How To Kill An Idea

How To Kill An Idea


By: Kermit Pattison / Fast Company
May 9, 2008

Fast Interview: Super consultant Ram Charan on why that’s one of the
most important — and most overlooked — aspects of innovation.

What’s the secret to a successful handoff? Trick question—there’s no
such thing as a good handoff when it comes to innovation, says Ram
Charan. Rather, the key to turning an idea into a business success is
to gather all players around the table from the beginning. In his new
book, The Game-Changer: How you Can Drive Revenue and Profit Growth,
Charan and co-author A.G. Lafley, chairman and CEO of Procter
&Gamble, lay out a process for systematic innovation — the very
thing that has turned P&G into an innovation powerhouse. Charan is
one of the most influential corporate consultants in the world, a man
so at home in the C-suites that he literally has no real home and
spends 365 days a year in jets and hotels. Here, Charan talks about why
innovation must be a social process, why linear handoffs are a recipe
for failure, why you should be ruthless about killing ideas, and why
successful companies of tomorrow will go horizontal.

You contend that innovation is a social process and that
innovation failure is less often a matter of bad ideas and more often a
result of failing to make the right connections. What do you mean?

Let me explain some simple things. First, as Thomas Edison said, an idea is called invention. Converting an idea into revenues and profits or something a customer uses is innovation.
Today, in the Internet society, you can buy ideas. You can have ideas
flow to you from outside your department and outside your company.
Innovation is selecting an idea and converting it to the production of
a product, service, or new business model that creates growth and
profit. The conversion of an idea for most companies, if not all,
requires more than one person to make it happen. And that is why it is
a social process.

Do people often underestimate the social aspect?

We know people have not framed the process of innovation this way at
all. But some companies have been doing it—Procter & Gamble, Lego,
Honeywell, Nokia.

You also emphasize the necessity of killing ideas. How do you decide which ones to kill?

A company will have several ideas in the pipeline. It’s not just one
idea; you have a portfolio of ideas. Some ideas will give you
incremental benefit, some will give you medium-sized benefits, and some
ideas are very risky and will be breakthroughs if you succeed. First
you look at the whole portfolio and you prioritize it. Some things fall
in the bottom priority. That’s the time you know you have to kill it
because you don’t have resources.

So don’t look at ideas individually when deciding which ones to eliminate?

If you look at one idea alone it’s very difficult to do. If you have a
portfolio of ideas and create priority one, priority two, and priority
three, then you see the bottom has to go. That’s the approach. But if
you take one idea, it’s going to be almost impossible to kill.

Is killing ideas integral to innovation?

Yes, because the success rate of innovation is not going to be 100 percent. If it’s 100 percent, you’re taking no risks.

What’s a good percentage of success?

It depends. We have laid out the social process. In that process, when
you select an idea you’ve got to do prototyping and engage the consumer
right away. By doing that, you reduce risk. If you do these kinds of
things we related in the book, you have an increasing success ratio. At
Proctor & Gamble, the success ratio has gone from 25 percent to 55
percent and the industry average is 15 to 20.

Does killing an idea mean it’s gone forever?

Now, when we say kill the idea, it does not really mean kill the idea.
You could go and give it to somebody else and take a portion of equity.
You can even go to a competitor, as P&G has done.

You talk about the mistake of one team throwing an idea over
the wall, say from technology to marketing. How can a bad handoff doom
a good idea?

We are saying do these things simultaneously and not linearly. You have
marketing and product development and engineering people sitting
together as one team, total immersion. When multiple disciplines sit
together, they see the total picture, isolate the major hurdles, and
work together to solve the problems. The principle of working
simultaneously is huge in making breakthroughs in innovation. Any
handoff linearly is going to reduce your success. On the automobile
business there’s a handoff from marketing, design, engineering to
suppliers — it takes a long time. But you go to Toyota, they do it
simultaneously and they do it faster.

The American auto companies follow the linear process?

I don’t want to name them, but they do. That’s why those guys are not
succeeding. Any handoff linearly is going to increase your cycle time,
and you’re going to run into problems.

How is the social architecture of companies changing to get away from this?

Necessity is the mother of invention. Those companies that are not
getting top line growth organically, they are absolutely pressed to
figure out how to create these collaborative changes for innovation.
This is the era of the renaissance of innovation. If you don’t do
innovation, cost cutting is not enough. You will be left behind.

 

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