In June I plan on returning to New York City to cover the World Innovation Forum (WIF). I have learned much about corporate innovation theory at this conference, and I also have enjoyed the exercise of comparing what I learn to what I see at my own company (EMC).
The most impactful speaker (for me) has been Dartmouth Professor Vijay Govindarajan. Among VG's many theories, I have found his 3-box theory to be the most relevant:
This theory, in brief, advises corporations to place their resources in 3 different buckets:
- Manage the present: Most employees operate in Box #1, incrementally delivering the "family jewels" that bring in the majority of revenue for the corporation.
- Selectively Abandon the Past: A percentage of employees should work here, exploring how to take existing technology into different markets that solve new customer problems.
- Create the Future: A percentage of employees should work here, anticipating new markets and new customer problems, and inventing brand new solutions with very little re-use of existing products and/or processes.
A good company will be well aware of the split between these three groups (e.g. 85-10-5, or 75-15-10).
After hearing about his theory while in New York City, I began to look for evidence that this type of approach was practiced at my own company. More specifically: how was my own organization applying resources in boxes #2 and #3? And what new products result?
Selectively Abandoning The Past
About 5 years ago some smart people inside EMC recognized the rise of the IT generalist and the need for easy-to-use, inexpensive storage devices that had the same capabilities of enterprise-class and mid-range storage systems. The decision was made to "tax" several of the organizations inside of EMC (e.g. CLARiiON, Celerra, Centera) and carve off certain individuals to focus on Box 2 activities. This group of people were creatively combined with recently-hired employees. These two groups of people were collectively tasked to "selectively forget" the traditional markets and focus on the new IT generalist market(s). They focused on a componentization strategy that extracted enterprise class components from their embedded systems and built them as standalone reusable components. These components were then hardened and inserted into various products.
In order to satisfy the "ease-of-use" requirements for IT generalists, the "selectively forget" strategy was critical. The user interfaces of CLARiiON, Celerra, and Centera were not re-used at all. They presented the wrong approach for IT generalists. However, some of the back-end plumbing (e.g. CIMOMs and Web Servers) were re-packaged and re-used. The new user interface (built with FLEX technology) was created as a set of reusable components that were then inserted into a variety of different products.
Create The Future
A good example of rebalancing resources into Box #3 occurred with the Atmos product. Once again, some smart people inside of EMC predicted the eventual need for highly-scalable and highly-distributed cloud storage systems. These systems needed to automatically migrate content across great geographic distances via policy decisions. Upper management went out and hired new blood from the OceanStore project and dedicated dozens of employees to specifically focus on this new market. There was very little need to reuse critical assets from internal projects.
Atmos is definitely an example of a Box #3 investment. Often times these groups can operate so far off of the beaten path that there is an aura of mystery about what they are building.
The Theory In Practice
I have found that VG's theory applies quite nicely in the real world. In fact, I have asserted that it can also play a role as an excellent time management technique for individuals, especially would-be innovators.
For internal employees that see the formation of these groups within a corporation,I believe that it is a sign of health. It is also a win-win for employees that have the option to join one of these new groups or stay where they are (and continue to more directly impact revenue by staying in Box #1).
The strategy is not limited to high-tech companies, or to engineering organizations. I have heard horror stories about companies that stick nearly everybody in Box #1.
I'd love to hear what people are seeing at their own company.