World Document

The Sophisticated Innovator

The Innovation Value Chain

Rather than reflexively importing innovation best practices, managers should adopt

a tailored, end-to-end approach to generating, converting, and diffusing ideas.

by Morten T. Hansen and Julian Birkinshaw

Mick Wiggins

E

XECUTIVES IN LARGE COMPANIES often ask themselves,

“Why aren’t we better at innovation?” After all, there is

no shortage of sound advice on how to improve: Come

up with better ideas. Look outside the company for

concepts and partners. Establish different funding mechanisms.

Protect the new and radically different businesses from the old.

Sharpen the execution.

Such strategic counsel, however, is based on the assumption

that all organizations face the same obstacles to developing new

products, services, or lines of business. In reality, innovation challenges differ from firm to firm, and otherwise commonly followed advice can be wasteful, even harmful, if applied to the

wrong situations.

hbr.org

1179 Hansen_new.indd 121

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June 2007

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Harvard Business Review 121

5/2/07 8:05:09 PM

The Sophisticated Innovator

Consider how two different CEOs

confronted the innovation challenges

facing their companies. When Steve

Bennett joined Intuit, the maker of the

financial software programs Quicken

and QuickBooks, in January 2000, it

was a company with lots of ideas – most

collected from outside the organization – but little discipline for bringing

those ideas to market. “We had a lot of

energy focused on learning from customers,” the CEO recalls, “but we were

struggling to decide which ideas would

have the highest impact.” To fix this,

Bennett demanded that clear business

objectives be set for ideas in development, and he held people accountable

for delivering on them. Intuit is now

just as good at executing on ideas as it

is at generating them. The company’s

Article at a Glance

There is no universal solution for

organizations wanting to...