When companies launch innovation initiatives, they focus almost all of their time and energy on that initial one per cent — the thrilling hunt for the breakthrough idea. The reality is that an idea is only a beginning. Innovation is not just the much-anticipated light-bulb moment. It is also a long, hard journey — from imagination to impact. In The Other Side of Innovation: Solving the Execution Challenge, Vijay Govindarajan and Chris Trimble say there is too much emphasis on ideas, and not nearly enough emphasis on execution, and guide business leaders on how to execute an innovative initiative. In the following extract from the book, they take the example of tractor manufacturer Deere & Company to explain how to take on the execution challenge.
Product development teams are often considered the centres for innovation within a company. As such, it is natural to assign existing product development groups heavy responsibilities in executing innovation initiatives. But be careful. Product development teams are like any other part of the Performance Engine. They have limitations that are tied to the nature of the work relationships within them.
Deere & Company’s product development group, the one that built the award-winning 8030 tractor for large-scale industrial farming, provides a fitting illustration. The group excelled at Performance Engine innovation. Over a period of about 15 years and four design iterations (the 8030 was preceded by three models, the 8000, 8010, and 8020, launched at roughly four-year intervals), the group mastered the innovation = ideas + process approach.
Deere did not start from scratch with each design. Each was an improvement over the previous design, incorporating new features and technologies without fundamentally redesigning the tractor. Nonetheless, in each iteration, the stakes were high. The 8030 was the most capital-intensive product development effort in Deere’s history. And Deere faced a tough constraint. The time line for 8030’s launch was fixed. Due to tightening regulations for diesel emissions, Deere would not be able to sell the 8020 tractor after January 1, 2006.
Therefore, developing the 8030 was a job that had to be on time, on budget, and on spec. In short, it was a job for a Performance Engine, and Deere’s product development team was a Performance Engine in every sense. The group documented the design process in great detail to make the process more repeatable. It also gathered extensive data during each design effort so that the process was predictable. The leadership team set specific time and budget expectations for each step in the process.
The group was disciplined and accountable, and it delivered. Deere launched ahead of the January 1, 2006, regulatory change. Customers responded enthusiastically. They particularly welcomed the 8030’s remarkable fuel efficiency at a time of rising oil prices.
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Deere’s product development capability is valuable. Nonetheless, in its effort to stay atop this market, Deere also takes on numerous innovation challenges that are beyond the capabilities of this particular product development team. Thus, the company is constantly confronted with decisions about when to work within its well-oiled product development process and when to work outside it.
To understand Deere’s product development organisation — to understand what it can and cannot do — some background is necessary.
The modern industrial tractor
Modern machines have made agriculture incredibly efficient, freeing millions from the labours of the field. “Tractor” may not mean much more to you than “big lawn mower.” If so, you’d find it eye opening to actually ride the 8030, a $300,000 machine when fully loaded.
You’d probably be surprised, for example, when you found yourself looking skyward just to glimpse the top of the rear tire, nearly seven feet off the ground. Once up the ladder and inside the enormous enclosed cab, you might be just as surprised by the ubiquity of electronics, including computer screens. And, once in motion, you might be caught off guard by the comfort of the ride. An independent electrohydraulic suspension eliminates 90 per cent of the vehicle’s vertical motion as it passes over bumps, ruts, and rocks.
You would also find the turning radius impressively tight for such a large vehicle, an engineering feat accomplished by building a special dropbox transmission that enables the engine to be mounted high and the wheels to maneuver underneath. But, really, did you expect to have to steer? Full-time steering is a dated notion. Not only do the 8030’s onboard computers plot the most efficient route to cover every inch of field, they handle most of the steering too.
The tractor is the workhorse of farming. Yet, for all its technological sophistication, it does little on its own. It tows or pushes farm implements for all crops and all seasons-tillers, planters, sprayers, cutters, scrapers, harvesters, and more.
Farm economics
While there are still many individuals who farm as a hobby and as a lifestyle, large-scale farming is a business. The tractor, at the centre of the action, is a major capital investment. The economics of farming are closely tied to the economics of owning and operating a tractor. For farmers facing the tough realities of unpredictable weather and volatile commodity prices, tractors are one of the few economic drivers that farmers can actually exert some control over.
To run the farm as efficiently as possible, farmers seek fuel-efficient and powerful engines that can tow large implements. To minimise the total distance the tractor travels, they appreciate precise routing and steering. So that drivers can work from sunrise to sunset with few breaks, they like a tractor with a comfortable ride.
Still, ask farmers what they want from their tractor more than anything else, and the answer is quick and consistent. It is reliability — perhaps followed quickly by how fast it can be fixed if it breaks. The cost that farmers are most concerned with, by far, is the cost of an unexpected breakdown, especially during the short and unforgiving weather window for harvest.
Deere’s product development organisation
Like any Performance Engine, Deere’s product development organisation evolved for efficiency through specialisation of labour. Few individuals were experts on the tractor as a whole. Most had in-depth expertise in just one component. Each person’s efforts were dependent on, and had to be coordinated with, the work of others.
A small and newly formed product development organisation might take an ad hoc approach to coordination. One that aspired to maximise efficiency, however, would, with experience, hardwire the coordination task in job descriptions, schedules, formal process steps, and so forth. That’s what happened over time at Deere. Each of thousands of work steps was scripted. The relationships between component-level experts were formally defined. In fact, there were several managers dedicated full time to further specifying and improving the process. Work relationships also evolved informally, as pairs of individuals gained experience working together.
The network of work relationships within Deere’s product development organisation can be further described on the three critical dimensions of depth, power balance, and operating rhythm.
DEPTH. Some pairs of individuals in the organisation had very deep work relationships, while others hardly knew each other. For example, pairs of individuals within a component specialty tended to work very closely together, while connections across specialties tended to be weaker. Some cross-specialty connections were much stronger than others though. As it turns out, wherever there was a mechanical, electrical, or spatial connection between components in a tractor, there was a work relationship between specialists in the product development organisation. For example, the engine designers had formal relationships and routine interactions with the drive train designers. They depended on one another.
Thus, the organisation mirrored the product. Where there were connections in one, there were connections in the other.
POWER BALANCE. The power balance in work relationships was heavily shaped by customer priorities. Specialists who were instrumental in delivering on a critical customer need were more powerful than those who did not.
For example, because Deere’s customers cared so deeply about reliability, there was a heavy complement of quality and reliability experts, and they were influential. They ensured that every engineer instinctively worried about reliability problems, and they created an extensive process for reliability testing including over fifteen hundred specific verification and validation steps.
OPERATING RHYTHM. Developing a tractor for large-scale agriculture is a complex, multiyear endeavour. Thus, the product development team adopted operating practices and habits that were consistent with this large-scale and long-term reality. For example, while engineers within specialties collaborated daily, coordination across component specialties was only necessary at longer intervals.
Interactions between the product development team and the rest of the company were also tuned to a long-term rhythm. For example, the general managers running the large-tractor business would not receive feedback from the market (sales figures, comments from customers) for nearly five years after the initiation of the design process. Ties to the corporation’s human resource planning and capital budgeting processes also reinforced the multiyear operating rhythm.
Locating the Limits
For the 8030 effort, the network of work relationships within the product development organisation was a strength. Change the product being developed, however, and strengths become weaknesses. Take the Performance Engine out of its sweet spot — that is, outside of the narrow bounds of its specialty — and a Dedicated Team is required. Consider the following three examples, which show how the depth, power balance, and operating rhythm of existing work relationships each create a limitation.
DEPTH. What if Deere wanted to pursue a major design revision? If the new project altered design at the system level — that is, it modified the way that the components within the tractor were linked together — then the component-level experts would have to work together in new ways. They would have to develop new work relationships that mirrored the new component connections in the new design. Deere would need a Dedicated Team to tackle that portion of the effort that had unfamiliar connections between components.
POWER BALANCE. What if Deere wanted to design a product with a new value proposition? Examine any strong product development organisation and you’ll find that the balance of power between individuals mirrors the customers’ priorities. When a company wants to develop a product with a different value proposition, it needs to create a Dedicated Team, at least for the affected portions of the design effort. For example, if Deere wanted to serve a new segment of customers, one that cared more about engine power than reliability, it would need to build a Dedicated Team with more numerous and more influential engine and drivetrain experts and fewer and less influential reliability experts.
OPERATING RHYTHM. What if Deere wanted to pursue a design effort of a different scale or duration? A product development team that is accustomed to five-year projects costing hundreds of millions will have a hard time simultaneously managing a five-month project costing tens of millions. To make such a shift, a company needs to build a Dedicated Team within which there are fewer engineers in each specialty and more frequent interactions across specialties. In fact, Deere has different product development teams that tackle much shorter and simpler tractor-like products, such as consumer lawn tractors.
By calling attention to these limits, we are not taking anything away from the individuals on Deere’s product development team. They are all skilled and capable engineers. It is not at all hard to imagine them coming together to design a much wider range of products, from lawn mowers to locomotives. However, they are organised for one task and one task only — designing reliable, high-tech tractors for large-scale agriculture that have a system-level design like the 8030. To do anything else, they would have to reorganise. They would have to somehow dissolve existing work relationships and rebuild new ones from scratch.
Reprinted with permission from Harvard Business Press. Copyright 2010 Harvard Business Publishing. All rights reserved.
AUTHORS: Vijay Govindarajan and Chris Trimble
PUBLISHER: Harvard Business Review Press
PRICE: Rs 695
ISBN: 9781422157381