Profitable innovation doesn’t just happen. It must be managed, measured, and properly executed, and few companies know how to accomplish this effectively. Making Innovation Work presents a formal innovation process proven to work at HP, Microsoft and Toyota, to help ordinary managers drive top and bottom line growth from innovation. The authors have drawn on their unsurpassed innovation consulting experience -- as well as the most thorough review of innovation research ever performed. They'll show what works, what doesn't, and how to use management tools to dramatically increase the payoff from innovation investments. Learn how to define the right strategy for effective innovation; how to structure an organization to innovate best; how to implement management systems to assess ongoing innovation; how to incentivize teams to deliver, and much more. This book offers the first authoritative guide to using metrics at every step of the innovation process -- from idea creation and selection through prototyping and commercialization. This updated edition refreshes the examples used throughout the book and features a new introduction that gives currency to the principles covered throughout.  

Table of Contents:
Introduction to Updated Edition xiii Introduction xliii Chapter 1  Driving Success: How You Innovate Determines What You Innovate 1 Innovation Is the Power to Redefine the Industry 1 The Innovation Imperative: Driving Long-Term Growth in Top and Bottom Lines 5 How to Make Innovation Work: How You Innovate Determines What You Innovate 7 The Rules of Innovation 9 1. Exert Strong Leadership on Innovation Direction and Decisions 12 2. Integrate Innovation into the Business Mentality 15 3. Match Innovation to Company Strategy 16 4. Manage the Natural Tension Between Creativity and Value Capture 18 5. Neutralize Organizational Antibodies 23 6. Cultivate an Innovation Network Beyond the Organization 24 7. Create the Right Metrics and Rewards for Innovation 25 Summary: The Innovation Company 28 Chapter 2  Mapping Innovation: What Is Innovation and How Do You Leverage It? 29 A New Model of Strategic Innovation 29 Business Model Change 31 Value Proposition 32 Supply Chain 33 Target Customer 34 Technology Change 35 Product and Service Offerings 35 Process Technologies 36 Enabling Technologies 37 Three Types of Innovation 39 Incremental Innovation 42 Semiradical Innovation 47 Radical Innovation 51 Ersatz Radical Innovation 55 Disruptive Technologies 57 Innovation Model and the Innovation Rules 58 Chapter 3  Choosing Your Destiny: How to Design a Winning Innovation Strategy 59 Choosing the Right Strategy 59 Play to Win and Play Not to Lose Strategies 60 Play to Win Strategy 60 Play Not to Lose Strategy 63 Too Much of a Good Thing 71 Clearly Defined Innovation Strategy Drives Change 72 Do You Select an Innovation Strategy? 75 Internal Factors 76 External Factors 77 Risk Management and Innovation Strategy 78 Innovation Strategy: The Case of the Pharmaceutical Industry 79 Attempts to Solve the Innovation Problem 81 Changing the Innovation Approach 82 Strategy and the Innovation Rules 85 Chapter 4  Organizing for Innovation: How to Structure a Company for Innovation 87 Organizing for Innovation 87 Developing an Internal Marketplace for Innovation 88 Balancing Creativity and Value Creation 89 The Balance Changes as the Organization Matures 91 Five Steps to Balancing Creative and Commercial Markets 98 Outsourcing Innovation 100 Making Good Use of Your Partners 103 Integrating Innovation within the Organization 105 The Value of Networks and Innovation Platforms 106 The Corporate Venture Capital Model 110 The Ambidextrous Organization 112 The Leadership Role 115 Organization and the Innovation Rules 116 Chapter 5  Management Systems: Designing the Process of Innovation 119 Systems and Processes Make Things Happen 119 The Objectives of Well-Designed Innovation Systems 120 Choosing and Designing Innovation Systems 124 Systems for Ideation: Seeing the Gaps 127 Structured Idea Management 128 Experimentation 130 Prototyping 131 Making Deals 133 Innovation That Fits 134 Management Systems Comparison 137 Electronic Collaboration 139 Management Systems and the Innovation Rules 142 Chapter 6  Illuminating the Pathway: How to Measure Innovation 145 To Measure or Not to Measure? 145 What Gets Measured Gets Done 146 The Three Roles of a Measurement System 148 A Balanced Scorecard for Measuring Innovation 150 The Business Model for Innovation 150 Inputs, Processes, Outputs, and Outcomes 151 From the Business Model to the Measurement System 155 Designing and Implementing Innovation Measurement Systems 159 Measures for Ideation 160 Measuring Your Innovation Portfolio 163 Measuring Execution and Outcomes of Innovation 168 Measuring Sustainable Value Creation 170 The Barriers to Effective Performance Measurement. 176 Measurement and the Innovation Rules 178 Chapter 7  Rewarding Innovation: How to Design Incentives to Support Innovation 181 The Importance of Incentives and Rewards 181 Motivation 182 Different Strokes for Different Folks 183 A Framework for Incentive Systems’ Design 185 Setting Goals for Measuring Performance 188 Specific vs. Broad Goals 188 Quantitative vs. Qualitative Goals 190 Stretch vs. Expected Goals    190 Success-Driven vs. Loss-Avoidance Goals 191 Performance Evaluation and Incentive Contracts 193 Team vs. Individual Rewards 193 Subjective vs. Objective Evaluation 196 Relative Performance vs. Absolute Performance Evaluation 198 Incentive Contracts 199 Expected Level of Pay 200 The Shape of the Pay–Performance Relationship 200 Timing Incentives 202 Delivery of Compensation 203 Key Considerations in Designing Incentives Systems for Innovation 204 The Danger of Overuse 205 The Negative Effect on Intrinsic Motivation 206 Fear, Failure, and Fairness 207 Incentives and Rewards, and the Innovation Rules 208 Chapter 8  Learning Innovation: How Do Organizations Become Better at Innovating? 211 The Importance of Learning 211 A Model of Learning 214 Learning to Act 215 Learning to Learn 216 Learning Systems for Innovation 217 Systems for Delivering Value 218 Systems for Refining the Current Model 220 Systems for Building Competencies 221 Systems for Crafting Strategy 223 How to Make Learning Work in Your Organization 224 Knowledge and Ignorance Management 224 The Project Roadmap 226 Failures As Part of the Process 228 Learning Histories 228 The Dynamic Nature of Innovation Strategy 229 The Technology Stage 230 The Performance Stage 232 The Market Segmentation Stage 233 The Efficiency Stage 234 The Complementarities Stage 234 Learning and the Innovation Rules 235 Chapter 9  Cultivating Innovation: How to Design a Winning Culture 237 How Culture Affects Innovation 237 Is Innovation the New Religion? 238 The Danger of Success 240 Organizational Levers of an Innovative Culture 244 The Levers of an Innovative Culture 244 Legends and Heroes 251 The Physical Environment 252 Different Country Cultures Breed Different Innovation Cultures 252 People and Innovation 254 Recruiting to Build an Innovative Organization. 255 Turn Your Recruitment Strategy Upside-Down! 256 The Role of Senior Management 258 Leading Innovation 258 The Role of the CEO 260 Culture and the Innovation Rules 261 Chapter 10  Conclusion: Applying the Innovation Rules to Your Organization 263 Combining Creativity with Commercial Savvy 263 Smart Execution 264 The Role of Leadership 266 Leadership Must Define the Innovation Strategy and Link It to the Business Strategy 266 Innovation Must Be Aligned with the Company Business Strategy, Including Selection of the Innovation Strategy 267 Leadership Must Define Who Will Benefit from Improved Innovations 268 Diagnostics and Action 269 Stage Gate Systems 278 The Venture Capital Model 280 The Technology Innovation Model 281 Time-Driven Systems 282 Organizing Initiatives 285 Fine Tuning 285 Redirection/Revitalization 285 Generating Innovation Value 286 Endnotes 289 Bibliography 307 Additions to Bibliography for Updated Edition 329 Index 333