The IBM EBO Process is one I’ve admired for a while
One of the most persistent problems with innovation is that the structures and practices that foster doing something new are quite different from those that foster getting great results from today's core business. A company that has done a good job of figuring out how to address this is IBM, with its Emerging Business Opportunity organization. My friend and colleague Mike Tushman has just posted a blog on some principles for running EBO's and what they learned as they developed the idea.
Among the principles that are worth repeating are:
- Active and frequent senior-level sponsorship: This ensures that there is clarity of strategy and organizational alignment, and that there is support available.
- Dedicated A-team leadership: Previously, younger, less-experienced leaders were put in charge of EBOs so that the EBO wouldn't get caught up in the established way of thinking. This didn't work well. Younger managers often lacked the networks needed to nurture an embryonic business within the larger company.
- Disciplined mechanisms for cross-company alignment: An explicit goal of the EBO process is to address business opportunities across the company to make sure the established businesses provide support to the EBO, even if it runs counter to their short-term interests.
- Resources fenced and monitored to avoid premature cuts: Funds need to be allocated and used according to plan, not re-allocated to existing businesses. Previously, there was a tendency to poach the new business's resources.
- Actions linked to critical milestones: This is key in making sure the EBO is moving in the direction and at the rate the company needs. Milestones are not necessarily tied to financial metrics and are reviewed in monthly meetings.
- Quick start, quick stop: Speed is essential. If an EBO isn't meeting its milestones, it needs to be stopped, or morphed into something else that will. Get the idea to market quickly, experiment, learn, and either iterate or stop the venture.
It amazes me how often these simple principles get violated when people try to start new things. See my related post, "Five Ways to Ruin Your Innovation Process"
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