Organizational Dynamics of Innovation
C. Todd Lombardo
Chief Design Strategist - Fresh Tilled Soil
Adjunct Professor - IE Business School
@iamctodd
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For Sale:
Socks. Three.
Different colors.
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A $5M Idea?
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A $25M Idea??
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No content
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Why not Zara? H&M?
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Every major corporation in the 21st
century is dealing with issues of disruption.
Steve Blank,
8-TIME ENTREPRENEUR, AUTHOR, STARTUP GURU
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different measure of performance
time
performance
time
new market disruption
compete against nonconsumption
low end disruption
adressing overserved customers
with a low cost business model
sustaining technology
bringing a better product into
an established market
most demanding
customers
least demanding
customers
Formula…?
○ Raise some venture backing: $16M >> $41M
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Formula…?
○ Raise some venture backing: $16M >> $41M
○ Hire the best engineers you can find
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Formula…?
○ Raise some venture backing: $16M >> $41M
○ Hire the best engineers you can find
○ Give them space (a 22,000 ft2)
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Formula…?
○ Raise some venture backing: $16M >> $41M
○ Hire the best engineers you can find
○ Give them space (a 22,000 ft2)
○ Pray they make something valuable
Slavery
Average
manufacturing
had less than
4 employees
Average lifespan
of S&P500 is
67 years
Pay by performance
Capital budgeting
Task design
Divisionalization
Brand management
Women
couldn’t vote
Management 1.0
90% of people
were in
agriculture
Ford makes
500K cars/yr
Social
segregation
Colonialism No
environmental
care
Communism No
Google
No
Airbnb
1850 1890 1900 1915 1940 1960 1970 1985 1995 2005 2015 2020 2025 2030
US Steel has
$1B market
capitalization
Source: XPLANE
Peak of II
Industrial
Revolution
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Slavery
Average
manufacturing
had less than
4 employees
US Steel has
$1B market
capitalization
Pay by performance
Capital budgeting
Task design
Divisionalization
Brand management
Women
couldn’t vote
Management 1.0
90% of people
were in
agriculture
Ford makes
500K cars/yr
Social
segregation
Colonialism No
environmental
care
Communism No
Google
No
Airbnb
Peak of II
Industrial
Revolution
1850 1890 1900 1915 1940 1960 1970 1985 1995 2005 2015 2020 2025 2030
Source: XPLANE
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Slavery
Average
manufacturing
had less than
4 employees
US Steel has
$1B market
capitalization
Pay by performance
Capital budgeting
Task design
Divisionalization
Brand management
Women
couldn’t vote
Management 1.0
90% of people
were in
agriculture
Ford makes
500K cars/yr
Social
segregation
Colonialism No
environmental
care
Communism No
Google
No
Airbnb
Peak of II
Industrial
Revolution
2ND
Innovation
Consultants
3RD
Venture
Design
Human-Centered
Co-Creation
Ethnography
Customer Journey
1850 1890 1900 1915 1940 1960 1970 1985 1995 2005 2015 2020 2025 2030
Rise of Design for
Innovation
Source: XPLANE
1ST
Digital
change
agents
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Slavery
Average
manufacturing
had less than
4 employees
US Steel has
$1B market
capitalization
Pay by performance
Capital budgeting
Task design
Divisionalization
Brand management
Women
couldn’t vote
Management 1.0
90% of people
were in
agriculture
Ford makes
500K cars/yr
Social
segregation
Colonialism No
environmental
care
Communism No
Google
No
Airbnb
Peak of II
Industrial
Revolution
2ND
Innovation
Consultants
3RD
Venture
Design
Human-Centered
Co-Creation
Ethnography
Customer Journey
1850 1890 1900 1915 1940 1960 1970 1985 1995 2005 2015 2020 2025 2030
Rise of Design for
Innovation
Source: XPLANE
1ST
Digital
change
agents
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Slavery
Average
manufacturing
had less than
4 employees
US Steel has
$1B market
capitalization
Pay by performance
Capital budgeting
Task design
Divisionalization
Brand management
Women
couldn’t vote
Management 1.0
90% of people
were in
agriculture
Ford makes
500K cars/yr
Social
segregation
Colonialism No
environmental
care
Communism No
Google
No
Airbnb
Peak of II
Industrial
Revolution
2ND
Innovation
Consultants
3RD
Venture
Design
Human-Centered
Co-Creation
Ethnography
Customer Journey
1850 1890 1900 1915 1940 1960 1970 1985 1995 2005 2015 2020 2025 2030
Rise of Design for
Innovation
Source: XPLANE
Average lifespan
of S&P500 is
67 years
Average lifespan
of S&P500 is
15 years
1ST
Digital
change
agents
1850 1890 1900 1915 1940 1960 1970 1985 1995 2005 2015 2020 2025 2030
Traditional Organizations from the 20th Century
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1850 1890 1900 1915 1940 1960 1970 1985 1995 2005 2015 2020 2025 2030
Traditional Organizations from the 20th Century
Organizations with a more conscious approach
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1850 1890 1900 1915 1940 1960 1970 1985 1995 2005 2015 2020 2025 2030
Traditional Organizations from the 20th Century
Organizations with a more conscious approach
Modern Organizations from the 21st Century
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Traditional Organizations More Conscious Organizations Modern Organizations
THREE ORG TYPES
Source: XPLANE
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Traditional ORG - The “Pyramid”
Source: XPLANE
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Rigid Organizations
○ No formal innovation framework
○ Innovation initiatives untied to company strategy
○ Siloed
○ Misaligned metrics
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Conscious ORG - The “Family”
Source: XPLANE
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Modern ORG - The “Organism”
Source: XPLANE
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An Evolution?
Pyramid Family Organism
Source: XPLANE
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20TH TO 21ST CENTURY ORG MODELS
Change
Source: XPLANE
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20TH TO 21ST CENTURY ORG MODELS
Change
Source: XPLANE
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CORE
TODAY
NEW
FUTURE
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Allocation of Resources
MONEY WHERE YOUR MOUTH IS?
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Twenty percent of our new products are
now required to be driven by innovation.
CHIEF STRATEGY OFFICER, FORTUNE 500 COMPANY
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Twenty percent of our new products are
now required to be driven by innovation.
CHIEF STRATEGY OFFICER, FORTUNE 500 COMPANY
Do you set aside 20%
of your company’s
time & resources??
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Twenty percent of our new products are
now required to be driven by innovation.
CHIEF STRATEGY OFFICER, FORTUNE 500 COMPANY
Do you set aside 20%
of your company’s
time & resources??
ME
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Source: Innovation Leader
Total exceeds 100% as many respondents cited more than one reason.
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Source: Innovation Leader
Total exceeds 100% as many respondents cited more than one reason.
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Valuing Design
DO YOU, REALLY?
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Design leads to innovation and innovation
demands design.
Indra Nooyi
CEO, PEPSICO
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Source: UK Design Council
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Creative Tension
BRUTALLY HONEST
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What tools are you using?
21ST CENTURY TOOLS FOR 21ST CENTURY PROBLEMS
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Source: STRATEGYZER
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Product Roadmapping
VISION OBJECTIVES PRIORITIZE ROADMAP
USER
GOALS
SOLUTIONS
THEMES
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Programmatic Factors
INNOVATION PROGRAMS?
WHAT CAN WE DO?
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Top-down sponsorship and bottom-up
effort is essential to make meaningful
culture transformation progress.
Dane Howard
DIRECTOR OF USER EXPERIENCE, EBAY
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DESIGN SPRINT
INTERVALS
AGILE SCRUM
Define
Understand
Build
Test
Ideate
WEEK 1
Refine
Build
Test
WEEK 2
Refine
Build
Test
WEEK 3
Refine
Build
Test
WEEK 4
Refine
Build
Test
WEEK n
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Individual Factors
HOW DO YOU THINK?
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You have 3 sheets of paper
Build the Tallest Tower
In 3 minutes
Challenge