10 Rules for Strategic Innovators

"It’s a chronic dilemma: investors demand growth—yet the older a company gets, the harder it is to deliver the kind of innovations that younger startups are known for. Most companies are full of creative people with imaginative ideas for new businesses, but ideas only get you so far. The real challenge is executing innovation.

So how can companies that have been shaped for excellence in an old business, build a new one with different rules for success? It requires a near-impossible balancing act—but it’s one that many accomplished companies see as a necessity. Examples include General Motors, which launched the cutting edge OnStar in-vehicle communication system; Procter & Gamble, currently reaching out to the coveted teen market with word-of-mouth marketing service Tremor; and the Walt Disney Company, which recently introduced MovieBeam to break into the lucrative in-home video rental market.

Large established companies don’t have to be the underdog when it comes to innovation. But how to start? How can executives manage new high-growth-potential businesses inside established organizations? 10 Rules for Strategic Innovators includes instructive, real-world stories of innovation in action. Case studies include Corning’s behind-the-scenes entry into the high-risk biotechnology industry, Hasbro’s aggressive pursuit of interactive video games—and the hurdles it faced in getting there, and the contentious rise of New York Times Digital. "

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Why Large Companies Should Out-Innovate Small Ones

ABOUT THE LECTURE:
"Given the choice, Dan Hesse would opt for working in a big company rather than a small one, especially when it comes to innovating. He backs up this preference with years of experience, from his days running a start up (“It was really hard work”) to leading some of AT&T’s pioneer telecom ventures.

Hesse first describes some of his formative projects for AT&T, including the “all you can eat” long distance WATTS line and AT&T’s first internet and wireless divisions. What he learned was how to “sit down with the guys in the labs,” and also with customers, applying market research to generate new inventions. He came to appreciate AT&T’s very deep pockets for R&D, which made it possible for “the large guy to completely change the game” and “make it almost impossible for smaller guys to compete.”

His new enterprise, Embarq, (an offshoot of Sprint Nextel) is the nation’s 4th largest local telephone company, present in 18 states with $6.5 billion in revenues. Hesse is determined to fight the slow but relentless loss of market share to wireless and cable companies. His plan involves changing the image of the firm “to get customers to embrace innovation” and try Embarq’s new products, which include: One Voicemail, a service that provides a single voicemail messaging system for home and wireless phones; Smart Connect, which enables an Embarq phone user to switch transparently from mobile frequencies to Wi-Fi as the phone moves from outside to inside; Media Safe, 25gb of internet storage for Embarq’s DSL subscribers to stow their videos and tunes; and the Offer, a company promise not to raise the DSL subscription price – ever.

He offers general advice on innovating, especially aimed at large firms that “typically don’t innovate because they’re too comfortable.” He suggests integrating across platforms to make life simpler for customers; cultivating a competitive corporate culture, in which delegation, teamwork and employee recognition play important roles; studying the market; incubating new projects while maintaining steady revenues in the old business; figuring out a business model that “gets things down to single-user economics;” and “shamelessly stealing good ideas.” Most important, when it comes to creating the next new thing, nothing beats leveraging the assets of a large company. When customers trust the company and the brand, marketing new ideas is easier, concludes Hesse."

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