‘Before you can create, you must forget’

Innovation guru Vijay Govindarajan (VG) believes an organisation’s innovation path can be slotted into three boxes. This Three-Box framework makes innovation easier as it gives business leaders a set of simple tools for managing and measuring behaviours across an organisation. VG, the Coxe Distinguished Professor at Dartmouth College’s Tuck School of Business and the Marvin Bower Fellow at Harvard Business School, says the framework addresses the fundamental challenge every organisation faces: How do you meet the performance requirements of a thriving existing business while reinventing it? In an e-interview with BusinessLine, VG talks about his latest book, innovation and more. Edited excerpts:

Is the Three-Box model suited for all kinds of organisations and business issues?

It applies to every company — big or small, manufacturing or service, high-tech or low-tech. It applies to the non-profit sector as well as for-profit sector. The model applies to countries as well. I’d say the Prime Minister must practice the Three-Box Solution.

Why does this framework have such broad applicability?

At its core, the Three-Box Solution addresses a fundamental challenge every organisation faces: How do you meet the performance requirements of the existing business — one that is still thriving — while dramatically reinventing it? How do you envision a change in your current business model before a crisis forces you to abandon it? It deals with a simple and proven method for allocating the organisation’s energy, time, and resources — in balanced measure — across “the three boxes”:

Box 1: The present — manage the core business at peak profitability;

Box 2: The past — abandon ideas, practices and attitudes that could inhibit innovation;

Box 3: The future — convert breakthrough ideas into new products and businesses.

The Three-Box framework makes leading innovation easier because it gives leaders a simple vocabulary and set of tools for managing and measuring these different sets of behaviours and activities across all levels of the organisation. I’ve supported my ideas with rich company examples — GE, Mahindra & Mahindra, Hasbro, IBM, United Rentals and TCS. I’ve even used the example of a Church to solve once and for all the practical dilemma of how to align an organisation on the critical but competing demands of innovation.

Which organisation has best-performed the Three-Box innovation and how?

I will consider TCS and M&M as examples. TCS has transformed itself many times during its short history. M&M has become a manufacturing power house — exactly the kind of company we need more of in India to create millions of jobs.

How difficult is it for legacy organisations to ‘forget’ the past, Box 2?

Forgetting is the most difficult for organisations. Managers exploiting current businesses develop mindsets based on what they have experienced in the past. Such mindsets become further embedded in systems, structures, processes and cultures that are self-perpetuating. Organisations that cannot erase memory do not notice that many entrenched mindsets have lost relevance in changing circumstances that require exploring for new businesses.

The bottom line: Before you can create, you must forget. Based on over 100 interviews in dozens of Fortune 500 companies and other organisations, I have found that unlearning, although indispensable, is extremely difficult.

But can an organisation forget everything it has learnt and stood for? Doesn’t it have to take something from its past into the future?

Box 2 is about selectively forgetting the past. It is critical that the organisation does not forget everything about the past. The work of Box 2 often comes down to making key distinctions between values that are timeless (enduring for the long run) versus those that are timely (ultimately perishable with the passing of time).

Think of roots and chains. If you cut a tree’s roots, it dies. Therefore, leaders need to understand that their organisation’s roots have timeless value and need to be preserved. You must fertilise the roots, strengthen them, and keep them forever.

However, every organisation also accumulates chains consisting of once-timely ideas and activities that have lost their usefulness. If you do not find and break the chains, they will keep you from getting to the future. The bottom line: Do not forget everything; just forget the chains, but preserve the roots.

What takeaways and learnings can Indian organisations have from the Three-Box model?

India is a very old civilisation, but in terms of its economic history, we are a very young country.

There are millions of non-consumers in India. Only the top of the economic pyramid and a fraction of the middle of the economic pyramid in India have benefited from the liberalisation of the early 1990s. Indian companies must do Box 3 breakthrough innovations to convert non-consumers into consumers. We should leverage our strengths in this process such as high mobile penetration and young demographics to create affordable products.

Given our long history, there are old, entrenched mindsets we must forget that have little relevance to today’s realities. We must first innovate in India for India. We must make those innovative products in India thereby creating jobs in India. Finally, we must take those frugal innovations abroad.

In your study of Indian organisations, which box are most Indian organisations stuck in?

I find the toughest box for Indian companies is box two. Indeed, there is really nothing quite so powerful as an entrenched set of obsolete values and practices.

Given India’s long history, there are lots of entrenched beliefs to forget. If not forgotten, these beliefs can easily come to seem as immutable as the laws of physics. But where the laws of physics are generally helpful, the dominance of the past has the ability to freeze time and enforce inertia.

COMMENT NOW