Our last speaker for Day 1 of the World Innovation Forum was Vijay Govindarajan from the Tuck School of Business at Dartmouth University and clearly they saved the most energetic, funniest speaker for last. I almost forgot he was an academic! J
He covered so many good ideas that they can’t all fit in one blog but one area I found particularly poignant was around segmenting a company’s strategic choices into 3 boxes.
Box 1 is managing the present – closing the performance gap between where you are and where you want to be with existing customers and products. Box 2 involves projects and initiatives that close the opportunity gap between what your company does and existing opportunities it could exploit. The third box is about creating the future – clearly the hardest one to capitalize on.
Box 1 initiatives, he recommended, should comprise about 60-70% of a company’s strategic projects given the current economic challenges. These are more tactical or shorter-term refinement of what you’ve already got. Think: restructuring. This is where you’re doing benchmarking looking for best practices in your industries and modeling those.
Box 2 initiatives focus on adjacent growth – pushing existing competencies into adjacent customers, products, or geographies. Under “normal” economic conditions, he recommends that these projects make up 10-20% of you strategy but in today’s environment, he suggested an adjustment to 15 – 30%.
Anything that launches into new territory would fall under a box 3 initiative. Along with box 2, this box ignores best practices and strives to find or create “next” practices. He gave an interesting story around this using the Olympic High Jump. Essentially the techniques that were used for the high jump were considered “best practices” only until the next style of jumping was perfected. Each time, experts said “this is the best” but when another approach was perfected, that became the best. The last one, which is called the Fosbury Flop (named, of course, for the guy who created it) redefined all the rules and is still the current standard.
How many of your strategic initiatives are Fos Flops? Better question: how well balanced are your projects between the 3 boxes? Another interesting point he shared is that projects in box 1 must be managed completely different from the projects in box 3. In box 1, you’re working 95% with knowledge. In box 3, it shifts to 95% assumptions. Clearly, the ways those projects are implemented must be completely different.
At the end of his program during the Q&A, he made the point that the 3-box strategy also works for individuals. He suggested putting your daily activities into one of the 3 boxes to see if you’re spending your personal growth time in the right places. Do you have enough Fos Flop opportunities on your horizon?