Books: The right levers for change

Another book on innovation, but it's worth taking seriously because it recognises the importance of putting in place the processes to drive it, says Julian Birkinshaw.

Last Updated: 31 Aug 2010

The New Age of Innovation: Driving co-created value through global
CK Prahalad and MS Krishnan
McGraw-Hill £16.99

More business books are written on innovation than on just about any other topic except leadership, so when faced with a book entitled The New Age of Innovation, a certain level of circumspection is warranted.

There are two good reasons to take this book seriously. One is the authors, both professors at the Ross School of Business at the University of Michigan. CK Prahalad is one of the foremost management gurus alive today - he wrote Competing for the Future with Gary Hamel, and The Fortune at the Bottom of the Pyramid, both bestsellers. MS Krishnan, less well known, is a highly respected academic and consultant specialising in information technology management.

The other reason is that the book takes us deep into the internal workings of the firm. Most books on innovation take a people-centred approach - for example, Tom Kelley's The Ten Faces of Innovation or Gary Hamel's Leading the Revolution. Others focus on the higher-order principles of innovation, such as Hank Chesbrough's Open Innovation or Clay Christensen's The Innovator's Dilemma.

What sets this book apart is its attempt to marry the high-level need for innovation with the mundane reality of managing business processes and IT systems. The authors do not fully succeed in bridging these two worlds, but this is still essential reading for any executive serious about building an internal infrastructure for innovation.

The book is framed in a familiar way. Firms today, the authors say, have to confront two megatrends. One is the shift to individualised product offerings, and the 'co-creation' of services between the user and the provider. The other is the increasingly global pool of resources available to the firm in delivering value to consumers. For example, TutorVista is a specialised tutoring service for high-school children that combines highly personalised services with an India-based pool of tutors.

These trends are making companies rethink their organisational principles - they need to be fast-moving, flexible, collaborative, and able to cope with complexity. And that requires them to rethink their technical architecture, processes and social architecture.

These points are well argued, although, as the authors admit, they're not entirely new. But the real value-added comes next. Chapter 2 focuses on the often-neglected role of business processes in enabling innovation. Chapter 3 examines the analytical tools that can be used to identify trends and reveal innovation opportunities. Chapter 4 describes the IT architecture needed to implement these business processes and tools.

The second half of the book (chapters 5-7) examines the change-management agenda - how a firm can overcome the impediments of its traditional model and move to one allowing flexibility, individualisation and collaboration.

A major strength of the book is its emphasis on the role of business processes in driving (or hampering) innovation. It's hard to underestimate their importance, yet most books on innovation hardly mention them. In fact, they skirt around the challenge of implementation. The New Age of Innovation is different: it provides advice on how to fix the plumbing and the wiring, rather than just provide a showcase for beautiful new homes.

Another strength is the diversity of company examples. The authors provide a mix of well-known western case studies, from Google to Wal-Mart, less well-known cases such as ING Bank and Corning, and then detailed cases of Indian companies, including ICICI Bank, Tata Consultancy Services and Madras Cements. India's elite firms are as progressive as any in Europe or North America, and often even more innovative.

The book's biggest weakness is that it suggests a single path of transformation that all firms should pursue. Yet some firms need to focus on value-added, some on growth, others on flexibility, and the process of transformation is likely to vary accordingly. But here the transformation paths are all merged together, and a single broad solution is proposed.

As a result, much of the text in in the second half is best read as generic advice on how to transform a large firm. It is good, thoughtful advice, but the 'red thread' between these chapters and the earlier ones becomes frayed at times.

Who should read this book? It's not a coffee-table volume that you can dip in and out of at leisure. It's a serious how-to guide for managers who are struggling with the inertia and complexity of managing a large organisation, and who are looking for guidance on the right levers to pull to make change happen.

- Julian Birkinshaw is professor and deputy dean at London Business School, and co-founder of the Management Innovation Lab there.

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