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Out With the Old, in With the New

In order to thrive, new ventures launched by established organizations must surmount three distinct challenges: to forget, borrow, and learn. This idea, supported by new research from Vijay Govindarajan, Earl C. Daum 1924 Professor of International Business and director of the Center for Global Leadership at the Tuck School of Business, and Chris Trimble, executive director of the Center, was featured in the lead article of the May 2005 Harvard Business Review and appears in their new book, Ten Rules for Strategic Innovators: From Idea to Execution (Harvard Business School Press, 2005).

Vijay Govindarajan and Chris Trimble
Tuck School professors Vijay Govindarajan (left) and Chris Trimble coauthored a book that addresses how established businesses can make the best use of their existing resources when launching strategic experiments. (photo by Thomas Ames, Jr.)

As organizations embark on strategic business experiments, understanding the concepts of forgetting, borrowing, and learning (and how they are related) is critical, as these issues will be present from the launch to profitability. Because of the differences between the new business and the established one, the new venture must forget some of what made the larger, established company successful. At the same time it must borrow some of the core assets of the larger company, and it must promote the learning process.

"It is always encouraging to see an established market leader boldly pursue new and innovative ideas," says Govindarajan. "Strategic experiments, after all, are crucial to long-term growth. However, businesses must realize early on that to get an idea out of the incubator and up and running as a sustainable new business, long-established practices will have to shift."

To get to the heart of what it takes to get a new business initiative beyond the idea stage, Govindarajan and Trimble spent five years chronicling initiatives at organizations including the New York Times Company, Analog Devices, Corning, Hasbro, and Johnson & Johnson. In summarizing their findings for the Harvard Business Review, the authors write that in order to convert breakthrough ideas into breakthrough growth, companies must master the forgetting, borrowing, and learning challenges. This demands that they redesign every aspect of their organizations, from hiring, performance evaluation, and budgeting to compensation, definitions of success, and reporting relationships.

Trimble comments, "It is imperative that companies try to learn from others' experiences. Today's executives celebrate an innovation myth focused on gifted visionaries. But the capabilities of the organizations that surround these visionaries will make or break the visions."

By KERI PACIENCIA

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Last Updated: 12/17/08