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EXECUTIVE SUMMARIES

FEATURES

MANAGING ORGANIZATIONS INNOVATION STRATEGY STRATEGY

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How to deal with ROSE HOLLISTER It addresses the biases JEANNE LIEDTKA How companies can benefit from innovation WILLIAM KERR Alibaba and the Future
centers without necessarily relocating
Professor, Harvard
Executive coach and consultant,
initiative overload MICHAEL D. WATKINS and behaviors that School of Business
Genesis Advisers
Business School
Professor, Darden
Cofounder, Genesis Advisers, and
hamper innovation.
professor, IMD MING ZENG of Business
Why Navigating Lessons from China’s innovative digital giant Chairman, Academic Council
of the Alibaba Group
Too Desıgn Art by Harry Campbell libaba hit the headlines with the world’s biggest IPO in September 2014. Today, the our disjointed observations and ideas ecosystem: a community of organisms (businesses and consumers of many types)
Alibaba’s special innovation, we realized, was that we were truly building an
company has a market cap among the global top 10, has surpassed Walmart in global
Many Talent Hot A become a household name. the end, we had agreed on a vision. We off-line physical elements). Our strategic imperative was to make sure that the platform
about e-commerce trends began to coalesce
into a larger view of the future, and by
sales, and has expanded into all the major markets in the world. Founder Jack Ma has
interacting with one another and the environment (the online platform and the larger
From its inception, in 1999, Alibaba experienced great growth on its e-commerce
provided all the resources, or access to the resources, that an online business would
would “foster the development of an open,
need to succeed, and hence supported the evolution of the ecosystem.
platform. However, it still didn’t look like a world-beater in 2007 when the manage-
coordinated, prosperous e- commerce
The ecosystem we built was simple at first: We linked buyers and sellers of goods. As
ment team, which I had joined full-time the year before, met for a strategy off-site
ecosystem.” That’s when Alibaba’s journey
really began.
at a drab seaside hotel in Ningbo, Zhejiang province. Over the course of the meeting,
technology advanced, more business functions moved online—including established
Projects Thinking SPOTS
Works
i�
“the essence of strategy is choosing what not to do,”
as Michael Porter famously said in a seminal HBR ar-
ticle, then the essence of execution is truly not doing
it. That sounds simple, but it’s surprisingly hard for O ccasionally, a new way of orga-
nizing work leads to extraordi-
organizations to kill existing initiatives, even when nary improvements. Total quality management did that in manu-
they don’t align with new strategies. Instead, leaders facturing in the 1980s by combining a set of tools—kanban cards,
keep layering on initiatives, which can lead to severe quality circles, and so on—with the insight that people on the shop
overload at levels below the executive team. floor could do much higher level work than they usually were asked
to. That blend of tools and insight, applied to a work process, can be
thought of as a social technology.
In a recent seven-year study in which I looked in depth at 50
projects from a range of sectors, including business, health care, and
64 HARVARD BUSINESS REVIEW SEPTEMBER–OCTOBER 2018 Art by Alain Delorme SEPTEMBER–OCTOBER 2018 HARVARD BUSINESS REVIEW 65 72 HARVARD BUSINESS REVIEW SEPTEMBER–OCTOBER 2018 Illustrations by Marcos Chin 80 HARVARD BUSINESS REVIEW SEPTEMBER–OCTOBER 2018 Art by Eddie Guy 88 HARVARD BUSINESS REVIEW SEPTEMBER–OCTOBER 2018
TOO MANY PROJECTS WHY DESIGN NAVIGATING TALENT ALIBABA AND THE
Rose Hollister and Michael D. THINKING WORKS HOT SPOTS FUTURE OF BUSINESS
Watkins | page 64
Jeanne Liedtka | page 72 William Kerr | page 80 Ming Zeng | page 88
If “the essence of strategy is
choosing what not to do,” as While we know a lot about practices Innovation clusters like San Alibaba is not a retailer in the
Michael Porter famously wrote, that stimulate new ideas, innovation Francisco and Boston have long traditional sense. It doesn’t source
then the essence of execution is teams often struggle to apply them. had an outsize impact on the global or keep stock, and logistics services
truly not doing it. That may sound Why? Because people’s biases and economy, and their influence keeps are carried out by third-party
simple, but most organizations entrenched behaviors get in the way. growing. In 2017, for instance, providers. Instead, Alibaba is
struggle to kill initiatives, even In this article a Darden professor America’s 10 largest tech hubs what you get if you take all the
those that no longer support their explains how design thinking helps accounted for 58% of U.S. patents. functions associated with retail
strategy. Unaware of the cumulative people overcome this problem and Globally, cities such as Tokyo, and coordinate them online into
impact or unwilling to part with unleash their creativity. Paris, Beijing, Shenzhen, and Seoul a sprawling, data-driven network
pet projects or both, senior leaders Though ostensibly geared to produced a similar proportion. The of sellers, marketers, service
pile on more and more, expecting understanding and molding the increased geographic concentration providers, logistics companies,
teams to absorb it all. Productivity, experiences of customers, design of innovation activity poses a and manufacturers. Indeed,
engagement, performance, and thinking also profoundly reshapes challenge for firms based in Alibaba does what Amazon, eBay,
retention tend to suffer as a result. the experiences of the innovators suburban industrial parks. To stay PayPal, Google, FedEx, all of the
In their consulting work the themselves. For example, immersive relevant, they need to tap into wholesalers, and a good portion of
authors have observed several customer research helps them urban hotbeds, but setting up manufacturers in the U.S. do, with a
root causes of initiative overload, set aside their own views and operations there can be extremely healthy helping of financial services
including impact blindness, recognize needs customers haven’t expensive. for garnish.
multiplier effects, political In his work on global talent Alibaba achieves this by
logrolling, unfunded mandates, cost DESIGN THINKING flows, Harvard Business School’s leveraging the new technologies
myopia, and inertia. Understanding Kerr has seen organizations of network coordination and data
those causes can help leaders COULD DO FOR try three solutions: At one intelligence. It harnesses the
diagnose the risks in their extreme, they can relocate their efforts of thousands of Chinese
organizations and make smarter INNOVATION WHAT headquarters to a hub, as GE businesses to create an ecosystem
decisions about what to keep and recently did (but make them that is faster, smarter, and more
what to kill. A step-by-step process TQM DID FOR much smaller). A less expensive efficient than traditional business
can guide them. Leaders should: MANUFACTURING. strategy is to create an innovation infrastructures.
1. Get a true count of the current lab or corporate outpost in a This is an emerging business
initiatives across the enterprise. talent cluster, as Walmart did model that Ming Zeng, the chair
2. Assess each one, identifying with Walmart Labs. The most of Alibaba’s Academic Council,
the business need, the required expressed. Carefully planned conservative strategy is to run calls smart business. Players in the
budget, the head count allocation, dialogues help teams build on their executive retreats and immersions ecosystem share data and apply
and the business impact. diverse ideas, not just negotiate in talent clusters—a tactic Vodafone machine-learning technology to
3. Get senior leaders working compromises when differences uses effectively. identify and better fulfill consumer
together to establish priorities, arise. And experiments with new These three options aren’t needs. This article provides a
in a discussion driven by the top solutions reduce all stakeholders’ mutually exclusive. Given the need framework for transforming a
leadership team and informed by fear of change. to stay in touch with multiple company into a smart business.
candid feedback from below. At every phase—customer clusters, companies may want to HBR Reprint R1805F
4. Establish a “sunset” clause for discovery, idea generation, and try them all. Each one involves
each initiative. testing—a clear structure makes substantial risks that executives
5. In yearly planning, require people more comfortable trying must manage. But together they
each initiative to reapply for funding new things, and processes offer a good playbook to firms that
and other resources. increase collaboration. Because it are finding themselves outside the
6. Strongly communicate that combines practical tools and human action as the clout of a handful of
stopping an initiative isn’t a sign of insight, design thinking is a social cities grows.
failure. technology—one that the author HBR Reprint R1805E
Organizations that learn how predicts will have an impact as large
to wisely cut back can accomplish as an earlier social technology, total
more in the areas that really matter. quality management.
HBR Reprint R1805C HBR Reprint R1805D
154 HARVARD BUSINESS REVIEW SEPTEMBER–OCTOBER 2018