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Organizational Dynamics of Innovation
C. Todd Lombardo
Chief Design Strategist - Fresh Tilled Soil
Adjunct Professor - IE Business School
@iamctodd
For Sale:
Socks. Three.
Di鍖erent colors.
A $5M Idea?
A $25M Idea??
MCE^3 - C. Todd Lombardo -  Organizational Dynamics of Innovation
Why not Zara? H&M?
Every major corporation in the 21st
century is dealing with issues of disruption.
Steve Blank,
8-TIME ENTREPRENEUR, AUTHOR, STARTUP GURU
differentmeasureofperformance
time
performance
time
new market disruption
compete against nonconsumption
low end disruption
adressing overserved customers
with a low cost business model
sustaining technology
bringing a better product into
an established market
most demanding
customers
least demanding
customers
disruptive
innovations
low-end
disruptions
new-market
disruptions
SSD Hard Drives
JetBlue / EasyJet
Zipcar
AirBnB
Case Studies
MCE^3 - C. Todd Lombardo -  Organizational Dynamics of Innovation
MCE^3 - C. Todd Lombardo -  Organizational Dynamics of Innovation
MCE^3 - C. Todd Lombardo -  Organizational Dynamics of Innovation
MCE^3 - C. Todd Lombardo -  Organizational Dynamics of Innovation
酷看姻馨顎鉛温?
酷看姻馨顎鉛温?
 Raise some venture backing: $16M >> $41M
酷看姻馨顎鉛温?
 Raise some venture backing: $16M >> $41M
 Hire the best engineers you can 鍖nd
酷看姻馨顎鉛温?
 Raise some venture backing: $16M >> $41M
 Hire the best engineers you can 鍖nd
 Give them space (a 22,000 ft2)
酷看姻馨顎鉛温?
 Raise some venture backing: $16M >> $41M
 Hire the best engineers you can 鍖nd
 Give them space (a 22,000 ft2)
 Pray they make something valuable
MCE^3 - C. Todd Lombardo -  Organizational Dynamics of Innovation
MCE^3 - C. Todd Lombardo -  Organizational Dynamics of Innovation
MCE^3 - C. Todd Lombardo -  Organizational Dynamics of Innovation
MCE^3 - C. Todd Lombardo -  Organizational Dynamics of Innovation
MCE^3 - C. Todd Lombardo -  Organizational Dynamics of Innovation
MCE^3 - C. Todd Lombardo -  Organizational Dynamics of Innovation
H4 H3
Innovation Emerging Scaling Operating
Problem/Solution Product/Market Ef鍖ciency
(core)
H2 H1
Scale
H4 H3 H2 H1
Product
Development
Innovation
Services
Startup
Accelerator
DESIGN SPRINTS, WORKSHOPS, EVENTS
FIVE EXTERNAL STARTUPS
CORETODAY
NEWFUTURE
CORETODAY
NEWFUTURE
Organizational Factors
WHATS IT LIKE AT YOU COMPANY?
1850 1890 1900 1915 1940 1960 1970 1985 1995 2005 2015 2020 2025 2030
Source: XPLANE
1850 1890 1900 1915 1940 1960 1970 1985 1995 2005 2015 2020 2025 2030
Source: XPLANE
Peak of II
Industrial
Revolution
Slavery
Average
manufacturing
had less than
4 employees
Average lifespan
of S&P500 is
67 years
Pay by performance
Capital budgeting
Task design
Divisionalization
Brand management
Women
couldnt vote
Management 1.0
90% of people
were in
agriculture
Ford makes
500K cars/yr
Social
segregation
Colonialism No
environmental
care
Communism No
Google
No
Airbnb
1850 1890 1900 1915 1940 1960 1970 1985 1995 2005 2015 2020 2025 2030
US Steel has
$1B market
capitalization
Source: XPLANE
Peak of II
Industrial
Revolution
Slavery
Average
manufacturing
had less than
4 employees
US Steel has
$1B market
capitalization
Pay by performance
Capital budgeting
Task design
Divisionalization
Brand management
Women
couldnt vote
Management 1.0
90% of people
were in
agriculture
Ford makes
500K cars/yr
Social
segregation
Colonialism No
environmental
care
Communism No
Google
No
Airbnb
Peak of II
Industrial
Revolution
1850 1890 1900 1915 1940 1960 1970 1985 1995 2005 2015 2020 2025 2030
Source: XPLANE
Slavery
Average
manufacturing
had less than
4 employees
US Steel has
$1B market
capitalization
Pay by performance
Capital budgeting
Task design
Divisionalization
Brand management
Women
couldnt vote
Management 1.0
90% of people
were in
agriculture
Ford makes
500K cars/yr
Social
segregation
Colonialism No
environmental
care
Communism No
Google
No
Airbnb
Peak of II
Industrial
Revolution
2ND
Innovation
Consultants
3RD
Venture
Design
Human-Centered
Co-Creation
Ethnography
Customer Journey
1850 1890 1900 1915 1940 1960 1970 1985 1995 2005 2015 2020 2025 2030
Rise of Design for
Innovation
Source: XPLANE
1ST
Digital
change
agents
Slavery
Average
manufacturing
had less than
4 employees
US Steel has
$1B market
capitalization
Pay by performance
Capital budgeting
Task design
Divisionalization
Brand management
Women
couldnt vote
Management 1.0
90% of people
were in
agriculture
Ford makes
500K cars/yr
Social
segregation
Colonialism No
environmental
care
Communism No
Google
No
Airbnb
Peak of II
Industrial
Revolution
2ND
Innovation
Consultants
3RD
Venture
Design
Human-Centered
Co-Creation
Ethnography
Customer Journey
1850 1890 1900 1915 1940 1960 1970 1985 1995 2005 2015 2020 2025 2030
Rise of Design for
Innovation
Source: XPLANE
1ST
Digital
change
agents
Slavery
Average
manufacturing
had less than
4 employees
US Steel has
$1B market
capitalization
Pay by performance
Capital budgeting
Task design
Divisionalization
Brand management
Women
couldnt vote
Management 1.0
90% of people
were in
agriculture
Ford makes
500K cars/yr
Social
segregation
Colonialism No
environmental
care
Communism No
Google
No
Airbnb
Peak of II
Industrial
Revolution
2ND
Innovation
Consultants
3RD
Venture
Design
Human-Centered
Co-Creation
Ethnography
Customer Journey
1850 1890 1900 1915 1940 1960 1970 1985 1995 2005 2015 2020 2025 2030
Rise of Design for
Innovation
Source: XPLANE
Average lifespan
of S&P500 is
67 years
Average lifespan
of S&P500 is
15 years
1ST
Digital
change
agents
1850 1890 1900 1915 1940 1960 1970 1985 1995 2005 2015 2020 2025 2030
1850 1890 1900 1915 1940 1960 1970 1985 1995 2005 2015 2020 2025 2030
Traditional Organizations from the 20th Century
1850 1890 1900 1915 1940 1960 1970 1985 1995 2005 2015 2020 2025 2030
Traditional Organizations from the 20th Century
Organizations with a more conscious approach
1850 1890 1900 1915 1940 1960 1970 1985 1995 2005 2015 2020 2025 2030
Traditional Organizations from the 20th Century
Organizations with a more conscious approach
Modern Organizations from the 21st Century
Traditional Organizations More Conscious Organizations Modern Organizations
THREE ORG TYPES
Source: XPLANE
Traditional ORG - The Pyramid
Source: XPLANE
Rigid Organizations
 No formal innovation framework
 Innovation initiatives untied to company strategy
 Siloed
 Misaligned metrics
Conscious ORG - The Family
Source: XPLANE
Modern ORG - The Organism
Source: XPLANE
An Evolution?
Pyramid Family Organism
Source: XPLANE
20TH TO 21ST CENTURY ORG MODELS
Change
Source: XPLANE
20TH TO 21ST CENTURY ORG MODELS
Change
Source: XPLANE
CORETODAY
NEWFUTURE
Allocation of Resources
MONEY WHERE YOUR MOUTH IS?
Twenty percent of our new products are
now required to be driven by innovation.
CHIEF STRATEGY OFFICER, FORTUNE 500 COMPANY
Twenty percent of our new products are
now required to be driven by innovation.
CHIEF STRATEGY OFFICER, FORTUNE 500 COMPANY
Do you set aside 20%
of your companys
time & resources??
Twenty percent of our new products are
now required to be driven by innovation.
CHIEF STRATEGY OFFICER, FORTUNE 500 COMPANY
Do you set aside 20%
of your companys
time & resources??
ME
Source: Innovation LeaderTotal exceeds 100% as many respondents cited more than one reason.
Source: Innovation Leader
Total exceeds 100% as many respondents cited more than one reason.
Valuing Design
DO YOU, REALLY?
Design leads to innovation and innovation
demands design.
Indra Nooyi
CEO, PEPSICO
Source: UK Design Council
Creative Tension
BRUTALLY HONEST
MCE^3 - C. Todd Lombardo -  Organizational Dynamics of Innovation
What tools are you using?
21ST CENTURY TOOLS FOR 21ST CENTURY PROBLEMS
Source: STRATEGYZER
Product Roadmapping
VISION OBJECTIVES PRIORITIZE ROADMAP
USER 
GOALS
SOLUTIONS
THEMES
Programmatic Factors
INNOVATION PROGRAMS?
WHAT CAN WE DO?
MCE^3 - C. Todd Lombardo -  Organizational Dynamics of Innovation
MCE^3 - C. Todd Lombardo -  Organizational Dynamics of Innovation
MCE^3 - C. Todd Lombardo -  Organizational Dynamics of Innovation
Top-down sponsorship and bottom-up
effort is essential to make meaningful
culture transformation progress.
Dane Howard
DIRECTOR OF USER EXPERIENCE, EBAY
}
}
}
DESIGN SPRINT
INTERVALS
AGILE SCRUM
Define
Understand
Build
Test
Ideate
WEEK 1
Refine
Build
Test
WEEK 2
Refine
Build
Test
WEEK 3
Refine
Build
Test
WEEK 4
Refine
Build
Test
WEEK n
Individual Factors
HOW DO YOU THINK?
You have 3 sheets of paper
Build the Tallest Tower
In 3 minutes
Challenge
00:03:00
00:02:30
00:02:00
00:01:30
00:01:00
00:00:30
00:00:00
Designtist
(DESIGNER + SCIENTIST)
DESIGNER SCIENTIST
EMPATHIC
MAKER
FORWARD LOOKING
RIGOROUS
EXPERIMENTAL
HYPOTHESIS DRIVEN
Focus on a
Human
Problem
Focus on the job
NOT THE TECH, NOR THE PRODUCT
People Business
Technology
SCIENTIFIC
METHOD
DESIGN
PROCESS
AGILE
PHILOSOPHY
design
sprint
http://designsprintbook.com
MCE^3 - C. Todd Lombardo -  Organizational Dynamics of Innovation
OPPORTUNITY
IDENTIFICATION
PROJECT
ACCEPTANCE
V0.1 V0.2 V0.3 LAUNCH
OPPORTUNITY
IDENTIFICATION
PROJECT
ACCEPTANCE
INVENTOR
V0.1 V0.2 V0.3 LAUNCH
TECHNICAL
CREATIVITY
OPPORTUNITY
IDENTIFICATION
PROJECT
ACCEPTANCE
INVENTOR CHAMPION
V0.1 V0.2 V0.3 LAUNCH
TECHNICAL
CREATIVITY
POLITICAL
SAVVY
OPPORTUNITY
IDENTIFICATION
PROJECT
ACCEPTANCE
INVENTOR CHAMPION IMPLEMENTER
V0.1 V0.2 V0.3 LAUNCH
TECHNICAL
CREATIVITY
POLITICAL
SAVVY
PROJECT
MANAGEMENT
OPPORTUNITY
IDENTIFICATION
PROJECT
ACCEPTANCE
INVENTOR CHAMPION IMPLEMENTER
V0.1 V0.2 V0.3 LAUNCH
TECHNICAL
CREATIVITY
POLITICAL
SAVVY
PROJECT
MANAGEMENT
SERIAL INNOVATOR
MCE^3 - C. Todd Lombardo -  Organizational Dynamics of Innovation
MAKE
PEOPLE
WANT
THINGS
MAKE
THINGS
PEOPLE
WANT
MAKE
PEOPLE
WANT
THINGS
MCE^3 - C. Todd Lombardo -  Organizational Dynamics of Innovation
Tension Brutal Honesty. Mixed Viewpoints.
Tension Brutal Honesty. Mixed Viewpoints.
Agility Quickly change. Learn fast.
Tension Brutal Honesty. Mixed Viewpoints.
Agility Quickly change. Learn fast.
Space Experiment. Fail. Collaborate.
Tension Brutal Honesty. Mixed Viewpoints.
Agility Quickly change. Learn fast.
Space Experiment. Fail. Collaborate.
Mindset Designer + Scientist. FOCUS ON PEOPLE
PROBLEMS
MCE^3 - C. Todd Lombardo -  Organizational Dynamics of Innovation
MCE^3 - C. Todd Lombardo -  Organizational Dynamics of Innovation
C. Todd Lombardo
@iamctodd
freshtilledsoil.com
http://bit.ly/mce2016

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