Episode 67: Vijay Govindarajan

Strategy

Nov 12

Written By Michael LaBlanc

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The Three-Box Solution for Corporate Innovation

Innovation demands different skill sets, methods, and leadership approaches from business owners. The challenge for leaders is to find the balance between three innovation areas: preservation, destruction, and creation. These concepts are central to the innovation framework designed by business strategy coach Vijay Govindarajan.

In his book The Three-Box Solution, Vijay teaches a framework for allocating energy, time, and resources for driving innovation while delivering current goals. We will also hear about the importance of embracing change to build the future.

Episode Quotes:

An overview of the Three-Box Solution

[00:02:27] I always ask companies to put whatever they do into three boxes. How many of their activities are in Box 1? And Box 1 is about managing the present, which is about improving the efficiency of your current business model. Box 2 is about selectively forgetting the past, and Box 3 is about creating the future. Manage the person Box 1, selectively abandon the past Box 2, and create the future Box 3. And working with organizations, what I found is they all are focused on Box 1. While Box 1 is terribly important, strategy has to include all three boxes.

Why is it difficult for companies to integrate the strategy of forgetting into their innovation plan?

[00:03:04] The challenge for companies in Box 3 is how are you going to create your future in the year 2030? If you want to create your future in the year 2030, then you have a job to do in Box 2. Mainly you have to selectively forget. And I find of my three boxes; Box 2 is the most challenging, and it is one that has not been recognized by academics and practitioners, to the extent they should.

If you can't forget, you can't learn as simple as that. Think about how many books are written about learning organizations. We haven't written a single book on forgetting organizations. The reason why Box 2 is such a big problem is Box 2 is your current strength then lays your future weakness. That is why it is very difficult to forget because when you forget, you're forgetting your current strength.

On Hindu beliefs that influenced the Three-Box Solution.

[00:08:29] As a circle, the beauty is that there is no beginning and no end to a circle. Everything that is born in this universe will be preserved. That is the job of Vishnu, that is Box 1, manage the person. Everything that is preserved, will be ultimately destroyed, that is the job of Shiva. That is Box 2; destroy the past. And everything that is destroyed will get regenerated. That is the job of Brahma, that is Box 3.

This notion of preservation, destruction, and regeneration as a rhythmic, continuous cycle is how humanity has sustained. I have simply taken something that was written in Hindu spirituality 3000 years ago, packaged it, and presented it to companies, and said 'If General Motors wants to remain in business forever, you must also master these three processes.

How can leaders effectively innovate for the future while implementing present processes?

[00:18:00] I think that is the art of the leader. The CEO should never say Box 1 is a dinosaur and Box 3 is the future. I think the CEO has to message creating the future requires a role for both the performance gap, which is what Box 1 is and the possibility gap, which is what Box 3 is. Without focus on both, we are never going to achieve our future.

What is the biggest challenge faced by companies as they innovate?

[00:23:41] I say the biggest problem in companies is not lack of ideas; it is a lack of capacity to execute the ideas. Therefore, the biggest challenge is in the execution. That includes changing mindsets, changing structures, changing capabilities, changing processes, changing people. All of them are hard. And mindsets you can change by changing people. Because you can't change mindset directly.

Time Code Guide:

00:02:27 An Overview of the Three-Box Strategy

00:03:04 The Strategy of Forgetting for Company Innovation

00:07:29 Vishnu, Shiva, and Brahma: The Three Gods from Hindu Scripture

00:08:45 The notion of preservation, destruction, and regeneration

00:10:33 How to preserve and overcome the dominant logic

00:13:23 The present and dominant logic is an ally of the future

00:15:49 Three Rules for Executing the Three-Box Solution

00:18:00 Ways to innovate for the future while implementing the present processes

00:18:27 Industries with a transformed and preserved past

00:20:06 Balancing the cost of cannibalization and the cost of inaction

00:23:41 The biggest challenge in creating an ambidextrous organization

00:25:34 The planned opportunism

00:26:45 Creating the future is never a random process

00:29:35 The metaphor of two horses

00:31:07 The only competition that matters is self-competition

00:34:47 How can individuals prepare for their goals while managing present commitments

00:45:02 Reverse Innovation

00:48:56 The Three-Box Solution applied to business education

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Michael LaBlanc