Executing Innovation

A young sheep named Stella takes off on a holiday after graduating school, hiking on the Inca trail in Peru, where she meets a handsome alpaca named Alejandro.The two woolly animals have a whirlwind romance, thereby setting the stage for How Stella Saved the Farm, the new novella from Vijay Govindarajan and Chris Trimble of Tuck School of Business at Dartmouth. But this is no Mills & Boon romance.It is a parable about managing innovation in organisations.As you read it you will recognize familiar people and situations from your life.

Stella returns from Peru to her life in Windsor Farms, just in time to attend a meeting called by the CEO, a mare named Deirdre, who has recently taken over the reins from her father. Deirdre’s grandfather pioneered the concept of animal-owned farms when he took over the operations of the farm after the original owners, the Windsors, abandoned it.

Now Windsor produces commodity products like wool, milk and grains, whose prices are dropping steadily. Though it is a tightly run operation, with the highest productivity levels, Windsor is under severe pressure from the larger mechanized farms run by humans, especially the one owned by its neighbour, McGillicuddy, who has already offered to buy Deirdre out.

Two weeks ago, Deirdre had launched a contest, a ‘big idea hunt’ for the future of the farm, where all the animals had been invited to come up with new business ideas. On the day Stella returns, 40 teams are presenting their ideas. She hears Maisie, the farms’s trendy Holstein, propose the idea of creating a magazine, Bovine Style, featuring trends in luxury fashion.This sets Stella’s own mind whirring and she impulsively makes a suggestion of her own that Windsor get into the business of luxury wool, the kind produced by Peru’s alpaca. This innovative idea, brought on by exposure to new animals and places, is just a start. It sets into motion a chain of events at Windsor Farms that illustrate the many problems of executing innovation.

One of the familiar characters in the book is Bull, Windsor’s COO and Deirdre’s second-in-command. He’s an old timer who was bypassed when Deirdre was promoted to CEO.There’s much uncertainly as to whether he will remain loyal to Windsor or move on. Bull is resistant to the very idea of a new business and believes the solution to Windsor’s problem lies in further improving the productivity of the existing business.

But Deirdre needs Bull’s co-operation in getting the new business off the ground, for resources must be shared between the old and new businesses.For starters, Deirdre and Bull need to decide on who will be in charge of the new business. Stella herself is just out of school and in no position to lead. They pick Mav (short for Maverick), a confident, energetic middle management stallion who has no respect for tradition. Mav is to report to Rambo, the head of ovine operations, who reports to Bull.

Mav hits a wall as soon as he starts setting up the new business.The purchase head won’t okay the high salaries of the alpaca and Maisie can’t spare time to work on a marketing brochure. Deirdre realizes that one leader can’t make innovation happen. Mav needs his own full-time team and he needs to report directly to the CEO.

Though he’s named the book after Stella, Govindarajan makes it clear that she’s not necessarily the one who really saved the farm.In the real world, there’s always this glamour associated with idea generation.People tend to celebrate the Stellas, leaving out the many people who spend long hours making the idea happen. Execution is considered a grind, leading innovation to fail in many organizations.

The challenges to executing the luxury wool project are many.First, when the herd of alpacas arrives from Peru, they culture-clash with the sheep. Second, the farm’s yarn making process doesn’t work with alpaca wool because the length of the fibers varies according to which part of the animal it comes from. Luxury wool, it turns out, isn’t a bulk process but one that requires constant resetting of machinery to produce gradations.One reason the senior management chose Stella’s idea over the many others was that it seemed to require the least investment. But now it’s necessary to spend on leasing a new grazing ground and dedicated machinery for alpaca wool. That’s not all. Deirdre also realizes she needs to recruit expensive managerial talent at senior levels with luxury wool experience.

How Stella Saved the Farm is about the lessons that Windsor Farm learns about making innovation happen.That sharing existing resources works only to a point, that conflicts between the old and new are inevitable, that building a dedicated team for a totally new business is like building a different company.The last chapters of the book are reserved for one of the most difficult issues concerning innovation -how do you evaluate performance and appraise those responsible for it? By the end of the book, the luxury wool business is still consuming more cash than it is generating. The investments made are beginning to show results, but the animals are very resentful of the way the luxury wool operation is draining the reserves created by the old business.But as Windsor’s research chief, Einstein the rooster, explains, “Profits come second in an innovative business,learning comes first.” The innovation leader has to be evaluated on whether he has executed a disciplined experiment and learnt from it.

How Stella Saved the Farm ends happily, with the luxury wool business growing explosively. When McGillicuddy makes another offer for her farm, Deirdre rejects it in no uncertain terms. The Stella-Alejandro romance however, doesn’t survive the test of time and distance, which might disappoint some readers.By the conclusion to the book, Stella has a new sheep-friend in Michael, who lives in another animal owned farm nearby.