“But if you don’t forget them, it will create future weakness.” “Today those are your strengths,” says Govindarajan. It requires companies to identify businesses that might still be working but may not be relevant for the future. This box is the toughest and most important to get right, says Govindarajan. No matter how cool and innovative a new idea is, however, it’s impossible to pursue without allocating time, resources, and manpower within the company. He gives the example of Keurig coffee makers, which first introduced their technology for the office, learned lessons about the market, then created a smaller version for the home. “But they are the ones on the fringes who are most likely to see something new.”įinally, companies must test these new hypotheses with low-cost, low-risk bets (the “fail fast” of design thinking). “These are the crazy people in an organization-the organizational nightmares who can’t get along with anyone,” says Govindarajan. First, identify weak signals, or early warning indicators of change, in the marketplace-whether that means a new consumer trend, a regulatory change, or a new technology that might lead to something new. Since the future is essentially unknowable, leaders must do three things to create something new, he says. Govindarajan starts with Box 3-the future-which means for a company the game-changing innovations that are going to transform its business for tomorrow. "I took something written in scripture 3,500 years ago, this idea of cyclical rhythmic activity, and repackaged it for companies.” “I took something written in scripture 3,500 years ago, this idea of cyclical rhythmic activity, and repackaged it for companies” “It’s only through balanced action that humanity as we know it can be sustained.” In the Hindu universe, there is no beginning or end, only an endless circle in which life is constantly being created, preserved, and destroyed in order to create new life. “According to Hindu scripture, none of these is any more important than the other two,” says Govindarajan. The origins of the idea, says Govindarajan, go back to Hindu cosmology, which posits three gods: Vishnu, the preserver, Shiva, the destroyer, and Brahma, the creator. Just as important, it serves as a communication tool within the organization, creating a common language to prioritize projects. “When CEOs see this framework, they can immediately start asking, is something a Box 1 project or a Box 2 project? They can start improvising. “If it’s going to take five hours for someone to understand what you are saying, they will never use it,” he says. In the book The Three Box Solution: A Strategy for Leading Innovation, to be published April 26, Govindarajan lays out the three-box concept with deceptive simplicity, providing a framework for companies to organize strategy with an emphasis on developing future innovation. He has never written down the philosophy that started it all, however, until now. Govindarajan, known as “VG,” is now one of the top strategy consultants in the world, author of countless books and articles, recipient of piles of awards, and consultant to a quarter of Fortune 500 companies over the past few decades. So, before his first meeting with BF Goodrich, he literally sketched an idea consisting of three boxes on the back of an envelope, one each for past, present, and future, and made that the center of his strategy consulting. Consulting seemed a good way to earn extra money, but he figured CEOs didn’t want to hear about accounting. Thirty-five years ago, Vijay Govindarajan was a newly minted accounting professor at Harvard Business School facing a mountain of student debt.
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