What is the forget, borrow and learn framework? Description
Establishing major innovations within the borders of a large corporation
is one of the most complex and important challenges for management. A new
business (NewCo) with high growth potential rarely coexists harmoniously with
established Business Units (CoreCo). Often, innovation managers face considerable
head winds, when they move strategic experiments out of the incubator into
execution. The Forget, Borrow and Learn challenges from Vijay Govindarajan
and Chris Trimble are helpful in dealing with these headwinds. The framework
was first introduced in the article "Building Breakthrough Business Within
Established Organizations" in the HBR of May 2005. When the model of Govindarajan
and Trimble is applied well, the emphasis in innovation can be shifted to
organizational excellence. In this way the organization is becoming less dependent
on excellent leadership.
According to Govindarajan and Trimble, NewCo must forget
some of what made CoreCo successful, because NewCo and CoreCo have elemental
differences. Furthermore, NewCo must borrow some assets of CoreCo.
This is the biggest advantage NewCO has over independent competitors. Finally,
NewCo must be prepared to learn some things from the beginning.
It is important to notice that the three challenges are complex.
- They are present throughout NewCo's lifecycle.
- They are present all at once.
- They are related.
- They can be at odds.
- They need to be balanced.
Origin of the forget, borrow and learn theory. History
The HBR article by Professor Govindarajan and Professor Trimble was adapted
from their forthcoming book "Ten Rules for Strategic Innovators - from Idea
to Execution".
Usage of the forget, borrow and learn method. Applications
- Guidance on how strategic innovation should be organized within large
firms.
- Decreasing dependence on leadership skills in innovation processes.
Principles of the Forget Borrow Learn framework. Elements
- How to Forget?
- Don't be isolated (insular). Hire outsiders in key management roles
for NewCo and strongly consider an outsider to head the business. Outsiders
challenge institutional memory and are instrumental in building new competencies.
- Don't assign status based on size. NewCo should report at least one
level above CoreCo in order to reduce the pressures on NewCo for short-term
results and to ensure that CoreCo does not hoard resources.
- Rearrange the moving parts. NewCo should reconsider how major business
functions such as marketing and product development interact. Established
patterns of interaction within CoreCo are usually incompatible with the
new business model.
- Build a new dashboard. The company should not base NewCo's performance
on CoreCo's metrics. Doing this reinforces CoreCo's formula for success,
not NewCo's.
- Dare to make complex judgments. The company should not judge the performance
of NewCo's leader too heavily against plans.
- Promote new thinking about success. NewCo's leader should create a
unique set of beliefs about actions that will cause success. And he should
regularly reinforce this set of beliefs. CoreCo's beliefs may not apply
in NewCo's environment.
- How to Borrow?
- Balance the yin of forgetting with the yang of borrowing. Only create
links to lend NewCo a crucial competitive advantage. Avoid links where
conflicts are severe. Avoid links to the IT or Human Resources departments.
- Find common ground. Reinforce values that NewCo and CoreCo share.
In most cases, CoreCo will have some values that are inconsistent with
NewCo's business model. Still, the senior management team can facilitate
cooperation by creating a "metaculture" composed of more general values.
- Be careful what you ask for. To promote collaboration, reconsider
individual targets. Evaluate and reward the managers of CoreCo, in part,
according to their willingness to cooperate with NewCo. Avoid strong incentives
tied strictly to CoreCo's short-term performance.
- Co-opt CoreCo. To eliminate resistance from CoreCo's general manager,
make borrowing as painless as possible so that he can focus strictly on
CoreCo. Replenish CoreCo's resources when NewCo borrows heavily. Set transfer
prices high enough to ensure that CoreCo will consider it a priority to
help NewCo but not so high that NewCo cannot realistically achieve profitability.
NewCo's profitability is a powerful symbol. CoreCo will always be more
enthusiastic about helping when there is evidence that NewCo is succeeding.
- Be alert to problems. Assign a senior executive to anticipate tensions
between NewCo and CoreCo and to intervene should those tensions become
destructive. The senior executive must be willing to spend a lot of time
and energy and must be influential and respected within the corporation.
She must continually explain the rationale for the differences between
NewCo and CoreCo.
- How to Learn?
- Don't try to mix oil with water. Hold separate meetings for evaluating
the business performance of NewCo and CoreCo. These meetings must be handled
very differently, and combining them can be impractical, if not destructive.
- Protect predictions. Ensure that executives involved in NewCo's planning
process understand the importance of improving predictions and are aware
of how this learning process can go astray when predictions are ignored,
are manipulated, or become rigid.
- Avoid being defensive. Evaluate the leader of NewCo not on results
but on his ability to learn and make good decisions. Though accountability
to plans is an effective practice in mature businesses, it can be crippling
in new high-potential businesses. If NewCo's leader is held accountable
to the business plan, he will become defensive once targets are missed.
A highly likely outcome in any strategic experiment. It will be difficult
for him to be open and candid. He may even hide information, perhaps even
taking the senior management team out of the learning process altogether.
- Perform less, faster. Simplify the plans. But plan more often. Each
cycle through the planning process creates an opportunity to learn, therefore
more frequent planning increases the speed of learning. To make a higher
frequency practical, plans must be simplified. Detailed plans (broken
down by region, product line, sales channel, and so forth) are useful
for mature businesses, but NewCo should focus on resolving critical unknowns,
which can be accomplished at a more aggregate level.
- Analyze through a new lens. Compare predicted and actual trends. Because
strategic experiments are dynamic, the pace of changes is often more valuable
information than current results.
- You should measure what you don't know. Identify metrics that are
most useful in resolving critical unknowns. These are usually nonfinancial
measures and are rarely the most closely monitored metrics at CoreCo.
Strengths of the Forget, Borrow and Learn method. Benefits
- Framework provides advice on a very difficult and important challenge
within large firms.
- Helps innovation in organizations, which will result in stimulation
of the economy.
- Provides guidance on how strategic innovation should be organized within
large firms.
- The framework decreases resistance in organizations.
- It helps to decrease dependence on leadership skills in innovation processes.
There is shortage of such skills.
Limitations of the forget, borrow and learn theory. Disadvantages
- Even when this framework is used to its full capacity, the problem it
was designed for will likely remain.
- The framework helps to decrease, but not to end the need for strong
leadership in innovation.
- The three challenges are sometimes at odds, they are interrelated and
they must be balanced.
Assumptions of the forget, borrow and learn framework. Conditions
- Strategic experiments constitute the highest-risk, highest-return category
of innovation and require a unique managerial approach.
- A new business with high growth potential rarely coexists harmoniously
with established Business Units.
- Through improving the capabilities of the organization surrounding the
innovation leader, his work can be made easier.
Book: Govindarajan,
Trimble - Ten Rules for Strategic Innovators - from Idea to Execution -
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Compare with the Forget Borrow Learn approach:
Stage-Gate |
Business Process Reengineering |
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