thnk innovative enterprise essentials
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INNOVATIVEENTERPRISEESSENTIALS
INNOVATIVE ENTERPRISE ESSENTIALSCopyright © 2013 by THNK. THE AMSTERDAM SCHOOL OF CREATIVE LEADERSHIP. All rights reserved.
The material in this handbook has been developed for educational purposes only by THNK. THNK has made its best efforts to give appropriate credit to the various materials used in this book, however in addition THNK wishes to acknowledge these materials and the respective authors.
ISBN 978-1-291-67398-2
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OVERVIEW
BIG VISION TOP TALENT
OVERVIEW 7
THREE HORIZONS 85
BIPOLAR FOCUS 93
MOEBIUS RING 99
INNOVATION PLAYS 108
ORCHESTRATING TEAMS 135
TALENT MAKE AND BUY 144
CULT OF INNOVATOR ROCK STAR 150
GOVERNANCE HEADROOM 156
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INDEX
EXTERNAL ORIENTATION
SELF ORGANIZING SYSTEMS 164
LEARNING LOOPS 175
LEVERAGE THE CROWD 185
PATIENT FUNDING 199
TRENDS & SIGNALS 56
CUSTOMER DIALOGUE 62
SPARKLING PARTNERSHIPS 69
LEVERAGED TAILWIND 78
INNOVATION SYSTEMS
WILL TO INNOVATE
INNOVATORS DNA 31
RENEWAL MUST 37
INNOVATION CONGRUENCE 45
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Businesses become obsolete at an ever increasing speed. This is driven by forces like new technology breakthroughs, drastic shifts in customer needs and market trends and competitors pushing the productivity frontier or industry disruptors. Some companies have the natural drive and thrill for innovation but others struggle to sustain growth being unable to renew their business before it becomes outdated
At THNK, we believe that build industry leadership through innovation and that the ability of a company to innovate can be deliberately orchestrated. We work with leading global companies on realizing innovation at scale. Even though some spontaneous innovation does happen and some leaders seem to be born as idea generators, we have discovered from our collaborations with entrepreneurs, corporates and in-depth research that continuous innovation requires a congruent approach between creative leadership, strategy, and organization. We framed these in 5 essential characteristics that determine whether your organization can innovate on an ongoing basis
This book covers these 5 essentials in detail. Each essential provides you with a framework to guide your thinking on innovation, highlights the most critical insights for successful adaptation and offers you tools to develop and test your ideas before putting these into practice. The essentials can be worked with on an individual basis, though they will come best to life as part of a THNK program
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INTRODUCTION
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Three horizonsMoebius ringBipolar focusInnovation plays
Leveraged tailwindTrends & signalsCustomer dialogueSparkling partnerships
Self organizing systemsLearning loopLeverage the crowdPatient funding
Innovators DNARenewal mustInnovation congruence
Orchestrating teamsTalent make and buyCult of innovator rock starGovernance headroom
INNOVATIVE ENTERPRISE ESSENTIALS
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Essentials follow a standard format to facilitate ease of use and cater to different learning styles: WHEN NEEDED: highlights 2-3 situations when the essential is particularly relevant
ESSENCE: describes the framework to guide your thinking
KEY INSIGHTS: synthesizes the key insights for successful adaptation
TOOL: provides a model to develop and test your ideas before putting them into practice
FRAMEWORK: describes a basic structure or frame to support your thinking arrount this essential
SOURCES: provides a list of references for more information
HOW TO USE THIS BOOK
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OVERVIEW
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A brief outline of each of the 5 innovative enterprise essentials
8 OVERVIEW
“INNOVATION is the application of new solutions that meet new or existing market needs - something original, new, and important - in whatever field - that breaks in to a market or society”
Innovation differs from invention in that innovation refers to the use of a better and, as a result, novel idea or method, whereas invention refers more directly to the creation of the idea or method itself
Innovation differs from improvement in that innovation refers to the notion of doing something different rather than doing the same thing better
Source: Innovation. Wikipedia. 02 December 2013www.en.wikipedia.org/wiki/Innovation
> DEFINITION OF INNOVATION
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9OVERVIEW
> INNOVATION WITHIN GROWTH
ALLOCATING RESOURCES TO MARKET SEGMENTS THAT GROW
AUTONOMOUSLY
CONTINUOUS SERVICE IMPROVEMENT AND PRODUCT
RENEWAL
BREAK-THROUGH INNOVATION (INVENTING AND APPLYING
NEW PRODUCT MARKET SOLUTIONS OR NEW BUSINESS
MODELS)
SYNERGISTIC OR MARKET CONSOLIDATION ACQUISITIONS
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The market demands innovative new solutions that work much better and can be offered at much lower cost and burden on society and planet
Innovation is the only escape out of the commodity trap of mature markets with aggressive competitive pricing
Technology development progresses at neck breaking pace and triggers a constant flow of break-through innovation opportunities
Creative destruction continues to reduce the expected lifespan of corporations; innovation leading to continuous renewal and adaptability is required to avoid being outplaced
The best, most entrepreneurial, most future-oriented people want to work on innovations; if they cannot use the corporate platform to build new opportunities to scale, they leave
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> IMPORTANCE OF INNOVATION
OVERVIEW - WHY INNOVATE?
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> STRONG DEPENDENCE ON INNOVATION FOR LONG TERM STRATEGY SUCCESS
Source: Koetzier, W., and Alon, A. Retrieved 2013, from Accenture www.accenture.com/SiteCollectionDocuments/PDF/Accenture-Why-Low-Risk-Innovation-Costly.pdf
OVERVIEW - WHY INNOVATE?
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> PREEMPTING CREATIVE DESTRUCTION
Source: Foster, R., and Caplan, S. “Creative Destruction: Why companies that are built to last underperform the market – and how to successfully transform them”. Doubleday/Currency, 2001
OVERVIEW - WHY INNOVATE?
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> EXITS
Source picture: Foster, D. Retrieved December, 2013, from Innosight wwww.innosight.com
OVERVIEW - WHY INNOVATE?
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> MOST ENTERPRISES NEED TO GET BETTER AT INNOVATION
Source: McKinsey Global Innovation Surveywww.mckinsey.com
PERCENTAGE OF GLOBAL EXECUTIVES WHO AGREE (%)
INNOVATION IS IMPORTANT TO OUR GROWTH STRATEGY
84%
OUR BUSINESS MODELS ARE AT RISK
80%6%
WE ARE SATISFIED WITH OURINNOVATION PERFORMANCE
OVERVIEW - WHY INNOVATE?
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> WHERE DOES YOUR COMPANY STAND ON INNOVATION?
DO YOU HAVE A VISION WHERE AND HOW TO CREATE A TOTALLY NEW-TO-
WORLD BUSINESS?
DOES YOUR COMPANY SPEND
MORE TIME LEARNING OUTSIDE
THAN INSIDE? DOES YOUR COMPANY HAVE THE STRUCTURE
AND CULTURE FOR RISK RAKING, AND SMART
FAILURE?
DOU YOU HAVE A POOL OF INNOVATOR TOP TALENT IN YOUR
RANKS?
DOES YOUR COMPANY HAVE
THE URGENT DRIVE TO CONTINUOUSLY
INNOVATE?
OVERVIEW - WHY INNOVATE?
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> WHAT IS THE TRADE-OFF THAT YOU MAKE?
In a survey of 400 CFOs 80% stated “they would reduce discretionary spending on potentially value creating activities in order to meet short term earnings targets”
Source: The Boston Consulting Group’s Report on Innovation. Retrieved December, 2011, from The Boston Consulting Group
OVERVIEW - WILL TO INNOVATE
Do you accept the dicotomy between short term results and opportunity creation?>
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> ESSENCE
Either having passion for ongoing innovation in the “DNA” of the organization or having the understanding that constant renewal is a must to survive and prosper. The behaviors need to be congruent with the “will to innovate” throughout all layers of the organization, in words, actions and values, across all stages of the economic cycle
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OVERVIEW - WILL TO INNOVATE
Innovators DNARenewal mustInnovation congruence
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> DO YOU RISK DELIVERY MISPERCEPTION?
Source: Bain & Companywww.bain.com
OVERVIEW - EXTERNAL ORIENTATION
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> ESSENCE
Being externally orientated as main source for new ideas and best hunting ground for future opportunities. Including participating in privileged customer dialogues and co-creation, adapting quickly to trends and market signals, priority presence in growth markets and venturing with like-minded partners and start-ups with complementary skills and experiences
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OVERVIEW - EXTERNAL ORIENTATION
Leveraged tailwindTrends & signalsCustomer dialogueSparkling partnerships
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> DO YOU STRUGGLE TO MAKE YOUR INNOVATION VISION COMPELLING?
Source: Richard Bransonwww.virgin.com
OVERVIEW - BIG VISION
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> EXAMPLE SIMPLE VISION: SOLAR AND WIND PROVIDING ALL POWER FOR EU
Source: www.sciencedirect.com, THNK analyses
OVERVIEW - BIG VISION
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> AND DOES YOUR INNOVATION VISION LACK SOCIAL RELEVANCE?
Source Picture: Sunni Brownwww.sunnibrown.com
“People are seldom motivated by a numbers based story. Occasionally (but not nearly often enough) organizations tell a change story related to the individual’s passion or purpose (“what is in it for me”). Seldom do they tell a change story related to impact on society, the customer, or the team”
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OVERVIEW - BIG VISION
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Having a clear vision for the “next big thing”. It builds on the current strengths, translates into a serious investment commitment, combines societal and economic value, provides direction to short term actions still providing some optionality. It leverages innovation plays like either technology, consumer insight or business model disruption
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OVERVIEW - BIG VISION
> ESSENCE
Three horizonsMoebius ringBipolar focusInnovation plays
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> DO YOU LACK APPEAL TO INNOVATION TALENT?
Source: Steve Bankwww.stevebank.com
OVERVIEW - TOP TALENT
SUPERSTAR MANAGER OF PLANS, GOALS, PROCESS, AND PERSONNEL
24/7 LONG TERM 9 TO 5
OPPORTUNISTIC & AGILE PROCESS-, AND GOAL-DRIVEN
HATES AND ELIMINATES IMPLEMENTS AND USES
AUTOCRATIC, STAR SYSTEM MAY BE BUREAUCRATIC
HANDS-ON DISTRIBUTED DOWN THE ORGANIZATION
HIGH AND PASSIONATE VISION EXECUTION
BRINGS ORDER OUT OF CHAOS FOCUSES ON REPEATABILITY
CEO’S PERSONAL CONTRIBUTION
CEO’S PERSONAL CONTRIBUTION
PLANNING
PROCESS
FOCUS
MANAGEMENTSTYLE
SPAN OF CONTROL
UNCERTAINTY/CHAOS
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SCALABLE STARTUP
ENTREPRENEURIAL-DRIVEN LEARNINGAND DISCOVERY
LARGE COMPANY
PROCESS-MANAGED EXECUTION AND GROWTH
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Ensuring the organization nurtures, attracts and protects “ innovation super stars” – the individual innovation super stars that will take the risks, and “break the eggs” to eventually make innovations happen - and allows them to orchestrate strong creative teams around them
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OVERVIEW - TOP TALENT
> ESSENCE
Orchestrating teamsTalent make and buyCult of innovator rock starGovernance headroom
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> ARE YOU PLUGGED IN CO-CREATION NETWORKS?
Source: McKinsey & Companywww.mckinsey.com
OVERVIEW - INNOVATION SYSTEMS
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Organizing the company into innovation projects and ventures , with tracking systems that stimulate risk taking, smart failures, learning and improvement, that leverage the wisdom and insights from the entire organization , customers and suppliers, and are fueled with patient funding
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OVERVIEW - INNOVATION SYSTEMS
> ESSENCE
Self organizing systemsLearning loopLeverage the crowdPatient funding
28 OVERVIEW
> UNDERLYING INNOVATIVE ENTERPRISE ESSENTIALS
Three horizonsMoebius ringBipolar focusInnovation plays
Orchestrating teamsTalent make and buyCult of innovator rock starGovernance headroom
Leveraged tailwindTrends & signalsCustomer dialogueNeue Kombinationen
Self organizing systemsLearning loopLeverage the crowdPatient funding
Innovators DNARenewal mustInnovation congruence
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Either having passion for ongoing innovation in the “DNA” of the organization or having the understanding that constant renewal is a must to survive and prosper. This will to innovate needs to be congruent through the different layers of the organization, between words and action and across the economic cycle
WILL TO INNOVATE
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30 WILL TO INNOVATE OVERVIEW
INNOVATION CONGRUENCE
To realize successful innovation requires commitment from the top and congruence “talk and walk”
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INNOVATORS DNA RENEWAL MUST
Some enterprises have the natural drive to innovate, with creativity in their DNA and as a core element in the culture. This coincides with high expectations from all stakeholders
Enterprises have to constantly reinvent themselves to avoid withering away. Business models become obsolete at an increasing speed, driven by technology breakthroughs, market developments and other competitions
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INNOVATORS DNA SOME ENTERPRISES HAVE THE NATURAL DRIVE TO INNOVATE, WITH CREATIVITY IN THEIR DNA AND AS CORE ELEMENT IN THE CULTURE. THIS COINCIDES WITH HIGH EXPECTATIONS FROM ALL STAKEHOLDERS
“I think that our investors value our innovative efforts, but am not sure how to measure it”
“We spend all our time on managing the current wave of success”
“We had one great hit, but we don’t have any new ideas in the pipeline”
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> ESSENCE: INTRINSIC PUSH AND EXTERNAL PULL
INNOVATORS DNA
Company drive
> “We invented Post-its”
> “We brought you the iPhone”
> “We dreamt up “Big Brother” and “Deal or No Deal”
External expectations
> Enterprise value (market cap + debt)
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Note: Walmart was listed on nr. 20 in the BCG report “The most innovative companies 2012”
Source: Wal-Mart Stores Inc. (WMT). Retrieved December 4, 2013, from Yahoo! Finance www.finance.yahoo.com/q/ks?s=WMT
Intrinsic drive and external expectations should coincide
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> KEY INSIGHTS: EXAMPLES OF INNOVATORS PREMIUM
INNOVATORS DNA
1: Unilever Heavy Electricals
Source: Holt and The Innovator’s DNA LLC.
THE WORLD’S MOST INNOVATIVE COMPANIES(RANKED BY INNOVATION PREMIUM AVERAGE 2005-2009)
1 SALESFORCE.COMCLOUD COMPUTING SOFTWARE
73%
2 INTUITITIVE SURGICALDA VINCI SYSTEM ROBOTS FOR SURGERIES
64%
3 AMAZON.COMONLINE DISCOUNT RETAILER, KINDLE, CLOUD COMPUTING
57%
4 CELEGENE CORP. PHARMACEUTICALS 55%
5 APPLECOMPUTERS, SOFTWARE, MUSIC DEVICES, PHONES, ETC.
52%
6 GOOGLESOFTWARE, PRIMARILY FOR INFO RETRIEVAL (E.G., SEARCH)
49%
7 HINDUSTAN LEVER1 HOUSEHOLD PRODUCTS 47%
8 RECKITT BENCKISER GROUP HOUSEHOLD PRODUCTS 44%
9 MONSANTO CO.SEEDS, GENETICALLY MODIFIED SEEDS, CORP PROTECTION
44%
10 BHARAT HEAVY ELECTRICALS ELECTRICAL EQUIPMENT 44%
RANK COMPANY NAME INDUSTRY/KEY BUSINESSES INNOVATION PREMIUM
34 INNOVATORS DNA
> KEY INSIGHTS: ONLY THE NEXT BREAK THROUGH COUNTS
Source Picture: Baekdal, T. Retrieved June 14, 2013, from Baekdal.com www.baekdal.com/insights/understanding-change-and-predicting-trends
The innovator’s DNA has to be constantly nourished and re-established>
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> TOOL: ALLOCATION OF INNOVATION BUDGET TO THREE CATEGORIES
INNOVATORS DNA
EXISTING BUSINESSIMPROVEMENT
NEW-TO-COMPANY PRODUCT LINE EXTENSIONS
NEW-TO-WORLD PRODUCT INVENTIONS
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READING VIDEO
INNOVATORS DNA
The most innovative companies 2012, The state of the art in leading industries, BCG
Google logic: why Google does the things it does the way it does, The guardian, July 2013www.guardian.co.uk/technology/2013/jul/09/google-android-reader-why?
The Innovator’s DNA: Mastering the Five Skills of Disruptive Innovators, by Jeff Dyer, Hal Gregersen, Clayton M. Christensen, 2011
Jeff Bezos: Lessons to Learn from a Failing Businesswww.youtube.com/watch?v=rOteo4IARgw
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RENEWAL MUST ENTERPRISES HAVE TO CONSTANTLY REINVENT THEMSELVES TO AVOID WITHERING AWAY. BUSINESS MODELS BECOME OBSOLETE AT AN INCREASING SPEED, DRIVEN BY TECHNOLOGY BREAKTHROUGHS, MARKET DEVELOPMENTS AND OTHER COMPETITIONS
“We have been in this business for years, nothing to worry about”
“We still have a steady cash flow so nobody seems to care about innovation”
“We are the market leader, so little to worry about”
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> ESSENCE: INNOVATE CONTINUOUSLY
TRADITIONAL LOGIC
MARKETGROWTH
MARKETMATURITY
MARKETDECLINE
CURRENT WORLD
CONTINUOUSINNOVATION
Need to constantly innovate to avoid withering away>
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> ESSENCE: SUSTAINING GROWTH IS HARD TO DO
RENEWAL MUST
Source: Donald, L., Doz, Y., and Sheer, C. Retrieved May, 2006, from Harvard Business Review www.hbr.org/2006/05/creating-new-growth-platforms/ar/1
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RENEWAL MUST
Traditional logic was to innovate when the market started to decline; the new prevailing logic is to innovate continuously
Growth projections of a few innovations get inflated, leading to making large expenses at early stages. Instead, start with small investments and demand early success to profitability
Create an innovation pipeline that is balanced in terms of diversity in timing, size, riskiness and type of innovation. The chance of finding the next big opportunity is largely a function of how many seeds one sows
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> KEY INSIGHTS: AVOID THE GROWTH GAP
RENEWAL MUST
Source: Christensen, C., and Raynor, M. Retrieved September 3, 2003, from Harvard Business Review www.hbr.org/product/there-is-good-money-and-there-is-bad-money/an/1545BC-PDF-ENG
Avoid the vicious cycle resulting from waiting too long>
42 RENEWAL MUST
> KEY INSIGHTS: A THICK AND BALANCED INNOVATION PIPELINE
Source: Innovation in Consumer Products: New products from concept to launch. Retrieved 2008, from Accenture www.accenture.com/SiteCollectionDocuments/PDF/ConsumerProductsGroupPoV_103008_fnl.pdf
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> TOO: A BALANCED PORTFOLIO
RENEWAL MUST
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READING VIDEO
RENEWAL MUST
Creating new growth platforms. Harvard Business Review, May 2006
Business model innovation, BCG, December 2009
Profit From The Core , Harvard Business School Press, 2001
Winnovation - 5 ways to improve your innovation pipelinewww.talarforum.se/artikel/rowan.gibson/236/236/winnovation_5_ways_to_improve_your_innovation_pipeline.html
AMCF Horizon Series: Strategy Thought Leaders Define Strategywww.youtube.com/watch?v=0JyRXpYFIcg&feature=youtube_gdata_player
Professor Richard Rumelt : What is Good Corporate Strategy?www.youtube.com/watch?v=43kZDnyDXOc
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INNOVATION CONGRUENCE TO REALIZE SUCCESSFUL INNOVATION REQUIRES COMMITMENT FROM THE TOP AND CONGRUENCE: “TALK AND WALK”
“They say that innovation is important, but our leaders aren’t interested of the latest technologies”
“Whenever I want to do a small experiment, I need to get 10 approvals and everybody is afraid of failure”
“Our values don’t stimulate any dialogue, it is more follow what you are told”
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INNOVATION CONGRUENCE
Congruence comes in several forms:
> Translating innovation and growth vision into actual investments at risk
> The leadership behaviors, demonstrating that innovation is valued through symbolic actions, e.g. promoting innovation leaders who experienced entrepreneurial failure
> Recruiting and capability building oriented to creativity, innovation, entrepreneurship and risk taking
> Metrics and rewards that stimulate behavior innovation and risk taking, e.g. Tracking and rewarding new product revenues instead of total revenues
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> KEY INSIGHTS: DEMONSTRATE THAT INNOVATION IS IMPORTANT
INNOVATION CONGRUENCE
Source Picture: 10 business cases for CEOs to use social media. Retrieved June 20, 2013, from Arikhanson.com www.arikhanson.com/2013/06/20/10-business-cases-for-ceos-to-use-social-media/
48 INNOVATION CONGRUENCE
> KEY INSIGHTS: CREATE THE RIGHT MINDSET
Develop appropriate mindsets towards risk and smart failure
> At Google, Sheryl Sandberg made a bad decision costing millions of dollars. Co-founder Larry Page responded:
> “I’m so glad you made this mistake, because I want to run a company where we are moving too quickly and doing too much, not being too cautious and doing too little. If we don’t have any of these mistakes, we’re just not taking enough risk”
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Source Picture: Official Logo of Google, Inc.Trademark and Website. Retrieved November, 2013, from Wikimedia www.commons.wikimedia.org/wiki/File:Logo_Google_2013_Official.svg
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> KEY INSIGHTS: EMBED INNOVATION VALUES
INNOVATION CONGRUENCE
Source: Prokesch , S. How GE Teaches Teams to Lead Change. Retrieved January, 2009, from Harvard Business Review www.ge.com/pdf/innovation/leadership/hbr_crotonville.pdf
50 INNOVATION CONGRUENCE
> KEY INSIGHTS: INSTALL THE RIGHT METRICS
Source: Innovation Performance Measurement – Assessing and Driving the Innovation Performance of Companies. Retrieved January, 30, 2013, from Detecon Consulting www.innovationcenter.deteconusa.com/articles/innovation-performance-measurement-assessing-and-driving-the-innovation-performance-of-companies/
> Innovation strategy & vision e.g. contribution of innovation to top-line growth
> Innovation leadership & commitment e.g., leadership time and funds dedicated to innovation
> Innovation skills and culture e.g., % of time spent with customers
> Innovation process e.g., Net Promoter Score of new concepts
> Innovation pipeline e.g., e.g., overlap of portfolio with vision in terms of time, risk, size and innovation type
> Portfolio and project management: Conversion rate of ideas to profitable projects, availability of key resources
> Innovators premium e.g., revenue and profit from new products or services, raking in top X of most-innovative companies
> Customer feedback e.g., customer satisfaction of new products or services
> Contribution to business growth: positive ROI on innovation
Measure the innovation outputs, not the process (which is ugly)>
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> FRAMEWORK: THNK INNOVATION CHANGE FRAMEWORK
INNOVATION CONGRUENCE
Make innovation a critical part of your growth vision and select the most promising innovation plays
Make innovation a critical part of your growth vision and select the most promising innovation plays
Build leaders that role model innovation and build innovation capabilities through tools and techniques
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> FRAMEWORK: THNK INNOVATION CHANGE FRAMEWORK - EXAMPLES
INNOVATION CONGRUENCE
Set-up time for external orientation among all executives and managers (more time for sensing) Commit to a visioning journey with all stakeholders involved over the course of 1-2 years
Hire edgy external creative talent and put in leadership positions before their ageInvest in technology skills in most relevant areasAdopt concepting design methodologiesReduce hierarchy and internal bureaucracy to foster entrepreneurshipPut innovation success in KPI’s
De-couple investments in innovation from short term variability and earningsAllocate substantial senior executive time on innovationUndertake an innovation challenge project with the organization involved on a wider societal project
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READING VIDEO
Encouraging organizations to change: The influence model, 2011, Colin Price
The inconvenient truth of change management , 2000, Scott Keller and Carolyn Aiken
Its not what you sell, it’s what you stand for, Roy Spencewww.itsnotwhatyousell.com
Giving voice to values, Mary C. Gentile
The Innovator’s DNA: Mastering the Five Skills of Disruptive Innovators, Jeff Dyer , Hal Gregersen , Clayton M. Christensen, Mel Foster
Innovation metricswww.innovation-point.com/innovationmetrics.htm
IBM iForum - Rethinking Innovation Measurement by Dean Spitzer
Change Management - 30-Second Management Training Coursewww.youtube.com/watch?v=fpuHUiy_xog&feature=youtube_gdata_player
Leadership training and change managementwww.youtube.com/watch?v=c-B2vOmuzOg&feature=youtube_gdata_player
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INNOVATION CONGRUENCE
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Being externally orientated, resulting in privileged customer dialogue and co-creation, adapting quickly to trends and market signals, priority presence in growth markets and venturing with like-minded partners with complementary skills and experiences
EXTERNAL ORIENTATION
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55EXTERNAL ORIENTATION OVERVIEW
LEVERAGED TAILWIND
Focus on market opportunities that are in a growth window and take advantage of the resulting momentum; or renew a market that is shrinking with a break-through innovation
SPARKLING PARTNERSHIPS
TRENDS & SIGNALS
Innovation partnerships aim not so much for synergy but for a creative spark between two literacies, two sets of capabilities, two worlds of experience
Openness to uncertain trends and weak signals increases the probability of a serendipitous insight on opportunity spaces and most attractive hunting grounds
CUSTOMER DIALOGUE
Innovation needs to meet customer needs, but in surprising new ways that will not emerge from simply asking the customer what he or she wants
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TRENDS & SIGNALS OPENNESS TO UNCERTAIN TRENDS AND WEAK SIGNALS INCREASES THE PROBABILITY OF A SERENDIPITOUS INSIGHT ON OPPORTUNITY SPACES AND MOST ATTRACTIVE HUNTING GROUNDS
“For market research, we have default, automated set of data that we collect to get new insights”
“I don’t have time to look at any other materials outside of work”
“We are in execution mode now, we need to focus on optimization – trends aren’t that important”
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57TRENDS & SIGNALS
> KEY INSIGHTS: MEGA TRENDS ARE PARAGDIGM SHIFTS
Source: THNK Paradigm Shiftswww.thnk.org
The world is complex and uncertain: inspiration for innovation results from being open to contrary and surprise insights, the unusual news and disturbing information
The certain trends and the consistent signals only serve to continue the existing business
Examples of a few megatrends (THNK Paradigm Shifts)
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58 TRENDS & SIGNALS
> KEY INSIGHTS: “WEAK SIGNALS” HAVE A PATTERN
DAILY VARIATION IN JOB ADVERTISEMENTS INCREASING SHARE IN IT JOB ADVERTISEMENTS
NEWS ARTICLESAMOUNT OF ATTENTION IN GLOSSARIES, SEARCH VOLUME
SCIENTIFIC ARTICLES ACCUMULATION OF VC INVESTMENTS
START OF UPSWING IN THE ECONOMY
NEW TECHNOLOGY TREND
ILLUSTRATION
NEW CUSTOMER TREND E.G. SPIRITUALITY
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NOISE (RANDOM) WEAK SIGNALS (PATTERNS)
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> KEY INSIGHTS: OTHER PLAYERS AS SOURCE OF WEAK SIGNALS
TRENDS & SIGNALS
Southwest Airlines, a leading US budget airline, has viewed the car and bus as its competitors and thereby focused on offering inexpensive, frequent flights between urban centres separated by 500 miles or less. Short-haul, point-to-point flying however puts greater physical stress on aircraft, adds to maintenance costs and increases aircraft time on the ground which is non-revenue producing time. To overcome these disadvantages, Southwest Airlines has pursued a number of operating strategies:
> Strong focus on turning aircraft around quickly so as to minimize time on the ground. This has required strong cross-functional collaboration among pilots, gate agents, mechanics, fuelers, cleaners, caterers and others
> Standardizing on one single operating platform – the Boeing 737 – and aligning as far as possible all Standard Operating Procedures for these aircraft over time
> Using less congested airports close to big urban centers – such as Dallas’ Love Field or Chicago’s Midway – to avoid delays from using congested hubs
> Radically limiting customer services, from on-board meals to advanced seat selection, to reduce operational complexity and cost
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Source Picture: JetBlast. Retrieved August 31, 2012, from Wikipedia www.en.wikipedia.org/wiki/File:Southwest_Airlines_Logo.png
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> TOOL: EXTERNAL ORIENTATION SURVEY
TRENDS & SIGNALS
WE HAVE A CLEAR VIEW ON THE MAJOR 3-5 TRENDS AND DO A GOOD JOB IN DEFINING THE POSSIBLE OPPORTUNITIES AND THREATS FOR OUR BUSINESS?
WE ARE OPEN TO AND IDENTIFY WEAK SIGNALS FROM THE MARKETS ABOUT THE FUTURE TRENDS?
WE HAVE FREQUENT, CASUAL DIALOGUES WITH USERS THAT FORM THE BASIS FOR UNDERSTANDING WHAT THEY VALUE MOST?
OFTEN NEW IDEAS OR INSIGHTS ARE A SPIN-OFF FROM SUGGESTIONS IN THE MARKET?
WE ARE UP TO SPEED TO WHAT COMPETITORS DO IN THE INNOVATION SPACE AS SOURCE FOR DIFFERENTIATION, INNOVATION AND POSSIBLE PARTNERSHIPS?
WE MAKE USE OF SOCIAL MEDIA AND LEVERAGE THE CROWD TO UNDERSTAND WHAT IT VALUES MOST?
WE MAINTAIN STRONG RELATIONSHIPS WITH VARIOUS STAKEHOLDERS E.G., COMMUNITIES, GOVERNMENTS, REGULATORS?
SURVEY FOR THE TEAM - QUESTIONS TO ASK YOURSELFSTRONGLYDISAGREE DISAGREE NEUTRAL AGREE
STRONGLYAGREE
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READING VIDEO
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Harvard Business School: How can big companies keep the entrepreneurial spirit alive?
Harvard Business School case study: Innovation and Collaboration at Merrill Lynch
INSEAD case study: Transforming DNV: From Silos to Disciplined Collaboration across Business Units – Changes at the Top
The Conference Board: The entrepreneurial flame: How to keep it burning brightly in your company?
IDEO workshop for techstarswww.slideshare.net/thulme/ideo-workshop-for-techstars?
Trend Watchingwww.trendwatching.com
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TRENDS & SIGNALS
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CUSTOMER DIALOGUE INNOVATION NEEDS TO MEET CUSTOMER NEEDS, BUT IN SURPRISING NEW WAYS THAT WILL NOT EMERGE FROM SIMPLY ASKING THE CUSTOMER WHAT HE OR SHE WANTS
“I know that our product is good, the customer just still has to discover how to best use it”
“You need to measure stuff – focus on the quantitative data”
“As we know, it is more a push than a pull market”
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> ESSENCE: MEETING CUSTOMER NEEDS IS CRUCIAL FOR INNOVATION
CUSTOMER DIALOGUE
Source: Innovation in consumer products. Retrieved 2008, from Accenture www.accenture.com/SiteCollectionDocuments/PDF/ConsumerProductsGroupPoV_103008_fnl.pdf
Reasons cited for failure of new products, %>
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> KEY INSIGHTS: LISTENING IN GIVES VERY DIFFERENT CLUES
CUSTOMER DIALOGUE
Source: Nielsen McKinsey Incite
Example: customer research on diapers - survey vs. online dialogue>
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Customers...
> often have trouble articulating their unmet needs
> rarely have a clue why they do what they do
> do not tell the truth
> and rarely know what novel products and services they would crave for, if only they knew all possibilities that existed and had experience with these
>
Source Picture: Retail prophet consulting
> KEY INSIGHTS: MARKET RESEARCH IS NOT ENOUGH
CUSTOMER DIALOGUE
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Desired customer paths often deviate from the paths as designed by the architect and usually represents the shortest or most easily navigated route between an origin and destination
How flexible do you think the architect is to change his design and follow the preferences of the users?
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Source Picture: The gentle author. Retrieved August 16, 2012, from Spitalfields life www.spitalfieldslife.com/wp-content/uploads/2012/08/IMG_2244.jpg
> KEY INSIGHTS: WHO FOLLOWS THE USER BREAKING FREE?
CUSTOMER DIALOGUE
67CUSTOMER DIALOGUE
> TOOL: USER INSIGHT AND FORESIGHT TOOLS
Source: THNK Concepting Flowwww.thnk.org
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READING VIDEO
CUSTOMER DIALOGUE
The customer’s voice. Why are we so bad ad hearing it? BCGwww.bcg.com/documents/file35167.pdf
Innovation in Consumer products, Accenture, 2008www.accenture.com/SiteCollectionDocuments/PDF/ConsumerProductsGroupPoV_103008_fnl.pdf
Understanding change and predicting trendswww.baekdal.com/insights/understanding-change-and-predicting-trends/
Why we’re so bad at predicting the futurewww.venturevillage.eu/predicting-future
Why I brought PacMan to Momawww.ted.com/talks/paola_antonelli_why_i_brought_pacman_to_moma.html
Malcolm Gladwell: Choice, happiness and spaghetti saucewww.ted.com/talks/malcolm_gladwell_on_spaghetti_sauce.html
The Power of Habit Why We Do What We Do in Life and Businesswww.youtube.com/watch?v=a6p3lG9EDXw
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SPARKLING PARTNERSHIPS INNOVATION PARTNERSHIPS AIM NOT SO MUCH FOR SYNERGY BUT FOR A CREATIVE SPARK BETWEEN TWO LITERACIES, TWO SETS OF CAPABILITIES, TWO WORLDS OF EXPERIENCE. SCHUMPETER CALLS THIS “NEUE KOMBINATIONEN”
“We do all our development in-house”
“We really struggle to build competitive advantage by partnering with externals”
“Whenever we partner, we don’t really have a clear added value or approach identified – it is more random”
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> ESSENCE: A COMPLEMENTARY COMBINATION
SPARKLING PARTNERSHIPS
Source Pictures: www.starbucks.com , www.pepsico.com
Company: An international coffee and coffeehouse chain
Contributions: Most influential and recognized brand for coffee drinks
Win: Brand extension, capacity building, and access to know-how that fueled subsequent growth and drove the creation of other JVs. E.g., ice cream partnership with Dreyers Grand ice cream
Company: A global 500 company active in manufacturing, marketing, and distribution of snacks and beverages in 200 countries
Contributions: Well-established manufacturing and distribution channels Win: Successful extension into new product market with reduced risk and cost than go-alone
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Red Bull, as a company, is all about creativity, innovation, and doing things differently, which is what Red Bull Racing shares
It takes a completely different approach to Formula One and offers partners the ability to make their sponsorship come alive – to create something people will remember and gravitate toward
It tries to open up the possibilities, not restrict the partners. It creates value streams for partners in addition to those normally associated with Formula One, allowing them to exploit rights in interesting and unusual ways
It is a premium sponsorship opportunity, dedicated to working with a small number of partners – with the relationships based on creativity and innovation – so that they gain maximum benefit from the cooperation
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Source Picture: Partnerships a team-building exercise. Retrieved November, 2013, from Red Bull www.redbull.com/cs/Satellite/en_INT/Red-Bull-Racing-Partners/001242811070589
> KEY INSIGHTS: “UPWARD MARRIAGE”, PARTNERS OF BEST CHOICE
SPARKLING PARTNERSHIPS
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Partnerships with venture capital firms > Benefits for VCs: Insight in market attractiveness,
commercialization viability, path to exit > Benefits for company: Insight in innovations, opportunity to
buy in early on, expand deal flow and network, great source for innovation opportunities
> Example: P&G serves as a strategic partner for clean-tech sector of VantagePoint
Partnerships with experts/academic institutions > Benefits for academic institution: Increased funding, facilities,
capabilities > Benefits for company: Access to cutting-edge and academic
research > Example: Unilever invested more than £13mn to establish
a world-leading research group in Cambridge, chemistry department in emerging field of molecular informatics
Partnerships with suppliers > Benefits for supplier: Guaranteed volumes, control over supply
chain > Benefits for company: Discount on procurement; no need to
integrate upstream > Example: Green Giant, vegetable producer, partnered with
Seneca, processor of canned foods
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Source Pictures: www.pg.com , www.vpcp.com , www-ucc.ch.cam.ac.uk , www.greengiant.com , www.senecasnacks.com
> KEY INSIGHTS: THINK BROAD ABOUT POSSIBLE PARTNERSHIPS
SPARKLING PARTNERSHIPS
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> ESSENCE: STRATEGIC FIT IS ONLY ONE CRITERIA
SPARKLING PARTNERSHIPS
Source: www.lilly.com
Example: JV assessment framework used by Lilly>
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> TOOL: IP NETWORK MAPPING
SPARKLING PARTNERSHIPS
Source: McKinsey & Companywww.mckinsey.com
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> TOOL: INNOVATION PARTNERSHIP CURRENCIES (1/2)
SPARKLING PARTNERSHIPS
FINANCIAL SUPPORT
COINVESTMENT ACCELERATE PROCESS ACCESS TO CAPITAL
JOINT VENTURESECURE ACCESS AND/OR OWNERSHIP OF STRATEGIC SOURCE OFVALUE
ACCELERATE PROCESS
EQUITY INVESTMENT (MINORITY STAKE, ACQUISITION)
REDUCE RISK AND COSTSSECURE ACCESS AND/OR OWNERSHIP OF STRATEGIC SOURCE OF VALUE
COST SHARING REDUCE RISK AND COSTS
PAY FOR SERVICES
CHANNELS
OISTRIBUTION NETWORK (SCALE)
POTENTIAL TO MONETIZE FLXED COSTS IN DISTRIBUTION AND CUSTOMER RELATIONSHIPS
ACCESS TO DISTRIBUTION NETWORK
ACCESS TO CUSTOMERS (ACCESS)
ACCESS TO NEW RELATIONSHIPS
SALESFORCE LEVERAGE NEW CAPABILITIES
BRAND ANDRELATIONSHIPS
LICENSINGFIT WITH BRANDS WHILE REDUCING UPFRONT INVESTMENT
LOWER SG&A AND MARKETING COSTS
COMARKETINGLEVERAGE EXISTING PARTNERSHIPS
ACCESS TO NEW PARTNERS
COBRANDING (BRAND EQUITY)
FACILITATE INTERACTION WITH OTHER PARTNERS
"PHYSICAL ASSETS"
MANUFACTURING CAPABILITIES (SCALE, CAPEX)
DRIVE PLANT UTILIZATIONREDUCE UPFRONT CAPEX INVESTMENT
RESOURCES (E .G ., R&D, FINANCE)
HELP DRIVE VALUE FROM FIXED COSTS
ACCESS NEW MANUFACTURING CAPABILITIES
LAB/OFFICE SPACE LEVERAGE SCALE
LEVERAGE EXPERTISE
CURRENCY TYPE WHAT OTHERS MIGHT VALUE RATIONALE FOR COMPANY RATIONALE FOR PARTNER
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> TOOL: INNOVATION PARTNERSHIP CURRENCIES (2/2)
SPARKLING PARTNERSHIPS
KNOW-HOW
TECHNOLOGY, LPMONETIZE EXISTING INSIGHTS, PROPRIETARY KNOWLEDGE , TECHNOLOGY
ACCESS TO NEW INSIGHTS PROPRIETARY KNOWLEDGE, TECHNOLOGY
CONSUMER INSIGHTSOVERLAP OF CONSUMER SEGMENT
OVERLAP OF CONSUMER SEGMENT
INDUSTRY EXPERTISE
FUNCTIONAL CAPABILITIES
RECOGNITION
INTERNAL RECOGNITION ENERGIZE INTERNAL EFFORT STRENGTHEN PARTNERSHIP
MEETINGS WITH SENIOR LEADERS
LOW COST INVESTMENTPOTENTIAL ACCESS TO ADDITIONAL KNOW-HOW AND PARTNERSHIPS
INVITATION TO FORUM , TRADE SHOWS
STRENGTHEN PARTNERSHIP
ACCESS TO INTEMAL FORUMFACILITATE CROSS PARTNER COMMUNICATION
KNOW-HOW AND PARTNERSHIPS
SHARED VALUE AND MISSIONBUILD OR STRENGTHEN COMMUNITY AROUND SHARED SET OFVALUES
ENGAGE OWN COMMUNITY AROUND SHARED SET OF VALUES
CURRENCY TYPE WHAT OTHERS MIGHT VALUE RATIONALE FOR COMPANY RATIONALE FOR PARTNER
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READING VIDEO
Creating new growth platforms. Harvard Business Review May 2006
Managing Alliances with the Balanced Scorecard. Harvard Business Review, 2010
OECD patent databasewww.oecd.org/sti/inno/oecdpatentdatabases.htm
Clay Shirky: Institutions vs. collaborationwww.ted.com/talks/clay_shirky_on_institutions_versus_collaboration.html
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LEVERAGED TAILWIND FOCUS ON MARKET OPPORTUNITIES THAT ARE IN A GROWTH WINDOW AND TAKE ADVANTAGE OF THE RESULTING MOMENTUM; OR RENEW A MARKET THAT IS SHRINKING WITH A BREAK-THROUGH INNOVATION
“We only look at the general market trends, it’s not worth it to zoom in into smaller markets”
“Our market is shrinking, but it will take a long time before it is gone – no need to worry”
“We always tend to be unlucky – launching the product where it is not relevant”
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> KEY INSIGHTS
LEVERAGED TAILWIND
Flying against the wind, swimming against the tide is incredibly difficult – so is growth in declining markets
These markets are prone to be replaced by new entrants with innovations
Markets that do grow provide the room and expectation for ongoing innovation – this is a major driver for enterprise growth
At the granular product/market/geography - segment level differences in growth are very significant - for every “dog” there is an adjacent “star”
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> KEY INSIGHTS: SWIMMING AGAINST THE TIDE IS DIFFICULT
On the verge of losing billions of dollars in revenue, U.S. Postal Service launched a campaign to warn about the dangers of email and proposed paper-mail as a safer alternative
Source: Postal Service launches new ad campaign promoting snail mail. Retrieved September 29, 2011, from Washington Post www.washingtonpost.com/posttv/business/economy/postal-service-launches-new-ad-campaign-promoting-snail-mail/2011/09/29/gIQA-ZJBB8K_video.html
81LEVERAGED TAILWIND
> FRAMEWORK: GROWTH OPPORTUNITIES ARE GRANULAR
Source Picture: Matheson, Z. Retrieved April 5, 2011, from The Atlantic www.theatlantic.com/business/archive/2011/04/the-metro-story-growth-without-growth/73368/
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> SOURCES
READING VIDEO
LEVERAGED TAILWIND
Is your growth strategy flying blind? Harvard Business Review, Mehrdad Baghai, Sven Smit, and Patrick Viguerie, 2009
The alchemy of growth, 2000, Mehrdad Baghai, Steve Coley, David White, Stephen Coley
The granularity of growth, 2007, Patrick Viguerie, Sven Smit & Mehrdad Baghai, 2007
Megatrends. Tailwinds for growth in a low-growth environment, 2010, BCG
Jon Vander Ark: Get small to grow big in micromarketswww.youtube.com/watch?v=PYzc9ZdVm2E
Business Growth - Get Connected, Get Granular, Get Focusedwww.youtube.com/watch?v=BlC1IHMOENQ
Seth Godin: How to get your ideas to spreadwww.ted.com/talks/seth_godin_on_sliced_bread.html
Malcolm Gladwell: Choice, happiness and spaghetti saucewww.ted.com/talks/malcolm_gladwell_on_spaghetti_sauce.html
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Having a clear vision for the “next big thing”, that builds on the current strengths, translates into serious investment commitment, includes optionality, combines societal and economic value, aligns short term actions and leverages either technology, business model disruption and customer delight
BIG VISION
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THREE HORIZONS
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BIPOLAR FOCUS MOEBIUS RING
Any corporate needs a balance of activities across the 3 horizons: managing core business, the next big innovation and a portfolio of future growth options
Combine commitment to the longer term vision with execution in the very short term (“next Monday”) actions. All at the expense of futile mid-term planning
Drive the enterprise to deliver societal and shareholder value in a symbiotic way. Similarly, deliver premium value and lower cost simultaneously
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INNOVATION PLAYS
Three major plays of innovation can be observerd: technology, business model disruption and customer delight
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THREE HORIZONS ANY CORPORATE NEEDS A BALANCE OF ACTIVITIES ACROSS THE 3 HORIZONS: MANAGING CORE BUSINESS, THE NEXT BIG INNOVATION AND A PORTFOLIO OF FUTURE GROWTH OPTIONS
“Investing in innovation would harm the bottom line”
“I am too busy with running the current business, no time to think about what’s next”
“We have our current business and a few wild ideas, but no innovation initiatives that are ready to be launched”
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> ESSENCE: FROM ONE FLOWER TO AN ECOSYSTEM
“ Our thinking about growth and decay is dominated by the image of a single life span, animal or vegetable. Seedling, full flower, and death. The flower that once has bloomed forever dies...
... but for an ever-renewing society the appropriate image is a total garden, a balanced aquarium, or other ecological system. Some things are being born, other things are flourishing, still other things are dying, but the system lives on.”
John GardnerSelf Renewal: The Individual and the Innovative Society,W.W. Norton, 1981
Source Picture: Wallace, R. Retrieved August 31, 2013, from Flickrwww.flickr.com/photos/rob_wallace/9637672207/Source Picture: ynnil. Retrieved April 12, 2009, from Flickrwww.flickr.com/photos/nnil/sets/72157617095488185/with/3465661693/
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> ESSENCE: BALANCE CURRENT AND FUTURE ACTIVITIES
THREE HORIZONS
Source: Inspired by original concept of Scott, A. Retrieved August 21, 2013, from Business Model Innovation Hub www.businessmodelhub.com/profiles/blogs/the-business-model-canvas-and-2
88 THREE HORIZONS
Horizon 1: Defending and securing core business.
> Building on existing foundations and ensuring the “right to grow” by focussing efforts on good business operations that are well equipped to absorb change and opportunity. Truly understanding the business and the areas for improvement to build the best foundations.
Horizon 2: Building emerging business.
> Focusing on those ideas or initiatives that are ready to be executed, have been tested and will extend existing business into parallel or new areas. Horizon 2 often involves the development of new business models and defining and manage the impacts on the incumbent business through implementing initiatives from Horizon 2.
Horizon 3: Market making.
> Always dedicating some effort or thought to challenging business around what is truly market defining. Having the ability to quickly test or recognise those ideas or opportunities arising from Horizon 3 that will work and generate new markets.
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Source: Scott, A. “The Business Model Canvas and Horizon Thinking”. Business Model Innovation Hub. 15 February 2011www.businessmodelhub.com/profiles/blogs/the-business-model-canvas-and-2
> ESSENCE: BALANCE CURRENT AND FUTURE ACTIVITIES
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Various dangerous profiles exist:
> Horizon 1 only: being focused on continuous firefighting in core business or maximizing profitabily and market share while opportunities pass
> Horizon 2 only: “the all eggs in one basket” bet without a core business generating cash flow
> Horizon 3 only: the risky profile of a visionary company that runs out of fuel
The optimal allocation of time and cash investments is probably (round numbers):
> H1: 40-60%, H2: 30-40% and H3: 20-10%
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> KEY INSIGHTS: HAVE A BALANCED PORTFOLIO
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> KEY INSIGHTS: LEADING FOR CONTINOUS GROWTH
THREE HORIZONS
Source: Baghai, M., Coley, S., and White, D. The alchemy of growth. London: Orion Business, 1999www.mckinsey.com/Client_Service/Strategy/Latest_thinking/The_Alchemy_of_Growth.aspx
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> TOOL: 3 HORIZONS MANAGEMENT MODEL
THREE HORIZONS
Source: Garvin, David A., and Levesque, L. “Emerging Business Opportunities at IBM.” Harvard Business School Case 304-075, March 2004www.hbs.edu/faculty/Pages/item.aspx?num=30958
TIMEHORIZON
CURRENT MEDIUM TERM LONG TERM
FOCUSEXTEND AND DEFEND CORE BUSINESSINCREASE PRODUCTIVITY AND PROFIT CONTRIBUTIONLOW UNCERTAINTY/RISK
BUILD EMERGING BUSINESSESSCALE PROVEN BUSINESS MODELS, INCREASE MARKET SHARE, AND GROW TO OPPORTUNITYMEDIUM UNCERTAINTY/RISK
CREATE VIABLE OPTIONSTEST BUSINESS MODELS, PROVE VIABILITY, CAPABILITIES AND VALUEDELIBERATE INITIATIVES TO SEED GROWTH OPPORTUNITIESHIGH UNCERTAINTY/RISK
PROFITIMPACT
CURRENT; WILL EVENTUALLY FLATTEN OUT AND DECLINE
SUBSTANTIAL PROFITS MAY BE 4-5 YEARS IN THE FUTUREWITHIN NEXT FEW YEARS, SHOULD COMPLEMENT OR REPLACE CURRENT CORE BUSINESSES
MOST WILL NOT SUCCEEDA FEW CAN SECURE LONGER-TERM FUTURE
KEYCHALLANGE
FIND NEW REVENUE AND PROFIT GROWTH FOR THE IMMEDIATE FUTURE THROUGH INCREMENTAL SALES, LINE EXTENSIONS, AND INCREMENTAL EFFICIENCIESMAKE REVENUE PLANS
BUILD THE BUSINESSSCALE UP QUICKLYMANAGE TRIPLE-DIGIT GROWTH
EXPLORE OPTIONS ON FUTURE OPPORTUNITIES, SUCH AS RESEARCH PROJECTS, PROTOTYPES, TEST MARKETS, ALLIANCES, AND INVESTMENTS TO IDENTIFY AND BEGIN TO DEVELOP OPPORTUNITIESTARGETS CANNOT BE SET WITH PRECISION
OUTPUTS ANNUAL OPERATING PLAN: TACTICAL PLANS, RESOURCE DECISIONS, BUDGETS
BUSINESS-BUILDING STRATEGIES: INVESTMENT BUDGET, DETAILED BUSINESS PLANS FOR NEW VENTURES; VIABLE PRODUCTS
DECISIONS TO EXPLORE: INITIAL PROJECT PLAN, PROJECT MILESTONES
TYPE OFPEOPLE
OPERATORS:DEEP FUNCTIONAL AND/OR INDUSTRY EXPERTISESTRONG DRIVE TO CONSISTENLY MEET PLANSDISCIPLINE
BUSINESS BUILDERS:ENTREPRENEURIAL DESIRE TO CREATECOMFORT WITH AMBIGUITY AND CHANGETOP-LINE FOCUSED, SHARP DECISION MAKER
VISIONARIES:CHAMPIONSUNCONVENTIONAL THINKERS
TALENT APPROACH
CREATE PERSONAL CONSEQUENCES FOR NON-TERM PERFORMANCE INCLUIDING CLEAR PENALTIES FOR UNDER-PERFORMANCEIMPOSE “NO EXCUSES” MANAGEMENT STYLE
PROVIDE AUTONOMY/FREEDOM TO ACT AND MANDATE TO CREATE AND BUILDOPPORTUNITY TO CREATE PERSONAL WEALTH THROUGH CASH BONUSES AND EQUITY PARTICIPATIONOPPORTUNITY TO BUILD AND LEAVE A LEGACY
PROVIDE PSYCHOLOGICAL REWARDS: RECOGNITION OF IDEAS, FREEDOM TO EXPERIMENT AND EXPLOREPROVIDE CAREER ADVANTAGE: OPPORTUNITY TO SATISFY INTELLECTUAL CURIOSITY, OPTION TO BECOME HORIZON 2 BUSINESS BUILDERS
MEASURESTRADITIONAL BUDGETS AND CONTROLSPROFITRETURN ON INVESTED CAPITALPRODUCTIVITY OF EFFICIENCY
HIGH REVENUE GROWTHMARKET SHARE GAINSNEW CUSTOMER ACQUISITIONSCAPITAL INVESTMENT EFFICIENCYEXPECTED NET PRESENT VALUE
PROJECT-BASED MILESTONESOPTION VALUATIONRATE OF CONVERSION FROM IDEA TO BUSINESS LAUNCHNUMBER OF INITIATIVES
CORPORATE BEHAVIORS
REVIEW, CHECKSET AGGRESSIVE TARGETS TO IMPROVE
SUPPORT TAKING RISKSADDRESS PROBLEMS TO SCALINGUNDERSTAND VIABILITY
ENGAGE AND WORK WITH AND FORFIND VIABLE BUSINESS MODEL
ISSUE H1MATURE, WELL-ESTABLISHED
BUSINESSES
H2RAPIDLY GROWING BUSINESS
H3EMERGING BUSINESSES
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READING VIDEO
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Scott, A. “The Business Model Canvas and Horizon Thinking”. Business Model Innovation Hub. 15 February 2011www.businessmodelhub.com/profiles/blogs/the-business-model-canvas-and-2
Enduring Ideas: The three horizons of growth. McKinsey Quarterly, 2009Profit From The Core , 2001, Harvard Business School Press
Profit From The Core , 2001, Harvard Business School Press
Staircase to growth. McKinsey Quarterly, 1996
Stop Chasing Too Many Priorities. Harvard Business review, 2011
Emerging Business opportunities at IBM, 2010, Harvard Business School
AMCF Horizon Series: Strategy Thought Leaders Define Strategywww.youtube.com/watch?v=0JyRXpYFIcg
Professor Richard Rumelt : What is Good Corporate Strategy?www.youtube.com/watch?v=43kZDnyDXOc
Evan Williams on listening to Twitter userswww.ted.com/talks/evan_williams_on_listening_to_twitter_users.html17
THREE HORIZONS
9393
BIPOLAR FOCUS COMBINE COMMITMENT TO THE LONGER TERM VISION WITH EXECUTION OF VERY SHORT TERM (“NEXT MONDAY”) ACTIONS. ALL AT THE EXPENSE OF FUTILE MID-TERM PLANNING
“Everything seems to be a priority, we are fire fighting”
“We spend endless time on strategic planning, but it is more like a paper exercise”
“We don’t have a clear and inspiring goal to aim for”
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> ESSENCE
BIPOLAR FOCUS
Source Picture: Fisk, P. GeniusWorkswww.emeraldinsight.com
Combine long term commitment with short term action>
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> FRAMEWORK: TIME HORIZON AND MANAGEMENT ATTENTION
BIPOLAR FOCUS
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> KEY INSIGHTS
Articulate the vision:
> Articulate an inspirational vision in a simple statement
> Ascertain oneself of organizational buy-in
> Make the vision specific so that each employee knows what to focus on and what not to focus on a day-to-day basis
Focus on action:
> Ensure shared understanding, clear roles, decision-making rules, complementary skills
> Shorten the feedback cycles drastically; don’t let people work for a long time without getting input
> Have an “undue” expectation of immediate follow-up and resolution (act immediately)
BIPOLAR FOCUS
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WE CAN DESCRIBE OUR LONGER TERM VISION IN 50 WORDS
ALL EMPLOYEES UNDERSTAND AND ARE COMMITTED TO THE LOGIC OF THE LONGER TERM VISION AND WHAT GETS PRIORITIZED
WE FOCUS OUR DISCUSSIONS ON KEY STRATEGIC ISSUES, RATHER THAN GETTING LOST IN IRRELEVANT NON-STRATEGIC MATTERS
OUT INTERNAL PROJECTS ARE INCONSISTENT WITH OUR LONGER TERM VISION
OUR TIME SPENT ON PLANNING IS USEFUL AND EFFECTIVE
WE TRANSLATE OUR LONGER TERM VISION TO ANNUAL PLANS AND BUDGETS IN A DISCIPLINED AND TRANSPARENT PROCESS
OUR PLANNING PROCESS IS DISCIPLINED WITH FOCUSED INFORMATION REQUESTS AND ANALYSES REQUIRED FOR DECISION MAKING
WE HAVE IDENTIFIED A FEW EARLY WARNING SIGNS FOR POSSIBLE RISKS/THREATS THAT ARE ASSESSED PERIODICALLY (RATHER THAN A VERY DATA INTENSIVE PROCESS)
WE HAVE A CLEAR LIST OF 3-6 CRITICAL STRATEGIC INITIATIVES WE FOCUS ON
WE UNDERSTAND THE CRITICAL PATHS AND THE ACTIVITIES ON THESE PATHS ARE STREAMLINED TO ACHIEVE OUR GOALS MOST EFFECTIVELY
OUR PLANS ARE TRANSLATED INTO ACTIONS AND USED TO MEASURE PROGRESS
WE HAVE CLEAR ACCOUNTABILITIES AND OUR INDIVIDUAL TARGETS ARE ALIGNED WITH THE ANNUAL PLANS
BIPOLAR FOCUS
> TOOL: BIPOLAR FOCUS ASSESSMENT
LONGER TERM VISION
EFFECTIVE PLANNING
SHORT TERM IMPACT
IN OUR ORGANIZATION...STRONGLYDISAGREE DISAGREE NEUTRAL AGREE
STRONGLYAGREE
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> SOURCES
READING VIDEO
Dave McClure’s 10 tips for the perfect investment pitchwww.thenextweb.com/entrepreneur/2011/10/29/dave-mcclures-10-tips-for-the-perfect-investment-pitch/
Getting behind the perfect pitch, M. Kokwww.mjskok.com/resource/getting-behind-perfect-pitch
Looking beyond the `Vision Thing’, 1997, by Harari, Oren, Management Review, 1997
The power of bifocal vision by Albrecht, Karl G,1994, Management Review
The elevator pitchwww.youtube.com/watch?v=Tq0tan49rmc
Effective Strategic Planning with the “Art of Action”www.youtube.com/watch?v=yoFVPpo1eEE
Eleven start-up pitches archetypes with examples from YC companieswww.jasonshen.com/2012/eleven-compelling-startup-pitch-archetypes-with-examples-from-yc-companies/
BIPOLAR FOCUS
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MOEBIUS RING DRIVE ENTERPRISE TO DELIVER SOCIETAL AND SHAREHOLDER VALUE IN A SYMBIOTIC WAY. SIMILARLY, DELIVER PREMIUM VALUE AND LOWER COST SIMULTANEOUSLY
“I don’t think business and doing good for society can go hand in hand”
“We are a non-profit, so we better not have any overhead”
“Contributing to society always makes the business more complicated and expensive”
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Source Picture: Benbennick, D. Retrieved March 14, 2005, from Wikimedia Commons www.commons.wikimedia.org/wiki/File:M%C3%B6bius_strip.jpg
People/planet versus profit are not two sides of a ring– they are the same side of the coin
MOEBIUS RING
> ESSENCE: INTEGRATE PEOPLE, PLANET, PROFIT
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> KEY INSIGHTS: EXAMPLE OF TRIPLE P INTEGRATION
MOEBIUS RING
We help people around the world meet everyday needs for nutrition, hygiene and wellbeing, with brands that help people look good, feel good and get more out of life. We work to create a better future every day for our consumers and the communities in which we operate. We aim to double the size of Unilever while reducing our impact on the environment
Our oral care brands encourage children to brush their teeth day and night for optimal dental health. We helped parents believe that children learn through play, and mud spatters and grass stains can easily be removed with effective laundry product. We bring our expertise in nutrition to children in some of the world’s poorest countries. Our margarine brands have been scientifically proven to help reduce cholesterol levels. We provide research into skin conditions and support for people affected by them. We promote hand washing with soap has reached more than 70 million people in rural India. (Through Dove) we educate and inspire millions of young women. We provide affordable oral care solutions for consumers in developing markets. We encourage consumers to change their laundry habits to reduce water and energy consumption. We back sustainable forest management projects in Africa. Many of our brands contain ethically and sustainably sourced ingredients that are independently certified. Around half our raw materials come from agriculture and forestry, so we’re working towards making our key crops 100% sustainable
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Source Picture: Unilever. Retrieved December, 2013, from Unilever.com www.unilever.com
102 MOEBIUS RING
> FRAMEWORK: SOCIAL IMPACT AND SHAREHOLDER VALUE
Break-through innovation creates shareholder and societal value>
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Break-through innovation can lead to increasing both societal and shareholder value in an integrated manner
Opportunity for “profit” sector:
> To broaden scope from revenue growth to convincingly improve society
> To broaden scope from reducing cost to reducing societal burden
> To stimulate innovation through usage of stretched targets e.g., zero footprint and continued employment growth
Opportunity for “non-profit” sector:
> Combine social mission with economically sound business model
> Apply good business practices to maximize impact
104 MOEBIUS RING
> KEY INSIGHTS: EXAMPLES OF TRIPLE P BREAKTHROUGHS
REDUCE COST TO SOCIETY
CONTRIBUTE TO SOCIETY
LED LAMP SAVES ELECTRICITY
BOTTLE PROMOTES BREAST CANCER AWARENESS
BOTTLE OF BIODEGRADABLE MATERIALS REDUCES CO2 AND WASTE FOOTPRINT
CAR WITH AUTOMATED SYSTEM TO AVOID ACCIDENTS
CAR CONSUMES LESS FUEL
LED LAMP ENABLES STUDENTS TO STUDY BETTER IN CLASSROOM
> LAMP > CAR > BOTTLE
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> TOOL: FROM SOCIAL RESPONSIBILITY TO SHARED VALUES
Source: Porter, M. and Kramer, M. Retrieved December 22, 2010, from Harvard Business Review www.hbr.org/2011/01/the-big-idea-creating-shared-value
MOEBIUS RING
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FOCUS OFTEN ON ACTIVITIES RATHER THAN IMPACT
CLEAR, QUANTITATIVE METRICS ON IMPACT
MEASURE ONLY AT THE END OF A PROJECT SYSTEMATIC AND FREQUENT MEASUREMENTS
OFTEN BLURRED LINES BETWEEN BOARD AND STAFF
CLEARLY DEFINED RESPONSIBILITIES ACROSS THE WHOLE ORGANIZATION
BOARD MUST SUBSTITUTE FOR DISCIPLINARY ROLE OF CAPITAL MARKETS
STRONG SUPERVISORY BOARD
FUNDING PARTNERS FOCUS ON DIRECT PROJECTS EXPENSES RATHER THAN SUPPORT STRUCTURE
OBTAIN FUNDING ALSO FOR “OVERHEAD” AND MARKETING
FRAGMENTED FUNDING SOURCES AND RELIANCE ON DONATIONS
DON’T RELY ONLY ON GRANTS OR GIFTS FOR FUNDING , ALSO CONSIDER OTHER BUSINESS MODELS
OFTEN FACE HR CONSTRAINTS AND LESS MANAGEMENT CAPABILITY
HIRE AND INVEST IN GOOD MANAGEMENT BY PROVIDING MARKET CONFORM SALARIES
STAFF TYPICALLY MOTIVATED BY CAUSE PROVIDE REWARDS/INCENTIVES BASED ON PERFORMANCE
LACK OF MARKETING BUDGET EFFECTIVE MARKETING EFFORTS FOCUSED ON TARGET SEGMENTS
UNFOCUSED, WIDELY SPREAD MARKETING EFFORTS
DECENT MARKETING BUDGET
LIMITED OR UNPROFESSIONAL SUPPORT PROCESSES DUE TO LACK OF INVESTMENTS AND SKILLED RESOURCES
EFFECTIVE MANAGEMENT PROCESSES (INVESTMENT DECISIONS, HR MANAGEMENT, BUDGETING, ETC)
AVERSE ATTITUDE TOWARDS CLEAR ACCOUNTABILITY AND FORMAL PROCESSES
LEAN OPERATIONAL PROCESSES
MOEBIUS RING
PERFORMANCE MEASURES
GOVERNANCE
FUNDING
MARKETING
HUMAN RESOURCES
SUPPORTPROCESSES
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FROM TRADITIONAL NON-PROFIT PRACTICES... ...TO COMMON BUSINESS PRACTICES
> TOOL: “NON-PROFIT” PROFESSIONAL MANAGEMENT
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READING VIDEO
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Building Social Business Models: Lessons from the Grameen Experiencewww.sciencedirect.com/science/article/pii/S0024630109001290
Creating shared value, Harvard Business Review, 2011
Peepoo bag: customer value proposition and business model for social entrepreneurswww.businessmodelalchemist.com/2010/08/combining-business-model-prototyping-customer-development-and-social-entrepreneurship.html
Shaping the future: Solving Social Problems through Business Strategy, McKinsey & Company
Michael Porter, Creating shared valuewww.youtube.com/watch?v=z2oS3zk8VA4&feature=youtube_gdata_player
What non-profits can learn from CocaColawww.ted.com/talks/melinda_french_gates_what_nonprofits_can_learn_from_coca_cola.html
The way we think about charity is dead wrongwww.ted.com/talks/dan_pallotta_the_way_we_think_about_charity_is_dead_wrong.html
108108
INNOVATION PLAYS THREE MAJOR PLAYS OF INNOVATION CAN BE OBSERVERD: TECHNOLOGY, BUSINESS MODEL DISRUPTION AND CUSTOMER DELIGHT
“We have been succesfull with this business model for a while, no need to change the value chain dynamics”
“We always base our offerings on clearly identified customer preferences, supported by quantitative data”
“Technology doesn’t play a clear role in our industry”
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109INNOVATION PLAYS
> OVERVIEW
CUSTOMER DELIGHTTECHNOLOGY BUSINESS MODEL DISRUPTION
Break-through innovation is not based on customer preferences or articulated needs; indeed innovation will surprise customers and create new needs
Using a new, improved or new combination of technologies in the offering itself, in the development, manufacturing or delivery process
Change the value chain players, economics, creating new profit or changing the delivery models for an offering
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INNOVATION PLAYS: TECHNOLOGY USING A NEW, IMPROVED OR NEW COMBINATION OF TECHNOLOGIES IN THE OFFERING ITSELF, IN THE DEVELOPMENT, MANUFACTURING OR DELIVERY PROCESS
“We do all our R&D in-house, more effective than to involve externals”
“When the market starts to disqualify the initial hype, what do you do?” “It will take a long time before technologies will be able do that”
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> ESSENCE: BUY IS OFTEN MORE EFFECTIVE THAN BUILD
INNOVATION PLAYS: TECHNOLOGY
LEVERAGING EXTERNAL ASSETS/TALENT AT LOW/NO COST
SHARING OF UP-FRONT INVESTMENTS AND RUNNING EXPENSES
ACCESS TO MORE SPECIALIZED TALENT
EARLY UNDERSTANDING OF STAKEHOLDER NEEDS (CUSTOMERS, SUPPLIERS, ETC.)
DEVELOP MULTIPLE TECHNOLOGIES IN PARALLEL
ACCESS TO BROADER IDEA AND TALENT BASE
ACCESS TO DEEPER KNOWLEDGE OF CUSTOMERS’ AND SUPPLIERS’ NEEDS
MORE EYES ON PROBLEMS
INVOLVEMENT OF MORE SPECIALIZED TALENT AND ASSETS SPEEDS UP IDEATION PHASE
REDUCTION OF R&D COST
LOWERPROJECT FAILURE RATE
BETTER QUALITY OF INNOVATION
FASTER TIME TO MARKET
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BENEFIT OF BUY VS. BUILD
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Leveraging the external market to source intellectual property and develop new technologies is often more effective than developing these in-house
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NEXT TECHNOLOGY LOOKS INITIALLY INFERIOR
> KEY INSIGHTS: TECHNOLOGY PERFORMANCE OVER TIME
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> KEY INSIGHTS: STEP IN AFTER THE PHASE OF DISILLUSIONMENT
Source: Gartner’s 2012 Hype Cycle for Emerging Technologies. Retrieved July, 2012, from Gartner.com www.gartner.com/technology/research/hype-cycles/
INNOVATION PLAYS: TECHNOLOGY
The optimal time to commit to a new technology might be when the market starts to disqualify the initial hype
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114 INNOVATION PLAYS: TECHNOLOGY
> KEY INSIGHTS: DO-IT-YOURSELF
Source: Cost of Computing Power Equal to an iPad2. Retrieved August 5, 2011, from hamiltonproject.org www.hamiltonproject.org/multimedia/charts/cost_of_computing_power_equal_to_an_ipad2/
COST OF COMPUTING POWER EQUAL TO AN IPAD2
Digitalization is the “über” technology trend driving down costs exponentially, providing superior control and access and opening up the “Internet of things”. Moore’s law dynamics continue to surprise progress
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Source: Zappa’s Technology Cards. Retrieved July, 2012, from THNKLinkwww.thnklink.org/mod/ouwiki/view.php?id=84&page=Emerging+Technologies(Note: for THNK participants only)
INNOVATION PLAYS: TECHNOLOGY
> TOOL: ZAPPA’S TECHNOLOGY CARDS
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READING VIDEO
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Disruptive technologies: advances that will transform life, business and global economy. McKinsey Global Institutewww.mckinsey.com/insights/mgi.aspx
Digitizing the value chain for high performance, Accenture, 2012www.accenture.com/SiteCollectionDocuments/PDF/Accenture-Digitizing-the-Value-Chain-for-High-Performance.pdf
2013 internet trends. Kleiner Perkins Caufield Buyerswww.kpcb.com/insights/2013-internet-trends
Pretty profitable parrotswww.economist.com/node/21554500
First mover or fast follower, Bloombergwww.bloomberg.com/news/2012-06-14/first-mover-or-fast-follower-.html
Everything is a remixwww.everythingisaremix.info/watch-the-series
Digital transformation, we haven’t seen anything yetwww.youtube.com/watch?v=AZ5ePL36BbU
Johanna Blakley: Lessons from fashion’s free culturewww.ted.com/talks/johanna_blakley_lessons_from_fashion_s_free_culture.html
Ray Kurzweil: The accelerating power of technologywww.ted.com/talks/ray_kurzweil_on_how_technology_will_transform_us.html
117117
INNOVATION PLAYS: BUSINESS MODEL DISRUPTION CHANGE THE VALUE CHAIN PLAYERS, ECONOMICS, CREATING NEW PROFIT OR CHANGING THE DELIVERY MODELS FOR AN OFFERING
“Our value chain is still intact – we control and operate in all steps”
“Technology enables our customers more are more – they almost take over the power”
“Software is taking over our service industry”
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> ESSENCE: BUSINESS MODEL INNOVATION
119INNOVATION PLAYS: BUSINESS MODELS
Split of value chains and modularity. Value chains from raw materials to final products or from research to after-sales service are split into separate steps. Niche players who excel in just one step in the chain emerge
Do-it-Yourself business models. Empowered by the Internet, consumer and business customers can design and create their own services. This is superior in terms of engagement, customization and cost of delivery
Shift from services to software. Related to DIY is the shift to software. It significantly reduces costs, and increases functionality for users
“Big hit” and long tail (platform) opportunities. The number of global hit products and services is increasing. So it the fragmentation of the long tail of niche products and services
Bipolarization. Both the “premium” high end and the “valued” low end grow at expense of the middle. This holds for almost all industries
Mass Individualization. Customer Relationship management (customer databases combined with software based recommendation engines allows for individual offers at mass scale)
Authenticity/craftsmanship/relationship. The antidote of software based services and global “big hit” brand is the appeal of any product local, with a story and a face of the craftsman who produced the good
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120 INNOVATION PLAYS: BUSINESS MODELS
> KEY INSIGHTS: SPLIT OF VALUE CHAINS
iPod example:>
121INNOVATION PLAYS: BUSINESS MODELS
> KEY INSIGHTS: DO-IT-YOURSELF
MakerBot
> Manufacturing
> 3-D Prototyping/Printing
oDesk/eLance
> Employment
> Workforce as a Service (WaaS)
> On-Demand/Global
Airbnb
> Housing
> Turn Privately-Owned Properties into Hotel Experience
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Source Pictures: www. store.makerbot.com/replicator2.html , www.odesk.com , www.airbnb.com
122 INNOVATION PLAYS: BUSINESS MODELS
> KEY INSIGHTS: SERVICES TO SOFTWARE
VIP Fridge magnet
> Pizza ordering by home delivery in Dubai
> Bluetooth enabled fridge-magnet button to order pizza’s
Västtrafik Tram sightseeing
> Public transport
> Free app that guides visitors to the nearest trams stop
> Phone GPS triggers the right audio tour guide
Push to talk in Shanghai
> Taxi service
> Voicemail of customer is instantly delivered to all nearby available taxis
> Taxi driver chooses to answer
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Source Pictures: www. redtomato.biz/magnet , www.vasttrafik.se/timetables/sightseeing/index_eng.html ,www.commons.wikimedia.org/wiki/File:Shanghai_62580000_Taxi.jpg
123INNOVATION PLAYS: BUSINESS MODELS
Will you be the disrupter or the disrupted?
To act on platform opportunities, consider the three factors transforming industry and embrace them:
> Remake the role that experts play inside your business to leverage user capabilities outside your business. Build social curation and reputation systems to employ the collective intelligence and judgment of your users
> Connect consumers to their best product options, regardless of source, through data-driven matchmaking. The firm that builds an OpenTable for consumer finance, considering appetites for risk and reputations of products that deliver on promises, would help buyers make sense of the dizzying array of complex and disconnected products. The value would be enormous
> Finally, solve a consumer problem in your industry by marshaling spare resources. If you’re in transportation, build systems that employ other people’s trucks before expanding your own fleet
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> KEY INSIGHTS: WHAT TO DO TO THRIVE WITH PLATFORMS
Source: Choudary, S.P. Retrieved October 19, 2013, from platformed.info www.platformed.info/platform-economics
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Source: THNK Venture model www.thnk.org
INNOVATION PLAYS: BUSINESS MODELS
> TOOL: THNK VENTURE DESIGN
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READING VIDEO
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Big Bang disruption, Harvard Business Review, March 2013
Digitalizing the value chain for high performance. Accenturewww.accenture.com/SiteCollectionDocuments/PDF/Accenture-Digitizing-the-Value-Chain-for-High-Performance.pdf
Platform thinkingwww.platformed.info/platform-economics
Reinventing your business model, Harvard Business Review, 2008
Unbundling of the value chain, The internet’s impact on supply chain relationshipswww.boozallen.com/media/file/80560.pdf
Authors@Google: Eric Ries “The Lean Startup“www.youtube.com/watch?v=f EvKo90qBns
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INNOVATION PLAYS: CONSUMER DELIGHT BREAK-THROUGH INNOVATION ISN’T BASED ON CUSTOMER PREFERENCES OR ARTICULATED NEEDS; BUT WILL SURPRISE CUSTOMERS AND CREATE NEW NEEDS
“Our NPS is way below the industry average”
“We have many new ideas and technologies, just didn’t discover yet how they can be useful for the customer”
“We focus innovation either on making a premium or providing and offering at extremely low cost”
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> KEY INSIGHTS
Source: Consumer Benchmark Survey. Retrieved Q3, 2013, from Temkin Groupwww.experiencematters.wordpress.com/category/temkin-group-research/
The customer needs to be delighted and therefore conclude he wants it
Almost all industries have the potenial for a high NPS
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> KEY INSIGHTS
Source: IT Benchmark Survey. Retrieved Q1, 2012, from temkingroup.comwww.experiencematters.wordpress.com/2012/05/14/net-promoter-score-and-market-share-for-60-tech-vendors/
The customer needs to be delighted and therefore conclude he wants it
NPS has to reach treshold for market to take off
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129INNOVATION PLAYS: CUSTOMER DELIGHT
> FRAMEWORK: BI-POLARIZATION SPECTRUM
Break-through innovation combines better functionality and lower cost, combining the two ends of the spectrum (E.g. Wikipedia versus an encyclopedia)
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130 INNOVATION PLAYS: CUSTOMER DELIGHT
> TOOL: PIVOT POINTS
CHANNEL(SAME SERVICE/PRODUCT, NEW CHANNEL)
VALUE CAPTURE(SAME SERVICE/PRODUCT, NEW REVENUE MODEL)
PURPOSE(SAME OVERARCHING PURPOSE, DIFFERENT BUSINESS MODEL)
TECHNOLOGY(SAME TECHNOLOGY, DIFFERENT USAGE)
ZOOM OUT(PRODUCT BECOMES FEATURE)
CUSTOMER SEGMENT(SAME SEGMENT, DIFFERENT SERVICE/PRODUCT)
CUSTOMER NEED(SAME PROBLEM RESOLVED, DIFFERENT PRODUCT/SERVICE)
ZOOM IN(FEATURE BECOMES PRODUCT)
The final purpose of a new concept of technology can derivate significantly from the original intent
With “pivot”, you keep one fundamental aspect of your concept fixed, with changing the other, based on what is most wanted in the moment
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131INNOVATION PLAYS: CUSTOMER DELIGHT
> TOOL: USER INSIGHT AND FORESIGHT TOOLS
Source: THNK Concepting Flowwww.thnk.org
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READING VIDEO
INNOVATION PLAYS
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The customer’s voice. Why are we so bad at hearing it? BCGwww.bcg.com/documents/file35167.pdf
Innovation in Consumer products, Accenture, 2008www.accenture.com/SiteCollectionDocuments/PDF/ConsumerProductsGroupPoV_103008_fnl.pdf
Understanding change and predicting trendswww.baekdal.com/insights/understanding-change-and-predicting-trends/
5 ways companies can pivot like leanwww.fastcodesign.com/1672580/5-ways-big-companies-can-pivot-like-lean-startup
Why we’re so bad at predicting the future www.venturevillage.eu/predicting-future
Why I brought PacMan to Momawww.ted.com/talks/paola_antonelli_why_i_brought_pacman_to_moma.html
Malcolm Gladwell: Choice, happiness and spaghetti saucewww.ted.com/talks/malcolm_gladwell_on_spaghetti_sauce.html
The Power of Habit Why We Do What We Do in Life and Businesswww.youtube.com/watch?v=a6p3lG9EDXw
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Ensuring the organization nurtures, attracts and protects innovation “rock stars” – the individual innovation leaders that will take the risks, and “break the eggs” to eventually make innovation happen - and allow them to orchestrate strong creative teams around them
TOP TALENT
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134 TOP TALENT OVERVIEW
TALENT MAKE AND BUY
Break-through innovation requires infusion of external talent to engage “fresh eyes”, ask naive questions and collect novel analogies
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ORCHESTRATING TEAMS
There are three essential elements to an effective team: casting, setting-up the team, followed by leading the organization
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GOVERNANCE HEADROOM
Form a supervisory board that can stretch the executive board and stretches with the board in the continued accelerated growth in terms of vision and innovation
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CULT OF INNOVATOR ROCK STAR
The output difference between an outstanding creative talent and a good creative talent is huge , much more significant than in operating or management jobs
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ORCHESTRATING TEAMS THERE ARE THREE ESSENTIAL ELEMENTS TO AN EFFECTIVE TEAM: CASTING, SETTING-UP THE TEAM, FOLLOWED BY LEADING THE ORGANIZATION
“We have great idea generation sessions with our management team, but nobody seems to care about the execution”
“I can’t rely on my team members, they never keep their promises”
“Our roles are not very clear, each member of the board seems to focus on their own hobby horses”
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136 ORCHESTRATING TEAMS
HOP STEP JUMP
Source Picture: Giles, R. Retrieved August 21, 2008, from Wikipedia The Free Encyclopedia www.en.wikipedia.org/wiki/File:Triple_Jump,Idowu_Phillips,_Bejing_08.jpg
ORCHESTRATINGSETTING UP THE TEAM
LEADINGGUIDING THE ORGANIZATION
CASTINGPICKING THE TEAM
> ESSENCE
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Hire bigger than you are
> “If each of us hires people who are smaller than we are, we shall become a company of dwarfs. But if each of us hires people who are bigger than we are, we shall become a company of giants.” - David Ogilvy
“Hop, step, jump”
> Hop: Cast the management team with the right mix of capabilities and personality types
> Step: Align the team on a common goal and primitives
> Jump: Lead the team from the front and the back
The creative people for one’s team can be found across all functions and are best characterized as paradoxical
As innovation is a perilous journey, one wants people who one can trust
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WE SHALL BECOME A COMPANY OF dwarfs
BUT IF EACH OF US HIRES PEOPLE WHO ARE BIGGER THAN WE ARE
WE SHALL BECOME A COMPANY OF GIANTS - Dav
id O
gilvy
IF EACH OF US HIRES PEOPLE WHO ARE SMALLER THAN WE ARE
ORCHESTRATING TEAMS
HIRE PEOPLE THAT ARE BIGGER THAN YOU ARE
> KEY INSIGHTS
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> KEY INSIGHTS: TYPICAL PROFILE OF CREATIVE PEOPLE
ORCHESTRATING TEAMS
Source: Csikszentmihalyi, M. “Creativity: The Work and Lives of 91 Eminent People.” HarperCollins, 1996www.hbs.edu/faculty/Pages/item.aspx?num=30958
Creative people are paradoxical
> Combining convergent and divergent thinking
> Smart and fast , yet naïve about what does not work
> Playful with discipline, putting in long hours.
> Imagination combined with a rooted sense of reality. Rebellious yet deeply rooted in an area of expertise
> Extroverted, yet reserved and reflective
> Humble about importance of luck and of predecessors while proud of achievement
> Sensitive, even in pain, with lack of perfection, yet truly enjoying the creative pursuit
> Great bursts of energy, combined with periods of quiet and at rest
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Behaviors that build trust
> Credibility: Personality traits for and track record in creative efforts
> Reliability: Consistency between what is said and body language
> Personal connect: Empathy and willingness to disclose and be vulnerable about weaknesses and concerns
Behaviors that undermine trust
> Self-orientation: Degree of egocentricity. Lack of willingness to understand the other person. Inability to be generous
> FRAMEWORK: WHO TO TRUST
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Source: storebukkebruse. Retrieved September 14, 2012, from Flickr www.flickr.com/photos/tusnelda/8408155485/
ORCHESTRATING TEAMS
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> TOOL: MBTI PRE-TEST
DISCLAIMER
TEAM IMPLICATIONS
MBTI PRE-TEST
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These are 4 questions, only to give a first indication. To do a proper assessment of your MBTI profile, use the formal MBTI test1.
> Ensure team members are aware of differences in style and personalities without being judgmental
> Ensure the team is sufficiently balanced or is aware of the weaknesses (e.g., no one likes planning)
1. Please refer to the official website of Myers and Briggs for the official MBTI test: www.myersbriggs.org
WHAT IS YOUR SOURCE OF ENERGY, PEOPLE AROUND YOU OR INNER STRENGTH? PEOPLE AROUND YOU: E
INNER STRENGTH: I
DO YOU THINK ABOUT THE PRESENT OR DO YOU THINK ABOUT THE FUTURE? WHAT DO YOU ENJOY MOST, REALIZATION OF ANTICIPATION?
PRESENT: S
FUTURE: N
WHEN PUSHED, WHAT IS MORE IMPORTANT, WHAT IS BEING SAID OR WHO SAID IT? WOULD YOU LIE FOR A FRIEND? YES: F
NO: T
DO YOU PREFER PLANNING OR SURPRISE? HOW DO YOU APPROACH HOLIDAY? PLANNING: J
SURPRISE: P
QUESTIONS PROFILE INDICATION
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OUR TEAM HAS ALL FUNCTIONAL SKILLS AND BEHAVIOR STYLES TO WIN
OUR TEAM HAS SUFFICIENT COMMONALITY TO RECOGNIZE AND TRUST EACH OTHER
OUR TEAM IS SUFFICIENTLY DIVERSE TO AVOID GROUP THINK
TEAM MEMBERS ENJOY WORKING WITH AND INTERACTING WITH EACH OTHER
WE ALL AGREE ON THE SAME VISION FOR THE COMPANY IN 3-5 YEARS TIME
TEAM MEMBERS WILLINGLY MAKE SACRIFICES (SUCH AS BUDGET, TURF, HEAD COUNT) IN THEIR DEPARTMENTS OR AREAS OF EXPERTISE FOR THE BETTER OF THE TEAM
WE HAVE CLEAR AGREEMENTS ON ROLES, DECISION RIGHTS AND WAY OF WORKING
WE HAVE AN OPEN DIALOGUE, WE DARE TO CHALLENGE EACH OTHER IN A PRODUCTIVE CONFLICT, LEAVING NOTHING UNSAID AND PICKING UP THE BEST IDEAS
WE WORK TOGETHER IN A TRUST-BASED MANNER, SHARING FEARS, ADMITTING MISTAKES AND CONNECTING ALSO ON A PERSONAL LEVEL
WE GIVE EACH OTHER FEEDBACK
WE ALL RECEIVE CLEAR DIRECTION
EACH OF US HAS A PROPER MANDATE AND THIS IS CASCADED DOWN INTO THE ORGANIZATION THROUGH DELEGATION OF ROLES AND AUTHORITIES
WE GET THE RIGHT TRAINING, TOOLS AND SUPPORT
WE HAVE THE RIGHT CONTROLS AND SAFETY-NETS IN PLACE TO AVOID SIGNIFICANT FAILURES
CASTING
ORCHESTRATING
LEADING
SURVEY FOR THE TEAM - QUESTIONS TO ASK YOURSELFSTRONGLYDISAGREE DISAGREE NEUTRAL AGREE
STRONGLYAGREE
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ORCHESTRATING TEAMS
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READING VIDEO
MBTI profilewww.myersbriggs.org
Alternative MBTI profilewww.similarminds.com
Personality pathwayswww.personalitypathways.com/type_inventory.html
Team work at the top, 2001, McKinsey Quarterly
Three steps to building a better top team, 2011, McKinsey Quarterly
Five Dysfunctions of a Teamwww.youtube.com/watch?v=UtB6D9tIjl8
Learning styles inventory, California Management Review Article “Innovation as a Learning Process: Embedding Design Thinking”www.vimeo.com/3475327
Dare to disagreewww.ted.com/talks/margaret_heffernan_dare_to_disagree.html
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TALENT MAKE AND BUY BREAK-THROUGH INNOVATION REQUIRES INFUSION OF EXTERNAL TALENT TO ENGAGE “FRESH EYES”, ASK NAIVE QUESTIONS AND COLLECT NOVEL ANALOGIES
“I really need a radical new way of thinking in our organization”
“It will just take too long to train people in-house to be able to master this skill”
“We have a blind spot for those competences and we typically don’t have them in our DNA”
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145TALENT MAKE AND BUY
Source Picture: Forbes Staff. Retrieved April, 2012, from Forbes.com www.forbes.com/sites/forbespr/2012/04/04/press-release-amazons-jeff-bezos-tops-the-list-of-the-best-ceos-for-the-buck-while-sirius-xm-radios-mel-karmazin-ranks-as-one-of-the-lowest/
To illustrate, Bezos described how he surrounds himself with people at Amazon who are inventive.
He asks all job candidates: “Tell me about something that you have invented.” He adds, “Their invention could be on a small scale—say, a new product feature or a process that improves the customer experience, or even a new way to load the dishwasher. But I want to know that they will try new things.” “I also look for people who believe they can change the world,” Bezos stated. “If you believe the world can change, then it’s not a stretch to believe you can be a part of it.”
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> ESSENCE: RECRUIT INNOVATIVE PEOPLE
146
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> KEY INSIGHTS
There is significant resistance against external creative talent hiring
Most organizations find attracting creative talent externally as admitting defeat or dismissing internal expertise
Genuine interest in what the external world can bring in terms of new ideas is precious
Executive search typically centers on “safe pair of hands”, the opposite of what is needed for break-through innovation
When external talent is hired, the corporate expectation is to first have them to learn the organization and the business before making any suggestions for change
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TALENT MAKE AND BUY
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Tell us about a time when the tried-and-true solution did not work and if you were able to solve the problem and how?
Tell us about a situation in which you had to come up with several new ideas in a short period of time. Were they accepted and were they successful?
Describe the most significant plan or program that you ever developed or implemented
Tell us about a time when you created a new process or program that was considered risky
Tell us about a problem that you solved in a unique or unusual way. Were you happy with the outcome?
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TALENT MAKE AND BUY
> TOOL: INTERVIEW QUESTIONS
148
> TOOL: RECRUITING HEATMAP
TALENT MAKE AND BUY
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READING VIDEO
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Encouraging organizations to change, 2011, The influence model, Colin Price
Meeting the challenge of corporate entrepreneurship, 2012, Harvard Business review
What every CEO should know about creating new businesses, Harvard Business Review, D.A. Garvin, 2012
The innovators DNA, Clayton M. Christensen, Hal B Gregersen & Jeff Dyer, 2011
N/A
TALENT MAKE AND BUY
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CULT OF INNOVATOR ROCK STAR THE OUTPUT DIFFERENCE BETWEEN AN OUTSTANDING CREATIVE TALENT AND A GOOD CREATIVE TALENT IS HUGE , MUCH MORE SIGNIFICANT THAN IN OPERATING OR MANAGEMENT JOBS
“We recruit creative people, but we can’t fit them into our system so they leave quickly”
“We don’t have any creative or innovative leaders in our board”
“We aren’t able to recruit creative people at the top – just doesn’t fit in our same salary scheme”
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K E E PC A L M
THE CAVALRYHAS ARRIVED
CULT OF INNOVATOR ROCK STAR
> ESSENCE: BRING IN THE INSPIRATIONAL TOP TALENT
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> KEY INSIGHTS
Appoint the “top of the top”, and avoid past glory. Recruit creative top talent with failures on their resume
Failure is a source of creative dissent and pursuit. Success often equals repeat and complacency. Protect your hired top talent again the organizational push-back
Be willing to pay a special price for special talents (in terms of salary, recognition and freedom to act)
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CULT OF INNOVATOR ROCK STAR
153
Source: Clean Sheet Capital Redesign
> KEY INSIGHTS: BREAK THROUGH TRADITIONAL QUALIFICATIONS
CULT OF INNOVATOR ROCK STAR
Be flexible in applying the traditional qualifications for senior roles
It’s imperative to staff the “next big thing” with the strongest business development and business building talent (so not with junior staff ).
Typically senior talent is staffed on largest units not on the ones with the most future potential, and full-time involved on the most pressing operational issues, not full time leading future oriented projects.
IBM is one of few companies with a pool of senior development leaders available for project leadership.
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154
What new skills does your organization need (next to what it’s already good at)?
Who externally (individual or firm) is truly leading edge in this skill area?
How are you going to win this individual or firm over?
> TOOL: GUESS WHO
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Source Picture: Khan, Bethany Ann. Retrieved January 24, 2010, from Flickr www.flickr.com/photos/bethanykhan/4466733616/
CULT OF INNOVATOR ROCK STAR
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> SOURCES
READING VIDEO
Meeting the challenge of corporate entrepreneurship, Harvard Business review, 2012
What every CEO should know about creating new businesses, Harvard Business Review, D.A. Garvin, 2012
The innovators DNA, Clayton M. Christensen, Hal B Gregersen & Jeff Dyer, 2011
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The innovators DNA, Hal Gregerson. www.youtube.com/watch?v=Xy6Ex1C_SAs
Claudia Kotchka on innovation at P&G, Institute of Design Strategy Conference, May 2008www.vimeo.com/5203345
CULT OF INNOVATOR ROCK STAR
156156
GOVERNANCE HEADROOM FORM A SUPERVISORY BOARD THAT CAN STRETCH THE EXECUTIVE BOARD AND STRETCHES WITH THE BOARD IN THE CONTINUED ACCELERATED GROWTH IN TERMS OF VISION AND INNOVATION
“I am selecting my new board member, but don’t know what is a good mix”
“How can I get my supervisory board to get more innovative minded?”
“What is the right balance of controlling what happens versus pushing our innovative vision for our board?”
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157GOVERNANCE HEADROOM
A supervisory board that can stretch the executive board and stretches with the executive board in the continued accelerated growth in terms of visioning and innovation
Source Picture: Baltic Development Forum. Retrieved January 19, 2011, from Flickr www.flickr.com/photos/baltic-development-forum/5369318551/
> ESSENCE
158
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> KEY INSIGHTS
Compose the board for heavy engagement on growth, innovation, and change
Avoid any legacies and protection of the past
Aim for deep engagement
Avoid too strict split in roles, work as a team
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GOVERNANCE HEADROOM
159GOVERNANCE HEADROOM
> FRAMEWORK: BOARD COMPOSITION ELEMENTS
160 GOVERNANCE HEADROOM
Does the board actively engage with the CEO and top team in development of corporate strategy, providing judgment and senior perspective and approval of strategy?
Does the board support the CEO in major periodic performance reviews with the top team including challenging aspirations and performance?
Does the board assist the CEO in senior management reviews; help set performance standards; proactively counsel CEO on senior management development and succession planning?
Does the board help the CEO and top team transform culture of providing external perspectives and judgment and modeling behaviors; encourage injection of external perspectives in company processes?
Does the board provide external access?
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> TOOL: BOARD INVOLVEMENT CHECK-LIST
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> SOURCES
READING VIDEO
Business Knowledge Resource onlinewww.business.gov.in/corporate_governance/index.php
eHOW, What Is the Purpose of Corporate Governance? www.ehow.com/about_6630366_purpose-corporate-governance_.html
Organisation for Economic Co-operation and Development www.OECD.org
United Nations ESCAPwww.unescap.org/pdd/prs/ProjectActivities/Ongoing/gg/governance.asp
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Organizing the company into innovation projects and ventures, with tracking systems that stimulate risk taking, small failures, learning and improvement, that leverage the wisdom and insights from the entire organization, customers and suppliers, and are fueled with patient funding
INNOVATION SYSTEMS
162
163INNOVATION SYSTEMS OVERVIEW
LEVERAGE THE CROWD
PATIENT FUNDINGSELF ORGANIZING SYSTEMS
LEARNING LOOPS
The “crowd”, customers in particular, but also competitors, suppliers, professionals, academia, and financiers, provides a great platform for co-creation, and support for roll-out
Manage the innovation portfolio separate, in a “VC-like” manner, with sufficient patience
For innovation or adaptability, the principle of emergence and self-organizing systems becomes valuable
Innovation is a path of discovery, consisting of rapid, consecutive cycles of best-efforts trial, surprise insight, adjustment and next trial
> PAGE 185 > PAGE 199> PAGE 164 > PAGE 175
164164
SELF ORGANIZING SYSTEMS FOR INNOVATION OR ADAPTABILITY, THE PRINCIPLE OF EMERGENCE AND SELF-ORGANIZING SYSTEMS BECOMES VALUABLE
“In our organization each process is defined so precisely that it is difficult to step out”
“We are a traditional silo organization which works well, I don’t know where to start to stimulate cross pollination”
“There are no incentives to step out our usual way of working”
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165
Source Picture: Stroh, J. Retrieved October, 2012, from jarche.com www.jarche.com/wp-content/uploads/2012/10/fractal_JoachimStroh.jpg
SELF ORGANIZING SYSTEMS
> ESSENCE: DRIVE TOWARDS HIGH VALUE WORK
166
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> KEY INSIGHTS
SELF ORGANIZING SYSTEMS
For innovation or adaptability, the principle of emergence and self-organizing systems become valuable. This means to use spontaneous coordination through the self-interested behaviors of the employees and rules embedded in the way of interacting instead of the traditional formal and well-structured management processes to deliver and control outputs
Hierarchy and silos are the largest impediment to innovation. Large corporates stumble because of internal complexity. Instead of finding the optimal structure, try to avoid it
Various alternative coordination mechanisms exist including performance transparency, internal markets, projects, shared values, externalization of functions and coordination platforms
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167SELF ORGANIZING SYSTEMS
> KEY INSIGHTS: SILOS ARE OFTEN THE BIGGEST OBSTACLES
I strongly believe innovation is a team sport. The 2004 National Innovation Initiative report observed that innovation “is multidisciplinary and technologically complex. It arises from the intersections of different fields or spheres of activity.” That is why it often takes a group of people who are not only highly talented but who bring together diverse skills and points of view in order to successfully tackle the kinds of complex problems we face in the 21st century. But perhaps even more important, a collaborative approach to innovation helps provide the energy and emotional support that new ideas need in their very early stages. New ideas are almost always rough and ill-formed at first. Nothing works better than bouncing ideas off other, supportive people.
This back-and-forth dialogue is crucial in helping to shape the idea into something more concrete, understandable, and actionable. Then it is more ready to face the tougher challenges and criticisms from line management and others in the organization. That is why isolating people in organizational silos is one of the biggest obstacles to innovation.
Companies that are serious about innovation do everything possible to break down silos and encourage communication and collaboration across the organization and beyond. Fostering innovation is very hard, especially if the innovation is disruptive in nature. A spirit of innovation and collaboration does not come naturally to an organization. For such a spirit to take hold, it must become an integral part of the company’s culture. None of this is easy, but it is what a company must do.
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Source: Wladawsky-Berger, I. Retrieved August 22, 2008, from Business Week www.businessweek.com/stories/2008-08-22/the-challenges-of-innovationbusinessweek-business-news-stock-market-and-financial-advice
168 SELF ORGANIZING SYSTEMS
> KEY INSIGHTS: LET GO OF BUREAUCRATIC CONTROL
Management structures to coordinate activities are limiting the engagement, cross-pollination and capabilities of employees, which are especially important for innovation
So when innovation becomes more important, stimulating the principle of emergence and self-organizing systems rather than direct bureaucratic control
Example traffic system in Drachten, NL:
> Municipality took away traffic lights, pedestrian barriers, road markings and cycle lanes and created instead a “shared space” for all users of the road network
> Not only did the safety record go up but the speed of movement improved as well. Everyone got used to being a bit more careful
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Source: Birkinshaw, J., and Goddard, J. What is your management model. Retrieved January 01, 2009, from Harvard Business Reviewwww.hbr.org/product/what-is-your-management-model/an/SMR307-HCB-ENG
169SELF ORGANIZING SYSTEMS
> FRAMEWORK: ORGANIZATIONAL STRUCTURES
170 SELF ORGANIZING SYSTEMS
> KEY INSIGHTS: ALTERNATIVE COORDINATION SYTEMS
Performance transparency: provide employees with all information required to make informed own decisions
Internal markets: create markets for jobs, assignments, staffing, investments
Projects: organize around projects from one staffing pool
Shared values: embed shared values as compass to make right decentral decisions without need for consultation
Externalization/virtual organizations: outsource activities to create freedom to act and survive
Collaboration platforms; stimulate information sharing and mutual support
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171SELF ORGANIZING SYSTEMS
> KEY INSIGHTS: THE GORE CASE (1/2)
W.L. Gore & Associates, known mostly for its Gore-Tex range of high-performance fabrics, the company makes more than 1,000 products and employs 9,000 in 50 locations around the world. Wherever it operates, Gore is frequently ranked as one of the best possible places to work. Also in 50 years it has never made a loss
The core elements of Gore’s model: a collaborative decision-making process, an organization where leaders aren’t appointed but emerge from below, associates that have the knowledge and authority to make the critical real-time trade-offs
Associates are all owners in the company. Gore associates self-commit to what they want to work on. Rather than having a boss tell them what to do, they decide what they want to work on and where to make the greatest contribution
Rather than relying on a top-down appointment process, the organization determines who qualified to be a leader, based on the willingness of others to follow, based on a peer review process. The leader is not expected to be the most knowledgeable person on the team. Instead he/she wants to tap into the whole organization and distributes responsibilities to the associates who have the relevant knowledge. Gore resist titles, as it would put leaders in a box and a position where they assume authority to command others. The leader’s job is to make sure the culture is healthy: Is it working as a system? Are teams coming together? Are we getting diverse points of view? Are the best ideas rising to the surface? Their contribution is to help the organization scale and be effective.
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Source: Gary Hamelwww.garyhamel.com
172 SELF ORGANIZING SYSTEMS
> KEY INSIGHTS: THE GORE CASE (2/2)
People have the right to challenge, they have the right to know why a decision is the right one for the company. The leader has constantly to explain the rationale behind decisions, and to put it in the context of our culture. The most impactful decisions at Gore are made by small teams. Teams take a lot of time to come together, to build trust and to build relationships
Each associate gets a sponsor. A sponsor makes a personal commitment to an associate’s success and development
Gore likes to have all core functions co-located in its factories because innovation depends on having research, manufacturing and sales all in the same place, where they can build off each other. It also likes to split businesses that get too large—more than 250 or 300 people—to avoid the sense of ownership, the involvement in decision-making, the feeling that one can make an impact starts to get diluted
To drive discipline at Gore, everyone in the organization will be ranked by their peers, and their compensation will depend on this ranking. Typically, an associate will be evaluated by 20 or 30 peers and will, in turn, evaluate 20-30 colleagues. You rank your peers from top to bottom. It’s a forced ranking. Gore does not tell its associates what criteria to use, but simply asks them to base their ranking on who’s making the greatest contribution to the success of the enterprise. A committee of individuals with leadership roles put together an overall ranking. In setting compensation, the folks who are making the biggest contributions are also making the most money
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CommandDo you understand
and buy in to the direction and the
performance bar?
ControlHas a safety net been
put in place under you?
SELF ORGANIZING SYSTEMS
> TOOL: ORGANIZATIONAL EFFECTIVENESS TEST
EmpowerDo you have the mandate to act?
EnableDo you have the information and means required?
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READING VIDEO
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6 Ways to create a culture of innovation, Fast co designwww.fastcodesign.com/1672718/6-ways-to-create-a-culture-of-innovation?utm_content=buffer03e33&utm_source=buffer&utm_medium=twitter&utm_campaign=Buffer
Get self organized, Harvard Business Review, 2004
INSEAD case study: Transforming DNV: From Silos to Disciplined Collaboration across Business Units – Changes at the Top
The art of the intrapreneurshipwww.linkedin.com/today/post/article/20130701110415-2484700-the-art-of-intrapreneurship?utm_content=buffer73394&utm_source=buffer&utm_medium=twitter&utm_campaign=Buffer
N/A
SELF ORGANIZING SYSTEMS
175175
“We only launch our concepts at large scale and when they are 100% complete to prevent reputational losses”
“Once we have launched the concept – we hardly change it anymore”
“We only look at the sales number when launching a new product – it’s not very clear and easy to measure other things”
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LEARNING LOOP INNOVATION IS A PATH OF DISCOVERY, CONSISTING OF RAPID, CONSECUTIVE CYCLES OF BEST-EFFORTS TRIAL, SURPRISE INSIGHT, ADJUSTMENT AND NEXT TRIAL
176 LEARNING LOOPS
Source: Pingdom. “Why is almost half of Google in beta?”. Royal Pingdom. 24 September 2008royal.pingdom.com/2008/09/24/why-is-almost-half-of-google-in-beta/ http://royal.pingdom.com/2008/09/24/why-is-almost-half-of-google-in-beta/
> ESSENCE: APPLY CONTINUOUS DEVELOPMENT
Google has 45% of it’s products in BETA (22 out of 45 )
> Alerts
> Blog Search
> Book Search
> Google Chrome
> Finance
> Google Health
> Patent search
> Product Search
> Scholar
> Video
> Custom Search
> Calendar
> Docs
> Gmail
> Knol
> Orkut
> Talk
> Translate
> Google Pack
> Base
> Image Labeler
> News Archive Search
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> KEY INSIGHTS
LEARNING LOOPS
Innovation is a path of discovery, consisting of rapid, consecutive cycles of best-efforts trail, surprise insight, adjustment and next trial. Because innovation cannot be designed with precision but has to be “stumbled upon” this sequence of learning loops is necessary
Forecasting innovation is riddled with false assumptions. This is true even for professionals like Venture Capitalists. Hence constant piloting and pivoting
Experiments need to include multiple options, including “far out” ones, that can open completely new opportunities. This way the enterprise avoids getting locked in to optimizing a suboptimal solution
Online businesses are ideally positioned for high frequency of learning because of real time tracking of results.
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178 LEARNING LOOPS
> KEY INSIGHTS: TESTING AND LEARNING
> Revealed through asking “why?” and checking underlying rationale
> Customer is price sensitive because of budget constraints
> Actually they have substantial budgets
> Validated through hypothesis testing
> This product concept might break down
> Actually it works really well
> Discovered through prototype experimentation
> This product is targeted to adults
> Actually it appeals to youngsters
EXAMPLE
UNKNOWN UNKNOWNS
EXAMPLE
KNOWN UNCERTAINTIES
EXAMPLE
FALSE ASSUMPTIONS
179LEARNING LOOPS
> KEY INSIGHTS: EXAMPLES OF LEARNING LOOPS
Engineering firms building a model of a new factory to brainstorm and test various configurations and process flows
A TV channel constantly making programming and content changes and tracking impact on viewership the next day
An e-commerce company constantly adapting its web pages to keep improving click through rates
An insurance company constantly changing the scripts for its telephone sales force and tracking lead conversion performance
Note that all these examples can include a combination of continuous incremental improvement plus infrequent “far out” experiments
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180 LEARNING LOOPS
> KEY INSIGHTS: ONLINE TRACKING AND VIRAL MARKETING
Social sentiment, website usage, digital test, online surveys – these are all very low cost, real time, very granular tracking methods of any change in product or service offering
Corporations are starting to build good experience with taking online customer engagement seriously, involving customers in beta testing, constantly collecting their feedback, and responding in the open to their complaints
Online experimentation has the additional benefit; beta launches that hit the bull’s eye can trigger powerful viral marketing effect, whereas failed experiments that are withdrawn die quickly in terms of online buzz
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181LEARNING LOOPS
Source Picture: Porembiński, K. Retrieved June 28, 2008, from Flickr www.flickr.com/photos/paszczak000/2672829276/
> FRAMEWORK: LEARNING LOOP OF CONTINUOUS EXPERIMENT
182 LEARNING LOOPS
> FRAMEWORK: INNOVATION SHARK
Combining hypothesis and experimentation>
183
Launch prototype
> Make a tangible prototype (crude assembly, fab lab, 3D print, Lego, beta website, etc.)
> Launch it in by handing it to customers
Track results and derive learning
> Test performance on key output metric > Look for unexpected results (especially in the detail) > Collect negative feedback from test users > Engage users in co-creation: invoke suggestions
Repeat ideation
> Review initial assumptions – what was a surprise? > Design new variations,: more of what seems to work
well, plus new surprise additions
Change prototype and test changes
> Don’t waste time on writing reports or internal meetings > Focus on getting results. Tweak the prototype quickly
and launch a new test run
LEARNING LOOPS
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> TOOL: RAPID PROTOTYPING
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READING VIDEO
LEARNING LOOPS
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Startup Metrics for Pirates (Dave McClure)www.slideshare.net/dmc500hats/startup-metrics-for-pirates-long-version
Closing the delivery gap, Bain & Co. www.bain.com/publications/articles/closing-the-delivery-gap-newsletter.aspx
Why the lean start-up changes everything. Steve Blank, Harvard Business Review
The lean start-up, Eric Ries
Authors@Google: Eric Ries “The Lean Startup”www.youtube.com/watch?v=f EvKo90qBns
Tom Hulme, IDEO at G8 Innovation Conferencewww.youtube.com/watch?v=kSLK3A1Kbl8
185185
“Less than 10% of our new ideas and concepts are coming from outside”
“We prefer work with partners in a robust JV style”
“We did do a crowdsourcing effort but we got too many ideas from too many contributors and we failed to engage them throughout the process”
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LEVERAGE THE CROWD THE “CROWD”, CUSTOMERS IN PARTICULAR, BUT ALSO COMPETITORS, SUPPLIERS, PROFESSIONALS, ACADEMIA, AND FINANCIERS, PROVIDES A GREAT PLATFORM FOR CO-CREATION, AND SUPPORT FOR ROLL-OUT
186 LEVERAGE THE CROWD
Source Picture:www.innocentive.com
Innocentive provides a website where companies can post scientific problems to be solved by individuals
Winning outcomes receive money prices
Most problems are solved by students or other people with scientific interest
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> ESSENCE: USING THE CROWD FOR TECHNOLOGY DEVELOPMENT
187LEVERAGE THE CROWD
Source Picture:www.magazinevoce.com.br
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> ESSENCE: USING THE CROWD FOR CO-CREATION
Magazine Você
> Brazilian electronics and home ware retailer ML created a new platform “Magazine Você”
> Here people can create their own mini stores on the social networking sites, stocking them up with 60 items from ML’s inventory
> Within 2 weeks, 20.000 people opened online stores with 40% higher conversion rates than the traditional ecommerce channels
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188 LEVERAGE THE CROWD
Source Picture:https://getontheshelf.walmart.com
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> ESSENCE: USING THE CROWD FOR CO-CREATION
Walmart Lab– Get on the shelf
> Walmart reached out to both established businesses and new innovators with the “get on the shelf ” contest, to uncover the next products to be stocked
> The “American Idol”-like contest that attracted more than 4,000 products from inventors, entrepreneurs and small businesses across the nation
> During 2 voting rounds, over 1 million votes were cast
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189LEVERAGE THE CROWD
Source Picture:www.quirky.com
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> ESSENCE: USING THE CROWD FOR CO-CREATION
Quirky
> Quirky offers co-creation along the whole process from ideation to sales
> Every contribution is free, if you want to upload your idea, you pay a small fee. The reward is a revenue share of the products developed, depending on the level of influence you have
> 87.000 designs have been submitted, 360.000 registered users
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190 LEVERAGE THE CROWD
> ESSENCE: USING THE CROWD FOR COMMERCIALIZATION
3M’s Lead User products show greater commercial promise
Source: Lillen Et Al, Surgical instruments example
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> KEY INSIGHTS
LEVERAGE THE CROWD
Different objectives are recognized: market intelligence, technology development, co-creation and commercialization
Some customers are much more important (factor 100) than others in engaging with the brand and in influencing others, and it pays to identify these and engage them directly
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192 LEVERAGE THE CROWD
> KEY INSIGHTS: LEVERAGING THE CROWD COMES IN MANY FORMS
DIGITAL OR PHYSICAL SHELVING WITH CUSTOMERS
PRODUCT PROTOTYPING, TESTING, TASTING WITH CONSUMERS
PARTICIPATORY PRODUCT RESEARCH/DEVELOPMENT LAB
PRODUCT ARCHIVE/ LIBRARY
CONSUMER INSIGHTS/RESEARCH
IDEA SHARING AND POSTING
CONCEPT TESTING
CONCEPT PRIORITIZATION
CONTESTS FOR DESIGNS/RECIPES
EXTERNAL PARTNERSHIPS FOR DESIGN/R&D
COLLABORATIVE INTERACTION BETWEEN MANUFACTURER, VENDOR, CONSUMER, CUSTOMER
SCAN OF INTERNATIONAL AND PARALLEL INDUSTRY TECHNOLOGIES AND BUSINESS TRENDS
USER-CREATED/VETTED ADS
VIRAL MARKETING
SOCIAL MEDIA / CROWD-SOURCING (E.G., FACEBOOK, TWITTER)
LEVERAGING EMPLOYEES AS SOURCE OF IDEA GENERATION
EMPLOYEE INNOVATION COMPETITIONS
BRICKS AND MORTAR INNOVATION CENTERS/STORES
DIGITAL CONSUMER COMMUNITIES
COLLABORATIVE/SOCIAL MARKETING
EMPLOYEE COLLABORATION
DIGITAL CONSUMER COMMUNITIES
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EXAMPLE MODELS OBSERVED ACTIVITIES EXAMPLE COMPANIES
193LEVERAGE THE CROWD
> KEY INSIGHTS: THE ECOSYSTEM IS NOT HOMOGENEOUS
Source Picture: Life of Riley. Retrieved September 5, 2011, from Wikipedia www.en.wikipedia.org/wiki/File:1percentrule.svg
> Only 1% of the people in any kind of community create content (i.e., reviews, commentary, perspectives) and generate the majority of the output
9% edit or modify that content
90% view the content without contributing
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194 LEVERAGE THE CROWD
> KEY INSIGHTS: ON AVERAGE 500X EXPOSURE
Source Picture: NM Incte Retrieved December, 2013, from nmincite.com www.nmincite.com
195LEVERAGE THE CROWD
> TOOL: NET PROMOTER SCORE
Source: The Net Promoter Score and System. Retrieved December, 2013, from netpromoter.com www.netpromoter.com/why-net-promoter/know/
Question: How likely is it that you would recommend this product or brand to a friend or colleague?
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196 LEVERAGE THE CROWD
> TOOL: SOCIAL NETWORK ANALYSES
Source Picture: Retrieved December, 2013, from Wikipedia www.en.wikipedia.org/wiki/Social_network_analysis_software
Key scientific contact. Many contacts, not yet a “big shot”
and relatively easily accessible
197LEVERAGE THE CROWD
> TOOL: DIFFERENT STRUCTURES
Broadcasted academic collaboration topics
Small laboratories close to universities or on grounds
Web-based community platform
Spin-in and scanning network of VCs and partners
Experience testing labs
Connect-and-develop web platform
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READING VIDEO
LEVERAGE THE CROWD
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Fronteer strategy www.slideshare.net/Fronteer/fronteer-strategy-5-guiding-principles-110426-presentation
How P&G triples its innovation success rate, Harvard Business Review, June 2011www.hbr.org/2011/06/how-pg-tripled-its-innovation-success-rate/
The next step in open innovation, McKinsey Quarterly review, June 2008
Which kind of collaboration is right for you? Harvard business review, December 2008www.hbr.org/2008/12/which-kind-of-collaboration-is-right-for-you/
Charles Leadbeater: The era of open innovationwww.ted.com/talks/charles_leadbeater_on_innovation.html
Clay Shirky: Institutions vs. collaborationwww.ted.com/talks/clay_shirky_on_institutions_versus_collaboration.html
199199
“We often have multiple projects for longer period of time on “orange” – we don’t have the guts to “kill” them”
“We typically invest too much too early on raising too high expectations that never can be met”
“We develop and test some innovative concepts left and right, thought we don’t have an innovation “pipeline”
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PATIENT FUNDING MANAGE THE INNOVATION PORTFOLIO SEPARATE, IN A “VC-LIKE” MANNER, WITH SUFFICIENT PATIENCE
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> KEY INSIGHTS
PATIENT FUNDING
Innovation is a learning process; accumulated insight leads to ultimate success. VCs tend to lose money on their first investments in a new area
Radical innovation portfolios typically “get in the money” after year seven. Almost all corporate venture funds are discontinued afer 5 years
Stage gate funding is the right process for continuous pruning, if applied with rigorous discipline and external metrics
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201PATIENT FUNDING
> KEY INSIGHTS: REALLOCATE FUNDS WITHIN PORTFOLIO
Source: How to put your money where your strategy is. McKinsey Quarterly, March 2012www.mckinsey.com
202 PATIENT FUNDING
> KEY INSIGHTS: SUCCESS FACTORS OF VCs
Select a portfolio within one area of opportunity, to accelerate learning and build network access
Pick the right industries - this is superior to the right individual ventures
Stay independent from corporate pet products and strategy or synergy considerations
Use objective, external metrics of progress. Forecasting is useless, only progress matters
Stimulate frequent pivoting
Increase funding per stage gate
Push for go and no-go decisions rather than recycling; decide on “right concept, right team, right time”
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203PATIENT FUNDING
> TOOL: OPTIMAL PORTFOLIO
Optimize portfolio on risk/return levels and time horizons>
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> SOURCES
READING VIDEO
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There is good money and there is bad money. Harvard Business Review
New project development stage gate overviewwww.slideshare.net/danzyger/new-product-development-stage-gate-process-overview
The art of managing innovation risk. June 2013, Accenturewww.accenture.com/us-en/outlook/Pages/outlook-journal-2013-art-of-managing-innovation-risk.aspx?c=mc_myoutlook2_10000115&n=emc_0613
Why “Low Risk” Innovation Is Costly. Overcoming the Perils of Renovation and Invention. Accenture
How to put your money where your strategy is. McKinsey Quarterly, March 2012
N/A
6739827812919
ISBN 978-1-291-67398-290000
INNOVATIVE ENTERPRISE ESSENTIALS
At THNK, we believe that build industry leadership through innovation and that the ability of a company to innovate can be deliberately orchestrated. We have discovered from our collaborations with entrepreneurs, corporates and in-depth research that continuous innovation requires a congruent approach between creative leadership, strategy, and organization. We framed these in 5 essential characteristics that determine whether your organization can innovate on an ongoing basis
This book covers these 5 essentials in detail. Each essential provides you with a framework to guide your thinking on innovation, highlights the most critical insights for successful adaptation and offers you tools to develop and test your ideas before putting these into practice. The essentials can be worked with on an individual basis, though they will come best to life as part of a THNK program
Hella is a core faculty at THNK. She brings a broad blend of experiences to the Accelerator program, ranging from structural engineering at ARUP, to commercial finance at Shell, and organizational transformations at McKinsey.
hella.schmidt@thnk.org
THNK is a leadership school in Amsterdam offering a part-time creative leadership program. The next generation of leaders must be creative. With curiosity, courage, and power needed to develop new ideas and solutions.
www.thnk.org
Meno is member-at-large & co-founder of THNK. He is former Director at McKinsey & Company, former board member of New Venture, NEMO and other organizations.
menno.vandijk@thnk.org
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