Developing and Managing aSuccessful

Innovation Strategy

Effective Innovation Strategies AnswerThree Key Questions:

How will weCreate value?

How will we

Deliver value?

How will we

Capture value?

Reasons to have aninnovation strategy:

1. To make choices

Overcommitment destroysproductivity

Average

Value-Added

Time on

Engineering

Tasks

Number of Projects perEngineer

Reasons to have aninnovation strategy:

2. To be able to change it

The S-curve Maps Major Transitions

Performance

Maturity

Takeoff

Ferment

Discontinuity

Time

Transitions often challenge existingorganizations severely

Transitions are hard!

• Answers to the key strategic questions:– How do we create value?– How do we capture value?– How do we deliver value?

• CHANGE!

A map of the course….

Technology

Markets

Competition

Organization

Maturity

Takeoff

Ferment

Value Creation

The nature of technical work changes

Performance We need to beresponsive & flexiblebut controlled

Can we make100,000?And service them?

Will it work?Exploration, fun,creativity key

Will it work?Exploration, fun,creativity key

Time

The marketing challenge evolves

Performance Stay close to yourcustomer – really close

Do we haveany referencecustomers?

Whoneeds this?

Whoneeds this?

Time

Some new technologies sell to niche marketswith less demanding requirements

Value Capture

Uniqueness & Complementary Assetsover the Life Cycle:

Takeoff

Maturity

Ferment

Uniqueness Complementary

Assets

The ways in which a firm captures value alsoevolve dramatically

Performance We may not be leading edgebut you’d rather buyfrom us because…

We can sell it,make it,service it, ship itMost of the time

Speed, IPDifferentiation,Frontier performance key

Speed, IPDifferentiation,Frontier performance key

Time

Value Delivery

The S-curve Maps Major Transitions

PerformanceMaturity

Takeoff

Ferment

Growth?

Time

Change challenges every aspect of anorganization

Leadership& Strategy

Structure &Process

Incentives

Culture &Mental Models

But strategically, growth must build onexisting assets…

Takeoff

Maturity

Ferment

Uniqueness Complementary

Assets

The Organizational Challenge:

Startups

B as U

Successful growth unites

entrepreneurial insight with

effective coordination

Control & Coordination

Entrepreneurial

Drive,

Freedom from

the “old ways”

What can be done?

Problems in Recognition(problems in strategy?)

• Growth opportunities do not arrive with labels on them• Forecasting the future of technology is hard• Forecasting customer needs and market demands is eve

n harder• Growth opportunities often look less profitable than the c

urrent business• Deep rooted mental models may make even “easy” reco

gnition difficult

Some discontinuities will pose harderproblems than others:

New needs

Lower margins

Old needs

Higher margins

But then they improved sufficiently totake the whole market

• Fear of Cannibalization• Time horizons & Incentives• Overload• Competency Traps

What can be done?

• Lead• Structure• Incent• Transform the culture & mental models

Where we go next:• Dealing with discontinuities:

– Synthes– Allied Chemical– Donnelley– Xerox Technology Ventures– Corporate ventures @ Procter & Gamble– Ciba Geigy/Alza

• The mechanics of doing strategy– Medtronics– Kirkham Instruments

• Pulling it all together– Kodak– Nokia