strategic innovation management
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Strategic InnovationStrategic InnovationManagementManagement
Creating a Sustainable CompetitiveCreating a Sustainable Competitive
AdvantageAdvantageBy Dr. Iain SandersBy Dr. Iain Sanders
(Design for Innovation Ltd.)(Design for Innovation Ltd.)
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What you dont know about yourWhat you dont know about your
customers and your business maycustomers and your business may
be costing you millions!be costing you millions!
For example:
technology,
product &
service
value-creation
For example:
The best
customer
solutions to
maximize your
customers
profitability
For example:
Your businessmodel is nowobsolete,limiting youreffectivenessand ability toachieve asustainablecompetitiveadvantage
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Business FocusBusiness Focus::Effectiveness Effectiveness
BusinessBusiness
ProactivityProactivity
Business FocusBusiness Focus::
Efficiency Efficiency
BusinessBusiness
ResponsivenessResponsiveness
7 levels for maximizing potential7 levels for maximizing potential
innovation value-creationinnovation value-creation
1.1.
Business Model IdeationBusiness Model Ideation
2.2.
Business Model OptimizationBusiness Model Optimization
3.3.
Customer Solution OptimizationCustomer Solution Optimization
4.4.
Solution-driven ServicesSolution-driven Services
5.5.Solution-driven ProductsSolution-driven Products
6.6.
Delivery ProcessesDelivery Processes
7.7.
Technology EnablersTechnology Enablers
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IN INCREASING DETAILWITH GREATER PRECISION
3. PERFORMANCE-DRIVEN DELIVERY CHANNELS3. PERFORMANCE-DRIVEN DELIVERY CHANNELS
A. PROCESS DISTINCTIONSA. PROCESS DISTINCTIONSB. PROCESS INTEGRATIONB. PROCESS INTEGRATION C. PROCESSC. PROCESS
COORDINATIONCOORDINATION
D. PROCESS VALIDATIOND. PROCESS VALIDATION
1. SOLUTION-DRIVEN NEEDS ASSESSMENT1. SOLUTION-DRIVEN NEEDS ASSESSMENT
A. NEEDS ANALYSIS AUDITA. NEEDS ANALYSIS AUDIT B. RESULTS-DRIVEN EVALUATIONB. RESULTS-DRIVEN EVALUATIONREQUIREMENTSREQUIREMENTS
C. PLANNING & COMMUNICATINGC. PLANNING & COMMUNICATINGRESULTS REQUIREMENTSRESULTS REQUIREMENTS
2. DATA-DRIVEN TARGETS AND MEASURES2. DATA-DRIVEN TARGETS AND MEASURES
A. REVIEW STRATEGY METRICSA. REVIEW STRATEGY METRICS B. ESTABLISH METRIC WORLDVIEWB. ESTABLISH METRIC WORLDVIEW C. DEVELOP INTEGRATEDC. DEVELOP INTEGRATEDSTRATEGIC WORLDVIEWSTRATEGIC WORLDVIEW
4. VALUE-DRIVEN PROCESS OPTIMIZATION4. VALUE-DRIVEN PROCESS OPTIMIZATION
A. PROCESS DEFINITIONA. PROCESS DEFINITION B. PROCESS ANALYSISB. PROCESS ANALYSIS C. PROCESSC. PROCESSOPTIMIZATIONOPTIMIZATION
D. PROCESSD. PROCESSIMPLEMENTATIONIMPLEMENTATION
6. PROFIT-DRIVEN PORTFOLIO MANAGEMENT6. PROFIT-DRIVEN PORTFOLIO MANAGEMENT
A. DEFINEA. DEFINEREQUIREMENTSREQUIREMENTS
B. PORTFOLIOB. PORTFOLIOPROCESS DESIGNPROCESS DESIGN
C. TRIAL INSTALL &C. TRIAL INSTALL &ADJUSTADJUST
D. IMPLEMENT &D. IMPLEMENT &IMPROVEIMPROVE
5. PROCESS-DRIVEN PROJECT MANAGEMENT5. PROCESS-DRIVEN PROJECT MANAGEMENT
A. PROJECT ALIGNMENTA. PROJECT ALIGNMENT B. PHASE-GATE MANAGEMENTB. PHASE-GATE MANAGEMENT C. PROJECT PERFORMANCEC. PROJECT PERFORMANCE
7. OUTCOME-DRIVEN SYSTEMS INTEGRATION7. OUTCOME-DRIVEN SYSTEMS INTEGRATION
A. SYSTEM SETUPA. SYSTEM SETUP B. SYSTEM TRAININGB. SYSTEM TRAINING C. SYSTEM SUPPORTC. SYSTEM SUPPORT
QUANTIFIED, QUALIFIED AND MAXIMIZED CURRENT AND FUTURE VALUE-QUANTIFIED, QUALIFIED AND MAXIMIZED CURRENT AND FUTURE VALUE-
CREATION:CREATION: Sustainable Innovative Solutions Ltd. Sustainable Innovative Solutions Ltd.
20082008
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FINANCE
INFRASTRUCTURE CUSTOMER
VALUEVALUE
PROPOSITIONPROPOSITION
OFFER
gives an overall view of
a company's bundle of
products and services
PARTNERPARTNER
NETWORKNETWORK
portrays the network of
cooperative
agreements with other
companies
DISTRIBUTIONDISTRIBUTION
CHANNELSCHANNELS
describes the channels
to communicate and
get in touch with
customers
VALUEVALUE
CONFIGURATIONCONFIGURATION
describes the
arrangement of
activities and resources
CUSTOMERCUSTOMER
RELATIONSHIPRELATIONSHIP
explains the
relationships a
company establishes
with its customers
COSTCOST
STRUCTURESTRUCTURE
sums up the monetary
consequences to run a
business model
REVENUEREVENUE
STREAMSSTREAMS
describes the revenue
streams through which
money is earned
TARGETTARGET
CUSTOMERSCUSTOMERS
describes thecustomers and
customer segments a
company wants to offer
value to
CORECORE
CAPABILITIESCAPABILITIES
outlines the capabilities
required to run a
company's business
model
Creating, Defining and Improving aCreating, Defining and Improving a
Companys Business ModelCompanys Business Model
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Improve the Business ModelImprove the Business Model
1.1. Customer SegmentsCustomer Seg
ments who are our customers? who are our customers?
2.2. Value PropositionValue Prop
osition - what do we offer each of our client- what do we offer each of our clientsegments?segments?
3.3. ChannelsChannels - how do we reach each of our client segments?- how do we reach each of our client segments?
4.4. Customer RelationshipsCustomer Relationship
s how do we relate to our clients how do we relate to our clientsover time?over time?
5.5. Revenue StreamsRevenue Streams - how do we earn money?- how do we earn money?
6.6. Key ResourcesKey
Resources based on which assets are we running our based on which assets are we running ourbusiness?business?
7.7. Key ActivitiesKey
Activities - what key activities do we need to run our- what key activities do we need to run ourbusiness model?business model?
8.8. Partner NetworkPartner Network- with which partners do we leverage our- with which partners do we leverage ourbusiness?business?
9.9. Cost StructureCost Structure where are our most important costs? where are our most important costs?
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Strategies for continually developing aStrategies for continually developing a
more profitable business modelmore profitable business model
11stst StageStage: Target most productive areas for: Target most productive areas for
improving the business modelimproving the business model
22ndnd
StageStage
: Provide sustained benefits for all: Provide sustained benefits for all
stakeholdersstakeholders
33rdrd StageStage: Expand business model: Expand business model
innovationinnovation
44thth StageStage: Pursue higher-potential business: Pursue higher-potential business
model optimizationmodel optimization
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Identify and Qualify New OpportunitiesIdentify and Qualify New Opportunities
ExploitedExploited
OpportunitiesOpportunities
UnexploitedUnexploited
OpportunitiesOpportunities
UnexploitedUnexploited
OpportunitiesOpportunitiesUnexploitedUnexploited
OpportunitiesOpportunities
Served Customers Unserved Customers
Unarticulated
Needs
Articulated
Needs
Articulated-Served
Customers: knownworld of customer
needs
Articulated-
Unserved
Customers:offerings developed
& perfected forexisting customers
extended to newcustomers in
different markets
Unarticulated-
Unserved
Customers:proactive and
visionary companieslike Honda seek toget inside he heads
& experiences ofunaddressed
customers
Unarticulated-
Served Customers:
potential forsatisfied customers
to becomefrustrated or
uninterested ifunexpressed but feltneeds not addressed
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Opportunities IdentifiedOpportunities Identified
A.A. Unexpected SuccessesUnexpected Successes
B.B. Unexpected FailuresUnexpected Failures
C.C. Unexpected External EventsUnexpected External Events
D.D. Process WeaknessesProcess Weaknesses
E.E. Industry / Market StructureIndustry / Market StructureChangesChanges
F.F. High-Growth AreasHigh-Growth Areas
G.G. Converging TechnologiesConverging Technologies
H.H. Demographic ChangesDemographic Changes
I.I. Perception ChangesPerception Changes
J.J. New KnowledgeNew Knowledge
Dimensions AvailableDimensions Available
1.1. OfferingsOfferings
2.2. PlatformPlatform
3.3. SolutionsSolutions
4.4. CustomersCustomers
5.5. Customer ExperienceCustomer Experience
6.6. Value CaptureValue Capture
7.7. ProcessesProcesses
8.8. OrganizationOrganization
9.9. Supply ChainSupply Chain
10.10. PresencePresence
11.11. NetworkingNetworking
12.12. BrandBrand
Dimensions to Opportunities AvailableDimensions to Opportunities Available
Vs.Vs.
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Dimensions to Opportunities IdentifiedDimensions to Opportunities IdentifiedDimensionDimension DefinitionDefinition ExamplesExamples
OfferingsOfferings Develop innovative new products or servicesDevelop innovative new products or services Gillette Mach3Turbo razorGillette Mach3Turbo razor
Apple iPod music player & iTunes music serviceApple iPod music player & iTunes music service
PlatformPlatform
Use common components or building blocks toUse common components or building blocks to
create derivative offeringscreate derivative offerings
General Motors OnStar telematics platformGeneral Motors OnStar telematics platform
Disney animated moviesDisney animated movies
SolutionsSolutions Create integrated and customized offerings thatCreate integrated and customized offerings thatsolve end-to-end customer problemssolve end-to-end customer problems
UPS logistics services Supply Chain SolutionsUPS logistics services Supply Chain Solutions
DuPont Building Innovations for constructionDuPont Building Innovations for construction
CustomersCustomers Discover unmet customer needs or identifyDiscover unmet customer needs or identifyunderserved customer segmentsunderserved customer segments
Enterprise Rent-A-Car focus on replacement car rentersEnterprise Rent-A-Car focus on replacement car renters
Green Mountain Energy focus on green powerGreen Mountain Energy focus on green power
CustomerCustomer
ExperienceExperience
Redesign customer interactions across all touchRedesign customer interactions across all touchpoints and all moments of contactpoints and all moments of contact
Washington Mutual Occasio retail banking conceptWashington Mutual Occasio retail banking concept
Cabelas store as entertainment experience conceptCabelas store as entertainment experience concept
Value Capturealue Capture Redefine how company gets paid or createRedefine how company gets paid or createinnovative new revenue streamsinnovative new revenue streams
Google paid searchGoogle paid search
Blockbuster revenue-sharing with movie distributorsBlockbuster revenue-sharing with movie distributors
ProcessesProcesses Redesign core operating processes to improveRedesign core operating processes to improveefficiency and effectivenessefficiency and effectiveness
Toyota Production System for operationsToyota Production System for operations
General Electric Design for Six Sigma (DFSS)General Electric Design for Six Sigma (DFSS)
OrganizationOrganization Change form, function or activity scope of theChange form, function or activity scope of thefirmfirm
Cisco partner-centric networked virtual organizationCisco partner-centric networked virtual organization
Procter & Gamble front-back hybrid organization forProcter & Gamble front-back hybrid organization for
customer focuscustomer focus
Supply ChainSupply Chain Think differently about sourcing and fulfillmentThink differently about sourcing and fulfillment Moen ProjectNet for collaborative design with suppliersMoen ProjectNet for collaborative design with suppliers
General Motors Celta use of integrated supply and online salesGeneral Motors Celta use of integrated supply and online sales
PresencePresence Create new distribution channels or innovativeCreate new distribution channels or innovativepoints of presence, including the places wherepoints of presence, including the places whereofferings can be bought or used by customersofferings can be bought or used by customers
Starbucks music CD sales in coffee storesStarbucks music CD sales in coffee stores
Diebold RemoteTeller System for bankingDiebold RemoteTeller System for banking
NetworkingNetworking Create network-centric intelligent and integratedCreate network-centric intelligent and integratedofferingsofferings
Otis Remote Elevator Monitoring serviceOtis Remote Elevator Monitoring service
Department of Defense Network Centric WarfareDepartment of Defense Network Centric Warfare
BrandBrand Leverage a brand into new domainsLeverage a brand into new domains Virgin Group branded venture capitalVirgin Group branded venture capital
Yahoo! as a lifestyle brandYahoo! as a lifestyle brand
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REVENUESCOSTS
KEY ISSUESTO SOLVE
ACTIVITIES
PARTNERS RELATIONS
OFFER CLIENTSCHANNELS
ValueValue
Proposition 1Proposition 1
CostingCosting
Issue1Issue1
CustomerCustomer
Relations 1Relations 1
CustomerCustomer
Segment 1Segment 1
ConfigureConfigure
Value 3Value 3CoreCore
Capability 4Capability 4
PartnerPartner
Network 1Network 1
Revenues 1Revenues 1
DeliveryDeliveryChannel 1Channel 1
ConfigureConfigure
Value 2Value 2
CoreCore
Capability 2Capability 2
ConfigureConfigure
Value 1Value 1
CoreCoreCapability 1Capability 1
CoreCore
Capability 3Capability 3
CostingCosting
Issue 2Issue 2
DeliveryDelivery
Channel 2Channel 2
MappingOpportunities
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REVENUESCOSTS
KEY ISSUESTO SOLVE
ACTIVITIES
PARTNERS RELATIONS
OFFER CLIENTSCHANNELS
selling stuffselling stuff
on the Webon the Web
IT infraIT infra
automatizedautomatized
relationshipsrelationships
massmass
customercustomer
data servicesdata services
Amazon.comAmazon.com
data griddata grid
partnerspartners
selling stuffselling stuff
Amazon.comAmazon.com
warehousingwarehousing
& distribution& distribution
distributiondistribution
contentcontent
managementmanagement
productproductselectionselection
productproduct
searchsearch
marketingmarketing
affiliatesaffiliates
Example:
AMAZON.COM
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Strategic alternatives / value propositionStrategic alternatives / value proposition
ValueValue What we are striving forWhat we are striving for
Valuationfilter
Operationalfilter
Strategicfilter
Economic
filter
Evaluate Strategic AlternativesEvaluate Strategic Alternatives
SourcesSources
of valueof value
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Quantify Opportunities with a SWOT analysisQuantify Opportunities with a SWOT analysis
ExploitExploit SearchSearch
ConfrontConfront Avoid or PrepareAvoid or Prepare
InternalEnvironment
Strengths
External
EnvironmentThreats
External
EnvironmentOpportunities
Opportunity ismatched with
strength. Businesssgrowing edge
where it cancapitalize on areas
of strategicadvantage
Opportunity ismatched with
weakness.Opportunities exist
that theorganization can
recognize but is notequipped to tackle
Threat matched withweakness. Some
threats avoidable,and others are not.
Confrontingcompetitive threatswith weakness is notonly dangerous but
drains resources
Threat is matchedwith organizationalstrength mobilizeto limit and controlthe looming danger
InternalEnvironment
Weaknesses
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REVENUESSTREAMS
COSTSSTRUCTURE
CORECAPABILI-
TIES
VALUECONFIG-
URATION
PARTNERNETWORK
CUSTOMERRELATIONS
VALUEPROPOSI-
TION
TARGETCUSTOMER
SEGMENTS
DELIVERYCHANNELS
ImprovingOpportunities
5
6
5
6
ThreatsThreats
OpportunitiesOpportunities
1 1
1
WeaknessesWeaknesses
1
1
2
2
StrengthsStrengths
2
2
2
22
2
2
2
5
5
6
6
1
2 2
2
E l
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REVENUESCOSTS
KEY ISSUESTO SOLVE
ACTIVITIES
PARTNERS RELATIONS
OFFER CLIENTSCHANNELS
selling stuffselling stuff
on the Webon the Web
IT infraIT infra
automatizedautomatized
relationshipsrelationships
massmass
customercustomer
data servicesdata services
Amazon.comAmazon.com
data griddata grid
partnerspartners
selling stuffselling stuff
Amazon S3Amazon S3
Amazon.comAmazon.com
Internet APIInternet API
Web2.0Web2.0
companiescompanieswarehousingwarehousing
& distribution& distribution
distributiondistribution
contentcontent
managementmanagement
productproductselectionselection
A9 productA9 product
searchsearch
data storagedata storage
feesfees
productproduct
searchsearch
search enginesearch engine
revenuesrevenues
e-commercee-commerce
sitessites
InternetInternet
marketingmarketing
affiliatesaffiliates
Example:
AMAZON.COM
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Mapping Problems / OpportunitiesMapping Problems / Opportunities
TargetSegments
(TS)
ValuePropositions
(VP)
ValueConfigurations
(VC)
CoreCapabilities
Customer
Domain
Functional
Domain
Physical
Domain
Resource
Domain
WHAT? HOW?
Vision Design
Phase:
Customer
wants & needs
WHAT? HOW?
Mission Design
Phase:
Strategies to
satisfy needs
WHAT? HOW?
Implementation
Design Phase:
Processes to
execute strategies
(CC)
Strategy Formulation & ImplementationStrategy Formulation & Implementation
VISION MISSION
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MeasuringMeasuring
Value-drivenValue-drivenImplement-Implement-
ationation
6
Customer
Satisfaction(34 measures)
1
Employee
Satisfaction(22 measures)
2
Investor
Satisfaction
(27 measures)
3
Regulator &
Community
Satisfaction
(27 measures)
4
Supplier
Satisfaction
(14 measures)
5
StakeholderStakeholder
Satisfaction MeasuresSatisfaction Measures
VISION MISSION
24
Develop Products
& Services
(18 measures)
16
Generate
Demand
(17 measures)
17
Fulfill
Demand
(35 measures)
18
Plan & Manage
Enterprise:
Financial
Operations
(17 measures)
19
Plan & Manage
Enterprise:
Human
Resources
(33 measures)
20
Plan & ManageEnterprise:
Operations
(15 measures)
21
Plan & Manage
Enterprise:
Plan Enterprise
(10 measures)
22
Plan & Manage
Enterprise:
Stakeholder
Relations
(39 measures)
23
Processes forProcesses for
Executing StrategiesExecuting Strategies
29
Infrastructure
(16 measures)
25
People
(21 measures)
26
Practices
(7 measures)
27
Technology
(19 measures)
28
Capabilities to FulfillCapabilities to Fulfill
Process RequirementsProcess Requirements
6
Customer
Contribution
(14 measures)
1
Employee
Contribution
(11 measures)
2
Investor
Contribution
(11 measures)
3
Regulator &
Community
Contribution
(9 measures)
4
Supplier
Contribution
(4 measures)
5
StakeholderStakeholder
Contribution MeasuresContribution Measures
12
Corporate
Strategy
(12 measures)
8
Business
Unit
Strategy
(17 measures)
9
Brand, Product
& Service
Strategy
(19 measures)
10
Operating
Strategy
(13 measures)
11
Strategies for SatisfyingStrategies for Satisfying
Stakeholder Wants & NeedsStakeholder Wants & Needs
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Customer Satisfaction who are our customers and who are our customers and
what do they want and need?what do they want and need?
VALUEVALUE
PROPOSITIONPROPOSITION
DISTRIBUTIONDISTRIBUTION
CHANNELSCHANNELS
CUSTOMERCUSTOMER
RELATIONSHIPRELATIONSHIP
REVENUEREVENUE
STREAMSSTREAMS
TARGETTARGET
CUSTOMERSCUSTOMERS
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Other Stakeholder Contributions what contributions do what contributions do
we require from our other stakeholders if we are towe require from our other stakeholders if we are to
maintain and develop our capabilities?maintain and develop our capabilities?
VALUEVALUE
PROPOSITIONPROPOSITION
VALUEVALUE
CONFIGURATIONCONFIGURATION
CORECORE
CAPABILITIESCAPABILITIES
COSTCOST
STRUCTURESTRUCTURE
PARTNERPARTNER
NETWORKNETWORK
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Strategies what strategies do we have to put in place what strategies do we have to put in place
to satisfy the wants and needs of our key stakeholders?to satisfy the wants and needs of our key stakeholders?
DELIVERYDELIVERY
CHANNELSCHANNELS
VALUEVALUE
CONFIGURATIONCONFIGURATION
TARGETTARGET
CUSTOMERSCUSTOMERS
CORECORE
CAPABILITIESCAPABILITIES
VALUEVALUE
PROPOSITONPROPOSITONREVENUEREVENUE
STREAMSSTREAMS
PARTNERPARTNER
NETWORKNETWORK
CUSTOMERCUSTOMER
RELATIONSHIPSRELATIONSHIPS
COSTCOST
STRUCTURESTRUCTURE
Explore:
1. Corporatestrategy
2. Business unit
strategy
3. Brand, product &
service strategy
4. Operating
strategy
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Processes what critical processes do we require if we what critical processes do we require if we
are to execute these strategies?are to execute these strategies?
DELIVERYDELIVERY
CHANNELSCHANNELS
VALUEVALUE
CONFIGURATIONCONFIGURATION
TARGETTARGET
CUSTOMERSCUSTOMERS
CORECORE
CAPABILITIESCAPABILITIES
VALUEVALUE
PROPOSITONPROPOSITONREVENUEREVENUE
STREAMSSTREAMS
PARTNERPARTNER
NETWORKNETWORK
CUSTOMERCUSTOMER
RELATIONSHIPSRELATIONSHIPS
COSTCOST
STRUCTURESTRUCTURE
Explore:
1. Developing
products &services
2. Generating
demand
3. Fulfilling demand
4. Planning &
managing the
enterprise
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Capabilities what capabilities do we need to operate what capabilities do we need to operate
and enhance these processes?and enhance these processes?
DELIVERYDELIVERY
CHANNELSCHANNELS
VALUEVALUE
PROPOSITIONPROPOSITION
TARGETTARGET
CUSTOMERSCUSTOMERS
PARTNERPARTNER
NETWORKNETWORK
CORECORE
CAPABILITIESCAPABILITIESREVENUEREVENUE
STREAMSSTREAMS
VALUEVALUE
CONFIGURATIONCONFIGURATION
CUSTOMERCUSTOMER
RELATIONSHIPSRELATIONSHIPS
COSTCOST
STRUCTURESTRUCTURE
Explore:1. Infrastructure
2. People
3. Best practices
4. Technology
CUSTOMER SATISFACTIONCUSTOMER SATISFACTIONE GE G
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CUSTOMER VALUE-DRIVEN STRATEGIESCUSTOMER VALUE-DRIVEN STRATEGIES
CUSTOMER PROCESS-DRIVEN CAPABILITIESCUSTOMER PROCESS-DRIVEN CAPABILITIES
CUSTOMER STRATEGY-DRIVEN PROCESSESCUSTOMER STRATEGY-DRIVEN PROCESSES
CUSTOMER CONTRIBUTIONCUSTOMER CONTRIBUTION
CUSTOMER SATISFACTIONCUSTOMER SATISFACTION
FastFast RightRight AffordableAffordable EasyEasy
ProfitProfit GrowthGrowth FeedbackFeedback TrustTrust
Extend / renewExtend / renewproducts andproducts and
services offeredservices offered
Attract potentiallyAttract potentiallyprofitable newprofitable new
customerscustomers
Retain profitableRetain profitableexisting customersexisting customers
Grow share of targetGrow share of targetmarket segmentsmarket segments
DevelopDevelopproducts andproducts and
servicesservices
Build marketBuild marketoffering alliancesoffering alliances
GenerateGeneratedemanddemand
Fulfill demandFulfill demand Plan and managePlan and manageenterpriseenterprise
ResearchandDev
elop
ResearchandDev
elop
Merchandising/p
roduc
Merchandising/p
roduc
Pricingmanagement
Pricingmanagement
Marketingcampai
gnsa
Marketingcampaignsa
Alliancemanagem
ent
Alliancemanagem
ent
Salesanddistribu
tionc
Salesanddistribu
tionc
Salesforceeffectivenes
Salesforceeffectivenes
Technicalservices
Technicalservices
Orderfulfillmento
perati
Orderfulfillmento
perati
After-salesservice
After-salesservice
Customerrelation
ship
Customerrelation
ship
Qualitymanagement(et
Qualitymanagement(et
E.GE.G
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ARE THE DATAARE THE DATA
CAPTURED ANDCAPTURED AND
ANALYZED?ANALYZED?
QUALITY OFQUALITY OFMEASURMENTMEASURMENT
PRACTICESPRACTICES
QUALITY OFQUALITY OFMANAGEMENTMANAGEMENT
PRACTICESPRACTICES
ARE THE DATAARE THE DATA
ACTED UPONACTED UPON
EFFECTIVELY?EFFECTIVELY?
ARE THE RIGHTARE THE RIGHT
THINGS BEINGTHINGS BEING
MEASURED?MEASURED?
ARE THEY BEINGARE THEY BEING
MEASURED INMEASURED IN
THE RIGHT WAY?THE RIGHT WAY?
BUSINESSBUSINESS
PERFORMANCEPERFORMANCE
BenchmarkBenchmark
your growthyour growthpotential andpotential and
profitabilityprofitability
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Best Practice BusinessBest Practice Business
Performance ComparisonPerformance Comparison
1.1. Business ResponsivenessBusiness Responsiveness (Efficiency):(Efficiency): How well the enterprise achieves its goals.How well the enterprise achieves its goals.
1.1. Business EffectivenessBusiness Effectiveness (Proactivity):(Proactivity): How effective are enterprise goals forHow effective are enterprise goals for
delivering best practice?delivering best practice?
http://c/Documents%20and%20Settings/Iain/My%20Documents/Programs/New/Surveys/2nd%20Survey/SurveySummary.htmlhttp://c/Documents%20and%20Settings/Iain/My%20Documents/Programs/New/Surveys/2nd%20Survey/SurveySummary.htmlhttp://c/Documents%20and%20Settings/Iain/My%20Documents/Programs/New/Surveys/2nd%20Survey/SurveySummary.htmlhttp://c/Documents%20and%20Settings/Iain/My%20Documents/Programs/New/Surveys/4th%20Survey/SurveySummary.htmlhttp://c/Documents%20and%20Settings/Iain/My%20Documents/Programs/New/Surveys/4th%20Survey/SurveySummary.htmlhttp://c/Documents%20and%20Settings/Iain/My%20Documents/Programs/New/Surveys/4th%20Survey/SurveySummary.htmlhttp://c/Documents%20and%20Settings/Iain/My%20Documents/Programs/New/Surveys/2nd%20Survey/SurveySummary.html -
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What is Business Intelligence?What is Business Intelligence?
DataData InformationInformation KnowledgeKnowledge IntelligenceIntelligence
$ ROI
Pow
erofInfo
rm
Predictive
Modeling &Optimization
Data Mining forData Mining for
effectiveeffective
DatabaseDatabase
MarketingMarketing
Predictive Modeling &Optimization Put into
Action
BusinessIntelligence
(BI)
Wholistic systemsWholistic systems
thinking tracking &thinking tracking &
improving response ratesimproving response rates
and ROI from sales &and ROI from sales &
marketing campaignsmarketing campaigns
RawData
E.G.E.G.LoggingLogging
CustomerCustomer
CallCall
StandardReports
E.G.E.G.PanoramaPanorama
SalesSales
RecordedRecordedDescriptive
Models
E.G.E.G.PerformancePerformance
MeasureMeasure
AlignmentAlignment
with KPIswith KPIs
Ad hocReports& OLAP
E.G.E.G.
CrystalCrystalReportsReports
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Customer Relationship ManagementCustomer Relationship Management
Customer LifecycleCustomer Lifecycle
ManagementManagement
DataData InformationInformation KnowledgeKnowledge IntelligenceIntelligence
$ ROI
Pow
erofInfo
rm
PredictivePredictive
Modeling &Modeling &
OptimisationOptimisation
RawRaw
DataData
StandardStandard
ReportsReports
DescriptiveDescriptiveModelsModels
Ad hocAd hoc
ReportsReports
& OLAP& OLAP
Predictive Market
IntelligenceBusinessIntelligenceCapability
Business PerformanceAlignment
Spend when & where greatest impact
Predictive Modeling &Predictive Modeling &
Optimisation Put intoOptimisation Put into
ActionAction
Customer-driven BusinessCustomer-driven Business
IntelligenceIntelligence Best PracticesBest Practices
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76
Customer
Equity
Management
13
Forecasting
& Predictive
Modeling
15
Effective
Marketing
Promotions
16
Quantify
Marketing
Plans
17
Quantify
Decisions
18
Audit
Marketing
19
Accurate
& Reusable
Methods
20
Marketing
Communi-
cations
21
Accountable
Marketing
23
Quality
Market
Research
24
Business Effectiveness ResultsBusiness Effectiveness Results
Client Example
C stomer Val e B ilding Opport nitiesCustomer Value Building Opportunities
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Customer Value-Building OpportunitiesCustomer Value-Building Opportunities
ACQUIREACQUIREprofitableprofitable
CUSTOMERSCUSTOMERS
1. GET CUSTOMERS1. GET CUSTOMERS
RETAINRETAINprofitableprofitable
CUSTOMERSCUSTOMERS
WIN BACKWIN BACKprofitableprofitable
CUSTOMERSCUSTOMERS
ELIMINATEELIMINATEUnprofitableUnprofitable
CUSTOMERSCUSTOMERS
2. KEEP CUSTOMERS2. KEEP CUSTOMERS
UpsellUpsell
ADDITIONALADDITIONAL
PRODUCTSPRODUCTS
Cross-sellCross-sell
OTHEROTHER
PRODUCTSPRODUCTS
ReferralReferralBENEFITSBENEFITS
ReduceReduce SERVICE &SERVICE &
OPERATIONAL COSTSOPERATIONAL COSTS
3. GROW CUSTOMERS3. GROW CUSTOMERS
Client Example
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Sources of Customer Potential ValueSources of Customer Potential ValueActual vs. Potential ValueActual vs. Potential Value
ActualActual(Current)(Current)
ValueValue
$$
Pay forPay forServiceService
LowerLowercostcost
to serveto serve
IncreaseIncreaseshare ofshare ofwalletwallet
PotentialPotentialValueValue
ImproveImproveretentionretention
GrowGrowcategorycategory
spendingspending
GrowGrowadjacentadjacent
categorycategoryspendingspending
Develop Customer Value Building SolutionsDevelop Customer Value Building Solutions
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Develop Customer Value-Building SolutionsDevelop Customer Value-Building Solutions
with your Customerswith your Customers
1.QUANTIFY1.QUANTIFY
CUSTOMERCUSTOMER
CURRENTCURRENT
& FUTURE& FUTURE
VALUEVALUE
2. QUALIFY2. QUALIFY
PROFITABLEPROFITABLE
CUSTOMERCUSTOMER
GROWTHGROWTH
OPPORTUNITIESOPPORTUNITIES
3. MAXIMIZE3. MAXIMIZE
CUSTOMERCUSTOMER
VALUEVALUE
ADDINGADDING
SOLUTIONSSOLUTIONS
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Customer Partnerships for Customer-Customer Partnerships for Customer-
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Customer Partnerships for Customer-Customer Partnerships for Customerdriven Innovation:driven Innovation:
Involve Your Customers as Co-innovators
Board
Marketing
Leadership
R&D
Finance
Operations
CustomersCustomers
Sales
Purchasing
B i M d l Eff tiB i M d l Eff ti
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Business Model EffectivenessBusiness Model Effectiveness1. Define shareholder value-adding requirements1. Define shareholder value-adding requirements
2. Prioritise outputs delivering value-added2. Prioritise outputs delivering value-added3. Prioritise & consolidate value-drivers delivering outputs3. Prioritise & consolidate value-drivers delivering outputs
4. Prioritise & consolidate value-builders developing / supporting value-builders4. Prioritise & consolidate value-builders developing / supporting value-builders
5. Provide top-down performance measurement & management alignment5. Provide top-down performance measurement & management alignment
5. Provide bottom-up performance measurement & management alignment5. Provide bottom-up performance measurement & management alignment
4. Prioritise & consolidate event-impacts4. Prioritise & consolidate event-impacts
3. Align event-capture with performance measures according to their impact & influence3. Align event-capture with performance measures according to their impact & influence
2. Prioritise Latency-Recency-Frequency (LRF)-Event-Capture & Visualization2. Prioritise Latency-Recency-Frequency (LRF)-Event-Capture & Visualization
1. Scope real-time, activity-based business intelligence requirements1. Scope real-time, activity-based business intelligence requirements
EventsEvents Performance MeasuresPerformance Measures PatternsPatterns Systemic StructuresSystemic Structures
Technology Enablers EfficiencyTechnology Enablers Efficiency
Top-Down Requirements will drive Bottom-Up Data ConsolidationTop-Down Requirements will drive Bottom-Up Data Consolidation
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Thank you for your time!Thank you for your time!
For more information please visit:For more information please visit:
http://www.designforinnovation.comhttp://www.designforinnovation.com
Tel: +64(273)566-401Tel: +64(273)566-401Email: [email protected]: [email protected]
http://www.designforinnovation.com/http://www.designforinnovation.com/http://www.designforinnovation.com/