thnk innovative enterprise essentials

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and thrill for innovation but others struggle to sustain growth being unable to renew their business before it becomes outdated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


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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


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> EXITS

Source picture: Foster, D. Retrieved December, 2013, from Innosight wwww.innosight.com


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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


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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?


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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


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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


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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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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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> 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

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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


28 OVERVIEW

> UNDERLYING INNOVATIVE ENTERPRISE ESSENTIALS



Leveraged tailwindTrends & signalsCustomer dialogueNeue Kombinationen



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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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38 RENEWAL MUST

> 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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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


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/

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> 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


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


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


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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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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> 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

N/A

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>

65

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

66

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?

>

>

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

68

>

> >

>

> SOURCES

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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6969

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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70

> ESSENCE: A COMPLEMENTARY COMBINATION


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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71

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


72

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

>

>

>

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


73

> ESSENCE: STRATEGIC FIT IS ONLY ONE CRITERIA


Source: www.lilly.com

Example: JV assessment framework used by Lilly>

74

> TOOL: IP NETWORK MAPPING


Source: McKinsey & Companywww.mckinsey.com

75

> TOOL: INNOVATION PARTNERSHIP CURRENCIES (1/2)


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

76

> TOOL: INNOVATION PARTNERSHIP CURRENCIES (2/2)


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

77

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> >

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> SOURCES

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

>

>


7878

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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79

>

> 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”

>

>

>

80 LEVERAGED TAILWIND

> 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/

82

>

> >

>

> 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


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83

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

83

84 BIG VISION OVERVIEW

THREE HORIZONS

> PAGE 85

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

> PAGE 99> PAGE 93

INNOVATION PLAYS

Three major plays of innovation can be observerd: technology, business model disruption and customer delight

> PAGE 108

8585

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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86 THREE HORIZONS

> 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/

87

> 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

89

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%

>

>

THREE HORIZONS

> KEY INSIGHTS: HAVE A BALANCED PORTFOLIO

90

> 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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94

> ESSENCE

BIPOLAR FOCUS

Source Picture: Fisk, P. GeniusWorkswww.emeraldinsight.com

Combine long term commitment with short term action>

95

> FRAMEWORK: TIME HORIZON AND MANAGEMENT ATTENTION

BIPOLAR FOCUS

96

>

> 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

>

97

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

101

> 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

>

>

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>

103

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> KEY INSIGHTS

>

>

MOEBIUS RING

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

105

> 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

106

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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MOEBIUS RING

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

> PAGE 126> PAGE 110 > PAGE 117

110110

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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111

> 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

112

Leveraging the external market to source intellectual property and develop new technologies is often more effective than developing these in-house

>


NEXT TECHNOLOGY LOOKS INITIALLY INFERIOR

> KEY INSIGHTS: TECHNOLOGY PERFORMANCE OVER TIME

113

> 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/


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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115

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)


> TOOL: ZAPPA’S TECHNOLOGY CARDS

116

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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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118 INNOVATION PLAYS: BUSINESS MODELS

> 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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> KEY INSIGHTS


> KEY INSIGHTS: SPLIT OF VALUE CHAINS

iPod example:>


> 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

>

>

>

Source Pictures: www. store.makerbot.com/replicator2.html , www.odesk.com , www.airbnb.com


> 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

>

>

>

Source Pictures: www. redtomato.biz/magnet , www.vasttrafik.se/timetables/sightseeing/index_eng.html ,www.commons.wikimedia.org/wiki/File:Shanghai_62580000_Taxi.jpg


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

>

>

> 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

124

Source: THNK Venture model www.thnk.org

INNOVATION PLAYS: BUSINESS MODELS

> TOOL: THNK VENTURE DESIGN

125

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READING VIDEO

INNOVATION PLAYS: BUSINESS MODELS

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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

126126

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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127INNOVATION PLAYS: CUSTOMER DELIGHT

> 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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128 INNOVATION PLAYS: CUSTOMER DELIGHT

> 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

>

>


> 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)

>

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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> TOOL: USER INSIGHT AND FORESIGHT TOOLS

Source: THNK Concepting Flowwww.thnk.org

132

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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


The Power of Habit Why We Do What We Do in Life and Businesswww.youtube.com/watch?v=a6p3lG9EDXw

133

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

133

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

> PAGE 144

ORCHESTRATING TEAMS

There are three essential elements to an effective team: casting, setting-up the team, followed by leading the organization

> PAGE 135

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

> PAGE 156

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

> PAGE 150

135135

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

137

>

> KEY INSIGHTS

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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ORCHESTRATING TEAMS

138

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

139

> 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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140

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

> >

Source: storebukkebruse. Retrieved September 14, 2012, from Flickr www.flickr.com/photos/tusnelda/8408155485/

ORCHESTRATING TEAMS

141

> TOOL: MBTI PRE-TEST

DISCLAIMER

TEAM IMPLICATIONS

MBTI PRE-TEST

>

>

>

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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ORCHESTRATING TEAMS

142

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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> TOOL: TEAM ASSESSMENT

ORCHESTRATING TEAMS

143

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> SOURCES

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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ORCHESTRATING TEAMS

144144

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

>

> 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

147

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

149

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> SOURCES

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

150150

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


> ESSENCE: BRING IN THE INSPIRATIONAL TOP TALENT

152

>

> 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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153

Source: Clean Sheet Capital Redesign

> KEY INSIGHTS: BREAK THROUGH TRADITIONAL QUALIFICATIONS


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

>

>

>

Source Picture: Khan, Bethany Ann. Retrieved January 24, 2010, from Flickr www.flickr.com/photos/bethanykhan/4466733616/


155

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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

>

>

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


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

>

> 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

>

>

>

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

161

>

> >

>

> 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

N/A

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GOVERNANCE HEADROOM

162

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

>

> KEY INSIGHTS


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

>

>

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

>

>

>

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


> FRAMEWORK: ORGANIZATIONAL STRUCTURES


> 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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>

>

>


> 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.

>

>

>

>

Source: Gary Hamelwww.garyhamel.com


> 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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173

CommandDo you understand

and buy in to the direction and the

performance bar?

ControlHas a safety net been

put in place under you?


> TOOL: ORGANIZATIONAL EFFECTIVENESS TEST

EmpowerDo you have the mandate to act?

EnableDo you have the information and means required?

174

>

> >

>

> SOURCES

READING VIDEO

>

>

>

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


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”

>

>

>

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

>

177

>

> 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.

>

>

>

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

>

>

>

>

> TOOL: RAPID PROTOTYPING

184

>

> >

>

> SOURCES

READING VIDEO

LEARNING LOOPS

>>

>

>

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”

>

>

>

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

>

>

>

> ESSENCE: USING THE CROWD FOR TECHNOLOGY DEVELOPMENT

187LEVERAGE THE CROWD

Source Picture:www.magazinevoce.com.br

>

> 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

>


Source Picture:https://getontheshelf.walmart.com

>


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

>


Source Picture:www.quirky.com

>


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

>


> ESSENCE: USING THE CROWD FOR COMMERCIALIZATION

3M’s Lead User products show greater commercial promise

Source: Lillen Et Al, Surgical instruments example

>

191

>

> 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

>


> 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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>

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>

>

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>

EXAMPLE MODELS OBSERVED ACTIVITIES EXAMPLE COMPANIES


> 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

>

>

>


> KEY INSIGHTS: ON AVERAGE 500X EXPOSURE

Source Picture: NM Incte Retrieved December, 2013, from nmincite.com www.nmincite.com


> 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?

>


> 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


> 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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198

>

> >

>

> SOURCES

READING VIDEO

LEVERAGE THE CROWD

>>

>

>

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”

>

>

>

PATIENT FUNDING MANAGE THE INNOVATION PORTFOLIO SEPARATE, IN A “VC-LIKE” MANNER, WITH SUFFICIENT PATIENCE

200

>

> 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

>

>

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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>

>

>

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203PATIENT FUNDING

> TOOL: OPTIMAL PORTFOLIO

Optimize portfolio on risk/return levels and time horizons>

204

>

> >

>

> SOURCES

READING VIDEO

>

>

>

>

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.

[email protected]

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.

[email protected]

thnk innovative enterprise essentials

Education

continuous innovation

innovation inventing

overview9 innovation

importance of innovation

spontaneous innovation

innovative new solutions

new product market solutions

market trends