How to achieve strategic innovation?  Process and culture perspective            Jeroen De Flander          Munich, 13 Jan...
1. What is strategic innovation?2. What kind of processes should we put in place?3. What kind of cultural change should we...
A process?      A tool?     A management style?A philosophy?   A culture?       A mystery?
What’s the biggest car-renting company in the world?
Location       Airports                        DowntownMarketing      Travel Agents                   Mechanics & insuranc...
_ What’s the industry we want to play in?_ Overall competitive rules?_ Industry trends?_ Competitive advantage resides in ...
1   Split the strategic innovation process in 32   Manage conflict with existing strategy3   Encourage innovation behaviou...
1 Split the strategic innovation process in 3    Search                     Incubate         Execute
1 Split the strategic innovation process in 3 steps    Search                    Incubate                    Execute_   In...
1 Split the strategic innovation process in 3 steps    Search                    Incubate                    Execute_   In...
2 Manage conflict with the existing strategy     Threat or                  Threat or        Threat or   opportunity?     ...
2 Manage conflict with the existing strategy1. A conflict with the current business model:    –   Cannibalisation    –   B...
2 Manage conflict with the existing strategySuggestions:_ Grow to a decent size_ Test it within desired customer segment_ ...
3 Encourage innovation behaviour  “Don’t tell people to be innovative.  Rather, encourage them to adopt behaviours that  l...
3 Encourage innovation behaviour  _   Debating assumptions  _   Questioning things we take for granted  _   Experimenting ...
4 Create the right environment      Search                     Incubate                       Execute_    Industry        ...
5 Demystify strategy                       _ Remember the old Martini commercial. Ideas can                         come f...
6 Grow leaders and capabilities
7 Get rid of the strategy touristsPowerPoint fanatic                   From PowerPoint to practiceDo as I say, not as I do...
7 Get rid of the strategy tourists
8 Don’t loose value1. Did you know that companies loose between 40 to 60% of   their strategy during implementation?   Har...
8 Don’t loose value
8 Don’t loose value
8 Don’t loose value
8 Don’t loose value1.   Strategy Focus2.   Strategy Communication3.   Initiative Management4.   Individual Objective Setti...
8 Don’t loose valueSkilled ManagersEngaged People &Performance-Driven CultureStrategy FocusIndividual Objective SettingSup...
8 Don’t loose value                          “Initiative management is the spot                      where strategy transl...
8 Don’t loose value1. Strategic initiatives: poorly staffed and budgeted     _ 49% of all strategic initiatives are poorly...
8 Don’t loose value1.   Strategic initiatives: poorly staffed and budgeted     _ 49% of all strategic initiatives are poor...
8 Don’t loose value1.   Strategic initiatives: poorly staffed and budgeted     _ 49% of all strategic initiatives are poor...
1. Don’t forget to look for ways to continue to improve the   current value proposition and make the current strategy more...
4. Don’t focus only on the product or service. A risk, especially in   an engineering environment5. Recapture company heri...
8. Learn to play with the value chain/business model_   Transactional versus recurring revenues   _   Physical versus virt...
Jeroen De Flander is a seasoned internationalStrategy Execution expert, top executive coach,seminar leader and highly rega...
How to achieve strategic innovation?  Process and culture perspective
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Strategic innovation - GDFSuez University

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How to create strategic innovation in large organisations - process and culture perspective.
This is the slide set from my presentation for the Senior Management Forum, GDFSuez.

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Strategic innovation - GDFSuez University

  1. 1. How to achieve strategic innovation? Process and culture perspective Jeroen De Flander Munich, 13 January 2011
  2. 2. 1. What is strategic innovation?2. What kind of processes should we put in place?3. What kind of cultural change should we promote?4. Provide input for reflection on growth vectors? “Don’t measure performance by what you have accomplished, but by what you should have accomplished within your capabilities.”
  3. 3. A process? A tool? A management style?A philosophy? A culture? A mystery?
  4. 4. What’s the biggest car-renting company in the world?
  5. 5. Location Airports DowntownMarketing Travel Agents Mechanics & insuranceDelivery Airport Parking lots Home pick-upDrop off Airport HomeOrganisation Centralised DecentralisedSegment Business & pleasure travelers Car replacementAge cars Mainly new High average ageFee high LowWithin the same industry, Enterprise combines activities in the value chain in a different way to provide benefits to a different customer segment
  6. 6. _ What’s the industry we want to play in?_ Overall competitive rules?_ Industry trends?_ Competitive advantage resides in the value chain_ Redefine ‘the who’ and ‘the how’ in a certain industry_ A business model = combination of choices within the value chain to get and maintain this advantage_ Ability to find, grow and exploit competitive advantage
  7. 7. 1 Split the strategic innovation process in 32 Manage conflict with existing strategy3 Encourage innovation behaviour4 Create the right environment5 Demystify strategy6 Grow leaders and capabilities7 Get rid of the strategy tourists8 Don’t loose value
  8. 8. 1 Split the strategic innovation process in 3 Search Incubate Execute
  9. 9. 1 Split the strategic innovation process in 3 steps Search Incubate Execute_ Industry _ Trial & error _ Streamline_ Business model _ Business case _ Business as usual_ Find value _ Test value _ Grow value_ Creativity _ Passion _ Action
  10. 10. 1 Split the strategic innovation process in 3 steps Search Incubate Execute_ Industry _ Trial & error _ Streamline_ Business model _ Business case _ Business as usual_ Find value _ Test value _ Grow value_ Creativity _ Passion _ Action“the strategist” “the entrepreneur” “the manager”
  11. 11. 2 Manage conflict with the existing strategy Threat or Threat or Threat or opportunity? opportunity? opportunity?
  12. 12. 2 Manage conflict with the existing strategy1. A conflict with the current business model: – Cannibalisation – Brand identity – Culture/values – Distribution – Incentive system2. No enthusiasm from existing customers. “Disruptive strategic innovations offer a different value proposition from what the established players offer. As a result, they attract customers that are different from the customers that the established players focus on. As a result, if you ask your own customers if they want them, they will lead you astray (Christensen, 1997) ”3. The human side – Too big: the ego as a strategy killer. Protect domain and power position. – Too small: don’t get any attention because to small compared to other activities – No impact on bonus
  13. 13. 2 Manage conflict with the existing strategySuggestions:_ Grow to a decent size_ Test it within desired customer segment_ Decide pro-actively about possible trade-offs and communicate heavily_ Manage integration into regular business_ …
  14. 14. 3 Encourage innovation behaviour “Don’t tell people to be innovative. Rather, encourage them to adopt behaviours that lead to strategic innovation.” - Costas Markides Which behaviour creates innovation?
  15. 15. 3 Encourage innovation behaviour _ Debating assumptions _ Questioning things we take for granted _ Experimenting & trying unorthodox ideas _ Looking outside / copying with pride _ Willingness to stick neck out _ Taking initiative AND! Identify & discourage behavior _ Giving & receiving honest feedback that does not fit _ Taking risks _ Working together _ Empathy towards customers / listening “Ive missed more than 9000 shots in my career. Ive lost almost 300 games. 26times, Ive been trusted to take the game winning shot and missed. Ive failed over and over and over again in my life. And that is why I succeed” Michael Jordan
  16. 16. 4 Create the right environment Search Incubate Execute_ Industry _ Trial & error _ Streamline_ Business model _ Business case _ Business as usual_ Find value _ Test value _ Grow value_ Creativity _ Passion _ Action “the strategist” “the entrepreneur” “the manager”_ Local resources. _ Act like a venture _ Classic budget Carve out time. capitalist would do approach_ Selection based on _ Selection based on _ Just do it rules of competition test and business case_ Reward trying hard _ Reward ‘intelligent’ _ Reward results failure_ Encourage _ Encourage drivers _ Encourage execution revolutionaries heroes _ Punish low performers
  17. 17. 5 Demystify strategy _ Remember the old Martini commercial. Ideas can come from ‘Anybody, Anywhere, Anytime’. _ Communicate the current strategy _ Build, communicate and manage an easy strategy framework stick to it. _ Avoid strategy ‘blah blah’ and get rid of the strategy tourists _ Part of development program _ But more important: try it / do it. Not wait until you are...
  18. 18. 6 Grow leaders and capabilities
  19. 19. 7 Get rid of the strategy touristsPowerPoint fanatic From PowerPoint to practiceDo as I say, not as I do Actions speak louder than wordsWe need to start from scratch Let’s see what worksI’m too important and don’t do Getting things done is my priority
  20. 20. 7 Get rid of the strategy tourists
  21. 21. 8 Don’t loose value1. Did you know that companies loose between 40 to 60% of their strategy during implementation? Harvard Business Review2. Do I know exactly where my company, department or team is losing value?3. What can I do to close the execution gap? “However beautiful the strategy, you should occasionally look at the results” - Sir Winston Churchill
  22. 22. 8 Don’t loose value
  23. 23. 8 Don’t loose value
  24. 24. 8 Don’t loose value
  25. 25. 8 Don’t loose value1. Strategy Focus2. Strategy Communication3. Initiative Management4. Individual Objective Setting5. Skilled Managers6. Engaged People and Performance-Driven Culture7. Performance-Related Pay8. Support for Managers “Don’t measure performance by what you have accomplished, but by what you should have accomplished within your capabilities.”
  26. 26. 8 Don’t loose valueSkilled ManagersEngaged People &Performance-Driven CultureStrategy FocusIndividual Objective SettingSupport for ManagersPerformance-Related PayStrategy CommunicationInitiative ManagementExtract from the Strategy Execution Barometer
  27. 27. 8 Don’t loose value “Initiative management is the spot where strategy translates into practice or remains on paper forever”
  28. 28. 8 Don’t loose value1. Strategic initiatives: poorly staffed and budgeted _ 49% of all strategic initiatives are poorly budgeted and staffed _ 92% of all managers are unhappy with resource allocation2. Strategic projects lack transparent accountabilities _ 1 in 4 managers: responsible for key strategic projects? _ 79% of all managers find the project accountabilities unclear3. Mismatch between project portfolio and strategy _ 1 in 5 projects fail to support the strategy _ 85%: mismatch between project portfolio and strategy
  29. 29. 8 Don’t loose value1. Strategic initiatives: poorly staffed and budgeted _ 49% of all strategic initiatives are poorly budgeted and staffed _ 92% of all managers are unhappy with resource allocation2. Strategic projects lack transparent accountabilities _ 1 in 4 managers: responsible for key strategic projects? _ 79% of all managers find the project accountabilities unclear3. Mismatch between project portfolio and strategy _ 1 in 5 projects fail to support the strategy _ 85%: mismatch between project portfolio and strategy
  30. 30. 8 Don’t loose value1. Strategic initiatives: poorly staffed and budgeted _ 49% of all strategic initiatives are poorly budgeted and staffed _ 92% of all managers are unhappy with resource allocation2. Strategic projects lack transparent accountabilities _ 1 in 4 managers: responsible for key strategic projects? _ 79% of all managers find the project accountabilities unclear3. Mismatch between project portfolio and strategy _ 1 in 5 projects fail to support the strategy _ 85%: mismatch between project portfolio and strategy
  31. 31. 1. Don’t forget to look for ways to continue to improve the current value proposition and make the current strategy more distinctive. Introduce new technologies, features, products or services that leverage other part in the value chain and fit with the current strategy. It works, it’s needed, it’s faster and it’s less disruptive.2. What combination in my value chain is unique and can I copy to another business unit?3. Social value (environment, society,...) is ‘the next big thing’ in strategic thinking. And it’s much more then CSR.
  32. 32. 4. Don’t focus only on the product or service. A risk, especially in an engineering environment5. Recapture company heritage6. Take fast action in times of crisis. What you do during the crisis determines your strategic position when it’s over Harvard Management Update (Baveja, Ellis, Rigby March 2008): a study of more than 700 companies over a six-year period found that “twice as many companies made the leap from laggards to leaders during the last recession (90-91) as during surrounding periods of economic calm. And most of these changes lasted long after the recession was over. “7. Strategy execution as a competitive advantage
  33. 33. 8. Learn to play with the value chain/business model_ Transactional versus recurring revenues _ Physical versus virtual_ Niche market versus mass market _ Tailor-made versus mass_ Capital expenditure versus partnership production_ Product versus service _ Fixed versus variable costs_ Direct sales versus indirect sales _ Paid versus free_ Scale versus scope _ Distributed versus centralised_ Personal versus automated _ In-sourcing versus out-sourcing_ Disruptive versus incremental _ Marketing versus sales_ Acquisition versus retention _ New versus copy-paste_ Human intensive versus system intensive_ One customer segment versus another
  34. 34. Jeroen De Flander is a seasoned internationalStrategy Execution expert, top executive coach,seminar leader and highly regarded keynote speaker.Jeroen has helped more than 15,000 managers in 20countries master the necessary execution skills. Hisbook, Strategy Execution Heroes, reached theAmazon bestseller list in 5 countries.He is co-founder of the performance factory – aleading research, training and advisory firm which issolely focused on helping individuals andorganisations increase performance through best-in-class Strategy Execution.For several years, he was the responsible managerworldwide of the Balanced Scorecard product line forArthur D. Little – a leading strategy consulting firm.The 50+ companies he has advised on variousstrategy execution topics include Atos Worldline, AXA,Base, Bridgestone, CEMEX, GDFSuez, Honda, ING,Johnson & Johnson, Komatsu and Sony.To book Jeroen to speak at your next event or to run astrategy execution seminar for your company, pleasecontact him through his websitewww.jeroendeflander.com orjeroen@jeroen-de-flander.com
  35. 35. How to achieve strategic innovation? Process and culture perspective
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