INNOVATIVE
ENTERPRISE
ESSENTIALS
INNOVATIVE ENTERPRISE ESSENTIALS
Copyright © 2013 by THNK. THE AMSTERDAM SCHOOL OF CREATIVE LEADERSHIP. All rights reserve...
3

INDEX

WILL TO INNOVATE

TRENDS & SIGNALS

56

CUSTOMER DIALOGUE

62

SPARKLING PARTNERSHIPS

69

LEVERAGED TAILWIND

7...
4

INTRODUCTION



Businesses become obsolete at an ever increasing speed. This is driven by forces like new
technology br...
INNOVATIVE ENTERPRISE ESSENTIALS

Orchestrating teams
Talent make and buy
Cult of innovator rock star
Governance headroom
...
6

HOW TO USE THIS BOOK



Essentials follow a standard format to facilitate ease of use and cater to different learning s...
7

OVERVIEW

A brief outline of each of the 5 innovative enterprise essentials
8

OVERVIEW
 DEFINITION OF INNOVATION


“INNOVATION is the application of new solutions that meet new or existing market n...
OVERVIEW

9

 INNOVATION WITHIN GROWTH

ALLOCATING RESOURCES TO
MARKET SEGMENTS THAT GROW
AUTONOMOUSLY

CONTINUOUS SERVICE...
10

OVERVIEW - WHY INNOVATE?
 IMPORTANCE OF INNOVATION


The market demands innovative new solutions that work much better...
OVERVIEW - WHY INNOVATE?
 STRONG DEPENDENCE ON INNOVATION FOR LONG TERM STRATEGY SUCCESS

Source: Koetzier, W., and Alon, ...
12

OVERVIEW - WHY INNOVATE?
 PREEMPTING CREATIVE DESTRUCTION

Source: Foster, R., and Caplan, S. “Creative Destruction: W...
OVERVIEW - WHY INNOVATE?
 EXITS

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

1...
14

OVERVIEW - WHY INNOVATE?
 MOST ENTERPRISES NEED TO GET BETTER AT INNOVATION
PERCENTAGE OF GLOBAL EXECUTIVES WHO AGREE ...
OVERVIEW - WHY INNOVATE?

15

 WHERE DOES YOUR COMPANY STAND ON INNOVATION?

DO YOU HAVE A
VISION WHERE AND
HOW TO CREATE ...
16

OVERVIEW - WILL TO INNOVATE
 WHAT IS THE TRADE-OFF THAT YOU MAKE?


Do you accept the dicotomy between short term resu...
OVERVIEW - WILL TO INNOVATE

17

 ESSENCE


Either having passion for ongoing innovation in the “DNA” of the organization ...
18

OVERVIEW - EXTERNAL ORIENTATION
 DO YOU RISK DELIVERY MISPERCEPTION?

Source: Bain  Company
www.bain.com
OVERVIEW - EXTERNAL ORIENTATION
 ESSENCE


Being externally orientated as main source for new ideas and best hunting groun...
20

OVERVIEW - BIG VISION
 DO YOU STRUGGLE TO MAKE YOUR INNOVATION VISION COMPELLING?

Source: Richard Branson
www.virgin....
OVERVIEW - BIG VISION
 EXAMPLE SIMPLE VISION: SOLAR AND WIND PROVIDING ALL POWER FOR EU

Source: www.sciencedirect.com, TH...
22

OVERVIEW - BIG VISION
 AND DOES YOUR INNOVATION VISION LACK SOCIAL RELEVANCE?



“People are seldom motivated by a num...
OVERVIEW - BIG VISION
 ESSENCE


Having a clear vision for the “next big thing”. It builds on the current strengths, trans...
24

OVERVIEW - TOP TALENT
 DO YOU LACK APPEAL TO INNOVATION TALENT?

SCALABLE STARTUP

CEO’S
PERSONAL
CONTRIBUTION

LARGE ...
OVERVIEW - TOP TALENT

25

 ESSENCE


Ensuring the organization nurtures, attracts and protects “ innovation super stars” ...
26

OVERVIEW - INNOVATION SYSTEMS
 ARE YOU PLUGGED IN CO-CREATION NETWORKS?

Source: McKinsey  Company
www.mckinsey.com
OVERVIEW - INNOVATION SYSTEMS
 ESSENCE


Organizing the company into innovation projects and ventures , with tracking syst...
28

OVERVIEW
 UNDERLYING INNOVATIVE ENTERPRISE ESSENTIALS

Orchestrating teams
Talent make and buy
Cult of innovator rock ...
29

WILL TO INNOVATE

Either having passion for ongoing innovation in the “DNA” of the organization or
having the understa...
30

WILL TO INNOVATE OVERVIEW

INNOVATORS DNA

RENEWAL MUST

INNOVATION
CONGRUENCE

Some enterprises have the natural
driv...
31

INNOVATORS DNA
SOME ENTERPRISES HAVE THE NATURAL DRIVE TO
INNOVATE, WITH CREATIVITY IN THEIR DNA AND AS CORE
ELEMENT I...
32

INNOVATORS DNA
 ESSENCE: INTRINSIC PUSH AND EXTERNAL PULL


Company drive



External expectations

“We brought you th...
INNOVATORS DNA

33

 KEY INSIGHTS: EXAMPLES OF INNOVATORS PREMIUM
THE WORLD’S MOST INNOVATIVE COMPANIES
(RANKED BY INNOVAT...
34

INNOVATORS DNA
 KEY INSIGHTS: ONLY THE NEXT BREAK THROUGH COUNTS


The innovator’s DNA has to be constantly nourished ...
INNOVATORS DNA

35

 TOOL: ALLOCATION OF INNOVATION BUDGET TO THREE CATEGORIES

EXISTING BUSINESS
IMPROVEMENT

NEW-TO-COMP...
36

INNOVATORS DNA
 SOURCES


READING



VIDEO



The most innovative companies 2012,
The state of the art in leading indu...
37

RENEWAL MUST
ENTERPRISES HAVE TO CONSTANTLY REINVENT
THEMSELVES TO AVOID WITHERING AWAY. BUSINESS
MODELS BECOME OBSOLE...
38

RENEWAL MUST
 ESSENCE: INNOVATE CONTINUOUSLY


Need to constantly innovate to avoid withering away

TRADITIONAL LOGIC
...
RENEWAL MUST
 ESSENCE: SUSTAINING GROWTH IS HARD TO DO

Source: Donald, L., Doz, Y., and Sheer, C. Retrieved May, 2006, fr...
40

RENEWAL MUST
 KEY INSIGHTS


Traditional logic was to innovate when the market started to decline; the new prevailing ...
RENEWAL MUST
 KEY INSIGHTS: AVOID THE GROWTH GAP


Avoid the vicious cycle resulting from waiting too long

Source: Christ...
42

RENEWAL MUST
 KEY INSIGHTS: A THICK AND BALANCED INNOVATION PIPELINE

Source: Innovation in Consumer Products: New pro...
RENEWAL MUST
 TOO: A BALANCED PORTFOLIO

43
44

RENEWAL MUST
 SOURCES


READING



VIDEO



Creating new growth platforms. Harvard
Business Review, May 2006





Busi...
45

INNOVATION CONGRUENCE
TO REALIZE SUCCESSFUL INNOVATION REQUIRES
COMMITMENT FROM THE TOP AND CONGRUENCE:
“TALK AND WALK...
46

INNOVATION CONGRUENCE
 KEY INSIGHTS


Congruence comes in several forms:


Translating innovation and growth vision in...
INNOVATION CONGRUENCE
 KEY INSIGHTS: DEMONSTRATE THAT INNOVATION IS IMPORTANT

Source Picture: 10 business cases for CEOs ...
48

INNOVATION CONGRUENCE
 KEY INSIGHTS: CREATE THE RIGHT MINDSET


Develop appropriate mindsets towards risk and smart fa...
INNOVATION CONGRUENCE
 KEY INSIGHTS: EMBED INNOVATION VALUES

Source: Prokesch , S. How GE Teaches Teams to Lead Change. R...
50

INNOVATION CONGRUENCE
 KEY INSIGHTS: INSTALL THE RIGHT METRICS


Measure the innovation outputs, not the process (whic...
INNOVATION CONGRUENCE

51

 FRAMEWORK: THNK INNOVATION CHANGE FRAMEWORK

Make innovation a critical part of your
growth vi...
52

INNOVATION CONGRUENCE
 FRAMEWORK: THNK INNOVATION CHANGE FRAMEWORK - EXAMPLES




Set-up time for external orientation...
INNOVATION CONGRUENCE

53

 SOURCES


READING



VIDEO



Encouraging organizations to change: The
influence model, 2011, ...
54

EXTERNAL ORIENTATION

Being externally orientated, resulting in privileged customer dialogue and cocreation, adapting ...
EXTERNAL ORIENTATION OVERVIEW

55

TRENDS 
SIGNALS

CUSTOMER
DIALOGUE

SPARKLING
PARTNERSHIPS

LEVERAGED
TAILWIND

Opennes...
56

TRENDS  SIGNALS
OPENNESS TO UNCERTAIN TRENDS AND WEAK SIGNALS
INCREASES THE PROBABILITY OF A SERENDIPITOUS
INSIGHT ON ...
TRENDS  SIGNALS
 KEY INSIGHTS: MEGA TRENDS ARE PARAGDIGM SHIFTS


The world is complex and uncertain: inspiration for inno...
58

TRENDS  SIGNALS
 KEY INSIGHTS: “WEAK SIGNALS” HAVE A PATTERN

NOISE (RANDOM)

START OF
UPSWING IN
THE ECONOMY

 DAILY ...
TRENDS  SIGNALS
 KEY INSIGHTS: OTHER PLAYERS AS SOURCE OF WEAK SIGNALS


Southwest Airlines, a leading US budget airline, ...
60

TRENDS  SIGNALS
 TOOL: EXTERNAL ORIENTATION SURVEY

SURVEY FOR THE TEAM - QUESTIONS TO ASK YOURSELF

WE HAVE A CLEAR V...
TRENDS  SIGNALS

61

 SOURCES


READING



VIDEO



Harvard Business School: How can big
companies keep the entrepreneuria...
62

CUSTOMER DIALOGUE
INNOVATION NEEDS TO MEET CUSTOMER NEEDS, BUT
IN SURPRISING NEW WAYS THAT WILL NOT EMERGE
FROM SIMPLY...
CUSTOMER DIALOGUE
 ESSENCE: MEETING CUSTOMER NEEDS IS CRUCIAL FOR INNOVATION


Reasons cited for failure of new products, ...
64

CUSTOMER DIALOGUE
 KEY INSIGHTS: LISTENING IN GIVES VERY DIFFERENT CLUES


Example: customer research on diapers - sur...
CUSTOMER DIALOGUE
 KEY INSIGHTS: MARKET RESEARCH IS NOT ENOUGH


Customers...


often have trouble articulating their unme...
66

CUSTOMER DIALOGUE
 KEY INSIGHTS: WHO FOLLOWS THE USER BREAKING FREE?


Desired customer paths often deviate from the
p...
CUSTOMER DIALOGUE
 TOOL: USER INSIGHT AND FORESIGHT TOOLS

Source: THNK Concepting Flow
www.thnk.org

67
68

CUSTOMER DIALOGUE
 SOURCES


READING



VIDEO



The customer’s voice. Why are we so bad
ad hearing it? BCG
www.bcg.co...
69

SPARKLING PARTNERSHIPS
INNOVATION PARTNERSHIPS AIM NOT SO MUCH FOR
SYNERGY BUT FOR A CREATIVE SPARK BETWEEN TWO
LITERA...
70

SPARKLING PARTNERSHIPS
 ESSENCE: A COMPLEMENTARY COMBINATION



Company: An
international coffee and
coffeehouse chain...
SPARKLING PARTNERSHIPS
 KEY INSIGHTS: “UPWARD MARRIAGE”, PARTNERS OF BEST CHOICE


Red Bull, as a company, is all about
cr...
72

SPARKLING PARTNERSHIPS
 KEY INSIGHTS: THINK BROAD ABOUT POSSIBLE PARTNERSHIPS


Partnerships with venture capital firm...
SPARKLING PARTNERSHIPS
 ESSENCE: STRATEGIC FIT IS ONLY ONE CRITERIA


Example: JV assessment framework used by Lilly

Sour...
74

SPARKLING PARTNERSHIPS
 TOOL: IP NETWORK MAPPING

Source: McKinsey  Company
www.mckinsey.com
SPARKLING PARTNERSHIPS

75

 TOOL: INNOVATION PARTNERSHIP CURRENCIES (1/2)

CURRENCY TYPE

RATIONALE FOR COMPANY

COINVEST...
76

SPARKLING PARTNERSHIPS
 TOOL: INNOVATION PARTNERSHIP CURRENCIES (2/2)

CURRENCY TYPE

RATIONALE FOR COMPANY

TECHNOLOG...
SPARKLING PARTNERSHIPS

77

 SOURCES


READING



VIDEO



Creating new growth platforms. Harvard
Business Review May 2006...
78

LEVERAGED TAILWIND
FOCUS ON MARKET OPPORTUNITIES THAT ARE IN
A GROWTH WINDOW AND TAKE ADVANTAGE OF THE
RESULTING MOMEN...
LEVERAGED TAILWIND
 KEY INSIGHTS


Flying against the wind, swimming against the tide is incredibly difficult – so is grow...
80

LEVERAGED TAILWIND
 KEY INSIGHTS: SWIMMING AGAINST THE TIDE IS DIFFICULT

On the verge of losing billions of dollars i...
LEVERAGED TAILWIND
 FRAMEWORK: GROWTH OPPORTUNITIES ARE GRANULAR

Source Picture: Matheson, Z. Retrieved April 5, 2011, fr...
82

LEVERAGED TAILWIND
 SOURCES


READING



VIDEO



Is your growth strategy flying blind?
Harvard Business Review, Mehrd...
83

BIG VISION

Having a clear vision for the “next big thing”, that builds on the current strengths,
translates into seri...
84

BIG VISION OVERVIEW

THREE
HORIZONS

BIPOLAR FOCUS

MOEBIUS RING

INNOVATION
PLAYS

Any corporate needs a
balance of a...
85

THREE HORIZONS
ANY CORPORATE NEEDS A BALANCE OF ACTIVITIES
ACROSS THE 3 HORIZONS: MANAGING CORE BUSINESS,
THE NEXT BIG...
86

THREE HORIZONS
 ESSENCE: FROM ONE FLOWER TO AN ECOSYSTEM

“ Our thinking about growth and decay is
dominated by the im...
THREE HORIZONS
 ESSENCE: BALANCE CURRENT AND FUTURE ACTIVITIES

Source: Inspired by original concept of Scott, A. Retrieve...
88

THREE HORIZONS
 ESSENCE: BALANCE CURRENT AND FUTURE ACTIVITIES


Horizon 1: Defending and securing core business.




...
THREE HORIZONS
 KEY INSIGHTS: HAVE A BALANCED PORTFOLIO


Various dangerous profiles exist:




Horizon 2 only: “the all e...
90

THREE HORIZONS
 KEY INSIGHTS: LEADING FOR CONTINOUS GROWTH

Source: Baghai, M., Coley, S., and White, D. The alchemy o...
THREE HORIZONS

91

 TOOL: 3 HORIZONS MANAGEMENT MODEL

ISSUE

H1
MATURE, WELL-ESTABLISHED
BUSINESSES

H2
RAPIDLY GROWING ...
92

THREE HORIZONS
 SOURCES


READING



VIDEO



Scott, A. “The Business Model Canvas
and Horizon Thinking”. Business Mod...
93

BIPOLAR FOCUS
COMBINE COMMITMENT TO THE LONGER TERM VISION
WITH EXECUTION OF VERY SHORT TERM (“NEXT
MONDAY”) ACTIONS. ...
94

BIPOLAR FOCUS
 ESSENCE


Combine long term commitment with short term action

Source Picture: Fisk, P. GeniusWorks
www...
BIPOLAR FOCUS
 FRAMEWORK: TIME HORIZON AND MANAGEMENT ATTENTION

95
96

BIPOLAR FOCUS
 KEY INSIGHTS


Articulate the vision:



Ascertain oneself of organizational buy-in





Articulate an ...
BIPOLAR FOCUS

97

 TOOL: BIPOLAR FOCUS ASSESSMENT

IN OUR ORGANIZATION...



WE CAN DESCRIBE OUR LONGER TERM VISION IN 50...
98

BIPOLAR FOCUS
 SOURCES


READING



VIDEO



Dave McClure’s 10 tips for the perfect
investment pitch
www.thenextweb.co...
99

MOEBIUS RING
DRIVE ENTERPRISE TO DELIVER SOCIETAL AND
SHAREHOLDER VALUE IN A SYMBIOTIC WAY. SIMILARLY,
DELIVER PREMIUM...
100

MOEBIUS RING
 ESSENCE: INTEGRATE PEOPLE, PLANET, PROFIT

People/planet versus profit are not two sides of a ring–
the...
MOEBIUS RING
 KEY INSIGHTS: EXAMPLE OF TRIPLE P INTEGRATION


We help people around the world meet everyday
needs for nutr...
102

MOEBIUS RING
 FRAMEWORK: SOCIAL IMPACT AND SHAREHOLDER VALUE


Break-through innovation creates shareholder and socie...
MOEBIUS RING
 KEY INSIGHTS


Break-through innovation can lead to increasing both societal and shareholder value in an
int...
104

MOEBIUS RING
 KEY INSIGHTS: EXAMPLES OF TRIPLE P BREAKTHROUGHS
 LAMP

 CAR

 BOTTLE

CONTRIBUTE
TO SOCIETY

LED LAMP ...
MOEBIUS RING
 TOOL: FROM SOCIAL RESPONSIBILITY TO SHARED VALUES

Source: Porter, M. and Kramer, M. Retrieved December 22, ...
106

MOEBIUS RING
 TOOL: “NON-PROFIT” PROFESSIONAL MANAGEMENT

FROM TRADITIONAL NON-PROFIT PRACTICES...

 FOCUS OFTEN ON A...
MOEBIUS RING

107

 SOURCES


READING



VIDEO



Building Social Business Models: Lessons
from the Grameen Experience
www...
108

INNOVATION PLAYS
THREE MAJOR PLAYS OF INNOVATION CAN BE
OBSERVERD: TECHNOLOGY, BUSINESS MODEL
DISRUPTION AND CUSTOMER...
INNOVATION PLAYS

109

 OVERVIEW

TECHNOLOGY

BUSINESS MODEL
DISRUPTION

CUSTOMER DELIGHT

Using a new, improved or new
co...
110

INNOVATION PLAYS:
TECHNOLOGY
USING A NEW, IMPROVED OR NEW COMBINATION OF
TECHNOLOGIES IN THE OFFERING ITSELF, IN THE
...
INNOVATION PLAYS: TECHNOLOGY
 ESSENCE: BUY IS OFTEN MORE EFFECTIVE THAN BUILD

BENEFIT OF BUY VS. BUILD

 LEVERAGING EXTER...
112

INNOVATION PLAYS: TECHNOLOGY
 KEY INSIGHTS: TECHNOLOGY PERFORMANCE OVER TIME


Leveraging the external market to sour...
INNOVATION PLAYS: TECHNOLOGY
 KEY INSIGHTS: STEP IN AFTER THE PHASE OF DISILLUSIONMENT


The optimal time to commit to a n...
114

INNOVATION PLAYS: TECHNOLOGY
 KEY INSIGHTS: DO-IT-YOURSELF


Digitalization is the “über” technology trend driving do...
INNOVATION PLAYS: TECHNOLOGY
 TOOL: ZAPPA’S TECHNOLOGY CARDS

Source: Zappa’s Technology Cards. Retrieved July, 2012, from...
116

INNOVATION PLAYS: TECHNOLOGY
 SOURCES


READING



VIDEO



Disruptive technologies: advances that
will transform lif...
117

INNOVATION PLAYS: BUSINESS
MODEL DISRUPTION
CHANGE THE VALUE CHAIN PLAYERS, ECONOMICS,
CREATING NEW PROFIT OR CHANGIN...
118

INNOVATION PLAYS: BUSINESS MODELS
 ESSENCE: BUSINESS MODEL INNOVATION
INNOVATION PLAYS: BUSINESS MODELS
 KEY INSIGHTS


Split of value chains and modularity. Value chains from raw materials to...
120

INNOVATION PLAYS: BUSINESS MODELS
 KEY INSIGHTS: SPLIT OF VALUE CHAINS


iPod example:
INNOVATION PLAYS: BUSINESS MODELS
 KEY INSIGHTS: DO-IT-YOURSELF


MakerBot





Manufacturing
3-D Prototyping/Printing

oD...
122

INNOVATION PLAYS: BUSINESS MODELS
 KEY INSIGHTS: SERVICES TO SOFTWARE


VIP Fridge magnet





Pizza ordering by home...
INNOVATION PLAYS: BUSINESS MODELS
 KEY INSIGHTS: WHAT TO DO TO THRIVE WITH PLATFORMS


Will you be the disrupter or the di...
124

INNOVATION PLAYS: BUSINESS MODELS
 TOOL: THNK VENTURE DESIGN

Source: THNK Venture model
www.thnk.org
INNOVATION PLAYS: BUSINESS MODELS
 SOURCES


READING



VIDEO



Big Bang disruption, Harvard Business
Review, March 2013
...
126

INNOVATION PLAYS: CONSUMER
DELIGHT
BREAK-THROUGH INNOVATION ISN’T BASED ON
CUSTOMER PREFERENCES OR ARTICULATED NEEDS;...
INNOVATION PLAYS: CUSTOMER DELIGHT
 KEY INSIGHTS


The customer needs to be delighted and therefore conclude he wants it

...
128

INNOVATION PLAYS: CUSTOMER DELIGHT
 KEY INSIGHTS


The customer needs to be delighted and therefore conclude he wants...
INNOVATION PLAYS: CUSTOMER DELIGHT
 FRAMEWORK: BI-POLARIZATION SPECTRUM


Break-through innovation combines better functio...
130

INNOVATION PLAYS: CUSTOMER DELIGHT
 TOOL: PIVOT POINTS


The final purpose of a new concept of technology can derivat...
INNOVATION PLAYS: CUSTOMER DELIGHT
 TOOL: USER INSIGHT AND FORESIGHT TOOLS

Source: THNK Concepting Flow
www.thnk.org

131
132

INNOVATION PLAYS
 SOURCES


READING



VIDEO



The customer’s voice. Why are we so bad
at hearing it? BCG
www.bcg.co...
133

TOP TALENT

Ensuring the organization nurtures, attracts and protects innovation “rock stars”
– the individual innova...
134

TOP TALENT OVERVIEW

ORCHESTRATING
TEAMS

TALENT MAKE
AND BUY

CULT OF
INNOVATOR
ROCK STAR

GOVERNANCE
HEADROOM

Ther...
135

ORCHESTRATING TEAMS
THERE ARE THREE ESSENTIAL ELEMENTS TO AN
EFFECTIVE TEAM: CASTING, SETTING-UP THE TEAM,
FOLLOWED B...
136

ORCHESTRATING TEAMS
 ESSENCE

HOP

STEP

JUMP

CASTING

ORCHESTRATING

LEADING

PICKING THE TEAM

SETTING UP THE TEAM...
ORCHESTRATING TEAMS
 KEY INSIGHTS


Hire bigger than you are




“If each of us hires people who are smaller than we are, ...
ORCHESTRATING TEAMS
 KEY INSIGHTS
HIRE PEOPLE THAT ARE BIGGER THAN YOU ARE

B

UT I

F
CH O
F EA
WE S

E
AN W
R TH
LLE
A
E...
ORCHESTRATING TEAMS
 KEY INSIGHTS: TYPICAL PROFILE OF CREATIVE PEOPLE


Creative people are paradoxical


Combining conver...
140

ORCHESTRATING TEAMS
 FRAMEWORK: WHO TO TRUST


Behaviors that build trust


Credibility: Personality traits for and
t...
ORCHESTRATING TEAMS

141

 TOOL: MBTI PRE-TEST


DISCLAIMER

These are 4 questions, only to give a first indication. To do...
142

ORCHESTRATING TEAMS
 TOOL: TEAM ASSESSMENT

SURVEY FOR THE TEAM - QUESTIONS TO ASK YOURSELF



OUR TEAM HAS ALL FUNCT...
ORCHESTRATING TEAMS

143

 SOURCES


READING



VIDEO



MBTI profile
www.myersbriggs.org





Alternative MBTI profile
ww...
144

TALENT MAKE AND BUY
BREAK-THROUGH INNOVATION REQUIRES INFUSION OF
EXTERNAL TALENT TO ENGAGE “FRESH EYES”, ASK
NAIVE Q...
TALENT MAKE AND BUY
 ESSENCE: RECRUIT INNOVATIVE PEOPLE


To illustrate, Bezos described how
he surrounds himself with peo...
146

TALENT MAKE AND BUY
 KEY INSIGHTS


There is significant resistance against external creative talent hiring



Most o...
TALENT MAKE AND BUY
 TOOL: INTERVIEW QUESTIONS


Tell us about a time when the tried-and-true solution did not work and if...
148

TALENT MAKE AND BUY
 TOOL: RECRUITING HEATMAP
TALENT MAKE AND BUY

149

 SOURCES


READING



VIDEO



Encouraging organizations to change,
2011, The influence model, C...
150

CULT OF INNOVATOR ROCK STAR
THE OUTPUT DIFFERENCE BETWEEN AN OUTSTANDING
CREATIVE TALENT AND A GOOD CREATIVE TALENT I...
CULT OF INNOVATOR ROCK STAR
 ESSENCE: BRING IN THE INSPIRATIONAL TOP TALENT

KEEP
CALM

THE CAVALRY
HAS ARRIVED

151
152

CULT OF INNOVATOR ROCK STAR
 KEY INSIGHTS


Appoint the “top of the top”, and avoid past glory. Recruit creative top ...
CULT OF INNOVATOR ROCK STAR
 KEY INSIGHTS: BREAK THROUGH TRADITIONAL QUALIFICATIONS


Be flexible in applying the traditio...
154

CULT OF INNOVATOR ROCK STAR
 TOOL: GUESS WHO


What new skills does your organization need (next to what it’s already...
CULT OF INNOVATOR ROCK STAR

155

 SOURCES


READING



VIDEO



Meeting the challenge of corporate
entrepreneurship, Harv...
156

GOVERNANCE HEADROOM
FORM A SUPERVISORY BOARD THAT CAN STRETCH THE
EXECUTIVE BOARD AND STRETCHES WITH THE BOARD
IN THE...
GOVERNANCE HEADROOM
 ESSENCE

A supervisory board that can stretch the executive board and stretches with the executive
bo...
158

GOVERNANCE HEADROOM
 KEY INSIGHTS


Compose the board for heavy engagement on growth, innovation, and change



Avoid...
GOVERNANCE HEADROOM
 FRAMEWORK: BOARD COMPOSITION ELEMENTS

159
160

GOVERNANCE HEADROOM
 TOOL: BOARD INVOLVEMENT CHECK-LIST


Does the board actively engage with the CEO and top team in...
GOVERNANCE HEADROOM

161

 SOURCES


READING



VIDEO



Business Knowledge Resource online
www.business.gov.in/corporate_...
162

INNOVATION SYSTEMS

Organizing the company into innovation projects and ventures, with tracking
systems that stimulat...
INNOVATION SYSTEMS OVERVIEW

163

SELF ORGANIZING
SYSTEMS

LEARNING LOOPS

LEVERAGE THE
CROWD

PATIENT FUNDING

For innova...
164

SELF ORGANIZING SYSTEMS
FOR INNOVATION OR ADAPTABILITY, THE PRINCIPLE
OF EMERGENCE AND SELF-ORGANIZING SYSTEMS
BECOME...
SELF ORGANIZING SYSTEMS
 ESSENCE: DRIVE TOWARDS HIGH VALUE WORK

Source Picture: Stroh, J. Retrieved October, 2012, from j...
166

SELF ORGANIZING SYSTEMS
 KEY INSIGHTS


For innovation or adaptability, the principle of emergence and self-organizin...
SELF ORGANIZING SYSTEMS
 KEY INSIGHTS: SILOS ARE OFTEN THE BIGGEST OBSTACLES


I strongly believe innovation is a team spo...
168

SELF ORGANIZING SYSTEMS
 KEY INSIGHTS: LET GO OF BUREAUCRATIC CONTROL


Management structures to coordinate activitie...
SELF ORGANIZING SYSTEMS
 FRAMEWORK: ORGANIZATIONAL STRUCTURES

169
170

SELF ORGANIZING SYSTEMS
 KEY INSIGHTS: ALTERNATIVE COORDINATION SYTEMS


Performance transparency: provide employees ...
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THNK innovative enterprise essentials

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Whether or not your company can innovate is going to be the big determinant of corporate success. Five essential characteristics determine if your organization has what it takes to innovate on an ongoing basis.

Businesses are becoming obsolete at an ever increasing speed. This is driven by forces like new technology breakthroughs and drastic shifts in customer needs; meanwhile markets have been disrupted by competitors pushing the productivity frontier or nimble, new entrants. 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.

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Transcript of "THNK innovative enterprise essentials"

  1. 1. INNOVATIVE ENTERPRISE ESSENTIALS
  2. 2. INNOVATIVE ENTERPRISE ESSENTIALS Copyright © 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
  3. 3. 3 INDEX WILL TO INNOVATE TRENDS & SIGNALS 56 CUSTOMER DIALOGUE 62 SPARKLING PARTNERSHIPS 69 LEVERAGED TAILWIND 7 INNOVATORS DNA31 INNOVATION CONGRUENCE45 OVERVIEW EXTERNAL ORIENTATION RENEWAL MUST37 OVERVIEW 78 TOP TALENT BIG VISION INNOVATION SYSTEMS THREE HORIZONS 85 ORCHESTRATING TEAMS135 SELF ORGANIZING SYSTEMS164 BIPOLAR FOCUS 93 TALENT MAKE AND BUY144 LEARNING LOOPS175 MOEBIUS RING 99 CULT OF INNOVATOR ROCK STAR150 LEVERAGE THE CROWD185 GOVERNANCE HEADROOM PATIENT FUNDING199 INNOVATION PLAYS 108 156
  4. 4. 4 INTRODUCTION 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
  5. 5. INNOVATIVE ENTERPRISE ESSENTIALS Orchestrating teams Talent make and buy Cult of innovator rock star Governance headroom Three horizons Moebius ring Bipolar focus Innovation plays Leveraged tailwind Trends signals Customer dialogue Sparkling partnerships 5 Self organizing systems Learning loop Leverage the crowd Patient funding Innovators DNA Renewal must Innovation congruence
  6. 6. 6 HOW TO USE THIS BOOK Essentials follow a standard format to facilitate ease of use and cater to different learning styles: WHEN NEEDED: ESSENCE: KEY INSIGHTS: TOOL: FRAMEWORK: SOURCES: highlights 2-3 situations when the essential is particularly relevant describes the framework to guide your thinking synthesizes the key insights for successful adaptation provides a model to develop and test your ideas before putting them into practice describes a basic structure or frame to support your thinking arrount this essential provides a list of references for more information
  7. 7. 7 OVERVIEW A brief outline of each of the 5 innovative enterprise essentials
  8. 8. 8 OVERVIEW DEFINITION OF INNOVATION “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 2013 www.en.wikipedia.org/wiki/Innovation
  9. 9. OVERVIEW 9 INNOVATION WITHIN GROWTH ALLOCATING RESOURCES TO MARKET SEGMENTS THAT GROW AUTONOMOUSLY CONTINUOUS SERVICE IMPROVEMENT AND PRODUCT RENEWAL SYNERGISTIC OR MARKET CONSOLIDATION ACQUISITIONS BREAK-THROUGH INNOVATION (INVENTING AND APPLYING NEW PRODUCT MARKET SOLUTIONS OR NEW BUSINESS MODELS)
  10. 10. 10 OVERVIEW - WHY INNOVATE? IMPORTANCE OF INNOVATION 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
  11. 11. OVERVIEW - WHY INNOVATE? 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 11
  12. 12. 12 OVERVIEW - WHY INNOVATE? 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
  13. 13. OVERVIEW - WHY INNOVATE? EXITS Source picture: Foster, D. Retrieved December, 2013, from Innosight wwww.innosight.com 13
  14. 14. 14 OVERVIEW - WHY INNOVATE? MOST ENTERPRISES NEED TO GET BETTER AT INNOVATION PERCENTAGE OF GLOBAL EXECUTIVES WHO AGREE (%) INNOVATION IS IMPORTANT TO OUR GROWTH STRATEGY OUR BUSINESS MODELS ARE AT RISK 84% 80% 6% WE ARE SATISFIED WITH OUR INNOVATION PERFORMANCE Source: McKinsey Global Innovation Survey www.mckinsey.com
  15. 15. OVERVIEW - WHY INNOVATE? 15 WHERE DOES YOUR COMPANY STAND ON INNOVATION? DO YOU HAVE A VISION WHERE AND HOW TO CREATE A TOTALLY NEW-TOWORLD BUSINESS? DOES YOUR COMPANY SPEND MORE TIME LEARNING OUTSIDE THAN INSIDE? DOU YOU HAVE A POOL OF INNOVATOR TOP TALENT IN YOUR RANKS? DOES YOUR COMPANY HAVE THE STRUCTURE AND CULTURE FOR RISK RAKING, AND SMART FAILURE? DOES YOUR COMPANY HAVE THE URGENT DRIVE TO CONTINUOUSLY INNOVATE?
  16. 16. 16 OVERVIEW - WILL TO INNOVATE WHAT IS THE TRADE-OFF THAT YOU MAKE? Do you accept the dicotomy between short term results and opportunity creation? 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
  17. 17. OVERVIEW - WILL TO INNOVATE 17 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 Innovators DNA Renewal must Innovation congruence
  18. 18. 18 OVERVIEW - EXTERNAL ORIENTATION DO YOU RISK DELIVERY MISPERCEPTION? Source: Bain Company www.bain.com
  19. 19. OVERVIEW - EXTERNAL ORIENTATION 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 Leveraged tailwind Trends signals Customer dialogue Sparkling partnerships 19
  20. 20. 20 OVERVIEW - BIG VISION DO YOU STRUGGLE TO MAKE YOUR INNOVATION VISION COMPELLING? Source: Richard Branson www.virgin.com
  21. 21. OVERVIEW - BIG VISION EXAMPLE SIMPLE VISION: SOLAR AND WIND PROVIDING ALL POWER FOR EU Source: www.sciencedirect.com, THNK analyses 21
  22. 22. 22 OVERVIEW - BIG VISION AND DOES YOUR INNOVATION VISION LACK SOCIAL RELEVANCE? “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” Source Picture: Sunni Brown www.sunnibrown.com
  23. 23. OVERVIEW - BIG VISION ESSENCE 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 Three horizons Moebius ring Bipolar focus Innovation plays 23
  24. 24. 24 OVERVIEW - TOP TALENT DO YOU LACK APPEAL TO INNOVATION TALENT? SCALABLE STARTUP CEO’S PERSONAL CONTRIBUTION LARGE COMPANY ENTREPRENEURIAL-DRIVEN LEARNING AND DISCOVERY PROCESS-MANAGED EXECUTION AND GROWTH SUPERSTAR MANAGER OF PLANS, GOALS, PROCESS, AND PERSONNEL CEO’S PERSONAL CONTRIBUTION 24/7 LONG TERM 9 TO 5 PLANNING OPPORTUNISTIC AGILE PROCESS-, AND GOAL-DRIVEN PROCESS HATES AND ELIMINATES IMPLEMENTS AND USES MANAGEMENT STYLE AUTOCRATIC, STAR SYSTEM MAY BE BUREAUCRATIC SPAN OF CONTROL HANDS-ON DISTRIBUTED DOWN THE ORGANIZATION FOCUS HIGH AND PASSIONATE VISION EXECUTION UNCERTAINTY/ CHAOS BRINGS ORDER OUT OF CHAOS FOCUSES ON REPEATABILITY Source: Steve Bank www.stevebank.com
  25. 25. OVERVIEW - TOP TALENT 25 ESSENCE 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 Orchestrating teams Talent make and buy Cult of innovator rock star Governance headroom
  26. 26. 26 OVERVIEW - INNOVATION SYSTEMS ARE YOU PLUGGED IN CO-CREATION NETWORKS? Source: McKinsey Company www.mckinsey.com
  27. 27. OVERVIEW - INNOVATION SYSTEMS ESSENCE 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 Self organizing systems Learning loop Leverage the crowd Patient funding 27
  28. 28. 28 OVERVIEW UNDERLYING INNOVATIVE ENTERPRISE ESSENTIALS Orchestrating teams Talent make and buy Cult of innovator rock star Governance headroom Three horizons Moebius ring Bipolar focus Innovation plays Leveraged tailwind Trends signals Customer dialogue Neue Kombinationen Self organizing systems Learning loop Leverage the crowd Patient funding Innovators DNA Renewal must Innovation congruence
  29. 29. 29 WILL TO INNOVATE 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
  30. 30. 30 WILL TO INNOVATE OVERVIEW INNOVATORS DNA RENEWAL MUST INNOVATION CONGRUENCE 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 To realize successful innovation requires commitment from the top and congruence “talk and walk” PAGE 31 PAGE 37 PAGE 45
  31. 31. 31 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”
  32. 32. 32 INNOVATORS DNA ESSENCE: INTRINSIC PUSH AND EXTERNAL PULL Company drive External expectations “We brought you the iPhone” “We invented Post-its” “We dreamt up “Big Brother” and “Deal or No Deal” Enterprise value (market cap + debt) Intrinsic drive and external expectations should coincide 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
  33. 33. INNOVATORS DNA 33 KEY INSIGHTS: EXAMPLES OF INNOVATORS PREMIUM THE WORLD’S MOST INNOVATIVE COMPANIES (RANKED BY INNOVATION PREMIUM AVERAGE 2005-2009) RANK COMPANY NAME INDUSTRY/KEY BUSINESSES INNOVATION PREMIUM 1 SALESFORCE.COM CLOUD COMPUTING SOFTWARE 73% 2 INTUITITIVE SURGICAL DA VINCI SYSTEM ROBOTS FOR SURGERIES 64% 3 AMAZON.COM ONLINE DISCOUNT RETAILER, KINDLE, CLOUD COMPUTING 57% 4 CELEGENE CORP. PHARMACEUTICALS 55% 5 APPLE COMPUTERS, SOFTWARE, MUSIC DEVICES, PHONES, ETC. 52% 6 GOOGLE SOFTWARE, 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% : Unilever Heavy Electricals 1 Source: Holt and The Innovator’s DNA LLC.
  34. 34. 34 INNOVATORS DNA KEY INSIGHTS: ONLY THE NEXT BREAK THROUGH COUNTS The innovator’s DNA has to be constantly nourished and re-established Source Picture: Baekdal, T. Retrieved June 14, 2013, from Baekdal.com www.baekdal.com/insights/understanding-change-and-predicting-trends
  35. 35. INNOVATORS DNA 35 TOOL: ALLOCATION OF INNOVATION BUDGET TO THREE CATEGORIES EXISTING BUSINESS IMPROVEMENT NEW-TO-COMPANY PRODUCT LINE EXTENSIONS NEW-TO-WORLD PRODUCT INVENTIONS
  36. 36. 36 INNOVATORS DNA SOURCES READING VIDEO 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 2013 www.guardian.co.uk/technology/2013/ jul/09/google-android-reader-why? Jeff Bezos: Lessons to Learn from a Failing Business www.youtube.com/ watch?v=rOteo4IARgw The Innovator’s DNA: Mastering the Five Skills of Disruptive Innovators, by Jeff Dyer, Hal Gregersen, Clayton M. Christensen, 2011
  37. 37. 37 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”
  38. 38. 38 RENEWAL MUST ESSENCE: INNOVATE CONTINUOUSLY Need to constantly innovate to avoid withering away TRADITIONAL LOGIC MARKET GROWTH MARKET MATURITY CURRENT WORLD MARKET DECLINE CONTINUOUS INNOVATION
  39. 39. RENEWAL MUST ESSENCE: SUSTAINING GROWTH IS HARD TO DO 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 39
  40. 40. 40 RENEWAL MUST KEY INSIGHTS 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
  41. 41. RENEWAL MUST KEY INSIGHTS: AVOID THE GROWTH GAP Avoid the vicious cycle resulting from waiting too long 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 41
  42. 42. 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
  43. 43. RENEWAL MUST TOO: A BALANCED PORTFOLIO 43
  44. 44. 44 RENEWAL MUST SOURCES READING VIDEO Creating new growth platforms. Harvard Business Review, May 2006 Business model innovation, BCG, December 2009 AMCF Horizon Series: Strategy Thought Leaders Define Strategy www.youtube.com/watch?v=0JyRXpYFIc gfeature=youtube_gdata_player Professor Richard Rumelt : What is Good Corporate Strategy? www.youtube.com/ watch?v=43kZDnyDXOc Profit From The Core , Harvard Business School Press, 2001 Winnovation - 5 ways to improve your innovation pipeline www.talarforum.se/artikel/rowan. gibson/236/236/winnovation_5_ ways_to_improve_your_innovation_ pipeline.html
  45. 45. 45 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”
  46. 46. 46 INNOVATION CONGRUENCE KEY INSIGHTS 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
  47. 47. INNOVATION CONGRUENCE 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/ 47
  48. 48. 48 INNOVATION CONGRUENCE KEY INSIGHTS: CREATE THE RIGHT MINDSET Develop appropriate mindsets towards risk and smart failure At Google, Sheryl Sandberg made a bad decision costing millions of dollars. Co-founder Larry Page responded: “I’m so glad you made this mistake, because I want to run a company where we are moving too quickly and doing too much, not being too cautious and doing too little. If we don’t have any of these mistakes, we’re just not taking enough risk” 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
  49. 49. INNOVATION CONGRUENCE 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 49
  50. 50. 50 INNOVATION CONGRUENCE KEY INSIGHTS: INSTALL THE RIGHT METRICS Measure the innovation outputs, not the process (which is ugly) Innovation strategy vision e.g. contribution of innovation to top-line growth 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 Innovation leadership commitment e.g., leadership time and funds dedicated to innovation Innovation skills and culture e.g., % of time spent with customers 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 mostinnovative companies Customer feedback e.g., customer satisfaction of new products or services Contribution to business growth: positive ROI on innovation 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-ofcompanies/
  51. 51. INNOVATION CONGRUENCE 51 FRAMEWORK: THNK INNOVATION CHANGE FRAMEWORK 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 Make innovation a critical part of your growth vision and select the most promising innovation plays
  52. 52. 52 INNOVATION CONGRUENCE 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 De-couple investments in innovation from short term variability and earnings Allocate substantial senior executive time on innovation Undertake an innovation challenge project with the organization involved on a wider societal project Hire edgy external creative talent and put in leadership positions before their age Invest in technology skills in most relevant areas Adopt concepting design methodologies Reduce hierarchy and internal bureaucracy to foster entrepreneurship Put innovation success in KPI’s
  53. 53. INNOVATION CONGRUENCE 53 SOURCES READING VIDEO Encouraging organizations to change: The influence model, 2011, Colin Price The inconvenient truth of change management , 2000, Scott Keller and Carolyn Aiken Change Management - 30-Second Management Training Course www.youtube.com/watch?v=fpuHUiy_ xogfeature=youtube_gdata_player Leadership training and change management www.youtube.com/watch?v=cB2vOmuzOgfeature=youtube_gdata_ player Its not what you sell, it’s what you stand for, Roy Spence www.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 metrics www.innovation-point.com/ innovationmetrics.htm IBM iForum - Rethinking Innovation Measurement by Dean Spitzer
  54. 54. 54 EXTERNAL ORIENTATION Being externally orientated, resulting in privileged customer dialogue and cocreation, adapting quickly to trends and market signals, priority presence in growth markets and venturing with like-minded partners with complementary skills and experiences
  55. 55. EXTERNAL ORIENTATION OVERVIEW 55 TRENDS SIGNALS CUSTOMER DIALOGUE SPARKLING PARTNERSHIPS LEVERAGED TAILWIND Openness to uncertain trends and weak signals increases the probability of a serendipitous insight on opportunity spaces and most attractive hunting grounds 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 Innovation partnerships aim not so much for synergy but for a creative spark between two literacies, two sets of capabilities, two worlds of experience 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 PAGE 56 PAGE 62 PAGE 69 PAGE 78
  56. 56. 56 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”
  57. 57. TRENDS SIGNALS KEY INSIGHTS: MEGA TRENDS ARE PARAGDIGM SHIFTS 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) Source: THNK Paradigm Shifts www.thnk.org 57
  58. 58. 58 TRENDS SIGNALS KEY INSIGHTS: “WEAK SIGNALS” HAVE A PATTERN NOISE (RANDOM) START OF UPSWING IN THE ECONOMY DAILY VARIATION IN JOB ADVERTISEMENTS NEW CUSTOMER TREND E.G. SPIRITUALITY NEWS ARTICLES NEW TECHNOLOGY TREND SCIENTIFIC ARTICLES ILLUSTRATION WEAK SIGNALS (PATTERNS) INCREASING SHARE IN IT JOB ADVERTISEMENTS AMOUNT OF ATTENTION IN GLOSSARIES, SEARCH VOLUME ACCUMULATION OF VC INVESTMENTS
  59. 59. TRENDS SIGNALS KEY INSIGHTS: OTHER PLAYERS AS SOURCE OF WEAK 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 Source Picture: JetBlast. Retrieved August 31, 2012, from Wikipedia www.en.wikipedia.org/wiki/File:Southwest_Airlines_Logo.png 59
  60. 60. 60 TRENDS SIGNALS TOOL: EXTERNAL ORIENTATION SURVEY SURVEY FOR THE TEAM - QUESTIONS TO ASK YOURSELF 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? STRONGLY DISAGREE DISAGREE NEUTRAL AGREE STRONGLY AGREE
  61. 61. TRENDS SIGNALS 61 SOURCES READING VIDEO Harvard Business School: How can big companies keep the entrepreneurial spirit alive? N/A 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 techstars www.slideshare.net/thulme/ideoworkshop-for-techstars? Trend Watching www.trendwatching.com
  62. 62. 62 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”
  63. 63. CUSTOMER DIALOGUE ESSENCE: MEETING CUSTOMER NEEDS IS CRUCIAL FOR INNOVATION Reasons cited for failure of new products, % Source: Innovation in consumer products. Retrieved 2008, from Accenture www.accenture.com/SiteCollectionDocuments/PDF/ConsumerProductsGroupPoV_103008_fnl.pdf 63
  64. 64. 64 CUSTOMER DIALOGUE KEY INSIGHTS: LISTENING IN GIVES VERY DIFFERENT CLUES Example: customer research on diapers - survey vs. online dialogue Source: Nielsen McKinsey Incite
  65. 65. CUSTOMER DIALOGUE KEY INSIGHTS: MARKET RESEARCH IS NOT ENOUGH 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 65
  66. 66. 66 CUSTOMER DIALOGUE KEY INSIGHTS: WHO FOLLOWS THE USER BREAKING FREE? 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
  67. 67. CUSTOMER DIALOGUE TOOL: USER INSIGHT AND FORESIGHT TOOLS Source: THNK Concepting Flow www.thnk.org 67
  68. 68. 68 CUSTOMER DIALOGUE SOURCES READING VIDEO The customer’s voice. Why are we so bad ad hearing it? BCG www.bcg.com/documents/file35167.pdf Innovation in Consumer products, Accenture, 2008 www.accenture.com/ SiteCollectionDocuments/PDF/ ConsumerProductsGroupPoV_103008_ fnl.pdf Why I brought PacMan to Moma www.ted.com/talks/paola_antonelli_ why_i_brought_pacman_to_moma. html Malcolm Gladwell: Choice, happiness and spaghetti sauce www.ted.com/talks/malcolm_gladwell_ on_spaghetti_sauce.html The Power of Habit Why We Do What We Do in Life and Business www.youtube.com/ watch?v=a6p3lG9EDXw Understanding change and predicting trends www.baekdal.com/insights/ understanding-change-and-predictingtrends/ Why we’re so bad at predicting the future www.venturevillage.eu/predicting-future
  69. 69. 69 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”
  70. 70. 70 SPARKLING PARTNERSHIPS ESSENCE: A COMPLEMENTARY COMBINATION 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 Source Pictures: www.starbucks.com , www.pepsico.com 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
  71. 71. SPARKLING PARTNERSHIPS KEY INSIGHTS: “UPWARD MARRIAGE”, PARTNERS OF BEST CHOICE 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 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 71
  72. 72. 72 SPARKLING PARTNERSHIPS KEY INSIGHTS: THINK BROAD ABOUT POSSIBLE PARTNERSHIPS 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: PG 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.v pcp.com , www-ucc.ch.cam.ac.uk , www.greengiant.com , www.senecasnacks.com
  73. 73. SPARKLING PARTNERSHIPS ESSENCE: STRATEGIC FIT IS ONLY ONE CRITERIA Example: JV assessment framework used by Lilly Source: www.lilly.com 73
  74. 74. 74 SPARKLING PARTNERSHIPS TOOL: IP NETWORK MAPPING Source: McKinsey Company www.mckinsey.com
  75. 75. SPARKLING PARTNERSHIPS 75 TOOL: INNOVATION PARTNERSHIP CURRENCIES (1/2) CURRENCY TYPE RATIONALE FOR COMPANY COINVESTMENT ACCELERATE PROCESS ACCESS TO CAPITAL JOINT VENTURE FINANCIAL SUPPORT WHAT OTHERS MIGHT VALUE SECURE ACCESS AND/OR OWNERSHIP OF STRATEGIC SOURCE OFVALUE ACCELERATE PROCESS EQUITY INVESTMENT (MINORITY STAKE, ACQUISITION) REDUCE RISK AND COSTS SECURE ACCESS AND/OR OWNERSHIP OF STRATEGIC SOURCE OF VALUE COST SHARING RATIONALE FOR PARTNER REDUCE RISK AND COSTS PAY FOR SERVICES OISTRIBUTION NETWORK (SCALE) CHANNELS 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 LICENSING LOWER SGA AND MARKETING COSTS COMARKETING LEVERAGE EXISTING PARTNERSHIPS ACCESS TO NEW PARTNERS MANUFACTURING CAPABILITIES (SCALE, CAPEX) BRAND AND RELATIONSHIPS FIT WITH BRANDS WHILE REDUCING UPFRONT INVESTMENT DRIVE PLANT UTILIZATION REDUCE UPFRONT CAPEX INVESTMENT RESOURCES (E .G ., RD, FINANCE) HELP DRIVE VALUE FROM FIXED COSTS ACCESS NEW MANUFACTURING CAPABILITIES COBRANDING (BRAND EQUITY) FACILITATE INTERACTION WITH OTHER PARTNERS PHYSICAL ASSETS LAB/OFFICE SPACE LEVERAGE SCALE LEVERAGE EXPERTISE
  76. 76. 76 SPARKLING PARTNERSHIPS TOOL: INNOVATION PARTNERSHIP CURRENCIES (2/2) CURRENCY TYPE RATIONALE FOR COMPANY TECHNOLOGY, LP MONETIZE EXISTING INSIGHTS, PROPRIETARY KNOWLEDGE , TECHNOLOGY ACCESS TO NEW INSIGHTS PROPRIETARY KNOWLEDGE, TECHNOLOGY CONSUMER INSIGHTS OVERLAP OF CONSUMER SEGMENT OVERLAP OF CONSUMER SEGMENT INTERNAL RECOGNITION ENERGIZE INTERNAL EFFORT STRENGTHEN PARTNERSHIP MEETINGS WITH SENIOR LEADERS LOW COST INVESTMENT POTENTIAL ACCESS TO ADDITIONAL KNOW-HOW AND PARTNERSHIPS INVITATION TO FORUM , TRADE SHOWS STRENGTHEN PARTNERSHIP ACCESS TO INTEMAL FORUM KNOW-HOW WHAT OTHERS MIGHT VALUE RATIONALE FOR PARTNER FACILITATE CROSS PARTNER COMMUNICATION SHARED VALUE AND MISSION BUILD OR STRENGTHEN COMMUNITY AROUND SHARED SET OFVALUES INDUSTRY EXPERTISE FUNCTIONAL CAPABILITIES RECOGNITION KNOW-HOW AND PARTNERSHIPS ENGAGE OWN COMMUNITY AROUND SHARED SET OF VALUES
  77. 77. SPARKLING PARTNERSHIPS 77 SOURCES READING VIDEO Creating new growth platforms. Harvard Business Review May 2006 Managing Alliances with the Balanced Scorecard. Harvard Business Review, 2010 Clay Shirky: Institutions vs. collaboration www.ted.com/talks/clay_shirky_on_ institutions_versus_collaboration.html OECD patent database www.oecd.org/sti/inno/ oecdpatentdatabases.htm
  78. 78. 78 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”
  79. 79. LEVERAGED TAILWIND KEY INSIGHTS 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” 79
  80. 80. 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/gIQAZJBB8K_video.html
  81. 81. LEVERAGED 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/ 81
  82. 82. 82 LEVERAGED TAILWIND SOURCES READING VIDEO Is your growth strategy flying blind? Harvard Business Review, Mehrdad Baghai, Sven Smit, and Patrick Viguerie, 2009 Jon Vander Ark: Get small to grow big in micromarkets www.youtube.com/ watch?v=PYzc9ZdVm2E 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 Business Growth - Get Connected, Get Granular, Get Focused www.youtube.com/ watch?v=BlC1IHMOENQ Seth Godin: How to get your ideas to spread www.ted.com/talks/seth_godin_on_ sliced_bread.html Malcolm Gladwell: Choice, happiness and spaghetti sauce www.ted.com/talks/malcolm_gladwell_ on_spaghetti_sauce.html Megatrends. Tailwinds for growth in a low-growth environment, 2010, BCG
  83. 83. 83 BIG VISION 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
  84. 84. 84 BIG VISION OVERVIEW THREE HORIZONS BIPOLAR FOCUS MOEBIUS RING INNOVATION PLAYS 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 midterm planning Drive the enterprise to deliver societal and shareholder value in a symbiotic way. Similarly, deliver premium value and lower cost simultaneously Three major plays of innovation can be observerd: technology, business model disruption and customer delight PAGE 85 PAGE 93 PAGE 99 PAGE 108
  85. 85. 85 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”
  86. 86. 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 Gardner Self Renewal: The Individual and the Innovative Society, W.W. Norton, 1981 Source Picture: Wallace, R. Retrieved August 31, 2013, from Flickr www.flickr.com/photos/rob_wallace/9637672207/ Source Picture: ynnil. Retrieved April 12, 2009, from Flickr www.flickr.com/photos/nnil/sets/72157617095488185/with/3465661693/
  87. 87. THREE HORIZONS ESSENCE: BALANCE CURRENT AND FUTURE ACTIVITIES 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 87
  88. 88. 88 THREE HORIZONS ESSENCE: BALANCE CURRENT AND FUTURE ACTIVITIES Horizon 1: Defending and securing core business. Horizon 2: Building emerging 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. 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. Source: Scott, A. “The Business Model Canvas and Horizon Thinking”. Business Model Innovation Hub. 15 February 2011 www.businessmodelhub.com/profiles/blogs/the-business-model-canvas-and-2
  89. 89. THREE HORIZONS KEY INSIGHTS: HAVE A BALANCED PORTFOLIO Various dangerous profiles exist: Horizon 2 only: “the all eggs in one basket” bet without a core business generating cash flow Horizon 1 only: being focused on continuous firefighting in core business or maximizing profitabily and market share while opportunities pass 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% 89
  90. 90. 90 THREE HORIZONS KEY INSIGHTS: LEADING FOR CONTINOUS GROWTH Source: Baghai, M., Coley, S., and White, D. The alchemy of growth. London: Orion Business, 1999 www.mckinsey.com/Client_Service/Strategy/Latest_thinking/The_Alchemy_of_Growth.aspx
  91. 91. THREE HORIZONS 91 TOOL: 3 HORIZONS MANAGEMENT MODEL ISSUE H1 MATURE, WELL-ESTABLISHED BUSINESSES H2 RAPIDLY GROWING BUSINESS TIME HORIZON CURRENT FOCUS EXTEND AND DEFEND CORE BUSINESS INCREASE PRODUCTIVITY AND PROFIT CONTRIBUTION LOW UNCERTAINTY/RISK CURRENT; WILL EVENTUALLY FLATTEN OUT AND DECLINE SUBSTANTIAL PROFITS MAY BE 4-5 YEARS IN THE FUTURE WITHIN NEXT FEW YEARS, SHOULD COMPLEMENT OR REPLACE CURRENT CORE BUSINESSES FIND NEW REVENUE AND PROFIT GROWTH FOR THE IMMEDIATE FUTURE THROUGH INCREMENTAL SALES, LINE EXTENSIONS, AND INCREMENTAL EFFICIENCIES MAKE REVENUE PLANS BUILD THE BUSINESS SCALE UP QUICKLY MANAGE TRIPLE-DIGIT GROWTH PROFIT IMPACT KEY CHALLANGE OUTPUTS TYPE OF PEOPLE TALENT APPROACH MEASURES CORPORATE BEHAVIORS MEDIUM TERM BUILD EMERGING BUSINESSES SCALE PROVEN BUSINESS MODELS, INCREASE MARKET SHARE, AND GROW TO OPPORTUNITY MEDIUM UNCERTAINTY/RISK ANNUAL OPERATING PLAN: TACTICAL PLANS, RESOURCE DECISIONS, BUDGETS OPERATORS: DEEP FUNCTIONAL AND/OR INDUSTRY EXPERTISE STRONG DRIVE TO CONSISTENLY MEET PLANS DISCIPLINE CREATE PERSONAL CONSEQUENCES FOR NON-TERM PERFORMANCE INCLUIDING CLEAR PENALTIES FOR UNDER-PERFORMANCE IMPOSE “NO EXCUSES” MANAGEMENT STYLE H3 EMERGING BUSINESSES BUSINESS-BUILDING STRATEGIES: INVESTMENT BUDGET, DETAILED BUSINESS PLANS FOR NEW VENTURES; VIABLE PRODUCTS BUSINESS BUILDERS: ENTREPRENEURIAL DESIRE TO CREATE COMFORT WITH AMBIGUITY AND CHANGE TOP-LINE FOCUSED, SHARP DECISION MAKER LONG TERM CREATE VIABLE OPTIONS TEST BUSINESS MODELS, PROVE VIABILITY, CAPABILITIES AND VALUE DELIBERATE INITIATIVES TO SEED GROWTH OPPORTUNITIES HIGH UNCERTAINTY/RISK MOST WILL NOT SUCCEED A FEW CAN SECURE LONGER-TERM FUTURE EXPLORE OPTIONS ON FUTURE OPPORTUNITIES, SUCH AS RESEARCH PROJECTS, PROTOTYPES, TEST MARKETS, ALLIANCES, AND INVESTMENTS TO IDENTIFY AND BEGIN TO DEVELOP OPPORTUNITIES TARGETS CANNOT BE SET WITH PRECISION DECISIONS TO EXPLORE: INITIAL PROJECT PLAN, PROJECT MILESTONES VISIONARIES: CHAMPIONS UNCONVENTIONAL THINKERS PROVIDE AUTONOMY/FREEDOM TO ACT AND MANDATE TO CREATE AND BUILD OPPORTUNITY TO CREATE PERSONAL WEALTH THROUGH CASH BONUSES AND EQUITY PARTICIPATION OPPORTUNITY TO BUILD AND LEAVE A LEGACY PROVIDE PSYCHOLOGICAL REWARDS: RECOGNITION OF IDEAS, FREEDOM TO EXPERIMENT AND EXPLORE PROVIDE CAREER ADVANTAGE: OPPORTUNITY TO SATISFY INTELLECTUAL CURIOSITY, OPTION TO BECOME HORIZON 2 BUSINESS BUILDERS TRADITIONAL BUDGETS AND CONTROLS PROFIT RETURN ON INVESTED CAPITAL PRODUCTIVITY OF EFFICIENCY HIGH REVENUE GROWTH MARKET SHARE GAINS NEW CUSTOMER ACQUISITIONS CAPITAL INVESTMENT EFFICIENCY EXPECTED NET PRESENT VALUE REVIEW, CHECK SET AGGRESSIVE TARGETS TO IMPROVE SUPPORT TAKING RISKS ADDRESS PROBLEMS TO SCALING UNDERSTAND VIABILITY PROJECT-BASED MILESTONES OPTION VALUATION RATE OF CONVERSION FROM IDEA TO BUSINESS LAUNCH NUMBER OF INITIATIVES ENGAGE AND WORK WITH AND FOR FIND VIABLE BUSINESS MODEL Source: Garvin, David A., and Levesque, L. “Emerging Business Opportunities at IBM.” Harvard Business School Case 304-075, March 2004 www.hbs.edu/faculty/Pages/item.aspx?num=30958
  92. 92. 92 THREE HORIZONS SOURCES READING VIDEO Scott, A. “The Business Model Canvas and Horizon Thinking”. Business Model Innovation Hub. 15 February 2011 www.businessmodelhub.com/profiles/ blogs/the-business-model-canvas-and-2 AMCF Horizon Series: Strategy Thought Leaders Define Strategy www.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 users www.ted.com/talks/evan_williams_on_ listening_to_twitter_users.html17 Enduring Ideas: The three horizons of growth. McKinsey Quarterly, 2009 Profit 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
  93. 93. 93 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”
  94. 94. 94 BIPOLAR FOCUS ESSENCE Combine long term commitment with short term action Source Picture: Fisk, P. GeniusWorks www.emeraldinsight.com
  95. 95. BIPOLAR FOCUS FRAMEWORK: TIME HORIZON AND MANAGEMENT ATTENTION 95
  96. 96. 96 BIPOLAR FOCUS KEY INSIGHTS Articulate the vision: Ascertain oneself of organizational buy-in Articulate an inspirational vision in a simple statement 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)
  97. 97. BIPOLAR FOCUS 97 TOOL: BIPOLAR FOCUS ASSESSMENT IN OUR ORGANIZATION... 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 LONGER TERM VISION EFFECTIVE PLANNING SHORT TERM IMPACT STRONGLY DISAGREE DISAGREE NEUTRAL AGREE STRONGLY AGREE
  98. 98. 98 BIPOLAR FOCUS SOURCES READING VIDEO Dave McClure’s 10 tips for the perfect investment pitch www.thenextweb.com/ entrepreneur/2011/10/29/davemcclures-10-tips-for-the-perfectinvestment-pitch/ The elevator pitch www.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 companies www.jasonshen.com/2012/elevencompelling-startup-pitch-archetypeswith-examples-from-yc-companies/ Getting behind the perfect pitch, M. Kok www.mjskok.com/resource/gettingbehind-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
  99. 99. 99 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”
  100. 100. 100 MOEBIUS RING ESSENCE: INTEGRATE PEOPLE, PLANET, PROFIT People/planet versus profit are not two sides of a ring– they are the same side of the coin Source Picture: Benbennick, D. Retrieved March 14, 2005, from Wikimedia Commons www.commons.wikimedia.org/wiki/File:M%C3%B6bius_strip.jpg
  101. 101. MOEBIUS RING KEY INSIGHTS: EXAMPLE OF TRIPLE P INTEGRATION 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 101
  102. 102. 102 MOEBIUS RING FRAMEWORK: SOCIAL IMPACT AND SHAREHOLDER VALUE Break-through innovation creates shareholder and societal value
  103. 103. MOEBIUS RING KEY INSIGHTS Break-through innovation can lead to increasing both societal and shareholder value in an integrated manner Opportunity for “profit” sector: To broaden scope from reducing cost to reducing societal burden To broaden scope from revenue growth to convincingly improve society 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 103
  104. 104. 104 MOEBIUS RING KEY INSIGHTS: EXAMPLES OF TRIPLE P BREAKTHROUGHS LAMP CAR BOTTLE CONTRIBUTE TO SOCIETY LED LAMP ENABLES STUDENTS TO STUDY BETTER IN CLASSROOM CAR WITH AUTOMATED SYSTEM TO AVOID ACCIDENTS BOTTLE PROMOTES BREAST CANCER AWARENESS REDUCE COST TO SOCIETY LED LAMP SAVES ELECTRICITY CAR CONSUMES LESS FUEL BOTTLE OF BIODEGRADABLE MATERIALS REDUCES CO2 AND WASTE FOOTPRINT
  105. 105. MOEBIUS RING 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 105
  106. 106. 106 MOEBIUS RING TOOL: “NON-PROFIT” PROFESSIONAL MANAGEMENT FROM TRADITIONAL NON-PROFIT PRACTICES... FOCUS OFTEN ON ACTIVITIES RATHER THAN ...TO COMMON BUSINESS PRACTICES CLEAR, QUANTITATIVE METRICS ON IMPACT IMPACT PERFORMANCE MEASURES MEASURE ONLY AT THE END OF A PROJECT SYSTEMATIC AND FREQUENT MEASUREMENTS OFTEN BLURRED LINES BETWEEN BOARD AND CLEARLY DEFINED RESPONSIBILITIES ACROSS STAFF GOVERNANCE BOARD MUST SUBSTITUTE FOR DISCIPLINARY THE WHOLE ORGANIZATION STRONG SUPERVISORY BOARD ROLE OF CAPITAL MARKETS FUNDING PARTNERS FOCUS ON DIRECT PROJECTS EXPENSES RATHER THAN SUPPORT STRUCTURE FUNDING FRAGMENTED FUNDING SOURCES AND RELIANCE ON DONATIONS OFTEN FACE HR CONSTRAINTS AND LESS MANAGEMENT CAPABILITY HUMAN RESOURCES STAFF TYPICALLY MOTIVATED BY CAUSE OBTAIN FUNDING ALSO FOR “OVERHEAD” AND MARKETING DON’T RELY ONLY ON GRANTS OR GIFTS FOR FUNDING , ALSO CONSIDER OTHER BUSINESS MODELS HIRE AND INVEST IN GOOD MANAGEMENT BY PROVIDING MARKET CONFORM SALARIES PROVIDE REWARDS/INCENTIVES BASED ON PERFORMANCE LACK OF MARKETING BUDGET EFFECTIVE MARKETING EFFORTS FOCUSED ON TARGET SEGMENTS MARKETING UNFOCUSED, WIDELY SPREAD MARKETING DECENT MARKETING BUDGET LIMITED OR UNPROFESSIONAL SUPPORT EFFECTIVE MANAGEMENT PROCESSES EFFORTS SUPPORT PROCESSES PROCESSES DUE TO LACK OF INVESTMENTS AND SKILLED RESOURCES AVERSE ATTITUDE TOWARDS CLEAR ACCOUNTABILITY AND FORMAL PROCESSES (INVESTMENT DECISIONS, HR MANAGEMENT, BUDGETING, ETC) LEAN OPERATIONAL PROCESSES
  107. 107. MOEBIUS RING 107 SOURCES READING VIDEO Building Social Business Models: Lessons from the Grameen Experience www.sciencedirect.com/science/article/ pii/S0024630109001290 Michael Porter, Creating shared value www.youtube.com/watch?v=z2oS3zk8V A4feature=youtube_gdata_player What non-profits can learn from CocaCola www.ted.com/talks/melinda_french_ gates_what_nonprofits_can_learn_ from_coca_cola.html The way we think about charity is dead wrong www.ted.com/talks/dan_pallotta_the_ way_we_think_about_charity_is_ dead_wrong.html Creating shared value, Harvard Business Review, 2011 Peepoo bag: customer value proposition and business model for social entrepreneurs www.businessmodelalchemist. com/2010/08/combiningbusiness-model-prototypingcustomer-development-and-socialentrepreneurship.html Shaping the future: Solving Social Problems through Business Strategy, McKinsey Company
  108. 108. 108 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”
  109. 109. INNOVATION PLAYS 109 OVERVIEW TECHNOLOGY BUSINESS MODEL DISRUPTION CUSTOMER DELIGHT 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 Break-through innovation is not based on customer preferences or articulated needs; indeed innovation will surprise customers and create new needs PAGE 110 PAGE 117 PAGE 126
  110. 110. 110 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 RD 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”
  111. 111. INNOVATION PLAYS: TECHNOLOGY ESSENCE: BUY IS OFTEN MORE EFFECTIVE THAN BUILD BENEFIT OF BUY VS. BUILD LEVERAGING EXTERNAL ASSETS/TALENT AT LOW/NO COST REDUCTION OF RD COST SHARING OF UP-FRONT INVESTMENTS AND RUNNING EXPENSES ACCESS TO MORE SPECIALIZED TALENT LOWER PROJECT FAILURE RATE EARLY UNDERSTANDING OF STAKEHOLDER NEEDS (CUSTOMERS, SUPPLIERS, ETC.) DEVELOP MULTIPLE TECHNOLOGIES IN PARALLEL ACCESS TO BROADER IDEA AND TALENT BASE BETTER QUALITY OF INNOVATION ACCESS TO DEEPER KNOWLEDGE OF CUSTOMERS’ AND SUPPLIERS’ NEEDS MORE EYES ON PROBLEMS FASTER TIME TO MARKET INVOLVEMENT OF MORE SPECIALIZED TALENT AND ASSETS SPEEDS UP IDEATION PHASE 111
  112. 112. 112 INNOVATION PLAYS: TECHNOLOGY KEY INSIGHTS: TECHNOLOGY PERFORMANCE OVER TIME 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
  113. 113. INNOVATION PLAYS: TECHNOLOGY KEY INSIGHTS: STEP IN AFTER THE PHASE OF DISILLUSIONMENT The optimal time to commit to a new technology might be when the market starts to disqualify the initial hype Source: Gartner’s 2012 Hype Cycle for Emerging Technologies. Retrieved July, 2012, from Gartner.com www.gartner.com/technology/research/hype-cycles/ 113
  114. 114. 114 INNOVATION PLAYS: TECHNOLOGY KEY INSIGHTS: DO-IT-YOURSELF 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 COST OF COMPUTING POWER EQUAL TO AN IPAD2 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/
  115. 115. INNOVATION PLAYS: TECHNOLOGY TOOL: ZAPPA’S TECHNOLOGY CARDS Source: Zappa’s Technology Cards. Retrieved July, 2012, from THNKLink www.thnklink.org/mod/ouwiki/view.php?id=84page=Emerging+Technologies (Note: for THNK participants only) 115
  116. 116. 116 INNOVATION PLAYS: TECHNOLOGY SOURCES READING VIDEO Disruptive technologies: advances that will transform life, business and global economy. McKinsey Global Institute www.mckinsey.com/insights/mgi.aspx Everything is a remix www.everythingisaremix.info/watch-theseries Digital transformation, we haven’t seen anything yet www.youtube.com/ watch?v=AZ5ePL36BbU Johanna Blakley: Lessons from fashion’s free culture www.ted.com/talks/johanna_blakley_ lessons_from_fashion_s_free_culture. html Ray Kurzweil: The accelerating power of technology www.ted.com/talks/ray_kurzweil_on_ how_technology_will_transform_ us.html Digitizing the value chain for high performance, Accenture, 2012 www.accenture.com/ SiteCollectionDocuments/PDF/ Accenture-Digitizing-the-Value-Chainfor-High-Performance.pdf 2013 internet trends. Kleiner Perkins Caufield Buyers www.kpcb.com/insights/2013-internettrends Pretty profitable parrots www.economist.com/node/21554500 First mover or fast follower, Bloomberg www.bloomberg.com/news/2012-0614/first-mover-or-fast-follower-.html
  117. 117. 117 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”
  118. 118. 118 INNOVATION PLAYS: BUSINESS MODELS ESSENCE: BUSINESS MODEL INNOVATION
  119. 119. INNOVATION PLAYS: BUSINESS MODELS KEY INSIGHTS 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 119
  120. 120. 120 INNOVATION PLAYS: BUSINESS MODELS KEY INSIGHTS: SPLIT OF VALUE CHAINS iPod example:
  121. 121. INNOVATION PLAYS: BUSINESS MODELS KEY INSIGHTS: DO-IT-YOURSELF MakerBot Manufacturing 3-D Prototyping/Printing oDesk/eLance Workforce as a Service (WaaS) Employment 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 121
  122. 122. 122 INNOVATION PLAYS: BUSINESS MODELS KEY INSIGHTS: SERVICES TO SOFTWARE VIP Fridge magnet Pizza ordering by home delivery in Dubai Bluetooth enabled fridge-magnet button to order pizza’s Västtrafik Tram sightseeing Free app that guides visitors to the nearest trams stop Public transport 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
  123. 123. INNOVATION PLAYS: BUSINESS MODELS KEY INSIGHTS: WHAT TO DO TO THRIVE WITH PLATFORMS 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 Source: Choudary, S.P. Retrieved October 19, 2013, from platformed.info www.platformed.info/platform-economics 123
  124. 124. 124 INNOVATION PLAYS: BUSINESS MODELS TOOL: THNK VENTURE DESIGN Source: THNK Venture model www.thnk.org
  125. 125. INNOVATION PLAYS: BUSINESS MODELS SOURCES READING VIDEO Big Bang disruption, Harvard Business Review, March 2013 Digitalizing the value chain for high performance. Accenture www.accenture.com/ SiteCollectionDocuments/PDF/ Accenture-Digitizing-the-Value-Chainfor-High-Performance.pdf Authors@Google: Eric Ries “The Lean Startup“ www.youtube.com/ watch?v=f EvKo90qBns Platform thinking www.platformed.info/platformeconomics Reinventing your business model, Harvard Business Review, 2008 Unbundling of the value chain, The internet’s impact on supply chain relationships www.boozallen.com/media/file/80560. pdf 125
  126. 126. 126 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”
  127. 127. INNOVATION PLAYS: CUSTOMER DELIGHT KEY INSIGHTS The customer needs to be delighted and therefore conclude he wants it Almost all industries have the potenial for a high NPS Source: Consumer Benchmark Survey. Retrieved Q3, 2013, from Temkin Group www.experiencematters.wordpress.com/category/temkin-group-research/ 127
  128. 128. 128 INNOVATION PLAYS: CUSTOMER DELIGHT KEY INSIGHTS The customer needs to be delighted and therefore conclude he wants it NPS has to reach treshold for market to take off Source: IT Benchmark Survey. Retrieved Q1, 2012, from temkingroup.com www.experiencematters.wordpress.com/2012/05/14/net-promoter-score-and-market-share-for-60-tech-vendors/
  129. 129. INNOVATION PLAYS: CUSTOMER DELIGHT FRAMEWORK: BI-POLARIZATION SPECTRUM Break-through innovation combines better functionality and lower cost, combining the two ends of the spectrum (E.g. Wikipedia versus an encyclopedia) 129
  130. 130. 130 INNOVATION PLAYS: CUSTOMER DELIGHT TOOL: PIVOT POINTS 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 CUSTOMER SEGMENT (SAME SEGMENT, DIFFERENT SERVICE/ PRODUCT) CUSTOMER NEED (SAME PROBLEM RESOLVED, DIFFERENT PRODUCT/SERVICE) CHANNEL (SAME SERVICE/PRODUCT, NEW CHANNEL) VALUE CAPTURE (SAME SERVICE/PRODUCT, NEW REVENUE MODEL) ZOOM IN (FEATURE BECOMES PRODUCT) ZOOM OUT (PRODUCT BECOMES FEATURE) PURPOSE (SAME OVERARCHING PURPOSE, DIFFERENT BUSINESS MODEL) TECHNOLOGY (SAME TECHNOLOGY, DIFFERENT USAGE)
  131. 131. INNOVATION PLAYS: CUSTOMER DELIGHT TOOL: USER INSIGHT AND FORESIGHT TOOLS Source: THNK Concepting Flow www.thnk.org 131
  132. 132. 132 INNOVATION PLAYS SOURCES READING VIDEO The customer’s voice. Why are we so bad at hearing it? BCG www.bcg.com/documents/file35167.pdf Innovation in Consumer products, Accenture, 2008 www.accenture.com/ SiteCollectionDocuments/PDF/ ConsumerProductsGroupPoV_103008_ fnl.pdf Why I brought PacMan to Moma www.ted.com/talks/paola_antonelli_ why_i_brought_pacman_to_moma. html Malcolm Gladwell: Choice, happiness and spaghetti sauce www.ted.com/talks/malcolm_gladwell_ on_spaghetti_sauce.html The Power of Habit Why We Do What We Do in Life and Business www.youtube.com/ watch?v=a6p3lG9EDXw Understanding change and predicting trends www.baekdal.com/insights/ understanding-change-and-predictingtrends/ 5 ways companies can pivot like lean www.fastcodesign.com/1672580/5ways-big-companies-can-pivot-like-leanstartup Why we’re so bad at predicting the future www.venturevillage.eu/predicting-future
  133. 133. 133 TOP TALENT 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
  134. 134. 134 TOP TALENT OVERVIEW ORCHESTRATING TEAMS TALENT MAKE AND BUY CULT OF INNOVATOR ROCK STAR GOVERNANCE HEADROOM There are three essential elements to an effective team: casting, setting-up the team, followed by leading the organization Break-through innovation requires infusion of external talent to engage “fresh eyes”, ask naive questions and collect novel analogies The output difference between an outstanding creative talent and a good creative talent is huge , much more significant than in operating or management jobs 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 135 PAGE 144 PAGE 150 PAGE 156
  135. 135. 135 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”
  136. 136. 136 ORCHESTRATING TEAMS ESSENCE HOP STEP JUMP CASTING ORCHESTRATING LEADING PICKING THE TEAM SETTING UP THE TEAM GUIDING THE ORGANIZATION 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
  137. 137. ORCHESTRATING TEAMS 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 137
  138. 138. ORCHESTRATING TEAMS KEY INSIGHTS HIRE PEOPLE THAT ARE BIGGER THAN YOU ARE B UT I F CH O F EA WE S E AN W R TH LLE A E SM O AR E WH PL rfs PEO dwa RES Y OF S HI PAN FU O M ACH A CO IF E OME B EC L HAL WE S ARE H US H BE ALL IR EO ES P COM EA PLE W OF E AR E N TS GIA RE HO A Y PAN COM NW THA BIGG ER - David Ogilvy 138
  139. 139. ORCHESTRATING TEAMS KEY INSIGHTS: TYPICAL PROFILE OF CREATIVE PEOPLE 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 Source: Csikszentmihalyi, M. “Creativity: The Work and Lives of 91 Eminent People.” HarperCollins, 1996 www.hbs.edu/faculty/Pages/item.aspx?num=30958 139
  140. 140. 140 ORCHESTRATING TEAMS FRAMEWORK: WHO TO TRUST 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 Source: storebukkebruse. Retrieved September 14, 2012, from Flickr www.flickr.com/photos/tusnelda/8408155485/ Behaviors that undermine trust Self-orientation: Degree of egocentricity. Lack of willingness to understand the other person. Inability to be generous
  141. 141. ORCHESTRATING TEAMS 141 TOOL: MBTI PRE-TEST DISCLAIMER These are 4 questions, only to give a first indication. To do a proper assessment of your MBTI profile, use the formal MBTI test1. MBTI PRE-TEST QUESTIONS PROFILE INDICATION PEOPLE AROUND YOU: E INNER STRENGTH: I FUTURE: N WHEN PUSHED, WHAT IS MORE IMPORTANT, WHAT IS BEING SAID OR WHO SAID IT? WOULD YOU LIE FOR A FRIEND? NO: T DO YOU PREFER PLANNING OR SURPRISE? HOW DO YOU APPROACH HOLIDAY? SURPRISE: P WHAT IS YOUR SOURCE OF ENERGY, PEOPLE AROUND YOU OR INNER STRENGTH? DO YOU THINK ABOUT THE PRESENT OR DO YOU THINK ABOUT THE FUTURE? WHAT DO YOU ENJOY MOST, REALIZATION OF ANTICIPATION? PRESENT: S YES: F PLANNING: J TEAM IMPLICATIONS 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
  142. 142. 142 ORCHESTRATING TEAMS TOOL: TEAM ASSESSMENT SURVEY FOR THE TEAM - QUESTIONS TO ASK YOURSELF 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 STRONGLY DISAGREE DISAGREE NEUTRAL AGREE STRONGLY AGREE
  143. 143. ORCHESTRATING TEAMS 143 SOURCES READING VIDEO MBTI profile www.myersbriggs.org Alternative MBTI profile www.similarminds.com Five Dysfunctions of a Team www.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 disagree www.ted.com/talks/margaret_ heffernan_dare_to_disagree.html Personality pathways www.personalitypathways.com/type_ inventory.html Team work at the top, 2001, McKinsey Quarterly Three steps to building a better top team, 2011, McKinsey Quarterly
  144. 144. 144 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”
  145. 145. TALENT MAKE AND BUY ESSENCE: RECRUIT INNOVATIVE PEOPLE 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.” 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-radiosmel-karmazin-ranks-as-one-of-the-lowest/ 145
  146. 146. 146 TALENT MAKE AND BUY 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
  147. 147. TALENT MAKE AND BUY TOOL: INTERVIEW QUESTIONS 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? 147
  148. 148. 148 TALENT MAKE AND BUY TOOL: RECRUITING HEATMAP
  149. 149. TALENT MAKE AND BUY 149 SOURCES READING VIDEO Encouraging organizations to change, 2011, The influence model, Colin Price N/A 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
  150. 150. 150 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”
  151. 151. CULT OF INNOVATOR ROCK STAR ESSENCE: BRING IN THE INSPIRATIONAL TOP TALENT KEEP CALM THE CAVALRY HAS ARRIVED 151
  152. 152. 152 CULT OF INNOVATOR ROCK STAR 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)
  153. 153. CULT OF INNOVATOR ROCK STAR 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. Source: Clean Sheet Capital Redesign 153
  154. 154. 154 CULT OF INNOVATOR ROCK STAR TOOL: GUESS WHO 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? Source Picture: Khan, Bethany Ann. Retrieved January 24, 2010, from Flickr www.flickr.com/photos/bethanykhan/4466733616/
  155. 155. CULT OF INNOVATOR ROCK STAR 155 SOURCES READING VIDEO Meeting the challenge of corporate entrepreneurship, Harvard Business review, 2012 The innovators DNA, Hal Gregerson. www.youtube.com/watch?v=Xy6Ex1C_ SAs 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 Claudia Kotchka on innovation at PG, Institute of Design Strategy Conference, May 2008 www.vimeo.com/5203345
  156. 156. 156 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?”
  157. 157. GOVERNANCE HEADROOM ESSENCE 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/ 157
  158. 158. 158 GOVERNANCE HEADROOM 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
  159. 159. GOVERNANCE HEADROOM FRAMEWORK: BOARD COMPOSITION ELEMENTS 159
  160. 160. 160 GOVERNANCE HEADROOM TOOL: BOARD INVOLVEMENT CHECK-LIST 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?
  161. 161. GOVERNANCE HEADROOM 161 SOURCES READING VIDEO Business Knowledge Resource online www.business.gov.in/corporate_ governance/index.php N/A 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 ESCAP www.unescap.org/pdd/prs/ ProjectActivities/Ongoing/gg/ governance.asp
  162. 162. 162 INNOVATION SYSTEMS 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
  163. 163. INNOVATION SYSTEMS OVERVIEW 163 SELF ORGANIZING SYSTEMS LEARNING LOOPS LEVERAGE THE CROWD PATIENT FUNDING For innovation or adaptability, the principle of emergence and selforganizing systems becomes valuable Innovation is a path of discovery, consisting of rapid, consecutive cycles of best-efforts trial, surprise insight, adjustment and next trial The “crowd”, customers in particular, but also competitors, suppliers, professionals, academia, and financiers, provides a great platform for cocreation, and support for roll-out Manage the innovation portfolio separate, in a “VC-like” manner, with sufficient patience PAGE 164 PAGE 175 PAGE 185 PAGE 199
  164. 164. 164 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”
  165. 165. SELF ORGANIZING SYSTEMS ESSENCE: DRIVE TOWARDS HIGH VALUE WORK Source Picture: Stroh, J. Retrieved October, 2012, from jarche.com www.jarche.com/wp-content/uploads/2012/10/fractal_JoachimStroh.jpg 165
  166. 166. 166 SELF ORGANIZING SYSTEMS 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
  167. 167. SELF 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. 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 167
  168. 168. 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 selforganizing 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 Review www.hbr.org/product/what-is-your-management-model/an/SMR307-HCB-ENG
  169. 169. SELF ORGANIZING SYSTEMS FRAMEWORK: ORGANIZATIONAL STRUCTURES 169
  170. 170. 170 SELF ORGANIZING SYSTEMS KEY INSIGHTS: ALTERNATIVE COORDINATION SYTEMS Performance transparency: provide employees with all information required to make informed own decisions Internal markets: create markets for jobs, assignments, staffing, investments Projects: organize around projects from one staffing pool Shared values: embed shared values as compass to make right decentral decisions without need for consultation Externalization/virtual organizations: outsource activities to create freedom to act and survive Collaboration platforms; stimulate information sharing and mutual support

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