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Innovation Management - A NASSCOM organized session for CXO community of Indian IT services Companies in Pune, India

Innovation Management - A NASSCOM organized session for CXO community of Indian IT services Companies in Pune, India

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  • London Innovation definition: "Innovation is the successful exploitation of new ideas and is a vital ingredient for competitiveness, productivity and social gain within businesses and organisations." Dictionary definition: innovation: "i-n&-'vA-sh&n (noun) Date: 15th century 1: the introduction of something new 2: a new idea, method, or device : NOVELTY
  • Ben & Jerry graveyard of flavors
  • My aim here is not to convince your company to discard every routine it uses and devote all efforts to inventing new ways of thinking and acting. On the contrary doing routine work with proven methods is the right thing to do most of the time. It is wise to manage most organizations as if the future will be a perfect imitation of the past: Hospitals want surgical residents to perform operations exactly as their experiences mentors do. Airline pilots fly 747’s exactly as other pilots – by using the same controls, Mcdonalds want every trainee to make the big mac exactly the way its been getting made by others. But if part of your mission is to explore new possibilities, the you must create a culture that supports constant mindfulness and experimentation. Its not sufficient to generate a new idea now and then, and leave it on chance. Your company, in one of its form, needs to be a place to generate and test many new and disparate ideas. It should be an arena, a constant constructive and collaborative contest, where best ideas win.
  • My aim here is not to convince your company to discard every routine it uses and devote all efforts to inventing new ways of thinking and acting. On the contrary doing routine work with proven methods is the right thing to do most of the time. It is wise to manage most organizations as if the future will be a perfect imitation of the past: Hospitals want surgical residents to perform operations exactly as their experiences mentors do. Airline pilots fly 747’s exactly as other pilots – by using the same controls, Mcdonalds want every trainee to make the big mac exactly the way its been getting made by others. But if part of your mission is to explore new possibilities, the you must create a culture that supports constant mindfulness and experimentation. Its not sufficient to generate a new idea now and then, and leave it on chance. Your company, in one of its form, needs to be a place to generate and test many new and disparate ideas. It should be an arena, a constant constructive and collaborative contest, where best ideas win.
  • .

Innovation Management To Share Innovation Management To Share Presentation Transcript

    • Why innovation?
    • Understanding innovation
    • Objective
    • Proposed solution: Innovation Factory
    • Conclusion
    • Why innovation?
      • Undercurrents
      • Industry analysis
    • Understanding innovation
    • Objective
    • Proposed solution: Innovation Factory
    • Conclusion
  • December 17, 2009 Innovation Management Slide Containerisation, Blue-Collar Revolution 540 man days (108 men 5 days) 98.5% factor Industry Vignette 1970 Re-imagine, Tom Peters 8 man days (8 men 1 days) Undercurrents Industry Analysis
  • December 17, 2009 Innovation Management Slide Software development and Offshore revolution 98.5% factor ? What next Industry Vignette Undercurrents Industry Analysis
    • “ Business is about the production of goods and services by combining three production factors – land &natural resources , capital and labour ”
    1. Changing dominant production factors December 17, 2009 Innovation Management Slide Leading for innovation Arie de Geus, A writer and management thought leader Undercurrents Industry Analysis
  • 1. Changing dominant production factors December 17, 2009 Innovation Management Slide Leading for innovation Arie de Geus, A writer and management thought leader information Technology Printing technique Coincidence INNOVATION (Maximize Human Creativity) Dominant Prod. Factor Abundant supply Freely rentable Post modern: New World Maximize remuneration to capital providers move towards democracy Dominant Prod. Factor Increasingly irrelevant 15 th century - 1950 Violence Wars Management Philosophy Slavery/ Feudalistic Labour Non – existent Capital Dominant Prod. Factor Land & Natural resources Pre medieval Undercurrents Industry Analysis
  • 2. Rising speed of change December 17, 2009 Innovation Management Slide Ray Kurzweil Futurist. Kurzweil applied the tools of mathematical modelling to human history for his above argument Re-imagine, Tom Peters Time Paradigm shift > 1000 AD Typically took thousand of years to unfold (remember what you learnt in 5 th grade) 1000 AD Every 100 years 1800 AD More changes than in the previous 900 years 1900 -1920AD More changes than in 1800-1900 AD 1920 -2000 Major paradigm shift every decade 21 st century 1000 times more technological change than in 20 th century Undercurrents Industry Analysis
  • 3. Growing importance of Futuristic Potential
    • Revenue, profitability, market share, and customer satisfaction are all measures of a company’s current position. Contrary to what conventional strategic thinking suggests, those measures cannot point the way to the future. The pioneer-migrator-settler map can help a company predict and plan future growth and profit, a task that is especially difficult—and crucial—in a fast-changing economy.
    December 17, 2009 Innovation Management Slide Undercurrents Industry Analysis
  • 3. Growing importance of Futuristic Potential
    • “ wall street won’t pay any more for raising profit margins on a stagnant sales base. The crucial issue has become how far does a company stretch for growth”
    • Pankaj Ghemawat, Harvard Business School
    • “ In the final Analysis you can’t continue to reduce cost and grow”
    • Paul Cook, founder Raychem
    • “ Incrementalism is innovation’s worst enemy”
    • Nicholas Negroponte, MIT Media Lab
    December 17, 2009 Innovation Management Slide Undercurrents Industry Analysis
  • 3. Growing importance of Futuristic Potential
    • The correct answer is "80%." A recent study by PriceWaterhouse Coopers showed that intangible assets represent approximately 80% of a company's overall value. This has been rising steadily since 1960 when the typical ratio was less than 30%.
    December 17, 2009 Innovation Management Slide
    • What % of a typical company's market value is attributed to Intellectual Property?
    • 20%
    • 50%
    • 60%
    • 80%
    Undercurrents Industry Analysis
  • 4. Commoditization of IT December 17, 2009 Innovation Management Slide Information Technology is best seen as the latest in a series of broadly adopted (Infrastructural) technologies that have reshaped industry over the past two centuries. For a brief period, as they were being built into the infrastructure of commerce, all these technologies opened opportunities for forward-looking companies to gain real advantages. But as their availability increased and their cost decreased they became commodity inputs. From a strategic standpoint, they became invisible; they no longer mattered. IT as a % of total capital expenditure IT Doesn’t Matter Nicholas G. Carr Harvard Business Review, March 2003
    • Infrastructural Technologies
    • Steam Engine
    • Electricity
    • Railroads
    • Internal Combustion Engine
    • Electric Engine
    • Assembly line manufacturing
    U.S. Department of Commerce’s Bureau of Economic Analysis, 1965 > 5% 1980s 15% 1990s 30% 2000 50% Undercurrents Industry Analysis
  • 4. Commoditization of IT
    • IT based competitive advantages are dwindling because
    • IT’s power is outstripping most of the business needs it fulfills
    • The price of essential IT functionality has dropped to the point where it is more or less affordable to all
    • The capacity of the universal distribution network (the Internet) has caught up with demand, we already have considerably more fiber-optic capacity than we need
    • IT vendors are rushing to position themselves as commodity suppliers or even as utilities
    December 17, 2009 Innovation Management Slide “ When a resource becomes essential to competition but inconsequential to strategy, the risks it creates become more important than the advantages it provides” IT Doesn’t Matter Nicholas G. Carr Harvard Business Review, March 2003 Undercurrents Industry Analysis
  • New competitive Rules of tomorrow
    • Market share Vs Opportunity share
    • SBU competencies Vs Corporate competencies
    • Structured arenas Vs Unstructured arenas
    • Enterprise Vs Ecosystem
    • Mind share Vs Heart share
    • Operational efficiency Vs Creative energy (operational efficiency is the price of entry)
    December 17, 2009 Innovation Management Slide Inspired from: Competing for the Future Gary Hamel & CK Prahalad Undercurrents Industry Analysis
  • Bottom line
    • We need to optimise the potential of Human Brain (Labour) as a strategic production factor, in a rapidly changing business environment to gain sustainable competitive advantage
    December 17, 2009 Innovation Management Slide
    • INNOVATION :
    • Uses human brain as a key strategic production factor
    • Converts change from threat to an OPPORTUNITY.
    • Continuous innovation is a factor of culture – the most difficult capability to emulate, and one that endures over time
    Undercurrents Industry Analysis
  • How (ALL) Indian IT services firms are competing December 17, 2009 Innovation Management Slide Strategies Adopted Informed assumption Objectives P= Primary objective; S= Secondary objective Move up the value chain Operational Excellence Labor Arbitrage Mergers and Acquisitions P P Establish Management Consulting Practice P Create vertical industry organization P S Strengthen business process expertise P S Cultivate longer and deeper client relationships S P Innovate strategic engagement models S P Indian employees; foreign clients P Reposition old & Create new service offerings P Offshore Delivery model P P Global Branding P War for Talent (Retention & Attraction) S S Note: Firms also have an objective of gaining economies of scale and scope Undercurrents Industry Analysis
  • Trajectories of Industry Change December 17, 2009 Innovation Management Slide How industries Change Anita M. McGahan Harvard Business Review, Oct 2004 Core Activities Core Assets To identify what transformation your industry is going through – you need to consider whether there are threats to your industry’s core activities (The recurring actions performed that attract and retain supplier and buyers) and core assets (the durable resources, including intangibles, that make your company more efficient at performing core activities.) Threatened Not Threatened Radical Change Everything is up in the air Ex: Makers of landline telephone handsets, overnight letter carriers, and travel agencies Creative Change The industry is constantly redeveloping assets and resources. Ex: the motion picture industry, sports team ownership, and investment banking Threatened Intermediating Change Relationship are fragile Ex: automobile dealerships, investment brokerages, and auction houses Progressive Change Companies implement incremental testing and adopt to feedback Ex: Online auctions, commercial airlines, and long-haul trucking Not Threatened Undercurrents Industry Analysis
  • Major long term transformations facing Indian IT services firms
    • Commoditization of IT
    • Ease of implementation
    • Vanilla IT implementation becoming increasingly tool driven and less technical (less technology skill dependent and more functional expertise dependent)
    • India Advantage of cost arbitrage to Indian IT services firms being eroded
    December 17, 2009 Innovation Management Slide Informed assumption Undercurrents Industry Analysis
  • Threat Analysis Indian IT services December 17, 2009 Innovation Management Slide Informed assumption Core Assets Core Activities Indian Advantage (Cost Arbitrage) Relationship management People/ Institutional knowledge Low end programming skills Resource management Core Technology Skills Processes Project management Institutional Experience Sales and marketing Domain Knowledge IP & patents Threatened Not Sure Not Threatened Undercurrents Industry Analysis
  • Trajectories of Industry Change December 17, 2009 Innovation Management Slide Core Assets Core Activities core activities (The recurring actions performed that attract and retain supplier and buyers) and core assets (the durable resources, including intangibles, that make your company more efficient at performing core activities.) CREATIVE CHANGE: The industry is constantly redeveloping assets and resources. IT Low High Low High Innovation under creative change occurs in fits and starts. Leading companies in these industries tend to spread the risk of new-project development over a portfolio of initiatives. As a result, their returns are less volatile than those of smaller competitors. How industries Change Anita M. McGahan Harvard Business Review, Oct 2004 Threatened Not Threatened Radical Change Creative Change Threatened Intermediating Change Progressive Change Not Threatened Undercurrents Industry Analysis
  • Are we living in a surplus society?
    • “ The ‘surplus society’ has a surplus of similar companies, employing similar people, with similar educational backgrounds, coming up with similar ideas, producing similar things, with similar prices and similar quality.” Kjell Nordstrom and Jonas Ridderstrale, Funky Business
    December 17, 2009 Innovation Management Slide Is your company adding to this surplus? Funky Business Kjell Nordstrom and Jonas Ridderstrale ? Undercurrents Industry Analysis
  • Bragging Innovation or….are they really doing it? December 17, 2009 Innovation Management Slide No of search results for INNOVATION on the leading IT and Consulting firms’ websites Industry Vignette ! Innovation! Oh yeah… we are all for it! Look at our websites, it seems we are already doing a lot of it… ? Indian IT services MNC IT services Infosys 224 14% Accenture 2600 23% Wipro 190 10% IBM Global services 1474 9% TCS 79 5% Deloitte Consulting 1182 11% Satyam 32 6% EDS 423 17% CSC 410 3% Undercurrents Industry Analysis
    • Why innovation?
    • Understanding innovation
      • Definition and scope
      • Innovation thought leadership
      • Principles of innovation
    • Objective
    • Proposed solution: Innovation Factory
    • Conclusion
  • MONOPOLY December 17, 2009 Innovation Management Slide Death by a thousand cuts Don Moyer – Harvard Business Review Feb 2005 Definition & Scope Thought leadership Principles
  • End of MONOPOLY December 17, 2009 Innovation Management Slide Death by a thousand cuts Don Moyer – Harvard Business Review Feb 2005 Definition & Scope Thought leadership Principles
  • Competition December 17, 2009 Innovation Management Slide Death by a thousand cuts Don Moyer – Harvard Business Review Feb 2005 Definition & Scope Thought leadership Principles
  • Cut - Throat Competition December 17, 2009 Innovation Management Slide Death by a thousand cuts Don Moyer – Harvard Business Review Feb 2005 Definition & Scope Thought leadership Principles
  • INNOVATION December 17, 2009 Innovation Management Slide Death by a thousand cuts Don Moyer – Harvard Business Review Feb 2005 Definition & Scope Thought leadership Principles
  • … from Thought leaders, defining innovation December 17, 2009 Innovation Management Slide Change that creates a new dimension of performance – Peter Drucker The Profitable implementation of strategic creativity – Elaine Dundon.
    • In order for something to qualify as a true innovation, it should simultaneously meet three basic criteria. It must:
    • Engage a creative process
    • Be distinctive
    • Yield a measurable impact.
    • Eric Chen and Kathryn Kai-ling Ho Capgemini Center for Business Innovation
    Innovation = Big Idea = Eraser mania, Michelangelos all, Organizers not employers, Beautiful Systems, Branding mania, Talent based enterprise, Design is it!, Great service, passion- Tom Peters, Circle of innovation Definition & Scope Thought leadership Principles
  • Theory often bangs in to reality… December 17, 2009 Innovation Management Slide Because evidence from the past can be such misleading guide to the future, the only way to see accurately what the future will bring is to use theory The innovator’s Solution Clayton M Christensen Gravity !! Oh its just a theory Definition & Scope Thought leadership Principles
  • … Curves of innovation December 17, 2009 Innovation Management Slide Sigmoid Curve (a typical life cycle of almost anything): invention continuity The prescription to success: Blend of continuity with invention Charles Handy Professor at London business school Definition & Scope Thought leadership Principles Novel Design (invention/ innovation) Dominant Design (no product innovation) Adaptive Designs (marginal innovation) Redesign (invention/ innovation) Niche Designs (some innovation) Continuous Redesign (innovation) Stages of Design Henry Mintzberg Professor, Management, McGill Univ. & INSEAD
  • Forms of innovation December 17, 2009 Innovation Management Slide Product & services Operational & admin. Business Strategy Structural Social Radical Incremental Ambiguous Unfamiliar Categories Transformation Type Market Acquaintance Familiar Conservative Sales & Marketing Definition & Scope Thought leadership Principles
  • Forms of Innovation: Disruptive Vs Sustaining December 17, 2009 Innovation Management Slide The Innovator’s Solution Clayton M. Christensen & Michael E. Raynor Low end disruption Address over-served customer with a lower –cost business model Sustaining Strategy Bring a better product into an established market Performance Time New Market disruption Compete against non-consumption Non-consumers / Non–consuming occasions Different measure of Performance Time Definition & Scope Thought leadership Principles
  • Forms of Innovation: Disruptive Vs Sustaining December 17, 2009 Innovation Management Slide The Innovator’s Solution Clayton M. Christensen & Michael E. Raynor A company that finds itself in more than good enough circumstances simple can’t win: Either disruption will steal its market or commoditisation will steal its profits The innovator’s Solution Clayton M Christensen Definition & Scope Thought leadership Principles
  • Blue Ocean Strategy December 17, 2009 Innovation Management Slide Blue Ocean Strategy W. Chan Kim; Renee Mauborgne, Insead Harvard Business Review, Oct 2004 Characteristics Red ocean Strategy Blue Ocean Strategy Compete in existing market Create uncontested market space Beat the competition Make the competition irrelevant Exploit existing demand Create and capture new demand Make the Value/ cost trade off Break the value/cost trade-off Align whole system of company’s activities with its strategic choice of differentiation or low cost Align whole system of company’s activities in pursuit of differentiation and low cost Definition & Scope Thought leadership Principles
  • Blue Ocean Strategy December 17, 2009 Innovation Management Slide Some empirical evidence In a study of business launches in 108 companies Blue Ocean Strategy W. Chan Kim; Renee Mauborgne, Insead Harvard Business Review, Oct 2004 Examples Red Ocean Strategy Incremental improvement to existing products Blue ocean Strategy Attempts to create new markets Total Ventures 86% 14% Total Revenue 62% 38% Total profits 39% 61% Definition & Scope Thought leadership Principles In 2002, just 12 of Procter & Gamble’s 250-odd brands generated half of its sales and an even bigger share of net profits.
  • Weird ideas for managing creativity (innovation) December 17, 2009 Innovation Management Slide Conventional ideas that work Weird ideas that work Weird Ideas that work Robert. I. Sutton Prof. of Mgmt. Science and Engineering, Stanford University Decide to do something that will probably… Succeed, then convince yourself and everyone else that success is certain Fail then convince yourself and everyone else that success is certain Reward… Succeed; punish failure and inaction Success and failure; punish inaction Find some happy people… And make sure they don’t fight And get them to fight Hire… “ Fast learners” of the organization code “ Slow learners” of the organization code People you (probably) need People you (probably) don’t need Take your past success And replicate them And forget them Encourage people… That are obedient followers That are mavericks Make sure you… play by the rules of the game change the rules of the game Stay within the industry boundaries Go across the industry boundaries Focus on competition Focus on ecosystem Definition & Scope Thought leadership Principles
  • December 17, 2009 Innovation Management Slide Summary Efficiency indicates effectiveness in the implementation and use of proven ideas Creative companies and teams are inefficient and (often annoying) places to work Conventional ideas that work Weird ideas that work Weird ideas for managing creativity Weird Ideas that work Robert. I. Sutton Prof. of Mgmt. Science and Engineering, Stanford University Definition & Scope Thought leadership Principles
  • December 17, 2009 Innovation Management Slide Today’s Problems come from yesterdays ‘Solutions’. The Fifth Discipline Peter M. Senge Director, Centre for organisational learning, MIT Sloan school of management Definition & Scope Thought leadership Principles
  • Questions managers must ask…
    • Which of the factors that our industry takes for granted should be eliminated?
    • Which factors should be reduced well below the industry’s standard?
    • Which should be raised well above the industry’s standard?
    • Which factors should be created that the industry has never offered?
    December 17, 2009 Innovation Management Slide Asking the full set of questions—rather than singling out one or two—is necessary for profitable growth. Value innovation is the simultaneous pursuit of radically superior value for buyers and lower costs for companies. Definition & Scope Thought leadership Principles
  • Trimurti of the modern INNOVATIVE organisation (Do we have the right Balance?) December 17, 2009 Innovation Management Slide Building Breakthrough Businesses Within Established Organizations. Source: Harvard Business Review; May2005 Circle of innovation, Tom Peters ? Brahma = Creator = Learning Strategic experiments are highly uncertain endeavours. Regardless of the level of prior research and analysis, new co will face several critical unknowns. Vishnu = Preserver = Borrowing NewCo forgets most easily if it is isolated from the CoreCo. But Complete separation is impractical. CoreCo’s tremendous resources are too valuable to ignore Mahesh = Destroyer = Forgetting To build a foundation for success, NewCo must forget CoreCo’s business model. NewCo’s answer to the fundamental question that defines a business - Customer, value and channel needs to be answered Definition & Scope Thought leadership Principles
  • R+P+V= Culture December 17, 2009 Innovation Management Slide Innovator’s Solution, Clayton M. Christensen Resources
    • Things or assets that organizations can buy or sell, build or destroy
    • Examples:
    • People
    • Technology
    • Products
    • Equipment
    • Information
    • Cash
    • Brand
    • Distribution channels
    Processes
    • Established ways companies turn resources into products or services
    • Examples:
    • Hiring and training
    • Product development
    • Manufacturing
    • Planning and budgeting
    • Market research
    • Resource allocation
    Values
    • The criteria by which prioritization decisions are made.
    • Examples:
    • Cost structure
    • Income statement
    • Customer demands
    • Size of opportunity
    • Ethics
    Definition & Scope Thought leadership Principles
  • Fitting an Innovation's requirements with the organisation’s capability December 17, 2009 Innovation Management Slide Innovator’s Solution, Clayton M. Christensen Poor Fit (Disruptive) Strong Fit (Sustaining) Fit with Values Autonomous Org. Mainstream Org. Position of responsibility Customary New Fit with Processes Heavyweight Teams Lightweight Teams Functional Teams Structure development team Definition & Scope Thought leadership Principles
  • Seven Myths of Innovation December 17, 2009 Innovation Management Slide Building Breakthrough Businesses Within Established Organizations. Source: Harvard Business Review; May2005 Circle of innovation, Tom Peters Definition & Scope Thought leadership Principles Myth Reality You need more new ideas. You need more homes for ideas. Let people loose to innovate. Enable people through structure and process. Innovation is a department. Innovation is a company-wide competency. Innovation is a radical departure from the past Innovation often creatively combines pieces of the past. Mistakes are costly. Early mistakes are profitable Avoid the detours Detours may be the destination Innovation is about creating new things. There are many paths to innovation.
  • Silicon Valley (For) gets it ! (Secret to success)
    • Tolerance of Failure (It’s a badge of Honor)
    • Tolerance of Treachery (No such thing as loyalty)
    • Pursuit of Risk (Of 20 VC funded startups, 4 bankrupts, 6 lose money, 6 living dead, 3 do well, and one hits the jackpot)
    • Willingness to reinvest (Cash flows into the valley and stays there)
    • Enthusiasm for Change (obsolete ourselves or the competition will)
    • Promotion on merit (Politics count little)
    • Obsession with product (Cool ideas)
    • Openness to collaboration (borrow and get going)
    • Anybody can play (“I can be rich”)
    December 17, 2009 Innovation Management Slide John Mickelthwaite Management Editor, The Economist Definition & Scope Thought leadership Principles
  • James March, an organizational theorist December 17, 2009 Innovation Management Slide “ Unfortunately the difference between the visionary genius and delusional madness is much clearer in the history books than in experience” Definition & Scope Thought leadership Principles
    • Why innovation?
    • Understanding innovation
    • Objective
      • Goal
      • Analysis
      • Recommended Strategy
    • Proposed solution: Innovation Factory
    • Conclusion
    • How many of you feel that innovation, however you understand it, is fundamental for the future of your company?
    • How many of you believe that your company has a system for innovation that satisfies three simple test:
      • Your people know that the system exist; its not a secret
      • It works pretty well, whatever that means to you
      • On some basis, no matter how irregular, it leads to the realization of value on an ongoing basis for your organization.
    December 17, 2009 Innovation Management Slide John Kao, Founder and CEO The idea factory Goal Analysis Recommended Strategy
  • Our objective is…
    • To gain
    • sustainable competitive advantage
    • by creating an
    • integrated, inspiring, reliable & relevant Innovation & Change Management System
    • that would build enterprise wide capacity to continuously innovate in
    • all aspects of business at all levels
    December 17, 2009 Innovation Management Slide Goal Analysis Recommended Strategy
  • Systems Thinking: Building blocks December 17, 2009 Innovation Management Slide Delay Reinforcing Feedback Balancing Feedback Too HOT Too COLD Too HOT Too COLD HOT COLD The Fifth Discipline Peter M. Senge Director, Centre for organisational learning, MIT Sloan school of management Sales Satisfied Customer Positive word of mouth Body Temperature Temp. Gap Adjust Clothing Desired Body Temperature Goal Analysis Recommended Strategy
  • Systems Thinking analysis of current reality
    • Description: A short term solution is used to correct a problem, with seemingly positive immediate results. As this correction is used more and more, fundamental long-term corrective measure are used less and less. Over time, the capabilities for the fundamental solution may atrophy or become disabled, leading to even greater reliance on the symptomatic solution
    December 17, 2009 Innovation Management Slide Archetype: Shifting the Burden The Fifth Discipline Peter M. Senge Director, Centre for organisational learning, MIT Sloan school of management Symptomatic “Solution” Problem Symptom Fundamental Solution Side Effect Goal Analysis Recommended Strategy
  • Systems Thinking analysis of current reality
    • Early warning symptoms: “Look here, this solution has worked so far! What do you mean, there’s trouble down the road”
    • Management principle: Focus on the fundamental solution. If symptomatic solution is imperative (because of the delay in the fundamental solution), use it to gain time while working on the fundamental solution
    December 17, 2009 Innovation Management Slide Archetype: Shifting the Burden Indian IT services analysis The Fifth Discipline Peter M. Senge Director, Centre for organisational learning, MIT Sloan school of management Higher sales efforts & riding the wave Capacity to create unique Value Commoditization Delay High Demand, Rapid Change & Intense Competition Goal Analysis Recommended Strategy
  • Systems Thinking analysis of current reality
    • Examples:
    • Using alcohol, drugs or even exercise to relive work stress and thereby not facing the need to relieve workload itself
    • Selling more to existing customer base
    • Paying bill by borrowing, instead of going through disciplined budgeting
    December 17, 2009 Innovation Management Slide Archetype: Shifting the Burden The Fifth Discipline Peter M. Senge Director, Centre for organisational learning, MIT Sloan school of management Higher sales efforts & riding the wave Capacity to create unique Value Commoditization Delay High Demand, Rapid Change & Intense Competition Goal Analysis Recommended Strategy
  • Our Recommended Innovation strategy
    • Rapid & diverse low cost under the radar experimentation
    December 17, 2009 Innovation Management Slide Goal Analysis Recommended Strategy
    • Why innovation?
    • Understanding innovation
    • Objective
    • Proposed solution: Innovation Factory
      • Key attributes
      • Architecture
      • Valuation
    • Conclusion
  • Innovation Factory: December 17, 2009 Innovation Management Slide John Kao, Founder and CEO The idea factory INNOVATION SYSTEM: An integrated set of processes, policies, and tools that link corporate strategy to new sources of value (products, services and processes) in order to create sustainable competitive advantage Innovation Factory = Innovation Culture + Innovation System INNOVATION CULTURE : A set of values and behavioural factors that are designed to bring out the tremendous curiosity, creativity and human urge to experiment and improve things. It ensures collaboration, team work, and motivation. Key Attributes Architecture Valuation
  • Pillars of organizational innovation December 17, 2009 Innovation Management Slide The Seeds of Innovation Elaine Dundon Shared Innovation vision and Strategy Innovation Environment Support Innovation Resource Allocation Innovation Process Networks Innovation Programs Innovation Skills Development Innovation Rewards and Recognition External Stakeholder Innovation INNOVATION Key Attributes Architecture Valuation
  • Innovation DNA December 17, 2009 Innovation Management Slide Diversity Organized Forgetfulness Co-evolutionary collaboration Velcro Organisation Meaningful Organisational Vocabulary Rapid Experimentation & prototyping Inspirational Trust & transparency Motivating incentive system/ Recognition for Personal Accomplishment Key Attributes Architecture Valuation
  • Context Diagram December 17, 2009 Innovation Management Slide Information Engineering System Culture Engineering System LEADERSHIP VALUES MISSION Innovation System A systems that creates a desired behavioural response that induces innovation A system that manages the organisational innovation portfolio Key Attributes Architecture Valuation
  • December 17, 2009 Innovation Management Slide Employee groups, buyers, suppliers, experts, and competitors Innovation system architecture Innovation System Integrator A tool that would integrate innovation systems to other enterprise applications i.e.: CRM, ERP, and Delivery systems Idea mgmt tool INSPIRE LEARN CREATE MANAGE bQ Business quotient Innovation School An online education centre B-Plan Business planning tools iM Innovation Monitor Innovation tracking dashboard Talent Zone Skill assessment, capturing &trading system COI Communities of innovation HCL garage An internal VC firm Strategizer A collaborative ecosystem wide corporate strategy portal and A nalyst Portal LEADERSHIP INSPIRE LEARN CREATE VALUES MISSION CONNECT & COLLABORATE MANAGE RISK ENLIGHTENED EXPERIMENTATION STRUCTURED CHAOS Key Attributes Architecture Externalities
  • Managing the portfolio December 17, 2009 Innovation Management Slide
    • Distinctive knowledge surpassing that of competitors
    • Invest in initiatives possessed by company or easily acquired
    • Knowledge surpassed by competitors
    • Attempt small to midsize investments to gain familiarity
    • Probability of success difficult to estimate
    • Attempt small investments to gain familiarity
    Clustering here may indicate inefficient focus on opportunities to adopt core businesses Clustering here may indicate too little investment in building long-term growth options All significant actions mapped: adapting, building shaping Size of the circle reflects relative economic importance of the initiative Key Attributes Architecture Externalities
  • Innovation factory – a real option valuation December 17, 2009 Innovation Management Slide A team with a Strong understanding of innovation theory Time (Years) Innovation Consulting Enterprise Innovation Sys. $ 6 MM NPV of Potential profits from operational efficiencies and revenue enhancements is hugely positive Option Space 2005 2010 2006 2007 2008 2009 YES NO YES NO YES NO YES NO YES NO YES NO Key Attributes Architecture Valuation
    • Why innovation?
    • Understanding innovation
    • Objective
    • Proposed solution: Innovation Factory
    • Conclusion
  • Top ten reasons for innovation failure
    • Not creating a culture that supports innovation
    • Not getting buy-in and ownership from business unit managers
    • Not having a widely understood, eco system-wide process
    • Not allocating resources to the process
    • Not tying projects to company strategy
    • Not spending enough time and energy on the fuzzy front-end
    • Not building sufficient diversity into the process
    • Not developing criteria and metrics in advance
    • Not training and coaching innovation teams
    • Not having an innovation management system
    December 17, 2009 Innovation Management Slide
  • December 17, 2009 Innovation Management Slide Building organisation wide innovation will be the only sustainable growth strategy of the future, any success NOT driven by organizational innovation capacity will either be a lucky coincidence or a temporary arbitrage opportunity
  • You must be the change you wish to see in the world. Mohandas Karamchand Gandhi December 17, 2009 Innovation Management Slide If you have enough information to make a business case, you're too late Bill Gates
  • Thanks [email_address] , [email_address] P: 9818094464, 11-51436730 Don’t wait until the change in the market surprises you Presentation by abhishek breja manager strategy planning
    • Operational effectiveness: Operational effectiveness means performing similar activities better—that is, faster, or with fewer inputs and defects—than rivals perform them
    • Strategic positioning: means performing different activities from rivals’ or performing similar activities in different ways.
    Operational effectiveness VS strategic positioning December 17, 2009 Innovation Management Slide What is Strategy, Michel E Porter, Harvard Business Review Nov 1996 Fitment among activities Unique and valuable positioning Make tradeoffs Strategic positioning low high low high Relative cost position Non price buyer value delivered
  • Sustainable competitive advantage December 17, 2009 Innovation Management Slide Sustainable Competitive Advantage: Occurs when a firm develops a strategy that competitors are not simultaneously implementing and Provides benefits which current and potential competitors are unable to duplicate Strategic Competitiveness: Achieved when a firm successfully formulates and implements a value-creating strategy Competitive advantage to have any strategic meaning, three things must happen. 1. Customers must perceive a consistent difference between a company’s product or service and those of its competition, and that difference must occur in one or more key buying criteria. 2. The difference must come from a capability gap between the favored company and its competitors. 3. The product difference and the capability gap must endure over time . What is Strategy, Michel E Porter, Harvard Business Review Nov 1996
  • Blue Ocean Strategy December 17, 2009 Innovation Management Slide Blue Ocean Strategy W. Chan Kim; Renee Mauborgne, Insead Harvard Business Review, Oct 2004 Examples Automobiles industry Key blue ocean creation Creator Technology Vs Value pioneering Industry attractiveness Ford Model T 1908, First mass produced car New Entrant Value Pioneering Unattractive GM’s Car 1924- Fun and fashion Incumbent Value Pioneering (Some new Tech.) Attractive Japanese Cars 1970: small reliable fuel efficient autos Incumbent Value Pioneering (Some new Tech.) Unattractive Chrysler Minivan 1984: Ease of a car, space of a van Incumbent Value Pioneering Unattractive
  • Blue Ocean Strategy December 17, 2009 Innovation Management Slide Blue Ocean Strategy W. Chan Kim; Renee Mauborgne, Insead Harvard Business Review, Oct 2004 Computer industry Examples Key blue ocean creation Creator Technology Vs Value pioneering Industry attractiveness CTR’s (IBM) tabulating machine 1914, modularizing & leasing tabulating machine Incumbent Value Pioneering Unattractive IBM 650 electronic computer & System 360 1952, business computer industry: by reducing & simplifying the power & price of existing tech. Incumbent System 650: Value Pioneering System 360 : Value & Tech. pioneering Nonexistent Apple Personal Computer 1978: All in one simple to use Apple II New entrant Value Pioneering Unattractive Compaq PC Server 1992: ProSignia server, twice the and print capability of a minicomputer at 1/3 rd the price Incumbent Value Pioneering Nonexistent Dell Built to order Mid 1990s: New purchase and delivery experience for buyers New entrant Value Pioneering Unattractive
  • Ten ways to stifle innovation
    • Be suspicious of every new idea from below – because its new and its from below
    • Insist that people who need your approval to act go through several other levels of management first
    • Ask department or individuals to challenge and criticize one another’s proposals
    • Express your criticism freely and withhold your praise, let them know they could be fired at any time
    • Treat identification of problems as a sign of failure, to discourage people from letting you know when something in their area isn’t working
    December 17, 2009 Innovation Management Slide 100% Satisfaction Guaranteed Organization fitment Valuation Plan of action
  • Ten ways to stifle innovation
    • Control everything carefully, Make sure people count everything that can be counted frequently
    • Make decision to reorganize and change policies in secret, and spring them on people unexpectedly
    • Make sure that request for information are fully justified don’t give it out freely
    • Assign to lower –level managers, in the name of delegation and participation, responsibility for figuring out how to cut back, lay off, move people around, or other quickly implement threatening decisions you have made
    • And above else always remember and keep telling others that the rules of the business have been set for a reason – there’s no point challenging them
    December 17, 2009 Innovation Management Slide 100% Satisfaction Guaranteed Organization fitment Valuation Plan of action