Identification and targeting of key processes that have considerable impact on the organization’s ability to: Achieve its short, medium and long term Strategic Goals and ObjectivesIf improved, enable the organization to realize a high Return on the Investment (ROI) Identification of target processes for which complaints have been received from customers, trading partners or internal staff and which can result in productivity improvement Achieving initial success with BPM projects in one area of the organization, will create enthusiasm and buy-in from other groups.
Improving Performance: The ultimate reason for a firm to innovate is to improve its performance, for example by increasing demand or reducing costs. Market Advantage: A new product or process can be a source of market advantage for the firm. Productivity Enhancement: The firm gains a cost advantage over its competitors, allowing a higher mark-up at the prevailing market price or, depending on the elasticity of demand, the use of a combination of lower price and higher mark-up than its competitors to gain market share and increase profits. Product Innovation: the firm can gain a competitive advantage by introducing a new product, which allows it to increase demand and mark-ups.Product Differentiation: Firms can also increase demand through product differentiation, by targeting new markets and by influencing demand for existing products.Changes in Organizational Methods: Firms can improve the efficiency and quality of their operations, thereby increasing demand or reducing costs.Improving Production Processes: Innovation can also improve performance by increasing the firm’s ability to innovate. Improving the capabilities of production processes can make it possible to develop a new range of products, and new organisational practices can improve the firm’s ability to gain and create new knowledge that can be used to develop other innovations.
Recreated from Peter Skarzynski and Rowan Gibson,Building A Systemic Innovation Capability , Harvard Business Review, 2008. Fig 11.1
Ref. PaulTrott p. 97.
Foundations ofBusiness Innovation Andrew Maxwell
Agenda Explain who we are Get to know you Provide an outline of the course Provide an introduction to innovation concepts Deal with any administration issues Text - Managing Creativity and Innovation – Harvard Business Press Web site – U of T portal and CIC Downtown course Expectations and registration Class 6 – 9 pm Mondays at IB 270
Who are we: Andrew Maxwell• Director Business Partnerships CIC• Professional engineer and MBA• 15 years with tech. multinationals• Cofounded several technology businesses• Created U of T’s technology incubator• Teaches technology entrepreneurship• Completing Ph.D. in innovation and new venture creation at University of Waterloo• Industry advisor CBC Dragons’ Den.
1. Understand the innovation imperativeDefinition of InnovationMacro-economic impactMicro-economic impactInnovation imperative Country level Regional level Firm level
The Economic Conception of Innovation Joseph SchumpeterInnovation is:• Introduction of a new good, or a new quality of a good• Introduction of a new method of production (need not need include new technologies)• The opening of a new market• The securing of a new source of supply• The creation of a new organization
Canada lags at innovation & gets worse Canadian Council Of Academies
2. Importance of Firm-Level InnovationIn a knowledge based economy, organizations that are able to do more with less, outperform competitorsIn the private sector, higher productivity makes you the acquirer, rather then the acquireeIn the public sector, exceeding benchmarks is encouraged, while falling behind has negative repercussions“In the road to the future, there are drivers, passengers and roadkill” Gary Hamel
3. Recognize different types of innovation Innovation is often confused with invention and specifically research and development leading to new technologies. In fact innovation includes: a. Product Innovation b. Process Innovation c. Supply chain Innovation d. Service Innovation e. Business model Innovation ……….. And can be applied to all areas of an organization
a) Product innovation Technology Existing Internal External Customer New
b) Process innovationA change in the way a product or service is manufactured, created, or distributedProcess innovation involves implementation of new or improved production or delivery method.Process innovations can be intended to decrease unit costs of production or delivery, to increase quality, or to produce or deliver new or significantly improved products.
c) Supply Chain Innovation What product/service will be delivered to customers What components or services will be acquired externallyHow you will add value internallyThis involves consideration of: Core competencies necessary for long term success Availability of partners in supply chain Strategic risk management of relationship
Supply Chain Innovation Opportunities• New raw materials• Alternate suppliers• Outsource manufacturing• Third party distribution• Sales agents or on-line salesConsider: Risk management Financial implications Market issues
d) Service InnovationMajority of individuals in Canada (and US) work in service industryEven where people work in manufacturing, many of these individuals provide support servicesService innovation is biggest opportunity to increase competitivenessImprovements in service innovation can be measured in terms of increases productivity and value added
Opportunities for Service InnovationContributes to competitive advantageRequires specific social and technical skillsInvolves development and new technology applicationCostly to develop needed specialist and generalist skillsRequires integrated thinking and agile environmentCan be implemented in all service areasMost significant possibilities in financial and medical services
Can you change your product into a service? “An automobile is actually art, entertainment and mobile sculpture, which, coincidently, also happens to provide transportation.” Robert Lutz, Chairman, GM “Product, “Make sure I service or don’t run out experience” of cash” “The customer rarely buys what the company thinks it is selling him” - Peter Drucker
e) Business Model InnovationThe goal of innovation is to increase competitivenessNew ways of doing business can also increase competitiveness and productivity by: Creating enhanced utility for the customer Enabling a different pricing strategy Providing alternate purchasing optionsSometimes a technology innovation requires a business model innovation to achieve commercial success
Some Innovative Revenue ModelsXerox Developed photocopying technology Initial capital costs of machines perceived as excessive Introduced pay per copy business modelGoogle Automated search-engine technology Provided free to end users Revenues generated by advertising
4. Need to identify what innovation success looks like Improve top line, bottom line or market share Strengthen balance sheet Strengthen brand/reputation Increase workforce retention (incent stakeholders) Enhance community engagement Improve environmental performance Attract investors/acquirers
Establish specific innovation goals Improve quality of Reduce use of raw processes, products and materials services Reduce environmental Create of new markets damage Extend product range Reduce energy Reduce labour costs consumption Improve production Conform to regulations processes If you don’t have specific goals, your chance of reaching them are small
5. Need to find a way to create and capture innovation opportunitiesCommunicate vision and innovation imperativeStimulate creativity and idea generationDevelop innovation decision-making process that: Captures ideas Makes decisions Activate resourcesImplements projects and encourages accountability
Yes ……I know we are meant to be moreinnovative … can you give me some guidelines
Identify sources of innovationInternal drivers Internal sources1. Unexpected event 1. Research2. Contradiction 2. Shop floor3. Change of work process 3. Sales/service4. Change in industry structure 4. Customer serviceExternal Drivers External Sources5. Socio-economic changes 5. Customers6. Political changes 6. Suppliers7. Technology changes 7. Competitors Drucker‘s Innovation Framework
6. Recognize that innovation is a processInnovation is a management process the requires specific tools, techniques and disciplineInnovation involves the development of organizational processes and procedures for generating, considering and acting on innovative ideasInnovation research focussed on technology; but real challenge is to understand innovation process and the cognitions and behaviours of people in that processInnovation failures due to lack of understanding people
“Stage Gate” Innovation Process Stage-Gate Institute (Bob Cooper)
Implementing The Innovation Process Identify innovation imperative and establish objectives Create innovation framework Assess current resources (Business Analysis) Analyze current environment and external trends Source and capture innovative ideas Create an innovation decision system Compare each opportunity to agreed criteria Implement pilot project Measure performance Scale up or cancel
8. Understand innovation constraintsSuccessful innovation usually involves:Changing current processes and proceduresModifying management style and communicationsDeveloping new organizational structuresAbandoning existing customers and finding new onesModifying incentives, compensation and recruitmentChange company culture and attitude to riskImportant to raise questions and ask how far you will go
Is your organization innovative?Embraces and learns Focuses on financials & from failure timelinesFosters high energy Has strict guidelines & control activities Had a hierarchical structureCreate a “Can do” Has multiple bosses & “dotted environment lines”Develop support & trust Fosters attitude of “EveryoneIs a fun place to work is for himself”
Change management approach can help an organization become innovative1. Change through Leadership2. Create a Shared Need3. Shape a Vision4. Mobilize Commitment5. Make Change Last6. Monitor Progress7. Change Systems and Structures8. Change Culture from Control to Trust9. Communicate10.Incentivize
Focus on the people issuesWhat works: Mentoring and coaching Skills & experience development Free information exchange (networking) Resource availabilityWhat doesn’t: Strict personal objectives Individual performance over team performance The “right” way of doing things
Architect an innovative environment• Company leaders • Collaborative & open and organization culture. aligned to achieve a • Incentives that vision reward challenging Leadership Culture the status quo and and Organization Values• Disciplined approach to People Process building and • Process & tools that and innovation Skills support idea Tools generation &• Desire to do experimentation things better
Creating an Innovation Capability The High morale and organization’s retention of reputation for creative people innovation Motivates people Attraction of within the organization creative people and reduces frustration Organizational A willingness within encouragement of the organization to creativity & accept new ideas innovation Development of innovative products
Develop an Innovation Culture Create an innovation-friendly organization, that embraces a culture of “risk” and “rewards failure” (and success)Develop a “ project and portfolio management” approach to innovation around decision-making and implementationDevelop a cross functional “matrix organization” to embrace innovation across organizationFocus on “communications” and “engagement”Design “incentives” to support innovation
Common Causes of Innovation FailureOrganizational Causes Process Causes1. Poor leadership 1. Poor goal definition2. Poor organization 2. Poor alignments of goals3. Poor communication and actions4. Lack of empowerment of 3. Poor team effort stakeholders 4. Poor monitoring of results5. Poor knowledge 5. Poor communication and management access to information6. Resource limitations 6. Inappropriate decision making
Meeting Topic Meeting Topic1 Introduction and Innovation Management: Basic Concepts 7 The Innovative Organization: Structures and Systems · What is innovation? · What Makes an Organization Innovative · Balanced Scorecard · Innovation Myths and Mantras · People Leadership · Innovation Vocabulary · Team dynamics / structures · Models of Innovation · Communication strategies · Centers of innovation (Ex: Universities) Intellectual Property Management 8 Leadership in Innovation2 The Social and Economic Dimensions of Innovation · Common Myths About Leadership · International Innovation Indices · Characteristics of a Leader · Innovation, Productivity and Economic Competitiveness · Motivation, Performance, Reward Systems · Productivity vs. Competitiveness · Voice of the Customer3 Innovation in Business Models 9 Managing Change · “Traditional” vs. Emerging Business Models · Innovation and Change · Examples for Innovative Business Models · Why Change? What is Change Management? · Implementing Business Models · Factors in Change – CAP Model4 The Essentials of Product Innovation · Creating the Need for Change · Implementing Change · Scale of Product Innovation 10 Service Innovation · Product vs. Process Innovation · What is Service Innovation · Examples of Disruptive Innovations · Examples of Service Innovations · New Product Development Framework · Closed vs. Open Innovation5 The Essentials of Process Innovation Product or Service? · The Drivers of Process Innovation 11 Innovation in Product Development · Business Process Management · 50,000 ft view of innovation in product development (Courses 2 and 3) · Business Process Mapping · Stages of Product Development · 3P – People, Product, Process · Management of Change · Examples6 Mid-Term Presentation/Exam 12 · Team Presentation and Final Exam
Assignments1. If you haven’t done register for course learn.utoronto.ca/bps/innt.htm www.slideshare.net/andrewmaxwell/innovate-or- die-91903542. Find someone else you think might be interested and tell them to watch the video http://vimeo.com/291127173 Identify a key innovation challenge you are willing to share
Thank you“I don’t mind failure. I’ve always thought thatschoolchildren should be marked by the number offailures they’ve had.” – James Dyson
Thank you“Innovation comes from saying no to 1,000things to make sure we don’t get on the wrongtrack or try to do too much.” – Steve Jobs
Thank you“If the people running Amazon.com don’t make some signiﬁcantmistakes, then we won’t be doing a good job for our shareholdersbecause we won’t be swinging for the fences.”- Jeff Bezos
Thank you“You have three choices…. Innovate, find a partnerwho you can innovate with… or wait to be innovatedby someone else….” – Andrew Maxwell.