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Bearing presentation on innovation driven competitive advantage - adc ci - 2013-03-13

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Seminar on innovation driven competitive advantages for Abu Dhabi Chamber of Commerce and Industry

Seminar on innovation driven competitive advantages for Abu Dhabi Chamber of Commerce and Industry

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  • Vi som är här är Magnus Penker, Jan Snygg och Jörgen Eriksson.Vi undervisar alla tre vid den tredagarskurs i innovation management som vi ger genom DFK. Datum för kursen är 12-13 oktober samt 27 oktober. Jan Snygg är huvudlärare.Jag vill även nämna att Jan sitter i den svenska kommittén för standardisering av Innovation Management i Europa och deltar i standardiseringen av Innovation Management som ISO-9000 liknande verktyg.
  • Litteraturen visar många vägar till att lyckas med innovation.In search of Excellence – inte samma företag tio år senare
  • Vi som är här är Magnus Penker, Jan Snygg och Jörgen Eriksson.Vi undervisar alla tre vid den tredagarskurs i innovation management som vi ger genom DFK. Datum för kursen är 12-13 oktober samt 27 oktober. Jan Snygg är huvudlärare.Jag vill även nämna att Jan sitter i den svenska kommittén för standardisering av Innovation Management i Europa och deltar i standardiseringen av Innovation Management som ISO-9000 liknande verktyg.

Bearing   presentation on innovation driven competitive advantage - adc ci - 2013-03-13 Bearing presentation on innovation driven competitive advantage - adc ci - 2013-03-13 Presentation Transcript

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  • Innovation driven competitive advantages March 13, 2013 “..because the execution of an idea is always more important than the brilliance of the thought..” (Harvard Business Publishing – Morgan, Levitt & Maleck – INVEST model) This document is solely for the use of the receiver. No part of it may be circulated, quoted, or reproduced fordistribution outside the receivers organisation without prior written approval from Bearing Consulting Ltd.
  • Presenting todayFöreläsare Jörgen Eriksson, Founding Partner in Bearing and adjunct Professor of Innovation Management, resides in France and works with consulting internationally. Has since 1995 led a large number of projects related to innovation systems, business development, restructuring and R&D across four continents. 3
  • About Bearing ConsultingBearing Consulting is a management consultancy incorporated in UnitedKingdom with offices in London, Stockholm, Barcelona, andJohannesburg Bearing develops years, we have been Over the past 12 methodology and We work with clients in three focus areas; also engaged in projects across four publish books continents Places & Regions Finance Innovation 4
  • Places where we have worked 5
  • Agenda1. Globalisation and Hyper Competition2. Business in Hyper Competitive Markets3. What do we mean with Innovation?4. How can we work with Innovation?5. Corporate Innovation and common gaps6. How to make Corporate Innovation work7. The Innovation Navigator 6
  • Globalisation and Hyper CompetitionThis document is solely for the use of the receiver. No part of it may be circulated, quoted, orreproduced fordistribution outside the receivers organisation without prior written approval from Bearing ConsultingLtd.
  • Some drivers of hyper competitionWhy hyper competition? Globalisation – less trade barriers and efficient transport (e.g. containers) Speed of hyper connected communication and the pace of modern business Disruptive Technologies A new technology that has a serious impact on the status quo and changes the way people have been dealing with something, perhaps for decades 8
  • The European Perspective Sub heading“Europe is facing a moment of transformation. The crises haswiped out years of economic and social progress and exposedstructural weaknesses in Europe s economy.In the meantime, the world is moving fast and long-term challengessuch as globalisation, pressure on resources, population ageing,are intensifying.”- Quote from Europe 2020 Strategy 9
  • The European PerspectiveThe European Union has set out its vision for Europe s economy in Sub headingthe Europe 2020 Strategy, which aims at confronting structuralweaknesses through progress in three mutually reinforcingpriorities:1. Smart Growth, based on knowledge and innovation2. Sustainable growth, promoting a more resource efficient, greener and competitive economy3. Inclusive growth, fostering a high employment economy delivering economic, social and territorial cohesion 10
  • The European PerspectiveSub headingInvesting more in research, innovation and entrepreneurship isat the heart of Europe 2020 and a crucial part of Europe s responseto the economic crises.So is having a strategic and integrated approach to innovationthat maximizes European, national and regional research andinnovation potential.It is about enhancing Europe s capacity todeliver smart, sustainable and inclusivegrowth, through the concept of smartspecialization. 11
  • Specialization in EuropeSub heading 12
  • Business in hyper competitive markets This document is solely for the use of the receiver. No part of it may be circulated, quoted, or reproduced for distribution outside the receivers organisation without prior written approval from Bearing Consulting Ltd.
  • Corporate world dominanceIn the year 1994, Motorola was world leader in (analogue)mobiles,seven years later Nokia was world leader in (digital) mobiles60%50% Motorola40%30%20%10% Nokia0% Market shares 1994 Market Shares 2001 14
  • From #1 to crises in less than three years…Why ?Nokia share price 15
  • Apple stock price down more than 30% 16
  • Hyper competition“Either you innovate or you’re in commodity hell. If youdo what everyone else does, you have a low-marginbusiness. That’s not where you want to be.” Sam Palmisano, former CEO IBM 17
  • Hyper competition“Managing innovation better may be the only way out ofthe abyss called commodity hell” Jeffrey R. Immelt, CEO General Electric 18
  • What do we mean with innovation? This document is solely for the use of the receiver. No part of it may be circulated, quoted, or reproduced for distribution outside the receivers organisation without prior written approval from Bearing Consulting Ltd.
  • What is Innovation?The literatureis not givingus aconsistentdefinition 20
  • The definitionInnovation is creative destruction, whereentrepreneurs combine existing elements innew ways… After Joseph Schumpeter (1883 – 1950) 21
  • What is Innovation? Innovation ?Innovation can be incremental or disruptive / radical Train Car Airplane”Invention” => Innovation => Effect (Globally) 22
  • Types of innovation 23
  • How can we work with innovation? This document is solely for the use of the receiver. No part of it may be circulated, quoted, or reproduced fordistribution outside the receivers organisation without prior written approval from Bearing Consulting Ltd.
  • Innovation across the business systemBusiness Product & Sales & Delivery & Operation Model Services Marketing Supply Chain 25
  • From ―hard‖ to ―soft‖ factors 26
  • Does Harley-Davidson sell motorcycles? 27
  • Does Harley-Davidson sell motorcycles?―…what we sell is the abilityfor a 43-year-old accountantto dress in blackleather, ride through smalltowns and have people beafraid of him― – an HD executive 28
  • The Lego StoryY2000 "Toy of the Y2004-03, the Century" by owner & CEOFortune magazine Kjeld Kirk and the British Kristiansen decideAssociation of Toy to go back to Retailers basic! Y2003 – 2004 Y2004-10, Jørgen Huge losses, close Vig Knudstorp to bankruptcy appointed as new CEO 29
  • The Lego Story  The situation 2004  Demand decreasing, competition from games, movies, merchandising  Poor quality  Poor logistics  Slow in adoption  Simplistic leadership and laid-back cultureSources: HBR, DN, Guardian, BBC, Handouts European Offshoring Summit, (2009, Copenhagen) 30
  • The Lego Story Innovate Execute Stabilize Deliver what operations we promise Improve the Value Creating business Partnership Define Rigid Execution Raison dêtre Platform Organic growth Differentiated Value Chain Offshoring Consumer Driven Restore the Value Chain balance sheet 2200Operational Profit 1200 MDK 200 -800 2003 2004 2005 2006 2007 2008 -1800 31 Year
  • Lego – key achievementsClear Raison dêtre: ―we help children learn systematic and creative problem solving—a crucial twenty-first-century skill‖Gained consumer insights through ―direct sales to consumers‖ through BuiltByMe without competing with existing distribution channelCo-Branding with strong and selected partners such as Star wars and Harry Potter 32
  • Lego – key achievementsReduced lead time, 45 to 3 days to storeCost saving through offshoring non- core competenciesA new supplier interfaceQA system in placeOpen Innovation, 120,000 people involved in external innovation work – DesignByMe, DreamtByMe, BuildByM eCommunity driven approach; the open platform Mindstorm encouraging customers to design and develop their 33
  • Lego total innovation makeover Customer External Innovation Engagement Internal Innovation Brand Services Supply Chain Business Model Partner Model Product Marketing...and LEGO continues to deliver exceptional profitable growth onan oligopolistic/niche and international toy market... 34
  • Corporate Innovation and common gaps This document is solely for the use of the receiver. No part of it may be circulated, quoted, or reproduced fordistribution outside the receivers organisation without prior written approval from Bearing Consulting Ltd.
  • Types of innovation 36
  • The S-curve Emergent Growth Mature Performance / Value offering Ongoing business Business of the future (EXPLOITATIVE) (EXPLORATORY) Effort / TimeSource: Tovstiga (2007) 37
  • Common gaps En definition...1. Framework of reference, lack of common terminology2. Heads on competition in market. Limited focus on differentiation3. Corporate Culture4. Not allow people time and space to be creative5. Focus only on exploitative business, not exploratory6. Creativity killed by process and procedure7. Too long time to market 40
  • How to make corporate innovation work This document is solely for the use of the receiver. No part of it may be circulated, quoted, or reproduced for distribution outside the receivers organisation without prior written approval from Bearing Consulting Ltd.
  • What successful development requiresSuccess with innovation does not require comparative resources.The Ghaff tree grows in the desert virtually without water.The key factors for success with innovation are knowledge and creativity 42
  • Strategy 43
  • Blue Ocean Strategy Blue Ocean Strategy (2004) 44
  • Blue Ocean Strategy 45
  • Sweetspot analysis Where your firm meets What? customers needs in a Where? way in which your Why? Competitors’ Customers’ competitors cannot How? offerings needs 3 1 Sweet Spot Sweet spot = unique spot 2 How to protect/define boundary 1,2,3 Company’s capabilities Context (technology, industry, regulat ory, etc.) 46llis & Rukstad (2008). Can You Say What Your Strategy Is?, HBR (April 2008)
  • Your Sweet Spot Defines Your Future Success First DIFFERENTIATE Where your company What? from competitors meets customers needs in a way in Where? Why? Competitors’ Customers’ which your competitors How? offerings needs cannot 3 1 Sweet Spot Sweet spot = unique spot 2 How to protect/define boundary 1,2,3 Company’s capabilities Context (technology, industry, regulat ory, etc.) 47llis & Rukstad (2008). Can You Say What Your Strategy Is?, HBR (April 2008)
  • Your Sweet Spot Defines Your Future Success THEN expand border 3 north toward customer needs Where your company What? meets customers Where? needs in a way in Why? Competitors’ Customers’ which your competitors How? offerings needs cannot 3 1 Sweet Spot Sweet spot = unique spot 2 How to protect/define boundary 1,2,3 Company’s capabilities Context (technology, industry, regulat ory, etc.) 48llis & Rukstad (2008). Can You Say What Your Strategy Is?, HBR (April 2008)
  • Innovation CapabilitiesInnovation Capabilities- Determines how well you will succeed with your innovation efforts The most successful companies are those that focus on a particular, narrow set of common and distinct capabilities that enable them to better execute their chosen strategy.Examples:• Personas• Knowledge• Team structure• Tools• Processes. 49
  • Bearing Innovation Navigator...the navigatorInitiated by the work of Sawhney, M., Wolcott, R. C., & Arroniz, I. (2006). The 12 Differetnt Ways for Companies toInnovate. MIT Sloan Management Review , 75-81. 50
  • Bearing Innovation NavigatorComparisons 51
  • Case – African Frontier HoldingsThis document is solely for the use of the receiver. No part of it may be circulated, quoted, orreproduced fordistribution outside the receivers organisation without prior written approval from Bearing ConsultingLtd.
  • The Process...the process Client Involvement Analysis process •In-depth interviews interviews with key stakeholders •Hypothesis •Survey: Capturing imperatives of the business, scoping the •Internal and external data collection (survey) case •Generating relevant benchmark data and innovation •Survey: Capture strategies, weaknesses, market patterns structures, key drivers •Analysis •Internal and external communication / enrolment •Strategic options generation •Presentation with recommendations •Evaluation and conclusions •Recommendations 53
  • Overall snapshotOverall snapshot “innovation capability footprint‖ 54
  • Comparison with databaseBenchmark against benchmarking database (AFH = red) 55
  • Respondent categories 56
  • The Innovation RadarWolcott, Lippitz, ―Grow from Within‖ 57
  • OfferingsOfferings are a firm’s products and services.Innovation along this dimension requires the creation of new productsand services that are valued by customers. 58
  • PlatformA platform is a set of common components, assembly methods ortechnologies that serve as building blocks for a portfolio of products orservices.Platform innovation involves exploiting the ―power of commonality‖ —using modularity to create a diverse set of derivative offerings morequickly and cheaply than if they were stand-alone items.Innovations along this dimension arefrequently overlooked even thoughtheir power to create value can beconsiderable. 59
  • SolutionsSolutions A solution is a customized, integrated combination ofproducts, services and information that solves a customer problem.Solution innovation creates value for customers through thebreadth of assortment and the depth of integration of the differentelements. 60
  • CustomersCustomers are the individuals or organizations that use or consumea company’s offerings to satisfy certain needs.To innovate along this dimension, the company can discover newcustomer segments or uncover unmet (and sometimes unarticulated)needs.Compare – Blue Ocean Strategy 61
  • Customer ExperienceCustomer Experience This dimension considers everything a customersees, hears, feels and otherwise experiences while interactingwith a company at all moments.To innovate here, the company needs to rethink the interface betweenthe organization and its customers. 62
  • Value CaptureValue Capture refers to the mechanism that a company uses torecapture the value it creates.To innovate along this dimension, the company can discover untappedrevenue streams, develop novel pricing systems and otherwise expandits ability to capture value from interactions with customers and partners. 63
  • ProcessesProcesses are the configurations of business activities used toconduct internal operations.To innovate along this dimension, a company can redesign its processesfor greater efficiency, higher quality or faster cycle time. Such changesmight involve relocating a process or decoupling its front-end from itsbackend. 64
  • OrganizationOrganization is the way in which a company structures itself, itspartnerships and its employee roles and responsibilities.Organizational innovation often involves rethinking the scope of the firm’sactivities as well as redefining the roles, responsibilities and incentives ofdifferent business units and individuals. 65
  • Supply ChainSupply Chain A supply chain is the sequence of activities andagents that moves goods, services and information from sourceto delivery of products and services.To innovate in this dimension, a company can streamline the flow ofinformation through the supply chain, change its structure or enhance thecollaboration of its participants. 66
  • PresencePresence Points of presence are the channels of distribution thata company employs to take offerings to market and the placeswhere its offerings can be bought or used by customers.Innovation in this dimension involves creating new points of presence orusing existing ones in creative ways. 67
  • NetworkingNetworking A company and its products and services are connectedto customers through a network that can sometimes become part of thefirm’s competitive advantage.Innovations in this dimension consist of enhancements to the networkthat increase the value of the company’s offerings. 68
  • BrandBrand are the symbols, words or marks through which a companycommunicates a promise to customers.To innovate in this dimension, the company leverages or extends itsbrand in creative ways. 69
  • The twelve dimensions of innovation 70
  • Innovation framework Strategic question Type of innovation Style Why How What Profit / Market share Product Innovation • Cauldron Company Strategy Process Innovation • Spirale • Incremental/ Organisational Innovation • Fertile Disruptive • PacMan Management Innovation • Need seekers • Explorer Production Innovation • Market readers • Technology drivers Commercial/Marketing People Innovation • 10 Faces of Innovation Service Innovation Capability & Process • Ideation • Project selection • Product development • CommercialisationSource: Penker (2011) 71
  • Why – Strategic Question ? Strategic To keep competitors Question out keeping/gaining To increase the profit ? market shares? Building the capabilities to increaseIncrease barriers to enter or copy the internal efficiencyDifferentiation and neutralization of Cost savings competitorsFocus on competitive advantages Disruptive opportunities 72
  • How – Style & People ―The Devil´s Advocate may never go away, but on a good day, the ten personas can keep him in place‖ (Kelly & Littman, 2005) Learning Organisational Building personas personas personas Experience Anthropologist Hurdler Architect Set Designer Experimenter Collaborator Storyteller Cross-Pollinator Director CaregiverSource: Kelly & Littman (2005) 73
  • What – Types of InnovationBusiness model • Creating or reinventing the business in itselfOrganisational • Changing the organisational structure, in its business structure practice, workplace organisation or external relations Processes • Creation of better or more efficient internal processes Production • Improve the production stream and business methods Products • Development of new or improved products Services • Development of new or improved services Management • Development or implementation of more efficient or systems better management systems 74
  • Innovation style • An entrepreneurial • A style where you are • A style where the style where the constantly innovating organisation tries to business model is the existing business use existing constantly challenging and it over time capabilities and and is frequently changes its nature. resources in a new challenged While it seems to stay way beyond the in the same place. company’s existing operations. The Spiral The Cauldron The Fertile Field Staircase • A style where you • A style where you invest in start ups that explore possibilities have already done and invest time and the strategy money in them development and without demanding R&D short-term profit The PacMan The ExplorerSource: Loewe, Williamson and Wood 75 (2001)
  • The Innovation Personas The world is changing at an accelerating speed and these personas are needed to Learning help teams from becoming too internally Personas focused. • The Anthropologist • The Experimenter • The Cross-Pollinator Enables the ideas to move forward in the organisation as even the best ideas must The Organising compete got time, attention and Personas resources. • The Hurdler • The Collaborator • The Director The building roles apply insights from the learning roles and channel the The Building empowerment from the organising roles Personas to make innovation happen. • The Experience Architect • The Set Designer • The Storyteller • The CaregiverSource: Kelly and Littman (2005) 76
  • How – Capabilities & Process Project Product Commercializa Ideation Selection Development tion Supplier and Strategic disruption Diverse user group distributor decision making and Reverse engineering management engagement in transition plan ideation process Independent Technical risk Supplier–partner Production ramp-up competitive insights assessment/manage engagement in from the marketplace ment product development Regulatory/governme nt relationship Open Rigorous decision management innovation/capturing Design for specific making around ideas at any point in goals portfolio trade-offs the process Global, enterprise- Detailed wide product launch Project resource understanding of requirement Product platform emerging forecasting and management Product life-cycle technologies and planning management trends Deep consumer and Engagement with Pilot-user Ongoing assessment customer insights and customers to prove selection/controlled of market potential analytics real-world feasibility rolloutsSource: Jaruzelski & Dehoff (2010) 77
  • Bearing on the web Read more about what we do on the Bearing homepage www.bearing-consulting.com Bearing has a blog with an active debateblog.bearing-consulting.com 78
  • INNOVATE - EXECUTE™ 79