Leading Practices for Managing InnovationDate: 17 December 2010DRAFT v.02                                                 ...
Leading Practices for Managing InnovationDate: 17 December 2010DRAFT v.02                                                 ...
Leading Practices for Managing InnovationDate: 17 December 2010DRAFT v.02                                                 ...
Leading Practices for Managing InnovationDate: 17 December 2010DRAFT v.02                                                 ...
Leading Practices for Managing InnovationDate: 17 December 2010DRAFT v.02                                                 ...
Leading Practices for Managing InnovationDate: 17 December 2010DRAFT v.02                                                 ...
Leading Practices for Managing InnovationDate: 17 December 2010DRAFT v.02                                                 ...
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ALYNDe Whitepaper - Innovation And The CIO - Preparing For Transformation

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Whitepaper that discusses the impact of innovation management on today\'s CIO

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ALYNDe Whitepaper - Innovation And The CIO - Preparing For Transformation

  1. 1. Leading Practices for Managing InnovationDate: 17 December 2010DRAFT v.02 ALYNDe ALYNDe Creating an Operational Nerve Center to Manage the Balance Among Innovation, IT Complexity and Scarce Resources An Executive White Paper on Improving Organizational Effectiveness by Allowing Innovation to Become a Core Element of Your Business Strategy Glenn A. Bunker Partner ALYNDe, LLC Glenn.bunker@alynde.com 770.377.7061 - Mobile Confidential ©2009 ALYNDe, LLC Page 1 2/10/2011
  2. 2. Leading Practices for Managing InnovationDate: 17 December 2010DRAFT v.02 ALYNDe The “Innovation Nerve Center” and the role of today’s Chief Information Officer Leading practices in the field of innovation have evolved to the degree that today’s Chief Information Officer should consider becoming a partner in the Innovation function itself – possibly evolving into the role of Chief Innovation Officer. Organizations are learning that managing the “process of innovation” requires collaboration across non-IT working teams that should ideally be supported with an automation framework designed to support innovation success. A proper automation framework will function as an “Innovation Nerve Center” by reducing process cycle times and non value-added work that ultimately hampers time-to-market performance. Whether success is defined as: st Achieving “1 -mover” status (time-to-market performance), Achieving quality expectations (establishing brand valuation), Performing with agility in turbulent economic markets (achieving operational equilibrium), Maximizing profitable revenue potential (optimizing the product portfolio), Satisfying shareholder expectations (creating long-term value), or All of the above… The innovation function should benefit from new solutions in much the same way that IT operations learned to better align with the businesses they support via use of enterprise IT Governance (ITG) and Portfolio/Program/Project Management (PPM) frameworks. Forward-thinking CIO’s who have elected to implement organizational work management solutions with leading ITG/PPM frameworks to manage demand, programs, projects, resources, budgets and non-project work can apply lessons learned when supporting the Innovation function within their organizations. Since the Innovation process touches both business units and product teams that do not traditionally utilize such management frameworks, a critical-to-success factor will be the willingness of the CIO and his or her organization to assist in the deployment and support of emerging Innovation Lifecycle Management (ILM) solutions. So as not to confuse the role of ILM with current PLM (Product Lifecycle Management) solutions, let’s look at some definitions: Product Lifecycle Management is a category of software and services that uses Internet technologies to tie together product marketing, sales, design, engineering, manufacturing, purchasing, field services, customers and suppliers into a global knowledge net. Product Lifecycle Management provides a framework for capturing, managing and sharing knowledge and business intelligence within the company, throughout the extended enterprise and across the supply chain. Product Lifecycle Management, frequently called Collaborative Product Commerce, enables all stakeholders in the manufacturing value chain to collaborate in real time along the product lifecycle continuum. Innovation Lifecycle Management utilizes an “Innovation Nerve Center” as a management ‘hub’ for Demand, Program, Portfolio, Resource, Change, Issue, Risk, and Launch Management activities. The Nerve Center will support and facilitate institutionalization of Innovation strategy with governance best practices needed to ensure company-wide adoption. Confidential ©2009 ALYNDe, LLC Page 2 2/10/2011
  3. 3. Leading Practices for Managing InnovationDate: 17 December 2010DRAFT v.02 ALYNDe Management of the Innovation function itself, supported by a Stage-Gate™ process model versus an IT-centric SDLC such as RUP™, can now be supported by leading ITG/PPM solutions from firms such as PowerSteering, CA, Planview, Instantis and Oracle when configured as the organization’s “nerve center” for managing the innovation process itself. CIO’s should consider the following shift in emphasis: From… To… Viewing your business through a customer lens – Viewing your business through a technology ensure that technology decisions lead to improved lens innovation capabilities Supporting growth through traditional technical Supporting growth based on helping to eliminate approaches (i.e. reactive services to business waste in the innovation lifecycle with effective use of unit demands) new program management frameworks Validation of solutions based on multiple market & Developing solutions based on what you think customer criteria. Ensure that technology is used to is the next great technology advancement drive performance results that align with business strategy by managing product offerings as a portfolio Basing solutions on innovation that is focused on the Basing solutions on incremental “Big Problems” your company’s customers are improvements wrestling with. Remember… invention is easy, innovation is hard! Framework approach / planned innovation supported Ad hoc process for solution development – by an integrated Stage-Gate™ process model multiple technology platforms within business embedded within a framework designed to support units, lack of end-to-end visibility performance measurement In additions to the shift in thinking above, there are three critical steps to building an innovation foundation that will position an organization to develop and implement a growth strategy of “continuous innovation”. The CIO will become a key partner in this strategy, whether as a sponsor or in concert with the Chief Innovation Officer. st I. The 1 step is to Make Innovation the Strategy. “Invention is easy… Innovation is hard”. th From the October 2004 75 Anniversary Issue of Business Week, “Inspiration is fine, but above all, innovation is really a management process”. To build a strategy that focuses on growth through innovation, organizations should establish internal and external alignment around this strategy including leadership development, core competency focus, performance metrics and goals and incentives alignment. nd II. The 2 step is to Develop Organizational Capabilities and Culture. To develop a culture of continuous innovation within the enterprise, organizations should establish managerial and operational processes and infrastructure to support growth through innovation. It is here that the CIO can become an influencing factor in the organization’s success. Companies that understand the need to differentiate themselves via innovation need to establish an organizational structure that rewards innovative thought and execution. rd III. The 3 step is to Manage Innovation. The objective here for organizations is to institute a culture of innovation. To sustain growth in today’s challenging global markets, CIO’s (both Information and Innovation) should effectively manage the transition from old to new performance-driven infrastructures, sustain executive commitment throughout the organization, motivate employees, understand customer needs and identify product ideas to bridge “needs gaps”. This will aid in keeping the organization focused on continuous improvement. Confidential ©2009 ALYNDe, LLC Page 3 2/10/2011
  4. 4. Leading Practices for Managing InnovationDate: 17 December 2010DRAFT v.02 ALYNDe Adoption of these strategies results in the creation of a dedicated organization that serves as the ‘hub’ for innovation activities emerging throughout the company and greatly facilitates institutionalization of Innovation. A few final recommendations: Create a cross-functional organization to monitor, manage and drive innovation initiatives within your company. The “nerve center” framework should have a small, dedicated organization of full-time resources, supplemented by initiative-specific resources from divisions / departments across the organization The Innovation function should be headed by an Chief Innovation Officer Should be a full time position Should report to the CEO Should command the respect of department / divisions Should have the authority to make cross-functional decisions (as it pertains to Innovation within your business) Key responsibilities Create, develop and nurture the Innovation foundation Identify, evaluate and prioritize Innovation initiatives Manage staffing and implementation of Innovation initiatives What kinds of companies can benefit from these practices? In the Consumer Products space, many firms are engaged in operational effectiveness initiatives geared to improve competitive performance. In one case, a global firm had a highly compartmentalized infrastructure that limited their ability to create and launch successful new products. This infrastructure created non-aligned processes across the geographic markets it served and it became difficult to transfer ideas, best practices and an ability to leverage their global network in support of the innovation process. Core branded products had achieved market dominance and future growth targets were deemed only possible via the launch and acceptance of new products within new channels, market segments and even via new business models. By adopting many of the practices stated above, this firm has created a framework to manage the innovation process from idea through launch. By having a common framework, the company will be able to have global visibility into the entire product development lifecycle across all geographies and product lines as well as internal business functions and organizations. They have created: A disciplined, cross-functional approach to manage projects for greater marketplace success A criteria-driven method of decision making yielding an efficient, effective portfolio Process governed by operating teams to prioritize resource allocation Benefits they expect to achieve are: Increased leverage of solutions across markets to reduce duplication and improve speed through the product development lifecycle Improved system-wide strategic portfolio decision-making to drive pipeline value Capability to invest in fewer bigger initiatives that leverage scarce resources across markets Elimination of non value-added work from the New Product Development Lifecycle Confidential ©2009 ALYNDe, LLC Page 4 2/10/2011
  5. 5. Leading Practices for Managing InnovationDate: 17 December 2010DRAFT v.02 ALYNDe How will these practices change over the next few years? If so, how? Leading practices will continue to evolve as product and service-centric organizations transition into st true innovation-centric enterprises. Leading “1 -Mover” competitors within their market segments will be driven to make Innovation their core strategy, although culture change remains a major obstacle. This does not mean that the key attributes of product quality, cost management or time-to-market that define your firm to the customers you serve are made less important. Innovation simply becomes the foundational value stream in your business that drives these critical differentiators. Traditional organizational structures will become leaner in an effort to eliminate the inherent waste involved in managing today’s innovation practices across existing barriers. Traditional competition has been based on one of four primary dimensions: Traditional Strategy: Future Strategy: Focus on one at the Make Innovation the expense of the others cornerstone yet focus on balancing all four Innovation Quality Innovation Core Strategy Time-to- Time-to- Cost Quality Market Cost Market Achieving this new operational balancing act will require Executive leadership that understands the need to topple traditional barriers inherent with “silo’ed” Business Units and Product Teams. Due to these somewhat autonomous structures, it is not uncommon today to find that “necessity has been the mother of invention” when we evaluate technology infrastructures that have been created to manage current-state innovation practices. This leads to a lack of cohesion that impedes time-to-market, product quality, feature content and other key competitive metrics. Chief Information Officers will need to work closely with business units engaged in the innovation process to streamline existing management infrastructures into measurement-enabled end-to-end frameworks designed to eliminate waste from the innovation lifecycle. The next five years will bring an even heightened level of global competition to the world of product development, as companies that are typically focused on enhancements and development of new products alone will need to create products that penetrate new channels and markets in order to achieve growth objectives – even via adoption of new business models within their existing organizations. An example of this shift can be seen in the Telecom segment as traditional Telephone companies transition into BSP’s (Broadband Service Providers) that compete with disruptive new players. The “Triple Play” concept of voice, video and data will need to be packaged in a manner that allows these traditional firms to even exist in the future, yet alone, compete. The ability to innovate new product and service offerings will be fundamental to survival. The advent of social networking and increased Confidential ©2009 ALYNDe, LLC Page 5 2/10/2011
  6. 6. Leading Practices for Managing InnovationDate: 17 December 2010DRAFT v.02 ALYNDe mobile utilization for all things involving communication means innovation will, indeed, be paramount for survival. An example of the needed change from current to future-state over the next few years can be seen below with practices aligned with a representative New Product Introduction Process. Development Stage-Gate Development and Introduction Desired State Desired State Desired State NPD is the hub of Concepts are Sourcing an outward- directed through decisions made process, managed through Introduction efforts well reaching, multi- tailored against Demand via performance integrated efforts teams committed balanced dimensional development Strategies and metrics and of Development through Initial between demand strategy processes: new, Business Case integrated and Procurement Production development and creation effort change, etc. justifications workflow Efforts launch phases New Product Introduction Process Development Development Development Sourcing & Sourcing & Initial Initial Idea Idea Concept Concept Concept Concept Development Product Product Planning/ Planning/ Production Production Volume Volume Generation Generation Definition Definition Screening Screening Execution Execution Launch Launch Scheduling Scheduling Placement Placement Production Production Current State Current State NPD group relies All concepts are Concept Single Process, Sourcing done Development So much time largely on developed screening via managed via by development staff not involved spent in internal through a presentations to overall project staff or in production development that resources for common process executive plan performance Purchasing. Not efforts launch phase ideas management with variable an integrated gets short shrift milestones effort How does governance play a role in a company’s quest to enhance innovation? Good program management does not “just happen”. Managing innovation is a skill and discipline as with any other complex operational competency. ALYNDe recommends deployment of an operational “nerve center” framework configured to manage the complexities of innovation and the resources engaged in the collaborative product development process. This means that new governance practices supported within this framework will be required to mitigate the risk associated with market adoption and continued technological development of differentiated new products. Effective Governance practices will address the issues shown below. STAKEHOLDER DECISION MAKING PLANNING AND EXECUTION ISSUES ISSUES ISSUES Business objectives are Program status, issues, Unreasonable expectations and sometimes unclear - and risks are not cohesively poor planning prevail information dissemination tracked, clearly Plans and teams focus on difficult communicated or building a better mousetrap, not Stakeholders do not consistently understood catching the mouse agree on objectives or Decision making is slow Priorities change, so projects priorities and often not based on change, but without Roles, and especially facts coordination responsibilities, are Issues do not reach the Once in fire-fighting mode, it is unclear leaders who can resolve hard to see the forest from the Once there is trouble, disputes and problems trees assigning blame is more important than solving problems A “nerve center” model, as referred to in this paper, is recommended when implementing any large R&D-centric initiative consisting of multiple projects (often global in nature) that must be managed in Confidential ©2009 ALYNDe, LLC Page 6 2/10/2011
  7. 7. Leading Practices for Managing InnovationDate: 17 December 2010DRAFT v.02 ALYNDe a collaborative manner to maximize the achievement of product launch objectives while mitigating risk and managing organizational change. When considering the function of governance, it is important to recognize that there are several complimentary functions that should be considered in order to create a more functional management framework. These complimentary functions include: Communication/Change Management, People, Projects and Measurement. Governance Communication / People Projects Measurement Change Management Regarding the Governance function, there are specific leading practices that should be considered: Establish a centralized Program Office to serve as a “nerve center” to manage all Innovation activities (based on Stage-Gate™), process contributors (resources), product programs (projects) and performance data (product portfolio management) to ensure effective allocation and use of budget dollars across all development programs. Define a clear governance structure outlining principles and processes for: Decision Making (manage gating criteria) Budget Utilization (go/kill decisions) Resource Management (improved capacity planning of scarce and constrained resources) Communication with Leadership Teams (ensuring that all product development programs remain aligned with business strategy and that changes/issues are immediately visible for resolution when captured) Internal Communication (collaboration across product teams and business units) Partner (Vendor) Management (extending the idea capture function outside the enterprise as well as including partners in the development lifecycle) Knowledge management Change Control Data Storage (Work, Resources, Artifacts, etc) Develop Guidelines for: Issue management Risk management Stage-Gate process monitoring and Progress reporting Confidential ©2009 ALYNDe, LLC Page 7 2/10/2011

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