Innovat e Portfolio of Capabilities!

PORTFOLIO OF DYNAMIC CA PA BILITIES FOR INDUSTRY & GROWTH Alar Kolk [email_address] Presented at ISPIM conference, Tours, France 2008

A lar Kolk : B uilding New Innovation Capability to Identify Future Opportunities I dentify N ew G rowth O pportunities D efine & Implement New Innovation Strategies G enerate & Deliver Better Ideas R enew Organizatonal Capabilities

I dentify N ew G rowth O pportunities

D efine & Implement New Innovation Strategies

G enerate & Deliver Better Ideas

R enew Organizatonal Capabilities

Where is Your Destination?

Scope and Focus of the Research – Valu Creation and Appropriation Dynamic Capabilities Open Innovation Alliance Portfolios Capability Innovation Capability Growth, TCM,TCP Knowledge & Cognitive Systems Capability Portfolio Co-Specialization Capability Learning

I nnovation A cceleration ... T ime I mpact I nnovations are having a larger impact T he lifecycle of innovations is getting shorter

I nnovations are having a larger impact

T he lifecycle of innovations is getting shorter

Open Innovation means that valuable ideas can come from inside or outside the company (industry) and can go to market from inside or outside the company (industry) as well 1 . This approach places external ideas and external path to market on the same level of importance as that reserved for internal ideas and paths to market during the Closed Innovation era 2 . CLOSED & OPEN BUSINESS MODEL OPEN INNOVATION! 1,2 H.Chesbrough, 2003

D ynamic capabilities as the firm's ability to integrate, build, and reconfigure internal and external competences to address rapidly changing environments 1 . S ome dynamic capabilities integrate resources (product development; strategic decision making), others focus on reconfiguration of recourses (knowledge brokering) within firm and other dynamic capabilities are related to the gain and release of recourses (knowledge creation routines; alliance, acquisition and exit routines) 2 . EXPLORATION & TRANSFORMATION DYNAMIC CAPABILITIES Roald Amundsen, Robert Scott, Umberto Nobile 1 Teece et al 1997 2 Eisenhardt and Martin 2000

Building Portfolio of Capabilities

Developing Portfolio of Capabilities Ope rational Capabilities Technological Capabilities Transforming Seizing Sensing Open Capabilities Dynamic Capabilities Learning Innovation

Sensing : Elements of an ecosystem framework for ‘sensing’ market and technological opportunities Teece 2007 Sensing Seizing Managing

Seizing : Dynamics in strategic decision skills & execution Teece 2007 Sensing Seizing Managing

Growth is top of mind for business executives. Strong, value creating revenue growth lies within reach of corporations that pursue best practice in strategy, marketing, operations and organizations . For companies aspiring to grow, where to compete is just as important as how. To choose the right battlegrounds, they must match their distinctive capabilities with sectors where profitability growth is likely to occur. W HERE and H OW to G row ?

H ow to G row?

Managing : Combination, reconfiguration, and asset protection skills Teece 2007 Sensing Seizing Managing

At any given point in time, firms must follow a certain trajectory or path of competence development. This path not only defines what choices are open to the firm today, but it also puts bounds around what its internal repertoire is likely to be in the future 1 . Collaborative know-how is a particular type of knowledge that determines whether companies can develop specialized knowledge via expertise and then use it to obtain further benefits 2 . STEP OUT OF THE BOX!!! PATH DEPENDENCY We had become stuck in our past and weren’t stretching far enough to innovate new ideas , to “step out of the box.” D avid O. Swain , ex. CTO, Boeing 1 Teece et al, 1997 2 Simonin 1997

Developing Robust Portfolio of Capabilities Ope rational Capabilities Technological Capabilities Transforming Seizing Sensing Open Capabilities Dynamic Capabilities Learning Innovation

Developing Portfolio of Capabilities Ope rational Capabilities Technological Capabilities Transforming Seizing Sensing Open Capabilities Dynamic Capabilities Learning Innovation Internal R&D Suppliers External R&D Customer Business Model Decisions Culture Platform Knowledge M Co-specialization Open Innovation Governance

Developing Portfolio of Capabilities at Start-up Phase Ope rational Capabilities Technological Capabilities Transforming Seizing Sensing Open Capabilities Dynamic Capabilities Learning Innovation Internal R&D Suppliers External R&D Customer Business Model Decisions Culture Platform Knowledge M Co-specialization Open Innovation Governance

Developing Portfolio of Capabilities at Transformation Phase Ope rational Capabilities Technological Capabilities Transforming Seizing Sensing Open Capabilities Dynamic Capabilities Learning Innovation Internal R&D Suppliers External R&D Customer Business Model Decisions Culture Platform Knowledge M Co-specialization Open Innovation Governance

Ope rational Capabilities Technological Capabilities Transforming Seizing Sensing Open Capabilities Dynamic Capabilities Learning Innovation Developing Capability Constellation Internal R&D Suppliers External R&D Customer Business Model Decisions Culture Platform Knowledge M Co-specialization Open Innovation Governance

Developing Portfolio of Capabilities Ope rational Capabilities Technological Capabilities Transforming Seizing Sensing Open Capabilities Dynamic Capabilities Learning Innovation Internal R&D Suppliers External R&D Customer Business Model Decisions Culture Platform Knowledge M Co-specialization Open Innovation Governance

Portfolio of Capabilities & Open Business Model Open Capabilities Dynamic Capabilities Operational Capabilities Technology Capabilities Portfolio

PORTFOLIO OF DYNAMIC CA PA BILITIES FOR INDUSTRY & GROWTH Alar Kolk [email_address] Presented at ISPIM conference, Tours, France 2008