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Why Companies Suck at Innovating and What to do About it
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Why Companies Suck at Innovating and What to do About it

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Given a global 98% failure rate when it comes to innovating there clearly needs to be a better understanding about what Innovation Management is and how to do it effectively or at the very least not ...

Given a global 98% failure rate when it comes to innovating there clearly needs to be a better understanding about what Innovation Management is and how to do it effectively or at the very least not suck as much doing it as we've done before

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  • Because I missed it, actually I need to revisit that specific slide, as there are updates / changes anyway, Thanks I'll make sure that is captured in the revision.

    Cheers, RP
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  • Why does Pahl/Beitz show up twice on the Systematic Innovation Toolbox ?
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  • Richard
  • Richard
  • Richard
  • RichardHow do you create the environment for constructive conflict?
  • Pete - Solution 3Professional ideals build trust. And trust is the foundation for both personal and organizational success.
  • PetePeople who conduct themselves as consummate professionals make everyone around them feel betterEspecially in after work events – the manager who goes out for drinks and tells sexually explicit jokes – just lost all the opposite sex on the team.Don’t bring their home-life problems to work – doesn’t appear to impact work/mood/leadership???
  • PeteExample of the doctor with lousy bedside mannerHow are you a professional in your world?
  • PeteCharacter is to a Person as Culture is to an Organization
  • PeteWhat employees want
  • PeteAs Professionals we have an inherent obligation to the organization or client we are part of to put its interest ahead of our own.
  • PeteAs Professionals we have an inherent obligation to the organization or client we are part of to put its interest ahead of our own.Recognizes value of team members in success – not a credit taker. (monthlies/focals – managers rollup what others did as their accomplishments)
  • RichardAims to advance the interests of someone other than selfOne example – should be a good manager in a corporation that gets successful business results is proud of the results and didn’t kill the team (these examples speak so much to bettering yourself spiritually)Examples - Japan, Katrina, and 911
  • RichardCharacter counts above all. It is a privilege to work with those people.Someone will ask can’t low valued people be successful leaders? Two life dual personalities – I’m good at work but am bad off-hoursWhat are your standards?
  • PeteIntegrity is the mother of all virtuesBelieve in the corporate mission / product?Example – bar of soap
  • RichardPeople distrust those who exhibit emotional extremes. Emotions can trip us up and make smart people dumb:We are responsible for our emotional reactionsWe are responsible for our external responsesEmotions are self-induced. Controlling one’s emotions enables effective leaders to remain clam in a crisisWithout being a pushover – or an overly stroking person – “you’re right – I value your opinion” then do the opposite every timeProfessionals recognize that emotions impact motivationRecognizes others when they keep their cool – in front of team members – sets expectation with the team on acceptable behavior
  • PeteInspire other teammates to also lift others – not just tops down behavior
  • : Breaking Contradictions, Inventive Principles, Functional Modeling, Evolutionary Trends, Laws of Engineering Evolution, Rapid / Virtual prototyping, Ethnographic analysis, etc… 
  • http://depositphotos.com/13411024/stock-photo-A-gloved-hand-hammering-a-nail-in-a-piece-of-wood.html?sst=0&sqc=17&sqm=237&sq=%26
  • Put these slides in another ebook/piece – too much here
  • What Drucker is to Management, Deming is to Quality. Drucker also wrote about quality and Deming also wrote extensively about management.

Why Companies Suck at Innovating and What to do About it Why Companies Suck at Innovating and What to do About it Presentation Transcript

  • 7/8/2012 The Strategy + Innovation Group | All Rights Reserved - Copyright (c) 2 76% of Innovation Initiatives Fail 60% outright fail and another 16% make it to market, but lose money Only 24% are successful and profitable Source:“Innovator‟sDilemma” The 2003 Data
  • 7/8/2012 The Strategy + Innovation Group | All Rights Reserved - Copyright (c) 3 Reality: 98% Failure Rate The 2013 Data
  • 7/8/2012 The Strategy + Innovation Group | All Rights Reserved - Copyright (c) 4 Can‟t Hide it We All Suck at Innovating
  • 3/12/2013 The Strategy + Innovation Group | All Rights Reserved - Copyright (c) 55 Luck isn‟t Enough
  • 6
  • 7/8/2012 The Strategy + Innovation Group | All Rights Reserved - Copyright (c) 7 In 2008 we went Deep Undercover In the midst of economic chaos… to learn the hard lessons We Chose to Investigate
  • ASKING TWO QUESTIONS 1. Why don’t more companies use Systematic Innovation methods?  Especially when there are examples of good use Samsung | Intel | Siemens | Dow | Motorola 2. What prevents companies from materializing / monetizing results from innovating systematically? 8
  • MULTIPLE THEMES EMERGED OF WHY COMPANIES DON’T USE SI METHODS 1. Biases – 11 different biases cited, (see backup and McKinsey Report on Biases) 2. Prejudices – a.k.a. PI (Psychological Inertia) 3. Organizational Dysfunction 4. Ignorance of Systematic Innovation Methods or how to best apply them 9
  • 7/8/2012 The Strategy + Innovation Group | All Rights Reserved - Copyright (c) 10 Biases distort the Quality of Decisions = Poor Execution Biases See backup for detailed explanation of McKinsey‟s Analysis and What we found
  • Innovation: a commercially successful step change advance (not to be confused with „optimization‟) This the typical way most of us approach improving businesses and technology
  • 3/12/2013 The Strategy + Innovation Group | All Rights Reserved - Copyright (c) 12 WHAT DOES A 98% FAILURE RATE IMPLY?  Extremely costly making innovation “bets”, but We cannot call it management or investment – Results Do Matter  Clearly No Established Process for innovating  Managing the Risk of Innovating is ineffective
  • 7/8/2012 The Strategy + Innovation Group | All Rights Reserved - Copyright (c) 13 Traditional Innovation Risk: The Risk of Decision Making Prediction Learning %RiskAccuracyof DecisionMaking Time Wild Guesses 0% 25% 50% 75% 100% 25% 50% 75% 100% Informed Estimates Reliable Forecasts
  • 7/8/2012 The Strategy + Innovation Group | All Rights Reserved - Copyright (c) 14 Traditional Innovation Risk: The Risk of Decision Making Prediction Learning %RiskAccuracyof DecisionMaking Time Wild Guesses 0% 25% 50% 75% 100% 25% 50% 75% 100% Informed Estimates Reliable Forecasts Most management at best, are guessing
  • MORE INNOVATION FAILURE STATISTICS Over 90% of innovation attempts fail before they reach the market of those attempts that do reach the market will also fail of innovations are delivered late, over-budget or at a lower quality than was originally planned of collaborative innovations fail
  • 3/12/2013 The Strategy + Innovation Group | All Rights Reserved - Copyright (c) 16 WHY WE ACTUALLY FAIL AT INNOVATION HAS MULTIPLE SOURCES 10% 18% 44% 20% 28% Coordination Production Route to market More Ideal Solution Market Demand Sources of Innovation Initiative Failure: SME's, Startups
  • 3/12/2013 The Strategy + Innovation Group | All Rights Reserved - Copyright (c) 17 A LITTLE DIFFERENT FAILURE RATE AT MNC’S 34% 12% 8% 23% 26% Coordination Production Route to market More Ideal Solution Market Demand Sources of Innovation Initiative Failure: MNC's / Large Corporations
  • THE HEART OF THE PROBLEM Customer Need Technical Solution (protectable IP) Ability of an Organisation To successfully exploit the IP Only when all three are in place is there an opportunity for successful commercialisation VoC VoS VoB Legend: VoC: Voice of the Customer VoS: Voice of the System VoB: Voice of the Business
  • 7/8/2012 The Strategy + Innovation Group | All Rights Reserved - Copyright (c) 19 WHICH MEANS IF WE NEED TO BE MORE PREDICATABLE (PROFITABLE) THEN WE WILL NEED TO BE RESPONSIBLE AND ACCOUNTABLE FOR: Our Thinking Our Learning Our Decisions Our Actions Our Results Otherwise
  • 7/8/2012 The Strategy + Innovation Group | All Rights Reserved - Copyright (c) 20 WE ARE NOT MAKING INVESTMENTS – WE ARE…
  • TYPICAL APPROACH TO PROBLEM SOLVING AND INNOVATING We leverage our acquired knowledge and the experience we‟ve gained from academia, on-the-job, company and industry experts, etc… The good news:  This works well enough when addressing known problems and solution sets with conventional methods and frameworks for solving problems in a given discipline. The bad news:  When we look at all problems in the same way we can become „stuck‟ in looking at things the same way that others have. Resulting in a psychological inertia, preventing a solution from being found. 7/8/2012 The Strategy + Innovation Group | All Rights Reserved - Copyright (c) 21
  • PSYCHOLOGICAL INERTIA EFFECT 10/1/2013 Property of the Strategy + Innovation Group-- Do Not Distribute or Reproduce without permission 22  Problem solving is like digging for treasure in a field  If a hole already exists, our inclination is to dig in deeper  If someone else comes along, we encourage them to jump in the hole with us  The deeper the hole, the more difficult it is to see what’s happening in other parts of the field
  • CLASSIFICATION OF PROBLEMS Invention: Innovator (Sys. Innov trained Engineers) Troubleshooting: Skilled Prediction: Futurist (Advanced Sys Innov, trained engineers) Shotgun Approach / Trial and Error: Pseudo-Expert Known Unknown KnownUnknown Solution Problem Type III Errors Inventive Problems • Eliminate Type III errors (solving the wrong problem precisely). • Remove Psychological inertia. • Improve the level of innovation Psychological InertiaLine
  • 4/27/2010 24 CORPORATE CULTURE ADAPTIVE VERSUS UNADAPTIVE CORPORATE CULTURES ADAPTIVE UNADAPTIVE Core Values Most managers care deeply about customers, stockholders and employees. They also strongly value people and processes that can create useful change. Most managers care mainly about themselves, their immediate workgroup or their product. They value the orderly and risk-reducing management process much more highly than leadership initiatives. Common Behavior Managers pay close attention to all their constituencies, especially customers, and initiate change when necessary to serve their legitimate interests, even if that entails taking some risk. Managers tend to behave somewhat insularly, politically and bureaucratically. As a result, they do not change their strategies quickly to adjust to or take advantage of changes in their business environments. Source: “Corporate Culture and Performance”, Kotter, J.P. and Heskett, J.L., 1992
  • 7/8/2012 The Strategy + Innovation Group | All Rights Reserved - Copyright (c) 25 Designing For Organizational Innovation
  • Avoid the Stupid Mistakes, Learn from Others and Don’t be a Fluffy Bunny Fluffy Bunnies go here too
  • Copyright Protected | Property of the Strategy + Innovation Group 27 THE COST OF THE DYSFUNCTIONAL ORGANIZATION 25% Avg. Profitability Difference (20-30% range) between ―Remarkable‖ vs. ―Unremarkable‖ firms (dysfunctional culture) Can be as high as 50% This material MAY NOT be distributed to others, copied or reproduced without the express consent of the author “Culture, a fancy word for the habituated thinking of an organization, rightly or wrongly” -RP
  • Copyright Protected | Property of the Strategy + Innovation Group 28 THE COSTS OF THE DYSFUNCTIONAL ORGANIZATION  Those working in an uncivil work environment • 48% decreased their work effort • 47% decreased their time at work • 38% decreased their work quality • 66% said their performance declined • 80% lost work time worrying about (an uncivil) incident • 63% lost time avoiding the (uncivil) offender • 78% said their commitment to the organization declined  Bad Apple Syndrome  Negative comments are 5X stronger than good  Caustic people will infect and bring down performance in short time frames This material MAY NOT be distributed to others, copied or reproduced without the express consent of the author
  • Copyright Protected | Property of the Strategy + Innovation Group 29 DYSFUNCTION‟S IMPACT  BOTTOM LINE: Dysfunction causes 25 - 50% Lower Profitability and Productivity, Higher Healthcare costs and Higher Employee turnover  Performance gains are hindered by poor work processes that in turn creates toxic employees  Toxic Employees / Leaders • Have a significant negative financial ripple effect on an firm’s performance and profitability (Bad Apple Syndrome) • They’ll likely block necessary strategies to achieve performance gains (Maintaining status quo irrationally) Organizations need a multi-pronged strategy to eradicate the effects of operating in a dysfunctional state This material MAY NOT be distributed to others, copied or reproduced without the express consent of the author
  • Copyright Protected | Property of the Strategy + Innovation Group 30 ROOT CAUSE Only 1% of the population is Sociopathic so…  Pointing at people alone as the problem is not a complete answer We Believe the workaround to the issues are..  Misunderstanding what an effective Professional Leader really means and does  Lack Knowing ―How-To‖ effectively Influence others This material MAY NOT be distributed to others, copied or reproduced without the express consent of the author
  • Copyright Protected | Property of the Strategy + Innovation Group 31 ORGANIZATIONAL LIMITATIONS Successful companies & the strategies they use often owe a great deal to the inertia and inefficiency of rivals An organization‟s greatest challenge may not be external threats or opportunities but instead to the effects of inertia and entropy This material MAY NOT be distributed to others, copied or reproduced without the express consent of the author
  • Copyright Protected | Property of the Strategy + Innovation Group 32 DIAGNOSIS OF THE PROBLEM  Organizational Inertia: is an organization’s unwillingness or inability to adapt to changing circumstances  Organizational Entropy: measures a organizational system’s degree of disorder, and without intervention will always increase This material MAY NOT be distributed to others, copied or reproduced without the express consent of the author
  • Copyright Protected | Property of the Strategy + Innovation Group 33 Causes of Fear and Dysfunction  Entitlement  Self-Interest  Putting Oneself Above the Rules Some companies even have individual promotion / compensation programs that support this This material MAY NOT be distributed to others, copied or reproduced without the express consent of the author WHAT LIMITS ORGANIZATIONS FROM BECOMING GREAT?
  • Copyright Protected | Property of the Strategy + Innovation Group 34 RESOLVING THE DILEMMA This material MAY NOT be distributed to others, copied or reproduced without the express consent of the author GOT LEVERAGE? Mind Set Skill Set Strategy Diagnosis  Insights – looking for assumptions and contradictions Strategic Intent Strategic Policy Strategic & Tactical Actions Competitive Frameworks / Tools / Methods
  • Copyright Protected | Property of the Strategy + Innovation Group 35 5 DYSFUNCTIONS OF TEAMS Fear of being vulnerable with team = Artificial harmony for the sake of peace = Ambiguity & Failure to Buy-in to decisions = Unwillingness to call peers on performance or behaviors = Caring about something other than the collective goals of the group = This material MAY NOT be distributed to others, copied or reproduced without the express consent of the author
  • Copyright Protected | Property of the Strategy + Innovation Group 36 HOW FUNCTIONAL TEAMS BEHAVE Artificial Harmony Mean-Spirited Personal Attacks Ideal Conflict Point DestructiveConstructive How do you define success?
  • Copyright Protected | Property of the Strategy + Innovation Group 37This material MAY NOT be distributed to others, copied or reproduced without the express consent of the author 37 THE POWER OF PROFESSIONALISM “Technical competency will get you onto the green. But a professional puts it into the cup every time” -Richard Platt
  • Copyright Protected | Property of the Strategy + Innovation Group 38This material MAY NOT be distributed to others, copied or reproduced without the express consent of the author 38 WHY PROFESSIONALISM MATTERS Professionals hold it together under difficult circumstances Professionals 1. Demonstrate mastery in their work 2. Conduct themselves in a way that engenders trust Choosing to be a Professional provides an identity that raises your sights above mediocrity  People who view themselves as professionals outperform, outsmart and outlast others
  • Copyright Protected | Property of the Strategy + Innovation Group 39This material MAY NOT be distributed to others, copied or reproduced without the express consent of the author 39 WHY PROFESSIONALISM MATTERS The Effectiveness of a Professional is Balanced “What You Do” (blade #1) Skill Set (Technical Competency) “How” you go about Your Work (blade #2) Mind Set (Leadership Competency) Note: Experts are not necessarily Professionals
  • 40This material MAY NOT be distributed to others, copied or reproduced without the express consent of the author Copyright Protected | Property of the Strategy + Innovation Group 40 FOUNDATIONS OF PROFESSIONALISM Trust: The One Thing You Have to Get Right With Trust: people are more confident, proactive and hopeful Without Trust: people are more skeptical, withdrawn and pessimistic Gaining Trust is based on supporting another’s priorities, protecting their self-interests and respecting their values 3 elements needed in order to Build Trust: Character, Competence and Judgment
  • Copyright Protected | Property of the Strategy + Innovation Group 41This material MAY NOT be distributed to others, copied or reproduced without the express consent of the author 41 FOUNDATIONS OF PROFESSIONALISM Trust: (Continued) Consistency, an inseparable correlation between it and trust. You cannot have trust without it.  Show up as a professional, not merely when it suits your needs  No mixed messages, be clear  No double standards,  No creative rationalizations
  • Copyright Protected | Property of the Strategy + Innovation Group 42This material MAY NOT be distributed to others, copied or reproduced without the express consent of the author 42 7 MIND-SETS OF TRUSTED PROFESSIONALS MS#1: Professionals Have a Bias for Results  Delivering results demonstrates trustworthiness  Deliver the Right Results in the Right Way • Ensure outcomes are sustainable, not just a flash in the pan
  • Copyright Protected | Property of the Strategy + Innovation Group 43This material MAY NOT be distributed to others, copied or reproduced without the express consent of the author 43 7 MIND-SETS OF TRUSTED PROFESSIONALS MS#2: Professionals Realize (and Act) They're part of Something Bigger Than Themselves  Commit to the success of the firm, organization or client.  Realize success transcends your own parochial interests.  Collaborate as an effective team member
  • Copyright Protected | Property of the Strategy + Innovation Group 44This material MAY NOT be distributed to others, copied or reproduced without the express consent of the author 44 MS#3: Professionals Know Things Get Better When They Get Better  Disaster / Aid Workers  Selfless Efforts in the For-Profit World • Giving back to the Community  Personal example • Near death, significant losses and the march back 7 MIND-SETS OF TRUSTED PROFESSIONALS
  • Copyright Protected | Property of the Strategy + Innovation Group 45This material MAY NOT be distributed to others, copied or reproduced without the express consent of the author 45 MS#4: Professionals Have Personal Standards Often Transcending Organizational Ones  Have a personalized core set of values  Do what’s right over what’s expedient by taking a long view  Rise above the fray, stay focused and avoid pointless drama 7 MIND-SETS OF TRUSTED PROFESSIONALS
  • Copyright Protected | Property of the Strategy + Innovation Group 46This material MAY NOT be distributed to others, copied or reproduced without the express consent of the author 46 MS#5: Professionals know That Personal Integrity is All they Have 3 Very Important underpinnings of Integrity: 1. Authenticity and honesty 2. Delivering on one’s commitments (both explicit and implicit) 3. Refusing to violate the trust others have extended to us 7 MIND-SETS OF TRUSTED PROFESSIONALS
  • Copyright Protected | Property of the Strategy + Innovation Group 47This material MAY NOT be distributed to others, copied or reproduced without the express consent of the author 47 MS#6: Professionals Aspire to Be Masters of Their Emotions Not Enslaved by them 3 by-products of Mastering one‟s emotions (and inspiring trust in others): 1. Professionals are respecting when it’s difficult to be respectful 2. Professionals maintain their objectivity and keep their wits about them – Don’t take things personally 3. Professionals manage their ego and resist the urge for immediate gratification 7 MIND-SETS OF TRUSTED PROFESSIONALS
  • Copyright Protected | Property of the Strategy + Innovation Group 48This material MAY NOT be distributed to others, copied or reproduced without the express consent of the author 48 MS#7: Professionals Aspire to Reveal Value in Others ―Aspire‖ suggests intent, priority and, most importantly, proactively Professionals who hold this mind-set:  Readily extend trust • Where & When appropriate – don’t be naive – that’s stupid  Recognize the value other professionals bring to the table.  Aspire to lift others through their demeanor and actions 7 MIND-SETS OF TRUSTED PROFESSIONALS
  • PERFORMANCE MANAGEMENT PYRAMID 7/8/2012 The Strategy + Innovation Group | All Rights Reserved - Copyright (c) 49
  • POSITIVE RESPONSE TO CHANGE Informed anguish Blissful ignorance Coming to terms Realistic support Overt checking out Covert checking out 1. Uninformed Optimism (Certainty) 2. Informed Pessimism (Doubt) 3. Hopeful Realism (Hope) 4. Informed Optimism (Confidence) Resistant Time Supportive
  • 4/27/2010 Property of Strategy + Innovation Group LLC 53 Finding Out What You Don‟t Know is the 1st Step “It is not what you do know that hurts you, it is what you don’t know that get’s you thrown under the bus” - Richard Platt
  • SO AS INNOVATION CHAMPION CHARTERED BY THE CEO TO PROLIFERATE ACROSS THE ENTERPRISE you HAVE TO PICK A SIDE This? Or This?
  • Fluffy Bunnies Don’t Live at the Intel I Know Published in 1999
  • 7/8/2012 The Strategy + Innovation Group | All Rights Reserved - Copyright (c) 57
  • 7/8/2012 The Strategy + Innovation Group | All Rights Reserved - Copyright (c) 58
  • Whatever You Do Remember This: This Is NOT about You It is about Your Customer Take Nothing Personally
  • 4/27/2010 Property of Strategy + Innovation Group LLC 60 WHAT OODA LOOP SPEED MEANS TO A CHANGE AGENT Implicit Guidance & Control Know what to do Act And be able to do it Unfolding Interaction With Environmen t Action (Test) Feedback Decide Decision (Hypothesis) Feed Forward Feed Forward Feedback While learning from the experience Observe Orient Feed Forward Observations Unfolding Circumstances Outside Information Unfolding Interaction With Environment Quickly understand what‟s going on Implicit Guidance & Control Cultural Traditions Genetic Heritage New Information Previous Experience Analyses & Synthesis Source: Adapted from presentation by Chet Richards author of ―Certain to Win‖; http://www.belisarius.com/index.htmli
  • THE VALUE PIPE (A STORY OF 2 FLOWS) $ flow back to the business Value provided to a downstream customer (JTBD, product, service, information, etc…)
  • This material MAY NOT be distributed to others, copied or reproduced without the express consent of the author Copyright Protected | Property of the Strategy + Innovation Group 62 COMPARING PROCESS IMPROVEMENT AND SYSTEMATIC INNOVATION METHODS Program Six Sigma Lean Thinking Theory of Constraints TRIZ / Systematic Innovation Theory Reduce Variation Reduce Waste Manage Constraints Evolve System to Next Generation 1. Define 1. Identify Value 1. Identify Constraint 1. Identify Ideal Final Result and gaps to IFR 2. Measure 2. Identify Value Stream 2. Exploit Constraint 2. Functional Analysis of System 3. Analyze 3. Flow 3. Suborndinate Processes 3. Solve Contradictions (w/ Inventive Principles) 4. Improve 4. Pull 4. Elevate Constraint 4. Apply Trends and Laws of Technological Evolution 5. Control 5. Perfection 5. Repeat Cycle 5. Select Best Solutions Focus Problem Focused Flow Focused System Constraints System Analysis & Break Contradictions Primary Effect Uniform Process Output Reduced Flow Time Fast Throughput Innovative Solutions for tough problems Application Guidelines Reduction in process Variability (Stop building crap product) Stop doing Wasteful Activities Increasing the Speed of Processes Complex Problem Solving Tools for Evolving the System to Next Level of Performance Value Derived for Company
  • The results of a firm’s competitiveness is derived from its ability and process by which it innovates. If the results are poor we have no other alternative but to look at the process by which the results that were delivered gave us. It is our process by which we innovate that must become our focus – otherwise we are back in the land of magic pixie dust and the business god’s favoring us as we attempt to move forward with our business plans and expectations. Focus on the process to deliver Customer Results. Build the process in and manage it relentlessly. Results are what Customers Pay For, Everything Else is Waste
  • Systematic Innovation TOOLS AND THEIR APPLICATION Systematic Innovation Tool Application / Use JTBD – “jobs to be done”: The job that a customer hires a product or service for, embedded within a given system. a.k.a. the main parameters of value IFR – Ideal Final Result: Uses Law of Ideality as a guideline, (when the JTBD is within it), to define the functionality, performance, costs and limits of a system Functional Modeling: Shows “how” the system is interacting dysfunctionally Zone of Conflict Analysis: Shows “where” and “when” the system is dysfunctioning Contradictions: Refines “how” the system is dysfunctional, and “where to focus” efforts Inventive Principles: Provides potential solutions to overcome system contradictions and dysfunction (best solutions are usually combinations) S-Curve Analysis: Shows level of system maturity, and “how to” evolve the system to greater level of maturity, performance and profitability Trends of Eng. Systems: Shows “how to” evolve the system to higher levels of functionality Scientific Effects: Shows ways to solve limitations of the system using scientific effects from other industries or sciences 7/8/2012 The Strategy + Innovation Group | All Rights Reserved - Copyright (c) 64
  • THE SYSTEMATIC INNOVATION TOOLBOX 65
  • 66 Systematic Innovation++
  • <5% Going After Non-Consumers 5 - 10% No Guts, No Glory 5 - 10% Staying In Your Own Backyard 80 - 100% Staying Inside the House Source: Booz, Allen, Hamilton white paper ―The Innovators Prescription - Raising Your Return on Innovation Investment‖ (2004)
  • Note: The #‟s come from NIST‟s analysis of Typical R&D spending by corporations, the category names are my own Evaluating Efforts; Use 4 Metrics (minimum): 1. Return On Human Assets (ROHA): 2. Return On Investment (ROI): 3. New Usage or Market Segment? (Y/N) 4. Proprietary Technology? (Y/N)
  • BILL GATES
  • Intel Confidential | Internal Use Only INGREDIENTS OF AN INNOVATION MANAGEMENT SYSTEM Leadership & Organization Vision & Goals Innovation Strategy Org Structure Innovation Policy - ICMM Culture & Values Collaboration Open “Idea Friendly” Culture Innovation Incentives and Rewards Established Process to trust Processes & Tools Systematic Innovation methods Supporting Tools (Proto-typing capability) Idea Management (Generation & Shaping) Pipeline & portfolio Management People & Skills Grammar of Innovation Proficiency in Innovation (Process, Methodology & Tools) Innovation Training, Workshops & Coaching Innovation Effectiveness Innovation Metrics
  • 7/8/2012 The Strategy + Innovation Group | All Rights Reserved - Copyright (c) 71 INNOVATION CAPABILITY MATURITY MODEL INDEX Effects of implementing an ICMM  Managed Process for Innovation  Increase in Customer Loyalty  Increase in Quality  Increase in Predictability  Increase in Profitability  Decrease in Risk Level -3: Undermining Level -2: Contemptuous Level -1: Obstructive Level 0: Negligent Level 1: Initial Level 2: Defined Level 3: Implemented Level 4: Managed Level 5: Adaptive Risk Profit ICMM helps to combat Bias Prejudice and Organizational Dysfunction
  • STEVE JOBS
  • OPTIMIZATION IS DEFINED BY BOUNDARY CONDITIONS OF THE SYSTEM 7/8/2012 The Strategy + Innovation Group | All Rights Reserved - Copyright (c) 73 Optimization occurs at or below the apex Contradictions define the limits of all systems Put another way: Assumptions or biases limit what we view when look at how a system performs Parameters „x‟ and „y‟ limit performance of „z‟
  • RESOLVING BIASES AND ASSUMPTION ARE ADDRESSED LOOKING FOR CONTRADICTIONS AND USING FUNCTIONAL ANALYSIS OF THE SYSTEM 7/8/2012 The Strategy + Innovation Group | All Rights Reserved - Copyright (c) 74 X Innovation occurs above the apex of the contradiction paraboloid Contradictions define the limits of all systems, if we purposefully break them we gain performance in the „z‟ axis Parameters „x‟ and „y‟ limit performance of „z‟
  • S-CURVES Helps define where a technology exists in regards to its functionality (performance), and its maturity 7/8/2012 The Strategy + Innovation Group | All Rights Reserved - Copyright (c) 75 Performance
  • S-CURVES AND CONTRADICTIONS 7/8/2012 The Strategy + Innovation Group | All Rights Reserved - Copyright (c) 76 Each step in increased performance along a single s-curve can be defined in terms of contradictions (obstacles to be overcome)
  • Measured Parameter – Cost, Profit, ROI, Efficiency, Effectiveness, etc. Current System Altered System Fundamental Limit of Capability target Getting to the target requires a change to the system -Solve a contradiction -Use another means -Evolve to other trend stages THE OVERRIDING IMPORTANCE OF EVOLUTIONARY S-CURVES
  • EACH LARGE SYSTEM IS MADE UP OF INDIVIDUAL COMPONENTS Individual components, have their own individual s-curves 7/8/2012 The Strategy + Innovation Group | All Rights Reserved - Copyright (c) 78
  • A PRODUCT IS DEFINED BY THE PROCESS THAT MAKES IT The process by which a product is produced is inseparable from its process, thus any improvement suggested or envisioned for a product has a direct causality back to the processes used to create it. In effect there are always at least two s-curves defining a system: • The product (a demand driven function) • The process that builds or produces a product (a cost driven function) 7/8/2012 The Strategy + Innovation Group | All Rights Reserved - Copyright (c) 79 Danner, T.W. A Formulation of Multidimensional Growth Models for the Assessment and Forecast of Technology Attributes. Aerospace Engineering (Georgia Institute of Technology, 2006).
  • IMPROVEMENT OF A DESIGN IS LIMITED BY THE IMPROVEMENT IN THE PROCESS THAT CREATES IT  Design performance (demand driven curve) is constrained by Manufacturing performance (cost driven curve)  Why Important: Coordinating development of the Process Innovation curve to coincide with the Product Innovation Curve increases margin sooner, shortening Time-To- Productivity, shortening Time-To- Market, lowering product cost with greater performance, reliability, and functionality than competitors products or processes that don’t use such a methodology 7/8/2012 The Strategy + Innovation Group | All Rights Reserved - Copyright (c) 80
  • 7/8/2012 The Strategy + Innovation Group | All Rights Reserved - Copyright (c) 81 Systematic Innovation Risk: Reducing the Risk of DecisionsPrediction Learning %RiskAccuracyof DecisionMaking Time Wild Guesses 0% 25% 50% 75% 100% 25% 50% 75% 100% Informed Estimates Reliable Forecasts Utilizing Systematic Innovation Methods: Dramatically Reduce the Risks of Human Biases and the costs of Trial & Error drop significantly Quality of Prediction/Solution = Better Faster Speed
  • TYPICAL TOP DOWN PERSPECTIVES CEO’s Perspective Grow topline business Grow Revenues Launch new products / services Globalize the business COO’s Perspective Execute current priorities Operational efficiencies Effective processes People priorities CFO’s Perspective Grow bottom line Reduce costs Manage Risks Compliance What’s the Next BIG Thing? What’s Today’s BIG Challenge? What’s our Next BIG Risk? 3/12/2013 The Strategy + Innovation Group | All Rights Reserved - Copyright (c) 82 Source: Cognizant’s submission to MIXprize.org
  • EXAMPLES OF STRATEGIC BUCKETS Portfolio management splits the overall NPD resources a priori to the formulation of project ideas on different NPD programs as bundles of NPD projects. Projects compete with like projects instead of with one another across the buckets 3/12/2013 The Strategy + Innovation Group | All Rights Reserved - Copyright (c) 83 Development of advanced technologies Cost Reductions Process & Product Improvements Development of Completely new products / services
  • INNOVATION SYSTEM CONTROLS  Focus on problems that need to be solved, customer‟s and production processes (needs)  Learn and implement systematic innovation tools across the org (methods and people)  Start simple where there are already issues, (look for contradictions)  Support and enable the products, services, R&D, and process development activities (idea conversion)  Tie projects to revenue, cost savings and productivity benefits (metrics) 3/12/2013 The Strategy + Innovation Group | All Rights Reserved - Copyright (c) 84
  • INNOVATION SYSTEM CONTROLS  Connect with others in the organization, get their support, enable their activities and agendas (key initiatives)  Communicate up down and across the organization on the value add (dashboards)  Communities of practice are vital (culture)  Big wins are nice, but look for multiple small wins from all corners of the organization, they accumulate (visibility and rewards) 3/12/2013 The Strategy + Innovation Group | All Rights Reserved - Copyright (c) 85
  • Understanding the Different Types of Innovation
  • Understanding the Different Types of Innovation Knowing the different types of innovation and which one to use and when is vital to architecting your process that fit‟s your industry and firm‟s needs to be competitive Geoffrey Moore did an insightful analysis of the many different types of innovation in his book “Dealing with Darwin”
  • I N N O VAT I O N M Y T H B U S T I N G
  • Myth Busting There are multiple types of innovation initiatives NOT just disruptive innovation, each one provides a means towards achieving profitability and delivering value to customers. Disruptive innovation: really only works if you have excess functionality, or over-serving a given market and that there are underserved elements to migrate that functionality towards those underserved markets Disruptive Innovation Platform Innovation Application Innovation Product Innovation Value Eng. Innovation Incremental Innovation Process Innovation Design Innovation Marketing Innovation Experiential Innovation Value Migration Innovation Integration Innovation Organic Innovation Structural Innovation This is the one many think of, when thinking about innovation and it‟s the riskiest to do
  • EXAMPLE OF A MISUNDERSTOOD AND MISAPPLIED METHOD Blue Ocean Strategy (BOS) is an excellent example of a marketing innovation. The authors present it as a means of “value” innovation, however the downside that we‟ve noted about it‟s use is that it is often a one-time win for a firm. Can Blue Ocean Strategy be sustained?
  • By example when we evaluated Casella Wines („yellow tail‟ brand) from Australia, an example cited by the authors of Blue Ocean Strategy, what we did not see was any subsequent use of the method demonstrating a repeatability and reliability of using the method. It might be repeatable migrating from one company or industry, however it has not been demonstrated that it is repeatable within the same product line that it was first applied.
  • 93 It is not that yellow tail didn’t gain benefit from its initial BOS analysis and redefining the market, but what new innovation has yellow tail introduced since it began. The only noticeable change is that the price of yellow tail wines has increased, and the hoped for volume increases did not pass on a lower cost to buyers.
  • Blue Ocean Strategy Conclusion Our conclusion is that BOS is useful for redefining other parameters that are under-recognized by the market. But once that has been executed and the market made aware of the enhanced value of a given product, the method is not able to exploit other value parameters that the buyer may desire. It is not that BOS‟s approach is wrong, we adamantly agree with the fundamentals of decreasing industry costs, and increasing buyer value, we see it as a marketing tool, not necessarily as a repeatable and reliable method we can go to market with. But can it modified to be repeatable? Can BOS be modified to be repeatable?
  • The Core of BOS The Four Actions Framework is the core process by which BOS operates and where the additional value parameters are found, and where a firm may reduce, change, or eliminate to gain competitive advantage.
  • 10/19/2007 The Strategy + Innovation Group LLC | Confidential 96 IMPORTANCE OF 4 ACTIONS FRAMEWORK TO SKILLED INNOVATORS All of these methods are techniques from the Systematic Innovation toolbox Evolve System using Evolutionary Trends to achieve higher performance Model System under evaluation for its functionality and utilize Trimming Method Use Inventive Principles to solve contradictions Find an alternative means of achieving Functionality
  • This material MAY NOT be distributed to others, copied or reproduced without the express consent of the author Copyright Protected | Property of the Strategy + Innovation Group 97 PROBLEMS WITH ORGANIZATIONAL STRATEGY and What to Do About It
  • This material MAY NOT be distributed to others, copied or reproduced without the express consent of the author Copyright Protected | Property of the Strategy + Innovation Group 98 SCHOOLS Base Discipline – Some Shortfalls Design Architecture as metaphor - Neither analytical, nor intuitive. Too static in an era of rapid change. Planning Linked to urban planning, system theory, & cybernetics - Neither supports real- time strategy making nor encourages creative accidents. Positioning Economics of industrial organization & military history (Art of War) - Strategy reduced to generic positions selected through formalized analysis of industry situations. Entrepreneurial Early writings come from economics - Vague vision; strategies are designed mainly based on leader's intuition. Cognitive Cognitive Psychology - Too subjective approach to strategy formulation (just in the head of the strategist). Learning Linked to learning theory & Chaos theory in mathematics - Strategy development process is rather chaotic, unpredictable and process (rather than result-oriented) Power Political science - Focuses mainly on the clash of self-interests of stakeholders during the process of strategy development Culture Anthropology - Not well suited for radical change projects. Environment Biology - Severe limits to strategic choice. Configuration History - Polarized between two approaches favoring either radical or incremental change
  • This material MAY NOT be distributed to others, copied or reproduced without the express consent of the author Copyright Protected | Property of the Strategy + Innovation Group 99 SUMMARY OF ISSUES WITH THE SCHOOLS OF STRATEGY Majority miss…  organizations ability to compete and innovate is the sum total of the collective habits of its people – What Your People Do • “How it gets things done” (a.k.a. the company culture)
  • This material MAY NOT be distributed to others, copied or reproduced without the express consent of the author Copyright Protected | Property of the Strategy + Innovation Group 100 SUMMARY OF ISSUES WITH THE SCHOOLS OF STRATEGY Majority miss…  are tops down, thus little / no buy-in from the people doing the work, the execution part • Little appreciation for front line on “how to” deliver value (What Customers Pay For)
  • This material MAY NOT be distributed to others, copied or reproduced without the express consent of the author Copyright Protected | Property of the Strategy + Innovation Group 101 SUMMARY OF ISSUES WITH THE SCHOOLS OF STRATEGY Majority miss…  not focused on “how” the work will achieve the desired outcomes • Doesn‟t unleash capabilities and talents of front line personnel  delivering value to the customer (How the Value is Delivered to the Paying Customer)
  • 4/27/2010 Property of Strategy + Innovation Group LLC 102 wis•dom |ˈwizdəm| the ability to discern or judge what is true, right, or lasting; insight. Confucius stated that wisdom can be learned by three methods:  Reflection (the noblest)  Imitation (the easiest)  Experience (the bitterest)
  • THE DEMING AND DRUCKER MODEL OF CHALLENGE 7/8/2012 The Strategy + Innovation Group | All Rights Reserved - Copyright (c) 103 “The enterprise that does not innovate ages and declines. And in a period of rapid change such as the present…the decline will be fast.” - Peter Drucker
  • 7/8/2012 The Strategy + Innovation Group | All Rights Reserved - Copyright (c) 104 Topic of Intersection Dr. Drucker Dr. Deming Fear as a motivator Modern behavioral psychology has demonstrated that great fear coerces, while remnants of fear cause only resentment and resistance. Lesser fears destroy motivation. Drive out fear, so that everyone may work effectively for the company. Fear impairs performance and causes numbers to be padded. Management by drives and quotas Many managements fail to draw the obvious conclusion that drives [such as cost cutting, then inventory cutting, then human relations] are after all, not the way to get things done. Quotas are a barrier to improvement. Eliminate numerical quotas for the work force. Eliminate numerical goals for people in management. Innovation Inherent in the managerial task is entrepreneurship: making the business of tomorrow. Inherent in the task is innovation. Innovation is above all, top- management attitude and practices. Innovation in a business enterprise must therefore always be market-focused. Actually, ―What is our business?‖ is almost always a difficult question and the right answer is usually anything but obvious. Innovation, the foundation of the future, cannot thrive unless the top management have declared unshakable commitment to quality and productivity. The moral is that it is necessary to innovate, to predict the needs of the customer. A good question for anyone in business to ask is: What business are we in? What product or service would help our customers more? Productivity Productivity means that balance between all factors of production that will give the greatest output for the smallest effort. Economic performance that is achieved by mismanaging work and workers is illusory and actually destructive of capital even in the fairly short run. To leave knowledge skill underutilized is impoverishment of society and individual alike. Production [and service] should be viewed as a system. The improvement of quality begets naturally and inevitably improvement of productivity...this transfers waste of man-hours into good product and better service. The result is a chain reaction—lower costs, better competitive position, happier people on the job, jobs and more jobs. Variation To design a control system, one has to think through what is routine and what is exception. The traditional American system is misapplication of control. It subordinates the routine to the exception. There are two mistakes frequently made: 1. To react to an outcome as if came from a special cause, when actually it came from common causes of variation. 2. To treat an outcome as if it came from common causes of variation, when actually it came from a special cause. Learning Worker responsibility for the job, work groups, and output cannot be expected, let alone demanded until the foundations of productive work, feedback information, and continuous learning have been established. The fault is in the system, not in the men. I should estimate that in my experience most troubles and most possibilities for improvement add up to proportions something like this: --94% belong to the system, (common causes) which are the responsibility of management. --6% special causes Psychology of leadership Management by drive [such as a theme of the month] is a sure sign of confusion. It is an admission of incompetence. It is a sign that management does not think. To make a living is no longer enough. Work also has to make a life. Transformation to the new philosophy of management will result in joy in work, joy in learning. The result will in time be greater innovation, expansion of market, greater material reward for everyone. Everyone will win; no losers. Use of rewards to motivate ...watch lest the compensation system reward the wrong behavior, emphasize Rewards motivate people to work for rewards (quoting Alfie Kohn). A show W. Edwards Deming, renowned statistician and management expert, and Peter F. Drucker, the father of modern management thinking, knew one another. What might surprise you is the incredible number of intersections there are in their thinking
  • 7/8/2012 The Strategy + Innovation Group | All Rights Reserved - Copyright (c) 105 Deming’s SOPK (System of Profound Knowledge)
  • 7/8/2012 The Strategy + Innovation Group | All Rights Reserved - Copyright (c) 106
  • 7/8/2012 The Strategy + Innovation Group | All Rights Reserved - Copyright (c) 107
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  • THE SYSTEMATIC INNOVATION TOOLBOX 109
  • JTBD and Diagnosis 7/8/2012 The Strategy + Innovation Group | All Rights Reserved - Copyright (c) 110 INTEGRATING THE INNOVATION LIFE CYCLE INTO THE PRODUCT LIFE CYCLE Planning ProductionDevelopment Implementation (IPA) Approval Meetings: Ship Release Approval (SRA) Development Investment Approval (DIA) Product Documents: Product Requirements Product Implementation Design Specifications Qualification Reports Product Overview Proposal (POP) Product Discontinuance Approval (PDA) Exploration Business Requirements Document (BRD) Plan Plan Approval Strategic Goal and Limits Analysis Problem Definition Competitive Frameworks and Innovation Methods Solution Finding Adoption / Rapid Prototyping Implementation Design for Innovation in Manufacturing After Action ReviewPLC ILC Product Life Cycle Innovation Life Cycle
  • 7/8/2012 111 Customer Requirements, Data Standards e-CAD data input CAM / DFM s/w package Run Design for Manufacturability Analysis and review results Do manufacturability issues exist? Document Issues in the DFM report Use principles to Identify viable solutions Yes No Prototype New Component solutions for ES Build ES Prototypes (w/ Mfg. Eng. at build) Identify Contradictions Check DFM violations against customer Product cost and Performance requirements Low Risk Med & High Risk Review Manufacturing Performance (w/ mfg floor feedback) Legend: ES = Engineering System CAM = Computer Automated Manufacturing DFM = Design for Manufacturability Release Product for High Volume Mfg DFM Tool as a Virtual Prototyping Tool Continue NPI Builds for Statistical significance Root cause for low yield High Yield Trends of ES Evolution Analysis S-Curve Analysis Low Yield Problem solved with standard Engineering approach No Yes DfIM Flow All Rights Reserved – The Strategy + Innovation Group
  • Please contact The Strategy + Innovation group for a discussion of your organization‟s needs www.sig-hq.com
  • BACKUP 7/8/2012 The Strategy + Innovation Group | All Rights Reserved - Copyright (c) 113
  • The Strategy + Innovation Group | All Rights Reserved - Copyright (c) 114 6 COMPANIES INVESTIGATED* +10 YEARS 10 Biases - Barriers to Effective Innovation #1: Overconfidence in Predictions – outcomes fall short of predictions, plans are usually overly optimistic #2: Innovation is Too Risky – uninformed about the different types of innovation, where, when and how to do it effectively #3: a Priori – bias that you don‟t actually know, so you guess, a.k.a. confirmatory bias #4: Illusion of Predictability – separate variant of #1 bias, in that one undervalues the uncertainty of environmental/external factors #5: Silver Bullet – overestimating or assuming a simple remedy for a challenging, difficult or intractable problem * Note: Plus a boat load of research on organizational decision making, resistance, inertia, entropy and dysfunction
  • 7/8/2012 The Strategy + Innovation Group | All Rights Reserved - Copyright (c) 115 10 BIASES - BARRIERS TO EFFECTIVE INNOVATION #6: Ego – bias since we were previously successful / innovative, you can‟t tell / teach us anything about innovation, we are the leaders #7: Recency – bias focusing on what just happened instead of looking at the totality of what happened from the beginning #8: Familiarity – instinct to gravitate to familiar explanations, instead of investigating more deeply #9: Size – bias of large effort for large results, resulting in an inaccurate attribution of what actually achieved the results. Typically seen in large culture changes. #10: Political – individual‟s bias and focus on personal interests / positions versus organizational needs. Killing projects that aren‟t yours, siloing, etc…
  • 7/8/2012 The Strategy + Innovation Group | All Rights Reserved - Copyright (c) 116 Bonus Bias: WHAT MOST COMPANIES THINK IS GOING TO MAKE THEM COMPETITIVE The driver of “Talent-driven innovation” is misleading, effective innovation is a function of skills and capabilities that are learned and can be taught
  • PREJUDICES AGAINST INNOVATION  Lack of understanding that everyone is innovative  Fear of failure  Fear of criticism  Lack of a conducive environment/motivation (management)  Lack of time 7/8/2012 The Strategy + Innovation Group | All Rights Reserved - Copyright (c) 117  Lack of understanding of innovation process  Team culture too focused on status quo  Lack of skills/knowledge that drives insights and ideas  Lack of awareness about reuse as a form of innovation  „Not invented here‟ syndrome prevents use