InnoAction LLC Proprietary and Confidential
Where
to Play
How
to Win Governance Capabilities
Define the
Innovation
Mandate...
InnoAction LLC Proprietary and Confidential
Establish Innovation Leadership Team (ILT) & Its Goals
1) Build the ILT, to pr...
InnoAction LLC Proprietary and Confidential
3
Innovation Portfolio Strategy
Sustaining Transformative Disruptive
Cost
Proc...
InnoAction LLC Proprietary and Confidential
Sustaining: incremental improvement
to existing products (“er” benefits;
bette...
InnoAction LLC Proprietary and Confidential
Core SBU Innovation Disruptive Innovation
Type of Innovation Sustaining Transf...
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Framework for Organization Corporate Innovation

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Highlevel frameworks and teasers for organizing innovation within large companies.

Published in: Business, Economy & Finance
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Framework for Organization Corporate Innovation

  1. 1. InnoAction LLC Proprietary and Confidential Where to Play How to Win Governance Capabilities Define the Innovation Mandate Build a Diversified Innovation Portfolio • Are we balancing risk and reward in a diversified portfolio of Core and New Growth initiatives? Sustaining Innovation • Cost, Process and Product Improvement Transformative Innovation • Adjacencies • New Growth Platforms Disruptive Innovation • Market Making Balance the Core Business vs. New Growth Platforms Engage Leadership to Drive Innovation Develop the Essential Capabilities for Innovation Innovation Mandate Innovation Operating Model • What is the specific contribution of innovation to delivering growth? • Do we have the different organizational, financial and performance models for innovation? • Separate teams for Transformative & Disruptive Innovation • Special funding model to plan and allocate investment in innovation • Dynamic measurement system balanced between learning and results • New IP Management Strategies • Is Leadership actively managing innovation? • Are there incentives to innovate and take risks, and disincentives not to? • Are there clear decision rights and accountabilities? • Are there regular Innovation Reviews? • Is the Innovation Portfolio continually rebalanced? • Are we strong in the following areas? • Superior Customer Insights • Internal Knowledge Sharing and Learning • External networks and ecosystems • Innovative new business models • Finding and acquiring new talent •Capital Efficient Innovation Methods (e.g. Lean)
  2. 2. InnoAction LLC Proprietary and Confidential Establish Innovation Leadership Team (ILT) & Its Goals 1) Build the ILT, to provide Group-wide leadership and to drive the Innovation Mandate (e.g.50% net new growth from innovation by 2020) 2) Balance the Core Business and New Growth Platforms, to defend/extend the current franchise and to diversify the portfolio long-term 3) Develop Adjacencies as the first step in creating New Growth Platforms, focusing on close-to-the-Core, risk-managed opportunities that leverage existing assets and knowledge 4) Deploy Innovation Capabilities throughout the organization, to support both Core and New Growth, in the areas of Cost, Process, Technology, Product and Business Model Innovation(e.g. Lean Start-up, Design Thinking, etc.) 5) Create an Innovation Culture that can unlock creativity and entrepreneurship
  3. 3. InnoAction LLC Proprietary and Confidential 3 Innovation Portfolio Strategy Sustaining Transformative Disruptive Cost Process Product Technology Business Model 70% for established companies 50% for high growth companies 20% established, 30% high growth 10% established, 20% high growth Benchmark ratios for innovation investment: 70-20-10 for established companies, 50-30-20 for high growth companies (e.g., technology sector, developing markets, etc.)
  4. 4. InnoAction LLC Proprietary and Confidential Sustaining: incremental improvement to existing products (“er” benefits; better, easier, cheaper), line extensions on same product dimensions (efficacy, convenience, etc.) • Ultra-concentrated laundry detergent • Disposable battery-powered toothbrushes • Universal remote controls for TV • Form-fitting shoes • Etc. Transformative: re-frames existing categories (order of magnitude improvements and fundamental changes to the category) • Digital cameras (no film) • Drinkable yogurt (no spoon) • Liquid bandages (invisible, no adhesives) • Home routers/networks (more capacity, control) • Google Apps (no software) • Etc. Disruptive: New-to-the-world businesses with radically new offerings that disrupt incumbents (there are clear winners and losers, legacy companies/brands decline sharply) • Smart phones disrupt: mobile phone, PC, music, gaming, and GPS industry (e.g., Apple wins, long list of losers includes Nokia, Blackberry, Dell, EMI, Electronic Arts, Garmin, et al.) • Cloud-based storage disrupts hard drive industry • Online trading platforms disrupts financial advisor networks • Tablets disrupt video players, print media • Etc. Governance: Establish Decision Rights “small i” “Big I” 4 SBU Responsibility ILT ResponsibilityManaging “small i” vs. “Big I” Adjacencies, New Growth Platforms, Market Making
  5. 5. InnoAction LLC Proprietary and Confidential Core SBU Innovation Disruptive Innovation Type of Innovation Sustaining Transformative Market Structure Existing Converging Business Model Contract manufacturing Many alternatives Customer Habits and preferences well known Doesn’t know what he/she might want Technology Focused on existing industry methods Discovered in other domains Competition Established players within industry Non-traditional entrants from different domains Partners Customers and suppliers Vast ecosystem, many potential partners Investment Model Capital allocation based on predictable cash flows Futures and options Success Ratio 3:1 9:1, like venture capital Process Predictable stage gates Highly iterative, loop backs Measurement Finite set of variables Large set of variables, highly interdependent Practitioner Profile Industry insider Entrepreneur, thinks outside the industry Outcomes New product, cost or process improvement New growth platform, $1B + Disruptive Innovation vs. Core Innovation 5
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