Expanding the Innovation Horizon: The Global CEO Study 2006


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  • Comprehensive…largest ever study of its kind…talked with 765 CEOs and leaders around the world…80% in person…hour long discussions…they revealed what is really on their minds CEOs see RADICAL CHANGE on immediate horizon…next 2 years are NOT ABOUT cost cutting, or efficiencies, it’s going to be a period of extensive change…global change…capitalizing on and responding to the forces of a rapidly ‘flattening world’ In the next quarter hour will take you through most surprising findings
  • In fact 65% or two thirds will make fundamental change in the next 2 years…that’s 24 month. But ….and here is one of the tensions we uncovered…ONLY 15% say they have been VERY SUCCESSFUL with change in the past. Even if some of those that were successful were being conservative when we talked to them…more than half of those planning radical change have not delivered to expectations in the past. The next two years are going to be interesting to see play out…competitive and market forces dictating change, and CEOs aware that fundamental change is needed…many fewer are equipped.
  • CEOs told us it’s the ‘perfect storm’ for radical change Here is a sampling… Competitors emerging from everywhere…as one CEO put it. No growth without change…as another put it We must innovate to justify 40% sales on the Net We could have shown hundreds of quotes…but they all reflect the fundamental forces driving new Innovation to navigate the fast flattening world…whether opportunity or threat… CEOs increasingly see Innovation as the way out…the way forward… And the types of innovation they are pursuing are DIFFERENT.
  • They are relying on outsiders not insiders to innovate… Collaboration is critical… CEOs looking to capture the innovation beyond the walls of their organization…
  • Interestingly…What we found was more and more CEOs looking outside the organization for fresh ideas and innovation Look at this…external sources mentioned twice as often as internal sources Look at this…R&D mentioned by just over 15% …. a few years ago this would not have been the case There’s a real shift underway to collaborative innovation…
  • Surprisingly … out performers actually sourced more ideas from outside Out performers use external ideas 30% more than underperformers…and in several industries, half their ideas come from outside, and in 9 industries more than 40% ideas now coming from outside…when the industry structure was in flux and more networked …like Media and Entertainment and Telecommunications we found more than half the ideas coming from outside… How did we define “outperformers” and “underperformers”? For the 200 or so participating companies where we were able to obtain financial data, we split them into a “top 50%” group and a “bottom 50%” group based on key indicators like compound annual growth rate. We then looked at differences in survey responses between these two groups.
  • 80% of the CEOs we talked to saw the potential for collaborative innovation…in fact 76% said it is absolutely critical …yet of those only 51% said they were doing it to any great extent … Huge gap exists in what they seek and what has been realized…this is a trend that is gaining momentum A vivid example: Goldcorp…Canadian Gold mining firm that was struggling to find new sources of gold so they posted geological data on the web for other geologists to see around the world…entries from 50 countries were received…they ranked the most likely prospects and started drilling…in almost all cases they struck gold…and none of the geologists ever visited the mine. Lam Research has created a “variable virtual company” – using sourcing to secure translate fixed to variable costs and creating a buying alliance (CapOneSource) to aggregate the buying power of a broad range of capital equipment-buying companies and reduce each company’s sourcing costs even further.
  • 3 rd Surprising finding is Business Model Innovation really Matters We defined Business Model innovation as…Change in structure...change in shape…change in financial structure CEOs told us 61% fear a competitor radically changing the structure of their industry… … because so many industries have been disrupted…think airlines South West and Jet Blue , think steel and Nucor, think TV and Tivo, think Music and iTunes, think software and Linux, think universities (University of Phoenix) But what is happening now is NEW…CEOs are trying to harness the trends of the fast flattening world…technology, connectivity, access to skills, more markets … to disrupt or avoid disruption
  • So the innovation focus has moved from products and services to Business Model Innovation…30% overall and almost 40% in Asia Pacific... Fundamental change of business model…through actions like Org Structure change 66%, and Strategic Partnerships 53%...seen happening For the first time in history firms can assemble the capabilities they need in new and different ways…the vertically integrated firm is no longer a requirement…specialized enterprise is the future model for many…and CEOs are recognizing that innovation around the business model is what will take them there
  • But perhaps what was even more interesting is the link between business model innovation and performance…those firms that were in the out performer group – measured by operating margin growth – placed twice as much emphasis on business model innovation and half as much emphasis on operational innovation….product/service/market innovation remained important to all Out performers nearly twice as likely to be business model innovators What’s different today is SPEED, TECHNOLOGY (Connectivity), SKILLS…so the out performers are more focused on business model innovation
  • So we see (repeat themes) Fundamental, radical change in the next 2 years A Perfect Storm of forces colliding that are enabling new ways to innovate CEOs collaborating more…seeking ideas from outside Focusing on innovating their Business Model But what stands in the way…after regulation its all INTERNAL…Most obstacles are organization wide. This is good news…while the issues remain tough…they can be addressed and managed
  • Largest ever Study of its kind – 765 CEOs and business leaders around the world They tell us Radical Change will occur in the next 2 years A Perfect Storm of forces is colliding creating opportunity and fear among CEOs…they see Innovation as the way out But Innovation is DIFFERENT this time Innovation is Collaborative…focuses outside for ideas…and focuses on creating innovative Business Models…and needs CEO leadership to knock down the obstacles Now lets turn to our CEO Panel to learn about what they see and about the innovations they are working on
  • So we looked at who is responsible…who’s going to get this done…and found that only 35% of CEOs said they were responsible…varies by Geography…20% in US and 47% in Emerging Markets What about the ‘no owner’? 27% say no-one in particular… Given the obstacles…we see a greater need for CEO leadership in future In Closing…
  • Today, radically new forms of collaboration are possible -- within a company, between companies, with online communities of experts and even with countless unknown individuals in the world. Employees can share ideas and work on projects together with unprecedented ease. Engineers and experts can team with those of another company. And any business can engage with the entire networked world to learn, to capture feedback -- or to turn their customers into co-creators. [CLICK on “collaboration & co-creation” to return to the menu --OR— NEXT slide to discuss “the marketplace for expertise”]
  • All the capabilities we’ve just mentioned are the elements that enable innovation. But applying them is not, by itself, innovation. Innovation comes when you take those elements, integrate them with your products, your operations and your corporate culture. You combine them in a new ways with some new thinking about why you’re in business and what you have to offer your customers, and then you can start to tackle the things shown here on the left. We’ll walk through each of those. On the right, you can see how CEOs responded in IBM’s most recent global study. Who’s responsible for implementing innovation in the company? Over a third of the CEOs say they and their direct teams are. Others spread the responsibility around, and more than a quarter of CEOs admit that there really isn’t anyone driving an innovation agenda for their organizations. There isn’t necessarily a right answer here, though it obviously requires a commitment and a focus from corporate leaders, or else it just won’t happen. But it can’t just be another top-down initiative like “quality” and “excellence” and such things we’ve seen before. That’s because innovation requires collaboration, it requires openness and a willingness to “let go to grow.” In other words, every part of the company has a part to play if an enterprise is to be an innovation organization. And it’s only with a cross-company focus that you’re able to innovate the following ways... [NEXT to discuss innovation in products]
  • In a world of commoditized goods, some companies are developing and bringing to market products that stand out -- in feature, function, cost, availability, or just in being in the right place at the right time. They’re able to do this by applying advanced technology in both product design and in product features... ...and also by innovating in products through collaborative relationships with developers and other companies. [NEXT/CLICK to reveal HONDA example] [NEXT/CLICK again to reveal MAYO CLINIC example] [NEXT slide to discuss innovation in services]
  • The services companies that distinguish themselves will be those that do two things well: 1) they customize – especially when their competitors offer one-size-fits-all; and 2) they cut prices – and thereby beat their rivals who aren’t capitalizing on the new tools of innovation. Similar to the “grow-revenue-while-cutting-costs” imperative, these two approaches to success in services would seem to be at odds, except for the possibilities now available from technology and in business models. [NEXT/CLICK to reveal BOULANGER example] [NEXT/CLICK again to reveal OXXIO example] [NEXT slide to discuss innovation in business processes]
  • To create more than just innovative products and services, and instead produce, deliver and sell them in innovative ways requires some rethinking across the company. One of the ways to do that is to look at the company not as a collection of brands or vertical silos, but as a set of process components that can be extended, shared, and even outsourced to maximum effect. By combining advanced technology and leveraging industry-specific expertise, an enterprise can manage its business needs at a lower cost and with greater flexibility to address new challenges and new opportunities. [NEXT/CLICK to reveal JABIL CIRCUIT example] [NEXT/CLICK again to reveal AAA CAROLINAS example] [NEXT slide to discuss innovation in business models]
  • With business rethought as a set of components, and the transformation itself being provided by someone like IBM, the next step many companies take is to re-cast their actual business model, the basic design and operation of their business. It’s far easier to do this today than it used to be, thanks to capabilities such as global integration, new kinds of expertise, and new forms of collaboration. And by doing so, a business can concentrate on the one or two aspects that differentiate the company. It can even rethink them, along with whatever legacy notions of ownership, sales and trade still left over from the twentieth century’s industrial economy that may no longer be useful. [NEXT/CLICK to reveal PARCELHOUSE example] [NEXT/CLICK again to reveal DELTA FLUID PRODUCTS example] [NEXT slide to discussion innovation in management and culture]
  • This is the hardest part of enterprise innovation, naturally -- because this is where the human element comes into play. It requires deliberate choices on the part of management to reward risk-taking -- and risk-sharing. It requires a culture of empowerment and enablement, and a strong bias in favor of collaboration. Instead of doing everything itself, an enterprise today needs to build collaboration into its process, to constantly unlock new ideas. Instead of hoarding intellectual property, it may be better to leverage -- and refresh and contribute to -- common stores of intellectual capital. [NEXT/CLICK to reveal V Ä GVERKET example] [NEXT/CLICK again to reveal NORTEL example] [NEXT slide to discuss innovation in policy and society]
  • As corporations innovate in these multiple dimensions, it raises broader implications -- for privacy, piracy, digital rights, intellectual property, global trade and more. These days, in our increasingly interconnected world, innovation as we’ve been describing it pretty soon leads you to the dimension where innovation impacts on policy and society It will often include the entire ecosystem of players and participants: people in academia and government; researchers and advocates; employees, managers, and shareholders. It covers a lot of subject-matter territory, too. Everything from workplace practices, education, and supply chain responsibility, to intellectual property, trade and financial regulations, and issues of safety and security; as well as issues and practices that haven’t even yet been defined. [NEXT/CLICK to reveal AUTOSAR example] [NEXT/CLICK again to reveal NATIONAL DIGITAL MEDICAL ARCHIVE example] [NEXT slide to close]
  • In April 2005, IBM and the National Geographic Society launched a major five-year research project to map the human journey across our planet. One of the most ambitious research initiatives in history, the Genographic Project performs advanced computer analysis of DNA from hundreds of thousands of people to reveal the deep migratory history of the human species. With the samples in hand, researchers will use sophisticated computer techniques to analyze that data and report the comprehensive results. All people around the world can take part in the research effort by purchasing Genographic Project kits, submitting their own DNA samples and allowing their confidential and anonymous results to be included in the database. To date, (June 2005) more than 45,000 kits have been sold. The Genographic Project shows the world that we are eager to, and capable Of, bringing IBM’s legacy and resources to bear on the world’s toughest challenges. Great example of global collaboration to deliver innovative outcomes.
  • Expanding the Innovation Horizon: The Global CEO Study 2006

    1. 1. Expanding the Innovation Horizon: The Global CEO Study 2006 Kris Pederson May 16, 2006
    2. 2. AGENDA <ul><li>CEO Study results </li></ul><ul><li>Opening up a world of innovation </li></ul><ul><li>Innovation in action </li></ul>
    3. 3. The Global CEO Study 2006 <ul><li>Scope: 765 CEOs and business leaders in all major countries </li></ul><ul><li>Purpose: Understand role of innovation on CEOs’ agenda </li></ul><ul><li>Definition: “New ideas or current thinking applied in fundamentally different ways resulting in significant change” </li></ul><ul><li>Innovation focus: </li></ul><ul><ul><li>Products, Services, and Markets </li></ul></ul><ul><ul><li>Business Models </li></ul></ul><ul><ul><li>Operations </li></ul></ul>
    4. 4. The study probed innovation – its importance and its benefits – across three innovation types and 6 Innovation enablers ……… .and six vital innovation enablers (3) Products, Services and Markets Innovation applied to customer-focused, go-to-market areas (1) Business and Enterprise Models Innovation applied to restructure and extend the enterprise (2) Operations Innovation to improve effectiveness and efficiency of core functional areas Innovation Types <ul><li>Enhancing communication & collaboration </li></ul><ul><li>Eliminating redundancy </li></ul><ul><li>Increasing organizational effectiveness </li></ul><ul><li>Increasing external partnering </li></ul><ul><li>Developing and launching innovative products or services, </li></ul><ul><li>Entering new markets, </li></ul><ul><li>Reaching out to new audiences </li></ul><ul><li>Launching new channels and delivery paths </li></ul><ul><li>Improving both the effectiveness and efficiency of functions and processes within an organization </li></ul>Climate for Creativity Working environment where inspiration thrive & creativity flourishes Idea Generation secure a continuous source of creativity and flow of new ideas Incubation Structures support the development and growth of ideas from innovation to delivery Metrics & Incentives measure outcomes from creative processes and recognize talent at the organization and individual levels Role of Collaboration & Partnering work externally and internally with organizations and specialists who have the strongest capabilities for innovation Integration of Business & Technology integrate technological capabilities with business insight to achieve innovation
    5. 5. CEO Perspective <ul><li>Myth: “Flat world” trends only affect a few firms </li></ul><ul><ul><li>CEOs plan imminent and radical change </li></ul></ul>
    6. 6. Two-thirds of CEOs see significant change in next 2 years Extent of Fundamental Change Needed Over the Next Two Years Significant change 65% Moderate change 22% Little or no change 13% Little to no success 15% Past Level of Success at Managing Fundamental Change No change experience 5% Some success 33% Successful 32% Very successful 15%
    7. 7. CEOs told us… “ The market imposes innovation.” “ Last year’s products are last year’s dollars.” “ We must innovate to justify our existence.” “ no growth without changing ourselves and the industry itself.” “ Competitors are emerging from everywhere” “ Globalization, commoditization, higher cost structures… all drive increasing specialization…” “ Business Model change is dramatic …40% sales now on the internet”
    8. 8. CEO Perspective Myth: Innovation is too critical and proprietary to involve outsiders Myth: “Flat world” trends only affect a few firms CEOs plan imminent and radical change <ul><ul><li>Collaborative innovation is indispensable </li></ul></ul>
    9. 9. Partners and customers edge out employees for ideas “ Today…more capability and innovation in the marketplace than we could try to create…” Sources of New Ideas and Innovation Academia Associations, trade groups, conference boards Competitors Consultants Customers Business partners 0 5 15 25 35 45% 45% 35 15 25 5 0 Internet, blogs, bulletin boards Other R&D (internal) Sales or service units Employees (general population) Think tanks External Internal
    10. 10. Out-performers source 30% more ideas from outside “ If you think you have all of the answers internally, you are wrong.” (5 year revenue growth CAGR) 10% 20% 30% 40% 50% 0% Underperformers Outperformers Quantity of New Ideas from External Sources <ul><li>3 industries — Media & Entertainment, Telecommunications, and Chemicals/Petroleum — source >50% from outside </li></ul><ul><li>9 industries source more than 40% </li></ul>
    11. 11. Collaboration gap looms large in the mind of the CEO 20% 40% 60% 80% Collaboration Gap 0% Collaboration of great importance Collaborate to a large extent Collaboration Importance versus Extent “ Without collaboration innovation would be impossible.” “ It would be counterproductive to do everything yourself.” “ Partner…extract maximum value and avoid reinventing the wheel.”
    12. 12. CEO Perspective Myth: Innovation means inventing new products and services Myth: “Flat world” trends only affect a few firms CEOs plan imminent and radical change Myth: Innovation is too critical and proprietary to involve outsiders Collaborative innovation is indispensable <ul><ul><li>Business model innovation matters </li></ul></ul>
    13. 13. Business model innovation gains prominence Products, Services, Markets Operations Business Model CEOs Innovation Focus 50% 10% 20% 40% “ We need to develop a business model based on strategic partnerships that creates value for our company…and for the industry…in this era of specialization” 30% Organization Structure Changes (66%) Building Strategic Partnerships (53%)
    14. 14. Outperformers double their focus on the business model “ The business model we choose will determine the success or failure of our strategy.” “ Products and services can be copied, the business model is the differentiator.” “ Our greatest focus is on business model innovation, which is where the greatest benefits lie.” Innovation Priorities (operating margin growth CAGR) Underperformers Outperformers % of respondents by innovation priority Products/services/markets Operation Business Model 0% 20% 40% 60% 80% 100%
    15. 15. What stands in the way? Obstacles to Innovation 0 10 20 30 40 40 30 20 10 0 Government and other legal restrictions Economic uncertainty Inadequate enabling technologies Insufficient access to information Unsupportive culture Limited funding Internal workforce issues Process immaturity Inflexible infrastructure External workforce issues External Internal
    16. 16. CEO Perspective predicts dramatic innovative change Myth: “Flat world” trends only affect a few firms CEOs plan imminent and radical change Myth: Innovation is too critical and proprietary to involve outsiders Collaborative innovation is indispensable Myth: Innovation means inventing new products and services Business model innovation matters
    17. 17. Who is responsible? Operations CEOs Innovation Leadership 0% 10% 20% 30% 40% 50% Product, Services, Markets Business Model Division Mgrs 14% Responsibility for Innovation Leadership No Owner 27% Functional Mgrs 24% CEOs 35%
    18. 18. Outperforming CEOs lead and cultivate innovation and change with a distinct set of innovation enablers Basic Requirements Key Performance Differentiators Combining business insight with technological know-how Integration of Business & Technology Focus on customer satisfaction and % sales from new products Measures Encourages innovation Risk-Management Approach For individual innovation contributions Rewards Collaborative, collegial, team oriented Culture
    19. 19. Creating a distinct culture of innovation and rewarding contributors makes the difference High Performing Firms’ Reward & Risk Practices Reward Encouraged Risk Source: The IBM Global CEO Study 40 60 80 100% 20 0 INNOVATIONS High Performing Firms’ “Collaborative vs. Individual” Profile Source: The IBM Global CEO Study Collaborative 0 20 40 60 80% 34% 66% Individual 82% 78%
    20. 20. CEOs agree that the integration of business and technology is particularly important, but practice lags importance Integration of Great Importance Integrate to a Large Extent Integration Gap 45% <ul><li>CEOs say: </li></ul><ul><ul><li>“… [organizations] must use technology to stay ahead of the curve…” </li></ul></ul><ul><ul><li>“ Technology must be integrated in business strategy stages…” </li></ul></ul><ul><ul><li>“ Technology is the only way to cope with the surge of new work… [and] opportunities.” </li></ul></ul><ul><ul><li>“ … must be integrated in early stages of business strategy…” </li></ul></ul>78%
    21. 21. . . . And, that gap could put a damper on growth <ul><li>High integrators on average achieved: </li></ul><ul><li>4.6% greater compound annual revenue growth than the median of the sample and </li></ul><ul><li>178 basis points of additional margin </li></ul>4.6% 1.8% Average value as benchmarked against peers 1.8% 50% <ul><li>CEOs say: </li></ul><ul><ul><li>Technology = “Excellent ROI” </li></ul></ul><ul><ul><li>Technology results in “increased productivity” </li></ul></ul><ul><ul><li>“ Technology… drives innovation and low costs.” </li></ul></ul><ul><ul><li>“ helps integration and collaboration with external parties.” </li></ul></ul><ul><ul><li>“ … must be integrated in early stages of business strategy…” </li></ul></ul>
    22. 22. Business and Technology enables Collaboration Technorati/ Law Technology News, Dec 1, 2005 ; Comscore , Aug 8, 2005 ; America Online/ Research Alert, Jan 6, 2006 ; IBM CEO Study 2006; Gartner/ BusinessWeek, Nov 28, 2005 ; BusinessWeek,Mar 21, 2005 ; Gartner & Berkman Center for Internet and Society/ Christian Science Monitor, Feb 16, 2006 between, with and among companies, experts, communities, customers <ul><li>By 2009, wikis are predicted to become mainstream collaboration tools in at least half of all companies. </li></ul>between individuals <ul><li>A new blog gets created every second. </li></ul><ul><li>50 million Americans -- 30% of U.S. Internet users -- visited blog sites in the first three months of 2005 alone. </li></ul><ul><li>70% of Internet users use instant messaging, and nearly 4 in 10 send as many or more IMs as e-mails. </li></ul>more kinds of things to collaborate on <ul><li>Procter & Gamble has set itself a goal of getting half its new product ideas from outside the company by 2010. </li></ul><ul><li>By 2010, 1 of 4 online music sales will be driven by recommendation technology, or “taste-sharing applications.” </li></ul>
    23. 23. From these findings, five recommendations emerge to seed the innovation agenda for the future <ul><li>Think broadly, act personally, manage the mix </li></ul><ul><li>Challenge your business model to become deeply different </li></ul><ul><li>Defy collaboration limits </li></ul><ul><li>Force an outside look . . . every time </li></ul><ul><li>Ignite innovation through business and technology integration </li></ul>
    24. 24. AGENDA <ul><li>CEO Study results </li></ul><ul><li>Opening up a world of innovation </li></ul><ul><li>Innovation in action </li></ul>
    25. 25. products services business processes business models management and culture policy and society CEOs’ View: Primary Responsibility for Innovation Leadership It’s time to innovate IBM Global CEO Study 2006 “ Constant reinvention is the central necessity at GE…We’re all just a moment away from commodity hell.” Jeffrey Immelt Chairman and CEO, GE “ Innovation is an essential component of corporate survival.” Anne Golden President and CEO The Conference Board of Canada “ We will fight our battles not on the low road to commoditization, but on the high road of innovation.” Howard Stringer Chairman and CEO, Sony Corporation
    26. 26. How are you capitalizing on the new tools of innovation — and combinations of those tools — to differentiate your products ? And how are your competitors doing so? Are your products smart ? Do they talk to each other? How do they provide you additional data about your customers’ purchase, use and disposal of your products? products HONDA has become the first car manufacturer to equip vehicles in the United States and Canada with an in-car navigation system that uses an advanced speech recognition interface and text-to-speech capabilities. The system allows drivers to simply say city and street names in their natural voice to receive turn-by-turn voice guidance to their destination. MAYO CLINIC physicians, physicists and engineers developed a new MRI coil that improved hand and wrist imaging. Each one was originally hand built, but engineers collaborated with Mayo to turn the MRI coil into a manufacturable product, while preserving its industry-leading imaging capability.
    27. 27. How can new business and technical capabilities deliver higher value to your customers? What can personalization, real-time analytics, self-service, and network-enabled services do to differentiate your company? Is your customer care as responsive and as cost-efficient as it could be? services BOULANGER , a French electronics retailer, needed to distribute new information daily about products and offers to its stores and consumers. It can now update Internet, store, and catalog systems simultaneously, making it easy to create cross-selling and up-selling opportunities. Energy company OXXIO provides their customers with a digital meter that can be read remotely. Consumers linked to the Oxxio network will not need to send in meter readings manually. This innovative &quot;smart meter&quot; will help consumers save energy by managing usage at home and decrease the risk of late or inaccurate invoices.
    28. 28. How can you conceive of, implement, integrate and manage your processes for competitive differentiation ? Is your supply chain the most productive and efficient in the industry? Does your CRM system produce the highest customer satisfaction? Is your product development achieving the best time-to-market? Are your finance and accounting costs the most effective? business processes JABIL CIRCUIT has a 55,000+ workforce in over 40 facilities around the world. Acquiring additional plants required the integration of disparate processes. Building a core set of processes for its plants yielded 60% reduction in integration time and increased flexibility in implementation sequencing. AAA CAROLINAS had to expand its business, lower costs and improve customer service to compete in a national market. The AAA affiliate embraced a service-oriented architecture solution that enables it to cross-reference customer data and create cross-promotional marketing campaigns. This helped result in a 60% customer acquisition and retention spike.
    29. 29. How can you use innovation tools and collaborative approaches to overturn the conventional wisdom ? How can you combine those tools and new ways of thinking to increase productivity , generate revenue, approach customers, and leverage your partners ’ scale and expertise? How do we make you the disruptive force in your industry? business models PARCELHOUSE , a logistics solution provider, was growing fast and its systems couldn’t support growth. They deployed e-business hosting for a flexible platform with pay-per-use cost structure resulting in a 200% user increase without raising costs -- 80% cheaper than in-house. DELTA FLUID PRODUCTS , which makes valves and fittings for gas lines and other critical environments, wanted to be the first in the industry to provide same-day delivery. The company was fitted with an enterprise-wide ERP system that has helped the client get a 20% reduction in inventory, a 30% increase in inventory turnover, and faster customer service.
    30. 30. What’s getting in the way of truly differentiating your company? Are there legacy behaviors , unnecessary financial models , and organizational structures that can be reengineered? How can we use partnerships, new models and practices, to help change the way companies works ? management & culture VÄGVERKET , Sweden's National Road Administration, expects to reduce traffic, increase accessibility, improve the environment, and raise funds for other initiatives through a new road-usage solution that charges a small fee for driving in central Stockholm. NORTEL and IBM established a joint development center to design and develop a next-generation suite of communication products and services for the global needs of our joint customers. This has resulted in new levels of R&D collaboration, reduced R&D costs, and the ability to quickly introduce a broader range of products.
    31. 31. What potential exists in partnerships with other companies, governments, and nonprofits to create breakthrough innovation? How are schools preparing the next generation of your employees? How are regulations and policies enabling open collaboration and shared intellectual capital? How can we innovate together ? policy & society IBM has joined AUTOSAR , a consortium of automotive companies and technology firms devoted to standardizing a platform for in-vehicle, electrical/electronics and software systems. As a Premium Member, IBM is working with AUTOSAR to create and to implement open standards in vehicles. The NATIONAL DIGITAL MEDICAL ARCHIVE stores digital images in a single, accessible database, which doctors and researchers use to find patterns in the images from mammographies. Those patterns can lead to accelerated treatment and prevention strategies in the fight against breast cancer. Individual patients can contribute to the project, access and manage their own records, and share them with the doctors they choose.
    32. 32. AGENDA <ul><li>CEO Study results </li></ul><ul><li>Opening up a world of innovation </li></ul><ul><li>Innovation in action </li></ul>
    33. 33. Challenges facing the Public Sector <ul><li>Aging Workforce </li></ul><ul><li>Economic Development </li></ul><ul><li>Emergency Preparedness </li></ul><ul><li>National Security </li></ul><ul><li>Privacy </li></ul><ul><li>Math and Science Skills </li></ul><ul><li>Medical Fraud </li></ul><ul><li>Inefficiency </li></ul><ul><li>Governance </li></ul><ul><li>Lack of standards </li></ul><ul><li>Tight budgets/limited resources </li></ul><ul><li>Rising Costs </li></ul><ul><li>Patient Safety </li></ul><ul><li>Electronic Health Records </li></ul><ul><li>Epidemics/Pandemics </li></ul><ul><li>War for Talent </li></ul><ul><li>Aging Infrastructure </li></ul><ul><li>Technology ROI </li></ul><ul><li>Competition </li></ul><ul><li>Physical and IT security </li></ul><ul><li>Growth </li></ul>Healthcare Education Government
    34. 34. What does Innovation mean in Education? <ul><li>A community of connected constituents </li></ul><ul><li>Improved teaching quality and access for students </li></ul><ul><li>Individualized and mobile student learning </li></ul><ul><li>More business-oriented processes </li></ul><ul><li>Wireless campus networks </li></ul><ul><li>Collaboration among students, administrators, industry and academia </li></ul><ul><li>Real time, anywhere communications </li></ul><ul><li>Multimedia learning </li></ul><ul><li>Efficient/effective schools: </li></ul><ul><ul><li>Keeping costs to a minimum </li></ul></ul><ul><ul><li>Automated processes </li></ul></ul><ul><ul><li>Economies of scale </li></ul></ul>Innovation applied to Education
    35. 35. Shaping a better world through Innovation Challenge: With the US losing ground in education, Broward County School District, the sixth largest school district in the nation, is taking action. The district, home to more than 270,000 students, wanted to leverage information technology to improve student achievement and improve teacher effectiveness. Solution : As part of a four-year, $68 million technology program, Broward County schools now have state-of-the art laptop computers – 40,000 of them – installed in the system’s 262 school buildings. The new computers are being used to provide students and teachers with the tools they need to enhance learning. The technology pilot includes such innovations as wireless laptops, digital textbooks, and other one-to-one digital learning devices. Benefits : Initial results include increased student attendance, greater parent involvement, and a general enthusiasm for learning among students. “ Instead of having to flip through the pages of a textbook all day long, you can actually just look up information fast and easy, and it actually saves a lot of time.” - A student at Broward’s North East High School
    36. 36. What does Innovation mean in Government? <ul><li>Create jobs and economic growth </li></ul><ul><li>Meet significant societal needs </li></ul><ul><li>Evolve sustainable communities </li></ul><ul><li>Build national and global markets </li></ul><ul><li>Establish global advantage </li></ul><ul><li>Increase standard of living </li></ul>Government in an Innovative society <ul><li>Large portion of GDP where Innovation can improve performance and results </li></ul><ul><li>Government action shows leadership </li></ul><ul><li>Efficient/effective government: </li></ul><ul><ul><li>Supports global competitiveness </li></ul></ul><ul><ul><li>Delivers more societal value </li></ul></ul><ul><ul><li>Frees resources for investment </li></ul></ul>Innovation applied to government operations
    37. 37. Shaping a better world through Innovation Challenge : The New York City Police Department has billions of records that contain information that detectives and investigators need to “mine” to identify and stop emerging crime quickly. These include over 5 million New York State criminal records, over 20 million New York City criminal complaints, 911/311 calls and summonses, over 30 million national crime records and billions of public records. The problem NYPD faced: It was taking hours, days and sometimes weeks to get limited access to this information – precious time lost in identifying and apprehending criminals. Solution : NYPD created the Real Time Crime Center, which uses powerful data mining technology to swiftly provide investigators in the field with information about crime scenes, potential suspects, satellite images and sophisticated mapping of the City precinct by precinct, and other crime-fighting resources. At the heart of the center is a massive data warehouse that makes information available to detectives within minutes. Benefits : “It will help [NYPD] stop spikes in crime before they become trends, and make sure dangerous criminals are caught before they can hurt others.” Mayor Michael R. Bloomberg “ The Center will put valuable information into the hands of detectives even before they leave the squad room, so they can hit the ground running in identifying and apprehending criminals.” - NYPD Commissioner Raymond W. Kelly
    38. 38. What does Innovation mean in Healthcare? Innovation Applied to Healthcare <ul><li>A cohesive interconnected network of hospitals and clinicians and payers </li></ul><ul><li>Electronic health records </li></ul><ul><li>Pay based on performance </li></ul><ul><li>Modern, eHealth infrastructures </li></ul><ul><li>Adoption of open standards </li></ul><ul><li>Improved patient outcomes </li></ul><ul><li>Reduced costs of care </li></ul><ul><li>Privacy and security of data </li></ul>
    39. 39. Shaping a better world through Innovation Challenge : In the US, an estimated 100,000 deaths occur each year due to preventable medical errors, such as drug interactions and inaccurate drug dosages. Miami Children’s Hospital wanted to address this issue using information technology, including speech recognition. Solution : i-Rounds, a web-based solution from Teges, an IBM Business Partner, provides real-time information that enables clinicians to access patient data at different facilities from one database. The hospital’s medical staffs can now view and input data in real time and in some instances in a hands-free environment, enabling better patient care and patient outcomes by having critical health information available whenever and wherever treatment decisions are being made. “ It was a way for me to access data in a hands-free environment, which is the Operating Room. If I had a heart in my hands, I can’t use a keyboard or a mouse. But I still have that need for data.&quot; - Dr. Raymond Burke, cardiovascular surgeon, Miami Children’s Hospital
    40. 40. What do teams need to facilitate Innovation? Insight Invention Creativity Disruptive Game changing Positive impact
    41. 41. Innovation means using both sides of our brains… Left Brain Right Brain
    42. 42. Ten Types of Innovation <ul><li>Business Model </li></ul><ul><li>Networks and Alliances </li></ul><ul><li>Enabling Processes </li></ul><ul><li>Core Processes </li></ul><ul><li>Product Performance </li></ul><ul><li>Product System </li></ul><ul><li>Service </li></ul><ul><li>Channel </li></ul><ul><li>Brand </li></ul><ul><li>Customer Experience </li></ul>
    43. 43. Questions?
    44. 44. Break-out Groups … and six vital innovation enablers (3) Products, Services and Markets Innovation applied to customer-focused, go-to-market areas (1) Business and Enterprise Models Innovation applied to restructure and extend the enterprise (2) Operations Innovation to improve effectiveness and efficiency of core functional areas Innovation Types <ul><li>Enhancing communication & collaboration </li></ul><ul><li>Eliminating redundancy </li></ul><ul><li>Increasing organizational effectiveness </li></ul><ul><li>Increasing external partnering </li></ul><ul><li>Developing and launching innovative products or services, </li></ul><ul><li>Entering new markets, </li></ul><ul><li>Reaching out to new audiences </li></ul><ul><li>Launching new channels and delivery paths </li></ul><ul><li>Improving both the effectiveness and efficiency of functions and processes within an organization </li></ul>Climate for Creativity Working environment where inspiration thrive & creativity flourishes Idea Generation secure a continuous source of creativity and flow of new ideas Incubation Structures support the development and growth of ideas from innovation to delivery Metrics & Incentives measure outcomes from creative processes and recognize talent at the organization and individual levels Role of Collaboration & Partnering work externally and internally with organizations and specialists who have the strongest capabilities for innovation Integration of Business & Technology integrate technological capabilities with business insight to achieve innovation
    45. 45. Break-out #1: Innovation Enablers Discussion Items <ul><li>How important is this enabler to innovation in your organization? Why? </li></ul><ul><li>What best-practices/learnings can you share from when the enabler was optimzed and leveraged? </li></ul><ul><li>What challenges have you faced in bringing the concept to your organization? </li></ul><ul><li>Do women leaders use this enabler differently? More/less effectively? </li></ul>
    46. 46. Break-out #2: Challenge Scenarios Discussion Items <ul><li>Apply learnigns from the Innovation Enablers discussion to solve 1 of 3 challenges. Which tactics, tools, approaches work best in these situations? </li></ul><ul><ul><li>Managing change when there is a new &quot;strategic investment &quot; (from company, from university, due to gov't funding available, etc)--how to mobilize people, dollars, support </li></ul></ul><ul><ul><li>Managing change when there is a change in leadership with different direction, approach, than what you had previously been working on </li></ul></ul><ul><ul><li>Managing change when you are brought into a project to &quot;fix things that are broken&quot; </li></ul></ul>