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Accelerating and Sustaining Business Model Innovation

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In depth guide to accelerating and sustaining business model innovation in the enterprise. Includes tools, models, frameworks, and references to thought-leaders, best selling books and research on the subject.

Published in: Leadership & Management

Accelerating and Sustaining Business Model Innovation

  1. 1. ACCELERATING & SUSTAINING BUSINESS MODEL INNOVATION Executive Briefing Inês Almeida | April 2016
  2. 2. A BRIEF INTERRUPTION
  3. 3. TONS OF DATA, MODELS, TOOLS, QUOTES FROM TOP ORGANISATIONS, EXPERTS & BOOKS CURATED, CONNECTED & ENHANCED BASED ON MY PERSPECTIVE AND EXPERIENCE
  4. 4. INNOVATION Revolution Disruption Thinking Outside the Box Challenging Status Quo
  5. 5. OPEN INNOVATION Designing Systems for Trust & Collaboration
  6. 6. A small act of rebellion
  7. 7. ü DO Share wide and grow our ecosystem of change makers and innovatorsinside and outside your organization or tribe ü DO Co-create ü DO Evolve ü DO Challenge ü DO Debate ü DO Attribute ü DO Innovateyour business model Why ? because =
  8. 8. MAKE YOUR MARK By adding value
  9. 9. EVOLVE, CONNECT AND CURATE IDEAS, APPLY TO A NEW CONTEXT MAKE YOUR MARK A GOOD MARK
  10. 10. BACK TO REGULAR PROGRAMMING
  11. 11. AGENDA 01 Introduction 02 Types of Innovation 03 Strategic Alignment 04 Governance 05 Common Language & Context 06 Structure & Design 07 Culture 08 Environment 09 Motivation & Metrics 10 Closing Remarks
  12. 12. 01INTRODUCTION
  13. 13. BUSINESS MODEL INNOVATION BUSINESS MODEL INNOVATION • Digital products & services • Technology innovation • Digital transformation • Enterprise transformation • Agile software development • Rapid product development • Lean startup IS NOT (but may include) IS An approach that enables an organization to: • achieve sustainable growth, • become a market leader in one or more categories, • torespond effectively and promptly tochanging conditions.
  14. 14. AVERAGE COMPANY LIFESPAN ON S&P 500 INDEX (IN YEARS) INTRODUCTION 60 13 1958 2029 DATA: INNOSIGHT/Richard N. Foster / Standard & Poor’s SOURCE: Wired
  15. 15. INTRODUCTION INNOVATION IS ONE OF THE TOP3STRATEGIC PRIORITIES OF MOSTEXECS Top 3 Priorities Top Priority Source: Themost innovativecompanies 2015 by Ringel, Taylor, andZablit - Boston ConsultingGroup(2015) 1500 senior executives from a wide variety of industries and regions Where does innovation/product development rankamongst your companies’ top strategic priority?
  16. 16. 16 BUSINESS-AS-USUAL WINS FAILURE TO SCALE FOCUS ON VANITY METRICS CREATIVITY OVER EXECUTION WHY INNOVATION INITIATIVES FAIL INTRODUCTION DISCONNECTED & ISOLATED EFFORTS HISTORICAL BIAS FRAGMENTATION INTERNAL FOCUS
  17. 17. 17 FRAGMENTATION Too many bottom-up experiments drive fragmented focus by senior management and key talent. Customer experience is fragmented and brand vision diluted. FAILURE TO SCALE Leadership fails to transition innovation through the different horizons of growth. FOCUS ON VANITY METRICS Culture and values of the organisation are not conducive to innovation. Lack of focus on data- driven metrics results in the prioritisation of wrong initiatives. CREATIVITY OVER EXECUTION Underestimating the selection, validation, execution and scaling of innovative ideas. HISTORICAL BIAS Models that resulted in growth in the past are prioritised above other game-changing models. INTERNAL FOCUS Failure to place the customer’s needs at the centre of innovation engine. DISCONNECTED Bottom-up innovation efforts lack alignment with business strategy. Teams may be guided by hype or unable to influence decision makers to get the resources they need. BUSINESS-AS-USUAL WINS Execs fail to grasp how much business-as-usual hinders innovation. Short term pressure results in sporadic, tactical innovation efforts lacking sustainability. WHY INNOVATIONINITATIVESFAIL
  18. 18. INTRODUCTION Sizeoforganisation Age of organisation Late Prime Adolescence Courtship Death STAGES OF CORPORATE LYFECYCLE Bureaucracy Recrimination Aristocracy Prime Go-Go Infant Source: IchakAdizes FOCUS OF THIS BRIEFING GROWING AGING
  19. 19. STAGES OF CORPORATELYFE CYCLE Sizeoforganisation Age of organisation Late Prime Adolescence Courtship Death STAGES OF CORPORATE LYFECYCLE Bureaucracy Recrimination Aristocracy Prime Go-Go Infant PRIME ü Growingand profitable ü New ‘infants’ arespun off ü Success maybreedcomplacency ü Measurements focus on the presentvalueof past decisions ü Inadequate bench strength LATE PRIME ü Financeintroduces controlsfor shorttermfinancial results ü The organization is becoming complacent ü Although it is not yet obvious the ‘aging’ process has begun ARISTOCRACY ü Not making waves becomes a way of life ü Outwardsigns of respectability take on enormous importance ü The organization acquires companies rather than incubatingstartup businesses GROWING AGING Source: IchakAdizes
  20. 20. Sizeoforganisation Age of organisation Late Prime Adolescence Courtship Death STAGES OF CORPORATE LYFECYCLE Bureaucracy Recrimination Aristocracy Prime Go-Go Infant RECRIMINATION ü Witch-hunts becomeprevalent ü Back-stabbing becomes commonplace ü The customer is effectivelya nuisance BUREAUCRACY ü The Bureaucracyis survival oriented ü Thereare policies for everything ü The written wordis worshipped ü If the organization is important to the economyand the governmenthas socialistic tendencies the organization will be put on life support (taxpayer dollars) DEATH ü The organization is bankrupt STAGES OF CORPORATELYFE CYCLE GROWING AGING Source: IchakAdizes
  21. 21. INTRODUCTION Growth Time Optimization Market Development Concept Creation Concept Development S-CURVE OF PRODUCT, SERVICE OR BUSINESS
  22. 22. INNOVATE OR DIE INTRODUCTION Growth Time Reinvention HarvestingMarket Development Concept Creation Concept Development Optimization
  23. 23. INTRODUCTION Growth Time SUSTAINABLE BUSINESS
  24. 24. Products and Services will be copied, overshadowed, or commoditized. Your innovation engine is your true competitive advantage, and the fuel for business sustainability.
  25. 25. The innovation engine should leverage the entire business model. COST STRUCTURE REVENUE STREAMS VALUE PROPOSITIONS CUSTOMER RELATIONSHIPS CUSTOMER SEGMENTS KEY PARTNERS CHANNELS KEY ACTIVITIES KEY RESOURCES 💡 💡 💡 💡 💡 💡 💡💡
  26. 26. INTRODUCTION Excessperformanceaboveindustrypeers Time BUSINESSMODEL INNOVATORS OUTPERFORM TRADITIONAL INNOVATORSOVER TIME Process &Product Innovators Business Model Innovators 3 year period 5 year period 10 year period Source: Business Model Innovation byLindgardt, Reeves, Stalk and Deimler - Boston ConsultingGroup(2009)
  27. 27. Logic will get you from A to B. Imagination will take you everywhere. “ Albert Einstein ”
  28. 28. 28 Source: Design Thinking,IDEO COSTS CREATE CHOICES MAKE CHOICES DIVERGENT THINKING CONVERGENT THINKING EXPLORE CHOICES EMERGENT THINKING A B ...BUT IT TAKES TREMENDOUS RIGOUR TO GO FROM A TO B INNOVATION = IDEAS + EXECUTION INTRODUCTION
  29. 29. CONTINUOUS INNOVATION DEMANDS BOTH RIGOUR AND ART THIS IS YOUR MAP TO MASTERY
  30. 30. 30 EXECUTIVEINNOVATION WORK MAT Source: Agility Innovation and Ovo Innovation STRATEGIC ALIGNMENT MOTIVATION & METRICS COMMON LANGUAGE & CONTEXT GOVERNANCE STRUCTURE& DESIGN ENVIRONMENT CULTURE INTRODUCTION
  31. 31. 31 Source: Agility Innovation and Ovo Innovation STRATEGIC ALIGNMENT MOTIVATION & METRICS COMMON LANGUAGE & CONTEXT GOVERNANCE STRUCTURE& DESIGN ENVIROMENT CULTURE Strategic Alignment Aligning innovation initiatives with corporate strategy. Culture Defining and sustaining an innovation culture. Common Language & Context Creating common language. Providing rationale and context. Structure & Design Defining the structure, processes and functional design. Environment Identifying and nurturing internal and external innovation environments. Governance Establishing innovation governance. Motivation & Metrics Developing the right measures to sustain innovation. EXECUTIVEINNOVATIONWORK MAT
  32. 32. 02TYPES OF INNOVATION Lenses
  33. 33. 33 Leaders looking to drive innovation in the enterprise must look at current and future business models from different points of view in search of game changing solutions
  34. 34. 34 BUSINESS MODEL CANVAS IS AN IDEATION AND ALIGNMENT TOOL THAT HELPS YOU DOCUMENT EXISTING BUSINESS MODELSAND DEVELOP NEW ONES Image Source: Stattys TYPES OF INNOVATION
  35. 35. 35 BUSINESS MODEL CANVAS COST STRUCTURE REVENUE STREAMS VALUE PROPOSITIONS CUSTOMER RELATIONSHIPS CUSTOMER SEGMENTS KEY PARTNERS CHANNELS KEY ACTIVITIES KEY RESOURCES Source: Business ModelGeneration by Osterwalder and Pigneur TYPES OF INNOVATION
  36. 36. 36 BUSINESS MODEL CANVAS COST STRUCTURE REVENUE STREAMS VALUE PROPOSITIONS CUSTOMER RELATIONSHIPS CUSTOMER SEGMENTS KEY PARTNERS CHANNELS KEY ACTIVITIES KEY RESOURCES Source: Business ModelGeneration by Osterwalder and Pigneur Value Propositions What value do we deliver to customers? Which one of our customer’s problems are we helping to solve? What bundles of products and services are we offering each Customer Segment? Which customer’s need are we satisfying? Characteristics Newness, Performance, Customization, “Getting the Job Done”, Design, Brand/Status, Price, Cost Reduction, Risk Reduction, Accessibility, Convenience/Usability. BUSINESS MODEL CANVAS
  37. 37. 37 BUSINESS MODEL CANVAS COST STRUCTURE REVENUE STREAMS VALUE PROPOSITIONS CUSTOMER RELATIONSHIPS CUSTOMER SEGMENTS KEY PARTNERS CHANNELS KEY ACTIVITIES KEY RESOURCES Source: Business ModelGeneration by Osterwalder and Pigneur Customer Segments For whom are we creating value? Who are our most important customers? Mass Market, Niche Market, Segmented, Diversified, Multi- sided Platform. Examples BUSINESS MODEL CANVAS
  38. 38. 38 BUSINESS MODEL CANVAS COST STRUCTURE REVENUE STREAMS VALUE PROPOSITIONS CUSTOMER RELATIONSHIPS CUSTOMER SEGMENTS KEY PARTNERS CHANNELS KEY ACTIVITIES KEY RESOURCES Source: Business ModelGeneration by Osterwalder and Pigneur Customer Relationships What type of relationships does each of our Customer Segments expect us to establish and maintain with them? Which ones have we established? How are they integrated with the rest of the business model? How costly are they? Examples Personal assistance, Dedicated Personal Assistance, Self- Service, Automated Services, Communities, Co-creation. BUSINESS MODEL CANVAS
  39. 39. 39 BUSINESS MODEL CANVAS COST STRUCTURE REVENUE STREAMS VALUE PROPOSITIONS CUSTOMER RELATIONSHIPS CUSTOMER SEGMENTS KEY PARTNERS CHANNELS KEY ACTIVITIES KEY RESOURCES Source: Business ModelGeneration by Osterwalder and Pigneur Channels Through which Channels do our Customer Segments want to be reached? How are we reaching them now? How are our Channels integrated? Which ones work best? Which ones are most cost-efficient? How are we integrating them with our customer routines? Channel phases Awareness, Evaluation, Purchase, Delivery, After sales. BUSINESS MODEL CANVAS
  40. 40. 40 BUSINESS MODEL CANVAS COST STRUCTURE REVENUE STREAMS VALUE PROPOSITIONS CUSTOMER RELATIONSHIPS CUSTOMER SEGMENTS KEY PARTNERS CHANNELS KEY ACTIVITIES KEY RESOURCES Source: Business ModelGeneration by Osterwalder and Pigneur Revenue Streams For what value are our customers willing to pay? For what do they currently pay? How are they currently paying? How would they prefer to pay? How much does each Revenue Stream contribute to the overall revenues? Types Asset sale, usage fee, Subscription fees, Lending/Renting/Leasing, Licensing, Brokerage fees, Advertising. Fixed Pricing List price, Product feature dependent, Customer segment dependent, Volume dependent. Dynamic Pricing Negotiation (bargaining), Yield Management, Real-time-Market. BUSINESS MODEL CANVAS
  41. 41. 41 BUSINESS MODEL CANVAS COST STRUCTURE REVENUE STREAMS VALUE PROPOSITIONS CUSTOMER RELATIONSHIPS CUSTOMER SEGMENTS KEY PARTNERS CHANNELS KEY ACTIVITIES KEY RESOURCES Source: Business ModelGeneration by Osterwalder and Pigneur Key Partnerships Who are our Key Partners? Who are our key suppliers? Which Key Resources are we acquiring from partners? Which Key Activities do partners perform? Motivations for partnerships Optimization and economy Reduction of risk and uncertainty Acquisition of particular resources and activities BUSINESS MODEL CANVAS
  42. 42. 42 BUSINESS MODEL CANVAS COST STRUCTURE REVENUE STREAMS VALUE PROPOSITIONS CUSTOMER RELATIONSHIPS CUSTOMER SEGMENTS KEY PARTNERS CHANNELS KEY ACTIVITIES KEY RESOURCES Source: Business ModelGeneration by Osterwalder and Pigneur Key Activities What Key Activities do our Value Propositions require? What Key Activities do our Distribution Channels require? What Key Activities do our Customer Relationships require? What Key Activities do our Revenue Streams require? Categories Production Problem Solving Platform/Network Marketing/Sales BUSINESS MODEL CANVAS
  43. 43. 43 BUSINESS MODEL CANVAS COST STRUCTURE REVENUE STREAMS VALUE PROPOSITIONS CUSTOMER RELATIONSHIPS CUSTOMER SEGMENTS KEY PARTNERS CHANNELS KEY ACTIVITIES KEY RESOURCES Source: Business ModelGeneration by Osterwalder and Pigneur Key Resources What Key Resources do our Value Propositions require? What Key Resources do our Distribution Channels require? What Key Resources do our Customer Relationships require? What Key Resources do our Revenue Streams require? Types Physical Intellectual (brand patents, copyrights, data) Human Financial BUSINESS MODEL CANVAS
  44. 44. 44 BUSINESS MODEL CANVAS COST STRUCTURE REVENUE STREAMS VALUE PROPOSITIONS CUSTOMER RELATIONSHIPS CUSTOMER SEGMENTS KEY PARTNERS CHANNELS KEY ACTIVITIES KEY RESOURCES Source: Business ModelGeneration by Osterwalder and Pigneur Cost Structure What are the most important costs inherent in our business model? Which Key Resources are the most expensive? Which Key activities are the most expensive? Is your business more Cost Driven (leanest cost structure, low price value proposition, maximum automation, extensive outsourcing) Value Driven (focused on value creation, premium value proposition) Sample characteristics Fixed Costs (salaries, rents, utilities), variable costs, Economies of scale, Economies of scope. BUSINESS MODEL CANVAS
  45. 45. 45 Source: Business ModelGeneration by Osterwalder and Pigneur . . . . . . . Resource-driven Offer-driven Customer-driven Finance-driven Multiple epicenter-driven ASKING “WHAT IF...?” AND DRIVING INNOVATION FROM ONE OR SEVERAL EPICENTERS TYPES OF INNOVATION
  46. 46. 46 Source: Business ModelGeneration by Alexander Osterwalder COSTS VALUE REDUCE ELIMINATE LEAN LOGIC EFFICIENCY EFFECTIVENESS SCARCITY RAISE CREATE EXPERIENCE EMOTION TYPES OF INNOVATION VALUE INNOVATION
  47. 47. 47 OPERATING MODEL INNOVATION COST STRUCTURE KEY PARTNERS KEY ACTIVITIES KEY RESOURCES Work smarter Agile software development Continuous delivery Lean manufacturing: Toyota Automation: Amazon, Tesla Digitization of manual processes Collaborate “Platform” as a business model: AirBNB Value chain innovation: Instacart Organise to win Enterprise Agility as operating model (organisational design, talent management, cost structure, budgeting, value chain) TYPES OF INNOVATION
  48. 48. 48 VALUE INNOVATION REVENUE STREAMS VALUE PROPOSITIONS CUSTOMER RELATIONSHIPS CUSTOMER SEGMENTS CHANNELS Unique Offerings Feature set Complimentary products & services Distinct Experiences New channels Service & support: Rackspace Fanatical support Tribes & Meaningful Stories Trust, Reputation, Quality, Good, Specialness TYPES OF INNOVATION
  49. 49. 49 VALUE INNOVATION Source: Change by Design,Tim Brown EXISTING OFFERINGS EXISTING USERS NEW USERS NEW OFFERINGS EXTEND (evolutionary) CREATE (revolutionary) MANAGE (incremental) ADAPT (evolutionary) TYPES OF INNOVATION
  50. 50. 50 Source: Clayton Christensen EXISTING OFFERINGS EXISTING USERS NEW USERS NEW OFFERINGS EXTEND (evolutionary) CREATE (revolutionary) MANAGE (incremental) ADAPT (evolutionary) TYPES OF INNOVATION INCUMBANTS NEARLY ALWAYS WIN SUSTAINING INNOVAITON BACK IN THE DAY CLAYTON CHRISTENSEN TOLD US WHY INCUMBANTS GET DISRUPTED...
  51. 51. 51 Source: Clayton Christensen EXISTING OFFERINGS EXISTING USERS NEW USERS NEW OFFERINGS EXTEND (evolutionary) CREATE (revolutionary) MANAGE (incremental) ADAPT (evolutionary) DISRUPTIVEINNOVATION INCUMBANTS NEARLY ALWAYS WIN INCUMBANTS PURSUE HIGHER MARGINS BY PRODUCING MORE COMPLEX OFFERINGS THIS MAY LEAD TO PRODUCTS & SERVICES THAT ARE TOO SOFISTICATED, COMPLEX AND EXPENSIVE THIS ENABLES NEW ENTRANTS TO DISRUPT SUSTAINING INNOVAITON BACK IN THE DAY CLAYTON CHRISTENSEN TOLD US WHY INCUMBANTS GET DISRUPTED...
  52. 52. 52 EXISTING OFFERINGS EXISTING USERS NEW USERS NEW OFFERINGS EXTEND (evolutionary) CREATE (revolutionary) MANAGE (incremental) ADAPT (evolutionary) TYPES OF INNOVATION ENTRANTS NEARLY ALWAYS WIN Source: Clayton Christensen DISRUPTIVE INNOVAITON BACK IN THE DAY CLAYTON CHRISTENSEN TOLD US WHY INCUMBANTS GET DISRUPTED...
  53. 53. 53 EXISTING OFFERINGS EXISTING USERS NEW USERS NEW OFFERINGS EXTEND (evolutionary) CREATE (revolutionary) MANAGE (incremental) ADAPT (evolutionary) DISRUPTIVEINNOVATION ENTRANTS NEARLY ALWAYS WIN Source: Clayton Christensen DISRUPTIVE INNOVAITON ENTRANTS IN INITIAL STAGES PURSUE LOWER MARGINS, NICHE MARKETS AND SIMPLER PRODUCTS THAT EVENTUALLY BECOME POPULAR WITH THE MAINSTREAM MARKET BACK IN THE DAY CLAYTON CHRISTENSEN TOLD US WHY INCUMBANTS GET DISRUPTED...
  54. 54. 54 TYPES OF INNOVATION Source: Clayton Christensen UNLESS THE INCUBANT IS... aka PLATFORM AS A BUSINESS MODEL brought to you by BUSINESS MODEL INNOVATION
  55. 55. From products or services to platforms ü What relationships and partnerships enable business success? ü Which bigger-than business goals do you share with your ecosystems? ü How can you increase trust with your ecosystem?
  56. 56. 56 CROSS-INDUSTRY INNOVATION Source: CrossIndustryInnovation.com TYPES OF INNOVATION
  57. 57. 57 Source: CrossIndustryInnovation.com Cross-industry innovation is a clever way to jump-start your innovation efforts by drawing analogies and transferring approaches between contexts, beyond the borders of your own industry, sector, area or domain. These analogies can be drawn at various levels, from products to services, to processes, to strategies, to business models, to culture and leadership. CROSS-INDUSTRYINNOVATION
  58. 58. 58 Source: CrossIndustryInnovation.com CROSS-INDUSTRYINNOVATION
  59. 59. INNOVATION POWERED BY TECHNOLOGY-ENABLED INNOVATION: ü SCAN THE HORIZON FOR CURRENT TRENDS ü LOOKING AT MULTIPLE SOURCES ü DEFINE YOUR BOUNDARIES AND YOUR DECISION FRAME ü VISUALISE & ASSESS RESULTS
  60. 60. 60 MASTERING THE HYPE CYCLE RISK VS REWARD Source: Gartner Hype Cyle TIME EXPECTATIONS TYPES OF INNOVATION Innovation Trigger Peak of Inflated Expectations Trough of Disillusionment Slope of Enlightenment Plateau of Productivity
  61. 61. 61 Source: Jim Highsmith – Adaptive Leadership (based on Thoughtworks Technology Radar) OPPORTUNITY RADAR TYPES OF INNOVATION HOLD ASSESS TRIAL ADOPT Category A Category B Category C Category D
  62. 62. 62 TECHNOLOGY INNOVATION ADOPTION CURVE Source: Geoffrey Moore TIME Relative % of customers TYPES OF INNOVATION Innovators & technology enthusiasts Earlyadopters & visionaries Earlymajority pragmatists Laggards & sceptics Late majority conservatives
  63. 63. 63 IN THE OLD DAYS GEOFREY MORE TOLD US THERE WAS A CHASM... Source: Crossing the Chasm by Geoffrey Moore 1991 TIME Relative % of customers TYPES OF INNOVATION Innovators & technology enthusiasts Earlyadopters & visionaries Earlymajority pragmatists Laggards & sceptics Late majority conservatives EARLY MARKET REVOLUTION EVOLUTION STABILITY PREDICTABILITY CHASM
  64. 64. 64 THE CHASM HAS DISAPEARED IN THE CONSUMER FOCUSED DIGITAL INNOVATION Source: Strata 2014:Geoffrey Moore, Crossingthe Chasm What's New, What's Not TIME Relative % of customers TYPES OF INNOVATION Innovators & technology enthusiasts Earlyadopters & visionaries Earlymajority pragmatists Laggards & sceptics Late majority conservatives TORNADO OR BUST
  65. 65. 65 TIME Relative % of customers TYPES OF INNOVATION Innovators & technology enthusiasts Earlyadopters & visionaries Earlymajority pragmatists CREATING TECHNOLOGY PLATFORMS THAT CAN BE LEVERAGED REPEATEDLY IS HARD THE CHASM IS EXPANDING DUE TO THE EXPONENTIAL RATE OF INNOVATION SO IS THE NEED AND THE PAIN... Source: Strata 2014:Geoffrey Moore, Crossingthe Chasm What's New, What's Not IOT PLATFORM BLOCKCHAIN MACHINE LEARNING BIG DATA WEARABLES AGILE DEVOPS DEVOPS AFFECTIVE COMPUTING QUANTUM COMPUTING BRAIN COMPUTER INTERFACE AR VR CLOUD COMPUTING HEAVY TO DEPLOY & REQUIRE END-TO-END SOLUTION FOCUS THE CHASM GROWSIN ENTREPRISE IT TRANSFORMATION
  66. 66. 66 TIME Relative % of customers TYPES OF INNOVATION Innovators & technology enthusiasts Earlyadopters & visionaries Earlymajority pragmatists Source: Strata 2014:Geoffrey Moore, Crossingthe Chasm What's New, What's Not IOT PLATFORM BLOCKCHAIN MACHINE LEARNING BIG DATA WEARABLES AGILE DEVOPS DEVOPS AFFECTIVE COMPUTING QUANTUM COMPUTING BRAIN COMPUTER INTERFACE AR VR CLOUD COMPUTING To cross the chasm you have to: ü Target a niche area with an intractable problemwhere pragmatists are desperate. ü Commit to provide complete solution, this typically includes products and services from partners and allies. ü Leader must take responsibility for ensuring customer success. ü To cross you must secure and deliver breakthroughhigh-profile projects. ENTERPRISE IT TRANSFORMATION
  67. 67. 67 TYPES OF INNOVATION TWO WORLDS COLLIDING CONSUMER FOCUSED DIGITAL INNOVATION ENTERPRISE IT
  68. 68. 68 TYPES OF INNOVATION “There’s an app for that” New features any time Rapid product development MVP Agile Full-stack engineers Generalists Pods Specialists Procurement Legal Annual Budgets Legacy Systems Silos Continuous Delivery Devops CONSUMER FOCUSED DIGITAL INNOVATION ENTERPRISE IT Learning oriented Iterative Experimental Cross functional Continuous Funding gates Maintenance Complexity FragmentationMicroservices Outsourcing Crowdsourcing Crowdfunding Waterfall Fix Price Vendor Management CUSTOMERS, ENTERPRISE EMPLOYEES AND EXECUTIVES EXPECT AGILITY Evolutionary architecture
  69. 69. 69 TYPES OF INNOVATION “There’s an app for that” New features any time Rapid product development MVP Agile Full-stack engineers Generalists Pods Specialists Procurement Legal Annual Budgets Legacy Systems Silos Devops CONSUMER FOCUSED DIGITAL INNOVATION ENTERPRISE IT Learning oriented Iterative Experimental Cross functional Continuous Funding gates Maintenance Complexity FragmentationMicroservices Outsourcing Crowdsourcing Crowdfunding Waterfall Fix Price Vendor Management CUSTOMERS, ENTERPRISE EMPLOYEES AND EXECUTIVES EXPECT AGILITY Continuous Delivery Evolutionary architecture FROMTHEGROUNDUP
  70. 70. 70 TYPES OF INNOVATION CONSUMER FOCUSED DIGITAL INNOVATION ENTERPRISE IT CUSTOMERS, ENTERPRISE EMPLOYEES AND EXECUTIVES EXPECT AGILITY DIGITAL TRANSFORMATION OR ENTERPRISE IT TRANSFORMATION FROMTHETOPDOWN
  71. 71. 71 TYPES OF INNOVATION CONSUMER FOCUSED DIGITAL INNOVATION ENTERPRISE IT CUSTOMERS, ENTERPRISE EMPLOYEES AND EXECUTIVES EXPECT AGILITY ENTERPRISE AGILITY OR BUSINESS MODEL INNOVATION ABETTERLENSE
  72. 72. 72 COMPANY’S STRENGHTS AND KEY ASSETS AS EPICENTER
  73. 73. Companies using a combination of innovation types generate better results. Source: Keeley and Waters in Ten Types of Innovation
  74. 74. 03STRATEGIC ALLIGMENT Aligning innovation with the business strategy
  75. 75. 75 STRATEGIC ALIGNMENT MOTIVATION & METRICS COMMON LANGUAGE & CONTEXT GOVERNANCE STRUCTURE& DESIGN ENVIROMENT CULTURE
  76. 76. 76 VALUE GENERATION INNOVATION MISSION VALUES OBJECTIVES CORPORATE STRATEGY INNOVATION INITIATIVE OBJECTIVES INNOVATIVE SOLUTIONS THAT RESPOND TO SPECIFIC ORGANISATIONAL PROBLEMS METRICS STRATEGIC ALLIGMENT
  77. 77. 77 STRATEGIC ALLIGMENT THE PROBLEM WITH MOST PUBLIC COMPANY’S STRATEGY and yet... THE FUTURE IS SHAPED NOW!
  78. 78. How do you create your future while managing the present? “ Vijay Govindarajan, A Strategy for Leading Innovation ”
  79. 79. 79 How in the age of rapid change do you create organizations that are as adaptable and resilient as they are focused and efficient? Gary Hamel Moonshots for Management “ ”
  80. 80. 80 MISSION VALUES OBJECTIVES CORPORATE STRATEGY INNOVATION INITIATIVE OBJECTIVES METRICS In the future, top management won’t make strategy but will work to create the conditions in which new strategies can emerge and evolve. Gary Hamel in Moonshots for Management STRATEGIC ALLIGMENT “ ”
  81. 81. 81 START BY MAPPING YOUR INNOVATION PORTFOLIO WIP AGAINST BUSINESS STRATEGY Source: Lean Enterprise: How high performance organisation innovate at scale by Humble, Molesky and O’Reilley STRATEGIC ALLIGMENT EXPLORE EXPLOIT SUSTAIN RETIRE
  82. 82. 82 EXPLORE EXPLOIT SUSTAIN RETIRE Early stage initiatives that are bets for the future with high degrees of uncertainty Initiatives that have achieved product- market fitand the organization wants to grow and scale Initiatives that have become repeatable and scalable business models, products or services that drive the majority of revenue Initiatives that are long lived, no longer beneficial (even limiting) to the future success or strategy Source: Lean Enterprise: How high performance organisation innovate at scale by Humble, Molesky and O’Reilley MAPPING INNOVATIONWIP AGAINSTBUSINESS STRATEGY
  83. 83. 83 the discipline to discard what does not fit—to cut out what might have already cost days or even years of effort—that distinguishes the truly exceptional artist and marks the ideal piece of work. “ Jim Collins ” GOVERNANCE
  84. 84. 04GOVERNANCE Decision making and sponsorship
  85. 85. 85 STRATEGIC ALIGNMENT MOTIVATION & METRICS COMMON LANGUAGE & CONTEXT GOVERNANCE STRUCTURE& DESIGN ENVIROMENT CULTURE
  86. 86. ALLIGN GOALS ALLOCATE RESOURCES ASSIGN DECISION MAKING AUTHORITY DIFFERENTIATE INVESTMENT PROFILES PRIORITIZE AND FUND BALANCE SHORT AND LONG TERM ⎯ INTERNALLY AND WITH THIRD PARTIES
  87. 87. The CEO must: ü Champion innovation at the top table ü Shape, inspire, and clarify the necessary links and synergies across the company ü Become familiar with the evolving frameworks, tools and techniques ü Differentiate important vs urgent
  88. 88. The Innovation Leader must: ü Support best practices ü Develop skills ü Support business unit initiatives ü Identify new market spaces ü Facilitate idea generation ü Direct seed funding Source: HOW TO LEAD INNOVATION: 7 Tasks for Innovation Focused Executives by Alessandro Di Fiore and Elisa Farri
  89. 89. 89 Viability (Business) Desirability (Human) Feasibility (Technology) INNOVATION Source: Design Thinking, IDEO GOVERNANCE
  90. 90. 90 Sketch out your business plans in one page
  91. 91. 91 First, rather than engaging in months of planning and research, entrepreneurs accept that all they have on day one is a series of untested hypotheses— basically, good guesses. So instead of writing an intricate business plan, founders summarize their hypotheses in a framework called a business model canvas. “ Steve Blank for HBR ” GOVERNANCE
  92. 92. 92 THE ENTERPRISE AS AN INCUBATOR discovering a new business model is inherently risky, and is far more likely to fail than to succeed. Companies need a portfolio of new business start-ups rather than putting all of their eggs into a limited number of baskets. “ Steve Blank for HBR ” GOVERNANCE
  93. 93. 93 Source: Lean Enterprise: How high performance organisation innovate at scale by Humble, Molesky and O’Reilley Time to market Sales Profit Time Break even InvestReturn EXPLORE (radical) EXPLOIT (incremental) MOST IDEAS WILL NOT GET TO BREAK EVEN GOVERNANCE
  94. 94. 94 HOW WILL YOU EVALUATE, SELECT & FUND IDEAS? A CONTINUOUSEVALUATION FUNDING MODEL FOR RADICAL INNOVATION ENABLES YOU TO FAIL FAST AND REDUCE INVESTMENTON NON-VIABLE IDEAS. GOVERNANCE
  95. 95. 95 PRIORITISE THE INITIATIVES THAT BRING MOST VALUE GOVERNANCE V V V DEFINE VALUE
  96. 96. 96 MCKINSEY’S THREE HORIZONS OF GROWTH GOVERNANCE
  97. 97. 97 As companies mature, they often face declining growth as innovation gives way to inertia. In order to achieve consistent levels of growth throughout their corporate lifetimes, companies must attend to existing businesses while still considering areas they can grow in the future. MCKINSEY’S THREE HORIZONS OF GROWTH
  98. 98. 98 Visibility Time Now H1 - ANALYSIS H2 - EXPLORATION H3 - IMAGINATION GOVERNANCE COMPANIES MUST MANAGE BUSINESSES ALONG ALL THREE HORIZONS CONCURRENTLY
  99. 99. 99 FROM PLANS TO EXPERIMENTS Measure Learn Build GOVERNANCE
  100. 100. 100 MINIMUM VIABLE, BOOTSTRAPPED EXPERIMENTS Time to market Profit Time Break even InvestReturn $ $ $$$ $ $ $ $ $ $ $ $ $$ $ $ 🔍 $ Microinvestments GOVERNANCE
  101. 101. 101 COSTS A B GOVERNANCE GET THE RIGHT IDEA GET THE IDEA RIGHT
  102. 102. 102 INVESTMENT UNCERTAINTY GOVERNANCE DELAY DECISIONS TO THE LAST RESPONSIBLE MOMENT Time TACKLE HARDEST PROBLEMS FIRST
  103. 103. 103 BE FORWARD LOOKING BUT, DON’T STARVEYOUR PERFORMANCE ENGINE GOVERNANCE
  104. 104. 104 If you're spending a lot of time accounting for the time you're spending, that's time you're not innovating. “ Steve Swasey, Netflix's VP for corporate communication EMPOWERMENTAS GOVERNANCE ”
  105. 105. 105 Finance people should remember Albert Einstein’s wise words: “Not everything that counts can be counted, and not everything that can be counted counts.” Bjarte Bogsnes Implementing Beyond Budgeting: Unlocking the Performance Potential “ ”
  106. 106. 106 GOVERNANCE MOVE BEYOND BUDGETING LEADERSHIP PRINCIPLES PROCESS PRINCIPLES TO INNOVATION ACCOUNTING
  107. 107. 107 CUSTOMERS VALUES RESPONSIBILITY MOVE BEYOND BUDGETING AUTONOMY ORGANISATION TRANSPARENCY Focus everyone on improving customer outcomes, not on hierarchical relationships Govern through a few clear values, goals, and boundaries, not detailed rules and budgets Enable everyone to act and think like a leader, not merely micromanage them. Give teams the freedom and capability to act; do not micromanage them. Organise as a network of lean, accountable teams, not around centralized functions. Promote open information for self-management; do not restrict it hierarchically. LEADERSHIPPRINCIPLES Source: Bjarte Bogsnes in Implementing Beyond Budgeting: Unlocking the Performance Potential GOVERNANCE
  108. 108. 108 GOALS RESOURCES PLANNING MOVE BEYOND BUDGETING CONTROLS REWARDS COORDINATION Set relative goals for continuous improvement; do not negotiate fixed performance contracts. Make resources available as needed, not through budget allocations. Make planning a continuous and inclusive process, not a top-down annual event. Base controls on relative indicators and trends, not on variances against plan. Reward shared success based on relative performance, not on meeting fixedtargets. Coordinate interactions dynamically; do not through annual planning cycles. PROCESSPRINCIPLES Source: Bjarte Bogsnes in Implementing Beyond Budgeting: Unlocking the Performance Potential GOVERNANCE
  109. 109. A BRIEF INTERRUPTION
  110. 110. Every company is work in progress. Don’t get overwhelmed with the chasm--get curious, get excited, get busy, build bridges, debate, educate, share and drive change.
  111. 111. BACK TO REGULAR PROGRAMMING
  112. 112. 05Promoting a shared understanding COMMON LANGUAGE AND CONTEXT
  113. 113. 114 STRATEGIC ALIGNMENT MOTIVATION & METRICS COMMON LANGUAGE & CONTEXT GOVERNANCE STRUCTURE& DESIGN ENVIROMENT CULTURE
  114. 114. CONSISTENT COMMUNICATION COMMON LANGUAGE WELL DEFINED RATIONALE MAKING COMMITMENTS VISIBLE
  115. 115. 116 Focus on communicating Principles and Values
  116. 116. 117 Use stories and memes
  117. 117. 118 Tell the team where they are in the process and what is expected
  118. 118. 119 Emotional Careful and cautiousPositive Positive Cool and organizedCreativity and new ideas Nurture T-shaped, adaptable team members that are prepared to color outside the lines and practice lateral thinking Source: Edward DeBono
  119. 119. 120 Target equal representation and be inclusive in your language and communication
  120. 120. 121 Be fanatical about sharing context and information to fuel autonomy and empowered decision making
  121. 121. 06STRUCTURE & DESIGN Who, what, when, how?
  122. 122. 123 STRATEGIC ALIGNMENT MOTIVATION & METRICS COMMON LANGUAGE & CONTEXT GOVERNANCE STRUCTURE& DESIGN ENVIROMENT CULTURE
  123. 123. WHO IS RESPONSIBLE FOR INNOVATION WITHIN THE ORGANIZATION? WHAT TECHNIQUES TOOLS AND METHODS ARE USED TO SUSTAIN INNOVATION? HOW DO OUR TEAMS ADQUIRE CAPABILITIES?
  124. 124. “ William Shakespeare ” There’s a method to his her madness.
  125. 125. 126 A bad system will beat a good person every time. “ W. Edwards Deming ”
  126. 126. 127 LOOK UPSTREAM FOR THE SOURCE OF THE PROBLEM This principle is applicableto many processes within organizations, particularly to developing new offerings, platforms, and businesses. Before reacting to feedback, ask why someone is seeing things the way they are. You might discover what needs to be changed is back upstream. “ Oren Jacob, former chief technical officer Pixar ”
  127. 127. 128 EXPLORE exploringnewbiz models EXPLOIT exploiting provenexisting business models SUSTAIN RETIRE Source: Lean Enterprise: How high performance organisation innovate at scale by Humble, Molesky and O’Reilley High performance organisations build capability to continuously move initiatives through the model from Explore to Retire. They understand that using the same strategy, practices and processes across the entire portfolio will result in negative outcomes and results. STRUCTURE & DESIGN DIFFERENT PRACTICES AND PROCESSES STRUCTURE & DESIGN
  128. 128. 129 ü Cross-functional multidisciplinary teams ü Make lots of small bets ü Boundaries of time, scope, financial investment and risk ü Design experiments are safe to fail (the only true failure is the failure to learn) ü Create a sense of urgency ü Demonstrable evidence of value to proceed Source: Lean Enterprise: How high performance organisation innovate at scale by Humble, Molesky and O’Reilley ü Create end-to-end customer facing teams, not project teams ü Continuous evaluation funding model ü Target condition is to achieve break-even point ü Data-driven, fact-based decisions based on accumulated knowledge ü Maintain a sense of urgency ü Set a vision, trust the team to get there, clear blockers and support as they proceed ü Make knowledge sharing and organisational learning easy SUSTAIN RETIREEXPLORE exploringnewbiz models EXPLOIT exploiting provenexisting business models STRUCTURE & DESIGN DIFFERENT STRATEGIES, PRACTICES & PROCESSES
  129. 129. 130 Organisations are not designed for innovation. Quite the contrary they are designed for ongoing operations. THE PERFORMANCE ENGINE “ ”Vijay Govindarajan Source: The Other Side of Innovation: Solvingthe Execution Challenge, Vijay Govindarajan STRUCTURE & DESIGN
  130. 130. 131 “ ” Source: The Other Side of Innovation: Solvingthe Execution Challenge, Vijay Govindarajan Under pressure to deliver profits every day, the Performance Engine instinctively swats down innovation initiatives—or any project, for that matter, that cannot make an immediate contribution. Managers at middle and low levels who face rigid performance targets each quarter can be powerless to overcome this reflex. INNOVATION Relentless pursuit of: • Reliable profits • Repeatability & Predictability • Efficiency & Effectiveness Short-term Non-routine Uncertain Long-term PERFORMANCE ENGINE VS STRUCTURE & DESIGN Vijay Govindarajan
  131. 131. 132 $ DON’T: § fuel antagonism § promote heroism § promote “break-all-rules” § promote “go-make-it-happen” MUTUAL RESPECT & DEPENDENCY THE PERFORMANCE ENGINE IS NOT THE PROBLEM, IT’S THE HEART OF THE BUSINESS. THE INNOVATION ENGINE IS NOT BETTER, IT JUST REQUIRES DIFFERENT TYPES OF DISCIPLINE AND ACCOUNTABILITY STRUCTURE & DESIGN
  132. 132. 133 Source: The Other Side of Innovation: Solving the Execution Challenge, Vijay Govindarajan ü Continuous process improvement (small enough to fit within “slack” time) ü Repeatable product development efforts (that follow Performance Engine-like processes) STRUCTURE & DESIGN SMALL INNOVATION MAY BE DRIVEN BY THE PERFORMANCE ENGINE
  133. 133. 134 STRUCTURE & DESIGN InnovationEngine Dedicated Team Custom Organisational Design Plan Rigorous Learning Process No Shortcuts of Convenience DESIGNING & STRUCTURINGTHE INNOVATION ENGINE Source: The Other Side of Innovation: Solving the Execution Challenge, Vijay Govindarajan
  134. 134. 135 Source: The Other Side of Innovation: Solving the Execution Challenge, Vijay Govindarajan Shared Staff Dedicated Staff Partnership PERFORMANCE ENGINE COMPANY STRUCTURE & DESIGN DESIGNING & STRUCTURINGTHE INNOVATION ENGINE Senior Executive Council Innovation Engine Leadership ü Innovation Project team = dedicated team + shared staff ü Team must be separate but not isolated. Must be linked to the core business.
  135. 135. 136 Source: The Other Side of Innovation: Solving the Execution Challenge, Vijay Govindarajan Shared Staff Dedicated Staff Partnership PERFORMANCE ENGINE COMPANY DESIGNING & STRUCTURING THE INNOVATIONENGINE DESIGNING & STRUCTURINGTHE INNOVATION ENGINE Senior Executive Council Innovation Engine Leadership ü Leaders should be positioned as the leaders of the initiative as a whole to maximise partnership.
  136. 136. 137 Source: The Other Side of Innovation: Solving the Execution Challenge, Vijay Govindarajan Shared Staff Dedicated Staff Partnership PERFORMANCE ENGINE COMPANY DESIGNING & STRUCTURINGTHE INNOVATION ENGINE Senior Executive Council Innovation Engine Leadership ü Sometimes it requires commissioning a special senior executive council to mediate and to nurture partnership. DESIGNING & STRUCTURING THE INNOVATIONENGINE
  137. 137. 138 Source: The Other Side of Innovation: Solving the Execution Challenge, Vijay Govindarajan Shared Staff Dedicated Staff Partnership PERFORMANCE ENGINE COMPANY DESIGNING & STRUCTURINGTHE INNOVATION ENGINE Senior Executive Council Innovation Engine Leadership ü Dedicated team is custom built for the initiative. ü Team must be separate but not isolated. Must be linked to the core business. ü Dedicated team takes the non-routine portion of the effort. ü Calling the dedicated team “innovation”team is inaccurate and undermines the partnership. ü Sometimes requires hiring and empowering a new group of experts. DESIGNING & STRUCTURING THE INNOVATIONENGINE
  138. 138. 139 Source: The Other Side of Innovation: Solving the Execution Challenge, Vijay Govindarajan Shared Staff Dedicated Staff Partnership PERFORMANCE ENGINE COMPANY DESIGNING & STRUCTURINGTHE INNOVATION ENGINE Senior Executive Council Innovation Engine Leadership ü Shared staff retains its existing responsibilities as part of Performance Engine and supports Innovation Engine. ü Shared staff takes on the repeatable portion of the effort that are consistent with the individual’s skills and work relationships. DESIGNING & STRUCTURING THE INNOVATIONENGINE
  139. 139. 140 HIRE FOR EXCELLENCE It is because of hybrid folks like Jacob, who see past the status quo to create better systems that enable greatness, that we stand a chance to solve the toughest,most ambiguous problems facing our world today. “ Oren Jacob, former chief technical officer of Pixar ” STRUCTURE & DESIGN
  140. 140. “ Elphaba also known as The Wicked Witch of the West ” I don’t cause commotions, I am one.
  141. 141. 142 INNOVATION ENVIRONMENTAL COMPLEXITY INCREMENTALRADICAL ESTABLISHED FRAME NEW FRAME BROKERS Create connections and find relationships between people. SCOUTS Explorers that find what is relevant. They find the right places to go and explore. ENTREPENEURS Break the rules and challenge you. Flexible, agile, tolerant of ambiguity, and take risks to learn. SYSTEM ARCHITECTS See big picture. See possibility at system level. IDENTIFY THE RIGHT TALENTTO MOVE BEYOND THE ESTABLISHED FRAME Source: Professor John Bessant STRUCTURE & DESIGN
  142. 142. 143 APPOINT THE RIGHT LEADERS “ ” internal entrepreneurs are more likely to be rebels who chafe at standard ways of doing things, don’t like to follow the rules, continually question authority, and have a high tolerance for failure. Yet instead of appointing these people to create new ventures, big companies often select high-potential managers who meet their standard competencies and are good at execution (and are easier to manage). Steve Blank on Why Big Companies Can’t Innovate (HBR) STRUCTURE & DESIGN
  143. 143. 144 DON’T STEREOTYPE OR LIMIT PEOPLE’S POTENTIAL Change the system and the incentives and a performance engine leader can become an innovation engine leader and vice-versa. STRUCTURE & DESIGN
  144. 144. 145 Partner insiders with outsiders
  145. 145. 146 THE RISK OF ORGANIZATIONAL MEMORY Source: The Other Side of Innovation: Solving the Execution Challenge, Vijay Govindarajan Products Products An innovation team composed entirely of “insiders” will struggle with two particular strong sources of organizational memory INSTINCTS “If something worked in the past...” EXISTING WORKING RELATIONSHIPS Dedicated teams full of people that have worked closely together for years are almost guaranteed to become little performance engines. STRUCTURE & DESIGN
  146. 146. “ Glinda also known as The Good Witch of the South ” Cause getting your dreams It's strange, but it seems A little - well - complicated There's a kind of a sort of : cost There's a couple of things get: lost There are bridges you cross You didn't know you crossed Until you've crossed... And if that joy, that thrill Doesn't thrill you like you think it will Still -
  147. 147. 148 DESIGN FOR TRUST When we design systems that assume bad faith from the participants, and whose main purpose is to defend against that nasty behavior, we often foster the very behavior we're trying to deter. “ ”Clay Shirky STRUCTURE & DESIGN
  148. 148. 149 HIERARCHICAL NETWORKED CONNECTED TO ECOSYSTEM ISOLATED CONTROL EMPOWERMENT PRIVACY TRANSPARENCY INNOVATION STRUCTURE & DESIGN
  149. 149. 150 Choose early customer validation over stealth mode and big revelations
  150. 150. 151 Unless: 1. You are seriously cashed up 2. Have access to a reliable learning engine that provides you with the insights you need to make decisions Photo: PRWire
  151. 151. 152 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% Fairness and equality Enhance innovation Reflect gender composition of customer base Enhance decision-making Expand talent pool External pressures, reputation Government regulation No rationale SIGNIFICANCEOF RATIONALES FOR GENDER PARITY, INDUSTRIES OVERALL Share of respondents statingrationale, % Source: The Future of Jobs Report - World Economic Forum Extensive survey of Chief Human Resources Officers and other senior talent and strategy executives from a total of371 leading global employers, representing more than 13 million female and male employees across 9 broad industry sectors in 15 major developed and emerging economies and regional economic areas. STRUCTURE & DESIGN
  152. 152. 153 GENDER DIVERSITY MAKES A TEAM SMARTER Source: What Makes a Team Smarter? More Women by Professors Woolley (MIT) and Malone (Carnegie Mellon) Many of the factors you might think would be predictive of group performance were not. Things like group satisfaction, group cohesion, group motivation—none were correlated with collective intelligence. And, of course, individual intelligence wasn’t highly correlated, either. STRUCTURE & DESIGN
  153. 153. BUT, IT’S NOT JUST ABOUT GENDER Employees at 2-D companies are 45% likelier to report that their firm’s market share grew over the previous year and 70% likelier to report that the firm captured a new market. 2-D diversity: üInherent Gender, ethnicity, and sexual orientation. üAcquired Traits you gain from experience: Working in another country, researching female consumers etc.
  154. 154. 07CULTURE Designing and sustaining a culture of innovation
  155. 155. 156 STRATEGIC ALIGNMENT MOTIVATION & METRICS COMMON LANGUAGE & CONTEXT GOVERNANCE STRUCTURE& DESIGN ENVIRONMENT CULTURE
  156. 156. CULTURE MAKES OR BREAKS INNOVATION CULTURE COMES FROM THE TOP CULTURE EATS STRATEGY AND PROCESS FOR BREAKFAST
  157. 157. 158 ORGANIZATIONAL CULTURE CONSISTS OF VALUES, NORMS, AND BEHAVIOURS, WHICH COLLECTIVELY DEFINE AND COMPRISE ACCEPTABLE AND “NORMAL” WAYS OF GETTING THINGS DONE WITHIN AN ORGANIZATION Research shows culture is strongly associated with successful and continuousinnovation Openness to external ideas Future-market orientation Organizational-learning orientation Support for experimentation and risk taking Tolerance of failure Willingness to cannibalize existing business Good collaboration Leaders as role models and sponsors Source: Strategic Innovation for Business Performance by Harold Schroeder CULTURE
  158. 158. 159 THE LEADER’SGUIDE TO RADICAL MANAGEMENTBY STEVE DENNING Re-inventing the workplacefor the 21st century Inspiringcontinuous innovation,deep job satisfaction and clientdelight CULTURE The goal of work is to delight clients Managers communicate interactively through stories, questions and conversations Work is conducted in self-organizing teams Teams operate in client-driven iterations Each iteration delivers value to clients Managers foster radical transparency Managers foster continuous self-improvement
  159. 159. It's quite simple isn't it? Just listen and learn in a team. ü Put ideas and collaboration above organizational hierarchies. ü Give each team member a voice and an equal opportunity to participate. ü Be open and listen carefully to ideas – wherever they come from. ü Help to connect your people and encourage them to do the same. ü Experts shouldn’t just talk to other experts. ü Proactively drive a culture of innovation but keep participation voluntary. Source: ADIDAS INNOVATON LAB – A Culture of innovation is a culture of listening
  160. 160. “ Dan Pink ” Questions open and declarations close. We need both, of course. But that initial tincture of honest doubt turns out to be more powerful than a bracing shot of certainty.
  161. 161. 162 SELF-QUESTIONING VS SELF-AFFIRMING Three social scientists asked a group of volunteers to work on a series of anagrams—changing the word “sauce” to “cause,” for example, or “when” to “hewn.” Before the participants tackled the problem, the researchers asked one half of them to take a minute to ask themselves whether they could complete the task—and the other half to tell themselves that they would complete the task.“WILL I” “I WILL” NUMBER OF ANAGRAMS PRIME CULTURE
  162. 162. 163 When you create something, you can fall in love with it and aren't able to see or hear anything contrary. Whatever comes out of your mouth is all you're inhaling, but when you ask a question—Will I?—you're creating an opening. You're inviting a conversation—whether it's self conversation or a conversation with others. “ Lisa Gansky in The Flip Manifesto by Dan Pink ”
  163. 163. 164 START DOUBTING YOURSELF COSTS A B WILL I? YES! STOP BREATHING FROM YOUR OWN EXHAUST Source: TheFlip Manifesto by Dan Pink CULTURE
  164. 164. 165 If you are part of a structure or tribe that is specifically designed and incentivized to make the most of anything (sales, marketing, advertising) you must ensure you know when to unleash or contain those specific capabilities.
  165. 165. 166 Time to market Profit Time InvestReturn $ $ $ $ $ $ $ $ $ $$ Sales $ $ $ $ $ $ $ $ $ $$ TOO MUCH STORY, NOT ENOUGH EVIDENCE WASTE CULTURE
  166. 166. 167 CONTINUOUS INNOVATION, VALUE AND COST ALIKE, REQUIRE THE SAME MINDSET “Away from” “Towards” Risk and Fear Growth and Learning Protection, Safety, and Status Impact and Value Cynicism and Pessimism Skepticism and Optimism Controlling Empowering Managing Leading Short livedresults Sustainable thrivingecosystems TOWARDS SUSTAINABLE GROWTH CULTURE
  167. 167. 168 THE ONLY TRUE FAILURES ARE THE FAILURE TO TRY & THE FAILURE TO LEARN AS FAST AS YOU POSSIBLY CAN
  168. 168. “ Charles Darwin ” A woman who dares to waste one hour of time has not discovered the value of life.
  169. 169. 170 Co-creation, co-evolution, collaboration and cooperation are set on a healthy foundation of trust and mutual respect. Highly aggressive competitive environments block flow of information and learning. Building trust through attribution/acknowledgment is key. Platforms like OpenIdeo and HitRecord, and thriving movements such as Open Source are build on this foundation. CULTURE
  170. 170. 08ENVIRONMENT Internal and external hubs
  171. 171. 172 STRATEGIC ALIGNMENT MOTIVATION & METRICS COMMON LANGUAGE & CONTEXT GOVERNANCE STRUCTURE& DESIGN ENVIRONMENT CULTURE
  172. 172. Rigid walls belong in museums Photo credit: Sam Kittner/Newseum – Berlin Wall
  173. 173. “ If our institutions are to survive, they’ll have to create new roadways. That’s a design problem — one that requires new rules of engagement with a broad set of collaborators. Tim Brown, Ideo ”
  174. 174. 175 Own market revenue CLOSED BUSINESS MODEL Time CostsRevenues Shorter product life in market WHY OPEN BUSINESS MODEL INNOVATION? ENVIRONMENT Internal development costs Own market revenue 0 Rising costs of innovation Internal development costs Source: Open Business Models: How To Thrive In The NewInnovationLandscapeby Henry Chesbrough
  175. 175. 176 CLOSED BUSINESS MODEL Costs Revenues New revenues WHY OPEN BUSINESS MODEL INNOVATION? ENVIRONMENT Own market revenue Cost & time savings from leveragingexternal development Internal development costs Source: Open Business Models: How To Thrive In The NewInnovationLandscapeby Henry Chesbrough Internal & External development costs Own market revenue License Spin-off JV revenue Sale/ divestiture OPEN BUSINESS MODEL
  176. 176. 177 OPEN COLLABORATION Companies known for their successful record of innovation have often institutionalized collaboration within organizational systems and processes Products Consultants Idea sharing and joint experimentation has been reported to contribute significantly to more rapid implementation, at lower cost, and reduced risk for the firms involved Open collaboration between employees in different areas of the organization, with external stakeholders, and between organizations within a network Source: Strategic Innovation for Business Performance by Harold Schroeder ENVIRONMENT
  177. 177. The most creative ideas aren’t going to come while sitting in front of your monitor. The new building is really designed to spark not just collaboration but that innovation you see when people collide. Scott Birnbaum, VP Samsung Semiconductor “ ”
  178. 178. 179 SPACE DESIGN MATTERS ENVIRONMENT RAPID PROTOTYPING Iterative creativity, brainstorming, and small group idea refinement CROSS-POLLINATION Silo-busting, increased creativity, and more innovation INDIVIDUAL PRODUCTIVITY Personal productivity, focused individual work, and deadline work GROUP EFFICIENCY Team productivity, focused group work, and project development ASSIGNED SEATINGFLEXIBLE SEATING PRIVATE OFFICES OPEN PLAN Source: Workspaces thatmove people by Waber, Magnolfi, and Lindsay
  179. 179. 180 OUT OF SIGHT, OUT OF SYNC ENVIRONMENT LESSMORE LESS MORE Source: Workspaces thatmove people by Waber, Magnolfi, and Lindsay COMMUNICAITON PHYSICAL DISTANCE FACE TO FACE EMAIL ALLEN CURVE
  180. 180. 181 CORPORATE SOCIAL NETWORKS HELP, BUT THEY ARE NOT AS EFFECTIVE... ENVIRONMENT Source: Why no one uses the corporate social network by CharleneLi, HBR
  181. 181. Source: Why Brainstorming Works Better Online by Tomas Chamorro-Premuzic in HBR THE EXCEPTIONIS BRAINSTORMING Virtual brainstorming enhances creative performance – versus in-person brainstorming sessions – by almost 50% of a standard deviation. This means that almost 70% of participants can be expected to perform worse in traditional than virtual brainstorming sessions. “ ”
  182. 182. 183 VIRTUAL BRAINSTORMING ENVIRONMENT Source: Collaborating Online Is Sometimes Betterthan Face-to-Face by Alexandra Samual, HBR. 1. Stops dominant participants from talking too much, taking over the session and eclipsing their colleagues. 2. Reduces evaluation apprehension, particularly in less confident individuals. 3. Option for anonymity enables ideas to be judged more objectively. 4. Preventing participants from being exposed to each other’s ideas during the idea-generation phase encourages participants to offer a wider variety of ideas.
  183. 183. 09MOTIVATION & METRICS Developing measures
  184. 184. AUTONOMY MASTERY PURPOSE Dan Pink - Drive
  185. 185. 186 MOTIVATION = IMPACT NOT AWARD MOTIVATION& METRICS
  186. 186. What gets measured, gets managed. “ Peter Druker ”
  187. 187. Aristotle “ ” Our problem is not that we aim too high and miss, but that we aim too low and hit.
  188. 188. 189 INCENTIVISE FOR COLLABORATION Our innovation challenge is about making connections – thorough structures, networks, technological infrastructures and, above all, through people. Knowledge broking will increasingly be a key skill within organizations and the basis of a growing service sector. “ ”The Future Of Innovation…. Challenges At The Innovation Frontier by Prof. John Bessant INNOVATION IS POWERED BY CONNECTIONS MOTIVATION& METRICS
  189. 189. 190 WRONG INCENTIVE, WRONG BEHAVIOUR Neil Davidson in The Flip Manifesto by Dan Pink Imagine you could construct a sales robot, programmed solely by the rules in any sales structure. How would it behave? It would steal deals off other salespeople, sell customers software they didn't need, argue with its boss over its commission and backstab its colleagues. That wasn't the behavior we wanted, but our commission structure sent a strong signal that it was. “ ” MOTIVATION& METRICS
  190. 190. 191 BEYOND BUDGETING TRANSPARENT BENCHMARKING, AUTONOMY, SHARED GOALS & DESCENTRALIZATION Drive performance and learning through transparent internal benchmarking between regions and branch offices. Source: Bjarte Bogsne -Implementing Beyond Budgeting: Unlocking the Performance Potential MOTIVATION& METRICS Provide sufficient freedom and responsibility to enable each branch and region to do what is right to lift it’s own performance. Balance the individual drive with a shared purpose through a common bonus scheme for all employees, and no individual bonuses.
  191. 191. 192 Source: Entrepreneurs: BewareofVanity Metrics by Eric Ries BEWARE OF VANITY METRICS, WHAT YOU MEASURE MUST BE: ACCESSIBLE AUDITABLE ACTIONABLE MOTIVATION& METRICS
  192. 192. 193 Source: Entrepreneurs: BewareofVanity Metrics by Eric Ries BEWARE OF VANITY METRICS, WHAT YOU MEASURE MUST BE: ACCESSIBLE Key data should be available to any employee, anytime, in a matter of minutes. In order to achieve that goal, the reports themselves have to be extremely simple. AUDITABLE Believe me, when it’s your idea on the line, it’s much easier to believe the report is the problem rather than the idea. Thus, it’s important that skeptics can audit a report. ACTIONABLE We know how to replicate the result in the report. Followingthe scientific method gives confidence that the observed behavior was, in fact, caused by the change being tested. Example: split-testing. MOTIVATION& METRICS
  193. 193. 194 The Other Side of Innovation: Solving the Execution Challenge Vijay Govindarajan Evaluate the performance of the dedicated team not on short term financial results, but in their ability to test assumptions about the future. “ ” MOTIVATION& METRICS
  194. 194. 195 We believe that ________________________________ Will result in __________________________________ We will know when we succeed when ______________ (this idea) (this outcome) (these results) ABILITY TO TEST HYPOTHESIS RAPIDLY NO MATTER IF THEY FAIL OR SUCCEED MOTIVATION& METRICS
  195. 195. 196 Source: Barry O’Reilley – Blow up the business case MOTIVATION& METRICS ELEMENT QUESTION RELEVANT METRICS ACQUISITION How do your customers find you? Traffic, Mentions, Cost per click,Cost of Acquisition ACTIVATION Do your customers havea great experience? Sign ups, Completed on- boarding process, Used service RETENSION Do your customers come back? Time sincelast visit, daily/moth active users, churns REVENUE How do you make money? Customer life value, conversion rate, shopping cart size REFERRAL Do customers tell others? Invites sent, viral coefficient, viral cycletime STAKEHOLDER METRIC CURRENT TARGET TREND CUSTOMER % users that complete sales flow 30% 45% % Retention 20% 25% Net Promoter Score 44 60 BUSINESS % visits to sign up for service 20% 25% % conversion to paying customers 15% 20% Customer acquisition costs $0.5 $0.25 Life time customer value $12 $20 % attrition 30% 15% ONE METRIC THAT MATTERS
  196. 196. 197 DATA OVER HIPPOs The goal is to use data-driven decisions based on usage and profitability to enhance what customers desire – not just copy what competitors release or what HIPPOs (HIghest Paid Person’s Opinion) want to have. “ ”Barry O’Reilley Lean PMO: Managing the innovation portfolio MOTIVATION& METRICS
  197. 197. 10CLOSING REMARKS Wicked & The Wizard of Oz
  198. 198. 199 Accelerating and sustaining business model innovation
  199. 199. 200 Always partner insiders with outsiders
  200. 200. 201 Expect and mediate tension Nurture partnership
  201. 201. 202 Insiders should always become allies that model empathy, bravery and critical thinking
  202. 202. 203 Look upstream for root cause and don’t be intimidated by power structures
  203. 203. 204 Drive change from multiple epicenters, expect setbacks and keep learning
  204. 204. 205 Make change sustainable by focusing on the entire system
  205. 205. 206
  206. 206. 207 INNOVATE INNOVATE INNOVATE INNOVATE INNOVATE INNOVATE INNOVATE INNOVATE
  207. 207. THANK YOU

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