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Making Innovation Happen

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Innovation represents for many companies the key to a successful future. Many CEOs around the globe are prioritizing and investing in innovation; however, the potential for innovation taking place within big organizations often goes unrealized.

Stefan Erschwendner, Managing Partner of LHBS, had the opportunity to speak at the Good School’s ‘Camp Digital’ on the topic of “Making Innovation Happen,” where he elaborated on the idea of innovation as well as its implementation inside of an organization.

Published in: Marketing

Making Innovation Happen

  1. 1. 26.05.2015 CAMP DIGITAL - GOOD SCHOOL MAKING INNOVATION HAPPEN
  2. 2. HOW TO INTEGRATE THE NEW INTO THE OLD?
  3. 3. 1. BUSINESS ENVIRONMENT
  4. 4. Organizations are put under pressure 4
  5. 5. Uber: The biggest taxi organization does not own cars 5
  6. 6. Facebook: The biggest media company does not produce content 6
  7. 7. Alibaba: The biggest trade company does not have any inventory/stock 7
  8. 8. Airbnb: The biggest hotel does not own any rooms 8
  9. 9. "The main thing that has caused companies to fail, in my view, is that they missed the future." Larry Page, at TED 2014 9
  10. 10. The one that stops, loses.
  11. 11. Interconnectivity of organizations and the environment is essential 11 Organization Umwelt
  12. 12. “It is not the strongest or the most intelligent who will survive but those who can best manage change.” Charles Darwin
  13. 13. ?Why are organizations not as innovative as startups?
  14. 14. What are the biggest innovation barriers?
  15. 15. 20Source: http://www.marktundmittelstand.de/uploads/media/ The biggest challenges for innovation 1 High R&D costs 2 Economic risk of innovations 3 Missing financial means 4 Resistance of employees 5 Missing specialized staff 6 No innovation strategy 7 Lacking management competencies 8 Absence of academics 9 No access to external funding 10 Company culture hinders innovation
  16. 16. 2. STRATEGY & TYPES OF INNOVATION
  17. 17. THE INNOVATOR’S DILEMMA
  18. 18. 23 Successful companies can put too much emphasis on customers' current needs, and fail to adopt new technology or business models that will meet customers' unstated or future needs. Such companies will eventually fall behind, what Christensen calls "disruptive innovation" Clayton Christensen Innovator’s Dilemma
  19. 19. Two Innovation Strategies 24 Sustaining Innovation Disruptive Innovation Problem is well understood Problem is not well understood Existing Market New Market Innovation improves performance, lower cost, incremental changes Innovation is dramatic and game changing Evolutionary Innovation Revolutionary Innovation Satisfies current customer needs (of mainstream customers) Satisfies future customer needs (nice) Traditional business methods are sufficient Traditional business methods fail Source: The Innovator’s Dilemma
  20. 20. The Innovator’s Dilemma 25Source: The Innovator’s Dilemma
  21. 21. The Innovator’s Dilemma 26Source: http://www.youtube.com/watch?v=pBaaB3pWcLI
  22. 22. For many successful organizations disruptive innovations do not make ‘sense’. Start-ups profit from this attitude and follow ‘senseless’ ideas that often lead to success. 27
  23. 23. None of the two innovation strategies is better than the other. Many organizations follow both strategies at the same time. 28
  24. 24. 10 TYPES OF INNOVATION
  25. 25. “97% of CEOs see innovation as a top priority for their business” press.pwc.com 30
  26. 26. 31 ‘Innovation’ is mostly associated with product innovation. However, there exist different types of innovation. The more types you address, the bigger potential the innovation has.
  27. 27. 32Source: 10 Types of Innovation, Keeley 10 Types of Innovation Profit Model Network Structure Process Product Performance Product System Service Channel Brand Customer Engagement Configuration Offering Experience The way in which you make money Connections with others to create value Alignment of your talent and assets Signature or superior methods for doing work Distingui- shing features and functional- ities Compliment- ary products & services Services & Enhance- ments that surround your offerings How your offerings are delivered to your customers Represent- ation of your offerings and business Distinctive interactions you foster
  28. 28. Profit Model - Uber Premium-Price-Strategy: the demand shapes the price 33Source: https://www.uber.com/
  29. 29. Network - Victorinox Jovoto Open Innovation: outsourcing the design to Jovoto 34Source: http://victorinox.jovoto.com/
  30. 30. Structure - Number26 Provides only Banking-Interface. Banking structure itself is outsourced to a partner. 35Source: https://number26.de/
  31. 31. Process - Walmart Hubs Hub-structure for efficient storage and delivery 36Source: http://www.walmart.com
  32. 32. Product Performance - Bluesmart Suitcase Development of a new suitcase concept (Connected to app, built-in scale, battery charger, digital lock) 37Source: http://bluesmart.com/
  33. 33. Product System - Nespresso Eco-System Coffee machines only work with Nespresso capsules and can only be bought in Nespresso shops. 38Source: https://www.nespresso.com
  34. 34. Service - Apple Genius Bar Support, repair, experts and product trainings in one spot 39Source: https://www.apple.com/retail/geniusbar/
  35. 35. Channel - NIKETOWN Product experience instead of product sales 40Source: https://www.youtube.com/watch?v=Q5Rz9ZRnIVQ
  36. 36. Brand - Virgin Portfolio developed from music label to telco to airline to hotel,... 41Source: https://www.virgin.com/about-us
  37. 37. Customer Engagement - AMEX Open Forum Community Platform for SME’s with business & finance advice from experts 42Source: https://www.americanexpress.com/us/small-business/
  38. 38. 3. IMPLEMENTATION OF INNOVATIONS
  39. 39. 44 In which environment should innovations be realized?
  40. 40. 45 Performance Engine - a closed system protected data fixed hierarchies codified processes supply isolated customers Source: http://www.accenture.com/microsites/digital-industry/Pages/
  41. 41. 46 Innovation Engine - an open, collaborative system internal & external data collaborative teams adaptive processes isolated customers supply Source: http://www.accenture.com/microsites/digital-industry/Pages/
  42. 42. 47 Performance Engine Innovation Engine a closed system fixed hierarchies codified processes supply isolated customers internal & external data collaborative teams adaptive processes isolated customers supply an open, collaborative system protected data Source: http://www.accenture.com/microsites/digital-industry/Pages/home.aspx#/impact
  43. 43. Profound structural differences 48 Structures Performance Engine Innovation Engine Communication team members in various departments - slow cross communication sub-seven man teams sitting together Decision making unclear or unresponsive, intra-company ownership & politics create slow decision-making autonomous decision making with kill switches on milestones Location cubicle / HQ Offsite Compensation no upside for extra effort/ success Equity / success fee Time allocation maybe 20% ‘Google Time’ full-time ‘Google Time’ Liability strict business practices and principals ad hoc and spontaneous problem solving Source: Prehye Talk https://vimeo.com/28433022
  44. 44. 49 Initiatives of Innovations
  45. 45. Implementation models for innovations 50 Possibilities for the realization of innovation initiatives: SUSTAINING INNOVATIONS ‘Squeeze it in’ DISRUPTIVE INNOVATIONS ‘Separate it’ many small innovation projects one big innovation initiative Source: Beyond the Idea, Govindarajan & Trimble
  46. 46. Innovation depends on ‘leftover’ resources 51 Performance Engine % of people %ofTime 0 100 100 50 50 a small contribution from everyone ateamdedicatedfulltimetoinnovation Sustaining Innovation DisruptiveInnovation Source: Beyond the Idea, Govindarajan & Trimble
  47. 47. 52 Planning & Implementation of innovations
  48. 48. Planning of innovations 53 Performance Engine Plans Innovation Engine Plans based on precedent start with a blank page emphasize data emphasize assumptions standard scorecard custom scorecard highlight quarterly and yearly totals highlight trends hold firm expectations expectations often adjusted focus on results focus on learning Source: Beyond the Idea, Govindarajan & Trimble
  49. 49. Interconnection between the Performance & Innovation Engine 54 PERFORMANCE ENGINE Funding Knowhow INNOVATION ENGINE Finance small initiatives disruptive initiatives
  50. 50. 55 Coca Cola’s - 70/20/10 Investment rule Source: http://www.slideshare.net/McK_CMSOForum/liquid-linked-marketing? 10% Hard, risky, complicated 20% Moderately risky should appeal to new audience 70% Safe, standard content that appeals to a huge audience
  51. 51. BEST PRACTICE ADOBE KICKBOX
  52. 52. 57 Adobe Kickbox - Innovation Kit Source: https://www.youtube.com/watch?t=99&v=VU4XYGuUh_0
  53. 53. KEY TAKEWAYS
  54. 54. - Differentiate between the Performance Engine & the Innovation Engine - Sustainable & disruptive innovations need to be distinguished and tackled differently - Innovation potential lies across all 10 Types of Innovation - Innovation is a dynamic process and eventually needs its own playground to thrive 59
  55. 55. In case of any questions, regarding this presentation please do not hesitate to get in touch with us. ts@lhbs.com +49 171 317 9595 Consultant Tamara Stix LET´S GET IN TOUCH Stefan Erschwendner Managing Partner se@lhbs.com +49 151 6462 0729 60
  56. 56. Impressum: Die in dieser Präsentation dokumentierten Gedanken und Vorschläge sind geistiges Eigentum der LHBS Consulting Berlin GmbH und unterliegen den geltenden Urhebergesetzen. Die unautorisierte Nutzung, die ganze oder teilweise Vervielfältigung sowie jede Weitergabe an Dritte ist nicht gestattet. LHBS Consulting Berlin GmbH Köpenicker Straße 154  10997 Berlin Germany  

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