How do you build an innovation culture in your team? – An 8-Step Guide

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Institute of Product Leadership in association with Adaptive Marketing organises monthly series of Product Professionals networking event .Our theme for this event was about How do you build an innovation culture in your team? – An 8-Step Guide that every Product Professionals should know.
Speaker for this event was Prof. Rishikesha T Krishnan IIMB .

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How do you build an innovation culture in your team? – An 8-Step Guide

  1. 1. How do you Build an Innovation Culture in your Team? An 8-Step Guide 3 Improve Batting Avg 1Build apipeline 2 Improve idea velocity Rishikesha T. KrishnanNov. 24, 2012 Professor & Area Chair, Corporate Strategy & Policy, IIM Bangalore
  2. 2. THE IDEAS IN THISPRESENTATION WILL BEELABORATED IN AFORTHCOMING BOOKBY VINAY DABHOLKAR &RISHIKESHA T. KRISHNANPUBLISHED BYHARPERCOLLINS
  3. 3. 3WHAT IS INNOVATION?
  4. 4. What is Innovation?4 Problem + Idea + Execution + Benefit Novelty Utility Application of new ideas to solve problems resulting in benefits to users
  5. 5. 8 Steps to Innovation Excellence: 3 Improve Batting Avg 1Build apipeline 2 Improve idea velocity
  6. 6. Build a Pipeline6 1. Lay the Foundation 2. Create a Challenge Book 3. Build Participation
  7. 7. Improve the Idea Velocity7 4. Experiment with Low Cost at High Speed 5. Go Fast from Prototyping to Incubation 6. Iterate on the Business Model
  8. 8. Increase the Batting Average8 7. Build an Innovation Sandbox 8. Create a Margin of Safety
  9. 9. 8 Steps to Innovation Excellence9 STEP 1 LAY THE FOUNDATION
  10. 10. Build a Pipeline10 1. Lay the Foundation  Create Innovation Program  E.g. Jeff Immelt “Imagination Breakthroughs” - $1B potential 3 Key Processes  Idea Management  Buzz Creation  Training & Development
  11. 11. 3 Key Processes in an Innovation Program Idea Buzz Training &Management Creation Development(who submits? (campaigns, (prototyping, who selects? communication, TRIZ, who funds?) rewards, design thinking, innovation day) idea communication, leadership development)
  12. 12. Idea Management source scope stages technology selection funding Idea Box
  13. 13. 13  Source: Where will ideas come from? (Any employee, Only certain employees (shop floor workers), Employees and customers, Employees, customers and partners, Anyone on the internet)  Scope: What is the scope of ideas? (Process improvement, product improvement, new product, customer experience, business models, any of these).  Stages: How many stages will an idea go through before it is either implemented or parked? In M&M, a new product idea would go through six stages.
  14. 14. 14  Technology: In what form will ideas be gathered, stored, searched, and presented? Will it be a physical suggestion box, a bulletin board or an Intranet web-site where people submit ideas?  Selection: How will ideas be selected for further development? Will it be through a committee or through open voting or through some other mechanism? What is the criterion for selection?  Sponsorship: How and what kind of resources will be allocated to the selected ideas? Will the sponsorship be in the form of time-off from the existing project or mentoring.
  15. 15. 40 years, 20 million ideasYear No of Suggestions Participation Adoption suggestions per person Rate(%) Rate(%)1951 789 0.1 8 231971 88,607 2.2 67 721986 2.6million 48 95 96
  16. 16. The Power of Small Ideas16 “There is no genius in our company. We just do whatever we believe is right, trying every day to improve every little bit and piece. But when 70 years of very small improvements accumulate, they become a revolution” From Interview with Katsuaki Watanabe in HBR, July-Aug 2007
  17. 17. Build a Pipeline17  Lay the Foundation  Create Innovation Program  E.g. Jeff Immelt “Imagination Breakthroughs” - $1B potential 3 Key Processes  Idea Management  Buzz Creation  Training & Development
  18. 18. Buzz Creation (creative campaigns)18
  19. 19. Indian Railways in 2004 Market share 2004 (1951):  Freight: 40% (90%)  Passenger: 20% (70%) Budgetary support went down 25% Fund balance: Rs. 350 crore Dr. Rakesh Mohan committee declared “Terminal debt trap” Recommendation: Downsizing
  20. 20. Sudhir Kumar’s study Sudhir Kumar studies Rakesh Mohan report Finds a curious contradiction With increase in freight rates:  Market share of steel, cement declined  Iron ore, coal and other minerals stayed same What could be the reason?
  21. 21. Door-to-door vs station-to-station Door-to-door created more value However, pricing didn’t differentiate Why not focus on these customers?  Provide more freight per train  charge more  Increase number of trains Heavier, faster and longer
  22. 22. Axle load Garib Rath (Heavier & longer)
  23. 23. Build a Pipeline24  Lay the Foundation  Create Innovation Program  E.g. Jeff Immelt “Imagination Breakthroughs” - $1B potential 3 Key Processes  Idea Management  Buzz Creation  Training & Development
  24. 24. Training & Development25  Titan Innovation School of Management  “Everybody an innovator by 2015” Focus area Techniques Design thinking Immersive research, rapid prototyping, brainstorming Systems thinking TRIZ Systems archetypes Theory of constraints (TOC) Lateral thinking Edward de Bono’s six thinking hats
  25. 25. 8 Steps to Innovation Excellence26 STEP 2 CREATE A CHALLENGE BOOK
  26. 26. Build a Pipeline27 2. Create a Challenge Book U & I Portal at HCL  Petition Box at Tihar Jail  Feel the Pain  Sense the Wave  See the Waste
  27. 27. Build a Pipeline28
  28. 28. The Bajaj Pulsar exploited a discontinuity..29
  29. 29. 30 7 Themes  Digital consumers  Emerging economies  Sustainable tomorrow  Smarter organizations  New commerce  Pervasive computing  Healthcare economy http://jugaadtoinnovation.blogspot.in/2012/04/infosys-innovation-to-build-tomorrows.html
  30. 30. 8 Steps to Innovation Excellence31 STEP 3 BUILD PARTICIPATION
  31. 31. Build a Pipeline32 3. Build Participation  Role model: People who inspire and then others feel, “If he can do it, why can’t I?”  Community of practice: Places where practitioners “hang out”, learn from each other and together help others outside this community  Innovation catalyst: People who encourage idea authors and offer constructive inputs  Rewards & recognition: Mechanisms through which idea authors get appreciated
  32. 32. Build Participation33
  33. 33. Managerial Practices &Intrinsic Motivation Match people’s expertise & skills Challenge in creative thinking with their jobs Set goals, communicate them clearly, Freedom but give autonomy regarding the means Just right – too little dampens Resources creativity No fake deadlines 34
  34. 34. Managerial Practices &Intrinsic Motivation Work-group Mutually-supportive groups of people from diverse backgrounds Features Freely & generously recognise Supervisory creative work; avoid long delays; don’t over-do critiques; tolerateEncouragement honest failureOrganizational Facilitate information sharing Don’t allow political problems to fester Support 35
  35. 35. Improve the Idea Velocity36 4. Experiment with Low Cost at High Speed 5. Go Fast from Prototyping to Incubation 6. Iterate on the Business Model
  36. 36. 8 Steps to Innovation Excellence37 STEP 4 EXPERIMENT WITH LOW COST AT HIGH SPEED
  37. 37. Improve the Idea Velocity38 4. Experiment with Low Cost at High Speed
  38. 38. Feb 2004Sep Nov Apr 20042003 2003 impact demo idea itch Feasibility Loop Viability Loop 2 months 3 months 2 months
  39. 39. Creating a Climate for Experimentation40  Failure plays a critical role in innovation  Post-It Notes & failed adhesives  Nylon: a lab experiment that went wrong  TVS Spectra failed, but Victor succeeded  Time-to-market is important…but don’t forget the role of earlier innovations  Separate intelligent failure from unnecessary failure - in language and managerial response  Create infrastructure, give resources for expts  Have a high trial rate: fail fast, learn fast  Can you do the “last” experiment first?
  40. 40. Avoid the “Failure Fallacy”41
  41. 41. 8 Steps to Innovation Excellence42 STEP 5 GO FAST FROM PROTOTYPE TO INCUBATION
  42. 42. Improve the Idea Velocity43 5. Go Fast from Prototyping to Incubation
  43. 43. Improve the Idea Velocity44 5. Go Fast from Prototyping to Incubation
  44. 44. Make the story sticky45
  45. 45. Make Ideas Sticky46 Characteristic of Technique of improvement a sticky idea Prototype (Rajappa, Phalke), Concrete “Before and after” scenarios, Stories (Salt march) Curiosity Curiosity flow (Steve Jobs iPod launch) Find a champion (Bose and Credible Einstein), Testable credentials (idea per person per year)
  46. 46. 47
  47. 47. 8 Steps to Innovation Excellence48 STEP 6 ITERATE ON THE BUSINESS MODEL
  48. 48. Improve the Idea Velocity49 6. Iterate on the Business Model
  49. 49. Inimitability/Complementary Assets Framework Holder of complementary High Difficult to resources makes make money MoneyEase of Imitation (EMI, Coke) Party with Low Inventor Innov .+ Compl. makes resources makes money Money (Pixar vs Disney) Freely available Tightly held or unimportant and importantSource: Afuah, 2004 Complementary Assets
  50. 50. Increase the Batting Average51 7. Build an Innovation Sandbox 8. Create a Margin of Safety
  51. 51. 8 Steps to Innovation Excellence52 STEP 7 BUILD AN INNOVATION SANDBOX
  52. 52. Increase the Batting Average53 8. Build an Innovation Sandbox
  53. 53. 54 AT LOWCOST… “A near fanatical focus on cost reduction”
  54. 54. German Companies’ Role in Tata Nano Auto55  Bosch “The Tata Nano engine lies in the heart of the Bosch Engine Management System,  Fuelinjection which meets Bharat Stage III and future Euro IV emission norms. For the first time,  Braking systems Bosch developed the two-cylinder  Car electronics Common Rail Direct Injection (CRDi) system with an enhanced Electronic  Continental Control Unit (ECU). A new Starter Motor was conceived, and the super efficient  BASF Generator developed has optimized size and innovative design that meet target specifications and cost.” Source: http://www.boschindia.com/content/language1/html/715_13769.htm
  55. 55. Biocon’s Platform-based Innovation Strategy Potential56 blockbuster Source: Krishnan & Jha, 2011 Novel cancer treatment 2G Oral Insulin Monoclonal Antibodies Biosimilars with Cuban Inst. Novel process Generic drugs for R-insulin Production of statins, immuno- suppressants Expertise in Fermentation Technology Built through Enzyme Business
  56. 56. 57 7 Themes Platform Offering  Digital consumers  Emerging economies  Sustainable tomorrow  Smarter organizations  New commerce WalletEdge  Pervasive computing  Healthcare economy http://jugaadtoinnovation.blogspot.in/2012/04/infosys-innovation-to-build-tomorrows.html
  57. 57. Open Innovation58  Procter & Gamble has radically altered the way it comes up with new ideas & products. It now works with universities, suppliers and outside inventors. It offers them a share in the rewards. In less than a decade, half of P&G’s new-product ideas originate outside of the firm  Thus P&G has been able to grow at 6% a year between 2001 and 2006, tripling annual profits to $8.6 billion. The company now has a market capitalisation of over $200 billion.  Check out The Game Changer by Lafley & Ram Charan
  58. 58. 8 Steps to Innovation Excellence59 STEP 8 CREATE A MARGIN OF SAFETY
  59. 59. Increase the Batting Average60 9. Create a Margin of Safety
  60. 60. Measurement (Metrics)61  Pipeline  Idea Velocity  Batting Average  Participation
  61. 61. No Parameter Lead indicator Lag indicator 1 Pipeline Number of challenges in the Number of ideas in the challenge-book pipeline, Number of ideas per person per year. 2 Idea velocity Average time to give idea Number of experiments in relevant feedback to the exploring new types of idea author, customers, defining new Number of experiments / offerings / products, exploring prototypes, new partnerships and new feasibility studies, pricing models, invention disclosures, Average time from formal white papers in a year, approval to cash / saving / Average time for an idea to impact reach the first experiment / prototype, Frequency of innovation review, Average time to get support from a champion 3 Batting average Number of innovation Percentage of revenue from sandboxes, number of innovations in the last 5 years innovation platforms 4 Participation Number of people giving Number of active ideas / comments / votes, Communities of practice Mentors / catalysts / (CoPs), Role models,62 champions customers engaged
  62. 62. 63rishi@iimb.ernet.inhttp://jugaadtoinnovation.blogspot.in THANK YOU

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