Organazational and Strategic innovation

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Strategic Innovation is the creation of growth strategies, new product categories, services or business models that change the game and generate significant new value for consumers, customers and the corporation

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Organazational and Strategic innovation

  1. 1. Organizational Organizational andand Strategic Innovation Strategic Innovation Afrouz Hojati Fatemeh Aghajani University of Tehran Spring 2014
  2. 2. Outline 0 Innovation Definition and types? 0 Organizational Innovation 0 Strategic Innovation 0 How to Implement Strategic Innovation? 0 Sources 2
  3. 3. 3 What Is Innovation?
  4. 4. 4 Management Innovation Strategic Innovation Business Model InnovationValue Innovation Product Innovation Service Innovation Market Innovation Process Innovation Technological Innovation Disruptive Innovation Application Innovation Experiential Innovation Marketing Innovation Structural Innovation Brand Innovation User Lead Innovation Supply Chain Innovation Evolutionary Innovation Revolutionary Innovation Innovation Comes in Many Flavors;
  5. 5. 0 Many companies fail to extract the most from their investments in innovation, this can be attributed to many pitfalls, to name a few: 0 Not having a complete understanding of innovation, all the different options to achieve a sustaining innovative organization 0 Insufficient insight into what customers really want 0 Failure to make innovation connected and explicit in vision, objectives and part of the strategy and fabric of the organization 0 Lack of balance between the ‘dynamic’ parts required to be successful 5 Why does structuring innovation really matter?
  6. 6. 0 Weak links between business strategy and product portfolio 0 Insufficient engagement of the whole organization to pursuit innovation 0 A lack of resources or not placed in the appropriate part that brings value in your high priority areas. 0 A weak innovation process that places its focus on one part, not appreciating the whole process needs equal emphasis 0 A missing set of enabling structures within the organization 0 Knowing that different types of innovation require ‘distinctive’ recognition 6 Why does structuring innovation really matter?
  7. 7. Internal Innovation vs External Innovation 7 What’s the direction of your innovation efforts?
  8. 8. Continuous / Evolutionary Innovation vs Discontinuous / Revolutionary Innovation 8 Just How Innovative Do You Want to Be?
  9. 9. 9 Internal External DiscontinuousContinuous Management Innovation Management Innovation Operational Innovation Operational Innovation Product & Service Innovation Product & Service Innovation Strategic Innovation Strategic Innovation The Innovation Map: 4 prototypal innovation types
  10. 10. 0 New business models (including a new value chain architecture), or 0 New markets (either by creating new ones or reshaping existing ones), or 0 Increased value for both the customer and the company or a combination of these three, and as such it‘s nature is radical. It‘s a departure from a company‘s traditional definition of “how we do business around here”. 10 What Is Strategic Innovation?
  11. 11. 11 What Is Strategic Innovation?
  12. 12. 12 What Is Strategic Innovation?
  13. 13. 13 Internal External DiscontinuousContinuous Management Innovation Management Innovation Operational Innovation Operational Innovation Product & Service Innovation Product & Service Innovation Strategic Innovation Strategic Innovation Processes Technological innovation Disruptive Innovation Blue Ocean Strategy Customer interfaces and experiences New offerings Partner interfaces Internal structures and processes People Management Channels Brand Networking Supply Chain Technological innovation New markets Innovation Map
  14. 14. 0 “No problem can be solved from the same level of consciousness that created it.” -Albert Einstein 14
  15. 15. 0 Traditional Approach 0 Serendipitous Approach 0 Strategic Innovation 15 3 Different Approaches
  16. 16. 16 Traditional Approach Vs. Strategic Innovation Traditional Approaches Strategic Innovation Approaches 0 Adopt a “present to future” orientation-takes today as the starting point 0 “Starts with the end in mind”-identifies long-term opportunities and then “bridges back to the present” 0 Assume a rule-maker/taker(defensive/follower) posture 0 Assume a rule-breaker (revolutionary) posture 0 Accept established business boundaries/product categories 0 Seeks to create new competitive space/playing fields 0 Focus on incremental innovation 0 Seeks breakthrough, disruptive innovation-while continuing to build the core 0 Follow traditional, linear business planning models 0 Marries process discipline with creative inspiration 0 Seek input from obvious, traditional sources 0 Seeks inspiration from unconventional sources 0 Seek articulated consumer needs 0 Seeks unarticulated consumer needs 0 Are technology-driven(seek consumer satisfaction) 0 Is consumer inspired (seek consumer delight) 0 May have a “one-size-fits-all” organizational model 0 May experiment with entrepreneurial “new venture” or other organizational structures
  17. 17. Serendipity (n.) Finding something good without looking for it. 17 Serendipity; Fortunate Mistake
  18. 18. 0 It’s part luck, part skill 0 Incorporates a process to create and takes advantage of serendipitous moments 0 Sounds like planning for accidents, right? 0 While this concept may seem counter intuitive, but it actually makes a lot of sense 0 Integrate the best strategy and chance into your plans 0 Cannot plan for all of the unexpected opportunities that may come your way, but what you can do is analyze the unplanned opportunities 18 Serendipitous Strategy
  19. 19. 19 Breakthrough Incremental Serendipitous Intentional Incremental Innovation -Incremental innovation -Low/Med Revenue Potential -Initiated by Organization
  20. 20. 20 Serendipitous Innovation Vs. Strategic Innovation
  21. 21. 0 Focus on a common theme of making large expansive changes in products and operation vs 0 The traditional TQM approach of incremental monitoring, assessing, and modifying. 21 Strategic Innovation Models
  22. 22. As seen in this figure many innovation strategies refer to these explosive growth and breakthroughs created by Strategic Innovation as discontinuous change or disruptive change and innovation. 22 Level of Change
  23. 23. 23 to produce outcomes that drive organizational growth 1: Managed Innovation Process Dimension 2: Strategic Alignment Dimension 3: Industry Foresight Dimension 4: Consumer/Customer Insight Dimension 5: Core Technologies and Competencies Dimension 6: Organizational Readiness Dimension 7: Disciplined Implementation (Keathley, Merrill, Owens, Meggarrey, & Posey, 2014) 7 Dimensions
  24. 24. Managed innovation processes are at the core of any strategic approach. An organization’s goal is to find the equilibrium between external perspectives and an organization's internal capabilities. It must look beyond the obvious in order to create a culture that explores new possibilities. 24 1 – Managed Innovation Processes
  25. 25. Strategic alignment involves internal support and commitment among key stakeholders. This commitment is necessary for strategic innovation. It engages the organization around a unifying vision and goals which align its strategies and business models. 25 2 – Strategic Alignment
  26. 26. Industry Foresight is a top-down perspective used to understand the complex forces that drive change, it includes emerging and converging trends, the latest technology, competitive dynamics, and alternative scenarios. 26 3- Industry Foresight
  27. 27. Core Technologies and Competencies are a set of internal capabilities, competencies needed deliver value to the organization’s customers. Understanding these capabilities and competencies, as well as the organization’s gaps in technologies, intellectual property, brand equity and strategic relationships are critical for creating strategic innovation. 27 4- Core Technologies and Competencies
  28. 28. 28 Quote on Core Competencies
  29. 29. Consumer/Customer Insight is mirroring, bottom- up perspective, a deep understanding of both articulated (explicitly stated) and latent, or unrecognized, needs of current and potential customers and business segments. 29 5- Consumer/Customer Insight
  30. 30. Organizational Readiness is the determination and ability for an organization to implement new ideas and strategies, as well as, to successfully manage and sustain those ideas and strategies once initiated. It is typically made up of three areas of readiness; cultural, process, and structural. 30 6- Organizational Readiness
  31. 31. Disciplined Implementation is the organization’s capability to effectively sustain the life cycle of innovation. The sustainment of which is dependent on the organization's repeat each step of the innovation life cycle over and over again. 31 7- Disciplined Implementation
  32. 32. 32
  33. 33. 0 Five Phases of Innovation 0 Generate 0 Conceptualize 0 Optimize 0 Implement 0 Capture 0 Repeat as needed 33 5 Phase Strategic Innovation Life Cycle Model
  34. 34. A specific type of strategic innovation 0 Leads to a new way of doing the business 0 Conflicts with the traditional way of doing business Examples: 0 Internet 0 Low-cost airlines 0 Direct insurance 0 Online brokerage trading 0 Distribution of news 0 Home delivery of grocery stores 34 Disruptive Strategic Innovation
  35. 35. 0 Emphasis on different product or service attributes 0 Traditional brokers sell services on the basis of research and advice 0 Online brokers sell on price and speed of execution 0 Innovators become attractive to new segments 35 Characteristics of Disruptive Strategic Innovation
  36. 36. 0 Start out as small and low-margin businesses 0 Rarely gain support or long-term commitment from established competitors 0 The innovations are small and not attractive until they grow 0 Grow to capture a large share of the established market 0 Improvements are made over time 0 They are able to deliver comparable performance 0 Established competitors model the new attributes 36 Characteristics of Disruptive Strategic Innovation
  37. 37. 0 General Electrics 0 Dell 0 Canon 0 Kodak 0 IBM 0 Spacex 37 Applied Example
  38. 38. 38 GE’s Six Part Growth Model
  39. 39. 0 Developed new engines and a new launch vehicle 0 Resulting in NASA and commercial customers signing on to 40+ manifests 0 Focused on Disruptive Strategic Innovation 0 Developing the Grasshopper vertical takeoff and landing (VTVL) vehicle 39 Space-X
  40. 40. 0 Dell Inc. redesigned the company’s direct-sales model 0 IBM changed its practice of independently selling hardware and software to selling complete solutions 0 Canon Inc. developed photocopiers for small offices instead of large corporations 0 Eastman Kodak pioneered IT operations outsourcing 40 Technological Industry Examples
  41. 41. 41 Risk in Strategic innovation
  42. 42. 0 Delve into product innovation until ready to kick-off 0 Use time effectively 0 Portfolio Mapping 0 Innovation Roadmaps 0 Innovation Funnel 0 Stage Gate Innovation 0 Open innovation has emerged as viable mitigation strategy (More Recently) 42 Risk Management Applied to Product Innovation
  43. 43. 0 Innovate while providing service Invest in new service infrastructure Customers finance the development cost Risks 0 Higher service costs/reduced profit margins 0 Contract penalties 0 Uncertainty of outcomes/customer satisfaction 0 Soiled reputation 43 Risk Management Applied to Service Innovation
  44. 44. 0 Phased/Pilot implementation may yield desired outcome Avoid singular mindset Open to suggestions Critical elements: 0 Entrepreneurial culture 0 Incentives 0 Knowledge management 0 Risk Management in Service Innovation 0 Prepare for Service Innovation 0 Examine alignment of business model, infrastructure, operations 0 Identify gaps 0 Take actions (hire experts, separate business models) 44 Risk in Strategic innovation
  45. 45. 0 Master the learning challenge 0 Collaborate with frontline stakeholders 0 Knowledge dissipation/training 0 Knowledge capture/feedback 0 Customer collaboration 0 Setup the stage/expectations 0 Positive customer engagement 0 Knowledge capture 0 Learn from the knowledge 0 Look at past and current initiatives and Key Performance Indicators (KPIs) 0 Adjust as needed 45 Risk in Strategic innovation
  46. 46. 0 Facts: 0 Service Innovation happens in “real-world” 0 Initial service delivery does not yield returns right away 0 Benefits come from “hits-and-misses” analysis and corrective measures Service B overlap Service A Time Time 0 Better results can be achieved by: 0 Cross-functional decision making 0 Organizational alignment 0 Knowledge management 0 Incentives and rewards 46 Risk in Strategic innovation
  47. 47. 1. Conduct Innovation Audits 2. Build Innovation Strategies 3. Create Continuous Innovation 4. Optimize Marketing Strategies 5. Improve Customer Relationships 6. Find Revenue Innovations 7. Uncover Cost Innovations 47 What We Do?
  48. 48. 48 What We Do? 0 Conduct Innovation Audits 0 Build Innovation Strategies 0 Create Continuous Innovation 0 Optimize Marketing Strategies 0 Improve Customer Relationships 0 Find Revenue Innovations 0 Uncover Cost Innovation
  49. 49. 49 • How innovative is your company already? • Do people feel like they can innovate in your organization? • Are building blocks for innovation in place? • Is the organization aligned to support innovation? - Culture - Rewards - Human Resource policies - Top-down support • Is funding for idea development set aside? What We Do? 0 Conduct Innovation Audits 0 Build Innovation Strategies 0 Create Continuous Innovation 0 Optimize Marketing Strategies 0 Improve Customer Relationships 0 Find Revenue Innovations 0 Uncover Cost Innovations
  50. 50. 50 • Align with Corporate Strategy or not? • Define Innovation Goals • Define Innovation Policies • Innovation Management System Selection • Build Processes for Idea Selection • Establish an Innovation Funding Plan • Identify Relevant Innovation Metrics • Create an Innovation Training Plan 0 Conduct Innovation Audits 0 Build Innovation Strategies 0 Create Continuous Innovation 0 Optimize Marketing Strategies 0 Improve Customer Relationships 0 Find Revenue Innovations 0 Uncover Cost Innovations What We Do?
  51. 51. 51 • Identify Organization Cultural Changes to be Made • Build Visual Models to Drive Quality Contributions • Train All Employees to be Business Innovators • Modify HR Policies as Needed • Define Innovation Communications Plan • Refine Processes for Idea Generation as Needed • Innovation Management System Implementation • Refine Innovation Funding Plan as Needed • Refine Innovation Metrics as Needed 0 Conduct Innovation Audits 0 Build Innovation Strategies 0 Create Continuous Innovation 0 Optimize Marketing Strategies 0 Improve Customer Relationships 0 Find Revenue Innovations 0 Uncover Cost Innovations What We Do?
  52. 52. 52 •Are you building your marketing and product development around the right customer insights? •Are you marketing to your customers where they are, or are you shouting into the darkness? •Are you reaching the right customers? •Are you building a relationship of increasing mutual value with your customers? •We’ll improve your marketing outcomes or build you a marketing strategy from scratch 0 Conduct Innovation Audits 0 Build Innovation Strategies 0 Create Continuous Innovation 0 Optimize Marketing Strategies 0 Improve Customer Relationships 0 Find Revenue Innovations 0 Uncover Cost Innovations What We Do?
  53. 53. 53 • Together we will create meaningful and productive conversations your customers • Enabling a seamless transition of the conversation from pre-sale to post-sale • Creating loyalty not just a loyalty program • Delivering value to customers, not e-mails • We can help you implement a true conversational marketing strategy • We will find the right role for social media in your conversational marketing strategy 0 Conduct Innovation Audits 0 Build Innovation Strategies 0 Create Continuous Innovation 0 Optimize Marketing Strategies 0 Improve Customer Relationships 0 Find Revenue Innovations 0 Uncover Cost Innovations What We Do?
  54. 54. 54 • Understand your customers better • Identify new markets or customers for existing products or services • Deliver new products or services that will expand your customer base or increase your customer penetration • Deliver new products or services that will increase lifetime value of your customers through higher customer loyalty • Extract the right customer insights, those that will result in competitive separation 0 Conduct Innovation Audits 0 Build Innovation Strategies 0 Create Continuous Innovation 0 Optimize Marketing Strategies 0 Improve Customer Relationships 0 Find Revenue Innovations 0 Uncover Cost Innovations What We Do?
  55. 55. 55 • Optimize your business processes with us • We will help you identify what customers really want • We will help you identify what the business really needs • As a result their may be things you currently do that you can stop doing • Identify opportunities for savings from outsourcing • Identify opportunities for insourcing (does it make sense to perform a process for others in the industry to leverage our investments) 0 Conduct Innovation Audits 0 Build Innovation Strategies 0 Create Continuous Innovation 0 Optimize Marketing Strategies 0 Improve Customer Relationships 0 Find Revenue Innovations 0 Uncover Cost Innovations What We Do?
  56. 56. 0 Palmer, D., & Kaplan, S. (n.d.). Resources: Strategic Innovation Resources – Articles, White Papers & Books. Retrieved November 14, 2013, from InnovationPoint: http://www.innovationpoint.com/resources.htm 0 Abraham, J., & Knight, D. (2001). Strategy & Leadership: leveraging creative action for more profitable growth. Strategy & Leadership, 29(1), 21-26. Retrieved from Emerald: https://www.emeraldlibrary.com 0 Govindarajan, V. (2004, January 15). Strategic Innovation and the Science of Learning. Retrieved November 21, 2013, from MIT Sloan Management Review: http://sloanreview.mit.edu/article/strategic-innovation-and-the-science- 56 Refrences
  57. 57. 0 Markides, C. (1997, April 15). Strategic Innovation. Retrieved November 18, 2013, from MIT Sloan Management Review: http://sloanreview.mit.edu/article/strategic-innovation/ 0 Porter, M. E. (1996, November 1). What is Strategy? Harvard Business Review(74), pp. 61-78. Retrieved November 18, 2013 57
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