Creating an Innovation Strategy


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Creating an Innovation Strategy

  1. 1. Creating An Innovation Strategy RDM Management Group Ron Pickett MBA, CMC
  3. 3. WHY CREATE AN INNOVATION STRATEGY  Many executives believe that innovation is critical for success … many have deep concerns about their firm’s ability to innovate effectively … they do not have a formal innovation strategy • A recent study found that only one in five chief executives believes his strategic investments in innovation are paying off… (Bloomberg Business Week, 2013) • Canada has a poor innovation record, ranking 13 out of the 16 OECD countries (Conference Board of Canada, 2014) 3RDM Management Group
  4. 4. WHY CREATE AN INNOVATION STRATEGY  Innovation does not require a revolution inside companies  Innovation is not alchemy, with mystifying transformations …its more like the basic tackling of other key business functions  How you innovate determines what you innovate  Strategic advantage 4RDM Management Group
  5. 5. SEVEN INNOVATION OBSTACLES 1. Concentration on daily business / short-term goals 2. Current products and processes are not put into question 3. Lack of collaboration between departments (silos) 4. Risk aversion 5. Management does not support innovation enough 6. Innovation strategy, process, idea management not existing, not clear and/or not communicated 7. Budget- and/or resource limitations 5RDM Management Group
  6. 6. WHAT IS AN INNOVATION STRATEGY?  An integrated structure, formal processes, and tools for an innovation growth strategy  Includes an organizational design, management systems, performance evaluation metrics, people, HR policies, and rewards  Links to the business strategy 6 RDM Management Group
  7. 7. WHAT IS INNOVATION?  Innovation occurs when a company makes changes to the major technologies or business model for the products and services it markets 7RDM Management Group
  8. 8. INNOVATION DRIVERS  Business model change drivers  Value proposition – what you sell  Value networks – how you sell it  Target customer – who you sell to  Technology change drivers  Products and service offerings  Process technologies  Enabling technologies  Three types of innovation  incremental, semi-radical, and radical 8RDM Management Group
  9. 9. INNOVATION STRATEGY PLANNING MATRIX RDM Management Group 9 Business model drivers Technology drivers Value proposition Value chain Value proposition Target customer Product & service Process technology Enabling technology Incremental Small changes in one or more of the six levers Semi radical Business model driven Radical Significant change in one or more of the three levers Small change in one or more of the three levers Semi radical Technology driven Small change in one or more of the three levers Significant change in one or more of the three levers Significant change in one or more of the three levers Significant change in one or more of the three levers Innovation types
  10. 10. INNOVATION STRATEGIES  Innovation strategy must align with the business strategy  Play Not to Lose (PNTL) – Incremental innovation  Protect and maintain market share  Combat margin erosion  Play to Win (PTW) – Semi radical and radical innovation  Maintain market leadership  Market makers, new industries  Drives growth  Brand building  Ideal strategy balances PNTL and PTW  Play to Fail (PTF) is not having an innovation strategy 10 RDM Management Group
  11. 11. INNOVATION STRATEGY PLANNING MATRIX Business model drivers Technology drivers Innovation types Incremental Banks, Utilities, Government, TQM, ISO 9000, Oligopolies Cellular Wireless Approximately 80% of all innovation Semi radical Business model driven Dell, SW Airlines, Walmart, IBM,, Virgin Semi radical Technology driven Mobile phones, automobiles, Radical Amazon, Google, Apple, Facebook, Henry Ford Walmart, Bit Coin, Apollo Group – Online Education, Virgin, Cloud Computing Value proposition Value chain Target customer Product & service Process technology Enabling technology 11 RDM Management Group
  12. 12. PLAY TO FAIL  … RIM/Blackberry, Nokia, Motorola, Kodak, Sears, Blockbuster Video, Sun Microsystems, DEC, Eatons, Simpsons … 12RDM Management Group
  13. 13. INNOVATION MATRIX Semi Radical Technology Automobiles Mobile telephones Radical Apple Google Amazon Virgin Bit Coin Cloud Computing Incremental Oligopolies Banks Utilities Cellular Wireless Companies 80% of innovation Semi Radical Business Dell SW Airlines Walmart IBM Business Model T e c h n o l o g y 13RDM Management Group
  14. 14. INNOVATION STRATEGY Assess Drivers • Business – What, How, Who you Sell to • Technology – Product, Process, Enabler Select Strategy • Play Not to Lose • Play to Win • Combination Manage Innovation Portfolio • Incremental • Semi Radical • Radical 14 RDM Management Group
  15. 15. LEADERSHIP  Sets the vision  Leads the innovation strategy  Align the innovation and business strategy  Engrain the innovation strategy into the corporate culture  Create innovation networks of intrapreneurs inside and outside the company  Correct metrics and motivators  Risk tolerance  Overcome internal organizational resistance  Freeing up appropriate budget  Be aware and overcome complacency that innovation success creates 15RDM Management Group
  16. 16. Innovation Pyramid An Innovation Strategy provides:  Increased profits  Branding  Market Leadership  High performance work teams  Learning innovative culture  Real competitive advantage 16 RDM Management Group
  17. 17. NEXT STEPS 1. Exert strong leadership and determine the innovation strategy that fits the business strategy, competitive environment, and innovation competencies  PNTL, PTW, or a balance  Assess the innovation climate, run a cultural diagnosis on creativity and value capture 2. Develop innovation platforms for different innovation types – six business and technology drivers  Incremental, semi radical, radical  Structure company and organizing management systems to promote innovation 3. Create portfolios for each platform including idea generation and gating – find the right balance 17RDM Management Group
  18. 18. NEXT STEPS 5. Define internal and external resource requirements 6. Ensure internal innovation platforms have diverse creative and commercialization resources working in harmony 7. Create balanced scorecard metrics and rewards supporting the innovation strategy 8. Overcome any internal resistance to change subverting creativity and commercialization 9. Celebrate successes and embed innovation throughout the corporate culture 18RDM Management Group
  19. 19. HOW CAN RDM ?  An engagement is typically a number of facilitation workshops and stakeholder interviews, walking a leadership team through the 8 steps  Deals with leadership requirements, strategy, structure, resources, management systems, processes, performance metrics, project management discipline, measurement and incentive rewards – organizational structure and culture  Document and present workshop/interview results, clarify, finalize, act, and move to next step  Similar to the strategic planning process 19RDM Management Group
  20. 20. THE INNOVATION PROCESS RDM Management Group 20
  21. 21. THE INNOVATION PROCESS RDM Management Group 21
  22. 22. Questions? RDM Management Group