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The Disciplines of Continuous innovation

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Can we design an organization that will release a steady stream of breakthroughs?

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The Disciplines of Continuous innovation

  1. 1. ©2014 FCB Partners. All rights reserved. Webinar Roundtable Discussion June 18, 2014 The Disciplines of Continuous Innovation: Can We Design an Organization to Release A Steady Stream of Breakthroughs? Brad Power Ted Power Andrew Gaule
  2. 2. 1©2014 FCB Partners. All rights reserved. Housekeeping  Please change “Viewer X” to your name by clicking on “Viewer X” and changing it.  Ask questions at any time during the session by using the chat window.
  3. 3. 2©2014 FCB Partners. All rights reserved. Today’s Discussion Leader Brad Power Experience • Has consulted and conducted research on process innovation and business transformation – 30+ years • Consulting: recent work with healthcare organizations to define and launch "journeys" to improve their work • Research: CSC Index, Lean Enterprise Institute, Hammer and Company, and FCB Partners Passion Stories of companies which embarked on a process innovation program and either kept going, or didn't, and why. Engage • Blog posts: The Harvard Business Review • Continuous Innovation: LinkedIn discussion
  4. 4. 3©2014 FCB Partners. All rights reserved. Can You Create an Organization that Embraces Continuous Innovation? Drivers  Social, mobile, ‘Big Data’, cloud, sensors, cameras  Software is eating the world Threats  Shorter product lifecycles Opportunities: Role Models  High-tech disruptor: Google  Retail and high-tech disruptor: Amazon
  5. 5. 4©2014 FCB Partners. All rights reserved. Google’s Continuous Innovation Innovation Examples  Driverless car, maps  YouTube  Google Glass  Google Fiber, Project Loon  Google Goggles Management System  Google[x] (moonshots)  Acquisitions (Makani)  20% time  Quick demos  Run lots of experiments and let the market decide  Fail fast and learn, scale up quickly if it shows promise  Culture of openness, analytical rigor, and respect for workers
  6. 6. 5©2014 FCB Partners. All rights reserved. Amazon’s Continuous Innovation Innovation Examples  Kindle  Web services  Amazon Prime  Drones? Management System  Think big: the everything store  Focus on customer value  Disrupt yourself (used books, Kindle)  Set up lab in Silicon Valley (A9, Lab 126)  Acquisitions (Zappos)  Missionary (relentlessly disruptive) and mercenary (calculating and ruthless)
  7. 7. 6©2014 FCB Partners. All rights reserved. How GE Stays Young Process Disciplines 1. Segregate funding and management – Bet on Durathon battery 2. Rapid product development – FastWorks at GE Appliances 3. Partnering – GE Ventures, Local Motors, Quirky, Kaggle, GrabCAD For more, see my Harvard Business Review post “How GE Stays Young”
  8. 8. 7©2014 FCB Partners. All rights reserved. 1. Segregate Funding and Management Purpose (Time Frame) Tune the Engine (0 – 12 months) Cross the Chasm (12 – 36 months) Create Future Options (36 – 72 months) Driving Goal Maximize economic returns - incremental Become a going concern - sustaining Create a category - disruptive Key Performance Indicators Financial targets (revenue, bookings, margin, share) – faster, cheaper, better Escape velocity (target accounts, sales, deals, time to tipping point) Momentum (name-brand customers, deal size, name-brand partners, PR buzz) Risk: Approach Predictable: LSS Uncertain: Big bets Uncertain: Experiment Accountable Operating managers Venture managers Corporate managers Delivery Organization Hierarchy Temporary, virtually- integrated business unit Incubator Scarce Resources Operations people and assets Time Sales Customer access Capital Sources: Geoffrey Moore, Michael Raynor, Clayton Christensen
  9. 9. 8©2014 FCB Partners. All rights reserved. 2. Continuous Product Management Best Practice Software Development Cutting Edge Software Management Hardware Product Management Release frequency Cadence: weeks (days) = batch Continuous: 100s of changes per day = flow ? Architecture One code base Many small services ? Testing Sequential testing process (scripts, unit test, system test) Continuous: Automated test system, “feature gates” (hidden, test, beta, unveil, A/B) ? Organization Cross-functional teams, meetings Small teams, responsible for all aspects of services ? ?
  10. 10. 9©2014 FCB Partners. All rights reserved. Google’s Automated Test Machine  Architecture: Single version of test system – As developers make changes, they are tested with the most recent version, which includes all changes – Runs 100 million test cases per day – If a test finds problems, it tells developers whom to contact – directly, no middle managers  Organization: Built and run by a “test engineering” group – About 15% of total developers – Build the automated test systems – they don’t do testing  Performance: Can go from an idea for a software change to release in 48 hours. Source: Andy Singleton
  11. 11. 10©2014 FCB Partners. All rights reserved. Amazon’s Continuous Delivery Process  Architecture: Divide big online ordering application into thousands of smaller “services”. – A service might display a web page, or get information about a product.  Organization: A service development team maintains a small number of services – Release changes as they become ready  Performance: Release a change about once every 11 seconds, adding up to about 8,000 changes per day. – In the time Staples makes a new release, Amazon has made 300,000 changes Source: Andy Singleton
  12. 12. 11©2014 FCB Partners. All rights reserved. GE Appliances’ FastWorks  Based on the’ Lean Startup’ approach of Eric Ries – Rapid learning cycles  Jan. 2013 challenge: create a working ‘French door’ refrigerator in 3 months and production model in 11-12 months – vs. model changes every 5 years  Changes in supplier relations, finance, and leadership roles For more, see my Harvard Business Review post “How GE Applies Lean Startup Practices”
  13. 13. 12©2014 FCB Partners. All rights reserved. Google’s ‘Moonshot’: Project Ara  Mission: Open hardware modular smartphone – Swap in different components when it's time to upgrade – Cheap enough to be accessible to 5 billion people  Organization: Small team of ex- DARPA engineers and Googlers – Partnered with a dozen partners – 2-years to saleable product  Technology: Continuous 3D printing – ‘Racetrack’ 50x faster – Create thousands of unique module shells every day
  14. 14. 13©2014 FCB Partners. All rights reserved. 3. 10 Partnering Moves 1. Technology scouts 2. University collaboration 3. Open R&D campus 4. Incubator units, Accelerators 5. Direct venture funds 6. Indirect venture fund investments 7. Joint opportunities, strategic alliances 8. IP repositories 9. Proprietary crowd ecosystems 10. Open crowd ecosystems Source: Andrew Gaule, Open Innovation
  15. 15. 14©2014 FCB Partners. All rights reserved. Incubator Example: Y Combinator Success Examples  Since 2005 funded over 630 startups – Airbnb – Disqus – Dropbox – Reddit – … and Abacus Management System  The deal: small investment (rarely more than $20,000) for small stake (usually 2- 10%), 3 months in Mountain View, culminating in “Demo Day” – promote to angel investors  Two cycles per year, rapid selection process  Support: Tuesday “dinners”, office hours, Prototype Days, Rehearsal Day  Protect entrepreneurs and angel investors from cram down  Analysis of venture success: gather profile data (e.g., number and type of founders), videotape initial interviews, then review after teams succeed or fail“The most prestigious program for budding digital entrepreneurs”
  16. 16. 15©2014 FCB Partners. All rights reserved. Venture Funding Example: AMEX Success Examples  Investments include – Bill.com Inc ., which automates billing for small businesses – ShopRunner Inc., which provides membership services for online shoppers and is considering an IPO – Radius Intelligence Inc., which aggregates data on small businesses to generate leads. Management System  American Express Ventures (Managing Director based in Silicon Valley) works closely with units to identify needs.  Team leverages relationships to identify start-ups with new technologies that might be relevant.  Senior executives visit and evaluate start-ups as potential partners.  Jointly define use cases and run a pilot.  American Express may invest, depending on strategic importance and financial viability ($100 million fund).  Funding justified on strategic fit first, financial return second. For more, see my Harvard Business Review post “Leveraging Silicon Valley - From Wherever You Are”
  17. 17. 16©2014 FCB Partners. All rights reserved. What Should You Do? Resource Allocation  How are you allocating resources between today and tomorrow? Capabilities  Do you have the disciplines for continuous innovation?
  18. 18. 17©2014 FCB Partners. All rights reserved. How Are You Allocating Resources Between Today and Tomorrow? Stable World Change Coming Disruption Now! You? Daily Operations 90% 85% 75% Incremental Improvement 5% 5% 5% Sustaining Innovation 5% 5% 5% Disruptive Innovation 5% 15%
  19. 19. 18©2014 FCB Partners. All rights reserved. The Disciplines of Continuous Innovation Product Management Partnering Funding
  20. 20. 19©2014 FCB Partners. All rights reserved. Disciplines Assessment Funding Product Management Partnering Competitively Disadvantaged World-Class Competitive Parity Industry Leadership X = Where we are performing today G = Goal X X XG G G Performance Gap
  21. 21. 20©2014 FCB Partners. All rights reserved. Continue the Dialogue Host Date Subject October 15 Institutionalizing Operational Excellence: Continuously Improving the Customer Experience Roundtable Discussion October 16 Process Innovation Research Report and Discussion October 17 Sustaining Process Thinking Roundtable Discussion 1. Chicago Meetings October 15-17 2. LinkedIn Discussion Group Continuous Innovation What are the key processes for an enterprise to deliver continuous innovation – a steady stream of breakthroughs? 3. Research Interview

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