Corporate innovation a basic premise by devasis chattopadhyay


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  • Corporate innovation a basic premise by devasis chattopadhyay

    1. 1. A Basic PremiseCorporate InnovationThe theory that propels business Devasis Chattopadhyay 1
    2. 2. 2
    3. 3. Invention versus Innovation Invention Innovation Happens in a lab Happens in the market with customers You have to fail to succeed Can’t afford to fail No intrinsic value Has value because it solves a real problem Expense Revenue is the return on innovation Individual performance Organizational Leverage 3
    4. 4. Innovation Plays a very major role in any Organizational Change… Globalisation Cost-effective Innovation producer Supply chain  Partnerships  Push to pull  New competitors  Logistics  New products/technology  Time to market Work Practices Imperatives Customer focused  Organisation  Processes  Procedures for  Culture  Values  Key performance indicators (KPI) change in  Style Design  Continuous improvement Company   Recruitment Technology  Products  Process Knowledge capital  Systems  Information Speed World class  Training to market quality
    5. 5. Need for InnovationThe proliferation of new technologies, disruptive delivery and distributionmechanisms, and frequent changes in business models are forcing companies to adaptin order to survive and thrive. This requires constant innovation….. — The Winners — — The Survivors — — The Losers —  Far reaching, rapid  Sluggish, “me too”  No action; performance improvements in service improvement gap leaves them far capability behind  May be able to hold  Will be able to increase ground if they stay close  Market share gains of market share enough to early movers early movers will be at the expense of these  Will be well positioned  Will lose some ground as manufacturers during industry consolidation takes place consolidation phase  Consolidation/shakeout will threaten survival Company must move quickly; those who lag will survive at best
    6. 6. Innovation: The Concept Innovation is generally understood as the successful introduction of new products, services or methods. Innovation is the embodiment, combination, or synthesis of relevant knowledge in original form along with valued new products, creative processes, or innovative services. Like many business functions, it is a management process that requires specific tools, rules, and discipline Innovation is viewed as an invention that adds sustaining value or creates quantum leap improvement for companies - the kind of value that one can quantify – it could be increased revenues and/or profits leading to increased valuations of businesses
    7. 7. Innovation: The Organizational Concept In the organizational context, innovation in most cases is linked to performance and growth through improvements in efficiency, productivity, quality, competitive positioning and market share. All innovation begins with creative ideas . Innovation is defined as the successful implementation of creative ideas within an organization that generates economic value. Creativity of individuals and teams is the starting point for innovation; a creative team is a pre-requisite but that does always guarantee successful innovation. For innovation to be successful, something more than just the generation of a creative idea or insight is required: the idea must be put into action to make a genuine difference. Such a change might require new or altered business processes within the organization, or changes in the products and services or a launch of a radically different new product or a business model. 7
    8. 8. Innovation – The Goal Being First or Great ? Innovation must enable businesses to not only excel in today’s globally competitive environment but also ensure survival for a longer term. Companies must innovate primarily for ensuring sustainability and long-term competitive advantage. Hence the question is not whether one is first or great. There is no place in today’s global marketplace for those companies that cannot continually envision, conceptualize, and continuously innovate whether it is products, services or a new business model that delivers perceived value to the customers. It is not only critical that business innovate and launch new products and services in a highly profitable manner, but also equally important agenda would be to build a highly knowledge-oriented organization for effectively competing in the global markets. In order to enable all the above, it requires a different kind of leadership style, mindset, work culture to become an “innovative organization”. 8
    9. 9. What drives successful innovation ?If one asks, “What drives successful innovation?” one is likely to get theseanswers:“Desire for growth.”“Demand for increased profitability.”“Motivation and Retention of People.” Typically what drives successful innovation are:  Entrepreneurial leadership  Respect for creative thinkers  Desire to be known as a knowledge-based organization  Desire to be one of the best in the world – whether products, unique service/delivery or cost competitivenessEvery business needs an innovation engine to generate the great orunique ideas that will propel the business forward into the future. Cont…… 9
    10. 10. Purposeful Innovation Before the 1880s, invention was mysterious. During the early nineteenth century, books talked incessantly of the flash of genius.’ By the time World War I broke out in 1914, ‘invention’ had become ‘research,’ a systematic purposeful activity, planned and organized with high predictability both with respect to the results aimed at and likely to be achieved. Something similar would need to be done with respect to innovation. Enterprise will have to learn to practise systematic purposeful innovation. Successful company’s do not wait for a bright idea to strike; they do not look for the big time innovation that will revolutionize the industry they are operating in nor do they work to create a multi-billion dollar business. Therefore, those companies who start out with the idea of making it big and thus are in a hurry, are probably destined to fail because they are bound to do wrong things. Cont………….. 10
    11. 11. Purposeful Innovation An innovation that looks very big may turn out to be nothing more than technical virtuosity while the one with modest intellectual pretensions, a McDonald’s for example, may eventually turn out to become a gigantic and highly profitable business. Successful companies, whatever their individual motivation — be it money, power, curiosity or a great desire for fame and recognition — try to create value and make a tangible contribution. It is true that successful companies aim high; they are not content simply to improve on what already exists or to modify it. They try to create new and different value propositions to convert a ‘material’ into a ‘resource,’ or to combine the existing resources in a new or more productive configuration. And, it is this change that always provides the opportunity for the new and different. 11
    12. 12. Entrepreneurship and Innovation - Examples According to conventional wisdom, “Big businesses don’t innovate”. This is to a large extent true that new and major innovations of this century did not come from out of the old, large businesses of their time.Examples of large companies that have done well as Entrepreneurs andInnovators are: The railroads did not spawn the automobile or the truck; they did not even try. On the contrary, the automobile companies did try (Ford and General Motors pioneered in aviation and aerospace), all of today’s large aircraft and aviation companies have evolved out of separate new ventures. Similarly, every one of the giants of the electrical industry – General Electric, Westinghouse, and RCA in the United States; Siemensand Philips on the Continent; Toshiba in Japan – rushed into computers in the 1950s. Not one was successful. IBM and Hewlett Packard now dominate the field and both were either small or barely mid-sized and most Cont………….. definitely not influential companies fifty years ago. 12
    13. 13. Entrepreneurship and Innovation – The Truth In the current era of rapid change, success of a business will clearly depend on how much the top management encourages and practices entrepreneurship and innovation. If the enterprise does not innovate, it will inevitably age and fast decline. Sometimes successful and financiallyhealthy businesses do run the risk of becoming bureaucratic and complacent. And this could become a serious impediment to entrepreneurship and innovation. However, we must understand and appreciate that entrepreneurship is not “natural”; it is not “creative”. It is hard work as opposed to what conventional wisdom would like us to believe. Entrepreneurial businesses treat entrepreneurship as a duty. They are disciplined about it; they work for it and religiously practice it. 13
    14. 14. Corporate Innovation MachineThe Corporate innovation machine is a model for understanding how toimplement an effective, idea management based innovation strategy inthe firm. 14
    15. 15. Principles behind theInnovation Machine Strategy 15
    16. 16. Corporate Innovation Machine - Powered by Management The corporate innovation machine is powered by management. Just as the most sophisticated machine will not run without a power source, likewise your corporate innovation strategy will go nowhere without top management taking the lead. Managements main task is to create within the organization a culture of innovation which will empower workers to think creatively, collaborate on ideas and contribute their ideas to the company. This is not an easy task, but done well it will make construction of the remainder of the innovation machine a relatively easy job. Management must have a plan that’s put into place to move the company towards innovation 16
    17. 17. Do’s and Don’t for Management Ensure that there is environment of trust - If the workforce does not trust the company, they will not innovate for the company. Survey after survey has shown that trust is one of the most critical factors in establishing a culture of innovation. If your workforce trusts the company, this is not an issue. If not, establishing trust must be your very first step. Establish innovation goals - Determine what you wish to achieve through innovation. This should translate into a series of short term and long term goals against which the results of implementing the innovation machine strategy can be compared. Designate responsibility and resources - Who will take charge of the innovation programme?What tools will you invest in? What resources will you provide? What budget will be available for the innovation programme? Cont…… 17
    18. 18. Do’s and Don’t for Management Develop a communications plan - Likewise, your shareholders and customers should also be aware of your new innovation strategy and how it will benefit them. This all demands a comprehensive communications plan. Demonstrate innovation - If management is seen as managing by the book, employees will doubt managements commitment to innovation. Instead, management should be sharing and implementing innovative ideas – and must communicate this to the workforce. Reduce creative risk - Albert Einstein once said: “If at first the idea is not absurd, then there is no hope for it.” For many people, sharing a potentially absurd idea with their company is overly risky. At best, they may be ridiculed by their colleagues. If the level of creative risk in your organization is too high, people will keep ideas to themselves, rather than share them. You need to ensure creative risk is as low as possible. Cont…… 18
    19. 19. Do’s and Don’t for Management Establish a rewards scheme - Rewarding innovative thinking is an important part of an idea management based innovation strategy. Rewards increase motivation for employees to continue developing and sharing ideas. How management implements these actions varies from organization to organization and depends on existing culture, existing tools, innovation goals and facilities. 19
    20. 20. Idea GeneratorIf management is the power source of the innovation machine, then theidea generator – the tools and techniques for generating ideas – is themotor that drives the innovation process. 20
    21. 21. Creative collaboration – Essential part of InnovationCreativity is the generation of new ideas. Collaboration is an essential element of organizational Creativity innovation. When a team of people come together to vs. devise and develop ideas, they can potentially be Innovation much more innovative than any individual member of the team can be on her own. Innovation is the implementation of creative ideas. Creative collaboration occurs in several ways:Creative Teams Brainstorming groups Open collaborationEmployees should be Again, an effort should be made Possible through web based discussion fora, some webencouraged to form teams to bring as wide a variety ofwith members of other people as possible into each based software and other on-line collaborative tools.departments. brainstorming session. Open collaboration is whereBuild the team with people When appropriate, business any user can interact with anyfrom different divisions partners, Customers and others other user in a transparentand locations session. from outside the company manner. Open collaboration is should be brought In to particularly useful for idea participate. Management in large organizations with multiple locations. 21
    22. 22. Tools & Techniques for generating ideas Organizations should have a small “toolbox” of tools and techniques for facilitating innovation. The central tool should be an idea management system capable of soliciting, capturing and evaluating ideas. Properly used, such a tool permits a steady stream of innovative ideas for implementation. Other tools, such as skunkworks, brainstorming, creative spaces and creative meetings further your organizations innovation potential. Suggestion scheme based idea management An innovation manager reviews suggestions on regular basis with other managers to decide which ideas should be developed further is a good introduction to idea management, but is flawed as a long term innovation solution, particularly in medium to large organizations. An example of suggestion scheme problemIf the suggestion scheme is well promoted, the person in charge will typically be inundated withall kinds of unrelated ideas. Most likely he/she will be unable to manage the quantity andvariety of ideas. As a result the system will begin to stagnate. At the same time, employees seethat nothing is happening to their suggestions and become demotivated, thus stagnating thesystem. 22
    23. 23. Campaign versus Suggestion-based Idea Management Campaign based idea management A superior alternative to the suggestion scheme model of idea management is the campaign based model of idea management. In the campaign based approach, instead of openly soliciting all ideas, the company launches short term campaigns to solicit ideas on specific issues or problems, for example : “Ideas for new product features that will make our widgets more appealing to young home-owners” or “How can we improve the product documentation in order to reduce customer support demands?” Campaign based idea management offers two huge benefits over the suggestion scheme approach.  Firstly it forces people to think about and, focus their innovation on, specific business needs.  Secondly, it motivates employees to participate by providing specific, time limited challenges. Compare the demands: “give me an idea” and “give me an idea on how we can improve our marketing strategy” and it is easy to understand why campaign based idea management attracts more and better ideas. 23
    24. 24. Idea Quality Control The more successful an idea management system is, the more ideas it will generate. As a result, you need an effective idea quality control system. 24
    25. 25. Idea Quality Control Components 1. Evaluation Evaluation Matrix  Retain Flexibility in the system. The 5x5 evaluation matrix is a simple, quick and relatively  If an idea is clearly a winner, it is accurate method for evaluating ideas. You establish five often wise to “run with it" criteria by which an idea can be measured. For example, if immediately, before the competition evaluating a new product idea, the five criteria might be: comes up with the same idea or learns about yours. 1. How profitable do your expect this new product to be over the next 12 months? Care should be taken not to over- 2. How quickly can we get this to market? evaluate ideas. 3. To what extent does this product represent an advance If a highly innovative idea has to go over our competitors products? through multiple evaluations and reviews it is almost certain to be rejected for 4. To what extent is this product likely to expand our perceived risk or so heavily modified in market share? attempt to limit risk, that it loses its innovativeness. 5. How good of a fit is this product with our current product line? It goes without saying that it would be a tremendous waste of budget to implement an enterprise innovation strategy only to reject the most innovative ideas that come out of that strategy.
    26. 26. Idea Quality Control Components2. Open analysisIf an idea gets a good evaluation score, an open analysis meeting is a good means ofdetermining the next steps and any issues which should be borne in mind during theimplementation.The analysis should include the evaluators, the person or people responsible for the idea,the manager who led the campaign and the person who will be in charge of implementingthe idea. The aim of the meeting is to have an open discussion of the idea, potentialweaknesses uncovered by the evaluators and to establish a pre-implementation andimplementation plan. 3. Pre-implementations Pre-implementations are post-evaluation actions designed to analyze an idea in more depth than is possible with an evaluation. Pre-implementations include:  Business cases  Business plans  Market surveys  Prototype development and testing  Trials  Experiments Companies normally have pre-implementation procedures in place for testing new products and services. However, they do not always use such procedures for testing operational or other internal ideas. Pre- implementation is an effective means of testing a new idea while minimizing the risk. Existing pre- implementation procedures should be integrated into the innovation machine strategy. 26
    27. 27. Output: Implemented Ideas Once ideas pass all required quality control processes, they are ready to be implemented. Interestingly actually implementing ideas is a weakness in many companys innovation strategies. 27
    28. 28. Implementation of ideas – Additional ThoughtsIn addition to implementing good ideas, it is important to: Monitor the results of the idea implementations to evaluate the overall innovation programme. Communicate, via the communication plan details about new ideas that are being implemented. Be sure to include the names of the people responsible for the ideas. Disseminating news about successful implementations of ideas demonstrates the value of the innovation strategy as well as recognizes the contributions of the idea submitters. Reward people who have submitted and implemented ideas. This can include recognition as well as using any other rewards system you have implemented. Incidentally, you should also reward people who contribute good ideas which you are unable to implement for whatever reasons. This shows that you value their ideas and creative contributions and encourages them to continue to be creative on the organizations behalf. 28
    29. 29. Redefining Innovation in Today’s World Succeeding as an entrepreneur and an innovator in today’s world is vastly different from what it was in the 20th century. Our times are radically different, the challenges are enormous, and innovations continue to disrupt the way businesses are conducted, and it happens within weeks and months. Organizations will face seven trends in the next decade as they fight to survive, grow and remain competitive. These are:  Speed and uncertainty will prevail  Technology will continue to disrupt and enable  Demographics will dictate much of what happens in business  Loyalty will erode  Work will be done anywhere, anytime  Employment as we know it will disappear  The organization will become a nexus of treaties Cont…… 29
    30. 30. Future Directions On Thursday September 13, 2001, just two days after the attack by terrorists on New York’s WTC, managers at K-Mart noticed an increase in customer demand for American flags. The day before, managers at Target Stores had observed the same thing. Both companies tried to purchase more flags from suppliers but none were available anywhere. That’s because on afternoon of September 11, just hours after the attack, Wal- Mart noticed the same increase in customer demand and purchased every American flag, from every supplier, everywhere. They were able to do so because they update inventory every seven minutes. One international management consulting firm was gathering information for a client recently on the history and pace of computer technology. While it was amazing to review the unimpeded advance in computing power predicted nearly 40 years ago by Gordon Moore, the future holds even greater, discontinuous change. IBM recently announced its intent to design a computer on a molecular scale – a computer that will literally float through the air. 30
    31. 31. Future Directions Today, these stories capture our attention and define our time. If you have ever worked in a large organization, you know that the speed of Wal-Mart is daunting. If you have lived long enough to watch the evolution of the computer age, you must have got used to expecting regular, head-turning innovations. Even still, molecular computers get attention. Technological innovations once came along every generation, then every decade, and now in this nanosecond world, innovative breakthroughs are commonplace, more normative. And if you have discovered that the representative calling about your mortgage payment is sitting in Mumbai, India, you know it really is a different world – its borderless today. This would mean that the very word “innovation” needs redefining. 31
    32. 32. Thank youDevasis Chattopadhyay 32