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Strategic Foresight for Effective Innovation

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A Brief Overview of the Critical Importance and role of Strategic Foresight towards Innovating Effectively.

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Strategic Foresight for Effective Innovation

  1. 1. STRATEGIC FORESIGHT FOR EFFECTIVE INNOVATION A Brief Overview of the Critical Importance and role of Strategic Foresight towards Innovating Effectively NOVEMBER 16, 2014 STRATSERV CONSULTANCY 51 Goldhill Plaza #07-10/11 Singapore 308900
  2. 2. STRATEGIC FORESIGHT FOR EFFECTIVE INNOVATION Page 1 of 9 CCCCONTENTSONTENTSONTENTSONTENTS 1. Purpose 2 2. Types of Innovation 3 3. The Need for Strategic Foresight Driven Innovation 4 4. Crafting Effective Innovation Strategies 5 5. Applying Strategic Foresight for Innovation 6-7 6. Strategic Foresight Methods to aid Innovation Strategies 8 7. About Stratserv Consultancy & Contact Information 9
  3. 3. STRATEGIC FORESIGHT FOR EFFECTIVE INNOVATION Page 2 of 9 1.1.1.1. PPPPURPOSEURPOSEURPOSEURPOSE 1.1 This document highlights the critical role of Strategic Foresight in the Innovation process to ensure that outcomes of efforts and/or resources expanded are fruitful. This is because no Innovation occurs without a certain amount or type of investment expanded. A failed Innovation means a Negative Return on Investment. A successful Innovation means Positive Return of Investment. This document identifies and highlights the effective application of Strategic Foresight as the significant difference maker towards determining the success or failure of the Innovation effort. 1.2 This document addresses Innovation objectives of commercial enterprises primarily, although, content herein may also serve as point of reference for employees or decision makers of non- commercial entities devising or managing Innovation Plans, Policies or Strategies. 1.3 This document acknowledges that Innovation is a process or action aimed at improvement relative to status quo, with obvious benefits intended at the start of the Innovation process. This document also acknowledges however, that upon expansion of efforts, resources and time necessary on the conversion of an Innovative Idea into an implemented reality, the desirability of the outcome is contingent upon actual costs, monetary or otherwise, incurred over the time period and the actual relevance of the product or output of the Innovation effort at the time of the Innovation process’ completion. 1.4 This document aims to educate the reader on the importance of anticipating the right opportunities, as well as threats, including those of disruption, when drawing plans for Innovation. This document also aims to educate the reader on the need to forecast the lifespan or life-cycle of the product or intended consequence of Innovation efforts in considering the impact upon ROI. The question this document aims to convince the reader to see the need to ask and answer, is whether at the end of the Innovation effort, the Innovation will be worth the resources, time and effort expanded? This document aims to educate the reader on the role of Strategic Foresight in aiding that consideration effectively. 1.5 This document draws the reader’s attention to Strategic Foresight being a logically methodical process that can provide valid objectivity to the thought and decision making processes behind Innovation approaches within organisations. 1.6 This document is not an exhaustive resource on the subject of “Strategic Foresight for Effective Innovation”, but rather a basic reference point for education and awareness.
  4. 4. STRATEGIC FORESIGHT FOR EFFECTIVE INNOVATION Page 3 of 9 2.2.2.2. TTTTYPES OFYPES OFYPES OFYPES OF IIIINNOVATIONNNOVATIONNNOVATIONNNOVATION There are various types of Innovation for various purposes. Herein is a list along with implications. The types of Innovation are not mutually exclusive. An Innovation can fit into multiple descriptions listed herein. The definition for each type of Innovation mentioned herein is not exhaustive but intended to provide the reader with the basic concept. 2.1 Process Innovation is when a process is re-engineered, restructured, amended, modified, reinvented or improved upon for greater efficiency and/or effectiveness. This can be to increase output rate or capacity, reduce waste, reduce cost or dependencies on particular resources, on material or on labour. Process Innovation can be the Innovation of any process including but not limited to, production, administration, logistics, including packaging, or marketing. 2.2 Technological Innovation is the improvement of a technological object or system, whether software or hardware, to enhance performance by any means or measure, such as increasing functionality, speed of operation or ease of usage. 2.3 Product Innovation is the improvement upon or creation of a product that outperforms existing or pre-existing products, substitutes or alternatives in terms of serving a particular purpose or meeting a particular need. 2.4 Business Model Innovation is the improvement upon an existing or creation of a new type of business setup, structure, design or method of commercial operation to better deliver goods or services to customers/clients in terms of efficiency or effectiveness, often involving strategically advantageous cost or price benefits to the owners or beneficiaries of the Innovative Model. 2.5 Disruptive Innovation is the type of innovation that disrupts an existing product or service currently sold by existing entities on the market. While your Disruptive Innovation in the form of a deliverable good or deliverable service may disrupt the products of others, that very same product resulting from your Disruptive Innovation may be disrupted in time by the Disruptive Innovation of another. An interesting point to note, is that while engaging in efforts to realise a Disruptive Innovation that would disrupt existing products, someone else may complete a Disruptive Innovation that Disrupts, meaning, renders irrelevant or obsolete, your Disruptive Product while it is still in the Innovation Stage, before it is ready to be sold or marketed. 2.6 Innovation for Sustainability is when a product or process is improved upon to reduce negative impact upon the environment, at times at a greater cost or lower short-term profitability to the Innovator, as well as the consumer or client who inherits the cost burden of the Innovation.
  5. 5. STRATEGIC FORESIGHT FOR EFFECTIVE INNOVATION Page 4 of 9 3.3.3.3. TTTTHEHEHEHE NNNNEED FOREED FOREED FOREED FOR SSSSTRATEGICTRATEGICTRATEGICTRATEGIC FFFFORESIGHTORESIGHTORESIGHTORESIGHT DDDDRIVENRIVENRIVENRIVEN IIIINNOVATIONNNOVATIONNNOVATIONNNOVATION As of November 2014, we live in a world well accustomed to constant changes, shifts and evolutions in technologies, market realities and consumer trends. The pace of Scientific and Technological progress is unprecedented in human history at the time of this document being released. The current environment provides a fertile landscape for Disruptive Innovation which creates new markets to render incumbent ones obsolete. In fact, Disruption is embraced as part and parcel of business culture with wide adoption of strategies such as Blue Ocean for example that renders existing competition irrelevant as a factor in product commercialisation effectively. Besides the rapid change and progress, where a Disruptive Product may be disrupted before it reaches the market space potentially, the environment we live in is also increasingly unpredictable. Whether it is increasing armed conflict or increasingly felt effects of global climate or weather pattern change, whether the change or innovation is relevant at the time it is achieved rather than thought of or planned, is genuinely in question. If Innovation were for the present, it would already have been executed and implemented. The process of Innovation begins, with a desired or intended outcome, whether in the form of process, business model or product, anticipated at the end of the process, at a point in time ahead, or in other words, in the future. The obstacle presented by the Future, unlike the other two segments of time, past and present, is that its dynamics are unknown. We can analyse records of the past to comprehend the past. Based upon which we can establish if a process or a product would have resulted in desired outcomes within a time period in the past. As for the immediate present, we can look around and interact with networks or resources for information to determine what works and what does not work. The future however, is a segment in time that is relatively unknown because it has not yet occurred, we have not been there and the information about it therefore has yet to be created. What needs to be done therefore to comprehend this relatively unknown segment of time, is the crafting of possibilities, probabilities, scenarios, projections and forecasts for the purposes of planning, determining and decision making. This is where Strategic Foresight comes into play. Upon expenditure of time, capital, effort and other resources, an Innovation effort may be redundant because the outcomes or output may be irrelevant in the context of the realities or scenarios that play out in the future, or events that occur between or after the starting point and the end point of an Innovation effort may disrupt or overshadow the effort’s results or output. Innovation itself cannot be abstained from as with the current pace of change, progress and Innovative developments, ultimately means being disrupted or displaced or being rendered obsolete by the Innovation of others, if an organisation itself does not anticipate through Strategic Foresight the possible Innovations that may threaten it and engage in Innovation of its own to stay ahead or at least relevant.
  6. 6. STRATEGIC FORESIGHT FOR EFFECTIVE INNOVATION Page 5 of 9 4.4.4.4. CCCCRAFTINGRAFTINGRAFTINGRAFTING EEEEFFECTIVEFFECTIVEFFECTIVEFFECTIVE IIIINNOVATIONNNOVATIONNNOVATIONNNOVATION SSSSTRATEGIESTRATEGIESTRATEGIESTRATEGIES To craft an Effective Innovation Strategy, the ideal first step is to ask and answer the following litmus questions: • What kind of Innovation is necessary and why? • Are you better off not innovating on the principle that “if it isn’t broken, don’t fix it”? • Will the investment in the Innovation Effort(s) be recovered? • What are the opportunity costs of channelling attention, time, effort, capital and other resources towards the Innovation effort? • Are the opportunity costs of pursuing an Innovation worth incurring? • What is the ROI that can be expected from pursuing an Innovation effort? • What is the estimation of the expected ROI in the Innovation effort that is based upon? • Is it possible that another development elsewhere will render your Innovation irrelevant or redundant? • How will your innovation be accepted or received by the people who need to accept it for it to matter or for it to work for you? (i.e., your staff, your customers, your partners) The questions above are future-oriented when asked at the start of the Innovation process, as they should be. For these questions to be answered effectively therefore, Strategic Foresight needs to be applied. The above questions should form the guiding pillar for the Innovation policy at any organisation. Acquisition, maintenance and application of Strategic Foresight in addressing the questions to determine relevance, feasibility and desirability of any new Innovation pursuit should be the first step in the Innovation process. When Strategic Foresight is effectively applied to acquire the best possible answers, scenarios or considerations in addressing the critical questions listed herein, an organisation is adequately prepared to draw out and pursue or execute strategies and plans for Innovation. The means to effectively answering the questions herein, is to apply Systems Thinking, considering all factors as part of a greater interdependent system. The use of Scenario Planning to construct and surface the most probably Future probabilities aids identification of possible cross-impacts of changes foreseeable in the horizon through monitoring and environmental scanning, to factors within “systems” such as the department, business unit, organisation, market, industry or economy. The cross-impacts can be analysed to ascertain opportunities, threats or costs and benefits, in pursuing alternative actions. This aids educated decision making on matters of investment, monetary or non-monetary, including in relation to options for Innovation pursuit. As such, with the effective use of Strategic Foresight and its methods, effective Innovation Strategies may be crafted.
  7. 7. STRATEGIC FORESIGHT FOR EFFECTIVE INNOVATION Page 6 of 9 5.5.5.5. AAAAPPLYINGPPLYINGPPLYINGPPLYING SSSSTRATEGICTRATEGICTRATEGICTRATEGIC FFFFORESIGHT FORORESIGHT FORORESIGHT FORORESIGHT FOR IIIINNOVATIONNNOVATIONNNOVATIONNNOVATION 5.1 Identifying risks is a function of Strategic Foresight. With costs attached, monetary or otherwise, to any Innovation effort, naturally there are risks involved. Identifying risks upfront enables and empowers decision makers to mitigate them by making necessary provisions or adjustments within their strategies. Identifying risks aids identification of need for Innovation or type of Innovation to mitigate the risks faced by maintaining status quo. Identifying the risks that could cause failure to the product of Innovation or a loss arising from engaging in the Innovation effort could aid decisions on whether to pursue the effort or not. It could also influence the crafting of the strategy to mitigate the possible threats to the success or profitability of the Innovation. If factored, risks identified can guide decisions in choosing to pursue an Innovation effort or not, and steps to mitigating risks, if the decision to pursue an effort is made. 5.2 Strategic Foresight is also applied to identify opportunities. Seeing opportunities before others provides an advantage to pursue a possibility or idea that is Innovative In nature ahead of others to gain a first mover advantage or to perfect expertise or knowledge in an area that would grant Strategic Advantage in the market place before the same opportunity is tapped by others. 5.3 Anticipating Disruption whether in the form of emergence of a Disruptive Technology, Disruptive Innovation by another market entity or a Disruptive Event on the horizon enables an educated measure of an existing or future product’s life-cycle or lifespan. Anticipating an eventual future disruption of a product, justifies whether to pursue or not pursue efforts to innovate for the purpose of extending or renewing its life-cycle. If a life-cycle cannot be extended or renewed despite Innovative efforts or spending, the question is warranted in the decision making process as to whether the ROI before the end of the product life-cycle on the Innovation expense will be adequate. 5.4 Knowledge of anticipated technologies ahead play a critical role in ensuring a sound judgement call in pursuing Innovation efforts. Convergence of anticipated technologies may lead to Disruptive Innovations in the future that would potentially disrupt the Disruptive Innovations preceding them. What this means for an organisation is that completely new and Innovative product may not lead to desirable returns if it’s lifespan in the market is short-lived due to a subsequent Disruptive Innovation by another business entity. Knowledge of anticipated technologies provides useful constructive ideas for Innovation of process, products or models that do not yet exist that can be worked on gradually as an anticipated technology becomes available, to facilitate ground-breaking Innovation.
  8. 8. STRATEGIC FORESIGHT FOR EFFECTIVE INNOVATION Page 7 of 9 5.5 Even if the impact of a future development or emergence of a new product or process does not amount to disruption, it may pose a threat to the product’s marketability. Anticipation and identification of the threat can aid mitigation through contingent measures within internal strategies including those of Innovation. 5.6 Strategic knowledge of impending or possible changes to laws or regulations enable Innovators to pre-empt possible compliance problems ahead. By analysis of laws and regulations, both existing and possibly those that may come into effect ahead, thought could be applied to develop scenarios where a product of Innovation may be abused by an external stakeholder raising issues of ethics, social responsibility, safety or other matters pertaining to public interest, legality or compliance. The development of these scenarios helps in then planning and implementing safe guards against risks of abuse, to ensure that the product of Innovation is not rejected, banned or restricted for legal or regulatory purposes. 5.7 Strategic Foresight of the labour market enables Innovators to objectively envision the cost or feasibility of maintaining the outcome of an Innovation effort. For example, upon Innovating a production process, if there is going to be a skills shortage on the labour market to ensure continuity of the new Innovative method, regardless of how effective or efficient it may be if pursued, the Innovative process will be difficult to maintain. If a goods item that is technologically Innovative but requires a particular skill set to maintain after sales, that will be short in supply, maintaining long-term sales of the Innovative good would pose difficulties. 5.8 An Innovation that disrupts another line of the Innovator’s own products that are profitable, will result in internal cannibalisation. A scenario can possibly emerge, that selling an existing product line may be more profitable, for various reasons, and it may be disrupted causing an overall loss. It is also possible that newly Innovated product will reduce consumers’ need for multiple products sold by the Innovator before the new product is innovated. 5.9 Socio-cultural and behavioural changes can alter consumer or worker attitudes and preferences, which can affect reception or acceptance of Innovative processes or products. With Strategic Foresight, these changes can be anticipated and factored for in the Innovation Strategy.
  9. 9. STRATEGIC FORESIGHT FOR EFFECTIVE INNOVATION Page 8 of 9 6.6.6.6. SSSSTRATEGICTRATEGICTRATEGICTRATEGIC FFFFORESIGHTORESIGHTORESIGHTORESIGHT MMMMETHODS TOETHODS TOETHODS TOETHODS TO AAAAIDIDIDID IIIINNOVATIONNNOVATIONNNOVATIONNNOVATION SSSSTRATEGIESTRATEGIESTRATEGIESTRATEGIES 6.1 Environmental Scanning is broad and detailed research. Information is gathered from a myriad of literature sources. The purpose of Environmental Scanning is to collect and table / list all possible factors that may or are likely to affect the strategy for which the forecast or projection exercise is intended. Environmental Scanning involves the scanning and analysis of the environment at multiple levels. It includes identification and analysis of shifts, trends, events, issues and interests. Environmental Scanning requires the consideration and analysis of the following factors: Political Economical Socio-Cultural Technological Environmental (as in sustainability, nature, climate, etc) Legal 6.2 Scenario Planning is the identification of possibilities that may play out in the future period, or time-frame being planned for. These possibilities are derived from trends and events of the past to the present. Strategies or decisions are drawn upon what best meets the most likely possibilities along with contingencies, whether for the known or the unknown. 6.3 Monitoring is the action of constantly scanning for, detecting, projecting, assessing / evaluating, responding to and tracking events as they occur, as well as following their impacts. 6.4 Failure Mode Analysis is the method with which potential failures are examined. This method is particularly useful when forecasting for risk management or product commercialisation or a new market entry. Users can construct remedial measures for embedding into strategies to mitigate possible threats, obstacles or failures ahead. 6.5 The Futures Wheel is used to chart out the secondary and tertiary level outcomes of trends and events. The aim of this method is to understand the ripple effects of a trend, event or development. 6.6 Social Network Analysis facilitates the prediction of individual behaviours, group behaviours, organisational behaviours, societal behaviours and changing consumer preferences. To illustrate how powerful this method is, take for example, that is possible to project outcomes of national elections with the application of this method. 6.7 Trend Analysis is a method used hand-in-hand with daily monitoring with a trend with potential for long-term or significant impact being analysed upon identification. It aid in identifying future impacts. Analysis in the method can be both qualitative and quantitative.
  10. 10. STRATEGIC FORESIGHT FOR EFFECTIVE INNOVATION Page 9 of 9 7.7.7.7. AAAABOUTBOUTBOUTBOUT SSSSTRATSERVTRATSERVTRATSERVTRATSERV CCCCONSULTANCYONSULTANCYONSULTANCYONSULTANCY &&&& CCCCONTACTONTACTONTACTONTACT IIIINFORMATIONNFORMATIONNFORMATIONNFORMATION Stratserv Consultancy is a Singapore registered Management Consulting practice founded and managed by Singapore’s first local born Professional Futurist, Harish Shah, offering a broad range of Strategy Consulting services, with Strategic Foresight as its core strength. Stratserv’s services to clients include: Strategic Foresight Branding Strategy Change Management Strategy Communication Strategy Innovation Management Strategy Marketing Strategy Negotiation Strategy Social Media & Network Strategy Futurist Talks and Workshops Stratserv Consultancy leverages on a strong strategic global network consisting of established Professional Futurists, Management Consultants, Thought Leaders, Academics and Captains of Industry to ensure quality inputs to clients. Stratserv Consultancy has also forged Strategic Market Alliances with a list of emerging and unique Consulting service providers internationally to leverage on complementing competencies. Apart from being Singapore’s first local born Professional Futurists, Harish Shah is one of the youngest in the profession worldwide. His name has become synonymous with Strategic Foresight or Future Studies in Asia and he known globally as “The Singapore Futurist”. He has fast established himself as a key point of reference for long-term visioning especially in the areas of New & Emerging Technologies and future Business Models. Harish Shah’s Futurist articles and commentaries have widely been published in Asia, North America and Europe. To contact Stratserv Consultancy, you may call Harish Shah directly at +65 94510637 or email him at harish_shah@stratservconsultancy.com You may visit Stratserv Consultancy’s website at www.stratservconsultancy.com

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