Vmo innovation management


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A proper VMO does more than just contract and supplier management. One of the components of VMO value capture is to work with suppliers and cappture innovation in order to accelerate Time to Market, shorten cycle times in competitive differentiation, or grow market share. Here is a possible framework VMO directors could use to make "the right decision for the right reasons" and leverage supplier-initiated innovation initiatives

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Vmo innovation management

  1. 1. VMO-led Innovation ManagementA Procurement Perspective"Without change there is no innovation, creativity,or incentive for improvement. Those who initiatechange will have a better opportunity to managethe change that is inevitable."- William PollardWorking Draft
  2. 2. Since the word innovation entered the business lexicon, it’s come to mean differentthings to different people. There’s a tendency to speak of innovation in the context ofadvanced technologies, futuristic product development and the development of new“game-changing” strategies.At the root, however, innovation is fundamentally about doing something differently todeliver demonstrable business value, at the top line, bottom line or both. Against thatstandard, the successful application of new ideas to reduce costs clearly constitutesinnovation—at least in theory. There’s an emerging consensus that the best way for a company to fosterinnovation is to harvest the best ideas wherever they are, whether it’s inside thecompany or among customers, suppliers and partners. In generating new ways toreduce costs, the benefit of this broad approach—leveraging collective intelligence—is to extend the breadth and diversity of inputs into a company’s ideationprocess. More subtle yet powerful is the impact this approach has at a human level,transforming cost reduction ideation from a more expert-driven, adversarialexercise to a participatory experience that—by encouraging “buy-in”— dramaticallyincreases the likelihood of successful implementation.2What is Innovation
  3. 3.  The dirty little secret … is that unlike the mythical epiphany, real creation issloppy. Discovery is messy; exploration is dangerous. No one knows whatyou’re going to get when you’re being creative Innovation comes at a price – it might be money, time, sanity, friends, ormarriages, but there will be one The majority of innovations come from dedicated people in a field working hardto solve a well-defined problem. It’s not sexy and it won’t be in any majormovie coming to theater near you anytime soon – but it’s the truth Revolutionary ideas can be too much change for people to handle. Innovationsoften need to be explained in terms of the status quo, which is whyautomobiles are rated in horsepower Innovative ideas are rarely rejected on their merits; they’re rejected because ofhow they make people feel3What is Innovation?The inconvenient truth
  4. 4. 4Innovation: What’s in it for you?’s Idea MarketplaceAdvanced IdeaManagementBasic IdeaManagementSuggestionProgramIdeaListRawIdeasElaboratedConceptsSignificant ROIacross rangeof activitiesBenefits limited tocost savings and“Small idea”Consumers Suppliers PartnerIdea MarketplaceData storeProduct / Services / Pricing / BrandingInnovation Development New Markets for Existing Products New Products and Concepts Revenue Acceleration / Margin Improvement / market share gain Cost Reduction and Productivity improvement Process Replacement Avoiding Waste by Selecting Quality Concepts Employee InvolvementInnovation Benefit Focus AreasROI depends on the quality of the processand of the ideas
  5. 5. Suggested Approach for the VMO
  6. 6. 6The Character of the Innovation ProcessInnovation is…. An individual process Hidden in the R&D laboratory Ungovernable, uncontrollable More or less accidental Something that’s been going on for ages No effective governance No correlation with trending or consumer /customer demand and insight No correlation with corporate strategy, orexecution capabilitiesInnovation is… A multi-disciplinary group process Supported top down and driven bottom up Guided, facilitated, controllable More than just incremental improvements toproduct A process by jumps and starts Surrounded by a risk management envelope Effective governance Effective measurements Bleeding edge portfolio managementmethodologyInnovation is anUnpredictableProcess?Innovation becomesA predictable, measuredprocess !Classical Approach Recommended Approach
  7. 7.  Create an Innovation Environment – Process, Discipline, BehaviorsThis is a business management service, NOT a technology solution; there is no magic software wand to wave to realize10X innovation investment returns. We help clients focus on process, discipline, a dedicated team and deep skills inengaging and facilitating people in large numbers to focus on solving problems and solutions Effectively Engage the Organizational, Manage ComplexityWe leverage the collective organizational wisdom to optimize the innovation process and results Establish Long-term Capabilities, Target Quick WinsBy tapping into the brainpower of the greater organizational community, we create an effective and sustainableinnovation environment that produces quick wins. Drive Business BenefitsThrough effective execution of ’s Innovation management techniques and tools, we improve margins (PricingOptimization) and boost revenue (Market share gain through innovative products, services or processes), improvecustomer satisfaction scores, launch new products, and generate cost savings on a variety of levels7The VMO-led Innovation DifferentiationWe focus on key areas of process and target 10X ROIWe accomplish this by a flexible but proven approach to managing innovation, implementing andcustomizing Innovation Idea technology, and incorporating suppliers, partners, customers andemployees holistically in the process.
  8. 8. 8VMO Innovation Management Framework1. Available technologies2. Available experience3. Potential Technologies4. Consumer insights5. Competitor behavior6. Emerging Technologies7. Emerging business models8. Emerging Partneringopportunities9. Academic Innovationdevelopment10. Trending11. IdeationCommitment1. Operational Guidance2. Portfolio and selection strategies3. Funding strategies4. Project strategies5. Communications6. Marketing7. Performance IndicatorsOrganization1. Vision2. Urgency3. Strategy4. Structure5. Insight in competitivebehaviors6. Skill sets7. Support8. DedicationCompetitive Consequence1. Team composition2. Partner composition3. Effective leadership4. Risk tolerance5. Career management6. Cultural commitment7. Ideation encouragement & RewardKnowHow&FlexibilitySpeed
  9. 9. CHANGEDoes the strategy takeadvantage of change?Yes/NoVALUEIs the value preferred bythe majority ofcustomers?Yes/NoACTIVITIESIs the Firm performing theright activitiesYes/NoAPPROPRIABILITYDoes the strategy enablethe Firm to make moneyYes/NoCompetitiveConsequence9Our ApproachPhase 1: Organizational Awareness Phase 2: Innovation IdeationInnovationPreconditionsAssessmentCreateInnovationPreconditions.Ideation andSelection toPortfolio.InnovationPortfolioManagementInnovationProgramManagementInnovationProjectManagementPortfolio Management Program LeadershipEnterprise Project DeliveryConduct InnovationDiagnostic using theInnovationsDimensions modelDevelop an innovationvision and strategy tofit the organization’sculture. using ’sStrategic InnovationFrameworkCollect, evaluate,prioritize, and selectan optimized mix ofinnovation programsand projects.Manage innovationportfolio delivery.Manage theinnovation portfoliobenefits realizationDrive InnovationProgram deliveryDrive InnovationProject deliveryThe VMO approach leads the client though six progressive areas to focus to drive effective innovation management.EnablersAVAC PortfolioManagementInnovationDiagnosticPortfolioOptimizationConsumer /CustomerinsightArticulated needs,unarticulated needs,inspired solutionsStrategicAlignmentRapid , smartdecisions, effectiveexecutionOrganizationalReadinessCultureStructureProcessesIndustryForesightFuture-orientedbusiness andsuccess driversCoreTechnologiesandCompetenciesCapabilities andassetsDisciplinedImplementationSystematic Portfolio.Program, supportmanagementPcubedManaged Innovation Creativity Methodology Strategic Thinking ExecutionStrategic InnovationFrameworkProgramManagementProjectManagementInnovation PMOPhase 3: Innovation Delivery
  10. 10. 10Strategic Innovation FrameworkConsumer /CustomerinsightArticulated needs,unarticulated needs,inspired solutionsStrategicAlignmentRapid , smartdecisions, effectiveexecutionOrganizationalReadinessCultureStructureProcessesIndustryForesightFuture-orientedbusiness andsuccess driversCoreTechnologiesandCompetenciesCapabilities andassetsDisciplinedImplementationSystematic Portfolio.Program, supportmanagementVMOManaged Innovation Creativity Methodology Strategic Thinking ExecutionThe VMO Strategic InnovationFramework weaves together sevendimensions to produce a portfolio ofoutcomes that drive growth. : A Managed Innovation ProcessCombining Non-Traditional and TraditionalApproaches to Business Strategy Strategic AlignmentBuilding Support Industry ForesightUnderstanding Emerging Trends Consumer/Customer InsightUnderstanding Articulated andUnarticulated Needs Core Technologies & CompetenciesLeveraging and Extending Corporate Assets Organizational ReadinessThe Ability to Take Action Disciplined ImplementationManaging the Path From Inspiration toBusiness ImpactSeven Dimensions ofStrategic Innovation
  11. 11. 11AVAC Innovation FrameworkDoes the strategy takeadvantage of change?Is the value preferred by themajority of customers?Is the organization performingthe right activities?Does the strategy enable thebusiness to make money?CompetitiveConsequenceCHANGE VALUEACTIVITIESAPPROPRIABILITYIs the Firm performing theRight services?Is the value created preferredBy many customers?Does our strategy takeadvantage of change?Does our strategy enableThe Firm to generate cash?Do Activities… Contribute to low cost, differentiation, etc. Contribute to improve the Firms position vs.competitors? Take advantage of Industry Value Drivers? Contribute to building or translating distinctiveresources / capabilities? Conform to parsimony and comprehensiveness?Value… Do customers perceive valueas unique? Do many customers perceivethis unique value? Are customers valuable? Are there white spacesnearby?Appropriability… Is there superior competitive positioning? Are competitive positioning and customer benefitsexploited? Is the company difficult to imitate? Are there few substitutes but many complements?Does or will the organization takeadvantage of… New ways of creating or capturing value? Distinctive resources/capabilities? First-mover advantages or disadvantagesand competitor’s handicap? Competitors’ reactions to actions? Opportunities or threats of environment?
  12. 12. 12Strategic Innovation FrameworkManaging the path from inspiration to business impact withsystematic Portfolio Management, Program Management, and innovation environment managementThe VMO Strategic Innovation Framework weaves together seven dimensions toproduce a portfolio of outcomes that drive growth.Disciplined ImplementationOrganizational Readiness Core Technologies and CompetenciesStrategic AlignmentConsumer / Customer InsightFuture-oriented business and successdrivers that reflect emerging trendsIndustry Foresight and TrendingInnovatiqueManaged Innovation♦ Creativity ♦ Methodology ♦♦ Strategic Thinking ♦♦ Execution ♦Combining non-traditional andtraditional approaches tobusiness strategyLeveraging and extending corporateassets and capabilitiesRapid , smart decisions, effectiveexecution – tied to strategiesInspired solutions, created with anunderstanding of articulated andunarticulated needsThe Ability to Take Action Culture  Structure  Processes 
  13. 13. Building Capability and Driving Results
  14. 14. 14Building Innovation CapabilityLeadership andOrganizationProcess& ToolsCulture& ValuesPeople& SkillsInnovationcapabilityCompany Leaders andOrganization aligned around acommon vision of innovationCollaborative, open culture andincentives that rewardchallenging the status quoDisciplined approach tobuilding innovation capabilitiesacross the organizationSystematic approach andsupporting tools to enable ideacapture and generation,pipeline and portfolio /program and projectmanagement
  15. 15. 15VMO Framework for Strategic InnovationIncrementalSubstantialBreakthroughLow Customer Impact HighValue Drivers(External Perspectives)Industry foresightFuture-oriented Success FactorsCustomer InsightsArticulated and Unarticulated Needs / TrendsOrganizational Drivers(Internal Capabilities and Limitations)Managed Innovation process Strategic / Commercial and EconomicAlignment Insights and Understanding Ideation / Idea marketplace / Idea Trading Opportunity Identification Economic , Competitive and InvestmentDrivers Opportunity Prioritization Innovation Risk management Innovation Program Planning Innovation Project Execution Innovation value measurements Risk management NegotiationIdea FactoryNew ProductsNew StrategiesNew MarketsNew Business ModelsBranding / Sales /MarketingNew PartnershipsSustainable InnovationNew RevenueCore Technologies& CompetenciesRiskManagementDisciplinedImplementationOrganizationalReadiness
  16. 16. Closing Thoughts on Innovation
  17. 17.  The crux of the VMO Innovation approach is to capture a company’s far-flung,diverse and often overlapping knowledge and ideas and harmonize them into acoherent, workable action plan. Underpinning the approach is the idea thatwhen an abundance of brains is connected within the right kind of network—and are backed up by processes that enable and encourage the exchange ofideas—the rules all change. Even with current technologies, how companies solicit their employees’ ideasshare the same fundamental shortcoming as the old-fashioned suggestion boxfrom which they evolved. If participants can’t see the ideas of their peers, ideasoften overlap (some 60 percent, research shows). What’s more, the fact thatthe community lacks a reference point as to what constitutes a “good” ideatends to drag down the quality of submissions. Contributors also tend to suggest ideas that— unbeknownst to them—havealready been considered. Together, these factors can significantly diminish theefficiency and effectiveness of the ideation process.17Gaining Focus
  18. 18.  The VMO Idea Marketplace solution transforms ideation by making it moretransparent and collaborative.• Unlike black-box solutions, Idea Marketplace has the built-in intelligence to filter outduplicate ideas—as well as ideas that have already been implemented—at the frontend of a process.• Once in the pipeline, the best ideas rise, evolve and improve through the scrutinyand collaboration of the employees and other enterprise stakeholders taking part inthe ideation campaign. It ensures that the best ideas reflect the “wisdom of thecrowd” by putting the right challenge to the right people at the right time. The VMO’s track record in collaborative cost reduction reveals that this path isseldom linear and that experts don’t have a monopoly on wisdom. The fact thatcritical knowledge can reside anywhere in the enterprise makes broadparticipation in the ideation process the key to success. When the goal ofinnovation is cost reduction and higher efficiency, it’s important that the processremain constructive and not devolve into a forum for complaints.18Wisdom Rising
  19. 19.  Recognize good ideas, develop them organically and collaboratively, andevolve them to fruition through a rigorous framework. Be it cost reduction or any other focus of a company’s innovation efforts, thekey to success is in managing the ideation process from input to output toaction plan.19A Call to InnovateThe VMO recognizes that when it comes to collective intelligence, it isn’t the quantityof ideas that leads to success – it is the ability to recognize good ideas It’s seen in the way the VMO works with each supplier to build an environment thatleverages the culture and organizational dynamics to produce the most successfulinnovation ideas. Through its Idea Marketplace solution, professional services capability, and unparalleledtrack record, the VMO has emerged as the clear leader in this space – and has the resultsto prove it.The VMO knows the importance of reflecting each company’s uniqueness.