Strategic Innovation Management for a Competitive Advantage

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Design for Innovation (D4I) has defined 7 levels of innovation to manage to achieve a sustainable competitive advantage.

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  • Amazon S3 Here are the facts: This is a web service, and so Amazon is not releasing a customer facing service. They are offering standards-based REST and SOAP web services interfaces for developers. Entire classes of companies can be built on S3 that would not have been possible before due to infrastructure costs for the developer. Virtually any file type is allowed, up to 5 GB. Files may be set as public, shared or private and will have a unique URL. Pricing is cheaper than anything else I’ve seen: $0.15 per GB of storage per month, and $0.20 for each GB of data transferred up or downstream. This translates to $15 per month for 100 GB of storage, net of any transfer fees (to move that much data on to S3 would be a one time cost of $20). These prices are going to be significantly below the development and ongoing costs for small or medium sized storage projects - meaning a lot of the front end services I’ve previously profiled will be much better off moving their entire back end to S3.
  • Amazon S3 Here are the facts: This is a web service, and so Amazon is not releasing a customer facing service. They are offering standards-based REST and SOAP web services interfaces for developers. Entire classes of companies can be built on S3 that would not have been possible before due to infrastructure costs for the developer. Virtually any file type is allowed, up to 5 GB. Files may be set as public, shared or private and will have a unique URL. Pricing is cheaper than anything else I’ve seen: $0.15 per GB of storage per month, and $0.20 for each GB of data transferred up or downstream. This translates to $15 per month for 100 GB of storage, net of any transfer fees (to move that much data on to S3 would be a one time cost of $20). These prices are going to be significantly below the development and ongoing costs for small or medium sized storage projects - meaning a lot of the front end services I’ve previously profiled will be much better off moving their entire back end to S3.
  • Amazon S3 Here are the facts: This is a web service, and so Amazon is not releasing a customer facing service. They are offering standards-based REST and SOAP web services interfaces for developers. Entire classes of companies can be built on S3 that would not have been possible before due to infrastructure costs for the developer. Virtually any file type is allowed, up to 5 GB. Files may be set as public, shared or private and will have a unique URL. Pricing is cheaper than anything else I’ve seen: $0.15 per GB of storage per month, and $0.20 for each GB of data transferred up or downstream. This translates to $15 per month for 100 GB of storage, net of any transfer fees (to move that much data on to S3 would be a one time cost of $20). These prices are going to be significantly below the development and ongoing costs for small or medium sized storage projects - meaning a lot of the front end services I’ve previously profiled will be much better off moving their entire back end to S3.
  • Amazon S3 Here are the facts: This is a web service, and so Amazon is not releasing a customer facing service. They are offering standards-based REST and SOAP web services interfaces for developers. Entire classes of companies can be built on S3 that would not have been possible before due to infrastructure costs for the developer. Virtually any file type is allowed, up to 5 GB. Files may be set as public, shared or private and will have a unique URL. Pricing is cheaper than anything else I’ve seen: $0.15 per GB of storage per month, and $0.20 for each GB of data transferred up or downstream. This translates to $15 per month for 100 GB of storage, net of any transfer fees (to move that much data on to S3 would be a one time cost of $20). These prices are going to be significantly below the development and ongoing costs for small or medium sized storage projects - meaning a lot of the front end services I’ve previously profiled will be much better off moving their entire back end to S3.
  • Strategic Innovation Management for a Competitive Advantage

    1. 1. Strategic Innovation Management Creating a Sustainable Competitive Advantage By Dr. Iain Sanders Design for Innovation Ltd, 2009 1
    2. 2. What you don’t know about your customers and your business may be costing you millions! Design for Innovation Ltd, 2009 2 For example : technology, product & service value-creation urgent needs For example : The best customer solutions to maximize your customers’ profitability For example : Your business model is now obsolete, limiting your effectiveness and ability to achieve a sustainable competitive advantage
    3. 3. 7 levels for maximizing potential innovation value-creation 3 Business Focus : Effectiveness – Business Proactivity Business Focus : Efficiency – Business Responsiveness
    4. 4. Creating, Defining and Improving a Company’s Business Model Design for Innovation Ltd, 2009 4 FINANCE INFRASTRUCTURE CUSTOMER VALUE PROPOSITION OFFER gives an overall view of a company's bundle of products and services PARTNER NETWORK portrays the network of cooperative agreements with other companies DISTRIBUTION CHANNELS describes the channels to communicate and get in touch with customers VALUE CONFIGURATION describes the arrangement of activities and resources CUSTOMER RELATIONSHIP explains the relationships a company establishes with its customers COST STRUCTURE sums up the monetary consequences to run a business model REVENUE STREAMS describes the revenue streams through which money is earned TARGET CUSTOMERS describes the customers and customer segments a company wants to offer value to CORE CAPABILITIES outlines the capabilities required to run a company's business model
    5. 5. Improve the Business Model <ul><li>Customer Segments – who are our customers? </li></ul><ul><li>Value Proposition - what do we offer each of our client segments? </li></ul><ul><li>Channels - how do we reach each of our client segments? </li></ul><ul><li>Customer Relationships – how do we relate to our clients over time? </li></ul><ul><li>Revenue Streams - how do we earn money? </li></ul><ul><li>Key Resources – based on which assets are we running our business? </li></ul><ul><li>Key Activities - what key activities do we need to run our business model? </li></ul><ul><li>Partner Network - with which partners do we leverage our business? </li></ul><ul><li>Cost Structure – where are our most important costs? </li></ul>Design for Innovation Ltd, 2009 5
    6. 6. Strategies for continually developing a more profitable business model <ul><li>1 st Stage : Target most productive areas for improving the business model </li></ul><ul><li>2 nd Stage : Provide sustained benefits for all stakeholders </li></ul><ul><li>3 rd Stage : Expand business model innovation </li></ul><ul><li>4 th Stage : Pursue higher-potential business model optimization </li></ul>Design for Innovation Ltd, 2009 6
    7. 7. Identify and Qualify New Opportunities Design for Innovation Ltd, 2009 7 Exploited Opportunities Unexploited Opportunities Unexploited Opportunities Unexploited Opportunities Served Customers Unserved Customers Unarticulated Needs Articulated Needs Articulated-Served Customers : known world of customer needs Articulated-Unserved Customers : offerings developed & perfected for existing customers extended to new customers in different markets Unarticulated-Unserved Customers : proactive and visionary companies like Honda seek to get inside he heads & experiences of unaddressed customers Unarticulated-Served Customers : potential for satisfied customers to become frustrated or uninterested if unexpressed but felt needs not addressed
    8. 8. <ul><li>Opportunities Identified </li></ul><ul><li>Unexpected Successes </li></ul><ul><li>Unexpected Failures </li></ul><ul><li>Unexpected External Events </li></ul><ul><li>Process Weaknesses </li></ul><ul><li>Industry / Market Structure Changes </li></ul><ul><li>High-Growth Areas </li></ul><ul><li>Converging Technologies </li></ul><ul><li>Demographic Changes </li></ul><ul><li>Perception Changes </li></ul><ul><li>New Knowledge </li></ul><ul><li>Dimensions Available </li></ul><ul><li>Offerings </li></ul><ul><li>Platform </li></ul><ul><li>Solutions </li></ul><ul><li>Customers </li></ul><ul><li>Customer Experience </li></ul><ul><li>Value Capture </li></ul><ul><li>Processes </li></ul><ul><li>Organization </li></ul><ul><li>Supply Chain </li></ul><ul><li>Presence </li></ul><ul><li>Networking </li></ul><ul><li>Brand </li></ul>Dimensions to Opportunities Available Vs. Design for Innovation Ltd, 2009 8
    9. 9. Dimensions to Opportunities Identified Design for Innovation Ltd, 2009 9 <ul><li>Virgin Group “branded venture capital” </li></ul><ul><li>Yahoo! as a lifestyle brand </li></ul>Leverage a brand into new domains Brand <ul><li>Otis Remote Elevator Monitoring service </li></ul><ul><li>Department of Defense Network Centric Warfare </li></ul>Create network-centric intelligent and integrated offerings Networking <ul><li>Starbucks music CD sales in coffee stores </li></ul><ul><li>Diebold RemoteTeller System for banking </li></ul>Create new distribution channels or innovative points of presence, including the places where offerings can be bought or used by customers Presence <ul><li>Moen ProjectNet for collaborative design with suppliers </li></ul><ul><li>General Motors Celta use of integrated supply and online sales </li></ul>Think differently about sourcing and fulfillment Supply Chain <ul><li>Cisco partner-centric networked virtual organization </li></ul><ul><li>Procter & Gamble front-back hybrid organization for </li></ul><ul><li>customer focus </li></ul>Change form, function or activity scope of the firm Organization <ul><li>Toyota Production System for operations </li></ul><ul><li>General Electric Design for Six Sigma (DFSS) </li></ul>Redesign core operating processes to improve efficiency and effectiveness Processes <ul><li>Google paid search </li></ul><ul><li>Blockbuster revenue-sharing with movie distributors </li></ul>Redefine how company gets paid or create innovative new revenue streams Value Capture <ul><li>Washington Mutual Occasio retail banking concept </li></ul><ul><li>Cabela’s “store as entertainment experience” concept </li></ul>Redesign customer interactions across all touch points and all moments of contact Customer Experience <ul><li>Enterprise Rent-A-Car focus on replacement car renters </li></ul><ul><li>Green Mountain Energy focus on “green power” </li></ul>Discover unmet customer needs or identify underserved customer segments Customers <ul><li>UPS logistics services Supply Chain Solutions </li></ul><ul><li>DuPont Building Innovations for construction </li></ul>Create integrated and customized offerings that solve end-to-end customer problems Solutions <ul><li>General Motors OnStar telematics platform </li></ul><ul><li>Disney animated movies </li></ul>Use common components or building blocks to create derivative offerings Platform <ul><li>Gillette Mach3Turbo razor </li></ul><ul><li>Apple iPod music player & iTunes music service </li></ul>Develop innovative new products or services Offerings Examples Definition Dimension
    10. 10. Design for Innovation Ltd, 2009 10 REVENUES STREAMS COSTS STRUCTURE CORE CAPABILI-TIES VALUE CONFIG-URATION PARTNER NETWORK CUSTOMER RELATIONS VALUE PROPOSI-TION TARGET CUSTOMER SEGMENTS DELIVERY CHANNELS Linking Opportunities Process weaknesses Industry / Market Structural changes High-growth areas Converging technologies Demographic changes New knowledge Perception changes Unexpected successes Unexpected failures Unexpected external events
    11. 11. Quantify Opportunities with a SWOT analysis Exploit Search Confront Avoid or Prepare Internal Environment Strengths External Environment Threats External Environment Opportunities Opportunity is matched with strength. Business’s growing edge – where it can capitalize on areas of strategic advantage Opportunity is matched with weakness. Opportunities exist that the organization can recognize but is not equipped to tackle Threat matched with weakness. Some threats avoidable, and others are not. Confronting competitive threats with weakness is not only dangerous but drains resources Threat is matched with organizational strength – mobilize to limit and control the looming danger Internal Environment Weaknesses 11
    12. 12. 12 REVENUES STREAMS COSTS STRUCTURE CORE CAPABILI-TIES VALUE CONFIG-URATION PARTNER NETWORK CUSTOMER RELATIONS VALUE PROPOSI-TION TARGET CUSTOMER SEGMENTS DELIVERY CHANNELS Improving Opportunities Threats Opportunities Weaknesses Strengths
    13. 13. Design for Innovation Ltd, 2009 13 RELATIONS PARTNERS KEY ISSUES TO SOLVE ACTIVITIES COSTS REVENUES OFFER CLIENTS CHANNELS Value Proposition 1 Costing Issue1 Customer Relations 1 Customer Segment 1 Configure Value 3 Core Capability 4 Partner Network 1 Revenues 1 Delivery Channel 1 Configure Value 2 Core Capability 2 Configure Value 1 Core Capability 1 Core Capability 3 Costing Issue 2 Delivery Channel 2 Mapping Opportunities
    14. 14. Design for Innovation Ltd, 2009 14 RELATIONS PARTNERS KEY ISSUES TO SOLVE ACTIVITIES COSTS REVENUES OFFER CLIENTS CHANNELS Selling Stuff on the Web IT Infra-structure Automated CRM Mass Custom-ization Data Services Amazon Data Grid Partner Network 1 Selling Stuff Amazon.com Warehous-ing and Distribution Distribution Content Management Product Selection Product Search Marketing Affiliates Example: Amazon.com
    15. 15. What is Missing from this Business Model Framework? Design for Innovation Ltd, 2009 15 <ul><li>The ability to learn more about our customers faster than the competition. </li></ul><ul><li>The ability to turn that learning into action faster than the competition.” </li></ul>“ We have only two sources of competitive advantage: Jack Welch, former CEO, GE
    16. 16. Design for Innovation Ltd, 2009 16 VALUE PROPOSITION CUSTOMER RELATIONSHIPS REVENUE STREAMS PARTNER NETWORKS COST STRUCTURE COMPETITIVE STRATEGY KEY CAPABILITIES & RESOURCES KEY CUSTOMER / MARKET SEGMENTS VALUE CONFIGURATION CASHFLOW MANAGEMENT DELIVERY CHANNELS BUSINESS (INVESTOR) VALUE COMPETITORS
    17. 17. Evaluate Strategic Alternatives 17 Strategic alternatives / value proposition Value What we are striving for Valuation filter Operational filter Strategic filter Economic filter Sources of value
    18. 18. 18 Mapping Problems / Opportunities Target Segments (TS) Value Propositions (VP) Value Configurations (VC) Core Capabilities Customer Domain Functional Domain Physical Domain Resource Domain WHAT? HOW? Vision Design Phase: Customer wants & needs WHAT? HOW? Mission Design Phase: Strategies to satisfy needs WHAT? HOW? Implementation Design Phase: Processes to execute strategies (CC) Strategy Formulation & Implementation
    19. 19. Where [are our customers going]? 19 [1] CUSTOMER WANTS & NEEDS FOR PROVIDING CONTRIBUTIONS [2] STRATEGIES TO SATISFY KEY CUSTOMER WANTS & NEEDS [3] CRITICAL PROCESSES TO EXECUTE STRATEGIES [4] CAPABILITES TO OPERATE & ENHANCE PROCESSES [5] CUSTOMER CONTRIBUTIONS TO SUSTAIN CAPABILITIES Target key stakeholders’ unmet wants and needs
    20. 20. Customer Contributions – what contributions do we require from our customers if we are to maintain and develop our capabilities? VALUE PROPOSITION DISTRIBUTION CHANNELS CUSTOMER RELATIONSHIP REVENUE STREAMS TARGET CUSTOMERS Design for Innovation Ltd, 2009 20
    21. 21. Customer Satisfaction – who are our customers and what do they want and need? VALUE PROPOSITION DISTRIBUTION CHANNELS CUSTOMER RELATIONSHIP REVENUE STREAMS TARGET CUSTOMERS Design for Innovation Ltd, 2009 21
    22. 22. Other Stakeholder Contributions – what contributions do we require from our other stakeholders if we are to maintain and develop our capabilities? VALUE PROPOSITION VALUE CONFIGURATION CORE CAPABILITIES COST STRUCTURE PARTNER NETWORK Design for Innovation Ltd, 2009 22
    23. 23. Other Stakeholder Satisfaction – who are our other stakeholders and what do they want and need? VALUE PROPOSITION VALUE CONFIGURATION CORE CAPABILITIES COST STRUCTURE PARTNER NETWORK Design for Innovation Ltd, 2009 23
    24. 24. Strategies – what strategies do we have to put in place to satisfy the wants and needs of our key stakeholders? DELIVERY CHANNELS VALUE CONFIGURATION TARGET CUSTOMERS CORE CAPABILITIES VALUE PROPOSITON REVENUE STREAMS PARTNER NETWORK CUSTOMER RELATIONSHIPS COST STRUCTURE <ul><li>Explore : </li></ul><ul><li>Corporate strategy </li></ul><ul><li>Business unit strategy </li></ul><ul><li>Brand, product & service strategy </li></ul><ul><li>Operating strategy </li></ul>Design for Innovation Ltd, 2009 24
    25. 25. Processes – what critical processes do we require if we are to execute these strategies? DELIVERY CHANNELS VALUE CONFIGURATION TARGET CUSTOMERS CORE CAPABILITIES VALUE PROPOSITON REVENUE STREAMS PARTNER NETWORK CUSTOMER RELATIONSHIPS COST STRUCTURE <ul><li>Explore : </li></ul><ul><li>Developing products & services </li></ul><ul><li>Generating demand </li></ul><ul><li>Fulfilling demand </li></ul><ul><li>Planning & managing the enterprise </li></ul>Design for Innovation Ltd, 2009 25
    26. 26. Capabilities – what capabilities do we need to operate and enhance these processes? DELIVERY CHANNELS VALUE PROPOSITION TARGET CUSTOMERS PARTNER NETWORK CORE CAPABILITIES REVENUE STREAMS VALUE CONFIGURATION CUSTOMER RELATIONSHIPS COST STRUCTURE <ul><li>Explore : </li></ul><ul><li>Infrastructure </li></ul><ul><li>People </li></ul><ul><li>Best practices </li></ul><ul><li>Technology </li></ul>Design for Innovation Ltd, 2009 26
    27. 27. E.G… Design for Innovation Ltd, 2009 27 CUSTOMER VALUE-DRIVEN STRATEGIES CUSTOMER PROCESS-DRIVEN CAPABILITIES CUSTOMER STRATEGY-DRIVEN PROCESSES CUSTOMER CONTRIBUTION CUSTOMER SATISFACTION Easy Affordable Right Fast Trust Feedback Growth Profit Grow share of target market segments Retain profitable existing customers Attract potentially profitable new customers Extend / renew products and services offered Plan and manage enterprise Fulfill demand Generate demand Build market offering alliances Develop products and services Quality management (etc.) Customer relationship management After-sales service Order fulfillment operations Technical services Salesforce effectiveness Sales and distribution channel mgt. Alliance management Marketing campaigns and brand mgt. Pricing management Merchandising / product range Research and Development
    28. 28. Thank you for your time! For more information please visit: http://www.designforinnovation.com Tel: +64(273)566-401 Email: iain@designforinnovation.com Design for Innovation Ltd, 2009 28

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