Innovation through connectedness

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2-part presentation at the ICT Business Summit 2013 in Singapore, March 2013.

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Innovation through connectedness

  1. 1. Innovation through Connectedness Professor Dr Jan Recker Woolworths Chair of Retail Innovation Information Systems School, Queensland University of Technology
  2. 2. The Bad News Upfront Social media “noise” has no measurable impact on short term sales short-term But Digital ROI remains key measure for media selection and marketing strategies 3
  3. 3. But there is something to it, right?“The future competition stems from the likes of Facebook.” Ralph Norris, ex‐CEO CBA 11 August 2011 11 August 2011 1 mio new active users every week
  4. 4. Agenda The Innovation Affordances of Social Media: Can we Innovate with Social Media? 2.35pm-3.35pm How to Innovate: Four Ways to Develop Innovations (with Social Media) 4.00pm-5.00pm Q & A and Debate dD b t 5.00pm-5.30pm
  5. 5. Innovation A novel contribution l b that produces value.
  6. 6. Drivers of Innovation Problems Transactional innovation i i Reactive resolutionThat’s the stuff we know. Or at least we should. Constraints Reactive adoption Opportunities Proactive design Transformational innovation
  7. 7. InnovationDriven by a Problem focus on fixing issues top-down, imposed Reliant on problem being perceived Reactive Relatively well-understood Typically leads to transactional innovations
  8. 8. Reacting to a Problem:Social Media Example - EMC|One mid-2008: The GFC pressure Employees identified and implemented 200+ cost saving ideas “People had a sense of People being part of the process” 10
  9. 9. InnovationDriven by a Constraint Constraints are fixed issues, problems are dynamic issues Relies on context-awareness Requires tight coupling Can lead to adjacent innovation Can be reverse-engineered
  10. 10. Constraint-Constraint-driven InnovationExample – Gcash, Philippines Gcash,
  11. 11. Constraint-Constraint-driven InnovationExample – Tesco, South Korea
  12. 12. InnovationDriven by an Opportunity Requires the realization of innovation affordances of emerging assets such as social media Typically leads to transformational innovations Is time-dependent – opportunities I ti d d t t iti become constraints and problems over time p Realization depends on innovation latency
  13. 13. The problem of opportunities:Innovation Latency diminishes the value Business Innovation Affordance Value emergesValue lostthrough g Innovation affordanceinnovation is noticed Innovationlatency analysis is Innovation conducted is implemented Data Analysis y Decision Time Latency Latency Latency Infrastructure Latency Reaction Time Adapted from Hackathorn, 2002
  14. 14. Social Media is (still) an Opportunity But Why?And h tA d what are the opportunities? th t iti ? 18
  15. 15. The Fascination of Social Media‐i is not the same as its Potential h i i l Extremely high user numbers Exponential growth High connectedness High speed Empowered user base What is at its base?
  16. 16. Social Media = Digital Public Good- The Four Principles Non-excludability Non-rivalry N i l Versatility y Positive network effects
  17. 17. Examples for Digital Public GoodsDigital Public Good As a Capability…Google, YahooGoogle Yahoo, Bing SearchInstagram, FlickR, Picassa Content (pictures)Twitter, Facebook Event SignalYouTube, Hulu, Vevo , , VideoFacebook, MySpace, Orkut Social NetworkingLinkedIn, Google+ Semantic ConnectednessWikipedia, Hudong.com DictionaryITunes/Ping, Spotify, Simfy Music
  18. 18. The Opportunity:Social Media as a Digital Complementary AssetYour Company: Social Media: The I Th Innovator? t ? Digital Complementary Asset
  19. 19. Goal: Reducing Innovation Latency But Capabilities d not mean I B tC biliti do t Innovation ti We need to think differently about Social Media It is NOT about what Social Media can do (capabilities), ( biliti ) … but about what we can do with Social Media (affordances). (affordances)
  20. 20. Attributes of Affordances26 1. Affordances that are perceived as such (sufficient information) Perceptible affordances 2. Information can suggest non-existing affordances. gg g False affordances 3. 3 Affordances can exist – even if they are not visible Hidden affordances
  21. 21. J. Davis (2011)
  22. 22. Example pLocalization Affordances
  23. 23. Example pDe-Localization Affordances
  24. 24. Example pDemocratization Affordances
  25. 25. What sWhat’s common in these cases? They’re actually old. ld They will be the standard in a few years – they will be hygiene factors (rather than excitement factors) sooner rather than later. The opportunity is diminishing. What are (still) emerging opportunities?
  26. 26. Connectedness:The true Innovation Opportunity in Social Media The connected customerC C C C C C C Organisation O i ti
  27. 27. Example pConnectedness Social Flying
  28. 28. Social Media Capability: Event Signal Publishing- Examples: Tweets ( (manual) or myskystatus.com ( ) (automatic) )
  29. 29. The Power of Connectedness: Network Effects!Qualityof NetworkService Effects Direct: More users convert to customers indirect: High user number attracts complementary partners Lack of network effects Number of Customers
  30. 30. Connectedness of Social Media Social ? Enterprise ? Social social media media platforms Type of   connectedness ? Collaboration ?Social tools media platforms Semantic Internal to the  Internal to the External to the  External to the Organization Organization Locus of assets
  31. 31. Three Key Innovation Opportunitiesthrough Connectedness Social Connectedness Social Influence Semantic R l ti hi S ti Relationships
  32. 32. 1) Social Connectedness– help your consumers connect to each others Allowing consumers (not necessarily customers) to transfer money simply through email or mobile number
  33. 33. Embed Social Connectedness in Processes- Ti k tM t TicketMaster: S l Process Sales P
  34. 34. 2) Social Influence– Triage your processes based on value of influence Identifying users (including but not limited to customers) and assigning status, priority and/or added-value services based on their influence on others.
  35. 35. 3) Semantic RelationshipsBroker new connections – and trigger processes Identifying new connections (within and beyond the existing relationships) and position y your organization as a service broker in an g emerging consumer network.
  36. 36. Summary:AF Four St Stage M d l t C Model to Connectedness t dPhase ChallengesAssess What services benefit from connectedness? What are the related benefits for the service provider and the consumer?Design Make-or-consume connectedness? How d i H to design positive network effects into service ii k ff i i delivery and consumption?Scale up How to scale up in light of exponential growth?Sustain How to secure an ongoing value proposition from connectedness?
  37. 37. Summary: From Pain Points to Opportunities via AffordancesSupply: Demand:AffordancesAff d Pain/Opportunity Points in Processes P i /O t it P i t i P Localization Need to locate (e.g. Foursquare) employees Semantic S i Need to connect relationships customers (e.g., Linkedin) Cloud Computing Need to scale up (e.g., Google) ( G l ) Social Influence Need to convince (e.g., Klout, Freemium) customers
  38. 38. Intrigued? See you after the Break! Innovation through Social Media depends on the identification of innovation affordances. Affordances emerge as opportunities, but become problems over time time. (De-) Localization and Democratization are already becoming hygiene factors. Connectedness is (still) an emerging affordance. How do you reduce your innovation latency?
  39. 39. Intrigued? See you after the Break! Find out after the break!
  40. 40. Innovation through Connectedness g - Part II: How To Innovate Professor Dr Jan Recker Woolworths Chair of Retail Innovation Information Systems School, Queensland University of Technology
  41. 41. Pick your Poise y We value transactions more than transformations… We are not ambitious enough… We don’t expect innovations… p We do not think outside the box… boxWhat this Session is about:Why d like change l t iWhdodo we struggle to innovate?We not change… t t ?
  42. 42. Agenda The Innovation Affordances of Social Media: Can we Innovate with Social Media? 2.35pm-3.35pm How to Innovate: Four Ways to Develop Innovations 4.00pm-5.00pm 4 00pm-5 00pm Q & A and Debate 5.00pm-5.30pm
  43. 43. What did we learn before the Break?Social Media reverses the Business Process Paradigm • It is not about how the customer participates in our processes, • but about how we participate in the customers’ processes. processes Chr. Potts (2010)
  44. 44. Types of Innovation Brunswicker (2013)
  45. 45. It s It’s not aquestion of type!q i f yp !
  46. 46. How ambitious are you?
  47. 47. The Innovation Ambition Matrix new Transformational Innovation ustomers Adjacent markets/cu Innovation m Core Innovation existing existing products/processes/assets new Nagji, Tuff (2012)
  48. 48. Example: Retail Innovation in Australia10 |
  49. 49. How do we innovate?
  50. 50. Four Ways to InnovationHigh predictability, High predictability,incremental outcomes Derive better practices Enhance Innovate Createcurrent practices new practices p Utilise potential practices High uncertainty,  disruptive outcomes
  51. 51. Four Ways to Innovation y Derive better practices Enhance Innovate Createcurrent practices new practices p Utilise potential practices
  52. 52. Process Enhancement Pre-requisite: existing process (model) Iterate all possible micro changes of an existing p business process Deploy suitable element from available set of enhancement patterns Assess th benefits, costs, risks A the b fit t ik and potential for innovation of each alternative f h lt ti
  53. 53. Enhance Example p Wait Pay Wait Go Up Enjoy Leave
  54. 54. Enhance – ELIMINATION Wait Pay Wait Go Up Enjoy Leave
  55. 55. Enhance – INSERT Buy Wait Pay Wait Go Up Enjoy Leave Drink
  56. 56. Enhance – RESEQUENCE Wait Pay Wait Go Up Enjoy Leave
  57. 57. Enhance – INTEGRATION Enjoy Wait Pay Wait Go Up Enjoy Leave & Leave
  58. 58. Enhance – SPECIALISE Pay ($19) Wait Pay Wait Go Up Enjoy Leave Pay ($42)
  59. 59. Process Enhancement Patterns
  60. 60. Application: Enhancing your Process through Social Media AffordancesSupply: Demand:AffordancesAff d Pain/Opportunity Points in Processes P i /O t it P i t i P Localization Need to locate (e.g. Foursquare) employees Semantic S i Need to connect relationships customers (e.g., Linkedin) Cloud Computing Need to scale up (e.g., Google) ( G l ) Social Influence Need to convince (e.g., Klout, Freemium) customers
  61. 61. Four Ways to Innovation y Derive better practices Enhance Innovate Createcurrent practices new practices p Utilise potential practices
  62. 62. Process Derivation Pre-requisite: awareness of innovations and affordances outside the own organization Convert external idea into a pattern and identify opportunity points in own processes that benefit from this pattern Assess the benefits, costs, risks and potential for innovation of each alternative Example: Di E l Disneyland - GE l d
  63. 63. Derivation Example• Indian software vendor receives 1.6mio job applications in one year.• They will hire 22,000 employees. h ill hi 22 000 l• Derivation is asking what they can learn for the recruitment  process… – from the mortgage application process of a bank? from the mortgage application process of a bank? – or a prestigious scientific journal?
  64. 64. Process Derivation - Procedure Select Domain Design Pattern? Transfer Assess
  65. 65. Example: Derivation for Retailers
  66. 66. Customer Triage g30
  67. 67. 31
  68. 68. Deploying Derivation to ProcessesDemand: DerivationMap underlying issues in process Opportunities Need to allocate Banks: limited li it d resources Pre-approval P l Need to have Traffic fines i T ffi fi in sanctions Scandinavia Need to triage Airline Frequent customers Flyer Programs Need to convert p products into BMW services DriveNow
  69. 69. Four Ways to Innovation y Derive better practices Enhance Innovate Createcurrent practices new practices p Utilise potential practices
  70. 70. Process Utilization Pre-requisite: awareness of under-utilized, outstanding and accessible external and g internal resources (people, assets, data) Capitalize C i li on Idle resources (idle capacity, waiting time) Positive outliers Assess the benefits costs risks and potential benefits, costs, for innovation of each alternative
  71. 71. Utilization of Assets:The Utilization Differential• Assume you drive 15,000 kms in your car per year• Assume th average speed is 50 k /h A the di kms/hr• You are driving the car for roughly 300 hours• There are 8,760 hours in the year Th 8 760 h i th• car utilization = 3.4%• If your car were a service, that untapped 96.6% becomes a source of value • Commercialization of idle time (revenue) • Share acquisition, operation, maintenance costs Henry Ch b H Chesbrough (2012) h
  72. 72. Utilisation (Assets)Example – Walmart Overnight Parking
  73. 73. Utilisation (Assets)Example – parkatmyhouse.com
  74. 74. Utilization of People- The Search for Positive Deviance
  75. 75. Process Utilisation- Example: Nurses Bandaging
  76. 76. 25:00 25:00 24:00 24:00 23:00 23:00 22:00 22:00 21:00 21:00 20:00 20:00 19:00 19:00 18:00 18:00 17:00 17:00 16:00 16:00 15:00 15:00 14:00 14:00 13:00 13:00 12:00 12:00 11:00 11:00 10:00 10:00 09:00 09:00 08:00 08:00Comparison 07:00 07:00 06:00 06:00 05:00 05:00 04:00 04:00 03:00 03:00 02:00 02:00 01:00 01:00 00:00 00:00 materials planning doing reacting materials planning doing reacting Expert t ovice No
  77. 77. Example – find internal innovation p“What“Wh can we l learn about success f b from within i hi our own company?” p y
  78. 78. Utilization: Studying Positive DevianceUtilization: Studying Positive Deviance Positive DeviantWhat is the Positive Deviantevidence for Positive Deviant Positive Deviantsuccess? Positive Deviant Positive Deviant Sales process performanceWho is trulysuccessful? Positive DeviantWhy are they Averagesuccessful? pWhich true rootcauses can weinsertelsewhere? Number of customers
  79. 79. Finding the True Root Causes
  80. 80. Four Ways to Innovation y Derive better practices Enhance Innovate Createcurrent practices new practices p Utilise potential practices
  81. 81. Process Creation Pre-requisite: access to innovators and the ability to prototype quickly p yp q y Capitalize on Creative potential within the organization The true meaning of customers’ demands The crowd as a source Assess the benefits costs risks and potential for benefits, costs, innovation of each alternative
  82. 82. Process Creation Techniques: Lateral Thinking Brainstorming Crowdsourcing and -solving Design-led Innovation …
  83. 83. Programmed vs Lateral Thinking Programmed - structured or logical way to develop a solution Lateral - jumping outside of usual patterns and assumptions
  84. 84. Brainstorming: Key Rules g y Process for generating new thinking P f i hi ki Encourages radical ideas Based on association Helps us think outside of “patterns” Build on ideas of others Quantity, not quality
  85. 85. Creation through Social Media - Open Innovation and Crowdsourcing51
  86. 86. Creation through Narratives - Design-led Innovation52
  87. 87. Design-led Innovation - Example: Shopping at Airports53
  88. 88. Summary- 4 Ways to InnovateInnovation Approach Selected TechniquesEnhancement 15 Process Improvement PatternsCreation Lateral Thinking, (Open) Brainstorming, Crowdsourcing, Design-Led InnovationUtilization Use data, assets, people, better, new or differently, Positive DeviantsDerivation Reference models, benchmarking, case studies, Patterns
  89. 89. Key Takeaways Innovation i h I ti is happening, whether you’re involved or not. i h th ’ i l d t Innovation means bringing processes closer to consumers consumers. Social Media enables business to “listen“ to live events as listen they occur. Innovation is a mindset that needs to be cultivated, learned and nurtured. Build your capability in 4 Ways of Innovation.
  90. 90. Got You Thinking? Start Reading! Recker, J “F R k J. “From Product Innovation to Organizational Innovation – and what that has to do P d I O lI d h h h d with Business Process Management,” BPTrends (9:6), pp 1-7. Recker, J., and Dreiling, A. “Towards a Theoretical Framework for Organizational Innovation”, QUT Technical Report, 2013. Nagji, B., and Tuff, G. "Managing Your Innovation Portfolio," Harvard Business Review (90:5) 2012, pp 66-74. Birkinshaw, J., Bouquet, C., and Barsoux, J.-L. "The 5 Myths of Innovation," MIT Sloan Management Review (52:2) 2011, pp 53-50. Find more papers at http://eprints.qut.edu.au/view/person/Recker,_Jan.html
  91. 91. Prof. Dr. Jan ReckerWoolworths Chair of Retail InnovationInformation Systems SchoolQueensland University of Technologye j.recker@qut.edu.auw www.janrecker.comt janrecker
  92. 92. Panel Discussion What are your Questions and Views? How are you using social media affordances? Is your organization becoming connected? What are your challenges in y g connectedness and social media? How do you create innovations?

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