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Innovation Management Slow In The City Lounge 2012 09 11

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Presentation from breakfast seminar given at the Slow Lounge in Sandton, Johannesburg, South Afria on September 11, 2012

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Innovation Management Slow In The City Lounge 2012 09 11

  1. 1. Innovation Management Slow in the City lounge, Sandton 11th September 2012 “..because the execution of an idea is always more important than the brilliance of the thought..” (Harvard Business Publishing – Morgan, Levitt & Maleck – INVEST model) This document is solely for the use of the receiver. No part of it may be circulated, quoted, or reproduced fordistribution outside the receivers organisation without prior written approval from Bearing Consulting Ltd.
  2. 2. Who we areFöreläsare Jörgen is a Swedish citizen, residing in France and working internationally. During the last 15 years, he has led a large number of projects related to corporate Jörgen innovation, innovation Eriksson systems, corporate restructuring and R&D in Europe, Africa, the Middle East and the United States. Richard is South African, residing in South Africa and the United Kingdom and has a career Richard Shaw spanning 20 years in international strategy and management consulting, often in projects related to change, finance and innovation. 2
  3. 3. About Bearing ConsultingBearing Consulting is a management consultancy incorporated inUnited Kingdom with offices in London, Stockholm, Basel, Barcelonaand JohannesburgWe work with clients in three focus areas; Over the past 12 years, we have been engaged in projects across four continents Development of Places & Regions Management Consulting towards Bank & Finance Corporate Innovation 3
  4. 4. What is innovation? Litteraturen visar mångaThere is an vägar...abundance ofliterature 4
  5. 5. What is Innovation? Innovation ? Innovation can be incremental or disruptive Train Car Airplane”Invention” => Innovation => Effect (Globally) 5
  6. 6. The official definition En definition...―Innovation Management is thecapability to manage an invention/ideaof newproducts, services, processes, production methods, organizational forms, oran elementary improvement of abusiness (model) system up to itssuccessful realization.”- Definition from the IMP3rove project within EU Innova, which works toward a standardization of Innovation Management in 6
  7. 7. InnovationInnovation is creative destruction, whereentrepreneurs combine existing elements innew ways… After Joseph Schumpeter (1883 – 1950) 7
  8. 8. Drivers of innovation Business in hypercompetitive marketsThis document is solely for the use of the receiver. No part of it may be circulated, quoted, orreproduced fordistribution outside the receivers organisation without prior written approval from Bearing ConsultingLtd.
  9. 9. World dominanceIn the year 1994, Motorola was world leader in (analogue)mobiles,seven years later Nokia was world leader in (digital) mobiles60%50% Motorola40%30%20%10% Nokia0% Market shares 1994 Market Shares 2001 9
  10. 10. From #1 to crises in less than three years…Why ? 10
  11. 11. Hyper competition“Either you innovate or you’re in commodity hell. If youdo what everyone else does, you have a low-marginbusiness. That’s not where you want to be.” Sam Palmisano, former CEO IBM 11
  12. 12. Some drivers of hyper competitionWhy hyper competition? Globalisation – less trade barriers and efficient transport (e.g. containers) Speed of hyper connected communication and the pace of modern business Disruptive Technologies A new technology that has a serious impact on the status quo and changes the way people have been dealing with something, perhaps for decades 12
  13. 13. Shift from ―hard‖ to ―soft‖ factors in packaging of products and brands 13
  14. 14. Does Harley-Davidson sell motorcycles? What doesHarley-Davidson sell? 14
  15. 15. Does Harley-Davidson sell motorcycles?―…what we sell is the abilityfor a 43-year-old accountantto dress in blackleather, ride through smalltowns and have people beafraid of him― – an HD executive 15
  16. 16. THE LEGO STORYY2000 "Toy of the Y2004-03, the Century" by owner & CEOFortune magazine Kjeld Kirk and the British Kristiansen decideAssociation of Toy to go back to Retailers basic! Y2003 – 2004 Y2004-10, Jørgen Huge losses, close Vig Knudstorp to bankruptcy appointed as new CEO 16
  17. 17. THE LEGO STORY  The situation 2004 Demand decreasing, competition from games, movies, merchandising Poor quality Poor logistics Slow in adoption Simplistic leadership and laid-back cultureSources: HBR, DN, Guardian, BBC, Handouts European Offshoring Summit, (2009, Copenhagen) 17
  18. 18. THE LEGO STORY Innovate Execute Stabilize Deliver what operations we promise Improve the Value Creating business Partnership Define Rigid Execution Raison dêtre Platform Organic growth Differentiated Value Chain Offshoring Consumer Driven Restore the Value Chain balance sheet 2200Operational Profit 1200 MDK 200 -800 2003 2004 2005 2006 2007 2008 -1800 18 Year
  19. 19. KEY ACHIEVEMENTSClear Raison dêtre: ―we help children learn systematic and creative problem solving—a crucial twenty-first-century skill‖Gained consumer insights through ―direct sales to consumers‖ through BuiltByMe without competing with existing distribution channelCo-Branding with strong and selected partners such as Star wars and Harry Potter 19
  20. 20. KEY ACHIEVEMENTSReduced lead time, 45 to 3 days to storeCost saving through offshoring non- core competenciesA new supplier interfaceQA system in placeOpen Innovation, 120,000 people involved in external innovation work – DesignByMe, DreamtByMe, BuildByM eCommunity driven approach; the open platform Mindstorm encouraging customers to design and develop their own LEGO-robots systems 20
  21. 21. LEGO TOTAL INNOVATION MAKEOVER Customer External Innovation Engagement Internal Innovation Brand Services Supply Chain Business Model Partner Model Product Marketing...and LEGO continue to deliver exceptional profitable growth onan oligopolistic/niched and international toy market... 21
  22. 22. THE S-CURVE The real challenge, LEGO managed, lies in achieving a strategically balanced portfolio that between exploitative and the exploratory Emergent Growth Mature Performance / Value offering Ongoing business Business of the future (EXPLOITATIVE) (EXPLORATORY)Source: Tovstiga (2007) Effort / Time 22
  23. 23. VALUE IS CREATED ON THE ”EDGE” OF YOUR BUSINESSBusiness Product & Sales & Delivery & Operation Model Services Marketing Consumption 23
  24. 24. CULTURE IS KEY ―Kulturens‖ betydelseBRA attLYCKAS ”Hylla hjältarna” ”man skall inte förhäva sig” KULTUR Påverkan ”borde skämmas” KRAV … ”Bra försök …OK att till och med …nästa gång så ”Miss-LYCKAS 24
  25. 25. Open InnovationESADE Creapolis is a jointventure betweenESADE, a consortium ofSpanish financialinstitutions, localgovernment institutionsand business associations.The organisation managesa technology andinnovation park on theESADE campus in SantCugat outside Barcelona. 25
  26. 26. IDEO´s method for creativity‖Method to our madness‖ 1. Understand the market, the client, the technology and percieved constraints 2. Observe real people in real life situations 3. Visualize new-to-the-world concepts 4. Evaluate and refine the prototypes 5. Implement the new concept for commercialisation 26
  27. 27. Ten steps to innovation managementFöreläsare 1. Adopt a disciplined method for innovation management including project management, focus on customer needs and alignment of research and development to marketing plans. 2. Use advisers and collaborators to obtain resources which are non-core, vital or of superior quality to resources available in-house. 3. Identify customer needs in market segments. 4. Identify the differentiation of your innovative offering (goods, services, systems or a combination of them) to meet those customer needs. 5. Develop the offering for the identified differentiation. 6. Secure intellectual property protection. 7. Use the differentiation as a component of the competitive advantage 8. Refine the positioning of the offering at either the offerings, operations or organisational structure level. 9. Monitor, anticipate and respond to competition against or relevant to the offering. 27 10. Monitor and respond to the market performance and feedback for the offering.
  28. 28. BEARING INNOVATION NAVIGATOR™ “..because the execution of an idea is always more important than the brilliance of the thought..” (Harvard Business Publishing – Morgan, Levitt & Maleck – INVEST model)This document is solely for the use of the receiver. No part of it may be circulated, quoted, orreproduced fordistribution outside the receivers organisation without prior written approval from Bearing ConsultingLtd.
  29. 29. BEARING INNOVATION NAVIGATOR™...within a hypercompetitive market How can you measure, improve and What is your invent new competitive future competitive advantages? advantage? Where is your value created? 29
  30. 30. YOUR SWEET SPOT DEFINES YOUR FUTURE SUCESS Where your firm meets What? customers needs in a Where? way in which your Why? Competitors’ Customers’ competitors cannot How? offerings needs 3 1 Sweet Spot Sweet spot = unique spot 2 How to protect/define boundary 1,2,3 Company’s capabilities Context (technology, industry, regulat ory, etc.) 30llis & Rukstad (2008). Can You Say What Your Strategy Is?, HBR (April 2008)
  31. 31. INNOVATION FRAMEWORK Strategic question Type of innovation Style Why How What Product Innovation • Cauldron Company Strategy Process Innovation • Spirale • Incremental/ Organisational Innovation • Fertile Disruptive • PacMan Management Innovation • Need seekers • Explorer Production Innovation • Market readers • Technology drivers Commercial/Marketing People Innovation • 10 Faces of Innovation Service Innovation Capability & Process • Ideation • Project selection • Product development • CommercialisationSource: Penker (2011) 31
  32. 32. BEARING INNOVATION NAVIGATOR™...the navigatorInitiated by the work of Sawhney, M., Wolcott, R. C., & Arroniz, I. (2006). The 12 Differetnt Ways for Companies toInnovate. MIT Sloan Management Review , 75-81. 32
  33. 33. CASE STUDYSituation Perceived Solution• Fast growing awarded Complication • Nine generated e-commerce fashion • Growth pain recommendations company • New competitors• Entrepreneur of the entering the scene year, A Great Place To • Lost the battle in Work, AAA rated, Super Denmark Gazell • Perceived quality issues in deliveries • Lack of capitalization of innovation initiatives 33
  34. 34. CASE STUDYRecommendation; Strategy Alignment• The IT department adjust its leadership style toward that of the company, i.e. fertility field—meaning a style where the organisation tries to use existing capabilities and resources in a new way, focusing on sales and profit.• Make clear—within the organisation—where the company is going for growth or profit as main objective, enrol all stakeholders.Recommendation; Recruiting• Employ Hurdlers, Cross Pollinators, Anthropologists and Experience ArchitectsRecommendation; Leadership• Today, the customer service department, according to itself, has a non-goal-oriented leadership. This must be addressed, as the customer service function is vital to adjusting the lacking capabilities pointed out in the analysis. It is imperative that this be addressed appropriately.Recommendation; Product Development• Launch more new products to keep up the pace in the market, especially considering that the other kind of innovation is low. 34
  35. 35. CASE STUDYRecommendation; Involvement• Engage the company’s customers, suppliers and partners in the development• Establish a reward system internally and eventually externally, using both extrinsic (monetary) as well as intrinsic (acknowledgment, involvement, competence development, etc.).Recommendation; Organisation & Systems• Test pilots and learn from them• Undertake frequent independent market research• Make systematic risk assessments• Put an effective product management system in placeRecommendation; Enlarged scope• The type of innovation that the company is engaged in is product innovation, typically for retail-oriented companies.• However, service innovations, delivery innovations and business model innovations are getting more and more important and the company scores very low here.• Keeping in mind that the company is technology-driven and fertile field, there are many more opportunities to use existing customers, consumers, capabilities, systems, products and technology to innovate for more profit and market shares by applying business model innovation, service innovation and delivery innovation. 35
  36. 36. Bearing on the web Read more about what we do on the Bearing homepage www.bearing-consulting.com Bearing has a blog with an active debateblog.bearing-consulting.com 36
  37. 37. END.INNOVATE - EXECUTE™ 37
  38. 38. ABOUT BEARING CONSULTING Bearing Consulting is a management consultancy incorporated in United Kingdom with local offices in London, Stockholm, Barcelona, Basel and Johannesburg We work with clients in three focus areas; Places & Regions Bank & Finance Corporate Innovation Through a resource pool of more than 60 expert consultants, we are currently engaged in projects across four continents.Bearing develops methodologies and publishesbooks “..because the execution of an idea is always more important than the brilliance of the thought..” •Morgan, Levitt & Maleck, Harvard Business 38 Publishing
  39. 39. Places where we have worked 39
  40. 40. Ten steps to innovation managementFöreläsare 1. Adopt a disciplined method for innovation management including project management, focus on customer needs and alignment of research and development to marketing plans. 2. Use advisers and collaborators (eg joint venturers, licensors and colleagues in your networks) to obtain resources which are non-core, vital or of superior quality to resources available in-house. 3. Identify customer needs in market segments. 4. Identify the differentiation of your innovative offering (goods, services, systems or a combination of them) to meet those customer needs. 5. Develop the offering for the identified differentiation. 6. Secure intellectual property protection. This includes: 1. obtaining signature of agreements; and 2. obtaining appropriate registrations of any patent, trade mark, design, domain name or other registrable property to ensure protection of the differentiation and gain exclusive or superior rights ownership or control. 7. Use the differentiation as a component of the competitive advantage of the offering for market or financial goals, eg creating brand awareness, building market share, and obtaining premium pricing. 8. Refine the positioning of the offering at either the offerings, operations or organisational structure level. This is a complex concept. Briefly, each level involves a bigger impact and generally higher levels of intellectual property or intellectual capital monopoly. The level you target to reach may seal the fate of the offering in terms of determining if: 1. it merely serves a current market, or 2. does better by extending the to a new market, or 3. does best by creating a market. 9. Monitor, anticipate and respond to competition against or relevant to the offering. 40 10. Monitor and respond to the market performance and feedback for the offering.

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