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

1. Innovation through Connectedness
Professor Dr Jan Recker
Woolworths Chair of Retail Innovation
Information Systems School, Queensland University of Technology

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. 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. 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. Innovation
A novel contribution
l b
that produces value.

6. Drivers of Innovation
Problems Transactional
innovation
i i
Reactive resolution
That’s the stuff we know.
Or at least we should.
Constraints
Reactive adoption
Opportunities
Proactive design Transformational
innovation

7. Innovation
Driven 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. 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. Innovation
Driven 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. Constraint-
Constraint-driven Innovation
Example – Gcash, Philippines
Gcash,

11. Constraint-
Constraint-driven Innovation
Example – Tesco, South Korea

12. Innovation
Driven 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

15. The problem of opportunities:
Innovation Latency diminishes the value
Business Innovation Affordance
Value emerges
Value lost
through
g Innovation affordance
innovation is noticed Innovation
latency analysis is Innovation
conducted is implemented
Data Analysis
y Decision Time
Latency Latency Latency
Infrastructure
Latency
Reaction
Time
Adapted from Hackathorn, 2002

16. Social Media is (still) an
Opportunity
But Why?
And h t
A d what are the opportunities?
th t iti ?
18

17. 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?

18. Social Media = Digital Public Good
- The Four Principles
Non-excludability
Non-rivalry
N i l
Versatility
y
Positive network effects

19. Examples for Digital Public Goods
Digital Public Good As a Capability…
Google, Yahoo
Google Yahoo, Bing Search
Instagram, FlickR, Picassa Content (pictures)
Twitter, Facebook Event Signal
YouTube, Hulu, Vevo
, , Video
Facebook, MySpace, Orkut Social Networking
LinkedIn, Google+ Semantic Connectedness
Wikipedia, Hudong.com Dictionary
ITunes/Ping, Spotify, Simfy Music

20. The Opportunity:
Social Media as a Digital Complementary Asset
Your Company: Social Media:
The I
Th Innovator?
t ? Digital
Complementary
Asset

21. 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)

23. Attributes of Affordances
26
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

24. J. Davis (2011)

25. Example
p
Localization Affordances

26. Example
p
De-Localization Affordances

27. Example
p
Democratization Affordances

28. What s
What’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?

29. Connectedness:
The true Innovation Opportunity in Social Media
The connected customer
C C C C C C C
Organisation
O i ti

30. Example
p
Connectedness Social Flying

31. Social Media Capability: Event Signal Publishing
- Examples: Tweets (
(manual) or myskystatus.com (
) (automatic)
)

32. The Power of Connectedness: Network Effects!
Quality
of Network
Service Effects
Direct:
More users convert to
customers
indirect:
High user number
attracts
complementary
partners
Lack of
network effects
Number of
Customers

33. 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

34. Three Key Innovation Opportunities
through Connectedness
Social Connectedness
Social Influence
Semantic R l ti hi
S ti Relationships

35. 1) Social Connectedness
– help your consumers connect to each others
Allowing consumers (not necessarily customers)
to transfer money simply through email or
mobile number

36. Embed Social Connectedness in Processes
- Ti k tM t
TicketMaster: S l Process
Sales P

37. 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.

38. 3) Semantic Relationships
Broker 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.

39. Summary:
AF
Four St
Stage M d l t C
Model to Connectedness
t d
Phase Challenges
Assess 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?

40. Summary:
From Pain Points to Opportunities via Affordances
Supply: Demand:
Affordances
Aff 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

41. 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?

42. Intrigued? See you after the Break!
Find out after the break!

43. 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

44. 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…
box
What this Session is about:
Why d like change l t i
Whdodo we struggle to innovate?
We not change…
t t ?

45. 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

46. 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)

47. Types of Innovation
Brunswicker (2013)

48. It s
It’s not a
question of type!
q i f yp !

49. How ambitious are you?

50. The Innovation Ambition Matrix
new
Transformational
Innovation
ustomers
Adjacent
markets/cu
Innovation
m
Core
Innovation
existing
existing products/processes/assets
new
Nagji, Tuff (2012)

51. Example: Retail Innovation in Australia
10 |

52. How do we innovate?

53. Four Ways to Innovation
High predictability,
High predictability,
incremental
outcomes Derive
better practices
Enhance Innovate Create
current practices new practices
p
Utilise
potential practices High uncertainty,
disruptive outcomes

54. Four Ways to Innovation
y
Derive
better practices
Enhance Innovate Create
current practices new practices
p
Utilise
potential practices

55. 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

56. Enhance Example
p
Wait Pay Wait Go Up Enjoy Leave

57. Enhance – ELIMINATION
Wait Pay Wait Go Up Enjoy Leave

58. Enhance – INSERT
Buy
Wait Pay Wait Go Up Enjoy Leave
Drink

59. Enhance – RESEQUENCE
Wait Pay Wait Go Up Enjoy Leave

60. Enhance – INTEGRATION
Enjoy
Wait Pay Wait Go Up Enjoy Leave
& Leave

61. Enhance – SPECIALISE
Pay
($19)
Wait Pay Wait Go Up Enjoy Leave
Pay
($42)

62. Process Enhancement Patterns

63. Application:
Enhancing your Process through Social Media Affordances
Supply: Demand:
Affordances
Aff 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

64. Four Ways to Innovation
y
Derive
better practices
Enhance Innovate Create
current practices new practices
p
Utilise
potential practices

65. 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

66. 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?

67. Process Derivation - Procedure
Select Domain
Design Pattern?
Transfer
Assess

68. Example: Derivation for Retailers

69. Customer Triage
g
30

70. 31

71. Deploying Derivation to Processes
Demand: Derivation
Map 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

72. Four Ways to Innovation
y
Derive
better practices
Enhance Innovate Create
current practices new practices
p
Utilise
potential practices

73. 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

74. 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

75. Utilisation (Assets)
Example – Walmart Overnight Parking

76. Utilisation (Assets)
Example – parkatmyhouse.com

77. Utilization of People
- The Search for Positive Deviance

78. Process Utilisation
- Example: Nurses Bandaging

79. 25:00
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materials
planning
doing
reacting
materials
planning
doing
reacting
Expert
t ovice
No

80. Example – find internal innovation
p
“What
“Wh can we l
learn about success f
b from within
i hi
our own company?”
p y

81. Utilization: Studying Positive Deviance
Utilization: Studying Positive Deviance
Positive Deviant
What is the Positive Deviant
evidence for
Positive Deviant
Positive Deviant
success?
Positive Deviant
Positive Deviant
Sales process performance
Who is truly
successful?
Positive Deviant
Why are they Average
successful?
p
Which true root
causes can we
insert
elsewhere?
Number of customers

82. Finding the True Root Causes

83. Four Ways to Innovation
y
Derive
better practices
Enhance Innovate Create
current practices new practices
p
Utilise
potential practices

84. 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

85. Process Creation
Techniques:
Lateral Thinking
Brainstorming
Crowdsourcing and -solving
Design-led Innovation
…

86. Programmed vs Lateral Thinking
Programmed - structured or logical way to develop a
solution
Lateral - jumping outside of usual patterns and
assumptions

88. 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

89. Creation through Social Media
- Open Innovation and Crowdsourcing
51

90. Creation through Narratives
- Design-led Innovation
52

91. Design-led Innovation
- Example: Shopping at Airports
53

92. Summary
- 4 Ways to Innovate
Innovation Approach Selected Techniques
Enhancement 15 Process Improvement Patterns
Creation Lateral Thinking, (Open) Brainstorming,
Crowdsourcing, Design-Led Innovation
Utilization Use data, assets, people, better,
new or differently, Positive Deviants
Derivation Reference models, benchmarking,
case studies, Patterns

93. 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.

94. 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

95. Prof. Dr. Jan Recker
Woolworths Chair of Retail Innovation
Information Systems School
Queensland University of Technology
e j.recker@qut.edu.au
w www.janrecker.com
t janrecker

96. 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?