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ACCELERATING & SUSTAINING
BUSINESS MODEL INNOVATION
Executive Briefing
Inês Almeida | April 2016
A BRIEF INTERRUPTION
TONS OF
DATA, MODELS, TOOLS, QUOTES
FROM
TOP ORGANISATIONS, EXPERTS
& BOOKS
CURATED, CONNECTED &
ENHANCED BASED ON MY
PERSPECTIVE AND EXPERIENCE
INNOVATION
Revolution
Disruption
Thinking Outside the Box
Challenging Status Quo
OPEN INNOVATION
Designing Systems for Trust
& Collaboration
A small act
of rebellion
ü DO Share wide and grow our ecosystem of change makers and
innovatorsinside and outside your organization or tribe
ü DO Co-create
ü DO Evolve
ü DO Challenge
ü DO Debate
ü DO Attribute
ü DO Innovateyour business model
Why ?
because =
MAKE YOUR MARK
By adding value
EVOLVE, CONNECT AND CURATE IDEAS, APPLY TO A NEW CONTEXT
MAKE YOUR MARK A GOOD MARK
BACK TO REGULAR
PROGRAMMING
AGENDA
01 Introduction
02 Types of Innovation
03 Strategic Alignment
04 Governance
05 Common Language & Context
06 Structure & Design
07 Culture
08 Environment
09 Motivation & Metrics
10 Closing Remarks
01INTRODUCTION
BUSINESS MODEL INNOVATION
BUSINESS MODEL INNOVATION
• Digital products & services
• Technology innovation
• Digital transformation
• Enterprise transformation
• Agile software development
• Rapid product development
• Lean startup
IS NOT
(but may include)
IS
An approach that enables an
organization to:
• achieve sustainable growth,
• become a market leader in
one or more categories,
• torespond effectively and
promptly tochanging
conditions.
AVERAGE COMPANY LIFESPAN ON S&P 500 INDEX (IN YEARS)
INTRODUCTION
60
13
1958 2029
DATA: INNOSIGHT/Richard N. Foster / Standard & Poor’s SOURCE: Wired
INTRODUCTION
INNOVATION IS ONE OF THE TOP3STRATEGIC PRIORITIES OF MOSTEXECS
Top 3 Priorities
Top Priority
Source: Themost innovativecompanies 2015 by Ringel, Taylor, andZablit - Boston ConsultingGroup(2015)
1500 senior executives from a wide variety of industries and regions
Where does innovation/product development rankamongst your
companies’ top strategic priority?
16
BUSINESS-AS-USUAL WINS FAILURE TO SCALE
FOCUS ON VANITY METRICS
CREATIVITY OVER
EXECUTION
WHY INNOVATION INITIATIVES FAIL
INTRODUCTION
DISCONNECTED & ISOLATED
EFFORTS
HISTORICAL BIAS
FRAGMENTATION
INTERNAL FOCUS
17
FRAGMENTATION
Too many bottom-up experiments
drive fragmented focus by senior
management and key talent.
Customer experience is fragmented
and brand vision diluted.
FAILURE TO SCALE
Leadership fails to transition
innovation through the different
horizons of growth.
FOCUS ON VANITY METRICS
Culture and values of the
organisation are not conducive to
innovation. Lack of focus on data-
driven metrics results in the
prioritisation of wrong initiatives.
CREATIVITY OVER EXECUTION
Underestimating the selection,
validation, execution and scaling of
innovative ideas.
HISTORICAL BIAS
Models that resulted in growth in
the past are prioritised above other
game-changing models.
INTERNAL FOCUS
Failure to place the customer’s
needs at the centre of innovation
engine.
DISCONNECTED
Bottom-up innovation efforts lack
alignment with business strategy.
Teams may be guided by hype or
unable to influence decision makers
to get the resources they need.
BUSINESS-AS-USUAL WINS
Execs fail to grasp how much
business-as-usual hinders innovation.
Short term pressure results in
sporadic, tactical innovation efforts
lacking sustainability.
WHY INNOVATIONINITATIVESFAIL
INTRODUCTION
Sizeoforganisation
Age of organisation
Late Prime
Adolescence
Courtship Death
STAGES OF CORPORATE LYFECYCLE
Bureaucracy
Recrimination
Aristocracy
Prime
Go-Go
Infant
Source: IchakAdizes
FOCUS OF THIS BRIEFING
GROWING AGING
STAGES OF CORPORATELYFE CYCLE
Sizeoforganisation
Age of organisation
Late Prime
Adolescence
Courtship Death
STAGES OF CORPORATE LYFECYCLE
Bureaucracy
Recrimination
Aristocracy
Prime
Go-Go
Infant
PRIME
ü Growingand profitable
ü New ‘infants’ arespun off
ü Success maybreedcomplacency
ü Measurements focus on the presentvalueof past
decisions
ü Inadequate bench strength
LATE PRIME
ü Financeintroduces controlsfor shorttermfinancial
results
ü The organization is becoming complacent
ü Although it is not yet obvious the ‘aging’ process has
begun
ARISTOCRACY
ü Not making waves becomes a way of life
ü Outwardsigns of respectability take on enormous
importance
ü The organization acquires companies rather than
incubatingstartup businesses
GROWING AGING
Source: IchakAdizes
Sizeoforganisation
Age of organisation
Late Prime
Adolescence
Courtship Death
STAGES OF CORPORATE LYFECYCLE
Bureaucracy
Recrimination
Aristocracy
Prime
Go-Go
Infant
RECRIMINATION
ü Witch-hunts becomeprevalent
ü Back-stabbing becomes commonplace
ü The customer is effectivelya nuisance
BUREAUCRACY
ü The Bureaucracyis survival oriented
ü Thereare policies for everything
ü The written wordis worshipped
ü If the organization is important to the economyand the
governmenthas socialistic tendencies the organization
will be put on life support (taxpayer dollars)
DEATH
ü The organization is bankrupt
STAGES OF CORPORATELYFE CYCLE
GROWING AGING
Source: IchakAdizes
INTRODUCTION
Growth
Time
Optimization
Market
Development
Concept
Creation
Concept
Development
S-CURVE OF PRODUCT, SERVICE OR BUSINESS
INNOVATE OR DIE
INTRODUCTION
Growth
Time
Reinvention
HarvestingMarket
Development
Concept
Creation
Concept
Development
Optimization
INTRODUCTION
Growth
Time
SUSTAINABLE BUSINESS
Products and Services
will be copied,
overshadowed, or
commoditized.
Your innovation engine is
your true competitive
advantage, and the fuel
for business
sustainability.
The innovation
engine should
leverage the
entire business
model. COST STRUCTURE REVENUE STREAMS
VALUE
PROPOSITIONS
CUSTOMER
RELATIONSHIPS
CUSTOMER
SEGMENTS
KEY PARTNERS
CHANNELS
KEY ACTIVITIES
KEY RESOURCES
💡
💡 💡
💡
💡 💡
💡💡
INTRODUCTION
Excessperformanceaboveindustrypeers
Time
BUSINESSMODEL INNOVATORS OUTPERFORM TRADITIONAL INNOVATORSOVER TIME
Process &Product Innovators
Business Model Innovators
3 year period 5 year period 10 year period
Source: Business Model Innovation byLindgardt, Reeves, Stalk and Deimler - Boston ConsultingGroup(2009)
Logic will get you
from A to B.
Imagination will
take you
everywhere.
“
Albert Einstein ”
28
Source: Design Thinking,IDEO
COSTS
CREATE	CHOICES MAKE	CHOICES
DIVERGENT	THINKING CONVERGENT	THINKING
EXPLORE	CHOICES
EMERGENT	THINKING
A B
...BUT IT TAKES TREMENDOUS RIGOUR TO GO FROM A TO B
INNOVATION = IDEAS + EXECUTION
INTRODUCTION
CONTINUOUS INNOVATION
DEMANDS BOTH
RIGOUR AND ART
THIS IS YOUR MAP TO
MASTERY
30
EXECUTIVEINNOVATION WORK MAT
Source: Agility Innovation and Ovo Innovation
STRATEGIC ALIGNMENT
MOTIVATION & METRICS
COMMON LANGUAGE
& CONTEXT
GOVERNANCE
STRUCTURE&
DESIGN
ENVIRONMENT
CULTURE
INTRODUCTION
31
Source: Agility Innovation and Ovo Innovation
STRATEGIC ALIGNMENT
MOTIVATION & METRICS
COMMON LANGUAGE
& CONTEXT
GOVERNANCE
STRUCTURE&
DESIGN
ENVIROMENT
CULTURE
Strategic Alignment
Aligning innovation initiatives with corporate strategy.
Culture
Defining and sustaining an innovation culture.
Common Language & Context
Creating common language. Providing rationale and context.
Structure & Design
Defining the structure, processes and functional design.
Environment
Identifying and nurturing internal and external innovation
environments.
Governance
Establishing innovation governance.
Motivation & Metrics
Developing the right measures to sustain innovation.
EXECUTIVEINNOVATIONWORK MAT
02TYPES OF INNOVATION
Lenses
33
Leaders looking to drive
innovation in the
enterprise must look at
current and future
business models from
different points of view in
search of game changing
solutions
34
BUSINESS MODEL CANVAS IS AN IDEATION AND ALIGNMENT TOOL THAT HELPS
YOU DOCUMENT EXISTING BUSINESS MODELSAND DEVELOP NEW ONES
Image Source: Stattys
TYPES OF INNOVATION
35
BUSINESS MODEL CANVAS
COST STRUCTURE REVENUE STREAMS
VALUE
PROPOSITIONS
CUSTOMER
RELATIONSHIPS
CUSTOMER
SEGMENTS
KEY PARTNERS
CHANNELS
KEY ACTIVITIES
KEY RESOURCES
Source: Business ModelGeneration by Osterwalder and Pigneur
TYPES OF INNOVATION
36
BUSINESS MODEL CANVAS
COST STRUCTURE REVENUE STREAMS
VALUE
PROPOSITIONS
CUSTOMER
RELATIONSHIPS
CUSTOMER
SEGMENTS
KEY PARTNERS
CHANNELS
KEY ACTIVITIES
KEY RESOURCES
Source: Business ModelGeneration by Osterwalder and Pigneur
Value Propositions
What value do we deliver to customers?
Which one of our customer’s problems are we helping to
solve?
What bundles of products and services are we offering each
Customer Segment?
Which customer’s need are we satisfying?
Characteristics
Newness, Performance, Customization, “Getting the Job Done”,
Design, Brand/Status, Price, Cost Reduction, Risk Reduction,
Accessibility, Convenience/Usability.
BUSINESS MODEL CANVAS
37
BUSINESS MODEL CANVAS
COST STRUCTURE REVENUE STREAMS
VALUE
PROPOSITIONS
CUSTOMER
RELATIONSHIPS
CUSTOMER
SEGMENTS
KEY PARTNERS
CHANNELS
KEY ACTIVITIES
KEY RESOURCES
Source: Business ModelGeneration by Osterwalder and Pigneur
Customer Segments
For whom are we creating value?
Who are our most important customers?
Mass Market, Niche Market, Segmented, Diversified, Multi-
sided Platform.
Examples
BUSINESS MODEL CANVAS
38
BUSINESS MODEL CANVAS
COST STRUCTURE REVENUE STREAMS
VALUE
PROPOSITIONS
CUSTOMER
RELATIONSHIPS
CUSTOMER
SEGMENTS
KEY PARTNERS
CHANNELS
KEY ACTIVITIES
KEY RESOURCES
Source: Business ModelGeneration by Osterwalder and Pigneur
Customer Relationships
What type of relationships does each of our Customer
Segments expect us to establish and maintain with them?
Which ones have we established?
How are they integrated with the rest of the business model?
How costly are they?
Examples
Personal assistance, Dedicated Personal Assistance, Self-
Service, Automated Services, Communities, Co-creation.
BUSINESS MODEL CANVAS
39
BUSINESS MODEL CANVAS
COST STRUCTURE REVENUE STREAMS
VALUE
PROPOSITIONS
CUSTOMER
RELATIONSHIPS
CUSTOMER
SEGMENTS
KEY PARTNERS
CHANNELS
KEY ACTIVITIES
KEY RESOURCES
Source: Business ModelGeneration by Osterwalder and Pigneur
Channels
Through which Channels do our Customer Segments want to
be reached?
How are we reaching them now?
How are our Channels integrated?
Which ones work best?
Which ones are most cost-efficient?
How are we integrating them with our customer routines?
Channel phases
Awareness, Evaluation, Purchase, Delivery, After sales.
BUSINESS MODEL CANVAS
40
BUSINESS MODEL CANVAS
COST STRUCTURE REVENUE STREAMS
VALUE
PROPOSITIONS
CUSTOMER
RELATIONSHIPS
CUSTOMER
SEGMENTS
KEY PARTNERS
CHANNELS
KEY ACTIVITIES
KEY RESOURCES
Source: Business ModelGeneration by Osterwalder and Pigneur
Revenue Streams
For what value are our customers willing to pay?
For what do they currently pay?
How are they currently paying?
How would they prefer to pay?
How much does each Revenue Stream contribute to the
overall revenues?
Types
Asset sale, usage fee, Subscription fees, Lending/Renting/Leasing,
Licensing, Brokerage fees, Advertising.
Fixed Pricing
List price, Product feature dependent, Customer segment
dependent, Volume dependent.
Dynamic Pricing
Negotiation (bargaining), Yield Management, Real-time-Market.
BUSINESS MODEL CANVAS
41
BUSINESS MODEL CANVAS
COST STRUCTURE REVENUE STREAMS
VALUE
PROPOSITIONS
CUSTOMER
RELATIONSHIPS
CUSTOMER
SEGMENTS
KEY PARTNERS
CHANNELS
KEY ACTIVITIES
KEY RESOURCES
Source: Business ModelGeneration by Osterwalder and Pigneur
Key Partnerships
Who are our Key Partners?
Who are our key suppliers?
Which Key Resources are we acquiring from partners?
Which Key Activities do partners perform?
Motivations for partnerships
Optimization and economy
Reduction of risk and uncertainty
Acquisition of particular resources and activities
BUSINESS MODEL CANVAS
42
BUSINESS MODEL CANVAS
COST STRUCTURE REVENUE STREAMS
VALUE
PROPOSITIONS
CUSTOMER
RELATIONSHIPS
CUSTOMER
SEGMENTS
KEY PARTNERS
CHANNELS
KEY ACTIVITIES
KEY RESOURCES
Source: Business ModelGeneration by Osterwalder and Pigneur
Key Activities
What Key Activities do our Value Propositions require?
What Key Activities do our Distribution Channels require?
What Key Activities do our Customer Relationships require?
What Key Activities do our Revenue Streams require?
Categories
Production
Problem Solving
Platform/Network
Marketing/Sales
BUSINESS MODEL CANVAS
43
BUSINESS MODEL CANVAS
COST STRUCTURE REVENUE STREAMS
VALUE
PROPOSITIONS
CUSTOMER
RELATIONSHIPS
CUSTOMER
SEGMENTS
KEY PARTNERS
CHANNELS
KEY ACTIVITIES
KEY RESOURCES
Source: Business ModelGeneration by Osterwalder and Pigneur
Key Resources
What Key Resources do our Value Propositions require?
What Key Resources do our Distribution Channels require?
What Key Resources do our Customer Relationships require?
What Key Resources do our Revenue Streams require?
Types
Physical
Intellectual (brand patents, copyrights, data)
Human
Financial
BUSINESS MODEL CANVAS
44
BUSINESS MODEL CANVAS
COST STRUCTURE REVENUE STREAMS
VALUE
PROPOSITIONS
CUSTOMER
RELATIONSHIPS
CUSTOMER
SEGMENTS
KEY PARTNERS
CHANNELS
KEY ACTIVITIES
KEY RESOURCES
Source: Business ModelGeneration by Osterwalder and Pigneur
Cost Structure
What are the most important costs inherent in our business
model?
Which Key Resources are the most expensive?
Which Key activities are the most expensive?
Is your business more
Cost Driven (leanest cost structure, low price value
proposition, maximum automation, extensive outsourcing)
Value Driven (focused on value creation, premium value
proposition)
Sample characteristics
Fixed Costs (salaries, rents, utilities), variable costs, Economies
of scale, Economies of scope.
BUSINESS MODEL CANVAS
45
Source: Business ModelGeneration by Osterwalder and Pigneur
.
. . .
. . .
Resource-driven Offer-driven Customer-driven
Finance-driven Multiple epicenter-driven
ASKING “WHAT IF...?” AND DRIVING INNOVATION FROM ONE OR SEVERAL EPICENTERS
TYPES OF INNOVATION
46
Source: Business ModelGeneration by Alexander Osterwalder
COSTS VALUE
REDUCE
ELIMINATE
LEAN
LOGIC
EFFICIENCY
EFFECTIVENESS
SCARCITY
RAISE
CREATE
EXPERIENCE
EMOTION
TYPES OF INNOVATION
VALUE INNOVATION
47
OPERATING MODEL INNOVATION
COST STRUCTURE
KEY PARTNERS
KEY ACTIVITIES
KEY RESOURCES
Work smarter
Agile software development
Continuous delivery
Lean manufacturing: Toyota
Automation: Amazon, Tesla
Digitization of manual processes
Collaborate
“Platform” as a business model: AirBNB
Value chain innovation: Instacart
Organise to win
Enterprise Agility as operating model
(organisational design, talent management,
cost structure, budgeting, value chain)
TYPES OF INNOVATION
48
VALUE INNOVATION
REVENUE STREAMS
VALUE
PROPOSITIONS
CUSTOMER
RELATIONSHIPS
CUSTOMER
SEGMENTS
CHANNELS
Unique Offerings
Feature set
Complimentary products & services
Distinct Experiences
New channels
Service & support: Rackspace
Fanatical support
Tribes & Meaningful Stories
Trust, Reputation, Quality, Good,
Specialness
TYPES OF INNOVATION
49
VALUE INNOVATION
Source: Change by Design,Tim Brown
EXISTING	OFFERINGS
EXISTING	USERS NEW	USERS
NEW	OFFERINGS
EXTEND
(evolutionary)
CREATE
(revolutionary)
MANAGE
(incremental)
ADAPT
(evolutionary)
TYPES OF INNOVATION
50
Source: Clayton Christensen
EXISTING	OFFERINGS
EXISTING	USERS NEW	USERS
NEW	OFFERINGS
EXTEND
(evolutionary)
CREATE
(revolutionary)
MANAGE
(incremental)
ADAPT
(evolutionary)
TYPES OF INNOVATION
INCUMBANTS
NEARLY ALWAYS
WIN
SUSTAINING
INNOVAITON
BACK IN THE DAY CLAYTON CHRISTENSEN TOLD US WHY INCUMBANTS GET DISRUPTED...
51
Source: Clayton Christensen
EXISTING	OFFERINGS
EXISTING	USERS NEW	USERS
NEW	OFFERINGS
EXTEND
(evolutionary)
CREATE
(revolutionary)
MANAGE
(incremental)
ADAPT
(evolutionary)
DISRUPTIVEINNOVATION
INCUMBANTS
NEARLY ALWAYS
WIN
INCUMBANTS	PURSUE	
HIGHER	MARGINS	BY	
PRODUCING	MORE	
COMPLEX	OFFERINGS
THIS	MAY	LEAD	TO	
PRODUCTS	&	SERVICES	
THAT	ARE	TOO	
SOFISTICATED,	
COMPLEX	AND	
EXPENSIVE
THIS	ENABLES	NEW	
ENTRANTS	TO	DISRUPT
SUSTAINING
INNOVAITON
BACK IN THE DAY CLAYTON CHRISTENSEN TOLD US WHY INCUMBANTS GET DISRUPTED...
52
EXISTING	OFFERINGS
EXISTING	USERS NEW	USERS
NEW	OFFERINGS
EXTEND
(evolutionary)
CREATE
(revolutionary)
MANAGE
(incremental)
ADAPT
(evolutionary)
TYPES OF INNOVATION
ENTRANTS NEARLY
ALWAYS WIN
Source: Clayton Christensen
DISRUPTIVE
INNOVAITON
BACK IN THE DAY CLAYTON CHRISTENSEN TOLD US WHY INCUMBANTS GET DISRUPTED...
53
EXISTING	OFFERINGS
EXISTING	USERS NEW	USERS
NEW	OFFERINGS
EXTEND
(evolutionary)
CREATE
(revolutionary)
MANAGE
(incremental)
ADAPT
(evolutionary)
DISRUPTIVEINNOVATION
ENTRANTS NEARLY
ALWAYS WIN
Source: Clayton Christensen
DISRUPTIVE
INNOVAITON
ENTRANTS	IN	INITIAL	
STAGES	PURSUE	LOWER	
MARGINS,	NICHE	
MARKETS	AND	SIMPLER	
PRODUCTS	THAT	
EVENTUALLY	BECOME	
POPULAR	WITH	THE	
MAINSTREAM	MARKET
BACK IN THE DAY CLAYTON CHRISTENSEN TOLD US WHY INCUMBANTS GET DISRUPTED...
54
TYPES OF INNOVATION
Source: Clayton Christensen
UNLESS THE INCUBANT IS...
aka PLATFORM AS A BUSINESS MODEL
brought to you by
BUSINESS MODEL INNOVATION
From
products or
services to
platforms
ü What relationships and
partnerships enable
business success?
ü Which bigger-than business
goals do you share with
your ecosystems?
ü How can you increase trust
with your ecosystem?
56
CROSS-INDUSTRY INNOVATION
Source: CrossIndustryInnovation.com
TYPES OF INNOVATION
57
Source: CrossIndustryInnovation.com
Cross-industry innovation is a clever way to jump-start your innovation efforts by drawing
analogies and transferring approaches between contexts, beyond the borders of your own
industry, sector, area or domain. These analogies can be drawn at various levels, from
products to services, to processes, to strategies, to business models, to culture and
leadership.
CROSS-INDUSTRYINNOVATION
58
Source: CrossIndustryInnovation.com
CROSS-INDUSTRYINNOVATION
INNOVATION POWERED BY
TECHNOLOGY-ENABLED
INNOVATION:
ü SCAN THE HORIZON FOR
CURRENT TRENDS
ü LOOKING AT MULTIPLE
SOURCES
ü DEFINE YOUR BOUNDARIES
AND YOUR DECISION FRAME
ü VISUALISE & ASSESS
RESULTS
60
MASTERING THE HYPE CYCLE
RISK VS REWARD
Source: Gartner Hype Cyle
TIME
EXPECTATIONS
TYPES OF INNOVATION
Innovation Trigger Peak of Inflated
Expectations
Trough of
Disillusionment
Slope of
Enlightenment
Plateau of
Productivity
61
Source: Jim Highsmith – Adaptive Leadership (based on Thoughtworks Technology Radar)
OPPORTUNITY RADAR
TYPES OF INNOVATION
HOLD
ASSESS
TRIAL
ADOPT
Category A Category B
Category C Category D
62
TECHNOLOGY INNOVATION ADOPTION CURVE
Source: Geoffrey Moore
TIME
Relative	%	of	customers
TYPES OF INNOVATION
Innovators &
technology
enthusiasts
Earlyadopters &
visionaries
Earlymajority
pragmatists
Laggards &
sceptics
Late majority
conservatives
63
IN THE OLD DAYS GEOFREY MORE TOLD US THERE WAS A CHASM...
Source: Crossing the Chasm by Geoffrey Moore 1991
TIME
Relative	%	of	customers
TYPES OF INNOVATION
Innovators &
technology
enthusiasts
Earlyadopters &
visionaries
Earlymajority
pragmatists
Laggards &
sceptics
Late majority
conservatives
EARLY	MARKET
REVOLUTION
EVOLUTION
STABILITY
PREDICTABILITY
CHASM
64
THE CHASM HAS DISAPEARED IN THE CONSUMER FOCUSED DIGITAL INNOVATION
Source: Strata 2014:Geoffrey Moore, Crossingthe Chasm What's New, What's Not
TIME
Relative	%	of	customers
TYPES OF INNOVATION
Innovators &
technology
enthusiasts
Earlyadopters &
visionaries
Earlymajority
pragmatists
Laggards &
sceptics
Late majority
conservatives
TORNADO OR BUST
65
TIME
Relative	%	of	customers
TYPES OF INNOVATION
Innovators &
technology
enthusiasts
Earlyadopters &
visionaries
Earlymajority
pragmatists
CREATING TECHNOLOGY
PLATFORMS THAT CAN
BE LEVERAGED
REPEATEDLY IS HARD
THE CHASM IS
EXPANDING DUE TO THE
EXPONENTIAL RATE OF
INNOVATION
SO IS THE NEED AND
THE PAIN...
Source: Strata 2014:Geoffrey Moore, Crossingthe Chasm What's New, What's Not
IOT	
PLATFORM
BLOCKCHAIN
MACHINE	
LEARNING
BIG	
DATA
WEARABLES
AGILE
DEVOPS
DEVOPS
AFFECTIVE	
COMPUTING
QUANTUM	
COMPUTING
BRAIN	COMPUTER
INTERFACE
AR
VR
CLOUD	
COMPUTING
HEAVY TO DEPLOY & REQUIRE END-TO-END SOLUTION FOCUS
THE CHASM GROWSIN ENTREPRISE IT TRANSFORMATION
66
TIME
Relative	%	of	customers
TYPES OF INNOVATION
Innovators &
technology
enthusiasts
Earlyadopters &
visionaries
Earlymajority
pragmatists
Source: Strata 2014:Geoffrey Moore, Crossingthe Chasm What's New, What's Not
IOT	
PLATFORM
BLOCKCHAIN
MACHINE	
LEARNING
BIG	
DATA
WEARABLES
AGILE
DEVOPS
DEVOPS
AFFECTIVE	
COMPUTING
QUANTUM	
COMPUTING
BRAIN	COMPUTER
INTERFACE
AR
VR
CLOUD	
COMPUTING
To cross the chasm you have to:
ü Target a niche area with an
intractable problemwhere
pragmatists are desperate.
ü Commit to provide complete
solution, this typically includes
products and services from
partners and allies.
ü Leader must take responsibility for
ensuring customer success.
ü To cross you must secure and
deliver breakthroughhigh-profile
projects.
ENTERPRISE IT TRANSFORMATION
67
TYPES OF INNOVATION
TWO WORLDS COLLIDING
CONSUMER	
FOCUSED
DIGITAL	
INNOVATION
ENTERPRISE	IT
68
TYPES OF INNOVATION
“There’s an app for that”
New features any time
Rapid product
development
MVP
Agile
Full-stack engineers
Generalists
Pods Specialists
Procurement
Legal
Annual Budgets
Legacy Systems
Silos
Continuous
Delivery
Devops
CONSUMER FOCUSED
DIGITAL INNOVATION
ENTERPRISE IT
Learning oriented
Iterative
Experimental
Cross functional
Continuous
Funding
gates
Maintenance
Complexity
FragmentationMicroservices
Outsourcing
Crowdsourcing
Crowdfunding Waterfall
Fix Price
Vendor Management
CUSTOMERS, ENTERPRISE EMPLOYEES AND EXECUTIVES EXPECT AGILITY
Evolutionary architecture
69
TYPES OF INNOVATION
“There’s an app for that”
New features any time
Rapid product
development
MVP
Agile
Full-stack engineers
Generalists
Pods Specialists
Procurement
Legal
Annual Budgets
Legacy Systems
Silos
Devops
CONSUMER FOCUSED
DIGITAL INNOVATION
ENTERPRISE IT
Learning oriented
Iterative
Experimental
Cross functional
Continuous
Funding
gates
Maintenance
Complexity
FragmentationMicroservices
Outsourcing
Crowdsourcing
Crowdfunding Waterfall
Fix Price
Vendor Management
CUSTOMERS, ENTERPRISE EMPLOYEES AND EXECUTIVES EXPECT AGILITY
Continuous
Delivery
Evolutionary architecture
FROMTHEGROUNDUP
70
TYPES OF INNOVATION
CONSUMER FOCUSED
DIGITAL INNOVATION
ENTERPRISE IT
CUSTOMERS, ENTERPRISE EMPLOYEES AND EXECUTIVES EXPECT AGILITY
DIGITAL	TRANSFORMATION	
OR
ENTERPRISE	IT	TRANSFORMATION
FROMTHETOPDOWN
71
TYPES OF INNOVATION
CONSUMER FOCUSED
DIGITAL INNOVATION
ENTERPRISE IT
CUSTOMERS, ENTERPRISE EMPLOYEES AND EXECUTIVES EXPECT AGILITY
ENTERPRISE	AGILITY
OR
BUSINESS	MODEL	INNOVATION
ABETTERLENSE
72
COMPANY’S
STRENGHTS
AND KEY
ASSETS AS
EPICENTER
Companies using
a combination of
innovation types
generate better
results. Source: Keeley and Waters in Ten Types of Innovation
03STRATEGIC ALLIGMENT
Aligning innovation with the business strategy
75
STRATEGIC ALIGNMENT
MOTIVATION & METRICS
COMMON LANGUAGE
& CONTEXT
GOVERNANCE
STRUCTURE&
DESIGN
ENVIROMENT
CULTURE
76
VALUE GENERATION INNOVATION
MISSION
VALUES
OBJECTIVES
CORPORATE STRATEGY
INNOVATION INITIATIVE
OBJECTIVES
INNOVATIVE SOLUTIONS THAT RESPOND TO
SPECIFIC ORGANISATIONAL PROBLEMS
METRICS
STRATEGIC ALLIGMENT
77
STRATEGIC ALLIGMENT
THE PROBLEM WITH MOST PUBLIC COMPANY’S STRATEGY
and yet... THE FUTURE IS SHAPED NOW!
How do you
create your
future while
managing the
present?
“
Vijay Govindarajan,
A Strategy for Leading Innovation
”
79
How in the age of rapid
change do you create
organizations that are as
adaptable and resilient
as they are focused and
efficient?
Gary Hamel
Moonshots for Management
“
”
80
MISSION
VALUES
OBJECTIVES
CORPORATE STRATEGY
INNOVATION INITIATIVE
OBJECTIVES
METRICS
In the future, top management won’t make strategy but will work to create the conditions
in which new strategies can emerge and evolve.
Gary Hamel in Moonshots for Management
STRATEGIC ALLIGMENT
“
”
81
START BY MAPPING YOUR INNOVATION PORTFOLIO WIP AGAINST BUSINESS STRATEGY
Source: Lean Enterprise: How high performance organisation innovate at scale by Humble, Molesky and O’Reilley
STRATEGIC ALLIGMENT
EXPLORE EXPLOIT SUSTAIN RETIRE
82
EXPLORE EXPLOIT SUSTAIN RETIRE
Early stage initiatives
that are bets for the
future with high
degrees of uncertainty
Initiatives that have
achieved product-
market fitand the
organization wants to
grow and scale
Initiatives that have
become repeatable
and scalable business
models, products or
services that drive the
majority of revenue
Initiatives that are long
lived, no longer
beneficial (even
limiting) to the future
success or strategy
Source: Lean Enterprise: How high performance organisation innovate at scale by Humble, Molesky and O’Reilley
MAPPING INNOVATIONWIP AGAINSTBUSINESS STRATEGY
83
the discipline to discard what does not
fit—to cut out what might have already
cost days or even years of effort—that
distinguishes the truly exceptional
artist and marks the ideal piece of
work.
“
Jim Collins ”
GOVERNANCE
04GOVERNANCE
Decision making and sponsorship
85
STRATEGIC ALIGNMENT
MOTIVATION & METRICS
COMMON LANGUAGE
& CONTEXT
GOVERNANCE
STRUCTURE&
DESIGN
ENVIROMENT
CULTURE
ALLIGN GOALS
ALLOCATE RESOURCES
ASSIGN DECISION MAKING AUTHORITY
DIFFERENTIATE INVESTMENT PROFILES
PRIORITIZE AND FUND
BALANCE SHORT AND LONG TERM
⎯
INTERNALLY AND WITH THIRD PARTIES
The CEO must:
ü Champion innovation at
the top table
ü Shape, inspire, and clarify
the necessary links and
synergies across the
company
ü Become familiar with the
evolving frameworks,
tools and techniques
ü Differentiate important vs
urgent
The Innovation Leader must:
ü Support best practices
ü Develop skills
ü Support business unit
initiatives
ü Identify new market
spaces
ü Facilitate idea generation
ü Direct seed funding
Source:	HOW	TO	LEAD	INNOVATION:	7	Tasks	for	Innovation	Focused	Executives
by	Alessandro	Di	Fiore	and	Elisa	Farri
89
Viability
(Business)
Desirability
(Human)
Feasibility
(Technology)
INNOVATION
Source: Design Thinking, IDEO
GOVERNANCE
90
Sketch out
your business
plans in one
page
91
First, rather than engaging in months of planning
and research, entrepreneurs accept that all they
have on day one is a series of untested hypotheses—
basically, good guesses. So instead of writing an
intricate business plan, founders summarize their
hypotheses in a framework called a business model
canvas.
“
Steve Blank for HBR ”
GOVERNANCE
92
THE ENTERPRISE AS AN INCUBATOR
discovering a new business
model is inherently risky, and
is far more likely to fail than to
succeed. Companies need a
portfolio of new business
start-ups rather than putting
all of their eggs into a limited
number of baskets.
“
Steve Blank for HBR
”
GOVERNANCE
93
Source: Lean Enterprise: How high performance organisation innovate at scale by Humble, Molesky and O’Reilley
Time to market
Sales
Profit
Time
Break
even
InvestReturn
EXPLORE
(radical)
EXPLOIT
(incremental)
MOST IDEAS WILL NOT GET TO BREAK EVEN
GOVERNANCE
94
HOW WILL YOU EVALUATE, SELECT & FUND IDEAS?
A CONTINUOUSEVALUATION FUNDING MODEL FOR RADICAL INNOVATION ENABLES
YOU TO FAIL FAST AND REDUCE INVESTMENTON NON-VIABLE IDEAS.
GOVERNANCE
95
PRIORITISE THE INITIATIVES THAT BRING MOST VALUE
GOVERNANCE
V
V
V
DEFINE VALUE
96
MCKINSEY’S THREE HORIZONS OF GROWTH
GOVERNANCE
97
As companies mature, they often face declining growth as innovation gives way to inertia. In order to
achieve consistent levels of growth throughout their corporate lifetimes, companies must attend to existing
businesses while still considering areas they can grow in the future.
MCKINSEY’S THREE HORIZONS OF GROWTH
98
Visibility
Time
Now
H1 - ANALYSIS H2 - EXPLORATION H3 - IMAGINATION
GOVERNANCE
COMPANIES MUST MANAGE BUSINESSES ALONG ALL THREE HORIZONS CONCURRENTLY
99
FROM PLANS TO EXPERIMENTS
Measure
Learn
Build
GOVERNANCE
100
MINIMUM VIABLE, BOOTSTRAPPED EXPERIMENTS
Time to market
Profit
Time
Break
even
InvestReturn
$ $
$$$ $ $
$
$
$
$
$
$ $$
$ $
🔍
$
Microinvestments
GOVERNANCE
101
COSTS
A B
GOVERNANCE
GET	THE	RIGHT	IDEA GET	THE	IDEA	RIGHT
102
INVESTMENT
UNCERTAINTY
GOVERNANCE
DELAY DECISIONS TO THE LAST RESPONSIBLE MOMENT
Time
TACKLE HARDEST PROBLEMS FIRST
103
BE FORWARD LOOKING BUT, DON’T STARVEYOUR PERFORMANCE ENGINE
GOVERNANCE
104
If you're spending a lot
of time accounting for
the time you're
spending, that's time
you're not innovating.
“
Steve Swasey,
Netflix's VP for corporate communication
EMPOWERMENTAS GOVERNANCE
”
105
Finance people should remember
Albert Einstein’s wise words: “Not
everything that counts can be
counted, and not everything that can
be counted counts.”
Bjarte Bogsnes
Implementing Beyond Budgeting: Unlocking the Performance Potential
“
”
106
GOVERNANCE
MOVE BEYOND BUDGETING
LEADERSHIP PRINCIPLES
PROCESS PRINCIPLES
TO INNOVATION ACCOUNTING
107
CUSTOMERS
VALUES
RESPONSIBILITY
MOVE BEYOND BUDGETING
AUTONOMY
ORGANISATION
TRANSPARENCY
Focus everyone on improving customer outcomes,
not on hierarchical relationships
Govern through a few clear values, goals, and boundaries,
not detailed rules and budgets
Enable everyone to act and think like a leader,
not merely micromanage them.
Give teams the freedom and capability to act;
do not micromanage them.
Organise as a network of lean, accountable teams,
not around centralized functions.
Promote open information for self-management;
do not restrict it hierarchically.
LEADERSHIPPRINCIPLES
Source: Bjarte Bogsnes in Implementing Beyond Budgeting: Unlocking the Performance Potential
GOVERNANCE
108
GOALS
RESOURCES
PLANNING
MOVE BEYOND BUDGETING
CONTROLS
REWARDS
COORDINATION
Set relative goals for continuous improvement;
do not negotiate fixed performance contracts.
Make resources available as needed,
not through budget allocations.
Make planning a continuous and inclusive process,
not a top-down annual event.
Base controls on relative indicators and trends,
not on variances against plan.
Reward shared success based on relative performance,
not on meeting fixedtargets.
Coordinate interactions dynamically;
do not through annual planning cycles.
PROCESSPRINCIPLES
Source: Bjarte Bogsnes in Implementing Beyond Budgeting: Unlocking the Performance Potential
GOVERNANCE
A BRIEF INTERRUPTION
Every company is work in progress.
Don’t get overwhelmed with the
chasm--get curious, get excited, get
busy, build bridges, debate, educate,
share and drive change.
BACK TO REGULAR
PROGRAMMING
05Promoting a shared understanding
COMMON LANGUAGE AND CONTEXT
114
STRATEGIC ALIGNMENT
MOTIVATION & METRICS
COMMON LANGUAGE
& CONTEXT
GOVERNANCE
STRUCTURE&
DESIGN
ENVIROMENT
CULTURE
CONSISTENT COMMUNICATION
COMMON LANGUAGE
WELL DEFINED RATIONALE
MAKING COMMITMENTS VISIBLE
116
Focus on
communicating
Principles
and
Values
117
Use stories
and memes
118
Tell the team
where they are
in the process
and what is
expected
119
Emotional Careful	and	cautiousPositive
Positive Cool	and	organizedCreativity	and	
new	ideas
Nurture
T-shaped,
adaptable team
members that are
prepared to color
outside the lines
and practice lateral
thinking
Source:	Edward	DeBono
120
Target equal
representation
and be inclusive
in your language
and
communication
121
Be fanatical about sharing context and information
to fuel autonomy and empowered decision making
06STRUCTURE & DESIGN
Who, what, when, how?
123
STRATEGIC ALIGNMENT
MOTIVATION & METRICS
COMMON LANGUAGE
& CONTEXT
GOVERNANCE
STRUCTURE&
DESIGN
ENVIROMENT
CULTURE
WHO IS RESPONSIBLE FOR INNOVATION
WITHIN THE ORGANIZATION?
WHAT TECHNIQUES TOOLS AND METHODS
ARE USED TO SUSTAIN INNOVATION?
HOW DO OUR TEAMS ADQUIRE CAPABILITIES?
“
William	Shakespeare ”
There’s a
method to his
her madness.
126
A bad system will beat a
good person every time.
“
W. Edwards Deming
”
127
LOOK UPSTREAM FOR THE SOURCE OF THE PROBLEM
This principle is applicableto many processes within organizations,
particularly to developing new offerings, platforms, and businesses.
Before reacting to feedback, ask why someone is seeing things the
way they are. You might discover what needs to be changed is back
upstream.
“
Oren Jacob, former chief technical officer
Pixar
”
128
EXPLORE
exploringnewbiz models
EXPLOIT
exploiting provenexisting business models
SUSTAIN RETIRE
Source: Lean Enterprise: How high performance organisation innovate at scale by Humble, Molesky and O’Reilley
High performance organisations build capability to continuously move initiatives through
the model from Explore to Retire. They understand that using the same strategy, practices
and processes across the entire portfolio will result in negative outcomes and results.
STRUCTURE & DESIGN
DIFFERENT PRACTICES AND PROCESSES
STRUCTURE & DESIGN
129
ü Cross-functional	multidisciplinary	
teams
ü Make	lots	of	small	bets
ü Boundaries	of	time,	scope,	financial	
investment	and	risk
ü Design	experiments	are	safe	to	fail	
(the	only	true	failure	is	the	failure	
to	learn)
ü Create	a	sense	of	urgency
ü Demonstrable	evidence	of	value	to	
proceed
Source: Lean Enterprise: How high performance organisation innovate at scale by Humble, Molesky and O’Reilley
ü Create	end-to-end	customer	facing	teams,	not	
project	teams
ü Continuous	 evaluation	funding	 model
ü Target	condition	 is	to	achieve	break-even	point
ü Data-driven,	fact-based	decisions	based	on	
accumulated	knowledge
ü Maintain	a	sense	of	urgency
ü Set	a	vision,	trust	the	team	to	get	there,	clear	
blockers	and	support	as	they	proceed
ü Make	knowledge	sharing	and	organisational
learning	easy
SUSTAIN RETIREEXPLORE
exploringnewbiz models
EXPLOIT
exploiting provenexisting business models
STRUCTURE & DESIGN
DIFFERENT STRATEGIES, PRACTICES & PROCESSES
130
Organisations are not
designed for innovation.
Quite the contrary they are
designed for ongoing
operations.
THE PERFORMANCE ENGINE
“
”Vijay Govindarajan
Source: The Other Side of Innovation: Solvingthe Execution Challenge, Vijay Govindarajan
STRUCTURE & DESIGN
131
“
”
Source: The Other Side of Innovation: Solvingthe Execution Challenge, Vijay Govindarajan
Under pressure to deliver profits
every day, the Performance
Engine instinctively swats down
innovation initiatives—or any
project, for that matter, that
cannot make an immediate
contribution. Managers at middle
and low levels who face rigid
performance targets each
quarter can be powerless to
overcome this reflex.
INNOVATION
Relentless pursuit of:
• Reliable profits
• Repeatability &
Predictability
• Efficiency & Effectiveness
Short-term
Non-routine
Uncertain
Long-term
PERFORMANCE ENGINE
VS
STRUCTURE & DESIGN
Vijay Govindarajan
132
$
DON’T:
§ fuel antagonism
§ promote heroism
§ promote “break-all-rules”
§ promote “go-make-it-happen”
MUTUAL RESPECT & DEPENDENCY
THE PERFORMANCE ENGINE IS NOT THE PROBLEM, IT’S THE HEART OF
THE BUSINESS. THE INNOVATION ENGINE IS NOT BETTER, IT JUST
REQUIRES DIFFERENT TYPES OF DISCIPLINE AND ACCOUNTABILITY
STRUCTURE & DESIGN
133
Source:	The	Other	Side	of	Innovation:	Solving	the	Execution	Challenge,	Vijay	Govindarajan
ü Continuous process improvement (small
enough to fit within “slack” time)
ü Repeatable product development efforts
(that follow Performance Engine-like
processes)
STRUCTURE & DESIGN
SMALL INNOVATION MAY BE DRIVEN BY THE PERFORMANCE ENGINE
134
STRUCTURE & DESIGN
InnovationEngine
Dedicated Team
Custom Organisational Design
Plan
Rigorous Learning Process
No Shortcuts of Convenience
DESIGNING & STRUCTURINGTHE INNOVATION ENGINE
Source:	The	Other	Side	of	Innovation:	Solving	the	Execution	Challenge,	Vijay	Govindarajan
135
Source:	The	Other	Side	of	Innovation:	Solving	the	Execution	Challenge,	Vijay	Govindarajan
Shared
Staff
Dedicated
Staff
Partnership
PERFORMANCE
ENGINE
COMPANY
STRUCTURE & DESIGN
DESIGNING & STRUCTURINGTHE INNOVATION ENGINE
Senior	Executive	
Council
Innovation	Engine	Leadership
ü Innovation Project team =
dedicated team + shared staff
ü Team must be separate but not
isolated. Must be linked to the
core business.
136
Source:	The	Other	Side	of	Innovation:	Solving	the	Execution	Challenge,	Vijay	Govindarajan
Shared
Staff
Dedicated
Staff
Partnership
PERFORMANCE
ENGINE
COMPANY
DESIGNING & STRUCTURING THE INNOVATIONENGINE
DESIGNING & STRUCTURINGTHE INNOVATION ENGINE
Senior	Executive	
Council
Innovation	Engine	Leadership
ü Leaders should be positioned
as the leaders of the initiative as
a whole to maximise
partnership.
137
Source:	The	Other	Side	of	Innovation:	Solving	the	Execution	Challenge,	Vijay	Govindarajan
Shared
Staff
Dedicated
Staff
Partnership
PERFORMANCE
ENGINE
COMPANY
DESIGNING & STRUCTURINGTHE INNOVATION ENGINE
Senior	Executive	
Council
Innovation	Engine	Leadership
ü Sometimes it requires
commissioning a special senior
executive council to mediate and
to nurture partnership.
DESIGNING & STRUCTURING THE INNOVATIONENGINE
138
Source:	The	Other	Side	of	Innovation:	Solving	the	Execution	Challenge,	Vijay	Govindarajan
Shared
Staff
Dedicated
Staff
Partnership
PERFORMANCE
ENGINE
COMPANY
DESIGNING & STRUCTURINGTHE INNOVATION ENGINE
Senior	Executive	
Council
Innovation	Engine	Leadership ü Dedicated team is custom built for the initiative.
ü Team must be separate but not isolated. Must be
linked to the core business.
ü Dedicated team takes the non-routine portion of
the effort.
ü Calling the dedicated team “innovation”team is
inaccurate and undermines the partnership.
ü Sometimes requires hiring and empowering a
new group of experts.
DESIGNING & STRUCTURING THE INNOVATIONENGINE
139
Source:	The	Other	Side	of	Innovation:	Solving	the	Execution	Challenge,	Vijay	Govindarajan
Shared
Staff
Dedicated
Staff
Partnership
PERFORMANCE
ENGINE
COMPANY
DESIGNING & STRUCTURINGTHE INNOVATION ENGINE
Senior	Executive	
Council
Innovation	Engine	Leadership ü Shared staff retains its existing
responsibilities as part of
Performance Engine and supports
Innovation Engine.
ü Shared staff takes on the repeatable
portion of the effort that are consistent
with the individual’s skills and work
relationships.
DESIGNING & STRUCTURING THE INNOVATIONENGINE
140
HIRE FOR EXCELLENCE
It is because of hybrid folks like Jacob, who see past the status quo
to create better systems that enable greatness, that we stand a
chance to solve the toughest,most ambiguous problems facing our
world today.
“
Oren Jacob, former chief technical officer of Pixar ”
STRUCTURE & DESIGN
“
Elphaba
also	known	as	
The	Wicked	Witch	of	the	West
”
I don’t cause
commotions,
I am one.
142
INNOVATION
ENVIRONMENTAL	COMPLEXITY
INCREMENTALRADICAL
ESTABLISHED	FRAME NEW	FRAME
BROKERS
Create connections and find relationships between people.
SCOUTS
Explorers that find what is relevant. They find the right
places to go and explore.
ENTREPENEURS
Break the rules and challenge you. Flexible, agile, tolerant
of ambiguity, and take risks to learn.
SYSTEM ARCHITECTS
See big picture. See possibility at system level.
IDENTIFY THE RIGHT TALENTTO MOVE BEYOND THE ESTABLISHED FRAME
Source: Professor John Bessant
STRUCTURE & DESIGN
143
APPOINT THE RIGHT LEADERS
“
”
internal entrepreneurs are more likely to be rebels who chafe at
standard ways of doing things, don’t like to follow the rules,
continually question authority, and have a high tolerance for
failure.
Yet instead of appointing these people to create new ventures, big
companies often select high-potential managers who meet their
standard competencies and are good at execution (and are easier
to manage).
Steve Blank on Why Big Companies Can’t Innovate (HBR)
STRUCTURE & DESIGN
144
DON’T STEREOTYPE OR LIMIT PEOPLE’S POTENTIAL
Change the system and the incentives and a
performance engine leader can become an
innovation engine leader and vice-versa.
STRUCTURE & DESIGN
145
Partner
insiders
with
outsiders
146
THE RISK OF ORGANIZATIONAL MEMORY
Source:	The	Other	Side	of	Innovation:	Solving	the	Execution	Challenge,	Vijay	Govindarajan
Products
Products
An innovation team composed entirely of “insiders” will struggle with two particular
strong sources of organizational memory
INSTINCTS
“If something worked in the past...”
EXISTING WORKING RELATIONSHIPS
Dedicated teams full of people that have worked closely together for years are almost guaranteed to
become little performance engines.
STRUCTURE & DESIGN
“
Glinda
also	known	as	
The	Good	Witch	of	the	South
”
Cause getting your dreams
It's strange, but it seems
A little - well - complicated
There's a kind of a sort of : cost
There's a couple of things get: lost
There are bridges you cross
You didn't know you crossed
Until you've crossed...
And if that joy, that thrill
Doesn't thrill you like you think it will
Still -
148
DESIGN FOR TRUST
When we design systems that assume bad
faith from the participants, and whose main
purpose is to defend against that nasty
behavior, we often foster the very behavior
we're trying to deter.
“
”Clay Shirky
STRUCTURE & DESIGN
149
HIERARCHICAL NETWORKED
CONNECTED TO
ECOSYSTEM
ISOLATED
CONTROL
EMPOWERMENT
PRIVACY
TRANSPARENCY
INNOVATION
STRUCTURE & DESIGN
150
Choose early
customer
validation over
stealth mode and
big revelations
151
Unless:
1. You are seriously
cashed up
2. Have access to a
reliable learning
engine that provides
you with the insights
you need to make
decisions
Photo:	PRWire
152
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Fairness	and	
equality
Enhance	
innovation
Reflect	gender	
composition	of	
customer	base
Enhance	
decision-making
Expand	talent	
pool
External	
pressures,	
reputation
Government	
regulation
No	rationale
SIGNIFICANCEOF RATIONALES FOR GENDER PARITY, INDUSTRIES OVERALL
Share of respondents statingrationale, %
Source:	The	Future	of	Jobs	Report	- World	Economic	Forum
Extensive	survey	of	Chief	
Human	Resources	Officers	and	
other	senior	talent	and	
strategy	executives	from	a	
total	of371	leading	global	
employers,	representing	more	
than	13	million	female	and	
male	employees	across	9	
broad	industry	sectors	in	15	
major	developed	and	
emerging	economies	and	
regional	economic	areas.
STRUCTURE & DESIGN
153
GENDER DIVERSITY MAKES A TEAM SMARTER
Source: What Makes a Team Smarter? More Women by Professors Woolley (MIT) and Malone (Carnegie Mellon)
Many of the factors you might
think would be predictive of group
performance were not. Things like
group satisfaction, group cohesion,
group motivation—none were
correlated with collective
intelligence. And, of course,
individual intelligence wasn’t
highly correlated, either.
STRUCTURE & DESIGN
BUT, IT’S NOT JUST ABOUT GENDER
Employees at 2-D companies are 45% likelier to report that their
firm’s market share grew over the previous year and 70% likelier
to report that the firm captured a new market.
2-D diversity:
üInherent
Gender, ethnicity, and sexual orientation.
üAcquired
Traits you gain from experience: Working in another country,
researching female consumers etc.
07CULTURE
Designing and sustaining a culture of innovation
156
STRATEGIC ALIGNMENT
MOTIVATION & METRICS
COMMON LANGUAGE
& CONTEXT
GOVERNANCE
STRUCTURE&
DESIGN
ENVIRONMENT
CULTURE
CULTURE MAKES OR BREAKS
INNOVATION
CULTURE COMES FROM THE TOP
CULTURE EATS STRATEGY AND
PROCESS FOR BREAKFAST
158
ORGANIZATIONAL CULTURE CONSISTS OF VALUES, NORMS, AND BEHAVIOURS, WHICH
COLLECTIVELY DEFINE AND COMPRISE ACCEPTABLE AND “NORMAL” WAYS OF GETTING THINGS
DONE WITHIN AN ORGANIZATION
Research shows culture is strongly associated with successful and continuousinnovation
Openness to external ideas
Future-market orientation
Organizational-learning orientation
Support for experimentation and risk taking
Tolerance of failure
Willingness to cannibalize existing business
Good collaboration
Leaders as role models and sponsors
Source: Strategic Innovation for Business Performance by Harold Schroeder
CULTURE
159
THE LEADER’SGUIDE TO RADICAL MANAGEMENTBY STEVE DENNING
Re-inventing the workplacefor the 21st century
Inspiringcontinuous innovation,deep job satisfaction and clientdelight
CULTURE
The goal of work is to delight clients
Managers communicate interactively through stories, questions and conversations
Work is conducted in self-organizing teams
Teams operate in client-driven iterations
Each iteration delivers value to clients
Managers foster radical transparency
Managers foster continuous self-improvement
It's quite simple isn't it? Just listen and learn in a
team.
ü Put ideas and collaboration above organizational hierarchies.
ü Give each team member a voice and an equal opportunity to
participate.
ü Be open and listen carefully to ideas – wherever they come from.
ü Help to connect your people and encourage them to do the same.
ü Experts shouldn’t just talk to other experts.
ü Proactively drive a culture of innovation but keep participation
voluntary.
Source: ADIDAS INNOVATON LAB – A Culture of innovation is a culture of listening
“
Dan Pink ”
Questions open and
declarations close.
We need both, of course.
But that initial tincture of
honest doubt turns out to
be more powerful than a
bracing shot of certainty.
162
SELF-QUESTIONING VS SELF-AFFIRMING
Three social scientists asked a group of
volunteers to work on a series of
anagrams—changing the word “sauce” to
“cause,” for example, or “when” to “hewn.”
Before the participants tackled the problem,
the researchers asked one half of them to
take a minute to ask themselves whether
they could complete the task—and the other
half to tell themselves that they would
complete the task.“WILL	I” “I	WILL”
NUMBER	OF	ANAGRAMS
PRIME
CULTURE
163
When you create something, you can fall in love
with it and aren't able to see or hear anything
contrary. Whatever comes out of your mouth is
all you're inhaling, but when you ask a
question—Will I?—you're creating an opening.
You're inviting a conversation—whether it's self
conversation or a conversation with others.
“
Lisa Gansky in The Flip Manifesto by Dan Pink
”
164
START DOUBTING YOURSELF
COSTS
A B
WILL I? YES!
STOP BREATHING FROM YOUR OWN EXHAUST
Source: TheFlip Manifesto by Dan Pink
CULTURE
165
If you are part of a structure or
tribe that is specifically
designed and incentivized to
make the most of anything
(sales, marketing, advertising)
you must ensure you know
when to unleash or contain
those specific capabilities.
166
Time to market
Profit
Time
InvestReturn
$
$
$
$ $
$
$ $
$
$$
Sales
$
$
$
$ $
$
$ $
$
$$
TOO MUCH STORY, NOT ENOUGH EVIDENCE
WASTE
CULTURE
167
CONTINUOUS INNOVATION,
VALUE AND COST ALIKE, REQUIRE THE SAME MINDSET
“Away from” “Towards”
Risk and Fear Growth and Learning
Protection, Safety, and Status Impact and Value
Cynicism and Pessimism Skepticism and Optimism
Controlling Empowering
Managing Leading
Short livedresults Sustainable thrivingecosystems
TOWARDS SUSTAINABLE GROWTH
CULTURE
168
THE ONLY TRUE
FAILURES ARE
THE FAILURE TO TRY
&
THE FAILURE TO LEARN
AS FAST AS YOU
POSSIBLY CAN
“
Charles	Darwin
”
A woman who dares
to waste one hour
of time has not
discovered the value
of life.
170
Co-creation, co-evolution, collaboration and cooperation are set on a
healthy foundation of trust and mutual respect. Highly aggressive
competitive environments block flow of information and learning.
Building trust through attribution/acknowledgment is key.
Platforms like OpenIdeo and HitRecord, and thriving movements such
as Open Source are build on this foundation.
CULTURE
08ENVIRONMENT
Internal and external hubs
172
STRATEGIC ALIGNMENT
MOTIVATION & METRICS
COMMON LANGUAGE
& CONTEXT
GOVERNANCE
STRUCTURE&
DESIGN
ENVIRONMENT
CULTURE
Rigid walls
belong
in museums
Photo credit: Sam	Kittner/Newseum – Berlin	Wall
“ If our institutions are to survive,
they’ll have to create new
roadways. That’s a design
problem — one that requires new
rules of engagement with a broad
set of collaborators.
Tim Brown, Ideo
”
175
Own	market	
revenue
CLOSED BUSINESS MODEL
Time
CostsRevenues
Shorter product life in market
WHY OPEN BUSINESS MODEL INNOVATION?
ENVIRONMENT
Internal	
development	costs
Own	market	
revenue
0
Rising costs of innovation
Internal	
development	costs
Source: Open Business Models: How To Thrive In The NewInnovationLandscapeby Henry Chesbrough
176
CLOSED
BUSINESS MODEL Costs
Revenues
New revenues
WHY OPEN BUSINESS MODEL INNOVATION?
ENVIRONMENT
Own	market	
revenue
Cost & time savings from
leveragingexternal
development
Internal	
development	costs
Source: Open Business Models: How To Thrive In The NewInnovationLandscapeby Henry Chesbrough
Internal	&	External	
development	costs
Own	market	
revenue
License
Spin-off
JV	revenue
Sale/	divestiture
OPEN
BUSINESS MODEL
177
OPEN COLLABORATION
Companies	known	for	their	successful	record	of	innovation	have	often	
institutionalized	collaboration	within	organizational	systems	and	processes	
Products
Consultants
Idea	sharing	and	joint	experimentation	has	been	reported	to	contribute	significantly	
to	more	rapid	implementation,	at	lower	cost,	and	reduced	risk	for	the	firms	involved
Open	collaboration	between	employees	in	different	areas	of	the	organization,	with	
external	stakeholders,	and	between	organizations	within	a	network	
Source: Strategic Innovation for Business Performance by Harold Schroeder
ENVIRONMENT
The most creative ideas aren’t going to
come while sitting in front of your monitor.
The new building is really designed to
spark not just collaboration but that
innovation you see when people collide.
Scott Birnbaum, VP Samsung Semiconductor
“
”
179
SPACE DESIGN MATTERS
ENVIRONMENT
RAPID	PROTOTYPING
Iterative	creativity,	
brainstorming,	 and	
small	group	idea	
refinement
CROSS-POLLINATION
Silo-busting,	
increased	creativity,	
and	more	innovation
INDIVIDUAL	
PRODUCTIVITY
Personal	productivity,	
focused	individual	
work,	and	deadline	
work
GROUP	EFFICIENCY
Team	productivity,	
focused	group	work,	
and	project	
development
ASSIGNED	SEATINGFLEXIBLE	SEATING
PRIVATE	OFFICES OPEN	PLAN
Source: Workspaces thatmove people by Waber, Magnolfi, and Lindsay
180
OUT OF SIGHT, OUT OF SYNC
ENVIRONMENT
LESSMORE
LESS MORE
Source: Workspaces thatmove people by Waber, Magnolfi, and Lindsay
COMMUNICAITON
PHYSICAL	DISTANCE
FACE	TO	FACE
EMAIL
ALLEN	
CURVE
181
CORPORATE SOCIAL NETWORKS HELP, BUT THEY ARE NOT AS EFFECTIVE...
ENVIRONMENT
Source: Why no one uses the corporate social network by CharleneLi, HBR
Source: Why Brainstorming Works Better Online by Tomas Chamorro-Premuzic in HBR
THE EXCEPTIONIS BRAINSTORMING
Virtual brainstorming enhances
creative performance – versus
in-person brainstorming
sessions – by almost 50% of a
standard deviation. This means
that almost 70% of participants
can be expected to perform
worse in traditional than virtual
brainstorming sessions.
“
”
183
VIRTUAL BRAINSTORMING
ENVIRONMENT
Source: Collaborating Online Is Sometimes Betterthan Face-to-Face by Alexandra Samual, HBR.
1. Stops	dominant	participants	from	talking	too	much,	taking	over	the	
session	and	eclipsing	their	colleagues.
2. Reduces	evaluation	apprehension,	particularly	in	less	confident	
individuals.
3. Option	for	anonymity	enables	ideas	to	be	judged	more	objectively.
4. Preventing	participants	from	being	exposed	to	each	other’s	ideas	during	
the	idea-generation	phase	encourages	participants	to	offer	a	wider	
variety	of	ideas.
09MOTIVATION & METRICS
Developing measures
AUTONOMY
MASTERY
PURPOSE
Dan Pink - Drive
186
MOTIVATION
=
IMPACT
NOT AWARD
MOTIVATION& METRICS
What gets
measured,
gets managed.
“
Peter Druker
”
Aristotle
“
”
Our problem is
not that we aim
too high and miss,
but that we aim
too low and hit.
189
INCENTIVISE FOR COLLABORATION
Our	innovation	challenge	is	about	making	connections	– thorough	
structures,	networks,	technological	infrastructures	and,	above	all,	
through	people.	Knowledge	broking	will	increasingly	be	a	key	skill	
within	organizations	and	the	basis	of	a	growing	service	sector.
“
”The Future Of Innovation…. Challenges At The Innovation Frontier by Prof. John Bessant
INNOVATION IS POWERED BY CONNECTIONS
MOTIVATION& METRICS
190
WRONG INCENTIVE, WRONG BEHAVIOUR
Neil Davidson in The Flip Manifesto by Dan Pink
Imagine you could construct a sales
robot, programmed solely by the rules
in any sales structure. How would it
behave? It would steal deals off other
salespeople, sell customers software
they didn't need, argue with its boss
over its commission and backstab its
colleagues. That wasn't the behavior we
wanted, but our commission structure
sent a strong signal that it was.
“
”
MOTIVATION& METRICS
191
BEYOND BUDGETING
TRANSPARENT BENCHMARKING, AUTONOMY, SHARED GOALS & DESCENTRALIZATION
Drive performance and learning through transparent internal benchmarking
between regions and branch offices.
Source: Bjarte Bogsne -Implementing Beyond Budgeting: Unlocking the Performance Potential
MOTIVATION& METRICS
Provide sufficient freedom and responsibility to enable each branch and region
to do what is right to lift it’s own performance.
Balance the individual drive with a shared purpose through a common bonus
scheme for all employees, and no individual bonuses.
192
Source: Entrepreneurs: BewareofVanity Metrics by Eric Ries
BEWARE OF VANITY METRICS, WHAT YOU MEASURE MUST BE:
ACCESSIBLE
AUDITABLE
ACTIONABLE
MOTIVATION& METRICS
193
Source: Entrepreneurs: BewareofVanity Metrics by Eric Ries
BEWARE OF VANITY METRICS, WHAT YOU MEASURE MUST BE:
ACCESSIBLE
Key data should be available to any employee, anytime, in a matter of minutes. In order to achieve that
goal, the reports themselves have to be extremely simple.
AUDITABLE
Believe me, when it’s your idea on the line, it’s much easier to believe the report is the problem rather than
the idea. Thus, it’s important that skeptics can audit a report.
ACTIONABLE
We know how to replicate the result in the report. Followingthe scientific method gives confidence that
the observed behavior was, in fact, caused by the change being tested. Example: split-testing.
MOTIVATION& METRICS
194
The	Other	Side	of	Innovation:	Solving	the	Execution	Challenge	
Vijay	Govindarajan
Evaluate the performance of the dedicated
team not on short term financial results, but
in their ability to test assumptions about the
future.
“
”
MOTIVATION& METRICS
195
We believe that ________________________________
Will result in __________________________________
We will know when we succeed when ______________
(this idea)
(this outcome)
(these results)
ABILITY TO TEST HYPOTHESIS RAPIDLY NO MATTER IF THEY FAIL OR SUCCEED
MOTIVATION& METRICS
196
Source: Barry O’Reilley – Blow up the business case
MOTIVATION& METRICS
ELEMENT QUESTION RELEVANT
METRICS
ACQUISITION How do your
customers find
you?
Traffic, Mentions,
Cost per click,Cost
of Acquisition
ACTIVATION Do your customers
havea great
experience?
Sign ups,
Completed on-
boarding process,
Used service
RETENSION Do your customers
come back?
Time sincelast
visit, daily/moth
active users,
churns
REVENUE How do you make
money?
Customer life
value, conversion
rate, shopping cart
size
REFERRAL Do customers tell
others?
Invites sent, viral
coefficient, viral
cycletime
STAKEHOLDER METRIC CURRENT TARGET TREND
CUSTOMER % users that
complete sales
flow
30% 45%
% Retention 20% 25%
Net Promoter
Score
44 60
BUSINESS % visits to sign
up for service
20% 25%
% conversion to
paying
customers
15% 20%
Customer
acquisition
costs
$0.5 $0.25
Life time
customer value
$12 $20
% attrition 30% 15%
ONE METRIC THAT MATTERS
197
DATA OVER HIPPOs
The	goal	is	to	use	data-driven	
decisions	based	on	usage	and	
profitability	to	enhance	what	
customers	desire	– not	just	copy	
what	competitors	release	or	what	
HIPPOs (HIghest Paid Person’s	
Opinion)	want	to	have.
“
”Barry O’Reilley
Lean PMO: Managing the innovation portfolio
MOTIVATION& METRICS
10CLOSING REMARKS
Wicked & The Wizard of Oz
199
Accelerating and
sustaining
business model
innovation
200
Always
partner
insiders with
outsiders
201
Expect and
mediate
tension
Nurture
partnership
202
Insiders should
always become
allies that model
empathy, bravery
and critical
thinking
203
Look upstream
for root cause and
don’t be
intimidated by
power structures
204
Drive change from multiple epicenters,
expect setbacks and keep learning
205
Make change
sustainable
by focusing
on the entire
system
206
207
INNOVATE
INNOVATE
INNOVATE
INNOVATE
INNOVATE
INNOVATE
INNOVATE
INNOVATE
THANK YOU

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Accelerating and Sustaining Business Model Innovation

  • 1. ACCELERATING & SUSTAINING BUSINESS MODEL INNOVATION Executive Briefing Inês Almeida | April 2016
  • 3. TONS OF DATA, MODELS, TOOLS, QUOTES FROM TOP ORGANISATIONS, EXPERTS & BOOKS CURATED, CONNECTED & ENHANCED BASED ON MY PERSPECTIVE AND EXPERIENCE
  • 5. OPEN INNOVATION Designing Systems for Trust & Collaboration
  • 6. A small act of rebellion
  • 7. ü DO Share wide and grow our ecosystem of change makers and innovatorsinside and outside your organization or tribe ü DO Co-create ü DO Evolve ü DO Challenge ü DO Debate ü DO Attribute ü DO Innovateyour business model Why ? because =
  • 8. MAKE YOUR MARK By adding value
  • 9. EVOLVE, CONNECT AND CURATE IDEAS, APPLY TO A NEW CONTEXT MAKE YOUR MARK A GOOD MARK
  • 11. AGENDA 01 Introduction 02 Types of Innovation 03 Strategic Alignment 04 Governance 05 Common Language & Context 06 Structure & Design 07 Culture 08 Environment 09 Motivation & Metrics 10 Closing Remarks
  • 13. BUSINESS MODEL INNOVATION BUSINESS MODEL INNOVATION • Digital products & services • Technology innovation • Digital transformation • Enterprise transformation • Agile software development • Rapid product development • Lean startup IS NOT (but may include) IS An approach that enables an organization to: • achieve sustainable growth, • become a market leader in one or more categories, • torespond effectively and promptly tochanging conditions.
  • 14. AVERAGE COMPANY LIFESPAN ON S&P 500 INDEX (IN YEARS) INTRODUCTION 60 13 1958 2029 DATA: INNOSIGHT/Richard N. Foster / Standard & Poor’s SOURCE: Wired
  • 15. INTRODUCTION INNOVATION IS ONE OF THE TOP3STRATEGIC PRIORITIES OF MOSTEXECS Top 3 Priorities Top Priority Source: Themost innovativecompanies 2015 by Ringel, Taylor, andZablit - Boston ConsultingGroup(2015) 1500 senior executives from a wide variety of industries and regions Where does innovation/product development rankamongst your companies’ top strategic priority?
  • 16. 16 BUSINESS-AS-USUAL WINS FAILURE TO SCALE FOCUS ON VANITY METRICS CREATIVITY OVER EXECUTION WHY INNOVATION INITIATIVES FAIL INTRODUCTION DISCONNECTED & ISOLATED EFFORTS HISTORICAL BIAS FRAGMENTATION INTERNAL FOCUS
  • 17. 17 FRAGMENTATION Too many bottom-up experiments drive fragmented focus by senior management and key talent. Customer experience is fragmented and brand vision diluted. FAILURE TO SCALE Leadership fails to transition innovation through the different horizons of growth. FOCUS ON VANITY METRICS Culture and values of the organisation are not conducive to innovation. Lack of focus on data- driven metrics results in the prioritisation of wrong initiatives. CREATIVITY OVER EXECUTION Underestimating the selection, validation, execution and scaling of innovative ideas. HISTORICAL BIAS Models that resulted in growth in the past are prioritised above other game-changing models. INTERNAL FOCUS Failure to place the customer’s needs at the centre of innovation engine. DISCONNECTED Bottom-up innovation efforts lack alignment with business strategy. Teams may be guided by hype or unable to influence decision makers to get the resources they need. BUSINESS-AS-USUAL WINS Execs fail to grasp how much business-as-usual hinders innovation. Short term pressure results in sporadic, tactical innovation efforts lacking sustainability. WHY INNOVATIONINITATIVESFAIL
  • 18. INTRODUCTION Sizeoforganisation Age of organisation Late Prime Adolescence Courtship Death STAGES OF CORPORATE LYFECYCLE Bureaucracy Recrimination Aristocracy Prime Go-Go Infant Source: IchakAdizes FOCUS OF THIS BRIEFING GROWING AGING
  • 19. STAGES OF CORPORATELYFE CYCLE Sizeoforganisation Age of organisation Late Prime Adolescence Courtship Death STAGES OF CORPORATE LYFECYCLE Bureaucracy Recrimination Aristocracy Prime Go-Go Infant PRIME ü Growingand profitable ü New ‘infants’ arespun off ü Success maybreedcomplacency ü Measurements focus on the presentvalueof past decisions ü Inadequate bench strength LATE PRIME ü Financeintroduces controlsfor shorttermfinancial results ü The organization is becoming complacent ü Although it is not yet obvious the ‘aging’ process has begun ARISTOCRACY ü Not making waves becomes a way of life ü Outwardsigns of respectability take on enormous importance ü The organization acquires companies rather than incubatingstartup businesses GROWING AGING Source: IchakAdizes
  • 20. Sizeoforganisation Age of organisation Late Prime Adolescence Courtship Death STAGES OF CORPORATE LYFECYCLE Bureaucracy Recrimination Aristocracy Prime Go-Go Infant RECRIMINATION ü Witch-hunts becomeprevalent ü Back-stabbing becomes commonplace ü The customer is effectivelya nuisance BUREAUCRACY ü The Bureaucracyis survival oriented ü Thereare policies for everything ü The written wordis worshipped ü If the organization is important to the economyand the governmenthas socialistic tendencies the organization will be put on life support (taxpayer dollars) DEATH ü The organization is bankrupt STAGES OF CORPORATELYFE CYCLE GROWING AGING Source: IchakAdizes
  • 24. Products and Services will be copied, overshadowed, or commoditized. Your innovation engine is your true competitive advantage, and the fuel for business sustainability.
  • 25. The innovation engine should leverage the entire business model. COST STRUCTURE REVENUE STREAMS VALUE PROPOSITIONS CUSTOMER RELATIONSHIPS CUSTOMER SEGMENTS KEY PARTNERS CHANNELS KEY ACTIVITIES KEY RESOURCES 💡 💡 💡 💡 💡 💡 💡💡
  • 26. INTRODUCTION Excessperformanceaboveindustrypeers Time BUSINESSMODEL INNOVATORS OUTPERFORM TRADITIONAL INNOVATORSOVER TIME Process &Product Innovators Business Model Innovators 3 year period 5 year period 10 year period Source: Business Model Innovation byLindgardt, Reeves, Stalk and Deimler - Boston ConsultingGroup(2009)
  • 27. Logic will get you from A to B. Imagination will take you everywhere. “ Albert Einstein ”
  • 28. 28 Source: Design Thinking,IDEO COSTS CREATE CHOICES MAKE CHOICES DIVERGENT THINKING CONVERGENT THINKING EXPLORE CHOICES EMERGENT THINKING A B ...BUT IT TAKES TREMENDOUS RIGOUR TO GO FROM A TO B INNOVATION = IDEAS + EXECUTION INTRODUCTION
  • 29. CONTINUOUS INNOVATION DEMANDS BOTH RIGOUR AND ART THIS IS YOUR MAP TO MASTERY
  • 30. 30 EXECUTIVEINNOVATION WORK MAT Source: Agility Innovation and Ovo Innovation STRATEGIC ALIGNMENT MOTIVATION & METRICS COMMON LANGUAGE & CONTEXT GOVERNANCE STRUCTURE& DESIGN ENVIRONMENT CULTURE INTRODUCTION
  • 31. 31 Source: Agility Innovation and Ovo Innovation STRATEGIC ALIGNMENT MOTIVATION & METRICS COMMON LANGUAGE & CONTEXT GOVERNANCE STRUCTURE& DESIGN ENVIROMENT CULTURE Strategic Alignment Aligning innovation initiatives with corporate strategy. Culture Defining and sustaining an innovation culture. Common Language & Context Creating common language. Providing rationale and context. Structure & Design Defining the structure, processes and functional design. Environment Identifying and nurturing internal and external innovation environments. Governance Establishing innovation governance. Motivation & Metrics Developing the right measures to sustain innovation. EXECUTIVEINNOVATIONWORK MAT
  • 33. 33 Leaders looking to drive innovation in the enterprise must look at current and future business models from different points of view in search of game changing solutions
  • 34. 34 BUSINESS MODEL CANVAS IS AN IDEATION AND ALIGNMENT TOOL THAT HELPS YOU DOCUMENT EXISTING BUSINESS MODELSAND DEVELOP NEW ONES Image Source: Stattys TYPES OF INNOVATION
  • 35. 35 BUSINESS MODEL CANVAS COST STRUCTURE REVENUE STREAMS VALUE PROPOSITIONS CUSTOMER RELATIONSHIPS CUSTOMER SEGMENTS KEY PARTNERS CHANNELS KEY ACTIVITIES KEY RESOURCES Source: Business ModelGeneration by Osterwalder and Pigneur TYPES OF INNOVATION
  • 36. 36 BUSINESS MODEL CANVAS COST STRUCTURE REVENUE STREAMS VALUE PROPOSITIONS CUSTOMER RELATIONSHIPS CUSTOMER SEGMENTS KEY PARTNERS CHANNELS KEY ACTIVITIES KEY RESOURCES Source: Business ModelGeneration by Osterwalder and Pigneur Value Propositions What value do we deliver to customers? Which one of our customer’s problems are we helping to solve? What bundles of products and services are we offering each Customer Segment? Which customer’s need are we satisfying? Characteristics Newness, Performance, Customization, “Getting the Job Done”, Design, Brand/Status, Price, Cost Reduction, Risk Reduction, Accessibility, Convenience/Usability. BUSINESS MODEL CANVAS
  • 37. 37 BUSINESS MODEL CANVAS COST STRUCTURE REVENUE STREAMS VALUE PROPOSITIONS CUSTOMER RELATIONSHIPS CUSTOMER SEGMENTS KEY PARTNERS CHANNELS KEY ACTIVITIES KEY RESOURCES Source: Business ModelGeneration by Osterwalder and Pigneur Customer Segments For whom are we creating value? Who are our most important customers? Mass Market, Niche Market, Segmented, Diversified, Multi- sided Platform. Examples BUSINESS MODEL CANVAS
  • 38. 38 BUSINESS MODEL CANVAS COST STRUCTURE REVENUE STREAMS VALUE PROPOSITIONS CUSTOMER RELATIONSHIPS CUSTOMER SEGMENTS KEY PARTNERS CHANNELS KEY ACTIVITIES KEY RESOURCES Source: Business ModelGeneration by Osterwalder and Pigneur Customer Relationships What type of relationships does each of our Customer Segments expect us to establish and maintain with them? Which ones have we established? How are they integrated with the rest of the business model? How costly are they? Examples Personal assistance, Dedicated Personal Assistance, Self- Service, Automated Services, Communities, Co-creation. BUSINESS MODEL CANVAS
  • 39. 39 BUSINESS MODEL CANVAS COST STRUCTURE REVENUE STREAMS VALUE PROPOSITIONS CUSTOMER RELATIONSHIPS CUSTOMER SEGMENTS KEY PARTNERS CHANNELS KEY ACTIVITIES KEY RESOURCES Source: Business ModelGeneration by Osterwalder and Pigneur Channels Through which Channels do our Customer Segments want to be reached? How are we reaching them now? How are our Channels integrated? Which ones work best? Which ones are most cost-efficient? How are we integrating them with our customer routines? Channel phases Awareness, Evaluation, Purchase, Delivery, After sales. BUSINESS MODEL CANVAS
  • 40. 40 BUSINESS MODEL CANVAS COST STRUCTURE REVENUE STREAMS VALUE PROPOSITIONS CUSTOMER RELATIONSHIPS CUSTOMER SEGMENTS KEY PARTNERS CHANNELS KEY ACTIVITIES KEY RESOURCES Source: Business ModelGeneration by Osterwalder and Pigneur Revenue Streams For what value are our customers willing to pay? For what do they currently pay? How are they currently paying? How would they prefer to pay? How much does each Revenue Stream contribute to the overall revenues? Types Asset sale, usage fee, Subscription fees, Lending/Renting/Leasing, Licensing, Brokerage fees, Advertising. Fixed Pricing List price, Product feature dependent, Customer segment dependent, Volume dependent. Dynamic Pricing Negotiation (bargaining), Yield Management, Real-time-Market. BUSINESS MODEL CANVAS
  • 41. 41 BUSINESS MODEL CANVAS COST STRUCTURE REVENUE STREAMS VALUE PROPOSITIONS CUSTOMER RELATIONSHIPS CUSTOMER SEGMENTS KEY PARTNERS CHANNELS KEY ACTIVITIES KEY RESOURCES Source: Business ModelGeneration by Osterwalder and Pigneur Key Partnerships Who are our Key Partners? Who are our key suppliers? Which Key Resources are we acquiring from partners? Which Key Activities do partners perform? Motivations for partnerships Optimization and economy Reduction of risk and uncertainty Acquisition of particular resources and activities BUSINESS MODEL CANVAS
  • 42. 42 BUSINESS MODEL CANVAS COST STRUCTURE REVENUE STREAMS VALUE PROPOSITIONS CUSTOMER RELATIONSHIPS CUSTOMER SEGMENTS KEY PARTNERS CHANNELS KEY ACTIVITIES KEY RESOURCES Source: Business ModelGeneration by Osterwalder and Pigneur Key Activities What Key Activities do our Value Propositions require? What Key Activities do our Distribution Channels require? What Key Activities do our Customer Relationships require? What Key Activities do our Revenue Streams require? Categories Production Problem Solving Platform/Network Marketing/Sales BUSINESS MODEL CANVAS
  • 43. 43 BUSINESS MODEL CANVAS COST STRUCTURE REVENUE STREAMS VALUE PROPOSITIONS CUSTOMER RELATIONSHIPS CUSTOMER SEGMENTS KEY PARTNERS CHANNELS KEY ACTIVITIES KEY RESOURCES Source: Business ModelGeneration by Osterwalder and Pigneur Key Resources What Key Resources do our Value Propositions require? What Key Resources do our Distribution Channels require? What Key Resources do our Customer Relationships require? What Key Resources do our Revenue Streams require? Types Physical Intellectual (brand patents, copyrights, data) Human Financial BUSINESS MODEL CANVAS
  • 44. 44 BUSINESS MODEL CANVAS COST STRUCTURE REVENUE STREAMS VALUE PROPOSITIONS CUSTOMER RELATIONSHIPS CUSTOMER SEGMENTS KEY PARTNERS CHANNELS KEY ACTIVITIES KEY RESOURCES Source: Business ModelGeneration by Osterwalder and Pigneur Cost Structure What are the most important costs inherent in our business model? Which Key Resources are the most expensive? Which Key activities are the most expensive? Is your business more Cost Driven (leanest cost structure, low price value proposition, maximum automation, extensive outsourcing) Value Driven (focused on value creation, premium value proposition) Sample characteristics Fixed Costs (salaries, rents, utilities), variable costs, Economies of scale, Economies of scope. BUSINESS MODEL CANVAS
  • 45. 45 Source: Business ModelGeneration by Osterwalder and Pigneur . . . . . . . Resource-driven Offer-driven Customer-driven Finance-driven Multiple epicenter-driven ASKING “WHAT IF...?” AND DRIVING INNOVATION FROM ONE OR SEVERAL EPICENTERS TYPES OF INNOVATION
  • 46. 46 Source: Business ModelGeneration by Alexander Osterwalder COSTS VALUE REDUCE ELIMINATE LEAN LOGIC EFFICIENCY EFFECTIVENESS SCARCITY RAISE CREATE EXPERIENCE EMOTION TYPES OF INNOVATION VALUE INNOVATION
  • 47. 47 OPERATING MODEL INNOVATION COST STRUCTURE KEY PARTNERS KEY ACTIVITIES KEY RESOURCES Work smarter Agile software development Continuous delivery Lean manufacturing: Toyota Automation: Amazon, Tesla Digitization of manual processes Collaborate “Platform” as a business model: AirBNB Value chain innovation: Instacart Organise to win Enterprise Agility as operating model (organisational design, talent management, cost structure, budgeting, value chain) TYPES OF INNOVATION
  • 48. 48 VALUE INNOVATION REVENUE STREAMS VALUE PROPOSITIONS CUSTOMER RELATIONSHIPS CUSTOMER SEGMENTS CHANNELS Unique Offerings Feature set Complimentary products & services Distinct Experiences New channels Service & support: Rackspace Fanatical support Tribes & Meaningful Stories Trust, Reputation, Quality, Good, Specialness TYPES OF INNOVATION
  • 49. 49 VALUE INNOVATION Source: Change by Design,Tim Brown EXISTING OFFERINGS EXISTING USERS NEW USERS NEW OFFERINGS EXTEND (evolutionary) CREATE (revolutionary) MANAGE (incremental) ADAPT (evolutionary) TYPES OF INNOVATION
  • 50. 50 Source: Clayton Christensen EXISTING OFFERINGS EXISTING USERS NEW USERS NEW OFFERINGS EXTEND (evolutionary) CREATE (revolutionary) MANAGE (incremental) ADAPT (evolutionary) TYPES OF INNOVATION INCUMBANTS NEARLY ALWAYS WIN SUSTAINING INNOVAITON BACK IN THE DAY CLAYTON CHRISTENSEN TOLD US WHY INCUMBANTS GET DISRUPTED...
  • 51. 51 Source: Clayton Christensen EXISTING OFFERINGS EXISTING USERS NEW USERS NEW OFFERINGS EXTEND (evolutionary) CREATE (revolutionary) MANAGE (incremental) ADAPT (evolutionary) DISRUPTIVEINNOVATION INCUMBANTS NEARLY ALWAYS WIN INCUMBANTS PURSUE HIGHER MARGINS BY PRODUCING MORE COMPLEX OFFERINGS THIS MAY LEAD TO PRODUCTS & SERVICES THAT ARE TOO SOFISTICATED, COMPLEX AND EXPENSIVE THIS ENABLES NEW ENTRANTS TO DISRUPT SUSTAINING INNOVAITON BACK IN THE DAY CLAYTON CHRISTENSEN TOLD US WHY INCUMBANTS GET DISRUPTED...
  • 52. 52 EXISTING OFFERINGS EXISTING USERS NEW USERS NEW OFFERINGS EXTEND (evolutionary) CREATE (revolutionary) MANAGE (incremental) ADAPT (evolutionary) TYPES OF INNOVATION ENTRANTS NEARLY ALWAYS WIN Source: Clayton Christensen DISRUPTIVE INNOVAITON BACK IN THE DAY CLAYTON CHRISTENSEN TOLD US WHY INCUMBANTS GET DISRUPTED...
  • 53. 53 EXISTING OFFERINGS EXISTING USERS NEW USERS NEW OFFERINGS EXTEND (evolutionary) CREATE (revolutionary) MANAGE (incremental) ADAPT (evolutionary) DISRUPTIVEINNOVATION ENTRANTS NEARLY ALWAYS WIN Source: Clayton Christensen DISRUPTIVE INNOVAITON ENTRANTS IN INITIAL STAGES PURSUE LOWER MARGINS, NICHE MARKETS AND SIMPLER PRODUCTS THAT EVENTUALLY BECOME POPULAR WITH THE MAINSTREAM MARKET BACK IN THE DAY CLAYTON CHRISTENSEN TOLD US WHY INCUMBANTS GET DISRUPTED...
  • 54. 54 TYPES OF INNOVATION Source: Clayton Christensen UNLESS THE INCUBANT IS... aka PLATFORM AS A BUSINESS MODEL brought to you by BUSINESS MODEL INNOVATION
  • 55. From products or services to platforms ü What relationships and partnerships enable business success? ü Which bigger-than business goals do you share with your ecosystems? ü How can you increase trust with your ecosystem?
  • 57. 57 Source: CrossIndustryInnovation.com Cross-industry innovation is a clever way to jump-start your innovation efforts by drawing analogies and transferring approaches between contexts, beyond the borders of your own industry, sector, area or domain. These analogies can be drawn at various levels, from products to services, to processes, to strategies, to business models, to culture and leadership. CROSS-INDUSTRYINNOVATION
  • 59. INNOVATION POWERED BY TECHNOLOGY-ENABLED INNOVATION: ü SCAN THE HORIZON FOR CURRENT TRENDS ü LOOKING AT MULTIPLE SOURCES ü DEFINE YOUR BOUNDARIES AND YOUR DECISION FRAME ü VISUALISE & ASSESS RESULTS
  • 60. 60 MASTERING THE HYPE CYCLE RISK VS REWARD Source: Gartner Hype Cyle TIME EXPECTATIONS TYPES OF INNOVATION Innovation Trigger Peak of Inflated Expectations Trough of Disillusionment Slope of Enlightenment Plateau of Productivity
  • 61. 61 Source: Jim Highsmith – Adaptive Leadership (based on Thoughtworks Technology Radar) OPPORTUNITY RADAR TYPES OF INNOVATION HOLD ASSESS TRIAL ADOPT Category A Category B Category C Category D
  • 62. 62 TECHNOLOGY INNOVATION ADOPTION CURVE Source: Geoffrey Moore TIME Relative % of customers TYPES OF INNOVATION Innovators & technology enthusiasts Earlyadopters & visionaries Earlymajority pragmatists Laggards & sceptics Late majority conservatives
  • 63. 63 IN THE OLD DAYS GEOFREY MORE TOLD US THERE WAS A CHASM... Source: Crossing the Chasm by Geoffrey Moore 1991 TIME Relative % of customers TYPES OF INNOVATION Innovators & technology enthusiasts Earlyadopters & visionaries Earlymajority pragmatists Laggards & sceptics Late majority conservatives EARLY MARKET REVOLUTION EVOLUTION STABILITY PREDICTABILITY CHASM
  • 64. 64 THE CHASM HAS DISAPEARED IN THE CONSUMER FOCUSED DIGITAL INNOVATION Source: Strata 2014:Geoffrey Moore, Crossingthe Chasm What's New, What's Not TIME Relative % of customers TYPES OF INNOVATION Innovators & technology enthusiasts Earlyadopters & visionaries Earlymajority pragmatists Laggards & sceptics Late majority conservatives TORNADO OR BUST
  • 65. 65 TIME Relative % of customers TYPES OF INNOVATION Innovators & technology enthusiasts Earlyadopters & visionaries Earlymajority pragmatists CREATING TECHNOLOGY PLATFORMS THAT CAN BE LEVERAGED REPEATEDLY IS HARD THE CHASM IS EXPANDING DUE TO THE EXPONENTIAL RATE OF INNOVATION SO IS THE NEED AND THE PAIN... Source: Strata 2014:Geoffrey Moore, Crossingthe Chasm What's New, What's Not IOT PLATFORM BLOCKCHAIN MACHINE LEARNING BIG DATA WEARABLES AGILE DEVOPS DEVOPS AFFECTIVE COMPUTING QUANTUM COMPUTING BRAIN COMPUTER INTERFACE AR VR CLOUD COMPUTING HEAVY TO DEPLOY & REQUIRE END-TO-END SOLUTION FOCUS THE CHASM GROWSIN ENTREPRISE IT TRANSFORMATION
  • 66. 66 TIME Relative % of customers TYPES OF INNOVATION Innovators & technology enthusiasts Earlyadopters & visionaries Earlymajority pragmatists Source: Strata 2014:Geoffrey Moore, Crossingthe Chasm What's New, What's Not IOT PLATFORM BLOCKCHAIN MACHINE LEARNING BIG DATA WEARABLES AGILE DEVOPS DEVOPS AFFECTIVE COMPUTING QUANTUM COMPUTING BRAIN COMPUTER INTERFACE AR VR CLOUD COMPUTING To cross the chasm you have to: ü Target a niche area with an intractable problemwhere pragmatists are desperate. ü Commit to provide complete solution, this typically includes products and services from partners and allies. ü Leader must take responsibility for ensuring customer success. ü To cross you must secure and deliver breakthroughhigh-profile projects. ENTERPRISE IT TRANSFORMATION
  • 67. 67 TYPES OF INNOVATION TWO WORLDS COLLIDING CONSUMER FOCUSED DIGITAL INNOVATION ENTERPRISE IT
  • 68. 68 TYPES OF INNOVATION “There’s an app for that” New features any time Rapid product development MVP Agile Full-stack engineers Generalists Pods Specialists Procurement Legal Annual Budgets Legacy Systems Silos Continuous Delivery Devops CONSUMER FOCUSED DIGITAL INNOVATION ENTERPRISE IT Learning oriented Iterative Experimental Cross functional Continuous Funding gates Maintenance Complexity FragmentationMicroservices Outsourcing Crowdsourcing Crowdfunding Waterfall Fix Price Vendor Management CUSTOMERS, ENTERPRISE EMPLOYEES AND EXECUTIVES EXPECT AGILITY Evolutionary architecture
  • 69. 69 TYPES OF INNOVATION “There’s an app for that” New features any time Rapid product development MVP Agile Full-stack engineers Generalists Pods Specialists Procurement Legal Annual Budgets Legacy Systems Silos Devops CONSUMER FOCUSED DIGITAL INNOVATION ENTERPRISE IT Learning oriented Iterative Experimental Cross functional Continuous Funding gates Maintenance Complexity FragmentationMicroservices Outsourcing Crowdsourcing Crowdfunding Waterfall Fix Price Vendor Management CUSTOMERS, ENTERPRISE EMPLOYEES AND EXECUTIVES EXPECT AGILITY Continuous Delivery Evolutionary architecture FROMTHEGROUNDUP
  • 70. 70 TYPES OF INNOVATION CONSUMER FOCUSED DIGITAL INNOVATION ENTERPRISE IT CUSTOMERS, ENTERPRISE EMPLOYEES AND EXECUTIVES EXPECT AGILITY DIGITAL TRANSFORMATION OR ENTERPRISE IT TRANSFORMATION FROMTHETOPDOWN
  • 71. 71 TYPES OF INNOVATION CONSUMER FOCUSED DIGITAL INNOVATION ENTERPRISE IT CUSTOMERS, ENTERPRISE EMPLOYEES AND EXECUTIVES EXPECT AGILITY ENTERPRISE AGILITY OR BUSINESS MODEL INNOVATION ABETTERLENSE
  • 73. Companies using a combination of innovation types generate better results. Source: Keeley and Waters in Ten Types of Innovation
  • 74. 03STRATEGIC ALLIGMENT Aligning innovation with the business strategy
  • 75. 75 STRATEGIC ALIGNMENT MOTIVATION & METRICS COMMON LANGUAGE & CONTEXT GOVERNANCE STRUCTURE& DESIGN ENVIROMENT CULTURE
  • 76. 76 VALUE GENERATION INNOVATION MISSION VALUES OBJECTIVES CORPORATE STRATEGY INNOVATION INITIATIVE OBJECTIVES INNOVATIVE SOLUTIONS THAT RESPOND TO SPECIFIC ORGANISATIONAL PROBLEMS METRICS STRATEGIC ALLIGMENT
  • 77. 77 STRATEGIC ALLIGMENT THE PROBLEM WITH MOST PUBLIC COMPANY’S STRATEGY and yet... THE FUTURE IS SHAPED NOW!
  • 78. How do you create your future while managing the present? “ Vijay Govindarajan, A Strategy for Leading Innovation ”
  • 79. 79 How in the age of rapid change do you create organizations that are as adaptable and resilient as they are focused and efficient? Gary Hamel Moonshots for Management “ ”
  • 80. 80 MISSION VALUES OBJECTIVES CORPORATE STRATEGY INNOVATION INITIATIVE OBJECTIVES METRICS In the future, top management won’t make strategy but will work to create the conditions in which new strategies can emerge and evolve. Gary Hamel in Moonshots for Management STRATEGIC ALLIGMENT “ ”
  • 81. 81 START BY MAPPING YOUR INNOVATION PORTFOLIO WIP AGAINST BUSINESS STRATEGY Source: Lean Enterprise: How high performance organisation innovate at scale by Humble, Molesky and O’Reilley STRATEGIC ALLIGMENT EXPLORE EXPLOIT SUSTAIN RETIRE
  • 82. 82 EXPLORE EXPLOIT SUSTAIN RETIRE Early stage initiatives that are bets for the future with high degrees of uncertainty Initiatives that have achieved product- market fitand the organization wants to grow and scale Initiatives that have become repeatable and scalable business models, products or services that drive the majority of revenue Initiatives that are long lived, no longer beneficial (even limiting) to the future success or strategy Source: Lean Enterprise: How high performance organisation innovate at scale by Humble, Molesky and O’Reilley MAPPING INNOVATIONWIP AGAINSTBUSINESS STRATEGY
  • 83. 83 the discipline to discard what does not fit—to cut out what might have already cost days or even years of effort—that distinguishes the truly exceptional artist and marks the ideal piece of work. “ Jim Collins ” GOVERNANCE
  • 85. 85 STRATEGIC ALIGNMENT MOTIVATION & METRICS COMMON LANGUAGE & CONTEXT GOVERNANCE STRUCTURE& DESIGN ENVIROMENT CULTURE
  • 86. ALLIGN GOALS ALLOCATE RESOURCES ASSIGN DECISION MAKING AUTHORITY DIFFERENTIATE INVESTMENT PROFILES PRIORITIZE AND FUND BALANCE SHORT AND LONG TERM ⎯ INTERNALLY AND WITH THIRD PARTIES
  • 87. The CEO must: ü Champion innovation at the top table ü Shape, inspire, and clarify the necessary links and synergies across the company ü Become familiar with the evolving frameworks, tools and techniques ü Differentiate important vs urgent
  • 88. The Innovation Leader must: ü Support best practices ü Develop skills ü Support business unit initiatives ü Identify new market spaces ü Facilitate idea generation ü Direct seed funding Source: HOW TO LEAD INNOVATION: 7 Tasks for Innovation Focused Executives by Alessandro Di Fiore and Elisa Farri
  • 91. 91 First, rather than engaging in months of planning and research, entrepreneurs accept that all they have on day one is a series of untested hypotheses— basically, good guesses. So instead of writing an intricate business plan, founders summarize their hypotheses in a framework called a business model canvas. “ Steve Blank for HBR ” GOVERNANCE
  • 92. 92 THE ENTERPRISE AS AN INCUBATOR discovering a new business model is inherently risky, and is far more likely to fail than to succeed. Companies need a portfolio of new business start-ups rather than putting all of their eggs into a limited number of baskets. “ Steve Blank for HBR ” GOVERNANCE
  • 93. 93 Source: Lean Enterprise: How high performance organisation innovate at scale by Humble, Molesky and O’Reilley Time to market Sales Profit Time Break even InvestReturn EXPLORE (radical) EXPLOIT (incremental) MOST IDEAS WILL NOT GET TO BREAK EVEN GOVERNANCE
  • 94. 94 HOW WILL YOU EVALUATE, SELECT & FUND IDEAS? A CONTINUOUSEVALUATION FUNDING MODEL FOR RADICAL INNOVATION ENABLES YOU TO FAIL FAST AND REDUCE INVESTMENTON NON-VIABLE IDEAS. GOVERNANCE
  • 95. 95 PRIORITISE THE INITIATIVES THAT BRING MOST VALUE GOVERNANCE V V V DEFINE VALUE
  • 96. 96 MCKINSEY’S THREE HORIZONS OF GROWTH GOVERNANCE
  • 97. 97 As companies mature, they often face declining growth as innovation gives way to inertia. In order to achieve consistent levels of growth throughout their corporate lifetimes, companies must attend to existing businesses while still considering areas they can grow in the future. MCKINSEY’S THREE HORIZONS OF GROWTH
  • 98. 98 Visibility Time Now H1 - ANALYSIS H2 - EXPLORATION H3 - IMAGINATION GOVERNANCE COMPANIES MUST MANAGE BUSINESSES ALONG ALL THREE HORIZONS CONCURRENTLY
  • 99. 99 FROM PLANS TO EXPERIMENTS Measure Learn Build GOVERNANCE
  • 100. 100 MINIMUM VIABLE, BOOTSTRAPPED EXPERIMENTS Time to market Profit Time Break even InvestReturn $ $ $$$ $ $ $ $ $ $ $ $ $$ $ $ 🔍 $ Microinvestments GOVERNANCE
  • 102. 102 INVESTMENT UNCERTAINTY GOVERNANCE DELAY DECISIONS TO THE LAST RESPONSIBLE MOMENT Time TACKLE HARDEST PROBLEMS FIRST
  • 103. 103 BE FORWARD LOOKING BUT, DON’T STARVEYOUR PERFORMANCE ENGINE GOVERNANCE
  • 104. 104 If you're spending a lot of time accounting for the time you're spending, that's time you're not innovating. “ Steve Swasey, Netflix's VP for corporate communication EMPOWERMENTAS GOVERNANCE ”
  • 105. 105 Finance people should remember Albert Einstein’s wise words: “Not everything that counts can be counted, and not everything that can be counted counts.” Bjarte Bogsnes Implementing Beyond Budgeting: Unlocking the Performance Potential “ ”
  • 106. 106 GOVERNANCE MOVE BEYOND BUDGETING LEADERSHIP PRINCIPLES PROCESS PRINCIPLES TO INNOVATION ACCOUNTING
  • 107. 107 CUSTOMERS VALUES RESPONSIBILITY MOVE BEYOND BUDGETING AUTONOMY ORGANISATION TRANSPARENCY Focus everyone on improving customer outcomes, not on hierarchical relationships Govern through a few clear values, goals, and boundaries, not detailed rules and budgets Enable everyone to act and think like a leader, not merely micromanage them. Give teams the freedom and capability to act; do not micromanage them. Organise as a network of lean, accountable teams, not around centralized functions. Promote open information for self-management; do not restrict it hierarchically. LEADERSHIPPRINCIPLES Source: Bjarte Bogsnes in Implementing Beyond Budgeting: Unlocking the Performance Potential GOVERNANCE
  • 108. 108 GOALS RESOURCES PLANNING MOVE BEYOND BUDGETING CONTROLS REWARDS COORDINATION Set relative goals for continuous improvement; do not negotiate fixed performance contracts. Make resources available as needed, not through budget allocations. Make planning a continuous and inclusive process, not a top-down annual event. Base controls on relative indicators and trends, not on variances against plan. Reward shared success based on relative performance, not on meeting fixedtargets. Coordinate interactions dynamically; do not through annual planning cycles. PROCESSPRINCIPLES Source: Bjarte Bogsnes in Implementing Beyond Budgeting: Unlocking the Performance Potential GOVERNANCE
  • 110.
  • 111. Every company is work in progress. Don’t get overwhelmed with the chasm--get curious, get excited, get busy, build bridges, debate, educate, share and drive change.
  • 113. 05Promoting a shared understanding COMMON LANGUAGE AND CONTEXT
  • 114. 114 STRATEGIC ALIGNMENT MOTIVATION & METRICS COMMON LANGUAGE & CONTEXT GOVERNANCE STRUCTURE& DESIGN ENVIROMENT CULTURE
  • 115. CONSISTENT COMMUNICATION COMMON LANGUAGE WELL DEFINED RATIONALE MAKING COMMITMENTS VISIBLE
  • 118. 118 Tell the team where they are in the process and what is expected
  • 119. 119 Emotional Careful and cautiousPositive Positive Cool and organizedCreativity and new ideas Nurture T-shaped, adaptable team members that are prepared to color outside the lines and practice lateral thinking Source: Edward DeBono
  • 120. 120 Target equal representation and be inclusive in your language and communication
  • 121. 121 Be fanatical about sharing context and information to fuel autonomy and empowered decision making
  • 122. 06STRUCTURE & DESIGN Who, what, when, how?
  • 123. 123 STRATEGIC ALIGNMENT MOTIVATION & METRICS COMMON LANGUAGE & CONTEXT GOVERNANCE STRUCTURE& DESIGN ENVIROMENT CULTURE
  • 124. WHO IS RESPONSIBLE FOR INNOVATION WITHIN THE ORGANIZATION? WHAT TECHNIQUES TOOLS AND METHODS ARE USED TO SUSTAIN INNOVATION? HOW DO OUR TEAMS ADQUIRE CAPABILITIES?
  • 126. 126 A bad system will beat a good person every time. “ W. Edwards Deming ”
  • 127. 127 LOOK UPSTREAM FOR THE SOURCE OF THE PROBLEM This principle is applicableto many processes within organizations, particularly to developing new offerings, platforms, and businesses. Before reacting to feedback, ask why someone is seeing things the way they are. You might discover what needs to be changed is back upstream. “ Oren Jacob, former chief technical officer Pixar ”
  • 128. 128 EXPLORE exploringnewbiz models EXPLOIT exploiting provenexisting business models SUSTAIN RETIRE Source: Lean Enterprise: How high performance organisation innovate at scale by Humble, Molesky and O’Reilley High performance organisations build capability to continuously move initiatives through the model from Explore to Retire. They understand that using the same strategy, practices and processes across the entire portfolio will result in negative outcomes and results. STRUCTURE & DESIGN DIFFERENT PRACTICES AND PROCESSES STRUCTURE & DESIGN
  • 129. 129 ü Cross-functional multidisciplinary teams ü Make lots of small bets ü Boundaries of time, scope, financial investment and risk ü Design experiments are safe to fail (the only true failure is the failure to learn) ü Create a sense of urgency ü Demonstrable evidence of value to proceed Source: Lean Enterprise: How high performance organisation innovate at scale by Humble, Molesky and O’Reilley ü Create end-to-end customer facing teams, not project teams ü Continuous evaluation funding model ü Target condition is to achieve break-even point ü Data-driven, fact-based decisions based on accumulated knowledge ü Maintain a sense of urgency ü Set a vision, trust the team to get there, clear blockers and support as they proceed ü Make knowledge sharing and organisational learning easy SUSTAIN RETIREEXPLORE exploringnewbiz models EXPLOIT exploiting provenexisting business models STRUCTURE & DESIGN DIFFERENT STRATEGIES, PRACTICES & PROCESSES
  • 130. 130 Organisations are not designed for innovation. Quite the contrary they are designed for ongoing operations. THE PERFORMANCE ENGINE “ ”Vijay Govindarajan Source: The Other Side of Innovation: Solvingthe Execution Challenge, Vijay Govindarajan STRUCTURE & DESIGN
  • 131. 131 “ ” Source: The Other Side of Innovation: Solvingthe Execution Challenge, Vijay Govindarajan Under pressure to deliver profits every day, the Performance Engine instinctively swats down innovation initiatives—or any project, for that matter, that cannot make an immediate contribution. Managers at middle and low levels who face rigid performance targets each quarter can be powerless to overcome this reflex. INNOVATION Relentless pursuit of: • Reliable profits • Repeatability & Predictability • Efficiency & Effectiveness Short-term Non-routine Uncertain Long-term PERFORMANCE ENGINE VS STRUCTURE & DESIGN Vijay Govindarajan
  • 132. 132 $ DON’T: § fuel antagonism § promote heroism § promote “break-all-rules” § promote “go-make-it-happen” MUTUAL RESPECT & DEPENDENCY THE PERFORMANCE ENGINE IS NOT THE PROBLEM, IT’S THE HEART OF THE BUSINESS. THE INNOVATION ENGINE IS NOT BETTER, IT JUST REQUIRES DIFFERENT TYPES OF DISCIPLINE AND ACCOUNTABILITY STRUCTURE & DESIGN
  • 133. 133 Source: The Other Side of Innovation: Solving the Execution Challenge, Vijay Govindarajan ü Continuous process improvement (small enough to fit within “slack” time) ü Repeatable product development efforts (that follow Performance Engine-like processes) STRUCTURE & DESIGN SMALL INNOVATION MAY BE DRIVEN BY THE PERFORMANCE ENGINE
  • 134. 134 STRUCTURE & DESIGN InnovationEngine Dedicated Team Custom Organisational Design Plan Rigorous Learning Process No Shortcuts of Convenience DESIGNING & STRUCTURINGTHE INNOVATION ENGINE Source: The Other Side of Innovation: Solving the Execution Challenge, Vijay Govindarajan
  • 135. 135 Source: The Other Side of Innovation: Solving the Execution Challenge, Vijay Govindarajan Shared Staff Dedicated Staff Partnership PERFORMANCE ENGINE COMPANY STRUCTURE & DESIGN DESIGNING & STRUCTURINGTHE INNOVATION ENGINE Senior Executive Council Innovation Engine Leadership ü Innovation Project team = dedicated team + shared staff ü Team must be separate but not isolated. Must be linked to the core business.
  • 136. 136 Source: The Other Side of Innovation: Solving the Execution Challenge, Vijay Govindarajan Shared Staff Dedicated Staff Partnership PERFORMANCE ENGINE COMPANY DESIGNING & STRUCTURING THE INNOVATIONENGINE DESIGNING & STRUCTURINGTHE INNOVATION ENGINE Senior Executive Council Innovation Engine Leadership ü Leaders should be positioned as the leaders of the initiative as a whole to maximise partnership.
  • 137. 137 Source: The Other Side of Innovation: Solving the Execution Challenge, Vijay Govindarajan Shared Staff Dedicated Staff Partnership PERFORMANCE ENGINE COMPANY DESIGNING & STRUCTURINGTHE INNOVATION ENGINE Senior Executive Council Innovation Engine Leadership ü Sometimes it requires commissioning a special senior executive council to mediate and to nurture partnership. DESIGNING & STRUCTURING THE INNOVATIONENGINE
  • 138. 138 Source: The Other Side of Innovation: Solving the Execution Challenge, Vijay Govindarajan Shared Staff Dedicated Staff Partnership PERFORMANCE ENGINE COMPANY DESIGNING & STRUCTURINGTHE INNOVATION ENGINE Senior Executive Council Innovation Engine Leadership ü Dedicated team is custom built for the initiative. ü Team must be separate but not isolated. Must be linked to the core business. ü Dedicated team takes the non-routine portion of the effort. ü Calling the dedicated team “innovation”team is inaccurate and undermines the partnership. ü Sometimes requires hiring and empowering a new group of experts. DESIGNING & STRUCTURING THE INNOVATIONENGINE
  • 139. 139 Source: The Other Side of Innovation: Solving the Execution Challenge, Vijay Govindarajan Shared Staff Dedicated Staff Partnership PERFORMANCE ENGINE COMPANY DESIGNING & STRUCTURINGTHE INNOVATION ENGINE Senior Executive Council Innovation Engine Leadership ü Shared staff retains its existing responsibilities as part of Performance Engine and supports Innovation Engine. ü Shared staff takes on the repeatable portion of the effort that are consistent with the individual’s skills and work relationships. DESIGNING & STRUCTURING THE INNOVATIONENGINE
  • 140. 140 HIRE FOR EXCELLENCE It is because of hybrid folks like Jacob, who see past the status quo to create better systems that enable greatness, that we stand a chance to solve the toughest,most ambiguous problems facing our world today. “ Oren Jacob, former chief technical officer of Pixar ” STRUCTURE & DESIGN
  • 142. 142 INNOVATION ENVIRONMENTAL COMPLEXITY INCREMENTALRADICAL ESTABLISHED FRAME NEW FRAME BROKERS Create connections and find relationships between people. SCOUTS Explorers that find what is relevant. They find the right places to go and explore. ENTREPENEURS Break the rules and challenge you. Flexible, agile, tolerant of ambiguity, and take risks to learn. SYSTEM ARCHITECTS See big picture. See possibility at system level. IDENTIFY THE RIGHT TALENTTO MOVE BEYOND THE ESTABLISHED FRAME Source: Professor John Bessant STRUCTURE & DESIGN
  • 143. 143 APPOINT THE RIGHT LEADERS “ ” internal entrepreneurs are more likely to be rebels who chafe at standard ways of doing things, don’t like to follow the rules, continually question authority, and have a high tolerance for failure. Yet instead of appointing these people to create new ventures, big companies often select high-potential managers who meet their standard competencies and are good at execution (and are easier to manage). Steve Blank on Why Big Companies Can’t Innovate (HBR) STRUCTURE & DESIGN
  • 144. 144 DON’T STEREOTYPE OR LIMIT PEOPLE’S POTENTIAL Change the system and the incentives and a performance engine leader can become an innovation engine leader and vice-versa. STRUCTURE & DESIGN
  • 146. 146 THE RISK OF ORGANIZATIONAL MEMORY Source: The Other Side of Innovation: Solving the Execution Challenge, Vijay Govindarajan Products Products An innovation team composed entirely of “insiders” will struggle with two particular strong sources of organizational memory INSTINCTS “If something worked in the past...” EXISTING WORKING RELATIONSHIPS Dedicated teams full of people that have worked closely together for years are almost guaranteed to become little performance engines. STRUCTURE & DESIGN
  • 147. “ Glinda also known as The Good Witch of the South ” Cause getting your dreams It's strange, but it seems A little - well - complicated There's a kind of a sort of : cost There's a couple of things get: lost There are bridges you cross You didn't know you crossed Until you've crossed... And if that joy, that thrill Doesn't thrill you like you think it will Still -
  • 148. 148 DESIGN FOR TRUST When we design systems that assume bad faith from the participants, and whose main purpose is to defend against that nasty behavior, we often foster the very behavior we're trying to deter. “ ”Clay Shirky STRUCTURE & DESIGN
  • 151. 151 Unless: 1. You are seriously cashed up 2. Have access to a reliable learning engine that provides you with the insights you need to make decisions Photo: PRWire
  • 152. 152 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% Fairness and equality Enhance innovation Reflect gender composition of customer base Enhance decision-making Expand talent pool External pressures, reputation Government regulation No rationale SIGNIFICANCEOF RATIONALES FOR GENDER PARITY, INDUSTRIES OVERALL Share of respondents statingrationale, % Source: The Future of Jobs Report - World Economic Forum Extensive survey of Chief Human Resources Officers and other senior talent and strategy executives from a total of371 leading global employers, representing more than 13 million female and male employees across 9 broad industry sectors in 15 major developed and emerging economies and regional economic areas. STRUCTURE & DESIGN
  • 153. 153 GENDER DIVERSITY MAKES A TEAM SMARTER Source: What Makes a Team Smarter? More Women by Professors Woolley (MIT) and Malone (Carnegie Mellon) Many of the factors you might think would be predictive of group performance were not. Things like group satisfaction, group cohesion, group motivation—none were correlated with collective intelligence. And, of course, individual intelligence wasn’t highly correlated, either. STRUCTURE & DESIGN
  • 154. BUT, IT’S NOT JUST ABOUT GENDER Employees at 2-D companies are 45% likelier to report that their firm’s market share grew over the previous year and 70% likelier to report that the firm captured a new market. 2-D diversity: üInherent Gender, ethnicity, and sexual orientation. üAcquired Traits you gain from experience: Working in another country, researching female consumers etc.
  • 155. 07CULTURE Designing and sustaining a culture of innovation
  • 156. 156 STRATEGIC ALIGNMENT MOTIVATION & METRICS COMMON LANGUAGE & CONTEXT GOVERNANCE STRUCTURE& DESIGN ENVIRONMENT CULTURE
  • 157. CULTURE MAKES OR BREAKS INNOVATION CULTURE COMES FROM THE TOP CULTURE EATS STRATEGY AND PROCESS FOR BREAKFAST
  • 158. 158 ORGANIZATIONAL CULTURE CONSISTS OF VALUES, NORMS, AND BEHAVIOURS, WHICH COLLECTIVELY DEFINE AND COMPRISE ACCEPTABLE AND “NORMAL” WAYS OF GETTING THINGS DONE WITHIN AN ORGANIZATION Research shows culture is strongly associated with successful and continuousinnovation Openness to external ideas Future-market orientation Organizational-learning orientation Support for experimentation and risk taking Tolerance of failure Willingness to cannibalize existing business Good collaboration Leaders as role models and sponsors Source: Strategic Innovation for Business Performance by Harold Schroeder CULTURE
  • 159. 159 THE LEADER’SGUIDE TO RADICAL MANAGEMENTBY STEVE DENNING Re-inventing the workplacefor the 21st century Inspiringcontinuous innovation,deep job satisfaction and clientdelight CULTURE The goal of work is to delight clients Managers communicate interactively through stories, questions and conversations Work is conducted in self-organizing teams Teams operate in client-driven iterations Each iteration delivers value to clients Managers foster radical transparency Managers foster continuous self-improvement
  • 160. It's quite simple isn't it? Just listen and learn in a team. ü Put ideas and collaboration above organizational hierarchies. ü Give each team member a voice and an equal opportunity to participate. ü Be open and listen carefully to ideas – wherever they come from. ü Help to connect your people and encourage them to do the same. ü Experts shouldn’t just talk to other experts. ü Proactively drive a culture of innovation but keep participation voluntary. Source: ADIDAS INNOVATON LAB – A Culture of innovation is a culture of listening
  • 161. “ Dan Pink ” Questions open and declarations close. We need both, of course. But that initial tincture of honest doubt turns out to be more powerful than a bracing shot of certainty.
  • 162. 162 SELF-QUESTIONING VS SELF-AFFIRMING Three social scientists asked a group of volunteers to work on a series of anagrams—changing the word “sauce” to “cause,” for example, or “when” to “hewn.” Before the participants tackled the problem, the researchers asked one half of them to take a minute to ask themselves whether they could complete the task—and the other half to tell themselves that they would complete the task.“WILL I” “I WILL” NUMBER OF ANAGRAMS PRIME CULTURE
  • 163. 163 When you create something, you can fall in love with it and aren't able to see or hear anything contrary. Whatever comes out of your mouth is all you're inhaling, but when you ask a question—Will I?—you're creating an opening. You're inviting a conversation—whether it's self conversation or a conversation with others. “ Lisa Gansky in The Flip Manifesto by Dan Pink ”
  • 164. 164 START DOUBTING YOURSELF COSTS A B WILL I? YES! STOP BREATHING FROM YOUR OWN EXHAUST Source: TheFlip Manifesto by Dan Pink CULTURE
  • 165. 165 If you are part of a structure or tribe that is specifically designed and incentivized to make the most of anything (sales, marketing, advertising) you must ensure you know when to unleash or contain those specific capabilities.
  • 166. 166 Time to market Profit Time InvestReturn $ $ $ $ $ $ $ $ $ $$ Sales $ $ $ $ $ $ $ $ $ $$ TOO MUCH STORY, NOT ENOUGH EVIDENCE WASTE CULTURE
  • 167. 167 CONTINUOUS INNOVATION, VALUE AND COST ALIKE, REQUIRE THE SAME MINDSET “Away from” “Towards” Risk and Fear Growth and Learning Protection, Safety, and Status Impact and Value Cynicism and Pessimism Skepticism and Optimism Controlling Empowering Managing Leading Short livedresults Sustainable thrivingecosystems TOWARDS SUSTAINABLE GROWTH CULTURE
  • 168. 168 THE ONLY TRUE FAILURES ARE THE FAILURE TO TRY & THE FAILURE TO LEARN AS FAST AS YOU POSSIBLY CAN
  • 169. “ Charles Darwin ” A woman who dares to waste one hour of time has not discovered the value of life.
  • 170. 170 Co-creation, co-evolution, collaboration and cooperation are set on a healthy foundation of trust and mutual respect. Highly aggressive competitive environments block flow of information and learning. Building trust through attribution/acknowledgment is key. Platforms like OpenIdeo and HitRecord, and thriving movements such as Open Source are build on this foundation. CULTURE
  • 172. 172 STRATEGIC ALIGNMENT MOTIVATION & METRICS COMMON LANGUAGE & CONTEXT GOVERNANCE STRUCTURE& DESIGN ENVIRONMENT CULTURE
  • 173. Rigid walls belong in museums Photo credit: Sam Kittner/Newseum – Berlin Wall
  • 174. “ If our institutions are to survive, they’ll have to create new roadways. That’s a design problem — one that requires new rules of engagement with a broad set of collaborators. Tim Brown, Ideo ”
  • 175. 175 Own market revenue CLOSED BUSINESS MODEL Time CostsRevenues Shorter product life in market WHY OPEN BUSINESS MODEL INNOVATION? ENVIRONMENT Internal development costs Own market revenue 0 Rising costs of innovation Internal development costs Source: Open Business Models: How To Thrive In The NewInnovationLandscapeby Henry Chesbrough
  • 176. 176 CLOSED BUSINESS MODEL Costs Revenues New revenues WHY OPEN BUSINESS MODEL INNOVATION? ENVIRONMENT Own market revenue Cost & time savings from leveragingexternal development Internal development costs Source: Open Business Models: How To Thrive In The NewInnovationLandscapeby Henry Chesbrough Internal & External development costs Own market revenue License Spin-off JV revenue Sale/ divestiture OPEN BUSINESS MODEL
  • 178. The most creative ideas aren’t going to come while sitting in front of your monitor. The new building is really designed to spark not just collaboration but that innovation you see when people collide. Scott Birnbaum, VP Samsung Semiconductor “ ”
  • 179. 179 SPACE DESIGN MATTERS ENVIRONMENT RAPID PROTOTYPING Iterative creativity, brainstorming, and small group idea refinement CROSS-POLLINATION Silo-busting, increased creativity, and more innovation INDIVIDUAL PRODUCTIVITY Personal productivity, focused individual work, and deadline work GROUP EFFICIENCY Team productivity, focused group work, and project development ASSIGNED SEATINGFLEXIBLE SEATING PRIVATE OFFICES OPEN PLAN Source: Workspaces thatmove people by Waber, Magnolfi, and Lindsay
  • 180. 180 OUT OF SIGHT, OUT OF SYNC ENVIRONMENT LESSMORE LESS MORE Source: Workspaces thatmove people by Waber, Magnolfi, and Lindsay COMMUNICAITON PHYSICAL DISTANCE FACE TO FACE EMAIL ALLEN CURVE
  • 181. 181 CORPORATE SOCIAL NETWORKS HELP, BUT THEY ARE NOT AS EFFECTIVE... ENVIRONMENT Source: Why no one uses the corporate social network by CharleneLi, HBR
  • 182. Source: Why Brainstorming Works Better Online by Tomas Chamorro-Premuzic in HBR THE EXCEPTIONIS BRAINSTORMING Virtual brainstorming enhances creative performance – versus in-person brainstorming sessions – by almost 50% of a standard deviation. This means that almost 70% of participants can be expected to perform worse in traditional than virtual brainstorming sessions. “ ”
  • 183. 183 VIRTUAL BRAINSTORMING ENVIRONMENT Source: Collaborating Online Is Sometimes Betterthan Face-to-Face by Alexandra Samual, HBR. 1. Stops dominant participants from talking too much, taking over the session and eclipsing their colleagues. 2. Reduces evaluation apprehension, particularly in less confident individuals. 3. Option for anonymity enables ideas to be judged more objectively. 4. Preventing participants from being exposed to each other’s ideas during the idea-generation phase encourages participants to offer a wider variety of ideas.
  • 188. Aristotle “ ” Our problem is not that we aim too high and miss, but that we aim too low and hit.
  • 189. 189 INCENTIVISE FOR COLLABORATION Our innovation challenge is about making connections – thorough structures, networks, technological infrastructures and, above all, through people. Knowledge broking will increasingly be a key skill within organizations and the basis of a growing service sector. “ ”The Future Of Innovation…. Challenges At The Innovation Frontier by Prof. John Bessant INNOVATION IS POWERED BY CONNECTIONS MOTIVATION& METRICS
  • 190. 190 WRONG INCENTIVE, WRONG BEHAVIOUR Neil Davidson in The Flip Manifesto by Dan Pink Imagine you could construct a sales robot, programmed solely by the rules in any sales structure. How would it behave? It would steal deals off other salespeople, sell customers software they didn't need, argue with its boss over its commission and backstab its colleagues. That wasn't the behavior we wanted, but our commission structure sent a strong signal that it was. “ ” MOTIVATION& METRICS
  • 191. 191 BEYOND BUDGETING TRANSPARENT BENCHMARKING, AUTONOMY, SHARED GOALS & DESCENTRALIZATION Drive performance and learning through transparent internal benchmarking between regions and branch offices. Source: Bjarte Bogsne -Implementing Beyond Budgeting: Unlocking the Performance Potential MOTIVATION& METRICS Provide sufficient freedom and responsibility to enable each branch and region to do what is right to lift it’s own performance. Balance the individual drive with a shared purpose through a common bonus scheme for all employees, and no individual bonuses.
  • 192. 192 Source: Entrepreneurs: BewareofVanity Metrics by Eric Ries BEWARE OF VANITY METRICS, WHAT YOU MEASURE MUST BE: ACCESSIBLE AUDITABLE ACTIONABLE MOTIVATION& METRICS
  • 193. 193 Source: Entrepreneurs: BewareofVanity Metrics by Eric Ries BEWARE OF VANITY METRICS, WHAT YOU MEASURE MUST BE: ACCESSIBLE Key data should be available to any employee, anytime, in a matter of minutes. In order to achieve that goal, the reports themselves have to be extremely simple. AUDITABLE Believe me, when it’s your idea on the line, it’s much easier to believe the report is the problem rather than the idea. Thus, it’s important that skeptics can audit a report. ACTIONABLE We know how to replicate the result in the report. Followingthe scientific method gives confidence that the observed behavior was, in fact, caused by the change being tested. Example: split-testing. MOTIVATION& METRICS
  • 194. 194 The Other Side of Innovation: Solving the Execution Challenge Vijay Govindarajan Evaluate the performance of the dedicated team not on short term financial results, but in their ability to test assumptions about the future. “ ” MOTIVATION& METRICS
  • 195. 195 We believe that ________________________________ Will result in __________________________________ We will know when we succeed when ______________ (this idea) (this outcome) (these results) ABILITY TO TEST HYPOTHESIS RAPIDLY NO MATTER IF THEY FAIL OR SUCCEED MOTIVATION& METRICS
  • 196. 196 Source: Barry O’Reilley – Blow up the business case MOTIVATION& METRICS ELEMENT QUESTION RELEVANT METRICS ACQUISITION How do your customers find you? Traffic, Mentions, Cost per click,Cost of Acquisition ACTIVATION Do your customers havea great experience? Sign ups, Completed on- boarding process, Used service RETENSION Do your customers come back? Time sincelast visit, daily/moth active users, churns REVENUE How do you make money? Customer life value, conversion rate, shopping cart size REFERRAL Do customers tell others? Invites sent, viral coefficient, viral cycletime STAKEHOLDER METRIC CURRENT TARGET TREND CUSTOMER % users that complete sales flow 30% 45% % Retention 20% 25% Net Promoter Score 44 60 BUSINESS % visits to sign up for service 20% 25% % conversion to paying customers 15% 20% Customer acquisition costs $0.5 $0.25 Life time customer value $12 $20 % attrition 30% 15% ONE METRIC THAT MATTERS
  • 197. 197 DATA OVER HIPPOs The goal is to use data-driven decisions based on usage and profitability to enhance what customers desire – not just copy what competitors release or what HIPPOs (HIghest Paid Person’s Opinion) want to have. “ ”Barry O’Reilley Lean PMO: Managing the innovation portfolio MOTIVATION& METRICS
  • 198. 10CLOSING REMARKS Wicked & The Wizard of Oz
  • 202. 202 Insiders should always become allies that model empathy, bravery and critical thinking
  • 203. 203 Look upstream for root cause and don’t be intimidated by power structures
  • 204. 204 Drive change from multiple epicenters, expect setbacks and keep learning
  • 206. 206