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Grundfos New Business journey_Innovation Roundtable presentation_2014
Grundfos' New Business Creation Journey and Lessons Learned discusses Grundfos' evolution in developing new business capabilities. It began with a corporate venture model (2004-2010) and transitioned to an innovation platform model (2008-2013) to better embed capabilities within the core organization. Key lessons included: visible leadership is paramount; managing resource battles between core and new business; and recognizing that organizational uncertainties present bigger challenges than technology or market uncertainties. The document outlines the company's approach to building a culture for innovation, dealing with uncertainty, and recognizing opportunities to continuously feed the new business portfolio.
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Grundfos New Business journey_Innovation Roundtable presentation_2014
- 1. Grundfos' New BusinessCreation Journey and Lessons Learned Thorbjørn Machholm Group Director, Business Development and New Business Grundfos Holding A/S +45 2125 5832
- 2. Facts • Founded in1945 by Poul Due Jensen • Global sales of EUR 3 billion • 85 companies in 45 countries • 18.000 employees worldwide • Ownership a family Foundation • EBIT 8,3% of sales • R&D 6% of sales • The world’s largest pump company • R&D, Manufacturing, Sales & Service Grundfos Group Markets Technologies Pumps, Motors, Drives, Controls, Sensor + Sub-systems A company with strong values and an ownership focusing on long term growth through innovation… 2
- 3. Innovation paradigms andtimeline….. 1995 2005 20151985 ”Nerd” ” Team worker” ”Specialist & Entrepreneur” ”Holistic Intrapreneur” Partnerships Business Models Open Innovation Technology driven 3
- 4. How do youstand out from the crowd?
- 5. Urbanization and Mega Cities CO2and climate changes Population growth Growing middle class New technologies Expanding and emerging markets Grundfos challenges and opportunities – NBC Drivers the Growth agenda, the Green agenda, the Technology agenda 5
- 6. Growth ambitions 2011-2015…and beyond How to make breakthrough innovation within a large, old and rigid organization as a result of a dedicated effort – and not by coincidence ? 6
- 7. Evolutionary Innovation • Buildingon and out from Core • Business Models • Financial Models • Strategic Partnerships Breakthrough Innovation Projects that promised at least one of and preferably more than the following: 1. New to the world performance features 2. Significant (5-10x) improvement in known features 3. Significant (30-50%) reduction in cost 2004 - 2010 2008 - 2013 7
- 8. Corporate Venture Building a New Business capability Innovation Intent Capability embedded in core organization • 2004 Grundfos New Business A/S • 2005 – 2010 Building up capabilities Old paradigm New paradigm: Innovation Intent It is more expensive than we thought ! It takes longer than what we thought ! … and we want this to be an embedded competency • 2008 • Migration + sustaining capabilities • New Governance Innovation platforms New innovation platforms initiated in 2008 • Future Home Living – China • Zero Impact Commercial Buildings • Rethink Decentralized Water Treatment R.I.P 2010 R.I.P 2012 R.I.P 2013 8
- 9. The Journey: Cyclesof evolution and… Metamorphosis Old paradigm • Opportunistic new business approach far from Core • Venture Capital inspired model • Building companies New paradigm • Strategically driven innovation platforms closer to Core • Governance structure to enable embedding capabilities • Building capabilities and competencies Strategic Intent • Strategy rationalization based on capacity, Business Segment priorities + Board priorities • New Business creation integrated with Core • Capabilities and competences embedded in Core 2004 - 2010 2008 - 2013 2014 9
- 10. Direction forward andnext design change – 1st step Frontloading • Enables us to handle more complex projects… Lessons learned from the previous cycles of evolution (TMOR) • Make PDP projects more predictable – and less likely to fall pray to technological arrogancy! Ensures that Technical, Market and Organizational uncertainties are considered before we are ready for PD • Ensures that new innovations are continuously fed into PD Innovation profile created and decided upon prior to PD Inclusion and demonstration of new technology Low Medium High Technical Market Organizational Product Development Process Technology project Frontloading project Levelofuncertainty Resource • 10
- 11. Technology Competence Areas MaterialsMotors/Controls Sensors Water Treatment ElectronicsHydraulics
- 12. The need fortransition 120 100 80 60 40 20 0 20122010200820062004200220001998 The slope of the curve is becoming flat. So what’s next? 100% 70% 62% 23% 22% 18% Yearlyenergyconsumption 12
- 13. Transition and repositioning Strategiclayers of value creation Physical Instrumented Interconnected Intelligent Strategic Business Models CAPEX OPEX Capabilities & Competences Acqusitions & Strategic Partnerships $ $$$ 13
- 14. Learnings and keyinsights • Visible top management/CEO commitment and strong leadership is paramount to the success of new business creation and it defines the live or die equation of the new business innovation activities. • You’ve got to find a way to manage the (constant) ”battle” over resources and funds between Core and New Business to enable new business creation to grow and mature • Contrary to what we initially thought, success is defined more by Organizational and Ressource uncertanties than Technology and Market uncertainties. • NBC takes time – and this is in opposition to Core’s expectations and KPI requirements. We need to run our activities with a different set of KPIs and ROI requirements. • NBC has a lot do to with building new competencies – new competencies must be embedded inside your organization. We reinvented our ”modus operandi” but were still facing O + R Uncertainty! • NBC, the D-I-A methodology and Uncertainty Management are generally accepted and embedded concepts today. • Innovation Management is really all about people. • Metamorphosis went from Explosion/Expansion (New Business) to Implosion/Re-focus (Innovation Platforms) and now new business creation around and embedded in Core. 14
- 15. New Business Creation Appendix •NBC # 1 - Build a culture for NBC and innovation • NBC # 2 - Learn how to deal intelligently with uncertainty • NBC # 3 - Learn how to recognize opportunities • Critical NBC questions • The Innovation Piano • Opportunity Scouting • Opportunity Engine and DIA Process Support • D-I-A Model and Roles for Radical/Evolutionary Innovation • NBC Incubation Methodology for Breakthrough / Evolutionary Innovation • NBC Models, Tools and Checklists
- 16. NBC # 1Condition Build a culture for NBC and innovation 16
- 17. NBC # 2Condition Learn how to deal intelligently with uncertainty 17
- 18. NBC # 3Condition Learn how to recognize opportunities 18
- 19. Critical NBC questions •What is your organizational commitment to or capacity for innovation? Do you have an innovation strategy in place? Where are you in terms of building a capability for innovation? • What is your definition of innovation? Do you have a common language and cultural understanding across the company? • What is the mandate for innovation in your company compared with product development? • Have you defined and clearly articulated your strategic intent (versus current strategy) for long term growth (5 to 10+ years)? • Do you have the right structure or group in place for innovation to support your growth objectives? Is the environment supportive of innovation (entrepreneurial versus operations culture, learning oriented mindset and clarity of roles and responsibilities)? • Do you have specific innovation processes, tools, decision-making criteria and metrics for success for managing higher uncertainty new business opportunities, which go beyond product development phase gates? • Do you have a plan for developing and attracting innovation talent? What have you accomplished with your innovation objectives? What are the challenges you face that are getting in the way of achieving your growth objectives? 19
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- 21. Partners Networks and Events Internally or externallydriven Universities and Research Institutes “Something that can generate enough opportunitiesto continuously feed the New Business Creation portfolio” “Something that can generate enough opportunitiesto continuously feed the New Business Creation portfolio” Articles, reports and conferences Employees New Inventions •Seeking Funding •Seeking Corporation •New Technology •Partnership •Research •Knowledge •Data •Concept experimentations •Business Partners •Strategic Trends •Emerging Broken Processes •Professional Networks •Emerging Broken Processes •Ideation •Grundfos Challenge et al •Activate Creativity Beyond Job Responsibility •iShare •Ideation •Trends •Inspiration •Corporate Foresight •Technology Scan/Plan •Business Strategies •Market Relations •Subject Matter Experts Thought Leaders •Validation •Trends •Drivers •Barriers External Inventors Grundfos Organization Opportunity Scouting 21
- 22. Due Diligence andAcquisition Candidates Opportunity Engine TransitionAcceleration Business Plan Incubation Business Proposal Discovery Business Concept Opportunity Engine and DIA Process Support 22
- 23. Discovery Incubation AccelerationOperations CompanyAreasof Focus Project Maturity Timeline Transition Management Organization and Resource Requirements D-I-A Model and Roles for Radical/Evolutionary Innovation 23
- 24. Toolbox • Learning Plan •Incubation Questions • Uncertainty Management Checklist • Voice of the Market / Technology • IP Strategy • Partnering Strategy • Partner Profiles • Value Pitch Late Incubation Transition Preparation Business Implementation Market Launch or Acceleration Mid-Incubation Multiple Experiments Early Incubation Concept Framing Discovery Business Concept Proceed or Sunset Decision Junctures = Toolbox • Learning Loops • Voice of the Market / Technology • IP Landscape Detail • Thought Leader Identification • Strategy Framework • Thought Leader Influence (techies / lead stakeholders) • Transition Strategy • Value Pitch Toolbox • Go-to-Market strategy • Acceleration Questions • Business Plan • Thought Leader Influence (lead customers) Toolbox • Learning Loops • 9-point Strategy • Value Pitch • Business Model Creation • Market Entry Strategy • Lead User Identification • IP Plan • Thought Leader Influence (visionaries / lead users) • Transition Plan • Business Proposal Incubation Radical Innovation Group Product Genesis Chasm Institute Others New Business Creation Incubation Methodology for Breakthrough / Evolutionary Innovation 24
- 25. • D-I-A Processand methodology • Opportunity Scan and Discovery • Opportunity Recognition Tool • Opportunity Placement Tool • Portfolio Evaluation Tool • Technology Readiness Tool • Market Readiness Tool • Transition Readiness Tool • Uncertainty Management Checklist • Learning Plan / Learning Loops • Value Pitch / Value Proposition • Business Model Creation • Chasm Institute Tools • 9-Point Strategy Joanne Hyland President and Founding Partner rInnovation Group www.rinnovationgroup.com joanne@radicalinnovation.com Jeff Hovis Managing Principal Product Genesis www.productgenesis.com jeff_hovis@productgenesis.com Mark Cavendar Managing Director and Founder Chasm Institute www.chasminstitute.com mcavender@chasminstitute.com NBC Models, Tools and Checklists 25
- 26. New Business Creationis a multi purpose game I. Creating new space for long term growth – pre-empting the future II. Creating a new organizational structure to allow New Business projects to be successful III. Experimenting with and developing towards a future organizational paradigm IV. Creating new career paths for Grundfos managers and building new capabilities and competencies V. Sound investment of Grundfos capital VI. Asset protection, asset utilization and asset development – and “keeping the factory full when production moves out”. VII. Developing Grundfos’ public image as an innovative and attractive company 26