Mastering the Dynamics of Innovation by Bernt Kristian Jensen and Tore Hundsnes, CapGemini Norway

Mastering the Dynamics of Innovation
A Capgemini Consulting Point of View
September 2009

Innhold

1. Capgemini Consulting
2. Innovation introduction
3. Norwegian CEO’ s on Innovation
4. Learning from others
5. A new Innovation approach emerges
6. Getting innovation right

© 2009 Capgemini – All rights reserved 1

Capgemini is one of the leading companies globally within Management
Consulting and Technology

Financially Strong Talent and skills Global presence
• Turnover on € 7,7 • 90.000 employees • 300 offices in more
billion globally than 30 countries
• Noted on the Paris • 3000 i the Nordic • Several branches in
Stock Exchange • 600 in Norway the each of the
Nordic Countries
• Ranked among the
top 100 of the most
attractive employers
(Fortune Magazine)

Three strong Capgemini Consulting Technology Services Outsourcing Services
service lines

• Strategy • Accelerated solutions • AM (Application Management)
• Business transformation • Technology consulting and • IM (Infrastructure Management)
• Finance & Employee development
p • BPO (Business Process
transformation • Business solutions Outsourcing)


In Norway, Capgemini Consulting focus on Strategy and Transformation
within five sectors

Finance & Employee
Strategy Transformation Transformation
a s o at o
Business Strategy Operational Excellence Financial Governance
Strategic Marketing Business Transformation Sourcing Advisory
M&A and strategic IT strategy and HR Strategy
transformation transformation

Energy & Utilities Distribution & Financial Services Public Telecom & Media
Transport

We consult leading businesses and organisations in various sectors in order to help clients make the right
strategic choices, transform their businesses and deliver results.


Innhold



Innovation can be understood both as a process and an outcome, which embodies
ideas, conversion of ideas and diffusion that creates an economic impact
Innovation is the process from idea, through development, t received b fit
I ti i th f id th hd l t to i d benefits:

Idea generation Conversion Diffusion

CREATIVITY AND ADOPTION INVENTION IMPLEMENTATION
The mental phenomena skills, “Converting ideas into something The process of transforming an
cognitive ability, structures, culture new and specific with value creating invention into products or activities
and/or tools capable of originating potential” in order to successfully create
(and subsequently developing) new impact of the invention”
ideas, innovation, inspiration or
insight
insight”

We do not classify an invention as an innovation until it has been developed and implemented to an extent where it has an
economic impact in an organisation and/or society.


While product innovation receive the majority of investments, business model
innovation which has the lowest investment levels offer superior returns

Investment levels and returns last 10 years Return on Innovation

Financial Process Offering Delivery

According to Keeley the average global
innovation success rate is 4%
Product innovation is by far the largest area of
investments, but offer overall very limited returns
Business Model innovation is the smallest area
System
Networking

Channel

Brand
Business

Product
Performance

Service
Processes

Processes

Experience
Customer
Enabling

of investments, but offer superior returns
Model

Product
Core

Customer focused innovation in channels, brand
and experience offer moderate returns
Investment levels
In estment le els Returns
Ret rns

Companies destroy business value by generally focusing too much on product innovation
compared to other innovation types !
p yp

Source: Calculation based on Prof. Larry Keeley (Doblin Analysis), The Taming of the New, Harvard Business School Press 2004


Innhold



While other Nordic countries are considered as innovation leaders, Norway is
heading towards the rock bottom of the Innovation Scorecard

European Innovation Scoreboard 2007 Scorecard definitions

The European Innovation Scorecard is a
comparative analysis of innovation
performance among EU
f
Summary Innovation Index is measured on
input and output factors, for example
Population with tertiary education pr 100
population (input) and European and US
patents per million population (output)
The secondary axis of the Innovation
Scoreboard is the average growth rate of the
Summary Innovation Index on the primary axis
The countries plotted have been grouped
by those that are ‘leading’, those that are
‘average’, those that are ‘catching-up’ and
those that are ‘trailing’

Despite the low Norwegian innovation score at an European level,
only 4% of interviewed CEO’s p
y perceive their company to be lagging behind among their peers.
p y gg g g p

Source: The European Innovation Scoreboard 2007; Capgemini Consulting CEO Study 2007


Norwegian CEO’s recognise severe challenges in pursuing innovation types
producing high returns

Norwegian CEO’s view on innovation Innovation type and returns
Product Business
performance Model
ormance
High

High
Business
Product Network
system
Perceive innovation perfo

Level of returns
Enabling
Customer Process
Moderate

Moderate
Experience
Customer
Experience
Brand
Core
ed

Process
Business Business
Network Model Brand
Product

Low
Low

system
Enabling Core Delivery
Process Process Product
channel
performance

Low Moderate High Low Moderate High
Perceived improvement need Level of investments
Source: Capgemin CEO study 2007 Source: Doblin analysis; Keeley

Despite a poor Norwegian position o t e EU Innovation Scoreboard, Norwegian CEO’s are confident about their
esp te poo o eg a pos t o on the U o at o Sco eboa d, o eg a C O s a e co de t t e
basic innovation capabilities in bringing product innovations to the market!


Norwegian companies have challenges across the innovation value chain

Idea management in place
Idea management in place
Norwegian CEO’s highlight a strong presence of new
ideas within Norwegian companies 60 % 48 %
However, as much as 48% of the interviewed CEO’s 50 % 39 %
Idea generation admit there is a lack of a structured process to 40 %
capture new id
t ideas 30 %
20 % 13 %
39% of interviewed CEO’s claim to have implemented 10 %
some sort of ‘idea management system’ 0%
To a large Moderate To a small
extent extent
48% of the participants cannot quantify their
Funding – investments in innovation
(Conversion - 68% of the participants fund their innovation within
selection) the operations, while only 9% are dedicated project
budgets
Innovation spending
Percentage of revenue spent on
innovation
Revenue, sales and EBIT are most widely used by 60 % 48 %
the participants to measure successful innovation, 50 %
35 %
Measurement – but the respondents are not particularly satisfied with 40 %
30 %
(Diffusion - impact) the KPIs
th KPI 20 % 9% 9%
40% of the respondents find it very hard to measure 10 %
successful innovation 0%
Can't 0-2% 4-5% 12-13%
quantify

Source: Capgemini Consulting CEO Study 2007


Innhold



Leading Internet and software players have adopted radical innovation
methods across the value chain

Early Adopters of New Approaches to Innovation


Cross-
In-House External Selection Development Spread
Pollination

Leverage Leverage Open APIs
Multi- Prototypes
yp
Idea submission Open Source
O S data f
d t from and platforms
functional and beta
to top executives and betas
teams releases
Mashups
tives

Hack Days and Web 2.0 VC funding Tapping into Consumer-
External
Code contests Tools for open led
ideas - Open
Initiat

employee developer innovation
Innovation
ideas communities
20% time Social
Distribute Alliances, Leverage networks
development co-opetition customer
Brainstorming
g kit broadly and common Balanced data from Mashupp
Sessions standards exploration betas applications

Source: Capgemini C4 Lab analysis. Harvard Business Review, “The Innovation Value Chain”, 2007


En godt kommunisert strategi gir en god ramme for idégenerering

Idea generation

En godt forankret strategi Idéer som bidrar til å realisere strategien

Vi skal bekjempe Vi skal Samle, spre og
Vi gjør det enkelt
gj
økonomisk samarbeide Trender, impulser
Trender impulser, ideer og nye brukerbehov videreutvikle
å handle riktig
kriminalitet aktivt med andre ideer som kan
bli til nye
tjenester
Kontinuerlig
evaluere og
forbedre
Strukturert
Velge ut de
tjenestene innovasjons- beste
prosess konseptene for
gjennomføring

Levere
tjenestene Realisere de
beste
konseptene


Innovasjon i en stor organisasjon krever dedikerte ressurser som kan
kjøre gode prosesser

I Skattedirektoratet er det etablert en egen stab som har dette som ansvarsområde

Evaluere og utvikle etatens samlede innovative evne
Oppgaver Utvikle, samle inn, foredle, utrede og sikre iverksetting av ideer
Sette ’Innovasjon’ på dagsordenen i organisasjonsutvikling, leder- og ledelsesutvikling,
kompetanse- og personalutvikling kultur- og samspillsutvikling
personalutvikling,
Ansvarlig for ”idea generation” og ”idea conversion” i nnovasjonsprosessen:

Utvikle/utrede Beslutning om
Fange idéer Behandle idéer Kvalifisere idéer
idéer handling

Bidra til å øke innovasjonstakten og utviklingen av nye interne og eksterne løsninger

Innovativ og dyktig på forretningsutvikling, analyse og utredning
Kompetanse Evne til å engasjere med gode prosesser
Struktur og systematikk


Capgemini’s large scale workshop methodology was adjusted in collaboration
with Oz’Tel and Vodafone UK to enhance acceleration and creativity in NPD

Background for “Collaboration Zone” Experience
New product development projects used to take Vodafone and Capgemini modified and
8 months from concept to feasibility stage and compressed the analysis process focusing on
60% of the projects ‘got st ck’ in the process
stuck’ acceleration,
acceleration collaboration and innovation
The result was a reduction of the analysis
Based on experience from Oz’Tel in Australia the process from 8 to 2 months
model consistent of 4 facilitated events was
The model is perceived by Vodafone as positive,
designed and implemented at Vodafone creative and fundamental to speeding up the
pace of th i b i
f their business

Collaboration Zone - Model with ‘explore-specify-design-sign off’ logic

Week
W k1 Week
W k2 Week
W k3 Week
W k4 Week
W k5 Week
W k6 Week
W k7 Week
W k8

Event 1 Event 2 Business requirements & Event 3 Event 4
Explore Specify Business model iterations Design Solution design iterations Sign off

Further adjustments were required in order to create a “fit” with the
Telenor organization and the business processes.
g p

© 2009 Capgemini – All rights reserved

A project manager’s dream world?
“Think if…
Think
all the right experts
“Think if…
were gathered in one
all project place”
participants were
motivated and
ti t d d
engaged in the work”

“Think if…
the analysis phase “Think if...
only took 8 weeks”
l t k k ”
“Think if… you always had
decisions could be answers to questions
taken continuously to from the steering
secure progress in committee”
the
th project”
j t”

“Think if…
there was a
methodology that
could solve all this”


Fast Lane is a collaborative workshop model consisting of four key
components together building an accelerated experience
The Fast Lane methodology consists of 4 main components:

A rigorous facilitation process Improved quality of content
Concept design including Use
Cases & B i
C Business R
Requirements
i t
The Fast Lane concept consists of a
Week 1 Week 3 Week 4 Week 5

Event 1
Event 2 Gallery Event 3 Event 4
Specify
Scan Act Sign off
-

sequence of facilitated events which
scope

4 hours 6 hours 6 hours 2 hours

process work in parallel
IS
Representatives from different Technical
Architecture
Design
do a s o
domains working together in eac
g toget e each
event drives the quality of content
and secures speed and direction in Process Content
the process Process Content
Environ
Securing that all the right people are People ment
Environ
involved at the same time enables People mentt
the team to focus on the right People
things, and kill ‘bad’ ideas early
Collaborative Highly configurable environment
The environment can be developed
over time, in the beginning it is phone lines and network ports for project team

MAP KEY

important to have a dedicated
5’ Round Table Seats 5 – 8
Participants, easily
4’ Si
Single Panel Mov eable
l P lM bl bl d/ t
assembled/stowed d Workstation Workstation
Whiteboard Wall
Power
points
8’ Double Panel Moveable around
Workstation Workstation
Whiteboard Wall Alternative arc formation the walls
of chairs

T /C ffe
ea o e/
C
environment with flexibility to re-
Project Team Workstation area)

atering
workstation Small waste Plant

P oto op
h c ier
bin

/P ters
rin

2x
Entrance

organize between different events Plenary
Area
PRODUCTION
Used by Facilitation Team

(sits 30)

PRODUCTION


The Fast Lane process is a collaborative event model which seeks to
do activities in parallel rather than in sequence

Fast Lane is a collaborative workshop methodology based on Telenor’s project model:

The Fast Lane design
-model
consists of a sequence
Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8
of facilitated events in
Event 1 Event 2 Event 3 Event 4
an 8 week period,
reducing the analysis
d i th l i
phase significantly

The Fast Lane process seeks to scan the opportunity area early in order to focus right:
Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8
A rigorous facilitation process

Scan area of opportunity
S f t it
Focus on the best ideas
Act on the right solutions
Bespoke design for every event
Scan Focus Act
Highly experienced facilitators


Fast Lane is an iterative process, involving and challenging different
domains of the organization by breaking up ‘silo’s’
Concept design
including use cases &
The approach to Collaboration is iterative business requirements

Each Event in the NPD process covers:
Business requirements
Technical design
IS architecture
Representatives from different domains working together in
each event drives the quality of content and secures speed and
direction in the process
IS Technical
Architecture design

Conceptual illustration of involvement from different domains:

IS architecture
volvement

Technical design
Business
Inv

requirements

(sub event) (sub event) (sub event) Time
EXPLORE SPECIFY DESIGN SIGN-OFF
SIGN OFF


Innhold



Innovation success today requires a marked departure from traditional
principles
The Innovation Value Chain

Cross-
In House
In-House External Selection Development Spread
Pollination

Prime Source Limited, Partner to Financing Linear Limited to
of Ideas is the through Create Dependant on process market
onal

R&D formal Proprietary Organisation segments or
Department
D t t Channels
Ch l IPR Priorities
P i iti Disjoint delivery
d li
Traditio

Ownership platforms
Across
Teams

Ideas can Emerge Collaboration Open Innovation - Financing Based Iterative process Rapid diffusion
Anywhere in the across diciplines source ideas on Merit of the Idea across markets
Organization externally Prototyping and and platforms
Structured
ach

Adequate, through beta-testing
prioritising and Consumer
New Approa

Provide individual Web 2.0 tools Collaborate
freedom to pursue to Evolve Common portfolio End-to-end involvement and
management Ownership with fast upgrades
own ideas Establish Standards
incentives for Single Team
Balance Openness to
collaboration exploration and Strong consumer encourage
exploitation involvement complementary
l t
projects products

Source: Capgemini C4 Lab analysis. Harvard Business Review, “The Innovation Value Chain”, 2007


Innhold



Getting innovation right, organisations have to master seven different, but
certainly interlinked, dimensions

Seven dimensions of innovation success
1 Select the right people to fuel the organisation’s innovative capabilities

2 Apply appropriate organisational levers to develop a culture of innovation

3 Foster creativity and collaboration across divisions and functional silos

4 Bring structure and discipline to all phases in the innovation value chain

5 Leverage data to prioritise projects and maintain a balanced project portfolio

6 Ensure resources and infrastructure to get speed into project execution and
project upgrades based on customer feedback

7 Track innovation performance, learn quickly and continuously upgrade practices

The road to innovation leadership is demanding, but rewarding !


Backup
Bernt Kristian Jensen
Capgemini Consulting
Tore Hundsnes
Capgemini Consulting
Principal | Chief of Staff Managing Consultant | Telecom Media Entertainment

Mobile: +47 41 43 18 29 Mobile: +47 46 42 57 78
be t je se @capge
bernt.jensen@capgemini.com
co to e u ds es@capge
tore.hundsnes@capgemini.com
co

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