This document discusses strategies for promoting innovation in organizations. It argues that companies focus too much on efficiency innovations and not enough on market-creating innovations. It recommends that companies rationalize their portfolios to focus more on capabilities that enable all three types of innovation, especially market-creating innovations. Technologists can help by influencing strategies to prioritize growth and shifting IT thinking from efficiency to innovation and value creation. Measurement of innovation impact and processes also needs to be improved.

1. The Technologist’s Dilemma
Refocusing on Innovation and Growth
26 June 2014
DISTRIBUTION COPY

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SPEAKER
Todd Ray
EVP of Strategy, Blue Rooster
toddr@bluerooster.com
Blue Rooster is a Seattle-based Microsoft Gold-Certified partner that develops innovative solutions to meet the needs of modern, digital enterprises
…specializing in social, mobile, responsive and business process- specific applications

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Introduction
•Initial Idea: discussion of strategies for making people more productive using information technology
•Based on a recent paper:
X?

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Innovation
Re-Focus:
How architects can help develop "innovation" capabilities in their respective organizations
“Innovation”

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TOPICS
Part I: Business Context
Part II: Innovation Today
Part III: Innovation Mandate
Discussion/Q&A

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PART I –Business Context
GDP
Jobs
Cash
Cost of Capital
Forecast

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Sluggish GDP Growth

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Jobless Recovery

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Cash Reserves
http://www.seeitmarket.com/2013-cash-reserves-ranking-apple-u-s-corporates-lead-way-13574/

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Low Cost of Capital

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Capital Allocation Forecast
•Dividend increases, share buy-backs
•M&A
•Hiring, technology, plants and equipment
Re: technology –which business priorities should we be targeting?

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PART II –Innovation Today
Innovation Types
Capitalist’s Dilemma
Re-thinking IT’s Role
Current Investment

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Investment in Growth and Innovation Lacking
“Capitalist’s Dilemma” –doing the right thing for investors is the wrong thing for long-term prosperity
Need: shift from “efficiency” thinking towards growth and “market-creating” innovations
•5 years post-recession, economy still sputtering, corporations still stuck, disappointing growth and job numbers
•Corporations sitting on piles of cash
•Investments (and markets) favor the wrong types of innovation

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Re-Thinking IT’s Role
(https://www.pwc.com/en_US/us/increasing-it- effectiveness/assets/it_spending_creating_value.pdf
2007
•<15% IT budgets on transformative innovation
•Competitive advantage through IT = rethinking spending on innovation and value creation
•CEO, CFO, COO all have roles
<15%

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Re-Thinking IT’s Role
(https://www.pwc.com/en_US/us/increasing-it- effectiveness/assets/it_spending_creating_value.pdf
2007
2012 –about same
•<15% IT budgets on transformative innovation
•Competitive advantage through IT = rethinking spending on innovation and value creation
•CEO, CFO, COO all have roles
<15%

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Innovation Investment –
Current
Lower cost production and distribution of existing products and services to existing customers
Production of new and better, mostly evolutionary products
Production of new classes of disruptive products, markets and customers
Market- Creating Innovations
Sustaining Innovations
Efficiency Innovations
More
Jobs
Fewer jobs
15%
20%
65%
Some jobs
Investment
Transformation
Some
Some
More
More

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Innovation Type Drill Downs
•Raise productivity (net effect of raising GDP/employee)
•“Low-end disrupters” (e.g. WalMart)
•Process improvements (e.g. Toyota’s JIT production)
•IW Enablement
•Free up capital for other forms of innovation
EFFICIENCY
•Replacement of old products with new and better models (e.g. MSFT Office)
•Mostly evolutionary
•Typical focus of incumbent firms' resource allocation strategy (repeatable, consistent, etc.)
•Creation of fewer jobs because they’re substitutive
SUSTAINING
•More disruptive and transformative
•Disrupts current paradigm of scarcity or high cost
•Dependent on tech. breakthrough
•New business models and customers
•New internal job + upstream and downstream jobs
•High capital
MARKET-CREATING

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PART III –INNOVATION MANDATE
Process Examples
Recommendations
Top 10 Dynamics
BKMs
Solution Complements
Sol’nConsiderations
Capability Model
Pkg’dSolutions
Portfolio Rationalization
Impact Measurement

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Recommendations –What Can Be Done
What can be done to address the "Capitalist's Dilemma" and re-purpose available capital and resources to promote growth and innovation?
What is the technologist/architect’s role in all this?
What does a typical approach look like?
What does a real-life example look like?

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Promote portfolio rationalization methods that address long term growth and innovation needs
•Focus on capabilities and systems that address all three forms of innovation, especially those targeted at market-creating innovations
•Leverage learnings from past innovation efforts from other firms
•Adopt best practices for ideation, innovation and commercialization
Business and Technology Mandates
•Promote education of these dynamics within business schools and with experienced business and IT management
•Re-set capital allocation rules to promote long term market- creating efficiencies
•Develop innovation scorecards to complement short-term operational ones
•Manage the company to maximize the value of the enterprise in the long term
Business
•Shift CIO (and overall IT) thinking towards how it contributes to innovation, growth and value creation
•Engage the CEO, CFO and COO to actively participate in aligning IT initiatives with overall strategy, IT value management, and customer- facing business innovations.
•Understand your user base and how "innovation happens" within your company, both from a technology and culture perspective
Technology

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•Promote portfolio rationalization methods that address long term growth and innovation needs
•Focus on capabilities and systems that address all three forms of innovation, especially those targeted at market-creating innovations
•Leverage learnings from past innovation efforts from other firms
•Adopt best practices for ideation, innovation and commercialization
Business and Technology Mandates
•Promote education of these dynamics within business schools and with experienced business and IT management
•Re-set capital allocation rules to promote long term market- creating efficiencies
•Develop innovation scorecards to complement short-term operational ones
•Manage the company to maximize the value of the enterprise in the long term
Business
Technology

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Top 10 Innovation Dynamics
Market Forces/ Competition
Industry
Business Priorities
Culture
Financial Condition & Commitment
Things impacting your innovation mandate, approach to innovation or innovation success:
Leadership (Vision, Sponsorship, etc.)
Org Structure/ Model
Governance(Roles, Processes and Rules of Engagement)
Organizational Capability (creative agility, abrasion, resolution)
Innovation Processes and Enabling Technology

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Ideation, innovation and commercialization process and solution BKMs
Essentials:
•Learn from mistakes (and successes) of past
•Align best known methods (BKMs) with an organization's overall innovation process, culture and business landscape
•Technology: focus design on making the organization successful relative to its:
(a)goals
(b)processes
(c) organizational/cultural profile
(d) OCM dynamics (e.g. willingness to change)

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Typical Process
Key early stage activity:
Learn more about the organization's existing innovation process, to the degree that one exists
(most large companies have one by now)

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Real-World Examples

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Solution Considerations
•Having a pre-defined understanding of goals and outputs has a significant impact on any innovation- related solution design.
Goals and Desired Outputs
•Formal, structured, vs. informal, unstructured
•Many organizations wish to pursue a more structured, directional, multi-stage idea campaigns/competitions in a controlled fashion -with specific filtering goals (e.g. 200 ideas down to 5 to be funded).
•An organization may also choose to pursue unstructured, ongoing idea sharing along with more punctuated campaign efforts.
•Innovation-type solutions vary in terms of the sources of inputs
•Topics for discussion/development may be determined up front or truly crowd-sourced
Participation and Topic Selection
•Internal, external, selective participation by experts only, etc.

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Solution Considerations
Innovation solutions can provide for:
•Longer-lived, sustained ideation, discussion and development; or
•More punctuated, time-blocked campaigns run on either an ad-hoc or periodic basis
Timeline and Lifecycle
•Closely related to the goals and desired outputs
•Critical for success and will vary considerably depending on ->
•Defines: rules, gates, workflows, incentives/reward systems, review cycles, reporting, funding criteria, etc. implemented accordingly.
Governance and Rules
•Closely related to goals, desired outputs, timeline/lifecycle, etc.

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Innovation Solution Capability Model

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Packaged Solutions –Considerations
•Been around for a while
•Gartner coverage started in 2002
Basic idea management tools focused on collection and prioritization of ideas
Value prop: alternative to email, spreadsheets, and “suggestion box” for high volume efforts
Vendors (current):
Standalone (~20) and platform (e.g. SharePoint -~3)-based
~20% dedicated to innovation products (only)
Most use in NA/EMEA
~60% <5,000 users (internal)
~30% >5,000 users (internal)
~10% external users
~40% on-prem, ~60% cloud
Most vendors cover most capability sets (gamification, social, execution, portfolio management, integration and mobility represent the greatest differences)

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Solution Alternatives and/or Complements
•Innovation and IP marketplaces
•Crowdsourcing sites
•Voice of the customer
•Prediction markets
•Team meetings and brainstorming
•Storytelling and scenarios
•Focus groups
•Customer-centric design
•Problem solving (Triz)
•Patent exploration
•Pattern based modeling
•Social monitoring and analytics

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Portfolio Rationalization
•What is our vision for further innovation in the future to move closer to our needs in the areas of things like market-creating innovations?
•What do we need to change in terms of technical and organizational capabilities to meet our future state vision?
•What is our strategy to address future state needs from a technical standpoint
•What sort of specific programs of change are needed over what time frame?
•What is the state of our ideation/innovation capabilities today? Are they enterprise- level or business-specific?
•How do we deliver these from a technical standpoint?
•How are they performing in terms of information worker and business capability enablement?

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Impact Measurement and Communication

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Case Study
Major Oil Company
•Technology Management and Architecture Org (incl. EA Function)
Global Innovation Group
oIdeation Campaign –late 2000s
–Social Computing Strategy
–Looked at existing business, user base, capabilities and portfolio and made recommendations for programs of change at enterprise level
–Exec-level recommendations on innovations enabled by social computing opportunity space (including prediction markets, virtual worlds, social collaboration, etc.)

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Conclusion
Technologist’s Dilemma
Just like with the “Capitalist’s Dilemma”, whereby there’s investment gravity towards efficiency innovations and “running the business” innovations (which limit job growth and economic recovery), there’s a “Technologist’s Dilemma” whereby the same dynamics impact IT investments!
Biggest impact opportunity: technologies that grow and transform the business
E.g. market-creating innovations (<15% of IT budgets overall)
EAs can help!
Influence strategies -> growth and market- creating innovations
Portfolio rationalization methods that address long term growth and innovation needs
Recommendation of best practices for ideation, innovation and commercialization processes
Develop innovation measurement and scorecard capabilities

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Re-thinking the original concept

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GETTING STARTED
Strategic Innovation Discovery Workshop
•Review of current environment, challenges and plans
•Assessment of high impact focus areas
•Review of alternatives
Deliverable:
Recommendations and prioritized action plan
Contact strategy@bluerooster.com

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Additional Information
Blogs:
•Re-Launching Your SharePoint Strategy for the SoMo Generation(June 2014)
•Critically Re-thinking Governance, Again: Modernizing How You Manage SharePoint(May 2014)
•Re-thinking Adoption, Again –Novel Ways to Modernize SharePoint(April 2014)
•Avoiding Social Entropy –Getting out of your Social Silo and Into the Big Tent (March 2014)
•What’s Your Altitude? Navigating the 5 Levels of Strategy(March 2014)
•Productivity is Not Just a Buzzword(January 2014)
•An Un-radical Vision for Intranets in 2014 –Back to Basics, Dialing Back the Hype(December 2013)
•Adapting Social Solutions to Modern Workstyles(October 2013)
•Developing Agile UX Strategies(September 2013)
•A Case for Agile Digital Strategy(September 2013)
Papers: (available upon request)
“What’s Your Altitude? Navigating the 5 Levels of Strategy Relevant to the Modern Digital Enterprise”, February 2014
“Strategies for Delivering Productivity and Value with Information Worker Technologies”, December 2013
“An Un-Radical Vision for Intranets in 2014 - Back to Basics, Dialing Back the Hype”, December 2013
“Adapting Social Solutions to Modern Workstyles”, October 2013

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Discussion

39. create. build. experience.