2. What is Innovation
Innovation is not just inventing a new product; but it is more about using the already existing
resources and leveraging external factors (like technology, government policies etc.) in ways
that improve the efficiency of the complete value chain
Innovation Across Value Chain
Page 2 Source Ref: Competitive Advantage: Creating and Sustaining Superior Performance, Porter/
3. JUGAAD - INDOVATION EXISTS IN OUR DNA
Sources for the images: articles.economictimes.indiatimes.com
4. Indovation- Tata Nano.
External Inputs- Designers, customer expectations, competitive environment
Engineering Operations Component Marketing
Design & Sales
Two cylinder engine. Four presses were installed
instead of two used in Club multiple components “A Promise is a Promise”
Engine in the rear.
traditional press shops. into a single piece to reduce “Brand positioning and
Adding dummy weights to procurement costs.
Reduced the time for door repositioning”
balance the horizontal and
production by half, thereby Integrate components to “Effective promotion through
lateral vibrations.
bringing the overall costs serve more than one function SBI loans- push + pull
down. at a time. strategies”
Gandhian Engineering- Minimalistic approach to production.
Source:, National Geographic: http://www.youtube.com/watch?v=8wZ8ZU6swxo
5. CURRENT INNOVATION GAPS in a typical Indian enterprise
AS IS CURRENT GAP TO BE
IDEATION IMPLEMENTATION
&EXECUTION
REALIZATION
&
NON RECEPTIVE CHANNELIZATION RECEPTIVE
INNOVATION HUB
UN-
SUSTAINABLE SUSTAINABLE
IMPERMEABLE PERMEABLE
Tap current resources and Create new opportunities
Page 5
7. AS IS TO BE
NON RECEPTIVE RECEPTIVE
IDEATION IMPLEMENTATION
&EXECUTION
UN-
SUSTAINABLE SUSTAINABLE
IMPERMEABLE PERMEABLE
Page 7
8. THE INNOVATION HUB WORKFLOW
IDEATION to IMPLEMENTATION & EXECUTION
Indovation
Champions
moderation, evaluation of
idea at organization level. Internal External Typically honorary positions.
Regular Unit level work,
appraisal of Leads, Appraisal A Part of the appraisal linked to
Vertical specific Indovation the overall effect on the bottom-
of ideas, final sign off. Champion
line and the topline due to the
ideas implemented in the unit
Implementation, regular Middle Level Indovation A part of the overall appraisal
work, appraisal of the scout.
Leads linked to the number of ideas in
execution.
Ideation, Execution, Grass Root Level Innovation Appraisals directly linked to the
dissemination and Workers – SCOUTS number of quality ideas
compliance. generated and disseminated
NON – RECEPTIVE to RECEPTIVE
9. AS IS TO BE
NON RECEPTIVE RECEPTIVE
IDEATION IMPLEMENTATION
&EXECUTION
UN-
SUSTAINABLE SUSTAINABLE
IMPERMEABLE PERMEABLE
Page 9
10. UNSUSTAINABLE to SUSTAINABLE
CIRCULATORY SYSTEM of INNOVATION
No. of Ideas reduce as they filter to the next level
No. if Innovative ideas (Research and Development)
1st Level Screening
2nd level screening
Rejected Ideas are circulated Approval and Feasibility
back for rework and modification test
depending upon the level
and Quality of Idea
Pilot Launch
Launch
Many good and innovative ideas get rejected because they are
not worked upon or presented well.
Page 10
11. AS IS TO BE
NON RECEPTIVE RECEPTIVE
IDEATION IMPLEMENTATION
&EXECUTION
UN-
SUSTAINABLE SUSTAINABLE
IMPERMEABLE PERMEABLE
Page 11
12. UNPERMEABLE to PERMEABLE
Current Value Chain
Inbound Outbound Marketing
Operations Service
Logistics logistics and Sales
Drill Holes within the system
Inbound Outbound Marketing Service
Operations
Logistics logistics and Sales
Flow of Innovation
Page 12
13. The Innovation Value Chain: A Systematic Way of Improving
and Measuring the Innovation Process
IDEA GENERATION CONVERSION DIFFUSION
IN-HOUSE CROSS- EXTERNAL SELECTION DEVELOPMENT SPREAD
POLLINATION
Collaboration Screening and Movement Dissemination
Creation within Collaboration with parties initial funding from across the
a unit across units outside the idea to first organization
firm result
KEY Do people Do we create Do we source Are we good Are we good at Are we good
QUESTIONS in our unit good ideas by enough good at screening turning ideas at diffusing
create good working across ideas from and funding into viable developed
ideas on their the company? outside the new ideas? products, ideas across
own? firm? businesses, the company?
and best
practices?
KEY Number of Number of Number of Percentage Percentage of Percentage
PERFORMANCE high-quality high-quality high-quality of all ideas funded ideas of penetration
INDICATORS ideas ideas ideas generated that that lead to in desired
generated generated generated end up being revenues; markets,
within a unit. across units. from outside selected and number channels,
the funded. of months to customer
firm. first sale. groups;
number
of months to
full diffusion.
Source: The Innovation Value Chain. By Morten Hansen and Julian Birkinshaw. Harvard Business Review, July 2007.
14. EDUCATIONAL & GOVERNMENT SUPPORT for
SUSTAINED INNOVATION – An External Barrier
EDUCATIONAL
• Firms should leverage and collaborate with Educational
institutes for Research and constant innovation. Government
• Companies should look out for young Scouts. Target
schools and colleges.
• Support PHD graduates and faculty and fund research
Educational
Enterprise
GOVERNMENT Institutes
• Innovation generates economic value, new jobs in the
economy and cultures of entrepreneurship.
• Fund R&D departments specially for SME’s
• Government to provide support for companies high on
patents
• Redesign curricula to emphasis on industrial Innovation,
problem-solving, design, experimentation.
Page 14 Source : http://knowledgecommission.gov.in/downloads/documents/NKC_Innovation.pdf
15. CASE STUDY - DEVI PRASAD SHETTY HOSPITALS
Indovation in Service Industry
This hospital caters the lower section of the society with more than 30000
operations a day at affordable prices
OPERATIONS & LOGISTICS MARKETING
Agile 40 : 60 pricing DISCRIMINATION strategy
Equipment is on rent basis Cutting down costs 40 % people who can afford surgery pay the
tremendously rack rate
Family is trained to take care of the patient. 60 % below the rack rate
Hence nurses are concentrated in the ICU Educating doctors about the financial
No Air-conditioning apart from ICU and other implications of their decisions
important medical rooms
The Henry Ford concept of creating economies of scale through mass production was
duplicated in health care
TAKE AWAY:
• Lower Operating Leverage in order to be agile and innovate under low cost
• Focus on LEAN technology practices and cost – effective marketing and pricing strategies .
Page 15 Source : http://www.youtube.com/watch?v=ISA0ZvHp5MA
16. Conclusions
Strategic approach to unleashing innovation across the value
chain.
Channelizing and realizing the “jugaad” potential.
Measuring innovation at each level and tying it with the overall
functioning to make it a part of the DNA.
Innovation is not an end, but a means to an end- delivering
value.
Educational institutes and government have a major role to
play in fostering a culture of innovation at the macro level.
Page 16
17. We are now open for questions.
GREATLAKES INSTITUTE OF MANAGEMENT
JEEWANT SINGH GUPTA
GUNEET GYANI
Editor's Notes
How exactly do we define Innovation?On analyzing how organizations across the world view innovation, we concluded that innovation is not just inventing a new product; but it is more about using the already existing resources and leveraging external factors (like technology, government policies etc.) in ways that improve the efficiency of the complete value chain. Thus, in our study, we conclude that innovation is not the end, but a means to achieve the end result of creating value for all the stakeholders across the entire gamut of activities of an organization.
Tata Nano is the perfect example of innovation at every level of the value chain. From procurement of materials at a low cost, to efficient manufacturing practices like The Gandhian Engineering Approach (minimalistic use of components) and a strong emotional connect with the audience through powerful Brand Positioning and reposition, Tata Nano is a prime example of how Indian-ness has helped enterprises Indovate and Innovate.
Innovation in the Indian Context- barriers:We have approached the problem statement keeping the Indian Enterprise in mind. From focus group discussions with members of the PGWPM batch at Great Lakes Institute of Management (working professionals, average age 35, holding middle management positions), we have come to the conclusion that the biggest deterrent to innovation within a typical India enterprise is insecurity of managers at the middle management level. These insecurities arise due to multiple reasons like the inability to adapt to radical changes and the aversion of coming out of the comfort zone that the middle management is fine tuned to in their daily work routine. We have given suggestions based on the premise that we need to make every stakeholder comfortable and accountable in order to make innovation a part of the DNA and everyday functioning of the organization at large.
A Typical Value Chain:Proposed by Mckinsey and later formulated and developed by Michael Porter, the concept of value chain has gained a lot of traction in the recent past as the size of organizations keeps increasing. Value chain analysis help the organizations perform in an increasingly complex global business environment. Porter and McKinsey formulated the value chain concept with the help of this diagramThe Solution: Innovation Hub as a separate support function.We propose that every organization that wants to implement innovation in its fabric should think about establishing an independent “innovation hub” as a support function in the value chain. The value chain diagram as laid down by Mckinskey would be modified as above
Sustainability: There are two major ways in which we would be sustaining innovation across the value chain using the innovation hub. First, we reward and motivate the people at each level of the innovation hub according to their aspirations and second, we make a funnel-structure repository of rejected ideas so that the ideas are not outrightly rejected and taken up at appropriated stages.Rewards and motivation:At the scout level, since we are linking the appraisal directly to the quantity and quality of the ideas, it makes a lot of immediate sense for the scout to sustain innovation in order to sustain his own growth. At the Innovation lead level, we are linking a part of the appraisal pie with the number of ideas executed, ensuring that implementable ideas are actually implemented. Implementing these ideas will in turn improve the overall efficiency of the team lead’s team and have an exponential effect on bumping up the other appraisal parameters of the lead. Thus, the innovation lead benefits dually from the direct impact and the indirect impact of implementing the idea.At the Unit head level, innovation is indirectly impacting the overall bottomline and topline of the unit, which are generally linked to the bonuses being doled out to the Unit Heads across organizations.Idea Repository:The idea behind the idea repository is to log the progress of an idea at every stage of its bottom-up movement from the ideation at the scout level to the approval at the unit head level. Now, in the process, some ideas might get rejected in one of the many stages we have identified in the below diagram. We suggest that each idea be taken up for rework from the stage of rejection and not be rejected altogether. This will ensure that the ideation is sustainable over a long period of time. We can also prioritize ideas with respect to their rejection stage. An idea that was rejected at a higher stage would require less rework as compared to an idea that was rejected at the ideation stage. Hence, the former should be prioritized higher than the latter.
The most important external barrier to Innovation, as perceived by both large firms and SMEs, is skill shortage due to the lack of emphasis on industrial Innovation, problem-solving, design, experimentation, etc. in the education curricula Other prominent external barriers are lack of effective collaboration with research in universities and R&D institutions, excessive government regulation as well as insufficient pricing power to derive value from Innovations.
