Innovation, business models and
manager’s role as ‘corporate
catalyst’

21 novembre 2013

Stefano Mizio – Management Board...
About Innovits
• InnoVitamins (InnoVits) è un’iniziativa non profit fondata con
l’obiettivo di catalizzare lo sviluppo del...
Agenda

We need
innovation
(Business Model
Innovation)

Lean
Startup/business
model
canvas/agile
methodologies

Large Corp...
Too big to produce gamechanging inventions?

innovate?
Stefano Mizio
Large companies:
Performance Engine

Performance engine strives to make every task, every process as
repeatable and predic...
Today – digitally disruptive
economy
A computer;
An internet connection;
A programming language and SDK;
A friction-free d...
Dozens of copycats
Increasing ease and decreasing cost of
innovation -> short-term pressure (startups)
Startup #1
Startup ...
The new corporate garage?

Big companies have hard-to-replicate advantages
Stefano Mizio
The Challenge

Tim Kastelle Blog

Stefano Mizio
David versus Goliath

Search for a new business model…

Stefano Mizio
The rise and the fall of…

Stefano Mizio
Blockbuster
this is the end…

Don’t get Netflixed!
Stefano Mizio
Netflix, netflixed
Verb:
1.to cause disruption or turmoil to an existing
business model
2.To destroy a previously successf...
The Challenge
You must reinvent a business model while the entire
organization is working hard pedaling the bicycle of
the...
Even Netflix is in Danger of being
Netflixed…

Stefano Mizio
The Key Issue:
Business model innovation is a competency
that doesn’t exist in most companies, since it
never had to… …
Th...
INNOVATOR’S PARADOX

and your current Business Model?
Scott D. Anthony

Stefano Mizio
Kodak acquired OFOTO in 2001

Stefano Mizio
Imagine if…
Kodak: “ our tagline is Share memories, share
lives”.
“Why don’t we let people simply share album
pictures?..w...
Kodak’magnete vs OFOTO: The
current business model

T&C:To maintain free storage, you need to meet the following minimum
p...
Your core business is a Magnet!

It can take the most power idea and turn it into something
that has been done before
Stef...
Car2Go business model

Take a look at Car2Go

Business Innovation Division
The Daimler Lab for new business
models

Compan...
The Magnet didn’t work!

Stefano Mizio
Car2Go in Milan: 40,000 clients in
few months
Fiat, ENI,
Trenitalia
“coming soon”

Stefano Mizio
Leassons learned
• Run Experiment (Ulm Germany – internal
employees) – Frugal innovation.
• Alert to the early warning sig...
Stefano Mizio
Large Companies

Resources Capabilities Exploration
Exploitation

Execution

New Business
Models
Search

Stefano Mizio
What kind of organization?
Spin out organization? Ambidexterity Organization? Partnership?

Stefano Mizio
Organizing an innovation initiative
Company
Performance Engine

Shared
Staff

Partenrship

Dedicated
Team

V. Govindarajan...
TELCO UNDER PRESSURE

Stefano Mizio
Whatsapp: founded in 2009
WhatsApp just surpassed 300 million users worldwide.

Telco senior management were worrying abou...
In 2008 that was the reality
WALLED GARDEN WAS OVER!

High Rivalry among traditional
competitors – efficiency mature secto...
Vodafone Internet Services
VF 360 platform

Trying to avoid being a Dumb Pipe
Stefano Mizio
Vodafone Internet Services

If you look for quick growth, you are forced to
Stefano Mizio
look to what exists
The organizational design seemed a good
fit for the innovation challenge…but
VIS relied too heavily on its Performance Eng...
What kind of competencies
Acqui–Hiring and the
“organizational memory”
To expand a business the company must expand its in...
Telco operators are organized to pursue
development effort of different duration
Develop and act as a venture backed start...
Using existing processes

Little Performance Engines instead of Dedicated teams
Stefano Mizio
No custom organizational model in place
Ongoing Operation

Strategy

Organizing
&
Planning

Execution

Innovation
Committi...
Fuji Film
Healthy Disengagement and Resource allocation

Fuji’s approach: investing in new advantages and
pulling resource...
The wave of transient advantage

What to do when you are in the Exploitation phase…
Healthy disengagement
R. Gunther McGra...
Kodak
Fuji: 25$ billion
2011 and 377th on
Fortune’s Global
500 list.
Kodak has gone
bankrupt.

Fuji didn’t get trapped by ...
Are Accountants and CFOs Killing
Innovation?
The Accounting Conservatism

Stage Gate (uber alles) innovation process and t...
Is it Business Model innovation
really matters?
“Bad things can happen to
good technology. And
much of what can happen
is ...
Portfolio of Business Models
Impact Grid
Business Model

Level of
Promise

Risk level (detailed)
Interdependance

Technica...
Balancing Short Term and Long Term
Innovation

Source: Rethinking Business Model for Innovation

Stefano Mizio
Integrating different “Time – Horizonts”
Innovation Portfolio Management

Source:Managing Innovation Portfolios – Strategi...
Innovation initiatives are deliberate
departures from the past
Ongoing operation (90%
data, 10% unknowns):
central focus i...
Run disciplined exp.
Companies need to
be learningfocused and failure
tolerant.
Building a culture
of
experimentation
Or b...
Run Disciplined Experiment
Learning :
the process
of turning
speculative
predictions
into reliable
predictions

V. Govinda...
Modern Day (management)
Neologisms
CORPORATE ENTREPRENURSHIP

ENTREPRENEURIAL ORIENTATION

INTRAPRENEURSHIP

LEAN ENTERPRI...
Intrapreneurship/Corporate
Entrepreneuship
Intrapreneurship can be defined as
using entrepreneurial skills without
taking ...
Why startup???

Search for a business model… sound interesting if
you are an established company!
Steve Blank – Customer D...
Startup and established company

Steve Blank

Stefano Mizio
key activities

value
proposition

customer
relationships

key
partners

customer
segments
Product/Market fit

cost
struct...
B Model structure

IBM’ s global CEO report 2006: business model innovation matters

Stefano Mizio
9 Guesses

Guess

Guess

Guess

Guess

Guess
Guess

Guess

Guess

Guess
Stefano Mizio
Customer Development Model
or How we search for the business Model
Search

Execution

Pivot
Learning and Discovering
Desig...
Holistic Focus on three things

Agile Coaching Blog – David Bland

Stefano Mizio
Medical Device Manufacturer

Heart disease is the number one killer in India, accounting for a quarter of
deaths among tho...
Healthy Hearth model
Innovation commitment
External
Partner:
Ashoka (to back
social
entrepreneurs and
support and
finance ...
Do you believe B. Model is a
tool for startups?
Entrepreneurial
approach/method

Unique capabilities

Experimentation/ get...
Managing the Partnership
You need the Performance Engine!

Performance
Engine

Dedicated
Team

Conflicts must be anticipat...
Innovation and Corporation in Italy
what managers say about innovation

WOBI (World of Business Ideas) indagine presentata...
Complacency and Fear

In 2001 Nokia engineers about iPod: “ It’s just a hard drive built on
older technology in a fancy ca...
A new Breed of manager

Organizations need a structure and a corresponding culture where
accelerated change is the new nor...
It’s a matter of Perpective

Curiosity + Diversity + Method
Stefano Mizio
The key Point
The limits to innovation in large organization
have nothing to do with creativity and nothing
to do with tec...
Innovits corporate catalyst stefano  mizio  21 novembre 2013
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Innovits corporate catalyst stefano mizio 21 novembre 2013

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Large corporations are integrating entrepreneurial behaviours with their existing capabilities. They aren't always Too Big to Innovate. Intrapreneurship and corporate catalyst.

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Innovits corporate catalyst stefano mizio 21 novembre 2013

  1. 1. Innovation, business models and manager’s role as ‘corporate catalyst’ 21 novembre 2013 Stefano Mizio – Management Board Innovits MIP – Politecnico di Milano
  2. 2. About Innovits • InnoVitamins (InnoVits) è un’iniziativa non profit fondata con l’obiettivo di catalizzare lo sviluppo della cultura imprenditoriale supportando idee di business innovative, fornendo strumenti professionali e opportunità di business. • InnoVits gestisce una gara di idee con l’obiettivo di selezionare, fra tutte, la migliore idea innovativa di business. • InnoVits è un percorso che accompagna e sostiene gli imprenditori consentendogli di sviluppare e “vendere” la propria idea di business in modo professionale, con il supporto di professionisti di esperienza della community AlumniMIP. • Innovits offre concrete opportunità di networking e, per le idee migliori, l’opportunità di entrare in contatto con Business Angels e Venture Capitalist in occasione della presentazione finale.
  3. 3. Agenda We need innovation (Business Model Innovation) Lean Startup/business model canvas/agile methodologies Large Corporation are not always too big to innovate Corporate Catalyst Stefano Mizio
  4. 4. Too big to produce gamechanging inventions? innovate? Stefano Mizio
  5. 5. Large companies: Performance Engine Performance engine strives to make every task, every process as repeatable and predictable as possible . Innovation is neither repeatable nor predictable; it’s exactly the opposite: nonroutine and uncertain Stefano Mizio
  6. 6. Today – digitally disruptive economy A computer; An internet connection; A programming language and SDK; A friction-free digital platform for distributing and making money from you innovation; …in few years a 3D-printer That’s all you need to bring your ideas to the market! BUT… Stefano Mizio
  7. 7. Dozens of copycats Increasing ease and decreasing cost of innovation -> short-term pressure (startups) Startup #1 Startup #1* Startup #1** Stefano Mizio
  8. 8. The new corporate garage? Big companies have hard-to-replicate advantages Stefano Mizio
  9. 9. The Challenge Tim Kastelle Blog Stefano Mizio
  10. 10. David versus Goliath Search for a new business model… Stefano Mizio
  11. 11. The rise and the fall of… Stefano Mizio
  12. 12. Blockbuster this is the end… Don’t get Netflixed! Stefano Mizio
  13. 13. Netflix, netflixed Verb: 1.to cause disruption or turmoil to an existing business model 2.To destroy a previously successful business model 3.To displace the way value is currently created, delivered, and captured 4.To be disrupeted, destroyed, or displaced by new business model. S. Kaplan Stefano Mizio
  14. 14. The Challenge You must reinvent a business model while the entire organization is working hard pedaling the bicycle of the current one. Stefano Mizio
  15. 15. Even Netflix is in Danger of being Netflixed… Stefano Mizio
  16. 16. The Key Issue: Business model innovation is a competency that doesn’t exist in most companies, since it never had to… … The new normal is Amazon Stefano Mizio
  17. 17. INNOVATOR’S PARADOX and your current Business Model? Scott D. Anthony Stefano Mizio
  18. 18. Kodak acquired OFOTO in 2001 Stefano Mizio
  19. 19. Imagine if… Kodak: “ our tagline is Share memories, share lives”. “Why don’t we let people simply share album pictures?..we can create a feature that allows people to share news items as well”. Facebook in 2001?? But Kodak didn’t take those steps…. Stefano Mizio
  20. 20. Kodak’magnete vs OFOTO: The current business model T&C:To maintain free storage, you need to meet the following minimum purchase requirement within 90 days of first uploading images, and then every 12 months thereafter ... If you do not purchase the required amount as set forth above from us for a period of 12 months, we may delete the images stored in your account. Stefano Mizio
  21. 21. Your core business is a Magnet! It can take the most power idea and turn it into something that has been done before Stefano Mizio
  22. 22. Car2Go business model Take a look at Car2Go Business Innovation Division The Daimler Lab for new business models Company CEO Robert Henrichcan can be credited with the founding of the services — while working at Daimler in a division tasked with exploring next-generation business models, he developed and championed the idea that grew into Car2Go. Stefano Mizio
  23. 23. The Magnet didn’t work! Stefano Mizio
  24. 24. Car2Go in Milan: 40,000 clients in few months Fiat, ENI, Trenitalia “coming soon” Stefano Mizio
  25. 25. Leassons learned • Run Experiment (Ulm Germany – internal employees) – Frugal innovation. • Alert to the early warning signs that a business model is facing erosion (car production for Daimler) • Emerging trends : sharing economy + sustainability/green economy. •Organizational Model: Business Innovation Division/ Strong Management Support. Stefano Mizio
  26. 26. Stefano Mizio
  27. 27. Large Companies Resources Capabilities Exploration Exploitation Execution New Business Models Search Stefano Mizio
  28. 28. What kind of organization? Spin out organization? Ambidexterity Organization? Partnership? Stefano Mizio
  29. 29. Organizing an innovation initiative Company Performance Engine Shared Staff Partenrship Dedicated Team V. Govindarajan – C. Trimble : The other side od Innovation Stefano Mizio
  30. 30. TELCO UNDER PRESSURE Stefano Mizio
  31. 31. Whatsapp: founded in 2009 WhatsApp just surpassed 300 million users worldwide. Telco senior management were worrying about the risk of cannibalizing SMS revenue. Always ask the question: “If I don’t do this, will an existing or new competitor decide to?” Stefano Mizio
  32. 32. In 2008 that was the reality WALLED GARDEN WAS OVER! High Rivalry among traditional competitors – efficiency mature sector Online players like Google have become a driving force in the industry. Dumb pipe risk: operators just building Freeways for Californian cars. http://flickr.com/photo_zoom.gne?id=321433870&size=l Darwin Bell S. Mizio :VODAFONE ENTRY IN THE MOBILE INTERNET MARKET: COMPETITIVE ISSUES, INNOVATION AND CAPABILITIES - March 2010 - Final Thesis 3 EMBA MIP
  33. 33. Vodafone Internet Services VF 360 platform Trying to avoid being a Dumb Pipe Stefano Mizio
  34. 34. Vodafone Internet Services If you look for quick growth, you are forced to Stefano Mizio look to what exists
  35. 35. The organizational design seemed a good fit for the innovation challenge…but VIS relied too heavily on its Performance Engine to develop VF360 infrastructure and APIs -> 1° Risk to overestimate the capabilities of the Performance Engine. “ One of the biggest problems is that the company still has a ‘handset & basestation’ mindset”. mobile industry review: vodafone_360_an_absolute_failure Stefano Mizio
  36. 36. What kind of competencies Acqui–Hiring and the “organizational memory” To expand a business the company must expand its inventory skills…skills that you have never needed before. Twitter 29 acquisitions since 2009 - 9 startups had received a seed Stefano Mizio
  37. 37. Telco operators are organized to pursue development effort of different duration Develop and act as a venture backed startup with a great “always beta” culture (Google) implied a different approach ( no waterfall ) -> 2° Risk : different Operating rhythm …delivering reliable features every 6/8 months costing a lot o money. That was unfit with Internet time/pace/philosophy Stefano Mizio
  38. 38. Using existing processes Little Performance Engines instead of Dedicated teams Stefano Mizio
  39. 39. No custom organizational model in place Ongoing Operation Strategy Organizing & Planning Execution Innovation Committing to an Innovative Idea ? “Great idea! Go make it happen” Something missing Stage gate? Agile approach? What kind of relationships? Making Innovation Happen V. Govindarajan – C. Trimble : The other side od Innovation Stefano Mizio
  40. 40. Fuji Film Healthy Disengagement and Resource allocation Fuji’s approach: investing in new advantages and pulling resources from declining ones. Stefano Mizio
  41. 41. The wave of transient advantage What to do when you are in the Exploitation phase… Healthy disengagement R. Gunther McGrath: The End of Competiitve Advantage Stefano Mizio
  42. 42. Kodak Fuji: 25$ billion 2011 and 377th on Fortune’s Global 500 list. Kodak has gone bankrupt. Fuji didn’t get trapped by its past. Stefano Mizio
  43. 43. Are Accountants and CFOs Killing Innovation? The Accounting Conservatism Stage Gate (uber alles) innovation process and the Net Present Value perspective. the Risk averse culture Stefano Mizio
  44. 44. Is it Business Model innovation really matters? “Bad things can happen to good technology. And much of what can happen is due to the business model the company uses to commercialize the technology ” H. Chesbrough Stefano Mizio
  45. 45. Portfolio of Business Models Impact Grid Business Model Level of Promise Risk level (detailed) Interdependance Technical Risk Financial Risk Risk Level (general) B.M. 1 B.M. 2 B.M. 3 Low – Low/Medium – Medium/High – Medium - High Source: Rethinking Business Model for Innovation Stefano Mizio
  46. 46. Balancing Short Term and Long Term Innovation Source: Rethinking Business Model for Innovation Stefano Mizio
  47. 47. Integrating different “Time – Horizonts” Innovation Portfolio Management Source:Managing Innovation Portfolios – Strategic Portfolio Management –R. Ohr and K. McFarthing Stefano Mizio
  48. 48. Innovation initiatives are deliberate departures from the past Ongoing operation (90% data, 10% unknowns): central focus is to execute the plan. Innovation initiative (10% data, 90% unknown): the plan is a hypothesis. Shifting attention from data to assumptions Stefano Mizio
  49. 49. Run disciplined exp. Companies need to be learningfocused and failure tolerant. Building a culture of experimentation Or better … disciplined experimentation Innovations as experiments Stefano Mizio
  50. 50. Run Disciplined Experiment Learning : the process of turning speculative predictions into reliable predictions V. Govindarajan –C. Trimble – The other side of innovation Stefano Mizio
  51. 51. Modern Day (management) Neologisms CORPORATE ENTREPRENURSHIP ENTREPRENEURIAL ORIENTATION INTRAPRENEURSHIP LEAN ENTERPRISE INTERNAL CORPORATE VENTURING Stefano Mizio
  52. 52. Intrapreneurship/Corporate Entrepreneuship Intrapreneurship can be defined as using entrepreneurial skills without taking on the risks or accountability associated with starting your own business. Instead, intrapreneurs are employees in larger organizations, who act as entrepreneurs while having the resources and capabilities of the larger firm to draw upon Corporate Entrepreneurship: is the process by which individuals inside organizations pursue opportunities without regard to the resources they currently control (Stevenson) Stefano Mizio
  53. 53. Why startup??? Search for a business model… sound interesting if you are an established company! Steve Blank – Customer Development Manifesto Stefano Mizio
  54. 54. Startup and established company Steve Blank Stefano Mizio
  55. 55. key activities value proposition customer relationships key partners customer segments Product/Market fit cost structure key resources revenue streams channels Business Model Canvas 55 Stefano Mizio JAM images by
  56. 56. B Model structure IBM’ s global CEO report 2006: business model innovation matters Stefano Mizio
  57. 57. 9 Guesses Guess Guess Guess Guess Guess Guess Guess Guess Guess Stefano Mizio
  58. 58. Customer Development Model or How we search for the business Model Search Execution Pivot Learning and Discovering Design experiments, start listening testing your hypotheses outside the building Steve Blank – Customer Development Manifesto Stefano Mizio
  59. 59. Holistic Focus on three things Agile Coaching Blog – David Bland Stefano Mizio
  60. 60. Medical Device Manufacturer Heart disease is the number one killer in India, accounting for a quarter of deaths among those aged 25 to 69. Millions are dying due to lack of access to treatments. Stefano Mizio
  61. 61. Healthy Hearth model Innovation commitment External Partner: Ashoka (to back social entrepreneurs and support and finance plan for pacemakers) Internal partners Bring pacemakerk tech. to Indians who desperately need it Patient education activities through local events, text messaging and social media. Hospitals People who are unable to obtain pacemakers and other cardiac products Stefano Mizio
  62. 62. Do you believe B. Model is a tool for startups? Entrepreneurial approach/method Unique capabilities Experimentation/ get out of the building : diagnostic camps to identify potential patients. Strong Brand Reputation: local doctors/ Regulatory approval/… Business Model Validation Open minded Observation ( Aravind Eye Care System) Humility Partner relationships “Last mile” distribution channels Process and internal resources: design, staffing and execute pilots and expanding programs Recombining existing capabilities Stefano Mizio
  63. 63. Managing the Partnership You need the Performance Engine! Performance Engine Dedicated Team Conflicts must be anticipated, mitigated or neutralized Stefano Mizio
  64. 64. Innovation and Corporation in Italy what managers say about innovation WOBI (World of Business Ideas) indagine presentata al World Business Forum di Milano (56 novembre) – 3500 dirigenti di azienda intervistati: WBF L'Italia chiede più innovazione • la scarsa propensione all’innovazione dimostrata dai manager (40,48%). • il 49,6% degli intervistati ritiene prioritario per stimolare l’innovazione il giusto approccio dei manager. • Solo il 9,9% dei manager pensa che le aziende con una lunga storia siano le più disposte a innovarsi Stefano Mizio
  65. 65. Complacency and Fear In 2001 Nokia engineers about iPod: “ It’s just a hard drive built on older technology in a fancy case.” Stefano Mizio
  66. 66. A new Breed of manager Organizations need a structure and a corresponding culture where accelerated change is the new normal. It requires an environment, a strategy in which experimentation and pioneering is the most common thing to do in order to be able to innovate. Stefano Mizio
  67. 67. It’s a matter of Perpective Curiosity + Diversity + Method Stefano Mizio
  68. 68. The key Point The limits to innovation in large organization have nothing to do with creativity and nothing to do with technology. They have everything to do with management capability. Ray Stata – founder and chairman of Analog Devices Stefano Mizio

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