Developing Innovation Capabilities “The Journey”

1. Developing Innovation Capabilities“The Journey” Jay Rao Professor Babson

2. Babson & Enterprise Leadership

5. 2008 McKinsey Study Highlights • CEOs and Executives are frustrated with their efforts to jumpstart innovation initiatives • Overall dissatisfaction with the dismal outcomes • Mimicking best practices have been ineffective • Resources and Processes that are applied are either underutilized or not achieving scale to have a financial impact • Unanimous agreement (94%) that people and corporate culture are the most important drivers of innovation Source: Leadership and Innovation, The McKinsey Quarterly, 2008 no. 1

6. Bruce Naussbaum, Business Week, Innovation Guru • “Innovation died in 2008, killed off by overuse, misuse, narrowness, incrementalism and failure to evolve. It was done in by CEOs, consultants, marketeers, advertisers and business journalists who degraded and devalued the idea by conflating it with change, technology, design, globalization, trendiness, and anything ‘new.’ It was done in by an obsession with measurement, metrics and math and a demand for predictability in an unpredictable world.”

7. Aspirations of Firms High Hierarchical Innovative Discipline Bureaucratic Start-Up Low Low High Innovation Behaviors Source: Collins, Good to Great

8. External Forces: Firms encountering environmental turbulence Steady and Stable Slowly changing, Predictable, Trends are Evident Increasing Rate of Change with Some Predictability, Unforeseen Trends Appear Rapid Change, Little Predictability, Many Surprises Chaotic & Unpredictable Source: Prof. Thornberry

9. Internal Inertia: Firms afflicted with symptoms of corporate inaction • Our employees just don’t seem to take the initiative • Our managers usually wait for someone higher up to make decisions • Our growth has been flat for the past X years • Our smaller and more agile competitors are killing us • We just don’t seem to attract the bright young graduates anymore • We have gone through many cost-cutting exercises and the people are worn out and cynical • We want our managers and employees to think and act more like owners • Our strategic planning process is killing us

10. Fosbury Flop Western Roll Scissor or Eastern Cut-off Straddle

11. Two Paths: Both Necessary INNOVATION Continuous Experimentation QUALITY Continuous Improvement Performance Time

12. Different Mindset

13. Different Processes Plan Act TQM Check Do

14. Different Rewards

15. The Enablers

16. Innovation Bench Strength-- Champions, Facilitators & Talent

17. Unconscious Incompetence Conscious Incompetence Conscious Competence Unconscious Competence The Innovation Bench Strength Journey: 3 Steps Education Practice Discipline

18. STEP 1 Unconscious Incompetence  Conscious Incompetence Education (Language, Concepts, Tools)

19. Education:Lingua Franca of Innovation

20. Ideas Science Problem Environment Knowledge Opportunity Passion Experience Education: Innovation happens in 2 Fundamental Ways Innovation Innovation Luck

21. Experiential Innovation Marketing Innovation Process Innovation Business Model Innovation Product Innovation Structural Innovation Revenue Growth Application Innovation Disruptive Innovation Time Education: Innovation Life Cycle Source: Moore, HBR, 2004

22. Education:Opportunity Identification  Development  Capture

23. Education: Opportunity Identification Space: Adjacencies – Stretching and Leaping Future 2 Leap Future 1 Market A5 A1 A4 Stretch A2 A6 Current A3 Future 2 Future 1 Current Capabilities

24. Education: Opportunity Capture: Example—Nike Long Dist. Runners 1983 Tennis Basketball Apparel Equipment Shoes • Soccer • 1996 Football • Hockey • Golf 1978 Long Dist. Runners Tennis Apparel Shoes Long Dist. Runners 1964 Shoes Source: Moore,

25. Education: Opportunity Capture: Platforms for Innovation & Growth ORGANIZATIONAL PLATFORM PRODUCT / MARKET PLATFORM PROCESS PLATFORM FIRM’S RESOURCES PROCESSES & VALUES METRIC PLATFORM PARTNER PLATFORM

26. STEP 2 Conscious Incompetence  Conscious Competence Practice

27. SELECTION MONITORING & SHAPING OPPORTUNITY IDENTIFICATION OPPORTUNITY CAPTURE OPPORTUNITY DEVELOPMENT MODULE 1 MODULE 3 MODULE 2 Coaching Review Tactics Funding Next Steps Coaching Review Tactics Funding Next Steps Coaching Review Tactics Funding Next Steps Practice: Opportunity Identification  Development  Capture

28. Practice: Build a Culture of Innovation — 6 Building Blocks Resources Values Processes Behaviors Success Climate

29. Practice:“Catch a few fish while learning to fish” Think Big Start Small Start Several Prototype Rapidly Fail Fast Fail Cheap Learn Quick Test & Re-shape Often Scale Success Immediately

30. STEP 3 Conscious Competence  Unconscious Competence Discipline

31. Discipline:Innovation is the disciplined pursuit of opportunities using innovation behaviors High Hierarchical Innovative Discipline Bureaucratic Start-Up Low Low High Innovation Behaviors Source: Collins, Good to Great

32. Cheshire Cat: "That depends a good deal on where you want to get to.” Alice: "I don't much care where…” Cheshire Cat: "Then it doesn't matter which way you go.” Alice: “…so long as I get somewhere.” Cheshire Cat: “Oh, you’re sure to do that, if you only walk long enough.” “Would you tell me, please, which way I ought to go from here?” – Alice asks the Cheshire Cat Lewis Carroll’s Alice in Wonderland Source: Prof. Thornberry

33. Discipline: Enterprise & Individuals • Who am I • Mindset, Success • What should I do? • Behaviors • How should I contribute? • Roles • Who are we? • Values, Success • What should we do? • Climate • How should we do it? • Resources, Processes

34. Discipline: Needs Coaching Tell Me Follow Up: Structure + Support + Accountability Show Me Let Me Observe Me Praise / Redirect Me Source: Know Can Do!

35. Discipline: Execute Strategy Resources Values Pick a ROAD that is friendly to your VALUES, CLIMATE & RESOURCESCreate PROCESSES & Encourage INNOVATION BEHAVIORSCelebrate SUCCESSES and FAILURES Processes Behaviors Success Climate 35

37. Thanks and Good Luck! rao@babson.eduhttp://www.jayrao.org