Innovate to succeed

1. Innovate to succeed Introduction to Foundations of Business Innovation September 8, 2011 Innovate to fail It’s about balancing the risk of innovating against the risk of not innovating

2. Why are we here? • Philosophical reasons: Take the course SCS 1724 Essential Western Philosophers • Meta-physical reasons: Read Stephen Hawking’s book “The Grand Design” • To identify ways we can increase the likelihood of innovation success in our organizations Take SCS 2539 Foundations of Business Innovation • Today we will provide an overview of the Business Innovation course by identifying: “The top ten causes of failure to innovate”

3. Ten key causes of failure: Confuse the role of innovation Fail to clarify innovation goals Don’t recognize innovation barriers Fail to engage entire organization Lack of recognition of importance of communication Underestimate need for innovation resources Unclear process for selecting innovation projects Recognize the importance of change management Failure to create an innovation culture Recognize innovation is a journey not a destination

4. 1. Confuse the role of innovation Innovation is: Introduction of a new good, or a new quality of a good Introduction of a new method of production (need not need include new technologies) The opening of a new market The securing of a new source of supply The creation of a new organization Joseph Schumpeter

5. Internal drivers Unexpected event Contradiction Change of work process Change in industry structure Identify Innovation Drivers External Drivers • Socio-economic changes • Political changes • Technology changes Drucker‘sInnovation Framework

6. Innovation not just technology development • Innovation includes: • Product Innovation • Process Innovation • Service Innovation • Business model Innovation……….. • Greatest opportunities seen in business model innovation. • Can be applied to both private and public organizations • If your organization doesn’t innovate, someone else will..

7. Understanding Process Innovation • A change in the way a product or service is manufactured, created, or distributed • Process innovation involves implementation ofnew or improved production or delivery method. • Process innovations can be intended to decrease unit costs of production or delivery, to increase quality, or to produce or deliver new or significantly improved products.

8. Majority of individuals in Canada (and US) work in service industry Even where people work in manufacturing, many of these individuals providesupport services Service innovation isbiggest opportunity to increase competitiveness Improvements in service innovation can be measured in terms of increases productivity and value added Understanding Service Innovation

9. Opportunities for Service Innovation • Contributes to competitive advantage • Requires specific social and technical skills • Involves development and new technology application • Costly to develop needed specialist and generalist skills • Requires integrated thinking and agile environment • Can be implemented in all service areas • Most significant possibilities in financial and medical services

10. Understanding Business Model Innovation • New ways of doing business can also increase competitiveness and productivity by: • Creating enhanced utility for the customer • Enabling a different pricing strategy • Providing alternate purchasing options • To truly disrupt a market a technology innovationrequires a business model innovation

11. 2. Fail to clarify innovation goals • Improve top line(revenues/market share) • Improve bottom line (profit/cost effectiveness) • Strengthen brand/reputation • Improve shareholder/stakeholder perceived value "Would you tell me, please, which way I ought to go from here?""That depends a good deal on where you want to get to," said the Cat."I don’t much care where--" said Alice."Then it doesn’t matter which way you go," said the Cat."--so long as I get SOMEWHERE," Alice added as an explanation."Oh, you’re sure to do that," said the Cat, "if you only walk long enough." Lewis Carroll

12. Organic Renewal Acquisition Renewal Renewal Innovation Recognize different types of innovation Line Extension Innovation Enhancement Innovation Marketing Innovation Experiential Innovation Platform Innovation Product Innovation Harvest & Exit Disruptive Innovation Application Innovation Value Engineering Innovation Integration Innovation Process Innovation Value Migration Innovation Geoffrey Moore Dealing with Darwin

13. 3. Fail to recognize innovation barriers Over time successful organizations develop • Processes and procedures • Management and leadership styles • Organizational structures and charts • Customer relationships and partners • Compensation and recruitment policies “Organizations, by their very nature are designed to promote order and routine. They are inhospitable environments for innovation” Ted Levitt

14. Is your organization innovative? • Embraces and learns from failure • Fosters high energy activities • Create a “Can do” environment • Develop support & trust • Is a fun place to work • Focuses on financials & timelines • Has strict guidelines & control • Has a hierarchical structure • Has multiple bosses & “dotted lines” • Fosters attitude of “Everyone is for himself”

15. Your organization’s innovation readiness? • Strategy • Product Leadership • Customer Intimacy • Operational Excellence • Disruptive Offerings • Resources • Financial • Technology • People • External • Leadership • Incentives • Communications • Risk Tolerance • Culture • Business Information • Quality Management • Project Management • Decision Support • Processes

16. Architecting an Innovative Environment

17. 4. Fail to engage entire organization Customers • Current • Potential • Unknown Employees • Sales • Operations • Support Internal Technology • Product innovations • Process innovations • Platform innovations Competitors • Direct • Indirect • Alliance External Technology • Embeddable technologies • Process technologies • Value added technologies Supply Chain • Suppliers • Distributors • Integrators

18. 5. Recognise the importance of communication • Communicate vision and innovation imperative • Stimulate creativity and idea generation • Develop decision-making process that communicates how: • Decisions are made • Resources are allocated • Create a feedback loop that updates status of innovation projects and encourages accountability “The greatest barrier to communication is believing that it has occurred” Oscar Wilde

19. 6. Lack of commitment to innovation resources • Greatest single barrier to stimulating innovation ideas, is the lack of action around previous innovation suggestions • Many ideas are not implemented without clarity or feedback as to why not • Implemented ideas are not successful because of: • Insufficient clarity of outcomes and expectations • Lack of required resource commitment (money, people, time) • Assumption that resources appropriate for one activity can be used in another

20. 7. Unclear innovation process • Innovation is a management process the requires specific tools, techniques and discipline • Innovation involves thedevelopment of organizational processes and procedures for generating, considering and acting on innovative ideas • Without an innovation process, the likelihood of innovative projects being pursued is minimal

21. Implementing The Innovation Process • Identify innovation imperative and establish objectives • Create innovation framework • Assess current resources (Business Analysis) • Analyze current environment and external trends • Source and capture innovative ideas • Create an innovation decision system • Compare each opportunity to agreed criteria • Implement pilot project • Measure performance • Scale up or cancel

22. The Inno-Gate Innovation Process

23. Ideation • Evaluation • Realization Implement process in organization’s context Innovation Outputs Resources Strategy Innovation Inputs Product Innovation Service Innovation Process Innovation Business Model Innovation Employees Suppliers & Partners Customers Competitors Processes Culture Creating the environment and processes to support innovation

24. 8. Recognize the importance of change management • Change through Leadership • Create a Shared Need • Shape a Vision • Mobilize Commitment • Make Change Last • Monitor Progress • Change Systems and Structures • Change Culture from Control to Trust • Communicate • Incentivize • ”If you always do what you always did, you will always get what you always got” Albert Einstein

25. 9. Create an innovation culture • Use mentoring / coaching approach to management • Lead by example • Learn from failure • Make resources for innovation available • Encourage / incent team rather than individual performance • Build trust rather than controls, and accountability rather than monitoring

26. Innovative organizations: • Embraces a culture of risk, reward success and learn from failure • Develop a project and portfolio managementapproach to innovation • Create open decision-making processes and focus on timely implementation • Develop cross functional teams to embrace innovation across organization • Focus on communications and engagement

27. Creating an Innovation Capability

28. Common Causes of Innovation Failure Organizational Causes Process Causes Poor goal definition Poor alignments of goals and actions Poor team effort Poor monitoring of results Poor communication and access to information Inappropriate decision making • Poor leadership • Poor organization • Poor communication • Lack of empowerment of stakeholders • Poor knowledge management • Resource limitations

29. 10. Innovation is a journey not a destination • Re-evaluate corporate strategy to examine innovation opportunities • Monitor innovation projects and review perfromance • Review innovation process and identify opportunities for improvement • Use projects and process to build awareness • Review and reduce innovation constraints • Learn from failures

30. Innovation for success Three choices: Innovate your organization, Partner with an innovative organization or Wait for innovation to happen……….. “In this road to the future, there are drivers, passengers or road kill” Competing for the future: Hamel & Prahalad, 1994

31. Innovate or die

32. See You in SCS 2539 Foundations of Business Innovation Starts Monday 19th in Mississauga and Tuesday 20th in Toronto http://innovationcentre.ca/learning-centre/education-partners/ “Well, in our country," said Alice, still panting a little, "you'd generally get to somewhere else — if you run very fast for a long time, as we've been doing.” “A slow sort of country!" said the Queen. "Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!” Lewis Carroll