Creating an Agile and Innovative Organization: Lessons from the Future

of Advertising Program Yoram (Jerry) Wind

The Lauder Professor and Professor of Marketing Director, SEI Center for Advanced Studies in Management

Academic Director, Wharton Fellows Program windj@wharton.upenn.edu

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Strategic Agility & Innovation Workshop

June 17, 2013

Premise In the turbulent and uncertain current business

environment, agility and innovation are critical mindsets and guidelines for successful strategy and organizational

architecture.

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The challenge, however,

is designing and implementing an effective agile and innovative strategy and supporting

organizational architecture

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Our Approach is Motivated by the

Findings of our Advertising 2020 Project

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203 Contributors from 16 Countries

Singapore

UK United States

Netherlands

Germany

China

Israel

Denmark Belgium

India

Japan

Brazil

Australia

Korea

Canada

Russia

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✦ Titles – 46% Founders/CEOs/Presidents – 9% Marketing Executives – 9% Strategy/Innovation/Planning Executives – 7% Research Executives – 2% Sales Executives – 5% Developers/Technologists – 22% Academics/Authors

✦ Organization Type – 47% Advertising Agencies – 13% Media Companies – 6% Advertisers – 9% Data Analytics – 6% Industry Associations – 13% Academia – 6% Technology

The Changing Market (Demand)

Passive Consumers

(At and With People)

Empowered and Skeptical

Consumers

(With and For People)

Evo

lvin

g D

eliv

ery

(Su

pp

ly)

Dynamic Ecosystems & Orchestrators

Traditional Advertiser – Agency – Media Model

III. Engaged Product, Brand and Campaign - Centric

I. Advertiser-Centric Interruption and Persuasion

IV. RAVE-Relevance, Actionable, Valuable Experiential Delivered creatively through all touch points

II. Empowered Interactive Messages, Multiple Media

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The Results

Q1:

The

Initial

Scenarios

Some of the Key Findings

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a

a

I. Advertising as a Newsroom

II. On Demand

Advertising

III. Orchestrating all Touch Points

a

IV. An Open Agency a

VI. Real Time

a V. Think and

Act Glocal

I. Adopt a Newsroom Model

“Brands will have to leave behind organizations and thinking built solely around the campaign

model, and instead adopt the defining characteristics of the real-time, data-driven

newsroom — a model that's prolific, agile and audience-centric.”

-Baba Shetty & Jerry Wind

“Advertisers Should Act More Like Newsrooms”

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II. Create On-Demand “Advertising”

“On-demand advertising requires timely, relevant, customized and trusted

advertising to be present at a consumer’s moment of need – no

matter where or when it is.” –Jacques Bughin & Jerry Wind

“On-Demand Advertising”

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III. Break Down Silos through Orchestration

“Siloed communications development needs to evolve into a carefully

orchestrated approach, with a bespoke selection of the best skill sets and

technologies for the communication objective.”

-Jerry Wind

“Toward a New Advertising Model”

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Old Media

New Media

Product Design

Package Design

Customer Service

Sales Team

Store Design

Public Relations

Employees

Social Networks

Empowered Consumers

IV. The Open Agency: Leverage Open Innovation

“When one person with a wireless connection can be an agency, a

media company or even a manufacturer, the traditional

advertising organizations have to change... to accommodate open

innovation.” -John Winsor & Jerry Wind

“Advertising in an Open Innovation World”

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V. Think & Act Glocal

“Many brands have the potential to become global. Glocal advertising centers on a global theme that can

be adjusted to local conditions.” -Jerry Wind, Stan Sthanunathan and Rob Malcolm

“Advertising in the Age of Global Tensions”

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VI. Harness Real Time Big Data and Analytics (while respecting privacy and permission)

“Marketers will need to master the data to coordinate a constantly expanding surface area of interactivity ... which will evolve to connect, track, and manage interactions across physical and digital points through the cloud.”

-Jacques Bughin, McKinsey

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“Personal data lockers” will give Internet users a degree of control over their online personal data that may well transform it into “a kind of online currency.”

-JR Smith, AVG Technology www.personal.com

What are the Implications of these

Findings?

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Our Proposed Guidelines

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Agile development, strategy & organization applied throughout the organization, its values, strategies &

architecture

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Agility principles: 1. The goal is speed, value and quality 2. Empower people but have them stay in their roles 3. Build partnership based on trust 4. Kaizen – continuous improvement 5. Transparency 6. Legacy mindsets handicap Agility 7. Control economic logic let others make decisions 8. From concept to cash in 10 weeks 9. Iterations, fast prototyping and experimentation 10. Have Fun along the way

For the full list of Agility Principles, see Robert Crudup, “The Scaled Agile – The Dirty Dozen: 13 things you should know about agile”

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…supporting accountable champions

Organizational and Network Architecture

The Organizational and Network Stakeholders:

Customers Employees Shareholders Partners Suppliers Government Communities Other

Metrics/Dashboard Performance Measures, Incentives

Technology

Resources

People and Competencies

Value Creation and Network Orchestration Processes

Ownership, Governance, Structure, & Network Orchestration

Culture & Values

• Vision • Objectives • Value

Proposition • Business

models • Strategies

H

G

A

B

C

D

F

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Facilities

E

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Growth momentum

Market

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Utilize Frameworks for Growth

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Imagine different mental models and world

Our Mental Models are a

major obstacle to creativity

and business transformation.

Thus, understanding and

challenging our mental

models is a MUST!

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What are mental models?

Let’s consider…

What just happened?

Robbery at Knifepoint Updated June 1, 2013 8:55am

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The reality of the situation did not change, our mental model did!

Our beliefs, attitudes, feelings and behaviors are driven by our Mental Models, not reality.

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Why are Mental Models critical?

Roger Bannister breaks the 4 Minute Mile on May 6, 1954

Inner City Alternative Medicine

Source: Zogby Analytics, 1/13/13 http://www.jzanalytics.com/DATA/US_Results_ZA_011013.pdf

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Consider Our Political Views

MIT’s Media Lab $100 laptop

Napster

Samsung SGH-E760

$2000 Car

All these breakthrough innovations challenged the mental models of their industries.

Sayaka Endoscope Capsule

Apple iPad

What is common to these innovations? Microsoft Xbox 360

Kinect

Google Glasses

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The GM En-V

Most Innovative Companies

February 2013

Nike Amazon

Square Splunk

For a pair of revolutionary new products and a culture of true believers

For speeding up the delivery of change.

For spreading the mobile payments revolution

For bringing big data to the masses

In a changing environment challenging our mental models is a must!

“Without changing our pattern of thought, we will not be able to solve the problems we created with our current pattern of thought.”

- Albert Einstein

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Should we challenge our mental models?

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Leveraging your stake holders and the wisdom of the crowd

Leverage All Your Stakeholders

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Customers Partners Distributors Suppliers Employees Shareholders

Producers

Leverage Your Customers

Are you doing it?

Advertisers

Designers

Marketers

Distributers

Pricers

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Over 225,000 apps!*

*http://www.apple.com/ipad/from-the-app-store/

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Leverage Open Innovation

Innovation => Creating the 3rd Dimension

Value Creation re innovative design, production and marketing with employees, customers, distributors, suppliers and others

Are you doing it?

Leverage Diverse Disciplinary Perspectives

Illustrative InnoCentive’s Disciplines

Are you doing it? 35

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Idealized design and Incubation of new initiatives

Idealized Design and Incubation of New Initiatives

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Accelerators

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Testing, testing & testing with adaptive experimentation

Response

x

$

Response

x

$

½x 2x

Adaptive Experimentation

X

X

X

- - - - - - - -

Have you adopted the adaptive experimentation philosophy? And what have you learned from the natural experiments occurring around you? 39

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Yield for all – shareholders, stakeholders and society

Yield For All Stakeholders

Shareholders Consumers

Employees & Partners

Society

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Source: Stengel, Jim. Grow. Crown Business: 2011

• Break Even Time (BET)

• % of Revenue and Profit from New Products and Services

• Share of Wallet

• Creation of New Industries

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Performance Metrics

Other?

Growth momentum

Agile development, strategy & organization applied throughout the organization, its values, strategies & architecture

Imagine different mental models and world

Leveraging your stake holders and the wisdom of the crowd

Idealized design and Incubation of new initiatives

Testing, testing & testing with adaptive experimentation

Yield for all-- shareholders, stakeholders and society

Our Proposed Guidelines:

43 Questions?

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Implications

To:

Research Teaching Practice

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Reflections & Action Plans

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Jerry (Yoram) Wind windj@wharton.upenn.edu

Share with us your experience . . .