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

Why are we here?Philosophical reasons:

Take the course SCS 1724 Essential Western PhilosophersMeta-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 InnovationToday we will provide an overview of the Business

Innovation course by identifying: “The top ten causes of failure to innovate”

Ten key causes of failure:1. Confuse the role of innovation2. Fail to clarify innovation goals3. Don’t recognize innovation barriers4. Fail to engage entire organization5. Lack of recognition of importance of communication6. Underestimate need for innovation resources7. Unclear process for selecting innovation projects8. Recognize the importance of change management9. Failure to create an innovation culture10. Recognize innovation is a journey not a destination

1. Confuse the role of innovationInnovation 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

Internal drivers1. Unexpected event2. Contradiction3. Change of work

process4. Change in industry

structure

Identify Innovation Drivers

External Drivers5. Socio-economic changes6. Political changes7. Technology changes

Drucker‘s Innovation Framework

Innovation not just technology developmentInnovation includes:Product InnovationProcess InnovationService InnovationBusiness model Innovation ………..

Greatest opportunities seen in business model innovation.Can be applied to both private and public organizationsIf your organization doesn’t innovate, someone else will..

Understanding Process Innovation

A change in the way a product or service is manufactured, created, or distributed

Process innovation involves implementation of new 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.

Majority of individuals in Canada (and US) work in service industry

Even where people work in manufacturing, many of these individuals provide support services

Service innovation is biggest opportunity to increase competitiveness

Improvements in service innovation can be measured in terms of increases productivity and value added

Understanding Service Innovation

Contributes to competitive advantageRequires specific social and technical skills Involves development and new technology applicationCostly to develop needed specialist and generalist skillsRequires integrated thinking and agile environmentCan be implemented in all service areasMost significant possibilities in financial and medical

services

Opportunities for Service Innovation

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 innovation requires a business model innovation

2. Fail to clarify innovation goalsImprove top line (revenues/market share)Improve bottom line (profit/cost effectiveness)Strengthen brand/reputationImprove 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

DisruptiveInnovation

ApplicationInnovation

ProductInnovation

PlatformInnovation

EnhancementInnovation

IntegrationInnovation

ExperientialInnovation

ProcessInnovation

MarketingInnovation

Value MigrationInnovation

Line ExtensionInnovation

Value EngineeringInnovation

Harvest& Exit

Renewal Innovation

OrganicRenewal

AcquisitionRenewal

Recognize different types of innovation

Geoffrey Moore Dealing with Darwin

3. Fail to recognize innovation barriersOver time successful organizations developProcesses and procedures Management and leadership styles Organizational structures and chartsCustomer relationships and partnersCompensation and recruitment policies“Organizations, by their very nature are designed to promote order and routine. They are inhospitable environments for innovation”

Ted Levitt

Focuses on financials & timelines

Has strict guidelines & controlHas a hierarchical structureHas multiple bosses & “dotted

lines”Fosters attitude of “Everyone

is for himself”

Is your organization innovative?Embraces and learns

from failureFosters high energy

activitiesCreate a “Can do”

environmentDevelop support & trustIs a fun place to work

Your organization’s innovation readiness?Resources

FinancialTechnology

PeopleExternal

Business InformationQuality ManagementProject Management

Decision Support

Processes

LeadershipIncentivesCommunicationsRisk Tolerance

Culture

StrategyProduct LeadershipCustomer IntimacyOperational ExcellenceDisruptive Offerings

• Process & tools that support idea generation & experimentation

• Disciplined approach to building innovation

• Desire to do things better

• Collaborative & open culture.

• Incentives that reward challenging the status quo

• Company leaders and organization aligned to achieve a vision

Leadership and

Organization

Culture and

Values

Processand

Tools

Peopleand

Skills

Architecting an Innovative Environment

4. Fail to engage entire organization

Internal Technology- Product innovations- Process innovations- Platform innovations

External Technology- Embeddable technologies- Process technologies- Value added technologies

Employees- Sales- Operations- Support

Customers- Current- Potential- Unknown

Supply Chain- Suppliers- Distributors- Integrators

Competitors- Direct- Indirect- Alliance

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 madeResources 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

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 expectationsLack of required resource commitment (money, people,

time)Assumption that resources appropriate for one activity

can be used in another

7. Unclear innovation process

Innovation is a management process the requires specific tools, techniques and discipline

Innovation involves the development 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

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

Implementing The Innovation Process

The Inno-Gate Innovation Process

Product Innovation

Service Innovation

Process Innovation

Business Model

Innovation

Resources

ProcessesCulture

Strategy

Ideation Evaluation Realization

InnovationInputs

Innovation Outputs

Creating the environment and processes to support innovation

Employees

Suppliers & Partners

Customers

Competitors

Implement process in organization’s context

8. Recognize the importance of change management

1. Change through Leadership2. Create a Shared Need3. Shape a Vision4. Mobilize Commitment5. Make Change Last6. Monitor Progress7. Change Systems and Structures8. Change Culture from Control to Trust9. Communicate10. Incentivize ”If you always do what you always did, you will always get what you

always got” Albert Einstein

9. Create an innovation cultureUse mentoring / coaching approach to managementLead by exampleLearn from failureMake resources for innovation availableEncourage / incent team rather than individual

performanceBuild trust rather than controls, and accountability

rather than monitoring

Innovative organizations:Embraces a culture of risk, reward success and learn from

failure Develop a project and portfolio management approach to

innovation Create open decision-making processes and focus on timely

implementationDevelop cross functional teams to embrace innovation

across organizationFocus on communications and engagement

Creating an Innovation CapabilityThe

organization’s reputation for

innovation

Attraction of creative people

Organizational encouragement of

creativity & innovation

Development of innovative

products

A willingness within the organization to accept new ideas

Motivates people within the organization and reduces frustration

High morale and retention of

creative people

Common Causes of Innovation Failure Organizational Causes

1. Poor leadership2. Poor organization3. Poor communication 4. Lack of empowerment of

stakeholders 5. Poor knowledge

management 6. Resource limitations

Process Causes

1. Poor goal definition2. Poor alignments of goals

and actions3. Poor team effort4. Poor monitoring of results5. Poor communication and

access to information 6. Inappropriate decision

making

10. Innovation is a journey not a destination

Re-evaluate corporate strategy to examine innovation opportunities

Monitor innovation projects and review perfromanceReview innovation process and identify opportunities

for improvementUse projects and process to build awareness Review and reduce innovation constraints Learn from failures

Innovation for success

Three choices:

Innovate your organization,Partner with an innovative organization orWait for innovation to happen………..

“In this road to the future, there are drivers, passengers or road kill”Competing for the future: Hamel & Prahalad, 1994

Innovate or die

See You in SCS 2539 Foundations of Business Innovation

“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

Starts Monday 19th in Mississauga and Tuesday 20th in Toronto

http://innovationcentre.ca/learning-centre/education-partners/