Making innovation work_in_new_times
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Making Innovation
Work in New TimesNASSCOM 2009 INNOVATION AWARDS
Where Innovation Operates
Management
Consultants
September 2009
Making Innovation Work NASSCOM Awards— September 2009 | © 2009 PRTM Proprietary CONFIDENTIAL | 2
Three Questions
Why don’t companies develop
strong, effective innovation?
Why do companies find it so hard to
sustain robust levels of innovation?
How do leaders create meaningful
levels of innovation?
Making Innovation Work NASSCOM Awards— September 2009 | © 2009 PRTM Proprietary CONFIDENTIAL | 3
Growth
InnovationOperational
ModelBusinessGoals andStrategy
InnovationStrategy and
Goals
InnovationExecution
InsightStrategicBlueprint
Management
Innovation Originates with Business Strategy
How You Innovate Determines What You Innovate
Making Innovation Work NASSCOM Awards— September 2009 | © 2009 PRTM Proprietary CONFIDENTIAL | 4
Insight Bridges Strategies and Goals
Insight
Customer
Product/sServices
Regulations/Society
Operations
Business Model
BusinessGoals andStrategy
InnovationStrategy and
Goals
Making Innovation Work NASSCOM Awards— September 2009 | © 2009 PRTM Proprietary CONFIDENTIAL | 5
Strategies Must Align
How You Innovate Determines What You Innovate
BusinessGoals andStrategy
InnovationStrategy and
Goals
Insight
Where Do We Focus Innovation Efforts?
How Much Innovation?
What Types ofInnovation Do We Need?
Making Innovation Work NASSCOM Awards— September 2009 | © 2009 PRTM Proprietary CONFIDENTIAL | 6
Blueprint Translates Strategy Into Operations
InnovationStrategy and
Goals
InnovationOperational
Model
Products/Services
ProcessTechnologies
SupportingTechnologies
ValueProposition
ValueNetwork
TargetCustomer
TechnologyInnovation
Business Model
Innovation
Strategic Blueprint
RADICAL
BREAKTHROUGH
BREAKTHROUGH
INCREMENTAL
Close to existing
Business Model Change
Technology
Change
New
Close to
existing
New
Making Innovation Work NASSCOM Awards— September 2009 | © 2009 PRTM Proprietary CONFIDENTIAL | 7
Innovation Portfolio Describes Innovation Goals
Stay in
the
Game
Drive
Growth
Drive
Growth
Change
the
Game
RADICAL
BREAKTHROUGH
BREAKTHROUGH
INCREMENTAL
New
Close to
existing
Close to existing New
Business Model Change
Technology
Change
Where Do We Focus Innovation Efforts?
How Much Innovation?
Making Innovation Work, Davila, Epstein, Shelton: Wharton School Publishing, 2006
Making Innovation Work NASSCOM Awards— September 2009 | © 2009 PRTM Proprietary CONFIDENTIAL | 8
Six Major Levers of Innovation
PRODUCTS/
SERVICES
PROCESS
TECHNOLOGIES
SUPPORTING
TECHNOLOGIES
Technology Innovation
VALUE
PROPOSITION
VALUE
NETWORK
TARGET
CUSTOMER
Business ModelInnovation
Making Innovation Work, Davila, Epstein, Shelton: Wharton School Publishing, 2006
What Types of Innovation Do We Need?
Making Innovation Work NASSCOM Awards— September 2009 | © 2009 PRTM Proprietary CONFIDENTIAL | 9
Six Major Levers of Innovation: Technology
Performance
Packaging Integral to Customer Value
Manufacturing and Assembly
Service Delivery
Information Systems
Logistics/ Inventory
What product or service should the company offer
in the marketplace?
What features or offering should the company
develop?
Can we reduce the cost of our current offering?
Can we improve the quality of existing products or
services?
Can we improve the inventory or quality control?
How can we leverage the IT backbone to create a
faster, better, cheaper product?
PRODUCTS/
SERVICES
PROCESS
TECHNOLOGIES
SUPPORTING
TECHNOLOGIES
Technology Innovation
Making Innovation Work, Davila, Epstein, Shelton: Wharton School Publishing, 2006
Making Innovation Work NASSCOM Awards— September 2009 | © 2009 PRTM Proprietary CONFIDENTIAL | 10
Six Major Levers of Innovation: Business Model
Customer Experience
Brand Value
Value Network/ Supply Chain
Ecosystem of Value Offerings
Buyers and Influencers
Marketing Methods
How do you define the customer experience?
What value do customers want?
What is the solution?
How can you optimize the supply chain?
What part will you play in the ecosystem?
How do you shape the customer experience?
Who are the targeted customers? Who is
excluded and why?
What do different segments want with regard to
the customer experience?
VALUE
PROPOSITION
“What”
VALUE
NETWORK
“How”
TARGET
CUSTOMER
“Who”
Business ModelInnovation
Making Innovation Work, Davila, Epstein, Shelton: Wharton School Publishing, 2006
Making Innovation Work NASSCOM Awards— September 2009 | © 2009 PRTM Proprietary CONFIDENTIAL | 11
Companies Underutilize Business Model LeversB
usin
es
s M
od
el
Inn
ova
tio
n
Te
ch
no
log
y I
nn
ova
tio
n
Recent global
supply chain
transformation
Innovation traditionally
focused on product
Recent PRTM Client Example
Value
Proposition
Value
Network
Target
Customer
Products/
Services
Process
Technologies
Supporting
Technologies
Making Innovation Work, Davila, Epstein, Shelton: Wharton School Publishing, 2006
Making Innovation Work NASSCOM Awards— September 2009 | © 2009 PRTM Proprietary CONFIDENTIAL | 12
How You Innovate Determines What You Innovate
InnovationOperational
ModelBusinessGoals andStrategy
InnovationStrategy and
Goals
InsightStrategicBlueprint
Management
Design Operational Model to Fit
Making Innovation Work, Davila, Epstein, Shelton: Wharton School Publishing, 2006
Making Innovation Work NASSCOM Awards— September 2009 | © 2009 PRTM Proprietary CONFIDENTIAL | 13
Partnerships Are a Core Competency of Leaders
Internal Resources
Suppliers
INNOVATION PLATFORM
Brainiacs
Suppliers
Universities
Suppliers
Suppliers
Customers Customers
Universities
External Resources
Competitors
Innovation is a team sport
Making Innovation Work, Davila, Epstein, Shelton: Wharton School Publishing, 2006
Making Innovation Work NASSCOM Awards— September 2009 | © 2009 PRTM Proprietary CONFIDENTIAL | 14
PRTM Model for Open Innovation Excellence
Defining Open Innovation• Choosing Open Innovation “paths to value”
• Clearly defining Open Innovation goals and
implications for the business
• Aligning Open Innovation goals and models
with business strategies
• Establishing a vision, metrics, and a path for
change
Executing Open Innovation• Defining missing innovation assets
• Establishing IP strategy and policies
• Building partner and ecosystem
management capabilities
• Establishing information exchange
(and control) capabilities
• Executing and demonstrating open
innovation behaviors
Becoming Openly Innovative• Overcoming “Not Invented Here” mindsets
• Finding and establishing relevant partners and networks
• Establishing new organizational roles and responsibilities
• Building the culture to become a partner of choice
Opening Up Strategy
Opening Up Organization and Culture
Opening Up Practices and Capabilities
Open Innovation Has a High Return on Investment
Net
Income
Increased
Revenues
from
“Open”
Model
Savings from
Leveraging
External
Development
0
Source: Adapted from Open Business Models, Henry Chesbrough © 2006, Harvard Business School Press
Our
Market
Revenue
Internal
Development
Costs
Our
Market
Revenue
Internal Development Costs
Closed Model Open Model
New Products & Services
New Market Access
Tech Licensing Revenue
Venture Funds Returns
Open Innovation “Costs”
Reduced & Avoided Costs
“Closed Model” Growth
Mergers & Acquisitions
Making Innovation Work NASSCOM Awards— September 2009 | © 2009 PRTM Proprietary CONFIDENTIAL | 16
Management Systems Bridge to Execution
Management
InnovationOperational
Model
InnovationExecution
Making It Happen
Focus and Discipline
Governance
Decision-MakingFramework, Systems
Organization andCulture
Metrics and Motivators
Strategic Languageand Processes
Internal Resources
Suppliers
INNOVATION PLATFORM
Brainiacs
Suppliers
Universities
Suppliers
Suppliers
CustomersCustomers
Universities
External Resources
Competitors
Making Innovation Work NASSCOM Awards— September 2009 | © 2009 PRTM Proprietary CONFIDENTIAL | 17
Management Systems Bridge to Execution
Management
InnovationOperational
Model
InnovationExecution
Making It Happen
Focus and Discipline
Governance
Decision-MakingFramework, Systems
Organization andCulture
Metrics and Motivators
Strategic Languageand Processes
Internal Resources
Suppliers
INNOVATION PLATFORM
Brainiacs
Suppliers
Universities
Suppliers
Suppliers
CustomersCustomers
Universities
External Resources
Competitors
Making Innovation Work NASSCOM Awards— September 2009 | © 2009 PRTM Proprietary CONFIDENTIAL | 18
Breakthrough Innovations Often Use Incubation
Roadmap for breakthrough / radical innovation development
Guidelines steer development activities
Tools and templates that help teams quickly identify innovative value
Loop Reviews Structured
Development
Process
Incubation Governance (IG)
Small and cross-functional
External as well as internal resources
Intrapreneurial and nimble
Clear responsibility and authority for innovation development
Development Teams
Clearly-defined decision makers
Innovation coaches
Effective resource allocation
LOOP KEY
QUESTION
Mechanism through which IG assesses value, provides direction, and manages scope
Event and time based reviews
Business opportunity perspective
Collaborative team guidance and empowerment
1 32
Loop
Exit
Next
Loop
Strategy Finance PC Reps External
Chair
Making Innovation Work NASSCOM Awards— September 2009 | © 2009 PRTM Proprietary CONFIDENTIAL | 19
Management Systems Bridge to Execution
Management
InnovationOperational
Model
InnovationExecution
Making It Happen
Focus and Discipline
Governance
Decision-MakingFramework, Systems
Organization andCulture
Metrics and Motivators
Strategic Languageand Processes
Internal Resources
Suppliers
INNOVATION PLATFORM
Brainiacs
Suppliers
Universities
Suppliers
Suppliers
CustomersCustomers
Universities
External Resources
Competitors
Making Innovation Work NASSCOM Awards— September 2009 | © 2009 PRTM Proprietary CONFIDENTIAL | 20
Metrics and Motivators Help Create the Culture
Leaders
hip
Organization Structure
Cu
lture
Learning Organization
Metrics
and
Motivators
Making Innovation Work, Davila, Epstein, Shelton: Wharton School Publishing, 2006
Making Innovation Work NASSCOM Awards— September 2009 | © 2009 PRTM Proprietary CONFIDENTIAL | 21
Optimize Alignment to Drive Growth
How You Innovate Determines What You Innovate
InnovationOperational
ModelBusinessGoals andStrategy
InnovationAspiration
InnovationExecution
Growth
InsightStrategicBlueprint
Management
Making Innovation Work NASSCOM Awards— September 2009 | © 2009 PRTM Proprietary CONFIDENTIAL | 22
Questions and Answers
Why can’t companies develop strong, effective innovation?
They are unwilling or unable to fix what is broken or underperforming
Why do companies find it so hard to sustain robust levels of innovation?
They use an outdated strategy or operational model for innovation
How do leaders create meaningful levels of innovation?
They manage innovation as if their future growth depends on it—because it does
PRTM Contacts
MAHESHWAR SINGH
Managing Director
India
T +91 80 4010 0900
M+91 96 1195 5116
Embassy Classic., 3rd Floor
11, Vittal Mallya Road,
Bangalore 560001
India
www.prtm.com
ROBERT SHELTON
Director
T +1 650 864 3517
M+1 650 218 3519
444 Castro Street
Suite 600
Mountain View, CA 94041
USA
www.prtm.com