Post on 23-May-2018
WHY CREATE AN INNOVATION STRATEGY
Many executives believe that innovation is critical for
success and a top priority… many have deep concerns about
their firm’s ability to innovate effectively … they do not have a
formal innovation strategy
• Studies find that few chief executives believe strategic
innovation investments in are paying off in spite of
increasing budgets… (Accenture, BCG, 2014)
• Canada has a poor innovation record, ranking 13 out of the
16 OECD countries (Conference Board of Canada, 2014)
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SEVEN INNOVATION OBSTACLES
1. Concentration on daily business / short-term goals
2. Current products and processes are not put into question
3. Lack of collaboration between departments (silos)
4. Risk aversion
5. Management does not support innovation enough
6. Innovation strategy, process, idea management not
existing, not clear and/or not communicated
7. Budget- and/or resource limitations
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WHAT IS AN INNOVATION STRATEGY?
An integrated structure, formal processes, and
tools for an innovation growth strategy
Includes an organizational design, management
systems, performance evaluation metrics, people,
HR policies, and rewards
Links to the business strategy
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WHAT IS INNOVATION?
Innovation occurs when a company makes changes to
the major technologies or business model for the
products and services it markets
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INNOVATION DRIVERS
Business model change drivers
Value proposition – what you sell
Value networks – how you sell it
Target customer – who you sell to
Technology change drivers
Products and service offerings
Process technologies
Enabling technologies
Three types of innovation
incremental, semi-radical, and radical
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INNOVATION STRATEGY PLANNING MATRIX
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Business model drivers Technology drivers
Value
proposition
Value
chain
Value
proposition
Target
customerProduct &
service
Process
technology
Enabling
technology
Incremental Small changes in one or more of the six levers
Semi radical
Business model driven
Radical
Significant change in one or
more of the three levers
Small change in one or more
of the three levers
Semi radical
Technology driven
Small change in one or more
of the three levers
Significant change in one or
more of the three levers
Significant change in one or
more of the three levers
Significant change in one or
more of the three levers
Innovation types
INNOVATION STRATEGIES
Innovation strategy must align with the business strategy
1. Play Not to Lose (PNTL) – Incremental innovation
Protect and maintain market share
Combat margin erosion
2. Play to Win (PTW) – Semi radical and radical innovation
Maintain market leadership
Market makers, new industries
Drives growth
Brand building
* Ideal strategy balances PNTL and PTW
3. Play to Fail (PTF) is not having an innovation strategy
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PLAY TO FAIL
… RIM/Blackberry, Nokia, Motorola, Kodak, Sears,
Blockbuster Video, Sun Microsystems, DEC,
Eatons, Simpsons …
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INNOVATION STRATEGY PLANNING MATRIX
Business model drivers Technology drivers
Innovation types
Incremental Banks, Utilities, Government,
TQM, ISO 9000, Oligopolies
Cellular Wireless
Approximately 80% of all
innovation
Semi radical
Business model driven
Dell, SW Airlines, Walmart,
IBM, Salesforce.com, Virgin
Semi radical
Technology driven
Mobile phones, automobiles,
Radical Amazon, Google, Apple, Facebook, Henry Ford
Walmart, Bit Coin, Apollo Group – Online Education, Virgin,
Cloud Computing
Value
proposition
Value
chain
Target
customer
Product &
service
Process
technology
Enabling
technology
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INNOVATION MATRIX
Semi Radical TechnologyAutomobiles
Mobile telephones
RadicalApple
Amazon
Virgin
Bit Coin
Cloud Computing
IncrementalOligopolies
Banks
Utilities
Cellular Wireless Companies
80% of innovation
Semi Radical BusinessDell
SW Airlines
Walmart
IBM
Salesforce.com
Business Model
T
e
c
h
n
o
l
o
g
y
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INNOVATION STRATEGY
Assess Drivers
•Business – What, How, Who you Sell to
•Technology – Product, Process, Enabler
Select Strategy
•Play Not to Lose
•Play to Win
•Combination
Manage Innovation Portfolio
• Incremental
•Semi Radical
•Radical
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LEADERSHIP
Sets the vision
Leads the innovation strategy
Align the innovation and business strategy
Engrain the innovation strategy into the corporate culture
Create innovation networks of intrapreneurs inside and outside
the company
Correct metrics and motivators
Risk tolerance
Overcome internal organizational resistance
Freeing up appropriate budget
Be aware and overcome complacency that innovation success
creates14RDM Management Group
Innovation Pyramid
Increased profits
Branding
Market Leadership
High performance
work teams
Learning innovative
culture
Real competitive
advantage
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Open
Innovation
Innovation Process
Idea Management
Innovation Strategy
Innovation Culture
An Innovation Strategy Provides:
NEXT STEPS
1. Exert strong leadership and determine the innovation strategy that fits the business strategy, competitive environment, and innovation competencies
PNTL, PTW, or a balance
Assess the innovation climate, run a cultural diagnosis on creativity and value capture
2. Develop innovation platforms for different innovation types – six business and technology drivers
Incremental, semi radical, radical
Structure company and organizing management systems to promote innovation
3. Create portfolios for each platform including idea generation and gating – find the right balance
4. Define internal and external resource requirements
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NEXT STEPS
5. Ensure internal innovation platforms have diverse creative
and commercialization resources working in harmony
6. Create balanced scorecard metrics and rewards supporting
the innovation strategy
7. Overcome any internal resistance to change subverting
creativity and commercialization
8. Celebrate successes and embed innovation throughout the
corporate culture
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CREATIVITY
PROCESS
IMAGINATION
VALUE
CREATION
CONCEPT
INTO
REALITY
BALANCING CREATIVITY & COMMERCIALIZATIONRDM Management Group
BALANCING CREATIVITY AND COMMERCIALIZATION
Creativity Processes
Imagination
• Out-of-box thinking
• Raw and refined ideas
• Experimentation
• Ambiguity/Uncertainty
• Research
• Intuition
• Surprise
• Courage
• Find the right things
• Ask questions and explore
the unknown innovation
• Seize opportunities
• Visualize the future and
consider all options
• Include incremental and
radical innovations
Value Creation Processes
Concept Into Reality
• In-the-box thinking
• Engineering/Manufacturing
• Precision
• Well-calculated trade-offs
• Buying/Selling of ideas
• Do things right
• Answer questions and
verify solutions
• Avoid major risks
• Get the product into
the marketplace
• Bias for incremental innovation
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BALANCING CREATIVITY AND VALUE
20
Bias toward
creativity
Balance creativity
and value capture
Focus on value
capture
As Organizations Mature Over Time
Challenge for
start-up companiesChallenge for mature
companies
Georgian College
WHY CREATE AN INNOVATION STRATEGY
Companies with innovation strategies generate three-year total shareholder return premiums of 6.7 percent over industry peers; the ten-year premium is 2.9 percent
The spread is wider in Asia, innovators enjoy a 14 percent three-year premium and a 6.9 percent ten-year premium over peers (BCG, 2014)
Only 45% of business decision-makers report that they have innovation groups, and only 34% have centralized innovation organizations and processes (Forrester, 2013)
Increasing centralization of innovation and the rise of incubators are key trends (BCG, 2014)
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