Succeeding at Strategic Innovation

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View the slides from a PDMA webcast given by Larry Schmitt, CEO of The Inovo Group, on April 3, 2014 to a national audience

Transcript of Succeeding at Strategic Innovation

Succeeding at Strategic Innovation Larry Schmitt – CEO The Inovo Group

www.theinovogroup.com Copyright © 2014 The Inovo Group LLC

Outline and Objectives

• What we will cover – It’s a fast, VUCA world

– The need for strategic innovations

– The problems with strategic innovations

– What to do about it

– A view of your possible future

• What you will learn – Steps you can take to make

strategic innovation a key competence for your company

• The premise, the consequence and the response – Premise: The world is Volatile

Uncertain Complex Ambiguous (VUCA) – this requires strategic innovation

– Consequence: Strategic innovation is inherently uncomfortable and causes strong emotional reactions

– Response: A new paradigm of iteration, building community, socializing, testing and learning is needed.

Copyright © 2014 The Inovo Group LLC 2

Introduction to The Inovo Group

Founded in 2001

Headquarters in Ann Arbor, MI

Any industry, any technology, any market

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An innovation consulting firm that helps the world’s top companies succeed at strategic innovation.

An Increasingly Fast VUCA World

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Transformation is Everywhere

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Doctor-centric -> Patient-centric

Healthcare Energy & Transportation

Molecular & singular -> Photonic & shared

‘IT’

Dumb & clueless -> Smart & informed

Consumers & Retail

Physical & blind -> Mobile & aware

The Kodak Story

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2003 – They knew what was happening!

Internal Kodak Strategy presentation

Quicktake digital camera - 1994

1993 – Formed Digital Imaging Business 1975 – First digital camera

Steve Stasson - Inventor

The Kodak Story

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A Damning Assessment! • Corporate Culture • Non-rational expectation of commitment • Hierarchical firm • Poor change management • Insiders resistance • Change middle to high-level management

Yet they couldn’t / wouldn’t do anything about it!

Innovation Movement

Quality Movement

Entering the Era of Strategic Innovation

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Not Best practices – Next practices

What is Strategic Innovation?

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Disruptive

Incremental

Operational Transformational

Newness to the World

Newness to the Company

Speculative

Strategic

Sustaining

Constant Pressure on the Boundary

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Disruptive

Incremental

Operational Transformational

Newness to the World

Newness to the Company

Sustaining

Strategic

External Forces

External Forces

Expanding Your Boundary

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Disruptive

Incremental

Operational Transformational

Newness to the World

Newness to the Company

When you push your organization’s boundaries,

does your organization push back?

Being Strategic – Company A

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Aerospace Automotive Differences • Costs & Volumes • Functionality • Industry structure • Design cycles • …

A different set of rules

Sustaining vs. Strategic Innovations

Sustaining Innovation Properties Strategic Innovation Properties

Clear signals Weak signals

Internal expertise Lack of expertise

Established models & processes Unfamiliar models & processes

Can be done ‘solo’ Requires collaboration (internal & external)

Quantitative decisions Qualitative decisions

High agreement High skepticism

Linear & sequential – concept to reality Non-linear & iterative – concept to reality

Decisions & actions based on analysis Decisions & actions based on emotion

Low VUCA High VUCA

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Reasons for discomfort

What Does this Mean for You?

• The Environment – Diversity & ambiguity of

knowledge sources

– Weak early signals, lack of evidence

– Knowledge-lean decision environment

• The Organization – Qualitative decisions

– Fuzzy milestones

– Uncertainty

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It’s not us – Company B

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The two most anti-innovative words that can be uttered – ‘prove it’

Roger Martin

Data, information, facts and analysis are not the complete answer

It’s the ‘feelings’ that kill an strategic opportunities

The Fundamental Barriers

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Emotional responses Divergent views of the future

Hidden assumptions Poor mental models

Preconceived notions

What to do about it?

Poor mental models Create new and better models

Hidden assumptions Surface assumptions, test & learn

Divergent views of the future

Develop multiple views, be ready for any of them

Preconceived notions Identify them, acknowledge them, incorporate them

Emotional responses Tell stories, empathize, make an emotional connection

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How to get there – Be Resilient

• Technophilia – Embracing the transformational power of fast moving technology

• Situational Empathy – Embracing the transformational force of rapidly evolving human needs and desires

• Extreme Agility – enhancing resilience to respond to the unexpected and create the unexpected

• Managed Boundaries – controlling what’s inside and what’s outside, what’s porous and what’s a barrier, what’s open and what’s protected.

• Risk Adaptation – changing uncertainty into risk and embracing risk (and failure)

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Healthcare Transformation – Company C

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The Plexus electronics manufacturing model really translates well into what we are doing here in terms of how do you take care of somebody front to back.

You are talking about vertically integrating all things relative to a very specific focus on orthopedics.

At Plexus, we paid attention to every cent and costs were coming down at a tremendous rate. We are structuring operations so that we make money on Medicare.

Curt Kubiak – CEO

Four Principles

• Iterative Deepening – multiple bites at the apple, focusing and shaping, contact over time, multiple-exposure, sub-conscious processing

• Community – contact with both internal and external adopters and influencers

• Socialization (with both internal and external community) – letting people connect, understand and gain insight using storytelling to think and feel

• Purpose built team & project – A journey of discovery and learning done by a skills team with a definitive purpose

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Iterative Deepening

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Build Community

It’s not just Voice-of-the-customer

It’s the Mind-of-the-community™

The community is the people who have the knowledge, experience and perspective that you need to know

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Empathize & Socialize

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Thinking

Feeling

Team

External

Experiences

Knowledge

External Adopters

Internal

Models

Stories Internal Adopters

Purpose-built Team & Project

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Purpose-built Team

External Diversity • Skill & Expertise • Perspective • Role & Responsibility • Compatibility • Cognitive Style

Internal Diversity • Demographic • Functional • Geographic • Org. Level • Connectivity

Purpose-built Project

It’s a Journey

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Into the unknown

The Journey’s Objective – Strategic Learning

“The Unknown”

• Demand Knowledge – What's really wanted and why?

• Design Knowledge – What might be possible and how?

• Future Insights – What are the non-obvious, plausible futures?

• Organizational Insights – How should/could the organization adopt something new (“say yes”) - and adapt?

• Business Model Knowledge – What are the “rules of the game”, and how can (or will) they change?

Opportunity Knowledge – What should/could be done …incorporating all of the above

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Business Model

Knowledge

Future Knowledge

Design Knowledge

Demand Knowledge

Organizational Knowledge

Opportunity Knowledge

Get the Internal Community Involved

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Internal Community

External Community

Advisory Support Team

Core Working Team

Extended Influence Team

Recognize the Power of Storytelling – Company D

Data, analysis, statistics

vs.

Telling stories, creating emotions

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Create Effective Working Relationships

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Do it with me

Help me do it

Do it yourself

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Outstanding Journeys need Outstanding Vessels and Crew

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Well constructed – the right organization Well outfitted – the right processes & methods Well provisioned – the right software & systems Well staffed – the right people and skills

The right leadership The right mission The right support

Your vessel – the organizational structure and the processes, methods and tools available

Your crew – the people who are expert in undertaking journeys and the people who are expert in exploiting what is discovered

But Sometimes Journeys Need to be Halted

Good Reasons*

1. No Pleasant Surprises

2. No Deeper Insights

3. Greater Prospect-Customer-Client Engagement Inspires Little Emotion

4. The opportunity shrinks or narrows the more it is shaped

Bad Reasons

1. We’ve never done this before

2. We’ve tried this before and it didn’t work

3. We don’t have the competency

4. We can’t be certain about the outcome

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*Credit to Michael Schrage

What Does Your Company Want?

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Focus on external knowledge and insights

Well-developed framework, methods and tools…

…ability to adapt to the varying situations

Open access to methods that encourage adoption

Balance demand and design – technology and markets

Navigation of the critical internal barriers

Knowing when to stop and when to push ahead

Key Actions for a VUCA World

• Embrace discomfort

– Acknowledge it, understand its sources, address it head on

• Launch well-constructed journeys

– Designed to understand the future, complex system

• Bring along the communities

– Tell stories to connect – be visual

• Always question, always test, always learn

– Keep iterating, give it soak time, abandon when necessary

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