Creating an Innovation Strategy - YSBEC · (Accenture, BCG, 2014) ... RIM/Blackberry, Nokia,...

Creating An

Innovation Strategy

RDM Management Group

Ron Pickett MBA, CMC

WHO IS THE GREATER INNOVATOR ?

THOMAS EDISON STEVE JOBS

RDM Management Group2

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)

3RDM Management Group

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


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


WHAT IS INNOVATION?

Innovation occurs when a company makes changes to

the major technologies or business model for the

products and services it markets


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


INNOVATION STRATEGY PLANNING MATRIX


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







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


PLAY TO FAIL

… RIM/Blackberry, Nokia, Motorola, Kodak, Sears,

Blockbuster Video, Sun Microsystems, DEC,

Eatons, Simpsons …


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


INNOVATION MATRIX

Semi Radical TechnologyAutomobiles

Mobile telephones

RadicalApple

Google

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


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


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


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


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


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


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

THE INNOVATION PROCESS


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)


Questions?

RDM Management Group

Creating a customer focusing

learning innovative culture of high

performance work teams with

continuous improvement

Creating an Innovation Strategy - YSBEC · (Accenture, BCG, 2014) ... RIM/Blackberry, Nokia,...

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