Creating an Innovation Strategy

Creating An

Innovation Strategy

RDM Management Group

Ron Pickett MBA, CMC

WHO IS THE GREATER INNOVATOR ?

THOMAS EDISON STEVE JOBS

RDM Management Group 2

WHY CREATE AN INNOVATION STRATEGY

Many executives believe that innovation is critical for

success … many have deep concerns about their firm’s

ability to innovate effectively … they do not have a formal

innovation strategy

• A recent study found that only one in five chief

executives believes his strategic investments in

innovation are paying off… (Bloomberg Business Week,

2013)

• Canada has a poor innovation record, ranking 13 out of

the 16 OECD countries (Conference Board of Canada,

2014)

3 RDM Management Group

WHY CREATE AN INNOVATION STRATEGY

Innovation does not require a revolution inside

companies

Innovation is not alchemy, with mystifying

transformations …its more like the basic

tackling of other key business functions

How you innovate determines what you innovate

Strategic advantage


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

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INNOVATION STRATEGY PLANNING MATRIX


Business model drivers Technology drivers

Value

proposition

Value chain

Value

proposition

Target

customer Product &

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


Semi radical

Technology driven Small change in one or








Innovation types

INNOVATION STRATEGIES

Innovation strategy must align with the business strategy

Play Not to Lose (PNTL) – Incremental innovation

Protect and maintain market share

Combat margin erosion

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

Play to Fail (PTF) is not having an innovation strategy


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


PLAY TO FAIL

… RIM/Blackberry, Nokia, Motorola, Kodak,

Sears, Blockbuster Video, Sun

Microsystems, DEC, Eatons, Simpsons …


INNOVATION MATRIX

Semi Radical

Technology Automobiles

Mobile telephones

Radical Apple

Google

Amazon

Virgin

Bit Coin

Cloud Computing

Incremental Oligopolies

Banks

Utilities

Cellular Wireless Companies

80% of innovation

Semi Radical

Business Dell

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 creates 15 RDM Management Group

Innovation Pyramid

An Innovation Strategy provides:

Increased profits

Branding

Market Leadership

High performance

work teams

Learning innovative culture

Real competitive advantage


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


NEXT STEPS

5. Define internal and external resource requirements

6. Ensure internal innovation platforms have diverse creative and commercialization resources working in harmony

7. Create balanced scorecard metrics and rewards supporting the innovation strategy

8. Overcome any internal resistance to change subverting creativity and commercialization

9. Celebrate successes and embed innovation throughout the corporate culture


HOW CAN RDM ?

An engagement is typically a number of facilitation workshops and stakeholder interviews, walking a leadership team through the 8 steps

Deals with leadership requirements, strategy, structure, resources, management systems, processes, performance metrics, project management discipline, measurement and incentive rewards – organizational structure and culture

Document and present workshop/interview results, clarify, finalize, act, and move to next step

Similar to the strategic planning process


THE INNOVATION PROCESS


Questions?


Creating an Innovation Strategy

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