How do you build an innovation culture in your team? – An 8-Step Guide
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Transcript of How do you build an innovation culture in your team? – An 8-Step Guide
Rishikesha T. KrishnanProfessor & Area Chair, Corporate Strategy & Policy, IIM Bangalore
How do you Build an Innovation
Culture in your Team?
An 8-Step Guide
Nov. 24, 2012
1
Build a
pipeline
3 Improve
Batting Avg
2 Improve idea velocity
THE IDEAS IN THIS
PRESENTATION WILL BE
ELABORATED IN A
FORTHCOMING BOOK
BY VINAY DABHOLKAR &
RISHIKESHA T. KRISHNAN
PUBLISHED BY
HARPERCOLLINS
WHAT IS INNOVATION?
3
Problem Idea Execution+
What is Innovation?
4
+ + Benefit
Novelty Utility
Application of new ideas to
solve problems resulting in
benefits to users
8 Steps to Innovation Excellence:
1
Build a
pipeline
3 Improve
Batting Avg
2 Improve idea velocity
Build a Pipeline
1. Lay the Foundation
2. Create a Challenge Book
3. Build Participation
6
Improve the Idea Velocity
4. Experiment with Low Cost at High Speed
5. Go Fast from Prototyping to Incubation
6. Iterate on the Business Model
7
Increase the Batting Average
7. Build an Innovation Sandbox
8. Create a Margin of Safety
8
LAY THE FOUNDATION
STEP 19
8 Steps to Innovation Excellence
Build a Pipeline
1. Lay the Foundation
Create Innovation Program
E.g. Jeff Immelt “Imagination Breakthroughs” - $1B potential
3 Key Processes
Idea Management
Buzz Creation
Training & Development
10
3 Key Processes
in an Innovation Program
Idea
Management
Buzz
Creation
Training &
Development
(who submits?
who selects?
who funds?)
(campaigns,
communication,
rewards,
innovation day)
(prototyping,
TRIZ,
design thinking,
idea communication,
leadership development)
Idea Box
source scope stages
technology selection funding
Idea Management
Source: Where will ideas come from? (Any
employee, Only certain employees (shop floor
workers), Employees and customers, Employees,
customers and partners, Anyone on the internet)
Scope: What is the scope of ideas? (Process
improvement, product improvement, new product,
customer experience, business models, any of these).
Stages: How many stages will an idea go through
before it is either implemented or parked? In M&M,
a new product idea would go through six stages.
13
Technology: In what form will ideas be gathered,
stored, searched, and presented? Will it be a
physical suggestion box, a bulletin board or an
Intranet web-site where people submit ideas?
Selection: How will ideas be selected for further
development? Will it be through a committee or
through open voting or through some other
mechanism? What is the criterion for selection?
Sponsorship: How and what kind of resources will
be allocated to the selected ideas? Will the
sponsorship be in the form of time-off from the
existing project or mentoring.
14
Year No of Suggestions Participation Adoption
suggestions per person Rate(%) Rate(%)
1951 789 0.1 8 23
1971 88,607 2.2 67 72
1986 2.6million 48 95 96
40 years, 20 million ideas
The Power of Small Ideas
“There is no genius in our company. We
just do whatever we believe is right, trying
every day to improve every little bit and
piece. But when 70 years of very small
improvements accumulate, they become a
revolution”
From Interview with Katsuaki Watanabe
in HBR, July-Aug 2007
16
Build a Pipeline
Lay the Foundation
Create Innovation Program
E.g. Jeff Immelt “Imagination Breakthroughs” - $1B potential
3 Key Processes
Idea Management
Buzz Creation
Training & Development
17
Buzz Creation (creative campaigns)18
Indian Railways in 2004
Market share 2004 (1951):
Freight: 40% (90%)
Passenger: 20% (70%)
Budgetary support went down 25%
Fund balance: Rs. 350 crore
Dr. Rakesh Mohan committee
declared “Terminal debt trap”
Recommendation: Downsizing
Sudhir Kumar’s study
Sudhir Kumar studies Rakesh Mohan report
Finds a curious contradiction
With increase in freight rates:
Market share of steel, cement declined
Iron ore, coal and other minerals stayed same
What could be the reason?
Door-to-door vs station-to-station
Door-to-door created more value
However, pricing didn’t differentiate
Why not focus on these customers?
Provide more freight per train
charge more
Increase number of trains
Heavier, faster and longer
Garib Rath
(Heavier & longer)Axle load
Build a Pipeline
Lay the Foundation
Create Innovation Program
E.g. Jeff Immelt “Imagination Breakthroughs” - $1B potential
3 Key Processes
Idea Management
Buzz Creation
Training & Development
24
Training & Development
Titan Innovation School of Management
“Everybody an innovator by 2015”
25
Focus area Techniques
Design thinking Immersive research, rapid
prototyping, brainstorming
Systems thinking TRIZ
Systems archetypes
Theory of constraints (TOC)
Lateral thinking Edward de Bono’s six thinking
hats
CREATE A CHALLENGE BOOK
STEP 226
8 Steps to Innovation Excellence
Build a Pipeline
2. Create a Challenge Book
U & I Portal at HCL
Petition Box at Tihar Jail
Feel the Pain
Sense the Wave
See the Waste
27
Build a Pipeline28
The Bajaj Pulsar exploited a discontinuity..29
7 Themes
Digital consumers
Emerging economies
Sustainable tomorrow
Smarter organizations
New commerce
Pervasive computing
Healthcare economy
30
http://jugaadtoinnovation.blogspot.in/2012/04/infosys-innovation-to-build-tomorrows.html
BUILD PARTICIPATION
STEP 331
8 Steps to Innovation Excellence
Build a Pipeline
3. Build Participation
Role model: People who inspire and then others
feel, “If he can do it, why can’t I?”
Community of practice: Places where
practitioners “hang out”, learn from each other
and together help others outside this community
Innovation catalyst: People who encourage idea
authors and offer constructive inputs
Rewards & recognition: Mechanisms through
which idea authors get appreciated
32
Build Participation33
Managerial Practices &
Intrinsic Motivation
Challenge
Freedom
Resources
Match people’s expertise & skills
in creative thinking with their jobs
Set goals, communicate them clearly,
but give autonomy regarding the means
Just right – too little dampens
creativity
No fake deadlines
34
Managerial Practices &
Intrinsic Motivation
Work-group
Features
Supervisory
Encouragement
Organizational
Support
Mutually-supportive groups of
people from diverse backgrounds
Freely & generously recognise
creative work; avoid long delays;
don’t over-do critiques; tolerate
honest failure
Facilitate information sharing
Don’t allow political problems to fester
35
Improve the Idea Velocity
4. Experiment with Low Cost at High Speed
5. Go Fast from Prototyping to Incubation
6. Iterate on the Business Model
36
EXPERIMENT WITH LOW COST
AT HIGH SPEED
STEP 437
8 Steps to Innovation Excellence
Improve the Idea Velocity
4. Experiment with Low Cost at High Speed
38
itchidea
demoimpact
Feasibility Loop Viability Loop
2 months
Sep2003
Nov2003
Feb 2004
3 months 2 months
Apr 2004
Creating a Climate for Experimentation
Failure plays a critical role in innovation
Post-It Notes & failed adhesives
Nylon: a lab experiment that went wrong
TVS Spectra failed, but Victor succeeded
Time-to-market is important…but don’t forget the role
of earlier innovations
Separate intelligent failure from unnecessary failure -
in language and managerial response
Create infrastructure, give resources for expts
Have a high trial rate: fail fast, learn fast
Can you do the “last” experiment first?
40
Avoid the “Failure Fallacy”41
GO FAST FROM PROTOTYPE
TO INCUBATION
STEP 542
8 Steps to Innovation Excellence
Improve the Idea Velocity
5. Go Fast from Prototyping to Incubation
43
Improve the Idea Velocity
5. Go Fast from Prototyping to Incubation
44
Make the story sticky45
Make Ideas Sticky46
Characteristic of
a sticky idea
Technique of improvement
Concrete
Prototype (Rajappa, Phalke),
“Before and after” scenarios,
Stories (Salt march)
Curiosity Curiosity flow (Steve Jobs iPod
launch)
Credible
Find a champion (Bose and
Einstein),
Testable credentials (idea per
person per year)
47
ITERATE ON THE
BUSINESS MODEL
STEP 648
8 Steps to Innovation Excellence
Improve the Idea Velocity
6. Iterate on the Business Model
49
Difficult to
make money
Holder of
complementary
resources makes
Money
(EMI, Coke)
Inventor
makes
money
Party with
Innov .+ Compl.
resources makes
Money
(Pixar vs Disney)
Freely availableor unimportant
Tightly heldand important
Low
High
Complementary Assets
Ease of Imitation
Inimitability/Complementary Assets Framework
Source: Afuah, 2004
Increase the Batting Average
7. Build an Innovation Sandbox
8. Create a Margin of Safety
51
BUILD AN
INNOVATION SANDBOX
STEP 752
8 Steps to Innovation Excellence
Increase the Batting Average
8. Build an Innovation Sandbox
53
“A near fanatical focus on cost reduction”
54
AT
LOW
COST…
German Companies’ Role in Tata Nano
Bosch
Fuel injection
Braking systems
Car electronics
Continental
BASF
55
“The Tata Nano engine lies in the heart
of the Bosch Engine Management System,
which meets Bharat Stage III and future
Euro IV emission norms. For the first time,
Bosch developed the two-cylinder
Common Rail Direct Injection (CRDi)
system with an enhanced Electronic
Control Unit (ECU). A new Starter Motor
was conceived, and the super efficient
Generator developed has optimized size
and innovative design that meet
target specifications and cost.”
Source:
http://www.boschindia.com/content/language1/html/715_13769.htm
Auto
Biocon’s Platform-based
Innovation Strategy
Expertise in Fermentation Technology Built through Enzyme Business
Production
of statins,
immuno-
suppressants
Novel process
for
R-insulin
Monoclonal
Antibodies
with
Cuban Inst.
2G Oral
Insulin
Generic drugs
Biosimilars
Novel cancer
treatment
Potential
blockbuster56
Source: Krishnan & Jha, 2011
7 Themes
Digital consumers
Emerging economies
Sustainable tomorrow
Smarter organizations
New commerce
Pervasive computing
Healthcare economy
57
WalletEdge
Platform Offering
http://jugaadtoinnovation.blogspot.in/2012/04/infosys-innovation-to-build-tomorrows.html
Open Innovation Procter & Gamble has radically
altered the way it comes up with new ideas & products. It now works with universities, suppliers and outside inventors. It offers them a share in the rewards. In less than a decade, half of P&G’s new-product ideas originate outside of the firm
Thus P&G has been able to grow at 6% a year between 2001 and 2006, tripling annual profits to $8.6 billion. The company now has a market capitalisation of over $200 billion.
Check out The Game Changer by Lafley & Ram Charan
58
CREATE A
MARGIN OF SAFETY
STEP 859
8 Steps to Innovation Excellence
Increase the Batting Average
9. Create a Margin of Safety
60
Measurement (Metrics)
Pipeline
Idea Velocity
Batting Average
Participation
61
62
No Parameter Lead indicator Lag indicator
1 Pipeline Number of challenges in the
challenge-book
Number of ideas in the
pipeline, Number of ideas per
person per year.
2 Idea velocity Average time to give idea
relevant feedback to the
idea author,
Number of experiments /
prototypes,
feasibility studies,
invention disclosures,
white papers in a year,
Average time for an idea to
reach the first experiment /
prototype, Frequency of
innovation review,
Average time to get support
from a champion
Number of experiments in
exploring new types of
customers, defining new
offerings / products, exploring
new partnerships and new
pricing models,
Average time from formal
approval to cash / saving /
impact
3 Batting average Number of innovation
sandboxes, number of
innovation platforms
Percentage of revenue from
innovations in the last 5 years
4 Participation Number of people giving
ideas / comments / votes,
Mentors / catalysts /
champions
Number of active
Communities of practice
(CoPs), Role models,
customers engaged
THANK YOU
63
http://jugaadtoinnovation.blogspot.in