Innovationstrategy

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RATIONALIST INCREMENTALIST

STRATEGYAPPROACH

RATIONALISTAPPROACHAlinearapproach:• APPRAISE:describe,understandandanalyzetheenvironmentbyusingappropriatetools(Scenarioanalysis,SWOT,etc.)andprojecton-goingtrendsintothelongterm

• DETERMINE:determineacourseofactioninthelightoftheanalysis.Determinetheallocationofinvestments

• ACT:carryoutthedecidedcourseofaction3

RATIONALISTAPPROACH:ADVANTAGES

• Consciousnessofongoingtrendsinthecompetitivearena

• Ensuresufficientattentionisdevotedtothelongterm

• Ensurecoherenceinaction,especiallyinbiganddispersedcorporation

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RATIONALISTAPPROACH:LIMITATIONS

• Acertainstabilityoftheexternalenvironmentisneeded(youcandowhatyou'veplanned);

• Firmsneedtobeperfectlyawareoftechnologicalandmarkettrajectories

• Firmsmustalsobeawareoftheirstrengthsandweaknessesandbereadytodevelopnewresourcesandcapabilitiesthatmeettheirstrategicobjectives

• Excessiveconcentrationonthe"enemy"(competitors)->lackofinterestindiscoveringunmetmarketneeds

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THECONTRIBUTIONOFM.E.PORTER

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INNOVATIONLEADERSHIP

- R&Dandtechdevelop.- Closetothemarket.- ClosetoUniversities,KIBS,etc.- Risktaking- Creativity…

INNOVATIONFOLLOWERSHIP

- Imitatingleaders;- Competitoranalysis;- Costcutting;- Learninginmanufacturing- Reverseengineering

ALTERNATIVEAPPROACHES

BOOZ,ALLEN,HAMILTONANNUALINNOVATIONSURVEY.SOMERESULTS

• WORLD’S1000TOPLEADINGFIRMS• INNOVATIONSTRATEGIES

– FIRMS’INNOVATIONSTRATEGIESARERATHERINDEPENDENTFROMCOMPETITORS’ BEHAVIORS

– THREEDISTINCTCLUSTERSOFGOODPRACTICECANBEOBSERVED:

• TECHNLOLOGYDRIVERS:focusonscoutinganddevelopingnewtechnologiesandmatchingthesetounmetneeds.

• NEEDSEEKERS: focusonemergingmarketneedsandtrends.Strongdesignandproductdevelopment capabilities

• MARKETREADERS:focusonanalyzecompetitorsandbeingfastfollowers 7

INCREMENTALISTAPPROACHAstep-by-stepandtrial-and-errorapproach:1. Makedeliberatestepstowardsthestated

objective2. Measureandevaluatetheeffectsofthesteps3. Adjust(ifnecessary)theobjectiveanddecideon

thenextstep4. Bereadytocallintoquestionformerstrategies,

re-designeverythingfromscratchandcannibalizeyourcurrentbusinesses

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INCREMENTALISTAPPROACH

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DEFINEGOALS

IMPLEMENTSTRATEGY

TEST/EVALUATE

ADJUSTGOALS/STRATEGY

RE-TESTEVALUATE…

DATA, FEEDBACKS

DATA, FEEDBACKS

ADVANTAGESANDLIMITATIONSOFINCREMENTALISTAPPROACH

ADVANTAGES• opentoarangeofpossibilities

• strategicflexibility(alsocalledAGILITY)

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LIMITATIONS• successfulstrategiescouldbeimpossibletoreplicate(non-reproduciblebestpractices)

• strategiesaredifficulttoplansincetherealbeginning

Strategiesfortransientadvantages

StrategiesForTransientAdvantages• ThinkaboutArenas,notindustries

– Lookforcompetitorsbeyondtheboundariesofyoursector.Innovateinthesameway!

• Setbroadthemesandthenletpeopleexperiment– Usepropermethodsand“gifted”peopletodiscovertheweaksignalscoming

fromthemarket• Adoptmetricsthatsupportentrepreneurial growth

– From“profitmaximization”to“maximumaffordableloss”• Focusonexperiencesandsolutionstoproblems

– Rememberyoudon’tselljust“products”,butalsosolutionsandexperiences toyourcustomers

• Buildstrongrelationshipsandnetworks– Yourclientsareyourallies.Reinforcetheir“senseofbelonging”toyouroffer

• Avoidbrutalrestructuring,learnhealthydisengagement– Ferryyourclientsfromonesolutiontoanother

• Getsystematicaboutearly-stageinnovation– Managetheinnovationbudgetseparatelyfromthegeneralbudget

• Experiment, iterate,learn– Learnambidexterity.Donotfearexperimentationandfailure

THEORGANIZATIONALSIDEOFGLOBALINNOVATION

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SPECIALIZATION-BASEDMODEL

Firms develop global centers of excellence in different fields, which are globally responsible for the development of a specific product/process/ technology

INTEGRATION-BASEDMODEL

Different units around the world each contributes to the development of

technology projects

IND

PRC

US

SPECIALIZATION-BASEDMODEL

ADVANTAGES:• +criticalmassofhumanand

financialresourcesandknowledgeiseasilyachieved

• +coordinationiseasier• +specializedresearchunits

canbeallocatedinglobalinnovationcluster

RISKS:• globalcenterstoomuch

isolated(difficulttogovern)andfarfromemergingmarketneeds

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INTEGRATION-BASEDMODEL

ADVANTAGES:• relyondifferentcultures,

capabilitiesandinternationalperspectives onthesamesubjects

• encouragecompetitionamongcenters

RISKS:• highercoordinationcosts• duplicationandinefficientuse

ofscarceresources risks

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