Innovation+Change=Transformation

innovation + change = transformationStephen Danelutti

Topics

• Strategic Imperatives for the CEO

• Strategic Imperatives for UK

• Conclusions

• Solutions

• Research

• Immediate Action

Strategic Imperatives for the CEO

Sources:

1. Strategos Innovation Survey 2004 (N: 557)

2. 2005 Training and Development Survey CIPD, UK (N: 664)

3. The Innovator's Solution: Clayton Christensen & Michael E. Rayno

4. Winning at Change: John P. Kotter

Barriers to InnovationShort-term focus/focus on operations-63%Lack of time, resources, or staff-52%Lack of systematic innovation process-33%Leaders expect payoff sooner than realistic-31%Incentives not structured to reward innovation-31%

Barriers to InnovationShort-term focus/focus on operations-63%Lack of time, resources, or staff-52%Lack of systematic innovation process-33%Leaders expect payoff sooner than realistic-31%Incentives not structured to reward innovation-31%

Innovation core corporate value – Yes 66%

“To be best-in-class we need innovation. Can’t be through continuous

improvement of existing work. Without innovation, we’ll always be tactical

tuners.”

Innovation core corporate value – Yes 66%

“To be best-in-class we need innovation. Can’t be through continuous

improvement of existing work. Without innovation, we’ll always be tactical

tuners.”

Main drivers for investing in leadership development are to successfully manage organisational change!

Main drivers for investing in leadership development are to successfully manage organisational change!

Organisations undergo some form of major

organisational change every 3 years, but 4 in 10

reorganisations fail to achieve objectives.

Organisations undergo some form of major

organisational change every 3 years, but 4 in 10

reorganisations fail to achieve objectives.

Over 60 percent of all new-product

development efforts are scuttled before they

ever reach the market. Of the 40 percent that do see the light of day,

40 percent fail to become profitable and are withdrawn from the

market.

Over 60 percent of all new-product

development efforts are scuttled before they

ever reach the market. Of the 40 percent that do see the light of day,

40 percent fail to become profitable and are withdrawn from the

market.

Fewer than 15 of the 100 or more companies I have

studied have successfully transformed themselves.

Fewer than 15 of the 100 or more companies I have

studied have successfully transformed themselves.

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1

2

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• Success factors for Innovation performance, in which UK below avg.

• Sources of new technological knowledge

• The capacity to absorb and exploit knowledge

• Few firms show evidence of systematic adoption of the human resource practices

typically associated with effective innovation

• Access to finance

• Competition & entrepreneurship

• Customers and suppliers

• The regulatory environment

• Networks and collaboration

• UK-based firms appear to have many, varied network relationships, but

infrastructure patchy and relationships largely driven by short-term decisions

Strategic Imperatives for UK

Source: DTI Innovation Report December 2003, drawing on an extensive review of international innovation literature, aided by a panel of experts, analysis by the AIM Management Research Forum and the OECD.

Conclusions

• Change is the only constant - constantly changing is key

• Constant innovation - good way of coping with change

• But … most change programmes and new innovations fail!

• Why?

• Innovation/change efforts often stand-alone and unstructured

• Work-force is not sufficiently engaged and do not collaborate effectively

Solutions

Change

Transformation

Tools¬ Research and Knowledge

Transfer¬ Consultancy or Interim

Management (outside experts)

¬ Social Software¬ Cultural Alignment

¬Locking-in Competence¬Engaging Workforce

Leveraging

Opportunities

The

Transformation

Cycle

Built-in

Resilience

Creative

Destruction

proactive

Innovation

reactive

ManagingCrises

Research - SD

• Influences on Corporate and Product brand evaluation?

• Image mostly. Other association types?

• No empirical link: association typecorporate/product evaluation

• One successful study - two association types

• Corporate Ability associations

• Company’s capability for producing products and affect on product

evaluation/purchase

• Corporate Social Responsibility associations

• Company’s perceived social responsibility and affect on product

evaluation/purchase

Research - SD

• Investigation of Interactive Processes and their influence

• Various contexts discovered:

• Communication/information

• From broadcast to interactive

• Relationship Marketing:

• Using IT: listen to individuals continually and understand, interact, quickly

respond to preferences

• Integrate marketing with design/manufacturing - involve customers early in

development

• Customer becomes “co-producer” and loyal

The Structural Equation Model

Product Sophistication

Product Suitability

Corporate Ability

Corporate Interaction

Corporate Evaluation

Product Evaluation

Research Framework - SD

• Associations of Corporate Interaction can be created

• Can influence product evaluations

• More interaction: more suitable products, more favourable corporate evaluation, more

products purchased

• Use in:

• Corporate positioning strategies

• Corporate identity and reputation building

• Corporate communication platforms

Implications - SD

Research – Innovation and Change

• Innovation requires experimenting and prototyping Leonard-Barton, 1995

• Innovation arises from knowledge creation in firm Nonaka & Takeuchi,

1995

• Innovation on a regular basis can prevent inertia. Tushman & O'Reilly,

1997

• Ambidextrous Organizations celebrate stability and incremental change as well as

experimentation and discontinuous change simultaneously

• Innovation relies on recognition of opportunities O'Connor & Rice, 2001

• The Idea Itself and the Circumstances of Its Emergence as Predictors of

New Product Success Jacob Goldenberg, Donald R. Lehmann and David

Mazursky, 2001

Four choices of approach open to leaders to engage everyone in change

a) Telling the many what has been decided by the few(instructional with little sell)

b) Selling to the many what has been decided by the few(tell with a sell and entertainment)

hooligans or spectatorshooligans or spectators

c) Driving accountability down by implicating people as individuals (giving people the time, space and process to apply the change/decision to their own work, regardless of the degree of delegation)

d) Co-creation: judging who will add value if included in front end decision forming and change/strategy development (not to be confused with a laissez faire culture which is poor at closure and ill disciplined. Co-creation takes robust governance and skill)

willing collaboratorswilling collaborators

compliant collaboratorscompliant collaborators

personally committed reformers

personally committed reformers

outcomeoutcome

outcomeoutcome

Research – Change

Source: McKinsey 2005

Features of successful innovation

• Successful innovations had some, or all, of following features:

• They were moderately new to the market

• Based on tried and tested technology

• Saved money

• Met customers' needs

• Supported existing practices.

• By contrast, the products that failed were based on:

• Cutting-edge or untested technology

• Followed a “me-too” approach

• Were created with no clearly defined solution in mind

Goldenberg, Lehmann and Mazursky, 2001 looked at 197 product innovations, of which 111 were successes and 86 failures)

• Where ideas come from and why ensuing innovation

succeeds/fails

• Need spotting - actively looking for answer to a known problem

• Solution spotting - finding new ways of using existing technology

• Mental inventions - dreamed up in head - little external reference

• Random events - serendipitous moments - no effort, large outcome

• Market research

• Trend following

Idea factors


Success-to-failure rate

• Trend following and mental inventions

• Three times as many failures as successes

• Need spotting

• Twice as many successes as failures.

• Market research

• Four times more successes than failures

• Solution spotting

• Seven times more successes than failures

• Taking advantage of random events

• Thirteen times more successes than failure


Bases for additional research

• Specific correlation between organisational factors and success?

• Capitalising on random events most successful method of innovation

• Effective change managements role?

• Its nature?

• Other “idea factors” imply systematic approach

• Correct?

• Its nature?

• Can all-encompassing approach be identified and described?

• Processes, technology and culture?

• Replicability with high success rate?

• Difference in approach between different factors of innovation?

• Product innovation, biz concept innovation, biz process innovation, etc.

• Wiki for collaborative environment

• Involve grass roots in Innovation and Change (needs management endorsement)

• Positively leverage trends in blogging and P2P collaboration/activisim

• Site becomes centre of expertise (knowledge base) in and of itself

• Core philosophy

• Everyone wants to make a difference, change faults, be creative, innovate in their work

• Focus where change effectively happens, where great ideas reside - workforce

• System of qualification

• Evaluate solutions posted

• External network of experts - payment if necessary

• Peer review – no charge but no way to verify expert involvement

• Company sponsorship useful endorsement

Immediate Action

Thank you!

There are costs and risks to a programme of action, but they are far less

than the long range risks and costs of comfortable inaction

John F. Kennedy

The idea that is not dangerous is unworthy of being called an idea at all

Elbert Hubbard

Stephen Danelutti

Mobile: 0044 (0)7786 115 227

E-mail: [email protected]

Web site: www.netociety.com

Blog: www.trans4mbiz.blogspot.com

Innovation+Change=Transformation

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