Executing Technological Innovation - TIEC

Executing Technological Innovation Mohab Anis, PhD, MBA, PEng Managing Director, INNOVETY Associate Professor, The American University in Cairo [email protected]

Copyright 2011 © Innovety LLC. All rights reserved

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Things I’ll Talk About

• Innovation levers • Technology cycles, dominant designs & timing of entry • Ideation & strategy • Innovation value chain • 6 rules for success • The platform 2 Copyright 2011 © Innovety LLC. All rights reserved

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What is common?


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What is common?


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What is common?


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What is Innovation?

Innovate or die! Tom Peters

Business Model Innovation

Technology Innovation

Value Proposition

Product and Services

Supply Chain

Process Technologies

Target Customer

Enabling Technologies 6


Mapping Innovation The 6 Levers & Types of Innovations

Copyright 2011 © Innovety. All rights reserved

Mapping Innovation

Target customer: To whom it is delivered Supply chain: How it is created and delivered to market

Business model; levers of innovation Copyright 2011 © Innovety LLC. All rights reserved

Value proposition: What is sold and delivered to the market

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Value Proposition (What?)

• New products • Enhancements of current products

Value proposition : What is sold and delivered to the market

IBM shifts focus from products to services Amazon moves from bookstore to mall Copyright 2011 © Innovety LLC. All rights reserved

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Supply Chain (How?) • Organization • Partnerships • Operations

Supply chain: How it is created and delivered to market

•Vodafone created its VC arm to outsource and invest in suppliers •Toyota’s suppliers have an intimate relationship with Toyota, sharing in its successes and failures •Microsoft’s Xbox developers received support from Microsoft, since their games make or break the Xbox (Complementary assets)


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Target Customer (Whom?)

• Nutritional bars were originally marketed to athletes, but are now marketed to women

Target customer: To whom it is delivered

• Dockers clothing targeted the unorthodox ‘lowmaintenance’ men’s segment


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Mapping Innovation

Enabling Technologies


Technology ; levers of innovation Copyright 2011 © Innovety LLC. All rights reserved

Products and Services

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Product and Services • New products • Enhancements of current products

Products and Services

McDonald’s low-fat oil

Mobile phones

iPad Copyright 2011 © Innovety LLC. All rights reserved

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Process Technologies • Manufacturing Computer Supply Chain (Dell) Auto manufacturing (Ford)


• Service delivery (Amazon, ebay)


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Enabling Technologies IT Wal-Mart’s supply chain system (allowed it to track and manage partners, supply chains and finances)


Enabling Technologies

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Mapping Innovation Strategic innovation and technological innovation go hand-in-hand

Business Model /Supply chain

e- business model


Business Model /Products E-supply chain

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New

Semi-Radical

Near to Existing

Technology

Types of Innovation

Incremental

SemiRadical

Near To Existing

New

Radical

• Incremental • Semi-radical • Radical

Business Model

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Types of Innovation Levers Types of Innovation

Incremental

Business Model Levers Value Proposition

Value Chain

Target Customer

Technology Levers Products and Services

Process Technology

Enabling Technology

SMALL change in 1 or more of the 6 levers

Semi-Radical Business Model Driven

Significant change in 1 or more of the 3 levers


Semi-Radical Technology Driven





Radical


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Types of Innovation Competence-Enhancing Competence-Destroying

• COMPETENCE-ENHANCING ; An innovation that builds on existing knowledge and skills.

• COMPETENCE-DESTROYING: An innovation that renders existing knowledge and skills obsolete Copyright 2011 © Innovety LLC. All rights reserved

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Technology S-Curves Timing of Entry Dominant Designs


Technology S-Curves • Technological improvement in product performance typically follows an S-curve • Rate of adoption and margins


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Technology S-Curves By plotting the S-curves of technologies that satisfy the same need against time, it becomes clear that the nature of innovation is cyclical


Technology S-Curves Markets and technology innovation cycles


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The Dominant Design A major factor influencing dominant design selection is increasing returns to adoption • A technology’s value increases as it is adopted by more users

This occurs as a result of: • Learning • Network externalities


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The Dominant Design

Learning • As an organization develops a new technology, the experience and knowledge it gains assist it in future developments • As a technology is used, producers learn to make it more efficiently and effectively • Thought of from point of customers too


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The Dominant Design Network Externalities increased benefits of using a good or service as more people use it Microsoft Windows is popular because it maximizes the number of users your files are compatible with • Includes the value created by: The size of the technology’s installed base The availability of complementary goods (iTunes, battery, games)


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Timing of Entry First-mover: • Advantages Brand loyalty and technological leadership Exploiting buyer switching costs Reaping increasing returns advantages • Disadvantages High R&D expenses Undeveloped supply and distribution channels Immature enabling technologies and complements (batteries, hydrogen fuel cells) Uncertainty of customer requirements


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Timing of Entry; winners and losers

Product

First Mover

Follower

Winner

8mm video

Kodak

Sony

Follower

Disposable diaper

Chux

Pampers

Follower

Microprocessor

Intel

AMD

First Mover

Microwave

Raytheon

Samsung

Follower

PC

Altair

IBM, Apple

Follower

VCR

Ampex/Sony

Matsushita

Follower

Video game console

Magnavox

Nintendo

Follower

Web browser

NCSA Mosaic

Netscape

Follower

Word processing

Wordstar

MS word

Follower


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Timing of Entry Factors Influencing Optimal Timing of Entry How certain are customer preferences? How much improvement does the innovation provide over previous solutions? Do complementary goods influence the value of the innovation, and are they sufficiently available? How high is the threat of competitive entry? Are there increasing returns to adoption? Does the firm have resources to accelerate market acceptance? Is the firm’s reputation likely to reduce the uncertainty of customers, suppliers, and distributors? Copyright 2011 © Innovety LLC. All rights reserved

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Innovation Strategy Ideation Process


Innovation Strategy You and your industry; Products Markets


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Innovation Strategy

Internal Factors

Innovation Strategy Decision

• • • • • •

Technical capabilities Organizational capabilities Current success Funding Top management vision Identification Core Competencies


1. 2. 3.

Is it a unique source of differentiation? Does it cover a range of business/products? Is it hard for competitors to imitate?

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Innovation Strategy

External Factors

• • • •

Capabilities in the external network Industry structure Competition Rate of technological change

Innovation Strategy Decision


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Innovation Strategy & Portfolio

Internal

Offensive radical


External

Defensive incremental

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Mapping Innovation

Assess • Level of investment • Technological Innovation • Business Model Innovation • Which levers is my company using? • Are they over-used?

Develop • Mix of incremental, semiradical and radical investments in your current portfolio • Sources of discrepancy : • Investment in technology and business model • Business model vs. tech in portfolio

• Under-used? • Win vs. No-Lose • Internal factors • External factors

Implement • Communicate decision to management & innovation leaders • Support strategy with metrics and rewards • Link innovation to business strategy • Leadership Must Define Who Will Benefit From Improved Innovation • Consumers • Employees • Channel partners • Suppliers • Investors - shareholders

• What needs correction? What doesn’t?


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Ideation Tools & Creative Problem Solving

Structured Idea Management (SIM) Buyer Utility Map Six Thinking Hats Mind Mapping Theory of Inventive Problem Solving (TRIZ) 36 Copyright 2011 © Innovety LLC. All rights reserved.

Measuring Innovation Through Innovation Value Chain


How To Measure Innovation Building the innovation value chain

Input

Lead Measures

Process

Real Time Measures

Output

Lagging Measures

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Inputs – Lead Measures Inputs Tangible resources: e.g., software and physical infrastructure Intangible resources: e.g., talent, motivation, culture, and knowledge Innovation strategy: e.g., vision, innovation platforms, and positioning in innovation matrix External network: e.g., partners, lead customers


Processes – Real Time Measures Processes Creative process: Tracks the quality of ideas, the ability to explore them, and the conversion rate into projects and value Project execution: Tracks the evolution of projects currently underway in dimensions such as time, cost, technology performance, and estimated value generated Balanced innovation portfolio: Tracks the mix of projects within the Innovation Matrix and its alignment with the strategy


Outputs – Lagging Measures Outputs Technology leadership: number of patents, cites, seminars, technology licenses, and technology adoption Project completion: execution metrics vs. expectations or competitors New product introduction: successful products, acceptance compared to competitors, market share, sales Market leadership: customer acquisition, customer share, and customer loyalty


Innovation Value Chain & Linkages


The 6 Rules of Innovation Management


7 Rules of Innovation Management 1. 2. 3. 4.

Exert strong leadership on innovation strategy Integrate innovation into business mentality Match innovation to company strategy Manage the tension between creativity and value capture 5. Neutralize resistance to change 6. Innovation is a network beyond the company 7. Create the right metrics and rewards for innovation


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Rule #1: Leadership

• • • • •

Exert strong leadership on innovation strategy Innovation comes from people Commitment, example, solid decisions Portfolio of technology and business model innovation Communicate strategy!


Rule #2: Business Mentality •

The Culture – innovation part of DNA, eagerness to learn, intrapreneurship

•

Collaboration (internal and external)

•

Learning Organization

•

Open culture

GOOGLE HAS A 20% FREE TIME POLICY 3M HAS A 15% FREE TIME POLICY


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Rule #3: Match Innovation to Strategy Click to edit Master title style

•Effectiveness of innovation depends on : oTiming of the last innovation o Market situation o Business strategy •Too much innovation is not a good thing

PROCTOR & GAMBLE 1990’S TOTAL OVERHAUL; PRODUCTION, NEW PRODUCTS, CUT PAYROLL TOO MUCH IS TOO MUCH Copyright 2011 © Innovety LLC. All rights reserved

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Rule #4: Resistance to Change Neutralize resistance to change •Change, innovation will inevitably face resistance The more radical, the stronger the resistance The more successful company, stronger resistance •Managers to understand that innovation comes from taking risks and learning from outcomes •Avoid “Not Invented Here” syndrome


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Rule #5: The Network Innovation is a network larger than the company •The primary unit of innovation is a network •Internal; R&D, marketing, manufacturing •External; customers, suppliers, partners •Stand-alone depts., incubators only function if they maintain rich networks of critical resources


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Rule #6: Rewarding Innovation Most rewards systems focus on meeting budgets and avoiding risks Organizational structure can be a barrier to innovation Sales may refuse the results of R&D R&D may not want to listen to marketing Balanced Systems for measurement, motivation, incentives and rewards Incentive system must reinforce company’s choice of a Play-to-win or –not-to-loose strategy


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Innovation Atrophy Symptoms (1) • • • • • • •

Entire innovation portfolio is incremental Funding for innovation available once a year Managers respond to new ideas with apathy Managers criticize and undermine innovators NIH Syndrome “We have always done it this way” Failures are socially punished


Innovation Atrophy Symptoms (2)

• Power structure supports the status quo • Supporting innovation is seen as inefficiency • Measures & rewards focus on short-term efficiency • Innovators are ignored or rewarded unfairly • Ideas have nowhere to go • Innovation a discrete event not a daily activity 52 Copyright 2011 © Innovety LLC. All rights reserved.

A.T. Kearney’s IMP3rove Framework


A.T. Kearney’s IMP3rove Framework IMP³rove provides answers to the most important question of businesses – how to secure the company‘s future and growth? Key question of SMEs How can I secure my company‘s future?

Challenge for SMEs

Necessity for SMEs

How can I sustain my margins? How can I ensure that my best customers will still be my best customers in 3 to 5 years’ time? How can I develop new customers and markets for my products and services as quickly as possible?

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IMProve Innovation Management Performance with sustainable IMPact

How can I attract and retain qualified employees? How can I finance my growth? … 54 Copyright 2011 © Innovety. All rights reserved

Assessing Innovation

Company 3 Company 2

Description 1 Innovation Strategy

Company 1 1 5 Innovation Innovation Strategy

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Results

2 InnovationsOrganisation and Culture

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3 Innovation Lifecycle Processes Idea Management

Product/Service/ Process development

Launch / Continuous Improvement

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4 Enabling Factors “A.T. Kearney House of Innovation”

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• Vision and strategic focus on innovation • Implementation of strategy Organisation and Culture • Roles and responsibilities • Organisational structure • Organisational culture and climate Innovation Life Cycle Processes • Idea management • Product/Process and Service Development • Launch and Continuous Improvement Enabling Factors • Project management • Human Resources and Incentives • IT and Knowledge Management Innovation Results

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Benchmarking Innovation The results of the benchmarking follow a key principle – comparison with the Growth Champions


Innovation Strategy, Organization & Culture

Innovation Strategy

Innovation Organization & Culture Copyright 2011 © Innovety. All rights reserved

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Innovation Life Cycle Processes


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Enabling Factors

Innovation Enablers

Innovation Results


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The Flow Phase I

Assessment

Duration

1 Month •Business Interviews

Key Activities

Tools

Deliverables

•Strategic Biz Assessment • 360 Innovation • Org Learning • Strategy alignment

• ATK IMP3ROVE Assessment • Learning Performance Index

• Assessment results • Established Baseline • Identified gaps • Project scope


Phase II

Strategy & Roadmap Development 1 Month •Strategy Development & innovation value chain • Organization alignment •Detailed project planning

• Innovation Matrix • Value Driven Innovation • Focus groups • Value Chain • Innovation Strategy & Roadmap • Detailed Execution plan

Phase III

Execution

Phase IV

Validation

7 months •Training & coaching in gap areas • Learning Forum •Structured idea management •Internal Communication Plan •Structured innovation portfolio •Transform mentality (project to deal) • Health checks (3 months intervals) • Structured Idea management • Various tools on learning and communication • Established Innovation and learning Management Processes • Enhanced Org. Culture • Transformational leadership 60

The Value Proposition

Value for SMEs

IMP³rove questionnaires Learning experience by completing the holistic and well structured questionnaire

Detailed reports with European benchmarks of the growth champions providing the basis for a structured discussion

Value for Financial Actors • Benchmarks • Additional investment criteria • Access to certified IMP³rove Consultants

Consulting advice

Value for Policy makers • Statistics and benchmarks, barriers and levers for innovation for profitable growth • Support to develop the Innovation Management infrastructure

Source: IMP³rove Core Team, 2010; www.improve-innovation,eu; IMP³rove is a registered trademark


High-level roadmap to improved Innovation Management as result from the Consulting Workshop

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Innovation Assessment Across All Levels Evaluating assessment results at 3 relevant layers Firm Level

Sector Level

Country Level

• In-Sector Score • Key Gaps • Potential Roadmap and strategy for SME (upon request)

• Sector Score/Themes • Capture hidden innovation • Reflect ways innovation happens in diff sectors

• Country Score • Climate Enablers KPIs • Impact on Productivity • Policy Setting

• Benchmark to average and best in class in other regions




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About INNOVETY


The Company • A non-traditional boutique management consulting firm. • We enable organizations to recognize and achieve their potential growth opportunities through innovation management. • 100+ years of technological innovation and operational/financial experience (industrial/academic)


What we do • Assess innovation readiness using A.T. Kearney House of Innovation platform & benchmarking • Assess organizational learning capabilities and conduct root cause analysis • Hands on coaching on New Venture Management Simulation Tool • Hands-on training and consulting in areas of: 1. Innovation management 2. Organizational learning 3. Operational finance 4. Business planning and modeling 5. Understanding root causes 65 Copyright 2011 © Innovety. All rights reserved

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