50 years ago, innovation centers like Xerox or Philips’ Natlab set the benchmark with their methodologies on organizing innovation. Today, innovation is influenced by rapid-moving triggers and companies have to organize accordingly. Discover current best practices on organizing your innovation ecosystem.

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CONFIDENTIAL Template Innovation Day 2019CONFIDENTIAL
SHAPING YOUR INNOVATION ECOSYSTEM
Stijn Smet
Coordinator InnoLab
stijn.smet@verhaert.com
TRACK 2
MyInnovationFactory

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CONTENT
How we used to organize
Current challenges
Innovation organization framework
Looking beyond your own organization

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HOW WE USED TO ORGANIZE
50 years ago: the birth of structured innovation programs

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Unix (’60s)
HEROES OF INNOVATION – AT&T BELL LABS
C (’70s)Solar cells (‘54)Transistor(‘47) Charge-coupleddevice (‘69)

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HEROES OF INNOVATION – IBM RESEARCH
Floppy disk (‘67) Watson Supercomputer (2011)Smartphone Simon (‘94)ATM (‘73)

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HEROES OF INNOVATION – XEROX PARC
Computer mouse (‘64) Ethernet (‘74) Graphic User Interface (’70s) Laser printer (‘75)

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Recipe for winning a Nobel prize
1. Have a lot of money ☺
2. The brightest minds
3. Closed environment
4. Deliberate focus on specific technologies
5. Time & resources to investigate
HOW THEY USED TO ORGANIZE
(or 9)

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CURRENT CHALLENGES
FOR CORPORATE INNOVATORS
Internal & external drivers for change

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Rising complexity
of systems
WHAT HAPPENED?
War for talent
Consumer demands &
shorter product lifecycles
Pressure on
short-term profit
Technology convergence
Rapid technology innovations
Global playing field
E-commerce
Fierce start-up disruption
New entrants &
market disruptors

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EVOLUTION OF CORPORATE R&D
1870 – 1920
Inventor / entrepreneur
Ad hoc
Trial & error
1920 – 1990
Corporate R&D labs
Closed & centralized
Divisionalization
1990 – today
Corporate VC & Biz dev
Investments & KPIs
ROI & revenue growth
2010 – today
Networks & outposts
Incubators
Open innovation

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FIRST THINGS FIRST:
FOCUS ON YOUR OWN AMBITIONS & STRATEGY

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WHY DOES INNOVATION FAIL
IN ESTABLISHED COMPANIES?

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INNOVATION
THEATER
CORPORATE
ANTIBODIES
STRATEGIC
DISCONNECT

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INNOVATION ORGANIZATION FRAMEWORK
Shaping your organization towards high-impact innovation

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ORGANIZING FOR IMPACT-DRIVEN INNOVATION
Kudos to: Tendayi Viki
Author of ‘The Corporate Startup’

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INNOVATION THESIS

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growing efforts
relevance not for granted
more in-house competences
INNOVATION THESIS
initiatives are standalone
no focus on synergies
no holistic vision
uncertain outcomes create hesitance
Companies require a compass to guide them
in the endless sea of opportunities, challenges
and methods to innovate.

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INNOVATION THESIS
Set global KPIs to follow-up
Re-balance your existing framework
Validate your innovation thesis
Define what you’re NOT going to focus on
Define your strategic innovation themes

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INNOVATION PORTFOLIO

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AN INNOVATION PORTFOLIO IS THE GLUE
BETWEEN STRATEGY & EXECUTION

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INNOVATION PORTFOLIO
ENOUGH IDEAS?
THE RIGHT MIX?
MEASURING PROGRESS?
ON TRACK?
WHAT TO PRIORITIZE?
WHAT BUDGET YOU NEED?

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Being intentional with your portfolio will help you to …
INNOVATION PORTFOLIO
Avoid ‘trial & error’ approach
Perform periodic reviews
Find opportunities to combine efforts & outcomes
Direct your portfolio according to your overall strategy
Better allocate your energy & resources

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Depending on your steering preferences
or KPIs, you can compile dashboards on:
• Focus
• Ambition/horizon
• Intent
• Time
• Execution stream
• …
INNOVATION PORTFOLIO

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WHAT IS THE IDEAL BALANCE?

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INNOVATION PRACTICE

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INNOVATION FRAMEWORK

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INNOVATION FRAMEWORK

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INNOVATION FRAMEWORK
Stage-gate meetings
Eg. 3 months
Clear decision points
List hypotheses, validation approach & budget

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INNOVATION FRAMEWORK
Set clear stage-gate criteria and reporting KPIs
Adjacent & transformational innovations require focused effort
Budget accordingly (avoid zombie projects)
Explicitly aid teams to work in sprints (build/test/learn)
Prioritize your riskiest assumptions

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INNOVATION ACCOUNTING

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INNOVATION ACCOUNTING
GLOBAL KPIS
GOVERNANCE KPIS
REPORTING KPIS ~ innovation practice

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INNOVATION ACCOUNTING
GLOBAL KPIS
GOVERNANCE KPIS
REPORTING KPIS ~ innovation practice
~ innovation management

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INNOVATION ACCOUNTING
GLOBAL KPIS
GOVERNANCE KPIS
REPORTING KPIS ~ innovation practice
~ innovation strategy
~ innovation management

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INNOVATION ACCOUNTING
GLOBAL KPIS
GOVERNANCE KPIS
REPORTING KPIS
ACTIVITY
METRICS
IMPACT
METRICS

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WHAT ARE YOUR INNOVATION KPI’S?

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REPORTING KPIs
ACTIVITY METRICS IMPACT METRICS
Number of ideas generated
Number of ideas chosen
Number of assumptions
Number of experiments
Number of customer conversations/interviews
Number of customer observations
Number of prototypes developed
Number of MVPs built
Number of hackathons held
Number of design sprints
Risky assumptions identified
Hypotheses developed
Minimum fail criteria set
Experiment results
Cohort analysis
Decisions made (pivot, persevere, retest)
Pirate metrics (acquisition, activation, retention, revenue, referral)
Customer lifetime value
Cost-per-learning
Time-cost-learning
Learning velocity
Validation velocity
REPORTING KPIs

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GOVERNANCE KPIs
ACTIVITY METRICS IMPACT METRICS
Number of products in pipeline
Number of products per innovation stage
Number of ideas submitted
Number of decisions made
Number of products moving stages
Average amount spent per stage
Assumptions-to-knowledge ratio
Stage-gate criteria
% of products at problem-solution fit
% of products at product-market fit
% of products at scale
Number of validated business models
Validation velocity
Returns on product development expense
Process improvement metrics
GOVERNANCE KPIs

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GLOBAL KPIs
ACTIVITY METRICS IMPACT METRICS
Number of products by type of innovation
(core, adjacent, transformational)
Number of products per innovation stage
% of products aligned to innovation thesis
Number of patent filings
Startup partnerships
Academic collaborations
Number of products built using lean methods
Number of employees trained
Number of investment boards
Number of innovation coaches
Number of innovation events
Innovation contribution
Cost savings
Innovation conversion
New product market share
New segment market share
Increased shelf space
Increased share of wallet
Increased distribution footprint
Number of patents granted
New business models taken to scale
GLOBAL KPIs

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MEASURE WHAT IS RELEVANT FOR YOUR ORGANIZATION
Innovation departments should measure cannibalization as a positive KPI
Innovation return is more important on overall level then per project basis
The knowledge-to-assumption ratio is an important KPI
Invest in installing this mindset throughout the organization
Business and innovation projects should be managed separately

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12 STEPS TOWARDS A MATURE INNOVATION ORGANIZATION
1. Explore your context
2. Get executive buy in
3. Develop innovation thesis
4. Map your portfolio
5. Choose innovation model
6. Create an innovation framework
7. Work with enabling functions
8. Create tools and platforms
9. Develop innovation capabilities
10.Set up investment boards
11.Choose key metrics
12.Build the community

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LOOKING BEYOND YOUR OWN ORGANIZATION

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THE NETWORK ALWAYS WINS

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LOOKING BEYOND YOUR OWN ORGANIZATION
Share the value with (open) platforms
Allow for casual connections to build the relationship
Be open about your innovation needs
Let users define your innovation goals & tweak your products
Go all-in. Don’t take it like a side project

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HOW VERHAERT LOOKS AT IT

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EVOLUTION OF CORPORATE R&D
1870 – 1920
Inventor / entrepreneur
Ad hoc
Trial & error
1920 – 1990
Corporate R&D labs
Closed & centralized
Divisionalization
1990 – today
Corporate VC & Biz dev
Investments & KPIs
ROI & revenue growth
2010 – today
Networks & outposts
Incubators
Open innovation

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One group, five brands
Our services are marketed through 5 brands each addressing
specific missions in product development.
INTEGRATED PRODUCT DEVELOPMENT
ON-SITE PRODUCT
DEVELOPMENT
DIGITAL PRODUCT
DEVELOPMENT
OPTICAL PRODUCT
DEVELOPMENT