Presentation delivered at the "2013 World Quality Day Conference", in Helsinki, Finland, sponsored by the Laatukeskus Excellence Finland.

1. COMBINING
CONTINUAL IMPROVEMENT AND
INNOVATION
ALEXIS P GONCALVES
IT DIRECTOR & INNOVATION CATALYST
COTY INC.
NEW YORK, NY, USA NOVEMBER 2013
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3. Finland is an
Innovation Hot
Spot !
Information Technology
Telecommunications
Forestry
Metals and Mechanical
Engineering
Intelligent Machines
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4. Reinventing
oneself several
times
2013
Network Solutions
2006
Mobile Phones
1967
Electronic Devices
1922
Rubber Business
1865
Paper Mill
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5. Combining
Continual Improvement
and Innovation…
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6. Several “metaphors”
can delineate the
combination…
Growth Path & Risk
Janusian Thinking
The Game Changer
Disruptive Technologies
The Three Horizons
Knowledge Funnel
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7. The Metaphor
of Change
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8. The Metaphor
of Change
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9. The Spectrum of Change
Exploitation
Horizon 1
Kaizen
Horizon 2
Kaikaku
Exploration
Horizon 3
Kakushin
Sustaining
Breakthrough
Disruptive
Innovation
Continual Improvement
Description
Goals
Incremental improvement
Breakthrough product
in products that can be
improvements that
delivered by existing
boosts market share but is
business resources and
still delivered by existing
processes
resources
Playing the Old Game
Better
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Old Game / New Rules
Disruptive business model
that serves new customers
and requires a new profit
model, resources and
processes to deliver
New Game / New Rules
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10. Three Relevant Perspectives to take into
consideration…
1
2
3
The Reliability Bias
When the pursuit of
continual improvement
risks innovation
Building Ambidexterity
How to use both
exploration and
exploitation techniques
De-risking Innovation
Moving from “trial and
error” to a “pattern
recognition” realm
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11. The Reliability
Bias
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12. The Predilection Gap
100% Reliability
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100% Validity
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13. Exhibits
Three Classic Stories of Reliability Bias
A
B
NTT slow adoption of the Internet
C
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Japan Loss of the DRAM Industry
The Death of Vacuum Tube Companies
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14. A
DRAM Memory
25 Years’ Durability
Japan Loss of the DRAM Industry
Japanese producers were making
incremental improvements but not
adjusting to the dramatic changes in
market conditions created when DRAMs
shifted from Mainframes to PC.
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15. B
NTT slow adoption of the Internet
NTT decision makers believed that the
only way to get high quality connection
was based on a dedicated connection
between sender and receiver – something
that the Internet (TCP/IP) did not offer.
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16. C
The Death of Vacuum Tube Companies
They all took a license from Bell Labs and
invested over $3 Billion dollars trying to
make the Transistor good enough that
could be used in products (televisions and
radios) that existed.
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SONY first “Pocketable“ Radio ($2.00 in 1957)
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17. 5
Productive Steps
1. Take inattention to Reliability as a
management challenge.
2. Empathize with the “Reliability-unfriendly
elements”.
3. Speak the language of Validity.
4. Share data and reasoning, not conclusions.
5. Bite off as big a piece as possible to give
innovation a chance.
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18. “The optimal approach to Reliability
and Validity is not to choose but to
seek a balance of both.”
– Roger Martin
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19. Building
Ambidexterity
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21. Five Conditions To Promote
Ambidexterity
A
B
A Common Identity
C
A Senior Team that Owns the Strategy
D
Separate but Aligned Architectures
E
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A Compelling Strategic Intent
A Clear Mechanism for Conflict Resolution
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22. A
Emerging Business Organization (EBO)
A Compelling Strategic Intent
In 2000, IBM began a programmatic effort,
termed the Emerging Business Organization
(EBO), to identify and develop cross-IBM
business opportunities that could provide $1.0
Billion in revenue within a 5-year time frame.
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23. A
• Need to intellectually justify the
importance of both exploration
and exploitation.
• Need a rationale for why
A Compelling Strategic Intent
In 2000, IBM began a programmatic effort,
termed the Emerging Business Organization
(EBO), to identify and develop cross-IBM
business opportunities that could provide $1.0
Billion in revenue within a 5-year time frame.
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profitable exploit units, especially
those under pressure, should
give up resources to fund small,
uncertain efforts.
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24. B
A Common Identity
At USA Today there is an explicit strategy to
“be a network, not a newspaper”. The overarching aspiration is to be “the local news for
the global village”. Common values around
fairness, accuracy, and trust, help knit
together a highly differentiated organization.
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25. B
• Need over-arching vision and
values that promote a common
identity but separate cultures.
• Without a common identity it’s
difficult to promote trust,
cooperation and long-term
perspective.
A Common Identity
At USA Today there is an explicit strategy to
“be a network, not a newspaper”. The overarching aspiration is to be “the local news for
the global village”. Common values around
fairness, accuracy, and trust, help knit
together a highly differentiated organization.
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26. C
A Senior Team that Owns the Strategy
In the Cisco Telepresence case, members
of the governance team (Boards and
Councils) had a significant portion of their
bonus (70%) contingent on the success of
both units.
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27. C
Without senior team consensus about
the importance of ambidexterity,
those who are uncommitted will:
Resist the effort
Diminish cooperation
Increase competition for resources
Slow down execution
A Senior Team that Owns the Strategy
In the Cisco Telepresence case, members
of the governance team (Boards and
Councils) had a significant portion of their
bonus (70%) contingent on the success of
both units.
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Create a Common-Fate Reward
System
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28. D
Separate but Aligned Architectures
In 2006, the CEO of SAP declared that the future
revenue growth for the company was in selling
software on demand. This Software-as-a-Service
(SaaS) product was developed but no separate
unit was established. Although this market has
grown substantially, SAP has failed to successfully
market their offering. In 2010, the CEO Leo
Apotheker was fired for failing to implement SaaS.
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29. D
Separate exploratory and exploitative
units with targeted integration at both
senior and tactical levels.
Key objectives are:
• To properly leverage organizational
assets.
Separate but Aligned Architectures
In 2006, the CEO of SAP declared that the future
revenue growth for the company was in selling
software on demand. This Software-as-a-Service
(SaaS) product was developed but no separate
unit was established. Although this market has
grown substantially, SAP has failed to successfully
market their offering. In 2010, the CEO Leo
Apotheker was fired for failing to implement SaaS.
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• To efficiently use resources.
• To ensure coordination across units.
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30. E
A Clear Mechanism for Conflict Resolution
At Zensar, even though there were substantial
conflicts between the existing business units and
the new integrative software platform, the CEO
saw to it that his team actually dealt with these
conflicts and made the appropriate resource
allocation shifts between the existing units.
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31. E
• Have a clear, identifiable leader
and forum to resolve conflicts
and make definitive resource
allocation decisions.
• Linked to the ability of senior
A Clear Mechanism for Conflict Resolution
At Zensar, even though there were substantial
conflicts between the existing business units and
the new integrative software platform, the CEO
saw to it that his team actually dealt with these
conflicts and made the appropriate resource
allocation shifts between the existing units.
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leadership to tolerate and resolve
tensions arising from separate
alignments.
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32. “Organizational ambidexterity is a
firm's ability to simultaneously exploit
and explore with equal dexterity.”
– Michael Tushman
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33. De-risking
Innovation
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34. How much do
we know about
Innovation…?
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INNOVATION
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35. How a does Body
of Knowledge
Emerge…?
Wallace Carothers
(April 27, 1896 – April 29, 1937)
An American chemist, inventor and the leader of
organic chemistry at DuPont, credited with the
invention of nylon and neoprene.
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Organic
Chemistry
80 years ago
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36. How a does Body
of Knowledge
Emerge…?
Nylon
Teflon
Kevlar
Neoprene
Lycra
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37. How a does Body
of Knowledge
Emerge…?
Today, if you need a new molecule, all you
need to have is…
• A B.S. in Chemistry from a state school
• A great piece of software
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Organic
Chemistry
today
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38. How a does Body
of Knowledge
Emerge…?
Rules-Based Modeling
Pattern Recognition
Trial-and-Error
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39. Pattern
Recognition
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Innovation Landscape
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40. Pattern
Recognition
Innovation Games and
Migration Paths
Roger Miller
Offering
Standalone
Products
Tightly
Integrated
Products
Open
Modular
Systems
Pattern-driven
discovery
Systems
Integration
Platform
Orchestration
G
H
Market
Market
Creation
A
Market
Evolution
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B
Cost-based
search for
efficiency
C
D
Strategic
Consulting &
Systems
Engineering
E
F
Customized
mass
production
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41. Rules-Based
Modeling
Disruptive Innovation
Theory
Clayton Christensen
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42. “A few years from now, Innovation will
be just another management discipline
– like budgeting or auditing – that is
well understood, thoroughly analyzed,
shared and taught.”
– Larry Keeley
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43. Closing Remarks
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44. Three Relevant Perspectives to take into
consideration…
1
2
3
The Reliability Bias
When the pursuit of
continual improvement
risks innovation
Building Ambidexterity
How to use both
exploration and
exploitation techniques
De-risking Innovation
Moving from “trial and
error” to a “pattern
recognition” realm
@ 2013 Alexis P Goncalves . ALL RIGHTS RESERVED
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45. Q&A
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46. SEE MORE INSIDE THIS BOOK
Book “Innovation Hardwired”
Available at
Author
Alexis P. Goncalves
Join my Network
http://www.linkedin.com/in/goncalves
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47. COMBINING
CONTINUAL IMPROVEMENT AND
INNOVATION
ALEXIS P GONCALVES
IT DIRECTOR & INNOVATION CATALYST
COTY INC.
NEW YORK, NY, USA NOVEMBER 2013
@ 2013 Alexis P Goncalves . ALL RIGHTS RESERVED
46