Presentation on Innovation Management to Department of Economic Development in Abu Dhabi - 2013-03-12

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reproduced for
distribution outside the receivers organisation without prior written approval from Bearing Consulting
Ltd.
Executive Innovation Management
Seminar
March 12, 2013
“..because the execution of an idea is always more
important
than the brilliance of the thought..”
(Harvard Business Publishing – Morgan, Levitt & Maleck – INVEST model)

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3. 3
Föreläsare
Jörgen Eriksson, Founding Partner in Bearing
and adjunct Professor of Innovation Management,
resides in France and works with consulting
internationally.
Has since 1995 led a large number of projects
related to innovation systems, business
development, restructuring and R&D across four
continents.
Presenting today

4. 4
We work with clients in three focus areas;
Bearing Consulting is a management consultancy incorporated in United
Kingdom with offices in London, Stockholm, Barcelona, and
Johannesburg
Places & Regions
Finance
Innovation
Over the past 12 years, we have been
engaged in projects across four
continents
About Bearing Consulting
Bearing develops methodology and
also
publish books

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Places where we have worked

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1. Globalisation and Hyper Competition
2. Business in Hyper Competitive Markets
3. What do we mean with Innovation?
4. How can we work with Innovation?
5. Innovation in Cities
6. Corporate Innovation and common gaps
7. How to make Corporate Innovation work
Agenda

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Globalisation and Hyper Competition

8. Sub heading
8
The European Perspective
“Europe is facing a moment of transformation. The crises has
wiped out years of economic and social progress and exposed
structural weaknesses in Europe´s economy.
In the meantime, the world is moving fast and long-term challenges
such as globalisation, pressure on resources, population ageing,
are intensifying.”
- Quote from Europe 2020 Strategy

9. Sub heading
9
The European Perspective
The European Union has set out its vision for Europe´s economy in
the Europe 2020 Strategy, which aims at confronting structural
weaknesses through progress in three mutually reinforcing
priorities:
1. Smart Growth, based on
knowledge and innovation
2. Sustainable growth, promoting a
more resource efficient, greener
and competitive economy
3. Inclusive growth, fostering a high
employment economy delivering
economic, social and territorial
cohesion

10. Sub heading
10
Investing more in research, innovation and entrepreneurship is
at the heart of Europe 2020 and a crucial part of Europe´s response
to the economic crises.
So is having a strategic and integrated approach to innovation
that maximizes European, national and regional research and
innovation potential.
It is about enhancing Europe´s capacity to
deliver smart, sustainable and inclusive
growth, through the concept of smart
specialization.
The European Perspective

11. Sub heading
11
Specialization in Europe

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Business in hyper competitive markets

13. 14
Corporate world dominance
In the year 1994, Motorola was world leader in (analogue)
mobiles,
seven years later Nokia was world leader in (digital) mobiles
0%
10%
20%
30%
40%
50%
60%
Market shares 1994 Market Shares 2001
Motorola
Nokia

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From #1 to crises in less than three years…
Why ?
Nokia share price

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Apple stock price down more than 30%

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“Either you innovate or you’re in commodity hell. If you
do what everyone else does, you have a low-margin
business. That’s not where you want to be.”
Sam Palmisano, former CEO IBM
Hyper competition

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“Managing innovation better may be the only way out of
the abyss called commodity hell”
Jeffrey R. Immelt, CEO General Electric
Hyper competition

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Why hyper competition?
 Globalisation – less trade barriers and efficient transport (e.g. containers)
 Speed of hyper connected communication and the pace of modern
business
 Disruptive Technologies
A new technology that has a serious impact on the
status quo and changes the way people have been
dealing with something, perhaps for decades
Some drivers of hyper competition

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What do we mean with innovation?

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What is Innovation?
The literature
is not giving
us a
consistent
definition

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Innovation is creative destruction, where
entrepreneurs combine existing elements in
new ways…
After Joseph Schumpeter (1883 – 1950)
The definition

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Train Car Airplane
Innovation ?
”Invention” => Innovation => Effect (Globally)
What is Innovation?
Innovation can be incremental or disruptive / radical

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Types of innovation

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What successful development requires
Success with innovation does not require comparative resources.
The Ghaff tree grows in the desert virtually without water.
The key factors for success with innovation are knowledge and creativity

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How can we work with innovation?

26. 28
Innovation across the business system
Product &
Services
Business
Model
Delivery &
Supply Chain
Operation
Sales &
Marketing

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The Innovation Radar
Wolcott, Lippitz, “Grow from Within”

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The twelve dimensions of innovation

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From “hard” to “soft” factors

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Does Harley-Davidson sell motorcycles?

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Does Harley-Davidson sell motorcycles?
“…what we sell is the ability
for a 43-year-old accountant
to dress in black leather,
ride through small towns
and have people be afraid
of him“
– an HD executive

32. 34
The Lego Story
Y2000 "Toy of the
Century" by
Fortune magazine
and the British
Association of Toy
Retailers
Y2003 – 2004
Huge losses, close
to bankruptcy
Y2004-03, the
owner & CEO
Kjeld Kirk
Kristiansen decide
to go back to
basic!
Y2004-10, Jørgen
Vig Knudstorp
appointed as new
CEO

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The Lego Story
 The situation 2004
Demand decreasing, competition from games,
movies, merchandising
Poor quality
Poor logistics
Slow in adoption
Simplistic leadership and laid-back culture
Sources: HBR, DN, Guardian, BBC, Handouts European Offshoring Summit, (2009, Copenhagen)

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The Lego Story
Improve the
business
Stabilize
operations
Organic
growth
Restore the
balance sheet
Define
Raison d'être
Value Creating
Partnership
Deliver what
we promise
Differentiated
Value Chain
Consumer Driven
Value Chain
Rigid Execution
Platform
-1800
-800
200
1200
2200
2003 2004 2005 2006 2007 2008
Operational
Profit
MDK
Year
Innovate Execute
Offshoring

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Lego – key achievements
Clear Raison d'être: “we help children learn systematic and creative
problem solving—a crucial twenty-first-century skill”
Gained consumer insights through “direct sales to consumers”
through BuiltByMe without competing with existing distribution
channel
Co-Branding with strong and selected partners such as Star wars
and Harry Potter

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Lego – key achievements
Reduced lead time, 45 to 3 days to
store
Cost saving through offshoring non-
core competencies
A new supplier interface
QA system in place
Open Innovation, 120,000 people
involved in external innovation work –
DesignByMe, DreamtByMe,
BuildByMe
Community driven approach; the open
platform Mindstorm encouraging
customers to design and develop their

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Lego total innovation makeover
Supply Chain
Business Model
Marketing
Customer
Engagement
Services
Brand
Product
Partner Model
...and LEGO continues to deliver exceptional profitable growth on
an oligopolistic/niche and international toy market...
Internal Innovation
External Innovation

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Innovation in cities and other places

39. 42
The City Competition Challenge
The global competition of
cities is estimated to host 2,7
million towns, 3 thousand large
cities and 455 large
metropolitan areas with a
population over one million.
All of them compete in the
struggle for attention and this
is not limited to the contest
between countries and cities.
Even within cities there is a fierce competition between city centers versus
neighbourhoods, shopping malls vs. traditional down towns, and so on.
The competition between places used to be about comparative
advantages, but in the age of globalisation it is about competitive
advantage.

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The Place Competition Challenge
Driven by globalisation, we now live in hyper
competitive global markets.
This competitive environment makes it
important for places, no matter their size or
composition, to clearly differentiate and to
convey why they are relevant and valued
options.
Places have always competed with each
other, but today the competitive
environment is increasingly fierce, because
of economic and cultural globalization and
the increasing mobility of talents and capital.
In positioning a place, there is always a
risk of simplification. All too often place
brand development results in slogans, but
such results are failures.

41. Sub heading
44
Specialization in Europe

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How to achieve Place Excellence

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Seattle in the 1970s – a place in decline
In the 1970s Seattle became synonymous with urban decline

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Seattle – example of success
World class
institutions and
companies based in
Seattle:
- Microsoft
(Redmond)
- Amazon.com
- Starbucks
- Nordstroms
Today, Seattle is one of the wealthier and most productive
metropolitan areas in the United States
- Per-capita income is 25 percent above the average
- Per-capita productivity is 37 percent above the average
Seattle has succeed by attracting talented institutions and people
through smart place management and smart place branding

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Differentiation with or without Direction….

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What City Branding means
A city brand strategy is a plan for defining
the most realistic, most competitive and
most compelling strategic vision for the
city.
This vision then has to be fulfilled and
communicated.
It is fundamental to ensure that the vision of
the place is supported, reinforced and
enriched by every act of communication
with the rest of the world.

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Communication
• Co-branding with products and services
• In promotion for trade, tourism,
investment and talent attraction
• In representing its culture with other
places
• How residents behave when abroad and
how they treat visitors at home
• In the urban and natural environment it
presents to the visitor
• In the way it features in media
• In the bodies and organisations it
belongs to
• Toward the other cities it associates with
When to
Communicate
the City Brand?

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The Internet home page
Internet is now the
primary communication
tool.
A city may have a very
well thought through place
brand, but the clarity and
relevance of the brand
has to be communicated
on the internet in an
efficient and skilful way.

49. Sub heading
52
Who to involve - the triple helix dilemma…
In the photo above we can see triple helix spiral
stairs from the cathedral in Santiago de
Compostela in Spain. They all start on the
ground floor and lead to different places. The
photograph illustrates the real-world difficulties of
making the business sector, the academic sector
and government understand each other and
cooperate.
For 20 years we have
used the traditional
triple-helix model,
describing the crossing
of three worlds;
academia, business and
government
4

50. Sub heading
53
The ”drain pipes”…
Successful development can never thrive on an organizational
set up where the traditional institutional borders look like the
drain pipes.
Instead, an open and innovative cross fertilization is the winning
recipe. In summary: “context management” is a prerequisite.
4

51. Sub heading
54
The Quad Helix model
The Quad-Helix model
recognizes that the drain
pipe approach is not
competitive
It also illustrates the key
importance of the central
context management
The Quad Helix model
approach is at the core
of our thinking
4

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Always start with your Target Markets
City branding is the process of image communication to a target
market
All places compete with other places for people (visitors, residents),
resources, and business.
Which are the target markets of your place?

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Perform a sweet spot analysis for differentiation
Customers’
needs
Competitive
places
offerings
Your own city
assets and
capabilities
Sweet
Spot
Where your city meets
target markets needs
in a way in which your
competitors cannot
What?
Where?
Why?
How?
1
2
3
Sweet spot = unique spot
How to protect/define boundary 1,2,3
Inspired by: Collis & Rukstad (2008). Can You Say What Your Strategy Is?,
HBR (April 2008)

54. Sub heading
57
The Power of Visions
“Vision without action
is merely a dream.
Action without vision
merely passes the
time.
Vision with action can
change the world.”
- Joel Barker, Futurist, Author
Vision
Strategy
Plans and
implementation

55. Sub heading
58
The importance of visions

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Book published in 2011
Place Management – book
on place management,
branding and development
The book is available on
www.amazon.co.uk
or
www.placemanagement.net

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distribution outside the receivers organisation without prior written approval from Bearing Consulting
Ltd.
Corporate Innovation
and common gaps

58. 61
Types of innovation

59. 62
The S-curve
Emergent Growth Mature
Performance
/
Value
offering
Effort / Time
Business of the future
(EXPLORATORY)
Ongoing business
(EXPLOITATIVE)
Source: Tovstiga (2007)

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Föreläsare
Ten steps to corporate innovation management
1. Adopt a disciplined method for innovation management including project
management, focus on customer needs and alignment of research and development to
marketing plans.
2. Use advisers and collaborators to obtain resources which are non-core, vital or of
superior quality to resources available in-house.
3. Identify customer needs in market segments.
4. Identify the differentiation of your innovative offering (goods, services, systems or a
combination of them) to meet those customer needs.
5. Develop the offering for the identified differentiation.
6. Secure intellectual property protection.
7. Use the differentiation as a component of the competitive advantage
8. Refine the positioning of the offering at either the offerings, operations or
organisational structure level.
9. Monitor, anticipate and respond to competition against or relevant to the offering.
10. Monitor and respond to the market performance and feedback for the offering.

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Siemens Corporate Innovation Process (CIP)

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En definition...
Common gaps
1. Framework of reference, lack of common terminology
2. Heads on competition in market. Limited focus on
differentiation
3. Culture
4. Not allow people time and space to be creative
5. Focus only on exploitative business, not exploratory
6. Creativity killed by process and procedure
7. Too long time to market

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How to make corporate innovation work

64. 67
Strategy

65. 68
Blue Ocean Strategy
Blue Ocean
Strategy (2004)

66. 69
Blue Ocean Strategy

67. 70
Sweetspot analysis
Customers’
needs
Competitors’
offerings
Company’s
capabilities
Sweet
Spot
Context (technology,
industry, regulatory, etc.)
Where your firm meets
customers needs in a
way in which your
competitors cannot
What?
Where?
Why?
How?
1
2
3
Sweet spot = unique spot
How to protect/define boundary 1,2,3
llis & Rukstad (2008). Can You Say What Your Strategy Is?, HBR (April 2008)

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Your Sweet Spot Defines Your Future Success
Customers’
needs
Competitors’
offerings
Company’s
capabilities
Sweet
Spot
Context (technology,
industry, regulatory, etc.)
Where your company
meets customers
needs in a way in
which your competitors
cannot
What?
Where?
Why?
How?
1
2
3
Sweet spot = unique spot
How to protect/define boundary 1,2,3
llis & Rukstad (2008). Can You Say What Your Strategy Is?, HBR (April 2008)
First
DIFFERENTIATE
from competitors

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Your Sweet Spot Defines Your Future Success
Customers’
needs
Competitors’
offerings
Company’s
capabilities
Sweet
Spot
Context (technology,
industry, regulatory, etc.)
Where your company
meets customers
needs in a way in
which your competitors
cannot
What?
Where?
Why?
How?
1
2
3
Sweet spot = unique spot
How to protect/define boundary 1,2,3
llis & Rukstad (2008). Can You Say What Your Strategy Is?, HBR (April 2008)
THEN expand border 3 north
toward customer needs

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Innovation framework
Why
Strategic question
Profit / Market share
Company Strategy
•Incremental/
Disruptive
•Need seekers
•Market readers
•Technology drivers
What
Type of innovation
Product Innovation
Process Innovation
Organisational Innovation
Management Innovation
Production Innovation
Commercial/Marketing
Innovation
Service Innovation
How
Style
•Cauldron
•Spirale
•Fertile
•PacMan
•Explorer
People
•10 Faces of Innovation
Capability & Process
•Ideation
•Project selection
•Product development
•Commercialisation
Source: Penker (2011)

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Innovation Capabilities
Innovation Capabilities
- Determines how well you will succeed with your innovation efforts
Examples:
• Personas
• Knowledge
• Team structure
• Tools
• Processes.
The most successful companies are those that focus on
a particular, narrow set of common and distinct
capabilities that enable them to better execute their
chosen strategy.

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Why – Strategic Question
?
Strategic
Question
Increase barriers to enter or copy
Differentiation and neutralization of
competitors
Focus on competitive advantages
Building the capabilities to increase
the internal efficiency
Cost savings
Disruptive opportunities
To keep competitors
out keeping/gaining
market shares?
To increase the profit ?

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How – Style & People
“The Devil´s Advocate may never go away, but on a good day, the ten
personas can keep him in place” (Kelly & Littman, 2005)
Source: Kelly & Littman (2005)
Learning
personas
Anthropologist
Experimenter
Cross-Pollinator
Organisational
personas
Hurdler
Collaborator
Director
Building
personas
Experience
Architect
Set Designer
Storyteller
Caregiver

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What – Types of Innovation
• Creating or reinventing the business in itself
Business model
• Changing the organisational structure, in its business
practice, workplace organisation or external relations
Organisational
structure
• Creation of better or more efficient internal processes
Processes
• Improve the production stream and business methods
Production
• Development of new or improved products
Products
• Development of new or improved services
Services
• Development or implementation of more efficient or
better management systems
Management
systems

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Innovation style
• An entrepreneurial
style where the
business model is
constantly challenging
and is frequently
challenged
The Cauldron
• A style where you are
constantly innovating
the existing business
and it over time
changes its nature.
While it seems to stay
in the same place.
The Spiral
Staircase
• A style where the
organisation tries to
use existing
capabilities and
resources in a new
way beyond the
company’s existing
operations.
The Fertile Field
• A style where you
invest in start ups that
have already done
the strategy
development and
R&D
The PacMan
• A style where you
explore possibilities
and invest time and
money in them
without demanding
short-term profit
The Explorer
Source: Loewe, Williamson and Wood
(2001)

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The Innovation Personas
Source: Kelly and Littman (2005)
The world is changing at an accelerating
speed and these personas are needed to
help teams from becoming too internally
focused.
Learning
Personas
• The Anthropologist
• The Experimenter
• The Cross-Pollinator
Enables the ideas to move forward in the
organisation as even the best ideas must
compete got time, attention and
resources.
The Organising
Personas
• The Hurdler
• The Collaborator
• The Director
The building roles apply insights from the
learning roles and channel the
empowerment from the organising roles
to make innovation happen.
The Building
Personas
• The Experience Architect
• The Set Designer
• The Storyteller
• The Caregiver

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How – Capabilities & Process
Ideation
Supplier and
distributor
engagement in
ideation process
Independent
competitive insights
from the marketplace
Open
innovation/capturing
ideas at any point in
the process
Detailed
understanding of
emerging
technologies and
trends
Deep consumer and
customer insights and
analytics
Project
Selection
Strategic disruption
decision making and
transition plan
Technical risk
assessment/manage
ment
Rigorous decision
making around
portfolio trade-offs
Project resource
requirement
forecasting and
planning
Ongoing assessment
of market potential
Product
Development
Reverse engineering
Supplier–partner
engagement in
product development
Design for specific
goals
Product platform
management
Engagement with
customers to prove
real-world feasibility
Commercializa
tion
Diverse user group
management
Production ramp-up
Regulatory/governme
nt relationship
management
Global, enterprise-
wide product launch
Product life-cycle
management
Pilot-user
selection/controlled
rollouts
Source: Jaruzelski & Dehoff (2010)

78. 81
En definition...
Marissa Mayer´s 9 Principles of Innovation
1. Innovation, not instant perfection
2. Ideas come from everywhere
3. A license to pursue your dreams
4. Morph projects don´t kill them
5. Share as much information as you can
6. Users, users, users
7. Data is apolitical
8. Creativity loves constraints
9. You´re brilliant? We´re hiring

79. 82
IDEO´s method for creativity
”Method to our madness”
1. Understand the market, the client, the technology and percieved
constraints
2. Observe real people in real life situations
3. Visualize new-to-the-world concepts
4. Evaluate and refine the prototypes
5. Implement the new concept for commercialisation

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...the navigator
Bearing Innovation Navigator
Initiated by the work of Sawhney, M., Wolcott, R. C., & Arroniz, I. (2006). The 12 Differetnt Ways for Companies to
Innovate. MIT Sloan Management Review , 75-81.

81. 84
Comparisons
Bearing Innovation Navigator

82. 85
Bearing on the web
Bearing has a blog with
an active debate
blog.bearing-consulting.com
Read more about what we
do on the Bearing homepage
www.bearing-consulting.com

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INNOVATE - EXECUTE™