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Innovation strategy answer demand renewal
- 1. No Is an innovation strategy the answer to the demand for renewal? Bengt Järrehult, SCA/LTH …it is a prerequisite, but it’s not sufficient…
- 2. The ontologies change with with time…. winning games change time…. Known & Ordered Knowable & Complicated Unknowable & Complex Best practice, SOPs Analytical/Reductionistic Pattern recognition/Experimental Sense – Categorize – Respond Sense – Analyze – Respond Probe – Sense – Respond Validity for success 1980 1990 2000 2010 Year Inspired by Dr Dave Snowdon Cynefin/IBM, ARK Group Annual Knowledge Management Conference London, 14 Nov 2002
- 3. Two types of innovation strategies Inspired by ”Making Innovation work”, 2006. Davila, Epstein, Shelton
- 4. Play both games simultaneously! Inspired by ”Making Innovation work”, 2006. Davila, Epstein, Shelton
- 5. Play both games simultaneously! Gr g o asp co f an in m mm d Inn ent it ov to on ati . Inspired by ”Making Innovation work”, 2006. Davila, Epstein, Shelton
- 6. Play both games simultaneously! In t egr on ati of risk taG - kirn an agpis cco da ng ham n itntI nme d of o g com he o n itm nt ov e cul pany atio nt tur n. e. Inspired by ”Making Innovation work”, 2006. Davila, Epstein, Shelton
- 7. Play both games simultaneously! Match ing I thente Innov ri grat atiok- Gion sn stratean tak ra of gydtc g ingsp the ov in ohanof in ertol com ge n al t a Busicom m he m d ness e Stracul Inpannt t it tegu .no y o t yr v one. ati . Inspired by ”Making Innovation work”, 2006. Davila, Epstein, Shelton
- 8. Play both games simultaneously! Securing a Match ing I balancent the Innov eg ar io betweens n rati ti strate k- G on g creativitynandtg ki ra of a y to a the ov d c erallc anofngspin int h g value capture a Busin o om e n coessm th for maximizede m d Strate mpaen it culgInn ROI.y. o nyt to tur v one. ati . Inspired by ”Making Innovation work”, 2006. Davila, Epstein, Shelton
- 9. Play both games simultaneously! AM well Securing a t at i hg ioncn inn t funcbalanceg e he I vat o I nt g onnoivar i,on rat Inn tr orkis between t s ewatea y k-ta Gion o frahe ig and n s m creativityng to g ki ra f t ing n d c value oviertalec anof ag pin nid l h g br capture Bughts/ o a m e n sicnessm th o for si omard. e m d iStmaximized n ractergInpaent it fo l w n s ROI.y. ny t ut o ure v o on . ati . Inspired by ”Making Innovation work”, 2006. Davila, Epstein, Shelton
- 10. Play both games simultaneously! well An of g a ioSecuring M on n at ncitiatcihing t on n t iliz fuatbalancente he I U ov Inn,ovo g oksati ar i,on rat n or v Inn Iwntr alrtisk between s ewo k - Gion a eg etframertnanandtak ra of creativity y to g i N tih t n. h neiecapturea o ngspi gerlg ch ia d t brt o n lla ovalue nrvin aec s n f b Bu /itd o g a n xs t o d eighns ssm th m e nd for s icoe rde e m aniStmaximized nr m . oelgI an actu wypannt it r fROI.n. y t tur ov o one. ati . Inspired by ”Making Innovation work”, 2006. Davila, Epstein, Shelton
- 11. Play both games simultaneously! of well io n An of g a ioSecuring Miatcih n n ning ct wtilizaftuntbalancen th e eU es a ciItno ion te e o I t ro n Itnvnovnnokn,ovar ion ra i I between g vsat t P ia arte otrewalrksk- Gion str atno i, it Necreativity y t ta r o wn m r ea t in hat frah te iglg o g kinas f rhtinh eng a and e e nd n. t foe briervera ch o g pi t t t o ni llaa f i f value captures ng a n b mex d od Bumi.nsnitdecom e n ninsirghte/ sm the m d s co s o r maximized afforto m rd. Snratewapaen it culgInn or fROI.y. nyt t tur ov o one. ati . Inspired by ”Making Innovation work”, 2006. Davila, Epstein, Shelton
- 12. The 5 parts of the Innovation strategy What? Why? How? Why? Who? When?
- 13. The 5 parts of the Innovation strategy What? What? How? Why? Who? When?
- 14. The 5 parts of the Innovation strategy What? How? How much? How? Why? Who? When?
- 15. The 5 parts of the Innovation strategy What? Who? How? Why? Who? When?
- 16. The 5 parts of the Innovation strategy What? When? How? Why? Who? When?
- 17. Summary - the answer to the demands for renewal 1. Notice the difference in world perception and suitable games 2. Play-Not-To-Lose and Play-To-Win applying both chess and poker 3. Use the 7 World Class Principles of Innovation in your strategy 4. Get all the 5 elements in the Innovation Strategy clarified 5. Do not plan too much – learn by doing it iteratively - NOW
Notas del editor
- This presentation has a short and a long version. The short version is simply this – NO! An innovation strategy is not sufficient, but it is a prerequisite to answer to the demand for renewal
- The way that we look upon the industrial world has changed the last decades. In the good old 1980’s there was a way to look at the world in a very comforting way that it was Known and Ordered . We used Best Practice and Standard Operation Procedures to adapt to this environment. We collected data, stored it from A-Z and then we responded. In the 1990’s we found that the world was may not only be not known and ordered but it was Knowable and Complicated . In order to reduce the complications we focused on Core Business and we sensed, analyzed without the demand on order from A-Z and then we responded. After the millennium shift we have indications that there is a new way to look at the world that occur simultaneously as the other two. This new way states that we live in an Unknowable and Complex world where things are entangled and interdependent. Here we use experiments and pattern recognition to come forward and the theme is “Probe – sense-Respond” These 3 areas are characterized with 3 different types of games, ordinary Chess, elaborate or strained Chess and Poker.
- The Chess and Poker games illustrate two rather contradictory innovation strategies that both are OK – and need to be run simultaneously, but not as a compromise. As Charles Simenon said in 1750 “The truth lies not in one extreme, or in the middle – it lies in both extremes.” And these extremes have a creative tension between them that needs to be addressed. Hence – DO NOT GET STUCK IN THE MIDDLE – play both parts full out instead and organize for both. One way or size does not fit both. The strategies differ in most aspects If you play not to lose you deal with large volumes, the other with initially small volumes The left are very effort efficient for the 42 km marathon, whereas the other are more dynamic 100 m rushes The left one minimizes risk whereas the right optimizes risks The left focuses on incremental innovation, the right on more radical and break through innovation etc
- This is the deck of 7 cards that entail both the games of chess and poker and it symbolizes the need to Play Both Games Simultaneously
- The first card, the RED KNIGHT card is about understanding & commitment meaning Common definition of words such as innovation , insight and concept Understanding of the width of innovation and that various areas for innovation exist. (e.g. brand model innovation, business model innovation, service innovation etc. and not only product innovation) Commitment from the whole organization, inclusive upper middle management, as studies show this layer constitutes the major implementation hurdle. “The cap is off, but the bottle neck is just below the top of the bottle” Financial and strategic expectations/goal s on innovation from top management Leadership in this indicates that all companies aim for Innovation nowadays – You just have to be best at it….
- The BLACK BISHOP card on risk, change and culture means Acceptance of a fail-early & fail-cheap mentality into the company culture , as the opposite to success is not failure, but inertia . Innovation and change regarded as a integrated part of every-day business.
- The RED CASTLE on innovation and business strategy combination means Full awareness of the innovation strategy in the organization. Innovation strategy connected to overall business strategy
- The BLACK QUEEN on balance means Self financing efforts for innovation for a given period of time. There is a need for a small sum of money to start doing things at a quite meager but still existing budget. Evidence has shown that a semi-isolated P/L sheet helps Balance between immediately value creating Inside-the-Box , the more mid term rewarding Adjacent and the usually long term rewarding Outside-the-Box or Breakthrough innovation efforts.
- The RED PAWN on the framework means Different innovation processes , each adapted to the character of Innovation, realizing that a one-size-fits-all process does not exist. (“ How you innovate decide what you innovate”). Selection criteria of the initiatives to chosen ventures Incentive program adapted to the various types of Innovation efforts (e.g. recognition, participation in bonus programs, etc) Metrics/KPIs for the input, process, output and outcome of the various innovation efforts Dedicated and balanced resources in time and money for the various characters of innovation efforts
- The BLACK KING card is on networks and kingdoms meaning Utilization of internal cross-functional networks within the company for the success of innovation initiatives. The magic words are de-silofication and cross-functionality . Utilization of external cross-functional networks both in the ideation phase as in the following conceptualizing and commercialization phases. This to optimize the speed from idea to commercialized concept. See innovation intermediaries, a.k.a. Innomediaries, such as InnoCentive, NineSigma, YourEncore etc.
- The RED QUEEN card signifies the nurturing instincts of a good mother, meaning Special efforts to safeguard Outside-the-Box innovation efforts or other initiatives that are not complying to “the every day norm”. This is important as the normal effectiveness focused company organization have a set of processes, resources and values that build up an almost hostile environment to new more daring initiatives. Here we need institutionalized protection governed by a powerful custodian, an active guardian angel from top management that dare to stand up for the future after the coming 3-5 year plan. All these 7 cards together make up what we may call the 7 World Class Principles of Innovation But behind them is the hand holding them all – and this hand constitutes of 5 fingers and a palm
- The fingers signify the 5 different elements necessary for an innovation Strategy to succeed and be implemented and we have only so far been talking about is the essential elements in HOW to do it, which here is the middle finger The most fundamental part, the thumb , I have taken for granted is the Why part – and it is simply “Innovate - or die”, carved in stone. Without this mindset it is very difficult to achieve anything on the long road to Innovation. Competition is hard and you have to out-innovate your competitors. Everybody is trying hard to innovate in various ways. Usually by looking at costs or looking at increasing customer’s value. What you have to do is to do both in order to out-innovate the others!
- The decision on what to start doing, in what areas, is essential. This is here characterized by the index finger . It is quite good if you have something to guide you forward in your quest for ideas. A sense of urgency usually helps in getting things started. Other essential factors to consider are Mega Trends, Deep consumer insight, the intuitive skills of top management, and Guts to pursue this – because it may be risky- and Risk avoidance is enemy Number One to Innovation
- The middle finger may also signify How Much . The Rule-of-Thumb is to start with a small sum of money and ITERATIVELY work yourself forward. Large investments only have the negative effect that the higher they are, the sooner the Lenders want the money back. You repeatedly hear Top Management say “ for good ideas we always have money” . Do not accept this approach! You have to start developing ideas to become good ideas and that initially costs some money – but only a little. Remember that most of your efforts will not pay off – so do not put all your money on one initiative – but spread the eggs in different baskets. When the small money is there – be patient for growth but impatient for profit
- A famous author named Gary Hamel said “Who said that change must start at the top? It must get up there and bounce back – but the responsibility to start it all lies with You ”
- The little Finger, the Pinkie , is about timing The most difficult thing that leads to the answer for renewal is to start implementing all your plans – and the best thing is learning by doing. There is no better time to start doing this than NOW. All eras or phases – baisse or hausse – have their advantages and disadvantages to start with ventures of a more radical type.
- Man is made to be able to remember 7 +/- 2 new things, so if you could remember these 5 items after this presentation I would be happy The looks upon the world is changing and with these changes come different ways to play to be successful, here signified with Chess and Poker There are basically 2 different and opposing Innovation strategies you can play, play-not-to-lose and play-to-win and you have to be able to play them both, hence play both chess and poker When you play apply the 7 WC principles of innovation as I have shown you in the chesspoker cards Remember the 5 elemants that have to be set before the innovation strategy is functioning The most difficult and the most important part is to start acting NOW, in an iterative way