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Innovation Overview Glenn Wintrich
Innovation Overview
Glenn Wintrich
2 © 2012 Forrester Research, Inc. Reproduction Prohibited
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Innovation is not for the faint of heart
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Speed of change accelerating
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IT’s transformation essential to 21st century business success
The purpose of the 20th century firm:
The purpose of the 21st century firm:
To minimize transaction costs and achieve scalable efficiency
To accelerate capability building and effectively apply that capability to innovation
Creating new value —better & faster
New view: Socially- enabled enterprise operating in a digital business ecosystem
IT is essential to enabling firms to transform and innovate with information-driven value creation
Processes Business Models
Management
Products and Services
Marketing
Innovation defined
Innovation is the process that takes new ideas and implements them in a way that creates value by solving unmet needs.
Would this qualify as innovative???
No turtle was hurt creating this picture
Common myths of Innovation
While creative thinking is helpful, innovation is a systematic discipline
You have to be creative to be innovative
Successful innovations require large-scale change
Innovation is expensive
The most successful innovations are often the simplest
Most innovations require a modest disciplined investment of time and brain power
Innovation is led by R&D & Technology
Innovation is an organization-wide responsibility to leverage ideas
Myth Reality
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Marketing innovation
Examples
Marketing innovation refers to tools and approaches that organizations use to cultivate relationships with customers and prospects.
Internet video
Gamification
Location based marketing Social network
marketing
Personalization
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Process innovation
Examples
Process innovation refers to new methods to achieve superior outcomes.
Electronic Medical Record
Streaming Video Robotic assembly line
Financial banking
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Management innovation
Examples
Management innovation refers to the way organizations engage resources to enhance performance and achieve superior outcomes.
Resource models
Reward structures
Organizational models
Organizational Models
Collaboration/ Autonomy
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Focus areas for Management Innovation
New view of the enterprise:
Socially-enabled enterprise operating in a digital business ecosystem
• Increase collaboration
• Allow for autonomy and innovation
• Experiment with new approaches and resource models:
o Crowdsourcing
o Hackathons
o Microwork
o Hollywood Model
o Self-Selecting Teams
o Expert Ecosystems
Management
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Product and Service innovation
Examples
Product and Service innovation refers to the introduction of new and enhanced goods and services.
Digital Oil Field
Sensors Car break system
(Carbon fiber)
3-D printing (Polymers)
Apple iTunes
Workstation on Wheels (WOW)
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Long Tail
Business Model innovation
Business Model innovation refers to the approach to how an organization creates, delivers, and captures value.
Sample business models
Franchise Direct Sales
Freemium
Add-on
Auction Low cost Recurring Revenue Subscription
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Business Model Analysis
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Business Model Innovation components
Components
• Partnerships
• Channels
• Cost Structure
• Key Resources
• Core Capabilities
Components
• Bundling and Configuration
• Segmentation
• Customer Relationships
• Revenue Streams: Pricing and Payment Structures
• Value Proposition
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A dynamic shift IT Environment
IT Productivity • Consolidation • Cost • Outsourcing • ERP
Prior to 2012 Post 2012
Degrees of Innovation B
usi
ne
ss M
od
els
an
d P
roc
ess
es
Products and Services
New
Existing
Ex
isti
ng
N
ew
New
Value
Breakthrough and Disruptive
Innovation
Incremental Innovation
Why is Innovation important?
Incremental
Breakthrough & Disruptive
1. Keep products & services in the competitive set
2. Reduce Cycle Time
3. Improve Quality
4. Reduce Cost
1. New revenue stream
2. First mover advantages
3. Obtain higher margins
4. Increase brand value
5. Realize an innovation premium on the stock
6. Improve corporate culture
Innovate or lose competitive position
Innovate or lose competitive position
http://www.youtube.com/watch?v=6Cf7IL_eZ38&feature=player_embedded
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The Volvo (Whitbread) Round-the-World Race: What Determines the Winner?
the Tactician ?
the Grinders?
the Skipper?
the Navigator?
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Answer: None of the Above.
It’s the DESIGN OF THE BOAT that matters.
The analogy to the corporate world is that designing an Innovation Culture that allows success to happen is
imperative to your Company’s success.
Credit: Peter Senge, The Fifth Discipline
Architecture for Systemic Innovation
Insight
Market Innovation Customer Innovation
Scan R&D, IP & Patents, Regulations & Standards
Identify Constraints & Opportunities
Environmental Scanning Weak Signals & Trends
Foresight
Develop Themes & Scenarios
Plan of Record
Plan of Intent
Plan of Investigation
Strategic Plans
Frameworks
Reference Architectures
Operational & Annual
Plans
Execute Business Challenges
Facilitate Shared & Open Innovation
Deliver Innovation Plans
Outcomes and Metrics
Invest Execute
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Architecture for Systemic Innovation
Insight
Market Innovation Customer Innovation
Scan R&D, IP & Patents, Regulations & Standards
Identify Constraints & Opportunities
Environmental Scanning Weak Signals & Trends
Foresight
Develop Themes & Scenarios
Plan of Record
Plan of Intent
Plan of Investigation
Strategic Plans
Frameworks
Reference Architectures
Operational & Annual
Plans
Execute Business Challenges
Facilitate Shared & Open Innovation
Deliver Innovation Plans
Outcomes and Metrics
Invest Execute
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The objective of foresight is to identify future opportunities, challenges, and potential solutions.
Approaches & Tools
Basics • Environmental Scanning • Extrapolation • Scenarios • Regulatory Reviews • SWOT • Surveys • Expert Panels • Patent Analysis Advanced • Futures Wheels • Futures Cone • Black Swan Analysis • Delphi • Backcasting • Paleofuture Analysis • Science Fiction
Foresight Foresight is knowledge of emerging indicators or macro trends across the social, technological, environmental, economic, and political landscape.
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STEEP/PESTLE
• Societal
• Technological
• Economic
• Environmental
• Political/Legal
S
T E
E
P
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Architecture for Systemic Innovation
Insight
Market Innovation Customer Innovation
Scan R&D, IP & Patents, Regulations & Standards
Identify Constraints & Opportunities
Environmental Scanning Weak Signals & Trends
Foresight
Develop Themes & Scenarios
Plan of Record
Plan of Intent
Plan of Investigation
Strategic Plans
Frameworks
Reference Architectures
Operational & Annual
Plans
Execute Business Challenges
Facilitate Shared & Open Innovation
Deliver Innovation Plans
Outcomes and Metrics
Invest Execute
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Insight
Popular resources & tools
• Social Media • Market Data • Analysts • Standards Bodies • Industry Publications • Laws, Regulations, (established &
pending) • Customer Surveys • Focus Groups • Patent Analysis
Insight is the observation of facts, knowledge, predictable trends, and points of view that may apply to particular issues, opportunities, and challenges.
. The objective of insight is to identify constraints and opportunities.
Macro trends indicate sustained shifts that influence future decisions in business, government and society.
Sample Macro Trends
Perfect Information
Consumerization
Smart Everything Crowdfunding & P2P Lending
An old workforce A new workforce
Urbanization
Freelance economy & Hollywood Model
Sharing Economy
Utility computing Pervasive simplification
Technology does not cause change, it
only enables, facilitates and
accelerates changes we already want to
take place.
Architecture for Systemic Innovation
Insight
Market Innovation Customer Innovation
Scan R&D, IP & Patents, Regulations & Standards
Identify Constraints & Opportunities
Environmental Scanning Weak Signals & Trends
Foresight
Develop Themes & Scenarios
Plan of Record
Plan of Intent
Plan of Investigation
Strategic Plans
Frameworks
Reference Architectures
Operational & Annual
Plans
Execute Business Challenges
Facilitate Shared & Open Innovation
Deliver Innovation Plans
Outcomes and Metrics
Invest Execute
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Foresight and Disruptive Innovation Disruption Zone: Incumbents myopically focus on sustaining innovation while new entrants disrupt the model through innovation.
t
%, $
t
Value of Foresight: Disruptive innovators see ways to improve a job that is performed and mobilize resources to achieve new results.
Disruptive Innovation
Sustaining Innovation
Market Innovation: Product Cycle
Cycle Market
View Product
Plan Signal
Sources
3 Unclear: Surprises
What is Possible? FORESIGHT including macro trends and all areas of STEEP
2 Generally Expected
What is planned to be developed.
INSIGHT: Competitors, Analysts, Customers, Standards bodies & Regulatory bodies
1 Planned What is funded and will be launched.
Customers
Market Innovation
Plan of Record
Plan of Intent
Plan of Investigation
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Metrics
Organizational level innovation metrics
3rd order External Corporate
Perception
Highest level of innovation indicators and long-term achievement • Customer perception assessments • Inclusion, rank, and direction of change in industry rankings
• Relative position in Gartner Magic Quadrants (MQ) • Placement in Forrester Waves • Most “innovative” company rankings
2nd Order Internal Corporate
Operational or functional level of innovation • Measurement of innovation activities and financial performance
• Includes both Input and Output metrics
1st Order Business Unit
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Tactical metrics and KPIs for BU activities and programs • Measurements of foundational catalysts for each BU that drive
towards higher functioning level of innovation.
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Innovation metrics
Inputs Idea Management Outputs
# of ideas submitted Cycle time metrics for initial review, incubation, development, pilot, etc.
# of new products or services launched
Amount of capital in # of ideas funded for incubation
Actual vs. targeted breakeven time (BET)
% of people trained in innovation
# of ideas piloted
% of revenue/profit from products or services introduced in the past X years
# of crowdsourcing challenges
# of ideas funded for commercialization
Royalty and licensing income from patents/intellectual property
#of leaders engaged in innovation
% of product/service or strategic innovation projects with assigned executive sponsors
Number of innovations that significantly advance existing businesses
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Final Thoughts
• Revenue growth belongs to the innovators
• Collaboration is king – victories are in the
white spaces between groups
• The “Red Queen Scenario”
• And one more thing………..
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We must Innovate or Die!!
Q&A
Open the floodgates for questions
Thank you
Innovate or lose competitive position
http://www.youtube.com/watch?v=6Cf7IL_eZ38&feature=player_embedded
