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2. AGENDA
3. The Global CEO Study 2006
4. The study probed innovation its importance and its benefits across three innovation types and 6 Innovation enablers .and six vital innovation enablers (3) Products, Services and Markets Innovation applied to customer-focused, go-to-market areas (1) Business and Enterprise Models Innovation applied to restructure and extend the enterprise (2) Operations Innovation to improve effectiveness and efficiency of core functional areas Innovation Types
Climate for Creativity Working environment where inspiration thrive & creativity flourishes Idea Generation secure a continuous source of creativity and flow of new ideas Incubation Structures support the development and growth of ideas from innovation to delivery Metrics & Incentives measure outcomes from creative processes and recognize talent at the organization and individual levels Role of Collaboration & Partnering work externally and internally with organizations and specialists who have the strongest capabilities for innovation Integration of Business & Technology integrate technological capabilities with business insight to achieve innovation 5. CEO Perspective
6. Two-thirds of CEOs see significant change in next 2 years Extent ofFundamentalChange NeededOver the Next Two Years Significant change 65% Moderate change 22% Little or no change 13% Little to no success 15% Past Level of Success at Managing FundamentalChange No change experience 5% Some success 33% Successful 32% Very successful 15% 7. CEOs told us The market imposes innovation. Last years products are last years dollars. We must innovate to justify our existence. no growth without changing ourselves and the industry itself. Competitors are emerging from everywhere Globalization, commoditization, higher cost structures all drive increasing specialization Business Model change is dramatic 40% sales now on the internet 8. CEO Perspective Myth: Innovation is too critical and proprietary to involve outsidersMyth: Flat world trends only affect a few firms CEOs plan imminent and radical change
9. Partners and customers edge out employees for ideas Todaymore capability and innovation in the marketplace than we could try to create Sources of New Ideas and InnovationAcademia Associations,trade groups,conference boards Competitors Consultants Customers Business partners 0 5 15 25 35 45% 45% 35 15 25 5 0 Internet, blogs, bulletin boards Other R&D (internal) Sales or service units Employees (general population) Think tanks External Internal 10. Out-performers source 30% more ideas from outside If you think you have all of the answers internally, you are wrong. (5 year revenue growth CAGR) 10% 20% 30% 40% 50% 0% Underperformers Outperformers Quantity of New Ideas from External Sources
11. Collaboration gap looms large in the mind of the CEO 20% 40% 60% 80% Collaboration Gap 0% Collaboration of great importance Collaborate to a large extent Collaboration Importance versus Extent Without collaboration innovation would be impossible. It would be counterproductive to do everything yourself. Partnerextract maximum value and avoid reinventing the wheel. 12. CEO Perspective Myth: Innovation means inventing new products and services Myth: Flat world trends only affect a few firms CEOs plan imminent and radical change Myth: Innovation is too critical and proprietary to involve outsiders Collaborative innovation is indispensable
13. Business model innovation gains prominence Products, Services, Markets Operations Business Model CEOs Innovation Focus 50% 10% 20% 40% We need to develop a business model based on strategic partnerships that creates value for our companyand for the industryin this era of specialization 30% Organization Structure Changes (66%) Building Strategic Partnerships (53%) 14. Outperformers double their focus on the business model The business model we choose will determine the success or failure of our strategy. Products and services can be copied, the business model isthe differentiator. Our greatest focus is on business model innovation, which is where the greatest benefits lie. Innovation Priorities (operating margin growth CAGR) Underperformers Outperformers % of respondents by innovation priority Products/services/markets Operation Business Model 0% 20% 40% 60% 80% 100% 15. What stands in the way? Obstacles to Innovation 0 10 20 30 40 40 30 20 10 0 Government and other legal restrictions Economic uncertainty Inadequate enablingtechnologies Insufficient access to information Unsupportive culture Limited funding Internal workforce issues Process immaturity Inflexible infrastructure External workforce issues External Internal 16. CEO Perspective predicts dramatic innovative change Myth: Flat world trends only affect a few firms CEOs plan imminent and radical change Myth: Innovation is too critical and proprietary to involve outsiders Collaborative innovation is indispensable Myth: Innovation means inventing new products and services Business model innovation matters 17. Who is responsible? Operations CEOs Innovation Leadership 0% 10% 20% 30% 40% 50% Product, Services, Markets Business Model Division Mgrs 14% Responsibility for Innovation LeadershipNo Owner 27% Functional Mgrs 24% CEOs 35% 18. Outperforming CEOs lead and cultivate innovation andchange witha distinct set of innovation enablers Basic Requirements Key Performance Differentiators Combining business insight with technological know-how Integration of Business & Technology Focus on customer satisfaction and % sales from new products Measures Encourages innovation Risk-Management Approach For individual innovation contributions Rewards Collaborative, collegial, team oriented Culture 19. Creating a distinct culture of innovation and rewarding contributors makes the differenceHigh Performing Firms Reward & Risk Practices Reward Encouraged Risk Source: The IBM Global CEO Study 40 60 80 100% 20 0 INNOVATIONS High Performing Firms Collaborative vs. Individual Profile Source: The IBM Global CEO Study Collaborative 0 20 40 60 80% 34% 66% Individual 82% 78% 20. CEOs agree that the integration of business and technology is particularly important, but practice lags importance Integration of Great Importance Integrateto a Large Extent Integration Gap 45%
78% 21. . . .And, that gap could put a damper on growth
4.6% 1.8% Average value as benchmarked against peers 1.8% 50%
22. Business and Technology enables Collaboration Technorati/ Law Technology News, Dec 1, 2005 ;Comscore , Aug 8, 2005 ; America Online/ Research Alert, Jan 6, 2006 ; IBM CEO Study 2006; Gartner/ BusinessWeek, Nov 28, 2005 ;BusinessWeek,Mar21, 2005 ; Gartner & Berkman Center for Internet and Society/ Christian Science Monitor, Feb 16, 2006 between, with and among companies, experts, communities, customers
between individuals
more kinds of things to collaborate on
23. From these findings, five recommendations emerge to seed the innovation agenda for the future
24. AGENDA
25. products services business processes business models management and culture policy and society CEOs View: Primary Responsibility for Innovation Leadership Its time to innovate IBM Global CEO Study 2006 Constant reinvention is the central necessity at GEWere all just a moment away from commodity hell. Jeffrey Immelt Chairman and CEO, GE Innovation is an essential component of corporate survival. Anne Golden President and CEO The Conference Board of Canada We will fight our battles not on the low road to commoditization, but on the high road of innovation. Howard Stringer Chairman and CEO,Sony Corporation 26. How are you capitalizing on the new tools of innovation and combinations of those tools todifferentiate your products ? And how are your competitors doing so? Are your productssmart ? Do they talk to each other? How do they provide youadditional dataabout your customers purchase, use and disposal of your products? products HONDAhas become the first car manufacturer to equip vehicles inthe United States and Canada with an in-car navigation system that uses an advanced speech recognition interface and text-to-speech capabilities. The system allows drivers to simply say city and street names in their natural voice to receive turn-by-turn voice guidanceto their destination. MAYO CLINICphysicians, physicists and engineers developed a new MRI coil that improved hand and wrist imaging. Each one was originally hand built, but engineers collaborated with Mayo to turn the MRI coil into a manufacturable product, while preserving its industry-leading imaging capability. 27. How can new business and technical capabilitiesdeliver higher valueto your customers? What canpersonalization, real-time analytics, self-service, and network-enabled servicesdo to differentiate your company? Is yourcustomer careas responsive and as cost-efficient as it could be? services BOULANGER , a French electronics retailer, needed to distribute new information daily about products and offers to its stores and consumers. It can now update Internet, store, and catalog systems simultaneously, making it easy to create cross-selling and up-selling opportunities. Energy companyOXXIOprovides their customers with a digital meter that can be read remotely. Consumers linked to the Oxxio network will not need to send in meter readings manually. This innovative "smart meter" will help consumers save energy by managing usage at home and decrease the risk of late or inaccurate invoices. 28. How can you conceive of, implement, integrate and manage yourprocesses for competitive differentiation ? Is yoursupply chainthe most productive and efficient in the industry? Does yourCRM systemproduce the highest customer satisfaction? Is yourproduct developmentachieving the best time-to-market? Are yourfinance and accountingcosts the most effective? business processes JABIL CIRCUIThas a 55,000+ workforce in over 40 facilities around the world. Acquiring additional plants required the integration of disparate processes. Building a core set of processes for its plants yielded 60% reduction in integration time and increased flexibility in implementation sequencing. AAA CAROLINAShad to expand its business, lower costs and improve customer service to compete in a national market. The AAA affiliate embraced a service-oriented architecture solution that enables it to cross-reference customer data and create cross-promotional marketing campaigns. This helped result in a 60% customer acquisition and retention spike. 29. How can you use innovation tools and collaborative approaches tooverturn the conventional wisdom ? How can you combine those tools and new ways of thinking toincrease productivity ,generate revenue, approach customers, and leverage your partners scale and expertise? How do we make youthe disruptive forcein your industry? business models PARCELHOUSE , a logistics solution provider, was growing fast and its systems couldnt support growth. They deployed e-business hosting for a flexible platform with pay-per-use cost structure resulting in a 200% user increase without raising costs -- 80% cheaper than in-house. DELTA FLUID PRODUCTS , which makes valves and fittings for gas lines and other critical environments, wanted to be the first in the industry to provide same-day delivery. The company was fitted with an enterprise-wide ERP system that has helped the client get a 20% reduction in inventory, a 30% increase in inventory turnover, and faster customer service. 30. Whatsgetting in the wayof truly differentiating your company? Are there legacybehaviors , unnecessaryfinancial models ,and organizationalstructuresthatcanbe reengineered? How can we use partnerships,new models and practices,to helpchange the waycompanies works ? management & culture VGVERKET , Sweden's National Road Administration, expects to reduce traffic, increase accessibility, improve the environment, and raise funds for other initiatives through a new road-usage solution that charges a small fee for driving in central Stockholm. NORTELand IBM established ajoint development center to design and develop a next-generation suite of communication products andservices for the global needs of ourjoint customers. This has resulted in new levels of R&D collaboration, reduced R&D costs, and the abilityto quickly introduce a broader range of products. 31. What potential exists in partnerships with othercompanies, governments, and nonprofitsto create breakthrough innovation? How are schools preparingthe next generationof your employees? How areregulations and policiesenabling open collaboration and shared intellectual capital? How can weinnovate together ? policy & society IBM has joinedAUTOSAR , a consortium of automotive companies and technology firms devoted to standardizing a platform for in-vehicle, electrical/electronics and software systems. As a Premium Member, IBM is working with AUTOSAR to create and to implement open standards in vehicles. TheNATIONAL DIGITAL MEDICAL ARCHIVEstores digital images in a single, accessible database, which doctors and researchers use to find patterns in the images from mammographies. Those patterns can lead to accelerated treatment and prevention strategies in the fight against breast cancer. Individual patients can contribute to the project, access and manage their own records, and share them with the doctors they choose. 32. AGENDA
33. Challenges facing the Public Sector
Healthcare Education Government 34. What does Innovation mean in Education?
Innovation applied to Education 35. Shaping a better world through Innovation Challenge: With the US losing ground in education, Broward County School District, the sixth largest school district in the nation, is taking action.The district, home to more than 270,000 students, wanted to leverage information technology to improve student achievement and improve teacher effectiveness. Solution : As part of a four-year, $68 million technology program, Broward County schools now have state-of-the art laptop computers 40,000 of them installed in the systems 262 school buildings.The new computers are being used to provide students and teachers with the tools they need to enhance learning.The technology pilot includes such innovations as wireless laptops, digital textbooks, and other one-to-one digital learning devices. Benefits : Initial results include increased student attendance, greater parentinvolvement, and a general enthusiasm for learning among students. Instead of having to flip through the pages of a textbook all day long, you can actually just look up information fast and easy, and it actually saves a lot of time. -A student at Browards North East High School 36. What does Innovation mean in Government?
Government in an Innovative society
Innovation applied to government operations 37. Shaping a better world through Innovation Challenge :The New York City Police Department has billions of records that contain information that detectives and investigators need to mine to identify and stop emerging crime quickly.These include over 5 million New York State criminal records, over 20 million New York City criminal complaints, 911/311 calls and summonses, over 30 million national crime records and billions of public records.The problem NYPD faced:It was taking hours, days and sometimes weeks to get limited access to this information precious time lost in identifying and apprehending criminals.Solution :NYPD created the Real Time Crime Center, which uses powerful data mining technology to swiftly provide investigators in the field with information about crime scenes, potential suspects, satellite images and sophisticated mapping of the City precinct by precinct, and other crime-fighting resources.At the heart of the center is a massive data warehouse that makes information available to detectives within minutes. Benefits :It will help [NYPD] stop spikes in crime before they become trends, and make sure dangerous criminals are caught before they can hurt others.Mayor Michael R. Bloomberg The Center will put valuable information into the hands of detectives even before they leave the squad room, so they can hit the ground running in identifying and apprehending criminals.-NYPD Commissioner Raymond W. Kelly 38. What does Innovation mean in Healthcare?Innovation Applied to Healthcare
39. Shaping a better world through Innovation Challenge : In the US, an estimated 100,000 deaths occur each year due to preventable medical errors, such as drug interactions and inaccurate drug dosages.Miami Childrens Hospital wanted to address this issue using information technology, including speech recognition.Solution : i-Rounds, a web-based solution from Teges, an IBM Business Partner,provides real-time information that enables clinicians to access patient data at different facilities from one database.The hospitals medical staffs can now view and input data in real time and in some instances in a hands-free environment, enabling better patient care and patient outcomes by having critical health information available whenever and wherever treatment decisions are being made. It was a way for me to access data in a hands-free environment, which is the Operating Room.If I had a heart in my hands, I cant use a keyboard or a mouse.But I still have that need for data." -Dr. Raymond Burke, cardiovascular surgeon, Miami Childrens Hospital 40. What do teams need to facilitate Innovation? Insight Invention Creativity Disruptive Game changing Positive impact 41. Innovation means using both sides of our brains Left Brain Right Brain 42. Ten Types of Innovation
43. Questions? 44. Break-out Groups and six vital innovation enablers (3) Products, Services and Markets Innovation applied to customer-focused, go-to-market areas (1) Business and Enterprise Models Innovation applied to restructure and extend the enterprise (2) Operations Innovation to improve effectiveness and efficiency of core functional areas Innovation Types
Climate for Creativity Working environment where inspiration thrive & creativity flourishes Idea Generation secure a continuous source of creativity and flow of new ideas Incubation Structures support the development and growth of ideas from innovation to delivery Metrics & Incentives measure outcomes from creative processes and recognize talent at the organization and individual levels Role of Collaboration & Partnering work externally and internally with organizations and specialists who have the strongest capabilities for innovation Integration of Business & Technology integrate technological capabilities with business insight to achieve innovation 45. Break-out #1:Innovation EnablersDiscussion Items
46. Break-out #2:Challenge ScenariosDiscussion Items