Incubating Innovation in the Enterprise: Harnessing Mindlessness and Mindfulness

Larry Gioia, Director PwC IT Strategy & Enterprise Architecture

Boston SIM March Monthly Meeting March 22, 2013 Cafe Escadrille Burlington, MA 7:00pm-8:00pm

The Candle Problem

The new age of innovation …

• Innovation should extend throughout the enterprise – not limited to R&D, innovation should be part of everyone’s DNA

• The challenge is enabling people to step outside their mindless jobs (e.g., functional fixedness) to engage in mindful innovation

• Everyone can become more innovative if provided with the right leadership, tools, and support

• Incubators provide an effective structure and process to harness creativity and drive mindful innovation

Innovation is value-creating novelty; the creation and delivery of new value for customers, consumers, and the company

The rate of change continues to accelerate …

Source: Go-Global.com

Change advances at a double exponential rate

We won’t experience 100 years of progress in the 21st century — it will be more like 20,000 years of progress (at

today’s rate). – Ray Kurzweil

Source: The Singularity is Near, Ray Kurzweil

The magnitude of this change is overwhelming

Source: http://visual.ly/exploding-interenet-2008

Are you playing to win or playing not to lose?

Play Not to Lose (Defensive)

Protect and Maintain

Learn and Prove

Build High-Potential Brands

Build New Growth

Platforms/ Business Models

Manage for Margin

Play to Win (Offensive)

What’s your flavor of innovation?

Process Service Product Business Model

I I Incremental Radical

• Typically focused around improving what is existing

• Less disruptive

• More “defensive” in nature

• Typically focused around invention and creation

• Higher potential for disruption

• More “offensive” in nature

How can we measure the potential disruption?

Cost

Confidence

Convenience

Compensation

C4 Innovation

Cost

Genomics and the resulting disruption …

Confidence

Convenience

Compensation Source: The Economist Source: Oxford Nanopore

Source: http://cmbi.bjmu.edu.cn/news/report/2001/02/view/4093.htm` Source: Oxford Genomic Health

Mobility and the resulting disruption …

Convenience

Confidence

Cost

Compensation Source: http://www.huffingtonpost.com/nathan-newman/in-att-tmobile-debate-

Source: The Economist Source: PwC analysis

Mindfulness vs. Mindlessness

Exploiting today

Organized

Stability

Incremental improvement

Efficient

9.99999 success

Predictable

Hierarchical

Exploring tomorrow

Chaotic

Change

Radical invention

Wasteful

10:3:1 failure

Plausible

Organic

Mindlessness Mindfulness

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Source: PwC

The paradox of mindfulness and mindlessness

Should all innovation be treated equally?

Those who are leading the innovation game acknowledge that not all innovation is created equal and have adopted different op models

Innovation Operational Model

Incremental Innovation

(2-5 years out)

Radical (Disruptive) Innovation

(5+ years out)

Idea

Generation

Channels and Markets

Idea Generation Idea Management Execution

Source Ideas

Build on Ideas

Record / Document Ideas

Capture Ideas

Evaluate Ideas

Channel Ideas

Experimentation

Prototype

Pilot

Roll out / Commercialization

Ste

ps

Bu

ild

ing

Blo

cks Required Tools: Learnings Capture, Communications, Documentation / Record Keeping

Culture: Incentives / Rewards, Marketing Campaigns, Visible Leadership Support

Support: Training on Processes / Available Resources, Clear Guidelines, Coaching / Mentoring, Funding

Governance and Oversight: Roles / Responsibilities

Development

Filter Ideas

With some common plumbing …

Source: PwC Innovation Benchmarking Analysis

Incubators are a popular method to begin the innovation journey …

Data mining

Partner collaboration

Innovation networks

Innovation tournaments

Rapid prototyping

Breakthrough innovations

Deep customer insights

Constraint-based innovation

New boundary conditions

Early acquisition

Companies Began Experimenting With Find New Ways to Grow

Stage Gate Product

Development Stage Gate

Product Development

Open Innovation

Incubators

Corporate Venture Capital

Co-Creation

Reverse Innovation

Design Thinking

Innovation generally requires and may draw from a mixture of operating models:

A Number of New Operating Models Have Emerged …

Frugal Innovation

A Case Study: How a Large Global Pharma is Incubating Innovation

Shifting the cultural mindset away from the traditional (mindless) IT and focusing on understanding the potential for disruption and determining where to “place bets”

Building the Foundation …

1

IT Leadership Champions

2

Assimilation of Disruptive Ideas

3

Global Candidate Application Process

4

Selected Teams and Aligned to Topics

5

Lite-weight Innovation Orchestration Team

6

External Advisory Panel

A few final design considerations …

1. Show traceability of your innovation efforts to overall strategy

2. Get the right employees and partners engaged

3. Promote frequent interactions of disparate groups

4. Invest in the fundamental plumbing

5. Incubation requires dedicated staff – no “stretch” assignments

6. Have a bias towards a lean corporate innovation team

7. Create separate structures that support each innovation type

8. Identify champions and customers in the business

9. Learn how to run your businesses ambidextrously

10.Foster innovation as a discipline in your organization

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Let’s Continue the Conversation …

Larry Gioia Director PwC IT Strategy & Enterprise Architecture larry.gioia@us.pwc.com 412.916.9960 www.linkedin.com/in/lgioia