Innovation leadership part3

Part 3

Rene Rene RosenthalRosenthalMicronics MobilityMicronics Mobilitypresident & CEOpresident & CEOIn

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Original doc May 7 2005Original doc May 7 2005 Micronics MobilityMicronics Mobility 11

Part 3In

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INNOVATION LEADESHIPINNOVATION LEADESHIP

“Innovation cannot be managed”

Creativity may well be unpredictable but it is not uncertain. It will happen. The challenge is focusing it and capturing the outputs. Managing creativity within the innovation process is not easy but just as with the rest of the more predictable development and realisation innovation activities, it is possible. From providing the initial stimulus for new ideas and a means of collating and evaluating them through to determining the most appropriate exploitation approaches and selecting delivery partners, innovation is a process and it can therefore be managed. Moreover, it is a process that is largely generic and hence similar from one sector to another. Innovation in financial services follows the same path as innovation in consumer goods. The detail may vary but the approach is frequently identical. As a consequence, managing innovation is also a generic skill that can be learnt in one arena and applied to another.



“Innovation cannot be measured”

Although it is not an assembly line where efficiency can be measured by tolerance or rejection rates and it is not itself a service where activation time or number of customer complaints can be tracked to indicate effectiveness, innovation can be measured.

Innovative companies do not encourage innovation without paying careful attention to the success of their innovations. Just as the quality of output from any production process can be measured both in terms of overall performance as well as individual stage efficiency, so can innovation. Whether using high-level metrics such as revenue from new products or component elements such as ideas generated, patents granted, time to market, number of products launched or payback times, any organisation can create its own series of innovation indicators. Either as part of a cascaded balanced scorecard or as a stand-alone performance metric, innovation is successfully measured and monitored in many leading firms, An example of this is Samsung.



Innovation as a source of competitive advantage

This thing called innovation is clearly something that many firms are paying more attention to - it sounds good but what is the real impact? Is it here to stay or is it just another business school fad? Is this not just another convenient buzzword for improved efficiency and effectiveness? Should you, as a manager busy with meeting the needs of the day-to-day survival and growth of your business, concern yourself with this innovation thing? Does it really apply? Is there not something else that can have more immediate influence on company performance? If innovation is relevant than how and where can it be applied? What does it involve? What are the benefits? Basically, why innovate?



Throughout the 1980s and 1990s a wide range of panaceas for the problem of becoming more competitive and improving business performance were proposed. However, although a number of practices such as Total Quality Management and Business Process Re-engineering provided some improvement, not all delivered consistent benefit. It is not that the original concepts were flawed, rather that many organisations assumed they could simply be copied, without the need to adapt them to suit individual circumstances.



Over the same period, some of the companies have shown repeatedly above average growth in both performance and shareholder value and have used innovation as a core strategic means of developing their businesses. Indeed financial markets reward innovation. A recent study found the top 20% of the most innovative firms deliver almost four times the total shareholder returns of the bottom 20% of innovators. Share price include an element of implied growth, be it organic or by merger and acquisition. Even a decade ago, innovative organisations – those that are able to use innovation to differentiate their products and services from competitors – were, on average, twice as profitable as other firms.

Companies as varied as 3M, Xerox, Nike, Du Pont, First Direct and Sony have all since continued to use innovation to meet such challenges as exploiting discontinuities, accelerating activities, encouraging growth and developing new businesses. Moreover, as new opportunities have been identified, new companies have been created to exploit them. Innovation has been at the forefront of the growth



and development of new products and services for a host of new arrivals from Apple, Intel and Samsung in the consumer space, Each of these successful companies continues to position innovation at the heart of their business strategies to challenge convention and redefine the competitive landscapes within which they operate.



The development of new products and services that can successfully compete in local, national and global markets has now become a key concern for organisations regardless of the sector in which they operate. Across industries, effective innovation performance has overtaken production efficiency as the key industrial battleground while companies all seek to reduce time to market and to access new technologies in their bid to develop more and better products and services. This is occurring not just in the core manufacturing sectors, but also in

service sectors such as insurance, waste management and education. In all fields, the benefits to be attained range from better resource utilisation and sustained competitiveness to increased revenue generation and improved shareholder return. Whether involved in the manufacture of discrete products such as consumer goods, medical devices and industrial machinery, in the production of consumables such as chemicals, paper and cereals, or in the provision of services such as banking, IT support and tourism, most forward-looking organisations are continuously looking for new opportunities to develop and exploit new or improved products and services.



‘Innovate or die’ has been the mantra for many leading companies over the past 20 years as they have sought to drive the whole ethos of innovation and continuous improvement throughout their organizations. Now days, businesses, specially in the high-tech sector, have to be one step ahead of the competitors. One way to accomplish this to innovate constantly products and services, assuring their relevance and up-to date-ness. If a

company fails to respond respectively to these kind of time pressures it may have to face severe consequences. A great example in this respect are Nokia, Motorola and Siemens AG with its segment mobile communications which encompassed both business and consumers applications. The company (Siemens) failed to respond to certain pressures and literally overslept important trends in the fast moving mobile market. This considerably weakened their position even before the disastrous software-related defect in summer 2005.



Siemens finally announced a hand over of their ailing mobile communications division to the Taiwanese technology group BenQ.

Firms worldwide have adopted an increasing variety of techniques and approaches to improve their innovation performance and to benefit more from new ideas. Some of these have addressed strategic issues, some the varied processes in use across the company and its network of suppliers and customers, others have focused on core organizational issues such as motivation, reward and structure.

the smartphone industry is rapidly changing and highly competitive.1 New and distinctive products are being developed continuously, and released almostweekly. For this reason, the landscape of the market can change dramatically from one year to the next, or even from one month to the next. It is also a relatively young industry, and especially in the United States, some of the major players today hardly existed ten years ago.



The smartphone business is not entirely indicative of market power. This is because profit margins for the market participants vary widely. Apple for example has been very successful at both selling large numbers of smartphones, andkeeping its profit margins very large. Other manufacturers have not been so successful, some even taking a loss in their smartphone business as they try to compete with no differentiation in their product portfolios, these companies believe that the name brand will do the job imitating products instead of being INNOVATORS. They choose to follow the market leader. Their lack of innovation have made them a ME TOO company.

Other manufacturers have not been so successful, some even taking a loss in their smartphone business as they try to compete, such as Motorola and Nokia.Nokia hardly have a presence in the U.S smartphone market.The larger profit margins of Apple and Samsung give them greater market power because they can compete by lowering prices if they desire.


INNOVATION LEADESHIPINNOVATION LEADESHIPThe expansion of the mobile phone, particularly in the case of developed countries, can be said to be in itsmature phase. Nevertheless, I believe there is still a great deal of potential which remains to be tapped.Indeed, in recent years alone, the boundaries of the mobile environment have been extended beyond digitalvoice capabilities to encompass data and video communications. Such innovations have added mobility andconnectivity to both professional and everyday life and they are but a mere hint of the possibilities that layahead. The unrelenting demands for product innovation and downward price pressures mean that not only the strongest but also the fastest will survive this industry. We must have an ambition to be a global player and be confident that we will get there. To do it, though, is going to require an obsession from our people with what creates real value. To harness this passion, our strategy should be anchored along 3 dimensions: 1. Innovate in design as well as technology- Consumer electronics is no longer about utilitarian brown goods and white goods. In all product categories

from handsets or washing machines consumers expect the latest in technology features, packaged in designs thatmake them passionate about these products. 2. Invest in building a clear, global brand identity our brand isour identity our corporate DNA we must continue to invest to build a brand with a clear identity, one whichcreates a real emotional bond with our consumers. 3. Develop a truly global, unsurpassed talent pool Focusingour strategy on shareholder value, developing products that create consumer value these things are not possible unless we have the most talented and motivated employees globally. I’m inspired by the opportunities and challenges that lie ahead and with the right focus, strategies, and people, we will get there.

Sincerely,RENE ROSENTHAL


Part 3

Rene Rene RosenthalRosenthalMicronics MobilityMicronics Mobilitypresident & CEOpresident & CEOIn

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