Organazational and Strategic innovation

Organizational Organizational

and and Strategic Innovation Strategic Innovation

Afrouz Hojati

Fatemeh Aghajani

University of Tehran

Spring 2014

Outline

0 Innovation Definition and types?0 Organizational Innovation0 Strategic Innovation0 How to Implement Strategic Innovation?0 Sources

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What Is Innovation?

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Management Innovation

Strategic Innovation

Business Model InnovationValue Innovation

Product Innovation

Service Innovation

Market Innovation

Process Innovation

Technological Innovation

Disruptive Innovation

Application Innovation

Experiential Innovation

Marketing Innovation

Structural Innovation

Brand Innovation

User Lead Innovation

Supply Chain Innovation

Evolutionary Innovation

Revolutionary Innovation

Innovation Comes in Many Flavors;

0 Many companies fail to extract the most from their investments in innovation, this can be attributed to many pitfalls, to name a few:

0 Not having a complete understanding of innovation, all the different options to achieve a sustaining innovative organization

0 Insufficient insight into what customers really want 0 Failure to make innovation connected and explicit in

vision, objectives and part of the strategy and fabric of the organization

0 Lack of balance between the ‘dynamic’ parts required to be successful

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Why does structuring innovation really matter?

0 Weak links between business strategy and product portfolio

0 Insufficient engagement of the whole organization to pursuit innovation

0 A lack of resources or not placed in the appropriate part that brings value in your high priority areas.

0 A weak innovation process that places its focus on one part, not appreciating the whole process needs equal emphasis

0 A missing set of enabling structures within the organization0 Knowing that different types of innovation require

‘distinctive’ recognition

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Why does structuring innovation really matter?

Internal Innovationvs

External Innovation

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What’s the direction of your innovation efforts?

Continuous / Evolutionary Innovation

vs

Discontinuous / Revolutionary Innovation

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Just How Innovative Do You Want to Be?

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Internal

External

DiscontinuousContinuous



Operational Innovation


Product & Service

Innovation

Product & Service

Innovation

Strategic InnovationStrategic

Innovation

The Innovation Map: 4 prototypal innovation types

0 New business models (including a new value chain architecture), or

0 New markets (either by creating new ones or reshaping existing ones), or

0 Increased value for both the customer and the company

or a combination of these three, and as such it‘s nature is radical. It‘s a departure from a company‘s traditional definition of “how we do business around here”.

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What Is Strategic Innovation?

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Internal

External

DiscontinuousContinuous





Product & Service

Innovation

Product & Service

Innovation

Strategic InnovationStrategic

Innovation

Processes

Technological innovation

Disruptive Innovation

Blue Ocean Strategy

Customer interfaces and experiences

New offerings

Partner interfaces

Internal structures and processes

People Management

Channels

Brand

Networking

Supply Chain

Technological innovation

New markets

Innovation Map

0 “No problem can be solved from the same level of consciousness that created it.”

-Albert Einstein

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0 Traditional Approach

0 Serendipitous Approach

0 Strategic Innovation

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3 Different Approaches

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Traditional Approach Vs. Strategic Innovation

Traditional Approaches Strategic Innovation Approaches

0 Adopt a “present to future” orientation-takes today as the starting point

0 “Starts with the end in mind”-identifies long-term opportunities and then “bridges back to the present”

0 Assume a rule-maker/taker(defensive/follower) posture

0 Assume a rule-breaker (revolutionary) posture

0 Accept established business boundaries/product categories

0 Seeks to create new competitive space/playing fields

0 Focus on incremental innovation 0 Seeks breakthrough, disruptive innovation-while continuing to build the core

0 Follow traditional, linear business planning models

0 Marries process discipline with creative inspiration

0 Seek input from obvious, traditional sources 0 Seeks inspiration from unconventional sources

0 Seek articulated consumer needs 0 Seeks unarticulated consumer needs

0 Are technology-driven(seek consumer satisfaction)

0 Is consumer inspired (seek consumer delight)

0 May have a “one-size-fits-all” organizational model

0 May experiment with entrepreneurial “new venture” or other organizational structures

Serendipity(n.) Finding something good without looking for it.

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Serendipity; Fortunate Mistake

0 It’s part luck, part skill0 Incorporates a process to create and takes advantage

of serendipitous moments0 Sounds like planning for accidents, right?0 While this concept may seem counter intuitive, but it

actually makes a lot of sense0 Integrate the best strategy and chance into your plans0 Cannot plan for all of the unexpected opportunities

that may come your way, but what you can do is analyze the unplanned opportunities

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Serendipitous Strategy

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Breakthrough

Incremental

Serendipitous Intentional

Incremental Innovation

-Incremental innovation

-Low/Med Revenue Potential

-Initiated by Organization

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Serendipitous Innovation Vs. Strategic Innovation

0Focus on a common theme of making large expansive changes in products and operation

vs

0The traditional TQM approach of incremental monitoring, assessing, and modifying.

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Strategic Innovation Models

As seen in this figure many innovation strategies refer to these explosive growth and breakthroughs created by Strategic

Innovation as discontinuous change or disruptive change and innovation.

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Level of Change

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to produce outcomes that drive organizational growth

1: Managed Innovation Process Dimension

2: Strategic Alignment Dimension

3: Industry Foresight Dimension

4: Consumer/Customer Insight Dimension

5: Core Technologies and Competencies Dimension

6: Organizational Readiness Dimension

7: Disciplined Implementation

(Keathley, Merrill, Owens, Meggarrey, & Posey, 2014)

7 Dimensions

Managed innovation processes are at the core of any strategic approach. An organization’s goal is to find the equilibrium between external perspectives and an organization's internal capabilities. It must look beyond the obvious in order to create a culture that explores new possibilities.

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1 – Managed Innovation Processes

Strategic alignment involves internal support and commitment among key stakeholders. This commitment is necessary for strategic innovation. It engages the organization around a unifying vision and goals which align its strategies and business models.

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2 – Strategic Alignment

Industry Foresight is a top-down perspective used to understand the complex forces that drive change, it includes emerging and converging trends, the latest technology, competitive dynamics, and alternative scenarios.

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3- Industry Foresight

Core Technologies and Competencies are a set of internal capabilities, competencies needed deliver value to the organization’s customers. Understanding these capabilities and competencies, as well as the organization’s gaps in technologies, intellectual property, brand equity and strategic relationships are critical for creating strategic innovation.

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4- Core Technologies and Competencies

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Quote on Core Competencies

Consumer/Customer Insight is mirroring, bottom-up perspective, a deep understanding of both articulated (explicitly stated) and latent, or unrecognized, needs of current and potential customers and business segments.

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5- Consumer/Customer Insight

Organizational Readiness is the determination and ability for an organization to implement new ideas and strategies, as well as, to successfully manage and sustain those ideas and strategies once initiated. It is typically made up of three areas of readiness; cultural, process, and structural.

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6- Organizational Readiness

Disciplined Implementation is the organization’s capability to effectively sustain the life cycle of innovation. The sustainment of which is dependent on the organization's repeat each step of the innovation life cycle over and over again.

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7- Disciplined Implementation

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0Five Phases of Innovation 0 Generate 0 Conceptualize 0 Optimize 0 Implement 0 Capture

0 Repeat as needed

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5 Phase Strategic Innovation Life Cycle Model

A specific type of strategic innovation 0 Leads to a new way of doing the business 0 Conflicts with the traditional way of doing business

Examples: 0 Internet0 Low-cost airlines 0 Direct insurance0 Online brokerage trading 0 Distribution of news0 Home delivery of grocery stores

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Disruptive Strategic Innovation

0 Emphasis on different product or service attributes

0 Traditional brokers sell services on the basis of research

and advice

0 Online brokers sell on price and speed of execution

0 Innovators become attractive to new segments

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Characteristics of Disruptive Strategic Innovation

0 Start out as small and low-margin businesses

0 Rarely gain support or long-term commitment from established competitors

0 The innovations are small and not attractive until they grow

0 Grow to capture a large share of the established market

0 Improvements are made over time

0 They are able to deliver comparable performance

0 Established competitors model the new attributes

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Characteristics of Disruptive Strategic Innovation

0 General Electrics 0 Dell0 Canon0 Kodak0 IBM0 Spacex

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Applied Example

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GE’s Six Part Growth Model

0 Developed new engines and a new launch vehicle

0 Resulting in NASA and commercial customers signing on to

40+ manifests

0 Focused on Disruptive Strategic Innovation

0 Developing the Grasshopper vertical takeoff and landing

(VTVL) vehicle

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Space-X

0 Dell Inc. redesigned the company’s direct-sales model

0 IBM changed its practice of independently selling

hardware and software to selling complete solutions

0 Canon Inc. developed photocopiers for small offices instead

of large corporations

0 Eastman Kodak pioneered IT operations outsourcing

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Technological Industry Examples

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Risk in Strategic innovation

0 Delve into product innovation until ready to kick-off

0 Use time effectively

0 Portfolio Mapping

0 Innovation Roadmaps

0 Innovation Funnel

0 Stage Gate Innovation

0 Open innovation has emerged as viable mitigation strategy

(More Recently)

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Risk Management Applied to Product Innovation

0 Innovate while providing service Invest in new service

infrastructure Customers finance the development cost

Risks

0 Higher service costs/reduced profit margins

0 Contract penalties

0 Uncertainty of outcomes/customer satisfaction

0 Soiled reputation

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Risk Management Applied to Service Innovation

0 Phased/Pilot implementation may yield desired outcome Avoid singular mindset Open to suggestions Critical elements: 0 Entrepreneurial culture 0 Incentives 0 Knowledge management 0 Risk Management in Service Innovation

0 Prepare for Service Innovation 0 Examine alignment of business model, infrastructure,

operations 0 Identify gaps 0 Take actions (hire experts, separate business models)

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0 Master the learning challenge 0 Collaborate with frontline stakeholders 0 Knowledge dissipation/training 0 Knowledge capture/feedback

0 Customer collaboration 0 Setup the stage/expectations 0 Positive customer engagement 0 Knowledge capture

0 Learn from the knowledge 0 Look at past and current initiatives and Key Performance Indicators

(KPIs) 0 Adjust as needed

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0 Facts: 0 Service Innovation happens in “real-world”0 Initial service delivery does not yield returns right away 0 Benefits come from “hits-and-misses” analysis and

corrective measures Service B overlap Service A Time Time

0 Better results can be achieved by: 0 Cross-functional decision making 0 Organizational alignment 0 Knowledge management 0 Incentives and rewards

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1. Conduct Innovation Audits

2. Build Innovation Strategies

3. Create Continuous Innovation

4. Optimize Marketing Strategies

5. Improve Customer Relationships

6. Find Revenue Innovations

7. Uncover Cost Innovations

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What We Do?

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What We Do?

0 Conduct Innovation Audits

0 Build Innovation Strategies

0 Create Continuous Innovation

0 Optimize Marketing Strategies

0 Improve Customer Relationships

0 Find Revenue Innovations

0 Uncover Cost Innovation

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• How innovative is your company already?

• Do people feel like they can innovate in your organization?

• Are building blocks for innovation in place?

• Is the organization aligned to support innovation? - Culture - Rewards - Human Resource policies - Top-down support

• Is funding for idea development set aside?

What We Do?







0 Uncover Cost Innovations

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• Align with Corporate Strategy or not?

• Define Innovation Goals

• Define Innovation Policies

• Innovation Management System Selection

• Build Processes for Idea Selection

• Establish an Innovation Funding Plan

• Identify Relevant Innovation Metrics

• Create an Innovation Training Plan








What We Do?

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• Identify Organization Cultural Changes to be Made

• Build Visual Models to Drive Quality Contributions

• Train All Employees to be Business Innovators

•Modify HR Policies as Needed • Define Innovation Communications Plan

• Refine Processes for Idea Generation as Needed

• Innovation Management System Implementation

• Refine Innovation Funding Plan as Needed

• Refine Innovation Metrics as Needed








What We Do?

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• Are you building your marketing and product development around the right customer insights?

• Are you marketing to your customers where they are, or are you shouting into the darkness?

• Are you reaching the right customers?

• Are you building a relationship of increasing mutual value with your customers?

• We’ll improve your marketing outcomes or build you a marketing strategy from scratch








What We Do?

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• Together we will create meaningful and productive conversations your customers

• Enabling a seamless transition of the conversation from pre-sale to post-sale

• Creating loyalty not just a loyalty program

• Delivering value to customers, not e-mails

•We can help you implement a true conversational marketing strategy

•We will find the right role for social media in your conversational marketing strategy








What We Do?

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• Understand your customers better

• Identify new markets or customers for existing products or services

• Deliver new products or services that will expand your customer base or increase your customer penetration

• Deliver new products or services that will increase lifetime value of your customers through higher customer loyalty

• Extract the right customer insights, those that will result in competitive separation








What We Do?

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• Optimize your business processes with us•We will help you identify what customers

really want•We will help you identify what the business

really needs• As a result their may be things you

currently do that you can stop doing

• Identify opportunities for savings from outsourcing

• Identify opportunities for insourcing (does it make sense to perform a process for others in the industry to leverage our investments)








What We Do?

0 Palmer, D., & Kaplan, S. (n.d.). Resources: Strategic Innovation Resources – Articles, White Papers & Books. Retrieved November 14, 2013, from InnovationPoint: http://www.innovationpoint.com/resources.htm

0 Abraham, J., & Knight, D. (2001). Strategy & Leadership: leveraging creative action for more profitable growth. Strategy & Leadership, 29(1), 21-26. Retrieved from Emerald: https://www.emeraldlibrary.com

0 Govindarajan, V. (2004, January 15). Strategic Innovation and the Science of Learning. Retrieved November 21, 2013, from MIT Sloan Management Review: http://sloanreview.mit.edu/article/strategic-innovation-and-the-science-of-learning/

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Refrences

http://www.innovationpoint.com/resources.htm

https://www.emeraldlibrary.com/

http://sloanreview.mit.edu/article/strategic-innovation-and-the-science-of-learning/

http://sloanreview.mit.edu/article/strategic-innovation-and-the-science-of-learning/

0 Markides, C. (1997, April 15). Strategic Innovation. Retrieved November 18, 2013, from MIT Sloan Management Review: http://sloanreview.mit.edu/article/strategic-innovation/

0 Porter, M. E. (1996, November 1). What is Strategy? Harvard Business Review(74), pp. 61-78. Retrieved November 18, 2013

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http://sloanreview.mit.edu/article/strategic-innovation/

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Date post:	14-Sep-2014
Category:	Business
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