1. Strategic Innovation Process Cijo Abraham

2. Strategic Innovation Process A systematic process for strategy formulation and implementation that will allow us to profit from innovationA strategy must be implemented well if its full benefits are to be realized 3. 1. Goals Strategic Direction 9. Structure 12. Profits & Their Protection 11. People 10. Systems or Processes 2. Innovation Opportunities & Threats 4. Choice of Profit Site 3. Capabilities 5. Business Strategy 7. Functional Strategy 6. Innovation Strategy 8.Globalization Strategy 4. 1. Mission and Goals

• • Goal Pull set some goal and then use innovation to achieve goal

• • Innovation Push a firm that is endowed with some unique capabilities, which enable it to recognize and exploit innovation, may make it its goal to be the most profitable firm in the world

Most firms have goals and the role of innovation varies from firm to firm.

Innovation is at core of the firms products and services

Innovation can play one of two roles

5. 2. Innovation Opportunities & Threats

To attain goal , the firm

• Scan suppliers, customers, competitors, complementary innovators, related industries, research laboratories, universities, and its own value chain for any ideas that can be turned into profitable innovations

Opportunities & Threats - Technological discontinuities, globalization, demographic changes, macroeconomic changes,changing customer tastes,preferences and expectations

6. 3. Identifying capabilities

Once the idea or invention has been spottedthe firm then determines three things

• What types of capabilities are required to exploit the innovation?

• Potential competitors capabilities

• Its capabilities and the extent to which they meet those required to exploit the innovation in each of these industries

• Capabilities are determined using VIDE analysis.

7.

VIDE criteria

• Customer Value:does the capability make an unusually high contribution to the values that customers perceive

• Imitability:how quickly and to what extent can other firms duplicate or substitute the capability

• Competitor Differentiation:is the type or level of the capability unique to the firm

• Extendability:can it be used in more than one product area

VIDE v alue,i mitability, competitord ifferentiation,e xtendability 8. 4. Choosing a Profit Site

To choose the profit site the firm must answer several questions

• • How attractive is the industry over the lifecycle of the innovation?

• • What capabilities are needed to be profitable over the lifecycle of the product?

• • Does the firm have these capabilities and if not ,can it build them quickly?

• • How about its competitors ?

• • With whom can it collaborate and at what level?

Corporate Strategy

9. 5. Business Strategy

Product

What industry should the firm must be in and where in the industry should it position itself?

Should the products from the innovation be low-cost, differentiated or both?

10. 6. Innovation Strategy

Time

The firm determines whether itwill follow an offensive innovation strategy in which it is the first to introduce the innovation or follow a strategy in which it waits for others to go first.

11. 7. Functional Strategies

Business and innovation strategies help to drive functional strategies

Resources and the actions taken by each function along the value chain (R&D, Manufacturing and so on)

• • • The firm must allocate resources and direct the different functions along its value chain

• • • Differentiated products and offensive strategies may require investing heavily in R&D to pioneer new products.

• • • A low-cost, follower strategy may require focusing on manufacturing processes.

12. 8. Globalization

How the firm will take the advantage of Worldwide sources of Innovation and Markets

• When and how to go global

• Where and when to locate what functions of the value chain

4 globalization strategies

• • International

• • Global

• • Multidomestic

• • Transnational

13. 9. Organizational Structure

The firm can now turn to their implementation.

It must find an organizational structure, build systems and processes and put in right place to match the strategy.

• • How do world wide functions keep increasing there specialization in their functional areas?

• • How should the task be organized?

• • Who goes where?

14. 10. Systems or Processes

Management must be able monitor performance and to reward and punish individuals ,functions ,divisions, and organization .

It must establish systems where information will flow in shortest possible time to the right targets for decision making.

15. 11. People

It is the people who carry out the strategies.

The firm ask several questions

• • What type of boundary spanners, champions, sponsors, and project managers does the firm have or need?

• • To what extend employee share the same goal as their firm?

• • To what extend do the employees have the knowledge that supports the various activities of the firms value chain?

• • What does it take to motivate the employees?

• • Are managersleaders or systematic planners?

16. 12. Profits & Their Protection

3 generic strategies

team up firm allies with others to improve its chances of gaining a standard or dominant design

Block firm prevent others from imitating its innovation

Run firm frequently introduces new products, restructuring its own products before anyone else does.

17. Strategic Innovation Styles 18. Strategic Innovation Stylesfor Approachingthe Innovation Process Fertile Field Cauldron Spiral Staircase Pac Man Explorer 19. Characteristics of Various Innovation Styles Improve on existing model? Is the primary focus to... Spiral Staircase 20. Spiral Staircase

• Create a profound sense of core purpose

• Let everyone know their innovation contribution is important

• Give groups the leadership and autonomy they need to win

• Create a culture of experimentation and commitment to learn

21. Characteristics of Various Innovation Styles Cauldron Develop new rapidly Improve on existing model? Create new Wealth? Do you need new assets and competencies? How well defined is the opportunity and how long will it take? Near term with defined market? Is the primary focus to... Spiral Staircase 22. Cauldron

• Internal markets for new ideas

• Venture capital model of internal entrepreneurs seeking funding from internal sources

• Use of peers, rather than superiors, to screen and evaluate opportunities

• Loose structure and frequent organizational changes

23. Characteristics of Various Innovation Styles Cauldron Develop new rapidly Fertile Field Leverage existing over time Improve on existing model? Create new Wealth? Do you need new assets and competencies? How well defined is the opportunity and how long will it take? Near term with defined market? Is the primary focus to... Spiral Staircase 24. Fertile Field

• Manage the overall portfolio of core competencies and strategic assets

• Bring people together across organizational boundaries to share information and discover opportunities

• Create mechanisms that gather, disseminate, and track new ideas and learning's for all

• Determine when and if to spin off a business idea

25. Characteristics of Various Innovation Styles Cauldron Develop new rapidly Packman Acquire in marketplace Fertile Field Leverage existing over time Improve on existing model? Create new Wealth? Do you need new assets and competencies? How can you best develop new assets and competencies? How well defined is the opportunity and how long will it take? Near term with defined market? Long term with undefined market Is the primary focus to... Spiral Staircase 26. Pac Man

• Guide entrance into new markets and development of new competencies

• Develop wide range of options early in the innovation process

• Acquire promising niche players, using the market as a screen

• Assess competitive responses to strategy innovations

27. Characteristics of Various Innovation Styles Cauldron Develop new rapidly Packman Acquire in marketplace Fertile Field Leverage existing over time Explorer Develop internally Improve on existing model? Create new Wealth? Do you need new assets and competencies? How can you best develop new assets and competencies? How well defined is the opportunity and how long will it take? Near term with defined market? Long term with undefined market Is the primary focus to... Spiral Staircase 28. Explorer

• Aspire beyond what seems possible

• Design and carry out effective and low-cost experiments

• Guide entrance into new markets and development of new competencies

• Emphasize continuous, cumulative learning

29. References

Innovation Management- Allan Afuah

Internet

30. Thank You