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Page 1: Strategic Innovation Process

Strategic Strategic Innovation Innovation ProcessProcess

Cijo Abraham Cijo Abraham

Page 2: Strategic Innovation Process

Strategic Innovation ProcessStrategic Innovation Process

A systematic process for strategy formulation and implementation that will allow us to profit from innovation

A strategy must be implemented well if its full benefits are to be realized

Page 3: Strategic Innovation Process

1. Goals

2. Innovation Opportuniti

es & Threats

4. Choice of Profit Site

3. Capabilities

5. Business Strategy

7. Functional Strategy

6. Innovation Strategy

8.Globalization

Strategy

Strategic Direction

9. Structure

12. Profits & Their

Protection

11. People

10. Systems or Processes

Page 4: Strategic Innovation Process

1. Mission and Goals1. Mission and Goals

Goal Pull Goal Pull – set some goal and then use – set some goal and then use innovation to achieve goalinnovation to achieve goal

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

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2. Innovation Opportunities & 2. Innovation Opportunities & ThreatsThreats

To attain goal , the firmTo attain goal , the firm

Scan – suppliers, customers, competitors, Scan – suppliers, customers, competitors,

complementary innovators, related industries, complementary innovators, related industries,

research laboratories, universities, and its own research laboratories, universities, and its own

value chain for any ideas that can be turned value chain for any ideas that can be turned

into profitable innovationsinto profitable innovations

Opportunities & Threats - Technological Opportunities & Threats - Technological

discontinuities, globalization, demographic discontinuities, globalization, demographic

changes, macroeconomic changes,changing changes, macroeconomic changes,changing

customer tastes,preferences and expectationscustomer tastes,preferences and expectations

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3. Identifying capabilities3. Identifying capabilities

Once the idea or invention has been spotted the 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.

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VIDE criteriaVIDE criteria

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

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

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

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

VIDE – value, imitability, competitor differentiation, extendability

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4. Choosing a Profit Site4. Choosing a Profit SiteTo choose the profit site the firm must answer To choose the profit site the firm must answer several questionsseveral questions

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

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

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

How about its competitors ?How about its competitors ?

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

Corporate StrategyCorporate Strategy

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5. Business Strategy5. Business Strategy

ProductProduct

What industry should the firm must be in and What industry should the firm must be in and

where in the industry should it position itself?where in the industry should it position itself?

Should the products from the innovation be low-Should the products from the innovation be low-

cost, differentiated or both?cost, differentiated or both?

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6. Innovation Strategy6. Innovation Strategy

TimeTime

The firm determines whether it will follow an The firm determines whether it will follow an

offensive innovation strategy in which it is the offensive innovation strategy in which it is the

first to introduce the innovation or follow a first to introduce the innovation or follow a

strategy in which it waits for others to go first.strategy in which it waits for others to go first.

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7. Functional Strategies7. Functional StrategiesBusiness and innovation strategies help to drive Business and innovation strategies help to drive functional strategiesfunctional strategies

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

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

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

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

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8. Globalization8. Globalization

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

When and how to go globalWhen and how to go global

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

4 globalization strategies4 globalization strategies

InternationalInternational

GlobalGlobal

MultidomesticMultidomestic

TransnationalTransnational

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9. Organizational Structure9. Organizational Structure

The firm can now turn to their implementation.The firm can now turn to their implementation.

It must find an organizational structure, build It must find an organizational structure, build

systems and processes and put in right place to systems and processes and put in right place to

match the strategy.match the strategy.

How do world wide functions keep How do world wide functions keep

increasing there specialization in their increasing there specialization in their

functional areas?functional areas?

How should the task be organized?How should the task be organized?

Who goes where?Who goes where?

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10. Systems or Processes10. Systems or Processes

Management must be able monitor performance Management must be able monitor performance

and to reward and punish and to reward and punish

individuals ,functions ,divisions, and organization individuals ,functions ,divisions, and organization

..

It must establish systems where information will It must establish systems where information will

flow in shortest possible time to the right targets flow in shortest possible time to the right targets

for decision making.for decision making.

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11. People11. People

It is the people who carry out the strategies.It is the people who carry out the strategies. The firm ask several questions The firm ask several questions

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

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

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

What does it take to motivate the employees?What does it take to motivate the employees? Are managers leaders or systematic Are managers leaders or systematic

planners?planners?

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12. Profits & Their Protection12. Profits & Their Protection

3 generic strategies3 generic strategies

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

Block – firm prevent others from imitating its Block – firm prevent others from imitating its innovationinnovation

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

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Strategic Innovation StylesStrategic Innovation Styles

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““Strategic Innovation Styles” Strategic Innovation Styles” for Approaching the Innovation Processfor Approaching the Innovation Process

Fertile FieldFertile Field

CauldronCauldron

Spiral StaircaseSpiral Staircase

Pac ManPac Man

ExplorerExplorer

Page 19: Strategic Innovation Process

Characteristics of Various Innovation StylesCharacteristics of Various Innovation Styles

Spiral StaircaseSpiral Staircase

Improve on existing model?

Improve on existing model?

Is the primary focus to...Is the primary focus to...

Page 20: Strategic Innovation Process

Spiral StaircaseSpiral Staircase

Create a profound sense of core Create a profound sense of core purpose purpose

Let everyone know their innovation Let everyone know their innovation contribution is importantcontribution is important

Give groups the leadership and Give groups the leadership and autonomy they need to winautonomy they need to win

Create a culture of experimentation and Create a culture of experimentation and commitment to learncommitment to learn

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Characteristics of Various Innovation StylesCharacteristics of Various Innovation Styles

Spiral StaircaseSpiral StaircaseCauldronCauldron

Develop new rapidly

Develop new rapidly

Improve on existing model?

Improve on existing model?

Create new Wealth?

Create new Wealth?

Do you need new assets and

competencies?

Do you need new assets and

competencies?

How well defined is the opportunity and how long will

it take?

How well defined is the opportunity and how long will

it take?

Near term with defined

market?

Near term with defined

market?

Is the primary focus to...Is the primary focus to...

Page 22: Strategic Innovation Process

CauldronCauldron

Internal markets for new ideasInternal markets for new ideas

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

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

Loose structure and frequent Loose structure and frequent organizational changesorganizational changes

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Characteristics of Various Innovation StylesCharacteristics of Various Innovation Styles

Spiral StaircaseSpiral StaircaseCauldronCauldron

Develop new rapidly

Develop new rapidly

Fertile FieldFertile Field

Leverage existing over

time

Leverage existing over

time

Improve on existing model?

Improve on existing model?

Create new Wealth?

Create new Wealth?

Do you need new assets and

competencies?

Do you need new assets and

competencies?

How well defined is the opportunity and how long will

it take?

How well defined is the opportunity and how long will

it take?

Near term with defined

market?

Near term with defined

market?

Is the primary focus to...Is the primary focus to...

Page 24: Strategic Innovation Process

Fertile Field Fertile Field

Manage the overall portfolio of core Manage the overall portfolio of core competencies and strategic assetscompetencies and strategic assets

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

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

Determine when and if to spin off a Determine when and if to spin off a business ideabusiness idea

Page 25: Strategic Innovation Process

Characteristics of Various Innovation StylesCharacteristics of Various Innovation Styles

Spiral StaircaseSpiral StaircaseCauldronCauldron

Develop new rapidly

Develop new rapidly

PackmanPackman

Acquire in marketplaceAcquire in

marketplace

Fertile FieldFertile Field

Leverage existing over

time

Leverage existing over

time

Improve on existing model?

Improve on existing model?

Create new Wealth?

Create new Wealth?

Do you need new assets and

competencies?

Do you need new assets and

competencies?

How can you best develop 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?

How well defined is the opportunity and how long will

it take?

Near term with defined

market?

Near term with defined

market?

Long term with

undefined market

Long term with

undefined market

Is the primary focus to...Is the primary focus to...

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Pac ManPac Man

Guide entrance into new markets and Guide entrance into new markets and development of new competenciesdevelopment of new competencies

Develop wide range of options early in the Develop wide range of options early in the innovation process innovation process

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

Assess competitive responses to strategy Assess competitive responses to strategy innovationsinnovations

Page 27: Strategic Innovation Process

Characteristics of Various Innovation StylesCharacteristics of Various Innovation Styles

Spiral StaircaseSpiral StaircaseCauldronCauldron

Develop new rapidly

Develop new rapidly

PackmanPackman

Acquire in marketplaceAcquire in

marketplace

Fertile FieldFertile Field

Leverage existing over

time

Leverage existing over

time

ExplorerExplorer

Develop internallyDevelop

internally

Improve on existing model?

Improve on existing model?

Create new Wealth?

Create new Wealth?

Do you need new assets and

competencies?

Do you need new assets and

competencies?

How can you best develop 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?

How well defined is the opportunity and how long will

it take?

Near term with defined

market?

Near term with defined

market?

Long term with

undefined market

Long term with

undefined market

Is the primary focus to...Is the primary focus to...

Page 28: Strategic Innovation Process

Explorer Explorer

Aspire beyond what seems possibleAspire beyond what seems possible

Design and carry out effective and Design and carry out effective and low-cost experimentslow-cost experiments

Guide entrance into new markets and Guide entrance into new markets and development of new competencies development of new competencies

Emphasize continuous, cumulative Emphasize continuous, cumulative learninglearning

Page 29: Strategic Innovation Process

ReferencesReferences

Innovation Management - Allan Innovation Management - Allan AfuahAfuah

InternetInternet

Page 30: Strategic Innovation Process

Thank YouThank You


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