A Basic Premise

Devasis Chattopadhyay 1

Corporate InnovationCorporate InnovationThe theory that propels businessThe theory that propels business

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Invention versus InnovationInvention versus Innovation

Invention Innovation Happens in a lab Happens in the market with customers

You have to fail to succeed Can’t afford to fail No intrinsic value Has value because it solves a real problem

Expense Revenue is the return on innovation Individual performance Organizational Leverage

Imperatives for

change in Company

Imperatives for

change in Company

Supply chain Push to pull Logistics Time to market

Customer focused Organisation Culture Values Style Design Recruitment

Work Practices Processes Procedures Key performance indicators (KPI) Continuous improvement

Knowledge capital Information Training

Technology Products Process Systems

Globalisation Partnerships New competitors New products/technology

Cost-effectiveproducer

World class quality

Speedto market

Innovation

Innovation Plays a very major role in any Organizational Innovation Plays a very major role in any Organizational Change…Change…

The proliferation of new technologies, disruptive delivery and distribution mechanisms, and frequent changes in business models are forcing

companies to adapt in order to survive and thrive. This requires constant innovation…..

Far reaching, rapid improvements in service capability

Will be able to increase market share

Will be well positioned during industry consolidation phase

Sluggish, “me too” improvement

May be able to hold ground if they stay close enough to early movers

Will lose some ground as consolidation takes place

No action; performance gap leaves them far behind

Market share gains of early movers will be at the expense of these manufacturers

Consolidation/shakeout will threaten survival

— The Winners — — The Survivors — — The Losers —

Need for InnovationNeed for Innovation

Company must move quickly; those who lag will survive at best

Innovation: The ConceptInnovation: The Concept

Innovation is generally understood as the successful introduction of new products, services or methods. Innovation is the embodiment, combination, or synthesis of relevant knowledge in original form along with valued new products, creative processes, or innovative services.

Innovation is viewed as an invention that adds sustaining value or creates quantum leap improvement for companies - the kind of value that one can quantify – it could be increased revenues and/or profits leading to increased valuations of businesses

Like many business functions, it is a management process that requires specific tools, rules, and discipline

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Innovation: The Organizational ConceptInnovation: The Organizational Concept In the organizational context, innovation in most cases is linked to performance and growth through improvements in efficiency, productivity, quality, competitive positioning and market share.

All innovation begins with creative ideas . Innovation is defined as the successful implementation of creative ideas within an organization that generates economic value. Creativity of individuals and teams is the starting point for innovation; a creative team is a pre-requisite but that does always guarantee successful innovation.

For innovation to be successful, something more than just the generation of a creative idea or insight is required: the idea must be put into action to make a genuine difference. Such a change might require new or altered business processes within the organization, or changes in the products and services or a launch of a radically different new product or a business model.

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Innovation – The Goal Being First or Great ?Innovation – The Goal Being First or Great ? Innovation must enable businesses to not only excel in today’s globally competitive environment but also ensure survival for a longer term. Companies must innovate primarily for ensuring sustainability and long-term competitive advantage. Hence the question is not whether one is first or great.

There is no place in today’s global marketplace for those companies that cannot continually envision, conceptualize, and continuously innovate whether it is products, services or a new business model that delivers perceived value to the customers.

IIt is not only critical that business innovate and launch new products and services in a highly profitable manner, but also equally important agenda would be to build a highly knowledge-oriented organization for effectively competing in the global markets.

In order to enable all the above, it requires a different kind of leadership style, mindset, work culture to become an “innovative organization”.

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What drives successful innovation ?What drives successful innovation ?

Every business needs an innovation engine to generate the great or unique ideas that will propel the business forward into the future.

Every business needs an innovation engine to generate the great or unique ideas that will propel the business forward into the future. Cont……

If one asks, “What drives successful innovation?” one is likely to get these answers:

“Desire for growth.”

“Demand for increased profitability.”

“Motivation and Retention of People.”

Typically what drives successful innovation are: Entrepreneurial leadership Respect for creative thinkers Desire to be known as a knowledge-based organization Desire to be one of the best in the world – whether products, unique service/delivery or cost competitiveness

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Purposeful InnovationPurposeful Innovation

Before the 1880s, invention was mysterious. During the early nineteenth century, books talked incessantly of the' flash of genius.’ By the time World War I broke out in 1914, ‘invention’ had become ‘research,’ a systematic purposeful activity, planned and organized with high predictability both with respect to the results aimed at and likely to be achieved. Something similar would need to be done with respect to innovation.

Enterprise will have to learn to practise systematic purposeful innovation. Successful company’s do not wait for a bright idea to strike; they do not look for the big time innovation that will revolutionize the industry they are operating in nor do they work to create a multi-billion dollar business. Therefore, those companies who start out with the idea of making it big and thus are in a hurry, are probably destined to fail because they are bound to do wrong things.

Cont…………..

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Purposeful InnovationPurposeful Innovation An innovation that looks very big may turn out to be nothing more than technical virtuosity while the one with modest intellectual pretensions, a McDonald’s for example, may eventually turn out to become a gigantic and highly profitable business. Successful companies, whatever their individual motivation — be it money, power, curiosity or a great desire for fame and recognition — try to create value and make a tangible contribution.

It is true that successful companies aim high; they are not content simply to improve on what already exists or to modify it. They try to create new and different value propositions to convert a ‘material’ into a ‘resource,’ or to combine the existing resources in a new or more productive configuration. And, it is this change that always provides the opportunity for the new and different.

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Entrepreneurship and Innovation - ExamplesEntrepreneurship and Innovation - Examples

According to conventional wisdom, “Big businesses don’t innovate”. This is to a large extent true that new and major innovations of this century did not come from out of the old, large businesses of their time.

Examples of large companies that have done well as Entrepreneurs and Innovators are:

The railroads did not spawn the automobile or the truck; they did not even try. On the contrary, the automobile companies did try (Ford and General Motors pioneered in aviation and aerospace), all of today’s large aircraft and aviation companies have evolved out of separate new ventures.

Similarly, every one of the giants of the electrical industry – General Electric, Westinghouse, and RCA in the United States; Siemens and Philips on the Continent; Toshiba in Japan – rushed into computers in the 1950s. Not one was successful. IBM and Hewlett Packard now dominate the field and both were either small or barely mid-sized and most definitely not influential companies fifty years ago.

Cont…………..

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In the current era of rapid change, success of a business will clearly depend on how much the top management encourages and practices entrepreneurship and innovation. If the enterprise does not innovate, it will inevitably age and fast decline. Sometimes successful and financially healthy businesses do run the risk of becoming bureaucratic and complacent. And this could become a serious impediment to entrepreneurship and innovation.

However, we must understand and appreciate that entrepreneurship is not “natural”; it is not “creative”. It is hard work as opposed to what conventional wisdom would like us to believe. Entrepreneurial businesses treat entrepreneurship as a duty. They are disciplined about it; they work for it and religiously practice it.

Entrepreneurship and Innovation – The Entrepreneurship and Innovation – The TruthTruth

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Corporate Innovation MachineCorporate Innovation Machine

The Corporate innovation machine is a model for understanding how to implement an effective, idea management based innovation strategy in the firm.

The Corporate innovation machine is a model for understanding how to implement an effective, idea management based innovation strategy in the firm.

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Principles behind the Innovation Machine

Strategy

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Corporate Innovation Machine - Powered by Corporate Innovation Machine - Powered by ManagementManagement

The corporate innovation machine is powered by management. Just as the most sophisticated machine will not run without a power source, likewise your corporate innovation strategy will go nowhere without top management taking the lead.

Management's main task is to create within the organization a culture of innovation which will empower workers to think creatively, collaborate on ideas and contribute their ideas to the company. This is not an easy task, but done well it will make construction of the remainder of the innovation machine a relatively easy job.

Management must have a plan that’s put into place to move the company towards innovation

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Do’s and Don’t for ManagementDo’s and Don’t for Management

Ensure that there is environment of trust - If the workforce does not trust the company, they will not innovate for the company. Survey after survey has shown that trust is one of the most critical factors in establishing a culture of innovation. If your workforce trusts the company, this is not an issue. If not, establishing trust must be your very first step.

Establish innovation goals - Determine what you wish to achieve through innovation. This should translate into a series of short term and long term goals against which the results of implementing the innovation machine strategy can be compared.

Designate responsibility and resources - Who will take charge of the innovation programme?What tools will you invest in? What resources will you provide? What budget will be available for the innovation programme?

Cont……

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Do’s and Don’t for ManagementDo’s and Don’t for Management Develop a communications plan - Likewise, your shareholders and customers should also be aware of your new innovation strategy and how it will benefit them. This all demands a comprehensive communications plan.

Demonstrate innovation - If management is seen as managing by the book,, employees will doubt management's commitment to innovation. Instead, management should be sharing and implementing innovative ideas – and must communicate this to the workforce.

Reduce creative risk - Albert Einstein once said: “If at first the idea is not absurd, then there is no hope for it.” For many people, sharing a potentially absurd idea with their company is overly risky. At best, they may be ridiculed by their colleagues. If the level of creative risk in your organization is too high, people will keep ideas to themselves, rather than share them. You need to ensure creative risk is as low as possible.

Cont……

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Establish a rewards scheme - Rewarding innovative thinking is an important part of an idea management based innovation strategy. Rewards increase motivation for employees to continue developing and sharing ideas.

Do’s and Don’t for ManagementDo’s and Don’t for Management

How management implements these actions varies from organization to organization and depends on existing culture, existing tools,

innovation goals and facilities.

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Idea Generator

If management is the power source of the innovation machine, then the idea generator – the tools and techniques for generating ideas – is the motor that drives the innovation process.

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Creative collaboration – Essential part of Innovation

Creativity vs. Innovation

Creativity is the generation of new ideas.

Innovation is the implementation of creative ideas.

Collaboration is an essential element of organizational

innovation. When a team of people come together to

devise and develop ideas, they can potentially be

much more innovative than any individual member of

the team can be on her own.

Collaboration is an essential element of organizational

innovation. When a team of people come together to

devise and develop ideas, they can potentially be

much more innovative than any individual member of

the team can be on her own.

Creative TeamsEmployees should be encouraged to form

teams with members of other departments.

Build the team with people

from different divisions and locations session.

Creative TeamsEmployees should be encouraged to form

teams with members of other departments.

Build the team with people

from different divisions and locations session.

Creative collaboration occurs in several ways:

Brainstorming groups

Again, an effort should be made

to bring as wide a variety of people as possible into eachbrainstorming session.

When appropriate, business partners, Customers and

others from outside the company should be brought In to participate.

Brainstorming groups

Again, an effort should be made

to bring as wide a variety of people as possible into eachbrainstorming session.

When appropriate, business partners, Customers and

others from outside the company should be brought In to participate.

Open collaborationPossible through web based discussion fora, some web based software and other on-line collaborative tools.

Open collaboration is where any user can interact with

anyother user in a transparent manner. Open collaboration

is particularly useful for idea Management in large organizations with multiple locations.

Open collaborationPossible through web based discussion fora, some web based software and other on-line collaborative tools.

Open collaboration is where any user can interact with

anyother user in a transparent manner. Open collaboration

is particularly useful for idea Management in large organizations with multiple locations.

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Tools & Techniques for generating ideas Organizations should have a small “toolbox” of tools and techniques for facilitating innovation. The central tool should be an idea management system capable of soliciting, capturing and evaluating ideas.

Properly used, such a tool permits a steady stream of innovative ideas for implementation. Other tools, such as skunkworks, brainstorming, creative spaces and creative meetings further your organization's innovation potential.

Organizations should have a small “toolbox” of tools and techniques for facilitating innovation. The central tool should be an idea management system capable of soliciting, capturing and evaluating ideas.

Properly used, such a tool permits a steady stream of innovative ideas for implementation. Other tools, such as skunkworks, brainstorming, creative spaces and creative meetings further your organization's innovation potential.

Suggestion scheme based idea management

An innovation manager reviews suggestions on regular basis with other managers to decide which ideas should be developed further is a good introduction to idea management, but is flawed as a long term innovation solution, particularly in medium to large organizations. An example of suggestion scheme problem If the suggestion scheme is well promoted, the person in charge will typically be inundated with all kinds of unrelated ideas. Most likely he/she will be unable to manage the quantity and variety of ideas. As a result the system will begin to stagnate. At the same time, employees see that nothing is happening to their suggestions and become demotivated, thus stagnating the system.

An innovation manager reviews suggestions on regular basis with other managers to decide which ideas should be developed further is a good introduction to idea management, but is flawed as a long term innovation solution, particularly in medium to large organizations. An example of suggestion scheme problem If the suggestion scheme is well promoted, the person in charge will typically be inundated with all kinds of unrelated ideas. Most likely he/she will be unable to manage the quantity and variety of ideas. As a result the system will begin to stagnate. At the same time, employees see that nothing is happening to their suggestions and become demotivated, thus stagnating the system.

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A superior alternative to the suggestion scheme model of idea management is the campaign based model of idea management. In the campaign based approach, instead of openly soliciting all ideas, the company launches short term campaigns to solicit ideas on specific issues or problems, for example :

“Ideas for new product features that will make our widgets more appealing to young home-owners” or “How can we improve the product documentation in order to reduce customer support demands?”

Campaign based idea management offers two huge benefits over the suggestion scheme approach.

Firstly it forces people to think about and, focus their innovation on, specific business needs.

Secondly, it motivates employees to participate by providing specific, time limited challenges. Compare the demands: “give me an idea” and “give me an idea on how we can improve our marketing strategy” and it is easy to understand why campaign based idea management attracts more and better ideas.

Campaign versus Suggestion-based Idea Management

Campaign based idea management

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Idea Quality Control

The more successful an idea management system is, the more ideas it will generate. As a result, you need an effective idea quality control system.

It goes without saying that it would be a tremendous waste of budget to implement an enterprise innovation strategy only to reject the most innovative ideas that come out of that strategy.

It goes without saying that it would be a tremendous waste of budget to implement an enterprise innovation strategy only to reject the most innovative ideas that come out of that strategy.

Evaluation Matrix

The 5x5 evaluation matrix is a simple, quick and relatively

accurate method for evaluating ideas. You establish five

criteria by which an idea can be measured. For example, if

evaluating a new product idea, the five criteria might be:

1. How profitable do your expect this new product to be

over the next 12 months?

2. How quickly can we get this to market?

3. To what extent does this product represent an advance

over our competitors' products?

4. To what extent is this product likely to expand our

market share?

5. How good of a fit is this product with our current product line?

Evaluation Matrix

The 5x5 evaluation matrix is a simple, quick and relatively

accurate method for evaluating ideas. You establish five

criteria by which an idea can be measured. For example, if

evaluating a new product idea, the five criteria might be:

1. How profitable do your expect this new product to be

over the next 12 months?

2. How quickly can we get this to market?

3. To what extent does this product represent an advance

over our competitors' products?

4. To what extent is this product likely to expand our

market share?

5. How good of a fit is this product with our current product line?

1. Evaluation Retain Flexibility in the system.

If an idea is clearly a winner, it is often wise to “run with it" immediately, before the competition comes up with the same idea or learns about yours.

1. Evaluation Retain Flexibility in the system.

If an idea is clearly a winner, it is often wise to “run with it" immediately, before the competition comes up with the same idea or learns about yours.

Care should be taken not to over- evaluate ideas.

If a highly innovative idea has to go through multiple evaluations and reviews it is almost certain to be rejected for perceived risk or so heavily modified in attempt to limit risk, that it loses its innovativeness.

Care should be taken not to over- evaluate ideas.

If a highly innovative idea has to go through multiple evaluations and reviews it is almost certain to be rejected for perceived risk or so heavily modified in attempt to limit risk, that it loses its innovativeness.

Idea Quality Control Components

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2. Open analysis

If an idea gets a good evaluation score, an open analysis meeting is a good means of determining the next steps and any issues which should be borne in mind during the implementation.

The analysis should include the evaluators, the person or people responsible for the idea, the manager who led the campaign and the person who will be in charge of implementing the idea. The aim of the meeting is to have an open discussion of the idea, potential weaknesses uncovered by the evaluators and to establish a pre-implementation and implementation plan.

2. Open analysis

If an idea gets a good evaluation score, an open analysis meeting is a good means of determining the next steps and any issues which should be borne in mind during the implementation.

The analysis should include the evaluators, the person or people responsible for the idea, the manager who led the campaign and the person who will be in charge of implementing the idea. The aim of the meeting is to have an open discussion of the idea, potential weaknesses uncovered by the evaluators and to establish a pre-implementation and implementation plan.

3. Pre-implementationsPre-implementations are post-evaluation actions designed to analyze an idea in more depth than ispossible with an evaluation. Pre-implementations include: Business cases Business plans Market surveys Prototype development and testing Trials Experiments

Companies normally have pre-implementation procedures in place for testing new products and services. However, they do not always use such procedures for testing operational or other internal ideas. Pre-implementation is an effective means of testing a new idea while minimizing the risk. Existing pre-implementation procedures should be integrated into the innovation machine strategy.

3. Pre-implementationsPre-implementations are post-evaluation actions designed to analyze an idea in more depth than ispossible with an evaluation. Pre-implementations include: Business cases Business plans Market surveys Prototype development and testing Trials Experiments

Companies normally have pre-implementation procedures in place for testing new products and services. However, they do not always use such procedures for testing operational or other internal ideas. Pre-implementation is an effective means of testing a new idea while minimizing the risk. Existing pre-implementation procedures should be integrated into the innovation machine strategy.

Idea Quality Control Components

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Output: Implemented Ideas

Once ideas pass all required quality control processes, they are ready to be implemented. Interestingly actually implementing ideas is a weakness in many company's innovation strategies.

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Implementation of ideas – Additional Implementation of ideas – Additional ThoughtsThoughtsIn addition to implementing good ideas, it is important to:

Monitor the results of the idea implementations to evaluate the overall innovation programme.

Communicate, via the communication plan details about new ideas that are being implemented. Be sure to include the names of the people responsible for the ideas. Disseminating news about successful implementations of ideas demonstrates the value of the innovation strategy as well as recognizes the contributions of the idea submitters.

Reward people who have submitted and implemented ideas. This can include recognition as well as using any other rewards system you have implemented. Incidentally, you should also reward people who contribute good ideas which you are unable to implement for whatever reasons. This shows that you value their ideas and creative contributions and encourages them to continue to be creative on the organization's behalf.

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Redefining Innovation in Today’s WorldRedefining Innovation in Today’s World SSucceeding as an entrepreneur and an innovator in today’s world is vastly different from what it was in the 20th century. Our times are radically different, the challenges are enormous, and innovations continue to disrupt the way businesses are conducted, and it happens within weeks and months. OOrganizations will face seven trends in the next decade as they fight to survive, grow and remain competitive. These are:

Speed and uncertainty will prevail Technology will continue to disrupt and enable Demographics will dictate much of what happens in business Loyalty will erode Work will be done anywhere, anytime Employment as we know it will disappear The organization will become a nexus of treaties

Cont……

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On Thursday September 13, 2001, just two days after the attack by terrorists on New York’s WTC, managers at K-Mart noticed an increase in customer demand for American flags. The day before, managers at Target Stores had observed the same thing. Both companies tried to purchase more flags from suppliers but none were available anywhere. That’s because on afternoon of September 11, just hours after the attack, Wal-Mart noticed the same increase in customer demand and purchased every American flag, from every supplier, everywhere. They were able to do so because they update inventory every seven minutes.

One international management consulting firm was gathering information for a client recently on the history and pace of computer technology. While it was amazing to review the unimpeded advance in computing power predicted nearly 40 years ago by Gordon Moore, the future holds even greater, discontinuous change. IBM recently announced its intent to design a computer on a molecular scale – a computer that will literally float through the air.

Future DirectionsFuture Directions

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Today, Today, these stories capture our attention and define our time. If you have ever worked in a large organization, you know that the speed of Wal-Mart

is daunting. If you have lived long enough to watch the evolution of the

computer age, you must have got used to expecting regular, head-turning

innovations. Even still, molecular computers get attention.

TTechnological innovations once came along every generation, then every

decade, and now in this nanosecond world, innovative breakthroughs are

commonplace, more normative. And if you have discovered that the

representative calling about your mortgage payment is sitting in Mumbai,

India, you know it really is a different world – its borderless today. This would mean that the very word “innovation” needs redefining.

Future DirectionsFuture Directions

Devasis Chattopadhyay 32

Thank you