Creating an Innovation Strategy
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Transcript of Creating an Innovation Strategy
Creating An
Innovation Strategy
RDM Management Group
Ron Pickett MBA, CMC
WHO IS THE GREATER INNOVATOR ?
THOMAS EDISON STEVE JOBS
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WHY CREATE AN INNOVATION STRATEGY
Many executives believe that innovation is critical for
success … many have deep concerns about their firm’s
ability to innovate effectively … they do not have a formal
innovation strategy
• A recent study found that only one in five chief
executives believes his strategic investments in
innovation are paying off… (Bloomberg Business Week,
2013)
• Canada has a poor innovation record, ranking 13 out of
the 16 OECD countries (Conference Board of Canada,
2014)
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WHY CREATE AN INNOVATION STRATEGY
Innovation does not require a revolution inside
companies
Innovation is not alchemy, with mystifying
transformations …its more like the basic
tackling of other key business functions
How you innovate determines what you innovate
Strategic advantage
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SEVEN INNOVATION OBSTACLES
1. Concentration on daily business / short-term goals
2. Current products and processes are not put into question
3. Lack of collaboration between departments (silos)
4. Risk aversion
5. Management does not support innovation enough
6. Innovation strategy, process, idea management not existing, not clear and/or not communicated
7. Budget- and/or resource limitations
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WHAT IS AN INNOVATION STRATEGY?
An integrated structure, formal processes,
and tools for an innovation growth strategy
Includes an organizational design,
management systems, performance
evaluation metrics, people, HR policies, and
rewards
Links to the business strategy
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WHAT IS INNOVATION?
Innovation occurs when a company makes
changes to the major technologies or business
model for the products and services it markets
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INNOVATION DRIVERS
Business model change drivers
Value proposition – what you sell
Value networks – how you sell it
Target customer – who you sell to
Technology change drivers
Products and service offerings
Process technologies
Enabling technologies
Three types of innovation
incremental, semi-radical, and radical
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INNOVATION STRATEGY PLANNING MATRIX
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Business model drivers Technology drivers
Value
proposition
Value chain
Value
proposition
Target
customer Product &
service
Process
technology
Enabling
technology
Incremental Small changes in one or more of the six levers
Semi radical
Business model driven
Radical
Significant change in one or
more of the three levers
Small change in one or
more of the three levers
Semi radical
Technology driven Small change in one or
more of the three levers
Significant change in one or
more of the three levers
Significant change in one or
more of the three levers
Significant change in one or
more of the three levers
Innovation types
INNOVATION STRATEGIES
Innovation strategy must align with the business strategy
Play Not to Lose (PNTL) – Incremental innovation
Protect and maintain market share
Combat margin erosion
Play to Win (PTW) – Semi radical and radical innovation
Maintain market leadership
Market makers, new industries
Drives growth
Brand building
Ideal strategy balances PNTL and PTW
Play to Fail (PTF) is not having an innovation strategy
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INNOVATION STRATEGY PLANNING MATRIX
Business model drivers Technology drivers
Innovation types
Incremental
Banks, Utilities,
Government,
TQM, ISO 9000, Oligopolies
Cellular Wireless
Approximately 80% of all
innovation
Semi radical
Business model
driven
Dell, SW Airlines, Walmart,
IBM, Salesforce.com, Virgin
Semi radical
Technology driven
Mobile phones, automobiles,
Radical Amazon, Google, Apple, Facebook, Henry Ford
Walmart, Bit Coin, Apollo Group – Online Education, Virgin,
Cloud Computing
Value
proposition
Value
chain
Target
customer
Product &
service
Process
technology
Enabling
technology
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PLAY TO FAIL
… RIM/Blackberry, Nokia, Motorola, Kodak,
Sears, Blockbuster Video, Sun
Microsystems, DEC, Eatons, Simpsons …
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INNOVATION MATRIX
Semi Radical
Technology Automobiles
Mobile telephones
Radical Apple
Amazon
Virgin
Bit Coin
Cloud Computing
Incremental Oligopolies
Banks
Utilities
Cellular Wireless Companies
80% of innovation
Semi Radical
Business Dell
SW Airlines
Walmart
IBM
Salesforce.com
Business Model
T
e
c
h
n
o
l
o
g
y
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INNOVATION STRATEGY
Assess Drivers
• Business – What, How, Who you Sell to
• Technology – Product, Process, Enabler
Select Strategy
• Play Not to Lose
• Play to Win
• Combination
Manage Innovation Portfolio
• Incremental
• Semi Radical
• Radical
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LEADERSHIP
Sets the vision
Leads the innovation strategy
Align the innovation and business strategy
Engrain the innovation strategy into the corporate culture
Create innovation networks of intrapreneurs inside and
outside the company
Correct metrics and motivators
Risk tolerance
Overcome internal organizational resistance
Freeing up appropriate budget
Be aware and overcome complacency that innovation
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Innovation Pyramid
An Innovation Strategy provides:
Increased profits
Branding
Market Leadership
High performance
work teams
Learning innovative culture
Real competitive advantage
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NEXT STEPS
1. Exert strong leadership and determine the innovation strategy that fits the business strategy, competitive environment, and innovation competencies
PNTL, PTW, or a balance
Assess the innovation climate, run a cultural diagnosis on creativity and value capture
2. Develop innovation platforms for different innovation types – six business and technology drivers
Incremental, semi radical, radical
Structure company and organizing management systems to promote innovation
3. Create portfolios for each platform including idea generation and gating – find the right balance
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NEXT STEPS
5. Define internal and external resource requirements
6. Ensure internal innovation platforms have diverse creative and commercialization resources working in harmony
7. Create balanced scorecard metrics and rewards supporting the innovation strategy
8. Overcome any internal resistance to change subverting creativity and commercialization
9. Celebrate successes and embed innovation throughout the corporate culture
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HOW CAN RDM ?
An engagement is typically a number of facilitation workshops and stakeholder interviews, walking a leadership team through the 8 steps
Deals with leadership requirements, strategy, structure, resources, management systems, processes, performance metrics, project management discipline, measurement and incentive rewards – organizational structure and culture
Document and present workshop/interview results, clarify, finalize, act, and move to next step
Similar to the strategic planning process
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THE INNOVATION PROCESS
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THE INNOVATION PROCESS
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Questions?
RDM Management Group