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Managing Innovation Program in Large Organisations

Asoke Das Sarma,

Vice President, Transformation, TCS Business Process Services

27th Sep, 2103

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Agenda

Innovation – definition

Why Innovation is important but often ignored

Common Mistake in Implementing Innovation in

Large Organisations

Applying Five Phases of Project Management in

Innovation Program

Conclusion & Final Comments

Managing Innovation in Large Organisations

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Invention and Innovation …

Invention : the discovery or creation of

a new idea ( a material, a product , a

process , a law of physics or anything

new) .

Innovation : the successful

commercialization of an idea.

The idea may result in a new

product / service or a new

way to produce a product /

service.

So, Innovation = Invention + (successful) Commercialisation

Managing Innovation in Large Organisations

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Innovation … Types

a) Product or Service Innovation :

b) Process or Value Chain Innovation

Collectively, these two types covers the universe of Innovation

Managing Innovation in Large Organisations

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Innovation meant profitable growth…...

Managing Innovation in Large Organisations

62% 38%Revenue Impact

39% 61%Profit Impact

86% 14%ProductLaunches

Innovation : 14 : 38 : 61

Me-Too’s &Value Improvement: 86 : 62 : 39

In a VUCA* World it means survival…

* Abbreviation for Volatile, Uncertain, Complex, Ambiguous - a term coined by US Military Academy

• Source : Professors W. Chan Kim & Renée Mauborgne , Insead , 2004

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But Large companies are often focused on current operations only… but

Why companies shun

Innovation* :

• Short term focus of the

management (next

quarter focus)

• Lack of time and

resource

• Fear of failure and

inability to manage the

“Innovation Program”

Managing Innovation in Large Organisations

Current

Competitionfor thepresent

Future

Competition for thefuture

Performance Gap

Optimisation

Opportunity Gap

Innovation

* Source : A Note on Corporate Entrepreneurship: Challenge or Opportunity? | Bhaskar Chakravorti | Jun 25, 2010 U

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Three Deadly mistakes Organisations make in Driving Innovation

Managing Innovation in Large Organisations

× Strategy Mistake : Start Big Bang Innovation initiatives without clear strategic themes - spreading innovation efforts too thinly.

× Structure/Process Mistake : Expect (and Use) structure , organisation and processes that are optimised for running BAU operations, to bring in radical Innovation

× Skill Mistake : Place bright technical talent (who may lack leadership/business skills) in-charge of Innovation. Innovation is fostered through collaboration among cross functional teams.

How to avoid these traps during 5 phase of Innovation Cycle (initiation , planning, execution , monitoring and control, closing) and succeed in “Managing Innovation”

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Phase 1 : Initiation

Idea Collection is good but first thing is to

determine the Innovation Strategy and decide the

Innovation theme. Ideas to be collected across

these themes and not just random ideas

Communicate adequately across the Organisation

on why Innovation is important and how each

employee can contribute. Train employees in

Innovation competency.

Have an end ( goal / objective) in mind before

initiating the Innovation Program

Managing Innovation in Large Organisations

Avoid Strategy Trap

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Phase 2 : Planning

There are four broad stages in Innovation Life Cycle – Idea Generation – Idea Assessment & Prioritization – Feasibility test and Concept Development – Launch and commercialization

The Organization must have meticulous plan of

resources and ( broad) timelines for each of these at

the beginning of the journey .

Typically an end to end cycle may last for 18 to 24

months while some projects will be faster

commercialized and others may get extended

Managing Innovation in Large Organisations

Avoid process & skill Trap

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Phase 3 : Execution (1 of 3)

Idea Generation

- Communicate key Innovation

themes

- Engage the whole

organisation

- Engage outside stakeholders

( customers , suppliers and others) in the

Idea generation exercise by using

appropriate (web) technology

Managing Innovation in Large Organisations

Employees

Business Parters

Customers

Internal Sales

Internal R & D

0% 10% 20% 30% 40% 50%

% of useful ideas contributed

Source : Bearing point Analysis, 2013

Avoid SkillTrap

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Phase 3 : Execution (2 of 3)

Idea Assessment

and Prioritization – It is important to acknowledge all

ideas but it is suicidal to work with all of them

– Constitute an idea selection board with cross functional representatives

– Prioritize not only based on financial metrics but also consider non- financial metrics

- Pursue the “Question Marks”

Managing Innovation in Large Organisations

Non –financial Metrics : Does it create a new market space ? Does it create new rules for

competition ? What is the growth potential ? Does it overturn competition ? Does it exploit discontinuities ?

Avoid Process Trap

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Phase 3 : Execution (3 of 3)

Concept Development, Launch

and Commercialization – Use separate dedicated

Project team with some shared staff

- Divide the labor and manage the partnership effectively

- Do not use the same process and metrics through which the BAU team is measured to evaluate the performance of “ Innovation team”

Managing Innovation in Large Organisations

Partnership

Dedicated Staff

BAU Team

Shared Staff

BAU : Business as usual

Avoid Structure and process Trap

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Phase 4 : Monitoring & Control

Managing Innovation in Large Organisations

• Develop critical few metrics to measure the

program health for each phase ( 2-3

metrics)

(Langdon Morris, in his book, “Innovation Master Plan”

had outlined 92 metrics!)

• Investigate and take corrective actions if

metrics performance shows monotonously

negative trend

• Do not get impatient – be flexible and have

tolerance for failure. “A majority of new ideas fail, but people shouldn’t fear for their jobs when that happens. We estimate that 61percent of our formal, new product programs never make it, when this happens, the important thing is not to punish the people involved

- . Gary Pint, retired Sr. VP of 3M

Avoid Process Trap

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Phase 5 : Closing

Managing Innovation in Large Organisations

• Celebrate success

• Give high visibility to winning teams

– who deliver . Reward team

appropriately commensurate to the

gains from the Innovation

• Document learning ( for individual

projects and overall program)

• Start the new cycle – Innovation is

a never ending pursuit – look for the

next big thing.

Avoid Strategy Trap

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Final comments …

Managing Innovation in Large Organisations

Some “common” challenges faced

in Large Organisations :

× Rigidity of structure

× Lack of freedom and flexibility

× Inertia to maintain status quo

× Constraint on external collaboration

(focus to protect existing IP)

× Not adequate management attention

due to insignificant revenue potential

of the new idea

Some “must do’s” for innovation

exercise to succeed : Separate dedicated project team ;

separate organisation if needed during

full fledged commercialisation

Dedicated team must collaborate and

not compete with BAU team,

Never measure performance of

Innovation team with the metrics used

for BAU team.

Experiment & Learn –it’s OK to fail

Managing Innovation Program is difficult but companies can only ignore “innovation” at its own peril.( “Learning is optional and so is survival” – Deming)

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Thank You

Managing Innovation in Large Organisations