Strategic Innovation Process
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Transcript of Strategic Innovation Process
Strategic Strategic Innovation Innovation ProcessProcess
Cijo Abraham Cijo Abraham
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
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
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
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
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.
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
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
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?
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.
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.
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
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?
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.
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?
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.
Strategic Innovation StylesStrategic Innovation Styles
““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
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...
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
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...
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
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...
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
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...
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
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...
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
ReferencesReferences
Innovation Management - Allan Innovation Management - Allan AfuahAfuah
InternetInternet
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