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Managing the Disruption

Creating a Culture of Digital Innovation

Professors PJ Guinan & Salvatore Parise

Ad Hoc Committee on Innovative Business Models

January 10, 2018

Discussion Points from Last Session

Branding impact on culture

Employee centered culture - innovation

Low-risk- hypotheses testing

Thinking differently without losing the core!

Disruption comes in many ways:

Disruption comes in many ways:

Disruption comes in many ways:

Disruption comes in many ways:

So different but what do they have in common?

Fortune 500 Digital Leaders

What does Digital mean to you? Technologies: cloud, AI, VR, cognitive computing, analytics

Engagement with customers- open to understanding the customer decision journey

A new way of doing business- willingness to develop an entirely new business

Re-thinking how to use these capabilities to improve how customers are served

Pro-active decision making- blend data from multiple channels into one view

Contextual interactivity- analyze how a consumer is interacting with a brand and modifications

Real-time automation – to drive down costs but also to provide companies with more flexibility

Journey focused innovation- - extend the relationship with the customer to benefit both parties

McKinsey and Company: “What digital really means.”

Digital Drives Organizational Performance

“Digital Masters are 26% more profitable than their industry peers and generate 9% higher revenue from there physical assets.”

• Westerman et.al. “The Digital Advantage: How Digital Leaders Out Perfom Their Peers in Every Industry – Nov. 2012.”

Is digital significant to your organization?

What role do digital solutions play in your strategy to enable both control and empowerment current employees, to recruit talent, to re-define your business?

Our proposed solution: think like a start-up

Think like a Start-upEntrepreneurial Thinking….

What do you think of when I ask: what are the characteristics of an entrepreneurial organization?

Popular Views of Entrepreneurs

13

• Low appetite for risk; adept at reducing and spreading it

• Often start without a sharply defined goal or vision, especially the “Old Masters”

• Distrust projections, extrapolations, studies, etc. that purport to predict the future

• Creates new businesses, but not necessarily original

• Self-confident? No more than anyone else

• Determined? Yes. Over-controlling? Sometimes, but so are others

• Decisive, yes. but then so are others

• Egotistical? Sometimes, and sometimes not

Appetite

for RiskVisionary

Foresee

the Future

Creative

Self-Confident

Determined

Over-Controlling

Decisive

Passionate

Egotistical

Closer to the truth:

13

The Critical Questions:

How to protect the core and innovate?

How are your currently negotiating innovation AND control?

How to exercise control, protect the core in organizations that demand flexibility, innovation and creativity?

Our Proposed Solution: Pilot , Pivot, Pitch

180Interviews with Senior

level managers

Qualitative

Quantitative

Surveys

70Across

industries

In-depth Case studies with Businesses

5

12Presentations

(Istanbul, Turkey and Keynote – Loma)

Additional Research Study 2 3

Babson Grants

Published

Papers

Training/workshops

Pilot

Pivot

BootstrappingCrowd sourcingPartnerships

The Essence of Entrepreneurial Thinking: Pilot , Pivot, Pitch

Manage riskLearn Reevaluate

ExperimentsHypothesis testing MVP

Pitch

InnovativeDigitalCulture

Business Metric

Productivity

Time To Market

New Products and Services

The Power of the Pilot: Best Practice

Key hypothesis testing with targeted customers

Experiments/ Lean Start Up

MVP (the minimum amount of functionality that your target customer considers viable, that is providing enough value) (Olson, 2015)

Design Thinking (left brain /right bran)

Pilot: Best Practices

•Rapid Prototyping: A large quantity of prototypes (low, medium to high fidelity)

•Agile/Scrum: Iterative design &constant learning from users (not just for software design for decision-making)

•Hackathons, Proof of Concepts: diverse teams working on a challenge in short time period

• Incubators, Labs, Skunkworks: a small team/group outside of production that experiments with new technologies, new business models

18

The Power of the Pivot: Best Practice

“Failing fast to succeed sooner”

Manage risk

Fast, iterative, learn from mistakes (F12- Twelve steps to focused, fearless, failure.)

Lay the foundation for successful mistakes

Pivot: Best Practices

• Senior level support : can not be mandated

•Honest retrospectives: rewarded for candor

•Culture change – flexibility, new business models

•Branded wins and successes – buy-in

• Small financial commitment- why?

20

Pivots that may surprise you:

The Power of the Pitch: Best Practice

New way to secure funding - Bootstrapping

Crowd-sourcing models

Seed funding

Unconventional pitch – early metrics, early buy-in

Venture funding (partnerships)

Pitch: Best Practices

•Exploratory and future focused: gruelingly honest

•Getting your stakeholder buy-in: on the ground floor

•Choose your resource requirements carefully (experiments, MVP, proof of concept)

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How does the Pilot, Pivot and Pitch help?

How to protect the core and innovate?

How are your currently negotiating innovation AND control?

How to exercise control, protect the core in organizations that demand flexibility, innovation and creativity?

The Mindset for the Leader

Servant Leadership

Reverse mentoring

Immersion

Servant Leadership

• Shares power, primarily focused on the needs of the group, people they work with, helps people develop and perform to their highest potential.

• Characteristics of servant leaders: empathy, stewardship, listening, building community, self-awareness versus command

and control

What concerns you about servant leadership?

ALAN MULALLY | Servant Leadership

27

©

Servant LEADERSHIP

Providing a vision and then give freedom, ownership

Proactive engagement in problem-solving

Heavy encouragement of self-management and servant leadership

Willingness to take calculated risks, learn from mistakes, experiments

Ability to listen and entertain new ideas

“I decided on an internal venture team to focus on technology-induced innovations made up of the CEO, general counsel, EVP of marketing and Digital. Since then, we bought three small companies, all cloud-based, and we are integrating these people into the organization. But they are doing the leading not me, I am just facilitating.”

“I had to pull people out of the business, separate a small team into “creative labs” to ideate. We called them ninja teams. And they decided on their own goals and deliverables.”

“As a leader, I realized it was about approachability. I try to encourage people to share ideas. Micro-management is never a good thing, so I am trying to balance the need for autonomy but providing as much feedback as I possibly can. It doesn’t come naturally to me because I have spent so much of my career making sure that our projects are execution focused.”

Servant Leadership| Best Practice

Reverse Mentorship

Pair tech-savvy, millennial employees to share emerging technology expertise with senior leaders, multi-generational teams to educate and encourage use for business value.

Reciprocated arrangement: relies on new developments in business strategy, leveraging the hi-po millennial talent, insures multi-generational sharing

Reverse Mentorship : Best Practice

“We blend co-op entry level people with experienced software engineers and they naturally cross-fertilize, teach each other.”

“What motivates me is the accountability given to me here. Management trusts me enough to be part of the decisions that matter in my area of expertise, they trust me and I have learned to listen.”

Reverse Mentor End-to-End Process

Execute Program

Select

Participants

Develop Mentor

Requirements

Develop List of

Mentees

Solicit/Select

Mentors

Align program

with Business

Strategies

Kick-Off Event to

Launch SessionsExecute Sessions

Wrap-up and

Key Learnings

Finalize

Mentor Teams

Match Mentors

and Mentees

credit: Lisa Bonner

How to Jump Start? Training Immersion

3 to 5 day course

Hackathon

Shark Tank

Research Opportunities: What is most interesting to you? The Digital Assistant: AI, Cognitive computing

How organizations are re-thinking their business strategies

Critical skill sets (leadership, technical business)

required to be digital innovators

Innovation Labs: Evaluation of Moving forward

The new measures of success

How are organizations building a culture of adaptability/change readiness?

Others……..? Help!

Innovation Advisory Council: Anyone interested?

Babson Opportunities: Please Take Advantage

Babson Consulting Alliance Program

Management Consulting Field Experience

Global Connections Through Technology

Strategic Analysis Consulting Project

http://www.babson.edu/executive-education/recruiting-partnerships/graduate/Pages/grad-student-consulting.aspx

Spring 2017: Partner with babson

• Externship Program: Provide student(s) with the opportunity to job shadow for a day during the spring semester. • Great for employer branding and encourages student learning

about your organization and the various job functions .

• Feb 28th - Spring Career Fair: Meet student talent from all four class years seeking internship and full time opportunities.

• MCFE: Submit a proposal to have a student consulting team work on a business project/challenge over the course of the Fall 2018 semester. Deadline to submit, March 1, 2018.