copyright 2007 markham pipeline construction innovation steve markham north carolina state...

Copyright 2007 Markham

Pipeline Construction Innovation

Steve MarkhamNorth Carolina State University

Center for Innovation Management Studies


Personal Introduction

• Professor at North Carolina State University• Research Foundation President for the Product Development

and Management Association • BP’s Innovation Board• IBM’s Innovation Council• Nortel’s Business Venture Group• Innovation consultant for numerous fortune 500 companies• Founder/Director of 8 high technology startup companies• CFO for 5 startups, VP Product Development• Research: innovation, champions• Former Director of CIMS

Introduction


CIMS is a virtual research center

• CIMS network includes over 100 research investigators at 55 universities involved in CIMS research programs

• CIMS is located on the Centennial Campus of NC State

• First national research center (NSF sponsored IUCRC) devoted exclusively to research on the management of technological innovation

• The International Association of Management of Technology (IAMOT) rated the College of Management 1st in Technology Management

• Journal of Product Innovation Management article ranks College of Management 11th in the Management of Technology/ Innovation.

Located in the Research Triangle Park (RTP) CIMS is in one of America’s most dynamic technological environments

Introduction


Agenda

The Case for Innovation Growth The Innovation Cube

Definitions Innovation, Invention, Management, Ideas,

Opportunities, Radical,, IncrementalObjectives

Community: Individual/company/inter-companyChampioning Projects

Building the case Relationships

Selling Ideas Rational Ignorance Getting Approvals

Introduction


We must not always value experience above other attributes, such as a willingness to learn, a willingness to change, and new knowledge.

Phil Hopkins, Technical Director, Professorial Fellow at the University of Newcastle

Making the Case


The Case for Growth!

• Growth is dominating discussions in boardrooms around the world1

• Barriers to competition have fallen precipitously…

• 50% of sales of “successful” companies come from new products/services… over 60% for “most successful”2

• Next round of competitive positioning will be based on innovation

• Only innovation increases the size of the pie – making its mastery vital

Making the Case

1. 2004 Global CEO Survey, IBM Business Consulting Services

2. PDMA Handbook of New Product Development


Management is waking up to innovation

April 24, 2006 edition of Business Week magazine

Making the Case


Unfortunately many managers may be better at controlling costs

• Companies have invested considerable resources and energy in becoming leaner and more nimble

• The quest for productivity, quality and speed has launched a number of management tools: TQM, Reengineering, Six sigma, Outsourcing, etc.

• Senior management is frustrated by their inability to translate gains into sustainable, profitable growth

• The products and services of these firms are indistinguishable

Bit by bit these tools have taken companies away from viable competitive positions

Making the Case


But just “how to” innovate can be a difficult and complex problem

To get ahead of the pack, managers at leading companies are asking:

• How can they move beyond producing only incremental products and create more radical innovations?

• Which emerging technologies have the potential to be disruptive and generate breakout financial results?

• Are there adjacent markets where they can leverage existing platforms?

• What internal capabilities do they need to be successful innovators?

Making the Case


CIMS IM Framework provides a systematic way to think about managing innovation

Making Innovation Easier

It breaks IM down into elements that can be learned, practiced, measured, and improved i.e. managed

Competences:• Idea Management• Market Management• Portfolio Management• Platform Management• Project Management

Levels:• Firm• Industry• Macro-environment

Dimensions:• Strategy• Organization & Culture• Process• Techniques & Tools• Metrics


IM Assessment Tool – Maturity Model Definitions

Five levels of maturity separate ‘Ad hoc’ companies from those that are ‘Optimized’:

1. Ad hoc - Initial state; results from having no concerted focus on innovation.

2. Defined - Organization makes innovation a strategic imperative; resources are dedicated to improving the firm’s IM proficiency.

3. Managed – Manager’s actions reinforce the desired new behavior; their goal is to institutionalize the new innovation business model.

4. Leveraged - Synergies occur; company involves people / competencies from outside the boundary of the firm.

5. Optimized - New innovation model is fully internalized; business results are repeatable and predictable (This state represents CIMS knowledge of leading IM practice).

Determining IM Competence


What are your company’s innovation enemies?

Source: April 24, 2006 edition of Business Week

Your Questions & Challenges


First, some definitions…

Innovation Defined

• Invention is a new device or method derived through experimentation. Often confused with ‘innovation’

• Innovation is turning ideas into a business success; it must always be user focused. Innovation is much broader, it is ‘the commercially successful use of inventions’.

• Innovation Management is a multidisciplinary process that involves Strategy, Marketing, Finance, Economics, Logistics, Operations, etc. to create new and valued products, services, and business models.

• Idea is the recognition that something has a commercial advantage

• Opportunity is an idea grounded in needs and capability to deliver

• Incremental vs Radical

Few words are so ubiquitous…its on the minds of CEOs, government officials, and academic leaders as they search for a way to survive.

Sam Palmisano, IBM CEO

Definitions


Macro-environment

For incremental innovations, problems are structured at the corporate level and information flows outward to the organization

Boundary Spanners

GatekeepersProject-level

Decision Makers

Small Groups of Individuals

Boundary Interface Gate-keeping Interface Project Interface

Front End of Innovation

Corporate Decision Makers

Problems and opportunities are identified and directed to individuals/small groups for information search

Reid and de Bretani, The Fuzzy Front End of New Product Development for Discontinuous Innovations: A Theoretical Model. Journal of Product Innovation Management, May 2004.

You are here

Definitions


Corporate Decision Makers

However, for breakthrough innovations information flows inward and decision making is individual and fragile

Macro-environment

Boundary Spanners

GatekeepersProject-level

Decision Makers

Greatest source of discontinuous technologies/ideas

Small Groups of Individuals

Boundary Interface Gate-keeping Interface Project Interface

Idea Management

Search for new technologies; intuit unaddressed markets

Determine value to organization; reduce uncertainty

Reid and de Bretani, The Fuzzy Front End of New Product Development for Discontinuous Innovations: A Theoretical Model. Journal of Product Innovation Management, May 2004.

Definitions


Opportunities for Partnership Difficulties

• One partner has interest in radical innovation the other wants incremental

• One partner wants to talk about ideas, the other wants to talk about opportunities Neither partner knows the difference

• A partnership agreement includes a “development” project that could be an invention or an innovation project

• How Partners ability to go at the same speed differs• Boundary Spanners and Gatekeepers do not know

their roles – can’t talk to their partners or internally to their own companies

Definitions


Agenda

The Case for Innovation Growth The Innovation Cube

Definitions Innovation, Invention, Management, Ideas,

Opportunities, Radical,, IncrementalObjectives

Community: Individual/company/inter-companyChampioning Projects

Building the case Relationships

Selling Ideas Rational Ignorance Getting Approvals


Objectives

Build an Innovative Community Around On-Shore Pipeline Construction Innovation at this conference Innovation between companies Innovation inside your company

Objectives


Innovation at this Conference

Innovation in the next 36 hours – How do we use our relationships to increase value by jointly benefiting each other through adoption of new practices?

This is not a detailed technical discussion Not creativity by itself Not invention alone Not just new “ideas” Nor is it a “what are all the problems” session This is not just a brainstorming workshop This is a “how do we collaborate” discussion

– Individually, company, collectively

. . . But may include all of

these

Objectives


Individual Participation at this Conference

Open discussion – Offer ideas without fear of being assigned to do it– Talk about innovation without fear of competition– Suggest how we can work together without fear that your

company can actually deliver it– Talk about early concepts without fear of looking bad– Think about future opportunities without skepticism of the

past– Participate without worrying about language barriers– Help set expectations about what can be done

Innovation is a difficult choice we make

Objectives


Innovation Between Companies

Requires a community (This meeting?) Mutual interest Willingness to share

Requires trust Setting and meeting expectations Reassess what is competitive and what is cooperative

Requires a strong reason for doing things differently Risk Resources

Discussion: What do you hope to get out of this meeting?– System approach – not just doing things good for your

company but shifts problems/costs to others– No use to do it alone – needs other parts of the supply chain to

make an innovation work– Innovation Partners?

Objectives


Innovation in Your Company

Know what is needed to participate in the community

What is the advantage for your company Not obvious at first

– Automotive (Paint) / Electronics (SRC)

Identify what is negotiable and what is not

“Sell” innovation (building a community) to others in your company Discuss the obstacles

– Trust– Risk– Resources / Priority

Objectives


Res

ou

rces

Level of Development

ExistingResearchResources(Technical and Market)

ExistingCommercialization

Resources

Discovery Early Development Commercialization

Decision space between discovery and

development

Used by permission

The Valley of Death

The ProblemC


Res

ou

rces

Level of Development

ExistingResearchResources(Technical and Market)

ExistingCommercialization

Resources

Discovery Early Development Commercialization

Used by permission

Use relationships to prepare case and sell the opportunity

Championing Projects

The Problem

Decision space between discovery and

development


Rational people protect

their ignoranc

e carefully

Rational Ignorance

People can’t be experts about everything They are selective about what they care to be

knowledgeable about

Yet . . . People have opinions about everything They manage the world by habit

When people do not accept your ideas its because of rational ignorance They don’t know the value of your idea

Rational Ignorance


Brilliant Idea

RationalIgnorance

RationalIgnorance

Rational Ignorance


. . . but who is Ignorant?

Decision makers are rationally ignorant of the value of the idea

The inventors are rationally ignorant about how decisions are made

Effective selling requires knowledge of both sides of the decision

Rational Ignorance


Combined Ignorance

Discussion:

What don’t decision makers know that they should?

What don’t innovators know that they should?

How are these gaps closed?

Rational Ignorance


Selling Closes the Gap

All ideas must be sold to overcome rational ignorance FIRST - Selling provides a reason to transfer an idea

from a habit, relatively uninformed state, to an actively considered concept

SECOND – Selling provides salient information about the idea to decision makers. Requires both the decision maker and innovator to make sense.

Selling Ideas


Who is the intended customerWhy is your IDEA a necessity to them

Cost savings, Production improvement, HSE.

What is the decision process for adoption Who, Criteria, Process, Timing

Often there is an over emphasis on

criteria

Opportunity: Identify Your Company NeedsOpportunity: Identify Your Company Needs

Selling Ideas


Why do they need it?

Performance improvement (10X)Cost reduction (30%)Something new and valuable

Quantify in salient terms

Featuresvs

Benefits

Selling Ideas


Targets

Who are the decision makers Talk their language

Not technical capabilities or features but benefits assuming it works; simplify your information

Selling Ideas


Compelling Case• Explain so people can see

the value• Provide whole picture to

decision makers• Create an “object of

support”• Get other people to help

Elevator Pitch• Explain their opportunity in

less than 2 minutes

“Killer” Graphic• Make value obvious • Simple representation• Variables and relationships

SellSelling tools• Selling Tactics• Target identification• Safety Tips

The Story – the idea as a: Benefit, Problem, Solution, Opportunity, Indispensable, Interesting, Dramatic . . .

Value PropositionCompared to base line

Opportunity: Identify Your Company Need Selling ToolsSelling Tools

Selling Ideas


Safety Tip

Never go into a meeting to get an approval The meeting must be a formality of the decisions that

have already been made– Get buy in from decision makers before meeting– Count votes before the vote– No surprises

Don’t beg, grovel or tantrum Be willing to walk away Keep being genuine

Selling Ideas


Breakthrough Innovation - Objectives

Innovative companies will be able to: Create and evaluate innovative product ideas that are based upon unique

technology capabilities, and link these to partners. Research both the technology and the partner opportunity efficiently utilizing

an information-gathering hierarchy. Research and evaluate the business opportunities on operational and

strategic dimensions to uncover ‘fatal flaw’s at an early stage. Develop a business model and commercialization strategy for the best

opportunity. Build an appropriate business case for innovations, venture, alliance or new

line of business, with the case tailored to the appropriate decision-makers.

Conclusion


• Work as a project team -- locally or remote. Coordinate multiple, interdisciplinary tasks in order to achieve innovation in an action-oriented business setting. This includes familiarization with critical management issues such as governance and performance measurement.

• Conceive, develop and market innovations. Lead innovation projects including the design of the innovation team and use of effective performance metrics. This includes proficiency in quantitative and qualitative techniques in market research, technology commercialization, and portfolio optimization.

• Wire the organization for success. Participants will be able to assess the drivers of an organization’s culture, determine corrective actions, and facilitate organizational change. This includes dealing with the tougher HR issues that are often pushed under the rug.

• Create the case for change. Initiate the development of specific execution strategies to better align innovation activities with the firm’s business strategy. This includes being able to objectively assess the maturity of their own organizations IM competence.

i.e. you will be able to increase your organization’s capacity to innovate.

Result = acquiring new behaviors - collectively

Conclusion


Your Questions & Challenges

Thank You!

copyright 2007 markham pipeline construction innovation steve markham north carolina state...

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