finance shaping innovation

John Devlin MBA FCCA https://au.linkedin.com/in/JohnDevlinSydney


- 1 -

How Finance can shape Innovation

John Devlin, MBA, FCCA https://au.linkedin.com/in/JohnDevlinSydney



- 2 -

Innovation or Bingo

Topic

1

Sustaining Innovation 2

Disruptive Innovation 3

Comparison 4

5

John Devlin

Content



- 3 -

Are we playing Management Bingo?

Innovation N

EW

Fu

ture

Strategy G

row

th

Ins

igh

t

Customer

Disruptive

Breakthrough R

ad

ica

l

Pro

du

cti

vit

y

Imp

rove

Change

Solution

Business

Performance

Implementation

IDE

AS

TE

CH

NO

LO

GY

Process

Process

Value-Add

Partner D

yn

am

ic

Market Creative Opportunity Innovative

LA

B

X



- 4 -

“Through innovation,

in years we are

going to be number

in the market

We need to analyse of statements

like…

v

v



- 5 -

We need to dissect statements like…

“Our Innovation lab

will produce new

products to market in

the next year

x



- 6 -

We need to question statements

like…

“In a tough market our

Innovation strategy will

deliver our %

growth target required

for next years budget

u u



- 7 -

Are we following the zeitgeist or…

Is our business afraid of not being seen as

“on trend” or…*

0

500

1,000

1,500

2,000

2,500

1998 2000 02 04 06 08 10 12 14

# o

f In

ovati

on

Refe

ren

ces

*Frequency of use of “Innovation strategy” in peer reviewed Journals 1998 – 2012. Source: HBR December 2015



- 8 -

…is there substance?



- 9 -

When we dig behind the words can

we…

Identify

• Who our clients will be

• What our clients will value

• How we create value for clients

• How we capture value for us



- 10 -

This identification enables us to…

Understand

• Our future

• Type of innovation required

• Resources required

• Areas of focus



- 11 -

If you can’t identify your areas of focus

…we need to question our innovation “strategy”



- 12 -

Innovation or Bingo

Topic

1



4

5

John Devlin

Content

Comparison



- 13 -

Sustaining Innovation is

inward looking



- 14 -

Sustaining Innovation is

customer centric

• Current clients are the

foundation of our future

• How can we improve their

experience

• Focus on functions of our

products

– Quicker, Faster, Cheaper, More

• Focus on our processes

• Major clients will influence

our future direction



- 15 -

Sustaining Innovation focusses on

process

Innovation

Process



- 16 -

0

1

2

3

4

5

6

7

8

9

0 1 2 3 4 5 6

How do we meet clients expectations

Delivery

Client

Expectation Under

Delivery

Exceed

Expectation

Strategic Variables

Low Cost

Reliability Flexibility

Accessibility Speed Quality

Dependability

Deli

very

/Exp

ecta

ito

n

High

• Meeting clients needs is

fundamental to growth

• But not as important as..



- 17 -

0

1

2

3

4

5

6

7

8

9

0 1 2 3 4 5 6

…Knowing where it matters

Delivery

Exceed

Expectation

Importance to client

Deli

very

/Exp

ecta

ito

n

Low

High

Under

Delivery

Low

Accessibility

Reliability Dependability

Cost Quality Speed

Flexibility

Client

Expectation

• Are we good in areas that

are important to our

clients

• If not, we have a bad

business model

High



- 18 -

0

1

2

3

4

5

6

7

8

9

0 1 2 3 4 5 6

Remembering clients expectations

change

Importance to client

Accessibility

Reliability Dependability

Cost Quality Speed

Flexibility

Under

Delivery

Low

Under

Delivery

Delivery

Deli

very

/Exp

ecta

ito

n

High

Client

Expectation

• Factors that Influence

change expectations

• Competitor offerings

• Technology

• Anchoring

Low High



- 19 -

Sustaining Innovation when…

• Industry profitability

exceeds ours

• Our services/products are

seen as inferior

• Productivity is below

Industry benchmarks

• Not meeting clients

expectations



- 20 -

Innovation or Bingo

Topic

1



4

5

John Devlin

Content

Comparison



- 21 -

Disruptive Innovation is confronting

• New clients are the

foundation of our future

• What “jobs” we do for clients

• New products/services

• Our future direction will

attract new clients

• We will create markets



- 22 -

Disruptive Innovation focuses on

Strategy

Strategy

Innovation


- 23 - John Devlin MBA FCCA https://au.linkedin.com/in/JohnDevlinSydney

Strategy means different…



…different means decisions….

Who How When



…decisions mean some people (may)

get upset

Product’s Geographies Channel’s (Will be challenged)



- 26 -

4 Area of Action

Raise Eliminate

Reduce Create

Disruptive Innovation

Which factors should be reduced

well below the industry standard

Which factors should be created

that the industry has never offered

Which actors that the industry

takes for granted should be

eliminated

Which factors should be raised

well above the industry standard



- 27 -

Disruptive Innovation when

• Industry profitability under

pressure

• Our services/products are

market leaders

• Productivity is above Industry

benchmarks

• Exceeding clients

expectations



- 28 -

Innovation or Bingo

Topic

1



4

5

John Devlin

Content

Comparison



- 29 -

Sustaining v Disruptive Innovation

Sustaining Disruptive

Competing in existing Market Space

Beat the Competition

Create uncontested market space

Make the competition irrelevant

Exploit Existing Demand Create and capture new demand

Make the value-cost Trade-off

Align the whole system of a firm’s activities with its strategic choice of

differentiation or low cost

Break the value-cost trade-off

Align the whole system of a firm’s activities in pursuit of differentiation and low cost



- 30 -

Our innovation type Influences

required measurement

Systems Clients Products

Sustaining

Disruptive

Internal

Efficiencies

Exploration

Reporting

External

Mkt. Intelligence

Proposing

Share of wallet

Same Market

New Clients

New Markets

Features

Development

Cycle

Outcome

Job to be done

Innovation

Type

Business

Model

Existing

Refine

New

Develop



- 31 -

Sustaining V’s Disruptive Innovation

Sustaining Disruptive

Focuses on rivals within its industry

Focuses on competitive position within strategic group

Looks across alternative industries

Looks across strategic groups within industry

Focus on better serving the buyer group

Redefines the industry buyer group

Focuses on maximising the value of product and service offerings

within the bounds of its industry

Focuses on improving price performance within the functional

emotional orientation of the industry

Looks across to complementary product and service offerings

Rethinks the functional emotional orientation of the industry

Focuses on adapting to external trends as they occur

Participates in shaping external trends over time

Industry

Strategic Group

Buyer Group

Scope of Product offering

Functional Emotional orientation

Time



- 32 -

How Finance can shape Innovation

John Devlin, MBA, FCCA https://au.linkedin.com/in/JohnDevlinSydney