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Innovate to succeedIntroduction to Foundations of Business Innovation September 8, 2011Innovate to failIts about balancing the risk of innovating against the risk of not innovating

Why are we here?Philosophical reasons: Take the course SCS 1724 Essential Western PhilosophersMeta-physical reasons:Read Stephen Hawkings book The Grand DesignTo identify ways we can increase the likelihood of innovation success in our organizations Take SCS 2539 Foundations of Business InnovationToday we will provide an overview of the Business Innovation course by identifying: The top ten causes of failure to innovateTen key causes of failure:Confuse the role of innovationFail to clarify innovation goalsDont recognize innovation barriersFail to engage entire organizationLack of recognition of importance of communicationUnderestimate need for innovation resourcesUnclear process for selecting innovation projectsRecognize the importance of change managementFailure to create an innovation cultureRecognize innovation is a journey not a destination

1. Confuse the role of innovationInnovation is:Introduction of a new good, or a new quality of a goodIntroduction of a new method of production (need not need include new technologies)The opening of a new market The securing of a new source of supplyThe creation of a new organization Joseph Schumpeter The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man George Bernard Shaw

Innovate or Die(c) Canadian Innovation Centre4 Internal driversUnexpected eventContradictionChange of work processChange in industry structure

Identify Innovation DriversExternal DriversSocio-economic changesPolitical changesTechnology changes

Druckers Innovation Framework5(c) Canadian Innovation CentreInnovate or DieInnovation not just technology developmentInnovation includes:Product InnovationProcess InnovationService InnovationBusiness model Innovation ..

Greatest opportunities seen in business model innovation.Can be applied to both private and public organizationsIf your organization doesnt innovate, someone else will..

(c) Canadian Innovation CentreInnovate or DieUnderstanding Process InnovationA change in the way a product or service is manufactured, created, or distributedProcess innovation involves implementation of new or improved production or delivery method. Process innovations can be intended to decrease unit costs of production or delivery, to increase quality, or to produce or deliver new or significantly improved products.

Identification and targeting of key processes that have considerable impact on the organizations ability to: Achieve its short, medium and long term Strategic Goals and ObjectivesIf improved, enable the organization to realize a high Return on the Investment (ROI) Identification of target processes for which complaints have been received from customers, trading partners or internal staff and which can result in productivity improvement Achieving initial success with BPM projects in one area of the organization, will create enthusiasm and buy-in from other groups.

7Majority of individuals in Canada (and US) work in service industryEven where people work in manufacturing, many of these individuals provide support servicesService innovation is biggest opportunity to increase competitiveness Improvements in service innovation can be measured in terms of increases productivity and value added Understanding Service InnovationContributes to competitive advantageRequires specific social and technical skills Involves development and new technology applicationCostly to develop needed specialist and generalist skillsRequires integrated thinking and agile environmentCan be implemented in all service areasMost significant possibilities in financial and medical services

Opportunities for Service InnovationUnderstanding Business Model Innovation New ways of doing business can also increase competitiveness and productivity by:Creating enhanced utility for the customerEnabling a different pricing strategyProviding alternate purchasing optionsTo truly disrupt a market a technology innovation requires a business model innovation

2. Fail to clarify innovation goalsImprove top line (revenues/market share)Improve bottom line (profit/cost effectiveness)Strengthen brand/reputationImprove shareholder/stakeholder perceived value

"Would you tell me, please, which way I ought to go from here?""That depends a good deal on where you want to get to," said the Cat."I dont much care where--" said Alice."Then it doesnt matter which way you go," said the Cat."--so long as I get SOMEWHERE," Alice added as an explanation."Oh, youre sure to do that," said the Cat, "if you only walk long enough."Lewis Carroll

Improving Performance: The ultimate reason for a firm to innovate is to improve its performance, for example by increasing demand or reducing costs. Market Advantage: A new product or process can be a source of market advantage for the firm. Productivity Enhancement: The firm gains a cost advantage over its competitors, allowing a higher mark-up at the prevailing market price or, depending on the elasticity of demand, the use of a combination of lower price and higher mark-up than its competitors to gain market share and increase profits. Product Innovation: the firm can gain a competitive advantage by introducing a new product, which allows it to increase demand and mark-ups.Product Differentiation: Firms can also increase demand through product differentiation, by targeting new markets and by influencing demand for existing products.Changes in Organizational Methods: Firms can improve the efficiency and quality of their operations, thereby increasing demand or reducing costs.Improving Production Processes: Innovation can also improve performance by increasing the firms ability to innovate. Improving the capabilities of production processes can make it possible to develop a new range of products, and new organisational practices can improve the firms ability to gain and create new knowledge that can be used to develop other innovations.

11(c) Canadian Innovation CentreInnovate or DieDisruptiveInnovationApplicationInnovationProductInnovationPlatformInnovationEnhancementInnovationIntegrationInnovationExperientialInnovationProcessInnovationMarketingInnovation

Value MigrationInnovationLine ExtensionInnovationValue EngineeringInnovationHarvest& ExitRenewal InnovationOrganicRenewalAcquisitionRenewalRecognize different types of innovation Geoffrey Moore Dealing with DarwinImprove quality of processes, products and servicesCreate of new markets Extend product range Reduce labour costs Improve production processes

Reduce use of raw materials Reduce environmental damage Reduce energy consumption Conform to regulations

(c) Canadian Innovation CentreInnovate or Die3. Fail to recognize innovation barriersOver time successful organizations developProcesses and procedures Management and leadership styles Organizational structures and chartsCustomer relationships and partnersCompensation and recruitment policiesOrganizations, by their very nature are designed to promote order and routine. They are inhospitable environments for innovation Ted Levitt Focuses on financials & timelinesHas strict guidelines & controlHas a hierarchical structureHas multiple bosses & dotted linesFosters attitude of Everyone is for himself Is your organization innovative?Embraces and learns from failureFosters high energy activitiesCreate a Can do environmentDevelop support & trustIs a fun place to workYour organizations innovation readiness?ResourcesFinancialTechnologyPeopleExternal

Business InformationQuality ManagementProject ManagementDecision SupportProcessesLeadershipIncentivesCommunicationsRisk ToleranceCultureStrategyProduct LeadershipCustomer IntimacyOperational ExcellenceDisruptive Offerings

Architecting an Innovative Environment Recreated from Peter Skarzynski and Rowan Gibson, Building A Systemic Innovation Capability , Harvard Business Review, 2008. Fig 11.1

16(c) Canadian Innovation CentreInnovate or Die4. Fail to engage entire organization

Internal TechnologyProduct innovationsProcess innovationsPlatform innovationsExternal TechnologyEmbeddable technologiesProcess technologiesValue added technologies

EmployeesSalesOperationsSupportCustomersCurrentPotentialUnknownSupply ChainSuppliersDistributorsIntegrators

CompetitorsDirectIndirectAlliance5. Recognise the importance of communicationCommunicate vision and innovation imperativeStimulate creativity and idea generation Develop decision-making process that communicates how:Decisions are madeResources are allocatedCreate a feedback loop that updates status of innovation projects and encourages accountability

The greatest barrier to communication is believing that it has occurred Oscar Wilde6. Lack of commitment to innovation resourcesGreatest single barrier to stimulating innovation ideas, is the lack of action around previous innovation suggestionsMany ideas are not implemented without clarity or feedback as to why notImplemented ideas are not successful because of:Insufficient clarity of outcomes and expectationsLack of required resource commitment (money, people, time)Assumption that resources appropriate for one activity can be used in another7. Unclear innovation processInnovation is a management process the requires specific tools, techniques and discipline Innovation involves the development of organizational processes and procedures for generating, considering and acting on innovative ideasWithout an innovation process, the likelihood of innovative projects being pursued is minimal

Identify innovation imperative and establish objectivesCreate innovation frameworkAssess current resources (Business Analysis)Analyze current environment and external trendsSource and capture innovative ideasCreate an innovation decision systemCompare each opportunity to agreed criteriaImplement pilot projectMeasure performanceScale up or cancel

Implementing The Innovation ProcessThe Inno-Gate Innovation Process

Product Innovation

Service Innovation

Process Innovation

Business Model InnovationResourcesProcessesCultureStrategyIdeationEvaluationRealizationInnovationInputsInnovation OutputsCreating the environment and processes to support innovationEmployeesSuppliers & PartnersCustomersCompetitorsImplement process in organizations context23(c) Canadian Innovation CentreInnovate or Die8. Recognize the importance of change managementChange through LeadershipCreate a Shared NeedShape a VisionMobilize CommitmentMake Change LastMonitor ProgressChange Systems and StructuresChange Culture from Control to TrustCommunicateIncentivize If you always do what you always did, you will always get what you always got Albert Einstein

24(c) Canadian Innovation CentreInnovate or Die9. Create an innovation cultureUse mentoring / coaching approach to managementLead by exampleLearn from failureMake resources for innovation availableEncourage / incent team rather than individual performanceBuild trust rather than controls, and accountability rather than monitoring

25(c) Canadian Innovation CentreInnovate or DieInnovative organizations:Embraces a culture of risk, reward success and learn from failure Develop a project and portfolio management approach to innovation Create open decision-making processes and focus on timely implementationDevelop cross functional teams to embrace innovation across organizationFocus on communications and engagementCreating an Innovation CapabilityRef. Paul Trott p. 97.27(c) Canadian Innovation CentreInnovate or DieCommon Causes of Innovation Failure Organizational Causes Poor leadershipPoor organizationPoor communication Lack of empowerment of stakeholders Poor knowledge management Resource limitationsProcess Causes Poor goal definitionPoor alignments of goals and actionsPoor team effortPoor monitoring of resultsPoor communication and access to information Inappropriate decision making10. Innovation is a journey not a destinationRe-evaluate corporate strategy to examine innovation opportunitiesMonitor innovation projects and review perfromanceReview innovation process and identify opportunities for improvementUse projects and process to build awareness Review and reduce innovation constraints Learn from failures

29(c) Canadian Innovation CentreInnovate or DieInnovation for successThree choices:

Innovate your organization,Partner with an innovative organization orWait for innovation to happen..

In this road to the future, there are drivers, passengers or road killCompeting for the future: Hamel & Prahalad, 1994

30(c) Canadian Innovation CentreInnovate or DieInnovate or die

31(c) Canadian Innovation CentreInnovate or DieSee You in SCS 2539 Foundations of Business Innovation

Well, in our country," said Alice, still panting a little, "you'd generally get to somewhere else if you run very fast for a long time, as we've been doing. A slow sort of country!" said the Queen. "Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that! Lewis CarrollStarts Monday 19th in Mississauga and Tuesday 20th in Toronto

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