seminar unit f sw
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Seminar Unit F SwTRANSCRIPT
Controlling of Innovation
Value based management of innovation
Creating Enduring OrganisationsLIFELONG LEARNING PROGRAMME - Leonardo da Vinci
The importance of innovation
206/05/2010
DAX in the start in 1988
Of the 300 leading listed [US] companies for 1996, 10 years later, 64 are no longer on the list.
Of the Fortune 500 companies in 1970, in 2005 just 190 are left in the market.
Names marked in red are no longer included in the current DAX.
Mortality rate: 2,5% per year
Mortality rate: 2,1% per year
Mortality rate: 1,6% per year
Creating Enduring OrganisationsLIFELONG LEARNING PROGRAMME - Leonardo da Vinci
The importance of innovation
306/05/2010
Each company normally insures against existential risk of 2% or more!
Innovation Management is an insurance against going out of business.
The insurance fee is not sunken cost but investment!
Creating Enduring OrganisationsLIFELONG LEARNING PROGRAMME - Leonardo da Vinci
Every year, German companies waste 150 Billion Euros in projects.
Source: Munich University of Applied Science: Studie Projektmanagement 2004
The value of innovation management
406/05/2010
Efficient (31%)
Not efficient (69%)
Adding value (43%) 13 % 30 %
Not adding value (57%) 18 % 39 %
More than one quarter of the projects are
launched with insufficient financial
and human resources.
Creating Enduring OrganisationsLIFELONG LEARNING PROGRAMME - Leonardo da Vinci
Every year, German companies waste 150 Billion Euros in projects.
Source: Munich University of Applied Science: Studie Projektmanagement 2004
The value of innovation management
506/05/2010
Efficient (31%)
Not efficient (69%)
Adding value (43%) 13 % 30 %
Not adding value (57%) 18 % 39 %
More than one quarter of the projects are
launched with insufficient
financial and human
resources.
16%
38%
46%
Projects that were stopped or failed
Projects that were only partially successful
Projects that were successfully
Source: IBM Global CEO Study 2006
Creating Enduring OrganisationsLIFELONG LEARNING PROGRAMME - Leonardo da Vinci
When and where to innovate
606/05/2010
As long as the strategy holds up in the market => How to stay/become better than my competitors?
If the current strategy can’t any more successfully be pursued in the market=> which new strategy can successfully be implemented with my means and resources.
Yield of strategy
time
Tactical innovation = Optimisation of strategy implementation
Strategic innovation = Development of fundamentally new business opportunities
Yield of strategy
time
Creating Enduring OrganisationsLIFELONG LEARNING PROGRAMME - Leonardo da Vinci
Tools: Life cycle analysis of strategyGAP AnalysisSWOT-AnalysisCost-benefit-analysis
Controlling the innovation process
706/05/2010
• Analysis of innovation needsCompetitive position
Potential improvements by optimizing
Life cycle position of the current strategy
Comparison of present and future yields
Yield
time
Strategic gap
Tactical gap
Plan
Creating Enduring OrganisationsLIFELONG LEARNING PROGRAMME - Leonardo da Vinci
Controlling the innovation process
806/05/2010
• Analysis of innovation needsCompetitive position
Potential improvements by optimizing
Life cycle position of the current strategy
Comparison of present and future yields
• Decision-making: profit versus investment in innovation
Creating Enduring OrganisationsLIFELONG LEARNING PROGRAMME - Leonardo da Vinci
Controlling the innovation process
906/05/2010
• Analysis of innovation needsCompetitive position
Potential improvements by optimizing
Life cycle position of the current strategy
Comparison of present and future yields
• Decision-making: profit versus investment in innovation
• Distribution of the innovation budget on strategy and tactics
Creating Enduring OrganisationsLIFELONG LEARNING PROGRAMME - Leonardo da Vinci
Controlling the innovation process
1006/05/2010
• Analysis of innovation needsCompetitive position
Potential improvements by optimizing
Life cycle position of the current strategy
Comparison of present and future yields
• Decision-making: profit versus investment in innovation
• Distribution of the innovation budget on strategy and tactics
• Draft project portfolio proposal referring to the requirements of the business and availability of resources
Creating Enduring OrganisationsLIFELONG LEARNING PROGRAMME - Leonardo da Vinci
Controlling innovation
1106/05/2010
Operation
Expenses Revenue
Primary costs
Labour costs Sales
Material costs
Secondary costs
License Fees Allocated costs for performance in projects
Profit
Innovation
Expenses Revenue
Primary costs
Labour costs
Material
Secondary costs
Allocated costs for performance in projects
License fees
ProfitEntire company
Expenses Revenue
Primary costs
Labour costs Sales
Material costs
Profit
Creating Enduring OrganisationsLIFELONG LEARNING PROGRAMME - Leonardo da Vinci
Approach to evaluation of the benefit of innovation
1206/05/2010
These figures don’t need the accounting accuracy of the legal accounting system!
Creating Enduring OrganisationsLIFELONG LEARNING PROGRAMME - Leonardo da Vinci
Tasks for the controller
1306/05/2010
Support