the art of war for the enterprise
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What are the Key Elements of Agility and Innovation in Business, read on....TRANSCRIPT
The Art of War for the Enterprise:
The Key Elements of Agility and Innovation in Business
Author: Richard PlattFormer Intel Corporate Innovation Program Manager and
The Senior Instructor for Innovation MethodsCONTACT INFO | EMAIL: [email protected] | PHONE: (503) 805-7612
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Author: Richard Platt | All Rights Reserved
Using the Analogy of Warfare?Competition: The struggle among organisms for food, space
and other vital requirements (Webster’s Dictionary)Put another way: Competition is the wrestling for resources
or having desired relationshipsSurvival Analogies in the Animal Kingdom explain the
mechanisms but not the Rules / GuidelinesWarfare as the ‘Ultimate Competition’
Hard to refute, is there a better one that works?The argument against the use of Warfare Analogy is based on Utopian ideals and being PC; not practical, or usefulThere are Rules, Guidelines and Principles for Warfare and Non-Rules “All’s Fair in Love and War”Who Wins dependant on…Who is the most Adaptable
Where do you find a rules for Adaptability in an ever changing environment?
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Best Fit Model for AdaptabilityBusiness can be described as Darwinian –
“Survival of the Fittest” – Adaptability
Most Adaptable (Fastest, Biggest, Smartest, etc…)
The benefits of being “Alpha” of their species: Get to eat 1st
Procreate 1st
Garner the largest amount of resources, etc…Competition for Resources and Survival
Hindsight is insufficient. Essential to have an effective way to look toward the future, and create it. - Got to have tools to do this
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There are multiple battlegrounds:Primarily in the mind of the customer AND then in the
marketplace:Market share and influence in the mind of the customer– harmonizing with customers needs/wantsCompeting against a ‘brother’ company in the innovation space – out innovating your competitorCompeting against a ‘brother’ company in the core competency space – known as Red OceanThere are multiple others…..
Business Warfare is about Winning ‘Hearts and Minds’ & Gaining
Competitive Advantage
Source: Adapted from the Book – “Customer Chemistry” -- http://www.inc.com/resources/inc500/existingcustomers.html
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Data: The Hard TruthFortune 500: 46 year period (on average)
1970 – 1983: 1/3 fell of the list or out of business30 companies left the list every year; 6% turnover / year
Forbes 100: 70 Year period1917 – 1987: 61 companies no longer existed
Average of 1 company / year disappeared
S&P 500: Originally 90 top companies, expanded to 500 in 19571997: 74 companies remained of the original 500Avg. Mortality Rate: 10 companies / yearAvg. Life Span: steadily decreased from 50 to 25 years
“By 2020, > ¾ of the S&P 500 will consist of companies that don’t exist today.”
Key Question: Why?
Source: “Business Model Warfare” article by Langdon Morris • May 2003
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A Sobering Yet Clear PatternProjecting forward its likely that only about
1/3 of today’s major corporations will survive as significant businesses for the next 25 years.
“Most will die or be bought out and absorbed because they are too slow to keep pace with change in the market.”
Source: Richard Foster and Sarah Kaplan. Creative Destruction. Currency Doubleday, 2001. P. 14.
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A Change ConspiracyThe three most critical market factors are:
Accelerating ChangeIncreasing CompetitionIncreasing Complexity
Resulting in drastically compressed planning and execution horizon for every company requiring faster responses throughout company
Root Cause Issue: Adaptability
Source: Business Model Warfare by Langdon Morris • May 2003
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Poor Habits Contribute“Change, is the common condition, not stability”
observed more than 60 years ago by economist Joseph Schumpeter...the very nature of market evolution to weaken some
companies while creating opportunities for others.
Instinctive habit of management is to look backwards to the past to guide a course into the future.
In an era characterized by a “Change Conspiracy”, this approach cannot succeed.
“This misplaced focus is usually only evident in hindsight, when market share, jobs, or stock value have already been lost.”
Source: Business Model Warfare by Langdon Morris • May 2003
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戦略法The Way of Strategy
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Getting Grounded on the Basics
Highest Form of Competing: “Winning without Fighting” a.k.a. getting the true Win-Win.
Harmonizing with customer’s needs is KEY
Compete where your competitor is NOT. You need tools for this: using “Blue Ocean Strategy” (BOS) is one of the bestCol. John R. Boyd developed O-O-D-A LoopsObserve – Orient – Decide – Act same approach martial
artists use and based in part on the AOW
Framework on unfolding competitive awareness that provides a capability to look at the landscape while adapting to changes real time
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What OODA Loop speed really means
Implicit Guidance & Control
Know what to do
Act
And be able to do it
Unfolding Interaction
With Environment
Action (Test)
Feedback
Decide
Decision (Hypothesis)
Feed Forward
Feed Forward
Feedback
While learning from the
experience
Observe Orient
Feed Forward
Observations
Unfolding Circumstances
Outside Information
Unfolding Interaction
With Environment
Quickly understand
what’s going on
Implicit Guidance & Control
Cultural Traditions
Genetic Heritage
New Information Previous
Experience
Analyses & Synthesis
Source: Adapted from presentation by Chet Richards author of “Certain to Win”; http://www.belisarius.com/index.htmli
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OODA and Agility of the EnterpriseAgility is a time based strategy for operational success and notbased on size.Agility is a relative concept, not an absolute concept.Agility is an important attribute for project success, large or small.• Rapid prototyping projects and then refine by iterating (Read
“Serious Play” by Michael Schrage)• Recommend Rule Developing Experimentation (Blue
Elephants) application
Agility depends on organizational culture.
Source: “What Lessons Can the Agile Community Learn from a Maverick Fighter Pilot?” article by Steve Adolphhttp://www.belisarius.com
What Determines OODA Speed?• Ultimately Culture & climate of Trust encourages people to
use their initiative to further the goals of the organization• In such a climate, people solve the technical problems
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Operating Inside Their OODA Loop“It’s like they’re moving in slow motion.” —Boyd describing “operating inside opponents’ OODA loops.”
“It’s like you’re commanding both sides.” — typical impression of a successful cheng / ch’i operation.
cheng - “orthodox, expected”
ch’i - “unorthodox, shocking, irregular.”
Operating inside an opponent’s OODA loop, (decision making process) makes it easier to set up and exploit cheng / ch’i situations
Source: Adapted from presentation by Chet Richards author of “Certain to Win”; http://www.belisarius.com/index.htmli
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Proof of OODA Loops in Action
Toyota Production and Development Systems are 2X faster than most of their competitorsApple iPod + iTunes combination and taking advantage of Napster’s failure with stakeholders (Recording Industry)Dell’s supply chain is shorter (in time) than its competitorsHonda – Yamaha War: 18 month war
Honda had 2X the # of designs in the marketplace (testing in themarketplace) – out innovated YamahaYamaha left with 12 months of unsellable inventory – they lost
A time-compressed company does the same thing as a pilot in an OODA Loop … It’s the competitor who acts on information faster who is in the best position to win.
A time-compressed company does the same thing as a pilot in an OODA Loop … It’s the competitor who acts on information faster who is in the best position to win.
George Stalk, Jr. & Tom Hout, “Competing Against Time”, 180-181.
Source: Adapted from presentation by Chet Richards author of “Certain to Win”; http://www.belisarius.com/index.html
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Way of Strategy Summary1. Rigorously assess ALL environmental factors
Use OODA or something else that works?
2. Determine your company’s competitive stanceCompetitor focused (fast follower) or customer focused?
3. Find your Gaps – determine what you provide is effective and what is not
Find out your technical shortcomings ASAP and solve quickly
4. Find out what the customer wants (explicitly and implicitly)Get into the Mind Of the Customer (MOC) – there are tools for this
5. Incorporate findings from above and rapidly Prototype different Strategies (Virtual is cheapest and fastest)
Investigate – Propose – Iterate – Learn – Refine – Deploy
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革新法The Way of Innovation
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Author: Richard Platt | All Rights ReservedCorporate Infrastructure Barrier or Enabler of Innovation?
Innovative Concept
For the Innovator:Get your track shoes on to
run the “corporate gauntlet”For Corporations:
This isn’t a system its “trial by fire”
This is what passes for an Innovation Pipeline in most companies today
Decisions made at mid- level, made even more
difficult across silo’d orgs, which then turns it into a
political discussion
Snr Mgmt expects the mid-level mgmt to vet good from bad ideas before it gets to them
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Impact to Speed & Efficiency
Impact of a corporate structure on innovation:
Corporation NOT setup to Integrate or Effectively Exploit innovation opportunities
Even profitable ideas don’t make the cutPolitical element enters into decision making (away from data driven decision making)Inadequate / Insufficient / No resourcingMomentum and Speed of implementation slowed or stoppedSiloed efforts (not-holistic)
RESULT: Few new Strategies to enable corporation in new markets or profitability. Bureaucracy rules, if the ones at the top are the only one’s with good ideas
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What is Industrial Innovation*? …something that people VALUE and are willing to pay
for (it’s about providing jobs a.k.a. as solving problems)
* A.K.A.: Commercial Innovation Source: David Verduyn (c2c-solutions Inc) - All Rights Reserved
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Why is Industrial Innovation Important?Technology and Service Based Business commoditize over the long run…Global Competition Drives Down the PriceInnovation (Value Provided to Customer) is the fighter of Product and Service Price Deflation -- this is where Margin Lives!!Innovation is actually a Core CompetencyUNDERSTAND: strategy and Innovation are inexorably tied together. Strategy pulls everything together, without it innovation is rudderless over the long term
Other Reasons:Aging Product / Service Lines Business Decline Customer DefectionBureaucracy of Large Enterprise
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Systematic Innovation Methods
All brands, logos and trademarks remain the sole property of their respective ownersAll brands, logos and trademarks remain the sole property of their respective owners
…improves an engineer / problem solver’s ability to get to fundamental root cause, along with suggesting innovative solutions to solving problems
1/3 of Top 25 Most Innovative Companies (BusinessWeek) use Systematic Innovation Methods, and ½ of the Top 10 of thoseCompelling results show these have been used to help tough solvetechnical problems enhancing innovativeness of world class companies
Companies Now using Systematic Innovation Methods:
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Systematic Innovation Methods Mapped to Problems
Property of: Richard Platt (Strategy + Innovation Group LLC) and David Verduyn (c2c-solutions Inc)
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What Methods Increase Speed and Growth?
New Product Development (NPD) investments should impact:
Speed to marketProfitability
Accelerating NPDStudy of 233 Manufacturing firms9 different NPD Acceleration approaches:
Used by Permission. Original presentation by SBTI – Sigma Breakthrough Technologies Inc
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1st What Type of Competitor Are YouWhat type of a competitor are you?
Pioneer ? Creates new markets, new-to-world products …
Fast Follower ?Studies markets and enters when they ramp-up …
General ?Core business area competitor, #1, or #2 in market ownershipCan be both pioneering and fast following
Do you fit in one category, or does each NPD team need to be classified by their goals?
Used by Permission. Original presentation by SBTI – Sigma Breakthrough Technologies Inc
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Author: Richard Platt | All Rights Reserved
9 ApproachesSupplier Involvement (SCI)Lead User Involvement (LUI)Acceleration of activities and tasks (AST) Reduction of parts and components (DFA)Training and Rewarding Employees (TRE)Implementation of support Systems and Structures (SST)Stimulating Cross-Functional Cooperation (XFC)Customer Emphasis (VOC)Simplification of organizational structure (SOS)
Used by Permission. Original presentation by SBTI – Sigma Breakthrough Technologies Inc
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Author: Richard Platt | All Rights Reserved
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Speed Beta
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SCI LUI AST DFA TRE SST XFC VOC SOS
Key Results: Pioneers, Market CreatorsPioneers have emphasis on either speed or profitability, NPD teams must choose their approach carefully if pioneering
Used by Permission. Original presentation by SBTI – Sigma Breakthrough Technologies Inc
Bureaucratic structures can’t get speed
Matrixed groups help but still won’t overcome internal politics
which slows speed
Listening to the customer / user is both speedy and more profitable
No structure for innovation, reduced
profitability
Anything that increases speed
is goodness
Increase speed of supplier response
Bureaucratic structures can’t get speed
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Opportunity-driven Business Development Summary on Moving with Speed
Fastthinking
Fastdecision-making
Fasttomarket
Sustainingspeed
Technology Trend Forecasting & road-mapping
Anticipating by looking for problems
Spotting trends
Apply Systematic Innovation Methods
Putting every idea through the “grinder” – letting the best idea win
Setting guidelines
Reduce Time-To-Decision
Getting rid of bureaucracy
Shuffling portfolios
Rule Developing Experimentation
Constantly reassessing
Launching a crusade
Reduce Time-To-Market (Rapid Prototyping)
Owning competitive advantage
Getting suppliers to move fast
Staying beneath the radar
Institutionalizing innovation
Simplicity
Boundarylessness
Self-confidence & growth attitude
Financial flexibility
Business Process Mgmt System
Managing the innovation pipeline
Staying close to the customer
Adapted from “It’s not be big that eat the small…It’s the fast that eats the slow”, J.Jennings & L.Haughton Source: www.1000ventures.com
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SummaryThere are Rules, Guidelines and Tools for Effectively and Efficiently Competing (Winning)
Increase Speed of Decision Making and Shorten the Time To Process
Aggressively cut wasteful time consuming processes - You gain a valuable commodity
Disciplined and Systematic Approach towards Innovating is done by “Best-In-Class” companies, no process, limited results (at best)
Increase Value for Customers / Users – You get increased shareholder value as a Result
CONTACT INFO | EMAIL: [email protected] | PHONE: (503) 805-7612
BACKUP
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Other Corporate Systematic Innovation Users
Automotive
Aerospace
Consumer Goods
Microelectronics
Medical Technology
Petroleum
Optics/Electronics
Chemical
All brands, logos and trademarks remain the sole property of their respective owners
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Innovation AssumptionThere aren’t any decent metrics for InnovationInnovation = Growth
1. = Change = Measure Profitability over timeBoth lagging and leading indicators are available
Qtr-to-Qtr profitability and growth measures & targets“Real Options Theory” used as predictive tool for profitability of a project
2. = Change Over TimeMeasure 1st and then you can actually begin to see where your process isn’t working
TTP – Time-to-ProductivityTTM – Time-to-MarketTPT – Through Put Time of Cycle
You only get results from what you measure and “…you cannot manage what you don’t measure.” – Andy Grove