The Science of Innovation (Facts, Systems, Best practices)

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<ul><li><p>The Science of Innovation (Facts, the need for systems and best practices) </p></li><li><p>Notes to Readers This is a presentation that was given June 30th in Brussels by </p><p>@bryancassady In this presentation you will discover: </p><p> Some facts on what is driving innovation success. Why you need to go step by step to build your innovation capacities How to interpret the results of our innovation readiness assessment. You can </p><p>get your assessment at this link: http://tiny.cc/Slides_innov_ready 10 best practices to build a culture of Innovation </p><p> We will present the results again in Brussels (http://tiny.cc/iscienceBXL) and Gent (http://tiny.cc/isciencegent ) </p><p> If youd like to arrange a personalize talk at your company, contact Rabia@fast-bridge.com </p><p>http://tiny.cc/Slides_innov_readyhttp://tiny.cc/iscienceBXLhttp://tiny.cc/isciencegentmailto:Rabia@fast-bridge.com</p></li><li><p> Agenda Why study innovation Our Research Terminologies Key learnings from the research The need for systems Interpreting your results Best practices Q &amp; A / Drinks </p></li><li><p>WHAT IS INNOVATION? </p><p>CREATIVITY is about new ideas </p><p>INNOVATION is the profitable </p><p>implementation of these ideas </p></li><li><p>Why it is important In Fortune 500 companies New products account for 50% of revenues </p><p> And 40% of profits </p></li><li><p>companies value innovation </p><p>are classified as innovative by their </p><p>peers </p></li><li><p>of their customers would agree </p><p>of companies think they had a major innovation in the </p><p>last 6 months. </p></li><li><p>of ideas fail when brought to the market </p></li><li><p>Why Study Innovation (Scientifically) Everyone seems to have an </p><p>opinion about Innovation and there is an enormous amount of (conflicting) information </p><p> A need for facts instead of opinions </p><p> A need for fact based theories to guide action </p><p>In Amazon there are 76.579 books on innovation ! </p></li><li><p>How to be meaningfully unique with 17 thousands management consultants Belgium ? Companies are tired of paying for advice, but are willing to pay for business results. The Fast Bridge Solution A focus on new business development The right people. Senior people with different skills The right methods. Fact based, using the best from around the world Whenever possible, results based compensation </p><p>About us </p></li><li><p>World class content from </p><p>Working together with </p></li><li><p>Senior people with grey hair (no hair) with the tools, expertise and </p><p>experience to make innovation happen </p></li><li><p>Our Core Interest .. </p><p>Innovation is hard work, but startups are getting it right </p><p>more often </p></li><li><p>Start-ups are about </p><p>more successful with new business projects than established companies. </p><p>Some experts estimate that over </p><p>of success in innovation is based on systems. </p><p>5x 80% </p></li><li><p>What should large companies change in their </p><p>systems ? </p></li><li><p>Over 200 ! Articles/ Books Research has linked significantly higher levels of innovation and business performance to business philosophies, strategic alignment, business processes and organizational learning Lets check it out </p><p>Innovation Performance </p><p>Firm Performance </p><p>Attitudes Processes </p><p>Learning </p><p>Strategic Alignment </p><p>Theoretical Background </p></li><li><p>Our work so far </p><p> 42 one to one company interviews to validate questions and test questions found in over 200 academic articles </p><p> A survey with 71 test companies testing initial questions and validating links to innovation performance. </p><p> April 2015 we updated the full survey to better analyze disruptive and ongoing innovation success. </p></li><li><p>Now we are going to look facts, figures on innovation </p><p>success </p></li><li><p>3 definitions to start </p><p>1. Sustaining innovations 2. Breakthrough innovations 3. InnoPreneurship: </p><p>Bringing an Entrepreneurial Mindset to established companies </p><p>Sustaining Keep competitive </p><p>Breakthrough Create future </p></li><li><p>Setting up the research </p></li><li><p>Our research database : 3 types of variables </p><p>1. Dependent Variables (Innovation / Business performance) </p><p>2. Independent Variables (company characteristics) </p><p>3. Covariates (company size, country, etc.) </p><p>Independent Var. #1 </p><p>Dependent Variables </p><p>Independent Var. # 2 </p><p>Covariates </p><p>Company Characteristics Habits </p><p>Market Company size Etc. </p><p>Innovation Business Results </p></li><li><p>A simplified view of the data set </p><p>1 Desire / Hunger2 Philosophies3 Autonomy4 Competitive5 Creativity6 Risk Taking7 Proactivity8 Structure Breakthrough Innovation Results Overall </p><p>Strategy alignment 9 Strategy alignment Innovation Results Business10 People processes Results11 Organizational Design Sustaining12 Customer Focus Innovation 13 Co-creation14 Ecosystem Management15 Speed / Results focus16 Systems to select ideas17 Commitment to Learning18 Knowledge Sharing19 Open Minded</p><p>Dependent Variables</p><p>Learning Orientation</p><p>Entreprenuerial Orientation</p><p>Independent Variables</p><p>Processes</p><p>Attitudes</p><p>Note: All the questions are in the appendix </p></li><li><p>W </p><p>Rich Investments in stocks </p><p>A simple example to show how we measured latent variables </p><p>Attitudes towards saving </p><p>Local alternatives How to measure </p><p>Rich ? </p><p>You cant really ask </p></li><li><p>W </p><p>Rich Vacations Type Car Type House Jewelry </p><p>Using questions to measure a latent variable (Rich) </p><p>Reliability All measuring </p><p>The same thing </p><p>Yes, but Jewelry lowers reliability. </p><p>Other latent factors </p><p>Mea </p><p>Measure: Cronbach alpha 0-1 (&gt;.6 good, &gt;.8 great) </p></li><li><p>W </p><p>Rich Vacations Type Car Type House Jewelry </p><p>Checking with other data Disposable Income </p><p>Validity Measurement </p><p>accurate ? </p></li><li><p>W </p><p>Rich Vacations Type Car Type House </p><p>Investments in stocks </p><p>A final model </p><p>Attitudes towards saving </p><p>Local alternatives </p></li><li><p>Some sample questions </p></li><li><p>OVERALL INNOVATION Rate of growth Rate of new product/service introductions Success rate of product/service introductions Level of product differentiation in terms of unique </p><p>selling points New product cycle time (i.e. inception to rollout) Ability to create new products/services with real </p><p>consumer value Profitability of new product/service introductions Percentage of revenues from new products </p><p>introduced in the last 2 years </p></li><li><p>We like to constantly challenge the way things are done.In my company, there is a sense of urgency regarding the importance of transformation driven by innovation.</p><p>Our innovation projects have helped our organization develop new capabilities that we did not have three years ago.</p><p>We have a burning desire to explore opportunities and to create new things.</p><p>We have committed leaders who are willing to be innovation champions.</p><p>In my company, change is regarded as an opportunity rather than a threat.</p><p>We encourage new ideas even if they seem completely out of our comfort zone and company's scope.</p><p>Our firm rarely introduces products that are radically different from existing products in the industry.</p><p>Our firm lags behind others in introducing products based on radically new technologies.</p><p>We have no difficulty introducing products that are radically different from the existing ones in the industry.</p><p>Desire / Hunger</p><p>Negatively scaled </p></li><li><p>A simplified view of the data set </p><p>1 Desire / Hunger2 Philosophies3 Autonomy4 Competitive5 Creativity6 Risk Taking7 Proactivity8 Structure Breakthrough Innovation Results Overall </p><p>Strategy alignment 9 Strategy alignment Innovation Results Business10 People processes Results11 Organizational Design Sustaining12 Customer Focus Innovation 13 Co-creation14 Ecosystem Management15 Speed / Results focus16 Systems to select ideas17 Commitment to Learning18 Knowledge Sharing19 Open Minded</p><p>Dependent Variables</p><p>Learning Orientation</p><p>Entreprenuerial Orientation</p><p>Independent Variables</p><p>Processes</p><p>Attitudes</p><p>Note: All the questions are in the appendix </p></li><li><p>Validity: Scaled measures / Self </p><p>declared measures had a .8 correlation </p><p>Reliability: The reliability of all scales was greater than .80 most </p><p>higher than .9 (typical cut-off values .6-.7) </p><p>Checking the Data </p><p>.8 38% &gt;.8 Of business </p><p>result variation explained by Innovation </p></li><li><p>Top-line correlation analysis Area</p><p> Sustaining Innovation </p><p> Breakthrough Innovation </p><p> Overall Innovation </p><p>Desire Hunger 0.45 0.48 0.49 Philosophies 0.41 0.45 0.52 </p><p>Autonomy (0.52) (0.37) (0.36)Competitive (0.37) (0.31) (0.40)Creative 0.33 0.58 0.54 Risktaking 0.26 0.61 0.58 Proactivity 0.53 0.59 0.59 Structure 0.49 0.45 0.44 All Entrep. Orientations 0.52 0.63 0.70 </p><p>Strategic Alignment Strategic Alignment 0.54 0.62 0.68 People systems 0.40 0.44 0.55 Organizational Design 0.36 0.29 0.46 Customer Focus 0.36 0.54 0.57 Co-Creation 0.37 0.38 0.48 Ecosystems 0.36 0.28 0.49 Speed 0.52 0.68 0.62 Clear Decision Systems 0.25 0.35 0.51 Commitment to learn 0.45 0.20 0.43 Knowledge Sharing 0.45 0.16 0.46 Open Minded 0.41 0.47 0.44 All Learning Orientation 0.45 0.30 0.53 </p><p>Overall Score Summary all Areas 0.56 0.64 0.71 </p><p>Learning Orientation</p><p>Entreprenuerial Orientation</p><p>Attitudes</p><p>Processes</p><p>1.Autonomy and competitiveness negatively correlated with Innovation success 1 </p><p>2 2.Entrepreneurial orientation = best predictor </p><p>3 3.Strategic Alignment = critical for all type of innovation </p><p>4 4.Speed is actually more important </p><p>5 5.Overall measure is strong </p></li><li><p>DETAILED ANALYSIS 7 Key Learnings and suggested action steps </p></li><li><p>1. You must start with strategic alignment 2. Alignment, attitudes and learning systems will follow (clarify) 3. Focus on customers, not competitors 4. The right balance disruptive/incremental is key 5. Proactivity is the one thing you need to reward 6. Walk before you run 7. If you are in a big company or a small company you need to act like you are in a </p><p>successful start up </p><p>7 Key learnings from the research </p></li><li><p>Not aligned Middle Alignedbottom </p><p>20% 60% top 20%Sustaining Innovation 22 56 65Breakhrough Innovation 46 43 72Overall Innovation 34 47 71</p><p>Other measuresAbility to create new ideas 37 47 69Ability to communicate new ideas 41 49 65Ability to commercialize new ideas 43 48 65Confidence in launching breakthrough Innovations in the future</p><p>29 56 57</p><p>N =202 companies</p><p>1. Strategic alignment is the cornerstone of successful innovation </p><p>Action Point: before doing anything, look at how you can build alignment </p><p>Details All participants ranked by level of strategic alignment (8 questions) Avg. Rank orders (0-100) Presented for other variables </p></li><li><p>Innovation Performance </p><p>Firm Performance </p><p>Attitudes Processes </p><p>Learning </p><p>Test #1 Strategic </p><p>Alignment </p></li><li><p>2. If you get aligned, the right attitudes and learning orientation in place systems will follow </p><p>Excellence in systems Predicted by Attitudes, Strategy Alignment, Learning Orientation 1. The model predicts 79% of the explained variance (a good model anything over 20%) 2. All variables significant with learning orientation / attitudes most predictive </p><p>Action Point: Think of these elements as the foundation of your innovation program gets these right first </p><p>R2 0.79 (1)</p><p>Std.Coefficients</p><p>B Std. Error Beta(Constant) .028 .045 .625 .533Strategic Alignement .125 .069 .135 1.822 .072Attitudes (ALL) .423 .069 .445 6.150 .000Learning Orientation .392 .067 .409 5.863 .000</p><p>a. Dependent Variable: Systems_ALL Systems_ALL</p><p>(2)</p><p>Unstandardized Coefficients</p><p>t Sig.</p></li><li><p> Autonomy and competitiveness were negatively correlated with innovation results </p><p> Why: It can take away focus from solving customer issues. When customer focus is high. Both autonomy and competitiveness are positively correlated with results. </p><p>Innovation Results</p><p>Low Cutomer High Customer</p><p>71</p><p>57</p><p>49</p><p>21</p><p>Low High Low HighAutonomy Autonomy</p><p>FocusFocus</p><p>3. Innovation Focus on customers needs not competitors, not autonomy </p></li><li><p>Attitudes Processes </p><p>Learning </p><p>Innovation Performance </p><p>Firm Performance </p><p>Test #2 </p><p>Sustaining Innovation </p><p>Breakthrough Innovation </p><p>Strategic Alignment </p></li><li><p>4. The right balance Disruptive/ Incremental is key </p><p>Std. CoefficientsB Std. Error Beta</p><p>(Constant) .896 .108 8.304 .000BreakthroughInnovation 0.51 0.15 0.51 3.51 0.00 </p><p>SustainingInnovation 0.29 0.16 0.26 1.76 0.09 </p><p>a. Dependent Variable: Overall Innovation Results</p><p>Unstandardized t Sig.</p><p>The biggest driver of overall innovation success is: Breakthrough Innovation A 1% improvement in breakthrough innovation will deliver 2 X more than a sustaining innovation (.51/ .26) </p></li><li><p>A balance portfolio = 85 % sustaining </p><p>15% breakthrough But 50% of profit growth from </p><p>breakthrough Action Point: Build breakthrough innovation capabilities and reallocate funds </p></li><li><p>A process of building a model by successively adding or removing variables based on their estimated coefficients Throw everything in and see what remains </p><p>Sideline: Stepwise regression </p></li><li><p>Testing Everything </p><p> 1 Desire / Hunger2 Philosophies3 Autonomy4 Competitive5 Creativity6 Risk Taking7 Proactivity8 Structure Breakthrough Innovation Results Overall </p><p>Strategy alignment 9 Strategy alignment Innovation Results Business10 People processes Results11 Organizational Design Sustaining12 Customer Focus Innovation 13 Co-creation14 Ecosystem Management15 Speed / Results focus16 Systems to select ideas17 Commitment to Learning18 Knowledge Sharing19 Open Minded</p><p>Dependent Variables</p><p>Learning Orientation</p><p>Entreprenuerial Orientation</p><p>Independent Variables</p><p>Processes</p><p>Attitudes</p></li><li><p>5. Proactivity is the most important thing you need to reward </p><p>Action Point: There is so much to do use these facts to focus your efforts </p><p>Unstandardized Coefficients</p><p>Std Coefficient</p><p>s t Sig.</p><p>BStd. Error Beta</p><p>(Constant) -.996 4.730 -.211 .834Proactivity .465 .077 .484 6.063 .000Commitment to Learn .286 .081 .291 3...</p></li></ul>

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