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IBM Global Services and the IBM Executive Business Institute

© Copyright IBM Corporation 2005

Workshop on Game Changing Innovation to drive your Business Strategy

Ho Chi Minh, VietnamOctober 5-7, 2005

Steve RoehmFaculty MemberThe IBM Executive Business Institute



IBM Executive Development Programme

"It's impossible to get out of a problem using the same kind of thinking that it took to getinto the problem.“

Think …….Differently ……More Openly

"If at first the idea is not absurd, then there is no hope for it."

Albert Einstein

Nobel Laureate




Do Your Own Thinking

"..best practices discovered by others are not asmeaningful to organizations as the discoveries they make themselves....

…we (and they) found that real change happened only when organizations generated their own tools and approaches."

SOURCE: Richard Foster + Sarah Kaplan, Creative Destruction, 2001




Introductions

Your Name

Your Organization

Your Job Responsibilities

One Expectation for this class




Seminar Objectives

To identify strategic innovation opportunities and challenges

To identify and apply strategic innovation tools or methods

To build an initial assessment of your organizations’current innovation state, and what you could do to leverage it




AgendaDay 1Strategic Innovation Overview

Customer Innovation Focus

Open Innovation

Asymmetries and Innovation Theory

Visual Strategy

Strategy Canvas

Strategy Framework

Day 2Business Design Assessment

Customer Presentation

IT and Business Alignment

Innovation Capability Assessment

Action Plan




Flow of Seminar

Tools and Methods

Business Design

Assessment InnovationCapability

Assessment

Ideas and

Customers

Action PlanAsymmetries and Innovation Theory

Visual Strategy

Strategy Canvas

Strategy Framework

Customer Innovation Focus

Open Innovation




Activity #1: In a group at each table, use a flip chart to record your answers to the following:

What is your definition of Innovation ?What is your definition of Strategy ?What is your definition of Strategic Innovation ?Be prepared to discuss your definitions.

Let’s examine your definitions of Innovation and Strategy and use them as a basis of discussion for this workshop.

Timing:- Definition 10 minutes- Workshop discussion 10 minutes




What is a Definition of Strategic Innovation ?

Strategic Innovation :is applying the appropriate type of innovation via a product, service, or business model that provides the customer the best value, and provides strategic leverage and value for the organization




Why Strategic Innovation ?

- 2X Profit !!- TSR Leader- Recovery Leader- Greater New Product Success Rate

- Growth and Leadership




Not Innovating is Costly Also…No. 2 Discount Retailer Kmart Files for Bankruptcy Reuters, Jan 23, 2002

Bethlehem Steel Files for Chapter 11

AP, October 15, 2001

United AirlinesChairman ResignsFT, 10/28/01

Lucent Posts $3.25 Billion Q3 Loss$7-9 B Writeoff coming....up to 47,000 to be laid off...AP, 7/24/2001

- S&P Downgrades Lucent Debt to Junk Status, Economist, 6/14/2001

Corus warns of big job cuts.......FT,3/12/03

In 126 Years, Ericsson Has Never Experienced Anything Like This....FT-4/3/03

Ericsson chairmansteps down as losses widen ..FT,10/28/01

Chief Executive Quits at Merck;Insider Steps Up

NY Times, BUSINESS/FINANCIAL DESK | May 6, 2005

In 1997-2000, innovations in food and beverages outpaced those in another crucial consumer-goodsmarket, personal care products….Thathas since been reversed.The Economist, 7 May 2005

“A crisis of creativity is causingRumblings in the Food IndustryEconomist | May , 2005




What Do These Industries Have In Common?What Do These Industries Have In Common?

Watches Electric Motors Industrial RobotsAutos Photocopiers Machine ToolsCameras Ship Building Optical EquipmentStereos Software Consulting ServicesMedical Equip Food Processors Computer HardwareColor TV's Microwave Ovens TextilesHand Tools Athletic Equipment AirlinesRadial Tires Semiconductors Financial Services

M. Tushman + C. O'Reilly, Winning Through Innovation




Coffee/Tea Break -- 20 Minutes




Types of Innovation

Disruptive New MarketCompetes against non-consumption. Creates new growth by making it easier for people to do

something that historically required deep expertise or great wealth.

Occurs when existing products and services are “too good” and hence overpriced relative to

the value existing customers can use.

Occurs when improvements are made to existing products on dimensions

historically valued by customers.

Low End Disruption

Sustaining

Source: Seeing What’s Next, Clayton Christensen et al, and EBI




Types of InnovationDisruptive New Market

Competes against non-consumption. Creates new growth by making it easier

for people to do something that historically required deep expertise or great wealth

Internet

eBay

Palm Pilot

Automobile

Mainframe computer

Airplane

Telephone





Types of Innovation - Example

Occurs when existing products and services are “too good” and hence overpriced relative to

the value existing customers can use.

Low End Disruption

Low cost airlines

Software as a Service

Wal-Mart

Steel Mini-mills





Types of Innovation - Example

Occurs when improvements are made to existing products on dimensions

historically valued by customers.

Sustaining

Features of telephones

Enhancements to parts of airplanes

Incremental enhancements to any product/service





Activity #2: 1) From below, select what type of innovation your idea represents?

a) Disruptive New Market – Competes against non-consumption. Creates new growth by making it easier for people to do something that historically required deep expertise or great wealth

b) Low End Disruption - Occurs when existing products and services are “too good” and hence overpriced relative to, the value existing customers can use.

c) Sustaining - Occurs when improvements are made to existing products on dimensions, historically valued by customers.

2) What are the important characteristics or attributes of the type of innovation you selected, and why does it match your new idea ?

3) Please be prepared to discuss your assessment.

What Type of Innovation Does Your Idea Represent ?And, why ?

Approximate Timing:- Preparation 10 minutes- Discussion 10 minutes




Ingredients for Strategic Innovation Ingredients for Strategic Innovation

Ingredients

SOURCE: G. Hamel, Strategos

Ingredients

1- Ideas

2- Capital

3- Talent




Let’s discuss your organization:

Who is responsible for generating ideas ?

How are ideas evaluated, and compensated ?

How is the failure of an idea assessed, and what is the impact ?

How many ideas does your organization generate, and how many make it to the CIO ? ……the CFO ? …versus what a Venture Capitalist sees?

Discussion:Ideas to Build Strategic Innovation




CapitalCapital Needed for Strategic InnovationNeeded for Strategic Innovation

FinancialStructural

Intellectual

ImaginationEntrepreneurial


Is the capital there to support

Innovation in your organization ?




TalentTalent Needed for Strategic InnovationNeeded for Strategic Innovation

Resource Attractionvs.

Resource Allocation


How are resources allocated

in your organization ?




Summary

Defined Strategic InnovationWhy Strategic Innovation is ImportantTypes of InnovationIngredients for successful Strategic Innovation

….a baseline to begin our dialog




Sample Readings/SourcesSample Readings/Sources•Henry William Chesbrough, Open Innovation, 2003•Clayton Christensen, The Innovator's Dilemma, 1997•Clayton Christensen and Michael Raynor, The Innovator's Solution, 2003•Clayton Christensen et al, Seeing What’s Next, 2004•Richard Foster and Sarah Kaplan, Creative Destruction, 2001•Tom Friedman, The Lexus and the Olive Tree, 1999•Tom Friedman, The World Is Flat, 2005•Gary Hamel, Leading the Revolution, 2000•Marco Iansiti et al, The Keystone Advantage, 2004•Frans Johansson, The Medici Effect, 2004•W. Chan Kim and Renee Mauborgne, Blue Ocean Strategy, 2005 •Michael Lewis, Next: The Future Just Happened, 2001•Jeff Mauzy and Richard Harriman, Creativity, Inc, 2003•Carlota Perez, Technological Revolutions and Financial Capital, 2003•Michael Schrage, Serious Play, 1999•Robert Sutton, Weird Ideas that Work, 2001•Adrian Slywotzky, D. Morrison, B. Andelman, The Profit Zone, 2001•Strategy & Innovation Magazine•Peter Schwartz, The Art of the Long View, 1995•M. Tushman and C. O'Reilly, Winning Through Innovation, 1997•Eric Von Hippel, Democratizing Innovation, 2005




Thank You !Thank You [email protected]

(845) 512-5278

IBM Executive Business InstitutePalisades, New York 10964 - USA

http://www.ibm.com/ibm/palisades/abi




Another View Another View -- Types of InnovationTypes of Innovation

Strategic Strategic

IncrementalIncremental

DEGREEDEGREE

ComponentComponent SystemSystem

BREADTHBREADTH

ContinuousImprovement

Business ProcessRe-engineering

DisruptiveBusinessConcept

DisruptiveNew

Product

SOURCE: G. Hamel, Leading the Revolution

Disruptive New MarketDisruptive New Market

Or, Low-end Disruption

Sustaining Sustaining ++

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