Innovation Overview
Glenn Wintrich
Innovation is not for the faint of heart
© 2012 Forrester Research, Inc. Reproduction Prohibited
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Speed of change accelerating
IT’s transformation essential to 21st century business success
The purpose of the
20th century firm:
The purpose of the
21st century firm:
To minimize
transaction costs
and achieve scalable
efficiency
To accelerate
capability
building and
effectively
apply that
capability to
innovation
Creating
new
value —
better &
faster
New view:
Sociallyenabled
enterprise
operating in a
digital
business
ecosystem
IT is essential to
enabling firms to
transform and
innovate with
informationdriven value
creation
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Innovation defined
Innovation is the process that takes new ideas and implements
them in a way that creates value by solving unmet needs.
Business
Models
Processes
Products and
Services
Management
Marketing
Would this qualify as innovative???
No turtle was hurt creating this picture
Common myths of Innovation
Myth
Reality
You have to be creative to
be innovative
While creative thinking is helpful,
innovation is a systematic
discipline
Successful innovations require
large-scale change
The most successful innovations
are often the simplest
Innovation is expensive
Most innovations require a
modest disciplined investment of
time and brain power
Innovation is led by R&D
& Technology
Innovation is an organization-wide
responsibility to leverage ideas
Marketing innovation
Marketing innovation refers to tools and
approaches that organizations use to cultivate
relationships with customers and prospects.
Examples
Location based marketing
Gamification
Social network
marketing
Internet video
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Personalization
Process innovation
Process innovation refers to new methods to
achieve superior outcomes.
Examples
Electronic Medical Record
Streaming Video
Robotic assembly line
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Financial banking
Management innovation
Management innovation refers to the way
organizations engage resources to enhance
performance and achieve superior outcomes.
Examples
Collaboration/
Autonomy
Resource models
Organizational models
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Reward structures
Organizational Models
Focus areas for Management Innovation
New view of the enterprise:
Socially-enabled enterprise operating in a digital
business ecosystem
• Increase collaboration
• Allow for autonomy and innovation
• Experiment with new approaches and resource
models:
o Crowdsourcing
o Hackathons
o Microwork
o Hollywood Model
o Self-Selecting Teams
o Expert Ecosystems
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Management
Product and Service innovation
Product and Service innovation refers to the
introduction of new and enhanced goods and
services.
Examples
Digital Oil Field
Apple iTunes
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3-D printing (Polymers)
Car break system
(Carbon fiber)
Workstation on
Wheels (WOW)
Sensors
Business Model innovation
Business Model innovation refers to the
approach to how an organization creates,
delivers, and captures value.
Sample business models
Freemium
Franchise
Long Tail
Direct Sales
Add-on
Auction
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Subscription
Low cost
Recurring
Revenue
Business Model Analysis
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Business Model Innovation components
Components
•
•
•
•
•
Partnerships
Channels
Cost Structure
Key Resources
Core Capabilities
Components
Bundling and Configuration
Segmentation
Customer Relationships
Revenue Streams: Pricing and Payment
Structures
• Value Proposition
•
•
•
•
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A dynamic shift IT Environment
Post 2012
Prior to 2012
IT Productivity
•
•
•
•
Consolidation
Cost
Outsourcing
ERP
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New
Value
Breakthrough
and Disruptive
Innovation
Existing
Business Models and Processes
Degrees of Innovation
Incremental
Innovation
Existing
New
Products and Services
New
Why is Innovation important?
Incremental
1. Keep products &
services in the
competitive set
2. Reduce Cycle
Time
3. Improve Quality
4. Reduce Cost
Breakthrough & Disruptive
1. New revenue stream
2. First mover advantages
3. Obtain higher margins
4. Increase brand value
5. Realize an innovation
premium on the stock
6. Improve corporate culture
Innovate or lose competitive position
Innovate or lose competitive position
http://www.youtube.com/watch?v=6Cf7I
L_eZ38&feature=player_embedded
The Volvo (Whitbread) Round-the-World Race:
What Determines the Winner?
the Skipper?
the Grinders?
the Navigator?
the Tactician ?
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Answer: None of the Above.
It’s the DESIGN OF THE BOAT that matters.
The analogy to the corporate world is that designing
an Innovation Culture that allows success to happen is
imperative to your Company’s success.
Credit: Peter Senge, The Fifth Discipline
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Architecture for Systemic Innovation
Foresight
Frameworks
Insight
Environmental Scanning
Weak Signals & Trends
Strategic
Plans
Scan R&D, IP & Patents,
Regulations & Standards
Develop Themes
& Scenarios
Market Innovation
Plan of Investigation
Reference
Architectures
Execute
Invest
Operational
& Annual
Plans
Plan of Intent
Outcomes
and Metrics
Plan of Record
Identify Constraints
& Opportunities
Customer Innovation
Deliver Innovation Plans
Facilitate Shared &
Open Innovation
Execute Business
Challenges
Architecture for Systemic Innovation
Foresight
Frameworks
Insight
Environmental Scanning
Weak Signals & Trends
Strategic
Plans
Scan R&D, IP & Patents,
Regulations & Standards
Develop Themes
& Scenarios
Market Innovation
Plan of Investigation
Reference
Architectures
Execute
Invest
Operational
& Annual
Plans
Plan of Intent
Outcomes
and Metrics
Plan of Record
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Identify Constraints
& Opportunities
Customer Innovation
Deliver Innovation Plans
Facilitate Shared &
Open Innovation
Execute Business
Challenges
Foresight
Foresight is knowledge of
emerging indicators or macro
trends across the social,
technological, environmental,
economic, and political
landscape.
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The objective of foresight is to
identify future opportunities,
challenges, and potential solutions.
Approaches & Tools
Basics
• Environmental Scanning
• Extrapolation
• Scenarios
• Regulatory Reviews
• SWOT
• Surveys
• Expert Panels
• Patent Analysis
Advanced
• Futures Wheels
• Futures Cone
• Black Swan Analysis
• Delphi
• Backcasting
• Paleofuture Analysis
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• Science Fiction
STEEP/PESTLE
P
E
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• Societal
S
E
• Technological
T
• Economic
• Environmental
• Political/Legal
Services
Architecture for Systemic Innovation
Foresight
Frameworks
Insight
Environmental Scanning
Weak Signals & Trends
Strategic
Plans
Scan R&D, IP & Patents,
Regulations & Standards
Develop Themes
& Scenarios
Market Innovation
Plan of Investigation
Reference
Architectures
Execute
Invest
Operational
& Annual
Plans
Plan of Intent
Outcomes
and Metrics
Plan of Record
28
Identify Constraints
& Opportunities
Customer Innovation
Deliver Innovation Plans
Facilitate Shared &
Open Innovation
Execute Business
Challenges
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Insight
Insight is the observation of facts,
knowledge, predictable trends,
and points of view that may apply
to particular issues, opportunities,
and challenges.
.
The objective of insight is to
identify constraints and
opportunities.
Popular resources & tools
Social Media
Market Data
Analysts
Standards Bodies
Industry Publications
Laws, Regulations, (established &
pending)
• Customer Surveys
• Focus Groups
• Patent Analysis
•
•
•
•
•
•
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Macro trends indicate sustained shifts
that influence future decisions in
business, government and society.
Sample Macro Trends
Technology does
not cause change, it
only enables,
facilitates and
accelerates changes
we already want to
take place.
Sharing Economy
Perfect Information
Smart Everything
Utility computing
Consumerization
Urbanization
Freelance economy
& Hollywood Model
An old workforce
A new workforce
Crowdfunding &
P2P Lending
Pervasive
simplification
Architecture for Systemic Innovation
Foresight
Frameworks
Insight
Environmental Scanning
Weak Signals & Trends
Strategic
Plans
Scan R&D, IP & Patents,
Regulations & Standards
Develop Themes
& Scenarios
Market Innovation
Plan of Investigation
Reference
Architectures
Execute
Invest
Operational
& Annual
Plans
Plan of Intent
Outcomes
and Metrics
Plan of Record
Identify Constraints
& Opportunities
Customer Innovation
Deliver Innovation Plans
Facilitate Shared &
Open Innovation
Execute Business
Challenges
Foresight and Disruptive Innovation
Disruption Zone: Incumbents
myopically focus on sustaining
innovation while new entrants
disrupt the model through
innovation.
%, $
Value of Foresight:
Disruptive innovators
see ways to improve a
job that is performed
and mobilize resources
to achieve new results.
t
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Disruptive
Innovation
Sustaining
Innovation
Services
Market Innovation: Product Cycle
Market
Innovation
Plan of Investigation
Plan of Intent
Plan of Record
Cycle
Market
View
3
Unclear:
Surprises
What is Possible?
FORESIGHT including macro
trends and all areas of STEEP
2
Generally
Expected
What is planned
to be developed.
INSIGHT: Competitors, Analysts,
Customers, Standards bodies &
Regulatory bodies
Planned
What is funded
and will be
launched.
Customers
1
Product
Plan
Signal
Sources
Metrics
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Organizational level innovation metrics
Highest level of innovation indicators and long-term achievement
• Customer perception assessments
• Inclusion, rank, and direction of change in industry rankings
rd
• Relative position in Gartner Magic Quadrants (MQ)
3 order
• Placement in Forrester Waves
External Corporate
• Most “innovative” company rankings
Perception
2nd Order
Internal Corporate
1st Order
Business Unit
Operational or functional level of innovation
• Measurement of innovation activities and financial performance
• Includes both Input and Output metrics
Tactical metrics and KPIs for BU activities and programs
• Lorem
Measurements
catalysts
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sit foundational
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adipiscingfor
elit.each BU that drive
towards higher functioning level of innovation.
Innovation metrics
Inputs
Idea Management
Outputs
# of ideas submitted
Cycle time metrics for initial
review, incubation,
development, pilot, etc.
# of new products or
services launched
Amount of capital in
# of ideas funded for
incubation
Actual vs. targeted breakeven
time (BET)
% of people trained in
innovation
# of ideas piloted
% of revenue/profit from
products or services
introduced in the past X
years
# of crowdsourcing
challenges
# of ideas funded for
commercialization
Royalty and licensing income
from patents/intellectual
property
#of leaders engaged in
innovation
% of product/service or
strategic innovation projects
with assigned executive
sponsors
Number of innovations that
significantly advance existing
businesses
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Final Thoughts
• Revenue growth belongs to the innovators
• Collaboration is king – victories are in the
white spaces between groups
• The “Red Queen Scenario”
• And one more thing………..
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We must Innovate or Die!!
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Q&A
Open the
floodgates
for
questions
Thank you
Innovate or lose competitive position
http://www.youtube.com/watch?v=6Cf7I
L_eZ38&feature=player_embedded