Choosing Your
Innovation Engines
Dr. Bill Davidson
May 2012
Getting Started
If innovation is 1% inspiration and 99%
perspiration,
strategy is 50% contemplation and 50%
implementation.
Where and how do we focus our innovative
energies and talents?
Innovation Arenas
•
•
•
•
•
•
Product
Process
Solutions
Channel
Organizational
Business Model
Core Strategy and Business Model
BUSINESS
STRATEGY
Structure, job roles
& reporting lines
Organization
Beliefs, values,
norms & style
Culture
Business Portfolio
And Model(s)
Systems
Processes, infrastructure
People
Skill levels,
Management and
Leadership Capability
IBM’s Client-Centric Solutions Model
E
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T
E
R
P
R
I
S
E
R
E
S
O
U
R
C
E
S
Front –End OMS
Champion
Proposal Team
Opportunities
Proposal
Delivery Team
Back- End Function and Infrastructure
C
L
I
E
N
T
N
E
E
D
S
Entrepreneurship And Order
“At IBM, we tolerate wild ducks…
so long as they fly in formation.”
Tom Watson Jr., IBM CEO
Core Strategy and Business Model
BUSINESS
STRATEGY
Structure, job roles
& reporting lines
Organization
Beliefs, values,
norms & style
Culture
Business Portfolio
And Model(s)
Systems
Processes, infrastructure
People
Skill levels,
Management and
Leadership Capability
The Volvo Way

Strategic Coherence
– Focused set of similar businesses based on common
technology
• Market Leadership positions
• Global strategies
• Departure from the consumer automotive business

Strong Management System
– Core Principles and Practices
•
•
•
•
Team Focus
Consultative/collaborative leadership
Enterprise Functions and Processes
Limited Entrepreneurship
– ` Audit and Intervention
Top Executives Leadership Program - Learning Expeditions
The Volvo Way



Clear Business Strategy – Global Market Leadership in Long Cycle
Industrial businesses with common core technologies
Single environment type, single strategy permits single organization and
management model
Very clear, explicit Management System ~ Volvo Way
Right Results
Hi
Performance
Right Way
Lo
Lo
Hi
Conformance
Top Executives Leadership Program - Learning Expeditions
The Volvo Way

Team Focus

Customer Focus

Clarity of Goals

Human Potential Conviction

Collaboration

Trust

Respectful Communication and Feedback

Relationship Focus

Volvo Production System
Top Executives Leadership Program - Learning Expeditions
The Volvo Way


Team Effectiveness Reviews
Organizational Survey of all teams, plus Senior Team
– “if the senior team is not working well, it will waste the
teamwork of the rest of the company”
– Numeric ranking – scores below 75 receive intevention
– Were goals clear? Inclusion in setting goals? Quality of PBP
review?

Universal Leadership Development Process

Annual Ratings and Reviews

Personal Business Plans – all employees

Management Team Reviews of Personal Plans

Succession Planning
Top Executives Leadership Program - Learning Expeditions
The Volvo Way

Introduced Matrix in 2005
– “If you get agreement in a matrix, you win”

“No place for entrepreneurs”

KPI was reducing number of systems

Harmonizing processes

Standardization not centralization

Lean corporate functions

Went from 2 Business models to one(auto)

“Not new but a discovery of who we were already”

Company has Chosen - FIFO
Top Executives Leadership Program - Learning Expeditions
Volvo’s Integrated Value Chain
• Complementary Businesses allow
effective integration of Product
Development, Procurement and Power
Train technology(PPP1) activities in a
single supply chain structure.
• Significant gains realized also from PreProduction Planning(PPP2) to align
design, supply chain and production.
Wal-Mart's Strategy Diamond
G,SA/Sales
↓
GSA + GM < Comp
GSA
Procurement
“Buy For Not Sell
To”
IS
Suppl
y
Chain
Cross Dock
DC
DTS
Trucking
Store
Network
Location
Strategy
CGS ↓
Price < Comp Cost
Low Margin
High
Volume
Real Time
POS IS
Inventory
Turns ↑
Sales/SF
Limited
Competitio
n
Labor
Costs
↓
Store
Config.
Real
Estate
Costs ↓
Low Everyday
Prices
Starting A New Cycle
The Critical Duality
Operations
Optimization
Discipline
Processes
Metrics
Functions
Internal
Bottom Line
Perform
Transform
Strategy
Innovation
Creativity
Customers
Markets
BU’s/Projects
External
Top Line
The World's 50 Most Innovative
Companies*
Stock
Revenue
Margin
Returns Growth 2005- Growth 2005- Known for its Most
2005-08 *
08 **
08 ***
Innovative
2009 2008
Rank Rank Company HQ Country
1
1 Apple
U.S.
2
2
Google
3
4
5
6
3
5
7
12
7
15
8
9
13
10
10
23
Toyota Motor
Microsoft
Nintendo
IBM
HewlettPackard
Research In
Motion
Nokia
Wal-Mart
Stores
(in %)
5.9
(in %)
30.4
(in %)
15.8
U.S.
-9.5
52.6
-8.2
(% who think so)
Product (47%)
Customer
Experience (26%)
Japan
U.S.
Japan
U.S.
-20.7
-8.0
36.7
2.3
4.2
13.5
61.1
4.4
-35.9
-1.3
20.6
14.3
Process (35%)
Process (26%)
Product (48%)
Process (31%)
U.S.
9.1
10.9
31.6
Process (39%)
Canada
Finland
24.6
-8.3
74.1
14.0
11.2
-10.3
Product (53%)
Product (38%)
U.S.
8.0
9.1
-2.1
Process (49%)
*Business Week 2009
Supply Chain Innovation
Apple’s Strategy Innovations
Reverse Razor and Blades
OPB
Virtual (not vertical) Integration
Supply Chain Innovation
Cycle Time Acceleration
Negative Working Capital
EcoSystem
}
Market Development Focus
Black Hole Sector Strategy
Parts to Profit Cycle
KISS
Smart Phone As Black Hole
Music
Systems
Watches
PC
Protable
Music
Devices
Smart Phones
PDA’s
Digital Camera
Mobile
Phone
Portable TV
Utility (e.g. Leap)
Calculators
GPS
Dictation
Device
TV
Management Model and Strategy Focus
Innovation
HP
VIRGIN
IBM
NOKIA
Autonomy
Enterprise
GE
EXXON
TOYOTA
Optimization
Business Development
External
Customers
Markets
Growth
Optimization
Internal
Assets
Metrics
Returns
Topline
Sales
Bottom-line
Operations
Creativity
Standardization
Economic Cycles
% of GNP
100%
Hunting & Gathering
Agriculture
Industry
Info
Bionano
Cisco’s Innovation System
• Cisco outsources more than 90% of operations
– More than 90% of manufacturing is third party
• 1000 plus component suppliers
• 31 EMS/ Contract Mfg partners
• 17 logistics providers
– More than 90% of sales and service is third party
• Thousands of channel partners
– Focus on Value Chain Management, Strategic Alliances
• Company focuses on opportunity identification and
development
– 30 plus strategic development initiatives
• E.g. Telepresence, IPTV, Smart Home
• Half the company is current business, half is strategic
initiatives
Cisco Strategic Programs
China 2.0
Virtualization
Cisco 3.0
Video Compression
Emerging Markets 2.0
service)
Green
SAAS(software as
Smart Grid
Connected Buildings
Cloud Computing
Smart Home
Innovation Processes
• Geoffrey Moore Playbook –
Find/Filter/Incubate/Initiate/Accelerate
• I Zone – Idea Zone on web
• I Prize – global contest for new product ideas
• Sales is as active as engineering in development phase
• “Sync or Sink”
• Agile Development – “scrums”, lots of intermediate releases,
quick turn around, wisdom of crowds, ecosystem
Cisco’s Innovation strategy
• “Collaboration accelerates productivity, growth and Innovation”
• “A lot of our life is in the strategic innovation/transformational arena”
• Innovation Ecosystem includes Governments, NGO’s, Industry
Associations, Academia and supply chain partners
• Global Program office oversees the portfolio of 30 plus strategic initiatives,
each with its own leadership board(virtual)
– 23 Councils, more boards and more task forces
• Distinguish between Ops half of the company(structured), and strategic
development half(virtual)
Business Model Innovations
•
Informationalize the business
•
Smart Products
•
Product to Solution migration
•
Service Innovation
•
Value Proposition reengineering
•
Channel Innovation
•
Customer Centricity
•
Mass Customization
•
Market Redefinition(Seize Transition opportunities
)
Netting it Out
• Numerous Opportunities for Innovation
• Supply Chain is particularly fertile ground
• Customer Facing process Innovation
delivers strong, sustainable results
• Business Model Innovation is most
powerful and most demanding
• Collaboration is critical inside and out
• Nothing focuses the mind like a crisis