combining continual improvement and innovation
DESCRIPTION
Presentation delivered at the "2013 World Quality Day Conference", in Helsinki, Finland, sponsored by the Laatukeskus Excellence Finland.TRANSCRIPT
0@ 2013 Alexis P Goncalves . ALL RIGHTS RESERVED
ALEXIS P GONCALVES
COMBINING
CONTINUAL IMPROVEMENT AND
INNOVATION
IT DIRECTOR & INNOVATION CATALYST
COTY INC.
NEW YORK, NY, USA NOVEMBER 2013
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Finland is an
Innovation Hot
Spot !Information TechnologyTelecommunicationsForestryMetals and Mechanical EngineeringIntelligent Machines
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Reinventing
oneself several
times
1922Rubber Business
1865Paper Mill
1967Electronic Devices
2006Mobile Phones
2013Network Solutions
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Combining
Continual Improvement
and Innovation…
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Several “metaphors”
can delineate the
combination…
The Three Horizons
Janusian Thinking
Disruptive Technologies
Growth Path & Risk
Knowledge Funnel
The Game Changer
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The Metaphorof Change
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The Metaphorof Change
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The Spectrum of Change
Incremental improvement in products that can be
delivered by existing business resources and
processes
Breakthrough product improvements that
boosts market share but is still delivered by existing
resources
Disruptive business model that serves new customers and requires a new profit
model, resources and processes to deliver
Description
Sustaining Breakthrough Disruptive
Horizon 1
Kaizen
Horizon 2
Kaikaku
Horizon 3
Kakushin
Exploitation Exploration
Goals Playing the Old GameBetter
Old Game / New Rules New Game / New Rules
Continual Improvement
Innovation
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1 The Reliability BiasWhen the pursuit of
continual improvement
risks innovation
2 Building AmbidexterityHow to use both
exploration and
exploitation techniques
3 De-risking InnovationMoving from “trial and
error” to a “pattern
recognition” realm
Three Relevant Perspectives to take into consideration…
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The Reliability
Bias
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100% Reliability 100% Validity
The Predilection Gap
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ExhibitsThree Classic Stories of Reliability Bias
A Japan Loss of the DRAM Industry
B NTT slow adoption of the Internet
C The Death of Vacuum Tube Companies
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DRAM Memory25 Years’ Durability
Japan Loss of the DRAM IndustryJapanese producers were making incremental improvements but not adjusting to the dramatic changes in market conditions created when DRAMs shifted from Mainframes to PC.
A
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NTT slow adoption of the InternetNTT decision makers believed that the only way to get high quality connection was based on a dedicated connection between sender and receiver – something that the Internet (TCP/IP) did not offer.
B
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The Death of Vacuum Tube CompaniesThey all took a license from Bell Labs and invested over $3 Billion dollars trying to make the Transistor good enough that could be used in products (televisions and radios) that existed.
SONY first “Pocketable“ Radio ($2.00 in 1957)
C
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1. Take inattention to Reliability as a
management challenge.
2. Empathize with the “Reliability-unfriendly
elements”.
3. Speak the language of Validity.
4. Share data and reasoning, not conclusions.
5. Bite off as big a piece as possible to give
innovation a chance.
5 Productive Steps
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“The optimal approach to Reliability
and Validity is not to choose but to seek a balance of both.”
– Roger Martin
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Building
Ambidexterity
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Five Conditions To Promote
Ambidexterity
A A Compelling Strategic Intent
B A Common Identity
C A Senior Team that Owns the Strategy
D Separate but Aligned Architectures
E A Clear Mechanism for Conflict Resolution
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A
Emerging Business Organization (EBO)
A Compelling Strategic IntentIn 2000, IBM began a programmatic effort, termed the Emerging Business Organization (EBO), to identify and develop cross-IBM business opportunities that could provide $1.0 Billion in revenue within a 5-year time frame.
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A
A Compelling Strategic IntentIn 2000, IBM began a programmatic effort, termed the Emerging Business Organization (EBO), to identify and develop cross-IBM business opportunities that could provide $1.0 Billion in revenue within a 5-year time frame.
• Need to intellectually justify the importance of both exploration and exploitation.
• Need a rationale for whyprofitable exploit units, especially those under pressure, should give up resources to fund small, uncertain efforts.
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B
A Common IdentityAt USA Today there is an explicit strategy to “be a network, not a newspaper”. The over-arching aspiration is to be “the local news for the global village”. Common values around fairness, accuracy, and trust, help knit together a highly differentiated organization.
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A Common IdentityAt USA Today there is an explicit strategy to “be a network, not a newspaper”. The over-arching aspiration is to be “the local news for the global village”. Common values around fairness, accuracy, and trust, help knit together a highly differentiated organization.
B
• Need over-arching vision and values that promote a common identity but separate cultures.
• Without a common identity it’s difficult to promote trust, cooperation and long-term perspective.
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C
A Senior Team that Owns the StrategyIn the Cisco Telepresence case, members of the governance team (Boards and Councils) had a significant portion of their bonus (70%) contingent on the success of both units.
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C
A Senior Team that Owns the StrategyIn the Cisco Telepresence case, members of the governance team (Boards and Councils) had a significant portion of their bonus (70%) contingent on the success of both units.
Without senior team consensus about the importance of ambidexterity, those who are uncommitted will:
�Resist the effort
�Diminish cooperation
� Increase competition for resources
�Slow down execution
Create a Common-Fate Reward System
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D
Separate but Aligned ArchitecturesIn 2006, the CEO of SAP declared that the future revenue growth for the company was in selling software on demand. This Software-as-a-Service (SaaS) product was developed but no separate unit was established. Although this market has grown substantially, SAP has failed to successfully market their offering. In 2010, the CEO Leo Apotheker was fired for failing to implement SaaS.
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D
Separate but Aligned ArchitecturesIn 2006, the CEO of SAP declared that the future revenue growth for the company was in selling software on demand. This Software-as-a-Service (SaaS) product was developed but no separate unit was established. Although this market has grown substantially, SAP has failed to successfully market their offering. In 2010, the CEO Leo Apotheker was fired for failing to implement SaaS.
Separate exploratory and exploitative units with targeted integration at both senior and tactical levels.
Key objectives are:
• To properly leverage organizational assets.
• To efficiently use resources.
• To ensure coordination across units.
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E
A Clear Mechanism for Conflict ResolutionAt Zensar, even though there were substantial conflicts between the existing business units and the new integrative software platform, the CEO saw to it that his team actually dealt with these conflicts and made the appropriate resource allocation shifts between the existing units.
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E
A Clear Mechanism for Conflict ResolutionAt Zensar, even though there were substantial conflicts between the existing business units and the new integrative software platform, the CEO saw to it that his team actually dealt with these conflicts and made the appropriate resource allocation shifts between the existing units.
• Have a clear, identifiable leader and forum to resolve conflicts and make definitive resource allocation decisions.
• Linked to the ability of senior leadership to tolerate and resolve tensions arising from separate alignments.
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“Organizational ambidexterity is a
firm's ability to simultaneously exploit and explore with equal dexterity.”
– Michael Tushman
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De-risking
Innovation
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How much do we know about Innovation…? INNOVATION
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How a does Body of Knowledge Emerge…?
Organic Chemistry80 years ago
Wallace Carothers(April 27, 1896 – April 29, 1937)An American chemist, inventor and the leader of organic chemistry at DuPont, credited with the invention of nylon and neoprene.
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Nylon
Teflon
Neoprene
Kevlar
Lycra
How a does Body of Knowledge Emerge…?
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Today, if you need a new molecule, all you need to have is…• A B.S. in Chemistry from a state school• A great piece of software
Organic Chemistrytoday
How a does Body of Knowledge Emerge…?
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Trial-and-Error
Pattern Recognition
Rules-Based ModelingHow a does Body of Knowledge Emerge…?
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Pattern Recognition Innovation Landscape
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Roger Miller
Innovation Games and Migration Paths
Pattern Recognition
Strategic Consulting &
Systems Engineering
Pattern-driven discovery
Systems Integration
Platform Orchestration
Cost-based search for efficiency
Customized mass
production
Open Modular Systems
Tightly Integrated Products
Standalone Products
Market Creation
Market Evolution
Market
Offering
A B C D E F
HG
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Rules-BasedModeling Disruptive Innovation
Theory
Clayton Christensen
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“A few years from now, Innovation will be just another management discipline
– like budgeting or auditing – that is well understood, thoroughly analyzed, shared and taught.”
– Larry Keeley
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Closing Remarks
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1 The Reliability BiasWhen the pursuit of
continual improvement
risks innovation
2 Building AmbidexterityHow to use both
exploration and
exploitation techniques
3 De-risking InnovationMoving from “trial and
error” to a “pattern
recognition” realm
Three Relevant Perspectives to take into consideration…
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Q&A
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SEE MORE INSIDE THIS BOOK
Book “Innovation Hardwired”
Available at
Author
Alexis P. Goncalves
Join my Networkhttp://www.linkedin.com/in/goncalves
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ALEXIS P GONCALVES
COMBINING
CONTINUAL IMPROVEMENT AND
INNOVATION
IT DIRECTOR & INNOVATION CATALYST
COTY INC.
NEW YORK, NY, USA NOVEMBER 2013