Wrapping it upWrapping it upFinal ThoughtsFinal Thoughts

July 14, 2008 Dr. Iris Berdrow Bentley College/Harvard University

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ENVIRONMENT: • Competitive/Economic• Social, Political, Culture

• Technological

ORGANIZATION

Task & Work Systems People

Strategy

• Structure• Management systems

• Management style• Organizational culture

• Measurement/evaluation• Rewards

• Training / development

Host-country culture and paradigms

Home-country culture and paradigms

Organization Architecture ModelOrganization Architecture Model

InnovationInnovation

“Innovation is widely viewed as one of the surest ways to build competitive advantage”

Leading the Global Enterprise: Decisions at the Top, Wall Street Journal, June 2, 2008, B5

“The design, invention, development and/or implantation of new or altered products, services, processes, systems, organizational structures, or business models for the purpose of creating new value for customers and financial returns for the firm.”

(January 2008 report of The Advisory Committee on Measuring Innovation in the 21st Century Economy, Innovation Measurement: Tracking the State of Innovation in the American Economy).

1. Action – design, invention, development…2. Outcome – product, process, system …3. Purpose – customer value and financial return

LANGUAGE OF INNOVATIONLANGUAGE OF INNOVATION

*Tushman & Anderson, 1986** Teece 1996

INNOVATION LEARNING INNOVATING

Innovation for what purpose?

• Meet unsatisfied customer need by providing:– Same product/service, new features– New product/service, same features– New product/service, new features– Same product/service, same features, new

market/use– Same product/service/market, new

price/cost/internal components, etc.

Innovation – the outcomesInnovation – the outcomes

Products Services Operations/Processes Business Models Technologies

Results of InnovationResults of Innovation

Revenue Growth Stronger bottom line (Profits) Improved customer relationships More motivated employees Enhanced performance of partnerships Increased competitive advantage

Environment of InnovationEnvironment of InnovationGlobalization as complexity

Multiplicity – many things happening at once Interdependence – all things being connected Ambiguity – less knowledge about all aspects Flux – rapid and consistent change Implications for managing: rather than tactical solutions

to problems, need people who can engage in collaboration, discovery, architecting and systems thinking.

GLOBAL INNOVATIONGLOBAL INNOVATION

A process for innovating that transcends local clusters and national boundaries.

Sourcing and integrating knowledge from dispersed geographic locations, companies can generate more innovations of higher value and lower cost.

Integrating multiple evolving technologies Tapping globally dispersed technology sources Serving globally distributed customers

Innovation StrategyInnovation Strategy

A strategy is the way in which an organization chooses to meet its goals and objectives.

A strategy defines appropriate decisions and actions.

Innovation strategy determines to what degree and in what way a firm attempts to use innovation to execute its business strategy and improve its performance.

Types of Innovation StrategyTypes of Innovation Strategy

Make, Buy or Partner Radical or Incremental Exploration versus Exploration Play-to-win versus Play-not-to-lose High-end or Low-end of the market

Innovation position

Knowledge position

Product/MarketPosition

• What innovation position can we execute given what we know? • What knowledge is needed to support our innovation position?

• Given what we know what product/market position can we execute?• What do we need to know to execute our product/market position?

• What innovation position should we pursue given our product/market position?• Given our innovation position, what product/market position make the most sense?

STRATEGIC ALIGNMENTSTRATEGIC ALIGNMENT

Levers for Types of InnovationLevers for Types of InnovationDavila et al, Figure 2.3, page 41Davila et al, Figure 2.3, page 41

Levers Business Model Levers Technology LeversValue

PropositionValue Chain

Target Customer

Product and Service

Process Technology

Enabling Technology

Incremental Small change in one or more of the six levers

Semi-RadicalBusiness Model Driven

Significant change in one or more of the three levers

Small change in one or more of the three levers

Semi-RadicalTechnology Driven

Small change in one or more of the three levers

Significant change in one or more of the three levers

Radical Significant change in one or more of the three levers

Significant change in one or more of the three levers

Types of Innovation

Structuring for InnovationStructuring for Innovation

How are the organization’s activities organized such that innovative products, services, processes are generated?

Example of P&G Centralized or decentralized R&D Internal & external partnerships Collaborative or independent innovators

What is the relationship between innovation, What is the relationship between innovation, communication and organization structure?communication and organization structure?

Managers have both organizational structure and physical space available to them when planning the innovation process.

Most frequently, the best source of new technical ideas for product development engineers is a colleague in the same organization.

Challenge of a globally Challenge of a globally dispersed workforcedispersed workforce Communicating by e-mail or

videoconferencing when programmers have never met one another.

Strangers don’t readily share knowledge. “A big problem is trust, it works better if you

can go out to dinner with somebody and have a beet. But we can’t put people on places to visit each other all the time.” Dirk Wittkopp, director of IBM’s Boeblingen lab.

Innovation ProcessesInnovation Processes The way in which innovation happens in an

organization. The steps by which innovating activities are

organized and the systems that support those activities.

Bank of America achieved service innovation through experimentation.

Nokia achieved product innovation through centralized and dispersed research activities.

Innovation SystemsInnovation Systems

What inhibits innovation?1. Not-invented-here,

Nothing-is-invented-here mindset

2. Shortage of resources3. Organizational

bureaucracy4. Lack of motivation

What facilitates innovation?1. Leadership2. People 3. Management Practices4. Knowledge 5. Resources

Five Roles of Innovation Five Roles of Innovation SystemsSystems Efficiency Communication Coordination Learning Alignment

Range of Innovation SystemsRange of Innovation Systemsmechanisms that facilitate innovationmechanisms that facilitate innovation

Rewards/recognition Project planning Resource allocation Metrics Monitoring Process Formalization Market Research Strategic boundaries

Strategic planning Portfolio planning/

management Culture Learning Tools Knowledge

management Partnerships External monitoring

Formal innovationFormal innovationIdentify a problem > find a Identify a problem > find a

solutionsolution

How to move a new-product project from idea to launch.http://www.prod-dev.com/stage-gate.shtml

Stage Gate System

Informal Innovation ProcessesInformal Innovation ProcessesExperiment with solutions > find a problemExperiment with solutions > find a problem

Think TanksA think tank's purpose is to raise awareness about certain topics and "gather" communal thoughts toward that topic. core of such think tanks is based on the simple notion that

maximum thought energy (awareness) can make real change.http://en.wikipedia.org/wiki/Think_tanks

Research Laboratories (Labs)http://www.zurich.ibm.com/

Collaborative InnovationCollaborative Innovation

Requires Trust, Communication and Connections.Leads to more shots on goal..

Culture of InnovationCulture of Innovation

Organization culture is the shared attitudes and perceptions based on a set of fundamental norms and values by which the members understand the organization.

Organization culture is shaped by the leader’s agenda, the formal and informal structures, and the reward systems.

It starts at the top.

Motivating InnovationMotivating InnovationHow does senior leadership influence each of these elements of motivation?

Need to consider:Need to consider: Innovation strategy Desired behavior Appropriate reward systems Barriers to performance

Low tolerance for excusable failure Disengaged leadership Over evaluation and under interpretation Competitive versus collaborative work environment Lack of resources: time, expertise, skill, capital, equipment

StrategyWhat type of innovation are we good at? Do we need?

ENVIRONMENT: Global Complexity

Increased CompetitionWider reaching opportunities & resources

ORGANIZATION:

Task & Work Systems People

Is the senior leadership supportive of innovation?

How do we foster an innovation culture?

How do we measure the return on our innovation

investment?

The Innovation Architecture ModelThe Innovation Architecture Model

How do we organize our innovating activities?

What systems will support those activities?

What skills do we need to achieve the desired

innovation outcomes?How do we motivate and

reward accordingly?

MORE THOUGHTS..MORE THOUGHTS..Does location determine masters and recipients of innovation?

STRATEGIC INNOVATION AT STRATEGIC INNOVATION AT THE BASE OF THE PYRAMIDTHE BASE OF THE PYRAMID

Innovating for Developing (Frontier) Economies

(Anderson & Markides, 2007)

Strategic innovation at the base of the pyramid:Strategic innovation at the base of the pyramid:

For Developed Economies, find

new customers (“new whos”),

new products or services (“new whats”),

new ways or promoting, producing or distributing them (“new hows”).”

For Developing Economies, innovate based on: Affordability (enable

consumption by even the poorest)

Acceptability (address unique needs)

Availability (distribution & delivery to isolated locations)

Awareness (reach the conventionally unreachable)

(Anderson & Markides, 2007)

Is everyone an equal player?Is everyone an equal player?

Friedman claims the World is Flat Technology has leveled the playing field across

nations Richard Florida, author of The Flight of the

Creative Class claims the World is Spiky. The most populated areas of the world are also

the least economically and innovatively active.

World PopulationWorld Population

Light EmissionsLight Emissions

World Patent ActivityWorld Patent Activity

Scientific CitationsScientific Citations

Silicon

Valley Route128

IS INNOVATION AVAILABLE TO IS INNOVATION AVAILABLE TO EVERYONE, EVERYWHERE?EVERYONE, EVERYWHERE?