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Developing and Managing aSuccessful
Innovation Strategy
Effective Innovation Strategies AnswerThree Key Questions:
How will weCreate value?
How will we
Deliver value?
How will we
Capture value?
Reasons to have aninnovation strategy:
1. To make choices
Overcommitment destroysproductivity
Average
Value-Added
Time on
Engineering
Tasks
Number of Projects perEngineer
Reasons to have aninnovation strategy:
2. To be able to change it
The S-curve Maps Major Transitions
Performance
Maturity
Takeoff
Ferment
Discontinuity
Time
Transitions often challenge existingorganizations severely
Transitions are hard!
• Answers to the key strategic questions:– How do we create value?– How do we capture value?– How do we deliver value?
• CHANGE!
A map of the course….
Technology
Markets
Competition
Organization
Maturity
Takeoff
Ferment
Value Creation
The nature of technical work changes
Performance We need to beresponsive & flexiblebut controlled
Can we make100,000?And service them?
Will it work?Exploration, fun,creativity key
Will it work?Exploration, fun,creativity key
Time
The marketing challenge evolves
Performance Stay close to yourcustomer – really close
Do we haveany referencecustomers?
Whoneeds this?
Whoneeds this?
Time
Some new technologies sell to niche marketswith less demanding requirements
Value Capture
Uniqueness & Complementary Assetsover the Life Cycle:
Takeoff
Maturity
Ferment
Uniqueness Complementary
Assets
The ways in which a firm captures value alsoevolve dramatically
Performance We may not be leading edgebut you’d rather buyfrom us because…
We can sell it,make it,service it, ship itMost of the time
Speed, IPDifferentiation,Frontier performance key
Speed, IPDifferentiation,Frontier performance key
Time
Value Delivery
The S-curve Maps Major Transitions
PerformanceMaturity
Takeoff
Ferment
Growth?
Time
Change challenges every aspect of anorganization
Leadership& Strategy
Structure &Process
Incentives
Culture &Mental Models
But strategically, growth must build onexisting assets…
Takeoff
Maturity
Ferment
Uniqueness Complementary
Assets
The Organizational Challenge:
Startups
B as U
Successful growth unites
entrepreneurial insight with
effective coordination
Control & Coordination
Entrepreneurial
Drive,
Freedom from
the “old ways”
What can be done?
Problems in Recognition(problems in strategy?)
• Growth opportunities do not arrive with labels on them• Forecasting the future of technology is hard• Forecasting customer needs and market demands is eve
n harder• Growth opportunities often look less profitable than the c
urrent business• Deep rooted mental models may make even “easy” reco
gnition difficult
Some discontinuities will pose harderproblems than others:
New needs
Lower margins
Old needs
Higher margins
But then they improved sufficiently totake the whole market
• Fear of Cannibalization• Time horizons & Incentives• Overload• Competency Traps
What can be done?
• Lead• Structure• Incent• Transform the culture & mental models
Where we go next:• Dealing with discontinuities:
– Synthes– Allied Chemical– Donnelley– Xerox Technology Ventures– Corporate ventures @ Procter & Gamble– Ciba Geigy/Alza
• The mechanics of doing strategy– Medtronics– Kirkham Instruments
• Pulling it all together– Kodak– Nokia
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