Six things the Best Companies do to Build their Growth Engines

(How they Sustain Innovation and Grow)

The Growth Engine is a trading name of © System Growth Consulting Ltd 2016

The Growth EngineRob Munro CEng FIChemE MBA

Principal Consultantwww.systemgrowthconsulting.com

rob.munro@systemgrowthconsulting.com@RobMunro4 Manchester, UK

For businesses with the ambition for innovative growth – we create growth options and build an innovation system that delivers you

year-on-year double digit growth.

Imagine if you could (at least) double the success rate on new product and service launch…

You already innovate – Are you happy with the results? Mastery over innovation – Generates sustainable growth

A structured approach creates growth habits – Build a Growth Engine

What you will take away from this high-value briefing paper…

Why Build a Growth Engine?

8 Innovation Problems

10 Innovation Solutions

Where Innovation Pays

The Innovation Mission

The Growth Engine Framework

Gather Your Thoughts

3 Wins from Innovation

Offer and Easy Next Steps Cases

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The Why? – A personal message

The challenge has become how to do so… effectively and repeatedly.

At its heart, innovation is a critical business process that creates enduring commercial success - after all innovation activities create at least 50% of all economic growth1.

Why do I help businesses improve?

After over fifteen years driving corporate innovation, I became tired of seeing good ideas (and people) go to waste…

Having seen the good, the bad and the downright ugly in business, I just had to know –

“How can organizations improve their innovation performance?”

You may also be tired of reading in surveys about how business leaders lay awake thinking about growth, capability & competitiveness.

Fortunately, we can read the clues about how to create and organize innovation activities and build better systems to deliver those ideas.

I developed the Growth Engine FrameworkTM as a powerful way companies can unlock high innovation performance - reproducibly…

Read on and learn about how you can organize your business for growth and innovation… Enjoy.

Rob Munro

Hello. I’m Founder and Principal Consultant at The Growth Engine

Thanks for reading this high value briefing on how the best companies are using innovation to drive their business growth.

1. Department of Business, Innovation and skills.2. Boston Consulting Group.

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The State of the UK Innovation Nation

“The OECD estimates that $1trillion is spent yearly on the creation of new knowledge.”

Resulting in too many UK business languishing at Level 2 on the 5 stage Innovation Maturity scale.

80% of global CEOs ranked innovation as a top-three concern (BCG 2015).

Global CTOs expect share of revenues from innovation to double by 2020 to 40% (ADL).

The UK Productivity Gap – Persistent and pernicious!

UK lags international peers in R&D investment – 2.5% of GDP compared to 3.5% (average).

UK firms are not investing enough – and only 31% of firms are active on innovation (BIS 2012).

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Click Image for Video Message

1. Do you seek transformation, growth or greater ROI? How radical, disruptive and exciting are your ideas?

2. The Need for Speed – are you fast and effective in getting good ideas to market?

3. Do your strategies pull in different directions, give mixed signals, or exist in open conflict?

4. Does your Innovation Culture work for or against the organisation’s mission?

5. Do your Innovation projects go more wrong than right? Are you managing risk? Do new offerings deliver on the promise?

6. Are your staff – from the boardroom to the innovators – skilled with Innovation Tools and Techniques?

7. In the era of collaboration, are your open innovation projects delivering?

8. Do you practice creative leadership as something you do round here ? A key trait of the 21st Century leader.

The Growth GapThe difference between your company’s ambition and capability.

8 Problems and other Challenges… 4

The Impact of Lower Innovation Skill

Poor or No Growth

Competitors Get Ahead – You Fall Behind

Failure to Capitalise on New Market Offerings

Lost Opportunity from New Technologies

Low Productivity leads to High Costs

High Staff Turnover – the Grass really is Greener…

The Symptoms… …The Cause

Weak Idea Generation, Selection and Delivery

Low Business Innovation Maturity Level

Weak Systems forManaging Innovation

Unskilled in Selecting and Acquiring Technologies

Culture Unwilling to Embrace new Approaches

Poor Incentives and Lack of Creative Leadership

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Innovate Your Innovation…

Type of Innovation What is it? ExampleProduct Performance

The incremental or radical improvement of products

Johnson Matthey reducing platinum in a car catalytic convert by 100 times (1970- date)

Product System Building “externalities” to the product: add-ons and networks

Apple created the iPod + iTunes “ecosystem” (2003)

Process The way in which something is manufactured

Pilkington’s Float Glass manufacturing technology (1950)

Service How a service is delivered or experienced.

First Direct’s radical change to telephone-only banking (1990)

Business (profit) model

The way in which a company creates and captures value

Rolls Royce Aero engines shift from only making to service “Power-by-the-Hour”

Network Creating and harnessing massive consumer networks

Google – “organization the world’s information” And, Don’t be Evil.

Structure How you align your talent and your assets

MacDonalds develop a unique and long lasting delivery system

Channel How you connect offerings to your customers

Dell Direct PCs cut out the middle man – disintermediation (1990s)

Brand How you express offerings to your customers

Virgin Group brings difference to existing industries

Customer Engagement

How you create an overall experience for your customers

Harley Davison’s created a club for riders - the “Hogs”

Reflective Question: If you do Innovate, are you thinking beyond the usual types of innovation typical for you or your sector?

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Where Could Innovation Impact Your Income Statement?

Added Value

Price

Cost

NowE.g. Perceived BenefitSuper Price

Sales

Raw MaterialsOperations (labour)G&ADepreciation

WithInnovation

Cost E.g. New Processes

Added Value(Future)

Price E.g. Improved Features

Innovation at the Top and the Bottom Lines – Drives out waste and cost and by adding in benefits and value for the end users.

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Time Out

» What is driving your Innovation Agenda?

» Which of the Top 8 innovation problems apply to you?

» What Types of Innovation Matter to You?

» And, could you apply other types of innovation?

» What could do superbly well and consistently to make a dramatic difference to your innovation ROI?

As a small group, share and discuss the following questions to gauge where your business is at on your innovation agenda…

If you wish to discuss the answers and uncover the implications, please email me to book a one hour phone consultation at,

rob.munro@systemgrowthconsulting.com

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The Growth Engine Framework

Manchester Business School - the world’s largest business school research unit. From examining the innovation performance of leading companies these traits led to higher than average returns on innovation investment. “Open Innovation: Succeeding in an Established Technology Company.”

6 core areas were found to lead to higher innovation performance - Built on Systems Thinking.

1. Innovation Strategy that aligns activities. 2. Leadership that creates a climate of

performance. 3. Organization that makes innovation flow.4. Competent use of Tools & Techniques.5. Fruitful collaborations with Partners. 6. Supportive Innovation Culture.

More

Sales

Strategy

Organize

Lead

Tools

Partner

Culture

The Concept: Innovation Performance comes from the individual quality and interaction of Six Key Elements of your innovation system More-than-the-sum-of-the-parts.

The Growth Engine framework is business relevant and academically underpinned .

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Strategic Alignment

THE IDEA - Companies whose purpose and activities are aligned outperform those who are not.

The innovation strategy of a business is a crucial integrating plan that harnesses commercial, operation and development activities.

» Companies need to operate for both efficiency today and for growth tomorrow - becoming both creative and disciplined.

» Growth strategy is not an optional extra.

» Know Where to Play, How to Play, Why to play? And Play to Win – the company’s Innovation Mission.

» Crucially, it must guide people about what they do (and stop doing) every day.

StrategyJam Today? Yes and, while seeding for a fruitful future…

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Organizing

THE IDEA: Organization structure and routines makes innovation flow.

» Re-build the innovation ecosystem.

» Build teams with the skills and behaviours for Innovation.

» Be smart about Collaboration.

» Build systems for creating, retaining and disseminating knowledge.

» Build routines for decision-making, Project GO/KILL, Resource deployment, strategy refresh.

So, how can businesses optimise organization?

The organization helps decisions, resources and knowledge flow effectively; it’s both formal and informal.

Your innovation organization includes,

» The Board, R&D, Marketing, Operations» Suppliers and Customers» RTOs, Universities» Systems, IT, Financial» Formal and Informal

Organize

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Leading

THE IDEA: Leadership provides the conditions, permission and incentives for innovation.

We’re talking about Leadership at all levels: industry, organization, work team, individual and personal.

And it’s the most pressing talent management concern for the next decade.

Above all else, Creative Leadership is the leaders secret weapon.

Jim Collins calls it Level 5 Leadership.

» Create favourable working conditions – not only buildings but places to interact and to think.

» Know your people – profile and provide means to exercise the creativity muscle.

» Change the Language: from “that won’t work!” to “What will it take…?”

» Break the creative jam by using techniques to think differently and bigger.

LeadSo, what can Innovation Leaders do to tip the odds?

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Tools and Processes

THE IDEA: The use of innovation tools and techniques are an essential foundation of good innovation performance.

Have you seen those F1 garages where the floors are super shiny and the walls adorned with all manner of tools on shadow boards?

Organizations who actively use innovation toolkits outperform those who do not.

There are many – but you need to know about them and then use them.

» Methods to create more and better ideas and rigorously back the most promising.

» Build an optimise your innovation project portfolio, dynamically in real time.

» Scanning - be active in seeking to understand the external world.

» Design Thinking – A method for placing the user at the centre of the innovation.

» Effectively manage your resources and projects – ROI comes from delivering the right things, right!

ToolsWhat tools do you need to perform well?

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Fruitful Collaborations

THE IDEA: We live in a world where innovation is increasingly done through collaborations between the best providers. We’d better become savvy.

Henry Chesbrough popularized Open Innovation in his 2003 book (though the idea’s been around for a long time).

And it’s become a mainstream reality in virtually all industrial sectors and in companies of different shapes and sizes.

Companies openly innovate in order to,

» Use facilities, access knowledge, resources.» Increase the speed of innovation.» Reduce risk between partners.» Share costs, risks and rewards.» Enter new markets.

» Make a deliberate choice to become Open.

» Invest in the unique skills to innovate, openly.

» Create an Open Innovation infrastructure in your company.

» Manage the change to shift the company to an open-style.

» Know that it needs some patience. Test-Learn-Improve – it’ll take at least 3 years.

PartnerOI is good for firms wishing to break new ground, or undertake radical innovation.

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Culture That Works

THE IDEA: The key job that leaders can do is to provide a framework of incentives for people throughout the organization.

Innovation is a people thing more akin to a complex team sport.

And, when people get together, they develop patterns for “how we do things round here.”

Innovation culture are the patterns, traits and behaviours involved in how a company innovates.

As an innovation leader, work to build the positive and erode the negative aspects of your company culture.

» Get the right people on board.

» Being open to & acting on new ideas is a strong predictor of innovation performance.

» Introduce appropriate risk-taking.

» Create both a supportive and challenging working environment.

» Systems Thinking encourages personal mastery, team-based learning, the creation of shared vision and models of how your business world works.

CultureHow do you create an innovation-friendly culture?

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Time Out

» What is holding you back in achieving growth?

» Are your strategies aligned – do people know what they are doing,

every day?

» Are you effectively using the innovation tool kit?

» Is your innovation culture working for you or against you?

» Are you winning for your business when you collaborate?

» Do you have the right leadership behaviours and are you organized for

effective delivery?

Apply the Growth Engine Framework to your business. Rate each point in relation to where you are and where you want to be.

If you wish to discuss the answers and uncover the implications, please email me to book a one hour phone consultation at,

rob.munro@systemgrowthconsulting.com

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The 3 Wins from a structured approach to innovation

Win Financially…

• Top innovators outperform by 3x Revenue Growth.

• Year on Year 6% total shareholder premium.

• More types of innovation generates 2x returns.

Win for Stakeholders…

• Better financial returns, more stable jobs.

• New radical sources of innovation.

• Better able to respond to “disruption.”

Win for your people…

• Staff feel empowered to run with new ideas.

• Attract higher quality people.

• Staff retention improves.

So where does a structured approach to organizing innovation and growth take your business?

1 2 3First, create the innovation habit and outperform.

Second, new sources of growth in the long term.

Third, staff will draw energy from working at a great place.

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Offers and Easy Next Steps…

Consulting, Training, Coaching (Click on…)» Growth Engine» Growth Strategy» Growth by Technology» Growth Health Checker+

» Growth Workshop

© System Growth Consulting Ltd 2014

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