Strategic Innovation 3. Strategic Innovation in the ... · Costas Markides Strategic Innovation framework was the origin of several others which have been developed during the last

When in Newport

Strategic Innovation

3. Strategic Innovation in the Industry 4.0 context

Eleonora Escalante MBA-MEng, Strategic Corporate Advisory Services

© 2017-2018 Eleonora Escalante-all rights reserved 116 May 2018

OUTLINE. Strategic Innovation

When In Newport Stopover

02Innovation vs

Invention

03Strategic Innovation

Context

Industry 4.0


© 2017-2018 Eleonora Escalante-all rights reserved

04Strategic

Innovation

Paradigm

05Summary and

Conclusions

15 May 2018

01Innovation 101

We are here

2

https://support.office.com/es-ES/article/b89770f1-deb1-4a19-94ef-342aa15a4689

When In Newport Stopover. Strategic Innovation



Since the Industry 4.0 is led by European countries who are trying to find holistic solutions to

deploy it in better terms than the US or other countries, we will start today´s topic as follows:

3

Strategic Innovation in the context of Industry 4.0

The European Commission has established 10 strategic priorities for Europe. The second strategic

priority is the Digital Single Market. This priority has put together a OISPG team. Why?

Jobs, Growth and

Investment

Digital Single

Market

Energy Union and

Climate Change

Internal Market Deeper and Fairer

economical

monetary union

Balanced and

progressive trade policy

to harness globalization

Migration Stronger Global

Actor (protagonist)

Democratic Change

OISPG is the

EU’s Open

Innovation

Strategy and

Policy Group





The OISPG is the European Commission “Open Innovation Strategy and Policy Group” (OISPG).

It unites industrial groups, academia, governments, and private individuals (civil participants)

to support policies for open innovation.

4


Let´s ask some questions to ourselves:

• Why do the European Commission has established a group to

support policies for open innovation?

• The OISPG belongs to the Digital Single Market Priority in the

European Commission Big Strategy.

• What is the relation of the OISPG work and the context of

Industry 4.0?

• Specifically, why would we care about the OISPG research and

policies in our area of domain, strategic innovation?

• What is the link between the traditional concept of Strategic

Innovation and the context of Industry 4.0?





Let´s see where we are right now in relation to innovation evolution and the new context of Industry 4.0

5


The way we do

innovation has evolved

from a closed

perspective to what is

defined today as Open

Innovation Version 2.0

perspective

Diagram Source: Curley&Salmelin.

Open Innovation 2.0, a new

paradigm. Open Innovation Strategy

and Policy Group (OISPG), 2018






According to the OISPG, we are now going forward to reach the era of Open Innovation 2.0

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Closed Innovation Open Innovation Open Innovation 2.0

Dependency Independency Interdependency

Subcontracting-outsourcing Cross-Licensing Cross-fertilization

Solo Bilateral Ecosystem

Linear Linear-leaking Nonlinear mash-up

Planning Validation, pilots Experimentation

Control Management Orchestration

Win-lose game Win-win game Win more-win more

Box Thinking Out of the box No boxes

Single Entity Single discipline Interdisciplinary

Value Chain Value Network Value Constellation

For the OISPG, the

Innovation modes

have evolved and the

ideal destination is

Open Innovation 2.0

But reality is different

depending on the

degree of evolution in

our companies and

the readiness to join

Industry 4.0






For example, in Latin America, a company located in Guatemala, may have a different innovation

landscape than than one in Switzerland or other European countries.

7



Subcontracting-

outsourcingCross-Licensing Cross-fertilization









Switzerland Guatemala



Subcontracting-

outsourcingCross-Licensing Cross-fertilization









There is a gap in the innovation

landscape in several regions of the

world





Why do the European Commission has established a group to support policies for open innovation?

For the European Brains, Pre-Existing Standards and Regulations have an impact on the innovation and diffusion

of new high-tech products and services.

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• Many Europeans are firm believers that pre-existing standards and regulations on

the innovation process are beneficial for the society.

• The question whether standards and regulations hamper or enable innovation

has created controversy among scientists, while the policy and managerial

importance of resolving it goes undisputed.

• The OISPG is helping to guide in the process.

• And this is key, when we wish to do Strategic Innovation.

What is strategic innovation?

What is strategic innovation in the context of Industry 4.0?

https://www.igi-global.com/chapter/impact-of-industry-conditions-

on-innovation/197470





Costas Markides PHD, coined the Strategic Innovation outlook around 20 years ago.

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London Business School Professor of Strategy and

Entrepreneurship; Robert P Bauman Chair in

Strategic Leadership.

Strategic Innovation is a term that I heard for the first time when at

London Business School.

Costas Markides, Professor of Strategy at LBS, explained it as follows:

“Strategic Innovation occurs when a company identifies gaps in

the industry positioning map, decides to fill them, and the gaps

grow to become the new mass market.

By gaps, Markides means:

1. New emerging customer segments or existing customer segments

that other competitors have neglected, (WHO)

2. New emerging customer needs or existing customer needs not

served well by other competitors, (WHAT) and

3. New ways of producing, delivering, or distributing existing or new

products or services to existing or new customer segments

(HOW)”.

https://sloanreview.mit.edu/article/strategic-innovation/





Once we understand What is Strategic Innovation, it is easy to grasp that Industry 4.0 is and

will continue to show us gaps to expand our businesses. Industry 4.0 will push our current

boundaries and will force us to develop a new business game plan.

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Five Ways to Kick-Start Strategic

Innovation, By Costas Markides PhD.

How can a company proactively and

systematically think about and develop a

new game plan? Five generic approaches

of the successful strategic innovators can

provide clues:

1. Redefine the business.

2. Redefine the who. Who is our customer?

A company should think of new

customers or new customer segments

and develop a game plan that serves

them better.

3. Redefine the what. What products or

services are we offering these customers?

A company should think of new customer

needs or wants and develop a game plan

that better satisfies these needs.

4. Redefine the how. Companies should

leverage existing core competencies to

build new products or a better way of

doing business and then find the right

customers.

5. Start the thinking process at different

points. For example, instead of thinking,

“This is our customer, this is what he or

she wants, and this is how we can offer

it,” start by asking: “What are our unique

capabilities? What specific needs can we

satisfy? Who will be the right customer

to approach?

https://sloanreview.mit.edu/article/strategic-innovation/





Costas Markides Strategic Innovation framework was the origin of several others which have

been developed during the last 20 years. Another example: the Doblin Ten Types of Innovations

Model.

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“The Ten Types of

Innovation framework

provides a more complex

way to identify new

opportunities beyond

products and develop

viable innovations.

Source:

https://www.doblin.com/ten-types/

What?

How?What?What?

How?

How?

How?Who?





Each consulting company has its own strategic innovation framework. One interesting fact is that

Markides Strategic Positioning Map has been improved or it has evolved over the years. Bain Core

Adjacencies Expansion model is an evolution of Markides original model.

12


Source: Bain & Company.

“GROWING A CORE BUSINESS”

Scale Up Summit. San Antonio

Texas, May Summit 2017.

What?

Who?What?

How?

How?Where?


• Industry 4.0 is a door of opportunities: new wants and

new needs will arise. New products, new services, new

whats, whos and hows…

• Strategic Innovation is the way to go when trying to find

new business models in the context of Industry 4.0. We

can use any framework which has evolved from Markides

first approach. Including the Business Model Canvas too.

• Nevertheless, it is dramatically urgent to establish some

kind of protection to our societies. The European

Commission has created the OISPG as an initiative to

their second strategic priority called Digital Single

Market.

• Pre-Existing Standards and Regulations have an impact

on the innovation and diffusion of new high-tech

products and services.

Is this the best mechanism to protect our societies? Can

we add ethical self-control? What do you think?

• Industry 4.0 (as everything in life) has outstanding

benefits, but dark risks too. My personal perception or

intuitive feeling, is that we need to establish some ways

to protect our future generations from the dark side of

the wrong mental models which will come up through

Industry 4.0.

• If Industry 4.0 is a force for good (as Sumantra Ghoshal

said it) we will be successful. If we put integrity and

ethical values at the core of our value propositions, we

will choose right. Otherwise our corporate strategy is

going to drain our humanity.

• Then, in addition, If we try to force creativity and

innovation through Industry 4.0, nothing good will come

up from it. Creativity needs a nurturing environment.

Education and ethics are the self control filters which

will keep us safe.



© 2017-2018 Eleonora Escalante-all rights reserved 16 May 2018 13

Let me finish today with the following reflections:


Thank you!


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Strategic Innovation 3. Strategic Innovation in the ... · Costas Markides Strategic Innovation framework was the origin of several others which have been developed during the last