THE INNOVATION SYSTEMS LINK Professor Roy Marcus

THE INNOVATION

SYSTEMSLINK

Professor Roy Marcus

Getting to Basics

• “Technology is ruled by two types of people:

1.Those who manage what they do not understand and

2.Those who understand what they do not manage”

Mike Trout

Getting to Basics

• “The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency.

• The second is that automation applied to an Inefficient operation will magnify the Inefficiency” Bill Gates .

The Harsh Reality

• “We Live In A Society Exquisitely Dependant On Science And Technology, In Which Hardly Anyone Knows Anything About Science And Technology” Carl Sagan

A Quote From Einstein

• Without Changing our pattern of thought, we will not be able to solve the problems we created with our current patterns of thought.

Precursor – Wicked Problems

There is no definite formulation of a wicked problem.Wicked problems have no stopping rules.Solutions to wicked problems are not true-or-false, but better or worse.There is no immediate and no ultimate test of a solution to a wicked problem.

Where Systems Thinking Fails

Organisations where the people at the top always “know the answer” and the people below merely pull triggers when the target pops up are not places which systems thinking will flourish (Bolman 1997)

Example : Car Crash Problem

In the 1970s there were

many head-on car crashes resulting in injuries and deaths on the

George Washington Bridge (NY-NJ)

George Washington Bridge

Problem: Reduce into Parts

Port Authority

Police

and EMS

Columbia-Presbyterian

Medical Center

http://i158.photobucket.com/albums/t84/jspatches/Other%20Countries%20Police%20Patches/N.jpg

http://www.gothamist.com/attachments/garth/2005_11_19_newgroundzero.jpg

http://www.brorson.com/M4Bus/ColumbiaPresTower.jpg

http://www.njfirephotos.com/pa_54063.gif

Port Authority

Focused on the road markings so they regularly repainted the solid yellow lines. They measured their effectiveness by the degree of visibility of the lines by the drivers.

But, there was little overall improvement.

• Solid Yellow Lines

Police

Focused on driving behavior so they attentively issued fines to drivers who crossed the solid yellow lines or drove over the speed limit. They measured their effectiveness by the number of fines levied.

But, there was little overall improvement.

EMS

Focused on responding to emergencies so they kept themselves and their resources up to date. They measured their effectiveness by response time to the scene, quality of care, and response time to the medical center. But, there was little overall improvement.

Columbia-Presbyterian Medical Center

Focused on advanced medical care so they improved emergency facilities and treatment. They measured their effectiveness by quality of care feed-back and survival rate. But, there was little overall improvement.

Until…A Different Model Was Applied

Thinking Models/Metaphors: Social Systems

Think Systemically

Social System Thinking Model

The performance of the whole is NOT the sum of the performances of its parts.

Social System Thinking

In a system problem

the performance of the whole is derived from the

interactions of the parts.

A system problem cannot be solved by focusing on

independent parts.

Parts are Inter-Connected

Social System Thinking Model

The parts do NOT always

perform in ways

that are expected.


In a social system the “parts” include

► people and groups

► who are purposeful, have their own interests, intentions, generate their own goals, AND exhibit choices

Goals are not always shared


Different methods are required to diagnose,

describe, and understand

a systemic problem

Head-on Car Crash Problem: System Diagnosis

When these methods were applied a different question emerged:

On the George Washington Bridge, under what conditions would a

head-on collision be impossible?

Head-on Car Crash Problem: System Diagnosis

And THIS produced a Systemic Solution:

Replace the solid yellow painted lines with a

solid concrete barrier

George Washington Bridge

Gambino, Raymond. Beyond Quality Control. Lab Report, 1990, Vol. 12, No. 5.

Systemic Thinking is Not New

“Systemic thinking has permeated virtually every functional area of business, and is taught, in one form or another, at most of the top-ranked schools.”

Atwater, JB, Kannan, VR, & Stephens, AA. Cultivating Systemic Thinking in the Next Generation of Business Leaders.

Academy of Management Learning & Education, 2008, Vol. 7, No. 1, 9-25.

Stakeholder View of the Organisation

Contextual Environment

Operating Environment

StructureCulture

Competencies Resources

Transactional Environment

Trade Association

Regulators

Union/employees

Competitors

Creditors Suppliers

Customers

Communities

Shareholders

EconomicForces Ecological

Forces

Socio-culturalForces

TechnologicalForces

PoliticalForces

The 3 States Of A System

THE “AS IS”STATE

THE “AS IT WILL BE”

STATE

THE “AS IT

SHOULD BE”

STATE

DESIGN

THE DA

VINCIWAY

EARLY

WARNING

SYSTEM – the

consequence of

the system's

current state of

affairs

Letter to Madiba

• “When I visited South Africa a few years ago, I had a chance to go to Robben Island and stand in your cell, and I reflected on your fundamental belief that we do not have to accept the world AS IT IS; that we can remake the world AS IT SHOULD BE.”

• Barack Obama July 2008

TIPS Holism : Hypercompetition


Profits and value returns


• Speed to market

• Response to changes

• New world flexibility




• Speed to market




Costs of Incentivesand variable pay


• Speed to market





• Creative motivation & people retention


• Speed to market





• Creative motivation & people retention

• Skills in place

• Matching new technology skill needs

• Developing from within

Cost of up-skilling Hypercompetition =

Synthesis + Synovation + JVs and Alliances

CONTRIBUTION TO ORGANISATIONAL

ECOLOGY

MAKING A DIFFERENCE TO

COMMUNITIES

En

vir

on

men

tal E

E, B

-BB

EE

, Jo

b C

reatio

n, P

PP

TIPS Final Focus : Sustainability

SUSTAINABILITY

SS

The Da Vinci Competitive Model

D = defining the business (Discriminants)

A = assessing innovative competence

V = value chain

I = intelligence - competitor

N = new product/process development

C = commercialisation (compressing time)

I = improvement – the feedback loop

D = Defining the Business

This is all about identifying the mission and should answer the following questions:

What business are you in? What are your products/services? What is your market segmentation – product

and geographical? – who are your customers? What are your core competencies? What is your growth/market share objectives? What are your profit/ return expectations? How do you measure success? What are your values and beliefs?

• No organisation can be all things to all people – what are our key discriminants?

• The key issues which an organisation will fail or succeed in delivering unique value can be identified and discussed with the value disciplines model:– Operational excellence– Product leadership– Customer intimacy

• With MOTIP you can excel in all 3

D = Defining the Business




V = value chain





A = assessing innovative capabilities and competences

Distinctive competencies are the unique resources and strengths that management considers when formulating strategy: Workforce Facilities Market and financial know-how Systems and technology Global strategies

Collaborative effort Joint venture Licensing technology

Intellectual Property, Knowledge




V = value chain





• Competitive advantage grows out of the way organisations organise and perform discrete activities (Porter)

• All the activities in the value chain contribute to buyer value

• It is an interdependent system or network of activities

• Gaining competitive advantage requires that the organisation’s value chain is managed as a system rather than a collection of separate parts

V = Value Chain




V = value chain





I = Intelligence - competition

• Maximising the “flow and control” of information is key to competitiveness

• Ability to compete is determined on how well the organisation collects, analyses, disseminates and safeguards information

• Most organisations treat and organise the functions of competitive intelligence, decision making and security as separate distinct activities

• WarRooms (Strategic Navigation Centres) integrate these activities

I = Intelligence - competition

5%

15%

80%

55%

25%

20%

INTELLIGENCE

INFORMATION

DATA

REENGINEERING THE DECISION MAKING PROCESS FROM SEAT OF THE PANTS TO INTELLIGENCE BASED




V = value chain





New Technology Selection

New technology selection process (Adapted from: Dream Spring SA. The New Product Process)

N= new product/process

Ansoff’s matrix – the 5 business strategies

1. Product/market scope2. Growth vector3. Competitive advantage4. Synergy – by making use of

existing strengths or by acquisition of competencies

5. Make or buy

N= new product/process

2MARKET

DEVELOPMENT

4DIVERSIFICATION

1 MARKET

PENETRATION

3PRODUCT

DEVELOPMENT

PRODUCTSCurrent New

Current

New

MA

RK

ET

S

ANSOFF’S MATRIX

VerticalHorizontalConcentric

Conglomerate

Reasons For New Product Failures

0

5

10

15

20

25

30

35

40

45Lack of understandingof marketLack of internalsupportPoor planning andimplementationWeak competitivepositionMarketing support

Benefits not perceived

N = New Products/ProcessesKeep Your Eye On The Innovation Ball

• Donald Petersen - Ford Motor Company– Focus on products instead of profits, and the latter will naturally follow

– Give your people a say in running the show and a share in the rewards as well

– Be consistent

N = New Products/ProcessesEffect On Senior Management

• How will all of this impact top managers in the 21st century?

• The only question will be how much to invest and when.

• The “if” question goes away.• The “how” question becomes paramount.• An innovation mindset will be

acknowledged as a precursor for creating a stable of new products that will greatly contribute to future earnings.

N = New Products/ProcessesInnovation And Corporate Vision

• CORPORATE VISION:– To be recognised as the global leader in

electronic equipment that satisfies consumers leisure needs. To achieve aggressive returns to our shareholders by continuing robust growth.

• INNOVATION VISION:– We will effectively use innovation to reshape

our company from how we know it today. Within 10 years we will be recognised as the global leader of home leisure and recreational electronic equipment products.




V = value chain





C = commercialisation (compressing time) The Game Is Changing !

•Production (output) focus to customer focus•Mass production to lean production to customised mass production•Access to information•Access to technology•Intensifying competition•Borders disappearing•Need to focus•Need a strategy and a game plan !

ALL OF THIS TO BE EXECUTED WITHIN THE REALITIES OF INCREASING COMPLEXITY

C = commercialisation (compressing time) The Theme

• The elimination of non-value-adding activities

• The provision of customer satisfaction in service industries

• Whole systems “supply chain” approach, from supplier through service provider to customer and back again.

• People are an organisation’s greatest resource.

Strategic Direction

CostStrategies

Quality

Technology&

Innovation CustomerFocus Time

Based

Level ofDevelopment

High

Low

Old New

New CorporateStrategy =

The most for lesscost in the least

time.

Age

Rapid Innovation

Time is a Competitive WeaponTime is a Competitive Weapon

“ My job is to make our products obsolete,

before our competitors do”

Akio Morita, Akio Morita, Chairman of SonyChairman of Sony

They Place Emphasis on:

Responsiveness

Customer Focus

R&D and Innovation

Key Features of Organisations that Compress Time

• Increased Customer Demand

• Increased Product Variety

• Customer Lock-in

• Attract the most Profitable

Customers

• De-stock due to Short Lead Times

Benefits of a Time Based Strategy

MacDonald Saves $100 mil

• No food is prepared in advance –except the meat patties which are kept hot in the cabinet

• Total production process shortened to 45 seconds-toaster which browns buns in 11 seconds instead of 30 seconds (Technology)

• Bread suppliers to change texture of the bread to withstand additional heat (Suppliers)

• Workers involved in the design of condiment containers (Staff)

The Bottom Line

“The solution was simple once time was seen

as important”




V = value chain





I = improvement - feedback loop

• Measuring innovation value

dv = T + I + PINPUT

T + I + P

PROCESSES

AlignmentEngagement

Agility

OUTPUT

dv

Innovation Value

The Final Word

• There is an inextricable link between thinking systemically and the quality of the innovative process.

• Innovation in the business environment is moving more towards innovating the business process than product development.

• The new world of Design Thinking demonstrates the urgent need for operations to appreciate the Innovation – Systems Thinking linkage

Documents

THE INNOVATION SYSTEMS LINK Professor Roy Marcus