Developing and Managing a Developing and Managing a Successful Successful
Innovation Strategy Innovation Strategy
Effective Innovation Strategies Answer Effective Innovation Strategies Answer Three Key Questions:Three Key Questions:
How will we Create value?
How will weCapture value?
How will weDeliver value?
Reasons to have an Reasons to have an innovation strategy:innovation strategy:
1. 1. To make choicesTo make choices
Overcommitment destroys Overcommitment destroys productivityproductivity
Average
Value-Added
Time on
Engineering
Tasks
Number of Projects per Engineer
100%
80%
60%
40%
0%
20%
65431 2
Reasons to have an Reasons to have an innovation strategy:innovation strategy:
22. . To be able to change itTo be able to change it
The SThe S--curve Maps Major Transitionscurve Maps Major Transitions
Performance
Time
Ferment
Takeoff
Maturity
Disruption
Transitions often challenge existing Transitions often challenge existing organizations severelyorganizations severely
Transitions are hard!Transitions are hard!
Answers to the key strategic questions: Answers to the key strategic questions: –– How do we create value?How do we create value?–– How do we capture value?How do we capture value?–– How do we deliver value?How do we deliver value?
CHANGE!CHANGE!
A map of the course….A map of the course….
Ferment
Takeoff
Maturity
TechnologyMarkets
CompetitionOrganization
Value CreationValue Creation
The nature of technical work changesThe nature of technical work changes
Performance
Time
Will it work? Exploration, fun, creativity key
Can we make100,000?And service them?
We need to be responsive & flexiblebut controlled
Will it work? Exploration, fun, creativity key
The marketing challenge evolvesThe marketing challenge evolves
Performance
Time
Who needs this?
Do we haveany referencecustomers?
Stay close to yourcustomer – really close
Who needs this?
Some new technologies sell to niche markets Some new technologies sell to niche markets with less demanding requirementswith less demanding requirements
Value CaptureValue Capture
Uniqueness & Complementary Assets Uniqueness & Complementary Assets over the Life Cycle:over the Life Cycle:
The ways in which a firm captures value also The ways in which a firm captures value also evolve dramaticallyevolve dramatically
Performance
Time
Speed, IPDifferentiation,Frontier performance key
We can sell it, make it, service it, ship itMost of the time
We may not be leading edgebut you’d rather buyfrom us because…
Speed, IPDifferentiation,Frontier performance key
Value DeliveryValue Delivery
Competencies evolve over time,Competencies evolve over time,creating “competency traps”creating “competency traps”
Performance
Time
Ferment
Takeoff
Maturity
Growth?
Change challenges every aspect of an Change challenges every aspect of an organizationorganization
Leadership & Strategy
Structure &Process
Incentives
Culture & Mental Models
But strategically, growth must build on But strategically, growth must build on existing assets…existing assets…
Control & Coordination
The Organizational Challenge:The Organizational Challenge:
EntrepreneurialDrive,Freedom from the “old ways”
Successful growth unites entrepreneurial insight with
effective coordination
StartupsStartups
B as UB as U
What can be done?What can be done?
Problems in RecognitionProblems in Recognition(problems in strategy?)(problems in strategy?)
Growth opportunities do not arrive with labels on themGrowth opportunities do not arrive with labels on themForecasting the future of technology is hardForecasting the future of technology is hardForecasting customer needs and market demands is Forecasting customer needs and market demands is even hardereven harderGrowth opportunities often look less profitable than the Growth opportunities often look less profitable than the current businesscurrent businessDeep rooted mental models may make even “easy” Deep rooted mental models may make even “easy” recognition difficultrecognition difficult
Some discontinuities will pose harder Some discontinuities will pose harder problems than others:problems than others:
New needs
Old needs
Lower marginsHigher margins
Problems in ResponseProblems in Response(problems in organization?)(problems in organization?)
Fear of CannibalizationFear of CannibalizationTime horizons & IncentivesTime horizons & IncentivesOverloadOverloadCompetency TrapsCompetency Traps
What can be done?What can be done?LeadLeadStructure Structure IncentIncentTransform the culture & mental modelsTransform the culture & mental models
Where we go next:Where we go next:Dealing with discontinuities:Dealing with discontinuities:–– SynthesSynthes–– Allied ChemicalAllied Chemical–– DonnelleyDonnelley–– Xerox Technology VenturesXerox Technology Ventures–– Corporate ventures @ Procter & GambleCorporate ventures @ Procter & Gamble–– Ciba Ciba GeigyGeigy/Alza/Alza
The mechanics of doing strategyThe mechanics of doing strategy–– MedtronicsMedtronics–– Kirkham Kirkham InstrumentsInstruments
Pulling it all togetherPulling it all together–– KodakKodak–– NokiaNokia