1. Evaluating Your Innovation Practice Using Future Scenarios A WEBINAR BY INNOVATION 360 PRESENTER: KAMAL HASSAN

2. Why Innovate? Yesterday: Innovation strengthened competitive advantage, impacted strategy, and stimulated growth. Today: Innovation defines competitive advantage, drives strategy, and is a fundamental prerequisite for growth. Tomorrow: Innovation will be the ONLY practical source of competitive advantage, will dictate strategy, and will determine whether an organization will grow or die. 3. Some definitions A Trend: The direction is which a relevant condition, output, process or general tendency is emerging or changing. This could be markets, behaviors, technologies or capabilities A Scenario: A scenario is a STORY that describes a possible future. Scenarios are based on emerging trends, their relevance and impact 4. Characteristics of Each Scenario It should result from a mixture of different perspectives It reflects both qualitative and quantitative aspects of a trend or group of trends They are different from forecasts as they do not require 100% agreement from everyone but should be conceivable based on trends analyses 5. Trends framework and grouping All Trends Drivers Mega Forces Changing Stakeholder Needs Solutions Emerging Substitutes Emerging Capabilities Economic, Political, Social, Cultural Customer Influencers and expectations, Channels to customer, Supplier and partner needs New Offerings Technology, Skills, Competencies 6. Drivers and Solutions Drivers These are the concepts, challenges, behaviors, technologies that are likely to call for new set of metrics to solve or are likely to affect the demand in the near or far future Solutions These are the new and emerging trends that are being developed to tackle the challenges presented by the drivers 7. Drivers Mega forces: In the next 10 years, global political, social and economic issues will affect the financial services sector and importantly, retail banking. Changing stakeholder needs: Customers are demanding a different kind of experience from banks. Shareholders and other interested parties are becoming increasingly uncertain about the future of their assets Solutions Changing Capabilities: Example: The dynamic growth of technology in banking is affecting the nature of retail banking channels and the corresponding skills needed to effectively deploy banking services Substitutes: Disruptive innovations are creating new alternatives to banking. Most of these alternatives are simpler, faster or cheaper to use. Grouping: Drivers and Solutions 8. Impact Certainty High High Timeline Already Happening Near Future Far Future Impact-CertaintyFactor High Developing the Scenarios 9. Trends are grouped as shown below Drivers Mega Forces Changing Stakeholde r Needs Solutions Emerging Substitutes Emerging Capabilitie s TRENDS AND KEY QUESTIONS Trends span across both types and categories (Drivers and Solutions) Forming the scenarios require understanding how the trend will evolve (already happening. near future, far future) Asking Key Questions are necessary elements for forming each of the Scenarios [judging by these trends, what will a typical consumer expect?] By combining similar and different trends, illustrative answers to the key questions are generated which are necessary for formulating the Scenarios. Scenario Testing Factors Occurrence Factor Differentiating Factor Decision- Making Utility Developing the Scenarios 10. We will take a brief look at a retail banking as a case study Trends and Scenarios built used here are not exhaustive as they are only used to illustrate a methodology 11. Analytics get real time and mobility becomes priority Demand for online banking is set to grow considerably over time Consumers are seeking greater customization, faster automated transactions Alternative currencies will emerge the landscape Customers will gravitate towards simplicity There will be a growing dominance of the generation Y consumer demographic Transparent corporate governance and risk management issues will be key focus areas Impact Certainty High High Timeline Already Happening Near Future Far Future Impact-Certainty Factor High Banking Example 12. Key questions Judging by these trends, what will a typical consumer expect? [ This question tends towards changing stakeholder needs] In which other ways would consumers bank? [This question tends towards changing capabilities and emerging substitutes] 13. Scenario 1: Context Banking Scenario Outline (Simplified) The consumers know-me expectation will be stronger. Banks will therefore be embedded into the lives of the customers. customer relations will be less transactional but will seek to peep into the lives of the customers through inferences, recommend services or solutions. Real time information will be available per time/or per transaction on mobile devices and customers will demand further convenience. Smartcards will be replaced by digital mobile devices. There will be a near-extinction of physical bank branches. Examples of solutions at this stage will be personalized budgeting and budget control, expense control, expense analytics and tracking and probably also loan recommendations based on income levels or automated advisory. 14. Scenario 2: Deregulated Banking Scenario Outline (Simplified) There will be an introduction of alternative currencies and platforms. Money as we know it will change in definition and people will have the power to trade in totally digitized currencies which may not have any physical representation. Conventional trade and payments will be made by these currencies beyond the reach of national governments and regulatory institutions. Banks will stand the risk of losing their value as this currency will be cheaper to trade in than the conventional currencies. Tensions will be created between banks, governments and the providers of this currency. Banks may need to reinvent themselves. 15. Scenario Quality Scenario Occurrence Factor Differentiation Factor Decision-Making utility Context Banking Deregulated Banking Occurrence Factor Check if the scenario can conceivably happen Differentiation Factor Check if the scenario is not fundamentally the same with any other stated scenario Decision-Making Utility Check if the scenario can help the decision makers to make informed decisions 16. Scenarios can be used for Studying and analyzing the implications of future events to your organization Assessing the effectiveness of your current innovation processes in tackling the challenges of the futureInternal strategy: Innovation, Pricing, Market Entry, Suppliers etc. Competitor Responses and Analysis Challenges To The Industry Consumer Responses and Analysis YourBusiness Current Innovation Winninginthe Future Optimum Innovation 17. Strategy, Enablers, Leadership, Execution Strategy: The overall combination of plans, processes and activities that increases the possibilities of achieving the desired innovation goal(s) at a specific period and under specific conditions Enablers: The tools and technology needed to the desired results stated in the strategic plan Leadership: The methods and frameworks needed to achieve and build the human resources and talent that make the needed innovation culture possible Execution: The process of implementing the needed strategic plan and all other factors necessary to launch the new systems, products, operations or business models 18. Scenarios Every Scenario has its Optimum Strategy which dictates what the Enablers, Leadership and Execution frameworks should be Optimum: Describes the best, most suitable and most effective option for a given condition Optimum Innovation Strategy Enablers Leadership Execution 19. Evaluating your current Innovation Strategy Your Current Innovation Strategy Does your current innovation strategy .... Encourage experimentation by having limited fixed-cost infrastructure? Business model is adaptable and poised to test for assumptions? Adaptable to an emergent strategy rather than fixed on a deliberate strategy? Learns and adapt rather that assume and insist Hires and emphasizes skills that deal with handling uncertainties and spotting signals 20. Current Innovation (along the 4 dimensions) Optimum Innovation Strategy (along the 4 dimensions) Benchmarks you against practices needed for winning, preventing disruption and crossing sector boundaries in a future scenario Analyzes where you are currently Current and Optimum(future) 21. Understanding the gaps Encourage experimentation by having limited fixed-cost infrastructure Business model is adaptable and poised to test for assumptions Adaptable to an emergent strategy rather than fixed on a deliberate strategy Learns and adapt rather that assume and insist Hires and emphasizes skills that deal with handling uncertainties and spotting market signals Readiness and enablement of infrastructure for rapid experimenting and prototyping Business Model Adaptability to the elements of the scenario Overall strategy can be adapted to an emergent strategy suitable for competing in the scenario Organization culture and processes People learning and development OPTIMUM INNOVATION STRATEGYYOUR CURRENT INNOVATION STRATEGY ?? ?? ?? ?? ?? GAPS 22. Examples of Optimum Innovation Strategy options for Scenario: Deregulated Banking Innovation Governance system (function-based) Creating an autonomous business unit to compete with potential entrants into digitized currency spaces Allowing knowledge transfer from existing business to a new and autonomous(separate) business unit Constant evaluation of digital spaces to innovate in (adaptation) Strategic Partnerships with regulators and governments Strategic partnerships with digital e-payment platforms Decisions on vertical integration vs modular service delivery: which of our products do we deliver by covering the whole value chain needed in delivering it and which ones can we outsource some of the units in the value chain? (remove unnecessary rigidity) Make constant and incremental changes towards further digitized representations of conventional currencies 23. Q and A For more information, send us an e-mail at: solutions@i360institute.com 24. Corporate Headquarters6386 S. Tempe Ct. 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This commitment Inspires our clients to new heights of creativity and excellence, giving them Insight to their organizations true potential and capability. We positively Impact our clients innovation success rate by helping them devise a results-oriented yet realistic innovation strategy, one that creates new value through innovative products and services. We also give their people the knowledge, skills and leadership abilities to execute this strategy, as well as to creatively solve complex business issues. Throughout this process, Innovation 360 maintains our Integrity by exceeding our clients expectations and actively transferring our capability and knowledge. 26. How we help Innovation 360 helps you develop a customized strategy for innovation, growth and transformation.We guide your organization through each stage of a carefully designed 5-Step framework, help you bring your ideas to market, and improve your innovation leadership competencies. Foresight Foresight is aimed at helping your organization assess the current state of your innovation portfolio, as well as your readiness for future scenarios.This comprehensive evaluation also covers relevant FUTURE SCENARIOS and their implication to your future success. We provide a comprehensive recommendation based on this.To learn more: http://i360institute.com/foresight IdeaFusion IdeaFusion helps you generate Ideas from a dedicated community either ad hoc or around a specific challenge. Using an updated approach to soliciting ideas, as well as proven ideation tools and methods, IdeaFusion enables collaborative creativity for empowering innovation in your organization.To learn more: http://i360institute.com/ideafusion InPulse InPulse, our benchmarking solution gives you the competitive edge to see and rank your company against your industry peers and very innovative global businesses. 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