Making innovation work_in_new_times

Making Innovation

Work in New TimesNASSCOM 2009 INNOVATION AWARDS

Where Innovation Operates

Management

Consultants

September 2009

Making Innovation Work NASSCOM Awards— September 2009 | © 2009 PRTM Proprietary CONFIDENTIAL | 2

Three Questions

Why don’t companies develop

strong, effective innovation?

Why do companies find it so hard to

sustain robust levels of innovation?

How do leaders create meaningful

levels of innovation?


Growth

InnovationOperational

ModelBusinessGoals andStrategy

InnovationStrategy and

Goals

InnovationExecution

InsightStrategicBlueprint

Management

Innovation Originates with Business Strategy

How You Innovate Determines What You Innovate


Insight Bridges Strategies and Goals

Insight

Customer

Product/sServices

Regulations/Society

Operations

Business Model

BusinessGoals andStrategy


Goals


Strategies Must Align


BusinessGoals andStrategy


Goals

Insight

Where Do We Focus Innovation Efforts?

How Much Innovation?

What Types ofInnovation Do We Need?


Blueprint Translates Strategy Into Operations


Goals


Model

Products/Services

ProcessTechnologies

SupportingTechnologies

ValueProposition

ValueNetwork

TargetCustomer

TechnologyInnovation

Business Model

Innovation

Strategic Blueprint

RADICAL

BREAKTHROUGH

BREAKTHROUGH

INCREMENTAL

Close to existing

Business Model Change

Technology

Change

New

Close to

existing

New


Innovation Portfolio Describes Innovation Goals

Stay in

the

Game

Drive

Growth

Drive

Growth

Change

the

Game

RADICAL

BREAKTHROUGH

BREAKTHROUGH

INCREMENTAL

New

Close to

existing

Close to existing New

Business Model Change

Technology

Change

Where Do We Focus Innovation Efforts?

How Much Innovation?

Making Innovation Work, Davila, Epstein, Shelton: Wharton School Publishing, 2006


Six Major Levers of Innovation

PRODUCTS/

SERVICES

PROCESS

TECHNOLOGIES

SUPPORTING

TECHNOLOGIES

Technology Innovation

VALUE

PROPOSITION

VALUE

NETWORK

TARGET

CUSTOMER

Business ModelInnovation


What Types of Innovation Do We Need?


Six Major Levers of Innovation: Technology

Performance

Packaging Integral to Customer Value

Manufacturing and Assembly

Service Delivery

Information Systems

Logistics/ Inventory

What product or service should the company offer

in the marketplace?

What features or offering should the company

develop?

Can we reduce the cost of our current offering?

Can we improve the quality of existing products or

services?

Can we improve the inventory or quality control?

How can we leverage the IT backbone to create a

faster, better, cheaper product?

PRODUCTS/

SERVICES

PROCESS

TECHNOLOGIES

SUPPORTING

TECHNOLOGIES

Technology Innovation



Six Major Levers of Innovation: Business Model

Customer Experience

Brand Value

Value Network/ Supply Chain

Ecosystem of Value Offerings

Buyers and Influencers

Marketing Methods

How do you define the customer experience?

What value do customers want?

What is the solution?

How can you optimize the supply chain?

What part will you play in the ecosystem?

How do you shape the customer experience?

Who are the targeted customers? Who is

excluded and why?

What do different segments want with regard to

the customer experience?

VALUE

PROPOSITION

“What”

VALUE

NETWORK

“How”

TARGET

CUSTOMER

“Who”

Business ModelInnovation



Companies Underutilize Business Model LeversB

usin

es

s M

od

el

Inn

ova

tio

n

Te

ch

no

log

y I

nn

ova

tio

n

Recent global

supply chain

transformation

Innovation traditionally

focused on product

Recent PRTM Client Example

Value

Proposition

Value

Network

Target

Customer

Products/

Services

Process

Technologies

Supporting

Technologies







Goals


Management

Design Operational Model to Fit



Partnerships Are a Core Competency of Leaders

Internal Resources

Suppliers

INNOVATION PLATFORM

Brainiacs

Suppliers

Universities

Suppliers

Suppliers

Customers Customers

Universities

External Resources

Competitors

Innovation is a team sport



PRTM Model for Open Innovation Excellence

Defining Open Innovation• Choosing Open Innovation “paths to value”

• Clearly defining Open Innovation goals and

implications for the business

• Aligning Open Innovation goals and models

with business strategies

• Establishing a vision, metrics, and a path for

change

Executing Open Innovation• Defining missing innovation assets

• Establishing IP strategy and policies

• Building partner and ecosystem

management capabilities

• Establishing information exchange

(and control) capabilities

• Executing and demonstrating open

innovation behaviors

Becoming Openly Innovative• Overcoming “Not Invented Here” mindsets

• Finding and establishing relevant partners and networks

• Establishing new organizational roles and responsibilities

• Building the culture to become a partner of choice

Opening Up Strategy

Opening Up Organization and Culture

Opening Up Practices and Capabilities

Open Innovation Has a High Return on Investment

Net

Income

Increased

Revenues

from

“Open”

Model

Savings from

Leveraging

External

Development

0

Source: Adapted from Open Business Models, Henry Chesbrough © 2006, Harvard Business School Press

Our

Market

Revenue

Internal

Development

Costs

Our

Market

Revenue

Internal Development Costs

Closed Model Open Model

New Products & Services

New Market Access

Tech Licensing Revenue

Venture Funds Returns

Open Innovation “Costs”

Reduced & Avoided Costs

“Closed Model” Growth

Mergers & Acquisitions


Management Systems Bridge to Execution

Management


Model

InnovationExecution

Making It Happen

Focus and Discipline

Governance

Decision-MakingFramework, Systems

Organization andCulture

Metrics and Motivators

Strategic Languageand Processes

Internal Resources

Suppliers

INNOVATION PLATFORM

Brainiacs

Suppliers

Universities

Suppliers

Suppliers

CustomersCustomers

Universities

External Resources

Competitors



Management


Model

InnovationExecution

Making It Happen


Governance





Internal Resources

Suppliers

INNOVATION PLATFORM

Brainiacs

Suppliers

Universities

Suppliers

Suppliers

CustomersCustomers

Universities

External Resources

Competitors


Breakthrough Innovations Often Use Incubation

Roadmap for breakthrough / radical innovation development

Guidelines steer development activities

Tools and templates that help teams quickly identify innovative value

Loop Reviews Structured

Development

Process

Incubation Governance (IG)

Small and cross-functional

External as well as internal resources

Intrapreneurial and nimble

Clear responsibility and authority for innovation development

Development Teams

Clearly-defined decision makers

Innovation coaches

Effective resource allocation

LOOP KEY

QUESTION

Mechanism through which IG assesses value, provides direction, and manages scope

Event and time based reviews

Business opportunity perspective

Collaborative team guidance and empowerment

1 32

Loop

Exit

Next

Loop

Strategy Finance PC Reps External

Chair



Management


Model

InnovationExecution

Making It Happen


Governance





Internal Resources

Suppliers

INNOVATION PLATFORM

Brainiacs

Suppliers

Universities

Suppliers

Suppliers

CustomersCustomers

Universities

External Resources

Competitors


Metrics and Motivators Help Create the Culture

Leaders

hip

Organization Structure

Cu

lture

Learning Organization

Metrics

and

Motivators



Optimize Alignment to Drive Growth




InnovationAspiration

InnovationExecution

Growth


Management


Questions and Answers

Why can’t companies develop strong, effective innovation?

They are unwilling or unable to fix what is broken or underperforming

Why do companies find it so hard to sustain robust levels of innovation?

They use an outdated strategy or operational model for innovation

How do leaders create meaningful levels of innovation?

They manage innovation as if their future growth depends on it—because it does

PRTM Contacts

MAHESHWAR SINGH

Managing Director

India

T +91 80 4010 0900

M+91 96 1195 5116

[email protected]

Embassy Classic., 3rd Floor

11, Vittal Mallya Road,

Bangalore 560001

India

www.prtm.com

ROBERT SHELTON

Director

T +1 650 864 3517

M+1 650 218 3519

[email protected]

444 Castro Street

Suite 600

Mountain View, CA 94041

USA

www.prtm.com

Education

Making innovation work_in_new_times