Sunday, 16 November 2008

How do you know that your Innovation Strategy is the right one?

Many strategy knowledge centers like Insead, Havard Business School and McKinsey Global Institute are publishing many white papers on how to design (Innovation) Strategies. Yes, it is good stuff, but the key hurdle for a successful Innovation Strategy is the implementation of the design.
During implementation you will face the daily hurdles of Business Transformation. When the ambition level of Innovation is high (like Blue Oceans or New Business Models) implementation will be harder proportionally.

During implementation of an Innovation Strategy you also will experience the speed of changes in the assumptions you made in the design phase of the strategy. You need to go for a Strategic Scenario Thinking approach. This approach enables you to translate different trends and business drivers into you Innovation Strategy.
If significant changes occur you have already alternative scenarios in hand. Each scenario will indicate the need for adaption of your Innovation Portfolio as well.
Together with Daan Giessen, I build an approach to challenge your Innovation Strategy and the way you can adapt your Innovation Portfolio:

Sunday, 2 November 2008

What impact will have the Financial Crisis on Business Innovation?

So far we have seen Innovation as a luxury in growing economy. What will happen if we are facing with severe down scaling of the real economy? Do the current innovations methodologies like Blue Ocean Strategy, Open Innovation, Co-Cration, Brand Building helps companies to Innovate without having money for investments available?

I think this will be the time to change significantly our vision on Business Innovation. The financial sector has created a virus of so called Phantom Innovation. These innovations are focus on one-sided and short term enrichment for a small group of Robbers (hedge fund owners, specific group of CXOs). Of course they played with the less smarter but not less greedy consumer and small private investors. The Phantom Innovation creates only Phantom Value.

The good thing about the crisis is that there is a global burning platform to change from Phantom Innovation to Sustainable Innovation. We need to develop global real value with accessibility for everyone.
We saw different people speaking up against the legal robbers in politics and the economy. People like Charles Leadbeater but also Noreena Hertz: "I realised that economics is not about models, graphs and curves, but about people, politics and society, about history and culture; that these are all legitimate things to be concerned about as an economist. In fact, you would be a much better economist if you did understand these things."

I believe we will face a new generation of global leaders showing us the way to more Sustainable Social Innovations. I see it already emerging in different companies and the flow is with them. The future history will refer to this last decennia as the NEO- middle-ages in politics and economy.

Sunday, 7 September 2008

Why are Business Innovation Managers more successful than others?

In many different Innovation Management Surveys the key issue still is successful implementation. The theories will promise outstanding results but the hardness of reality faces us with tough hurdles to cross.

The theory “Blue Ocean Strategy” is one of the examples which supplies managers with a perfect model to change market boundaries. In my opinion the implementation part is still very academically and lacks concrete practical keys for implementation.

Techniques for idea generation like SIT (systematic Inventive Thinking) en TRIZ (Theory of Inventive Problem Solving) are too complex to incorporate in our organization of today. These systematic techniques ask for structural new ways of working and organizing the innovation process. This isn’t something an Innovation Manager with a project portfolio to manage can fixed at the same time.

A Innovation Manager faces quite some hurdles to be successful in implementing innovation projects:

- A manager per definition lacks the time to master complex models and even to endorse it in his organization.
- The Innovation Manager’s task is to integrate the so called “golden triangle”: R&D, Marketing & Sales, Operations. Each business function has its own objective and targets. This lead in many cases to a Political Arena. The Innovation Manager becomes suddenly a Gladiator.
- In order to get budget for the innovation project, many project managers create a Social Accepted Business Case. Their Sales Funnel looks like a perfect Hockey Stick. Of course, during the implementation reality it looks like a flat horizontal line.
- An innovation project is seen as one of the many projects instead as a business project (focus on capturing new business value: money!)

Together with top innovation managers tried and tested (special thanks to Mr. Remco van Es, DSM) we defined some Innovation Project Characteristics of successful implementation:

- Projects with focus on one unique product versus more than one product.
- Projects with clear focus on one unique positioning in the market versus a product with more interpretations on the benefits for the client.
- Projects with just one partner versus more than one or non partners.
- Projects managed by a Manager with an entrepreneurial Business Profile versus a managerial Marketing, R&D or Operations profile.
- Projects with a stable core dedicated team players versus changing team settings.
- Projects with specific cross functional design events (high pressure cooker approach) versus just separate project streams.
- Projects with implementation scenarios versus one “best” way.

The characteristics of Innovation Projects seems to be a little trivial but in real-life situations we see hardly any manager able to endorse it.

It seems to be that Innovation Manager prefer to go down as a Gladiator in the Political Arena rather than being the successful Outsider of the company!

Sunday, 18 May 2008

Business Model Innovation Archetypes

In the engagements with our client we face that business model innovation is a complex issue. Many aspects are involved and these are also intertwined. As I wrote in articles earlier we use a Business Model Innovation Framework based on Oosterwalder. We use this framework to facilitate the in depth discussion with our clients according to the systematic approach to create more business value. In these discussion sometimes we end up into an academic dilemma if we can speak about a new business model or just an improvement of the current business model. In concrete terms: how many of the building blocks of the framework have to change in order to speak of a real new business model. Personally I think that it is not a key discussion but I looked for some interesting peer views on the web. I found an interesting paper of MIT Sloan: Do some business models perform better than others? The authors defined a Basic Business Model Archetypes. They use two key criteria:
1. What rights are being sold?
2. What type of asset is involved?

In the first criteria they defined different rights: ownership, use, matching. In the situation of ownership they distinguish an ownership of asset with significant or limited transformation.
The second criteria they came also with four different types: Financial, Physical, Intangible and Human assets. If you combine these two sets of criteria you get theoretical 16 possible archetypes. The good news is that in the study of the largest 1000 US companies they discovered only seven types in practice. As I work a lot with high tech companies and manufacturers I am interested in the physical assets with gives three archetypes:
1.Manufacturer: creates and sells physical assets. Buys raw materials or components from suppliers and then transform or assembles the asset to create a product sold to buyers. (example: General Motors)
2.Wholesaler/Retailer: buys and sells physical assets. Buys a product and resells essential the same product to someone else an may provide additional value by transport, repackaging and customer service. (example: Wall marts)
3.Physical Landlord: sells the right to use a physical asset. The asset may be a location or equipment or even complete production plants (example: Marriot, Hertz).

We see that a lot of our Business to Business Clients are willing to move from one to type two or event to type three. We start to analyze the different archetypes in terms of differentiation of the Business Model Innovation Framework. As expected we see some logical differences in dominancy of the buildings blocks within the framework.
We use the outcome in two parallel ways. The first way (insight out) is we analyze the impact on the current business model of a running innovation project and see if it will lead to a new Business Model archetype and what kind of transformation is needed. In the second way (outside in) we use the Business Model Archetypes to challenge the current Innovation Portfolio in order to change the projects to boost the value creation.

The conclusion is that Business Model Archetypes can indeed help clients to improve the discussion of the current Innovation Portfolio and how to boost there business value. But only if the archetypes are in detailed analyzed by the Business Model Innovation Framework value can be captured.

Sunday, 6 April 2008

Business Model Innovation: Rational versus Emotional value performance

In my Innovation Team we work with clients on innovation and the influence on their current business model. We analyze the current business model using a framework based on the ideas of Alexander Osterwalder. We focus on the business model impact of the innovation portfolio of the client. In addition to the financial (Rational) performance of the business model we analyze the emotional side of the performance as well. We find out that two value performance indicators can be measured and managed on the emotional side of the business model: Reputation and Experience.

Reputation is the way stakeholders think of, speak about and act upon the image of your company. If you can create a company that people identify with, that is responsive to their sense of values, justice, fairness, ethics, compassion and appreciation, they will help you to be successful [Walter Haas, Jr., Chairman of Levi-Strauss].Reputation can be measured and managed. Good examples and cases can be tracked from the Reputation Institute. RI is the leading international organization devoted to advancing knowledge about corporate reputations and to providing professional assistance to companies interested in measuring and managing their reputations proactively.

Experience is a well known term in marketing for many years. In relation to innovation a new term is out: Experience Innovation. Clients and customers choose products and services more and more for emotional reasons. The get a first idea of what Experience means look at Wikepedia: Value can be placed on a continuum from undifferentiated (referred to as commodities) to highly differentiated. A possible classification for each stage in the evolution of value is:
- If you charge for undifferentiated stuff, then you are in the commodity business.
- If you charge for distinctive tangible things, then you are in the goods business.
- If you charge for the activities you perform, then you are in the service business.
- If you charge for the feeling customers have because of engaging you, then you are in the experience business.
- If you charge for the benefit customers (or "guests") receive as a result of spending that time, you are in the transformation business.

Experience can also be measured and managed. In 2005 Thomas Thijssen, director of research of the European Centre for the Experience Economy developed, together with Ed Peelen (Nyenrode Business School) and Susan Bink (University of Amsterdam), a new tool to measure the impact of meaningful experiences.

To become successful in business model innovation is is vital to include the two additional building blocks in the business model framework: REPUTATION and EXPERIENCE.

Friday, 28 March 2008

Do you feel that managing Innovation in your company is hard and no fun?

In many large companies managing Innovation is like being just one of the many risk avoiding grey suits. But working on Innovation supposed to be fun, different, free-thinking. Do you recognise yourself in the following situation:
  • You are responsible for the start of or running a complex and long term innovation program or portfolio with clear innovation objectives and targets
  • This portfolio exits of more complex innovation projects
  • The basics of project management of each separate project is well in place
  • Each project works in parallel to deliver the innovation targets
  • There are (strong or weak) interrelationships between these projects to manage
  • There are different (internal and external) stakeholders to manage

This sounds like one big opportunity. But there are some complications like:

  • The Innovation Objectives and targets are defined in only financial terms: Revenue/Profit growth
  • The Innovation Strategy doesn’t give directions for prioritizing and decision making processes
  • There is not overall logic overview for the portfolio to ensure the overall targets
  • There isn’t framework to oversee the impact of the portfolio on the current Business Model
  • There isn’t framework to oversee the impact of the portfolio on the technology integration needs
  • There isn’t a systematic way to manage the execution of the innovation projects successfully

And you left with the following questions:

  1. Do I really understand the Innovation Strategy of my company? If not how can I?
  2. Have I optimized our Innovation Portfolio to set the right priorities and the take the right decisions? If not how can I?
  3. Am I able to mobilize and manage the execution power in my company? If not how can I?

    And you just looking for some insights to get the answers:

Discontinuous Innovation Lab

This week the Benelux Discontinuous Innovation Lab organised a Kick-off Workshop to start an active link between the academic world and companies active in new innovation approaches. On behalf of Capgemini I took a membership in this DILab.
The main objective of this new community is to look for insights, experiences in searching, selecting and implementing new ways to realise discontinue innovations.
Prof. John Bessant shared his vision by presenting an entertaining overview in this field. He is one of the writers of the executive briefings of the Advanced Institute of Management Research: “Dealing with Discontinuity” and “Twelve search strategies that could save your organisation”.
The second presenter was Victor Paashuis from the company NEDAP. He showed us the innovation practices in his company. I was pleasantly surprised by his insights and his vision on how to execute and boost the innovation initiatives! One of his statement is that NEDAP innovates value which is not asked for by any customer, isn’t thought of by any R&D or Manager in his company. Good ideas come from a very selective group of free thinkers. They stick to the idea until it is launched in the market in spite of the dominancy of mangers focused on reducing risk.
I will keep you informed on the progress of this new initiative in the Benelux.

Friday, 21 March 2008

Technology Driven Innovation versus Business Innovation: poor alignment!

In many cases Technology Driven Innovation is an important driver for change in doing business. But what kind of technology are we talking about? Davila described in “Making Innovation Work” a distinction of three kinds of technology changes; namely in product and service offerings, process technologies and enabling technologies.

Enabling technology facilitates the speed of execution of the company’s strategy. ICT is by far the most important enabling technology in speeding up communications between the partners in the eco-system end value chain. Alignment between ICT and Business Innovation is become a key-success-factor. How are Top Innovators managing this alignment?

Recently a Global CIO Survey 2008 (400 CIOs across the globe representing all Industry sectors) showed that the role of IT function is almost non-existing in driving the Business Innovation. Alignment between ICT driven innovation and Business driven innovation is just not happening in almost every industry sector!

Business doesn’t recognize the most value Technology Trends which could enable the innovation strategy to execute.
On the other hand IT doesn’t recognize the main business drivers and can’t support the necessary changes in the business model.

I think there are already working Business Innovation Concepts to create this alignment. The challenge is how to mobilize the execution power. A lot of work is still to do!

Wednesday, 19 March 2008

Perfect example of innovative communication

Eric Bun is a real innovator of what I call the new generation. He is astonishing good in building communication formats in an innovative way. The latest achievement is a book review of "Brand Hijack'' from Axel Wipperf├╝rth. He showed that a book review is not simple a plain text with an opinion but also a way of bringing the message across!