innovate. - Innovation Management Institute

Report
Book Summary / 2014
Introduction to the world of
radical innovation
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Book Summary / 2014
1. Innovation terminology
Innovation
Innovation is a
commercialized invention.
Typical types of innovation
are product innovation,
service innovation and
business model innovation.
Differences between
incremental,
discontinuous, and
radical innovation?
They differ in novelty,
uncertainty, and risk.
Discontinuous or radical
innovation can be a product, a
service, or a combination.
Also, a new business model or
a process may fulfill the
characteristicts of
discontinuous or radical
innovation.
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Book Summary / 2014
Comparison between incremental and radical
innovation
Leifer et al. (2000)
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Book Summary / 2014
Comparison between incremental and radical
innovation
Leifer et al. (2000)
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Book Summary / 2014
2. Identify changes in
business environment and
barriers to renewal
Barriers
Organizations tend to have
several barriers to renewal,
regarding absorptive capacity,
established mindsets, and
risk-taking, to mention a few.
Changes in the business
environment create room for
radical innovations, but
require abilities to overstep
the barriers.
IDENTIFY.
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Book Summary / 2014
Five barriers of birth and progress of
radical innovations in organizations
1. Nascent Barrier
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Senior management turnover
Personnel changes
2. Structural Barrier
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Lack of mandatory infrastructure
Lack of adequate follow-through
3. Mindset Barrier
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Inability to unlearn
Learning trap
Lack of distinctive competencies
Obsolete mental models
Theories in use
Not-invented-here
Assink (2006)
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Book Summary / 2014
Five barriers of birth and progress of
radical innovations in organizations
4. Adoption Barrier
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Dominant designs
Path dependency
Successful concepts
Organizational dualism
Excessive bureaucracy
Stifling of the status quo
5. Risk Barrier
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High risks and uncertainty
Lack of realistic revenue and ROI
expectation
Risk-averse climate
Unwillingness to cannibalize
Assink (2006)
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Book Summary / 2014
3. Ensure that strategy
supports radical innovations
Strategic flexibility
Triggering radical innovations
requires strategic flexibility and
renewal. In a changing business
environment strategy needs to
stretch and constant renewal is a
demand. The renewal must be
justified even when the markets
change irrationally. Adding
creativity to strategy work,
breaking traditional boundaries
and bringing new insights to
decision making can give rise to
strategic flexibility.
ENSURE.
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Book Summary / 2014
Best practices to create strategic flexibility
1. Renewing the composition of people taking part in strategy work
2. Bringing new ideas systematically to strategy process.
3. Idea competitions and foresight practices
4. Proactivity
5. Creating alternative strategies
6. Exploiting new user and customer driven approaches
7. Breaking routines
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Book Summary / 2014
4. Develop enabling innovation culture
Creative development
Moving towards culture of radical
innovations requires new
management approaches, new
practices, and new competences.
Innovativeness always calls for
creativity, but even more crucial
is to ensure the implementation of
radical ideas. Make sure that
abilities to implement exist.
DEVELOP.
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Book Summary / 2014
Analyzing innovation culture
1. How much attention radical
4. What kind of practices does
innovations currently get and how
they are communicated? How are
their selection and development
supported?
current decision making culture
carry?
5. How are the abilities of making
2. How is the personnel encouraged
decisions and executing radical
innovations preserved?
to think outside-the-box?
3. Are issues of trust and feeling safe
given special notice?
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Book Summary / 2014
5. Renew search and selection
practices
Importance of foresight
Radical innovations require new
search and selection practices to
identify and take advantage of new
opportunities. Foresight work has
been recognized as a key practice
to foster the renewal of Finnish
companies.
RENEW.
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Book Summary / 2014
Practices for finding and identifying new
opportunities
Bessant & von Stamm (2007)
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Book Summary / 2014
Examples of search strategies
Webasto
Bang
& Olufsen
Webasto, an automotive supplier,
has an in-official, ‘idea hunter’, an
enthusiastic long-term employee
who has created this job for himself.
He provides varied input into the
company’s pre-development and
product management. In addition
they have trend scouts who go to
trade fairs regularly and capture
latest developments in the industry
Webasto supplies and parts
competitors produce.
At Bang & Olufsen, the audio and
video company, a number of
‘inspiration clubs’ have been formed,
each with a chair who has the role of
facilitator and driver. The setup
ensures that ideas from the whole
organisation are identified and
elaborated.
Bessant & von Stamm (2007)
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Book Summary / 2014
Selection practices for making the right choices
Bessant et al. (2009)
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Book Summary / 2014
Examples of selection practices
BBC Backstage
BBC Backstage tries to do with new
media development what the open
source community did with software
development. The model is
deceptively simple – developers are
invited to make free use of various
elements of the BBC’s site, such as
live news feeds, weather, TV listings
and so on, to integrate and shape
innovative applications. The strap
line is ‘use our stuff to build your
stuff.
Bessant et al. (2009)
British Telecom
For example, one basic element of British
Telecoms’ Wakaba programme (Japanese
for ‘green shoots’), designed to support
innovative ideas within the company, is the
creation of partnerships. Each project has a
senior management mentor associated
with it. Every eight weeks on-going
innovation projects are reviewed by a jury of
top executives. The mentors represented at
these sessions provide advice and guidance
to help shape and take ideas forward. This
process ensures that top management is
both aware and involved in the innovation
activities
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Book Summary / 2014
6. Implement experimental development
Testing the ideas
Development based on experimentations and
iterations supports radical innovations.
Experimental development means new
evaluation methods, implementation teams,
and continuous testing of ideas in real
environment. Customers’ role is central in
experimental development. New approaches
for commerzialization need to be found and
taken into account, whether you are making a
new product, service, or technology.
1. Systematic evaluation
2. Continuous testing and
iteration
3. Cross-functional and
committed implementation
teams
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Book Summary / 2014
Linear and experimental development
Linear development
Experimental development
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Book Summary / 2014
How to involve customer into the development process?
1. Analyzing the current state – what
are we currently doing?
4. Evaluating the customers’ goals how do we ensure that the
customers are satisfied?
2. Objectives of customer integration
– what do we want to
accomplish?
3. Motivating the customer – how
can we foster the interest of our
customers and end-users to
participate in the development?
5. Making customer integration part
of R&D – how do we organize the
development work with our
customers?
6. How do we evaluate the results of
collaboration work and the valueadded for our own business?
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Book Summary / 2014
7. Measure the right things
Radical innovation projects need indicators for
evaluating uncertainty and potential for
success. Measurement is a part of all parts of
innovation process and its management.
Measurement has a significant effect on
innovation culture, motivation of the
employees, and the sense of safety.
MEASURE.
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Book Summary / 2014
Risk-reward diagram for managing R&D portfolio
Cooper et al. (2001)
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Book Summary / 2014
Five dimensions of measuring innovation
1. Input information about the
innovation front-end.
4. Support from the social
environment. Relevant especially
for radical innovation.
2. Evaluating efficiency and
alignment to budget and project
plan at the development stage.
3. The success, payback period ,
and profit of a single innovation
project.
5. Extent of customer involvement in
R&D.
6. Support from the physical
environment.
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Book Summary / 2014
8. Organize accurately
Goals of radical innovation can be
supported by choosing the right
organization structure. The closer the
radical innovation development is to
incremental improvement work the
more the existing business determines
its direction.
ORGANIZE
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Book Summary / 2014
Link between strategy and organizational structure in radical
innovation
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Book Summary / 2014
Link between strategy and organizational structure in radical
innovation
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Book Summary / 2014
9. Utilize your stakeholders
Radical innovations have significant impacts
on the stakeholders of a firm. Similarly, the
stakeholders may influence the firm’s
operations. Identifying relevant stakeholders is
the beginning to benefiting from interacting
with them. Genuine dialog with the
stakeholders makes possible to acquire
valuable input from them. Utilizing the
acquired information requires new capabilities
from the organization.
UTILIZE.
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Book Summary / 2014
Establishing and maintaining a dialogue
1. Connecting with stakeholders
First step to collaboration is
identifying and establishing
connections with the
stakeholders. The extent of
networks and the firm’s position
in them are key issues here.
2. Expectations of value creation
from collaboration
Parties of the collaboration must
come to an agreement that they
are able to create new value
together.
3. Motivation
Parties of the collaboration must
agree on how the created value
is distributed between them.
4. Ability to utilize new knowledge
and competences
Firms must have methods to
integrate new knowledge and
utilize it in its business.
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Book Summary / 2014
10. Renew your services
Service innovation is one of the most potential
ways to strenghten the competitiveness of
industrial firms in the global markets. Top
managers and their established mental
models are the biggest obstacle in launching
new service business. Extending to service
business often requires a thorough change
process which can take 2-5 years.
RENEW.
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Book Summary / 2014
Solution business development process
1. Analysing business opportunities
2. Strenghtening the customer
interface
3. Improving Back-end operations
4. Redirecting the business
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Book Summary / 2014
INNOVATE.
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References
Assink, M. (2006). Inhibitors of disruptive
innovation capability: a conceptual model.
European Journal of Innovation
Management, 9(2), 215–233.
Leifer, R., McDermott, C. M., O’Connor, G.
C., Peters, L. S., Rice, M., & Veryzer, R. W.
(2000). Radical innovation: How mature
companies can outsmart upstarts. Boston,
Massachusetts: Harvard Business Press.
Bessant, J., & von Stamm, B. (2006). Twelve
search strategies that could save your
organization. AIM Research.
Bessant, J., Möslein, K., Neyer, A.-K., Piller,
F., & von Stamm, Bettina. (2009). Radical
Innovation: Making the Right Bets. AIM
Research.
Cooper, R. G., Edgett, S. J., & Kleinschmidt,
E. J. (2001). Portfolio Management for New
Products. Basic Books.
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