©2008 balanced scorecard collaborative, a palladium company 55 old bedford road lincoln ma 01773...
TRANSCRIPT
©2008 Balanced Scorecard Collaborative, a Palladium company • 55 Old Bedford Road • Lincoln • MA • 01773 • Tel 781-259-3737 • Fax 781-259-3389
Innovation moves strategy
>>>Executing the Balanced ScorecardDeveloping Strategy with the Balanced Scorecard
Developing_0108 Page 2©2008 Balanced Scorecard Collaborative, a Palladium company • thepalladiumgroup.com
Module 11 Innovation Moves Strategy
Innovation vs Strategy0.1
Define the opportunity0.2
Build through co-creation0.3
Execute innovation0.4
Create the movement0.5
>>>Executing the Balanced ScorecardDeveloping Strategy with the Balanced Scorecard
Developing_0108
Discussion Questions
Does your strategy consider innovation?
Or
Is your strategy innovative?
>>>Executing the Balanced ScorecardDeveloping Strategy with the Balanced Scorecard
Developing_0108
Innovation vs Strategy
• Within five years if you're in the same business you are in now, you are going to be out of business (Philip Kotler)
• Competitive strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value. (Michael Porter)
• A business has two-and only two-basic functions: marketing and innovation. Marketing and innovation produce results. All the rest are costs (Peter Drucker)
• Once you have defined your strategy, you should start thinking in the next generation strategy (Norton)
>>>Executing the Balanced ScorecardDeveloping Strategy with the Balanced Scorecard
Developing_0108
Triggers of strategychange at MarriotVacation ClubInternational
Innovation should be a continual and progressive process in every organization
Transformative strategy (high innovation)
Incremental strategy (execution)
Deg
ree
of
Ch
ang
e E
nco
mp
asse
d b
y S
trat
egy
Ideal transformative strategy curve
Transformative strategy (high innovation)
Innovation vs Strategy
>>>Executing the Balanced ScorecardDeveloping Strategy with the Balanced Scorecard
Developing_0108
COMPETITION
AS IS SITUATION
•The key success factor is being able to create new market spaces where there is no existing competence. Companies that find blue ocean are 2-3 times more profitable than the ones that are in red oceans
New Attributes
TO BE
Innovation should progressively drive companies towards Blue Oceans
Innovation vs Strategy
>>>Executing the Balanced ScorecardDeveloping Strategy with the Balanced Scorecard
Developing_0108
Strategy Plan;
• Many hypothesis (answers) to questions
• Questions that have no answer yet
Source; Jose Luis Larrea
Innovation vs Strategy
Cycle of innovationQuestions
Answers
>>>Executing the Balanced ScorecardDeveloping Strategy with the Balanced Scorecard
Developing_0108
Innovation vs Strategy
Water, from the Greek means new life, emotion, intuition, rebirth and force
VIDEO BE WATER MY FRIEND
• STEP ONE; do you have an enough broad mission?
Whose mission?Improve quality of lifeAll information at one clickWe want to be your energy
>>>Executing the Balanced ScorecardDeveloping Strategy with the Balanced Scorecard
Developing_0108
Execution Premium ProcessDEFINE + EXECUTE + INNOVATE
Innovation vs Strategy
>>>Executing the Balanced ScorecardDeveloping Strategy with the Balanced Scorecard
Developing_0108
Build through Co-CreationStart to ripple
Create MovementKeep the wave rolling
Execute InnovationBreak the rules
Define the Opportunity- Don't blow with the wind
40% of managers do not determine where to focus innovation efforts.
Three quarters of the executives consider customers, employees and affiliates as an important source of new ideas, but in most organizations there is no central governance to manage innovation.
Only 4% of the R&D projects obtain the expected results (BusinessWeek). The problem is R&D in normally constrained under a conservative strategy
64% of the executives say that they have enough of the right kind of people to innovate, however almost 70% of them considers this talent is not being used due to lack of processes or of an adequate culture
Innovation vs Strategy
>>>Executing the Balanced ScorecardDeveloping Strategy with the Balanced Scorecard
Developing_0108
40% of managers do not determine where to focus innovation efforts.
Don't just blow with the wind
Define the opportunity
>>>Executing the Balanced ScorecardDeveloping Strategy with the Balanced Scorecard
Developing_0108
COSTUMER JOURNEY ANALYSIS
XXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXX
XXXX
X
XXXX
X
XXXX
X
XXXX
X
XXXXX
XXXXX
XXXXX XXXXX
XXXXX
XXXXX
XXXXX
XXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXX
XXXX
X
XXXX
X
XXXX
X
XXXX
X
XXXXX
XXXXX
XXXXXXXXXX
XXXXX
XXXXX
XXXXXXXXXX
XXXXX
XXXX
X
XXXX
X
Get to know the customer's experience and all the processes that relate to the service
VALUE CHAIN ANALYSIS
Understand the current situation and the processes in the company.
LOOK BEYOND PRODUCT AND SERVICE OFFERINGS
Define the opportunity
>>>Executing the Balanced ScorecardDeveloping Strategy with the Balanced Scorecard
Developing_0108
XXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXX
XXXX
X
XXXX
X
XXXX
X
XXXX
X
XXXXX
XXXXX
XXXXX XXXXX
XXXXX
XXXXX
XXXXX
XXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXX
XXXX
X
XXXX
X
XXXX
X
XXXX
X
XXXXX
XXXXX
XXXXXXXXXX
XXXXX
XXXXX
XXXXXXXXXX
XXXXX
XXXX
X
XXXX
X
MARKET TRENDSReview market trends and the industry
COMPANY
CUSTOMER
Define the opportunity
>>>Executing the Balanced ScorecardDeveloping Strategy with the Balanced Scorecard
Developing_0108
STRATEGIC STRATEGIC COMPLEXITCOMPLEXIT
YY
200820052000
TIMETIME
To be
competitive
effective
efficient
Integration - i
ntermodal
Geographic dispersi
on
Extension
Liberalizatio
n
CHALLENGES• Manage growth• Customer orientation• Win concessions • External business • Cultural evolution
The role of the leaderEstablish a sense of urgency; The first thing our leader did was to remark the importance of change
Greater custo
mer demand
Environmental concerns
Define the opportunity; case study. Metro de Madrid
>>>Executing the Balanced ScorecardDeveloping Strategy with the Balanced Scorecard
Developing_0108
Define the opportunity; case study. Metro de Madrid
Strategy Map
Projects
10 strategic projects
• 9 with many questions,…,but also many answers
• 1 just with questions,...., ACTIVA
Typically, roughly 80% of an Organization should be focus on executing strategy, 20% need to be focus in evolving it
>>>Executing the Balanced ScorecardDeveloping Strategy with the Balanced Scorecard
Developing_0108
Public Transport
Define the opportunity; case study. Metro de Madrid
1. Advertisement & Public Relations
2. Subscription Administration /
Consortium
4.Entrance Hall & In-Station Stores
& Turn-tickets
6. Navigation & Information
Support
7. Providing Information &
Support
8. Navigation & Other information
Support
1. Choosing a daily transport
2. Applying for a card for season
ticket
3. Buying Season Ticket
4.Getting Inside Public Transport
Space
5. Public Transport Train
6. Train Change
7. Problems / Breakdown
8. Getting Outside of Public
Transport Space
Customer of Public Transport
5. Vehicles (Conductor)
3.Selling Points
>>>Executing the Balanced ScorecardDeveloping Strategy with the Balanced Scorecard
Developing_0108
Define the opportunity; case study. Metro de Madrid
4 MAIN QUESTIONS
What next when no tickets and no conductors are needed?, will Metro have employees?
Should Metro care for better use of citizen time?
Should Metro provide further information from the surface?
1. Advertisement & Public Relations
2. Subscription Administration /
Consortium
4.Entrance Hall & In-Station Stores
& Turn-tickets
6. Navigation & Information
Support
7. Providing Information &
Support
8. Navigation & Other information
Support
1. Choosing a daily transport
2. Applying for a card for season
ticket
3. Buying Season Ticket
4.Getting Inside Public Transport
Space
5. Public Transport Train
6. Train Change
7. Problems / Breakdown
8. Getting Outside of Public
Transport Space
5. Vehicles (Conductor)
3.Selling Points
>>>Executing the Balanced ScorecardDeveloping Strategy with the Balanced Scorecard
Developing_0108
Build Through Co-Creation
Three quarters of the executives consider customers, employees and affiliates as an important source of new ideas, but in most
organizations there is no central governance to manage innovation.
Start to ripple
>>>Executing the Balanced ScorecardDeveloping Strategy with the Balanced Scorecard
Developing_0108
Discussion Questions
Does your executive committee have many innovate ideas?
Guess why?
• Norton; There is a bottom-up innovation process, which involves employees and customers participating in the collective building of the next generation strategy.
>>>Executing the Balanced ScorecardDeveloping Strategy with the Balanced Scorecard
Developing_0108
4COMBINING and DEVELOPMENTOF IDEAS
2GROUPS
EMPLOYEES AND NON - EMPLOYEES
GENERATION OF IDEAS
STORAGEOF IDEAS
PORTFOLIO OF INITIATIVES
5
CUSTOMERS, AND NON-CUSTOMERS
AFFILIATES, UNIVERSITIES,ETC..
3CO-CREATION
WH
AT
WH
O
HO
W
WH
ER
E
WH
AT
WH
O
HO
W
WH
ER
E
1
2
3
4
5
Key success factorsLeadership and commitment around opportunity areas
Common language and philosophy
1
6
Co-create. Interaction generates creativity Combine and develop ideas using imagination
Right resources to the right initiatives
Coordination and communication
Build Through Co-Creation
>>>Executing the Balanced ScorecardDeveloping Strategy with the Balanced Scorecard
Developing_0108
OTHEROTHER
COMPANYCOMPANYCUSTOMERCUSTOMER SUPPLIERSUPPLIER REGULATORREGULATOR
CONSULTANTCONSULTANT
Build Through Co-CreationTools;
Ideation
ECC
Lateral thinking
Anthropology
Ask about how they use the product, their problems, their dreams, encourage or challenge your customers to change or improve. (i.e; restaurant)
>>>Executing the Balanced ScorecardDeveloping Strategy with the Balanced Scorecard
Developing_0108
Number of Red Dots >=3
Pilot Station potential Areas
Attention/Information Initiative potential Areas
Entertainment Initiatives potential Areas
ORIGIN to
ACCESS
ACCESS
To TURNSTI
LE
TURNSTILE to
PLATFORM
PLATFORM TRAIN
TRANSFER
PLATFORM to EXIT
EXIT to DESTINY Total
OTHER SERVICES 1 1 3 3 1 3 3 1 16
ENTERTAINMENT 0 3 2 1 0 2 4 0 12
ATTENTION 4 5 6 2 2 4 5 2 30
INFORMATION 3 9 6 6 3 6 7 1 41
ENVIRONMENT/CONSERVATION 0 5 5 4 3 5 5 0 27
COMFORT 0 2 2 2 2 2 0 0 10
SECURITY 0 3 1 0 0 2 1 0 7
SPEED 0 4 1 1 1 1 1 0 9
Total 8 32 26 19 12 25 26 4 152
Build Through Co-CreationCase Study: Metro de Madrid
GROUP IDEAS; 4 NEW POSSIBLE BUSSINES
• Media channel = 1.000.000 clients for 1 hour.
• School / Library
• Retail; Metro-shop
• Social & cultural Activity, Entertainment
NEW ATENTION / INFORMATION MODEL
>>>Executing the Balanced ScorecardDeveloping Strategy with the Balanced Scorecard
Developing_0108
Build Through Co-CreationCase Study: Metro de Madrid. Some ideas
>>>Executing the Balanced ScorecardDeveloping Strategy with the Balanced Scorecard
Developing_0108
Build Through Co-Creation; COMBINE AND DEVELOP THE IDEASUSING IMAGINATION
1. iPod “music
access and listening”
experience
2. iTunes “music
management and
download” experience
3. iTunes “music
browsing” experience
4. iMix sharing playlists
experience
Go beyond product and services, Create new experiences
What is it with the i-pod?
>>>Executing the Balanced ScorecardDeveloping Strategy with the Balanced Scorecard
Developing_0108
Key success factors for the Business Plan;
• IMAGINATION; visualize the ideas
• HOMOGENIZATION; The Strategy Map defines the KPI´s that will be estimated in every business plan.
- Time to results +-
Str
ate
gic
Im
pac
t
+
QUICK WINSNEEDS TEST AND
VALIDATION
STOP THESE INITIATIVES OR
TRANSFER TO THE CORRESPONDING AREA
Effort (Investment level, human capital, change management, etc.)+
START NOW
STRATEX; Expenditure for strategic and innovative initiatives
Build Through Co-Creation; RIGHT RESOURCES FOR THE RIGHT INITIATIVES
Strategic impact on FUTURE STRATEGY!!!...TO BE value proposition
>>>Executing the Balanced ScorecardDeveloping Strategy with the Balanced Scorecard
Developing_0108
Execute Innovation
Only 4% of the R&D projects obtain the expected results (BusinessWeek)
Break the rules
>>>Executing the Balanced ScorecardDeveloping Strategy with the Balanced Scorecard
Developing_0108
You can have an excellent idea and still be stuck in the same jam
>>>Executing the Balanced ScorecardDeveloping Strategy with the Balanced Scorecard
Developing_0108
Initiatives generating a differential costumer experience
Initiatives improving processes radically
STRATEGY INTEGRATION
Once the organisation has evaluated the impact of the innovation initiatives on the strategy, it's time to EXECUTE!
Impact on the strategy
Execute Innovation
>>>Executing the Balanced ScorecardDeveloping Strategy with the Balanced Scorecard
Developing_0108
FOCUSStrategy Map
Visual representation of the strategic objectives and their interactions
ACTIONInitiatives
(Incorporate Innovative Initiatives)
Key action programs to reach objectives
Economic value added
Asset productivity
Be the lowest cost producer
Pick the winners globally
Create new market demand
Price performance
Partnering
Integrate and align resources
Sales and customer development
Focused technology development
Perfect manufacturing
People and change management
Strategic competencies and skills
Individual and team performance
Customer sensitive culture
Perspectiva
Financial
Customer
Internal
Learning &
Growth
Objetivos
Pro
cure
men
t re
desi
gn
Em
ergi
ng m
arke
ts s
trat
egy
Par
tner
with
the
w
inne
rsR
es s
ec a
nd W
&L
and
hurr
ican
e
Qua
lity
need
s id
entif
icat
ion
Qua
lity
proc
for
roo
t ca
use
elim
Ref
orm
ulat
ion
SV
com
mer
cial
izat
ion/
faci
litie
s
Cus
t co
mpl
aint
tra
ckin
g pr
oces
s
Sid
e la
m V
P/p
artn
ersh
ips
IT e
nhan
cem
ent
in v
alue
cha
in
SC
OP
impl
emen
tatio
n
AB
M
Dev
elop
/cas
cade
BS
C
Com
mun
icat
e vi
sion
Asi
a re
form
atio
n fa
cilit
ies
IT s
trat
egy
alig
nmen
t
Scr
ap r
ewor
k pr
oc im
prov
emen
t
Yie
ld im
prov
emen
t pr
ogra
m
Fac
ilitie
s up
grad
e
ISO
900
2 N
A r
esin
mfg
ce
rt
Exp
ert
syst
ems
Rew
ards
dev
/impl
emen
tatio
n
Glo
bal c
omm
unic
atio
ns
Tra
inin
g st
rate
gic
skill
s
Inic
iati
vas
FOLLOW UPBalanced Scorecards /
Indicators / Goals
Key strategy success factors and definition of the anticipated
performance results
20%
80%
Execute Innovation
>>>Executing the Balanced ScorecardDeveloping Strategy with the Balanced Scorecard
Developing_0108
After 3 years “create a differential experience” become a strategic theme in the map
Execute Innovation; case study; Metro de Madrid
Cust
omer
's se
rvice
+
- Basic Service
Extended Service
IMAGE CUSTOMER´S ACQUISITION AND LOYALTYSERVICES
Journey phases from origin to destiny
TECHNOLOGY
Metro vuelaMetro vuelaalgo Muy tuyoalgo Muy tuyo
PERSONASCustomer Care
CultureGlobal Attention
Culture Commercial Culture
From 1 objective and 1 project, to 1
strategic theme with
many projects
>>>Executing the Balanced ScorecardDeveloping Strategy with the Balanced Scorecard
Developing_0108
‘Suddenly they start running, but no matter how hard Alice runs, they stay in the same place. The queen explains that in
this country you have to run at least twice as fast to get somewhere else…’
Alice in Wonderland
Execute Innovation; case study; Metro de Madrid
Execution Premium
BUSINESS RESULTS:
Sustained customer satisfaction > 70%.
Growth of the public transportation share within Madrid: from 32% to 40%.
Employees productivity from 43 agents per million Kms x Car in 2001 to 37 in 2004.
Improved safety ratings (even after 11-M terrorist attacks).
OTHER BENEFITS:
Developed a culture of “measure”
Begin to understand customer’s experience
Improved cross-unit’s communication
>>>Executing the Balanced ScorecardDeveloping Strategy with the Balanced Scorecard
Developing_0108
Create Movement
64% of the executives say that they have enough of the right kind of people to innovate,
however almost 70% of them considers this talent is not being used due to lack of processes or of an adequate culture
Keep the wave rolling
>>>Executing the Balanced ScorecardDeveloping Strategy with the Balanced Scorecard
Developing_0108
Create Movement. New functions for the OSM
ROLE OF THE CHIEF MARKETING
OFFICER (P.Kotler)
•Represent the voice of the customer
•Gather market insights to help develop
new products and services
•Be the steward of the corporate brand
•Upgrade marketing technology and
skills
•Bring insight into the corporate portfolio
and synergies
•Measure and account for marketing
financial performance
ROLE OF OSM REGARDING INNOVATION
OR DIFERENCIATION
•Identify strategic challenges…do the right
questions
•Innovation Process coordination and
training in the methodologies of generating and
developing ideas (could be)
•Enable strategy driven decision making
using the most informative and relevant
information
•Ensure effective implementation of
initiatives through efficient allocation of
resources2008
2010 ExecutionBI /
CPM
Data / Web 2.0
Organization Clients
CEO CFO CIO HR Mktg2008
2010 ExecutionBI /
CPM
Data / Web 2.0
Organization Clients
CEO CFO CIO HR Mktg
>>>Executing the Balanced ScorecardDeveloping Strategy with the Balanced Scorecard
Developing_0108
INTERESTING FOR STRATEGY MANAGEMENT?
Idea Management tools facilitate continuous Co-creation; structure and process determine success
>>>Executing the Balanced ScorecardDeveloping Strategy with the Balanced Scorecard
Developing_0108
I nternaProporcionar a la organización
municipal la información necesaria para la planificación y
la gestión de los servicios
ExternaInformar a los ciudadanos
de la gestión municipal y del nivel de calidad de los
servicios que le presta el Ayuntamiento
Funciones del Observatorio de la CiudadCity's Observatory Functions
InternalProvide local government
with the necessary information to plan and manage their services
accordingly
ExternalKeep citizens informed of the activities
of the local government and the perceived level of satisfaction for the services offered by the administration
Create Movement. Case study Ayuntamiento de Madrid
>>>Executing the Balanced ScorecardDeveloping Strategy with the Balanced Scorecard
Developing_0108
I nternaProporcionar a la organización
municipal la información necesaria para la planificación y
la gestión de los servicios
ExternaInformar a los ciudadanos
de la gestión municipal y del nivel de calidad de los
servicios que le presta el Ayuntamiento
Funciones del Observatorio de la Ciudad
Information Systems
Go
ve
rnan
ce
Man
ag
eme
nt
Ev
alu
ati
on
In accordance with the City Model
In accordance with the citizen's needs
INT
ER
NA
L P
ER
SP
EC
TIV
EE
XT
ER
NA
L P
ER
SP
EC
TIV
E
Operation Management
System
Budget Management
System
Complaint and Suggestion System
Service Form System Citizen's Perception
Evaluation System
Strategy Management
System
Budget Management System
Create Movement. Case study Ayuntamiento de Madrid
>>>Executing the Balanced ScorecardDeveloping Strategy with the Balanced Scorecard
Developing_0108
A co-created strategy will deliver new mutual value for a company and its customers
NEW ATRIBUTE
BEFORE
NEW MODEL
Planning Number of reports
Consistency Reliability Innovation Learning Motivation Execution Participation CustomerOrient.
Co-creation the strategy is part of the experience for employees and customers, and it improves the EXECUTION PREMIUM
2008
2010 ExecutionBI /
CPM
Data / Web 2.0
Organization Clients
CEO CFO CIO HR Mktg2008
2010 ExecutionBI /
CPM
Data / Web 2.0
Organization Clients
CEO CFO CIO HR Mktg
NEW MODEL
Strategy management value Proposition
Create Movement. New model for strategic development
>>>Executing the Balanced ScorecardDeveloping Strategy with the Balanced Scorecard
Developing_0108
Implementation(Operations)
Management
Definition
SCOPE
PARTICIPATIONBoard of Directors
Senior Management
All Employees Customers / Affiliates
STRATEGY
MANAGEMENT 2.0
Management is about having a continuous conversation with the people around you
(Gary Hamel)
Create Movement. New model for strategic developmentStrategy Management Evolution
>>>Executing the Balanced ScorecardDeveloping Strategy with the Balanced Scorecard
Developing_0108
Innovation movement model video