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Innovation Overview

Glenn Wintrich

2 © 2012 Forrester Research, Inc. Reproduction Prohibited

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Innovation is not for the faint of heart

3

Speed of change accelerating

5 Services

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IT’s transformation essential to 21st century business success

The purpose of the 20th century firm:

The purpose of the 21st century firm:

To minimize transaction costs and achieve scalable efficiency

To accelerate capability building and effectively apply that capability to innovation

Creating new value —better & faster

New view: Socially- enabled enterprise operating in a digital business ecosystem

IT is essential to enabling firms to transform and innovate with information-driven value creation

Processes Business Models

Management

Products and Services

Marketing

Innovation defined

Innovation is the process that takes new ideas and implements them in a way that creates value by solving unmet needs.

Would this qualify as innovative???

No turtle was hurt creating this picture

Common myths of Innovation

While creative thinking is helpful, innovation is a systematic discipline

You have to be creative to be innovative

Successful innovations require large-scale change

Innovation is expensive

The most successful innovations are often the simplest

Most innovations require a modest disciplined investment of time and brain power

Innovation is led by R&D & Technology

Innovation is an organization-wide responsibility to leverage ideas

Myth Reality

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Marketing innovation

Examples

Marketing innovation refers to tools and approaches that organizations use to cultivate relationships with customers and prospects.

Internet video

Gamification

Location based marketing Social network

marketing

Personalization

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Process innovation

Examples

Process innovation refers to new methods to achieve superior outcomes.

Electronic Medical Record

Streaming Video Robotic assembly line

Financial banking

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Management innovation

Examples

Management innovation refers to the way organizations engage resources to enhance performance and achieve superior outcomes.

Resource models

Reward structures

Organizational models

Organizational Models

Collaboration/ Autonomy

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Focus areas for Management Innovation

New view of the enterprise:

Socially-enabled enterprise operating in a digital business ecosystem

• Increase collaboration

• Allow for autonomy and innovation

• Experiment with new approaches and resource models:

o Crowdsourcing

o Hackathons

o Microwork

o Hollywood Model

o Self-Selecting Teams

o Expert Ecosystems

Management

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Product and Service innovation

Examples

Product and Service innovation refers to the introduction of new and enhanced goods and services.

Digital Oil Field

Sensors Car break system

(Carbon fiber)

3-D printing (Polymers)

Apple iTunes

Workstation on Wheels (WOW)

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Long Tail

Business Model innovation

Business Model innovation refers to the approach to how an organization creates, delivers, and captures value.

Sample business models

Franchise Direct Sales

Freemium

Add-on

Auction Low cost Recurring Revenue Subscription

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Services

Business Model Analysis

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Business Model Innovation components

Components

• Partnerships

• Channels

• Cost Structure

• Key Resources

• Core Capabilities

Components

• Bundling and Configuration

• Segmentation

• Customer Relationships

• Revenue Streams: Pricing and Payment Structures

• Value Proposition

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A dynamic shift IT Environment

IT Productivity • Consolidation • Cost • Outsourcing • ERP

Prior to 2012 Post 2012

Degrees of Innovation B

usi

ne

ss M

od

els

an

d P

roc

ess

es

Products and Services

New

Existing

Ex

isti

ng

N

ew

New

Value

Breakthrough and Disruptive

Innovation

Incremental Innovation

Why is Innovation important?

Incremental

Breakthrough & Disruptive

1. Keep products & services in the competitive set

2. Reduce Cycle Time

3. Improve Quality

4. Reduce Cost

1. New revenue stream

2. First mover advantages

3. Obtain higher margins

4. Increase brand value

5. Realize an innovation premium on the stock

6. Improve corporate culture

Innovate or lose competitive position

Innovate or lose competitive position

http://www.youtube.com/watch?v=6Cf7IL_eZ38&feature=player_embedded

Dell Services

The Volvo (Whitbread) Round-the-World Race: What Determines the Winner?

the Tactician ?

the Grinders?

the Skipper?

the Navigator?

Dell Services

Answer: None of the Above.

It’s the DESIGN OF THE BOAT that matters.

The analogy to the corporate world is that designing an Innovation Culture that allows success to happen is

imperative to your Company’s success.

Credit: Peter Senge, The Fifth Discipline

Architecture for Systemic Innovation

Insight

Market Innovation Customer Innovation

Scan R&D, IP & Patents, Regulations & Standards

Identify Constraints & Opportunities

Environmental Scanning Weak Signals & Trends

Foresight

Develop Themes & Scenarios

Plan of Record

Plan of Intent

Plan of Investigation

Strategic Plans

Frameworks

Reference Architectures

Operational & Annual

Plans

Execute Business Challenges

Facilitate Shared & Open Innovation

Deliver Innovation Plans

Outcomes and Metrics

Invest Execute

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Architecture for Systemic Innovation

Insight

Market Innovation Customer Innovation

Scan R&D, IP & Patents, Regulations & Standards

Identify Constraints & Opportunities

Environmental Scanning Weak Signals & Trends

Foresight

Develop Themes & Scenarios

Plan of Record

Plan of Intent

Plan of Investigation

Strategic Plans

Frameworks

Reference Architectures

Operational & Annual

Plans

Execute Business Challenges

Facilitate Shared & Open Innovation

Deliver Innovation Plans

Outcomes and Metrics

Invest Execute

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The objective of foresight is to identify future opportunities, challenges, and potential solutions.

Approaches & Tools

Basics • Environmental Scanning • Extrapolation • Scenarios • Regulatory Reviews • SWOT • Surveys • Expert Panels • Patent Analysis Advanced • Futures Wheels • Futures Cone • Black Swan Analysis • Delphi • Backcasting • Paleofuture Analysis • Science Fiction

Foresight Foresight is knowledge of emerging indicators or macro trends across the social, technological, environmental, economic, and political landscape.

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STEEP/PESTLE

• Societal

• Technological

• Economic

• Environmental

• Political/Legal

S

T E

E

P

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Architecture for Systemic Innovation

Insight

Market Innovation Customer Innovation

Scan R&D, IP & Patents, Regulations & Standards

Identify Constraints & Opportunities

Environmental Scanning Weak Signals & Trends

Foresight

Develop Themes & Scenarios

Plan of Record

Plan of Intent

Plan of Investigation

Strategic Plans

Frameworks

Reference Architectures

Operational & Annual

Plans

Execute Business Challenges

Facilitate Shared & Open Innovation

Deliver Innovation Plans

Outcomes and Metrics

Invest Execute

29 Services Sales Training

Insight

Popular resources & tools

• Social Media • Market Data • Analysts • Standards Bodies • Industry Publications • Laws, Regulations, (established &

pending) • Customer Surveys • Focus Groups • Patent Analysis

Insight is the observation of facts, knowledge, predictable trends, and points of view that may apply to particular issues, opportunities, and challenges.

. The objective of insight is to identify constraints and opportunities.

Macro trends indicate sustained shifts that influence future decisions in business, government and society.

Sample Macro Trends

Perfect Information

Consumerization

Smart Everything Crowdfunding & P2P Lending

An old workforce A new workforce

Urbanization

Freelance economy & Hollywood Model

Sharing Economy

Utility computing Pervasive simplification

Technology does not cause change, it

only enables, facilitates and

accelerates changes we already want to

take place.

Architecture for Systemic Innovation

Insight

Market Innovation Customer Innovation

Scan R&D, IP & Patents, Regulations & Standards

Identify Constraints & Opportunities

Environmental Scanning Weak Signals & Trends

Foresight

Develop Themes & Scenarios

Plan of Record

Plan of Intent

Plan of Investigation

Strategic Plans

Frameworks

Reference Architectures

Operational & Annual

Plans

Execute Business Challenges

Facilitate Shared & Open Innovation

Deliver Innovation Plans

Outcomes and Metrics

Invest Execute

33 Services

Foresight and Disruptive Innovation Disruption Zone: Incumbents myopically focus on sustaining innovation while new entrants disrupt the model through innovation.

t

%, $

t

Value of Foresight: Disruptive innovators see ways to improve a job that is performed and mobilize resources to achieve new results.

Disruptive Innovation

Sustaining Innovation

Market Innovation: Product Cycle

Cycle Market

View Product

Plan Signal

Sources

3 Unclear: Surprises

What is Possible? FORESIGHT including macro trends and all areas of STEEP

2 Generally Expected

What is planned to be developed.

INSIGHT: Competitors, Analysts, Customers, Standards bodies & Regulatory bodies

1 Planned What is funded and will be launched.

Customers

Market Innovation

Plan of Record

Plan of Intent

Plan of Investigation

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Metrics

Organizational level innovation metrics

3rd order External Corporate

Perception

Highest level of innovation indicators and long-term achievement • Customer perception assessments • Inclusion, rank, and direction of change in industry rankings

• Relative position in Gartner Magic Quadrants (MQ) • Placement in Forrester Waves • Most “innovative” company rankings

2nd Order Internal Corporate

Operational or functional level of innovation • Measurement of innovation activities and financial performance

• Includes both Input and Output metrics

1st Order Business Unit

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Tactical metrics and KPIs for BU activities and programs • Measurements of foundational catalysts for each BU that drive

towards higher functioning level of innovation.

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Innovation metrics

Inputs Idea Management Outputs

# of ideas submitted Cycle time metrics for initial review, incubation, development, pilot, etc.

# of new products or services launched

Amount of capital in # of ideas funded for incubation

Actual vs. targeted breakeven time (BET)

% of people trained in innovation

# of ideas piloted

% of revenue/profit from products or services introduced in the past X years

# of crowdsourcing challenges

# of ideas funded for commercialization

Royalty and licensing income from patents/intellectual property

#of leaders engaged in innovation

% of product/service or strategic innovation projects with assigned executive sponsors

Number of innovations that significantly advance existing businesses

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Final Thoughts

• Revenue growth belongs to the innovators

• Collaboration is king – victories are in the

white spaces between groups

• The “Red Queen Scenario”

• And one more thing………..

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We must Innovate or Die!!

Q&A

Open the floodgates for questions

Thank you

Innovate or lose competitive position

http://www.youtube.com/watch?v=6Cf7IL_eZ38&feature=player_embedded