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Organizational Design for Innovation

A proven approach to improving innovation effectiveness by combining best practices from Organizational Design and

Creative Problem Solving

Wayne Fisher, PhD [email protected]

Katie Kinnemeyer, MBA [email protected]

© 2015 Rockdale Innovation

What is Innovation?

Proactively seeking new problems to solve,

new ways to solve existing problems, and new ways to implement business

building ideas

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What is Open Innovation?

Actively engaging external subject matter experts in the

definition of technical problems, identification of potential

solutions, and implementation of the best solutions

Procter & Gamble Case Study

o Start with a well defined technical problem linked to an unmet customer need

o Seek win-win solutions by free exchange of technical knowledge and resources

o Collaboration with key film supplier resulted in: o  Superior dissolution in hot and cold water

o  Expanded product formulation flexibility o  Increased film supply at reduced cost o  Improved runnability on Pod converter

o  To learn more visit https://www.youtube.com/watch?v=gh65B9kmx8Y

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Examples of Open Innovation

•  Joint Development Agreements with customers and suppliers

•  Contract R&D •  University research sponsorship •  Crowdsourcing •  Customer Suggestion Systems •  Commercialization Partnerships


Joint Development Agreements •  Development of new technology driven by specific

product applications

•  Complex legal structures / CDAs / IP agreements

•  e.g., P&G with BASF, 3M, Sun Chemical; Novozymes; MonoSol

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Contract R&D •  Leverage specialized expertise in

universities, national labs, and private R&D labs

•  Generally, pay for exclusivity in a field of use

•  e.g., P&G investment in University of Cincinnati Simulation Center ($5M)


Crowdsourcing •  Open Innovation portal with well defined needs

like P&G’s Connect & Develop website •  Distribution of well defined problem statements

(technical briefs) via “brokers” like Innocentive or NineSigma

•  Facilitated technical problem solving sessions with diverse subject matter experts like IdeaConnection

•  Subject Matter Experts for hire like YourEncore

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Partnerships •  Collaboration with synergistic companies to bring

new products and services to market (frequently, outside the core) •  e.g., DC Water commercialization of IP

•  Investment (financial and intellectual) in start-up companies •  e.g., P&G investment in Cintrifuse and UCRI

•  Facilitated technical problem solving sessions with diverse subject matter experts like IdeaConnection

Organizational Design for Open Innovation

•  Open Innovation can only thrive if innovation is already a part of the company’s regular business process

•  “Innovation is a Team Sport” – there must be dedicated resources focused on Open Innovation challenges, with sufficient multi-functional support staff, as well as a ready receiving organization

•  Barriers to successful Open Innovation are more cultural than technical

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Organizational Design Approach

IDEAL FINAL RESULT

1… 2… 3… n… Continuous Improvement Cycles

CURRENT SITUATION

Fully implemented best-in-class OI principles

Intermediate solutions

… Current Design

Galbraith Model for Organizational Design

Are the right people in the right roles doing the right

work?

Are we doing the right work at the

right time?

Are we organized in the right way to

execute the work?

Does our strategy support our short and long-term goals?

Does our reward system drive the right

behaviors?

Strategy

Process Rewards

Structure People

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Galbraith Model


work?


right time?


execute the work?



behaviors?

Strategy

Process Rewards

Structure People

Translating Business Goals into an Innovation Strategy

Business'Goals'

Business'Strategy'

Innova3on'Strategy'

New'Product'Innova3on'Projects'

Cost'Innova3on''Projects'

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INNOVATION STRATEGY

Our innovation strategy and program are clearly linked to our business strategy and growth goals.

Our innovation strategy leverages our organization’s unique competitive advantage.

We have broadly communicated our “Where to Play” and “How to Win” choices.

Role of Open Innovation

•  A robust OI program greatly expands a Company’s sense of “What’s Possible” when setting business goals and strategies

•  External industry experts can help identify “Where to Play” and “How to Win” opportunities for category expansion

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Galbraith Model


work?


right time?


execute the work?



behaviors?

Strategy

Process Rewards

Structure People

Innovation Work Process

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INNOVATION PROCESS

We maintain a robust portfolio of innovation projects with sufficient staffing and resources to deliver our 3-5

year business goals.

We have a proven Idea Generation process that identifies new product and service opportunities to

address compelling unmet customer needs.

We manage innovation projects with a balance of risk and rigor using a disciplined phase-gate approach.

Role of Open Innovation

•  External experts can help create bigger, better ideas that support the company’s innovation strategy

•  External organizations can help accelerate innovation projects by providing resources (staff and facilities) to the project teams

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Galbraith Model


work?


right time?


execute the work?



behaviors?

Strategy

Process Rewards

Structure People

Dedicating Resources for Innovation

Maintaining the Core Business Developing Innovations

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INNOVATION STRUCTURE

We have sufficient multifunctional resources dedicated to execute innovation projects in a timely fashion.

We have internal processes for integrating innovation project work into the base business.

We have strong partnerships with key customers and suppliers for commercializing innovation project work.

Galbraith Model


work?


right time?


execute the work?



behaviors?

Strategy

Process Rewards

Structure People

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INNOVATION RESOURCES

Innovation resources have sufficient training and experience in innovation best practices.

Innovation resources understand how their role is essential to delivering business results.

The company has a sustained culture of innovation across all levels of the organization.

Galbraith Model


work?


right time?


execute the work?



behaviors?

Strategy

Process Rewards

Structure People

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INNOVATION REWARDS

Senior leaders regularly communicate the importance of innovation to delivering long-term business results.

Compensation systems include rewards for driving long-term success.

Innovation successes and failures are celebrated.


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ASSESS

DESIGN

MOBILIZE

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Problem Formulation

Opportunity Finding

Evaluate & Select

Execute

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Action Planning

Acceptance

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Problem Definition

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Idea Finding

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Solution Finding

Planning and Execution

ASSESS

Open Innovation Assessment Tool

Open Innovation Organizational Readiness Assessment

For each of the statements below, indicate how closely they match the current innovation work process in your organization, using the following scale:

1 – Strongly Disagree 2 – Somewhat Disagree 3 – Neutral 4 – Somewhat Agree 5 – Strongly Agree

INNOVATION STRATEGY Our innovation strategy and programs are clearly linked to our business strategy and growth goals.

1 2 3 4 5

We have broadly communicated “Where to Play” and “How to Win” strategies.

1 2 3 4 5

Our innovation strategy leverages our organization’s unique competitive points of difference.

1 2 3 4 5

!

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Open Innovation “Worst Practices”

•  OI not seen as key to business success or source of competitive advantage

•  Lack of senior manager support

•  Poor integration with internal systems

•  Not embraced by internal resources / NIH

•  Staff aren’t trained in OI best practices

•  Inflexible Intellectual Property strategy

•  Lack of meaningful metrics to gauge the success of the OI program

Moving into Design Phase

DESIGN

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Best Practice Review

Open Innovation Best Practices

www.pdma.org

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Open Innovation Roles •  CEO / Senior Leaders •  Open Innovation Leader •  Open Innovation Technical Scouts •  Project Team (main customer of OI work) •  Open Innovation Service Providers

o Solver Networks

o Business Information Specialist


Open Innovation Work Process •  Develop a Top Needs list based on innovation strategy

•  Conduct effective problem definition and translate Top Needs into Technical Briefs (Why-Why-Why analysis)

•  Identify and vet potential experts and solutions

•  Negotiate “win-win” deals and contract terms

•  Develop and execute a detailed Learning Plan

•  Monitor and manage the health of the relationship

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Preparing Technical Briefs •  Background

•  Problem Statement / Objective

•  In Scope / Out of Scope

•  Constraints

•  Success criteria

•  IP requirements


Managing Intellectual Property •  Deal with IP up front in a collaboration

•  Move away from Sole Ownership of IP

•  Agree first on “Right to Use”

•  Control access to IP in a market

•  Exclusivity within a domain/category

•  Exclusivity within a geography

•  Counsel can then craft appropriate wording

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Open Innovation Metrics •  Business Metrics

•  Net Present Value of OI program and project portfolio (looking forward)

•  New Sales generated by OI-enabled projects (looking back)

•  In-Process Metrics

•  Senior Leaders and OI Leader collaborate on OI strategy

•  OI Roles adequately staffed

•  # of staff trained on OI best practices

•  # of staff with OI projects on their work plan

•  # of Front End projects leveraging OI

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