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Succeeding at Strategic Innovation Larry Schmitt – CEO The Inovo Group
www.theinovogroup.com Copyright © 2014 The Inovo Group LLC
Outline and Objectives
• What we will cover – It’s a fast, VUCA world
– The need for strategic innovations
– The problems with strategic innovations
– What to do about it
– A view of your possible future
• What you will learn – Steps you can take to make
strategic innovation a key competence for your company
• The premise, the consequence and the response – Premise: The world is Volatile
Uncertain Complex Ambiguous (VUCA) – this requires strategic innovation
– Consequence: Strategic innovation is inherently uncomfortable and causes strong emotional reactions
– Response: A new paradigm of iteration, building community, socializing, testing and learning is needed.
Copyright © 2014 The Inovo Group LLC 2
Introduction to The Inovo Group
Founded in 2001
Headquarters in Ann Arbor, MI
Any industry, any technology, any market
Copyright © 2014 The Inovo Group LLC 3
An innovation consulting firm that helps the world’s top companies succeed at strategic innovation.
An Increasingly Fast VUCA World
Copyright © 2014 The Inovo Group LLC 4
Transformation is Everywhere
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Doctor-centric -> Patient-centric
Healthcare Energy & Transportation
Molecular & singular -> Photonic & shared
‘IT’
Dumb & clueless -> Smart & informed
Consumers & Retail
Physical & blind -> Mobile & aware
The Kodak Story
6 Copyright © 2013 The Inovo Group, LLC
2003 – They knew what was happening!
Internal Kodak Strategy presentation
Quicktake digital camera - 1994
1993 – Formed Digital Imaging Business 1975 – First digital camera
Steve Stasson - Inventor
The Kodak Story
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A Damning Assessment! • Corporate Culture • Non-rational expectation of commitment • Hierarchical firm • Poor change management • Insiders resistance • Change middle to high-level management
Yet they couldn’t / wouldn’t do anything about it!
Innovation Movement
Quality Movement
Entering the Era of Strategic Innovation
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Ad
op
tio
n o
f
Co
mm
on
Pra
ctic
e
Not Best practices – Next practices
What is Strategic Innovation?
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Disruptive
Incremental
Operational Transformational
Newness to the World
Newness to the Company
Speculative
Strategic
Sustaining
Constant Pressure on the Boundary
Copyright © 2014 The Inovo Group LLC 10
Disruptive
Incremental
Operational Transformational
Newness to the World
Newness to the Company
Sustaining
Strategic
External Forces
External Forces
Expanding Your Boundary
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Disruptive
Incremental
Operational Transformational
Newness to the World
Newness to the Company
When you push your organization’s boundaries,
does your organization push back?
Being Strategic – Company A
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Aerospace Automotive Differences • Costs & Volumes • Functionality • Industry structure • Design cycles • …
A different set of rules
Sustaining vs. Strategic Innovations
Sustaining Innovation Properties Strategic Innovation Properties
Clear signals Weak signals
Internal expertise Lack of expertise
Established models & processes Unfamiliar models & processes
Can be done ‘solo’ Requires collaboration (internal & external)
Quantitative decisions Qualitative decisions
High agreement High skepticism
Linear & sequential – concept to reality Non-linear & iterative – concept to reality
Decisions & actions based on analysis Decisions & actions based on emotion
Low VUCA High VUCA
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Reasons for discomfort
What Does this Mean for You?
• The Environment – Diversity & ambiguity of
knowledge sources
– Weak early signals, lack of evidence
– Knowledge-lean decision environment
• The Organization – Qualitative decisions
– Fuzzy milestones
– Uncertainty
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It’s not us – Company B
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The two most anti-innovative words that can be uttered – ‘prove it’
Roger Martin
Data, information, facts and analysis are not the complete answer
It’s the ‘feelings’ that kill an strategic opportunities
The Fundamental Barriers
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Emotional responses Divergent views of the future
Hidden assumptions Poor mental models
Preconceived notions
What to do about it?
Poor mental models Create new and better models
Hidden assumptions Surface assumptions, test & learn
Divergent views of the future
Develop multiple views, be ready for any of them
Preconceived notions Identify them, acknowledge them, incorporate them
Emotional responses Tell stories, empathize, make an emotional connection
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How to get there – Be Resilient
• Technophilia – Embracing the transformational power of fast moving technology
• Situational Empathy – Embracing the transformational force of rapidly evolving human needs and desires
• Extreme Agility – enhancing resilience to respond to the unexpected and create the unexpected
• Managed Boundaries – controlling what’s inside and what’s outside, what’s porous and what’s a barrier, what’s open and what’s protected.
• Risk Adaptation – changing uncertainty into risk and embracing risk (and failure)
Copyright © 2014 The Inovo Group LLC 18
Healthcare Transformation – Company C
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The Plexus electronics manufacturing model really translates well into what we are doing here in terms of how do you take care of somebody front to back.
You are talking about vertically integrating all things relative to a very specific focus on orthopedics.
At Plexus, we paid attention to every cent and costs were coming down at a tremendous rate. We are structuring operations so that we make money on Medicare.
Curt Kubiak – CEO
Four Principles
• Iterative Deepening – multiple bites at the apple, focusing and shaping, contact over time, multiple-exposure, sub-conscious processing
• Community – contact with both internal and external adopters and influencers
• Socialization (with both internal and external community) – letting people connect, understand and gain insight using storytelling to think and feel
• Purpose built team & project – A journey of discovery and learning done by a skills team with a definitive purpose
Copyright © 2014 The Inovo Group LLC 20
Iterative Deepening
21 Copyright © 2013-2014 The Inovo Group, LLC
Build Community
It’s not just Voice-of-the-customer
It’s the Mind-of-the-community™
The community is the people who have the knowledge, experience and perspective that you need to know
Copyright © 2013-2014 The Inovo Group, LLC 22
Empathize & Socialize
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Thinking
Feeling
Team
External
Experiences
Knowledge
External Adopters
Internal
Models
Stories Internal Adopters
Purpose-built Team & Project
24 Copyright © 2013 The Inovo Group, LLC
Purpose-built Team
External Diversity • Skill & Expertise • Perspective • Role & Responsibility • Compatibility • Cognitive Style
Internal Diversity • Demographic • Functional • Geographic • Org. Level • Connectivity
Purpose-built Project
It’s a Journey
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Into the unknown
The Journey’s Objective – Strategic Learning
“The Unknown”
• Demand Knowledge – What's really wanted and why?
• Design Knowledge – What might be possible and how?
• Future Insights – What are the non-obvious, plausible futures?
• Organizational Insights – How should/could the organization adopt something new (“say yes”) - and adapt?
• Business Model Knowledge – What are the “rules of the game”, and how can (or will) they change?
Opportunity Knowledge – What should/could be done …incorporating all of the above
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Business Model
Knowledge
Future Knowledge
Design Knowledge
Demand Knowledge
Organizational Knowledge
Opportunity Knowledge
Get the Internal Community Involved
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Internal Community
External Community
Advisory Support Team
Core Working Team
Extended Influence Team
Recognize the Power of Storytelling – Company D
Data, analysis, statistics
vs.
Telling stories, creating emotions
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Create Effective Working Relationships
Copyright © 2013 The Inovo Group, LLC
Do it with me
Help me do it
Do it yourself
29
Outstanding Journeys need Outstanding Vessels and Crew
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Well constructed – the right organization Well outfitted – the right processes & methods Well provisioned – the right software & systems Well staffed – the right people and skills
The right leadership The right mission The right support
Your vessel – the organizational structure and the processes, methods and tools available
Your crew – the people who are expert in undertaking journeys and the people who are expert in exploiting what is discovered
But Sometimes Journeys Need to be Halted
Good Reasons*
1. No Pleasant Surprises
2. No Deeper Insights
3. Greater Prospect-Customer-Client Engagement Inspires Little Emotion
4. The opportunity shrinks or narrows the more it is shaped
Bad Reasons
1. We’ve never done this before
2. We’ve tried this before and it didn’t work
3. We don’t have the competency
4. We can’t be certain about the outcome
Copyright © 2014 The Inovo Group LLC 31
*Credit to Michael Schrage
What Does Your Company Want?
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Copyright © 2013-2014 The Inovo Group, LLC
Focus on external knowledge and insights
Well-developed framework, methods and tools…
…ability to adapt to the varying situations
Open access to methods that encourage adoption
Balance demand and design – technology and markets
Navigation of the critical internal barriers
Knowing when to stop and when to push ahead
Key Actions for a VUCA World
• Embrace discomfort
– Acknowledge it, understand its sources, address it head on
• Launch well-constructed journeys
– Designed to understand the future, complex system
• Bring along the communities
– Tell stories to connect – be visual
• Always question, always test, always learn
– Keep iterating, give it soak time, abandon when necessary
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What Can You do Today?
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Investigate the future Advocate discomfort Instigate next practices Initiate journeys
For more information and analysis of these topics see the whitepapers available at www.theinovogroup.com
Strategic Innovation The Thinking-Feeling Organization Adapting Test & Learn for Internal Startups
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