Building a Framework for Innovation / Growth Capability growth@valize.com
What our 30 day innovation sprint will provide 1. 2. 3. 4. 5. 6.
A clear framework within which the innovations will operate A design for connecting strategy and the innovation program An opportunity portfolio assessment with recommended actions A recommended approach to training and skill-building A design for up to 3 early pilot projects Governance model design
Building Innovation Capability Enterprise Level Framing ● ● ● ●
Work Plan
Assessment ●
Innovation Objectives Scope Resources Scorecards
● ● ● ●
Innovation Proficiency (IMS) Team Effectiveness Interviews Portfolio review “As is”
●
●
Governance Model Project Prioritization Operating Rhythm
Project / BU Level Projects ● ● ● ●
SparcHub Checkpoints Learning Plan Portfolio Updates
Capabilities ● ● ●
On Demand Workshops Office Hours
2
This proposal covers the Framing Challenge Enterprise Level Framing ● ● ● ●
Work Plan
Assessment ●
Innovation Objectives Scope Resources Scorecards
● ● ● ●
Innovation Proficiency (IMS) Team Effectiveness Interviews Portfolio review “As is”
●
●
Governance Model Project Prioritization Operating Rhythm
Project / BU Level Projects ● ● ● ●
SparcHub Checkpoints Learning Plan Portfolio Updates
Capabilities ● ● ●
On Demand Workshops Office Hours
3
Innovation Objectives
Five Levers To Drive Growth: What is your growth gap? New Initiatives
Business Value ($Billion)
Services Geographic Expansion
The role of the Innovation and Growth Program
Business Model Innovation
Current Business Portfolio
Underlying Business Growth or decline
Baseline valuation of company 5
Every management decision has both NPV and Option Value
Option Value Present Value Low
High
Uncertainty
Technological Uncertainty
An activity portfolio
Positioning
Stepping Stones
Platform Positioning
Core
Platform Scouting
Scouting
Market Uncertainty
Technological Uncertainty
An activity portfolio
Positioning
Stepping Stones
Platform Positioning
Core
Platform Scouting
Scouting
Market Uncertainty
Core Enhancement: Launches make your core business stronger: expanding customer satisfaction, improving efficiency, taking cost out, being responsive, and investing in quality improvement.
Example: Enabling WFH, digitizing a customer portal, adding features to the web site
An activity portfolio Technological Uncertainty
Platform Positioning: Putting
Positioning
Stepping Stones
sufficient resources behind the initiative to prompt the formation of a favorable ecosystem; collaborate with standards bodies; “accelerate” venture stage
Example: Adobe Creative Cloud
Platform Positioning
Platform Scouting: Transition Core
Platform Scouting
Scouting
Market Uncertainty
from early adopting customers to mass market customers; a complete offering does a customer ‘job’ superbly; “accelerate” venture stage
Example: Amazon Web Services
Technological Uncertainty
An activity portfolio Positioning Options: You Positioning
Stepping Stones
Platform Positioning
Core
Platform Scouting
Scouting
Market Uncertainty
know there is demand, what you don’t know is which solution will meet the demand, whether the potential solutions will work, or what the standards will be.
Example:
Telepresence - whatever will replace Zoom (not a minute too soon!)
Technological Uncertainty
An activity portfolio Scouting Options: Positioning
Stepping Stones
Platform Positioning
Core
Platform Scouting
Scouting
Market Uncertainty
the business equivalent of an experiment. The purpose is to test well developed hypotheses. Even if the test fails, at least you’ve learned something.
Example: Second-Day Sushi
Technological Uncertainty
An activity portfolio Stepping Stones: Positioning
Stepping Stones
Platform Positioning
Core
Don’t know how to do it, don’t know if anyone wants it, but think the long-run potential is irresistible!
Example: Autonomous Vehicles Platform Scouting
Scouting
Market Uncertainty
First big question • Will the portfolio you have in the platform and options area fill your growth gap? • If not, we need to make the case for an innovation / growth program
• With specifically defined growth targets, worked back from the future
13
Technological Uncertainty
Typical Company profile
Positioning 125 Platform Positioning
• 25 Core Core 25
5
120
200+
5
Stepping Stones
Promised, but unworked on
75 75
75 110 110
Platform Scouting 95
210
Unfocused
Scouting
Market Uncertainty
Number of person-months devoted to a project
35
5
Not transparent Some projects with no activity
Scope of projects
Second Big Question: What is your scope and how will you create alignment?
•Strategy •Budgets •Projects •People 16
Governance – an ideal design
Your governance system • Typically composed of functional heads who are able to allocate resources to projects that are worthy of exploration • Agrees on areas of interest and establishes screening and selection criteria (in advance) • Monitors the opportunity portfolio
• Oversees integration of promising new opportunities into the business units • Establishes innovation fund to overcome disincentives for business unit commercialization of new products
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Cash Flow Considerations: Seed Stage Executive Committee
Positioning
Growth Board Investment
Stepping
Seed Funding
Stones Platform
Positioning Platform
Core
Scouting
Returns from previous projects or BU contributions
Project
Scouting DDP Looks Promising
Further Funding From Growth Board
DDP Early Exit
Loss to Growth Board Fund 19 19
Cash Flow Considerations: Development Stage Executive Committee
Positioning
Growth Board Investment
Stepping
Checkpoint Funding
Stones Platform
Positioning Platform
Core
Scouting
Returns from previous projects or BU contributions
Project
Scouting DDP Looks Promising
Further Funding From Growth Board
DDP Early Exit
Loss to Growth Board Fund 20 20
Cash Flow Considerations: Launch Stage Business Unit
Positioning Platform
E E
Launch Investment
Stones Project
Positioning Platform
Core
Stepping
Scouting
Scouting
Business Unit Pays back investment to growth fund, keeps remaining proceeds
Successful launch
Profits credited to BU Management
Abandon
Loss to Innovation Growth Board 21 21
Resource Allocation
Third big question: What criteria will you use to allocate resources? The role of screening scorecards
Screens can be used to create a scorecard for opportunities Dimension
Exceptional if.
Acceptable if..
Unfavorable if.
Strategic Intent
This opportunity takes us exactly where we want to go in terms of our strategy 9
This opportunity is not incon-sistent with our strategy, but offers no engine to drive it 3
This opportunity, even if we succeed, is inconsistent with our strategy 1
Builds competitive advantage
The idea builds both short term revenue streams and long-term competitive advantage 9
The idea has either long or short term benefits, but not both 3
The idea provides only short-term benefits and may interfere with a long-term opportunity 1
Builds knowledge capabilities
The opportunity will help us enhance our capabilities significantly 9
The opportunity will let us build new capabilities, but only in very limited areas 3
The opportunity will not lead us to extend our capabilities in any meaningful way 1
Use of existing assets
The opportunity requires no investment in new assets 9
The opportunity does require some investment but takes advantage of assets in place 3
The opportunity will require entirely new investment in assets 1
Score Totals
24 24
Keltex: An Actual Example of going from strategy to screening
25
Strategy Statement
Keltex is going to triple its profits by 2010 by providing innovative products and services that improve the lifetime value of a building to its owners.
Simultaneously, Keltex’s products and services are cost-competitive and its processes characterized by globally aligned operational excellence. 26
Three-Step Strategy Process Strategy Retreat Keltex 2010 - Strategic intent, strategic priorities
3-5 ”Gap groups” Assessment of strategic priorities & actions to close existing performance gaps
Communication and implementation Impact on yearly planning and everyday action
Continuous Refinement of Keltex 2010 Strategy Definition of growth strategy elements and specification of Keltex Business Model Feb
Mar
Apr
May
June
27 27
Strategic Initiatives (note not many) Implementation of segmentation solutions
The implementation of strategic and global customer management will be intensified. Simultaneously, a business model for managing core customers in an efficient way will be developed.
Road map for innovative services and solutions
Growth requires us to maximize our reachable market by ensuring appropriate product coverage (to cover relevant customer segments in the geographical areas that make the growth possible). The solutions (products, services and information) that we produce will be based on modularized platforms that allow regional flexibility.
Operational excellence
Explore adjacency growth
Define and develop core capabilities
Regional initiatives
Keltex will develop its cost competitiveness by globally aligned operational excellence, i.e. we will remove overlapping functions, clarify roles and responsibilities in the organization, and invest in creating global processes for quality management, end-to-end logistics, sourcing and a global IT infrastructure. Keltex will continuously explore growth opportunities in adjacent areas such as the facility quality business and elements relating to owning, managing and developing facilities.
Keltex will implement a major upgrade in its sales capability.
We will considerably strengthen our market position in Asia. We will secure a fast and efficient turnaround in the US market. 28
Linking the strategic initiatives to a set of screening statements
Dimension
Exceptional if…
Acceptable if…
Unfavourable if…
9
3
1
1. Gives the customer an edge
Measurable, significant positive impact on customer’s bottom line
Appreciated by customer, but impact is modest
Neutral for customer
2. Is innovative
Brings significantly better new features or processes to the market; disruptive
Involves improvements to features or processes, but not dramatic ones
No change to features or processes
3. Increases our cost competitiveness – overheads
Creates a 30% or better improvement in overhead costs
Creates a 5-29% improvement in overhead costs
Less than 5% impact on overhead costs
4. Increases our cost competitiveness
Creates a > 25% cost savings in module or component costs
Creates a 10-24% cost savings in module or component cost
No cost savings
5. Enhances global alignment
Creates a product, process or service that can be introduced globally
Creates a product, process or service for multiple locations, but not globally
Purely local product, produces or service
6. Exploits a Keltex capability
Both exploits and enhances a key Keltex E skill / capability
Benefits from Keltex capabilities
Keltex capabilities make no difference
7. Brand Image
Brand image exceptionally positive, preferred choice
Brand image positive
Neutral to negative brand image
8. Drives our growth program
Gives access to both near-term and long-term growth potential
Gives access to near-term growth potential
Not a growth driver for Keltex
9. Margins and Profitability
Significantly positive impact on Keltex margins and profitability
Positive impact on margins and profitability, but not significant
Neutral or negative effect on profits
10. Effect on addressable markets
Significantly expands Keltex addressable market
Allows Keltex to better exploit existing market
Does nothing to expand Keltex markets
11. Customer loyalty / retention
Extremely positive effect on loyalty and retention
Could improve loyalty and retention
No impact on loyalty or retention
12. Resources required
Can be accomplished with no or few additional resources
Requires some additional resources, but they are obtainable
Project requires significant new resource infusion
13. Takes Keltex into new opportunity areas
Opens exciting new opportunity spaces for Keltex
Allows Keltex to enhance existing activities
Benefits apply only to existing activities
14. Risks
No risks to doing this
Some risks, but they can be controlled
Highly risky project
Score Totals
30
Fourth big question: Where will you locate the venturing unit?
Archetype 1: Assign the project to a line manager
32
Archetype 2:
Create a separate unit within an operating division 33
Archetype 3: Have the unit report to R&D
34
IBM Example: EBO
Archetype 5: Create a new venture division
Archetype 6: Report to CEO
37
Archetype 7: The permissionless organization Agile, integrated, teams
38
Fifth big question: Timing and activity
Pick a few promising projects & plan using the DDG method
Next Steps
30 day plan
Strategy scorecard
Portfolio review
Staffing & training
Location plan
6 month milestone s
41
Balance core with growth!
42
Decades of thought leadership insights
Rita McGrath & Ron Boire
and operating experience combine to provide comprehensive solutions for your realworld strategic challenges
Rita McGrath is a best-selling author, a sought-
Ron Boire has held C-level roles as CEO of
after speaker, and a longtime professor at
Barnes & Noble, Sears Canada, and Brookstone,
Columbia Business School. She is widely
as well as senior leadership positions at Sony,
recognized as a premier expert on leading
Toys R Us, Sears Holdings and Best Buy. Ron has
innovation and growth during times of
guest lectured at Columbia Business School,
uncertainty. Rita has received the #1
Harvard Business School and MIT. He has
achievement award for strategy from the
appeared as an industry expert at numerous
prestigious Thinkers50 and has been
conferences such as the Consumer Electronics
consistently named one of the world’s Top 10
Show and been an expert guest on CNBC, Fox
management thinkers in its bi-annual ranking.
Business, The Wall Street Journal among other
As a consultant to CEOs, her work has had a
business media outlets.
lasting impact on the strategy and growth programs of Fortune 500 companies worldwide.
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