Archive | June, 2012

Book: The Innovator´s DNA (Abstract)

29 Jun

Abstract:

How do I find innovative people for my organization? And how can I become more innovative myself? These are questions that stump most senior executives, who know that the ability to innovate is the secret sauce of business success. Perhaps for this reason most of us stand in awe of the work of visionary entrepreneurs such as Apple’s Steve Jobs, Amazon’s Jeff Bezos, eBay’s Pierre Omidyar, and P&G’s A.G. Lafley. How do these individuals come up with groundbreaking new ideas? In this article, Dyer, of Brigham Young University; Gregersen, of Insead; and Christensen, of Harvard Business School, reveal how innovative entrepreneurs differ from typical executives. Their study demonstrates that five discovery skills distinguish the most creative executives: Associating helps them discover new directions by making connections among seemingly unrelated questions, problems, or ideas. Questioning allows innovators to break out of the status quo and consider new ideas. Through observing, innovators carefully and consistently look out for small behavioral details – in the activities of customers, suppliers, and other companies – to gain insights about new ways of doing things. In experimenting, they relentlessly try on new experiences and explore the world. And through networking with diverse individuals from an array of backgrounds, they gain radically different perspectives.

The author´s  found that innovators must consistently act different to think different. By understanding, reinforcing, and modeling the
innovator’s DNA, companies can find ways to more successfully develop the creative spark in everyone.

An exciting book that will give you interesting insights on what activities will help us to become innovative.

Jesus Mascareno

jesus.mascareno@innovationbeats.com

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// Innovation Snack 2

24 Jun

https://www.innocentive.com/

Looking for challenges?, Innocentive puts your creativity to the test. This company has a challenge center where different organizations like NASA publish innovation challenges seeking for creative solutions in exchange of awards. Take a look at it and if you want to participate you just need to register and light up your creativity. Hope you enjoy….

Jesus Mascareno

jesus.mascareno@innovationbeats.com

Measuring Innovation with Balanced Scorecard

24 Jun

Must of the complications in reaching innovation´s benefits is the lack of alignment between the overall organization’s strategy and the actual innovation department activities. The innovation department is sometimes seen as a dream factory disconnected from the firm´s reality.

The BSC  allows senior managers to align innovation departments to the overall organization’s strategy by keeping track on four different dimensions: customer, internal business, learning and growth, and financial. The four dimensions view allows everyone in the department to identify how its activities feed up the strategy of the organization.

Considering the problems arose in the management of innovation in respect of measuring the inputs and outputs of this type of activity, there are two reasons why it would be useful to implement BSC to aling innovation efforts. The first arises from the difficulties found in the employment of some of the indicators traditionally utilized in measuring the success obtained by companies in their R&D activities; the other arises from the lack of consensus in their choice of the dimensions that should be included in reports prepared for the strategic management of this type of activity, as well as from lack of alignment of the measurements of the returns from these activities with the strategy of the company; the BSC is one of the instruments for the measurement of these returns recommended in the literature on management of R&D (Bremser and Barsky, 2004; Kerssens-van Drongelen and Cook, 1997; Pearson et al., 2000).

In order to implement balanced scorecard in a innovation department of a production organization a deeper understanding of the tool’s four dimensions is needed, as well the specific characteristics of R&D departments that must be take into consideration in order to formulate the measures needed to enhance its performance.

Balanced scorecard relies on four areas for managing activities to achieve long term objectives or strategies. Balanced scorecard provides an opportunity to incorporate financial information into non-financial areas i.e. companies relationship with customer, internal process and learning and growth. When performance measures for these areas are added to financial metrics, it would not only provide companies’ overall performance but also a robust organizing framework.

The financial perspective determines whether company’s implementation and execution of strategies are contributing to the bottom line improvement of the company. Some of the common measures in financial perspective are profitability, growth and shareholder value through EVA, revenue growth, costs, profit margins, cash flow, net operating income etc. This perspective when implemented in production organizations’ R&D departments helps to measure value creation throughout R&D at the stage of innovation, and what percentage of sale from new development and value creation of development at commercial level.

The customer perspective defines value proposition of companies that involve time, quality, performance and service to satisfy the desired customers and to translate company’s mission statement on customer service into specific measures that reflect the factors that really matter to the customers. The main focus is to measure the value delivered to customer and result of value proposition. Customer response provides R&D department an insight into ongoing and new product initiatives. It also provides the impact of new R&D on capital employed, customer profitability and revenue growth rate which subsequently used for market potential and client retention.

The internal business process is concerned with processes, decisions, and actions of the organization that create and deliver the customer value propositions. It focuses on critical operations of the company that need to excel in order to satisfy customer needs. Main areas deals under internal business process are operations management, customer management, innovation and regulatory. In this dimension R&D could be measured according the efficiency in the development cycle time, time and cost taken by a development. Internal business dimension measures should have into consideration the accuracy of pricing and subsequent profit planning according to pricing policy and also consider new product development after having customer satisfaction index.

The innovation and learning perspective measures the company’s ability to develop and improve the performances focusing on the internal skills and capabilities that are required to support value creating process. It is concerned with the jobs, systems and climate of the organization. In R&D department this area can be very useful in measuring employees performance and their trainings e.g. employee retention and development. It also should be used for measuring the balance within the level of innovation in R&D as compared to competitors and its level of competence.

The previous analysis to each one of the balanced scorecard four dimensions, allows to identify the diverse opportunities that the tool present us to measure R&D performance. García-Valderrama, Mulero-Mendigorri and Revuelta-Bordoy (2008) made an extensive bibliographic and field study research in order to identify from the previous publications and managers perspectives which are the most relevant measures in R&D that must be taken into consideration for the elaboration of a balanced scorecard. Based on this research and the previous analysis throughout this paper the most relevant measures for each one of the four balanced scorecard dimensions are presented in the following table:

Financial Dimension Customers Dimension
Increased financial profitability Improved positioning against competitors
Increased profits Increased customer satisfaction
Internal Processes Dimension Increased market share
Effort in R&D Learning and Growth Dimension
Manuals of procedures Personnel hostility to new technology
Coordination in activities, and match between objectives and budget Personnel aptitudes/attitudes
Quality Training and experience
alliances with partners in R&D Degree of involvement and participation of R&D personnel
Degree of influence of external regulation on R&D Performance evaluation applied to R&D personnel and identification of competences and training needs in R&D
Innovation in products and process

The above mentioned measures pretend to give a more detailed performance management system for R&D department in production organizations, each one of the measures allow managers to keep on track of all the components of the R&D strategy and how well it is aligned with the overall strategy of the company. These measures provide a broader understanding of the research and development processes and give the baseline for judging its performance.  It is relevant to mention that each dimension and its measures are interlinked by a cause and effect component, the improvement in the internal processes measures increases the learning and growth dimension, by doing so customer satisfaction and value can be enhanced, which ultimately is  transformed into financial benefits for the organization as a whole.  In other words he proposed balanced scorecard for R&D departments in productions organizations (see figure1) promotes innovation and eases its adoption, constructs know-how, places new and better products into the market and ultimately assures a financial return, it sets the basis for competitive advantage creation.

The adoption of the balanced scorecard in R&D departments can bring three major benefits to this department, the first one is the congruency of the department’s activities to the overall strategy of the organization, this is the cause and effect element where each one of the dimensions are connected with each other and the sum of the dimensions is directly connected with the overall strategy of the organization. Second is the efficient and effective connotation of the activities performed, this means the tool assures that the most relevant activities are performed and they are performed in accordance with the established standards. The third benefit is the flexibility the tool has, since allow managers to design its own combination of measures taking by reference the ones above mentioned in order to fits to their individual characteristics.

Despite all the benefits mentioned, they all are related to improve and enhance the performance of product development in the R&D department, but excellent performed developed products can have a catastrophic market impact and have a negative impact on the financial dimension of the balanced scorecard. This awakes the necessity for measuring the potential of success in product development. Balanced Scorecard for R&D departments therefore requires further analysis and development to identify measures or dimensions in how new R&D projects are selected since they can be excellently measured but the whole process can be nothing but producing excellent mistakes.

Jesus Mascareno

jesus.mascareno@innovationbeats.com

// Innovation Snack 1

21 Jun

In this new type of posts which I will call  Innovation Snacks I want to share different websites that give us the latest beat on innovation and a spark our creativity with new insights on innovation. Hope you enjoy….

http://www.innovationmanagement.se/

Innovation Management is an Online Knowledge Center, what makes this website great is that that publishes content from leading innovation experts and practitioners with global perspectives. If you are interested in open innovation, social innovation and collaborative innovation you might feel in disneyland.  For those innovation specialists this website allows you to submit content and get published, the bar is quite high though.

Visit the website and give us your thoughts,

Jesus Mascareno

jesus.mascareno@innovationbeats.com

 

Future-Driven Innovation

17 Jun

I decided to write about future-driven innovation because most of the tools that we use for strategy  and innovation planning have a short term view. SWOT, PEST and other methods gives us great insights on how we are today and the gap we need to fill today to not loose ground in the market, these tools do not seem to fit an innovation strategy, if we use them to feed a long term innovation plan, the result will be an imbalanced plan doom to fail.

The term Future driven-innovation was first coined by the Copenhagen Institute for Future Studies in 2009 member´s report, in it the institute says trends and innovation are closely linked. No matter whether we speak of open-plan kitchens or technological innovation, the innovation is a responseto a trend. Apple chose to focus on the iPhone instead of PDAs because it expected the integrated mobile phone to be the future. The report points that success does not occur in a cultural vacuum, but represents an identification of a need-driven possibility space. The more style-conscious consumer that Apple appeals to is, for example, shaped by the megatrends individuality and increasing affluence.

But, how can we even grasp an idea of how the future will be in order to react?  Over the last three decades, Shell has been the pioneer in identifying emerging challenges to foster adaptability to change. They use scenario planning as a way to look into probable futures.

According to CFSI scneario planning is based on different projections, and then carefully examine the assumptions underlying the projections and the events that may affect them.In this way, we can work with transition scenarios that identify the steps that lead to a desired future (end state). This method makes it possible to create  indicators and cardinal points that help the company monitor progress on future innovations.

Overview of the process:
1. Identify and, if possible, quantify the trend
2. Identify actors influencing barriers and accelerators
3. Create different scenarios for the future development of the trend
4. Make a critical assessment of the preconditions for the different scenarios
5. Identify competitors
6. Construct transition scenario with time-to-market based on various developments
7. Monitor players. Are they addressing key barriers? Expect innovation from competitors.

In order to better understand its practicality I will give you an example: last year I had the chance to work with a logistics company that was struggling to make profits despite dominating the mass delivery of bank statements in México, after a scenario planning we idetify that trends such as digital documents, market fragmentation and increasing request of personalization by the customers was pointing to a future scenario were the mass market of deliveries no longer existed, instead the market would be a highly customized market of logistigs where products like documents will no longer needed to be delivered at least no in the traditional way. Long story short the company decided to create an innovation center fully dedicated to develop solutions for this future, nowadays this company delivers products bought online, mobile phones, laptops, sells RFID solutions and most important is now is making profits.

We can say that future-driven innovation is about identifying trends, how they evoluve and what outcomes will be if they merge between them. This analysis help us to identify future scenarios and what role do we want to play in them as company in order to draw the innovation path we must follow. With this information at hand we can now develop long term plans for our innovation efforts with strong focus in the trends that will shape the markets. I must say however that the key is not to loose sight of the cardinal points that help us to monitor possible shifts in future scenarios in order to to reassure the innovation path or to make proper adjustments. Another warning I give you is that we must avoid to chart only the obvious future scenarios, let´s be bold and analyze all possible outcomes to foresee possible uncertainties in order to have responses prepared.

Jesus Mascareno

jesus.mascareno@innovationbeats.com

Coordinating Innovation within Open Source Platforms -The Symbian Foundation Case-

11 Jun

The Symbian foundation was designed primarily to accelerate innovation of the Symbian Platform, enabling greater services and applications by promoting collaboration, technology contributions and active participation of both firm members and developers. Members created the Symbian Foundation to manage the complex interoganizational relationships (184 companies) and once in place the Symbian Foundation not just coordinated all the actors but promoted the complexity of the platform by negotiating the inclusion
of more members to the platform.
The founding members delegated coordination responsibilities to the Foundation, giving the authority to the Symbian Foundation to develop the meanings to achieve coordination. The founding members had no more authority on the platform release process, rather the platform shifted to a democratic process settled by the Foundation. The Symbian Foundation promoted virtual forms of organization by creating “Working Groups”. These groups are created by the councils to delegate work to a focused group
with the time and skills to carry the task. In addition to the Symbian Foundation, the developers’ community and the “Working Groups” it was found “Autonomous Groups” that pursue the ultimate goal of the Symbian Foundation but not the method. These autonomous groups do not participate in the process of new platform generation neither responds to specific mandates from any of the councils, however, they are linked to the Symbian Foundation vision of accelerating innovation.
The platform release process is the process developed and established by the Symbian Foundation to link all the different actors, from developers, members, councils and Symbian Foundation’s specialists to create the new version of the Symbian Platform. It is in this process that the vision and main goal of the firms to create the Symbian Foundation happens the synchronized collaboration of pooled resources to create and innovate the Symbian Platform.

The Symbian Platform uses a variety of legal documents such as the member contribution agreement, membership rules, behavior guidelines, licensees and deed of adherence. These documents have as goal the adherence of members to expected behaviors that reduces uncertainty, roles definition and it makes interactions among members predictable. The main formal coordination for the Symbian Platform is the platform roadmap, because in it all of the proposals of the members are reflected in one single document that serves as common goal. All the members of the platform can see the direction of the evolution of the Symbian platform and relate their tasks to the achievement of this common goal. In Symbian Platform ICT is a strong binding mechanism that increased the level of interaction, participation and coordination across the Symbian Platform. ICT allowed the Symbian Foundation to run its coordination processes and coordination mechanisms online and by doing so increased the level of participation, trust and accelerate the outcomes. Informal coordination mechanisms relied in the online forums and the different websites of theFoundation. Moreover, ICT worked as information storage center for all the actors, and it is used as means for controlling and monitoring the development of the platform.

In the Symbian Platform coordination was achieved through the creation of an institution, this institution in turn developed a process that links all the actors to pool knowledge and resources in order to create the platform. The Foundation heavily relied in ICT to implement a set of formal and informal coordination mechanisms to assure participation, behaviors and the vision of a common goal. In addition to this it was found the Symbian Foundation is increasingly promoting the self-coordination of the members by supporting the creation of autonomous groups.

Jesus Mascareno / Imran Moyhuddin

jesus.mascareno@innovationbeats.com

Platform Leadership as Innovation Driver

4 Jun

Industry platforms are the  building blocks that act as engines of innovation and redefine industrial architectures, is a novel phenomenon affecting most industries today, from products to services. (Gawer, 2009). Moreover Evans et al (2006) argues platforms are at the center of the tectonic industrial change now business arena is facing. Industry platforms are found at the industry level and its configuration has been widely used especially in high technology industries. Gawer (2009) described industry platforms as building blocks (they can be products, technologies or services) that act as a foundation upon which an array of firms can develop complementary products, technologies or services. Gawer and Cusumano (2002) mentioned that industry platforms provides a common foundation or core technology that a firm can reuse in different product variations, an industry platform provides this function as part of a technology “system” whose components are likely to come from different companies which are called “complementors.”

Within industry platforms we find key players who lead innovation, Gawer and Cusumano, (2002) presented the example of how Intel drove innovation across the PC industry platform when the platform was fragmented and the platform was constraining the development of Intel’s microprocessors. Intel sponsored innovation, stimulated external innovations on components and coordinated industrial innovation across boundaries to influence industry innovation and drive platform evolution. However Intel’s negotiation capabilities were strongly supported by its bargaining power and brand recognition.

Platform leadership nature resides in the fact that a platform leader has a strong bargaining power over the rest of the participants and therefore can influence the innovation path of the industry platform. Platform leaders’ bargaining power is enhanced in closed platforms where the leader often has erected a wall of property rights. Therefore the platform owner effectively controls a ‘bottleneck’ essential to other players (Rochet and Tirole, 2004; Jacobides et al., 2006). According to Boudreau and Hagiu (2009) platform regulators may also have access to a wider menu of regulatory instruments to implement desired actions. Apart from licensing, property rights assignment and other traditional contractual and legal instruments, platform technologies and design are themselves understood as a means of virtually imposing laws (Lessig, 1999) and design rules (Baldwin and Clark, 2000) by the platform
leaders.

Another problem for platform leadership is that the boundary between platform and complementary solutions are not well defined, and platform owners constantly absorb innovative features of complementary applications into the platform (Gawer and Henderson
2007). In doing this platform leaders may discourage innovation among complementors. Coordination under the umbrella of platform leadership it may become a long and expensive process. This was the case for Intel where it took five years and billions of dollars for the company to convince complementors to increase its capabilities in order to match Intel’s microprocessor full potential (Gawer and Cusumano, 2002).

In terms of innovation this approach presents a strong deficiency: the direction of the innovation path might respond to the platform leader needs and its expectations of the technology not of the whole platform. As Lansiti and Levien (2004) mentioned, keystone firms do not promote the health of others for altruistic reasons but because it is beneficial for their own strategy.

Jesus Mascareno

jesus.mascareno@innovationbeats.com