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
Its a fast, VUCA world Premise: The world is Volatile The need for strategic Uncertain Complex Ambiguous innovations (VUCA) this requires strategic The problems with strategic innovation innovations Consequence: Strategic innovation What to do about it is inherently uncomfortable and A view of your possible future causes strong emotional reactions What you will learn Response: A new paradigm of Steps you can take to make iteration, building community, strategic innovation a key socializing, testing and learning is competence for your needed. company
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The premise, the consequence and the response

Introduction to The Inovo Group

An innovation consulting firm that helps the worlds top companies succeed at strategic innovation.
Founded in 2001 Headquarters in Ann Arbor, MI Any industry, any technology, any market

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An Increasingly Fast VUCA World

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Transformation is Everywhere
Healthcare Energy & Transportation

Doctor-centric -> Patient-centric IT

Molecular & singular -> Photonic & shared

Consumers & Retail

Dumb & clueless -> Smart & informed

Physical & blind -> Mobile & aware

5

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The Kodak Story

1975 First digital camera 1993 Formed Digital Imaging Business

Steve Stasson - Inventor

Quicktake digital camera - 1994

2003 They knew what was happening!

Internal Kodak Strategy presentation

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The Kodak Story

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 couldnt / wouldnt do anything about it!

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Entering the Era of Strategic Innovation

Adoption of Common Practice

Quality Movement

Innovation Movement

Not Best practices Next practices

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What is Strategic Innovation?

Disruptive

Speculative

Newness to the World

Strategic

Sustaining
Incremental Operational Transformational

Newness to the Company

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Constant Pressure on the Boundary

External Forces
Disruptive

Newness to the World

Strategic

Sustaining
Incremental Operational Transformational

External Forces

Newness to the Company

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Expanding Your Boundary

Disruptive

When you push your organizations boundaries, does your organization push back?

Newness to the World

Incremental Operational Transformational

Newness to the Company

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Being Strategic Company A

Aerospace

Differences Costs & Volumes Functionality Industry structure Design cycles

Automotive
A different set of rules

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Sustaining vs. Strategic Innovations

Sustaining Innovation Properties Clear signals Internal expertise Established models & processes Can be done solo Quantitative decisions Strategic Innovation Properties Weak signals Lack of expertise Unfamiliar models & processes Requires collaboration (internal & external) Qualitative decisions

High agreement
Linear & sequential concept to reality Decisions & actions based on analysis Low VUCA

High skepticism
Non-linear & iterative concept to reality Decisions & actions based on emotion High VUCA Reasons for discomfort

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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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Its not us Company B

The two most anti-innovative words that can be uttered prove it Roger Martin Data, information, facts and analysis are not the complete answer Its the feelings that kill an strategic opportunities
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The Fundamental Barriers

Poor mental models

Hidden assumptions

Preconceived notions

Divergent views of the future

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Emotional responses
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What to do about it?

Poor mental models Hidden assumptions Divergent views of the future Preconceived notions Emotional responses Create new and better models Surface assumptions, test & learn Develop multiple views, be ready for any of them Identify them, acknowledge them, incorporate them 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 whats inside and whats outside, whats porous and whats a barrier, whats open and whats protected. Risk Adaptation changing uncertainty into risk and embracing risk (and failure)
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Healthcare Transformation Company C

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
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Four Principles
Iterative Deepening multiple bites at the apple, focusing and shaping, contact over time, multipleexposure, 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
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Iterative Deepening

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Build Community
The community is the people who have the knowledge, experience and perspective that you need to know

Its not just Voice-of-the-customer Its the Mind-of-the-community

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Empathize & Socialize

Thinking
Models Knowledge

Internal

External

Internal Adopters

Stories

Team

Experiences

External Adopters

Feeling
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Purpose-built Team & Project

Internal Diversity
Demographic Functional Geographic Org. Level Connectivity

External Diversity
Skill & Expertise Perspective Role & Responsibility Compatibility Cognitive Style

Purpose-built Team

Purpose-built Project

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Its a Journey

Into the unknown

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The Journeys 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 nonobvious, 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?
Future Knowledge

Organizational Knowledge

Opportunity Knowledge

Business Model Knowledge

Opportunity Knowledge What should/could be done incorporating all of the above

Demand Knowledge

Design Knowledge

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Get the Internal Community Involved

External Community

Core Working Team Advisory Support Team Extended Influence Team Internal Community
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Recognize the Power of Storytelling Company D

Data, analysis, statistics vs. Telling stories, creating emotions

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Create Effective Working Relationships

Help me do it

Do it with me

Do it yourself
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Outstanding Journeys need Outstanding Vessels and Crew

The right leadership The right mission The right support
Your vessel the organizational structure and the processes, methods and tools available Well constructed the right organization Well outfitted the right processes & methods Well provisioned the right software & systems Well staffed the right people and skills Your crew the people who are expert in undertaking journeys and the people who are expert in exploiting what is discovered
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But Sometimes Journeys Need to be Halted

Bad Reasons Weve never done this before Weve tried this before and it didnt work We dont have the competency We cant be certain about the outcome Good Reasons* No Pleasant Surprises No Deeper Insights Greater ProspectCustomer-Client Engagement Inspires Little Emotion The opportunity shrinks or narrows the more it is shaped
*Credit to Michael Schrage
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1. 2. 3. 4.

1. 2. 3.

4.

What Does Your Company Want?

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
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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?

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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