IBM iForum 2007 - Joint Innovation With Clients by Tony Morgan

Joint Innovation with ClientsNovember 2007

Tony Morgan - IBMSenior IT Architect

1Tuesday, December 4, 2007

Agenda

Innovation and Collaboration

IBM’s Approach to Innovation

Joint Innovation Partnership/Value Creation Centre

Factors for Success

Innovation – One Definition is… The use of new ideas or current

thinking applied in fundamentally different ways that result in significant change

Covering a broad scope including:

– Products, Services, and Markets

– Business Models

– Operations

The Global CEO Study 2006: InnovationInterviewed 765 CEO’s - across the globe, 5 sectors, 21 industries, large and SMB enterprises

The Global CEO Study 2006: Innovation

Interviewed 765 CEO’s - across the globe, 5 sectors, 21 industries, large and SMB enterprises

65%13%

Moderate

Little or no

CEOs: Extent of fundamentalchange needed over next two years

CEOs are looking to use Innovation to

drive fundamental change to enable sustainable growth

65%13%

Moderate

Little or no

Business model innovation is now nearly as important as more traditional innovation around products/services

65%13%

Moderate

Little or no

CEOs believe that integrating business insight and technology capabilities enables the organization to “stay ahead of the curve”

65%13%

Moderate

Little or no

CEOs believe that integrating business insight and technology capabilities enables the organization to “stay ahead of the curve”

CEOs agree that internal and external collaboration is key to innovation, but many are slow to actually practice it

65%13%

Moderate

Little or no

Sources of New Ideas and Innovation

IBM Institute for Business Value, CEO Study 2006

Academia

Associations

Business partners

Competitors

Think-tanks

Consultants

Customers directly

Employees

Labs and/or other institutions

Internal R&D

Internal Sales & Service Units

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

5Tuesday, December 4, 2007Interestingly…What we found was more and more CEOs looking outside the organization for fresh ideas and innovation

Look at this…external sources mentioned twice as often as internal sources

Look at this…R&D mentioned by just over 15% …. a few years ago this would not have been the case

There’s a real shift underway to collaborative innovation…

Sources of New Ideas and Innovation

Academia

Associations

Business partners

Competitors

Think-tanks

Consultants

Customers directly

Employees

Internal R&D

Internal Sales & Service Units

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

McKinsey Innovation SurveyOctober 2007

Mechanisms for Innovation

IBM CEO Study2006

Mechanisms for Innovation

IBM CEO Study2006

Delivering on Innovation Opportunities

Agenda

Factors for Success

Challenge /Opportunity Idea Generation Incubation Validation Value realized

Alpha Works –LOB with developer

community

Strong governanceis crucial

Research, Corporate

IBM Lines of Business

GTO / GIO /IBVClient (and IBM) Challenges

community

IBM innovation programs

Research, Corporate

InnovationJam

ThinkPlace

Communities of Practice

community

Research, Corporate

InnovationJam

ThinkPlace

Extreme Blue

Biz Tech

Emerging Business

Opportunities

community

Research, Corporate

InnovationJam

ThinkPlace

Extreme Blue

Biz Tech

Emerging Business

Opportunities

community

First of a Kind

Research, Corporate

InnovationJam

ThinkPlace

Extreme Blue

Biz Tech

Emerging Business

Opportunities

community

IBM Internal

IBM Offerings

Partners

Clients

First of a Kind

Research, Corporate

ClientChallenges

InnovationJam

ThinkPlace

Extreme Blue

Biz Tech

Emerging Business

Opportunities

community

IBM Internal

IBM Offerings

Partners

Clients

Joint Innovation Partnerships

First of a Kind

Agenda

Factors for Success

Through the VCC, IBM can share the technology vision, knowledge, best

practices, and solutions gained from IBM’s research, development and worldwide customer experience

VCC works withthe Client to conduct research and shape

propositions

A B C D

Value Creation Centre

IBM ResearchCentres

IBM Industryand technology

expertise

IBM Leader: XXXXXClient Leader: XXXXX

Client Business / CIO Teams

Client Strategy & Global / Regional Teams

Other IBMInnovationSources

A business-led governance process sets Strategic Direction &Priorities

Joint Innovation PartnershipClient and IBM Value

Creation Centre

Building a Joint Innovation Partnership

Mission Scope People Process Tools Support and Governance

Building an Innovation Partnership 1/4 Mission

– Create a set of objectives along with measurable success criteria for the innovation partnership

– Review these on a regular basis

Scope– Define scope - areas of the business and technology functions that

the innovation partnership should focus on– On occasion there may be a reason to go beyond this scope or to

handover an identified idea to a function in another part of the business

Building an Innovation Partnership 2/4 People

– Dedicate core resource and leadership – with clearly set objectives

– Ensure the right skills – not just gadget people!– Assign virtual resources per project– Ensure the right resources – IBM, IT, business units

Process– Use a “process” to identify and evaluate ideas (and collaborate on

if possible)– Use a “process” to develop ideas into real initiatives and projects

Building an Innovation Partnership 3/4 Tools

– Formal or informal tools– At the minimum a tool for rating ideas against business objectives

and priorities and a tool for running, tracking and reporting on the overall Innovation portfolio

– Formal tools can be used – alternatively informal tools such as spreadsheets and project management tools may be an option

Building an Innovation Partnership 4/4 Support and Governance

– Exec level sponsorship – IBM and client– Strong focussed Steering Committee – IBM and client– Hook the innovation system into the wider organisation– Potential role of Innovation Catalysts– Clear funding model – core budget, process to get project specific

funding

Innovation Process, What Process?

Innovation Process, What Process? “Innovation process” – isn’t that an oxymoron?

Example oxymorons – – “new improved”– “numbing sensation”– “partial silence”

Running the Innovation Process Generating and identifying ideas

Evaluating ideas

Developing innovation initiatives

Reporting the Innovation portfolio

Generating and Identifying Ideas How are you are going to generate and identify ideas?

– Initial ideas set by Steering Committee?– Ideas input formally or informally from internal employees,

business partners, customers, R&D department etc?– Both?

Academia

Associations

Business partners

Competitors

Think-tanks

ConsultantsCustomers directly

Employees

Internal R&DInternal Sales & Service Units

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Evaluating Ideas Once you have an idea how it will be evaluated?

– Set criteria and a scoring mechanism – Sometimes temper with a level of pragmatism and experience!

Innovation Initiative Process Once you have accepted an idea, what process will you follow? The VCC follows a structured gated innovation process

Discussions Initiatives Ideas Delivery Themes

Innovation Initiative Process Once you have accepted an idea, what process will you follow? The VCC follows a structured gated innovation process

Discussions Initiatives Ideas Delivery Themes

Example Project Walkthrough

Innovation Portfolio Reporting – Example ViewInnovation Portfolio Reporting

The Importance of Governance Strong governance means strong support and commitment for

the Innovation partnership and the innovation agenda

Steering Committee A strong joint executive level Steering Committee is key to

delivering a strong innovation partnership

The role of the Steering Committee, like the role of the Innovation Team, should be clearly defined

Example responsibilities include:– Review Innovation Team progress– Review Innovation Team requests and priorities– Confirm selection of current Innovation Team activities– Review Innovation Team Governance – making Exec level

decisions where required e.g. on funding priorities– Set strategic directions and focus for coming period

Steering Committee Membership The Steering Committee membership should include executive

management from both organisations covering the main scope areas of the innovation partnership, including an overall chair, plus empowered reps from related organisations, e.g. Strategy and Architecture teams

The Steering Committee should sit quarterly at a minimum and perhaps more often, especially in early days

Agenda

Factors for Success

Factors for Success Work as a Joint IBM / Client Team

– Effective / Staffed Core Team– Appropriate IBM, IT & Business Unit Involvement for each initiative– Working with the Strategy & Architecture Teams

Select the right ideas– Strategic for client and IBM – Valuable from a client business perspective– Balanced portfolio – quick wins as well as longer term strategic projects

Factors for Success Work as a Joint IBM / Client Team

– Effective / Staffed Core Team– Appropriate IBM, IT & Business Unit Involvement for each initiative– Working with the Strategy & Architecture Teams

Select the right ideas– Strategic for client and IBM – Valuable from a client business perspective– Balanced portfolio – quick wins as well as longer term strategic projects

Governance and Sponsorship– Effective overall joint governance and decision making – Clear business unit sponsorship for the specific initiatives to be progressed– A clear agreed funding model

Effective Communication within Client and IBM

Summary

Summary A Value Creation Centre will provide

– A proven structured mechanism for driving innovation with an assigned IBM owner who will manage the process

– Ongoing improvement over time - lessons learned and knowledge shared - e.g. 2007 IBM Academy of Technology Study, IBM Global Innovation Community, the iForum event

– Access to a wide range of IBM resources and capabilities

– Access to a wide range of IBM resources and capabilities– IBM focus on a set of jointly agreed innovation initiatives that will

add value to the client’s business

IBM iForum 2007 - Joint Innovation With Clients by Tony Morgan

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