The Science of Innovation (Facts, Systems, Best practices)

The Science of Innovation (Facts, the need for systems and best practices)

Notes to Readers • This is a presentation that was given June 30th in Brussels by

@bryancassady • In this presentation you will discover:

– Some facts on what is driving innovation success. – Why you need to go step by step to build your innovation capacities – How to interpret the results of our innovation readiness assessment. You can

get your assessment at this link: http://tiny.cc/Slides_innov_ready – 10 best practices to build a culture of Innovation

• We will present the results again in Brussels (http://tiny.cc/iscienceBXL) and Gent (http://tiny.cc/isciencegent )

• If you’d like to arrange a personalize talk at your company, contact [email protected]

http://tiny.cc/Slides_innov_ready

http://tiny.cc/iscienceBXL

http://tiny.cc/isciencegent

mailto:[email protected]

Agenda • Why study innovation • Our Research • Terminologies • Key learnings from the research • The need for systems • Interpreting your results • Best practices • Q & A / Drinks

WHAT IS INNOVATION?

CREATIVITY is about new ideas

INNOVATION is the profitable

implementation of these ideas

Why it is important In Fortune 500 companies… New products account for 50% of revenues

And 40% of profits

companies value innovation

are classified as innovative by their

peers

of their customers would agree

of companies think they had a major innovation in the

last 6 months.

of ideas fail when brought to the market

Why Study Innovation (Scientifically) • Everyone seems to have an

opinion about Innovation and there is an enormous amount of (conflicting) “information”

• A need for facts instead of opinions

• A need for fact based theories to guide action

In Amazon there are 76.579 books on innovation !

How to be meaningfully unique with 17 thousands management consultants Belgium ? “Companies are tired of paying for advice, but are willing to pay for business results.” The Fast Bridge Solution • A focus on new business development • The right people. Senior people with different skills • The right methods. Fact based, using the best from around the world • Whenever possible, results based compensation

About us

World class content from

Working together with …

Senior people with grey hair (no hair) with the tools, expertise and

experience to make innovation happen

Our Core Interest ..

Innovation is hard work, but startups are getting it right

more often

Start-ups are about

more successful with new business projects than established companies.

Some experts estimate that over

of success in innovation is based on systems.

5x 80%

What should large companies change in their

systems ?

Over 200 ! Articles/ Books Research has linked significantly higher levels of innovation and business performance to business philosophies, strategic alignment, business processes and organizational learning Let’s check it out …

Innovation Performance

Firm Performance

Attitudes Processes

Learning

Strategic Alignment

Theoretical Background

Our work so far…

• 42 one to one company interviews to validate questions and test questions found in over 200 academic articles

• A survey with 71 test companies testing initial questions and validating links to innovation performance.

• April 2015 we updated the full survey to better analyze disruptive and ongoing innovation success.

Now we are going to look facts, figures on innovation

success

3 definitions to start

1. Sustaining innovations 2. Breakthrough innovations 3. InnoPreneurship:

Bringing an Entrepreneurial Mindset to established companies

Sustaining Keep competitive

Breakthrough Create future

Setting up the research

Our research database : 3 types of variables

1. Dependent Variables (Innovation / Business performance)

2. Independent Variables (company characteristics)

3. Covariates (company size, country, etc.)

Independent Var. #1

Dependent Variables

Independent Var. # 2

Covariates

Company Characteristics Habits

Market Company size Etc.

Innovation Business Results

A simplified view of the data set

1 Desire / Hunger2 Philosophies3 Autonomy4 Competitive5 Creativity6 Risk Taking7 Proactivity8 Structure Breakthrough Innovation Results Overall

Strategy alignment 9 Strategy alignment Innovation Results Business10 People processes Results11 Organizational Design Sustaining12 Customer Focus Innovation 13 Co-creation14 Ecosystem Management15 Speed / Results focus16 Systems to select ideas17 Commitment to Learning18 Knowledge Sharing19 Open Minded

Dependent Variables

Learning Orientation

Entreprenuerial Orientation

Independent Variables

Processes

Attitudes

Note: All the questions are in the appendix

W

Rich Investments in stocks

A simple example to show how we measured latent variables

Attitudes towards saving

Local alternatives How to measure

Rich ?

You can’t really ask…

W

Rich Vacations Type Car Type House Jewelry

Using questions to measure a latent variable (Rich)

Reliability All measuring

The same thing

Yes, but Jewelry lowers reliability.

Other latent factors

Mea

Measure: Cronbach alpha 0-1 (>.6 good, >.8 great)

W

Rich Vacations Type Car Type House Jewelry

Checking with other data Disposable Income

Validity Measurement

accurate ?

W

Rich Vacations Type Car Type House

Investments in stocks

A final model…

Attitudes towards saving

Local alternatives

Some sample questions

OVERALL INNOVATION • Rate of growth • Rate of new product/service introductions • Success rate of product/service introductions • Level of product differentiation in terms of unique

selling points • New product cycle time (i.e. inception to rollout) • Ability to create new products/services with real

consumer value • Profitability of new product/service introductions • Percentage of revenues from new products

introduced in the last 2 years

We like to constantly challenge the way things are done.In my company, there is a sense of urgency regarding the importance of transformation driven by innovation.

Our innovation projects have helped our organization develop new capabilities that we did not have three years ago.

We have a burning desire to explore opportunities and to create new things.

We have committed leaders who are willing to be innovation champions.

In my company, change is regarded as an opportunity rather than a threat.

We encourage new ideas even if they seem completely out of our comfort zone and company's scope.

Our firm rarely introduces products that are radically different from existing products in the industry.

Our firm lags behind others in introducing products based on radically new technologies.

We have no difficulty introducing products that are radically different from the existing ones in the industry.

Desire / Hunger

Negatively scaled

A simplified view of the data set



Dependent Variables




Processes

Attitudes

Note: All the questions are in the appendix

Validity: Scaled measures / Self

declared measures had a .8 correlation

Reliability: The reliability of all scales was greater than .80 most

higher than .9 (typical cut-off values .6-.7)

Checking the Data

.8 38% >.8 Of business

result variation explained by Innovation

Top-line correlation analysis Area

Sustaining Innovation

Breakthrough Innovation

Overall Innovation

Desire Hunger 0.45 0.48 0.49 Philosophies 0.41 0.45 0.52

Autonomy (0.52) (0.37) (0.36)Competitive (0.37) (0.31) (0.40)Creative 0.33 0.58 0.54 Risktaking 0.26 0.61 0.58 Proactivity 0.53 0.59 0.59 Structure 0.49 0.45 0.44 All Entrep. Orientations 0.52 0.63 0.70

Strategic Alignment Strategic Alignment 0.54 0.62 0.68 People systems 0.40 0.44 0.55 Organizational Design 0.36 0.29 0.46 Customer Focus 0.36 0.54 0.57 Co-Creation 0.37 0.38 0.48 Ecosystems 0.36 0.28 0.49 Speed 0.52 0.68 0.62 Clear Decision Systems 0.25 0.35 0.51 Commitment to learn 0.45 0.20 0.43 Knowledge Sharing 0.45 0.16 0.46 Open Minded 0.41 0.47 0.44 All Learning Orientation 0.45 0.30 0.53

Overall Score Summary all Areas 0.56 0.64 0.71



Attitudes

Processes

1.Autonomy and competitiveness negatively correlated with Innovation success 1

2 2.Entrepreneurial orientation = best predictor

3 3.Strategic Alignment = critical for all type of innovation

4 4.Speed is actually more important

5 5.Overall measure is strong

DETAILED ANALYSIS 7 Key Learnings and suggested action steps

1. You must start with strategic alignment 2. Alignment, attitudes and learning systems will follow (clarify) 3. Focus on customers, not competitors 4. The right balance disruptive/incremental is key 5. Proactivity is the one thing you need to reward 6. Walk before you run 7. If you are in a big company or a small company you need to act like you are in a

successful start up

7 Key learnings from the research

Not aligned Middle Alignedbottom

20% 60% top 20%Sustaining Innovation 22 56 65Breakhrough Innovation 46 43 72Overall Innovation 34 47 71

Other measuresAbility to create new ideas 37 47 69Ability to communicate new ideas 41 49 65Ability to commercialize new ideas 43 48 65Confidence in launching breakthrough Innovations in the future

29 56 57

N =202 companies

1. Strategic alignment is the cornerstone of successful innovation

Action Point: before doing anything, look at how you can build alignment

Details All participants ranked by level of strategic alignment (8 questions) Avg. Rank orders (0-100) Presented for other variables


Firm Performance

Attitudes Processes

Learning

Test #1 Strategic

Alignment

2. If you get aligned, the right attitudes and learning orientation in place systems will follow

Excellence in systems Predicted by Attitudes, Strategy Alignment, Learning Orientation 1. The model predicts 79% of the explained variance (a good model anything over 20%) 2. All variables significant with learning orientation / attitudes most predictive

Action Point: Think of these elements as the foundation of your innovation program gets these right first

R2 0.79 (1)

Std.Coefficients

B Std. Error Beta(Constant) .028 .045 .625 .533Strategic Alignement .125 .069 .135 1.822 .072Attitudes (ALL) .423 .069 .445 6.150 .000Learning Orientation .392 .067 .409 5.863 .000

a. Dependent Variable: Systems_ALL Systems_ALL

(2)

Unstandardized Coefficients

t Sig.

• Autonomy and competitiveness were negatively correlated with innovation results

• Why: It can take away focus from solving customer issues. When customer focus is high. Both autonomy and competitiveness are positively correlated with results.

Innovation Results

Low Cutomer High Customer

71

57

49

21

Low High Low HighAutonomy Autonomy

FocusFocus

3. Innovation Focus on customers needs not competitors, not autonomy

Attitudes Processes

Learning


Firm Performance

Test #2

Sustaining Innovation

Breakthrough Innovation

Strategic Alignment

4. The right balance Disruptive/ Incremental is key

Std. CoefficientsB Std. Error Beta

(Constant) .896 .108 8.304 .000BreakthroughInnovation 0.51 0.15 0.51 3.51 0.00

SustainingInnovation 0.29 0.16 0.26 1.76 0.09

a. Dependent Variable: Overall Innovation Results

Unstandardized t Sig.

The biggest driver of overall innovation success is: Breakthrough Innovation A 1% improvement in breakthrough innovation will deliver 2 X more than a sustaining innovation (.51/ .26)

A balance portfolio = 85 % sustaining

15% breakthrough But 50% of profit growth from

breakthrough Action Point: Build breakthrough innovation capabilities and reallocate funds

A process of building a model by successively adding or removing variables based on their estimated coefficients “Throw everything in and see what remains”

Sideline: Stepwise regression

Testing Everything



Dependent Variables




Processes

Attitudes

5. Proactivity is the most important thing you need to reward

Action Point: There is so much to do… use these facts to focus your efforts

Unstandardized Coefficients

Std Coefficient

s t Sig.

BStd. Error Beta

(Constant) -.996 4.730 -.211 .834Proactivity .465 .077 .484 6.063 .000Commitment to Learn .286 .081 .291 3.539 .001Clear Decision Systems .261 .080 .272 3.264 .002Speed/Results focus .235 .079 .253 2.989 .004

Innovation Results All independent variables tested stepwise, 4 factors remained 1.The model predicts 63% of the explained variance (a good model is anything over 20%) 2.Proactivity is by far the most important driver of innovation performance

Now comes the most important thing we learned

When we rank order companies by innovation results there is a clear evolution of skills..

Group StrategyLearning

OrientationDesire/ Hunger

OperationalExcellence

Entrep. Orientation

Bottom 25% 11% 4% 4% 0% 13%25-50 42% 44% 24% 48% 44%50-75 81% 58% 92% 92% 79%Top 25% 96% 100% 100% 100% 92%

Stage 2 Stage 3Stage 1

Percentages represent the number of companies scoring over 40

Culture and capabilities grow over time

The Basics

Strategy Hunger Philosophy Learning Orientation *

Operations

Speed Proactivity General systems Customer focus

Entrepreneurial Orient.

Risk Taking Ecosystem Management Structure Creativity

Room to grow

Sustaining Innov.

Breakthrough Innov.

Want it Do it Not scared to do more

How we see this in the company results …

Stage 1 Stage 2 Stage 3 Stage 4Missing Basics Operations EO Core

Breakthrough Innovation 19 44 55 70Sustaining 25 40 50 64Overall Innovation 34 50 67 76

Now our core research question…

There is a big difference in the innovation profile of small and large companies

No big surprise there…

Small BigDesire / Hunger 65 39Philosophies 68 35Autonomy 35 61Competitive 48 54Creativity 58 41Risk Taking 63 38Proactivity 56 45Structure 64 38Strategy alignment 57 42People processes 70 39Organizational Design 67 38Customer Focus 60 39Co-creation 62 39Ecosystem Management 59 41Speed / Results focus 62 36Systems to select ideas 58 44Commitment to Learning 59 40Knowledge Sharing 67 36Open Minded 64 37

All

The real news is: Successful Innovators

big and small, have similar company

cultures

Small BigDesire / Hunger 75 79Philosophies 81 70Autonomy 27 41Competitive 45 37Creativity 72 72Risk Taking 71 77Proactivity 62 79Structure 61 64Strategy alignment 61 76People processes 86 79Organizational Design 70 72Customer Focus 75 68Co-creation 72 63Ecosystem Managemen 67 65Speed / Results focus 73 67Systems to select ideas 85 70Commitment to Learnin 49 72Knowledge Sharing 81 59Open Minded 65 57

Winning Innovators

Big Small Big SmallAll Leaning Orientation 37 66 67 78All Basics 37 68 72 77All Operations 40 60 72 66All Entrepreneurial Orientation 38 63 78 78Overall Innovation Readiness 40 70 80 82

All Companies Winning Innovators

Action Step: Big or small, you need to work on

innovating like a successful start up… The way to do it is step by step

Why you need systems The Story of Innovation Engineering

“America’s #1 Idea Guru” – A&E Top 10 ! “America’s #1 New Product Idea Man” – Inc. Magazine !

In his words.. He sold spark plugs to Industry They worked for hundreds of companies, then the sparks worked less and less

They analyzed mountains of data…

• PEOPLE Data: innovation benchmarking data on over 100,000 managers.

• PROCESS Data: As of this writing we have measured over 6,000 teams during a day of brainstorming.

• IDEA Data: market research on over 26,000 innovations.

16 % ideas

84 % systems

They identified the share of success due to ideas and systems to execute ideas

They found inspiration in the work of Dr. Edwards Deming

They created Innovation Engineering “A system for Innovation Success”

The idea: to apply a process to innovation Demming calls is : Plan, Do, Study, Act (Lean Start-up: Build, Measure, Learn) What a company needs 1. Alignment 2. Attitudes 3. Skills 4. Learning Orientation

Sideline: Demming is famous for revolutionizing manufacturing . He said that is low-hanging fruit Where the real gains from system thinking would be in : Marketing , Sales, Strategy (sounds a lot like innovation .. )

How to use your Innovation Audit report card to check your systems..

You can get your assessment at this link: http://tiny.cc/Slides_innov_ready


4

Step 1: Strengths Step 2: Basics Step 3: Procedures Step 4: InnoPreneurship

1

2 3

4

.

.

Step 2 Get the Basics RightPay particular attention to

Strategy First 17 Step 3 Build process and proceduresHunger 9 Pay particular attention toPhilosophy 37 Speed 28 Learning Orientation * 24 Proactivity 5 Step 4 Entrepreneurial Orientation

General systems 35 Pay particular attention toIf issues, fix Customer focus 42 Risk Taking 16 Strategy alignment Ecosystem Management 62 Innovation training If issues, fix Structure 26 (For management and workers) All Stage 1 activities Creativity 20 Innovation Events Moments of truthInvite Speakers Ask for ideas If issues, fixLean Start-up (learning training) Set up systems All Stage 1/2 activitiesExternal Events Accleration programs Ask for more ideasReward Proactivity Create Sessions Hackathons

Coaching Ecosystem developmentTell them it is important and Innovation Sprints Celebrate risk takingget them to believe … Reward Innovation Bring in Entrepreneurs

Reward InnopreneurshipAsk for ideas, push for speedBuild ideas and systems to test Expect Entrepreneurship, bring in

entrepreneurs/ partners to shake things u

Step 1: Look at strengths to build on: Competitive, Ecosystem Management,

.

.






entrepreneurs/ partners to shake things up


.

.






entrepreneurs/ partners to shake things up


Best practices

We work a lot with Innovation engineering

• A full innovation system • Great training materials

• Flipped classroom technology • A library of close to 100 training videos • Testing after each video • In collaborattion with 26 Universities (and very fact based) • Fully updated once per year

• Proven

Academically validated (see National science report) 26,000 trained already/ close to 90% repeat rate

However, unlike many consulting companies we can pick and choose the best programs (not just ones we have developed)

10 best practices 1.Assessment 2.Executive alignment 3.How to (Training) 4.Show it is important 5.Making change stick 6.Ongoing inspiration 7.Systems 8.Moments of truth 9.Ecosystem development 10.Acceleration programs

1. Assessments You need to know where you are, to decide what to do next…

1 Overall Score 11 People processes2 Desire / Hunger 12 Organizational Design3 Philosophies 13 Customer Focus4 Autonomy 14 Co-creation5 Competitive 15 Ecosystem Management6 Creativity 16 Speed / Results focus7 Risk Taking 17 Systems to select ideas8 Proactivity 18 Commitment to Learning9 Structure 19 Knowledge Sharing

10 Strategy alignment 20 Open Minded

Our Assessment: http://tiny.cc/Slides_innov_ready

How Innovative Is Your Company’s Culture?

http://tiny.cc/bainassess

http://tiny.cc/tellisassess




http://tiny.cc/tellisassess

2. Executive alignment

Executive alignment CIBAM (Benovate) 1 day C level focus Life cycle/ business analysis to set key priorities Deliverable: Innovation portfolio

Executive program (IE) 1.5 day C level focus Indiv. company or several companies Day 1: “How to” Day 2: “We need” Deliverable: skills to manage, 4-6 blue cards

AFCE 3 Day Mixed group Intensive introduction to lean Start-up with choice of first projects Deliverable: Projects for the next 3 months

KSFs: Strategy from within, linking alignment with actions

3. How to (Training)

77

2 Hours

Leadership Meeting CREATE Stimulus

Mining

2 Hours

IE Workshops CRE<ATE

COMMUNICATE

COMMERCIALIZE

2 Hours Each or I Full Day 4 Hours - Choose and Finalize Blue Card - Those Already Trained Join Here

Watch Video Before

Mine on VIP or VIO

Week 7 - 12

Monthly Weekly Weekly Project Updates Fail FAST Fail CHEAP ‘work’

Quarterly Decide on Next VIO/VIS Wave

GREEN BELT

Certification Celebration

1.5 Hour

.5 Hour

Week 1 Week 2,3,4 Week 5 Week 6

Process Check In

1 Hour

What’s Working?

What’s Not?

Innovate Process 2 Hours

Define Ideas

Green Belt Training

AFCE (Academy for Corp. Entrepreneurship)

DEFINING IDEAS

RAPID EXPERIME

NTS

PIVOT & ITERATE

3 Day Kick Off

MONTH 1 Customer

MONTH 2 MVP

MONTH 3 Funnels

90 Day Roadmap

Common characteristics of great training

Learn it, then use it Use it with support

4. Show it is important

Tell them it is important, but more importantly show it

• 555 program (5000 * 5 people * 5 days to make a prototype)

• 1000 and a box (see video) • Start-up weekend (see video)

Video: adobe box

https://www.youtube.com/watch?v=VU4XYGuUh_0&index=3&list=PL6K5SZuzYX_FE3tfE-ditlB0Yt1GDs2l_

81



Video: coca cola start up weekend

https://www.youtube.com/watch?v=QFqjRTWi22c

82



5. Making change stick

• Train the trainer programs • Ongoing coaching and development • Mentoring programs

6. Ongoing inspiration

• Lots of content • Lots of diverse content and people • = A recipe for new ideas • If you’re a bank don’t ask banker to s

peak, ask artists • Best in class google talks

(inspired from P&G) • Search “google talks” in YouTube

The Talks at Google brings directors, actors/actresses, artists, authors, musicians, innovators, and speakers of all stripes

7. Systems

• Javelin • Innovation Engineering • Yambla KSFs: simple, action focused, learning based

8. Moments of truth Almost anything works faster with a deadline

• Inspiration days • Pitch events (with internal / external

judges) • Hackathons

Up and running in 82 cities. Moments of truth (they call them forcing moments) are the foundation. Graduates 80% success, 52% funding

9. Ecosystem development

If you want to move fast, it is usually not what you know, but who you know that makes the difference

• Meet and greet sessions with Entrepreneurs • Events with entrepreneurs pitching ideas for your

business challenges • Attendance at external events (eg Inacademy, The

Founder Institute)

10. Acceleration programs

21 Days to build a business Week 1: Problem-solution fit (there is problem) Week 2: Product-Market Fit (you have a solution) Week 3: Business Model Fit (you can do it profitably and scale)

An example of world class Objectives A weekly learning cycle every week for 10 weeks

10 ideas for new users/ uses of their productAt least 80 new ideas, with 60 killed, 10 merged and 10 in progress

Alignment Every Monday… what next nowBuild ideas Each Friday a brain-storming session (with new external people)CommunicateCheckSystems Identify death threats/ work on death threats

Kill all weak ideas where death threats not resolved in 2 weeksAn 10 minute standing meeting every morningWrite and document work done each week

One person writes up the ideas/ Another lists the death threatsExternal experts to validate/ give feedback on all ideas

Fast Innovation World OtherBridge Engineering Class Programs

1 Assessment Innovation readiness Limited None Innovation readiness Dartmouth, Bain assessment Depth of assessment/ proven

CIBAM workshop 1.5 day program 3 Day 1.5 day program Strategy consultantsCoaching Coaching Workshops Coaching Independent consultants

Solvay Innovation 3 Day Training 3 Day Training 3 Day Training Hands on duringProgram How to Lean Enterprise How to Hands on after

Coaching Certification Certification CertificationProject Acceleration Project Acceleration Project Acceleration(Death threat focus) (Step by Step) (Step by Step)

6 Ongoing Monthly events Blog None Monthly events Too many to list A network of speakers

Yambla Innov. Engineering None TBD Cognistreamer Simplicity(Javelin would fit) (need to fit internal Bespoke systems Training to fit the systems

systems)

8Moments of

truthCorporate Events

Dates in acceleration programs

Project milestonesCorporate Events

+ milestonesToo many to list

Fit with your company, experience with events, Founder

Institute experience

9Ecosystem

DevelopmentMisc. TBC An established network

10Acceleration

ProgramsCoaching/Mentoring TBC

Coaching for innovation vs. project management

Our Advantage

Meet and greet sessions, Events with entrepreneurs Attendance at external events (eg Inacademy, The Founder Institute)

Kick box, Events, Startup weekend, Customized eventsKick box, Events, Startup

weekend, Customized events

University programs

Focus: we are innovation experts (Strategy ≠ Innovation)

Tools, methods, systems to coach innovation projects (and the right

people)

Fit with your companyExperience with events

Coaching/Mentoring

Best practices: Innovation Development

Too many to list

Too many to list

Executive Alignment

How to (Training)

Show Innovation is

Important

Support/ Making change

stick

System

2

4

7

5

3

AFCE (Moves the Needle)

Summary Best Practices

Remember, sometimes

“ The hurrier you go, the behinder you get…”

Smart Speed

A study by Economist intelligence with 312 companies split into 2 groups:

1. Go, go, go 2. Think, go , think, go (paused at strategic moments)

The companies with strategic pauses achieved: 40% higher sales, 52% higher profits

Conclusions…

There is lots you can do.. The important things is to do something and if possible do things step by step Two Key recommendations:

1. Start before you think you need to start.. It takes time to build cultural change (there are no miracle solutions !)

2. Don’t reinvent the wheel… copy best practices

Q & A

Contact Information For questions about this presentation or request for a meeting please contact [email protected] +32-475-860-757 Links to external company references in this presentation:

Innovation Engineering www.innovationengineering.org The Founder Institute www.fi.co European Innovation Academy www.inacademy.eu Benovate www.Benovate.biz AFCE www.afce.co




http://www.innovationengineering.org/

http://www.fi.co/

http://www.inacademy.eu/

http://www.benovate.biz/

http://www.afce.co/

Appendix: all questions