Seven Keys to Unlock and Lead Innovation Strategy - ?· to Unlock and Lead Innovation Strategy ... –…

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<ul><li><p>1</p><p>Seven Keys to Unlock and Lead Innovation Strategy</p><p>Whether innovation is incremental or moon shot in </p><p>significance, it flourishes in organizations that embrace </p><p>seven elements in the context of a strategic purpose.</p></li><li><p>Our Credera research team spent significant time evaluating </p><p>organizations with proven track records of innovation. We </p><p>set out on an adventure to understand and synthesize those </p><p>critical elements that show up repeatedly as foundational </p><p>enablers. We carefully examined organizations that rely </p><p>on innovation as a cornerstone for competitive advantage, </p><p>including NASAs Apollo space program, Procter &amp; Gamble, </p><p>IDEO, Stanford Design School, Apple, Google Ventures, and </p><p>early inventors like Edison and the Wright Brothers.</p><p>We looked back at history to synthesize patterns in major </p><p>innovations in science, mathematics, physics, genetics, </p><p>aviation, and business. Specifically, we explored the history of </p><p>innovation in the world: the printing press, the steam engine, </p><p>the light bulb, penicillin, nuclear power, exploration of space, </p><p>ARPAnet, personal computers, mapping the human gene, </p><p>Google, Facebook, SpaceX, and artificial intelligence.</p><p>We interviewed innovative leaders to understand their </p><p>journeys, successes, and failures. Lastly, we examined </p><p>scholarly articles, journals, books, and our own client </p><p>experiences to further understand the philosophical and, </p><p>more importantly, the digestible building blocks to answer </p><p>the primary questions: </p><p>How can the C-level leader enable systemic innovation </p><p>that leads to financial success and happy customers?</p><p>We live in a second Renaissance of sortsa fourth Industrial </p><p>Revolution as some have proclaimed. Business, government, </p><p>and nonprofit leaders all face pressure to innovate in order </p><p>to find some kind of advantage in a competitive landscape. </p><p>Standing still is not an option. The organizations that choose </p><p>a scatter-shot approach to innovation fail. The organizations </p><p>that refuse to innovate fail. Pressure builds to connect </p><p>people, devices, ideas, and experiences in meaningful and </p><p>new ways. The researchers in the study came across many </p><p>executives who shared their concern that innovation would </p><p>be yet another fad discussion, taking up resources and then </p><p>not yielding any benefit. Certainly, many fads create a flash in </p><p>Executive Summary</p><p>SEVEN KEYS TO UNLOCK AND LEAD INNOVATION STRATEGY</p><p> Coordinate enterprise-wide leadership and governance of innovation</p><p> Foster a culture of innovation </p><p> Manage the innovation portfolio like a venture capitalist</p><p> Create radical connection with customers</p><p> Build internal and external partnership networks</p><p> Develop a shared definition of innovation</p><p> Commit to design thinking </p><p>Establish Leadership &amp; Culture</p><p>Define Innovation &amp; Approach</p><p>Manage, Test &amp; Measure</p></li><li><p>3</p><p>the pan without substantial benefit, but research challenges </p><p>this skepticism. Even in ultra-mature industries such as oil </p><p>&amp; gas, travel &amp; hospitality, energy, law, and medicine, the </p><p>opportunities to innovate and expectations of customers </p><p>both continue to radically increase over time.</p><p>We choose to go to the moon and do the </p><p>other things, not because they are easy </p><p> President John F. Kennedy</p><p>We dont all need to all be astronautsinnovation </p><p>is essentially human. This paper examines different </p><p>magnitudes of innovation: core, adjacent, and </p><p>transformational. We all desire to improve, to restore, to </p><p>build, to rethink, to imagine. The vision and will to press </p><p>forward in the face of monumental challenge is a significant </p><p>part of leadership. Leaning into future vision, leaders take </p><p>riskspartly because they know that greater risks exist in </p><p>sitting still than in creating a new path for the future. </p><p>Credera helps C-level leaders see how innovation can lead </p><p>their organizations forward.</p><p>These enhanced strategies to lead innovation provide </p><p>significant opportunities for all organizationsbig </p><p>and small:</p><p>Coordinate enterprise-wide leadership and </p><p>governance of innovation.</p><p>Create a shared definition of innovation.</p><p>Foster a culture of innovation.</p><p>Manage the innovation portfolio like a </p><p>venture capitalist.</p><p>Commit to design thinking.</p><p>Create a radical connection with customers.</p><p>Build strong internal and external networks.</p><p>Credera helps C-level leaders see how innovation can lead </p><p>their organizations forward.</p><p>1</p><p>2</p><p>3</p><p>4</p><p>5</p><p>6</p><p>7</p></li><li><p>4</p><p>Contents</p><p>Coordinate Enterprise-Wide Leadership and Governance of Innovation 10</p><p>Modern Frameworks Describing Innovation 7</p><p>What is Innovation? 6</p><p>Introduction 5</p><p>Create a Shared Definition of Innovation 12</p><p>Foster a Culture of Innovation 14</p><p>Manage the Innovation Portfolio Like a Venture Capitalist 16</p><p>Commit to Design Thinking 18</p><p>Create a Radical Connection With Customers 20</p><p>Build Strong Internal and External Networks 22</p><p>Closing 24</p><p>Appendix 26</p><p>Sources 28</p></li><li><p>5</p><p>We live in the epicenter of the most innovative moment in </p><p>history. In many ways, we live in a modern Renaissancea </p><p>science- and technology-driven Renaissance. For-profit, </p><p>nonprofit, and government organizations all carry a </p><p>significant mandate to continue to lead innovation. </p><p>Opportunities abound to unlock the human potentialto </p><p>imagine and create a new future. </p><p>Industrial revolutions represent meta-</p><p>innovation moments in history.</p><p>Industrial revolutions represent meta-innovation moments </p><p>in history. There is a discussion unfolding proposing that we </p><p>are in the early stages of the fourth industrial revolution. </p><p>The first revolution began in 1784 with steam power and </p><p>mechanical production equipment. The second began in </p><p>1870 with electricity, human flight, internal combustion </p><p>engines, widespread use of fossil fuels, mass production, </p><p>and division of labor. The third began in the 1960s with </p><p>the computer, putting a man on the moon, integrated </p><p>semiconductors, and the internet. </p><p>In this current momentperhaps a fourth industrial </p><p>revolutionmachine learning (artificial intelligence) and the </p><p>removal of barriers between humans and machines propel </p><p>the world in new and innovative ways. In fact, computers </p><p>like IBMs Watson exceed the capacity, speed, and accuracy </p><p>of certain human brain functions. Genetic code is translated </p><p>and now being specifically understood, synthetic life is </p><p>possible as Dr. J. Craig Venter proved a few years ago, </p><p>autonomous cars are right around the corner, drones </p><p>deliver packages, and personal assistants like Siri and Alexa </p><p>talk with usin many ways like R2D2 of Star Wars. And, </p><p>at the time of writing, nearly 1.7 billion humans live in the </p><p>digital world called Facebook, sharing all of the emotions </p><p>and stories once confined to in-person interactions. The </p><p>average lifespan of Standard &amp; Poors 500 companies has </p><p>decreased from 67 years in the 1920s to 15 years today, </p><p>attributed mostly to the increased pace of innovation.</p><p>It is no wonder that leaders of organizations big and small </p><p>clamor to inspire and cultivate innovation throughout their </p><p>empires, teams, and companies as fast as humanly possible. </p><p>Introduction</p></li><li><p>6</p><p>What is Innovation?</p><p>In short, innovation is a novel improvement that is </p><p>meaningful to people. It is the process of introducing new </p><p>ideas, products, or methods.</p><p>Innovations vary in their degree of significance. Some </p><p>innovations are incremental; others are radical or moon </p><p>shot in their epic impact. Consider the Post-It-Note and </p><p>Apollo Space program. </p><p>Moon shot innovations represent a category defined by </p><p>the 1969 walk on the moon. In retrospect, the time from </p><p>1903 to 1969 illustrates the radical innovation in flight. In </p><p>Kittyhawk, N.C., the Wright Brothers, two bicycle designers, </p><p>made the first successful manned flight. Sixty-three years </p><p>later, Neil Armstrong and Buzz Aldrin walked on the </p><p>surface of the moon. NASA led the innovationmasterfully </p><p>coordinating 20,000 businesses and 400,000 engineers</p><p>without instant messenger, email, or any similar technology </p><p>(Apollo: The Race to The Moon by Charles Murray and </p><p>Catherine Bly Cox, 1989).</p><p>The Post-It-Note emerged at 3M, when an employee named </p><p>Dr. Spencer Silver, accidentally created a low-tack, reusable </p><p>adhesive. </p><p>Whether incremental or moon shot, innovation </p><p>approaches evolved markedly in recent years with the </p><p>advent of design thinking. This is a proven technique that </p><p>many companies have successfully used to accomplish </p><p>innovationthrough teamwork, empathy for the customers </p><p>through direct observation and interaction, rapid </p><p>prototyping, and data-driven testing. </p><p>With this in mind, lets examine several different categories </p><p>and types of innovations.</p></li><li><p>Developing breakthroughs and inventing things for markets that dont yet exist</p><p>Expanding from existing business into new to the company business</p><p>CORE</p><p>Optimizing existing products for existing customers</p><p>ADJACENT</p><p>TRANSFORMATIONAL</p><p>H O W TO W I N</p><p>USE EXISTING PRODUCTS AND ASSETS</p><p>ADD INCREMENTAL PRODUCTS AND ASSETS</p><p>DEVELOP NEW PRODUCTS AND ASSETS</p><p>WH</p><p>ER</p><p>E T</p><p>O P</p><p>LA</p><p>YSE</p><p>RV</p><p>E E</p><p>XIS</p><p>TIN</p><p>G M</p><p>AR</p><p>KE</p><p>TS </p><p>AN</p><p>D C</p><p>UST</p><p>OM</p><p>ER</p><p>SE</p><p>NT</p><p>ER</p><p> AD</p><p>JAC</p><p>EN</p><p>T M</p><p>AR</p><p>KE</p><p>TS,</p><p> SE</p><p>RV</p><p>E A</p><p>DJA</p><p>CE</p><p>NT</p><p> CU</p><p>STO</p><p>ME</p><p>RS</p><p>CR</p><p>EA</p><p>TE</p><p> NE</p><p>W M</p><p>AR</p><p>KE</p><p>TS,</p><p> TA</p><p>RG</p><p>ET</p><p> NE</p><p>W C</p><p>UST</p><p>OM</p><p>ER</p><p> NE</p><p>ED</p><p>S</p><p>7</p><p>Nagji and Geoff Tuff published a perspective in the Harvard Business Review in 2012 articulating three primary categories of innovations: core, adjacent, and transformational. These three categories of innovation provide leaders with a common vernacular from which to discuss innovation. </p><p>Modern Frameworks Describing Innovation</p></li><li><p>8</p><p>Core innovations serve existing customers and markets </p><p>with optimized, existing products. Nabiscos 100 Calorie </p><p>packet of Oreos is a good example; it enhanced an existing </p><p>product (Oreos) and targeted an existing market (calorie-</p><p>conscious consumers).</p><p>Adjacent innovations serve adjacent markets and related </p><p>adjacent customers. The Swiffer from Proctor &amp; Gamble </p><p>leveraged the fact that customers associated long-handled </p><p>mops with cleaning the floor and added a new technology to </p><p>access a new customer base (those who would not purchase </p><p>a traditional long-handled mop).</p><p>Apples iTunes, which introduced a market </p><p>for pay-by-the-song digital music, is a great </p><p>example.</p><p>Transformational innovations create new markets and </p><p>require the organization to provide new technologies and/</p><p>or processes. Apples iTunes, which introduced a market for </p><p>pay-by-the-song digital music, is a great example.</p><p>Additionally, Nagji and Tuff also highlight specific allocations </p><p>of resources for each type, revealed by correlated share </p><p>price performance: 70% for core, 20% for adjacent, and </p><p>10% for transformational. The returns from each category </p><p>prove to be almost inverted: 10% from core, 20% from </p><p>adjacent, and 70% from transformational.</p><p>Another helpful model was developed by Larry Keeley </p><p>(who has a doctorate in innovation from the University of </p><p>Chicago School of Design) who articulated 10 different </p><p>types of innovation under three distinct categories (Ten </p><p>Types of Innovation by Larry Keeley, Ryan Pikkel, Brian </p><p>Quinn, Helen Walters, 2013): </p><p>1. Configurationa. Profit Model Gillette offers a low cost razor with </p><p>expensive blades.</p><p>b. Network Target partners with designers for </p><p>exclusive products.</p><p>c. Structure Southwest Airlines simplified by using </p><p>only one type of airplane.</p><p>d. Process IKEA and Toyota use more efficient </p><p>processes.</p><p>2. Offeringa. Product Performance Dyson Vacuums and Intuit </p><p>Turbo Tax stand apart because of their dominating </p><p>performance through new technologies.</p><p>b. Product System Microsoft introduced a new </p><p>licensing approach and bundled the Office Suite, </p><p>Scion cars (Toyota) provide abundant Toyota </p><p>warrantied modification options for the middle </p><p>market tuner customer base.</p></li><li><p>9</p><p>3. Experiencea. Service Offering superior customer service, </p><p>with companies such as Zappos (where customers </p><p>can buy any shoe 24 hours a day online), Sysco </p><p>Foods where all restaurant-supporting items </p><p>are delivered around the clock, or 7-Eleven </p><p>convenience stores which provide locally-relevant </p><p>items on the shelves.</p><p>b. Channel Niketown stores or Amazon Kindle </p><p>Whispernet catering to a specific channel.</p><p>c. Brand The well-known brands such as Trader </p><p>Joes and their private-label food offerings, Intel </p><p>Inside branding on computers causing customers </p><p>to view computers with these parts as higher </p><p>quality, or American Heart Association menu </p><p>items helping people see the heart-healthy choices </p><p>on menus and thereby raising the value of the </p><p>American Heart brand.</p><p>d. Customer Engagement Apple World Wide </p><p>Developer Conference is an example of bringing </p><p>customers into the process. Apple shows off its </p><p>best new hardware and software each year at the </p><p>WWDC, where developers pay $2000 for tickets </p><p>that sell out in less than two hours.</p><p>Both incremental and radical (moon shot) </p><p>innovations propel businesses forward. </p><p>Our point of view leans intentionally toward the practical </p><p>regarding innovation: both incremental and radical </p><p>(moon shot) innovations propel organizations forward. </p><p>We can debate the finer points of business definitions, </p><p>but the fact remains that in any industry where free </p><p>market economics prevail, innovation is a requirement for </p><p>survival and competitive advantage. Without innovation, </p><p>companies (and countries) will eventually decline. This </p><p>does not mean that companies must innovate on their own. </p><p>In certain industries and in some sectors, imitation and/</p><p>or outsourcing for innovation present very real options. </p><p>For instance, in biotechnology, companies invest in many </p><p>small, highly innovative research laboratories or specific </p><p>novel, experimental drugs within those cottage industries</p><p>investing in joint venture partnerships and ultimately </p><p>purchasing the high-probability drug companies.</p><p>Companies need to embrace innovation as a primary </p><p>function, discipline, and organizational capability with </p><p>the same rigor applied to more traditional components </p><p>of business (i.e., finance, accounting, operations, human </p><p>capital, etc.). </p><p>Innovation isnt something that should be taken lightly, </p><p>and there is much that can be learned from organizations </p><p>that have found success. We have identified seven keys </p><p>to unlock and lead innovation within organizations. </p></li><li><p>Clear leadership, authority, and accountability </p><p>provide guidance to enable measurable results for </p><p>an enterprise-wide pursuit of innovation. The role of </p><p>an organizations top-level innovation leader could </p><p>be described with various titles: innovation architect, </p><p>vice president of innovation, lead innovation catalyst, </p><p>or something similar. This role could be a dedicated </p><p>position or could be the responsibility of a chief </p><p>operating officer, chief executive, or other executive </p><p>vice president. Our research and experiences clearly </p><p>mandate that a senior leader own the responsibility </p><p>and accountability to ensure optimized enterprise-</p><p>wide results for innovation efforts. Additionally, </p><p>innovation representatives or catalysts should exist, </p><p>embedded across all major functions or capabilities </p><p>in the organization. And, as Gary Hamel (author of </p><p>The 5 Requirements of a Truly Innovative Company, </p><p>Harvard Business Revi...</p></li></ul>

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