Strategic Management of Innovation_final

Strategic Management of Innovation

An extensive review on:What it takes to create a climate that encourages

creativity

Presentation Outline

• Purpose of the presentation• Introduction• Knowledge Worker Productivity• Organisational Memory• Innovation Framework• Harnessing Knowledge Asset• Climate for Innovation• Case Studies• Dealing with Change• Lessons from Workplace Challenge• Way-forward and Recommendations

Purpose

• The purpose of the presentation is to introduce and share some theoretical models about creating a conducive climate that encourages creativity

• Provide some practical considerations in formulating the NPI innovation strategy.

• Initiate and stimulate further debate around the requirements for successful innovation.

Introduction

• The importance of a culture, climate, atmosphere or ethos favourable to creativity is widely recognised.

• For innovation: NONE OF US IS AS GOOD AS ALL OF US

Introduction (cont

• “The creative act thrives in an environment of mutual stimulation, feedback and constructive criticism-in a community of creativity” by: William T. Brady

Knowledge Worker Productivity

• The most important, and indeed truly unique, contribution of management in the 20th century was the fifty-fold increase in the productivity of the manual worker in manufacturing.

• The most important contribution management needs to make in the 21st century is similarly to increase the productivity of knowledge work and knowledge workers.

Knowledge Worker Productivity (cont

• Knowledge-worker productivity demands that we ask the question: “What is the task”

• It demands that we impose the responsibility for their productivity on the individual knowledge workers themselves

• Continuing innovation has to be part of the work, the task and the responsibility of knowledge workers.


• Knowledge work requires continuous learning on the part of the knowledge worker, but equally continuous teaching on the part of the knowledge worker to build an organizational memory

• Productivity of the knowledge worker is not-at least primarily-a matter of the quantity of output. Quality is at least as important


• Finally, knowledge-worker productivity requires that the knowledge worker is both seen and treated as an “asset” rather than a “cost”. It requires that knowledge workers want to work for the organization in preference to all opportunities.

Organizational Memory

• Employees come into a job, spend a lot of energy and time learning how to do the work well, then move on, taking all their knowledge with them.

• There is no organizational memory to allow people to start where their predecessors left off, nothing that captures new methods that produce better results. The individuals learn, but the organization does not.

Organizational Memory (cont EYELASH LEARNING CURVE Ability to Do Job Time

New employee begins

Old employee leaves with knowledge

Organizational Memory (cont

RAPID LEARNING CURVE Ability to Do Job Time

New employee comes on; picks up almost where previous employee left off

Innovation Framework

YOU TEAM(S) ORGANISATION

Oyster-shell model for innovation

Innovation Framework (cont

Generating ideas Involving individuals and teams in producing ideas for improving existing products, processes

and services – and creating new ones.

Harvesting ideas Again involving groups of people in the gathering, sifting and

evaluating of ideas.

Developing and implementing these ideas

Once more involving teams in the work of improving and

developing the idea right up to the first response from a

delighted customer.

3 phases of innovation


1. Going beyond the nine dots2. Welcoming chance intrusions3. Listening to your depth mind4. Suspending judgement5. Using the stepping stones of analogy6. Tolerating ambiguity7. Ideas banking

7 habits of successful creative thinkers


• Selecting creative people• Encouraging group creative synergy• Training the team• Communicating about innovation• Overcoming the obstacles that separate new

ideas from the market place

Innovative teamwork


• Visible commitment at top level• A climate that encourages teamwork and

innovation• A toleration for failure to balance risk-

taking• Open and constructive communications• Flexibility in organisational structure

Innovative organisation


• Recognition and appreciation– Because the results of creative work are often

postponed for a long time (many geniuses in history received no recognition in their lifetimes), creative people stand in special need of encouragement and appreciation. The recognition of the value or worth of their contribution is especially important to them, particularly if it comes from those whose opinions the respect.

Environmental Factors

• Freedom to work in areas of greatest interest– While the predominantly analytical person concentrates

and focuses down, the creative person wanders in every possible or feasible direction. Freedom to move is the necessary condition of creative work. A creative person tends to be most effective if allowed to choose the area of work and the problems or opportunities within that area, which arouse deep interest.



Innovation Framework (cont.

• Contacts with stimulating colleagues– ‘Two heads are better than one,’ says the

ancient Greek proverb. Creative people need conversation with colleagues in order to think, not merely for social intercourse.


• Stimulating projects to work on– Along with a congenial and appreciative

environment and the opportunity for appropriate recognition by their professional peers inside and outside the organisation, stimulating projects or problems are especially attractive.



• Freedom to make mistakes– Errors are inescapable in innovative work. The

climate should be such that they are not all used to inflict immediate and permanent damage on one’s professional career.




TEAMS

SIEVES

NETS

NEW IDEAS

THINKING TIME

CREATIVE PEOPLE

A CLIMATE WHICH ENCOURAGES CREATIVITY

MARKET CONTACT

Successful Innovation

Harnessing Knowledge Asset

• Organisations that leapfrog their competition use knowledge in 2 ways:

• First, they understand that a perpetual flow of great ideas depends on people’s capacity to access knowledge freely.

• Hence, they deliberately smash barriers to the free flow of knowledge-barriers such as multiple management layers, narrowly focused functional silos, rigid job descriptions, numerous sign-off requirements, obsolete technologies, meager training, and corporate cultures marked by secrecy and one-upmanship

Harnessing Knowledge Asset (cont

• Second, they liberate employees to harness and use knowledge to take action-that is, to create fresh value for customers and shareholders.

• In this environment, employees continually grow their skills, use state-of-the-art information technologies as their servants, take on an attitude of “How would I act if I owned this business?” and take full accountability for the rapid decisions they’re encouraged to make at many times.


• Flooding the organisation does not mean drowning people with paper and data.

• It means having an enormous wealth of knowledge for people to access as they see fit.

• Flooding the organisation with knowledge gives people the fodder to use intelligence to transform corporate processes and products-and thus transform organisations in such a way that they can leapfrog competition.


• So what does a knowledge-based company look like?

• Visualise an organisation with a steadily growing “brain”, with a body structure so light and fluid that it is no longer constrained from jumping over competitors whose bodies are encumbered by the weight of fixed assets and sunk costs.


• The conventional big body/little brain premise is represented in the omnipresent organisational pyramid, including all of its current “progressive” variations.

• When all said and done, knowledge is still primarily concentrated at top management levels and hoarded among specialised professional staff.


• Think about where the expertise (high-end technical, functional, strategic thinking) and information (profit-and-loss data, policy and systems analysis, strategy and development) really resides.

• Think about where the decision-making authority and accountability for initiating innovative decisions really reside.


YESTERDAY

(still the model for too many

organisations)

Very little brain

Very big body

Top managementCorporate staff


TODAY

(a little flatter, a little more

decentralised)Big body

Little brain


TOMORROW

(The prototype for today’s winners)

Big brain

Little body

Senior management guidance and coaching

Permeable boundaries (people and knowledge passing freely) and constantly expanding


• These three models represent gross stereotypes, but the point they make is real.

• Leapfrogging organisations, large and small, move away from big body/little brain and toward big brain/little body.


• Companies as diverse as: Granite Rock, Cemex, Buckman Labs, Chaparral Steel, Oticon, Physician Sales & Service, Quad/Graphics, Springfield Remanufacturing, Sun Microsystems, and Verifone

• Instinctively connect to this big-brain metaphor


• Everyone has access to information, expertise, learning opportunities, fast decision-making authority, and accountability

• Information and data that were previously hoarded now become dispersed; people with ideas freely cross permeable boundaries within and beyond the organisation

• Expert systems, electronic databases, and open telecommunication systems proliferate


• Whoever or whatever function is in the organisation is part of the big brain-the core competency, knowledge-growing, value-adding part

• Otherwise, it is sourced to outside partners or eliminated entirely as value detracting

• Non-brain body weight is kept to a bare minimum


• The manager in this kind of organisation is no longer a “boss”-it is a self-defeating to put a cap on knowledge

• Nor is he or she an “organiser”-knowledge changes so rapidly that it quickly obsoletes any structure or system that has the slightest whiff of permanence

• Nor is he or she an empire builder-in a hierarchy-less, demassed organisation, playing power politics or even attempting to hoard talent and information for self-aggrandizement become downright absurd


• Likewise, employees are no longer order takers who except good things to occur if they keep their noses clean.

• In fact, those sorts of people are the first ones downsized in a brain-based organisation

• Xerox declared to their people: “if you’ve got a yes-man or yes-woman working for you, one of you is redundant”


• Flooding your organisation with knowledge means that you turn your organisation into a big brain/little body entity that can more easily vault over heavier competitors.

• In short, it means creating an organisation where, more than anything else, mind matters.


• Obliterating current barriers to the flow of ideas will require courage and persistence, for these barriers are the sacred cows of many organisations.

• When barriers are obliterated, decisions are made faster, better and more creatively. But there is even greater payoff: employees become more powerful. Knowledge is power. More knowleadgeable employees are more powerful employees. More powerful employees make for a powerful organisation.


• There are many reasons to obliterate barriers in organisations, but the main one is that by doing so, you morph your organisation from a hotbed of internal politics to a hotbed of ideas.

• Knowledge is power, and people who share knowledge can create incredible things.


• Business is about products and services• Competitive advantage, on the other hand,

is about great ideas.• It is no longer enough to think of

organisations as an amalgam of bricks, capital, and bodies but rather as a perpetually growing reservoir of ideas.


• In a brain-based economy, the leapfrogging organisations will be those that generate the greatest number of interesting and compelling ideas, take rapid-fire action on them, and then disseminate immediate feedback to everyone so as to generate yet more ideas.

• By repeating this cycle over and over, throughout every nook and cranny of the organisation, the organisation’s intelligence grows, and thus its efficiency, creativity, and competitive vigour increase as well.


• The best predictor of a company’s future earnings is its capacity to generate, consolidate, and use ideas from every possible source: employees, customers, suppliers, partners, outside experts and myriad databases.

Climate for Innovation

• Every manager can help to create that climate as a by-product of practising the seven habits of creative thinking and acting as role model in the management of innovation.

• If you are not part of the solution, you are part of the problem.

Climate for Innovation (cont

• The organisational climate should be an open one, which encourages participation

• There must also be a willingness to provide the relevant facts and information to enable employees to make informed contribution.

• There should be a long-term commitment to the positive management of change on the part of managers at all levels, together with a readiness to provide the necessary resources for education and training.


• These elements are all contributors to the right climate, one in which new ideas can be hatched and significant changes implemented.

• For apart from tending to have a fluid and organic rather than a rigid and mechanistic form, innovative organisations encourage participation in decision making, problem solving and creative thinking.


• They have policies or guidelines rather than rules, keeping the latter to the minimum.

• They have good internal communications, more by word of mouth than by memo or letter.

• The difficulty is to combine these ingredients in the corporate culture which favours new ideas and innovation with the high degree of structure, discipline and routine that is required to manufacture products and deliver a proper customer service


• The essential of a team, is that it is composed of people with complementary temperaments, sets of qualities, interests, knowledge and skills


• Leadership, teamwork and innovation work in harness together. Innovation often calls for teamwork that transcends departmental boundaries.

• Outstanding innovative companies, such as Digital Equipment and 3M, have led the way in this respect.


• The whole process of commercialising a new development is not like a relay race-in which the scientist completes his or her lap and passes a baton to production people, who in turn run their lap and pass the baton to a sales force for the final leg of the race.


• Ideally there is a communication and consultation among all functions at every step. They often form what we call a business development unit to exploit the new product or business idea.

• Such a team may transcend the existing organisation structure and be loosely formed as a matrix system.

Case Study #1

• The invention of Scotch Tape in 1930 is a highlight in the story of 3M. A salesman who visited the auto plants noticed that workers painting new two-toned cars were having trouble keeping the colours from running together.

• Richard Drew, a young 3M lab technician, came up with the answer: masking tape, the company’s first tape

Case Study #2

• Finnish telecommunications company Nokia launches new digital handset models every thirty-five days.

• Without an infrastructure and mindset that allows a firm to be first and exceptional-over and over again-it’s likely that the gains of any breakthrough will be short-lived

Case Study #3

• Intel’s dramatic decision to abandon the high-volume, low-margin, commodity like DRAM memory chip business in 1985 in favour of microprocessor chips propelled the company into dominant breakthroughs in both technology and shareholder wealth.

Case Study #4

• You often hear the expression, ‘We have tried that several times and it doesn’t work here.’ But next time you step into an aircraft remember that the Wright brothers tried 805 times before they achieved sustained flight

• Edison, for his part, failed 147 times before he hit upon the solution to the electric bulb. What separates an idea from success is often-perseverance

Case Study #5

• Since its birth over 30 years ago, Digital Equipment Company has risen like a space rocket to become one of the world’s larger computer manufacturers.

• ‘Our approach is more like a telephone network, where everyone can call everyone else. You have freedom and it is easy to make changes-you just plug in like a telephone’

• There were no barriers between product groups, so that a free exchange of knowledge could take place.

• Often described as a form of ‘organised chaos’, it allowed each manager to be genuinely entrepreneurial within the company.

Dealing with Change

• It took Wal-Mart (itself a breakthrough business model twenty years ago) a dozen years and seventy-eight stores to hit $150 million in sales; it’s taken Amazon three years and no stores to hit that milestone.

How long will it take?

Dealing with Change (cont

Adaptive change

Innovative change

Radically innovative change

Re-introducing a familiar practice

Introducing a practice new to the organisation

Introducing a practice new to the industry

LOW HIGHDegree of complexity, cost, and uncertaintyPotential for resistance to change

3-Stage Model of Planned Change


• Establish a sense of urgency• Create the guiding coalition• Develop a vision and strategy• Communicate the change vision• Empower broad-based action• Generate short-term wins• Consolidate gains and produce more change• Anchor new approaches in the culture

Steps for leading organisational transformation and change


ORGANISATIONAL STRATEGY

Behavioural Strategy

Structural Strategy

Technical Strategy

Change Attitudes & Values

Change Org Architecture &

Design

Change Operation & Methods

New Behaviours

New Relationship

s

New Processes

TRANSFORMED ORGANISATION AND IMPROVED PERFORMANCE

Organisational Improvement Model

Lessons from WPC• In the experience of the Workplace Challenge Programme and its

respective WCM Partners:• It takes 3 to 6 months to:

– To establish mini-business areas– Conduct BOP/Supervisor/Labour training– Clarify roles– Agree on improvements targets– Visual measures established and– Management support structures put in place

• From at least 6 to 12 months, the teams are able to operate independently by:– Being able to facilitate daily meetings effectively– Seeking correct assistance– Problem solving through interactions with other teams in the value chain– Discussing ideas and implement them, and– Starting to implement productivity improvement toolkits

± Harari (1999)“Leapfrogging the competition”

Way-forward & Recommendations

• To set aside 6 to 12 months in order to create a climate that encourages creativity in the NPI that’ll cover the following aspects:

± Spread information everywhere± Challenge sacred cows in pursuit of bold goals± Create a permeable organisation± Cultivate a culture of curiosity± Insist on perpetual learning

Thank You!

Any questions?

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Strategic Management of Innovation_final