The most innovative companies 2015 - HOME - THE INNOVATION ... · The Most Innovative Companies 2015 edition ... • Organizational structure as a pre-condition for digitization •

The most innovative companies 2015

Four factors that differentiate leaders from followers

Milano, 28 January 2016

160128 The Innovation Group BCG Preez PARTICIPANTS.pptx 1

Draft—for discussion only

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What we will see today in summary

Source: BCG Global Innovation Survey, 2015; Designing Digital Organizations, 2016

The Most Innovative Companies

2015 edition

Designing Digital Organizations

(in partnership with MIT CISR)



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Agenda

How leading innovators behave

How to design digital organizations



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Innovation Remains at the Top of Most Companies’ Agendas

19

40

23 23 25 26 24 24 22 22

47

32

43 43 39

45 52 5353

57

0

20

40

60

80

2007

66

2006

72

2005

66

2015

79 % respondents

Top priority

Top-three priority

2014

75

2013

77

2012

76

2010

72

2009

64

2008

66

Where does innovation/product development rank among your

company's top strategic priorities?

Source: BCG Global Innovation Survey, 2005–2015



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1. Apple

2. Google

3. Tesla Motors

4. Microsoft Corp.

5. Samsung Group

6. Toyota

7. BMW

8. Gilead Sciences

9. Amazon

10. Daimler

11. Bayer

12. Tencent

13. IBM

14. SoftBank

15. Fast Retailing

16. Yahoo!

17. Biogen

18. The Walt Disney

Company

19. Marriott

International

20. Johnson &

Johnson

21. Netflix

22. AXA

23. Hewlett-Packard

24. Amgen

25. Allianz

26. Tata Motors

27. General Electric

28. Facebook

29. BASF

30. Siemens

31. Cisco Systems

32. Dow Chemical

Company

33. Renault

34. Fidelity Investments

35. Volkswagen

36. Visa

37. DuPont

38. Hitachi

39. Roche

40. 3M

41. NEC

42. Medtronic

43. JPMorgan Chase

44. Pfizer

45. Huawei

46. Nike

47. BT Group

48. MasterCard

49. Salesforce.com

50. Lenovo

Source: BCG Global Innovation Survey, 2015

2015 50 Most Innovative Companies



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There are four factors that differentiate leaders

Emphasis on Speed

Systematic exploration of

adjacent markets

Lean R&D processes

Use of technological

platform




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Speed of Adoption Increased in Importance in 2015

-15

-12-10

-8-7-6

-5-5-4

-1

5

89

22

-20

-10

0

10

20

30

Technology

platforms

Big-data

analytics

Speed of

adopting

new tech

Digital

design

Extension

of existing

products

Operations

process

Mobile

products /

capabilities

Change in % respondents citing significant impact,

2014–2015

Business

model

Customer

channel

New

service

New

products

Supporting

capabilities

Marketing Extension

of existing

services

Which of the following areas of innovation/R&D/product development will have the

most impact on your industry over the next three to five years?

Emphasis on Speed




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Long Development Times remain the biggest Obstacle to

Returns on Innovation

What are the biggest obstacles you face when it comes to generating a return on your

investments in innovation/product development?

1210

14

1918

232525

30

36

1112

15

1820

22

25

3132

42

0

10

20

30

40

50

Lack of

coordination

Risk-averse

culture

Selecting the

right ideas to

commercialize

Development

times are too

long

% respondents

Can’t

measure

performance

well

Leadership

commitment

Compensation

not tied to

innovation

Marketing

innovations

Not enough

customer

insight

Not enough

great ideas

2015

2014

Emphasis on Speed




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Fast Innovators Apply Lean Processes

My company's innovation/R&D/product development process exhibits the following

dimensions related to lean and efficient product development

788077

8278

83

787882

7781

87

757880787779

7474

85

7774

83

0

20

40

60

80

100

Agree or strongly agree (%)

Designs

quickly

modeled

and tested

Global

knowledge

management

system

Accepts failure Systematic

cross-

functional

integration

Meaningful

KPIs

Strong

project

manager

Standardized

processes

Short cycles

and iterations

Intelligent

launch plan

Parallel

development

with stringent

funnel

Modularized

product lines

Defined

product

specifications

Fast innovators

Strong innovators

Lean R&D processes




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Strong Innovators Excel at Lean Methodologies

My company's innovation/R&D/product development process exhibits the following

dimensions related to lean and efficient product development

757880787779

7474

85

7774

83

2428

36353437

28

33302830

43

0

20

40

60

80

100

Accepts

failure

Agree or strongly agree (%)

Designs

quickly

modeled

and tested

Global

knowledge

management

system

Systematic

cross-

functional

integration

Meaningful

KPIs

Strong

project

manager

Standardized

processes

Short cycles

and iterations

Intelligent

launch plan

Parallel

development

with stringent

funnel

Modularized

product lines

Defined

product

specifications

Strong innovators

Weak innovators

Average

ratio:

2.5x

Lean R&D processes




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The Key Levers of R&D Improvement

Lean R&D processes




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High Expectations for Technology Platforms and Big Data

18

2325262626

313233343536

4950

0

20

40

60

New

products

Technology

platforms

Speed of

adopting

new

technology

Extension

of existing

services

Digital

design

Mobile

products/

capabilities

Marketing New

service

Extension

of existing

products

Big-data

analytics

Business

model

Customer

channel

Operations

process

% of respondents

Supporting

capabilities

Which of the following areas of innovation/product development will have the most

impact on your industry over the next three to five years?

Use of technological platform




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Expand to adjacencies is key

Systematic exploration of adjacent markets

"As markets mature and competition increases,

growth in the core portfolio inevitably slows"

"Companies that innovate successfully

in existing markets often end up

cannibalizing sales of their own brands"

"Big companies are often victims of their own success;

they operate according to

cultures and business system

that are set up to drive growth in the core"




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The five prerequisites of profitable adjacent growth

• Look at the intersection of context (who the customer is, how she/he

thinks, what she/he does) and emotional or functional needs

Explore demand-centric growth

• Avoid that resources and budget is pulled into core efforts

• Innovations require different people to those who drive core business

Cultivate a new organization

with new talents

• Required a separate senior governance team, equivalent to that of a

private equity or venture capital

Employ separate governance

Adopt an experimental approach

• Employ a low-cost fast-fail methodology based on a test, learn, adapt

and move-on approach, because failures are likely in the unknown

Build the right cultural enablers

• Long-term focus

• Appetite for risk

Systematic exploration of adjacent markets




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Agenda

How leading innovators behave

How to design digital organizations



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"Business architecture is generally not approached

strategically and was not supporting

transformations for the digital economy"

Source: Designing Digital Organizations, 2016



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What we’ve learned about digital strategy

Digital Service

Backbone

Operational

Backbone

Digitized

solutions

Customer

engagement

Solution capabilities

• Micro-services

• Connectivity

• Sophisticated analytics

Transform Go to Market

• More opportunities to

connect

• Better understanding of

customers

• Rapid (real-time) response

to immediate and ever-

changing needs

• Loyalty and trust

Transform Value Proposition

• Solving customer

painpoints with innovative

products/services

• Packaging information with

products/services

• New revenue streams

• Customer lock-in

Internal capabilities

• Integration

• Responsiveness

• Access to operational data

Source: Designing Digital Organizations, 2016



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Customer engagement: the Nordstrom example

Source: Nordstrom Investor presentation, June 2015

Online Multi-channel Seamless experience

1998 2004 2009 2011 2015



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IT

Rationalization

Operational

Excellence

Leading Edge

Digital Business Initiative

Digitized solutions: the Schindler example

2005 2010 2015



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How to design winning organizations in the digital world

Digital strategy

Operational

backbone

Digital

service

backbone

Partnership

with startups Processes

Skills &

incentives

Integrator

Roles

Structures Structures • Organizational structure as a pre-condition for digitization

• Engage multi-disciplinary teams in digital innovation

Integrator roles • Synchronization is a huge challenge as companies

empower people and attempt to rapidly innovate

Processes • Rapid, iterative delivery methods

• Planning and investment prioritization processes

• Cross-functional collaboration processes

Partnership with startups • Companies partner with startups to speed up innovation

• Labs

Skills & incentives • Developing and recruiting digital skills



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Structures: Four potential archetypes models

for digital organisational structures

Primary value lever of digital activity

Proximity to business Scale

Low

High

Level of disruption

of digital activity

BU BU BU

D D D

Non-digital org. unit Digital org. unit

"Decentralized model"

BU BU BU

"Centralized model"

COE

"Stand-alone model"

BU BU BU DE

There is no one-size-fits-all solution

• Businesses have different levels of

digital needs & strategies

• Therefore digital transformation

activities require different levels of

disruption and scale

Potential organizational archetypes

can be defined by two factors

• Level of disruption intended from

digital activities

• Source of value digital provides to

business (scale vs de-averaged)

Multiple digital structures can be

relevant for a company

• Key is to align company objectives

& priorities with benefits & tradeoffs

of a given model

Note: BU = Business Unit; D = Digital team; DE = Digital Excubator; COE = Digital Center of Excellence Source: BCG/DV analysis

Key considerations

BU BU BU

D D D

COE DE

"Hybrid model"

Documents

The most innovative companies 2015 - HOME - THE INNOVATION ... · The Most Innovative Companies 2015 edition ... • Organizational structure as a pre-condition for digitization •