Transcript Why Innovation is Key to the Success of an Enterprise?

Why Innovation is
Key to the Success
of an Enterprise?
Rajan Seriampalayam
McAfee
April 2014, Hillsboro, OR
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Introduction
• Who am I?
o Agile Transformation Coach @ McAfee
o Champion of Change
o Brings a Quality Mindset
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Agenda
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What is Innovation?
Reflecting on some past innovations
Industry Trends on Innovation
Impact on Employees and Shareholders
Innovation Practices – Examples
What can we learn?
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What Is Innovation?
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The Future of Business
© Brian Solis, What’s the Future of Business
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Current Scenario
• Business as usual doesn’t stand a chance anymore
In our country:
Every Year
Within the 1 st Year
Within the first 5 years
Businesses that develop innovative products, distribution channels and a strong
customer proposition will gain significant competitive advantage. Those who do not
respond to the new normal are at a greater risk of falling into difficulty – spokesperson
from BDO LLP, London
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What Happened?
• Do you recognize these companies, brands?
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Reflection on Some Past
Innovations
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The Kodak Story
• Kodak Why did they fail despite all these
innovations and inventions?
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1965
1973
1975
1982
1992
1995
2002
– First super 8 format film
– Introduced sound home movies with super 8
- World's first digital camera
- Disc Photography
– Writeable CD
– DC40 First Point & Shoot Digital Camera
– With Sanyo developed OLED – far superior than LCD
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The Kodak Story
• They were primarily a chemical factory
• Their big focus was making silver halide films and
paper (to preserve people’s memories)
• They did not have a strategy for major
transformation of their innovations
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- Imaging for Business
• Spun off consumer imaging solutions
• Leaner, Financially Stronger and Focused
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Sony Saga
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Why did Sony Fail?
• Lack of competitiveness
• Lack of knowledge sharing with partners and other
industry leaders in recording and storage formats
• Provided limited technical support to customers
• No strategy around unification of hardware and
software components
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Why Innovations Failed?
1.
Unrealistic expectations from top management regarding
resources and the time
2. Lack of resources allocated in budget, people,
infrastructure
3. Far too much focus on products and technology and
ignoring the other options within innovation, such as
service, business model, platform collaborations
4. People or teams operate in silo’s instead of broader
collaborative approaches
5. Wrong personnel in place to make innovation happen
6. Poorly defined innovation strategy
7. Poorly defined innovation goals
8. Too much focus on idea generation and not on execution
of generated ideas
9. Lack of involving external inputs (partners, potential
customers etc.)
10. Poor management of the innovation process
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Industry Trends on
Innovation
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Innovative Companies
Stock Price Growth Last 3 years
12.00
10.00
X growth
8.00
10.25
6.00
5.81
4.00
1.88
1.98
1.99
2.03
2.12
AAPL
GE
MMM
FB
INTU
GOOG
ADBE
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2.47
1.72
IBM
1.54
0.00
1.18
2.00
CMG
NFLX
TSLA
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Trends of Innovative
Companies
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High R&D Spend
Usage of digital tools to gain
market insights and get
feedback on transformative
potential of their innovations
8% of R&D budget allocated
to digital enablers
R&D Spending by 100 Globally innovative companies
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How Companies Spend
on Innovation?
Financial Performance of Innovative vs. top R&D spenders
• It is not about what you spend but how you spend it
• How you use digital research tools to make the difference
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Market Insight: Market Research, Seed Funding, Exploratory Research
End-user Insight: Customer Focus Groups, Idea Work-out Session, Customer
Observation
Technology Foresight: Meetings in Technical Community, Tech Road mapping, Cross
BU Communities of Practice, External Idea Scouting
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Impact of Innovation on
Employees & Shareholders
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Strategy & Culture
Cultural Attributes include:
• Strong identification with
customer / customer focus
• Passion/pride in products and
services
• Respect for technical talent
and knowledge
• Open to new ideas from
customers, partners,
competitors
• Collaboration across cultures
and geos
• Sense of accountability to
innovation and product
development process
• Over half the respondents to a survey indicated
inadequate strategic alignment or poor cultural support
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Employee Satisfaction
• A recent study by OC Tanner shows:
o Employees who receive recognition are more likely to be highly
engaged
o And as a result are highly likely to perform at their best and more
likely to develop innovative ways to improve their company
• Employees who are satisfied tend to
generate between 1.8 – 3 new ideas per
month
• Driving innovation is a top priority among
executives (43%) - PWC survey of C-Level execs
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What are leaders doing
about innovation?
Align business and innovation objectives
Innovation with purpose & clear strategy
Taking a more formal approach to innovation
Exploring a range of innovation options including
business model innovations
• Plan to collaborate more
• Generate a greater proportion of revenue through
new products and services
• Use social media to help with innovation
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Great leaders foster an environment where innovation is
valued and nurtured.
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Ideas to Create a Culture
of Innovation
Articulate the Vision
Fuel Passion
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Passion with purpose is key. Passion for change and to make a difference in the world
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Celebrate creative in public with praise, career opportunities, perks
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Granting autonomy means extending trust
Give teams the problem you want to solve or what outcomes you expect
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Netflix – courage of employees to say what they think, even if controversial
Boston SW company – two get out of jail cards per member, to avoid repercussions for mistakes they’ve
done
Celebrate & incentivize Ideas
Invest in People & Process; Provide Mentoring
Foster Autonomy & Accountability
Encourage Courage
Fail Forward
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Edison and his researchers blew10,000 light bulbs before they found a successful way to mass produce the
light bulb
Dyson failed at 5,100 prototypes before the revolutionary vacuum
Take risks, increase rate of experimentation
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ITW – small business units ~$ 100M
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Variety of race, culture, gender, geos, hobbies etc., breeds creativity
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Think Small
Maximize Diversity
Create a culture of innovation and disruption.
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Reward Great Ideas
• Before rewarding, foster an innovation culture
o Demo Days, Hack-a-thons, Idea Jams, Ship-it Days etc.
• Points, Prizes & Perks
o Peer driven nominations, gift cards for home repair, concert tickets, Time
off
• Create a culture of acknowledgement
o Helping others be recognized
• No two employees are alike
o Rewards need to be meaningful, memorable and motivating
• Give more to get more
o Let your most innovative employees take more responsibility
o Give freedom to choose their next project or assignment they want to
Ideas
are king and should be acknowledged. But rewarding
work on
great ideas should include much more than a token bonus.
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Some Examples of
Innovation Practices
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Chipotle Mexican Grill
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o Sofritas--the official name for the shredded organic tofu braised with
roasted poblanos, chipotle chiles, and spices
o Chipotle's Garden Blend burrito was introduced in Washington, D.C, last
fall specially for vegans.
o They debuted at ShopHouse, Chipotle's Southeast Asian-style outpost,
which opened in Washington, D.C. in 2011.
o Focus on a few and do them well
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Coconut Rice and Mango
Parfait
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Netflix’s Innovations
• Original Programming
• Turned the TV network into an app
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(others like Amazon and Yahoo are following them)
• Its Design Principle
o Think Big, Start Small, Fail Quickly, Scale Fast
• HR Innovations @ Netflix
o Keeper Test for Managers (which of my people would I fight hard to
keep?)
o Increase employee freedom as they grow, rather than limit it
o No Vacation Policy or tracking time spent
o Expense Policy: Act in Netflix’s Best Interest
o Pay Top of the Market. Compensation not dependent on company
performance
o Culture of Creativity, Self-discipline, Freedom & Responsibility
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Intuit Story
• Shortly after he took over in 2007, Smith discovered an
innovation gap: Only 4 out of 50 products introduced in
the past decade had grown to $50 million or more in
revenues.
• That's changing: In 2012, Intuit got $100 million in
revenues from products that didn't even exist three years
ago.
• The stock has tripled since 2009, and Intuit has made
smart acquisitions like Mint, a Web-based personalfinance manager, and PayCycle, an online-payroll
service.
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Read more: http://www.businessinsider.com/intuit-campus-tour-2013-2?op=1#ixzz2wZD1gcUb
Innovation @ Intuit
Intuit’s Approach
• Customer Driven Innovation
• Design for Delight
• Small and highly entrepreneurial teams which are
cross-functional
• They develop a hypothesis, have customer
empathy
• Go broad/narrow and run experiments
• Used Lean Startup Method
How it is done?
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Unstructured time
Innovation Catalyst Mentors
Scott Cook Innovation Awards
Rotational Dev. Program
Lean StartIN Events (workshop to test
ideas with real customers)
• Horizon Planning
Other Examples
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Adobe Kickstart
Whole Foods Market – Sustainability
IBM Accelerated Discovery Lab
IBM – Smart Energy Research Institute
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Take Aways
• Innovation:
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Is key to survival
Impacts employees, customers and shareholders
Cannot be an annual event
Ideas need to be rewarded and recognized
Culture defines success
Cannot be superficial; it needs a lot more deep
rooted leadership support and a defined process
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Thank You!
Email: [email protected]
Phone: 408-346-3780
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Acknowledgements
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http://www.inc.com/guides/201107/how-to-reward-employees-great-ideas.html
http://www.inc.com/articles/201106/josh-linkner-7-steps-to-a-culture-of-innovation.html
http://www.innovationexcellence.com/blog/2013/03/05/top-ten-causes-of-innovationfailure/#sthash.1Ov09ZQa.dpuf
Booz& Co 2013 Global Innovation 1000 Study, Navigating the Digital Future
Booz& Co 2012 Culture of Innovation
How Performance Recognition Impacts Innovation and Employee Engagement – OC
Tanner
Innovation Passport – IBM FOAK journey from research to reality
Breakthrough Innovation and Growth Sept 2013 (http://www.pwc.com/innovationsurvey)
http://pwcinnovate.wordpress.com/2010/02/03/rewarding-innovation/
Eastman Kodak Company History (www.kodak.com)
Historical Review of Sony’s Innovations an Future Steps – Masanori Hachiya (MIT Sloan
School of Management) June 2010.
Yahoo Finance (for Financial performance data of companies)
Images from the respective company sites and online
What’s the Future of Business (http://bit.ly/WTFBook) by Brian Solis
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Would you recommend
this session to your friend
or colleague?
• On a scale of 1 to 10.
• 1=Highly Unlikely, 10 = Highly Likely
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