innovation moves strategy v2. no slide photos

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Innovation moves strategy

>>>Executing the Balanced ScorecardDeveloping Strategy with the Balanced Scorecard

Developing_0108 ©2008 Balanced Scorecard Collaborative, a Palladium company • thepalladiumgroup.com

Module 11 Innovation Moves Strategy

Innovation vs Strategy0.1

Define the opportunity0.2

Build through co-creation0.3

Execute innovation0.4

Create the movement0.5


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Discussion Questions

Does your strategy consider innovation?

Or

Is your strategy innovative?


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Innovation vs Strategy

• Within five years if you're in the same business you are in now, you are going to be out of business (Philip Kotler)

• Competitive strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value. (Michael Porter)

• A business has two-and only two-basic functions: marketing and innovation. Marketing and innovation produce results. All the rest are costs (Peter Drucker)

• Once you have defined your strategy, you should start thinking in the next generation strategy (Norton)


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Triggers of strategychange at MarriotVacation ClubInternational

Innovation should be a continual and progressive process in every organization

Transformative strategy (high innovation)

Incremental strategy (execution)

Deg

ree

of

Ch

ang

e E

nco

mp

asse

d b

y S

trat

egy

Ideal transformative strategy curve

Transformative strategy (high innovation)



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COMPETITION

AS IS SITUATION

•The key success factor is being able to create new market spaces where there is no existing competence. Companies that find blue ocean are 2-3 times more profitable than the ones that are in red oceans

New Attributes

TO BE

Innovation should progressively drive companies towards Blue Oceans



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Strategy Plan;

• Many hypothesis (answers) to questions

• Questions that have no answer yet

Source; Jose Luis Larrea


Cycle of innovationQuestions

Answers


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Water, from the Greek means new life, emotion, intuition, rebirth and force

VIDEO BE WATER MY FRIEND

• STEP ONE; do you have an enough broad mission?

Whose mission?Improve quality of lifeAll information at one clickWe want to be your energy


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Execution Premium ProcessDEFINE + EXECUTE + INNOVATE



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Build through Co-CreationStart to ripple

Create MovementKeep the wave rolling

Execute InnovationBreak the rules

Define the Opportunity- Don't blow with the wind

40% of managers do not determine where to focus innovation efforts.

Three quarters of the executives consider customers, employees and affiliates as an important source of new ideas, but in most organizations there is no central governance to manage innovation.

Only 4% of the R&D projects obtain the expected results (BusinessWeek). The problem is R&D in normally constrained under a conservative strategy

64% of the executives say that they have enough of the right kind of people to innovate, however almost 70% of them considers this talent is not being used due to lack of processes or of an adequate culture



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40% of managers do not determine where to focus innovation efforts.

Don't just blow with the wind

Define the opportunity


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COSTUMER JOURNEY ANALYSIS

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Get to know the customer's experience and all the processes that relate to the service

VALUE CHAIN ANALYSIS

Understand the current situation and the processes in the company.

LOOK BEYOND PRODUCT AND SERVICE OFFERINGS



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MARKET TRENDSReview market trends and the industry

COMPANY

CUSTOMER



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STRATEGIC STRATEGIC COMPLEXITCOMPLEXIT

YY

200820052000

TIMETIME

To be

competitive

effective

efficient

Integration - i

ntermodal

Geographic dispersi

on

Extension

Liberalizatio

n

CHALLENGES• Manage growth• Customer orientation• Win concessions • External business • Cultural evolution

The role of the leaderEstablish a sense of urgency; The first thing our leader did was to remark the importance of change

Greater custo

mer demand

Environmental concerns

Define the opportunity; case study. Metro de Madrid


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Strategy Map

Projects

10 strategic projects

• 9 with many questions,…,but also many answers

• 1 just with questions,...., ACTIVA

Typically, roughly 80% of an Organization should be focus on executing strategy, 20% need to be focus in evolving it


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Public Transport


1. Advertisement & Public Relations

2. Subscription Administration /

Consortium

4.Entrance Hall & In-Station Stores

& Turn-tickets

6. Navigation & Information

Support

7. Providing Information &

Support

8. Navigation & Other information

Support

1. Choosing a daily transport

2. Applying for a card for season

ticket

3. Buying Season Ticket

4.Getting Inside Public Transport

Space

5. Public Transport Train

6. Train Change

7. Problems / Breakdown

8. Getting Outside of Public

Transport Space

Customer of Public Transport

5. Vehicles (Conductor)

3.Selling Points


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4 MAIN QUESTIONS

What next when no tickets and no conductors are needed?, will Metro have employees?

Should Metro care for better use of citizen time?

Should Metro provide further information from the surface?

1. Advertisement & Public Relations

2. Subscription Administration /

Consortium

4.Entrance Hall & In-Station Stores

& Turn-tickets

6. Navigation & Information

Support

7. Providing Information &

Support

8. Navigation & Other information

Support

1. Choosing a daily transport

2. Applying for a card for season

ticket

3. Buying Season Ticket

4.Getting Inside Public Transport

Space

5. Public Transport Train

6. Train Change

7. Problems / Breakdown

8. Getting Outside of Public

Transport Space

5. Vehicles (Conductor)

3.Selling Points


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Build Through Co-Creation

Three quarters of the executives consider customers, employees and affiliates as an important source of new ideas, but in most

organizations there is no central governance to manage innovation.

Start to ripple


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Discussion Questions

Does your executive committee have many innovate ideas?

Guess why?

• Norton; There is a bottom-up innovation process, which involves employees and customers participating in the collective building of the next generation strategy.


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4COMBINING and DEVELOPMENTOF IDEAS

2GROUPS

EMPLOYEES AND NON - EMPLOYEES

GENERATION OF IDEAS

STORAGEOF IDEAS

PORTFOLIO OF INITIATIVES

5

CUSTOMERS, AND NON-CUSTOMERS

AFFILIATES, UNIVERSITIES,ETC..

3CO-CREATION

WH

AT

WH

O

HO

W

WH

ER

E

WH

AT

WH

O

HO

W

WH

ER

E

1

2

3

4

5

Key success factorsLeadership and commitment around opportunity areas

Common language and philosophy

1

6

Co-create. Interaction generates creativity Combine and develop ideas using imagination

Right resources to the right initiatives

Coordination and communication

Build Through Co-Creation


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OTHEROTHER

COMPANYCOMPANYCUSTOMERCUSTOMER SUPPLIERSUPPLIER REGULATORREGULATOR

CONSULTANTCONSULTANT

Build Through Co-CreationTools;

Ideation

ECC

Lateral thinking

Anthropology

Ask about how they use the product, their problems, their dreams, encourage or challenge your customers to change or improve. (i.e; restaurant)


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Number of Red Dots >=3

Pilot Station potential Areas

Attention/Information Initiative potential Areas

Entertainment Initiatives potential Areas

ORIGIN to

ACCESS

ACCESS

To TURNSTI

LE

TURNSTILE to

PLATFORM

PLATFORM TRAIN

TRANSFER

PLATFORM to EXIT

EXIT to DESTINY Total

OTHER SERVICES 1 1 3 3 1 3 3 1 16

ENTERTAINMENT 0 3 2 1 0 2 4 0 12

ATTENTION 4 5 6 2 2 4 5 2 30

INFORMATION 3 9 6 6 3 6 7 1 41

ENVIRONMENT/CONSERVATION 0 5 5 4 3 5 5 0 27

COMFORT 0 2 2 2 2 2 0 0 10

SECURITY 0 3 1 0 0 2 1 0 7

SPEED 0 4 1 1 1 1 1 0 9

Total 8 32 26 19 12 25 26 4 152

Build Through Co-CreationCase Study: Metro de Madrid

GROUP IDEAS; 4 NEW POSSIBLE BUSSINES

• Media channel = 1.000.000 clients for 1 hour.

• School / Library

• Retail; Metro-shop

• Social & cultural Activity, Entertainment

NEW ATENTION / INFORMATION MODEL


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Build Through Co-CreationCase Study: Metro de Madrid. Some ideas


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Build Through Co-Creation; COMBINE AND DEVELOP THE IDEASUSING IMAGINATION

1. iPod “music

access and listening”

experience

2. iTunes “music

management and

download” experience

3. iTunes “music

browsing” experience

4. iMix sharing playlists

experience

Go beyond product and services, Create new experiences

What is it with the i-pod?


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Key success factors for the Business Plan;

• IMAGINATION; visualize the ideas

• HOMOGENIZATION; The Strategy Map defines the KPI´s that will be estimated in every business plan.

- Time to results +-

Str

ate

gic

Im

pac

t

+

QUICK WINSNEEDS TEST AND

VALIDATION

STOP THESE INITIATIVES OR

TRANSFER TO THE CORRESPONDING AREA

Effort (Investment level, human capital, change management, etc.)+

START NOW

STRATEX; Expenditure for strategic and innovative initiatives

Build Through Co-Creation; RIGHT RESOURCES FOR THE RIGHT INITIATIVES

Strategic impact on FUTURE STRATEGY!!!...TO BE value proposition


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Execute Innovation

Only 4% of the R&D projects obtain the expected results (BusinessWeek)

Break the rules


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You can have an excellent idea and still be stuck in the same jam


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Initiatives generating a differential costumer experience

Initiatives improving processes radically

STRATEGY INTEGRATION

Once the organisation has evaluated the impact of the innovation initiatives on the strategy, it's time to EXECUTE!

Impact on the strategy

Execute Innovation


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FOCUSStrategy Map

Visual representation of the strategic objectives and their interactions

ACTIONInitiatives

(Incorporate Innovative Initiatives)

Key action programs to reach objectives

Economic value added

Asset productivity

Be the lowest cost producer

Pick the winners globally

Create new market demand

Price performance

Partnering

Integrate and align resources

Sales and customer development

Focused technology development

Perfect manufacturing

People and change management

Strategic competencies and skills

Individual and team performance

Customer sensitive culture

Perspectiva

Financial

Customer

Internal

Learning &

Growth

Objetivos

Pro

cure

men

t re

desi

gn

Em

ergi

ng m

arke

ts s

trat

egy

Par

tner

with

the

w

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rsR

es s

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nd W

&L

and

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ican

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Qua

lity

need

s id

entif

icat

ion

Qua

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proc

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roo

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use

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orm

ulat

ion

SV

com

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izat

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faci

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s

Cus

t co

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Exp

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Rew

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Glo

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Tra

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Inic

iati

vas

FOLLOW UPBalanced Scorecards /

Indicators / Goals

Key strategy success factors and definition of the anticipated

performance results

20%

80%

Execute Innovation


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After 3 years “create a differential experience” become a strategic theme in the map

Execute Innovation; case study; Metro de Madrid

Cust

omer

's se

rvice

+

- Basic Service

Extended Service

IMAGE CUSTOMER´S ACQUISITION AND LOYALTYSERVICES

Journey phases from origin to destiny

TECHNOLOGY

Metro vuelaMetro vuelaalgo Muy tuyoalgo Muy tuyo

PERSONASCustomer Care

CultureGlobal Attention

Culture Commercial Culture

From 1 objective and 1 project, to 1

strategic theme with

many projects


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‘Suddenly they start running, but no matter how hard Alice runs, they stay in the same place. The queen explains that in

this country you have to run at least twice as fast to get somewhere else…’

Alice in Wonderland

Execute Innovation; case study; Metro de Madrid

Execution Premium

BUSINESS RESULTS:

Sustained customer satisfaction > 70%.

Growth of the public transportation share within Madrid: from 32% to 40%.

Employees productivity from 43 agents per million Kms x Car in 2001 to 37 in 2004.

Improved safety ratings (even after 11-M terrorist attacks).

OTHER BENEFITS:

Developed a culture of “measure”

Begin to understand customer’s experience

Improved cross-unit’s communication


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Create Movement

64% of the executives say that they have enough of the right kind of people to innovate,

however almost 70% of them considers this talent is not being used due to lack of processes or of an adequate culture

Keep the wave rolling


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Create Movement. New functions for the OSM

ROLE OF THE CHIEF MARKETING

OFFICER (P.Kotler)

•Represent the voice of the customer

•Gather market insights to help develop

new products and services

•Be the steward of the corporate brand

•Upgrade marketing technology and

skills

•Bring insight into the corporate portfolio

and synergies

•Measure and account for marketing

financial performance

ROLE OF OSM REGARDING INNOVATION

OR DIFERENCIATION

•Identify strategic challenges…do the right

questions

•Innovation Process coordination and

training in the methodologies of generating and

developing ideas (could be)

•Enable strategy driven decision making

using the most informative and relevant

information

•Ensure effective implementation of

initiatives through efficient allocation of

resources2008

2010 ExecutionBI /

CPM

Data / Web 2.0

Organization Clients

CEO CFO CIO HR Mktg2008

2010 ExecutionBI /

CPM

Data / Web 2.0


CEO CFO CIO HR Mktg


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INTERESTING FOR STRATEGY MANAGEMENT?

Idea Management tools facilitate continuous Co-creation; structure and process determine success


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I nternaProporcionar a la organización

municipal la información necesaria para la planificación y

la gestión de los servicios

ExternaInformar a los ciudadanos

de la gestión municipal y del nivel de calidad de los

servicios que le presta el Ayuntamiento

Funciones del Observatorio de la CiudadCity's Observatory Functions

InternalProvide local government

with the necessary information to plan and manage their services

accordingly

ExternalKeep citizens informed of the activities

of the local government and the perceived level of satisfaction for the services offered by the administration

Create Movement. Case study Ayuntamiento de Madrid


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I nternaProporcionar a la organización

municipal la información necesaria para la planificación y

la gestión de los servicios

ExternaInformar a los ciudadanos

de la gestión municipal y del nivel de calidad de los

servicios que le presta el Ayuntamiento

Funciones del Observatorio de la Ciudad

Information Systems

Go

ve

rnan

ce

Man

ag

eme

nt

Ev

alu

ati

on

In accordance with the City Model

In accordance with the citizen's needs

INT

ER

NA

L P

ER

SP

EC

TIV

EE

XT

ER

NA

L P

ER

SP

EC

TIV

E

Operation Management

System

Budget Management

System

Complaint and Suggestion System

Service Form System Citizen's Perception

Evaluation System

Strategy Management

System

Budget Management System

Create Movement. Case study Ayuntamiento de Madrid


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A co-created strategy will deliver new mutual value for a company and its customers

NEW ATRIBUTE

BEFORE

NEW MODEL

Planning Number of reports

Consistency Reliability Innovation Learning Motivation Execution Participation CustomerOrient.

Co-creation the strategy is part of the experience for employees and customers, and it improves the EXECUTION PREMIUM

2008

2010 ExecutionBI /

CPM

Data / Web 2.0


CEO CFO CIO HR Mktg2008

2010 ExecutionBI /

CPM

Data / Web 2.0


CEO CFO CIO HR Mktg

NEW MODEL

Strategy management value Proposition

Create Movement. New model for strategic development


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Implementation(Operations)

Management

Definition

SCOPE

PARTICIPATIONBoard of Directors

Senior Management

All Employees Customers / Affiliates

STRATEGY

MANAGEMENT 2.0

Management is about having a continuous conversation with the people around you

(Gary Hamel)

Create Movement. New model for strategic developmentStrategy Management Evolution


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Innovation movement model video