strategic and business model innovation 101510

Idea Accelerator Technologies, LLC: Licensing agent for Institute for Innovation, Inc.®

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Strategic and Business Model Innovation

H o w a r d R a s h e e d , P h . D . University of North Carolina Wilmington, Business Strategy and Innovation

Institute for Innovation, Founder

“Creative Disruption” is a metaphor for strategic renewal that is analogous to life cycles in nature.

In this ecosystem metaphor the energy of an innovative organization is knowledge. The creation of new knowledge serves as the energy source for recognizing and exploiting opportunities. Knowledge energy passes through the semi-permeable organizational boundaries.

The Sustainable Innovation Ecosystem (SIE) perpetually uses new knowledge to stimulate innovative minds, in a nurturing environment, with a productive system and efficient tools, to produce ideas that can be harvested for value-creating activities.

A dynamic view of knowledge is focused on relevant future issues from your value network of energize stakeholders, both internal and external. We identify the roles of the innovation actors and how to empower them for innovation, which parallels the mutual interaction, known as the co-evolution of eco-system organisms.

CollectiveIntelligence Collaborative

Technology

Value Networks

Innovative Stakeholders

The Strategic Ecosystem for Sustainable Innovation

Strategic Transformation ParadigmIn Strategic Transform their business organizations engage in Opportunity Recognition and Exploitation.

Opportunity recognition activities represented in the top half of the diagram is commonly defined as the perception of a potential to create a profitable new venture, or to improve the strategic position of an existing business.

Opportunity recognition includes strategic foresight related to the macro environment and new product development and strategic planning at the organizational level.

In Opportunity Exploitation managers focus on problem solving by engaging in new market development, process improvement, and productivity enhancement.

Opportunity Exploitation includes venture development, organizational change and business process activities.

Strategic innovation focuses on evaluating opportunities using Business Model Innovation process before engaging in exploitation activities.

Strategic Foresight

StrategicPlanning

Organizational

Change

Business Process

Business

Development

Product Development

Business Model

Innovation

OpportunityRecognition

issues

technology strategy

alignmentventure performance

internalexternal

micro

OpportunityExploitation

macro

In Strategic Transform their business organizations engage in Opportunity Recognition and Exploitation.

Opportunity recognition activities represented in the top half of the diagram is commonly defined as the perception of a potential to create a profitable new venture, or to improve the strategic position of an existing business.

Opportunity recognition includes strategic foresight related to the macro environment and new product development and strategic planning at the organizational level.

In Opportunity Exploitation managers focus on problem solving by engaging in new market development, process improvement, and productivity enhancement.

Opportunity Exploitation includes venture development, organizational change and business process activities.

To better evaluate opportunities we use the Business Model Innovation process before engaging in exploitation activities.

infrastructure market

Strategic Foresight

New Product Development

Strategic Planning

Institute for Innovation, copyrighted material, 20105

new ideas

ScenarioModels

Value network

Technology Roadmaps

Market plan

Strategic Plan

New Venture Plan

Strategic and Business Model Innovation

value—profit—growth Business Process

ImprovementInnovation Balanced

Scorecard

costefficiencies

revenue sources

Business Model Innovation

value proposition

A business model is the way an organization conducts business in order to sustain itself.

A business model is the logic of how an organization creates value, whether economic or social.

During the past decade (1997-2007), 14 of the 19 entrants into the Fortune 500 have achieved significant success because their business model innovations have transformed existing industries or created new ones.

A business model is the conceptual and architectural implementation of a business strategy and as the foundation for the implementation of business processes.

The business model is composed of four main pillars, which are Product Innovation, Infrastructure Management, Customer Relationship and Financial Aspects.

Business modeling addresses a broad range of core aspects of a business, including purpose, offerings, strategies, infrastructure, organizational structures, trading practices, and operational processes and policies.

Business Model Innovation

value proposition

Infrastructure Market

revenue sources

strategic partners

key activitiescore capabilities

distribution channelscustomer relationships

target customers

costefficiencies

sustainable value


• In a 2005 survey by the Economist Intelligence Unit more than 50% of executives predicted that by 2010, business model innovation will be even more important for success than product or service innovation.

• In a 2008 IBM survey of nearly all corporate CEOs polled reported the need to adapt their business models, while more than two-thirds said that extensive changes were needed.

• According to a recent American Management Association study no more than 10% of innovation investment at global companies is focused on developing new business models.


Business Model Innovation Trends

• Step 1: Assess your innovation stakeholders• Step 2: Visualize your environment• Step 3: Explore dynamic knowledge• Step 4: Discover Future Possibilities• Step 5: Innovate New Ideas• Step 6: Envision Scenarios• Step 7: Actualize: Measure Effectiveness


7 Steps to Strategic Innovation

http://idea-act.com/seven_steps/index2.html

One of the activities used in engagements using this methodology is the Innovation Style Assessment tool.

There are four dimensions of innovation styles: visioning, experimenting, exploring and modifying.

It measures your typical approach to problem solving and idea creation.

The 4 dimensions results in eight innovation profiles.

Six of the profiles are reflected as roles in the strategic ecosystem metaphor.

PollinatorThought leader

CultivatorAnalyst

RadiatorVisionary leader

HarvesterIntrapraneur

Rain MakerInnovation Champ

LandscaperProject leader

•Radiator: Visionary LeaderVisioningenvision and idealize

•Rainmaker: Innovation ChampVisioning/Exploringintuition, insights, and images

•Harvester: Intrapreneur Exploring/experimentingbroad, perceptive, learning-oriented

•Cultivator: AnalystModifyingrefine and optimize

•Landscaper: Project LeaderExperimentingcombine and test

•Pollinator: Thought leaderExperimenting/Modifyingfacts, details, and analysis

Step 1: Assess Innovation Stakeholders


Innovation Stakeholder Profiles

Innovation Style Assessment

•Participants complete an online assessment.

•Participant receive a 28 page report on their innovation style.

•Administrators/Facilitators get an online administration tool for group formation.

•Groups get a report of innovation styles of the group.

•Assessment facilitates group formation process for maximum diversity and effectiveness.

financeIT

HR

engineering

procurement

customer serviceoutboundprocessinbound marketing

R&D Administration

suppliers

labs

customers

auditors

stockholders investors

outsourcing intermediaries complimentaries

Value Chain

economic

social regulatory

technology Macro Environment

Step 2: Visualize Strategic Environment

Value Network

infrastructure

educationhealth care

economic development

workforce

environment

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Step 2: Visualize your Business Model

First Sentence: Value of the Offering

For…target Customer

who…need or opportunity

our product/service…Product/service

that…statement of benefit

Second Sentence: Positioning Value

Unlike…primary competitors

our product…primary beneficiary

because of our…proof of benefit

Value Proposition Template

Step 3: Value Proposition Future Scan

• Are customer needs changing?

• Are consumer tastes and perceptions changing?

• Are customer demographics changing?

• Are social customs changing?

• Are the core technologies in the industry changing?

• Are you developing new products?

• Are your competitors developing new products?

• Is the current competitive strategy effective?

• Is the economic climate changing?

• Are the economies of scale changing

• Are the barriers to market entry changing?

• Are the supplier cost structures changing?

• Is the availability of supplies changing?

• Are there new substitutes in the market place?

•Prevailing trends: historical data that has a pattern of change and current impact. (there has been an x% increase in y over z time)

•Emerging issues: information that may not have historical pattern but has recently become a factor of change in the environment. (there has been a recent increase in…)

•Expert predictions: expected change that has some validity but no historical pattern. (Dr. Jones predicts…)

•Probable scenarios: anticipated future events based on trends, issues, and predictions. (What if x happens based on y and z?)

Institute for Innovation, copyrighted material, 2010 14

Look for Trends in your environment


Step 4: Bisociation Brainstorming®

More Home computers

More travel

Internet travel booking

OrbitzExpedia

$6 billion

The interaction of seeming unrelated concepts—aha moment

Technology trend Social trendInspirational

spark

Step 5: Generate New Ideas

Innovations

• Products– Incremental– Breakthrough

• Strategy• Markets• Business Models• Policy initiatives• Programs

Applications

• Strategic Foresight Study• Intelligence Think Tanks• Economic Development• New Ventures• Technology Commercialization• Product Development• Strategic Plans• Social Ventures• Public-Private Business Models


Step 6: Envision Future Scenarios

Scenario Methodology:

Descriptions of alternative plausible futures

Significantly different views of the future

“Movies” of the evolving dynamics of the future

Specific decision-focused views of the future

Results of management insight and perceptions


innovation value proposition

infrastructure market

Internal processesperspectives

Customers and external perspectives

Learning and growth perspectives

financial model

Financial stakeholder expectations


Step 7 Actualize: Measure Effectiveness Innovation Balanced Scorecard