Navigating Innovation : How to Identify, Prioritize and Capture Opportunities for Strategic Success

Every firm must maintain an entrepreneurial ecosystem and a coherent innovation strategy in order to stay ahead of the competition. For managers this means being able to build a vision of what innovation looks like in the context of their organization, fostering entrepreneurial behaviour, spotting opportunities and making the right decisions. Based on years of practical experience and unique insight, this handy guide identifies fundamental challenges and is rooted in concrete examples. Accompanied by a brand new app for iPhone and Android as well as a companion website ((http://www.NavigatingInnovation.org) www.NavigatingInnovation.org ), this is an easy dip in, dip out guide with a focus on successful execution. Navigating Innovation is a one-stop-shop, giving you a deeper understanding of the core concepts and tools to capture the right opportunities for your business. Preface Acknowledgements Contents List of Figures 1: Introduction: Make Sense of Innovation 2: Build a Shared Strategic Vision of Innovation 2.1 Why It Matters: Innovation Management Capabilities 2.1.1 Megatrends: Beyond Hi-Tech High-Speed Innovations The New Normal Global Village There Is No Planet B So What? 2.1.2 Industry and Sector Trends The Future Is Not What It Used to Be Fighting for the Cake New Needs New Technologies So What? 2.1.3 Innovation as a Strategic Priority Safe Heavens (for Now) Icebergs Ahead Limited Visibility Embedded Flexibility So What? 2.1.4 Developing Innovation Management Capabilities The Innovation Engine The Steering Wheel The Innovation Fuel So What? 2.2 Innovation as a Business: More Than Creativity 2.2.1 Innovation Means Much More Than Invention Innovation Means Change Innovators Versus Inventors Innovation Versus Invention So What? 2.2.2 Newness Is Relative Newness Is Relative New for Whom? The Liability of Newness So What? 2.2.3 Many Small Steps and a Few Big Bets How Big Is the Change? Big Jumps From Continuous Improvements to Revolutions So What? 2.3 Innovation as a Process: Beyond Ideation 2.3.1 Resistance to Change: Disrupting Routines People Resist Being Changed Organizations Resist Being Changed So What? 2.3.2 Drivers of Adoption: Make It Worth It Selling the New Value Managing Adoption Phases Crossing the Chasm Dealing with Fears So What? 2.3.3 Drivers of Adoption: Make It Easy Minimizing the Switching Costs Keep It Simple, Stupid Creating Social Pressures Innovation Bottlenecks So What? 2.4 Innovation Typology: Beyond New Products 2.4.1 What Is New: What Versus How Doing New Things Doing Things in New Ways Organizing Things in New Ways New Things in New Ways New Products and New Services So What? 2.4.2 New Value Propositions and New Services New Marketing New Markets New Interactions Servitization Leveraging Servitization So What? 2.4.3 New and Disruptive Value Curves New Value Curves Disruptive Innovations Disrupting Incumbents So What? 2.4.4 New Business Models The Key Elements of a Business Model Innovative Business Models New Ways to Innovate So What? 2.5 Innovation Strategies: Beyond New Product Development 2.5.1 Innovative Corporate Strategies: (Re)define the Core Business Farming or Hunting Winning the Game Changing the Game So What? 2.5.2 Innovative Business Strategies: Redefine How to Compete What Do You Sell to Whom? How Do You Deliver Value? So What? 2.5.3 Timing: First Is Not Always Best Run Ahead Dominant Design The Second Mouse Gets the Cheese When the First Will Be Last Pacing Innovation So What? 2.5.4 Off the Beaten Paths: Strategic Innovations Diving into “Blue Oceans” Strategic Innovations So What? 2.6 Drivers of Innovation Strategies: Beyond Hype 2.6.1 Innovation as a Means, Not an End What the Firm Needs to Do Well What the Firm Can or Could Do Better Than Others What People Want from the Firm So What? 2.6.2 Key Success Factors and Sources of Competitive Advantages (New) Key Success Factors (New) Sources of Competitive Advantage New Kids on the Block Learn to Learn So What? 2.6.3 Purpose: Managing Stakeholder Expectations Identifying the Key Stakeholders Setting the Clock Sizing Expectations So What? 2.6.4 Define Your Innovation Posture Pick Your Innovation Mix So What? 2.7 Synthesis Bibliography1 3: Manage Entrepreneurial Ecosystems 3.1 Encourage People to Innovate: Corporate Entrepreneurs 3.1.1 Entrepreneurs: Made Not Born Made, Not Born So What? 3.1.2 Corporate Entrepreneurs Versus Managers Innovation Politics Corporate Entrepreneurship Innovators Versus Administrators So What? 3.1.3 Drivers of Entrepreneurial Intentions and Behaviors Entrepreneurial Intentions and Behaviors What’s in It for Me? What Will Others Think? Is It Feasible? So What? 3.2 Build and Lead Effective Innovation Teams: Balancing Acts 3.2.1 Why We Need Effective Project Teams to Innovate Complexity (Global) Interdependencies Underinvestment Dedicated Teams So What? 3.2.2 How to Build Great Innovation Teams: Key Trade-Offs Tasks and Objectives Diversity of Knowledge and Skills Group Dynamics So What? 3.2.3 Transformational Team Leaders and Members Transformational Innovation Leaders Building the Right Team So What? 3.3 Build and Manage Innovation-Ready Organizations: How Some Elephants Can Dance 3.3.1 Innovation-Ready Organizations: Mindset and Ventures Measuring Innovativeness Measuring Innovation Outputs Innovative, but Dead So What? 3.3.2 Doing Things in New Ways: Innovation Mindset Innovation-Ready Corporate Cultures Fostering Corporate Entrepreneurship Overcoming Organizational Barriers Drivers of Innovation Culture So What? 3.3.3 Doing Completely New Things: Corporate Ventures Never Seen Before but Obviously Core Far Away, but Still Home Designing Corporate Ventures Parenting Corporate Ventures So What? 3.3.4 “Ambidextrous” Organizations: Small Is Beautiful, Big Is Powerful Big Is Powerful Creative Accumulation Lost in Translation Small Is Beautiful Ambidexterity: Strong and Agile “Contextual” Versus “Structural” Ambidexterity Managing Ambidexterity So What 3.4 Develop Innovative Networks and Collaborations: Never Walk Alone 3.4.1 Capturing Unique Competitive Advantages from Partnerships Unity Makes Strength Unique Combinations So What? 3.4.2 Building Closer Ties: Innovation Networks, Communities and Intermediaries Dealing with Cultural Distance Networking: Building Closer Ties Innovation Communities: Sharing Ideas and Good Practices Innovation Dating Agencies and Facilitators So What? 3.4.3 Open Innovation (Chesbrough 2003): Proudly Found Elsewhere Sourcing: Absorbing Good Ideas Development: Never Walk Alone Go to Market: Don’t Do It Yourself Licensing: Selling Your Ideas So What? 3.4.4 Managing Innovation Across Corporate Boundaries Dating: Search and Information Costs Screening and Sorting Engaging: Bargaining Costs and Conflict Resolution Mechanisms Marrying: Trust, but Verify Living Together So What? 3.5 Create Innovation Ecosystems: Lands of Opportunities 3.5.1 Innovation Valleys: Regional Innovation Ecosystems Bricks (Not Only Clicks) and Blue (Not Red) Tape Dots to Connect So What? 3.5.2 Muppets and Unicorns: Start-Up Myths The Start-Up Mirage (Shane 2009) The Typical “Start-Up”: A Low-Tech “Muppet”, Not a Unicorn Why They Do Not Grow So What? 3.5.3 When Markets Fail: Targeted and Effective Public Interventions Creating and Shaping New Markets Selling Apple Versus Selling Lemons (Akerlof 1970) Managing Side-Effects So What? 3.5.4 The Visible Hands: Innovation Support Mechanisms Who Do You Want to Help? What Is the Help They Need? How Do You Want to Help? Deliver Efficiently So What? 3.6 Synthesis Bibliography 4: Identify Attractive Innovation Opportunities 4.1 Identify the Sources of Innovations: Beyond R&D 4.1.1 R&D Is Not Enough Causes and Effects Combining Technologies and Needs Push and Pull So What? 4.1.2 Triggers of Innovation Opportunities: Beyond New Tech Eureka What If? Wait a Minute... New Market Needs Changes in Industry New Environmental Constraints So What? 4.1.3 From Generating Ideas to Identifying Sizeable Innovation Opportunities From R&D to New Business Having Babies or Adopting Teenagers So What? 4.2 Foster Organizational Learning: Beyond Ideation 4.2.1 Organizational Learning: Growing Intellectual Capital Know What You Know Revisiting Trials and Errors Search Behaviors (Greve 2003) So What? 4.2.2 Idea Generation: Thinking in New Boxes Thinking Inside New Boxes Thinking Inside New Strategy Boxes Reinventing New Wheels So What? 4.2.3 Fostering Employee-Driven Innovation Employee-Driven Frustration Start with Why Focus on the Day After So What? 4.2.4 Developing New Technology Platforms R&D Strategy: Deciding What Not to Do R&D Challenges: Executing the Strategy So What? 4.3 Harvest and Protect Organizational Knowledge Assets 4.3.1 Managing Corporate Knowledge Assets Knowledge Is Pow(d)er Critical Knowledge: Less Is More Absorbing and Mediating Critical Knowledge So What? 4.3.2 Protecting Intellectual Capital Fencing: Intellectual Property Rights (Pisano 2006) The Wild Wild East Great Honors Are Great Burdens Attaching Strings So What? 4.3.3 Managing Patents Patents Benefits of Patents Patent Drawbacks So What? 4.4 Integrate External Sources of Knowledge 4.4.1 Harvest Technology (R)evolutions Sources of Technology Intelligence Do Not Outsource Your Incompetence So What? 4.4.2 Explore Untapped Customer Needs: User-Centric Innovation Value Gaps Uncovering Value Gaps in a Market So What? 4.4.3 Seeding New Ventures: Corporate Venture Capital Fertile Environments Make Small Bets Learning from the Front Line So What? 4.5 Synthesis Bibliography 5: Develop a Balanced Portfolio of Business Models 5.1 Business Model Design: Asking the Right Questions 5.1.1 Successful Business Model Design (Business Planning; Delmar and Shane 2003) This Is Not a Plan Pick Your Canvas If You Fail to Plan, You Plan to Fail So What? 5.1.2 The Key Questions: Why (Us)? What? Who? How Much? Why and What: The Opportunity Who and How Much: The Resources Addressing the Weakest Links So What? 5.1.3 Designing Innovative Business Models (Foss and Saebi 2017) New Whys and New Whats New Whos and New How Muches So What? 5.1.4 Do Not Plan to Fail Early Focus: The Right Persons at the Right Place and the Right Time Escaping the Planning Fallacy So What? 5.2 Designing Competitive Business Models: Why and What? 5.2.1 Strategy: Why? Addressing Somebody’s Problem Houston, Who Has a Problem? Empathic Design So What? 5.2.2 Strategy: Why Us? Being Better Positioned Than Others Being on the Corporate Agenda Play to Win So What? 5.2.3 Operations: What Could Be Sold? Designing the Value Proposition What Will Be on the First Invoice? Seeing Is Believing So What? 5.2.4 Operations: What Could Be Done? Assembling a Competitive Value Chain Find Your Niche Amateurs Worry About Strategy, Professionals About Logistics So What? 5.3 Mobilizing the Right Resources: Who and How Much? 5.3.1 Entrepreneurial Talent and Expertise: Who Does What? Build a Winning Team Do Not Walk Alone So What? 5.3.2 Governance: Who Decides What? Think Globally (Strategy) and Act Locally (Execution) Teenage Ventures and Corporate Stepmothers So What? 5.3.3 Financial Resources: How Much? Numbers Speak Louder Than Words Garbage In, Financials Out Paying for Your Cake and Eating It So What? 5.4 Valuating Innovative Business Models: Quantifying the Unquantifiable 5.4.1 The Valuation Decision-Making Process: Making Smart Bets The Ingredients, the Recipe and the Chef’s Touch Know You Don’t Know Agreeing on the Least Bad Bet So What? 5.4.2 Carefully Using NPV to Value Business Models Mother of All Valuation Methods Handle with Care The Value of Flexibility So What? 5.4.3 Integrating Known Risks and Potential Uncertainties Sense and Sensitivities Better Analysis, Not Bigger Spreadsheets What You Need to Believe So What? 5.5 Building a Consistent and Balanced Innovation Portfolio 5.5.1 Managing a Portfolio of Opportunities The New Piece and the Puzzle A New Egg in the Corporate Baskets So What? 5.5.2 Building Consistent Innovation Portfolios Avoiding Corporate Bottlenecks 1 + 1 = 3 So What? 5.5.3 Staying the Course: Balanced and Aligned Portfolios Mining Versus Hunting Today Versus Tomorrow So What? 5.6 Synthesis Bibliography 6: Nimble Execution: Fail Fast and Win Big 6.1 Nimble Execution: Learn Cheaply and Adapt Quickly 6.1.1 Management Is (Maybe) a Science, but Innovation Is an Art From Just in Time to Just in Case If You Have No Good Maps, Make Sure You Have a Good Backpack So What? 6.1.2 Play Poker, Not Chess: Learning and Folding Know You Don’t Know What You Don’t Know Designing Cheap, Smart Experiments The 5/95 Rule: Not 80/20 Why We Still Get Things Wrong: Decision Biases So What? 6.1.3 Plan for Changes in the Plan: Flexibility and Mobilization Do, Check, Plan Engage Early So What? 6.2 Lean Development: Speed and Flexibility 6.2.1 Learning While Delivering: Crafting the Right Decision Processes Pacing Commitments and Learning Designing Effective Decision Cycles When Gates Become Hurdles Staying in Touch with the Core Business So What? 6.2.2 Discipline and Care: Steering Innovation Projects and Teams Staying on Course Sustaining a Balanced Portfolio So What? 6.2.3 From Fuzzy Front End to Value Creation: Crossing the Gap Taming the Fuzzy Front End Growing Up So What? 6.3 Smart Money: Funding Innovation Projects 6.3.1 Sources of Financing: Why Cash Is Costly Apple or Lemon? Handle with Care Find Your Rich Uncle So What? 6.3.2 Navigating the Innovation Financing Fauna: Financial Stakeholders Dumb Money Smart Mothers-in-Law Finding Wisdom and Crowds Working with the Pros So What? 6.3.3 Professional Innovation Investors: Venture Capitalists Financial Bimbos Swimming with Sharks So What? 6.4 Synthesis Bibliography 7: Conclusion: More Brain, Less Storming Index Annotation Every firm must maintain an entrepreneurial ecosystem and a coherent innovation strategy in order to stay ahead of the competition. For managers this means being able to build a vision of what innovation looks like in the context of their organization, fostering entrepreneurial behaviour, spotting opportunities and making the right decisions. Based on years of practical experience and unique insight, this handy guide identifies fundamental challenges and is rooted in concrete examples