Strategic Innovation ODWS Budapest Aug 2010

$ 1.600.000,-


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Business
Model
Innovation

Strategic Innovation in Theory & Practice.

AGENDA
What are we going
to do today?

Introduction
Why does Strategic Innovation matter?

Some Theory (just a little bit)
What is Strategic Innovation?

In Practice
How to make it happen?


AGENDA Who’s this guy?


AGENDA Who’s this guy?

Strategy Change Management
Global Development Transformation
Local Implementation Cultural Change
Hard Cuts + New Growths

Leadership Innovation & Growth
Leadership Team Performance Reinventing Existing Businesses
Management Team Buildign Creating New Businesses
Building Innovation Capabilities

AGENDA

Why Strategic
Innovation?


It all started with criticism of strategic management.

Content
• Too much focus on best practices, operational effectiveness and incremental improvements in cost
and quality
• Too much imitation of competitors‘ moves
• Too much holding on to one strategic position
• Operational effectiveness is NOT strategy
•  „Herding“, clustering of companys around the most successful one
Process
• Strategy as incremental adaptation of last year‘s plan (no search for new opportunities,
differentiation, and new growth.
• Planning being too formal and analytical
• No creativity
• The assumption of linearity of the process
Tools
• Tools being too analytical
• Focus on control
• Tools were developed for a different purpose (analysis, planning and control)
• Conventional tools provide a snapshot of conventional wisdom
• „No battle plan survives contact with the enemy.“ General Collin Powell


„Innovation is front and
center on the corporate
agenda, according to a global
survey. Executives are adding
more breakthrough
innovations and business model
changes to their portfolio to
fuel the growth engine.“
Business Week, November 16, 2009

AGENDA

What is Strategic
Innovation?


Please discuss with your neighbours (groups of 3)

• What is „strategic innovation“ to you?

2 minutes


4 Types of Innovation

Internal

Operational Management
Innovation Innovation

Continuous Discontinuous

Product & Service Strategic
Innovation Innovation

External

Strategic Innovation is about growth

Growth

Organic growth Mergers &
Acquisitions

Within the Strategic
boundaries of the
current business Innovation

Same or increased Increased market
market share in share in mature
growing markets markets


„There„s no good
just being better,
...you got to be
different.“
Charles Handy

“Hey! They‟re lighting their arrows!
Can they do that?”

Achieving growth and/or differentiation through...



New Markets New / Increased Value New Business Models

Who What How
is your customer? Which do you offer your customers? do you create your value
customer segments do you Products, services, solutions, proposition? How do you
serve? experiences. reach the customer? How do
What problem do you solve for you make money?
them?

Market Innovation Value Innovation Business Model Innovation



New Markets New Value New Business Models

Who What How
them?




New Markets New Value New Business Models

Who What How
them?


Superior & Sustainable Financial Performance


AGENDA

OK…but how to
make it happen?

Theoretically...

...in practice!


The Purpose – Why do it?

• Simply the Best
Operationalisation of the mission statement.

• Common Understanding
Development of common language.

• Be One Step Ahead
Increase competencies to improve existing business models.

• Growth Targets
Generating ideas for new businesses.

• Create the Future
Benefit from strategic competencies of the 2nd and 3rd level.


The Purpose – Why do it?

Energy & Solar & Woods &
Technical Surfaces
Sports Decoratives
Components


The Process

Setting the Stage

A Discovery-Driven
Approach


• Define the purpose, scope and focus of innovation activities
The Process • Mobilize the organization
• Align business and innovation strategies
• Build leadership alignment & commitment
• Build a common language and understanding • Identifying internal
• Definition of governance structures and processes and external
• Definition of metrics opportunities
• Sensing, seeking
Setting the Stage and shaping
opportunities
• Bringing successful ideas to market • Describe the
• Financial impact current business
model
• Incubation
• Explore and
• Acceleration
understand
• Transition
A Discovery-Driven
consumer and
customer needs,

Approach
motivations,
behaviors
• Understand
emerging markets,
industry and socio-
ecological trends

• Turn ideas into market ready concepts
• Road-test the idea portfolio with key stakeholders,
consumers, internal and external
• Prototyping, Technical feasibility • Develop and select ideas
• Experimentation & learning • Develop an idea portfolio
• Customer & stakeholder feedback • Idea Generation (In-house, cross-units, external)
• Business planning, venturing, secure founding • Idea Evaluation
• Decide of organizational and governance structures • Idea Selection
• Evolution & optimization • Strategic decision making


The Future Space


A process and large group event for...

Setting the Stage

A Discovery-Driven
Approach


May 6-7
The Overall Process
April 15 Group Mgmt
March 10 Meeting BU
Workshop Mgmt
Division Mgmt
Meetings • Presentation of
Business Division
• Introduction to Models Mgmt
Business Model • Preparation of
Innovation GMM Group
• Introduction
Future Space Research on Final version 2010
• Process innovative Business until April 29 to
• Preparation Models and Trends. SIO Group
2011 +

Business Draft until March 29 to SIO
Model Description Coaching Sessions with SIO
by Division Mgmt Final Version until April 7 to SIO
and their teams.


The Future Space
3 steps


1. Description

2. Inspiration

3. Creation

Step 1
Description


Our past. Our present.


How your organization became what it is today…

• What was the original idea of the founders?
• What where the main life changing events in
your company’s history? (e.g.
internationalization, crisis,…)
• What was the focus of the phases between?
(e.g. growth, innovation, integration,…)
• What where the main challenges in the
respective phases and how did your organization
master them?
• What are the main strengths and mastered
challenges you can build your future on?
• What are 2-3 milestones for the future?


The Process

• Please form mixed groups of 3 people and B
discuss the path of life of your Business Unit.
A C
A-B-C Interviews
• A interviews B; C observes & gives feedback
• B interviews C; A observes & gives feedback
• C interviews A; B observes & gives feedback

• Please summarize the main points of your discussion.

Total Time = 60’
3x 15’ interview + 5’ feedback


1 Discussion in the business unit groups on

1. Path of life of the business unit
Main insights from the A-B-C group
discussion.

2
2. Current business model
Discussion of the main key success
factors of the model including the
Economic Engine.


Business model exhibition

• Please choose a business model that
you are interested to find out more
about
• After 15 minutes when you hear the
signal, please change to the next
business model booth.
• In total there will be 3 rounds of
Business Model presentations &
discussions.


Step 2
Inspiration


Looking outside


1. Please take your scenario card from your booklet and
study it for a couple of minutes.
2. Find a partner
3. Discuss with your partner:
• What could it mean for our
• Future if my, your or both trends come true?
4. Please change partner and discuss the two trends again.

KEY KEY VALUE RELATIONSHIPS CUSTOMERS
PARTNERS ACTIVITIES PROPOSITION

KEY
RESOURCES CHANNELS

COST CENTRES REVENUE STREAMS


Traditional Approach Strategic Innovation
Who • People who want a quick bite to eat • People who want to sit down and
• Get in, order, get served quickly, get remain seated for a while
out quickly again • Create a “3rd place” à la Starbucks
What • Pre-made food prepared constantly • Coffee and cake
according to demand • Made to order (coffee)
• Standard menus • Pre-produced (cakes)
• Some variations allowed
How • 1 counter • 2 counters
• Standardized processes • Separate seating area for McCafé
• Central locations with high • Key is to increase share of wallet
frequencies of the customer and keep him for
• The key is to serve a maximum a longer period of time in the
number of people during a given restaurant
time • Innovative use of existing assets.


Traditional Approach Strategic Innovation
Who • Kids • Everybody from 4-99
• Hard Core Gamers • The whole family
• Casual Gamers
What • High Tech – High Performance • Family Console
Console • Low tech console
• Focus on fun rather than technical
performance
How • High tech, high end processors for • Low tech, lower power processors,
speed and graphics, connect over the no additional features
internet, additional features (DVD, • New movement technology
internet,...)  lower cost
 high cost  lower sales price (190.- €)
 high sales price (250-300.- €)


1 Perspective 2020
• How will our environment develop?
• What are relevant trends for us?
• What will be coming up in the future
and what will be the implications?

2

• Discussion of innovative business
model examples

Step 3
Creation


Developing ideas


Method cards

WHO
WHAT
HOW

WHO
#1 Challenge industry assumptions #11 Target non-customers
#12 Target less profitable customers
WHAT #13 Target the least satisfied customers
#2 Offer complementary products and services #14 Target the chain of buyers
#3 Offer solutions and experiences #15 Segment according to commonalities
#4 Offer bundles #16 Segment according to circumstances
#5 Switch your appeal: functional versus #17 Desegment the customer based
emotional HOW
#6 Focus on the job to be done
#18 Reinvent the customer interface (channels)
#7 Selectively eliminate, reduce, raise and create
#19 Reinvent your customer relationships
#8 Look at subsitutes
#20 Invent new revenue streams
#9 Expand the use of your assets and capabilities
#21 Price differently
#10 Look at the customer experience
#22 Reinvent you cost base
#23 Re-assess your key activities
#24 Collaborate with suppliers, partners, the
network and ecosystem
#25 Look at completely different industries

KEY KEY VALUE RELATIONSHIPS CUSTOMERS
PARTNERS ACTIVITIES PROPOSITION

#24 Re-assess your #10 Offer
#3 Target non-
key activities complementary #13 Switch your customers
products and appeal: functional
#2 Look at services #4 Target less
#25 Collaborate with versus emotional
completely different profitable
suppliers, partners, industries #11 Offer solutions #20 Reinvent your customers
the network and and experiences customer
ecosystem relationships #5 Target the
#12 Offer bundles
least satisfied
#14 Focus on the job customers
to be done
KEY #6 Target the
RESOURCES #15 Selectively CHANNELS chain of buyers
eliminate, reduce,
#7 Segment
raise and create
#17 Expand the use according to
#16 Look at commonalities
of your assets and
#17 Expand the use substitutes
capabilities #8 Segment
of your assets and #17 Expand the use according to
capabilities #18 Look at the
of your assets and circumstances
customer experience
capabilities
#19 Reinvent the #9 Desegment the
#18 Look at the customer based
customer interface
customer experience
(channels)

COST CENTRES REVENUE STREAMS

#23 Reinvent your #21 Invent new revenue streams
cost base
#22 Price differently

Group work in the Business Units

• Based on the insights you gained, please develop ideas for new business
models
• The ideas can be
- Cross functional ideas
- Ideas for new business models
- Social business ideas
- Ideas for your own business unit
• Please note them on post its
• Please choose ONE most promising idea
• Please write them on post its and stick them on the canvas
• Chose the “Most Promising Idea”
Time: 60’

Business model exhibition

• Free floating and discussing of the
ideas developed by the business units.

Time: 60’


After the Future Space

1.Ideas were clustered and further described.
2.Project Teams were set up to evaluate the
details of group wide ideas.
3.Division and Business Unit ideas went straight
into the strategy & budgeting process for the
following year.


Area Rating Description What we know... What we assume...

Strategy How well does the idea
fit with our current 0 5 10
strategy?
What is the strategic  expanding or defending a current
purpose of the idea? business
 building a new one that has
already been identified
 laying the foundations for
potential new businesses
Organization Resources &
Competencies
Which do we need?
Which do exist already?
Which need to be
build?
Change need
Change readiness
Finance Revenue potential
Financial (Qty x Price)
Implications Cost (fix + variable)
Unit Margin Target
Cash Flow Payoffs in the
Payback  near <1 yr
 medium <3 yrs
 long term > 3 yrs
Net Present Value


Innovation How innovative is the WHO
Potential for new model?  Known to company and industry
disruption (Technology/Value  Known to industry, new to
Proposition, Market, company
Supply Chain)  New for company and industry
WHAT
 Known to company and industry
 Known to industry, new to
company
 New for company and industry
HOW
 Known to company and industry
 Known to industry, new to
company
 New for company and industry
Key risk Competition low mid high
factors
Weaknesses

Threaths

Expected blocks /
hurdels to
implementation
Key success Strengths
factors
Opportunities

Next steps
First
experiment


www.nin.com


Want more?
www.doujak.eu
www.sniukas.com

Further references


Would you like to participate?

• Dynamic Capabilities (i.e. activities,
processes and routines) through which
Business Model Innovations come about.

• Managerial capabilities for creating,
developing and leading these capabilities.


“The difficulty lies not
in the new ideas,...

…but in escaping from
the old ones.”
John Maynard Keynes


Looking forward to seeing you again...

Contact Details

Marc Sniukas

Doujak Corporate Development
Lainzer Strasse 80
A-1130 Vienna

Mobile: +43 699 122 333
marc.sniukas@doujak.eu


Lainzer Strasse 80
A-1130 Vienna
Austria

Tel: +43.1.306 33 66
Fax: +43.1.306 33 66 9

office@doujak.eu
www.doujak.eu

Strategic Innovation ODWS Budapest Aug 2010

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