Course intro (1)

Foundations of
Business Innovation

Andrew Maxwell

Agenda
 Explain who we are
 Get to know you
 Provide an outline of the course
 Provide an introduction to innovation concepts
 Deal with any administration issues
 Text - Managing Creativity and Innovation – Harvard Business Press
 Web site – U of T portal and CIC
 Downtown course
 Expectations and registration
 Class 6 – 9 pm Mondays at IB 270

Who are we:
Andrew Maxwell
• Director Business Partnerships CIC
• Professional engineer and MBA
• 15 years with tech. multinationals
• Cofounded several technology businesses
• Created U of T’s technology incubator
• Teaches technology entrepreneurship
• Completing Ph.D. in innovation and new
venture creation at University of Waterloo
• Industry advisor CBC Dragons’ Den.

1. Understand the innovation
imperative
Definition of Innovation
Macro-economic impact
Micro-economic impact
Innovation imperative
Country level
Regional level
Firm level

The Economic Conception of Innovation
Joseph Schumpeter

Innovation is:
• Introduction of a new good, or a new quality of a good
• Introduction of a new method of production (need not
need include new technologies)
• The opening of a new market
• The securing of a new source of supply
• The creation of a new organization

Canada lags at innovation & gets worse

Canadian Council Of Academies

2. Importance of Firm-Level Innovation
In a knowledge based economy, organizations that
are able to do more with less, outperform
competitors
In the private sector, higher productivity makes you
the acquirer, rather then the acquiree
In the public sector, exceeding benchmarks is
encouraged, while falling behind has negative
repercussions
“In the road to the future, there are drivers,
passengers and roadkill” Gary Hamel

3. Recognize different types of innovation
Innovation is often confused with invention and
specifically research and development leading to new
technologies. In fact innovation includes:
a. Product Innovation
b. Process Innovation
c. Supply chain Innovation
d. Service Innovation
e. Business model Innovation
……….. And can be applied to all areas of an organization

a) Product innovation
Technology
Existing Internal External
Customer
New

b) Process innovation
A change in the way a product or service is
manufactured, created, or distributed
Process innovation involves implementation of new or
improved production or delivery method.
Process innovations can be intended to decrease unit
costs of production or delivery, to increase quality, or
to produce or deliver new or significantly improved
products.

c) Supply Chain Innovation
 What product/service will be delivered to customers
 What components or services will be acquired
externally
How you will add value internally
This involves consideration of:
 Core competencies necessary for long term success
 Availability of partners in supply chain
 Strategic risk management of relationship

Supply Chain Innovation Opportunities
• New raw materials
• Alternate suppliers
• Outsource manufacturing
• Third party distribution
• Sales agents or on-line sales
Consider:
 Risk management
 Financial implications
 Market issues

d) Service Innovation
Majority of individuals in Canada (and US) work in
service industry
Even where people work in manufacturing, many
of these individuals provide support services
Service innovation is biggest opportunity to
increase competitiveness
Improvements in service innovation can be
measured in terms of increases productivity and
value added

Opportunities for Service Innovation
Contributes to competitive advantage
Requires specific social and technical skills
Involves development and new technology application
Costly to develop needed specialist and generalist skills
Requires integrated thinking and agile environment
Can be implemented in all service areas
Most significant possibilities in financial and medical
services

Can you change your product into a
service?
“An automobile is actually art, entertainment and
mobile sculpture, which, coincidently, also happens to
provide transportation.” Robert Lutz, Chairman, GM

“Product,
“Make sure I service or
don’t run out experience”
of cash”
“The customer rarely
buys what the
company thinks it is
selling him”
- Peter Drucker

e) Business Model Innovation
The goal of innovation is to increase competitiveness
New ways of doing business can also increase
competitiveness and productivity by:
 Creating enhanced utility for the customer
 Enabling a different pricing strategy
 Providing alternate purchasing options
Sometimes a technology innovation requires a business
model innovation to achieve commercial success

Some Innovative Revenue Models
Xerox
 Developed photocopying technology
 Initial capital costs of machines perceived as
excessive
 Introduced pay per copy business model
Google
 Automated search-engine technology
 Provided free to end users
 Revenues generated by advertising

4. Need to identify what innovation
success looks like
Improve top line, bottom line or market share
Strengthen balance sheet
Strengthen brand/reputation
Increase workforce retention (incent stakeholders)
Enhance community engagement
Improve environmental performance
Attract investors/acquirers

Establish specific innovation goals
 Improve quality of  Reduce use of raw
processes, products and materials
services  Reduce environmental
 Create of new markets damage
 Extend product range  Reduce energy
 Reduce labour costs consumption
 Improve production  Conform to regulations
processes If you don’t have specific goals, your
chance of reaching them are small

5. Need to find a way to create and
capture innovation opportunities
Communicate vision and innovation imperative
Stimulate creativity and idea generation
Develop innovation decision-making process that:
Captures ideas
Makes decisions
Activate resources
Implements projects and encourages accountability

Yes ……I know we are meant to be more
innovative … can you give me some guidelines

Identify sources of innovation
Internal drivers Internal sources
1. Unexpected event 1. Research
2. Contradiction 2. Shop floor
3. Change of work process 3. Sales/service
4. Change in industry structure 4. Customer service
External Drivers External Sources
5. Socio-economic changes 5. Customers
6. Political changes 6. Suppliers
7. Technology changes 7. Competitors
Drucker‘s Innovation
Framework

6. Recognize that innovation is a process
Innovation is a management process the requires
specific tools, techniques and discipline
Innovation involves the development of
organizational processes and procedures for
generating, considering and acting on innovative ideas
Innovation research focussed on technology; but real
challenge is to understand innovation process and the
cognitions and behaviours of people in that process
Innovation failures due to lack of understanding people

“Stage Gate” Innovation Process

Stage-Gate Institute
(Bob Cooper)

Implementing The Innovation Process
 Identify innovation imperative and establish objectives
 Create innovation framework
 Assess current resources (Business Analysis)
 Analyze current environment and external trends
 Source and capture innovative ideas
 Create an innovation decision system
 Compare each opportunity to agreed criteria
 Implement pilot project
 Measure performance
 Scale up or cancel

7. Establish innovation resources
Time
People
Money
Processes

8. Understand innovation constraints
Successful innovation usually involves:
Changing current processes and procedures
Modifying management style and communications
Developing new organizational structures
Abandoning existing customers and finding new ones
Modifying incentives, compensation and recruitment
Change company culture and attitude to risk
Important to raise questions and ask how far you will go

Is your organization innovative?
Embraces and learns Focuses on financials &
from failure timelines
Fosters high energy Has strict guidelines & control
activities Had a hierarchical structure
Create a “Can do” Has multiple bosses & “dotted
environment lines”
Develop support & trust Fosters attitude of “Everyone
Is a fun place to work is for himself”

Change management approach can help
an organization become innovative
1. Change through Leadership
2. Create a Shared Need
3. Shape a Vision
4. Mobilize Commitment
5. Make Change Last
6. Monitor Progress
7. Change Systems and Structures
8. Change Culture from Control to Trust
9. Communicate
10.Incentivize

Focus on the people issues
What works:
Mentoring and coaching
Skills & experience development
Free information exchange (networking)
Resource availability
What doesn’t:
Strict personal objectives
Individual performance over team performance
The “right” way of doing things

Architect an innovative environment
• Company leaders • Collaborative & open
and organization culture.
aligned to achieve a • Incentives that
vision reward challenging
Leadership Culture the status quo
and and
Organization Values

• Disciplined
approach to People Process
building and • Process & tools that
and
innovation Skills support idea
Tools generation &
• Desire to do
experimentation
things better

Creating an Innovation Capability
The
High morale and
organization’s
retention of
reputation for
creative people
innovation

Motivates people
Attraction of
within the organization
creative people
and reduces frustration

Organizational
A willingness within
encouragement of
the organization to
creativity &
accept new ideas
innovation
Development
of innovative
products

Develop an Innovation Culture
 Create an innovation-friendly organization, that embraces
a culture of “risk” and “rewards failure” (and success)
Develop a “ project and portfolio management” approach
to innovation around decision-making and implementation
Develop a cross functional “matrix organization” to
embrace innovation across organization
Focus on “communications” and “engagement”
Design “incentives” to support innovation

Common Causes of Innovation Failure
Organizational Causes Process Causes
1. Poor leadership 1. Poor goal definition
2. Poor organization 2. Poor alignments of goals
3. Poor communication and actions
4. Lack of empowerment of 3. Poor team effort
stakeholders 4. Poor monitoring of results
5. Poor knowledge 5. Poor communication and
management access to information
6. Resource limitations 6. Inappropriate decision
making

Meeting Topic Meeting Topic
1 Introduction and Innovation Management: Basic Concepts 7 The Innovative Organization: Structures and Systems
· What is innovation? · What Makes an Organization Innovative
· Balanced Scorecard
· Innovation Myths and Mantras · People Leadership
· Innovation Vocabulary · Team dynamics / structures
· Models of Innovation · Communication strategies
· Centers of innovation (Ex: Universities) Intellectual Property Management
8 Leadership in Innovation
2 The Social and Economic Dimensions of Innovation
· Common Myths About Leadership
· International Innovation Indices · Characteristics of a Leader
· Innovation, Productivity and Economic Competitiveness · Motivation, Performance, Reward Systems
· Productivity vs. Competitiveness · Voice of the Customer
3 Innovation in Business Models 9 Managing Change
· “Traditional” vs. Emerging Business Models · Innovation and Change
· Examples for Innovative Business Models · Why Change? What is Change Management?
· Implementing Business Models · Factors in Change – CAP Model
4 The Essentials of Product Innovation · Creating the Need for Change
· Implementing Change
· Scale of Product Innovation 10 Service Innovation
· Product vs. Process Innovation · What is Service Innovation
· Examples of Disruptive Innovations · Examples of Service Innovations
· New Product Development Framework · Closed vs. Open Innovation
5 The Essentials of Process Innovation Product or Service?
· The Drivers of Process Innovation 11 Innovation in Product Development
· Business Process Management · 50,000 ft view of innovation in product development (Courses 2 and 3)
· Business Process Mapping · Stages of Product Development
· 3P – People, Product, Process
· Management of Change
· Examples
6 Mid-Term Presentation/Exam 12 · Team Presentation and Final Exam

Assignments

1. If you haven’t done register for course
learn.utoronto.ca/bps/innt.htm
www.slideshare.net/andrewmaxwell/innovate-or-
die-9190354
2. Find someone else you think might be interested and tell
them to watch the video
http://vimeo.com/29112717
3 Identify a key innovation challenge you are willing to share

Thank you

“I don’t mind failure. I’ve always thought that
schoolchildren should be marked by the number of
failures they’ve had.” – James Dyson

Thank you

“Innovation comes from saying no to 1,000
things to make sure we don’t get on the wrong
track or try to do too much.” – Steve Jobs

Thank you

“If the people running Amazon.com don’t make some signiﬁcant
mistakes, then we won’t be doing a good job for our shareholders
because we won’t be swinging for the fences.”- Jeff Bezos

Thank you

“You have three choices…. Innovate, find a partner
who you can innovate with… or wait to be innovated
by someone else….” – Andrew Maxwell.

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