Chapter 1 Driving Success: How You Innovate Determines What You Innovate

Julie Gavin Alison McHale

Innovation Is the Power to Redefine the Industry
• Competitive Markets

• Noncompetitive/Non Profit Organizations

Achieving a leadership position is not easy, maintaining a leadership position is a challenge.

Case Study: Long-Term Innovation Company: Coca-Cola
• • 1990’s – 15-20% growth/year • 1998-2000 – 3 years of falling profit •

Major Cause:
• Demand was Decreasing
• Competitors Entering Market • Substitute Products

• • New Demands Emerging
• Children • Young Adults • Adults

One Core Product

Coca Cola’s Response
• “Play-to-Win” Innovation Strategy • • Employed Innovative Technology & Business Models • • “Think Local, Act Local”

Coca Cola’s Results
• Coke Identified 32 Beverage Occasions Each Day • New Beverage Types Have Emerged • New Brands

Will They Succeed?

The Innovation Imperative: Driving Long Term Growth in Top and Bottom Lines

How to Make Innovation Work: How You Innovate Determines What you Innovate
• Your company is perfectly designed to yield the innovation it is currently producing • Special touches • Less innovation

Research Bites: Transitioning from the First Breakthrough Innovation to an Innovative Company
• Innovation approach yielding insufficient growth • Redesign innovation approach

Elements of Innovation
• • • • • • • Leadership Strategy Processes Resources Performance Metrics Measurement Incentive Rewards

Seven Innovation Rules
1.Exert strong leadership on the innovation strategy and portfolio decisions. 2.Integrate innovation into the company’s basic business mentality. 3.Align the amount and type of innovation to the company’s business. 4.Manage the natural tension between creativity and value capture. 5.Neutralize organizational antibodies. 6.Recognize that the basic unit (or fundamental building block) of innovation is a network that includes people and knowledge both inside and outside the organization. 7.Create the right metrics and rewards for innovation.

Exert strong leadership on innovation direction and decisions
• Strong leadership from management • Most important factors for investing
• Management strength • Market dominance in the industry • Technology leadership

• Senior management – innovations strategy, level of risk, and amount of investment. • Create a portfolio of technology and business model innovation •

Integrate innovation into the business mentality
• Innovation must be an integral part of the business mentality • Innovation
• Technological • Strategic

• Requires resources in many areas of the organization and outside the organization •

Match innovation to company strategy
• The amount and type of innovation must match the strategy. • Senior management must determine the correct path. • The innovation strategy must be the central focus in every element of the business.

Manage the natural tension between creativity and value capture
• Innovation includes management of creativity • Business Manager:
• Artist or Movie Director

• There must be a balance between commercialization and creativity. •

Neutralize organizational antibodies
• The more radical the innovation or the greater the past success, the more resistance there will be. • What brought success in the past will not necessarily work in the future. • Communication is necessary with customers, competitors, other industries, and suppliers to gain insights

Cultivate an innovative network beyond the organization and outside the • A network both within

company is a building block of innovation.

• • Innovation platforms – focus on an area of competition and innovations that can result •

Crate the right metrics and rewards for innovation
• Companies establish rewards to drive performance. • Few reward systems are linked to innovation strategy • There needs to be reward systems in place to recognize long term breakthroughs. •

In Conclusion

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