Innovation: A business futurists tool to manage a complex environment

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Innovation A business futurists tool to manage
a complex environment

• R. Gayoso

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Agenda

• Study Background
• Challenges Opportunities
• Biz Environment Futurists
• Case for Biz Futurists
• Operational definition of Innovation
• Innovation as a Business Tool
• Methodology
• What we learned
• Four overarching themes
• QA

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Business Environment Challenges

• Cognitive dissonance
• Stahl Grigsby (1992) The external environment
  is so complex, there are so many stimuli for one
  to process, it becomes virtually impossible for
  management to capture the essence of the
  situation.
• Pace of technological change
• Drejer (2004) Not only it is difficult to gauge
  the impact of technological change, but also the
  pace of change is increasing rapidly
  (technological turbulence)
• Fragmentation
• Fletcher (2006) Consumers demand increasingly
  higher degrees of product customization
• Demand uncertainty
• McCarthy Mentzer (2006) The increased market
  fragmentation led to a situation where there are
  so many possible product variations to keep
  track, it is difficult for any one to keep track
  of all targets
• Regulation
• Dreyer (2004) and Roney (2003) One of the most
  important factors of environmental uncertainty is
  linked to the actions of governments revival of
  Sherman Anti Trust Acts Section II (2009)

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Impacts to the organization

• Cognition
• Surprises
• Pace of technological change
• Products become obsolete faster
• Fragmentation
• Too much customization ? higher costs and
  consumer confusion
• Demand uncertainty
• Too many product lines to track ? bureaucracy
• Regulation
• Increases costs

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Biz Futurists Challenges Opportunities

• Unclear biz process ownership
• Market Research, Competitive Intelligence or
  Strategic Planning?
• Silos versus collaborative environment
• Value Add
• Forecast Value Add (FVA), ROI
• Voice Perspective
• Short versus long run view
• Access to senior management (visibility)
• Credibility is a personal asset, not automatic
  with your job function/title

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Business Process Case for Futurists

• Management Dilemma Creating a sustainable future
  
• MR CI provide environmental context in which
  competition will take place
• Futuring is the framework upon business analysis
  takes place
• CI into which Markets, with which Products,
  against which Player will we be? (Objects of
  Interest)
• MR which Technology should we pursue in order
  to have a more competitive offering? How will
  competitors react? (Management Questions)
• Futuring is the analytical method of choice
  whenever there is decision making under
  uncertainty
• Biz Futurists synthesize the knowledge, add value
  and project reality into the future

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Value Add

• Unique skill base
• Link alternative realities to strategy
• Would existing strategy still work in an
  alternative reality?
• Identify gaps, risks and opportunities
• Who benefits from the gaps?
• Develop risk mitigation strategies
• How to close the gaps?
• Financial implications
• Opportunities Hedging, long term contracts and
  options

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Voice Perspective

• Perspective
• Labeling Rose colored glasses, Dr. Doom
• Short run versus Strategic Objectives
• Power of voice ?? Credibility
• Personal asset
• Emerging versus established profession
• Certification, credentials
• Validity of our tools
• Cling to established methods (i.e. Scenario
  Planning)
• Visibility
• Having a regularly scheduled forum populated with
  critical stakeholders (i.e. strategic planning
  review)

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Biz Futurists Success Strategies

• Get organized build your roadmap strategy
• Business research process design
• Business Competitive Intelligence key!
• Monitoring today , envisioning tomorrow
• Build a strong Forecasting base
• Get certified!!!
• Explore other Quantitative Methods
• Scenario Planning, Game Theory, Decision Trees,
  Neural Networks, and Prediction Markets
• Remain informed
• Attend WFS, industry peer conferences
• Read The Futurist, Journal of Forecasting / IBF
  Materials

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What is Innovation?
Definition Innovation is an organization's way of
implementing new ideas, of turning the creative
concepts of its membersinto realities
Continuous Improvement
Operational Excellence
INNOVATION
Conventional Innovation
Radical Innovation
Reapplied Innovation
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What is a proven innovation process?
ONLY 1-2 of creative ideas result in driving biz
value mass generation of ideas is necessary and
such behavior needs to be rewarded
100 IDEAS
20 IDEAS
Create many ideas from diverse sources
Advance Prioritize by objective criteria
5 IDEAS
Refine With BI
1-2 IDEAS
Investment
ImplementOnly high value/impact ones
Time
VALUE
Innovative Culture
Cultural Change needed to move along this path
and manage to the value curve
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Innovention
Animal Domestication
Miniaturization Compression
Wheel
Engine
Is this a by-product of MR , CI or Planning?
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Innovation Framework
Market Environment Regulatory/Political Shortened
Life Cycles Customer Expectations
Drivers of Innovation
RadicalInnovation
Conventional Innovation
OrganizationalImpacts
PerformanceResults
Innovative Culture
ReappliedInnovation
Cost Savings Strategic Direction Long Term
Cost Savings Productivity Efficiency
Enablers/Obstacles
Business Intelligence Individual
Competencies Organizational Knowledge Management
Key Message many sources of changes, many things
to keep up with
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Innovation Pipeline
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Innovation Definition

• Broad Looking at what others looked at and
  seeing what others didnt
• Narrow Innovation new business eco system

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Study Methodology

• Work sessions (4)
• Future Trends (IIR) 49
• Executive MindXChange (Frost Sullivan) 37
• SAS f2008 Business Conference - 38
• IBF Roundtable in Phoenix, AZ - 11
• Depth interviews (9)
• Market Research roundtable participants
• SCIP members
• WFS members
• Industry
• Academia

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Study Methodology Panel Composition

• Industry
• Consumer goods mfg, retail services
• High Tech, banking
• Size
• Mostly 1B to 5B in total sales
• Profile
• Business managers/planners (50), MR, CI,
  forecasters, consultants academia

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Tracking vs. Introducing Innovation

• The department mostly associated with tracking
  innovation is
• Respondents were mostly split between Strategic
  Planning and Marketing (or MR),
• a small minority believed it is mostly the
  domain of executive office,
• others in industry mostly closely associate
  tracking with a RD function
• The department most capable of introducing
  innovation is RD
• Product Planning / Development x Business

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Tools of the trade

• Some of the ways we uncover Innovation are
• First place split
• Traditional Market Research techniques (surveys,
  Delphi Panels)
• Social Trend analysis (Consumer trends /
  preferences, changes in demographics)
• In third place
• CI and trade shows
• In Fifth place the vote was split among Employee
  suggestions, word of mouth and brainstorming
• Futuring (or Scenario Planning) featured in sixth
  place
• The least noted method was structured analysis
  (War Gaming or Game Theory).

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Efficacy

• Reflecting on the tools of the trade, which of
  those do you BELIEVE are the top three ways to
  capture Innovation?
• Respondents believe the best way to capture
  innovation is Social Trend analysis
• followed closely by Emerging MR techniques (On
  Line communities, Social Networks) and CI.
• The next mostly often cited categories were
  Brainstorming and Futuring

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BKMs

• What are the top three Best Known Methods (BKMs)
  you use to capture Innovation?
• The three most often cited best methods to
  capture innovation were qualitative analysis,
  environmental scan and conducting planned /
  semi-structured meetings.
• The second most noted BKMs were quantitative
  analysis, brainstorming and comparing external
  sources.
• The third most cited BKMs related to holding
  interdepartmental meetings and other exercises to
  reduce internal biases and increase creativity
  while minimizing group think.

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Advice

• What are the top three best advices YOU would
  give to a firm just starting to capture
  Innovation?
• Conduct on line surveys
• Social and technological trend analysis
  (highlighted 2nd life)
• In-depth interviews and/or ethnography
• Exploratory techniques to explore human-machine
  interface to leverage creativity
• On line ideation (popular with industry
  respondents)
• Look at other companies with new eyes
• Listen to unexpected sources
• Beware of internal biases.

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Providers

• Which statement best describes your ATTITUDE
  towards outsourcing Innovation analysis?
• Most respondents were open to the idea of
  outsourcing innovation analysis
• Although they believed innovation is key
  information for the survival of their respective
  firms, it can be harnessed by external experts.
• Industry example using GDP although most
  quantitative analysts could come up with a decent
  forecast of GDP, it is best performed by
  specialists and the analytical resources of the
  firm should be used elsewhere (where they add
  more value).

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Agents

• Who do you BELIEVE is best equipped to uncover
  new trends and Innovation?
• Respondents were mostly evenly split between
  external experts and their own research
  departments
• A minority of respondents believed other
  information aggregation tools (such as Blogs)
  would be best equipped to uncover new trends.

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Barriers

• The main objection I have to our outsourcing of
  Innovation is
• Lack of budgets or high costs
• Own internal limitations rigid operation models
  / processes and the fear of losing control over
  the innovation discovery process
• Some cited lack of confidentiality, as their
  feared competition might find out their plans if
  vendors leaked the information
• Management would not find the information useful
  and therefore the ideas could not be implemented
  due to a lack of high level support.
• Industry external providers lack deep
  understanding of who we are and where we are
  going.
• Industry participants shared information on their
  experience outsourcing innovation analysis as
  they were not pleased with the end result of the
  process.
• Post mortem analysis mostly cited a lack of deep
  understanding of who we are and where we are
  going.

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Focus

• Which aspect of Innovation / topics should we
  pursue for next year?
• what are the key social trends shaping the next
  15-20 years?
• What scenarios evolve from these trends?
• Implications for what the trends mean for
  business

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Some overarching themes

• Bias respondents seem to believe they need to
  invest time and effort in order to overcome
  internal biases, rigid processes and group think.
  Some suggested inter-departmental meetings, on
  line ideation sessions and the use of external
  experts to overcome this danger
• Social Trend Analysis a lot of the discussion
  revolved around ways to understand social trends.
  Some believed conventional methods would be best
  to understand such trends, whereas others
  resorted to less conventional techniques, even to
  observing second life
• Futuring Increased popularity of Scenario
  Planning technique and use of futurists as
  value-added partners in the supply chain
• Trade shows still one of the best ways to
  perform a quick environmental scan and get up to
  date information of what others/peers are
  considering. Industry participants shared their
  own observations as firms mostly have different
  gadgets, but share the same problems/ challenges