Overcoming the barriers to innovation Changing your behavior and processes to increase performance Andrew Maxwell Ph. D. Chief Innovation Officer Canadian Innovation Centre www.innovationcentre.ca

Agenda Why is being innovative challenging? What stops us from innovating? How can we become more innovative?

Introductions Asst. Professor, Temple University Chief Innovation Officer, CIC Professional engineer (Imperial College, London MBA, London Bus. School, Ph.D. U of Waterloo) 15 years with technology multinationals Cofounded four technology businesses Managed U of T’s technology transfer office and established technology incubator Developing online courses in entrepreneurship and innovation

Why is innovation important? 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

Innovation is important….. but why is it difficult? Successful innovation involves: Changing current procedures Adapting leadership role Developing new organizational structures Abandoning existing customers (and finding new ones) Modifying incentives, compensation and recruitment Change company culture (and attitude to risk) The real question is…. are you ready for this 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 © Andrew Maxwell, CIC, 2012

Confusion over what innovation is Joseph Schumpter (1936) Introduction of a new good, or a new quality of good Introduction of a new method of production - need not include new technologies) The opening of a new market The securing of a new source of supply The creation of a new organization Innovator’s Alliance (2012) Innovation involves exploring and adopting new methods of creating value Generating new ideas Conducting R&D to develop new products Continuous improvement in all functional areas Finding new ways to deliver products and services

What is innovation? Innovation is the creation of better or more effective products, processes, services, technologies, or ideas that are accepted by markets, governments, and society (Wikipedia) Confused with: Invention refers more directly to the creation of the idea or method Innovation includes: Product Innovation Process Innovation Service Innovation Business model Innovation Innovation is the creation of better or more effective products, processes, services, technologies, or ideas that are accepted by markets, governments, and society. Innovation differs from invention in that innovation refers to the use of a new idea or method, © Andrew Maxwell, CIC, 2012

What is disruptive innovation Distinctions between incremental and disruptive innovations are based on the impact on the market, not on the sophistication of the technology advance Incremental innovations make changes to existing products or services that tend to reinforce existing market positions Disruptive innovations change nature of competition in marketplace, can lead to creation of new ventures an/or enable smaller companies to take on incumbents

What is business model innovation? Business model innovation identifies new ways to make money to increase competitiveness and drive adoption 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

The innovation imperative On the road to the future, you are either: The driver The passenger…..or Roadkill Gary Hamel

But innovation is a science not an art Traditionally we talk about innovation based on experience, not evidence We don’t look at diagnostic factors that differentiate between success and failure We provide insights, not predictions But as we advance the study of innovation, we can use our improved understanding to predict outcomes Adopting a process approach to innovation will improve innovation outcomes

Innovation management 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 involves an understanding of the social sciences, rather than the physical sciences

Implementing an innovation process Outputs Outputs Product innovation Service innovation Process innovation Business model innovation Inputs Decision making Monitoring Employees Suppliers & Partners Customers Competitors Ideation Evaluation Realization Resource allocation Project management

The innovation context Strategy Product Leadership Customer Intimacy Oper. Excellence Disruptive Offerings Resources Financial Technology People External Leadership Incentives Communications Risk Tolerance Culture Business Information Quality Management Project Management Decision Support Processes

The innovation context Outputs Strategy Resources Product innovation Service innovation Process innovation Business model innovation Inputs Employees Suppliers & Partners Customers Competitors Ideation Evaluation Realization Culture Processes

Innovative ideas only generated if… Clear understanding of why innovation is important for company The innovation strategy is clear and well communicated Simple method for collecting and evaluating ideas There is the requisite support for innovation Leadership support Alignment of incentives Allocation of necessary resources Decision system for deciding priorities open and Commitment to make decisions and implement in a timely manner “Organizations, by their very nature are designed to promote order and routine. They are inhospitable environments for innovation” Ted Levitt

Changing the rate of innovation requires company transformation Change through Leadership Create a Shared Need Shape a Vision Mobilize Commitment Make Change Last Monitor Progress Change Systems and Structures Change Culture from Control to Trust Communicate Incentivize

Changing the 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

Innovation is about taking higher levels of risk which means accepting higher levels of failure “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 “I don’t mind failure. I’ve always thought that schoolchildren should be marked by the number of failures they’ve had.” James Dyson “The biggest risk is not taking any risk…In a world that changing really quickly, the only strategy that is guaranteed to fail is not taking risks.” Mark Zuckerberg

Common causes of innovation failure Organizational Causes Process Causes Poor leadership Poor organization Poor communication Lack of empowerment of stakeholders Poor knowledge management Resource limitations Poor goal definition Poor alignments of goals and actions Poor team effort Poor monitoring of results Poor communication and access to information Inappropriate decision making

Innovate….or die trying…. Thank you © © Andrew Maxwell, CIC, 2012