1. Innovation Value Chain
Mohammed Alshamrani
Ahmed Danaf
Wabel Bahanshal
Keo Ros

2. Think Innovation Value Chain
Idea generation
Idea conversion
Idea diffusion

4. Focus on the Right Links
Executives need to view their companies’ innovation processes as a value chain, engaging in a link-by-link analysis
It doesn’t matter how great a company’s selection process is if only a few good concepts are on the table, or if the subsequent development process is weak
Managers need to stop putting all their efforts into improving their core innovation capabilities and focus instead on strengthening their weak links
Research shows that a company’s capacity to innovate is only as good as the weakest link in its innovation value chain

6. Focus on the Right Links
“Weakest Link” scenarios
Idea poor
Conversion poor
Diffusion poor

7. Focus on the Right Links Idea-Poor
Idea poor company spends a lot of effort and money developing and diffusing ideas that result in mediocre products and financial returns
Problem is in idea generation, not execution

8. Focus on the Right Links Conversion-Poor
Conversion poor company has good ideas, but managers don’t screen and develop ideas
Management needs to engage in a link-by-link analysis
Example: Computer hardware manufacturer
> 50 very good ideas for new products
Managers did not screen the ideas properly
Few ideas took hold and new ones kept coming in
Failed to recognize the weak link
Focused more time and resources on strong link
Resulted in undermining the company’s innovation efforts
Required better screen capabilities

9. Focus on the Right Links Diffusion-Poor
Diffusion poor company has trouble monetizing its good ideas
Decisions about what to bring to market are made locally
“Not invented here thinking dominates”
New products and services not pushed out across geographic regions; localized products

10. Fixing the Idea-Poor Company
Ways to generate ideas –
in-house
cross-pollination
external sourcing
Research indicates due to inadequate networks
Examples –
Managers fail to forge quality links with others outside their company
People prefer to talk to their coworkers rather than reach out to coworkers in other departments
Build External Networks and Internal Cross-Unit Networks

11. Fixing the Idea-Poor Company External Networks
Build External Networks
Solution Network geared toward finding answers to specific problems
Example – Eli Lilly
Developed InnoCentive, a solution-seeking website used by Eli Lilly, P&G and other companies to find answers to specific technical or scientific problems
Discovery Network geared toward uncovering new ideas within broad technology or product domains
Example – Intuit
Developed Simple Start edition of QuickBooks – best seller for the company
Developers observed business owners to learn accounting practices

12. Fixing the Idea-Poor Company Internal cross-unit Networks
Build Internal cross-unit Networks
Generates new ideas inside organizations by building cross-unit networks
Continuous dialogue and knowledge exchange between people from different units
Example –
Proctor & Gamble’s development of Olay Daily Facials
Collaboration among team members from different product lines

13. Which P&G groups worked together to develop
Olay Daily Facials?

14. Fixing the Conversion-Poor Company
Multichannel Funding model opens up options outside the boss’s immediate authority
Example – Shell Oil’s GameChanger unit developed in 1996 to fund radical ideas that lead to entirely new businesses
Safe Havens –
Companies build safe havens for emerging concepts
Critical to the successful conversion of good ideas into profitable product or business lines

15. Fixing the Diffusion-Poor Company
Why do some companies find it so difficult to gain traction for their new ideas?
In decentralized organizations, managers are granted considerable autonomy, including the freedom to say “no thanks” to new ideas
Even when managers have less formal control over which new ideas will be implemented, they can still delay or sabotage projects they don’t believe in

16. Fixing the Diffusion-Poor Company
Executives can’t just order a companywide rollout of developed ideas, instead, they need to create buzz for new concepts by using variety of catalysts (incentives)
They need to use their deep high-touch personal networks to increase awareness among employees and persuade them to adopt a new product or business concepts (phone calls, s, sales calls, and in meeting)

17. New Measures, New Roles
Managers who adopt the innovation value chain perspective will need to implement new key performance indicators that focus on the specific deliverables from each link in the chain
Managers will need to determine what constitutes a good idea versus a trivial one
Companies may have to start out with internal surveys and then accumulate information as they go
Managers who adopt the innovation value chain need to cultivate new roles for employees

18. Conclusion
Management needs to strengthen all phases of the value chain in order to make their companies successful
Idea generation
Idea conversion
Idea diffusion
Executives need to assess each of the 3 phases and focus more attention on the weakest links
Successful companies come up with good ideas, convert those ideas into products and services, and finally diffuse products & services both nationally and globally

19. Questions? Comments