1. THE INNOVATION SYSTEMS LINK Professor Roy Marcus

2. Getting to Basics “Technology is ruled by two types of people: 1.Those who manage what they do not understand and 2.Those who understand what they do not manage” Mike Trout

3. Getting to Basics “The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an Inefficient operation will magnify the Inefficiency” Bill Gates.

4. The Harsh Reality “We Live In A Society Exquisitely Dependant On Science And Technology, In Which Hardly Anyone Knows Anything About Science And Technology” Carl Sagan

5. A Quote From Einstein Without Changing our pattern of thought, we will not be able to solve the problems we created with our current patterns of thought.

6. Precursor – Wicked Problems There is no definite formulation of a wicked problem. Wicked problems have no stopping rules. Solutions to wicked problems are not true-or-false, but better or worse. There is no immediate and no ultimate test of a solution to a wicked problem.

7. Where Systems Thinking Fails Organisations where the people at the top always “know the answer” and the people below merely pull triggers when the target pops up are not places which systems thinking will flourish (Bolman 1997)

8. Example : Car Crash Problem In the 1970s there were many head-on car crashes resulting in injuries and deaths on the George Washington Bridge (NY-NJ)

9. George Washington Bridge

10. Problem: Reduce into Parts Port Authority Police and EMS Columbia-Presbyterian Medical Center

11. Port Authority Focused on the road markings so they regularly repainted the solid yellow lines. They measured their effectiveness by the degree of visibility of the lines by the drivers. But, there was little overall improvement. Solid Yellow Lines

12. Police Focused on driving behavior so they attentively issued fines to drivers who crossed the solid yellow lines or drove over the speed limit. They measured their effectiveness by the number of fines levied. But, there was little overall improvement.

13. EMS Focused on responding to emergencies so they kept themselves and their resources up to date. They measured their effectiveness by response time to the scene, quality of care, and response time to the medical center. But, there was little overall improvement.

14. Columbia-Presbyterian Medical Center Focused on advanced medical care so they improved emergency facilities and treatment. They measured their effectiveness by quality of care feed- back and survival rate. But, there was little overall improvement.

15. Until…A Different Model Was Applied

16. Thinking Models/Metaphors: Social Systems Think Systemically

17. Social System Thinking Model The performance of the whole is NOT the sum of the performances of its parts.

18. Social System Thinking In a system problem the performance of the whole is derived from the interactions of the parts. A system problem cannot be solved by focusing on independent parts.

19. Parts are Inter-Connected

20. Social System Thinking Model The parts do NOT always perform in ways that are expected.

21. Social System Thinking In a social system the “parts” include ► people and groups ► who are purposeful, have their own interests, intentions, generate their own goals, AND exhibit choices Goals are not always shared

22. Social System Thinking Different methods are required to diagnose, describe, and understand a systemic problem

23. Head-on Car Crash Problem: System Diagnosis When these methods were applied a different question emerged: On the George Washington Bridge, under what conditions would a head-on collision be impossible?

24. Head-on Car Crash Problem: System Diagnosis And THIS produced a Systemic Solution: Replace the solid yellow painted lines with a solid concrete barrier

25. George Washington Bridge Gambino, Raymond. Beyond Quality Control. Lab Report, 1990, Vol. 12, No. 5.

26. Systemic Thinking is Not New “Systemic thinking has permeated virtually every functional area of business, and is taught, in one form or another, at most of the top-ranked schools.” Atwater, JB, Kannan, VR, & Stephens, AA. Cultivating Systemic Thinking in the Next Generation of Business Leaders. Academy of Management Learning & Education, 2008, Vol. 7, No. 1, 9-25.

27. Stakeholder View of the Organisation Contextual Environment Operating Environment Structure Culture Competencies Resources Transactional Environment Trade Association Regulators Union/ employees Competitors CreditorsSuppliers Customers Communities Shareholders Economic Forces Ecological Forces Socio- cultural Forces Technological Forces Political Forces

28. The 3 States Of A System THE “AS IS” STATE THE “AS IT WILL BE” STATE THE “AS IT SHOULD BE” STATE DESIGN THE DA VINCI WAY EARLY WARNING SYSTEM – the consequence of the system's current state of affairs

29. Letter to Madiba “When I visited South Africa a few years ago, I had a chance to go to Robben Island and stand in your cell, and I reflected on your fundamental belief that we do not have to accept the world AS IT IS; that we can remake the world AS IT SHOULD BE.” Barack Obama July 2008

30. TIPS Holism : Hypercompetition

32. Profits and value returns TIPS Holism : Hypercompetition

33. Speed to market Response to changes New world flexibility Profits and value returns TIPS Holism : Hypercompetition

34. Speed to market Response to changes New world flexibility Profits and value returns Costs of Incentives and variable pay

35. TIPS Holism : Hypercompetition Speed to market Response to changes New world flexibility Profits and value returns Costs of Incentives and variable pay Creative motivation & people retention

36. TIPS Holism : Hypercompetition Speed to market Response to changes New world flexibility Profits and value returns Costs of Incentives and variable pay Creative motivation & people retention Skills in place Matching new technology skill needs Developing from within Cost of up- skilling Hypercompetition = Synthesis + Synovation + JVs and Alliances

37. CONTRIBUTION TO ORGANISATIONAL ECOLOGY MAKING A DIFFERENCE TO COMMUNITIES Environmental EE, B-BBEE, Job Creation, PPP TIPS Final Focus : Sustainability SUSTAINABILITY S S

38. The Da Vinci Competitive Model D = defining the business (Discriminants) A = assessing innovative competence V = value chain I = intelligence - competitor N = new product/process development C = commercialisation (compressing time) I = improvement – the feedback loop

39. D = Defining the Business This is all about identifying the mission and should answer the following questions: What business are you in? What are your products/services? What is your market segmentation – product and geographical? – who are your customers? What are your core competencies? What is your growth/market share objectives? What are your profit/ return expectations? How do you measure success? What are your values and beliefs?

40. No organisation can be all things to all people – what are our key discriminants? The key issues which an organisation will fail or succeed in delivering unique value can be identified and discussed with the value disciplines model: –Operational excellence –Product leadership –Customer intimacy With MOTIP you can excel in all 3 D = Defining the Business

41. The Da Vinci Competitive Model D = defining the business (Discriminants) A = assessing innovative competence V = value chain I = intelligence - competitor N = new product/process development C = commercialisation (compressing time) I = improvement – the feedback loop

42. A = assessing innovative capabilities and competences Distinctive competencies are the unique resources and strengths that management considers when formulating strategy: Workforce Facilities Market and financial know-how Systems and technology Global strategies Collaborative effort Joint venture Licensing technology Intellectual Property, Knowledge

43. The Da Vinci Competitive Model D = defining the business (Discriminants) A = assessing innovative competence V = value chain I = intelligence - competitor N = new product/process development C = commercialisation (compressing time) I = improvement – the feedback loop

44. Competitive advantage grows out of the way organisations organise and perform discrete activities (Porter) All the activities in the value chain contribute to buyer value It is an interdependent system or network of activities Gaining competitive advantage requires that the organisation’s value chain is managed as a system rather than a collection of separate parts V = Value Chain

45. The Da Vinci Competitive Model D = defining the business (Discriminants) A = assessing innovative competence V = value chain I = intelligence - competitor N = new product/process development C = commercialisation (compressing time) I = improvement – the feedback loop

46. I = Intelligence - competition Maximising the “flow and control” of information is key to competitiveness Ability to compete is determined on how well the organisation collects, analyses, disseminates and safeguards information Most organisations treat and organise the functions of competitive intelligence, decision making and security as separate distinct activities WarRooms (Strategic Navigation Centres) integrate these activities

47. I = Intelligence - competition 5% 15% 80% 55% 25% 20% INTELLIGENCE INFORMATION DATA REENGINEERING THE DECISION MAKING PROCESS FROM SEAT OF THE PANTS TO INTELLIGENCE BASED

48. The Da Vinci Competitive Model D = defining the business (Discriminants) A = assessing innovative competence V = value chain I = intelligence - competitor N = new product/process development C = commercialisation (compressing time) I = improvement – the feedback loop

49. New Technology Selection New technology selection process (Adapted from: Dream Spring SA. The New Product Process)

50. N= new product/process Ansoff’s matrix – the 5 business strategies 1.Product/market scope 2.Growth vector 3.Competitive advantage 4.Synergy – by making use of existing strengths or by acquisition of competencies 5.Make or buy

51. N= new product/process 2 MARKET DEVELOPMENT 4 DIVERSIFICATION 1 MARKET PENETRATION 3 PRODUCT DEVELOPMENT PRODUCTS CurrentNew Current New MARKETS ANSOFF’S MATRIX Vertical Horizontal Concentric Conglomerate

52. Reasons For New Product Failures

53. N = New Products/Processes Keep Your Eye On The Innovation Ball Donald Petersen - Ford Motor Company –Focus on products instead of profits, and the latter will naturally follow –Give your people a say in running the show and a share in the rewards as well –Be consistent

54. N = New Products/Processes Effect On Senior Management How will all of this impact top managers in the 21st century? The only question will be how much to invest and when. The “if” question goes away. The “how” question becomes paramount. An innovation mindset will be acknowledged as a precursor for creating a stable of new products that will greatly contribute to future earnings.

55. N = New Products/Processes Innovation And Corporate Vision CORPORATE VISION: –To be recognised as the global leader in electronic equipment that satisfies consumers leisure needs. To achieve aggressive returns to our shareholders by continuing robust growth. INNOVATION VISION: –We will effectively use innovation to reshape our company from how we know it today. Within 10 years we will be recognised as the global leader of home leisure and recreational electronic equipment products.

56. The Da Vinci Competitive Model D = defining the business (Discriminants) A = assessing innovative competence V = value chain I = intelligence - competitor N = new product/process development C = commercialisation (compressing time) I = improvement – the feedback loop

57. C = commercialisation (compressing time) The Game Is Changing ! Production (output) focus to customer focus Mass production to lean production to customised mass production Access to information Access to technology Intensifying competition Borders disappearing Need to focus Need a strategy and a game plan ! ALL OF THIS TO BE EXECUTED WITHIN THE REALITIES OF INCREASING COMPLEXITY

58. C = commercialisation (compressing time) The Theme The elimination of non-value- adding activities The provision of customer satisfaction in service industries Whole systems “ supply chain ” approach, from supplier through service provider to customer and back again. People are an organisation ’ s greatest resource.

59. Strategic Direction Cost Strategies Quality Technology & Innovation Customer Focus Time Based Level of Development High Low Old New New Corporate Strategy = The most for less cost in the least time. Age

60. Rapid Innovation Time is a Competitive Weapon “ My job is to make our products obsolete, before our competitors do” Akio Morita, Chairman of Sony

61. They Place Emphasis on: l Responsiveness l Customer Focus l R&D and Innovation Key Features of Organisations that Compress Time

62. Increased Customer Demand Increased Product Variety Customer Lock-in Attract the most Profitable Customers De-stock due to Short Lead Times Benefits of a Time Based Strategy

63. MacDonald Saves $100 mil No food is prepared in advance – except the meat patties which are kept hot in the cabinet Total production process shortened to 45 seconds-toaster which browns buns in 11 seconds instead of 30 seconds (Technology) Bread suppliers to change texture of the bread to withstand additional heat (Suppliers) Workers involved in the design of condiment containers (Staff)

64. The Bottom Line “The solution was simple once time was seen as important”

65. The Da Vinci Competitive Model D = defining the business (Discriminants) A = assessing innovative competence V = value chain I = intelligence - competitor N = new product/process development C = commercialisation (compressing time) I = improvement – the feedback loop

66. I = improvement - feedback loop Measuring innovation value d v = T + I + P INPUT T + I + P PROCESSES Alignment Engagement Agility OUTPUT d v Innovation Value

67. The Final Word There is an inextricable link between thinking systemically and the quality of the innovative process. Innovation in the business environment is moving more towards innovating the business process than product development. The new world of Design Thinking demonstrates the urgent need for operations to appreciate the Innovation – Systems Thinking linkage