Innovation Management and Technology Adoption Dr. Mircea Mihaescu, P.Eng. March 7, 2012
Why Should a Company Innovate? Where will the profits be tomorrow? Innovations in: Business model Operations New products/services/channels Creativity Banking is necessary, banks are not Bill Gates -- 1996 Innovation 2
% Penetration The Pace of Technology Innovation is Accelerating Adoption of new technologies is taking hold at double or triple previous rates 100 Cellular PC VCR Television Radio Electricity Telephone Automobile 50 0 0 25 50 75 100 125 150 Years
Let s start with some definitions Research Advancing human knowledge, not always successful Development Building a solution based on research results Invention A unique solution that is patentable Technology Innovation = Idea + Process Any new solution that was not in use before Scope: society, industry, company, department Business Innovation creation of substantial or radical new value for customers and the firm by dramatically changing one or more dimensions of the existing business system, or by creating entirely new business systems.
Making Innovation Happen Contrary to popular belief, innovation: Does not require a revolution inside the company Is not primarily about creativity and ideas Does not focus exclusively on cool new technology Not always demo-able or visible Not needed necessarily in large quantities Innovation Is a sustained, systematic management process Tools Rules -- Discipline Requires measurement Examples: # of innovations, cycle time ratio to complexity Discipline Rules Tools Technology innovation and business model innovation are complementary
Technology Research Center Model Internal and External Networks Academic research, Research Institutes Innovative earlystage startups Center for Advanced Studies Technology Venture Fund Traditional Projects Technology Innovation Projects Mature technology vendors Technology partners Innovative growthstage companies Emerging technology vendors In-house ideas and technology
Technology Research Center Strategy Technology Research Monitor and analyze the innovation landscape Competitors, partners, vendors, industry experts Customers, employees Innovation Projects Explore new ideas, develop and pilot new solutions to help business divisions and their customers Innovate to accelerate new product and process deployment Demonstrate what the future of business can be Advanced Studies Collaborate with worldwide universities and research institutes
Emerging Technology Evolution Gartner Hype Cycle
Analysis Framework for Emerging Technologies The right technology innovation at the right time Innovation cycle = hype + maturity 1. Technology trigger 2. Expectations peak 3. Disillusionment 4. Productivity What s here that we should be researching? Estimate fast track vs. long fuse What s here that we should be using already? 9
Entry point decision is critical to avoid long fuse effect French Matra videophone 1970 AT&T Picturephone 1964 Motorola DynaTAC 1983
Technology Innovation Projects Management Model Ideas Portfolio of Innovation Projects
Projects and Pilots Framework One BIG PROJECT applicable to adoption of mature technologies INVESTIGATE & TENDER PILOT DEPLOY Many small projects, delivered sooner applicable to adoption of emerging technologies INVESTIGATE EXPERIMENT PILOT DEPLOY INVESTIGATE EXPERIMENT PILOT DEPLOY Technology Research Center
AGILE -- FLEXIBLE -- NIMBLE Technology Innovation Projects High-Level Plan Template Experiment, learn fast Launch and learn -- Learn by doing 10% to 30% target fail rate build/buy/partner mix based on skills availability Concept = Idea Creation and Selection Development Scope the problem Track, rank, decide Evaluate technology, share, test, review, revise plans Incubate prototypes, pilots Internal Resources Development and Integration Vendors Deployment Large-scale pilots Evangelize, transfer, support, training Emerging Technology Vendors Willing to change quickly to accommodate new directions that lead to further growth
Technology Innovation Projects Assessing Maturity and Value Gaps Technology Innovation Maturity Stages radical incremental Embryonic research Emerging startups Adolescent adoption Mature version 1.0 3.0 Technology Research Center Traditional IT Innovation Value Gaps concept vs. solution Performance, scalability Integration with existing environment» processes, infrastructure, organizational structures and capabilities Penetration by when is it expected to achieve critical deployment / mass adoption? Payback, ROI estimate timeline Innovation team KPI / Value Metrics need to address all 4 value gaps
15 Technology Innovation Projects Selection and Planning Scope the problem Decide» Where it is most important to innovate business areas» How much risk are we willing to accept financial, technology Decide to focus on» Core competencies» Current business objectives and initiatives» Speculation vs. aspirations, opportunity capture Track Technologies -- find best entry point on technology hype-cycle Seek out innovations that make a difference in the areas deemed important Evaluate products, services, capabilities, trends Rank Build and monitor a list of candidate technologies Estimate scale of potential benefits, overall market attractiveness» Organizational scope» Current technology maturity» Time-to-value: <2 years pilot, 2 5 years track» Risks business, technology feasibility» Costs, Sponsors / Funding» Other similar internal/external projects Evaluate Decide on projects and pilots proposals approved by Technology Board and CTO Conduct regular evaluation and decision points» Drop from list of candidates, cancel or postpone projects» Re-asses potential impact/benefits: people, process, business, infrastructure Evangelize & Transfer Knowledge transfer is through people Work with operating units on deployment and adoption Build Buy Partner
From Problem to Solution the Design Thinking Way GROWTH INVESTIGATE INSIGHT PROJECTS SOLUTIONS USER EXPERIENCE DESIGN CUSTOMER VALUE STRATEGY FRAMEWORK
Technology Innovation Projects The Innovation Team Technology Innovation Council
Project Name: Innovation Project Tracking Template Project Lead: Description (the elevator pitch ) In simple terms- what is the business problem or opportunity? How does this address it? Where does this fit into the existing portfolio of applications our employees or customers use today? Why would this be considered a better alternative or strong addition to the portfolio? Size of proposed investment Minimal Small (1-2 ) Medium(3-4) Large ( 5 and over) Other costs vendors, special HW/SW Use case/business value statement and potential stakeholder Who (end user types) are we talking with about this concept? Who is the potential audience and how large is that audience? Current approach and what is the proposed innovation? How is this different than existing approaches (are there any)? Does functionality exists anywhere else - if yes, why is this better, faster, smarter, etc? If this is a new capability, how would this improve productivity, reduce cost, increase revenue? Who else is experimenting with similar ideas - who are they aligned with, how are we aligned with them or how is their work different? For updates: What's new in our thinking since we started project? Is technology still right /relevant, is this still the right approach? Who is the stakeholder(s)? What decision maker is (should be) involved? Who should we be aligned with for pilot and eventual deployment? What role does this play in Sberbank s strategic initiatives? Key Milestones/Date Amount of time estimated in each phase? When is project end planned? What are exit criteria? How have we aligned with key stakeholders in each phase? Are there any dependencies on other projects or tools? Strategy Alignment name of strategic initiative, if any
BUSINESS IMPACT Technology Innovation Projects Portfolio Management VERY HIGH CCC AAA HIGH Standard Projects DDD BBB MEDIUM FFF EEE LOW VERY LOW Incremental Improvement Projects in BUs VERY LOW LOW MEDIUM HIGH VERY HIGH RISK and COMPLEXITY LEGEND Completed Projects Small team Large team XLarge team Safe Preferred Risk Avoid
Technology Innovation Projects Success Metrics KPI Portfolio Balancing Radical 10-20% Semi-radical 20-30% Incremental 50-70% Portfolio Metrics # of projects % strategy alignment -- 80/20 Cost Size/complexity Duration Risk Benefit/value Estimate vs. ROI Intellectual property patents? Process Metrics Quality of Innovation Solutions Performance, scalability, integration Innovations Value / Penetration / ROI Innovation Process Effectiveness Rework, delays, pipeline Innovation Team Productivity # of projects/team member, cycle time ratio to complexity and value Resource Metrics Resource allocation Small teams, one lead, many part-time collaborators, vendor/partner costs Time to value/decision Time-boxed -- 1 to 3 months Dedicated/shared infrastructure cost and utilization Centralized development and artifacts repository utilization 20
Technology Innovation Derailment Factors What Can Go Wrong Metrics Balance creativity and value creation Too many incremental innovations ROI is the only success metric Inflexible funding Focus on innovation process efficiency as opposed to value creation Culture Managers respond to good ideas with indifference and/or complacency Too much criticism, not enough support/collaboration If it s not my idea, it must be bad Failures are punished Incentive system for shortterm efficiencies
Innovation Success Factors (Westerman MIT Sloan 2010)
Dr. Mircea Mihaescu Director, Sberbank Technology Research Center +7(495) 957 5115 MFMihaescu@sberbank.ru @MirceaMihaescu mircea@computer.org http://mihaescu.blogspot.com/