Pro Yearly is on sale from $80 to $50! »

Innovate or Die - Why corporate innovation fails (and what to do about it)

56df5ba00ba51eec752450870416c7b2?s=47 Vidar Andersen
November 29, 2018

Innovate or Die - Why corporate innovation fails (and what to do about it)

This was my keynote at RTL's Digital Shapers conference in Zagreb, November 2018.
You can find a recording of the talk at http://plusandersen.com/innovateordie
For booking inquiries, please contact you@plusandersen.com

56df5ba00ba51eec752450870416c7b2?s=128

Vidar Andersen

November 29, 2018
Tweet

Transcript

  1. INNOVATE OR DIE WHY CORPORATE INNOVATION FAILS plusandersen.com
 2019.02.07

  2. SHIFT HAPPENS

  3. REMEMBER STEVEN SASSON
 ODDS ARE YOUR DON’T 1975

  4. MORE VIDARANDERSEN.COM VIDAR ANDERSEN • STARTUP FOUNDER • EDUCATOR •

    INNOVATION ADVISOR FOUNDING PRINCIPAL +ANDERSEN & ASSOCIATES
  5. +ANDERSEN 
 & ASSOCIATES tomorrow today plusandersen.com

  6. None
  7. THE 
 OLD VS 
 NEW GAME OF GROWTH

  8. THE OLD GAME OF GROWTH

  9. PRODUCT OF THE INDUSTRIAL AGE

  10. ALL ABOUT MARKET CAPITALISATION

  11. DEFENDING MARKET POSITION AT ALL COSTS

  12. CONQUERING MARKET SHARE BY ANY MEANS

  13. AT GLACIAL SLOW SPEEDS

  14. FAILURE EQUALS CATASTROPHE

  15. SPECIALISED PROCESSES & PEOPLE

  16. PREDICTABLE STABLE ENVIRONMENT

  17. THE NEW GAME OF GROWTH

  18. LIVING IN A POST-INDUSTRIAL AGE

  19. CREATING NEW MARKETS

  20. None
  21. AND OWNING THE NEW MARKETS

  22. FOREVER CONTINUOUSLY

  23. AT LIGHT SPEED FOREVER ACCELERATING

  24. FAILURE ASSUMED PART OF THE PROCESS

  25. WITH POLYMATHS INSTEAD OF SPECIALISED EXPERTS

  26. UNPREDICTABLE ENVIRONMENT

  27. WHY?

  28. SHORTER
 LIFE EXPECTANCY FOR CORPORATIONS

  29. EXPONENTIAL
 TECHNOLOGY DEVELOPMENT

  30. AUTOMATION
 AFFECTING MOST VERTICALS

  31. MACHINES
 LEARNING BY THEMSELVES

  32. THEN

  33. NOW

  34. YOUR COMPETITION
 NO LONGER PEERS OR NEAR-PEERS THE AMOUNT OF

    VENTURE CAPITAL AVAILABLE TO STARTUPS HAVE NEVER BEEN BIGGER
  35. VS

  36. YOU DON’T EVEN NEED VC
 IT DOESN’T MATTER WHERE THE

    AMOUNT OF LOCATION
 & CLASS FREE
 CAPITAL AVAILABLE TO STARTUPS HAVE NEVER BEEN BIGGER
  37. STARTUP VALUATIONS
 RAPIDLY INCREASING

  38. YOUR COMPANY
 BIG, SLOW & RIGID THIS IS YOU

  39. YOUR NEW COMPETITORS
 ARE SMALL, FAST & AGILE YOUR COMPETITION

  40. YOUR COMPANY
 COMPLIANT WITH LAWS & REG YOU

  41. STARTUPS 
 ARE BREAKING THE RULES THE COMPETITION Breakin’ the

    law Breakin’ the law
  42. SO…

  43. SEARCH EXECUTION EXTEND EXISTING OR CREATE NEW DISRUPTING CORE UNKNOWN

    UNKNOWNS SUSTAINING BUSINESS AS USUAL
 KNOWN UNKNOWNS
  44. RED PILL OR BLUE PILL?

  45. WRONG QUESTION

  46. YOU HAVE TO DO BOTH CREATE NEW EXTEND EXISTING +

  47. "If you don't create the things that will kill Facebook,

    
 someone else will." - MARK ZUCKERBERG 
 FOUNDER OF FACEBOOK
  48. SEARCH EXECUTION IN PARALLEL BUSINESS AS USUAL & DISRUPTION DISRUPTING

    CORE EXTENDING BUSINESS AS USUAL
  49. AMBIDEXTROUS DISRUPT OR BE DISRUPTED

  50. DOING THINGS THE RIGHT WAY IS NOT ENOUGH

  51. “We didn’t do anything wrong, but somehow, we lost.” STEPHEN

    ELOP CEO NOKIA
  52. YOU ALSO NEED TO DO THE 
 RIGHT THINGS

  53. THE RIGHT THINGS THE RIGHT WAY

  54. THE RIGHT THINGS THE RIGHT WAY FOR THE RIGHT TYPE

    OF INNOVATIONS
  55. HOW DO 
 WE KNOW
 THE RIGHT THINGS?

  56. NOT BY USING OUTDATED 
 TOOLS FURTHER COMPLICATIONS

  57. BCG GROWTH MATRIX

  58. STRATEGY MAPS

  59. WATERFALL PROJECT MANAGEMENT

  60. ORGA CHARTS

  61. COMMAND LINES

  62. OUTDATED TOOLS • All tools assuming projecting and linearity •

    All tools prohibitive to speed and agility • All tools prohibitive to customer centricity
  63. THE TOOLS THAT WERE ONCE SUCCESSFUL FOR EXECUTION 
 HAVE

    BECOME IMPEDIMENTS 
 THAT ARE ANTITHETICAL TO CONTINUOUS INNOVATION
  64. SO WHAT TO DO?

  65. THREE HORIZONS

  66. H1: KNOWN H2: PARTIALLY KNOWN H3: UNKNOWN HORIZONS

  67. TIME SALES HORIZON 1 HORIZON 2 HORIZON 3 MATURE BUSINESS

    RAPIDLY GROWING BUSINESS EMERGING BUSINESS FOCUS: OUTPUT: EXECUTING TO DEFEND, EXTEND, AND INCREASE PROFITABILITY OF EXISTING BUSINESSES ANNUAL PLANNING AND FORECASTING; DETAILED PLANS FOR GROWTH THROUGH ADJACENCIES RESOURCING INITIATIVES TO BUILD NEW BUSINESSES BUSINESS BUILDING STRATEGIES: INVESTMENT, BUDGET, DETAILED BUSINESS PLANS FOR NEW VENTURES UNCOVERING OPTIONS FOR FUTURE OPPORTUNITIES AND PLACING BETS ON SELECTED OPTIONS DECISIONS TO EXPLORE; INITIAL PROJECT PLAN, PROJECT MILESTONES SOURCE: BAGHAI, COLEY, WHITE ≠ ≠ 3-12M 24-36M 36-72M
  68. HORIZON 1 HORIZON 3 HORIZON 2 Horizon 1 ideas provide

    continuous innovation to a company’s 
 existing business model and core capabilities. Horizon 2 ideas extend a company’s existing business/model and core capabilities to new customers, markets or targets. Horizon 3 is the creation of new capabilities to take advantage of or respond to disruptive opportunities or to counter disruption.
  69. HORIZON 1 - EXECUTING THE CURRENT CORE BUSINESS MODEL TO

    GENERATE VALUE TODAY HORIZON 2/3 SEARCHING FOR NEW BUSINESS MODELS TODAY TO GENERATE VALUE TOMORROW
  70. MORE BAD NEWS

  71. HBR Feb 1st 2019 https://hbr.org/2019/02/mckinseys-three-horizons-model-defined-innovation-for-years-heres-why-it-no-longer-applies

  72. HORIZON 1 HORIZON 3 HORIZON 2 New features that could

    be delivered in the short term of 3 to 12 months Business Model extensions that will be ready 24 to 36 months out Creating new disruptive products or business models 36 to 72 months out
  73. HORIZON 1 HORIZON 3 HORIZON 2 New features that could

    be delivered in the short term of 3 to 12 months Business Model extensions that will be ready 24 to 36 months out Creating new disruptive products or business models 36 to 72 months out
  74. This time-based definition made sense in the 20th century when

    new disruptive ideas took years to research, engineer, and deliver. That’s no longer true in the 21st century — and leadership hasn’t gotten the memo
  75. While traditional analysis suggests that Horizon 3 disruptive innovations take

    years to develop, in today’s world this is no longer the case. The three horizons are no longer bounded by time. Today, disruptive Horizon 3 ideas can be delivered as fast as ideas for Horizon 1 in the existing product line.
  76. For those who grew up with the notion that creative

    disruptive Horizon 3 products takes years are in for some unpleasant surprises.
  77. In fact, it’s the speed of deployment of H3 products,

    strategies, and capabilities that are a devastating upset to the status quo.
  78. "In the new world, it is not
 the big fish

    which eats the small fish, it's the fast fish which eats the slow fish." - KLAUS SCHWAB
 WORLD ECONOMIC FORUM
  79. INNOVATE OR DIE BE QUICK OR BE DEAD plusandersen.com/innovateordie/

  80. HOW TO MAKE IT WORK

  81. HORIZON 1 HORIZON 2/3 OUTSIDE OF DAILY OPERATIONS INSIDE OF

    DAILY OPERATIONS
  82. METHODOLOGY FOR HORIZON 1 INNOVATION EXECUTING KNOWN KNOWNS

  83. PRODUCT MANAGEMENT HORIZON 1 EXTENDS EXISTING CORE
 BUSINESS MODEL USE

    TRADITIONAL PRODUCT MANAGEMENT FOR HORIZON 1 PROJECTS IDEA SCREEN SECOND SCREEN GO TO DEVELOPMENT GO TO TESTING GO TO LAUNCH G ATE 1 STAGE 1 G ATE 2 STAGE 2 G ATE 3 STAGE 3 G ATE 4 STAGE 4 G ATE 5 STAGE 5 SCOPING BUILD BUSINESS CASE DEVELOPMENT TESTING & VALIDATION LAUNCH PROCESS INNOVATION
  84. CHANCES ARE YOU ARE ALREADY DOING HORIZON 1 RIGHT

  85. HORIZON 2 / 3 
 INNOVATIONS SEARCHING FOR THE UNKNOWN

  86. FAIL FAST FAIL OFTEN LEARN ITERATE OR PIVOT

  87. 1. METHODOLOGY BUSINESS MODEL GENERATION CUSTOMER
 DEVELOPMENT AGILE ENGINEERING +

    + THE LEAN STARTUP HORIZON 3 SEARCHES FOR
 NEW BUSINESS 
 MODELS THAT DISRUPT CURRENT CORE BUSINESS =
  88. LEAN METHOD HAS COME FULL CIRCLE 2013 2011 THE LEAN

    STARTUP 1940s AGILE & KANBAN 2005 LEAN INNOVATION MANAGEMENT 2016 KAIZEN
  89. ZEBRA HIPPO INTELLECTUAL HONESTY VERSUS…

  90. THE SCIENTIFIC METHOD APPLIED TO INNOVATION INSURING INTELLECTUAL HONESTY DATA

    TALKS - BULLSHIT WALKS
  91. BUSINESS MODEL ENGINEERING CUSTOMER
 DEVELOPMENT AGILE ENGINEERING HYPOTHESES EXPERIMENTS DATA

    METHODOLOGIES EVIDENCE BASED PROCESS + + MENTORSHIP 2. THE PROCESS THE LEAN STARTUP The Lean Launchpad Curriculum
  92. SPEED OF INNOVATION QUICK VS DEAD

  93. 2. THE PROCESS THE LEAN
 LAUNCHPAD (LLP)

  94. AS PRACTICED BY AND MANY, MANY MORE…

  95. LEAN LAUNCHPAD AND ALSO BY GOS

  96. LEAN LAUNCHPAD SCIENTIFIC CASE STUDY The National Science Foundation (NSF)

    is the United States government agency that supports fundamental research and education in all the non-medical fields of science and engineering They decide which public scientific research projects will get federal funding for commercialisation in the US with an annual budget of $7 Billion.
  97. LEAN LAUNCHPAD LEAN LAUNCHPAD VALIDATED The NSF had a challenge.

    Most applicants their accelerator program iCORPS were getting were not fundable by their standards of readiness. The NSF is as science-oriented as one can get, so they wanted to experiment with improving their fundability rate by providing the applicants with a fitness program before they could apply and get the data, the scientific facts, on how these applicants would perform compared to the baseline of normal applicants not taking the fitness program to see if there would be a difference, if at all. So the NSF started requiring applicants to take the Lean Launchpad as a prerequisite, as a fitness program, before applying to their NSF iCORPS accelerator.
  98. LEAN LAUNCHPAD THE SCIENCE IS IN And when the data

    came in, they found that the previous fundability rate of 18% of all applicants without the Lean Launchpad improved to a massive +60% of fundability of the teams that had taken the Lean Launchpad as a pre-accelerator fitness program. The science is in; By using the Lean Launchpad as a pre-accelerator program, The National Science Foundation managed to improve their dealflow with significant 44% hike in fundability and has now been
 turned into law.
  99. 3. MANAGEMENT KPI IRL 1 IRL 2 IRL 3 IRL

    4 IRL 5 IRL 6 IRL 7 IRL 8 IRL 9 Identify and validate metrics that matter Validate value delivery (Left BMC side) Prototype High-Fidelity MVP Validate Revenue Model (Right BMC side) Validate Product-Market fit Prototype Low-Fidelity MVP Problem-Solution validation Market size & competitive analysis Complete first-pass of business model canvas (BMC) THE INNOVATION READINESS LEVEL (IRL)
  100. TRL 1 TRL 2 TRL 3 TRL 4 TRL 5

    TRL 6 TRL 7 TRL 8 TRL 9 BASED ON NASA/DOD TRL
 TECHNOLOGY READINESS LEVEL • Formal way to assess technology project maturity • Quantify relative risks • Data driven • Adopted by NASA, DOD, FAA, ESA and so on… • Introduced in 1974 by NASA JPL • Also see: http://www.wikiwand.com/en/Technology_readiness_level
  101. BUSINESS MODEL ENGINEERING CUSTOMER
 DEVELOPMENT AGILE ENGINEERING HYPOTHESES EXPERIMENTS DATA

    WEEKLY 
 PROGRESS EXPERIMENT
 SCORECARD DATA, TRAJECTORY EXPERIMENTS,
 READINESS LEVEL METHODOLOGIES EVIDENCE BASED PROCESS MANAGEMENT TOOL - INNOVATION METRIC (KPI) + + + = MENTORSHIP THE PROCESS STACK THE LEAN STARTUP Innovation Readiness Level (IRL) The Lean Launchpad Curriculum
  102. 4. ORGANISATION

  103. SEARCH EXECUTION DISRUPTION IS MUTUALLY EXCLUSIVE TO SUSTAINING SUSTAINING DISRUPTING

  104. OPERATIONS INNOVATIONS NEW KPI & MANAGEMENT TOOLS PRODUCT MANAGEMENT &

    BIZ ADMINISTRATION
  105. SUSTAINING DISRUPTIVE OUTSIDE OF DAILY OPERATIONS INSIDE OF DAILY OPERATIONS

  106. MUST BE SEPARATED LIVE IN DIFFERENT WORLDS

  107. WITH GATEWAYS BETWEEN THE WORLDS

  108. CERTAIN FAILURE IF WITHIN SAME STRUCTURE SUSTAIN DISRUPT DESTROY CORE

    BUSINESS MOVE FAST AND BREAK THE RULES PROTECT CORE BUSINESS GO SLOW AND FOLLOW THE RULES HORIZON 1
 DAILY OPERATIONS HORIZON 2/3 
 DISRUPTIVE INNOVATIONS
  109. 4. ORGANISATION Executive Chair of the Board CEO Chief of

    Innovation Chief Internal Ambassador
 (Chief Resource Concierge) COO CFO CTO CMO Innovator Innovator Innovator Chief Portfolio Manager Chief VC Chief Risk
 Officer HORIZON 1 SUSTAINING CORE BUSINESS HORIZON 2/3 DISRUPTING CORE BUSINESS Legal Fast Track 24h response, limited risks assumed Corporate Legal
  110. HOW DO WE KNOW WHEN TO DO WHAT?

  111. 5. STRUCTURE: THE PIPELINE

  112. +ANDERSEN 
 & ASSOCIATES tomorrow today plusandersen.com

  113. We help you
 get ready for tomorrow today… plusandersen.com

  114. …by providing actionable answers to the questions of how to

    attract, motivate, support, and retain innovative people and how to generate, discover, explore, and exploit new business models through innovation… plusandersen.com
  115. …achieving a 
 50x speed-up of innovation the startup 


    way plusandersen.com
  116. None
  117. MORE PLUSANDERSEN.COM • Education & Training • Programs & Processes

    • Innovation Metrics • Management Tools • Innovation Outposts • Human Assets
  118. +ANDERSEN 
 & ASSOCIATES tomorrow today plusandersen.com

  119. ONLINE BONUS MATERIAL

  120. PROBLEMS & SOLUTIONS

  121. SHINY OBJECTS • Tech founder enamored with new tech, obsessed

    by “shiny object” • Abandoning core - Horizon 1 (H1) - business • Treating core business (H1) as “old guys who doesn't get it” • Company still dependent on H1 until new tech gets adopted (e.g. Apple, RIM) • Do not demoralise the current product team • Have a transition plan • Insure money, people and infrastructure are in place to cross the Tech transfer, to survive
 the “Valley of death” PROBLEM SOLUTION
  122. ONLY “NOW” • Leadership acting only on current mission, the

    “NOW” • Not investing for long term • CEO and management incentives all about current mission and goals • No incentives for CEO or management on innovation for Horizon 2 and Horizon 3 • You need need a corporate chief innovation officer who understands innovation • And you need a chief innovation officer in all of your divisions PROBLEM SOLUTION
  123. BUZZWORD BINGO • Innovation is being abused as a word

    to describe everything and 
 anything in the company • Use the horizons 1 2 3 metaphor to describe and position innovation • Understand that incubators & similar are just the innovation vehicles • Lean is the best methodology for accelerating learning • Lean Launchpad is the best program to implement it PROBLEM SOLUTION
  124. CAREER KILLER • Failed projects are avoided at all costs

    • Projects that are risky are avoided at all costs • “Projects are expensive, years of people and money invested!” • In lean organisations, failure is part of the process • Failure is acceptable because failures are required as learning process, achievable at very low cost and at very high speed • Pivoting from failure gives you more new learnings PROBLEM SOLUTION
  125. H1/H3 CONFUSION • Daily operations (H1) loses sight that the

    goal is to move forward, not to reinvent what already works • Fundamental issues, confusion about the goal of innovation in horizon 1 (H1) • Use the horizons 1 2 3 metaphor to describe what kind of innovation you are talking about • You need a corporate chief innovation officer who understands innovation PROBLEM SOLUTION
  126. NO H3 INCENTIVES • No divisional incentives for Horizon 3

    (Disruptive) innovations • No divisional or senior job level description for horizon 3 (H3) • No strategy or tactics for integration of H3 into operating dIvisions • Develop meaningful incentives for Horizon 3 innovation • Develop a written job description for H3 support • Develop strategy and tactics for integration of Horizon 3 into the rest of the organisation PROBLEM SOLUTION
  127. NO-GO TOP-BOTTOM • Top of organization says 
 “do it”

    (“GO!”) • Bottom of the organization (the innovators) are ready to “GO!” • Middle management kills it (“NO!”)actively, by sabotage or benign neglect • And thus innovation programs die • Prove that it can work • Then communicate, communicate, communicate: • Big idea, shared goal & mission • Strategy, big picture of how the 
 pieces work together • Tactical implementation • Update job specs to include innovation support • Change incentives to include innovation support • Give those who came before much appreciation • Support those who try and fail 
 and try again PROBLEM SOLUTION
  128. SALES DEPARTMENT • Sales says “no one can talk to

    our customers” • Legitimate concern of pitching new capabilities in place of the ones that exist • Believe they understand all user needs • Customer discovery is not about pitching new products • It’s about understanding user problems/needs and how they use current solutions • Impossible for a single individual to predict all of users needs now and the future PROBLEM SOLUTION
  129. ENGINEERING DEPT. • Engineering believes innovation is about technology •

    So they just talk to the subject matter expert • Talks to the same small group of users they've talked to for the past 5 years • They are not talking to the total available market so they miss solving the bigger problems • Focus the organisation on understanding customer problems • Focus on solving current or future problems PROBLEM SOLUTION