Nicol Seeking organization · Nicolas Bry HEC / Academic thesis rapid innovation, march 1, 2001 Procter & Gamble, Nicol opening innovation to the world Open innovation, connected

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Nicolas Bry HEC / Academic thesis rapid innovation, march 1, 2001

Nicolas Bry Innovation blog : nbry.wordpress.comHEC / Master MUSTAcademic defense > Tuesday March 1st, 2011

for rapid innovation

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Q4312Agenda

> Foreword and introduction

> Rapid innovation, why ?

> Rapid innovation, how?Q Analysis frameworkQ Proposition of a modelQ Implementation timeline

> Rapid innovation, what results?

> Perspectives for rapid innovation

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Foreword by Didier Lombard, Orange CEO 2005-2011

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Q4312Foreword by Patrick Le Quément, Head of Renault Design, 1987-2009

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Introduction of Jean-Louis Constanza, Orange Vallée CEO

Innovation is a combat sport.

For a company, innovating is always synonymous with self-denial.

The associate or the department of a big company that is dedicated to innovation always runs against resistance on three levels.

The first level of resistance is linked to strategy.

The second level of resistance is linked to organization.

The third level of resistance is linked to the outside world: clients and competitors.

Practically speaking, the value of innovation work is limited as long as big companies don’t know how to organize themselves in order to transform an abstract strategy into concrete products.

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Q4312Introduction of Jean-Louis Constanza, Orange Vallée CEO

This is the whole value of Nicolas’ work. He is capable of clearly drawing models for innovative organization that seem to me adaptable to all industries, from big equipment goods to mass products.

The French information technologies industry is potentially powerful. In practice, it should take inspiration from works such as Nicolas’ to learn how to organize itself and transform this potential power into global products.

Orange Vallée, which Nicolas describes, is a skunk works. It’s the whole of the company that has to become innovative, is what Nicolas explains.

I also agree with him on the importance of small coherent teams.

For those who know Apple, Jobs “genius” wasn’t to invent products, but mostly to create a perfectly efficient organization on these two contradictory aspects, which are: existing business and innovation.

A truly excellent organization has to perfectly manage the priority of these two businesses. This way, it can devote its collective intelligence to the things that will really make a difference with its competitors : tastes, original ideas, culture or vista.

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A rapid innovation, why?In a globalized market, competitors from the other end of the world and from other industries, with shorter product development cycles, are close to you : you have to react fast.

Reversely, speed is a way to new market, providing you with competitive advantageover industry’s incumbents.

It’s difficult to secure consumer loyalty : innovation is key to seduce themand it has to be done fast because it quickly becomes obsolete.

Rapid innovation is also necessary since the second version is often the right one!

Development speed increases the qualities of the forecasts that can be madeand has often much higher impact on profitability than cost of development.

Based on business cases conducted at IBM, Xerox, Honeywell, Black & Decker,Hewlett-Packard, Honda, and Motorola, Smith and Reinertsen have assesseda 50 % ratio for speeding innovation: " Developing products in half the time ".

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Analysis framework

Academic sources

Corporate casesKey points for rapid

innovation

Rapidinnovation

model

Implementation timeline

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The evolution of innovation

> From a linear model to an interactive model.

> The necessity of sharing knowledge.

> The emergence of an innovation market.

> A cyclic model is born from exchanges between communities.

> New Product Development : streamlining the process

Q tim

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Q4312From linear model to interactions model

Source : Model adapted by P. Trott de B. Rothwell et W. Zegveld (1985),Reindustrialisation and Technology, Longman, London

Science and technologyimprovements

> R&D > Manufacturing > Marketing >Idea Product

Technology PUSH

Market pullConsumer needs, market trends

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Q4312Open innovation and apparitionof an innovation market

R&D

opennetwork

ideas focusbrief

innovation network

screeningengagementintegration

Open Innovationat P&G

> collecting from outsideand bringing external ideasinto a company’s own innovation process.

> developing new business outof collaboration involving companiesmaking their unused ideasand technologies available to others.

> creating new business modelsarising from opening up the process,opening the doors to cocreation,and customer communitiesdriving a business.

Source : Henry Chesbrough

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Cyclic innovation model :knowledge circulation as a cornerstone

Source : CIM (Cyclic Innovation Model), Berkhout, 2000, “The dynamic role of knowledge innovation”.

Technological ResearchTechnologie

Portfolio – Thinking

Disciplinary ScienceKnowledgeCreation – Intuition

Right

Service ProvisionHuman Relations –Feeling & Emotions,related to societal needs

Product DevelopmentRational Goal – Sensing, Seeing

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Q43129 tips for acceleratingproduct development≥ Adapt the processes.

≥ Buy time.

≥ Master the complexity with an incremental approach. Prototype early and often

≥ Professionalize the pre-development stage.

≥ Staff projects to drive them faster.

≥ Work with open-minded experts.

≥ Let the team manage itself.

≥ Constantly work on reducing risks.

≥ Be mindful, learn from the experience !

Source : “Developing products in half the time” (1992) by P Smith and D Reinertsen

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The new product development game : “the rugby approach”> Built-in instability : freedom + challenging goals = “creative tension”.

> Self-organization project teams moving from chaos to order let the team lead the team tension drives attention

> Overlapping development phases share knowledge T-shaped people

> Multilearning multilevel learning (individual, group, and corporate) multifunctional learning

> Subtle control “natural leadership”

> Organization transfer of learning learnings for new product development projects or to other divisions blended team

Source : Ikujiro Nonaka, 1986,“The new product development game“ + Innovation, the “rugby approach” :thoughts for thoughts from 24 years ago (nbry.wordpress.com)

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Q43122 innovation models

3M, Procter & Gamble, Cisco, Open Source, Sanofi, Renault

Innovation from everyone,everywhere

Oticon, Decathlon, Gore,Jeux vidéo, Google, Apple

Ambidextrousorganization with 2 DNA

Lockheed, Saturn, Ideo, EDF Business Innovation

Skunk works,corporate venture,spin-off

Thriving innovation model

A model of internal and external interactions in a global innovation culture

Dedicated entity model

An autonomous unity pursuing new and uncertain activity lines

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3M, internal entrepreneurship

> Small autonomous units.

> Commitment to R&D.

> Technology propagation.

> “Lab to market” channel.

> Project management.

> Reward adapted to innovation.

> “Bootleg rule” : 15% free time to personal innovation.

> Recruitment focus.

> Innovation, a “game of numbers”.

> A solution to solve a problem, the post-it story.

> Learning from the past.

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Q4312Procter & Gamble,opening innovation to the world

Open innovation, connectedand collaborative.A structured way to cooperate with the outside.A cultural change to value what comes from the outside.Dedicated resources to open innovation : “technology entrepreneurs”.Futureworks entity focused on new markets“ Our best innovations comefrom crossing ideas ”.

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Decathlon, decentralized R&D units next to marketing and branding

Innovation process fosteringmixed project teams.

Innovation culture combining openness and rational.

Fundamental R&D and operational R&D.

R&D open to the outside world.

Understand and observe human behaviors,integrate professional feedbacks.

“An innovation spirit at each floor”.

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Source : Jumel (2004, p.128)

EDF, the missing link

Linking R&D and market, leveraging on Corporate Venture approach.

Focusing on recognizing innovations from outside, unknown from the R&D.

Setting-up innovation networksin the Valley, and internal networks with EDF decision makers.

Streamlining decision,and fostering to dare.

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Q4312Ideo, innovation experts

Culture driven by creativity :recrutiting, stimulating.

Small entities, flat hierarchy.

Crossfuntionality as creativity catalysis.

Fast prototyping and iteration :try it, fix it, try it again.

Innovation framework constantly improved.

“We’re not good at innovating because of our flawless intellects, but because we’ve done 2000 products, and we’ve been mindful”.

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Proposed model for rapid innovation

Mixed entityoutside and inside

Creative tension

Alignedinnovation strategy

Fast innovation

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Q4312Rapid innovation model : 3 principles further detailed1. Creating a dedicated entity : agile, risk-taking, open to new opportunities picked out

from the innovation market, new co will be mixed, both “inside and outside” the group,

building its own DNA and being able to bring back the innovation value to the core co.

2. Instilling “creative tension”: a framework for creativity will accelerate development

of new products and associated leadership platform. It will include following

foundations : a culture of diversity, natural leadership, specific goals

(“narrowing the scope actually helps the team”), knowledge circulation, using notably

“rugby approach”, fast prototyping, iteration & focus, and innovation portfolio.

3. Aligning with corporate innovation strategy : developing coordination with the

core company, forging persistent connections between innovators and mainstream

operations, benefiting from a sponsor at core co, and endorsing some core co strategic

priorities, so as to engage core co following “a line of less resistance“ instead of

“fighting against the organization”.

Source: “Rapid innovation, a must-have in globalization time” + “innovation plan” (nbry.wordpress.com), Vijay Govindarajan, 2005, “Forget, Borrow, Learn : Secrets to Building Breakthrough Businesses, Within Established Organizations”

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1. Create a frameworkfor rapid innovation

Create a new entity- direct report to CEO- tangible innovation objectives for core co- listen to CEO needs, and from other decision makers- new co performance yardstick- a clear sponsor

Define your belief & challenges- innovation culture- innovation targets & management, portfolio, mission statement

Build an innovation team- t-shaped professionals

2. Implement fast Development methodologies

Create context- your innovation “intent”- knowledge circulation levers- yardstick into individual objectives

Organize creative thinking- pre-development phase- project mantra

Start with a handful of projects- some with core co buy-in- staffing- mixed teams

Transfer concept in elegant realization- “rugby approach”- fast prototyping- open innovation- KISS

Stay alert, and chase innovation killers

Initiate innovation cycle

Stay connected with core co

3. Go for Engagement

Assess and optimize your innovation: customers often do not want the product itself, but rather the effect that the product produces.

Use your license to kill. “Celebrate failure, don’t stigmatize it. Celebrating a failure encourages risk taking.“

Prepare go-to-market: refine your usp,train to sell your innovation by keeping it simple.

Seek for core co engagement: Identify fears, harness the acceptance seeds you have planted, create necessity for change.Once core is engaged, plan implementation and scaling of the product.

Be mindful of the future. Reward and celebrate!

Rapid innovation model :timeline to implement

1st month 3 months 6 to 9 months

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Q4312Innovation, what results?

With “skunk works” Lockheed began a series of revolutionary airplanes that still ensures them the loyalty of the American army to this day.

To explain its continuous growth from the beginning to the end of the 20th century, 3M credits innovation.

According to Procter & Gamble, the fact that its market value doubled from 2000 to 2004 is due to its open innovation policy.

To face the “mountain” of generic products, Sanofi developed a new R&D model.

For Oticon, the only way to react is to outperform its competitors in the innovation department.

When Decathlon structured innovation around its passion brands, its sales figures went up from 2 to 5 Md € en 10 years.

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Rapid innovation, what results?

With his “sashimi” approach, a new product at Fuji-Xeroxrequires one-half of the original total manpower, and the product development cycle has reduced from 4 years to 24 months.

A new copier took Xerox three years to develop, whereas the company spent more than five years developing a comparable earlier model.

A portable Brother printer was developed in less than two years. It took the company more than four years to develop an earlier model.

One Apple CEO top priorities was to cut the company’sproduct development time from 3,5 years down to one year.

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Source: Ikujiro Nonaka, 1986, “The new product development game“

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Q4312PerspectivesToward a rapid innovation entity linking core co to innovation market : new co 2.0

> Innovation without a business model remains an invention> Innovation is firstly human : picking up the team, creating situations that make sense shall be first leader’s concern

coreco2.0

newco2.0 1Innovation

market

Mixed entity outside

and inside

Creative tension

Open innovation

Fast integration

Aligned innovationstrategy

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1PerspectivesIn the medium term, several new co connected to technological& consumer markets ? Rule of satellites for design at Renault.

Newco

Newco

Newco New

co

Newco

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Nicolas BryHEC / Mastère MUST

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Documents

Nicol Seeking organization · Nicolas Bry HEC / Academic thesis rapid innovation, march 1, 2001 Procter & Gamble, Nicol opening innovation to the world Open innovation, connected