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1 1 Dr. Sorin Cohn BD Cohnsulting Inc.. 2 Investments are not the fundamental issue for the Canadian Innovation Gap (“Paradox”). The issue is Innovation.

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Presentation on theme: "1 1 Dr. Sorin Cohn BD Cohnsulting Inc.. 2 Investments are not the fundamental issue for the Canadian Innovation Gap (“Paradox”). The issue is Innovation."— Presentation transcript:

1 1 1 Dr. Sorin Cohn BD Cohnsulting Inc.

2 2 Investments are not the fundamental issue for the Canadian Innovation Gap (“Paradox”). The issue is Innovation Management! … and LEADERSHIP nurturing a culture of entrepreneurship and pursuing innovation comprehensively, competitively and methodically! Question: How do we bring Firm Innovation Management knowledge to the people that matter: in industry and in governments?

3 3 From Industry Analysis to Action From Industry Analysis to Action Topic: Is there a Canadian paradox concerning:  Good Canadian Science & Technology Research vs.  Poor Canadian Business Innovation? No! There is a disconnect between reality and some outdated perceptions (myths)! Agenda:  Business Innovation  Perceptions & Reality of Canadian Industry Innovation  Summary: What’s To Be Done This is not about innovation in the research labs but about firm-level business innovation that leads to tangible performance where it counts: in the market! Innovation is the central issue in economic prosperity. (Michael Porter)

4 4 What is Business Innovation? Why Innovate? There is a lot of buzz around INNOVATION. However, there is much confusion about what it really means and how to manage it properly. Goal of Innovation: Create Value, Ensure Growth, Enhance Competitiveness  Amaze and attract customers with new/better value in products & services  Surprise competition through more effective internal & external processes  Be more competitive, grow and achieve your vision

5 5 Innovation is Means to an End  “Success” Success Success of a company is predicated on: M ARKET 1.A M ARKET of sufficient significance &/or growth C OMPETITIVENESS 2.The C OMPETITIVENESS of the organization in serving this Market as determined by: a)Desirabilityaffordability a)Desirability and affordability of its Products (Good & Services) b)Effectivenessunderstanding promotingaccessingsatisfying b)Effectiveness of its Interactions with the Market (environment) in terms of understanding of, promoting to, accessing to and satisfying of its targeted customers & its stakeholders c)Efficiencymanagementdevelopment, productionHRquality supplydistribution c)Efficiency of its Operations (including management, development, production, HR, quality, supply, distribution, etc.) d)Financial Strength, C ULTURE LeadershipSkills Competencies 3.The C ULTURE pervasive in the Organization (including Leadership, Skills, Competencies, etc.); and 4.Luck & Timing Innovation is the specific instrument of entrepreneurship. The act that endows resources with a new capacity to create wealth. Peter Drucker

6 6 Innovation is about creating value. Business value can be seen only in the context of the market. Social value can be seen only in the context of the community. Business Innovation is Much More than just R&D Innovation strategies,capabilitiesproducts servicesprocesses “Innovation is a process through which economic and social value is extracted from ideas and knowledge through the generation, development, and implementation of new or improved strategies, capabilities, products, services, or processes." Research & Technology Products Products  Goods  Services Markets & Channels Customers Business Models & Strategies Resources, Culture & Organization Processes & Platforms Business innovation may address all aspects at all times

7 7 Data from: 2012 Canadian Industry Survey on Firm-level Innovation Metrics & Management Center for Business Innovation at Conference Board of Canada  Inside the Firm Understanding of Innovation  Across all industry sectors  Across the wide geography of Canada  Firms of all ages, sizes and revenues  Over 600 responses to questions on:  Competitive Interests  Innovation Focus & Investments  Innovation Management Practices  Metrics  Factors affecting innovation effectiveness  With significant impact conclusions thanks to performance correlations

8 8 Myth #1: S&T Research = Innovation Research Money S&T Research  Science & Technology Market Research  Users’ Needs & Market Requirements Business Research  Management Know-How  Processes Implementation  Strategies  Business Models  Products & Services  Resources: People, Platforms, Partners  Corporate Processes Commercialization Solution(s)Solution(s)  Market Specifics  Customers  Channels & Support  Value & Brand + Economic & Social Benefits Reality, simply put, is that: Research = Transformation of Money into Knowledge Innovation = Transformation of Ideas & Knowledge into Money (etc.)

9 9 36.6% Without Project Structure 30.0% With Project Structure Myth #2: Innovation is Having Ideas Reality: Innovation is Structured Work to transform Ideas into tangible Market Value and higher Competitiveness 2012 Conference Board Survey on Innovation Management

10 10 48% of companies Over 61% of companies 2012 Conference Board Survey on Innovation Management Over 26% of companies Myth #3: Canadian Industry Does Not Invest Enough in Innovation Reality #1: Canadian Industry Invests a Lot in Innovation beyond R&D Less than 13% of companies - Ratio of Time Dedicated to Innovation is a Better Measure of Innovation Investment

11 11 Reality #2: Innovation Investments and Pursuits Are Sector Dependent Sectors have specific needs and pursue different types of innovation. Prof. Serv. Serv. Providers IT & S/W Life Sc. Et al Manufacturing Resources

12 12 Myth #4: Innovation Results are Strictly Proportional to Investments 2012 Conference Board Survey on Innovation Management Corporate-wide process uniformly applied Corporate-wide but each department pursuing own approach Only some departments have formal innovation management No formal innovation management process in company Innovation is not a priority in my company Formal Innovation Management 35% No Innovation Management 50% Reality: Yes… But If and Only If Innovation is Managed Adequately 50% of Canadian firms surveyed do not manage properly their innovation! That is the problem!

13 13 Over 60% of Surveyed Firms Puzzling Performance Corollary: Investing a Lot in Innovation is Meaningless unless Innovation is Managed Adequately Very Good Performance Very Bad Performance Better Performance Significantly Lower Performance Splitting by Innovation Management

14 Conference Board Survey on Innovation Management Myth #5: Innovate What Customers Demand Reality: Yes, Talk & Listen to Customers… But Innovate Strategically

15 Conference Board Survey on Innovation Management Myth #6: Executives Know Innovation Best Reality: A Balanced Approach Top-down & Bottom-up is much Better Culture matters a lot, and a culture of constructive debate is more productive. “When all think alike, then no one is thinking” (Walter Lipmann)

16 16 Sweet Spot Source: 2012 CBI Conference Board Study of Innovation Metrics & Management Over 45% of surveyed companies do not measure innovation performance at all or do it with just 1 metric Less than 8% are in sweet spot of metrics What could be gained in terms of industry well-being by raising the number of firms using 6-10 metrics?

17 17 Myth #7: Productivity Gains is a Good Innov. Metric Reality: Innovation is a complex multi-stage process and Productivity Gains is an obfuscating Innovation Metric unless balanced by others Firm (Black Box) Firm (Black Box) Input  Labour  Capital Input  Labour  Capital Output Value ($) Productivity = Output Input  The Innovation Value Chain links productivity and quality factors at all stages  Look inside the Productivity Value Chain to determine the Weak Links For Illustration: Productivity = P CM x Q CM x P RST x Q RST x P RM x Q RM x P D&D x Q D&D x P Sup x Q Sup x P Prod x Q Prod x P MKT x Q MKT x P Sales x Q Sales Sales  Direct  Channels Sales  Direct  Channels What value is in blaming the Workers ’ “productivity” if Management took lousy decisions or Product Design was unappealing or Supply got materials of poor quality or Marketing was ineffectual or Sales channels were weak? To find solutions one needs to address the real problem(s)! Marketing Production Supply Design & Developmt. Research  S & T  Market Research  S & T  Market Corp. Mgmt. Corp. Mgmt.

18 18 It’s mostly about management! … and leadership that nurtures a culture of entrepreneurship and pursues innovation comprehensively, competitively and methodically! What truly matters:  Showing Leadership with compelling Vision & manageable Goals; and ensuring/instilling competitive Will  Knowing about the Market, Yourself and the Competition  Focusing on winning Business Models and the right Competitive Imperatives  Having the necessary and sufficient means: Funding, Expertise, Connections, Structure, Processes and “Tools”  Applying effective Metrics-based Innovation Management  Timely evaluating & adjusting the firm’s innovation portfolio  Nurturing a Culture of Innovation/Entrepreneurship and a suitable Organization

19 19 All people in innovation projects are rewarded Only people in successful projects are rewarded Only some of the people in innovation are rewarded No special treatment for people involved in innovation Most people in failed innovation are “penalized” Reminder: Metrics Drive Behaviour. HR & Innov. Management should be aligned! Disregarding Innovation is NOT good! Encouraging innovation is GOOD! 2012 Conference Board Survey on Innovation Management

20 20 Manage Innovation Comprehensively Value-add Corporate Innovation Management (vCIM) Metrics drive behaviour!

21 21 Manage Innovation Competitively Firm X Competitive Dashboard  Determine YOUR competitive imperatives and the partnership needs by assessing your position in priority markets against most significant competitors  iTCA Tool for:  CEO  Exec Team Where should firm X focus its innovation activities? 21

22 22 Manage Innovation Methodically with Metrics-based Techniques & Tools cFIT ⑤ Evaluate, Review and Adjust Portfolio ⑤ Evaluate, Review and Adjust Portfolio ① Show Leadership: Vision, Goals & Will ③ Resource, Organize & Plan Innovation Portfolio ③ Resource, Organize & Plan Innovation Portfolio ⑥ Learn, Improve and Continue ② Select Bus. Model & Competitive Imperatives ④ Manage innovation activities RIGHT ⑦ Nurture Culture of Innovation and the Organization cFIT Innovation without methodology is just luck. (M. Langdon )

23 23 Nurture Competitive Firms & Industry Financial Strength Business / Commercial Capabilities “Technology” Capabilities Product / Service / Process Focus on Entrepreneurial Competitiveness and Leadership  Apply Effective Innovation Methodology & Tools  Align Culture with Business Goals & Innovation Strategy  Collaborate to Conquer: Lead Customers, Anchor Companies, In-Market Partners  Go for “Smart Money”  integrate financial and strategic support  Educate for Business Success and Nurture Entrepreneurial Leadership  Invest in companies that do manage innovation adequately  Focus on Effective Industry Competitiveness at global scale  Support Effective Innovation and Commercialization specific to sectors & firm sizes  Coordinate & balance programs that are accountable by Industry Results Industry 1st Government s

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