1. Introducing Systemic Innovation
The Holistic Approach for the Intelligence-Driven Technology-Based Company
From: Wolfgang Runge: Innovation, Research and Technology Intelligence in the Chemical Industry Fraunhofer IRB Verlag, 2006

2. Fundamentals
Systemic innovation is people-centric in “open systems” and focuses on the complex interactions between many individuals, organizations, their corporate-internal operating environment (the “core”) and the external environment (the “shell”) of “drivers” and the overall available resources defining the “innovation configuration”.
Systemic innovation is a non-linear corporate-wide work process based on ideas and imagination, interconnections, sharings, combinations, coordination and communication including feedback – and interfaces between corporate internal sub-systems and internal and external systems.
It is interwoven with intelligence (= knowledge and foreknowledge) on many levels and with many processes.
Systemic innovation is a future-oriented offerings and business development (open systems) framework.
It comprises technical and organizational (behavioral) innovation; “structured” and “unstructured” innovation.
Copyright 2006 Wolfgang Runge

3. Systems and Intelligence
The Systems Approach: How systems and sub-systems are organized (a “core-shell model”) and the means by which they receive, share, store, process and recall information, and the way they behave, respond and adapt to different “triggers” or “inputs” from their environment.
It refers to the “intelligence-based company” which is a two-strands model:
“Tangible assets” are managed efficiently according to “best practice”.
Managing “intangible assets” is seen as the fundamental differentiator for sustainable competitive advantage and growth.
The “intelligence-based company” is people-based and culture-oriented. The “innovation climate” is the balances between creativity & control, initiative & achievements.
Beyond the current business model(s): start thinking of the company as a combination of tangible and intangible assets and competencies.
Copyright 2006 Wolfgang Runge

4. Intelligence in Technology-Oriented Companies
“Intelligence is knowledge and foreknowledge of the world around us - the prelude to Presidential decision and action” (CIA Definition).
Business world: “competitive intelligence” (CI)
Technology Intelligence (TI) – (which, how, when; by whom) technology meets markets (demands); actionable knowledge arising from a systematic process involving gathering, analyzing, and disseminating information on external scientific or technological opportunities, threats or developments that may affect a company’s competitive position (defined by its strengths and weaknesses).
Information & Communication Technology (I&CT): supporting systemic innovation, particularly via intelligence processes and intelligence products.
Copyright 2006 Wolfgang Runge

5. The “Core”: The Company Variables
GOVERNANCE: Stakeholder Approach
rather than Shareholders First
The “Shell”
People: Employees, Leaders
Corporate Culture
Core Competencies, Intelligence; other Intangible Assets
Strategy
Organization (Businesses, Functions etc.); Business Model(s)
Tangible Assets
Work Processes
Copyright 2006 Wolfgang Runge

6. The “Shell”: Current and Future
OFFERINGS (SUPPLY)
DEMAND (Actual, “Latent”)
Technology, Production
Markets, Customers
Applications
(Civil, Military)
Political Incentives, Subsidies, Funds
The “Core”
Strategy
Scientific Disciplines
Norms, Political Regulations
Societal Values and Attitudes
Resource Options (Research Cooperation Licensing, etc.)
Infrastructure
Input: Raw Materials and Intermediates
FOCUS: Chemical Industry
Copyright 2006 Wolfgang Runge

7. Learning and Motivation – A Glue between Innovation and Intelligence
Behavior (Decision Making, Action, Feedback)
LEARNING - MOTIVATION
Purpose
FOREKNOWLEDGE
Context
Intelligence
KNOWLEDGE
INFORMATION
DATA
Learning is essentially “learning for the future”!
Copyright 2006 Wolfgang Runge

8. Intangibles for Innovation and Some Related Management Processes
Intellectual Properties
Learning
Intellectual Capital
Adaptability
Learning from Success and Failure
Improving Skills, New Skills
Attitudes
Behavioral Change
Intelligence
Creativity, Imagination
Problem-Solving
Experience, Know-How (Processes, Customers, Experts)
Judgment
Skill Sets
Leadership
Personal Traits
Communication Culture
Information Handling
Patents
Trade Secrets
Designs, Systems
Licenses
Trademarks
Technical Reports
Copyright
External Technology & Relationships
Managing Patents, Licenses, Marks
R&D People Management
R&D Project Management
R&D Management
Resources Management
Intelligence (Knowledge) Management
Copyright 2006 Wolfgang Runge

9. The Systemic Innovation Configuration
INNOVATION ARCHITECTURE (“Core”)
Organizational Drivers, Strategy, Business Model(s)
Managed Intelligence Processes
Managed Learning Processes
Managed Innovation Processes
Value Drivers (External: Parameters)
Megatrends
Technology Forecasting
Industry Foresight
Market/Customer Insight (Actual and “Latent”)
Managed Innovation Processes
Sustainable Innovation
Intelligence
Insights & Understandings
Work Processes
Strategic Alignment
Idea Generation & Opportunity Identification
Project Assessment and Selection
Resources Management
Executing Implementation
Learning from Project Success and Failure
New Strategies
New Business Models
New Competencies
New Relationships
New Operational Practices
New Markets
New Products (and Other Offerings) - NPD
New Businesses - NBD
Organizational Drivers (Internal: Variables)
Corporate Culture (including Learning)
Human Resources
Core Technical and Organizational Competencies
Business and Functional Interfaces
Operational Discipline
System innovation is always “strategic”
Copyright 2006 Wolfgang Runge

10. Contexts of Managed “Unstructured” and “Structured” Innovation Processes
Creativity Exploration Serendipity
Chance
The Right People with the Right Information at the Right Time to Make Right Decisions
Systematic Idea Generation and Opportunity Identification
Steering (“Selection”) Committee - SC (Program Approval Committee)
“Unstructured”
R&D MFG MKTG FIN etc.
Creativity Serendipity
SC Stage Review: Gates Core Teams
Structured Project / Development Process
“Sponsor”
R&D MFG MKTG/SALES Core Teams
Temporary Assignments (Experts, Specialists, “Leaders”)
Exploitation
The Right People with the Right Information at the Right Time to Select Right (Effective) Projects and Run Efficient Project Execution
Other Teams
Copyright 2006 Wolfgang Runge

11. Market Orientation and Business Alignment
Advanced researchers must have a working knowledge of the technology in the marketplace and the insight to develop new technology in line with market needs and demands.
A culturally rooted strategic differentiation (“semantics”):
Market orientation – external focus (“outside-in”), “more and other bubbles” Business alignment – internal focus (“inside-out”); “blow up existing bubbles”.
Market orientation covers business alignment!
Market orientation: present and future markets needs, actual and “latent”; markets new-to-the-firm, markets new-to-the-world.
Business alignment: present offerings (markets); present offerings to new markets, present offerings for new applications.
Customer-orientated versus customer-driven.
Copyright 2006 Wolfgang Runge

12. The Fine Lines between “Customer-Oriented” and “Customer-Driven”
Managed coupling versus strong bents.
Demands and “latent” (unarticulated ) needs versus spelled-out demands.
Spot the trends that are already changing, but have gone unnoticed; towards changing customer expectations.
Imaginative understanding of customer needs (and future markets) and carefully listening versus the Voice-of-the-Customer (VoC).
Customer Intimacy: an organized approach to customer needs.
Value chain emphasis versus account management
Customer loyalty (customer relationships as intangibles)
Customers of customers; the “unique selling point”
Partnership; Lead Customers
Copyright 2006 Wolfgang Runge

13. Implementing Technology Intelligence
Emphasize the Organization and Information & Communication Technology
Systems approach: The Law of Requisite Variety
The degree of complexity in a controller (here TI) must match the level of complexity in the environment (here the firm) in order for the controller to manage the environment.
Corporate culture, leadership and organizational structure represent key (risk) factors for implementation.
Copyright 2006 Wolfgang Runge

14. Technology and Research Strategy
Technology Intelligence Driven by R&D and Related to Corporate Functions, Units and Key Processes
Marketing/Sales
R&D
Production
Knowledge Management
Governmental Relations
Future Legislation
and Regulations
University Relationships
EH&S
Regulations, (FDA) Product Registrations; EH&S Issues and Fines
External Technologies
NPD
Technology and Markets
(Future) Technology, Markets, Customers
NBD
InfoCenter
Information Resources (external, some internal)
Venturing
Technology Intelligence
(Internal info repositories) I&CT (IS) Department
Tools JV
M&A
Research Computing
Technical Services - CTSC
IAM
Patents, Trade Secrets, Branding
Corporate Strategy
Technology and Research Strategy
Ideation
Ideas, Opportunities
Marketing and Market Intelligence
Production Intelligence
Copyright 2006 Wolfgang Runge

15. “Best Practice” Innovation Process?
For multiple business companies there is no single “best” innovation process that fits all strategies, purposes and innovation types in the continuum from incremental to discontinuous and disruptive (“radical”) innovation.
Key for the approach is meeting the fit between value drivers, organizational drivers, strategy and offering types and segments (product, service, system, etc.; plastics, specialty chemicals, fine chemicals etc.) and positioning.
Be aware of corporate culture.
Copyright 2006 Wolfgang Runge

16. New Development Direction
Emphasizing Early Innovation Phases and Channeling into Established Processes
Markets
Basic Research
New Development Direction
Applied Research, Technology
Launch
Stage 1: Ideation and Opportunities
Stage 2: Concept Shaping
Stage 3: Analysis, Definition
Stage 4: Development
Stage 5: Demo, Prototyping
Gate 3
Gate 4
Gate 5
Gate 2
Gate 1
Learning
Feedback
“Post-Launch Review”
Uncertainty
Low
Resource Requirements
High
Copyright 2006 Wolfgang Runge

17. A Systemic Approach to Resources Management
Openness: exchange and sharing, respectively, of resources and information/knowledge. Emphasize internal and external human, information and financial resources.
Think of your company as a portfolio of (tangible and intangible) assets and competencies.
Look at different competencies and assets, owned by different organizations (companies and non-profit organizations), that you can put together with the competencies and assets that already exist in your company.
This will not even increase efficiency (“incremental innovation”), but induce a new offering or even disruptive innovation through combination by Lego-type approaches.
The essence, hence, is not what you do; it is your ability to generate “implicit knowledge”.
Incremental innovation can be done by many talented people, but discontinuous innovation - or disruptive (radical) change - tends to be done only by certain people!
Copyright 2006 Wolfgang Runge

18. Human Resources and Culture, (Leaders, Sponsors, Gatekeepers, Teams)
Resource Management for Innovation in Open Systems: From Linear to Cross-Flow Processes
Basic Research
Core Competencies, Technology Platforms
External Information, Intelligence
Contract Research, Cooperation etc.
Contract Manufacturing
Marketing/ Sales Agreements
Build, Cooperate or Buy
Research
Production
Marketing/ Sales
Human Resources and Culture, (Leaders, Sponsors, Gatekeepers, Teams)
Internal and External Information and Intelligence Resources, (Information & Communication Technology)
Strategy and Resource Allocation
Copyright 2006 Wolfgang Runge

19. Systemic Innovation and “Open Innovation”
The “Want, Find, Get, Manage” ModelSM of “Open Innovation” * provides a “program structure” for just one resource management aspect of systemic innovation.
“Open Innovation” – structured approach:
The firm identifies the external high-value technology or resources it “wants” to access and utilize
“Find”: tools and techniques suggested for finding “targets”; implies subsequent “build, buy, cooperate” decision making
“Get”: planning, structuring and negotiating interactive and cooperative relationships
“Manage”: combines, integrates and coordinates sub-processes and/or sub-units (for instance, IAM, Corporate Research, Technology Intelligence)
Chesbrough, H. W. (2003): Open Innovation: The New Imperative for Creating and Profiting from Technology. Harvard Business School Press.
Copyright 2006 Wolfgang Runge

20. Touch-Points
Bundling complementary assets into an extensive menu for clients to pick and choose what they need. Drawing upon a variety of research topics and consulting disciplines and services.
Creativity & Idea Management
Patent and Intellectual Asset Management
New Business Development
RISCNet
Innovation Program Structures
Technology
Intelligence & Patent Systems
Innovation Programs
Research Management Processes
Technology (Competitive)
Intelligence Management
Emphasis: the chemical and related industries
Copyright 2006 Wolfgang Runge