Innovation moves strategy. ideas normally come bottom up, but you need a process to link them with the strategy

1. Innovation moves strategy

2. Module 11 Innovation Moves Strategy Page ©2008 Balanced Scorecard Collaborative, a Palladium company • thepalladiumgroup.com Innovation vs Strategy 0.1 Define the opportunity 0.2 Build through co-creation 0.3 Execute innovation 0.4 Create the movement 0.5

5. Triggers of strategy change at Marriot Vacation Club International Innovation should be a continual and progressive process in every organization Transformative strategy (high innovation) Incremental strategy (execution) Degree of Change Encompassed by Strategy Ideal transformative strategy curve Transformative strategy (high innovation) Innovation vs Strategy

9. Execution Premium Process DEFINE + EXECUTE + INNOVATE Innovation vs Strategy

10. Build through Co-Creation Start to ripple Create Movement Keep the wave rolling Execute Innovation Break the rules Define the Opportunity- Don't blow with the wind 40% of managers do not determine where to focus innovation efforts. Three quarters of the executives consider customers, employees and affiliates as an important source of new ideas, but in most organizations there is no central governance to manage innovation. Only 4% of the R&D projects obtain the expected results (BusinessWeek). The problem is R&D in normally constrained under a conservative strategy 64% of the executives say that they have enough of the right kind of people to innovate, however almost 70% of them considers this talent is not being used due to lack of processes or of an adequate culture Innovation vs Strategy

11. 40% of managers do not determine where to focus innovation efforts. Don't just blow with the wind Define the opportunity

12. COSTUMER JOURNEY ANALYSIS Get to know the customer's experience and all the processes that relate to the service VALUE CHAIN ANALYSIS Understand the current situation and the processes in the company. LOOK BEYOND PRODUCT AND SERVICE OFFERINGS Define the opportunity XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX

13. MARKET TRENDS Review market trends and the industry COMPANY CUSTOMER Define the opportunity XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX

16. Define the opportunity; case study. Metro de Madrid Public Transport 1. Advertisement & Public Relations 2. Subscription Administration / Consortium 4.Entrance Hall & In-Station Stores & Turn-tickets 6. Navigation & Information Support 7. Providing Information & Support 8. Navigation & Other information Support 1. Choosing a daily transport 2. Applying for a card for season ticket 3. Buying Season Ticket 4.Getting Inside Public Transport Space 5. Public Transport Train 6. Train Change 7. Problems / Breakdown 8. Getting Outside of Public Transport Space Customer of Public Transport 5. Vehicles (Conductor) 3.Selling Points

17. Define the opportunity; case study. Metro de Madrid 4 MAIN QUESTIONS What next when no tickets and no conductors are needed?, will Metro have employees? Should Metro care for better use of citizen time? Should Metro provide further information from the surface? 1. Advertisement & Public Relations 2. Subscription Administration / Consortium 4.Entrance Hall & In-Station Stores & Turn-tickets 6. Navigation & Information Support 7. Providing Information & Support 8. Navigation & Other information Support 1. Choosing a daily transport 2. Applying for a card for season ticket 3. Buying Season Ticket 4.Getting Inside Public Transport Space 5. Public Transport Train 6. Train Change 7. Problems / Breakdown 8. Getting Outside of Public Transport Space 5. Vehicles (Conductor) 3.Selling Points

18. Build Through Co-Creation Three quarters of the executives consider customers, employees and affiliates as an important source of new ideas, but in most organizations there is no central governance to manage innovation. Start to ripple

20. 4 COMBINING and DEVELOPMENT OF IDEAS 2 GROUPS EMPLOYEES AND NON - EMPLOYEES GENERATION OF IDEAS STORAGE OF IDEAS PORTFOLIO OF INITIATIVES 5 CUSTOMERS, AND NON-CUSTOMERS AFFILIATES, UNIVERSITIES,ETC.. 3 CO-CREATION 1 2 3 4 5 Key success factors Leadership and commitment around opportunity areas Common language and philosophy 1 6 Co-create. Interaction generates creativity Combine and develop ideas using imagination Right resources to the right initiatives Coordination and communication Build Through Co-Creation

21. Build Through Co-Creation Tools; Ideation ECC Lateral thinking Anthropology Ask about how they use the product, their problems, their dreams, encourage or challenge your customers to change or improve. (i.e; restaurant) OTHER COMPANY CUSTOMER SUPPLIER REGULATOR CONSULTANT

23. Build Through Co-Creation Case Study: Metro de Madrid. Some ideas

24. Build Through Co-Creation; COMBINE AND DEVELOP THE IDEAS USING IMAGINATION 1. iPod “music access and listening” experience 2. iTunes “music management and download” experience 3. iTunes “music browsing” experience 4. iMix sharing playlists experience Go beyond product and services, Create new experiences What is it with the i-pod?

26. Execute Innovation Only 4% of the R&D projects obtain the expected results (BusinessWeek) Break the rules

27. You can have an excellent idea and still be stuck in the same jam

28. Once the organisation has evaluated the impact of the innovation initiatives on the strategy, it's time to EXECUTE! Impact on the strategy Execute Innovation Initiatives generating a differential costumer experience Initiatives improving processes radically STRATEGY INTEGRATION

29. 20% 80% Execute Innovation FOCUS Strategy Map Visual representation of the strategic objectives and their interactions ACTION Initiatives (Incorporate Innovative Initiatives) Key action programs to reach objectives Economic value added Asset productivity Be the lowest cost producer Pick the winners globally Create new market demand Price performance Partnering Integrate and align resources Sales and customer development Focused technology development Perfect manufacturing People and change management Strategic competencies and skills Individual and team performance Customer sensitive culture Perspectiva Financial Customer Internal Learning & Growth Objetivos Procurement redesign Emerging markets strategy Partner with the winners Res sec and W&L and hurricane Quality needs identification Quality proc for root cause elim Reformulation SV commercialization/facilities Cust complaint tracking process Side lam VP/partnerships IT enhancement in value chain SCOP implementation ABM Develop/cascade BSC Communicate vision Asia reformation facilities IT strategy alignment Scrap rework proc improvement Yield improvement program Facilities upgrade ISO 9002 NA resin mfg cert Expert systems Rewards dev/implementation Global communications Training strategic skills Iniciativas FOLLOW UP Balanced Scorecards / Indicators / Goals Key strategy success factors and definition of the anticipated performance results

31. ‘ Suddenly they start running, but no matter how hard Alice runs, they stay in the same place. The queen explains that in this country you have to run at least twice as fast to get somewhere else…’ Alice in Wonderland Execute Innovation; case study; Metro de Madrid Execution Premium BUSINESS RESULTS: Sustained customer satisfaction > 70%. Growth of the public transportation share within Madrid: from 32% to 40%. Employees productivity from 43 agents per million Kms x Car in 2001 to 37 in 2004. Improved safety ratings (even after 11-M terrorist attacks). OTHER BENEFITS: Developed a culture of “measure” Begin to understand customer’s experience Improved cross-unit’s communication

32. Create Movement 64% of the executives say that they have enough of the right kind of people to innovate, however almost 70% of them considers this talent is not being used due to lack of processes or of an adequate culture Keep the wave rolling

34. INTERESTING FOR STRATEGY MANAGEMENT? Idea Management tools facilitate continuous Co-creation; structure and process determine success

35. City's Observatory Functions Internal Provide local government with the necessary information to plan and manage their services accordingly External Keep citizens informed of the activities of the local government and the perceived level of satisfaction for the services offered by the administration Create Movement. Case study Ayuntamiento de Madrid

36. Information Systems Governance Management Evaluation In accordance with the City Model In accordance with the citizen's needs INTERNAL PERSPECTIVE EXTERNAL PERSPECTIVE Operation Management System Budget Management System Complaint and Suggestion System Service Form System Citizen's Perception Evaluation System Strategy Management System Budget Management System Create Movement. Case study Ayuntamiento de Madrid

37. A co-created strategy will deliver new mutual value for a company and its customers NEW ATRIBUTE BEFORE NEW MODEL Planning Number of reports Consistency Reliability Innovation Learning Motivation Execution Participation Customer Orient. Co-creation the strategy is part of the experience for employees and customers, and it improves the EXECUTION PREMIUM NEW MODEL Strategy management value Proposition Create Movement. New model for strategic development

38. Implementation (Operations) Management Definition SCOPE PARTICIPATION Board of Directors Senior Management All Employees Customers / Affiliates STRATEGY MANAGEMENT 2.0 Management is about having a continuous conversation with the people around you (Gary Hamel) Create Movement. New model for strategic development Strategy Management Evolution