Innovation represents for many companies the key to a successful future. Many CEOs around the globe are prioritizing and investing in innovation; however, the potential for innovation taking place within big organizations often goes unrealized. Stefan Erschwendner, Managing Partner of LHBS, had the opportunity to speak at the Good School’s ‘Camp Digital’ on the topic of “Making Innovation Happen,” where he elaborated on the idea of innovation as well as its implementation inside of an organization.

1. 26.05.2015
CAMP DIGITAL - GOOD SCHOOL
MAKING INNOVATION
HAPPEN

2. HOW TO INTEGRATE THE
NEW INTO THE OLD?

3. 1.
BUSINESS ENVIRONMENT

4. Organizations are put under pressure
4

5. Uber: The biggest taxi organization does not own
cars
5

6. Facebook: The biggest media company does not
produce content
6

7. Alibaba: The biggest trade company does not have
any inventory/stock
7

8. Airbnb: The biggest hotel does not own any rooms
8

9. "The main thing that has caused companies
to fail, in my view, is that they
missed the future."
Larry Page, at TED 2014 9

10. The one that stops, loses.

11. Interconnectivity of organizations and the environment
is essential
11
Organization Umwelt

12. “It is not the strongest or the most intelligent
who will survive but those who can best
manage change.”
Charles Darwin

18. ?Why are organizations not as
innovative as startups?

19. What are the biggest
innovation barriers?

20. 20Source: http://www.marktundmittelstand.de/uploads/media/
The biggest challenges for innovation
1 High R&D costs
2 Economic risk of innovations
3 Missing financial means
4 Resistance of employees
5 Missing specialized staff
6 No innovation strategy
7 Lacking management competencies
8 Absence of academics
9 No access to external funding
10 Company culture hinders innovation

21. 2.
STRATEGY & TYPES OF
INNOVATION

22. THE INNOVATOR’S
DILEMMA

23. 23
Successful companies can put too much
emphasis on customers' current needs,
and fail to adopt new technology or
business models that will meet customers'
unstated or future needs.
Such companies will eventually fall
behind, what Christensen calls "disruptive
innovation"
Clayton Christensen
Innovator’s Dilemma

24. Two Innovation Strategies
24
Sustaining Innovation Disruptive Innovation
Problem is well understood Problem is not well understood
Existing Market New Market
Innovation improves performance,
lower cost, incremental changes
Innovation is dramatic and game changing
Evolutionary Innovation Revolutionary Innovation
Satisfies current customer needs
(of mainstream customers)
Satisfies future customer needs (nice)
Traditional business methods are sufficient Traditional business methods fail
Source: The Innovator’s Dilemma

25. The Innovator’s Dilemma
25Source: The Innovator’s Dilemma

26. The Innovator’s Dilemma
26Source: http://www.youtube.com/watch?v=pBaaB3pWcLI

27. For many successful organizations disruptive
innovations do not make ‘sense’.
Start-ups profit from this attitude and
follow ‘senseless’ ideas that
often lead to success.
27

28. None of the two innovation strategies is
better than the other.
Many organizations follow both strategies
at the same time.
28

29. 10 TYPES OF INNOVATION

30. “97% of CEOs see innovation as a top priority
for their business”
press.pwc.com 30

31. 31
‘Innovation’ is mostly
associated with
product innovation.
However, there exist
different types of
innovation.
The more types you address,
the bigger potential the
innovation has.

32. 32Source: 10 Types of Innovation, Keeley
10 Types of Innovation
Profit
Model
Network Structure Process
Product
Performance
Product
System
Service Channel Brand
Customer
Engagement
Configuration Offering Experience
The way in
which you
make money
Connections
with others to
create value
Alignment of
your talent
and assets
Signature or
superior
methods for
doing work
Distingui-
shing
features and
functional-
ities
Compliment-
ary products
& services
Services &
Enhance-
ments that
surround
your offerings
How your
offerings are
delivered to
your
customers
Represent-
ation of your
offerings and
business
Distinctive
interactions
you foster

33. Profit Model - Uber
Premium-Price-Strategy: the demand shapes the price
33Source: https://www.uber.com/

34. Network - Victorinox Jovoto
Open Innovation: outsourcing the design to Jovoto
34Source: http://victorinox.jovoto.com/

35. Structure - Number26
Provides only Banking-Interface.
Banking structure itself is outsourced to a partner.
35Source: https://number26.de/

36. Process - Walmart Hubs
Hub-structure for efficient storage and delivery
36Source: http://www.walmart.com

37. Product Performance - Bluesmart Suitcase
Development of a new suitcase concept
(Connected to app, built-in scale, battery charger, digital lock)
37Source: http://bluesmart.com/

38. Product System - Nespresso Eco-System
Coffee machines only work with Nespresso capsules and can only be bought
in Nespresso shops.
38Source: https://www.nespresso.com

39. Service - Apple Genius Bar
Support, repair, experts and product trainings in one spot
39Source: https://www.apple.com/retail/geniusbar/

40. Channel - NIKETOWN
Product experience instead of product sales
40Source: https://www.youtube.com/watch?v=Q5Rz9ZRnIVQ

41. Brand - Virgin
Portfolio developed from music label to telco to airline to hotel,...
41Source: https://www.virgin.com/about-us

42. Customer Engagement - AMEX Open Forum
Community Platform for SME’s with business & finance advice from experts
42Source: https://www.americanexpress.com/us/small-business/

43. 3.
IMPLEMENTATION OF
INNOVATIONS

44. 44
In which environment should
innovations be realized?

45. 45
Performance Engine - a closed system
protected
data
fixed
hierarchies
codified processes
supply
isolated customers
Source: http://www.accenture.com/microsites/digital-industry/Pages/

46. 46
Innovation Engine - an open, collaborative system
internal &
external data
collaborative
teams
adaptive
processes
isolated customers
supply
Source: http://www.accenture.com/microsites/digital-industry/Pages/

47. 47
Performance Engine Innovation Engine
a closed system
fixed
hierarchies
codified processes
supply
isolated customers
internal &
external data
collaborative
teams
adaptive
processes
isolated customers
supply
an open, collaborative system
protected
data
Source: http://www.accenture.com/microsites/digital-industry/Pages/home.aspx#/impact

48. Profound structural differences
48
Structures Performance Engine Innovation Engine
Communication
team members in various departments -
slow cross communication
sub-seven man teams sitting together
Decision making
unclear or unresponsive,
intra-company ownership & politics
create slow decision-making
autonomous decision making with
kill switches on milestones
Location cubicle / HQ Offsite
Compensation no upside for extra effort/ success Equity / success fee
Time allocation maybe 20% ‘Google Time’ full-time ‘Google Time’
Liability strict business practices and principals ad hoc and spontaneous problem solving
Source: Prehye Talk https://vimeo.com/28433022

49. 49
Initiatives of Innovations

50. Implementation models for innovations
50
Possibilities for the realization of innovation initiatives:
SUSTAINING
INNOVATIONS
‘Squeeze it in’
DISRUPTIVE
INNOVATIONS
‘Separate it’
many small
innovation projects
one big innovation
initiative
Source: Beyond the Idea, Govindarajan & Trimble

51. Innovation depends on ‘leftover’ resources
51
Performance
Engine
% of people
%ofTime
0 100
100
50
50
a small contribution from everyone
ateamdedicatedfulltimetoinnovation
Sustaining Innovation
DisruptiveInnovation
Source: Beyond the Idea, Govindarajan & Trimble

52. 52
Planning & Implementation
of innovations

53. Planning of innovations
53
Performance Engine Plans Innovation Engine Plans
based on precedent start with a blank page
emphasize data emphasize assumptions
standard scorecard custom scorecard
highlight quarterly and yearly totals highlight trends
hold firm expectations expectations often adjusted
focus on results focus on learning
Source: Beyond the Idea, Govindarajan & Trimble

54. Interconnection between the Performance &
Innovation Engine
54
PERFORMANCE
ENGINE
Funding
Knowhow
INNOVATION
ENGINE
Finance
small
initiatives
disruptive
initiatives

55. 55
Coca Cola’s - 70/20/10 Investment rule
Source: http://www.slideshare.net/McK_CMSOForum/liquid-linked-marketing?
10%
Hard, risky,
complicated
20%
Moderately risky
should appeal to
new audience
70%
Safe, standard content that appeals to a
huge audience

56. BEST PRACTICE
ADOBE KICKBOX

57. 57
Adobe Kickbox - Innovation Kit
Source: https://www.youtube.com/watch?t=99&v=VU4XYGuUh_0

58. KEY TAKEWAYS

59. - Differentiate between the Performance Engine &
the Innovation Engine
- Sustainable & disruptive innovations need to be
distinguished and tackled differently
- Innovation potential lies across all 10 Types of
Innovation
- Innovation is a dynamic process and eventually
needs its own playground to thrive
59

60. In case of any questions,
regarding this presentation
please do not hesitate to get
in touch with us.
ts@lhbs.com
+49 171 317 9595
Consultant
Tamara Stix
LET´S GET IN TOUCH
Stefan Erschwendner
Managing Partner
se@lhbs.com
+49 151 6462 0729
60

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