Innovation, Organisieren von Innovation, Organization Design, Case Study, Beratung Innovation, Organizational Capability

1. 1
Organizing for Innovation
A workshop for the Management Team of AAA
An Industrial Company for Metal Forming Systems
Consultant: Hubert Lobnig
www.lemon.at

3. 3
Myth Research & Practice say
1. Innovation is all about ideas Ideas are only the beginnings
2. Innovation does not fail
when great leaders are
appointed
When it comes to innovation there
is nothing simple about execution –
it takes a team
3. Effective innovation leaders
are subversives fighting the
system
Innovation leaders are building
bridges and partnerships
4. Everyone can be an
innovator
Ideation is everyones job as are
improvements in one´s sphere of
responsibility
5. Innovation happens
incrementally & organically
if we let creativity flow
Innovation initiatives of scale re-
quire a formal resource commit-
ment & a disciplined management
approach
Executive Summary: Lesson´s Learned from
Organizing Innovation *
* based on Galbraith 2014, Govindarajan & Trimble 2010, Grant 2013, Kay, Bolke & Fisher 2012,
O´Really & Tushman 2013, own real life projects;

4. 4
Executive Summary: Lesson´s Learned from
Organizing Innovation
Myth Research & Practice say
6. Innovation can be fully
embedded inside existing
organizational routines
Innovation is incompatible with
ongoing operations and needs a
separate organization design
7. Innovation can only happen
in isolated environments and
protected areas
Innovation can not be isolated
from ongoing operations – clear
connections are required
8. Innovation is a prolongation
of the existing product and
technology development
functions
Innovation exceeds logics and
capabilities of existing functions,
requires a custom design
9. Implementing innovation
requires changing the whole
organization (+culture)
Innovation requires targeted
change only
10. Only start-ups can innovate Corporations of any size can in-
crease their innovation capabilities

5. Innovation = ideas + execution
Vijay Govindarajan, Chris Tremble
Some definitions
Idea
Generation
Idea
Conversion
Idea
Diffusion
The Innovation Value Chain
Morten T Hansen, Julian Berkinshaw
Innovation: succesful
implementation of
creative ideas: Beth
Hennessey, Teresa
Amabile

6. 6
Th. Levitt´s product concept
2. Expected product:
„what the customer
expects“
1. Generic product:
„product in itself“
4. Innovative product/solution:
(generates new added value)
3. Improved product
„different than others“
„The customer does not
want a 5mm boring bit,
the customer wants a 5
mm hole in the wall !!
time

7. 7
Extending the Development Agenda
The expected product The improved product The innovative
solution
According to the
customer´s
expectations
Exceeds the customer’s
expectations and makes
us different from others
Solves elegantly the
customer’s problem in a
new, surprisingly value
adding way
What makes our products
strong? What causes us
weaknesses? What do our
customers expect from us
which we can not deliver
yet? Where do we see a
need for immediate/mid
term action?
Where have we
successfully achieved an
improved product?
What improved products
are in our pipeline -
better and different to
others?
What are enabling and
blocking forces? –
internal/external?
What are the fundamental
challenges our customer
faces as he starts to design
a new vehicle or another
new product/design? What
functions do our current
products/services play?
What other solutions can
we think of?

8. 8
Innovation is the process of applying and developing a new idea
into a new product, process or business
→ different kinds of innovations need different kinds of organizing
The Innovation continuum
incremental radical

9. 9
Organizing Innovation – the difference

10. 10
„Why have we been successful?
If you want a very simple answer: it is getting the balance
between innovation and core business.“ Jorma Ollila
(former CEO of the Nokia corporation, Member of the Board of Directors of Ford Motor Company)
Harvard Business Review
6/2011

11. 11
2 types of teams driving the innovation*
The dedicated team – driver for
the innovation
The shared team – resources from
the core business
A separate team responsible for the
innovation initiative: representing
the required expertise, power base
and skills to drive the entire
innovation. Clear mandate and
assignment (primary task!)
Existing experts and teams partially
involved in the innovation process.
Carefully contracted in as they need to
provide additional work to their primary
duties.
Each major innovation initiative needs a
dedicated team to coordinate the
innovation end-to-end (from invention
to commercialization)
- Cares for everything
- Coordinates the process throughout
the organization
- Assigns the workstream within the
“Power engine”
- Takes care that the important will
succed over the urgent
Each innovation initiative relies on using
existing capabilities and workflows within the
organization (“The Power Engine”). However
the “power engine” will continue to work
along existing priorities and work-processes.
- Takes on tasks aligned with the existing
skills and organizational capabilities
- Existing expertise might be (partially)
assembled differently than in the
“normal” work flow
- New connections and working
relationships will be required.
- Tensions between own tasks and “extra
work” need to be managed
* based on Govindarajan & Trimble (2010): The other side of Innovation. Solving the execution
challange. Boston: Harvard Business Review Press

12. 12
Partnership
The Partnership executes the initiative
shared staff
(routine tasks)
dedicated
staff
(nonroutine
tasks)
One project plan
„Innovation Leader“

13. 13
Innovation as end-to-end process: A value chain
perspective (Birkinshaw & Hansen 2007)

14. 14
People Weak/Low Developing Strong/High
1. Our Management Team is
innovative.
1 2 3 4 ×5 6
2. We have innovative front line
managers innovative.
1 2 3 4 ×5 6
3. Our employees are innovative 1 2 3 ×4 5 6
4. We encourage and recognize
insights that come from all parts of
the organization
1 2 ×3 4 5 6
5. We invest into the innovation
competence of our managers.
1 2 ×3 4 5 6
6. We invest into the innovation
competence of our employees.
1 2 ×3 4 5 6
Culture Weak/Low Developing Strong/High
7. Strength of our collaboration
culture across our units and layers
1 ×2 3 4 5 6
8. Willingness to experiment 1 2 ×3 4 5 6
9. Time and freedom to innovate. 1 2 ×3 4 5 6
10. Common language for innovation 1 2 ×3 4 5 6
Measuring the Readiness for Innovation *
* Own questionaire inspired by Stefan Lindegaard (2013), Amy Kates & Jay Galbraith (2010), Julian
Birkinshaw & Morten Hansen (2007)

15. 15
10. Common language for innovation 1 2 ×3 4 5 6
11. Known strategy, purpose and
mandate for innovation.
1 2 3 4 ×5 6
12. Collaboration with key customers
on innovation issues
1 2 3 4 ×5 6
13. Collaboration with external sources
(experts, research, knowledge
networks...)
1 2 3 4 ×5 6
Processes Weak/Low Developing Strong/High
14. Use of defined practices and tools
for idea generation
1 ×2 3 4 5 6
15. Select ideas and projects for initial
funding using a rigorous set of
decision criteria.
1 2 ×3 4 5 6
16. Turning ideas into viable
products/services or businesses
1 2 3 4 ×5 6
17. Diffusing developed ideas across
the company (whole value chain)
1 ×2 3 4 5 6

16. 16
Assessment „Readiness for Innovation –
Management Team“ (Mean per area) –
Company AAA
CULTURE 3.24
PEOPLE 3.16
PROCESSES 2.8
Processes Weak/Low Developing Strong/High
14. Use of defined practices and tools
for idea generation
1 ×2 3 4 5 6

17. 17
Assessments 5 highest & lowest Questions
Q 13: Collaboration with external sources 4.7
Q 8: Willingness to experiment 4.4
Q 3: Our Employees are innovative 4.3
Q 12: Collaboration with key customers on innovation issues 4.3
Q 16: Turning Ideas into viable products /services or businesses 3.6
Q 17: Diffusing developed ideas across the company (value chain) 2.4
Q 18: Stock keeping and transparency of ideas and knowledge base 2.4
Q 5: Invest into innovation competence of frontline managers 2.3
Q 14: Use defined practices and tools for idea generation 2.3
Q 10: Common Language 1.77
Processes Weak/Low Developing Strong/High
14. Use of defined practices and tools
for idea generation
1 ×2 3 4 5 6

18. 18
Survey Feedback: Recommendations for the
Management Team of AAA
1. Select areas to improve AAA´s Innovation Capabilities:
- Develop a shared understanding and strategic intent for
innovation
- Create tools & processes, stock-keeping and innovation skills,
focus on a crossfunctional approach
2. Build on strenghts:
- network resources with external experts and customers
- experimenting and technical skills (and attitude)
- existing experiences in turning innovation into products &
business
3. Discuss differences in assumptions (those with lower mean) within
AAA´s M-Team:
- Are our (front line) managers innovative?
- Are we able to turn ideas into viable products/services/business
- What is our strategic perspective on innovation

19. 19
Generating Ideas – Golden Rules
Note
every
idea
All is fair in
brainstorming
Don´t limit
your phantasy
Quantity
before
quality
Keep the
frame
(scope,
time,
task)
Search for
ideas –
even if they
are not
yours
phrase short
and concisely
(wording)

20. 20
Generating Ideas – Exercise
B) Ideation work processe according to the working paper
Scope Team 1 Scope Team 2
Sponsor: M B Sponsor: TH
How can we better make use of
and connect with ideas of any
employee everywhere in the
world?
How can we make our work
spaces to better conveyors for
creativity and inspirations?
A) Defining the scope for the
Brainstorming session

21. 21
• Plural or hybrid design
• Heterogenity of
elements
• Design complexity
Organizing Innovation: 3 Cases

22. 22
A custom organizational model
1. Each innovation initiative requires a team with a custom
organizational model and a plan that is revised only
through a rigorous learning process
2. Because ongoing operations are repeatable, while
innovation is nonroutine, innovation leaders must think
differently about organizing
3. Because ongoing operations are predictable while
innovation is uncertain, innovation leaders must think
differently about planning
4. The custom organizational model is based on a partnership
between dedicated and shared staff (teams),
- creating multi-levels of links between is important

23. 23
Digital Transformation: a „family“ of Innovation Initiatives
1. System Integration of the products („the endproduct“)
2. Connectivity („connecting devices, customers and offers“)
3. Enterprise Architecture
OP +
Supply chain
OP +
Supply chain
Case 1: Digital Transformation

24. 24
Case 1: The Digital Transformation Concept
Organizational
Elements
Description Function
The Innovation Leader From outside: background:
technical skills + business skills,
highly social skilled
Leads the whole DT initiative,
full time
The Digital
Transformation Team
IL + CFO + COO („old“) +
Teamleader Sales & Market, + IT
experts (R&D) + reps from OP
Jointly share work streams,
organizes the collaboration
with functional departments
Focal Experts in each
Department
Network of IT-affine people
(leaders?) across all depts.
communicate, align and review
DT work, adapting re-quired
changes in their depts.
Digital Strategy Paper IL + Corp.Leadership Team Setting frame and objectives,
provide focus and orientation
for all members of the
company
DT projects:
- AS systems integration
- Enterprise Architecture
- Business Modelling for
Connectivity
Lead by project leaders (some
FT) together with shared staff
from departments (decided by
required expertise and functional
representation)
Create solutions for two ends:
- Customer end and
commercial side
- Internal capabilities

25. The
Innovation
Plattform
Generic
Workflow
Innovation
Handbook
Innovation
Leaders &
Organisation
Innovation
Warehouse &
Infrastructure
Case 2: The Hybrid Approach – Frauenthal
Automotive

26. Heterogenous composition:
Presidents, VP Product and Market,
HR, 2 MD´s plants, Innovation
leader (as coordinator), temporary
guests
The FAC Innovation Network
meets 3 times a year, takes
desicions and monitors the
direction
The Innovation
Committee: deciding for
prototyping, reviewing,
strategy
Meet quarterly in the innovation
team
The Innovation Team:
driving the Innovation
Process and the
network
springs
airtanks U-bolts
VP PM & M
Operate in termporary
concept studies and R&D
projects
The Concept Leaders:
Nominated experts for
various strategic core
competencies
All Employees innovate
Whole System approach
Contribute to the IT plattform (open
innovation system),
brainstorming workshops,
integrate the nnovation in all meetings
The Innovation leader:
coordinator of the whole
process
The Innovation
Leader

27. 27
Case II: Learnings from the
Frauenthal Case
1. Strategic framing and communicating the strategy!
2. Senior team behaviour: good balance between
exploitation ↔ exploration!
3. „innovation leaders“ highly collaborative: innovation +
operations together
4. Continuous evolution of the platform (instead of ready
design)
5. Slack time for innovation in operations helped for ideation
6. Elements nicely linked together and reinforced the
strenght of the scheme
7. ? Innovating commercial aspects and existing business
models
8. ? Scope of innovation seemed to stick within known
territory of products

28. 28
CASE 3: Fashion meets technology
Swarowski Group:
30.000 employees, 170 Countries,
1800 shops, 3 Billion ann turnover
HQ Wattens (Tirol)1
Collaborating
in a network to
generate ideas
1 based on the publication: Wilhelmer D, J Erler, J Zimmermann (2014): Innovation Network: An
Integrated Organizational Structure for Organizational and Management Learning. In: Scala K et al (Eds):
Leadership Learning for the Future. Charlotte, IAP.

29. 29
Drivers for the innovation network
1. Business Units were highly successful in their areas, but
lacked cooperation; duplicating R&D activities and
competitive attitudes between the BUs:
➢ Crystal components
➢ Jewelery, watches and fashion accessoires
➢ Home accessoires and figurines
➢ Optical eyewear
➢ Gemstones and zirconia
➢ Lightning
2. How can we better collaborate for innovation without
weakening the business units?
3. Appointing a VP Innovation for the group enforcing
company wide innovation platforms was not enough

30. 30
1. Network Coordinator: VP of
Innvotion, elected by SG members
2. Cross functional steering
group: 6 inno managers of BU´s +
heads of R&D, Product dev.,
technology; 0.5 d monthly,
strategic frame („innovation
canvas“) and steering the portfolio
3. INNO Network: 70-90 cross
functional experts and decision
makers, meet twice a year
4. Innovation projects followed
the „canvas“, started and reviewed
within INNOnetwork meetings and
steered via INNO-steering group
The network structure
5. Informal teams; emerged
from INNOnetwork meetings

31. 31
Case III: Learnings from the INNOnetwork
1. The INNOnetwork needs space to find own approaches and
solutions beyond top management orders
2. BU´s as drivers: The Canvas and the portfolio-approach
helped to strategically frame idea generation and early
step work
3. The network is a useful instrument to create collaboration
on 1st, 2nd an 3rd level - but it is not the goal
4. The Innovation Coordinator acts as „server in the net“ for
the whole innovation platform
5. Meeting designs of large group events as of small team
meetings (open space, world cafee, group brain
storming…) were essential to leverage a collaborative
culture and to build trust across BUs
6. The INNOnetwork paved the way for adding external /
Open Innovation schemes

32. 32
Structure
Strategy
People/HR
Reward
Systems Processes
Galbraith´s Star Model
What is our direction? Vision, mission,
goals, strategic intent
Which skills, capabilities and
mindsets are required? Do we
have the capabilities for the
innovation iniatives? How can we
best make use of our talents?
How are we organized? How is
power distributed? How do we
organize the reporting lines?
What are the key roles?
How do we measure performance?
How do we reward desired
behaviour? What are our success
criteria? How are our feedback-
mechanisms organized?
Business P: How is our work
„flowing“? How do we connect
between units? How do we
cooperate?
Management P: How are our
decision making processes set
up? How does information flow?
How do we communicate?

33. 33
Promoting Innovation in Your
Organization
Identifying first ideas
Work along the assigned element of the star model:
What is needed in order to support, improve, stabilize
… Innovation in your company? Explain your
assumptions
-> Draft possible solutions, or ideas/ways how
solutions could be elaborated? (words, sketch, both)