The group of 16 students have visited the Tecnológico de Monterrey Campus Guadalajara in the early January in order to learn about Mexican history, culture and businesses. This is the last session. The topic of this course is Knowledge and Innovation in Mexico. After a brief introduction to the current changes that are occuring and discussion of the key abilities that future leaders need to develop (i.e. learning, analysis, search, flexibility, couriosity, foreign language skills, etc.) the instructor discusses innovation from different perspectives. He takes a look at innovation from the categorization of innovations, over to the different types of innovation. The session closes with an analysis of the case study about Cemex (Patrimonio Hoy) that highlights how Cemex has strengthened it´s competitive positon by integrating it´s expertise in the industry, as well as the mexican culture. This thorough analysis at the intersection of ideas lead to the successful development of a community house building program that revolutionsizes the industry. If you want a copy of my presentation, please send me an e-mail to pandza@itesm.mx.

2. WELCOME TO GUADALAJARA Last Session Knowledge Development Economy: Innovation

4. My Research Interest STRATEGIC MANAGEMENT & PLANNING ADOPTION THEORY & LIFE CYCLE STRATEGIES MARKETING STRATEGY INNOVATION STRATEGY SYSTEMS THEORY & THINKING 1

5. IN WHAT KIND OF WORLD ARE WE LIVING IN?

6. SHIFT HAPPENS

7. OK, THE WORLD IS CHANGING, AND IT IS CHANGING FASTER & FASTER… BUT IS INNOVATION THE RIGHT STRATEGY?

8. ENRON, WAS NAMED ONE OF THE MOST INNOVATIVE COMPANIES FOR 5 YEARS… But became a little bit too innovative with the interpretation of it´s balance sheets…

9. OR YOU MIGHT STILL REMEMBER THE DOT-COM

10. DO YOU REMEMBER ALL HYPE ABOUT ALL THESE INNOVATIVE BUSINESS MODELS…. BUT WERE THESE BUSINESSES MODELS REALLY INNOVATIVE?

12. There are many important things that companies need to understand if they want to win the game… Two of those are…

13. You have to be crazy… Crazy Stupid Crazy Smart Companies need to be revolutionary (i.e. crazy) and develop the cababilities to innovate in ways that other competitors can´t or won´t… (Hamel 2002)

14. You have to be different, not better… Better Different Expensive, Fast, Complex Cheaper, slower, easier 1.8 Mio units sold 1.7% net profit margin (over the last 10 years) 3.2 Mio units sold 14.6% profit margin (over the last 10 years) Source: The Ries Report. www.riesreport.com (May 2007)

15. But if this would be all you need to know about innovation, we would´t all be here today…

16. IT IS A FACT THAT… Hyper competition drives margins downward … (Hamel 2002) PROFIT MARGINS GLOBAL COMPETITION

17. And companies here in Mexico need to find a way out of the mouse trapp of competing on low price. There are more factors to compete on! WHY SHOULDN´T WE COMPETE ON VALUE?

18. INNOVATION CERTIFICATE = THEORY + PRACTICE + ATTITUDE Dinámica de la innovación en los negocios Innovación de modelos de negocio Proyecto de Innovación I Proyecto de Innovación II Innovación de productos y servicios Dirección estratégica de la innovación Jan-May 2008 Summer 2008 Aug-Dec 2008 New Knowledge Professional Experience Work with Managers Development & Implementation International Knowledge Mexican COMPANIES DIVERSITY

19. So, now let´s finally take a look at Innovation…

20. ¿WHAT ARE THE INTERNAL DRIVERS OF INNOVATION INITIATIVES? Waste: Innovation projects that even when they succeed fail to create definitive separation from competitive offerings and sustainable competitive advantage. Not going far enough in the right direction Why so much waste? Failed Attempts Waste Differentiation Neutralization Productivity

21. The spectrum of Innovations Organization Uncertainty Resource Uncertainty Technical Uncertainty Market Uncertainty Breakthrough/ Radical Innovations Semi Radical Innovations Incremental Innovations Low Uncertainty High Uncertainty Major

22. Is this spectrum of innovations only related to the innovation of new technology? NO!

23. R&D Networking Channels (WHERE) Logistics/ Supply Chain Value Chain Processes (HOW) Revenue Model Customer Experience Customers (WHO) Solutions Platforms Products (WHAT) Innovation Radar: Example: Dell computers Mohanbir Sawhney, et. Al (2006). The 12 Different Ways for Companies to Innovate MIT Sloan Management Reviw. Spring 2006. vol. 47, No. 3

24. R&D Networking Channels (WHERE) Logistics/ Supply Chain Value Chain Processes (HOW) Revenue Model Customer Experience Customers (WHO) Solutions Platforms Products (WHAT) Innovation Radar: Example: Starbucks Mohanbir Sawhney, et. Al (2006). The 12 Different Ways for Companies to Innovate MIT Sloan Management Reviw. Spring 2006. vol. 47, No. 3

25. Innovation Trends over the past years…

26. Increasing importance of Business Model Innovation over the past years… Innovation Process Governance Centralized De-centralized Innovation Focus Level Product Service Process Business Model “ Core Value Architects” “ Value Network Architects” 2000 1990 “ Competencies Network” “ Traditional R&D” Frontiers of Value 1980 Innovation, Business Architecture and Value

27. Daniel Pandza, M.A. (pandza@itesm.mx) Director Ejecutivo del Centro de Innovación Tecnológico de Monterrey, Rectoría Zona Occidente Profesor de Planta en el área de Mercadotecnia e Innovación Tecnológico de Monterrey, Campus Guadalajara Experiencia Relacionada: Director Asociado, International Undergraduate Program, Tecnológico de Monterrey, Campus Guadalajara Profesor de Cátedra, Mercadotecnia, Mercadotecnia Internacional, Mercadotecnia de Servicios, Tecnológico de Monterrey, Campus GDA International Business Development (Intern), Hella Hueck & Co. KG Automotive Lightning (Germany) Trade Marketing & Merchandising (Germany, Austria, Switzerland); W.L. Gore & Associate GmbH (Germany) Estudios: Master of Arts in International Business, enfoque Mercadotecnia e Estrategia Ecole Superieur de Commerce de Rennes (France) Open University (UK) Diplom Kauffmann (FH), enfoque Mercadotecnia e Estratégia University of Applied Sciences Bochum (Germany) Office Management Certificate, Trainee program Flebbe Filmtheaterbetriebe GmbH, Industrie & Handelskammer Essen (D)