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Innovation – What, Why, How…

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Why small and large firms depend on each other in their innovation process?

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Innovation – What, Why, How…

  1. 1. Innovation – What, Why, How…<br />Why small and large firms depend on each other in their innovation process?<br />Anand Subramaniam<br />
  2. 2. 2<br />“Without tradition, art is a flock of sheep without a shepherd. Without innovation, it is a corpse.” <br />- Winston Churchill <br />
  3. 3. 3<br />Highlights<br />Innovation Overview<br />Innovation Metrics / Measures<br />
  4. 4. Innovative Companies 2010<br />4<br />Source – Business Week<br />
  5. 5. Innovation Overview<br />
  6. 6. Innovation – Open vs. Closed<br />6<br />
  7. 7. Innovation and Customer Need<br />7<br />Target Audience<br />Objective<br />Mechanism<br />Target Audience<br />Objective<br />Mechanism<br />Target Audience<br />Objective<br />Mechanism<br />Target Audience<br />Objective<br />Mechanism<br />
  8. 8. Innovation - Drivers<br />Increased demand for accountability<br />Stricter regulation<br />Technologies coupled with a need to exceed the competition in these technologies<br />Rising customer expectations regarding service and quality<br />Changing economy<br />Drivers<br />Increased competition<br />Demographic, social and maket changes<br />Industry & community needs for sustainable development<br />Shorter product life cycles<br />8<br />
  9. 9. Innovation Types<br />9<br />Incremental Innovations<br />Focused on making small but significant improvements to existing products or services (when industry is mature)<br />Breakthrough Innovations <br />Introduces an existing technology into a new market, a new technology into an existing market or changes the way the offering is delivered<br />Disruptive Innovations<br />Game Changers who disrupt an existing market or create a whole new market<br />
  10. 10. Innovation - Sustaining vs. Disruptive<br />10<br />Sustaining<br />Focused on demanding customers; both incremental and radical.<br />Incumbents have resources and motivation<br />Disruptive<br />Introduce products and services not as advanced as existing ones, but offering other advantages (simpler, cheaper, more user friendly, ...) and focus on new or less demanding customers.<br />
  11. 11. Innovation - Enablers<br />11<br />Climate for Creativity<br />Working environment where inspiration thrive & creativity flourishes<br />Idea Generation<br />Secure a continuous source of creativity and flow of new ideas<br />Incubation Structures<br />Support the development and growth of ideas from innovation to delivery<br />Metrics & Incentives<br />Measure outcomes from creative processes and recognise talent at the organisation and individual levels<br />Role of Collaboration & Partnering<br />Work externally and internally with organisations and specialists who have the strongest capabilities for innovation<br />Integration of Business & Technology<br />Integrate technological capabilities with business insight to achieve innovation<br />
  12. 12. Innovation - Dependency<br />12<br />Small Firms depend on large firms for ..<br /><ul><li>as suppliers or customers
  13. 13. venture finance,
  14. 14. exit opportunites,
  15. 15. knowledge (production, markets and R&D)
  16. 16. opening new markets</li></ul>Large Firms depend on small firms for ..<br /><ul><li>New Product Development,
  17. 17. as suppliers of new knowledge (which they cannot develop themselves),
  18. 18. organisational renewal, for experimentation with busienss models,
  19. 19. opening new markets</li></li></ul><li>Innovation – Process Steps<br />13<br />$<br />Pre-IPO<br /><ul><li> Viable
  20. 20. Market acceptance
  21. 21. Heading to IPO or M&A</li></ul>Expansion<br /><ul><li>Legal Entity
  22. 22. Founders = Mgt Team
  23. 23. Minimal Revenue
  24. 24. Slow Growth
  25. 25. High Growth
  26. 26. Head Count
  27. 27. Multiple Cycles
  28. 28. Bright Idea
  29. 29. Experimental
  30. 30. Research
  31. 31. Business Plan
  32. 32. Proof of Concept </li></ul>Start-Up<br /><ul><li>Support Functions
  33. 33. Administration
  34. 34. Marketing
  35. 35. Revenue Growth</li></ul>Seed<br />Idea / Concept<br />Time<br />
  36. 36. Innovation – Detail at each Step <br />14<br /><ul><li>Recruitment
  37. 37. Business Development
  38. 38. Market Access
  39. 39. Financial
  40. 40. Training
  41. 41. PR / Marketing
  42. 42. Networking
  43. 43. Business Development </li></ul>$<br />Expansion<br /><ul><li>Business Plan
  44. 44. Prototype
  45. 45. Project Management
  46. 46. Business Premises
  47. 47. Management Training
  48. 48. International support
  49. 49. Market Access
  50. 50. Recruitment
  51. 51. Training and Incentives
  52. 52. Diversification strategies and support </li></ul>Start-Up<br />Seed<br />Idea / Concept<br />Time<br />
  53. 53. Metrics & Measures<br />
  54. 54. Innovation – Product / Service Measures<br />Growth rate in share of key customers’ purchases<br />Time to market for new products / services<br />Growth rate in number of customers<br />Number of patents<br />% age of revenue / sales / gross margins from new products / services<br />Customer satisfaction with product / service features<br />Product / Service Measures<br />ROI for new products / services<br />% of new products / services achieved initial business objectives<br />Time to profitability for new products / services<br />% age of products / services making up the 80% of sales volume<br />16<br />
  55. 55. Innovation – Business Model Measures<br />Number of sales channels used<br />Number of channel partners / alliances appointed / created<br />Revenue growth <br />Profit growth <br />Number of new sales channels created during the year<br />Business Model Measures<br />% age business components or processes outsourced<br />Number of joint ventures created during the year<br />Average time to act on identified business opportunities<br />17<br />
  56. 56. Innovation – Operation Measures<br />Warranty expenses as a % age of sales<br />Cost of goods sold as a % age of sales<br />On time delivery<br />Cost reduction<br />Customer retention<br />Operation Measures<br />Perfect order fulfilment<br />Full time equivalents<br />Customer satisfaction from order taking to delivery<br />Order fulfilment cycle time<br />Inventory turnover rate<br />18<br />
  57. 57. 19<br />“No one asks you to throw Mozart out of the window. Keep Mozart. Cherish him. Keep Moses too, and Buddha and Lao Tzu and Christ. Keep them in your heart. But make room for the others, the coming ones, the ones who are already scratching on the window-panes.” <br />- Henry Miller <br />
  58. 58. 20<br />Good Luck<br />http://www.linkedin.com/in/anandsubramaniam<br />