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Business Innovation & Innovation Management


The vision of Business Innovation and Innovation
Management
- Introduction -
Standing still is the fastest way to go backwards. For many organisations change is
the only option, while this is not always what the people working there want. Many
external factors make change necessary however.

The behaviour of customers and the way in which they experience products and
services is subject to constant change. In the eyes of the customer products that the
company put on the market and were highly successful are becoming obsolete
increasingly quickly. The quality of the product or the service is no longer the only
thing that customers look at. Issues such as service, price, accessibility of the
organisation and the experience the customer has when buying and using the
product are becoming increasingly important.

This full set of properties is the value proposition of a company. The changes in the
behaviour and experience of the customer makes organisations adjust this value
proposition constantly. The adjustment of the value proposition to the new wishes of
the customer is not sufficient however. To gain the preference of the customer
organisations must be distinctive in the offering of a value proposition compared
with the competition. A customer ultimately chooses those products and services
whose full set of properties is the best match for his or her wish at the time. The
credo therefore is: constantly in search of innovation of the value proposition. For
the company this means constant innovation of the business.

Many companies say they are working on Business Innovation, but are still
struggling with a number of outstanding issues:
     What does Business Innovation mean?
     Why is it that so few companies are successful in Business Innovation?
     Is there an approach that can be successful?
     And how do you implement such an approach?
In its vision of Innovation Management Capgemini gives an answer to these
questions.




Author: Koen Klokgieters, VP Business Innovation Capgemini Consulting Published: 2007   1
Business Innovation & Innovation Management


Chapter 1.              What is Business Innovation?
Business Innovation is the development and implementation of a unique added value
that customers adopt. The more unique and the greater the edge on the competitor
(at the time of a launch), the greater the chance of success among customers, all the
better the operating results.

When does the success of Business Innovation become visible for a business with a
commercial objective? With more customers, higher turnover, bigger margins and
higher profits. For non-profit organisations (such as hospitals) its success is
expressed in greater return for the target group with the same available budget.
Even if the success is measured in different ways, Business Innovation always has
the same aim: greater return for the business and its environment through
innovation.


1.1     What determines the distinctiveness of a company?
Companies with a strong history often have an area in which they are outstandingly good.
For example, by being distinctive with their product or technology. Miele is a good
example of this. Other businesses go for strong customer service (Singapore Airlines),
accessibility (Dell computers), experience (IKEA) or a low price (Aldi). These businesses
have chosen a recognisably outstanding area for customers in which they want to be
unique. A continuing behaviour analysis of customers enables the company to improve
its current business and in this way stay ahead of the competition. Business Innovation is
aimed at the realisation of an edge in business.

How can we achieve such an edge?
   Through the successful application of new technology in products or services
   Through insight into changing legislation (political climate) and being able to
      respond to it
   Through insight into the changing economic and social climate and being able to
      respond to it
   Through insight into changing behaviour of people and being able to respond to it

To what degree can a company predict the behaviour of customers? And how quickly can
it respond to this? These two aspects determine the distinctiveness of the company.




Author: Koen Klokgieters, VP Business Innovation Capgemini Consulting Published: 2007   2
Business Innovation & Innovation Management


1.2     How can a company prepare itself for the new developments and the
behaviour of customers?
A company can determine or reinforce distinctiveness on the basis of empirical data.
Except that it gives absolutely no guarantee that customers will continue to value the
current added value in the same way in the future. A company must therefore be able to
scan and to analyse trends and developments and then translate them into a possibly new
value proposition. Trends and the associated behaviour of customers can be subdivided
into:
     Mega Trends, which are long-term (15 to 30 years), often social trends, fed by
        economic, technological, political and social developments. Examples include the
        growing average purchasing power per family, humanisation of the technology,
        regionalisation and ageing.
     Consumer Trends, which have a medium-term cycle (three to ten years). They are
        developments that are already actually visible in the media and are translated into
        marketing messages. Examples include: the need for growth in risk control
        (everything can be insured), security (we will look after your family), safety (food
        and drink standards) and authenticity (regional products). Consumer Trends help
        to explain the behaviour of customers and the way in which their choices are
        determined.
     Market Trends, which are short-term developments (one to three years). These
        short-term trends determine the reaction of companies to the above trends and are
        often market sector-specific. Examples include: growth of service counters in
        supermarkets and the product integration of camera, mobile telephone and
        internet in the telecoms market.

1.3    On which areas of an organisation does the translation of trends have an
impact?
A company will analyse trends and translate them into concrete innovation initiatives.
These initiatives can have an impact on areas of an organisation that focus on both
external and internal factors.
     The areas that focus on external factors are: product/service development,
       innovation of distribution channels, setting up of new market (segments). These
       innovation initiatives have a direct impact on the customer‟s experience.
     The areas that focus on internal factors are: the business model and the
       organisational setup, the business processes, the (technological) resources and
       new competences of managers and staff. These innovation initiatives mostly have
       an indirect impact on the customer‟s experience, but are no less essential for the
       success of innovations.

Initiatives involving external factors on the one hand and internal factors on the other
have mutual influence on one another. For example, the launch of HDTV during the
World Cup in the summer of 2006: an innovative product was put on the market while
the internal and external factors were out of sync with one another. For a successful
Business Innovation the internal and external factors have to be carried out integrated.




Author: Koen Klokgieters, VP Business Innovation Capgemini Consulting Published: 2007      3
Business Innovation & Innovation Management



Business Innovation = the development and implementation of a unique added value
that is adopted by customers, by means of an integrated change of internal and
external factors.

1.4     Innovation in a public domain arises from a different need
In the public domain (such as the local authority) it is about innovations that lead to
greater value for the same money (read: budget). The driver does not therefore come
directly from competitors, but from greater social value for less social money. Here too
innovation is aimed at the creation of added value through a combination of new
externally and internally oriented factors.

An innovation example from the public domain is the integrated electronic service
provision at municipalities: the citizen can now – in addition to the familiar counter – get
help over the internet. Because of innovation in new channels the citizen can himself
decide how and when he wishes to use services of the municipality. Investing in new
technology brings the municipality a gain in time and cost savings. In short: greater value
for lower structural cost.




Author: Koen Klokgieters, VP Business Innovation Capgemini Consulting Published: 2007      4
Business Innovation & Innovation Management


Chapter 2.      Why are so few companies successful in Business Innovation?

2.1      Growing complexity in correlation between trends and developments
So far companies have in particular followed those specific trends and developments that
are an extension of their current value proposition. KPN for example has for a very long
time concentrated on monitoring and helping to develop above all technological
(telephony) developments and translating them for the Dutch market. It is clear that this
will no longer be enough for KPN. The new strategy is aimed at the provision of
communication, information and entertainment services. For this all the relevant Mega,
Consumer and Market trends must be monitored and analysed as they relate to one
another. This is also called „viewing from different perspectives‟. Too often many
businesses are still viewing from a single perspective. They have no workable method,
tools or the right competences at their disposal to be able to spot these trends as they
relate to one another and then to analyse them. Let alone translate them into innovations
in their value proposition.

2.2     Growing unpredictability in consumer behaviour
If consumers display stable buying behaviour and are easy to classify in customer
segments, the company can make a clear delineation at which the innovation is to be
aimed. Volvo and Saab for example have succeeded in appealing to a clear target group
with a safe, luxury passenger car. Customers have therefore remained loyal to these
brands for a very long time.
Capriciousness characterises the behaviour of the consumer of now and the future. Other
forms of living together, communicating, consuming and experiencing clearly have their
repercussions. The modern consumer wants an appeal to his DNA, the “genetic
blueprint” of his behaviour. The company must be capable of understanding this DNA
and translating it into a new value proposition. The chances of the company‟s survival are
determined by two crucial factors: insight into the specific customer and the speed of
reaction to the constant changes within the target groups. Capgemini‟s research Trends in
Retail (2006) shows that only a few companies have proved successful in this.

2.3     Obsolete organisational structures and governance models
The growth of companies in recent years has mainly been realised through acquisitions.
This has led to a structure of relatively autonomous business units, each with their own
Research & Development, marketing, production, etc. The units are aimed at achieving
their own result, they are first and foremost product-oriented and there is no flexibility in
the cost structure. Growth and expansion are achieved by copying a business unit with a
complex, expensive and inflexible structure. From the position of the central company
this leads to suboptimisation of the operating result and an uphill struggle to adapt the
value proposition quickly.

For these businesses innovating mainly means investing with a high risk factor. Many
innovations have been and are still technology (and product) driven. Converting new
technology into market products requires research. This research takes place in separate
organisational departments such as Research & Development (R&D). Research costs
time and money. And research is often driven by budget rather than business cases, in



Author: Koen Klokgieters, VP Business Innovation Capgemini Consulting Published: 2007       5
Business Innovation & Innovation Management


which costs and revenues are related to one another. Improvements of the innovation in
R&D environments are often aimed at shortening that lead time, reducing the costs and
avoiding the risks. To make the revenues from the innovation understandable there is a
need within the business unit to work with other departments such as Sales and
Marketing. Differences of insight in the area of control, allocation of costs and income,
dealing with risks, etc, do not fit within the existing structures and governance models.

Businesses do not know how they can transform in a controlled manner into new
structures and management that do fit in with a flexible manner of innovation. The
research “Erasmus Competition and Innovation Monitor 2005” shows that in innovative
businesses 25% of the innovation success is determined by R&D investments and 75%
by managing cleverly and organising innovatively.


2.4     Undeveloped competences in fossilised business culture
Changes in the strategy and structure of a company require changes in the culture of the
business. In one organisational structure a specific business culture will have a
strengthening effect and in another a paralysing one. Look at a business where
technological knowledge of things and 120% quality experience were preconditions for
performing (think of the old Utilities businesses). A technocratic organisational culture of
hierarchy, protocols, standards, more matter than people-oriented attitude, will have a
strengthening effect here. An organisational culture that is characterised by chaotic
creativity, scope to keep reinventing the wheel and actually aimed at behaviour of people,
has a paralysing effect. A complex change of competences and behaviour of staff is
necessary.
A company can develop a new innovation structure (for example strong cooperation
between the R&D departments of the business units), but the differences in the
organisational cultures often appear to prevent changes. The success of transformation is
an interaction between changes in the business strategy, the organisational structure and
the organisational culture. This is not an obvious change competence that businesses have
in house. Yet the logic of the new innovation structure must be in keeping with the new
logic of the feeling.

2.5    Is there an approach that increases the success of Business Innovation?
Where are we as a company in the area of innovation? Do we have a picture of our
innovation ambition? What capacities do we have in house to be able to innovate?
How can we increase our ability to innovate? And how can we controllably make
concrete steps in innovation? Innovation Management, a Capgemini approach, provides
the answers.




Author: Koen Klokgieters, VP Business Innovation Capgemini Consulting Published: 2007       6
Business Innovation & Innovation Management



Chapter 3.      Innovation Management, a successful approach!

3.1     Knowing where you are as a company
Companies embark upon innovation initiatives with a great deal of energy and a high
ambition level. It is not unusual for the enthusiasm to fade as time goes by. The company
is often unaware of the success factors of innovation and of its own ability to define the
preconditions for success.

An example from the Utilities sector …
In the Utilities sector in the Netherlands all the major electricity companies had sky-high
ambition levels when first exposed to market forces. They thought that they had after all
built up a good relationship with several million customers over the years. How easy
would it be to offer various new home-related products and services to loyal customers
and so develop new business. In practice these companies seem to have their hands full
innovating their existing services in a way that is in line with the market. For example,
simply being accessible by telephone for queries about the electricity bill. Nearly all the
new initiatives directed at consumers have been halted, despite huge investments.
These businesses had too high a Business Innovation ambition level in relation to their
ability to innovate. Success is determined by awareness of a realistic ambition level in
combination with self-knowledge of your ability to innovate.

3.2     Choosing the ambition level in Business Innovation
A company wants to innovate to bring about a distinctiveness for the customer.
Innovation can be translated into the innovation of various factors. The result of an
innovation can be a new product or a new channel, a new market or a combination of
these factors. The value proposition for the customer increases as a consequence of an
innovation in the order of product, channel and market level. The impact will increase
exponentially if the innovation is applicable at several levels at the same time. We call
this a “Blue Ocean” development.




     High                                            “Blue Ocean”
                                                     development

                                              Market
                                              development
     Impact on the
     Value proposition               Channel
                                     developent

                                Product
                                Service
                                development
     Low


                                   Low        Complexity      High
Figure 1. The Business Innovation Ambition level


Author: Koen Klokgieters, VP Business Innovation Capgemini Consulting Published: 2007       7
Business Innovation & Innovation Management



3.3     Methods and tools for determining the correct ambition level
The ambition level of innovation is the framework within which the process of creation
and the generation of ideas will take place. This process is directed in part by the
outcomes of the impact analysis. The company analyses the different trends and the
strategic choices for dealing with this impact.
The trends give an insight into the social developments, into what the customers want in
the short and long term and into how this will influence their behaviour. The company
needs a method and tool to spot trends and to analyse the impact:

    1. With the Innovation Radar Screen the impact is made business-specific. Trends
       are related to the estimated change on the measuring instrument. The organisation
       can use this to manage the results (for example the Balance Scorecard instrument).
    2. With the Strategic Innovation Scenario planning method the impact of the trends
       can be translated into possibly different innovation scenarios. A trend indicates a
       likely development. Of course a number of key uncertainties remain in a market,
       the outcome of which is difficult to gauge. Think of the development of the
       economic climate (rich years versus lean years). The actual outcome of this key
       uncertainty will have a major impact on the ultimate development of the
       innovation. A low price of a new product at a time of lean years for example will
       be very important. In the rich years on the other hand service and quality have a
       bigger part to play. An innovation scenario is built up on the basis of possible
       outcomes of key uncertainties. These uncertainties have a major impact on the
       operating result of the company. The planning method enables a company to
       cluster relevant trends for each scenario and to translate them into the behaviour
       of the consumers. The expected reaction of the businesses in the market sector can
       be indicated for each scenario. With this insight a company can decide for which
       scenarios adjustments are needed in the current value proposition. In this way
       concrete innovation initiatives, such as product, channel and market innovations
       can be defined. The overall review of the scenarios and the strategic choices of
       the company determines the ambition level for innovation.

3.4     A realistic picture of the company’s ability to innovate
The realisation of an innovation ambition level revolves around the ability to translate the
desired value proposition in concrete terms for the customer. The success of innovation is
not determined by the innovators in the organisation. What matters is the degree to which
the customers adopt the new value proposition!

A company‟s ability to innovate is divided into four different (innovation) domains. Each
domain has specific characteristics and makes its own contribution to the realisation of
the innovation. The four domains are:
    1. The Corporate strategic ability to innovate: the ability to translate the trends and
       developments into a new value proposition. This is a matter of signalling trends,
       building scenarios, gauging customer behaviour and above all translating all of
       this into product, channel and market features. It is an interaction of detailed
       knowledge and analysis in combination with the feel for customers and the market.



Author: Koen Klokgieters, VP Business Innovation Capgemini Consulting Published: 2007      8
Business Innovation & Innovation Management


       This ability is called the “entrepreneurial gut feeling” of the organisation.
       Examples of companies that are able to translate trends successfully into new
       value propositions are the Swedish company IKEA (products), the British
       supermarket chain Tesco (channels), the Dutch beer brewer Heineken (markets)
       and the Canadian company Cirque du Soleil (new product, market and channel).
    2. The External Network ability: the ability to organise different parties in the
       environment of the business and to realise common innovations. The external
       network ability is characterised by the viewing from different perspectives outside
       the organisation. Innovation is not exclusively an internal matter, intensive
       cooperation with external parties is crucial too. An example of this is so-called
       “co-creation” at Lego. Children (customer perspective) are actively involved in
       the development of new Lego “boxes of building blocks”. The children work with
       R&D over the internet (technological perspective), Sales & Marketing (market
       perspective) and Operations (business process perspective). The top three best-
       selling Lego boxes of building blocks have come about in this way. Successful
       cooperation requires structures and governance to be set up between the company
       and the external parties. These new structures are called Eco-systems and are
       mainly aimed at innovating collectively. Twente Care Services for example, the
       health care company of the Twente Hospitals Group, is also successful. It focuses
       on products and services that are closely associated with the key activities of the
       hospitals. The knowledge and experience deployed medically within the Twente
       Hospitals Group can be utilised with a consumer orientation through an eco-
       system of more than 30 different parties.
    3. The Integral Governance ability: the ability to adapt the business model (structure
       and culture) to the development and realisation of the new value proposition.
       Characteristic is the viewing from different perspectives within the organisation.
       Involved in an innovation are not just R&D for example, but also other business
       functions such as Sales & Marketing and Operations. It is necessary for the
       business model and the governance methodology to support the desired flexibility
       and integration. Thanks to such a “Business Service Oriented” business model
       EasyGroup (EasyJet, EasyMobile, etc) has proved able to adapt quickly and easily
       to the different value propositions in the market, without losing the integral
       governance.
    4. The Operational Acceleration ability: the ability to adapt processes, (technical)
       resources and competences to the development and realisation of the new value
       proposition. The concept of “Lean Solutions” shows how processes and
       technology fit seamlessly together as modules in different assemblies. A business
       with a huge operational acceleration ability is the American media group CNN.

The current and desired ability to innovate can be determined for each domain for a
company.




Author: Koen Klokgieters, VP Business Innovation Capgemini Consulting Published: 2007   9
Business Innovation & Innovation Management



       External Network                                     Corporate Strategic
           Capability                                       Capability




                          Desired

                                                    Current




     Operational Acceleration                           Integral Control
        Capability                                           Capability


Figure 2. Current and desired ability to innovate

There are specific methods and tools available for each domain for developing and
professionalising the ability to innovate:
     The Corporate strategic ability to innovate:
           o Systematic Innovation Method (SIM): the method provides support in the
               development of new products and services.
           o Channel Management Innovation: the method provides support in the
               development of new distribution and communication channels.
           o Blue Ocean Strategy: the method provides support in the development of
               new markets.
           o Consumer Experience Transformation: the method provides support in the
               creation and fulfilment of the overall experience that the customer has
               with the organisation and the new value proposition.
     The External Network ability:
           o Eco-system Development: the method provides support in the setting up
               and professionalising of (external) networks aimed at common innovation.
           o Reputation Management: the method provides support in giving insight
               into what impact innovations have on the creation of an image of the
               company.
     The Integral Governance ability:
           o Business Service Oriented Innovation: the method provides support in the
               structuring of the business model to adopt innovation quickly and to
               integrate it with the existing business and IT architecture.
           o Innovation Benefit Logic: the method provides support in making clear
               what benefits the innovation has for customers, operating results and
               society.
     The Operational Acceleration ability:



Author: Koen Klokgieters, VP Business Innovation Capgemini Consulting Published: 2007   10
Business Innovation & Innovation Management


            o Lean Solutions/TRIZ: the method provides support in the innovation of the
              business processes.
            o Rapid Unified Process: the method provides support in the innovation of
              the IT systems.
            o Social Innovation: the method provides support in the enhancement of the
              ability to innovate amongst directors, managers and staff.


3.5    The role of Innovation Management
Innovation Management directs the innovation ambition and the ability to innovate. The
challenge for the management in the company is to find a good balance between the
innovation ambition and the deployment of the ability to innovate of the business. What
evaluations does the management have to carry out?
    1. Evaluation of the priorities, derived from current business objectives versus future
       business ambition. Line management will in particular focus on the achievement
       of current business objectives. Additional innovation objectives can sometimes
       have a negative impact on the realisation of current desired performance.
    2. The method of integral coordination between the deployment and development of
       the four innovation domains. A company can for example experience a huge
       development in the generation of product innovations, but lag behind in the area
       of business process innovation. Lack of integral coordination will lead to all kinds
       of forms of loss: excessive costs, too long time-to-market, undesirable experience
       of the innovation amongst customers, etc.
    3. The method of facilitating the innovation process. Various innovation methods
       have been indicated for each domain. Which methods and associated tools are
       used and how are they applied in the business-specific situation?
    4. The method of managing the risks. The innovation process is a development
       process with many uncertainties. The directors of the company want to have
       insight into the risks and a way of working to be able to manage the risks.

Innovation Management = the taking of these decisions (or the management of the
decision-making) and the facilitation of their implementation.




Author: Koen Klokgieters, VP Business Innovation Capgemini Consulting Published: 2007   11
Business Innovation & Innovation Management


Chapter 4.            How do you implement Innovation Management successfully?

4.1     The management of innovation for a company is first and foremost a
        learning and development process.
There is no so-called “Soldier’s Bible” that gives an answer to every question in every
specific situation. There is also no short-term success formula: “Instant Innovation in 10
steps”. The key to success is a combination of the (continuing) search for relevant details
(which is hard work): on the one hand continuing to experiment (in search of creativity)
and on the other systematising (using methods and tools).
The innovation process is a development process, for staff and business partners. The
success of innovation is systematically increased by a good learning and experimenting
environment.

4.2     The Innovation Growth model gives insight into the different growth stages
The innovation growth model gives insight into the various stages of the innovation
management development process. We can distinguish four growth phases in innovation
management. Each phase has its own characteristics (ambition level and ability to
innovate) and challenges for growing to the next phase. For a company it is important to
assess which phase it is in. From there a company can see which initiatives will lead to
further professionalisation and growth.


      High




                      Framework for
                                                                              Eco-
                      Idea generation
                                                                              Innovation




Ambition level of                                               Co-Creation
Business Innovation



                                                 Program
                                                 Innovation



                                  Adhoc
      Low                         Innovation




                            Low                                                High

                                               Innovation capability
                                               of the organization                Framework for
                                                                                  Idea implementation


Figure 3. Innovation Growth model




Author: Koen Klokgieters, VP Business Innovation Capgemini Consulting Published: 2007                   12
Business Innovation & Innovation Management


4.3     The four growth phases of Innovation Management:

Phase 1. Ad hoc Innovation
A company in the first phase of the growth model initiates innovation projects on an ad
hoc basis. Creation and realisation of new ideas usually arise from a single perspective
within the organisation. For example from the perspective of the R&D department. There
are no parties from outside the organisation directly involved with the initiatives. The
innovation initiatives have no mutual coherence and the different parties within the
organisation often do not even know which initiatives have been started by the other
parties, let alone what influence they have on one another. If a business case has been
made, it relates only to an individual initiative. There is no standardised method (or tools)
for supporting the initiative. Many initiatives are aimed at product or process innovation.
The impact on the value proposition is relatively small.

The challenge in this phase consists of connecting and integrating the individual
initiatives and sharing knowledge and experience between the different departments and
units.

Phase 2. Programme Innovation
In the second phase the company is in a position to manage the innovation projects
integrally. An Innovation Projects Office has been set up that is responsible for project-
transcending functions. Apart from monitoring and reporting, the bureau standardises
innovation methods, tools and work processes. Knowledge and experience are exchanged
amongst one another and facilitated. Everybody works in the same way with an
(integrated) business case and integral decision-making takes place. The initiatives are
tested for a minimum number of success criteria at a so-called “tollgate session”. Apart
from product and process innovations more complex initiatives arise, such as channel
innovation and innovations in the business model. The impact on the value proposition
will be greater than in the first phase.

The challenge in this phase consists of attracting parties from outside the organisation to
develop new initiatives together.

Phase 3. Co-creation
In the third phase a company, in addition to the multidisciplinary innovation, actively
takes initiatives to participate with possible external parties. Viewing from different
perspectives from outside the organisation enriches the initiative. The Innovation Projects
Office will play an active role in the search for and selection of different external parties.
Representatives of the most important external parties take their place on an External
Innovation Board. This board serves as a sounding board and advisory group for the
innovation initiatives.

The new innovation initiatives become increasingly complex in nature. For example, new
product and channel initiatives are carried out at the same time. And in some cases
completely new markets are created. The organisation is in a position to manage the




Author: Koen Klokgieters, VP Business Innovation Capgemini Consulting Published: 2007      13
Business Innovation & Innovation Management


consequences for the internal organisation (business model and operation). The impact on
the value proposition is relatively great.

The challenge in this phase consists of learning to set up and maintain eco-systems, in
which new innovations take place systematically.

Phase 4. Eco-innovation
In the fourth phase a so-called “Eco-system” is set up. An Eco-system is a strong network
of parties from inside and outside the organisation. These parties systematically start up
new innovation initiatives for the short and long term. The company can form part of
several eco-systems in parallel. Within each eco-system the role of the company and the
interpretation of this role is clear. The Innovation Platform (Innovation Programme
Office with a virtual skin around it) facilitates the innovation programme at strategic,
tactical and operational level.

The result is a systematic method of (complex) innovation. Depending on the role and the
involvement that the company has in the eco-system, the internal organisation (business
model and operation) will be relatively easy to adapt. The impact on the value
proposition is structurally great.

The challenge in this phase consists of the maximum utilisation of the specific roles in
the different eco-systems.




Author: Koen Klokgieters, VP Business Innovation Capgemini Consulting Published: 2007      14
Business Innovation & Innovation Management


4.4   How does a business grow from one phase to the next?
To manage and professionalise innovation it is important to make a road map. The road
map shows where we are in the growth process (which phase) at the moment and which
way we want to go to grow (new phase).

    1. The first step: to find out where we are (Innovation Status). On the basis of an
       Innovation scan we can determine the position of the company in the growth
       model. The outcome of the scan gives an answer to the current ambition level and
       the ability to innovate in the four different domains. Insight is also given into the
       experiences with innovations so far and the experience of the staff of the
       organisation.
    2. The second step: the determination of the desired ambition level (Innovation
       Strategy). In this step the framework for the creation and the generation of ideas is
       laid down (see section 3.2).
    3. The third step: the innovation ambition level translated into the consequences for
       the ability to innovate in the four domains (see section 3.3). Also indicated is how
       the growth to the next phase is managed (Innovation Management).
    4. The final step: the definition and planning of the necessary activities that are
       needed actually to achieve the next phase in the growth model (Innovation
       Implementation).



                                                          Innovation
                        Current
    Innovation Scan     Position
                                                          Status
                        growthmodel



                                                                       Innovation
                                       Framework                       Strategy
                 Determine desired     Idea
                 Ambition level        generation



                                                                                Innovation
                                                 Framework                      Management
                         Determine growth        Idea
                         Innovation capability   implementation



                                                                                      Innovation
                                                                                      Implementation
                                 Define Innovation        Innovation
                                 Implementation plan      Implementation plan




Figure 4. Innovation Transformation Plan




Author: Koen Klokgieters, VP Business Innovation Capgemini Consulting Published: 2007                  15
Business Innovation & Innovation Management



Chapter 5.      The role of Capgemini

Capgemini can act as a partner in its customer‟s Eco-system. Capgemini‟s role is not a
one-man show in which it controls the customer‟s innovation process. It is actually about
intensive cooperation between Capgemini and the customer. Capgemini contributes the
necessary complementary knowledge, experience and methodology to the
professionalisation of the innovation.

Capgemini is a partner in:
    Coming out with and transferring specific market knowledge (Market analysis).
    Coming out with and transferring innovation methods and tools (Innovation
      Approach).
    Support in innovation transformation programmes (Innovation Programme
      Management and implementation).
    Support in management responsibility (Interim Innovation Management).
    Support in specific innovation (behaviour) intervention and development
      techniques (Accelerated Design Centers, Advanced Development Centers,
      Innovate Centers).

The aim is to enable the customer to grow effectively and efficiently in terms of
operating results and personal development of the staff of the customer organisation.


For additional information please contact:

Drs. Koen Klokgieters CPIM
VP Business Innovation Capgemini Consulting
Mobile: +31651123259
Blog: www.koenklokgieters-english.blogspot.com
Mailto: koen.klokgieters@capgemini.com




Author: Koen Klokgieters, VP Business Innovation Capgemini Consulting Published: 2007   16

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Business Innovation and Innovation Management Uk Version

  • 1. Business Innovation & Innovation Management The vision of Business Innovation and Innovation Management - Introduction - Standing still is the fastest way to go backwards. For many organisations change is the only option, while this is not always what the people working there want. Many external factors make change necessary however. The behaviour of customers and the way in which they experience products and services is subject to constant change. In the eyes of the customer products that the company put on the market and were highly successful are becoming obsolete increasingly quickly. The quality of the product or the service is no longer the only thing that customers look at. Issues such as service, price, accessibility of the organisation and the experience the customer has when buying and using the product are becoming increasingly important. This full set of properties is the value proposition of a company. The changes in the behaviour and experience of the customer makes organisations adjust this value proposition constantly. The adjustment of the value proposition to the new wishes of the customer is not sufficient however. To gain the preference of the customer organisations must be distinctive in the offering of a value proposition compared with the competition. A customer ultimately chooses those products and services whose full set of properties is the best match for his or her wish at the time. The credo therefore is: constantly in search of innovation of the value proposition. For the company this means constant innovation of the business. Many companies say they are working on Business Innovation, but are still struggling with a number of outstanding issues:  What does Business Innovation mean?  Why is it that so few companies are successful in Business Innovation?  Is there an approach that can be successful?  And how do you implement such an approach? In its vision of Innovation Management Capgemini gives an answer to these questions. Author: Koen Klokgieters, VP Business Innovation Capgemini Consulting Published: 2007 1
  • 2. Business Innovation & Innovation Management Chapter 1. What is Business Innovation? Business Innovation is the development and implementation of a unique added value that customers adopt. The more unique and the greater the edge on the competitor (at the time of a launch), the greater the chance of success among customers, all the better the operating results. When does the success of Business Innovation become visible for a business with a commercial objective? With more customers, higher turnover, bigger margins and higher profits. For non-profit organisations (such as hospitals) its success is expressed in greater return for the target group with the same available budget. Even if the success is measured in different ways, Business Innovation always has the same aim: greater return for the business and its environment through innovation. 1.1 What determines the distinctiveness of a company? Companies with a strong history often have an area in which they are outstandingly good. For example, by being distinctive with their product or technology. Miele is a good example of this. Other businesses go for strong customer service (Singapore Airlines), accessibility (Dell computers), experience (IKEA) or a low price (Aldi). These businesses have chosen a recognisably outstanding area for customers in which they want to be unique. A continuing behaviour analysis of customers enables the company to improve its current business and in this way stay ahead of the competition. Business Innovation is aimed at the realisation of an edge in business. How can we achieve such an edge?  Through the successful application of new technology in products or services  Through insight into changing legislation (political climate) and being able to respond to it  Through insight into the changing economic and social climate and being able to respond to it  Through insight into changing behaviour of people and being able to respond to it To what degree can a company predict the behaviour of customers? And how quickly can it respond to this? These two aspects determine the distinctiveness of the company. Author: Koen Klokgieters, VP Business Innovation Capgemini Consulting Published: 2007 2
  • 3. Business Innovation & Innovation Management 1.2 How can a company prepare itself for the new developments and the behaviour of customers? A company can determine or reinforce distinctiveness on the basis of empirical data. Except that it gives absolutely no guarantee that customers will continue to value the current added value in the same way in the future. A company must therefore be able to scan and to analyse trends and developments and then translate them into a possibly new value proposition. Trends and the associated behaviour of customers can be subdivided into:  Mega Trends, which are long-term (15 to 30 years), often social trends, fed by economic, technological, political and social developments. Examples include the growing average purchasing power per family, humanisation of the technology, regionalisation and ageing.  Consumer Trends, which have a medium-term cycle (three to ten years). They are developments that are already actually visible in the media and are translated into marketing messages. Examples include: the need for growth in risk control (everything can be insured), security (we will look after your family), safety (food and drink standards) and authenticity (regional products). Consumer Trends help to explain the behaviour of customers and the way in which their choices are determined.  Market Trends, which are short-term developments (one to three years). These short-term trends determine the reaction of companies to the above trends and are often market sector-specific. Examples include: growth of service counters in supermarkets and the product integration of camera, mobile telephone and internet in the telecoms market. 1.3 On which areas of an organisation does the translation of trends have an impact? A company will analyse trends and translate them into concrete innovation initiatives. These initiatives can have an impact on areas of an organisation that focus on both external and internal factors.  The areas that focus on external factors are: product/service development, innovation of distribution channels, setting up of new market (segments). These innovation initiatives have a direct impact on the customer‟s experience.  The areas that focus on internal factors are: the business model and the organisational setup, the business processes, the (technological) resources and new competences of managers and staff. These innovation initiatives mostly have an indirect impact on the customer‟s experience, but are no less essential for the success of innovations. Initiatives involving external factors on the one hand and internal factors on the other have mutual influence on one another. For example, the launch of HDTV during the World Cup in the summer of 2006: an innovative product was put on the market while the internal and external factors were out of sync with one another. For a successful Business Innovation the internal and external factors have to be carried out integrated. Author: Koen Klokgieters, VP Business Innovation Capgemini Consulting Published: 2007 3
  • 4. Business Innovation & Innovation Management Business Innovation = the development and implementation of a unique added value that is adopted by customers, by means of an integrated change of internal and external factors. 1.4 Innovation in a public domain arises from a different need In the public domain (such as the local authority) it is about innovations that lead to greater value for the same money (read: budget). The driver does not therefore come directly from competitors, but from greater social value for less social money. Here too innovation is aimed at the creation of added value through a combination of new externally and internally oriented factors. An innovation example from the public domain is the integrated electronic service provision at municipalities: the citizen can now – in addition to the familiar counter – get help over the internet. Because of innovation in new channels the citizen can himself decide how and when he wishes to use services of the municipality. Investing in new technology brings the municipality a gain in time and cost savings. In short: greater value for lower structural cost. Author: Koen Klokgieters, VP Business Innovation Capgemini Consulting Published: 2007 4
  • 5. Business Innovation & Innovation Management Chapter 2. Why are so few companies successful in Business Innovation? 2.1 Growing complexity in correlation between trends and developments So far companies have in particular followed those specific trends and developments that are an extension of their current value proposition. KPN for example has for a very long time concentrated on monitoring and helping to develop above all technological (telephony) developments and translating them for the Dutch market. It is clear that this will no longer be enough for KPN. The new strategy is aimed at the provision of communication, information and entertainment services. For this all the relevant Mega, Consumer and Market trends must be monitored and analysed as they relate to one another. This is also called „viewing from different perspectives‟. Too often many businesses are still viewing from a single perspective. They have no workable method, tools or the right competences at their disposal to be able to spot these trends as they relate to one another and then to analyse them. Let alone translate them into innovations in their value proposition. 2.2 Growing unpredictability in consumer behaviour If consumers display stable buying behaviour and are easy to classify in customer segments, the company can make a clear delineation at which the innovation is to be aimed. Volvo and Saab for example have succeeded in appealing to a clear target group with a safe, luxury passenger car. Customers have therefore remained loyal to these brands for a very long time. Capriciousness characterises the behaviour of the consumer of now and the future. Other forms of living together, communicating, consuming and experiencing clearly have their repercussions. The modern consumer wants an appeal to his DNA, the “genetic blueprint” of his behaviour. The company must be capable of understanding this DNA and translating it into a new value proposition. The chances of the company‟s survival are determined by two crucial factors: insight into the specific customer and the speed of reaction to the constant changes within the target groups. Capgemini‟s research Trends in Retail (2006) shows that only a few companies have proved successful in this. 2.3 Obsolete organisational structures and governance models The growth of companies in recent years has mainly been realised through acquisitions. This has led to a structure of relatively autonomous business units, each with their own Research & Development, marketing, production, etc. The units are aimed at achieving their own result, they are first and foremost product-oriented and there is no flexibility in the cost structure. Growth and expansion are achieved by copying a business unit with a complex, expensive and inflexible structure. From the position of the central company this leads to suboptimisation of the operating result and an uphill struggle to adapt the value proposition quickly. For these businesses innovating mainly means investing with a high risk factor. Many innovations have been and are still technology (and product) driven. Converting new technology into market products requires research. This research takes place in separate organisational departments such as Research & Development (R&D). Research costs time and money. And research is often driven by budget rather than business cases, in Author: Koen Klokgieters, VP Business Innovation Capgemini Consulting Published: 2007 5
  • 6. Business Innovation & Innovation Management which costs and revenues are related to one another. Improvements of the innovation in R&D environments are often aimed at shortening that lead time, reducing the costs and avoiding the risks. To make the revenues from the innovation understandable there is a need within the business unit to work with other departments such as Sales and Marketing. Differences of insight in the area of control, allocation of costs and income, dealing with risks, etc, do not fit within the existing structures and governance models. Businesses do not know how they can transform in a controlled manner into new structures and management that do fit in with a flexible manner of innovation. The research “Erasmus Competition and Innovation Monitor 2005” shows that in innovative businesses 25% of the innovation success is determined by R&D investments and 75% by managing cleverly and organising innovatively. 2.4 Undeveloped competences in fossilised business culture Changes in the strategy and structure of a company require changes in the culture of the business. In one organisational structure a specific business culture will have a strengthening effect and in another a paralysing one. Look at a business where technological knowledge of things and 120% quality experience were preconditions for performing (think of the old Utilities businesses). A technocratic organisational culture of hierarchy, protocols, standards, more matter than people-oriented attitude, will have a strengthening effect here. An organisational culture that is characterised by chaotic creativity, scope to keep reinventing the wheel and actually aimed at behaviour of people, has a paralysing effect. A complex change of competences and behaviour of staff is necessary. A company can develop a new innovation structure (for example strong cooperation between the R&D departments of the business units), but the differences in the organisational cultures often appear to prevent changes. The success of transformation is an interaction between changes in the business strategy, the organisational structure and the organisational culture. This is not an obvious change competence that businesses have in house. Yet the logic of the new innovation structure must be in keeping with the new logic of the feeling. 2.5 Is there an approach that increases the success of Business Innovation? Where are we as a company in the area of innovation? Do we have a picture of our innovation ambition? What capacities do we have in house to be able to innovate? How can we increase our ability to innovate? And how can we controllably make concrete steps in innovation? Innovation Management, a Capgemini approach, provides the answers. Author: Koen Klokgieters, VP Business Innovation Capgemini Consulting Published: 2007 6
  • 7. Business Innovation & Innovation Management Chapter 3. Innovation Management, a successful approach! 3.1 Knowing where you are as a company Companies embark upon innovation initiatives with a great deal of energy and a high ambition level. It is not unusual for the enthusiasm to fade as time goes by. The company is often unaware of the success factors of innovation and of its own ability to define the preconditions for success. An example from the Utilities sector … In the Utilities sector in the Netherlands all the major electricity companies had sky-high ambition levels when first exposed to market forces. They thought that they had after all built up a good relationship with several million customers over the years. How easy would it be to offer various new home-related products and services to loyal customers and so develop new business. In practice these companies seem to have their hands full innovating their existing services in a way that is in line with the market. For example, simply being accessible by telephone for queries about the electricity bill. Nearly all the new initiatives directed at consumers have been halted, despite huge investments. These businesses had too high a Business Innovation ambition level in relation to their ability to innovate. Success is determined by awareness of a realistic ambition level in combination with self-knowledge of your ability to innovate. 3.2 Choosing the ambition level in Business Innovation A company wants to innovate to bring about a distinctiveness for the customer. Innovation can be translated into the innovation of various factors. The result of an innovation can be a new product or a new channel, a new market or a combination of these factors. The value proposition for the customer increases as a consequence of an innovation in the order of product, channel and market level. The impact will increase exponentially if the innovation is applicable at several levels at the same time. We call this a “Blue Ocean” development. High “Blue Ocean” development Market development Impact on the Value proposition Channel developent Product Service development Low Low Complexity High Figure 1. The Business Innovation Ambition level Author: Koen Klokgieters, VP Business Innovation Capgemini Consulting Published: 2007 7
  • 8. Business Innovation & Innovation Management 3.3 Methods and tools for determining the correct ambition level The ambition level of innovation is the framework within which the process of creation and the generation of ideas will take place. This process is directed in part by the outcomes of the impact analysis. The company analyses the different trends and the strategic choices for dealing with this impact. The trends give an insight into the social developments, into what the customers want in the short and long term and into how this will influence their behaviour. The company needs a method and tool to spot trends and to analyse the impact: 1. With the Innovation Radar Screen the impact is made business-specific. Trends are related to the estimated change on the measuring instrument. The organisation can use this to manage the results (for example the Balance Scorecard instrument). 2. With the Strategic Innovation Scenario planning method the impact of the trends can be translated into possibly different innovation scenarios. A trend indicates a likely development. Of course a number of key uncertainties remain in a market, the outcome of which is difficult to gauge. Think of the development of the economic climate (rich years versus lean years). The actual outcome of this key uncertainty will have a major impact on the ultimate development of the innovation. A low price of a new product at a time of lean years for example will be very important. In the rich years on the other hand service and quality have a bigger part to play. An innovation scenario is built up on the basis of possible outcomes of key uncertainties. These uncertainties have a major impact on the operating result of the company. The planning method enables a company to cluster relevant trends for each scenario and to translate them into the behaviour of the consumers. The expected reaction of the businesses in the market sector can be indicated for each scenario. With this insight a company can decide for which scenarios adjustments are needed in the current value proposition. In this way concrete innovation initiatives, such as product, channel and market innovations can be defined. The overall review of the scenarios and the strategic choices of the company determines the ambition level for innovation. 3.4 A realistic picture of the company’s ability to innovate The realisation of an innovation ambition level revolves around the ability to translate the desired value proposition in concrete terms for the customer. The success of innovation is not determined by the innovators in the organisation. What matters is the degree to which the customers adopt the new value proposition! A company‟s ability to innovate is divided into four different (innovation) domains. Each domain has specific characteristics and makes its own contribution to the realisation of the innovation. The four domains are: 1. The Corporate strategic ability to innovate: the ability to translate the trends and developments into a new value proposition. This is a matter of signalling trends, building scenarios, gauging customer behaviour and above all translating all of this into product, channel and market features. It is an interaction of detailed knowledge and analysis in combination with the feel for customers and the market. Author: Koen Klokgieters, VP Business Innovation Capgemini Consulting Published: 2007 8
  • 9. Business Innovation & Innovation Management This ability is called the “entrepreneurial gut feeling” of the organisation. Examples of companies that are able to translate trends successfully into new value propositions are the Swedish company IKEA (products), the British supermarket chain Tesco (channels), the Dutch beer brewer Heineken (markets) and the Canadian company Cirque du Soleil (new product, market and channel). 2. The External Network ability: the ability to organise different parties in the environment of the business and to realise common innovations. The external network ability is characterised by the viewing from different perspectives outside the organisation. Innovation is not exclusively an internal matter, intensive cooperation with external parties is crucial too. An example of this is so-called “co-creation” at Lego. Children (customer perspective) are actively involved in the development of new Lego “boxes of building blocks”. The children work with R&D over the internet (technological perspective), Sales & Marketing (market perspective) and Operations (business process perspective). The top three best- selling Lego boxes of building blocks have come about in this way. Successful cooperation requires structures and governance to be set up between the company and the external parties. These new structures are called Eco-systems and are mainly aimed at innovating collectively. Twente Care Services for example, the health care company of the Twente Hospitals Group, is also successful. It focuses on products and services that are closely associated with the key activities of the hospitals. The knowledge and experience deployed medically within the Twente Hospitals Group can be utilised with a consumer orientation through an eco- system of more than 30 different parties. 3. The Integral Governance ability: the ability to adapt the business model (structure and culture) to the development and realisation of the new value proposition. Characteristic is the viewing from different perspectives within the organisation. Involved in an innovation are not just R&D for example, but also other business functions such as Sales & Marketing and Operations. It is necessary for the business model and the governance methodology to support the desired flexibility and integration. Thanks to such a “Business Service Oriented” business model EasyGroup (EasyJet, EasyMobile, etc) has proved able to adapt quickly and easily to the different value propositions in the market, without losing the integral governance. 4. The Operational Acceleration ability: the ability to adapt processes, (technical) resources and competences to the development and realisation of the new value proposition. The concept of “Lean Solutions” shows how processes and technology fit seamlessly together as modules in different assemblies. A business with a huge operational acceleration ability is the American media group CNN. The current and desired ability to innovate can be determined for each domain for a company. Author: Koen Klokgieters, VP Business Innovation Capgemini Consulting Published: 2007 9
  • 10. Business Innovation & Innovation Management External Network Corporate Strategic Capability Capability Desired Current Operational Acceleration Integral Control Capability Capability Figure 2. Current and desired ability to innovate There are specific methods and tools available for each domain for developing and professionalising the ability to innovate:  The Corporate strategic ability to innovate: o Systematic Innovation Method (SIM): the method provides support in the development of new products and services. o Channel Management Innovation: the method provides support in the development of new distribution and communication channels. o Blue Ocean Strategy: the method provides support in the development of new markets. o Consumer Experience Transformation: the method provides support in the creation and fulfilment of the overall experience that the customer has with the organisation and the new value proposition.  The External Network ability: o Eco-system Development: the method provides support in the setting up and professionalising of (external) networks aimed at common innovation. o Reputation Management: the method provides support in giving insight into what impact innovations have on the creation of an image of the company.  The Integral Governance ability: o Business Service Oriented Innovation: the method provides support in the structuring of the business model to adopt innovation quickly and to integrate it with the existing business and IT architecture. o Innovation Benefit Logic: the method provides support in making clear what benefits the innovation has for customers, operating results and society.  The Operational Acceleration ability: Author: Koen Klokgieters, VP Business Innovation Capgemini Consulting Published: 2007 10
  • 11. Business Innovation & Innovation Management o Lean Solutions/TRIZ: the method provides support in the innovation of the business processes. o Rapid Unified Process: the method provides support in the innovation of the IT systems. o Social Innovation: the method provides support in the enhancement of the ability to innovate amongst directors, managers and staff. 3.5 The role of Innovation Management Innovation Management directs the innovation ambition and the ability to innovate. The challenge for the management in the company is to find a good balance between the innovation ambition and the deployment of the ability to innovate of the business. What evaluations does the management have to carry out? 1. Evaluation of the priorities, derived from current business objectives versus future business ambition. Line management will in particular focus on the achievement of current business objectives. Additional innovation objectives can sometimes have a negative impact on the realisation of current desired performance. 2. The method of integral coordination between the deployment and development of the four innovation domains. A company can for example experience a huge development in the generation of product innovations, but lag behind in the area of business process innovation. Lack of integral coordination will lead to all kinds of forms of loss: excessive costs, too long time-to-market, undesirable experience of the innovation amongst customers, etc. 3. The method of facilitating the innovation process. Various innovation methods have been indicated for each domain. Which methods and associated tools are used and how are they applied in the business-specific situation? 4. The method of managing the risks. The innovation process is a development process with many uncertainties. The directors of the company want to have insight into the risks and a way of working to be able to manage the risks. Innovation Management = the taking of these decisions (or the management of the decision-making) and the facilitation of their implementation. Author: Koen Klokgieters, VP Business Innovation Capgemini Consulting Published: 2007 11
  • 12. Business Innovation & Innovation Management Chapter 4. How do you implement Innovation Management successfully? 4.1 The management of innovation for a company is first and foremost a learning and development process. There is no so-called “Soldier’s Bible” that gives an answer to every question in every specific situation. There is also no short-term success formula: “Instant Innovation in 10 steps”. The key to success is a combination of the (continuing) search for relevant details (which is hard work): on the one hand continuing to experiment (in search of creativity) and on the other systematising (using methods and tools). The innovation process is a development process, for staff and business partners. The success of innovation is systematically increased by a good learning and experimenting environment. 4.2 The Innovation Growth model gives insight into the different growth stages The innovation growth model gives insight into the various stages of the innovation management development process. We can distinguish four growth phases in innovation management. Each phase has its own characteristics (ambition level and ability to innovate) and challenges for growing to the next phase. For a company it is important to assess which phase it is in. From there a company can see which initiatives will lead to further professionalisation and growth. High Framework for Eco- Idea generation Innovation Ambition level of Co-Creation Business Innovation Program Innovation Adhoc Low Innovation Low High Innovation capability of the organization Framework for Idea implementation Figure 3. Innovation Growth model Author: Koen Klokgieters, VP Business Innovation Capgemini Consulting Published: 2007 12
  • 13. Business Innovation & Innovation Management 4.3 The four growth phases of Innovation Management: Phase 1. Ad hoc Innovation A company in the first phase of the growth model initiates innovation projects on an ad hoc basis. Creation and realisation of new ideas usually arise from a single perspective within the organisation. For example from the perspective of the R&D department. There are no parties from outside the organisation directly involved with the initiatives. The innovation initiatives have no mutual coherence and the different parties within the organisation often do not even know which initiatives have been started by the other parties, let alone what influence they have on one another. If a business case has been made, it relates only to an individual initiative. There is no standardised method (or tools) for supporting the initiative. Many initiatives are aimed at product or process innovation. The impact on the value proposition is relatively small. The challenge in this phase consists of connecting and integrating the individual initiatives and sharing knowledge and experience between the different departments and units. Phase 2. Programme Innovation In the second phase the company is in a position to manage the innovation projects integrally. An Innovation Projects Office has been set up that is responsible for project- transcending functions. Apart from monitoring and reporting, the bureau standardises innovation methods, tools and work processes. Knowledge and experience are exchanged amongst one another and facilitated. Everybody works in the same way with an (integrated) business case and integral decision-making takes place. The initiatives are tested for a minimum number of success criteria at a so-called “tollgate session”. Apart from product and process innovations more complex initiatives arise, such as channel innovation and innovations in the business model. The impact on the value proposition will be greater than in the first phase. The challenge in this phase consists of attracting parties from outside the organisation to develop new initiatives together. Phase 3. Co-creation In the third phase a company, in addition to the multidisciplinary innovation, actively takes initiatives to participate with possible external parties. Viewing from different perspectives from outside the organisation enriches the initiative. The Innovation Projects Office will play an active role in the search for and selection of different external parties. Representatives of the most important external parties take their place on an External Innovation Board. This board serves as a sounding board and advisory group for the innovation initiatives. The new innovation initiatives become increasingly complex in nature. For example, new product and channel initiatives are carried out at the same time. And in some cases completely new markets are created. The organisation is in a position to manage the Author: Koen Klokgieters, VP Business Innovation Capgemini Consulting Published: 2007 13
  • 14. Business Innovation & Innovation Management consequences for the internal organisation (business model and operation). The impact on the value proposition is relatively great. The challenge in this phase consists of learning to set up and maintain eco-systems, in which new innovations take place systematically. Phase 4. Eco-innovation In the fourth phase a so-called “Eco-system” is set up. An Eco-system is a strong network of parties from inside and outside the organisation. These parties systematically start up new innovation initiatives for the short and long term. The company can form part of several eco-systems in parallel. Within each eco-system the role of the company and the interpretation of this role is clear. The Innovation Platform (Innovation Programme Office with a virtual skin around it) facilitates the innovation programme at strategic, tactical and operational level. The result is a systematic method of (complex) innovation. Depending on the role and the involvement that the company has in the eco-system, the internal organisation (business model and operation) will be relatively easy to adapt. The impact on the value proposition is structurally great. The challenge in this phase consists of the maximum utilisation of the specific roles in the different eco-systems. Author: Koen Klokgieters, VP Business Innovation Capgemini Consulting Published: 2007 14
  • 15. Business Innovation & Innovation Management 4.4 How does a business grow from one phase to the next? To manage and professionalise innovation it is important to make a road map. The road map shows where we are in the growth process (which phase) at the moment and which way we want to go to grow (new phase). 1. The first step: to find out where we are (Innovation Status). On the basis of an Innovation scan we can determine the position of the company in the growth model. The outcome of the scan gives an answer to the current ambition level and the ability to innovate in the four different domains. Insight is also given into the experiences with innovations so far and the experience of the staff of the organisation. 2. The second step: the determination of the desired ambition level (Innovation Strategy). In this step the framework for the creation and the generation of ideas is laid down (see section 3.2). 3. The third step: the innovation ambition level translated into the consequences for the ability to innovate in the four domains (see section 3.3). Also indicated is how the growth to the next phase is managed (Innovation Management). 4. The final step: the definition and planning of the necessary activities that are needed actually to achieve the next phase in the growth model (Innovation Implementation). Innovation Current Innovation Scan Position Status growthmodel Innovation Framework Strategy Determine desired Idea Ambition level generation Innovation Framework Management Determine growth Idea Innovation capability implementation Innovation Implementation Define Innovation Innovation Implementation plan Implementation plan Figure 4. Innovation Transformation Plan Author: Koen Klokgieters, VP Business Innovation Capgemini Consulting Published: 2007 15
  • 16. Business Innovation & Innovation Management Chapter 5. The role of Capgemini Capgemini can act as a partner in its customer‟s Eco-system. Capgemini‟s role is not a one-man show in which it controls the customer‟s innovation process. It is actually about intensive cooperation between Capgemini and the customer. Capgemini contributes the necessary complementary knowledge, experience and methodology to the professionalisation of the innovation. Capgemini is a partner in:  Coming out with and transferring specific market knowledge (Market analysis).  Coming out with and transferring innovation methods and tools (Innovation Approach).  Support in innovation transformation programmes (Innovation Programme Management and implementation).  Support in management responsibility (Interim Innovation Management).  Support in specific innovation (behaviour) intervention and development techniques (Accelerated Design Centers, Advanced Development Centers, Innovate Centers). The aim is to enable the customer to grow effectively and efficiently in terms of operating results and personal development of the staff of the customer organisation. For additional information please contact: Drs. Koen Klokgieters CPIM VP Business Innovation Capgemini Consulting Mobile: +31651123259 Blog: www.koenklokgieters-english.blogspot.com Mailto: koen.klokgieters@capgemini.com Author: Koen Klokgieters, VP Business Innovation Capgemini Consulting Published: 2007 16