Top 10 Companies The Market Is Rewarding For Their Unique Innovations

Market pressures can drive companies to innovate, but corporate innovation can also drive market value.  One of the biggest drivers in how the market rewards companies and drives their stock prices higher is how well they can sustain innovation and invest in that innovation.  Across industries, as companies successfully innovate, valuations tend to move higher.  By identifying the companies the market is rewarding for continued success in innovation, we might be able to understand what kind of companies the market will reward in the future.

The GIM Institute (GIMI) and Valens Research worked together on this piece, leveraging GIMI’s deep insights in innovation and Valens knowledge of the UAFRS framework and corporate performance and valuation to identify great innovators who the market is rewarding for their innovation.  We’ve found 10 unique companies across the global corporate universe that are worthy of highlight.

We identified these companies using a multi-step process:

  • Identified firms with an excellent history of innovation, in products, processes, creating new markets and other areas.
  • Reviewed that universe of companies to see which companies have been able to generate value in terms of innovation based on their UAFRS-adjusted Return on Assets (ROA) being well above their required rate of returns for a multi-year period of time.
  • Verified those companies continued to invest in innovation and to grow, as identified by rapid investment in UAFRS-adjusted Asset growth into high ROA businesses.
  • Identified which of those companies the market was rewarding for their innovation with premium valuations.

To read more about GIMI and Valens and the processes we use to analyze companies, read at the bottom of the article.

 

Below are the 10 unique companies

 

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Spot-Frame-Learn: From Emerging Technologies to New Business Models

By: Dr. Irene Spitsberg, the Managing Director at InnoVentures LLC

 

Last week, I was co-presenting with Owens Corning’s innovation team at the IRI 2017 Annual Meeting in Boston. We shared a success story about building organization’s competency of integrating technology and business model innovation to drive business investment in new growth platforms and fast tracking ideas to market.

 

One example that we shared was commercializing disruptive material technology for 3D printing and achieving first commercial launch. The technology area itself resonated with many in the audience, and so did the team’s challenges in building the new business.

 

Reflecting on our story and the discussion it generated with the meeting participants, I wanted to share a few insights…

 

When I first met Anne Berthereau, R&D, VP of Emerging Technology and Composite Solutions Business at Owens Corning, her challenge was similar to that of many innovation executives: building her organization’s capacity to identify emerging technologies relevant to the company and engage business partners, turning them toward new growth platforms. Several key insights emerged from our discussion:

 

  • The biggest change doesn’t come from your own market (think of Kodak and Netflix). How do you extend your search across the industry boundary, yet stay focused and relevant?
  • There are many sources of information, but how do you know that you didn’t miss anything?
  • An idea is not enough. How can you quickly learn which technology presents a real business opportunity?
  • Information alone won’t make the business compelling. How do you engage business partners, ensuring their buy-in and commitment to adopting the opportunity?

 

Working with Anne and her team, we focused on overcoming three central challenges: 1) Establishing a robust capability to spot new technologies relevant to the company; 2) Using a strategic business context to create a frame for generating excitement with the business partners; 3) Building out capabilities for learning how selected technologies can be integrated into a business model (supported by the business).

 

Of the three challenges—spotting, framing and learning—the most attention is typically given to the first: finding new technologies that can become new growth ideas.

 

While this is by no means trivial, the actual challenge increases when fresh ideas must be turned into new business opportunities, then adopted by business units. This is especially true when new opportunities don’t fit neatly with the core business model, typically because the integration of new technologies: 1) Competes for R&D and business resources with established development programs; and 2) Requires learning new skills for succeeding with unfamiliar markets and new business models.

 

Our approach for spotting-framing-learning focused on:

 

  • Leveraging internal and expanding external networks to systematically uncover technologies and provide a forum for knowledge exchange.
  • Building an articulate framework to provide strategic context and ensure relevance and early engagement of business partners.
  • Adopting a structured learning process; this requires hypothesizing and building new business models, then quickly reducing uncertainties by staging business experiments and market tests.

 

With technologies framed within the language of the business, the innovation pipeline came to life and first successes emerged. One was the major international platform, advanced into an early commercial stage; the first product launch was achieved by leveraging strategic partnerships.

 

Reflecting on my earlier discussion with Anne, I think this Owens Corning’s example confirms that building organizational competency—learning how to succeed in unknown markets and with unfamiliar business models—is critical for shaping growth opportunities, and turning your portfolio into market success.

 

About the author:

Dr. Irene Spitsberg is the Managing Director at InnoVentures LLC, a strategic innovation company, where she works with Fortune 500’s as well as smaller companies on their toughest innovation strategy and execution problems.

Irene was the key strategist and driver in establishing Innovation Ventures Group at Kennametal, where she was responsible for multi-national cross-functional teams working on the development and commercialization of new offerings in adjacent and new spaces.  Her other roles included Director Global R&D Business with Cristal and a number of technology leadership positions with GE Aviation. Known for developing and implementing leading-edge innovation management frameworks and organizational solutions, Irene is a frequent speaker and author on the topics of Innovation management. Irene holds a PhD in Material Science, is the inventor or co-inventor for over 80 US patents, is a leading author of two featured papers in Research-Technology Management journal and is a recipient of NASA’s “Turns Goals into Reality” Award.

What the most innovative organisations are doing to speed up innovation?

The Road To Innovation In The Middle East. Part 3

By: Carlos Guevara and Dr. Hitendra Patel, with special collaboration of Dr. Saeed Al Dhaheri, Sudarshan Chakravarthi, Lisa Nyman, and Anthony Denatale

 

We asked our clients and experts for their recommendations for organisations trying to master the art of innovation. Here is what they answered.

 

  1. Get your CEO excited about innovation

Ensure frequent informal meetings with the CEO and Chief Innovation Officer. These encounters create the optics that innovation is important, they facilitate decisions and support commitment to innovation. “We pay great attention to our Quarterly Global New Product Launch”, says Sudarshan Chakravarthi, Head of Marketing & Communications at 3M Gulf, about the mechanisms used by this innovation giant to put innovation at the centre of the top management’s agenda. “To make innovation happen, we need to make people believe in it”, says Anthony Denatale, Head of the Innovation Unit at DAFZA, who is leading a major cultural change in his organisation by raising innovation awareness levels, from CEO to floor employees.

 

  1. Create spaces to innovate

“At 3M we have the 15% rule, where we allow our employees to spend 15% of their work time on experimental doodling or experimental projects that could give way to new products”, says Sudarshan Chakravarthi, Head of Marketing & Communications at 3M Gulf. Innovative organisations encourage their employees to try and experiment on concepts that will drive the future of their businesses.

 

  1. Balance results and capacity building

Focusing on results is not sustainable, it only helps to keep the consultants hired, whereas focusing on capability building only results in lots of people, processes, and systems development. This only increases impatience from management, who believe that time and money are being squandered. The solution is finding the optimal balance between innovation results and capacity building. “At Ericsson we use a wide range of initiatives to keep innovation alive” says Lisa Nyman, Head of Strategy & Business Innovation at Ericsson

RMEA, whose company is investing heavily in certifying innovation coaches, has created innovation incentives, and also has recently established a Chief Innovation Officer role

commissioned as a disruptive force to further augment and accelerate innovation via incubation and venture funding.

 

  1. Focusing on BIG ideas

Big ideas are exciting for managers, employees, suppliers, partners, and customers. Big Ideas move the needle on business results. “Focus on game-changing initiatives has to be the starting point… companies mistakenly use six-sigma, TQM or lean management tools for driving breakthrough business growth. These tools are for process improvement, cost reduction, increased predictability, exactly the opposite of innovation”, says Dr. Hitendra Patel at the IXL Center for Innovation.

 

  1. Embrace the digital forces

Most of the clients and experts agree that digital forces are about to disrupt the world as we know it. Some industries will feel this stronger than others. Pioneer organisations are

currently developing digital capabilities to be the disrupters, rather than being disrupted.

 

  1. Customer-centric innovation

Pioneer organisations place the customer at the centre of their innovation process, then iterate, connect and disconnect ideas until they find a unique space in which they can add value. “An example is the Adhesive platform in 3M; it goes from a simple Scotch Tape

which can hold the back side of an envelope, all the way up to Scotch solutions raising an 800 kilo car in Germany off a crane”, says Sudarshan Chakravarthi, Head of Marketing & communications at 3M Gulf.

 

  1. Fail…fast and cheap

Failing fast and cheap is not a new concept, but many organisations are still reluctant to endorse failure of any kind. “One way to overcome this is to use the Lean Startup method,

which focuses on reducing the upfront investment and thus the risk by creating a Minimum Viable Product (“MVP”) to be tested in the market, and based on the customer response

pivot or persevere. Another option is to work closer with customers and partners and thus share the risk and potential return”, says Lisa Nyman, Head of Strategy & Business Innovation at Ericsson RMEA. Companies like Google and 3M encourage innovation time among all their employees. Failure does not need to be expensive. Neither should it lead to career risk.

ixleretor

Lessons from the largest SME accelerator in the world

 By Dr. Hitendra Patel – IXL Center for Innovation and Project Leader of Colombia’s 10x SME Accelerator – Colciencias

 

Google created Alphabet because its founders were concerned that the company had become too big and it had stopped innovating. Innovation is typically associated with startups and SMEs, but startups face many challenges as they navigate the infantry stage. But what about SMEs? Could SMEs hold the magic formula to nurture innovation?

 

SMEs have a higher success rate with new ideas to commercialization than startups or large companies. In startups, the CEO is not a proven businessman or manager; and in large companies inputs and decisions are distributed across the organisation, slowing down or even stopping innovation. In SMEs, the CEO already knows how to buy, make and sell, hire and fire, and navigate complexity while in a startup the CEO is still learning. In SMEs, the CEO is often present in innovation meetings and decisions are made at the moment, and so are resource allocations; while in big companies the CEO delegates responsibilities and is not present.

Innovations pursued by SMEs are oftentimes me-too products but offered with a better value proposition along the value chain of an existing company. SMEs unlock value by innovating these inefficiencies. The impact of innovation growth in SMEs is significant, as it creates accelerated growth compared to big corporations.

 

About Colciencias: 10x SME program in Colombia has promoted regional economic growth by building innovation capacity at hundreds of small enterprises. Delivered in cooperation with the Colombian National Administrative Department of Science, Technology and Innovation (Colciencias) and five metropolitan governments, it guides companies from idea to purchase order.

 dubai-innovation

Public Sector Case Study – The UAE Journey Towards Innovation

Interview with Dr Saeed Al Dhaheri – Chairman of Smartworld and Advisor to several UAE government Entities

 

Can you provide a brief history of innovation in the UAE government and why it is so important today?

 

Innovation in UAE government can be traced back to 1997, with the establishment of the first Dubai Government Excellence Program DGEP, followed in 2009 by Abu Dhabi Award for Excellence in Government Performance, and in 2010 by the Federal Government – Sheikh Khalifa Government Excellence Program. These programs emphasised innovation as a necessary ingredient for government excellence.

 

In 2015, the UAE government launched the ‘National Innovation Strategy’, emphasising innovation in government as a cornerstone for social and economic development and key for increasing UAE competitiveness, providing new job opportunities, and improving the overall quality of life and happiness of people.

 

The 4th cycle of UAE government excellence model adopted in 2016 is now emphasising innovation as an enabler, and giving 20% weight in the evaluation of innovation management practices in government organisations. The Initiative for Government Innovation (IBDAA) has now four innovation categories: the most innovative government department, the most creative idea, the most creative government employee and the most creative government leader. These innovation programs have significantly helped instill a good innovation culture and practices in UAE government entities.

 

What are the most common challenges that government entities face when it comes to innovation?

The Innovation climate in UAE government is becoming more and more visible as innovation is supported and championed by leadership on many levels of government, and exercised in almost all of government entities.

 

Yet, there exist some challenges including insufficient allocated budgets to implement the accepted creative ideas coming through ideation systems. This can result in delaying the implementation of good ideas, which slows down innovation pace, or sometimes renders those ideas irrelevant if not implemented on time.

 

Providing and linking incentives to performance of staff is another challenge that government entities are facing. Without proper incentives, recognition, and reward for staff efforts to innovate, employees tend to lose momentum and passion, and become discouraged to come up with creative ideas or solutions.

 

Last but not least, organisations struggle with creating a risk environment that nurtures new ventures. Innovation requires experimentation and risk taking. If the environment does not allow employees to experiment and try new things with acceptable risk of failure, they will be afraid to test and try different approaches/ways to implement their ideas, which will stifle innovation.

 

What would you recommend to a government entity embarking in the journey of innovation?

 

Government entities should establish innovation strategies, link them to their organisational strategy, and ensure to have a clear innovation process that should be reviewed and assessed from time to time.

 

Adopting agile mindset and agile practices such as agile software development framework is of importance to government entities to be responsive to changes and for their provision of new innovative services.

 

Innovation is more about collaboration; internal collaboration within the organisation and external collaboration with customers and other stakeholders. Government entities need to capitalise on innovation technology to make collaboration possible.

 

ABOUT THE AUTHORS 
about-authors

What is not working well

The Road To Innovation In The Middle East. Part 2

By: Carlos Guevara and Dr. Hitendra Patel, with special collaboration of Dr. Saeed Al Dhaheri, Sudarshan Chakravarthi, Lisa Nyman, and Anthony Denatale

 

Many organisations in the Middle East region understand the importance and have started the journey of innovation. We have seen organisations seriously invest in the first two stages of innovation process, Setup and Diverge; however, most do not get past the space of ‘idea box’, Post-Its, and PowerPoint. Here we present the main barriers preventing innovation that ultimately impede ideas to reach the market, as reported by our clients:

what-is-not-working-well-uae-innovation

The quest for the ‘next big thing’

Managing the suggestion box is one of the most common challenges we observe among our clients, as organisations try to get the most out of their employees’ ideas. The problem is that ideas without direction are like a chicken without a head. A suggestion box without a focus and lacking strategic priorities can indistinctively produce ideas that aim to change the world and/or ideas to improve the food in the cafeteria.

Balancing risk with ROI

“Regionally, the main challenge is striking the balance between risk and return on investment” says Lisa Nyman, Head of Strategy & Business Innovation at Ericsson RMEA. This becomes increasingly difficult as industries are under pressure and tend to focus on short term growth and profitability.

Not getting enough ‘dots’

Everybody has the capacity to come up with great ideas, although it is obvious that not everyone is generating them. Which could have something to do with the fact that some individuals have more ‘dots’ than others. “You have to teach people to have more curiosity. Every kid has it and somewhere along the way we, as parents and school systems, shut it down”, says Dr. Hitendra Patel of the IXL Center.

Moreover, we have observed that many organisations are limiting the idea-sourcing initiatives to their own employees, and although this is a good practice the real potential lies in collaborating with customers and suppliers, and searching for idea dots beyond their natural fields of play.

Connect, disconnect, connect again

While having a good number of ideas is important, without proper connectivity there is little hope for innovation.

If ideas are treated as individual projects, we cripple the potential of connecting them with other ideas to generate even a bigger idea.

Providing space for ideas to mingle is one of the least common attributes exhibited by organisation in the region.

The business plan road to nowhere

“Innovation always comes with change and in some cases cost”, says Sudarshan Chakravarthi, head of Marketing & Communications at 3M Gulf. If you want to kill a great idea, just ask for a business plan. Nowadays, organisations are struggling to justify new ventures in light of the strict protocols for budgeting and resource allocation.

Embracing digital, now or later?

“Middle East organisations must adapt to changing times”, says Sudarshan Chakravarthi, Head of Marketing & Communications at 3M Gulf. It is getting easier and easier for new entrants to start to compete with the increasing possibility of acquiring business elements through partners or suppliers. Harnessing the forces that will shape the future and doing it at the right time has become an increasing concern of organisations today.

Moving beyond Power Point

While for many organisations crowdsourcing innovative ideas is a big achievement, the biggest challenge lies in the execution. Organisations struggle with testing and scaling up ideas to produce bigger, bolder, and more innovative concepts that can be taken to reality and generate value.

The culture killers

There are two prerequisites to innovation: acceptance to failure and tolerance to waste. “The biggest challenge is to change the culture of the organisation, from autocratic to democratic”, says Anthony Denatale, Head of the Innovation Unit at DAFZA.

 

ABOUT THE AUTHORS 
about-authors

The Road To Innovation In The Middle East

How innovation pioneers such as 3M, Ericsson and DAFZA are navigating internal barriers to drive innovation in the Middle East

 

By: Carlos Guevara and Dr. Hitendra Patel, with special collaboration of Dr. Saeed Al Dhaheri, Sudarshan Chakravarthi, Lisa Nyman, and Anthony Denatale

 

ABOUT THIS PAPER

The 30th of November 2014, Sheikh Mohammed bin Rashid, Prime Minister of UAE and Ruler of Dubai, led Cabinet in a special meeting at a historic fort in the emirate of Fujairah. Under the directions of Sheikh Khalifa, the President of UAE, the Cabinet approved the designation of 2015 as the Year of Innovation.

During the last 2 years we have been collaborating closely with government and private organisations that aim to harness innovation. But has there been any progress? This article analyses the achievements, challenges, and lessons learned from organisation in the Middle East trying to master the art of innovation.

 

MASTERING INNOVATION PROCESS

Before we talk about the state of innovation in the region we must first clarify how innovation works. There are 5 stages in the innovation process:

innovation-process

Setup

This is the step in which the management team must decide on where and where not to innovate, define growth targets, and strategic thrusts for breakthrough innovations.

Diverge

This is the step in which organisations typically brainstorm over a problem. Some organisations do this using internal ideas only, while others decide to crowdsource ideas beyond their organisational boundaries. During the ‘diverge stage’ organisations determine the trends that could impact their businesses and identify insights and idea fragments across the company, competitors, partners and the future.

Connect

The connect stage is one of the most forgotten steps in innovation management, yet one of the most important. At this point the company should provide spaces for ideas to mingle and connect with each other. A powerful marketing idea is useless unless it is connected to relevant means of production and delivery, and wrapped up by the right business model.

Converge

At this stage, the organisation must have connected new idea fragments around a desired ‘field of play’ to generate a range of new business concepts. The ‘convergence’ occurs when the organisation conducts some initial due diligence to validate the priority concept. Out of this process, a few highly viable concepts should emerge.

Emerge

Understand what conditions need to be tested first. Find the right partners. Summarise the business concept in a compelling, visually stimulating, and insightful way. Test with real clients. Build prototypes to ensure the new concepts meet the organisation’s internal conditions for new business development.

 

A COMMON VIEW ON INNOVATION

If you ask a group of 20 people what innovation is, you will probably get 20 different answers. In today’s world some people think innovation is the creation of new products and services, for others innovation is about R&D, or creating new experiences. The truth is that innovation encompasses all of these together.

The innovation process introduced by Dell to its supply chain management, the quality systems developed by Toyota, a practice like Walmart’s inventory management, Google’s use of mathematics to change the media and communications industries, or even Starbucks’ reimagining of the coffee shop experience have all been game-changing innovations.

Simply put, innovation is finding ‘new ways of creating value’. This is the definition that most businesses embrace today in order to drive the generation and application of innovative approaches not only in the development of new products and services, but across the whole value chain.

importance-innovation

The importance of innovation

Regardless of its importance in any priorities scale, an objective must be mastered in order to be successfully achieved. Spreading the word about innovation and its importance doesn’t make us innovative.

The organisation that fails to innovate is on the road to obsolescence. Major companies such as AT&T, Nokia, Dell, and Kodak used to be industry leaders, even dominators, but they all fell behind as their challengers relegated them into a second place (or worse).

 

The value of an idea

A large majority of our clients have implemented systems for idea collection (i.e. idea box), but how effective are these ideas in driving innovation? “An idea by itself is worth nothing unless it is translated into value”. The journey of an idea throughout the innovation lifecycle is quite interesting: it usually starts as a small concept (we call it an ‘idea dot’) that grows by connecting with other concepts; “ideas get connected, disconnected and reconnected with other idea dots until a viable business concept emerges…” says Dr. Hitendra Patel at the IXL Center for Innovation.

innovation-process-table-gimi
ABOUT THE AUTHORS 
about-authors

Rapid, iterative experimentation process – A ‘Lean Startup-style’ approach to innovation

By: Courtney Wood, Ron Jonash & Mick Simonelli

 

The emergence of disruptive digital technologies and changing customer expectations has made innovation an imperative for companies to remain sustainably competitive and stimulate growth. Realizing the benefits of innovation requires a systematic approach to not only generating novel ideas but converting them to meaningful business value. Rapid, iterative experimentation is critical to effective conversion in that it helps organizations ‘test the goodness’ of their ideas by turning hypotheses into facts and assumptions into validated conditions, thereby weeding out the bad ideas from the good and turning the good ideas into better, high-impact innovations.While many organizations are able to generate ideas, most are not equipped to conduct ‘Lean Startup-style’ experimentation, that is, they are unable to rapidly create solution prototypes and simulate and test outcomes from a customer, competitor, and partner perspective. We recommend organizations establish a ‘Rapid, Iterative Experimentation Process’ to allow them to quickly improve an innovative idea’s probability of achieving its expected outcomes by generating the information needed to iteratively pivot or remain confident in persevering.

The majority of innovation efforts are unsuccessful

Innovation has become the Holy Grail for executives in the 21st century. The advent of technological changes, such as the digital five forces (mobility and pervasive computing, big data and analytics, social media, cloud, and artificial intelligence and robotics), means that companies need to innovate continuously with agility and efficiency if they are to sustain themselves competitively. However, our numerous client interactions, as well as research from a broad array of sources, indicate that a majority of innovation efforts are unsuccessful. The challenge, more often, is not the generation of creative ideas but their conversion into meaningful innovations that stimulate growth in revenue and profitability. Primary reasons for failure include an inability to rapidly and iteratively experiment, by prototyping new solutions and determining business outcomes through simulation and testing of novel concepts.

Innovation is vital to growth

The emergence of digital technologies has made the current business environment one of the most dynamic in history. Figure 1 depicts the changes due to which most executives around the world have made innovation one of their strategic priorities.

ixl-center-innovation-strategic-priority

Companies seeking to expand their market share, enter new product or customer segments, or use emerging technologies to create more compelling customer experiences need to generate and launch innovative solutions faster than their competitors. These solutions may include differentiating services, breakthrough business models, or re-imagined business processes. To do this successfully they need to build the capability to continuously ideate, experiment, and monetize their inventive solutions. Innovation, therefore, requires a systematic yet flexible process to handle its associated ambiguity and uncertainty.

Conventional approaches to innovation fail

Many organizations have increased funding and are putting ‘people, processes, and technology’ in place to create their own engines of innovation. However, they struggle with generating enough of the right kind of ideas, and, perhaps more importantly, quickly and effectively converting them into bigger, bolder, faster, and cheaper innovations that drive significant value creation.

A key reason for this failure is the application of traditional product and technology development, as well as large program management methods, to innovation. These methods involve lengthy sequential processes designed to guarantee results. As such, they are too slow for today’s dynamic marketplace and often reject outright and/or strip from the inspired ideas the very essence that could change the game and contribute most to the top and bottom lines, that is, their ‘innovativeness.’ As a result, companies often fail to swiftly monetize their innovations and maximize overall innovation-driven returns.

The need for rapid experimentation

Generating new ideas and converting them into meaningful business value to support competitive sustainability requires a scalable Lean Startup-style approach. One that quickly and cost-effectively identifies the better ideas in the enterprise’s pipeline and evolves them into great innovations that significantly improve business performance. This approach or ‘Rapid Iterative Experimentation Process’ (RIEP – pronounced ‘reap’) involves the use of solution prototyping, concept simulation, and testing (for example, piloting) to assess and improve the potential of the proposed innovations. RIEP can be used to analyze and convert novel concepts along multiple dimensions such as customer attractiveness, market viability, and technical feasibility. By adopting this Lean/Agile and design thinking-based approach to assessing the value expected to be generated by their new ideas, enterprises can ‘learn fast and cheap’ and thereby optimize their overall investment in innovation.

The RIEP solution

RIEP deploys a combination of people, processes, and technology to practice Lean Startup-style experimentation to improve innovation driven business performance. It features a series of activities to generate the insights and information needed by the investors in innovation (for example, the CEO and Business Unit Heads) to make better decisions about whether to ‘pivot, halt, or persevere.’

ixl-center-innovation-experimentation-process

1) The process begins with identifying the critical value and growth assumptions and risks of the early stage idea or novel concept. These become the hypotheses to prove or disprove using some combination of solution prototyping, concept simulation, and testing. These hypotheses, for example, may relate to the customers’ perceived need for the innovation, the company’s ability to build and monetize the innovation at a reasonable cost, and the competitive response to the innovation’s launch/implementation which affects its sustainability. A major grocery and pharmacy retailer seeking to expand its market into a new community is a case in point. Key hypotheses related to the community’s purchase and use behavior as well as methods to source ‘ambassadors,’ that is members of the local community willing to conduct personal demonstrations relevant to the nutrition, pharmacy, and personal care programs organized by the retailer.

2) After identifying the ‘20 percent of the hypotheses that drive 80 percent of the uncertainty,’ these are broken down into smaller elements (akin to ‘user stories’ in Agile development) around which a detailed experimentation approach and resource plan is drawn up. This experimentation plan typically includes one ‘sprint’ for every element to determine whether that component of the innovative idea as currently envisioned will deliver the expected value. Each sprint lasts one to four weeks and involves a series of ‘value tests’, each taking one to five days. The value tests are designed to deliver the maximum possible data, or insight and information, with the least amount of effort.

3) Some of the sprints may involve solution prototyping to prove technical feasibility and/or to provide the ‘object’ needed to conduct the simulations and tests of the concept’s customer attractiveness and market viability. When IT-driven solution prototyping is used, outputs range from visual mock-ups (for example, PowerPoint presentations) to illustrative software (such as clickable apps to demonstrate the look and feel of a solution) to working software (including functional programs). IT-driven solution prototyping can incorporate any of the following technologies: UX and mobility extensions, workflow and data flow enhancements, heavy analytics, and enterprise software and hardware integration.

4) Most of the sprints involve simulation and testing focused on one or more of the four general areas related to the innovative concept using different techniques and tools:

ixl-center-innovation-4th-point

For example, when considering a new healthier product segment, a major beverage company used concept simulation to better understand customer purchasing behavior, determine distribution channel response, and assess the likelihood of collaboration and preferred relationships with other key players in the ecosystem.

5) The construct of an innovative concept’s unique experimentation plan determines the composition of the RIEP team required. This may include not only internal but external resources such as customers, value chain partners, innovation providers (for example, emerging technology startups), and other ecosystem players such as competitors. Ideally, all RIEP teams execute their specific experimentation plans using a shared technical platform and process playbook designed for distributed and iterative collaboration. While the composition of every RIEP team varies, common internal roles include those of an ideator, idea sponsor/investor, innovation coach (interface between idea sponsor/investor and RIEP team), rapid prototyping specialists (architects, designers, and developers), concept simulation and testing specialists, and other domain and functional experts.

Keys to success

An efficient and effective RIEP implementation requires individuals with an entrepreneurial mindset and competency in solution prototyping and concept simulation and testing, as well as the technologies and tools to conduct this type of experimentation rapidly and iteratively. Therefore, securing the intellectual support and financial commitment from senior leadership is vital for creating and maintaining the capability to maximize innovation-driven business performance while optimizing investment.

Skills and experience valuable to building competence in RIEP generally include having worked for a startup, incubator, or accelerator. For rapid prototyping of IT-driven solutions, competence in Agile development, digital and emerging technology, design thinking, and UX/UI design would be instrumental. For concept simulation and testing, a background in new venture development, business strategy formulation, innovation marketing, market analysis, Lean/Six Sigma, critical thinking, business case development, implementation planning, creativity facilitation and gamification, and role-playing would be very useful.

For the technical platform, solutions to enable rapid prototyping of the ‘touch, feel, and works like’ of the innovative concept are many. The goal is to know which solution to apply when. In addition, using free (for example, Open Source) solutions and provisioning on demand as much as possible, particularly in the early days of establishing an RIEP capability, as the patterns of the enterprise’s innovative idea prototyping needs emerge, is an important consideration.

Realizing value through effective innovation

Whether an organization employs their own RIEP capability or engages a trusted provider with the required competencies and infrastructure, it can expect significant increases in the quality and speed of input for decision making on innovation investments. This in turn will lead to higher returns from their new and novel ideas and business concepts. In particular, enterprises can expect higher innovation performance in the form of revenue growth, increased customer satisfaction, profitability enhancement, shareholder value creation, and ultimately optimized innovation investment.


About the Authors

Courtney Wood
Director, TCS Innovation Management Services

Courtney Wood leads the Innovation Management Services capability at Tata Consultancy Services (TCS). Courtney has spent 25 years in management consulting, supporting both large and early stage enterprises in establishing high-performing growth and profitability engines by developing the right business strategies as well as designing the right business capabilities and executional roadmaps to remain market relevant and fiscally viable in an ever more dynamic and complex world. During the ‘dot com days,’ Courtney was co-founder and chief strategist of a technology-based business incubator that brought promising start-ups into its nest, exchanging new venture development capability for equity.

 

Ron Jonash
Director and Senior Partner, IXL Center

Ron is a senior partner at the Center for Innovation, Excellence, and Leadership (IXL Center) and leads its innovation management practice. He is on the faculty of the Hult International Business School and the Tufts University School of Engineering, and is a partner at a venture capital firm. He is also chairman of the Board of the Global Innovation Management Institute, which establishes standards and provides professional certification for both innovation practitioners and managers. He was previously the founder and managing director of the Innovation Practice at the Monitor Group, and before that was head of Arthur D. Little’s Technology and Innovation Management Practice for over 20 years. Ron is author of the award winning book, The Innovation Premium, as well as numerous other innovation books and articles.

 

Mick Simonelli
Innovation Consultant

Mick is a thought leader on innovation in financial services. He is the former lead innovation executive for USAA, a Fortune 50 Insurance and Banking company, where he built and led their program to best-in-class status. Prior to USAA, he was an innovation and transformation officer for the U.S. Department of Defense.

Government Innovation From Within – 3

UAE Edition. Part 3

INNOVATION IMPACT

By: Rafael Lemaitre, ShiftIN Partners

 

Measuring the impact of innovations is not a straightforward task and is an area of high subjectivity. However, it is important to try to understand the perceived impacts that innovations have within the different entities surveyed. We asked the respondents if their organisations had some sort of mechanism or measurement system in place to assess the results of their innovations and only half of them responded positively. Nevertheless, although at low rates, encouraging signs also emerged as entities were looking at evaluating their innovation process regularly (27.4% fully implemented / 33.5% partially implemented), as well as evaluating the impact of their innovations in terms of outputs and outcomes (25.5% fully implemented / 37.0% partially implemented).

While analyzing the impact of the Most Important Innovations (MII), respondents reported the following set of positive effects as being at the top: improvement of the quality of services, increase in the speed of delivering services and delivering new services. The table below presents the ranking of the positive effects associated with these innovations.

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Important conclusions arise when innovations are transformative in nature and when they are cross-cutting (i.e. they do not involve only one type of innovation). In these cases the impact reported was higher and there was a clear and significant positive association between these variables and the positive effects delivered within the entities.

In addition to reviewing the internal effects on the entities, we also analyzed the perceived impacts that innovations have on outcomes. This analysis does not, of course, imply any causality between innovations and outcomes, but it does give an indication of their association. To this end, we asked the respondents to identify, to their best knowledge, the positive and negative effects of their Most Important Innovation on a set of predefined outcomes.

The results of the analysis showed that the top rated positive outcomes were the increase of the quality of life of citizens and residents and the reduction of negative impacts on the environment. The top “neutrally” rated outcomes were the enhanced access to finance for citizens, residents, and businesses, and the decrease in the cost of living.

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CONCLUSIONS

Through our first analysis of the survey results we have identified actions that entities could take towards improve their innovation process.

At the organisation level, the government entities could exploit their strengths at the front-end of the innovation process and move their efforts to the back-end, setting clear innovation intents/goals (and/or innovation strategies), placing in parallel a careful focus on the role of leadership. Awareness should be created in this role in supporting failure and fostering experimentation, in order to create a culture that encourages innovation.

At the individual level, strong emphasis should be given in the development of senior management capabilities in the balance of risk and innovation. The government entities should build capabilities in the management of innovation and more specifically in the addressing and management of the risk embedded in the innovation process.

In regards to the innovation initiatives, the government entities should prioritize projects that are shorter to materialize in terms of time and in the process adopt the principles of lean innovation. Instead of waiting until the later stages of innovation projects, the focus should be on moving quickly and testing and challenging assumptions at the initial steps of the design and incubation mechanisms. This should help develop the concepts and prototype them in a rapid manner.

Lengthy innovation projects with time horizons of over six months / one year mark should be carefully re-assessed whether or not these should continue, be re-scoped, or abandoned.

Finally, innovations that are cross-cutting and do not have a single focus on improving only one element in the outputs range should be prioritized. This white paper summarizes one of the few quantitative researches undertaken in government innovation in the Middle East and is a first step towards having a more systematic approach of measuring different aspects of how innovation happens and delivers results.

 

OUR PERSPECTIVE GOING FORWARD

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Methodology Note

The primary research involved 243 questionnaire interviews conducted across UAE Federal entities as well as Emirate level entities. The respondents were, in their majority, middle and senior management personnel. All responses are confidential and data has been disaggregated making it impossible to track individual responses.

The questionnaire was built incorporating lessons learned from other similar exercises around the world, (i.e. Innobarometer 2011; MEPIN 2011; Australian Public Service Commission 2012).The questions were peer-reviewed by experts in the field and were subject to extensive cognitive testing by a group of 35 UAE Government civil servants.

The statistical analysis behind these results included a variety of methods applied (i.e. generalized linear models), more details can be furnished upon request.

 

About ShiftIN Partners:

ShiftIN Partners is a leading strategy management consulting firm focused on helping clients manage strategy and innovation programs that enable the organization to achieve the necessary Shift, working from withIN. ShiftIN professionals have successfully led several consulting engagements worldwide, Partnering with customers in the Government, Utilities & Infrastructure, Oil & Gas, Manufacturing, Healthcare & Pharmaceutical, Financial Services and Telecommunications sectors. 

Top 10 Innovation Competitions

In modern societies everyone is enabled to create the next big thing. Innovation competitions encourage independent experts from various industries to take a part in managing innovation challenges. By definition, innovation competition is an attempt by independent agents to solve an innovation challenge of a certain company.

 

The list of Top 10 Innovation Competitions was created based on the following criteria.

The Innovation Competition must:

  1. Have more impactful and powerful outctome/solution, than an output of product development process for corporate clients;
  2. Request for breakthrough and disruptive innovations, while incremental innovation might come as an additional option;
  3. Apply crowdsourcing practices;
  4. Have well-established mentorship and leadership program;
  5. Be regionally or globally acknowledged and authoritative competition.

 

Scroll down to find out what are the Top 10 Innovation Competitions, that may generate breathtaking innovations in the nearest future.

 

Read More

Government Innovation From Within – 2

UAE Edition. Part 2

INNOVATORS AND THEIR ORGANISATIONS

By: Rafael Lemaitre, ShiftIN Partners

 

During our research we examined various factors at both the individual and organisation levels. For the individuals we analyzed their skills, domain knowledge, risk appetite, and attitudes while at the organisation level we looked at leadership styles, incentives, and processes.
Innovators Characteristics

As mentioned before, innovation goes well beyond the frontend. Our research of the UAE Government entities yields quite interesting results. For example, almost one third of the respondents reported that their entities had innovation champions appointed and innovation teams were in place to steer the implementation. These two concepts are key, making innovation happen relies heavily on having the rightpeople in the right place with the right level of commitment. The existence of identified innovators, well trained and with sound tools, and governance in place can make a large difference.

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Our research also looked at the concept of risk, as it is closely linked with innovation. Risk is present in many stages of an innovation process, from the early stages up to the implementation phase. Pursuing innovation implies a certain degree of risk-taking, which has been identified as a characteristic of efficient innovation managers: risk-averse subjects are less innovative. The risk appetite can shape how individuals pursue (or abandon) innovations. We analyzed the risk appetite of the respondents at a scale from zero (unwilling to take any risk) to ten (fully prepared to take risks). Almost half of them (49%) were concentrated in the seven and eight marks while respondents with a risk appetite of four or lower were very rare (11.2%). Furthermore, in our analysis of risk, we examined the impact of risk-appetite on the results delivered by the most important innovation in terms of positive effects for the organisation (i.e. better, faster, cheaper service, more efficiency, etc.) and found a significant positive association between the level of risk appetite and the positive results.

We also reviewed the domain of respondent’s knowledge: (a) knowledge about new trends and developments, (b) knowledge about information and communication technologies relevant to the organisation. In the first domain, a large share of respondents (74%) reported to have full knowledge of the trends in the sector of their organisation. In the second domain, the percentage of respondents who reported full knowledge was somewhat lower (63%).

Innovation Culture and the Role of Leadership

After looking at the individual profiles of the innovators, we examined the collective profiles of the organisations with special emphasis on the leadership style and the incentive mechanisms in place.

The role of leadership in innovation is pivotal: from giving individuals the time to innovate, supporting them through the innovation process, creating a culture that encourages innovation, to providing the right incentives for doing so. We analyzed the various levels that entities are achieving in each of these aspects. When it comes to creating a culture that supports experimentation and accepts failure, reported levels are on the low side: 29.6% of the respondents state that their entities management fully support experimentation and 16.6% stated that their organisations have a culture that fully supports them when an innovation fails, with relatively high levels of no support (14.2% and 22.7%, respectively).

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In addition, the leadership profiles of the organisations towards innovation were assessed. The large majority was found cautious (63.2%) or open (30.4%) to innovation while a very small minority (6.4%) was averse to innovation.

Charts 8, 9, and 10 show results supporting experimentation, culture towards failure, and leadership attitude. There are multiple opportunities for improvement here, as innovation flourishes when there is an open environment that tolerates risk of failure and encourages experimentation, even if the probabilities of success are uncertain.

Additionally to leadership profile and attitude towards innovation, there is another organisational aspect that is essential for innovation, and it is the incentives scheme in place.

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Incentives can take many forms, from mechanisms rewarding idea generation (financial or non-financial) to allocating time for employees to innovate. Our research indicates that 32.7% of the organisations have incentives for employees who produce ideas (76.9% when considering also partial incentive mechanisms) and take part in their development, and 22.6% have specific time allocated for innovation (72.6% when considering also some sort of time allocation).

At a further analysis, incentives were broken down into two categories: a) incentives for identifying new ideas (i.e. idea awards, recognition, etc.), and, b) incentives for taking part in the incubation and development of innovations. For each category, we identified the type of incentive, namely if it was non-monetary (i.e. recognition) from the senior management, non-monetary from external stakeholders, or monetary. For the idea generation, the majority of incentives were in the form of internal awards or recognition by the entities’ own senior management (40% of the respondents reported “Fully” in the relevant question) while monetary or external awards were much less reported (15% reported “Fully”). The incentives for the second category (taking part in the incubation and development of the  innovations) were highly correlated with the first, with almost identical response rates.

External Factors Driving / Hindering Innovation

Drivers and barriers to innovation are often quoted and cited in innovation research although it is difficult to draw a clear line in what constitutes a driver and what constitutes a barrier. For example, budget constraints or restrictions can act as a driver for organisations to innovate in order to do ‘more with less’, but they can also constitute a barrier, as the lack of funds for innovation can compromise some key innovation projects or initiatives. For this reason, we grouped the main external forces that could have an impact on the innovation of the entities (regardless of whether this impact is positive or negative). These are the factors assigned with ‘high importance’, in descending order:

 

About ShiftIN Partners:

ShiftIN Partners is a leading strategy management consulting firm focused on helping clients manage strategy and innovation programs that enable the organization to achieve the necessary Shift, working from withIN. ShiftIN professionals have successfully led several consulting engagements worldwide, Partnering with customers in the Government, Utilities & Infrastructure, Oil & Gas, Manufacturing, Healthcare & Pharmaceutical, Financial Services and Telecommunications sectors. 

Government Innovation From Within

UAE Edition. Part 1

By: Rafael Lemaitre, ShiftIN Partners

 

Based on our research undertaken in cooperation with the United Nations University – Maastricht Economic Research Institute on Innovation and Technology (UNU – MERIT), and sponsored by ShiftIN Partners and The Global Innovation Management Institute, we surveyed circa 250 government leaders in the UAE (at federal and regional levels) 1, using tools in line with best practice studies conducted in Scandinavia and the rest of Europe, and Australia to see how public sector innovation is being conducted, which barriers are being faced, which are the drivers of innovation and the critical success factors, and what are the outcomes of innovation projects.

The days when Innovation within governments was considered an oxymoron are long gone. Governments across the world are shifting from incremental improvements towards much more advanced and complex innovations and the case of the UAE is no exception. On the contrary, what has emerged from the survey and the analysis of its results is that the UAE Government organisations are experiencing an unprecedented momentum when it comes to innovation. The results indicate high level of “transformative” innovations and numerous positive impacts. In addition, the analysis shows that government entities are moving from focusing only on the front end of innovation (i.e. idea generation platforms) to the back-end (i.e. the development of the idea), and while doing so they are working on creating the right enablers (from culture and frameworks to processes) to do so.

The results make us realize that the UAE Government is well advanced on its journey to take a leadership role in public sector innovation and is undoubtedly a great case study. This white paper constitutes a first version to an in-depth research in the area and will be followed up by future editions.

UAE GOVERNMENT INNOVATION: AN OVERVIEW

 

Innovation goes well beyond generating an idea or even the next big idea. An idea becomes an innovation when the cycle is completed and that idea matures into a sound concept that captures and delivers new value, from a new service to a new product, or even a new set of internal processes: innovation can take many ways.

Our research indicates that UAE government entities are stronger at the early stages of the innovation management process (and at more abstract elements of the innovation framework), such as creativity and idea generation. For example, 55% of the respondents mentioned that their organisations fully support creativity and brainstorming (this percentage increases to 95% when “some” encouragement is included), and 40% answered that they have full idea generation mechanisms in place (90% including partial approaches). The government entities are less advanced when looked at other subsequent and more specific components such as innovation goals, strategies, and processes in place. For example, 35% of the respondents reported having specific innovation goals in place, and 50% indicated that their strategic goals could be linked to innovation. When looking at innovation strategies and innovation management processes, the results are also on the low side. Around 40% of the respondents were not aware of any innovation strategy or innovation management process in place in their organisations.

 

This gap between the large number of entities which have some sort of idea generation mechanism and creativity in place and the fewer number of entities reporting to have specific innovation processes and strategies is not however surprising. It demonstrates a well-known characteristic of innovation that organisations typically spend much more time working at the front-end of innovation while less time and energy are devoted to the back-end.

The gap is even higher when innovation strategy is contrasted with the overall strategy: 73% of the respondents consider that their organisations have a clear vision and a strategic plan in place while only 29% report that there is a written innovation strategy in place.

With regard to innovation rates, the UAE organisations are reporting high levels as 85% of the respondents stated that their organisations have introduced at least one significant innovation in the past 2 years. The respondents were also asked to think of the Most Important Innovation (MII) introduced by their work unit and to classify it. The largest share of MII type reported was for service delivery innovations or new products launched (64.3%), followed by new or improved processes to support service delivery (50.3%), operational processes (44.1%), and communication innovations (32.9%). Half of the respondents (49.6%) matched the MII with only one type of innovation while the rest matched it with two or more types. This shows that the most significant innovations tend to be cross-cutting and difficult to be associated with only one type. For example, the introduction of a new service will most likely bring side effects, such as a set of innovations within the structure and the processes required to deliver that new service.

For the most important innovations introduced according to the respondents, we also tried to identify if these MIIs were “transformative” in nature. These are innovations that completely change the way things are done, or provide large cost savings (at the working group or organisation level), or create an entirely new and important service. 80.8% of the respondents stated that their most important innovation was a transformative one – very large percentage. Caution is needed while interpreting this value, as this does not mean that almost 81% of all innovations are transformative in nature. This large percentage does however indicate that the large majority of the selected most important innovations were transformative.

When looking at the effort placed by the respondents to materialize the results of their most important innovations, almost one third of the MIIs (29.8%) took between 6 to 12 months to complete, 38.5% took between 1 to 6 months, and close to another third (27.9%) took more than a year. The effort of the innovations was analyzed in the context of the results delivered (see section on Innovation Impacts) and the results were surprising, as a significant negative relationship was found between the time required and the results delivered: the longer the time, the fewer the results3. A plausible explanation is that those innovations that require a high level of effort, from idea generation to implementation, can show diminishing returns. This could suggests that the adoption of lean innovation principles can be highly beneficial for public organisations.

 

About ShiftIN Partners:

ShiftIN Partners is a leading strategy management consulting firm focused on helping clients manage strategy and innovation programs that enable the organization to achieve the necessary Shift, working from withIN. ShiftIN professionals have successfully led several consulting engagements worldwide, Partnering with customers in the Government, Utilities & Infrastructure, Oil & Gas, Manufacturing, Healthcare & Pharmaceutical, Financial Services and Telecommunications sectors. 

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