Strategy-Aligned Innovation

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Outline. IntroductionsInnovation as a Strategic ImperativeTapping into Employee InnovationAlignment: The Need and the ToolsEmployee Innovation ManagementStrategy-Aligned InnovationLeveraging Technology to Support Strategy-Aligned InnovationInsightVisionTHINK PlatformConclusion. Introductions.

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Strategy-Aligned Innovation

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1. Strategy-Aligned Innovation Jennifer Rosenzweig and Bill Barberg ASP 2007 Annual Conference

2. Outline Introductions Innovation as a Strategic Imperative Tapping into Employee Innovation Alignment: The Need and the Tools Employee Innovation Management Strategy-Aligned Innovation Leveraging Technology to Support Strategy-Aligned Innovation InsightVision THINK Platform Conclusion JenniferJennifer

3. Introductions Jennifer Rosenzweig Bill Barberg How many attended my earlier break-out session? About the Audience Executive (not in the strategic planning function) in a mid-sized or large corporation (>1000 employees) Strategic planning function in a mid-sized or large corporation (>1000 employees) Executive or Upper management in small corporation (<1000 employees) Consultant Other Jennifer and BillJennifer and Bill

4. Innovation Revolution Why are companies focusing on innovation? INNOVATION IS OUR MISSION Ford.com/innovation Connect and Develop: Inside Procter & Gamble’s New Model for Innovation Harvard Business Review, March 2006 The Next Big Thing is Us: big, bold ideas used to come from small groups of experts Time, March 20, 2006 “An established company which, in an age demanding innovation, is not able to innovate, is doomed to decline and extinction,” Peter Drucker, June 22, 2005 Jennifer: Jennifer:

5. BCG Study: Innovation 2006 Jennifer: Jennifer:

6. Different Types of Innovation Radical Innovation New Business Models New Value Proposition Disruptive Changes “Blue Ocean” Strategy Semi-Radical Innovation Major technology leaps New Products for Existing Customers New Customers for Existing Products Incremental Innovation Process improvements Small changes to make things better Multitude of localized changes Bill: Bill:

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8. The Need for Supporting Innovation In this light, the big challenge may not be coming up with the initial deviation—there are usually lots of good ideas in play.  No, the real challenge is coming up with all the supporting innovations that reinforce the initial vector, aligning all the other functions in your company to reengineer their processes in such a way as to further accentuate the new value proposition, thereby creating a sustainable differentiation that can generate deep and lasting competitive advantage. -- Geoffery Moore, from his Blog in Nov. 2006 Bill: Bill:

9. Execution drives Shareholder Value “[Our research of over 2,000 firms over more than a decade] indicates that executing a firm’s strategy successfully had a six-times greater impact on shareholder value than did the choice of that strategy.” Brian Becker, Professor and chairman of the Department of Organization and Human Resources at the State University of New York, and co-author of The HR Scorecard: Linking People, Strategy and Performance. HR Magazine, Dec. 2003 Bill: Bill:

10. A Root Causes of Poor Execution The first words of Chapter 1… “Does every employee understand where your business is going? Are the steps necessary to reach the goal plain to see? Is there a good line of sight between the company’s mission and what your people do? Finally, does your team support the direction of the business?” “Forty-eight percent of the 12,000-plus top executives, middle-managers and front- line employees surveyed for WorkUSA 2002—Wyatt Watson’s annual research report on employee attitudes—could not honestly answer yes when asked those questions.” Bill: Bill:

11. Outline Introductions Innovation as a Strategic Imperative Tapping into Employee Innovation Alignment: The Need and the Tools Employee Innovation Management Strategy-Aligned Innovation Leveraging Technology to Support Strategy-Aligned Innovation InsightVision THINK Platform Conclusion JenniferJennifer

12. Tapping into Employee’s Micro-innovation grows profitability Given the opportunity, nearly 50% of employees will engage in identifying and implementing ideas On average, each idea will result in $9,300+ positive impact Achieving innovation excellence can result in 4% EBIT increase Jennifer: Jennifer:

13. Most companies focused on innovation are missing a critical component More than 6,000 companies have Innovation Management systems BUT In the United States, only 46% of employees submitted one idea Jennifer:Jennifer:

14. The burning platform US workers: one idea from every eight employees less than 30% were implemented Japanese workers: more than 30 ideas per year per person 72% were implemented Source: “Ideas Are Free”, 2004 Alan Robinson and Dean Schroeder, Berrett-Koehler Publishers, Inc., National Association of Innovation Management systems 1990 Jennifer:Jennifer:

15. What’s the difference? Engagement. Companies who focus on innovation as the key to ongoing success realize that they are dependent on engaged employees Source: Ideas Are Free Jennifer:Jennifer:

16. An ‘untapped’ workforce is not fully leveraged Employees have great line of sight to opportunities “Squandered” or untapped ideas are a major source of frustration and disengagement Tapping employees’ experience increases engagement and productivity Jennifer:Jennifer:

17. What does it take to fully leverage and engage employees in innovative thinking? Creativity and curiosity A systematic process to generate new ideas A methodology to evaluate, select, implement, recognize & reward and communicate ideas A process to implement ideas Available time to generate ideas Jennifer:Jennifer:

18. Success Story Examples Jennifer:Jennifer:

19. Eaton Corp success story Recorded implementation rate of 1,298 ideas per 100 employees High volume of suggestions (3,767 vs. 290 employees) High expectations from managers Promotional incentives and data Leadership support in yearly review process All ideas are pre-implemented – Weekly and monthly awards (top of mind awareness) Recognition through employee survey and specific involvement section Jennifer:Jennifer:

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21. Unfocused Micro-Innovation Missed opportunity to communicate strategy in a compelling way Ideas may have inherent value but not be of importance to the organization Employees can become discouraged (I gave you my best and you wouldn’t accept it) Ideas can undermine desired strategy Strategy is not fully realized Energy diffused away from strategy Gaps in implementation of strategy Jennifer:Jennifer:

22. Outline Introductions Innovation as a Strategic Imperative Tapping into Employee Innovation Alignment: The Need and the Tools Employee Innovation Management Strategy-Aligned Innovation Leveraging Technology to Support Strategy-Aligned Innovation InsightVision THINK Platform Conclusion Bill: Bill:

23. The Goal of Alignment Bill:Bill:

24. BCG Study: Innovation 2006 Bill:Bill:

25. Strategy-Aligned Management: A Framework Built around BSC Principles Bill:Bill:

26. SAM Process Bill:Bill:

27. Theme Destinations (“From-To”) Bill:Bill:

28. The BSC as a Strategy Tool Bill: Slide Script: The classic Balanced Scorecard has four perspectives, although they can be modified for different types of organizations. Each one of the perspectives is defined by a key questions. The financial perspective asks, “To succeed financially, how should we appear to our stakeholders?” The customer perspective asks, “To achieve our vision, how should we appear to our customers?” The Internal and business process perspective asks, “To satisfy our customers and shareholders, what business processes must we excel at?” This is sometimes called the operational perspective. The learning & growth perspective asks, “To achieve our vision, how will we sustain our ability to change and improve?” The learning and growth perspective is sometimes called the “employee and technology perspective.” There is a cause and effect relationship between the perspectives. Good performance in the Learning and Growth objectives generally drive improvements in the Internal Business Process perspective, which should improve the company in the eyes of the customer, which ultimately leads to good financial results. Bill: Slide Script: The classic Balanced Scorecard has four perspectives, although they can be modified for different types of organizations. Each one of the perspectives is defined by a key questions. The financial perspective asks, “To succeed financially, how should we appear to our stakeholders?” The customer perspective asks, “To achieve our vision, how should we appear to our customers?” The Internal and business process perspective asks, “To satisfy our customers and shareholders, what business processes must we excel at?” This is sometimes called the operational perspective. The learning & growth perspective asks, “To achieve our vision, how will we sustain our ability to change and improve?” The learning and growth perspective is sometimes called the “employee and technology perspective.” There is a cause and effect relationship between the perspectives. Good performance in the Learning and Growth objectives generally drive improvements in the Internal Business Process perspective, which should improve the company in the eyes of the customer, which ultimately leads to good financial results.

29. Classic Strategy Map Architecture Bill: This is the basic structure of the strategy map. Down the left-hand side, you will see the four perspectives of the balanced scorecard. This structure provides a framework to think more completely about both the desired outcome objectives (in the top perspectives) and the driver Objectives (in the bottom perspectives). The perspectives are organized so that the cause and effect logic flows upward. In the vertical arrows represent major strategic themes. These are a carefully-selected set of priorities that make up the strategy of the organization. They do NOT attempt to describe everything that the organization does. The focus on the strategy map is on supporting positive change (or transformational change, in many cases) to accomplish the vision and mission.Bill: This is the basic structure of the strategy map. Down the left-hand side, you will see the four perspectives of the balanced scorecard. This structure provides a framework to think more completely about both the desired outcome objectives (in the top perspectives) and the driver Objectives (in the bottom perspectives). The perspectives are organized so that the cause and effect logic flows upward. In the vertical arrows represent major strategic themes. These are a carefully-selected set of priorities that make up the strategy of the organization. They do NOT attempt to describe everything that the organization does. The focus on the strategy map is on supporting positive change (or transformational change, in many cases) to accomplish the vision and mission.

30. Strategic Theme Development Bill:Bill:

31. Cause and Effect Links in a Theme Strategy Map Bill: Bill:

32. Cause and Effect Links in a Theme Strategy Map Bill:Bill:

33. Cause and Effect Links in a Theme Strategy Map Bill:Bill:

34. Cause and Effect Links in a Theme Strategy Map Bill:Bill:

35. Process Bill:Bill:

36. Process Continued Bill:Bill:

37. Process Continued Bill:Bill:

38. Objective InfoSheets Bill:Bill:

39. Strategic Theme Bill:Bill:

40. Strategy Map Cascading

41. Strategy-Aligned Management: A Framework Built around BSC Principles

42. Outline Introductions Innovation as a Strategic Imperative Tapping into Employee Innovation Alignment: The Need and the Tools Employee Innovation Management Strategy-Aligned Innovation Leveraging Technology to Support Strategy-Aligned Innovation InsightVision THINK Platform Conclusion Bill: Bill:

43. The ‘suggestion box’ is ready to give way… Technology has created the opportunity to organize and promote employee suggestions Strategic alignment offers focus and energy to channel workforce creativity Jennifer:Jennifer:

44. How did we build our solution? We: Studied best-in-class examples Employee Involvement Association Secondary research Integrated competencies into a world-class, turnkey solution Piloted three distinct, strategic approaches within our own company to experience learning’s first-hand Jennifer:Jennifer:

45. Innovation initiatives need a balanced approach

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47. The Need to Communicate Jennifer:Jennifer:

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52. Outline Introductions Innovation as a Strategic Imperative Tapping into Employee Innovation Alignment: The Need and the Tools Employee Innovation Management Program Strategy-Aligned Innovation Leveraging Technology to Support Strategy-Aligned Innovation InsightVision THINK Platform Conclusion Bill: Bill:

53. What is Strategy-Aligned Innovation A blending of key principles, techniques and technologies relating to the BSC and Strategy-Aligned Management (SAM) and A well-designed, technology-enabled innovation-management program A powerful way to turbo-charge the execution of innovative business strategies

54. Keys to Supporting Innovation

55. Key Levers to Improve Innovation (BCG) “The critical, elusive ingredient is alignment—having the entire organization on the same page concerning objectives, tactics, and ultimately commitment to innovation.” (p.22) A second area ripe for an upgrade in most companies is measurement. If you don’t measure innovation, it tends to get overwhelmed by things that do get measured and that immediately impact the bottom line—a case of “the urgent crowding out the important.” (p.23) A third key area to focus on is the environment. Companies should take pains to ensure that the conditions that help people be more innovative, especially in the idea-generation phase—such as motivation, space to explore, the opportunity to develop deep domain knowledge, and time to think—are present. (p. 23) Source: Boston Consulting Group Study: Innovation 2006 Bill:Bill:

56. Outline Introductions Innovation as a Strategic Imperative Tapping into Employee Innovation Alignment: The Need and the Tools Employee Innovation Management Program Strategy-Aligned Innovation Leveraging Technology to Support Strategy-Aligned Innovation InsightVision THINK Platform Conclusion Bill: Bill:

57. Key Strengths of InsightVision Designed to Support Strategic Alignment Streamline the journey of creating cascaded strategy maps and scorecards Integration of Initiative Prioritization and Tracking Incremental Automation Leverage what you have Integrate spreadsheets and existing reports Build in reporting and analysis capabilities Reinforces Key BSC Concepts Central role of Strategic Objectives Strategic Themes Cause & Effect Relationships Strategy-Aligned Management Bill Bill

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63. Benefits enjoyed by Carlson Hotels Common language and focus on Strategy “Changed the conversations” Replaced Budget-focused to Strategy-focused Allowed broad, consistent deployment Over 70 scorecards, linked via cause & effect Hundreds of users Used in Monthly Operating Review Valuable drill-down capabilities 2004 was one of their best years of financial performance ever! BillBill

64. Quote from Carlson Hotel’s CIO "In the midst of rapid change in today's business environment, it is important for us to deliver a common point of view among all employees, all the way down to our line staff. With this software, we are able to harness the energy of each person in the organization and align everyone's efforts toward the strategies that are being deployed. The ability to effectively communicate the strategy of the organization, how we measure that effectiveness, and what we are doing to move those measures - that is our goal, and that is what Insightformation delivers." -- Scott Heintzeman BillBill

65. THINK Technology Platform

66. Dynamic landing page Jennifer:Jennifer:

67. Systematic process Jennifer:Jennifer:

68. Describe the idea Jennifer:Jennifer:

69. Support team Jennifer:Jennifer:

70. Review committee Jennifer:Jennifer:

71. Financial impact Jennifer:Jennifer:

72. Idea progress Jennifer:Jennifer:

73. Value of ideas Average impact $3,247 per suggestion submitted $9,317 per idea implemented Source: Employee Involvement Association, 2004 Survey Average awards paid out Average of $664 per implemented suggestion (7.5% of impact) Source: Employee Involvement Association, 2004 Survey $25 per idea submitted Source: Carlson Marketing performance engagement statistics Jennifer:Jennifer:

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76. Outline Introductions Innovation as a Strategic Imperative Tapping into Employee Innovation Alignment: The Need and the Tools Employee Innovation Management Strategy-Aligned Innovation Leveraging Technology to Support Strategy-Aligned Innovation InsightVision THINK platform Conclusion Bill: Bill:

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