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Scope
What Organization Design principles would build innovation as a competitive advantage?
Business Performance Discontinuous Innovation
Incremental Innovation
Concepts
Organizations can be designed to spur or curb innovation Innovation purpose differs by industry, life stage, resources, culture, therefore, organization design changes accordingly
DNA of Organizations
EXPLOITERS
Growth by driving efficiencies in the core business -Stable well understood strategy -Exploiters emphasize retention -Constant cost reduction -Continuous quality improvement -Berate Failure
COMBINATION
Managing the present growth by driving efficiencies, while building future growth engines
EXPLORERS
Growth by driving entry into new businesses or product lines -Explorers emphasize variation -Look for new bases of competitive advantage -Incentivize Failure
Culture
Commonly held values/beliefs that constrain & enable actions
Celebrations
Hard to change
Architecture and Routines need to be changed first, to bring about cultural change over time
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DNA of Organizations
EXPLOITERS Growth by driving efficiencies in the core business
COMBINATION
Managing the present growth by driving efficiencies, while building future growth engines
EXPLORERS
Growth by driving entry into new businesses or product lines
Routines
Fixed tasks SOPs Short term orientationquarter reviews/weekly IT man friday
Culture
Bureaucracy Process oriented Low risk/experiement Low tolerance for failure
EXPLOITER
EXPLORER
Brain storming Informal chatting Slack-free time No time sheets Diverse hiring
Examples: ARC
Functional Structure vs Divisional Structure: who leads strategy-function or division? Glocal or Local?
Incentives: sales vs. profit; growth vs. share gain; cost cutting vs. revenue increase
Hiring: hire for brilliance; or diversity; or attitude; or skills; technology vs. FMCG Planning Calendar -Time Management: Work Life Balance/I&GP, AOP: PepsiCo. / Coca Cola Work Vs. HUL Vs. Godrej How do you spend your money: Start Up- Cash Starved; vs. cash rich Importance of Leader (skincare in HUL), Industry (tech vs FMCG), Life Stage of Organization (Mature vs Nascent)
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A Trade-Off?
There is a trade-off between an organization being an explorer or an exploiter
Eg. Slack is inefficient for an exploiter
May be possible for a company to include structurally separated organizational units (or sub-systems) that have their own ARC
P&G has successfully accomplished this very successfully under the leadership of A.G.Lafely
centrally led innovation organization Foray into cutting edge innovation processes like open innovation, crowd sourcing and design thinking localized activation organization
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Slack
Each Innovation manager leads only 2 innovation projects at one time Organization focuses only on big bets for the future, small volume ideas not pursued Informally, flexi time is accepted
Culture
Intelligent Speak/word smithing Innovation is for cool people/ dressing/exposure
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Structural Change
Unilever P&G PepsiCo (small extent)
Open Innovation
P&G s open innovation process (retention)
Outside Help
Project-PepsiCo Meet Indra Nooyi
Acquisitions
Naked, Ben & Jerrys, Body Shop, Innocent
Leader Led- Apple, Google Hire Innovators-IDEO, Designers Function Led-only happens when the competitive advantage is driven by that function e.g. engineers in technology, designers/creative/consultants in agencies/services. Recruitment plays a big role, individual personality driven, incentive is internal, more than external
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Concepts
Exploiter organizations Vs. Explorer (pure innovation) Organizations & how mostly organizations today are a combination of both Organization Learning process around- variation, selection and retention-VRS guides explorer, exploiter and combination organizations. Specifically use 3M, Google and IDEO as examples, Red Bull, Clorox, Rx, Ben & Jerrys (Combination) Learning Organization Design through the Architecture, Routines and Cultures framework Exploring how the Architecture, Routines and Cultures for explorer organizations differ from Exploiter and how combination organizations are working through ARC. Specific examples from P&G, IDEO, 3M, GE, PepsiCo, Google, Apple, Xerox & PARC, Microsoft, Amazon, Red Bull
Impact of external environment-industry and life stage of industry play a role. E.g. technology led industries vs. hygiene led industries or mature industries vs. nascent industries or nature of competition (e.g. organic players in detergents, or fortified drinks in beverages)
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Idea Evaluation
Full Development
Launch Preparation
Market Execution
(Test or Full)
Decision To Develop
Decision to Produce
Feedback Corrections
Full Development
Launch Preparation
Market Execution
(Test or Full)
Idea creation Use brainstorming techniques/ creative tools to write out ideas
Classification and refinement of ideas Sequential recycling with consumers green, dustbin, rework Refinement of ideas Idea Selection Check strategic/technical fit Inno checkuniqueness, ITB, ITP
Decision to Charter
Input Consumer Results; Strategic fit; Technical fit Delivery until next gate Resources needed until next gate Output from Excom GO/NO GO/HOLD decision to make a project Allocate project team Allocate project funds
Full Development
Launch Preparation
Market Execution
(Test or Full)
Concept Concept Development Development Deep consumer understanding-consumer tension Develop concept Quantitative concept test results Develop final concept
Concept
Preliminary
Validation
Develop product brief Feedback from relevant functions (Financial, SRA,R&D, Commercial, QA, Legal) Pre-prototyping Need based Qualitative tests Need based
Business Case
Develop preliminary GTM out sales plan Define preliminary target business case (GM level) Key Success Factors, Risk assessment
Decision to Develop
Input Final Concept Preliminary business case Development plan and resources needed for full development Output from Excom GO/NO GO/HOLD decision to develop project Allocate project team Allocate project funds
Full Development
Launch Preparation
Market Execution
(Test or Full)
Product Development Flavor and Product development Product refinement qualitative CPT
Commercialization
Develop Sales & Marketing Plan A&M allocation Communication development GTM closures
Supply Chain and Manufacturing Trial runs Propose Capex NPPR written and uploaded
Decision to Launch
Input Business case Communication plan GTM recommendation test or national Research Results Output from Excom GO/NO GO/HOLD decision to launch/test Allocate project team Approve/Not approve capex
Full Development
Launch Preparation
Market Execution
(Test or Full)
Production Plan
Packaging artwork development and shade cards Launch plan at city/outlet level
Launch conference planning Develop incentive plan, agree DM/TM POSM and visibility agreements
Capex approved, machinery in NPPR approvals Concentrate order placed RM/PM orders First production of concentrate
Set-up volume plan and Financials validation Review launch success criteria Update risk assessment Finalize Business Case
Decision to Produce
Input Detailed Launch Plan Communication Package Output from Excom GO/NO GO/HOLD decision to produce
Full Development
Launch Preparation
Market Execution
(Test or Full)