From touchpoints to journeys: Seeing the world as customers do
By Nicolas Maechler, Kevin Neher, and Robert Park

To maximize customer satisfaction, companies have long emphasized touchpoints. But doing so can divert attention from the more important issue: the customer’s end-to-end journey.

http://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/from-touchpoints-to-journeys-seeing-the-world-as-customers-do?cid=other-eml-alt-mip-mck-oth-1603

Super insight

When most companies focus on customer experience they think about touchpoints—the individual transactions through which customers interact with parts of the business and its offerings. This is logical. It reflects organization and accountability, and is relatively easy to build into operations. Companies try to ensure that customers will be happy with the interaction when they connect with their product, customer service, sales staff, or marketing materials. But this siloed focus on individual touchpoints misses the bigger—and more important—picture: the customer’s end-to-end experience. Only by looking at the customer’s experience through his or her own eyes—along the entire journey taken—can you really begin to understand how to meaningfully improve performance.In our experience, six actions are critical to managing customer-experience journeys (articles elsewhere in this volume explore several of these topics in depth):

• Step back and identify the nature of the journeys customers take—from the customer’s point of view.

• Understand how customers navigate across the touchpoints as they move through the journey.

• Anticipate the customer’s needs, expectations, and desires during each part of the journey.

• Build an understanding of what is working and what is not.

• Set priorities for the most important gaps and opportunities to improve the journey.

• Come to grips with fixing root-cause issues and redesigning the journeys for a better end-to-end experience.

The amount of time it can take to identify journeys, understand performance, and redesign the experience can vary widely from company to company. For companies seeking only to fix a few glaring problems in specific journeys, top-down problem solving can be enough. But those that want to transform the overall customer experience may need a bottom-up effort to create a detailed road map for each journey, one that describes the process from start to finish and takes into account the business impact of enhancing the journey and sequencing the initiatives to do so. For many companies, combining operational, marketing and customer, and competitive-research data to understand journeys is a first-time undertaking, and it can be a long process—sometimes lasting several months. But the reward is well worth it; creating a fact base allows management to clearly see the customer’s experience and decide which aspects to prioritize.

10 Principles of Customer Strategy
It’s no longer enough to target your chosen customers. To stay ahead, you need to create distinctive value and experiences for them

Strongly urge you to read the full article and other studies highlighted in it.

The conventional approach to gaining customers, which was based on picking a segment of purchasers to target and developing products for that segment, is no longer sufficient. A customer strategy goes further: It is the articulation of the distinctive value and experience your company will deliver to a chosen set of customers over three to five years, along with the offerings, channels, operating model, and capabilities you will need….
….A well-designed customer strategy will coordinate many different functions, skills, and practices. For example, it should encompass data analytics; go-to-market and channel choices; and the delivery of products, services, and experiences.Ten principles are at the heart of any effective customer strategy. These principles are universally applicable, regardless of what industry a company operates in, whether it focuses on a business or consumer clientele, where it does business, or what products and services it offers. Based on long-standing practice and observation — along with our survey and interviews with key players in eight industries — these principles show how companies can position themselves for customer success.

How Domino’s Pizza Reinvented Itself
Bill Taylor
NOVEMBER 28, 2016

https://hbr.org/2016/11/how-dominos-pizza-reinvented-itself

This is a great turnaround story with a lot of insight in how to look at your business differently to turn it around

The scale of the changes at Domino’s are remarkable. Doyle became CEO in 2010, after some troubled years, when the company’s growth was slow and its stock price was stuck, a lame $8.76 per share. Today, Domino’s is the second-largest pizza chain in the world, with more than 12,500 locations in more than 80 countries, and a share price approaching $160. It has moved from being the butt of late-night jokes to becoming a favorite of the stock pickers on CNBC… 

… How have Doyle and his colleagues unleashed so much change in such a short period of time? First, by reminding themselves of the business they’re in. Domino’s is not just in the pizza-making business, the CEO emphasizes, but in the pizza-delivery business, which means it has to be in the technology business. “We are as much a tech company as we are a pizza company,”....  All that technology has changed how customers order (using the Domino’s app, or directly via twitter, or even by texting an emoji); how they monitor the status of their order; and how Domino’s manages its operations. 

Second, Doyle explains, Domino’s had to reinvigorate the brand. Even if delivery was the essential part of its business, the pizza mattered too—and the pizza was bad. Soon after he took over, the company launched an ad campaign that has become legendary for its boldness, sharing comments from focus groups about what people thought of the product: “worst pizza I ever had”; “the sauce tastes like ketchup”; “the crust tastes like cardboard.” Doyle appeared in the ads, accepted the withering criticism, and promised to “work days, nights, and weekends” to get better 

He and his colleagues worked to spice up the company’s image as well as its products. Once the pizza got better, Doyle announced plans to open a Domino’s in Italy—a move that was nothing if not daring. (Starbucks still doesn’t have coffee shops in Italy, although there is talk of opening them in 2017.) He also worked with crowd-sourced auto designers to create a Domino’s delivery car, the DXP, a colorful, cool-looking, modified Chevrolet Spark (an article called it a “cheese lover’s Batmobile”) with just one seat, and a warming oven with room for 80 pizzas 

“Transportation is a core part of the business,” Doyle explained, so it makes sense for Domino’s to create a “purpose-built pizza-delivery vehicle.” (The company is also experimenting with robotic delivery, and delivery by drones.) There is substance to all of these initiatives, but it’s pretty obvious they’re also designed to modernize the company’s image, to create a sense of style and a sense of humor to accompany the mushrooms and pepper.

Sustaining the momentum of a transformation

By Michael Bucy, Kevin Carmody, Jennifer Davies, and Greg Peacocke

Five elements can keep bad habits from reasserting themselves.

http://www.mckinsey.com/business-functions/mckinsey-recovery-and-transformation-services/our-insights/sustaining-the-momentum-of-a-transformation?cid=other-eml-alt-mip-mck-oth-1611

Sorry for not having any postings in November. A few things contributed:
• Recovering from the U.S. elections (this is NOT a political statement)
• Some client work
• A LOT OF TIME WITH MY GRANDCHILDREN!!!!!!!!

Let’s now continue our dialog

The importance of sustaining a transformation may sound obvious—and the actions required straightforward. But they’re not. Companies typically neglect this long-term imperative because, understandably, they’re obsessed by the short-term gains. They underestimate the difficulty of kicking old habits and developing a healthy new approach that will be manifest in thousands of everyday actions rather than referenced by a simple checklist. New skills, intense discipline, and strong personal relationships are needed to maintain the momentum. 

The key to sustaining a transformation is to embed what we call an “execution engine,” a replicable process that fundamentally changes performance rhythms and decision making in the business. It’s about raising sights beyond the strategic choices and daily initiatives to change how the organization 

1. Take an independent perspective.
Challenging everything is exhausting, but companies that sustain change are never satisfied with the situation today. They continue to look for fresh facts, rather than accepting the status quo. They guard constantly against falling back on negotiated targets that managers will accept easily. 

2. Think like an investor (particularly, a private-equity firm).
This mind-set is not always popular inside organizations, but adopting it is not just for the executive team. We all know how passive employees kill the dynamism of a business. Employees in successful companies sustain their transformation by constantly challenging colleagues, not just getting along. They refuse to settle back into a leisurely pace of decision making. And they pursue new sources of value. 

3. Ensure ownership in the line.
During the transformation program per se there is an inevitable tendency for management and outside advisers to set the targets (as happened with the North American engineering company). This should be resisted. Businesses with large central teams that own centrally imposed initiatives, embedded in budgets without buy-in from managers, are most at risk of falling back into their old ways. 

4. Execute relentlessly.
It’s all too easy for companies to allow the pace to let up once the initial improvement targets are achieved. It’s simpler to delegate, after all. But when senior executives go back to high-level target setting and avoid immersing themselves in the details—perhaps on the dubious pretext that they don’t want to micromanage—the warning lights should be starting to flash. 

5. Address underlying mind-sets.
Inspired employees make all the difference in an organization and in our experience conspicuously outperform those imprisoned by a traditional command-and-control culture. Managers should not just challenge; they must instill meaning. They must recognize extra effort. And they should not assume that employees necessarily understand why the company has to operate in a different way in the future.

Know Your Customers” “Jobs to be Done:
• Clayton M. Christensen
• Taddy Hall
• Karen Dillon
• David S. Duncan
FROM THE SEPTEMBER 2016 ISSUE

https://hbr.org/2016/09/know-your-customers-jobs-to-be-done?cm_sp=Magazine%20Archive-_-Links-_-Previous%20Issues

We discussed the useful concept in class. The article really brings these concepts alive

…After decades of watching great companies fail, we’ve come to the conclusion that the focus on correlation—and on knowing more and more about customers—is taking firms in the wrong direction. What they really need to home in on is the progress that the customer is trying to make in a given circumstance—what the customer hopes to accomplish. This is what we’ve come to call the job to be done….. 

….When we buy a product, we essentially “hire” it to help us do a job. If it does the job well, the next time we’re confronted with the same job, we tend to hire that product again. And if it does a crummy job, we “fire” it and look for an alternative. (We’re using the word “product” here as shorthand for any solution that companies can sell; of course, the full set of “candidates” we consider hiring can often go well beyond just offerings from companies.)... 

...Jobs analysis doesn’t require you to throw out the data and research you’ve already gathered. Personas, ethnographic research, focus groups, customer panels, competitive analysis, and so on can all be perfectly valid starting points for surfacing important insights. Here are five questions for uncovering jobs your customers need help with. 

Do you have a job that needs to be done?In a data-obsessed world, it might be a surprise that some of the greatest innovators have succeeded with little more than intuition to guide their efforts. Pleasant Rowland saw the opportunity for American Girl dolls when searching for gifts that would help her connect with her nieces.  

Where do you see non-consumption?You can learn as much from people who aren’t hiring any product as from those who are. Non-consumption is often where the most fertile opportunities lie, as SNHU found when it reached out to older learners. 

What work-arounds have people invented?If you see consumers struggling to get something done by cobbling together work-arounds, pay attention. They’re probably deeply unhappy with the available solutions—and a promising base of new business. When Intuit noticed that small-business owners were using Quicken―designed for individuals—to do accounting for their firms, it realized small firms represented a major new market. 

What tasks do people want to avoid?There are plenty of jobs in daily life that we’d just as soon get out of. We call these “negative jobs.” Harvard Business School alum Rick Krieger and some partners decided to start QuickMedx, the forerunner of CVS MinuteClinics, after Krieger spent a frustrating few hours waiting in an emergency room for his son to get a strep-throat test. MinuteClinics can see walk-in patients instantly, and their nurse practitioners can prescribe medicines for routine ailments, such as conjunctivitis, ear infections, and strep throat. 

What surprising uses have customers invented for existing products?Recently, some of the biggest successes in consumer packaged goods have resulted from a job identified through unusual uses of established products. For example, NyQuil had been sold for decades as a cold remedy, but it turned out that some consumers were knocking back a couple of spoonfuls to help them sleep, even when they weren’t sick. Hence, ZzzQuil was born, offering consumers the good night’s rest they wanted without the other active ingredients they didn’t need.

How growth champions create new value

Interesting take on what we covered in our Org Growth Class. Strongly recommend you read the full article

http://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/now-new-next-how-growth-champions-create-new-value?cid=other-eml-nsl-mip-mck-oth-1610

Three horizons of action for creating new growth
NOW initiatives find growth through new niches within categories, segments, and markets. NEW actions focus on developing new products and services. NEXT initiatives capture organic growth from new business models 

NOW initiatives focus on new ways to generate growth quickly. This could mean selling an existing product in a new channel or market, launching a product variant, rejuvenating a core product by infusing it with new meaning, or opening up micromarkets. NOW initiatives have a high likelihood of impact, often require relatively little effort, and take a rather short time to implement. They represent a company’s “bread-and-butter business,” as one CMO described it 

NEW initiatives take something that works and use it as the basis for innovation, i.e. launch a new product, expand a brand into a new category, or address new segments. Because NEW initiatives venture beyond existing business, analyzing the market as it is won’t be enough. Identifying unmet needs and spotting NEW opportunities require being close to consumers and customers 

NEXT initiatives try out new business models, explore disruptive ideas, and create things from scratch. Often they take a lot of time and energy and have highly uncertain outcomes. But if they work, they can have huge impact. Disruptors, such as Uber, AirBnB, and Netflix, are leading the way in this respect.

We also found that “growth champions” tend to exhibit the following characteristics: 

They take a structured approach to creating and managing their portfolio of growth initiatives. “You have to be systematic when going after revenue growth.

They use advanced analytics and agile insights techniques to spot opportunities. They don’t expect to come up with market-beating ideas by looking at the same data in the same way as their competitors do. They unleash the power of advanced analytics on highly granular consumer/customer data to develop distinctive insights, and they mobilize their organizations to act on them quickly

They mobilize for quick results, beating competitors to the market.A common complaint is that many marketing organizations are too slow, taking up to two years to bring a simple consumer product to market or a year to launch a new campaign. In today’s marketplace, the emphasis is on speed-to-market and on rapid test, learn, and optimize. Many of our growth champions have adapted tech-company techniques, e.g., hackathons and rapid prototyping, to learn fast and drive results quickly.

The four pillars of distinctive customer journeys
By Joao Dias, Oana Ionutiu, Xavier Lhuer, and Jasper van Ouwerkerk

New research reveals that focus, simplicity, “digital first,” and perceptions matter most.

Interesting insights into the customer's buying decision  journey:

In recent years, customer experience (CX) has emerged as a major differentiator for large companies… 

…. In this dynamic environment, institutions face a stiff challenge to differentiate their offerings while reducing cost and complexity for customers—and to do it at a profit.Overcoming these challenges is critical not just to meet rising customer expectations and to compete with new digital attackers but also to generate significant business impact. Our research indicates that for every 10-percentage-point uptick in customer satisfaction, a company can increase revenues 2 percent to 3 percent… 

…At a time when the customer-satisfaction scores of top-quartile institutions can exceed those of bottom-quartile players by as much as 30 to 40 percentage points, the financial payoff from best-in-class CX can be significant indeed… 

.. Analyzing and ranking correlations between customer satisfaction and operational factors (such as the reasons a customer chooses one company over others, cycle times, features offered, and the use of digital channels) in our survey, four pillars of great customer-experience performance stood out: 

• Focus on the few factors that move the needle for customers—transparency and simplicity are most important:  

• Ease and simplicity: The payoff trade-off --Today’s harried customer values convenience. Cutting down the time it takes to complete an individual journey, such as applying for an account, by making it easier and simpler has a deep effect on customer satisfaction. 

• Master the digital-first journey, but don’t stop there. We analyzed different types of customer journeys: those that are completely online, those that start online and finish in a branch, those that start in a branch and finish online, and those that take place fully in a branch. We found that digital-first journeys led to higher customer-satisfaction scores (Exhibit 2) and generated 10 to 20 percentage points more satisfaction than traditional journeys. 

• Brands and perceptions matter It may not be surprising that companies whose advertising inspires their customers with the power and appeal of their brand or generates word of mouth deliver 30 to 40 percentage points more satisfaction than their peers. But how advertising or word of mouth affects perceptions is crucial

Let’s talk about sales growth

High-growth companies have differentiated themselves in sales through analytics, big data, and a focus on the changing technology landscape

http://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/lets-talk-about-sales-growth?cid=podcast-eml-alt-mip-mck-oth-1609

As an overview of the article that is in the form of an interview of the author of Sales Growth: Five Proven Strategies from the World’s Sales Leaders(John Wiley & Sons, May 2016)

Question in the interview:

Great, so growth is certainly a topic that’s getting a lot of attention, particularly with the economic climate being so challenging. But, Mitra, there are companies that are still able to grow, even within the constrained environment we are in today. What are they doing that the others aren’t?

• First, they find growth before their competitors do. So they invest in identifying growth opportunities, whether through understanding trends or drilling into big data or finding pockets of growth in their existing markets. 

• Second, they sell the way their customers want to buy. They use multiple channels to reach and serve customers of all different sizes and different markets. And they optimize and organize across direct, indirect, and digital channels very efficiently. 

• Third, they soup up their sales engines, and especially, they invest in sales operations, pre-sales, and the alignment between marketing and technology to fire up and build their engines for growth.

• Fourth, they focus on their people. This one goes without saying, that there’s a need to spend time training, coaching, and mentoring the front-line sales teams and to balance that between both the drive for near-term growth and building longer-term capabilities for the field.

• And finally, they lead from the top: they invest in and gain commitment from the organization and are able to build the vision for their change and their plans from the executives and from the top down—but they also invest in change management and implement change from the ground up

Big Deals Like Bayer’s Often Fail to Deliver High Performance
Fair Game
By GRETCHEN MORGENSON SEPT. 16, 2016

http://www.nytimes.com/2016/09/18/business/big-deals-like-bayers-often-fail-to-deliver-high-performance.html?smprod=nytcore-ipad&smid=nytcore-ipad-share&_r=0

This article highlights our many discussion on the challenges of growing through an acquisition strategy. My belief is that M&A can play an important role in building the Capability Platform to enable organic growth

If the deal goes through, Monsanto’s executives and shareholders will receive a 44 percent premium to their company’s stock price on Wednesday, before Bayer sweetened its offer. The companies’ bankers and deal advisers will also reap rich rewards in the deal, which will create a global pharmaceuticals, health care and pesticides behemoth.History suggests, however, that one group should be wary of the transaction: Bayer’s stockholders.......That’s the message in a new and comprehensive analysis by the S&P Global Market Intelligence team. “Mergers & Acquisitions: The Good, the Bad, and the Ugly (and How to Tell Them Apart),” by Richard Tortoriello and a group of analysts, found that among Russell 3000 companies making significant acquisitions, post-deal returns generally under performed those of their peers.“Despite the often-heard claim of M&A synergies,” the report said, “acquirers lag industry peers on a variety of fundamental metrics for an extended period following an acquisition. Profit margins, earnings growth and return on capital all decline relative to peers, while interest expense rises, as debt soars, and other ‘special charges’ increase.”.....Timing, he speculated, is one reason for the poor performance. “Mergers and acquisitions really heat up at the top of the market when business prospects going forward aren’t as good,” he said. “Then it cools down when the market falls, just when you’d want to be buying stocks and companies.”......But precious few executives seeking to juice their earnings via acquisitions will get what they wished for. The average acquisition, the S&P Global study concluded, “tends to be dilutive to earnings growth over an extended period.” 

Other performance metrics — returns on both equity and invested capital — also declined as acquirers compared with their industry peers. This is partly a result of increased interest expense and other charges. And when looking at return on invested capital, many post merger companies struggled under the weight of their increased debt loads........Another aspect of failing deals: Those using stock as buyout currency under perform those deploying cash, as Bayer is doing with Monsanto. And the larger the stock acquisition, the more likely it is to under perform significantly, the study found. Acquirers using the highest percentage of stock under perform industry peers by 3.3 percent one year after the deal is done and by 8.1 percent after three years.

From touchpoints to journeys: Seeing the world as customers do
By Nicolas Maechler, Kevin Neher, and Robert Park

http://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/from-touchpoints-to-journeys-seeing-the-world-as-customers-do?cid=other-eml-alt-mip-mck-oth-1603

To maximize customer satisfaction, companies have long emphasized touchpoints. But doing so can divert attention from the more important issue: the customer’s end-to-end journey.

Great article and strongly recommend you g to the original source

When most companies focus on customer experience they think about touchpoints—the individual transactions through which customers interact with parts of the business and its offerings........customer journeys include many things that happen before, during, and after the experience of a product or service. Journeys can be long, stretching across multiple channels and touchpoints, and often lasting days or weeks........ he explosion of potential customer interaction points—across new channels, devices, applications, and more—makes consistency of service and experience across channels nigh impossible—unless you are managing the journey, and not simply individual touchpoints........the customers’ cumulative experience across multiple touchpoints, multiple channels, and over time.......Six actions are critical to managing customer-experience journeys :

• Step back and identify the nature of the journeys customers take—from the customer’s point of view.

• Understand how customers navigate across the touchpoints as they move through the journey.

• Anticipate the customer’s needs, expectations, and desires during each part of the journey.

• Build an understanding of what is working and what is not.

• Set priorities for the most important gaps and opportunities to improve the journey.

• Come to grips with fixing root-cause issues and redesigning the journeys for a better end-to-end experience.

Bad” Innovation Is Just What Your Company Needs

http://www.strategy-business.com/blog/Bad-Innovation-Is-Just-What-Your-Company-Needs?gko=cc371&utm_source=itw&utm_medium=20160721&utm_campaign=resp

Interesting article. See the original for great examples of each innovation type.

It’s easy to spot and celebrate the innovations that change company fortunes: Apple’s iPhone, Warner-Lambert’s (and then Pfizer’s) Lipitor, Microsoft’s Windows, to name a few. What is harder to appreciate are those innovations that aren’t the blockbusters and home runs but nonetheless play a critical role in a company’s innovation strategy. I’m not talking about the incremental improvements, but rather the value of launching new products and services that hold tremendous value even though they don’t shoot for the moon.
What follows are four perfectly good reasons, aside from world domination, to pursue innovations.

1. Innovation as placeholder. If you already have a dominant position in your market, chances are good that when a new niche product emerges in that space, your company would rather wait to see whether it matures into a clear threat before responding. But that could be a mistake. By the time the impact of that product becomes clear, you may have lost your window to launch a version that will gain traction. Instead, consider developing and launching a me-too product. Think of it as a placeholder to keep customers from straying. 

1. Innovation as proving ground. Smaller innovation projects can provide important but affordable ways to test new technologies, market opportunities, business models, and emerging talent. The interdisciplinary nature of developing and launching a smaller-scale project, and the reality of its outcome, can plainly show how a product or service is likely to do on the Broadway stage of your market, but with a community-theater budget.

1. Innovation as trust building. Backing an innovation isn’t a single decision. It’s a web of choices and actions to which everyone in the company must commit. That commitment is the core of the innovation process and requires enormous trust among coworkers and departments. No amount of talk can substitute for the level of trust that can be built through shared experience. If you wait for the really big innovations to form these bonds, it will be too late.

1. Innovation as a long game. For many innovation projects, the need to promise a certain and significant return on investment can doom otherwise viable opportunities. The traditional planning cycle kills projects not because the outlook for them is bad, but because nothing less than an overnight blockbuster will be considered a success. It’s called “giving birth to a 17-year-old” — and the class valedictorian or captain of the football team, at that. Some things just take time. Instead of thinking about whether the first product will be a success, consider whether the first product will enable you to build the right capabilities, understand the market potential, develop key partners, and guide the market toward where you want to be in five years.

http://us7.campaign-archive1.com/?u=c085f68552cb36b8f48e68bd7&id=03ae049069&e=1eb3a55cc4

We discussed topics like this extensively in our Driving Organic Growth and Innovation class. Rita McGrath is one of the leaders in this area of driving growth in uncertain business environments.

Innovation is on a roll these days as a hot topic of conversation. Unfortunately, despite all the talk about it (search on “Innovation” and it returns approximately 500,000,000 results) the doing, to many, is still a black box. Indeed, a recent McKinsey survey reported that 86% of the executives that responded thought that innovation would be highly important to their future growth strategies, while 80% reported that they were concerned about their business models being challenged. Only 6% reported being pleased with their company’s innovation performance, and the most telling response to me is that the 94% who were not pleased with how their innovation process was going had no idea what the problem was.... 

....My CEO won’t invest in innovation unless I can give him an ROI projection

 This is an all-time classic problem – see Clayton Christensen and colleague’s excellent article “Innovation Killers” for why. The first thing senior executives need to understand is that as uncertainty in your operations increases (as it does when you are doing something new to you), the value that is being created can in no way be captured in a present value calculation. Instead, you need to think of it in terms of option value. Consider the graphic above – as uncertainty increases, the present value component of value decreases, to the point at which when you are waaay out there the value you are creating is almost entirely option value.

....So what I would tell my ROI-hungry CEO is that… “unless you are investing in those hard-to-value but opportunity creating options (high uncertainty), you are implicitly voting that today’s business more or less as it is, is going to drive your growth needs in the future.” 

These Five Behaviors Can Create an Innovation Culture
http://www.strategy-business.com/blog/These-Five-Behaviors-Can-Create-an-Innovation-Culture?gko=85549&utm_source=itw&utm_medium=20160721&utm_campaign=resp

Some real interesting thoughts:

Many companies want to establish a culture of innovation, one that will encourage employees to take risks that lead to breakthrough products. But how exactly to build this type of culture often eludes senior leaders — threatening the success of their innovation initiatives.,,,Culture is the net effect of shared behaviors, and therefore adopting innovative behaviors must come first. You change the culture by becoming more innovative — not the other way around....companies should focus on changing a few critical behaviors — “a small number of important behaviors that would have great impact if put into practice by a significant number of people.” When it comes to innovation, adopting the following five behaviors can help your organization to make the leap.

1.  Build collaboration across your ecosystem. Innovation is a team sport. It requires excellent collaboration among siloed business and functional units and across geographies, as well as with external partners. 

1. Measure and motivate your intrapreneurs. Intrapreneurs are the folks in larger organizations who couple an entrepreneurial mind-set with the ability to leverage company assets such as channels, brand, and market savvy.To enable intrapreneurs to succeed, you’ll need to measure and recognize their innovative efforts. Three metrics play special roles.

1. Emphasize speed and agility. Innovation happens best when people move quickly. (Innovation and growth is all about momentum)

1. Think like a venture capitalist (VC). VCs tend to focus on big ideas that make the risk worth taking. You should do the same. When you hear a new idea, ask if it can make a significant difference. 

1. Balance operational excellence with innovation. Some experts think big companies can’t prevail in the face of disruptive innovation, even if they excel in operations. The truth is they not only can, but must. The tension that comes from balancing operations with innovation drives true success in today’s world.

Get rid of everything, just not your smart phone

Pretty amazing stuff – if you are not a learning organization, you will b dead

• ·         In 1998, Kodak had 170,000 employees and sold 85% of all photo paper worldwide.  Within just a few years, their business model disappeared and they became bankrupt. What happened to Kodak will happen to a lot of industries in the next 10 years - and most people don't see it coming.
• ·       In 1998, did you think that 3 years later you would never take pictures on paper again? Yet digital cameras were invented in 1975. The first ones only had 10,000 pixels, but followed Moore's law. So, as with all exponential technologies, it was a disappointment for a long time, before it became way superior and got mainstream in only a few short years.
•  It will now happen with artificial intelligence, health, autonomous and electric cars, education, 3D printing, agriculture and jobs.
•   Welcome to the 4th Industrial Revolution--Welcome to the Exponential Age. --Software will disrupt most traditional industries in the next 5-10 years.

o   Uber is just a software tool, they don't own any cars, and are now the biggest taxi company in the world.

o   Airbnb is now the biggest hotel company in the world, although they don't own any properties.

o   Artificial Intelligence: Computers become exponentially better in understanding the world.

o   This year, a computer beat the best Go player in the world, 10 years earlier than expected.

o   Facebook now has pattern recognition software that can recognize faces better than humans.

o   In 2030, computers will become more intelligent than humans.

o   Autonomous cars: in 2018 the first self-driving cars will be available for the public. Around 2020, the complete industry will start to be disrupted.  You don't want to own a car anymore. You will call a car with your phone, it will show up at your location, and drive you to your destination. You will not need to park it, you will only pay for the distance driven, and can be productive while driving. Our kids will never get a driver's license, and will never own a car.  It will change cities, because we will need 90-95% less cars. We can transform former parking space into parks. 1.2 million people die each year in car accidents worldwide. Traditional car companies try the evolutionary approach, and just build a better car, while tech companies (Tesla, Apple, Google) will do the revolutionary approach and build a computer on wheels.  Engineers from Volkswagen and Audi are completely terrified of Tesla. We now have one accident every 100,000 kms.  With autonomous driving, that will drop to one accident every 10 million kms.  That will save a million lives each year. Insurance companies will have massive trouble because without accidents, insurance will become 100x cheaper

o   Electricity will become incredibly cheap and clean: solar production has been on an exponential curve for 30 years, but you can only now see the impact. Last year, more solar energy was installed worldwide than fossil energy.  The price for solar will drop so much that all coal companies will be out of business by 2025.
With cheap electricity comes cheap and abundant water.  Desalination now only needs 2 kWh per cubic meter. We don't have scarce water in most places, we only have scarce drinking water.  Imagine what will be possible if anyone can have as much clean water as he/she wants, for nearly no cost.

o   Health 

§  The Tricorder X price will be announced this year.  There will be companies who will build a medical device (called the "Tricorder" from Star Trek) that works with your phone.  It will take your retina scan, your blood sample, and you will breath into it.   It will then analyse 54 biomarkers that will identify nearly any disease.

§  t will be cheap, so in a few years everyone on this planet will have access to world class medicine, nearly for free.

o   3D printing 

§  The price of the cheapest 3D printer came down from $18,000 to $400 within 10 years.  At the same time, it became 100 times faster.

§  All major shoe companies have started printing 3D shoes.

§  Spare airplane parts are already 3D-printed in remote airports

§  The space station now has a printer that eliminates the need for the large amount of spare parts they used to have in the past.

§  At the end of this year, new smartphones will have 3D scanning possibilities.  You can then 3D scan your feet, and print your perfect shoe at home.

§  In China, they have already 3D-printed a complete 6-story office building

§  By 2027, 10% of everything that's being produced will be 3D-printed.

o   Business opportunities 

§  If you think of a niche you want to go into, ask yourself, "In the future, do you think we will have that?" and if the answer is yes, how can you make that happen sooner?

§  If it doesn't work with your phone, forget the idea.

§  And any idea designed for success in the 20th century is doomed in to failure in the 21st century.

o   Work (this IS the real challenge of the future--not immigration nor globalization)

§  70-80% of jobs will disappear in the next 20 years.

§  There will be a lot of new jobs, but it is not clear if there will be enough new jobs in such a short time

-In the US, young lawyers already can't find jobs. Because of IBM Watson, you can get legal advice (so far, for more or less basic stuff) within seconds, with 90% accuracy compared with 70% accuracy when done by humans. There will be 90% less lawyers in the future, only specialists will remain.

-Watson already helps nurses diagnose cancer 4 times more accurately than human nurses.

o   Agriculture

§  There will be a $100 agricultural robot in the future.

§  Farmers in 3rd world countries can then become managers of their fields instead of working in their fields all day. 

§  Aeroponics will need much less water.

§  The first petri-dish produced veal is now available and will be cheaper than cow-produced veal in 2018.

§  Right now, 30% of all agricultural surfaces are used for cows.  Imagine if we don't need that space anymore.

§  There are several startups who will bring insect protein to the market shortly.  It contains more protein than meat.  It will be labeled as an "alternative protein source" (because most people still reject the idea of eating insects)

o    Longevity 

§  Right now, the average life span increases by 3 months per year.

§  Four years ago, the life span used to be 79 years, now it's 80 years

§  The increase itself is increasing, and by 2036, there will be more than a one year increase per year.  So, we all might live for a long, long time, probably much longer than 100.

o   Education 

§  The cheapest smartphones already cost $10 in Africa and Asia.   In 2020, 70% of all humans will own a smartphone.

§  That means everyone has the same access to a world-class education.

§  Every child in the world will be able to use Khan Academy to learn everything children in First World countries learn.

§  Software has already been released in Indonesia, and will be released in Arabic, Swahili and Chinese this summer, because of enormous potential.

§  There will be an English app for free, so that children in Africa can become fluent in English within six months.

Risk Heat Map

http://www.cgma.org/Resources/Tools/essential-tools/Pages/risk-heat-maps.aspx?TestCookiesEnabled=redirect

Just another visual to help you think through uncertainty/risk in your innovation projects. I would replace the term risk with uncertainty in your reading. Go to the original source for a full explanation of how to deploy this tool.

A risk heat map is a tool used to present the results of a risk assessment process visually and in a meaningful and concise way. 

Whether conducted as part of a broad-based enterprise risk management process or more narrowly focused internal control process, risk assessment is a critical step in risk management. It involves evaluating the likelihood and potential impact of identified risks.Heat maps are a way of representing the resulting qualitative and quantitative evaluations of the probability of risk occurrence and the impact on the organization in the event that a particular risk is experienced. 

The development of an effective heat map has several critical elements – a common understanding of the risk appetite of the company, the level of impact that would be material to the company, and a common language for assigning probabilities and potential impacts. 

The 5x5 heat map diagram below provides an illustration of how organizations can map probability ranges to common qualitative characterizations of risk event likelihood, and a ranking scheme for potential impacts. They can also rank impacts on the basis of what is material in financial terms, or in relation to the achievement of strategic objectives. In this example, risks are prioritized using a simple multiplication formula. 

Organizations generally map risks on a heat map using a ‘residual risk’ basis that considers the extent to which risks are mitigated or reduced by internal controls or other risk response strategies

What benefits do Risk Heat Maps provide ?• A visual, big picture, holistic view to share while making strategic decisions• Improved management of risks and governance of the risk management process• Increased focus on the risk appetite and risk tolerance of the company• More precision in the risk assessment process• Identification of gaps in the risk management and control process• Greater integration of risk management across the enterprise and embedding of risk management in operations.

BUILDING CAPABILITY, CAPACITY AND COMPETENCY IN THE INNOVATION CORE

Posted on June 26, 2016 by Paul Hobcraft
http://www.innovationexcellence.com/blog/2016/06/26/building-capability-capacity-and-competency-in-the-innovation-core/

The soft side of innovation.

Each of our organization needs to understand their strategic resources to build continuously, so as to sustain and grow the organization; otherwise it will eventually die, starved of what is vital to sustain itself. 

The resources you energize, feed and sustain provide the innovative lungs that give oxygen; they need to constantly be nurtured, too breathe and pump new life into the existing. 

For innovation to grow and be sustained, we need to consistently build our innovating resources, they give delivery of the healthy living cells to promote and sustain us in new value potential. 

The problem is we often are not very good at maintaining our resources and innovation activity. We just simply do not sustain our efforts, we tend to allow them to drift along or become lopsided from one individual teams efforts, while the others simply ‘wallow’... 

..Equally organizations rarely set about designing the right conditions, working towards the innovation environment that ‘delivers’ a particular state of being, so as to allow something positive to happen, it just expected to happen... 

...When are we going to recognize that innovation should be a real core of our organization’s make-up? With the increasing emphasis on technology within all our organizations we are in need of a radical newly designed Enterprise-wide innovation process. 

There are real differences when it comes to building innovation understanding and equipping your organization to perform at improved levels. There are different traits, actions and activities to think through. Here are some of the needs: We Need: 

* to build far more serendipity into what we do, also random connections, as well as purposeful discovery, by seeking out increasing connections and engaging in networks of learning and mutual exchange. 

* places where we are turning curiosity into reality and building our innovation mental abilities for growth, development and accomplishment, opening up and being receptive and then translating this into new innovation. 

* to embed into our new innovation core new routines and thinking. It is determining the changes needed by those new combinations of fusion by seeking out the chemistry from all the connections and exchanges, pushing for creative collisions, positive tensions and dynamics to engage fully in innovation, so the culture, climate and environment are vibrant, challenging and exciting. 

* to constantly seeking the new space from knowledge exploitation and exploration, redefining the organization edges, enlarging and enhancing our understanding, pushing constantly out, constantly evaluating, discovering and aligning growth options and then seeking out those outcomes that potentially offer the right return on innovation 

* to place learning into the center, to allow our capability building, new competencies to grow and evolve. We focus on the constant need to provide the mechanisms so as to improved performance and capacities by focusing on both our mental and physical abilities to our position and function to explore and exploit. Each contributes to our ability to receive, hold and absorb new knowledge. We measure these by the increased volume and quality outcomes 

* new structures, attitudes, investment and motivation to change, to focus on innovation building that needs instilling and coming from the top, not just as a commitment that must happen but integrated and aligned into the strategic thinking and planning, worked through a clear pathway of change to achieve a different, core innovation capability.. 

* to determine the abilities to deliver in effective, focused, efficient and aligned ways. Knowing what is important, seeking out the actions to support and deliver the part needed to achieve the desired goals. Adjusting as we go, as we learn, ramping up what is working, dampening down what is clearly not. 

* to build innovation by working it continuously, on making our environment into this more evolving and dynamic one, where the climate and culture of innovation thrives and grows from this constant feeding and attention.

Finding the “Herbie” in Your Change Initiative
Elizabeth Doty


http://www.strategy-business.com/blog/Finding-the-Herbie-in-Your-Change-Initiative?gko=908bd&utm_source=itw&utm_medium=20160623&utm_campaign=resp

Quite thought provoking regarding the principles of "theory of constraints" to driving change within your company/organization

Eli Goldratt’s “theory of constraints.” Goldratt’s 1984 classic, The Goal, is still one of Amazon’s top sellers in organizational change. His theory is based on the idea that, in the face of interdependencies and variability, maximizing the activity of each part in a system reduces the output of the system. Drawing on the analogy of a scout troop on a hike, Goldratt showed that only one factor determined how fast they would get to their destination: the speed of the slowest scout, a poor soul named “Herbie.” To maximize their speed as a troop, they needed to let Herbie set the pace. They put Herbie at the front of the line, then did everything they could to lighten his load and help him do his best.... 

...When applied to leading change, the theory of constraints reveals that a business can only operationalize real improvement at a certain pace. Yes, your business is more flexible than a factory. But chances are you are wrestling with interdependencies and bottlenecks. And wherever you have interdependencies, your slowest resource governs how fast you will get to your future state. Go faster than this, and you create confusion and waste, undermine your core business, or drift into “fake change” — incurring all of the costs of implementation, with few actual shifts in behavior. The key is to know your business’s limit, and to manage it like a hawk. Here are a few suggested steps, loosely adapted from Goldratt’s Five Focusing Steps:

• .Identify the current constraints on your progress. Imagine you are a new CEO, looking at your company with fresh eyes. Ask yourself: What function or resource most constrains our progress? Where would the smallest improvement yield the biggest impact on our business? In other words, you need to identify your “Herbie-group.” 

• Set a pace that supports your “constraint resource.” Rather than viewing your Herbie-group as a “weak link,” think of it as the player on your team that currently has the ball. How well are you blocking to ensure this player gets to the end zone? 

• Sequence priorities over time. Too often, we sequence change haphazardly based on timelines set by the groups initiating change. Instead, try to introduce improvements in a logical order for the groups on the ground, at the fastest pace they can handle. 

• Elevate the pace. Next, look for ways to increase your Herbie-group’s capacity by investing in systems, processes, tools, and training. 

• Pay attention as your constraints shift. Don’t expect to get rid of your constraints! Something always limits your progress; the key is to know where it is. Create a dashboard to help you stay on top of interdependencies and key initiatives across the enterprise