Michael Robinson

General Manager Microsoft New York/New Jersey

People Drive Innovation

Making Innovation Work
Robert Shelton
Managing Director, Navigant Consulting Author, Making Innovation Work

Innovation Panel
Moderator: Susan Bird, CEO Wf360 Pat Adamiak, Hewlett Packard William Carrelli, UGS Chuck Norsigian, Johnson & Johnson

Making Innovation Work

Robert D. Shelton Managing Director Navigant Consulting

Two Questions
1. How do companies lose their ability

to sustain strong, effective innovation?

2. Why do companies find it so hard to

regain robust levels of innovation?

*MakingInnovationWork,Davila,Epstein,Shelton:WhartonSchoolPublishing2005.

Two Key Lessons

How you innovate determines what you innovate You cant buy innovation with money

*MakingInnovationWork,Davila,Epstein,Shelton:WhartonSchoolPublishing2005.

Myths
Innovation is all about creativity Innovation is alchemy and cant be managed Innovation can only come from small groups of people Innovation is about cool new technology Innovation is something every company needs in large quantities
*MakingInnovationWork,Davila,Epstein,Shelton:WhartonSchoolPublishing2005.

How Determines What

Innovation Matrix
New

Breakthrough Breakthrough

Radical Radical

Technology Change
Close to Existing

Incremental Breakthrough Incremental Breakthrough

Close to Existing New

Business Model Change

*MakingInnovationWork,Davila,Epstein,Shelton:WhartonSchoolPublishing2005.

How Determines What

Innovation Strategies

Play to Win Play not to Lose

*MakingInnovationWork,Davila,Epstein,Shelton:WhartonSchoolPublishing2005.

How Determines What

Networks & Partnerships Of People
External Resources
Customers

Innovation Platform
Internal Resources Internal Resources
Universities

Brainiacs

Suppliers
*MakingInnovationWork,Davila,Epstein,Shelton:WhartonSchoolPublishing2005.

How determines what

People & Process

Ideation

Selection Development Commercialization

Value Creation
*MakingInnovationWork,Davila,Epstein,Shelton:WhartonSchoolPublishing2005.

Value Capture

How Determines What

Creativity
Find the right things Ask questions and explore the unknown Seize opportunities Visualize the future and consider all options Incremental and radical innovation

Value Capture
Do things right Answer questions and verify solutions Avoid major risks Get the concept into the marketplace Bias for incremental innovation

Value Creation
*MakingInnovationWork,Davila,Epstein,Shelton:WhartonSchoolPublishing2005.

Commercialization

Cant Buy Innovation

Innovation Model
Inputs Process Outputs Outcomes

*MakingInnovationWork,Davila,Epstein,Shelton:WhartonSchoolPublishing2005.

Cant Buy Innovation

Illustrative CxO Innovation Scorecard
Inputs
Supportive strategy, structure and systems Employee commitment to innovation Access to talent

Process
Balanced innovation portfolio Effective project execution Quality of innovation pipeline Partners value added

Outputs
Product performance Sales growth to existing customers New customers Process improvement IP

Outcomes
Sales growth IP Revenues Profit growth Value captured

*MakingInnovationWork,Davila,Epstein,Shelton:WhartonSchoolPublishing2005.

Cant Buy Innovation

Innovation Incentives
Incremental
Incentive systems Cash-based compensation Formula-based incentive systems emphasized Performance measures play a significant role Outcome-based performance measures Local performance measures
*MakingInnovationWork,Davila,Epstein,Shelton:WhartonSchoolPublishing2005.

Radical
Reward systems Stock-based compensation Subjective evaluation emphasized Performance measures play a minor role Input and process-based performance measures Organization-level performance measures

Cant Buy Innovation

Relationship Between Innovation Performance and Economic Incentives
Subjective Assessment Percentage of Variable Compensation
*MakingInnovationWork,Davila,Epstein,Shelton:WhartonSchoolPublishing2005.

Remember.
How you innovate determines what you innovate You cant buy innovation with money

*MakingInnovationWork,Davila,Epstein,Shelton:WhartonSchoolPublishing2005.

7 Innovation Rules

Exert strong leadership on the portfolio Integrate innovation into the peoples basic business mentality Align the amount and type of innovation to the companys business Manage the natural tension between creativity and value capture Neutralize organizational antibodies Recognize that the fundamental building block of innovation is a network of people Create the right metrics and incentives for people to innovate

*MakingInnovationWork,Davila,Epstein,Shelton:WhartonSchoolPublishing2005.

Innovation Panel
Moderator: Susan Bird, CEO Wf360 Panelists
Pat Adamiak, VP of Strategy and Operations, TSG Enterprise Marketing & Alliances, Hewlett Packard William Carrelli, VP Strategic Marketing, UGS Chuck Norsigian, Global VP Information Management, Consumer Demand Generation & New Product Development Johnson & Johnson Robert Shelton, Managing Director, Navigant Consulting

Please Join Us for Lunch

Turn in your event feedback form Book-signing by Robert Shelton, Michael Treacy and other authors Thank you for attending!