How Innovative organizations
organize:
• Executives say their companies
use multiple organizational approaches to drive innovation and that the
success of these efforts depends on integrated strategy and C-level support. In
a survey conducted by Mckinsey, When executives were asked about the
organizational innovation structures in place at their companies, the strategic
and financial objectives these structures have set, and the people and
processes involved in achieving innovation outcomes.
• Nearly
two-thirds of executives report broad innovation portfolios that include more
than one type of organizational model, and nearly half say their companies use
separate innovation functions that focus on developing new business
opportunities, sit at company headquarters, and are less than three years old.
While 86 percent say the structure of their separate functions positively
influences outcomes, the results suggest that the most important factors for
success are the extent to which innovation is integrated in corporate strategy
and to which company leaders support and engage with innovation efforts.
• These
separate functions are most likely to report directly to the CEO and to
interact formally with C-level leaders, yet across all types of structural
models and rates of success in meeting financial goals, respondents cite the
same perennial challenges: namely, competition with short-term priorities and
integration of the functions’ strategic objectives with the rest of the
business.
3 Things That Makes
Apple what it is today:
A start-up is formed:
Once a new product
has been decided on, a team is organized and segregated from the rest of the
company by secrecy agreements and sometimes physical barriers. Sections of the
building may be locked or cordoned off to make room for the teams working on a
sensitive new project. This effectively creates a ‘start-up’ inside the company
that is only responsible to the executive team, freeing them from the reporting
structure of a big company.
Apple New Product
Process (ANPP):
Once the design of
the product has begun, the ANPP is put into action. This is a document that
sets out every step in the development process of a product in detail. It’s not
an original Apple concept but was first applied at the company during the
development of the Macintosh. It maps out the stages of the creation, who is
responsible for completion, who will work on each stage and when they will be
completed.
Products are reviewed
every Monday:
The ET (Executive
Team) meets every Monday to go over every product that the company has in
process. It is able to accomplish this because Apple has so few products in
production at any given time. Any that do not get a review are rolled over to
the next review Monday. This means that no product is ever more than two-weeks
away from a key decision being made.
How is New Business
Development Organized in Innovative firms?
“This is a crucial question in new product and service development. Form
an expert team to evaluate new ideas. The team members are knowledgeable people
from business, science and engendering depending on the nature of the product
or service proposed. The team can evaluate marketing channel, operational cost,
technological advantage etc. It can be like putting pieces of puzzle together.
Even the team overlook the importance of new ideas. Therefore, put those new
ideas in the internal source so that good ideas do not go out from the
organization. There are many examples that the original inventing organization
did not commercialize its invention. IBM did not use its invention and Oracle
was born to use it. Kodak's digital technology is also known as another
example. These examples illustrate the importance of the evaluation of new
ideas” - Professor in Economics
What can one learn
from Google?
20% of the time of
each worker is dedicated to personal projects.
Eight Pillars of
Innovation at Google:
1. Have a mission that matters
2.
Think big but start small
3.
Strive for continual innovation, not instant perfection
4.
Look for ideas everywhere
5.
Share everything
6.
Spark with imagination, fuel with data
7.
Be a platform
8.
Never fail to fail
Most
disruptive/innovative projects are hosted and centralized in Google X Lab where
they are funded by corporate budget.
Best Practices for
Innovation Leaders:
·
Strategic Review: Base all initiatives in the strategic direction and
goals of the organization taking into consideration the competitive market
environment and the business operations.
·
Talent and Performance Management Review: Understand the existing processes
for performance management, talent development, and competency models.
·
Innovation Leader Profile: Create a customized Innovation Leader Profile
integrating the strategic context with the Innovation Leadership Capabilities.
·
Develop the Innovation Talent Management Strategy: Develop an Integrated
Talent Management Strategy for innovation. The strategy should consider the
development of existing Innovation Leaders and key cross-functional team
members as well as anticipating the future capacity required to meet strategic
goals. Elements of the plan include group and individual development plans and
a talent identification process including recruiting screens.
·
Develop the Innovation Scorecard: Finally, create a scorecard that links
strategic goals to innovation goals and to units and individual goals. The
Innovation Scorecard balances current, past, and future innovations along with
the organization’s current performance review process.
Innovation Ranking:
Booz&co Ranking:
•Methodology:
Ask the Global Innovation 1000 survey respondents to name the companies they
consider the world’s most innovative.
•Results:
Apple, Google, Samsung, Amazon, 3M, General Electric, Microsoft, IMB, Tesla
Motors, Facebook.
Universum Global’s Ranking:
•Methodology:
Ask 88,000 engineering students and 94,000 business students at more than 1,300
college throughout the world, what are the 10 most innovative companies.
•Results
for Business Students: Apple, Google, 3M, NASA, Daimler/Mercedes-Benz, BMW
Group, Honda Companies, GE, SAS Institute, Nike.
•Results
for Engineering Students: Google, Apple, NASA, UTC, Bose, Lockheed Martin
Corporation, Autodesk, 3M, Genetech, Boeing.
Forbes’
Ranking:
•Methodology:
Companies needs to have more that 7 years of financial data + more than $10
billion in market capitalisation. Companies are ranked by their innovation
premium: the difference between their market capitalization and a net present
value of cash flows from existing businesses. The difference measures how much
the stock market, in its imperfect wisdom, credits a company for its aility to
come up with profitable growth over the next several years.
•Results:
Salesforce.com, Alexion Pharmaceuticals, Vmware, Regeneron Pharmaceuticals,
ARM Holdings, Baidu, Amazon.com, Intuitive Surgical, Rakuten, Natura Cosmetics.
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