The Innovation Matrix - a Tool to define your innovation strategy (part2)

Hello everyone. Welcome back to the second part of this recording on the Innovation Matrix. We're going to explain the different initiatives within the matrix to help you to make the right decision on when to take what type of action. As I said, the Innovation matrix looks like this. It's a structuring based on two main the commitment of your organization towards initiatives and the capabilities that you want to focus upon, going from external capabilities to internal. So let's take a look at nine initiatives in a bit more detail. We'll start off with the first pattern and dive into each of the three initiatives, initiatives within that pattern. And these are all focused on internal capabilities. Let's start with innovation workshops. Innovation workshops are shorter one day, two day sessions where employees are invited for a short period of time to come up with new ideas outside of their normal work process. The benefit here is that it's very good to use internal knowledge and assets to come up with new ideas and it's a very quick way to spark innovation and an innovation culture to your employees. On the other hand, it might be a challenge because it's difficult in such a short period of time to grow extremely radical ideas. And at the end you need to select the right ideas to focus upon. You can't develop all of them. Once you have finished that session, a last recommendation is to always think about the next step. And that is definitely also what this matrix can help you with. Because what you can see is that a community of practice might be the next step for you. What does this mean? Well, what you can see is a community of practice is a group of people that share common interests and common goals and want to share expertise within the organization. So let's say you have a workshop on business model innovation, one day, two day session, and you want to grow that skill, you want to share that skill within the organization. Then several people can come together on a weekly monthly basis, share their knowledge, share tools and say how they will spread that knowledge within the organization. It's a very informal thing, but it really helps to grow that culture of innovation. The benefit is that there's a higher chance of acceptance because internal employees take ownership on it and it's a really good use of internal resources. Challenges might be that the speed of results might be a bit slower and it's again quite difficult to do something absolutely radical since it's so close to the core of your business. An example here would be a community of practice that I've recently started within Philips together with many Philips employees, to actually identify and grow the skill of business model innovation. So Philips is doing a lot of initiatives, but what we clearly noticed is that there's potential to grow the capabilities on business model innovation. So what we do is we come together and we grow that knowledge, we share that knowledge amongst each other to, to then unlock experiences and knowledge and share that within the entire organization. So let's take a look at the third internal capability example which is a center of excellence. This is the most mature and most structurally committed type of initiative. A center of excellence is a formal group of people in the organization which a certain type of knowledge or expertise that can be shared within the organization and can be structurally embedded. What this means is it's a group that is formally assigned to be not necessarily the owners, but the leaders or ambassadors of a specific type of knowledge or capability. The benefit here is that you will create a clear point to innovation. So people will know. When we have questions on business model innovation, on design thinking, we know where to go to. On the other hand, it will focus the efforts of these employees, of these people on that specific topic. And last but not least, the long term innovation planning will always be, these initiatives will always be part of a longer term innovation planning. It's not something that will go away from today and until tomorrow. Some challenges are if are the implementation of freedom. How can we free up these people so they can actually work within this center of excellence? So then let's take a look at the next pattern where we can see and identify three new initiatives. So the next pattern is focusing on mixed capabilities. Mixed capabilities meaning taking internal resources and bringing them outside of the organization. How can we do this? By for example, the first initiative and that is a Design Sprint. A Design Sprint is a process of about five days, one week to answer critical business challenges and to answer them through prototyping, testing them with actual customers. It's an ad hoc initiative that forces employees to interact closely with the outside world. So it's a very quick way to go from problem to actual prototype just in a matter of days. So the benefit is that you have rapid idea development, you can validate ideas with the external world very quickly and the focus is on specific projects. You will get specific outcome at the end of that week. So these are things that help you to bring the internal resources, internal people outside. If you want to do this more structurally, if you want to embed the concept of taking internal resources outside more structurally, then probably it's interesting to take a look at the next type of initiative which is an internal accelerator. If a Design Sprint works Out very well. Why don't you embed this in the organization so I'll explain you. An internal accelerator an external accelerator is a several month program where you take intrapreneurs and you give them for several months the time to go out and build a certain solution. The benefit here is that you give them more time to validate the feasibility of a certain idea and you give internal talent a longer term support to grow ideas. The only problem here is that since the timing is longer, it will be more difficult to select the right entrepreneurial people if we then go towards the next maturity level. If ideas or teams come out of an internal accelerator, it comes down to give them the right freedom and emerging business areas or new business areas might be your thing. Emerging business areas or new business areas are really sandbox environments outside of the organization where internal people can grow a business idea to prove their profitability and potential to enter an existing business unit or become even a new business unit. The benefit here is that when you see an idea coming out of an accelerator, it often needs a bit more time to really grow its business potential, to really grow its values. And therefore emerging business areas are really interesting. So they give further freedom to these projects and they help you with both transformational and business growth potential. The problem is that these projects still carry some uncertainty, so they can never report to an existing business unit. That's why a new business area is needed to be developed. Let's move towards the last pattern, which is the pattern of external capabilities, and let's dive into the first type of initiative within that pattern, which is an innovation challenge. Innovation challenges are initiatives that are launched by an organization to solve an internal problem or a societal challenge with the help of external expertise. Let's say you launch a challenge of a specific problem that you have within your organization, you open up a website and you ask people to share their ideas and to share their way on how to solve a certain problem. The benefit here is that you have a very quick way to grasp external knowledge and solve internal challenges. And it's the first way to experiment with open innovation. But a challenge here is that the quality of these ideas are very uncertain and you need certain PR efforts to get enough ideas on your platform if you would take that to the next step. If you want to really embed external insights and external capabilities in your organization, external incubators might do the trick. An external incubator or a startup environment sponsored by a corporate are a good way to collaborate with startups and support and evaluate them for a specific period. Of time. The benefits here are that it's a good way to experiment with radical innovations so you can give the startups the freedom and the support that they need to grow ideas that might disrupt your industry. And on the other hand, it's a good way to test collaboration with startups. The problem is that these ideas, since they are often more radical, it's often difficult to integrate them. So definitely make sure to select the right startups that are close enough to your business but far away to be innovative enough. And as a last example and as a last initiative I would like to share is the Startup Fund. This is the next level of an external incubator. If you've identified and you've run different external incubators, it might be interesting to to explore a startup fund. A startup fund is actually a fund, an investment of resources that can help you to really invest in external opportunities that fit with your strategic objectives. So the goal is that you free up some resources that you can invest not in internal projects, but in external projects. They have a total freedom to go and invest in whatever brings value to your strategic objectives. The benefit is that it's an ideal space to generate growth through external capabilities. You're investing outside of your core and you bring in external assets inside. Since it's a formal investment. The challenge is that the scouting of the right startup is time consuming and not so easy because there's a lot of factors that you need to encounter. And of course MA is a risky activity by default. You'll have to spread your risk, invest in multiple in order to achieve your success. So that is the story of the innovation matrix. I hope that you really liked the tool and that this recording, this video is relevant to you. If you would like to see more about it, definitely. Check out the blog posts on boardofinnovation.com and you'll be able to download a poster that explains a bit more about different patterns. If you have any more specific questions, I'm very happy to answer them. If you want to identify your ideal innovation initiative or innovation strategy, feel free to reach out to us. You'll find my contact details at the bottom of this slide and I'm happy to help you out at a later stage. So thanks for watching and hope to hear from you. Goodbye.