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Innovation Processes in Transition Large Corporations by Erkki Ormala Professor of Practice, Innovation Management Aalto University, Business School Innovation process 1. Mapping the future business environment – Extensive mapping covering key areas 2. Innovation strategy/business strategy 3. Implementation of the strategy 4. Expanding the markets and ecosystems Mapping the future business environment • Changing political, economic and regulatory landscapes, technology developments, global and regional markets and value chain analyses, competitor and competing ecosystem evolution, changes in customer preferences in terms of functionality, design and usability, etc. The macro-forces: Shaping our world and driving trends bigger and further Finance: Existing players keep the lid on imbalances as the centre of financial gravity shifts to fast growth economies Technology: Interconnectivity intensifies and application of technology is seen as a solution to many problems Urbanisation: big cities – and their problems - grow unchecked but are seen as the cutting edge development Governance: most effort goes into making the existing governmental functions run more efficiently Globalisation: Western consumerism spreads but cultural products from fast growing countries eclipse Western ones Life-balance: The cut and thrust of modern life makes it hard to switch off, and play only slowly gains a place in work Demographics: A gradual flow of immigration continues to palliate the impact of demographic shifts Business firms from high-growth markets globalise, setting new rules of play, forcing older players to innovate or die Resources: The feeling sets in that we are running out, encouraging aggressive rivalry to secure a resource base Belief: Ever more people aspire to Western values, but this also produces a aggressive backlash in many cultures 4 Connectivity Scorecard Canada USA Austria Belgium Czech Denmark Finland France Germany Greece Hungary Ireland Italy Netherlands Norway Poland Portugal Spain Sweden UK Bangladesh China India Indonesia Malaysia Philippines Sri Lanka Thailand Vietnam Iran Pakistan Syria Argentina Brazil Chile Colombia Mexico Egypt Kenya Nigeria South Africa Tunisia Innovation economies Russia Ukraine Turkey Resource & Efficiency economies Connectivity Scorecard 2011 May 2011 Australia Japan Korea Singapore New Zealand 2010 returned the TCO development back on track after negative development in 2009 14.00 12.00 tax 15% tax 14% USD 10.00 tax 14% tax 17% service 79% service 76% -4% 8.00 service 74% service 78% 6.00 - 12 % 4.00 2.00 0.00 handset 11% 2005 handset 8% handset 7% 2007 handset 7% 2008 2010 2009 unpublished results 6 NOTES - 43% 2009 was the first year since 2005 that witnessed increase in TCO as an aftermath for the financial crisis. 2010 put the development to the right track and overall TCO has decreased by 14% between 2005 and 2010. Bangladesh Sri Lanka China Pakistan India Uzbekistan Kenya Egypt Vietnam Sudan Iran Ethiopia Cambodia Thailand Ghana Uganda Tanzania Haiti Indonesia Algeria Philippines Tunisia Bolivia Guatemala Mozambique Nigeria Senegal Syria Honduras Côte d'Ivoire Kazakhstan Ecuador Dominical Republic Guinea South Africa Madagascar Zimbabwe Burkina Faso DRC Colombia Zambia Malawi Chile Cameroon Morocco Turkey Chad Argentina Peru Brazil US dollars TCO < USD 5 enables the majority of the lowerincome consumers to use mobile communications 25 20 7 Eleven countries 2011 reach the monthly TCO target of 5USD or less. From regions APAC is most affordable with average TCO with less than 5USD monthly. 15 Average 11.47 US dollars 10 5 0 NOTES Innovation strategy • Involves the SWOT analysis of the company capabilities with respect to the changing global competition and defines the key objectives and actions required to achieve them. • Integration with the business strategy; In house v.s. Partnering; Open innovation; IPR solutions, Public/private partnership, Crowd sourcing, Open Innovation Engaging the World’s Leading Institutions • Access and drive global intellectual vision and insight • Form strategic collaborations with world-leading institutions to multiply our efforts • Build global test beds to learn from broader audiences Open Innovation Research University Knowledge sharing EO.PPT /Lund 7-8.7.2009 Education Open Innovation/Knowledge Sharing • Complementary competence and excellence • Genuine commitment for knowledge sharing/trust • Collaboration platforms/joint campus presence • Mobility of research personnel • R&D/recruitment/education all involved • Transparent management and collaboration rules • Fair rules for IPR ownership and use • Reformed reward and incentive systems EO.PPT /Lund 7-8.7.2009 IPR solutions • Full ownership – open access • How to manage the IPR portfolio: Licensing, (FRAND principles) sharing, free access • Joint ownership • Right to use • Foreground, Background Sideground • International consortiums IPR Guidelines 1) Foreground: all parties have access right royalty-free to all foreground generated in the project 2) Background: • • • A) parties shall grant access right to background if it is needed for the project work (royalty free) B) parties shall grant access right to background if it is needed for the commercialization of foreground (FRAND) C) each consortia decides if they will create inclusion lists or exclusion lists 3) Ownership: Joint ownership is not preferred Implementation of the strategy Involves resource allocation, product and service specifications, milestones and progress approval decision Project Launch Control point 1 Decision go/no go Phase 1 Phase 2 Control point 2 go/no go Phase 3 Issues to be followed in addition to the progress: business environment, competition, markets, opportunities for partnering/outsourcing etc. Time Control point 3 To the market Absorptive Capacity of firms Five Key Principles • • • • • • Personal motivation and incentives Enabling mangement system Efficient use of web tools Extensive collaboration with external partners Stimulating corporate culture But these are not enough, as … Expanding the markets and ecosystems • Expanding the market prospects of the new innovation Innovation networks enable new ways of knowledge creation and utilization with orchestration capability to extended enterprise Demand orchestration Demand orchestration Architecture orchestration From traditional large enterprise Architecture orchestration Supply orchestration Innovation orchestration Supply orchestration Innovation orchestration Demand orchestration Partners Demand orchestration Architecture orchestration Core Supply orchestration Innovation orchestration Core Architecture orchestration Supply orchestration Innovation orchestration Innovation orchestration Demand orchestration Demand orchestration Architecture orchestration Architecture orchestration Supply orchestration Demand orchestration Innovation orchestration Architecture orchestration Supply orchestration Demand orchestration Innovation orchestration Architecture orchestration Architecture orchestration Innovation orchestration Supply orchestration Demand orchestration Innovation orchestration Supply orchestration Supply orchestration Crowdsourcing Open Innovation Co-Creation User Innovation Social media Source: Modified from Schenk and Guittard, 2009 Concluding remarks • Innovation processes are in transition; Network collaboration, open innovation, public/private partnerships; crowd sourcing; social media; etc. • Respect the new innovation paradigm • Innovation processes are complex and systemic; not linear • Will challenge the innovation policy intrument portfolio • A joint R&D program with Aalto, TEKES, Technology Industries and the Federation of the Finnish Industries • A wider European study in preparation in collaboration with the OECD and the ERT Thank you