The future of innovation - etsEQ

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4 The future of innovation Innovation is changing. What used to be a clearly defi ned process, in which companies developed knowledge and used it to create products to sell, is being replaced by a complex web of relationships that binds companies to competitors, commerce to academia, and disparate business and scientifi c disciplines to one another. In this environment, it’s as important to assess the fi nancial prospects of a business partner as to know if an internal research project will work. It’s vital to sense when partnerships have run their course and need replacing – the chairs at this party are constantly being rearranged. Although this approach makes innovation management more diffi cult, it also offers great potential for enabling breakthroughs. When a company changes its outlook from ‘not invented here’ to ‘proudly found elsewhere’, as Procter & Gamble has, suddenly the world becomes its research lab. Matthias Kaiserswerth, director of IBM Zurich Research Laboratory, explained what this means for Big Blue. “The nature of innovation is changing, away from local R&D teams to global collaborative teams, away from central innovation to collaborative innovation, and away from single-discipline work to multidisciplinary work,” he said. “We’re moving from developing product functions to developing value for customers, and moving our business from information science to services science. This means moving from a proprietary intellectual property (IP) model to a well-balanced IP model, and from product-focused innovation to multifaceted innovation.” Petteri Alinikula, vice president and head of core technology centres, Nokia Research Center, echoed Kaiserswerth’s sentiments: “Innovation is diversifying. We now have business model innovation, product innovation and technology innovation.” Nokia now sees its role as not so much making handsets as enabling customers to have and share experiences. Its product innovation is being tempered by a recognition that business models in the mobile telecoms sector are changing rapidly, particularly with the emergence of Internet phenomena such as community-created content. The most valuable parts of the industry now use business models that build on a technological layer that doesn’t necessarily cost them anything at all. Nokia needs to respond with its own business-model innovation. “We’ll take a dual approach to future success using new technology and new business models, with a rich interaction between the two approaches,” said Alinikula. Leif Kjaergaard, chief technology offi cer (CTO) at Danisco, added: “Business-process or business-model innovation is perhaps the most powerful type of innovation of all.” Of course, some businesses set out to create breakthroughs by force of will, rather than by simply making their organisations fertile ground for innovation. Shell’s game-changing exercise, in which it set out to fi nd completely new businesses to get involved in, made serious attempts to persuade the company to apply its expertise in geology, drilling and delivery systems to the issue of water scarcity. Although the idea was eventually turned down, Shell’s game-changing strategy has now delivered four out of fi ve of the company’s key growth opportunities. Many of the ideas aren’t “Innovation is diversifying. We now have business model innovation, product innovation and technology innovation.” Petteri Alinikula, Nokia Research Center
new – it is just that the corporate culture at Shell has advanced to the point that entrepreneurial people can now fi nd the backing they need for the projects. Martin Navratil, chairman of Synpo, has seen the same thing happen in the large multinationals he has worked for: “We called them dolphin projects. The most successful such projects are killed three times before rising again to succeed.” Doing the right thing If the linear model of innovation is melting into a world of fl uid collaborations and rapid change, clear leadership becomes more important for success. Corporate values can help. “A company needs values to help in making decisions when the process doesn’t give you the answer,” said Kaiserswerth. IBM responded to this issue in 2003 by setting corporate values including a dedication to each client’s success, innovation that matters for the company and the world, and trust and personal responsibility in all relationships. Tanja Lindermeier, R&D director, Johnson & Johnson EAME, says the ‘seven revolutions’ outlined by the Global Strategy Institute at EIRMA’s 2006 annual conference (see further reading) are already having an impact on her business. “We’re seeing declining birth rates in our target markets, a global generation gap in which baby boomers want to stay young forever, the growing challenge of food, water and energy consumption, and the stark reality that for the fi rst time, according to Kevin Roberts, CEO of Saatchi & Saatchi, the consumer is the boss,” she said. “How can R&D take leadership in this situation, where companies are under pressure from both local consumers and macro-economic trends? We can innovate with a purpose, anticipating consumer needs and creating innovations that change consumer behaviour. One of the keys to Johnson & Johnson is our credo, a value system which provides the fundamental underpinnings of innovation.” Under pressure Future innovation strategies must also bear the burden of new external pressures. Jacques Lukasik, senior vice president for scientifi c affairs at Lafarge, said: “R&D is being transformed. We have to add to existing factors, such as market pull and technology push, four major new pushes: the climate, energy, security and health.” A senior group at the EIRMA annual conference considered the impact of such issues on future innovation strategy. Reporting the group’s conclusions, Phil Gamlen, director, Group Technology, ICI, said: “There is a convergence between the science of climate change and the politics of energy security and national interest. The question is how does this drive R&D, effective organisations, sound development procedures, better alignment with regulatory requirements and stakeholder expectations? “At heart the question is whether it is possible to bring global carbon dioxide emissions in 2050 back to their levels in 2003. It should be easy to reduce CO 2 emissions in power generation, but not in transport. That will need a great technological effort and great changes in behaviour,” he said, adding that it was questionable whether stabilising CO 2 levels would be enough to arrest climate change. A presentation from the Pew Center on Global Climate Change in Virginia, US (see further reading), suggested that global attitudes are changing. There’s a new pace of change in the US, led by individual states, and refl ected in a major change in outlook within Washington DC’s political community over the past 12 months. Companies have begun to look at climate change not just as a risk management issue, in terms of meeting regulatory requirements, but also as a very large business opportunity. Firms have realised that incorporating climate change into their strategies will give them an advantage by enabling them to handle risk better, pick up early market signals, shape the agenda and even use adapting to climate change as a game-changing strategy. But it’s important that companies The future of innovation “R&D is being transformed. We have to add to existing factors, such as market pull and technology push, four major new pushes: the climate, energy, security and health.” Jacques Lukasik, Lafarge 5
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The future of innovation - etsEQ

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