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Archive for the ‘Innovation’ Category

Mastering project selection – which project should I choose?

Thursday, June 14th, 2018

Which project is ‘best’?

A key challenge in any innovation programme – be it creating a pipeline of new product proposals, selecting service/process re-engineering projects or deciding how best to allocate budget across multiple project proposals – is how to determine which projects are ‘best’ and therefore which to select. Managers are often faced with several possible projects and have to choose which to back, long before there is enough information to build a conventional business plan.

Once a project proposal is sufficiently developed to include details of planned implementation, financial evaluation methods such as Net Present Value (NPV) can be applied. But for projects at earlier concept stages, over-reliance on strictly financial criteria may lead to wrong decisions, simply because financial data are often wrong” – the words of Bob Cooper, who developed the stage-gate model for new product development. At this stage it can be tempting to simply fall back on intuition and previous experience but a better approach is to assess projects against a number of criteria which are pointers to likely success.

Read the full paper by Rick Mitchell & Alastair Ross:

Mastering project selection – Codexx whitepaper – June 2018

Disruption in your hand

Wednesday, June 13th, 2018

You are carrying a device that has been responsible for the decimation of industries, the loss of millions of jobs and has subjected billions of people to an increased risk of fraud and bullying. This same device is also responsible for enriching our lives, bringing information and money to the billions of people living in remote and less developed regions of the world and enabling thousands of new businesses. This device is of course your Smartphone. It is a prime example of disruptive innovation.

What is disruptive innovation?

The term ‘disruptive innovation’ was coined by the academic, Clayton Christensen in 1997 to describe innovations that, at their inception, pose no threat to established businesses, due to their limited functionality. But over time, as they develop their functionality/price, they begin to nibble away at the established market, taking customers who are looking for ‘good enough’ solutions. The loss of these customers may not necessarily be seen as negative by established businesses who may well regard them as less attractive lower margin customers. But as time goes on, the disruptor takes more and more market share as its proposition grows in capability and acceptance. The result is that the incumbent, and once dominant, providers are squeezed ever more upmarket and ultimately into niche markets (see Figure 1).

Figure 1: Disruptive innovation (based on work by Clayton Christensen)

Christensen argues that disruptive innovations can hurt all companies – especially the successful, well managed companies that are responsive to their customers and open to new technologies and methods (see his book ‘The innovator’s dilemma’). For these companies tend to focus on meeting the needs of their existing customers. They ignore the market segments most susceptible to disruptive innovations, because these segments often have very tight profit margins and are too small to provide a good enough growth rate to attract established firms. The result is that these ‘less attractive’ market segments become the ‘beach heads’ for new value propositions that grow and develop in these segments before invading the ‘more attractive’ more profitable segments in the market – the ones that are the preserve of the established and dominant competitors.

The Smartphone as a disruptor

The smartphone is one of the most disruptive products to have appeared in the last two decades. It has disrupted a number of markets, including digital cameras, music and video players, portable satellite navigation, e-book readers, voice recorders, paper diaries and personal organizers and even the humble wristwatch. The subsequent growth in phone screen size is creating further disruption in the tablet and laptop markets.

The smartphone is a good illustration of the process of disruption. Consider but one of its functions, its ability to take digital photographs. The first mobile phone with a built-in camera was manufactured by Samsung and released in South Korea in June 2000. It had a 1.5-inch LCD screen, and the built-in digital camera was capable of taking only 20 photos each at 0.35-megapixels in size, but the user had to connect it to a computer to share their photos. Sharp launched an improvement on this concept in November 2000 – the J-SH04 could take photos at 0.11-megapixels, a lower resolution than the Samsung, but importantly photos could be shared using mobile data transmission. This phone therefore combined the key elements of today’s smartphone cameras – picture capture and immediate distribution.

By the end of 2004 the camera phone was riding high. It was reported that over half of the phones sold worldwide in the first 9 months of 2004 had cameras in them, and two-thirds of all the phones shipped in the third quarter were camera phones. Leading the way was Finnish manufacturer, Nokia.

The arrival of mobile phone cameras at the functional level of ‘good enough’ was illustrated in 2013 when the Chicago Sun-Times sacked its entire staff of 28 full-time photographers and replaced them with reporters using smartphones. As well as significantly reducing the newspaper’s costs, the paper was able to increase its video content. The paper released a statement saying: “The Sun-Times business is changing rapidly and our audiences are consistently seeking more video content with their news. We have made great progress in meeting this demand and are focused on bolstering our reporting capabilities with video and other multimedia elements. The Chicago Sun-Times continues to evolve with our digitally savvy customers, and as a result, we have had to restructure the way we manage multimedia, including photography, across the network.” It was reported that reporters were to be trained in ‘iPhone photography basics’.

Figure 2: Digital camera sales volumes  (Source: IC Insights)

The impact of the disruption caused by camera phones on traditional cameras was clear to see with the market leaders being squeezed into the smaller more specialist and profitable, niches such as digital SLRs.

Other victims of smartphone disruption were closer to home

Apple has benefitted from the disruptive impact of its iPhone smartphone product on the mobile phone market since it was launched in 2007. The immediate loser was Nokia which was the market leader at the time, with handsets that focused primarily on mobile telephony and secondarily on mobile computing and entertainment. But another major player, BlackBerry (originally called Research in Motion) was also hit by the move away from the traditional keyboard to touchscreens.

It is also interesting to consider why it was Apple that was the disruptor of the mobile-phone market and not IBM, whose Simon Personal Communicator introduced in 1994, was effectively the first Smartphone or Nokia, the market leader, whose Communicator series of Smartphones were successfully sold into business markets for several years before the iPhone was launched.

One key factor in Apple’s successful disruption of the mobile phone and smartphone sectors was that the company primarily targeted consumers and not businesses with its smartphone offering, unlike both IBM and Nokia. This enabled it to quickly build volume and sizeable market share. It cemented this success with its complementary ecosystem built around the iTunes App store and its partners’ offerings. This enabled it to then enter the business market taking advantage of the BYOD (‘bring your own device’) movement with its customers using their phones at work and helping to convince purchasing decision-makers of their benefits.

Dealing with disruption?

Disruptive Innovation can threaten any business. It also offers the opportunity for innovative businesses to enter new markets with the strategic potential for overcoming the existing dominant competitors. So any forward-looking organization today should have approaches and mechanisms that try and spot such potential disruptive innovations when they are still ‘over the horizon’. Indeed such disruptive innovation, used proactively, can form the core element of a powerful business transformation strategy.

Unfortunately there is no one approach that can be used to identify potential disruptions early. Businesses need to select a range of complementary approaches for ‘scanning’ the business environment for potential disruptions. They also need to develop and assess scenarios of technology, competition and market changes to determine when and how they should best respond to potential disruption. Whatever approaches they choose to adopt, it is important that they are proactive, rather than planning to react when disruptions become visible – for by then it is likely to be too late.

The one approach that business leaders should most definitely not adopt – is unfortunately the most common: to take a dominant market position for granted or to consider it has some degree of permanence. The business history books are full of companies that have made that mistake.

This article is an extract from ‘Sowing the seeds of business transformation’ by Alastair Ross,available as paperback or e-book on Amazon. It was originally published on LinkedIn on 13-6-18.

 

How’s your innovation health?

Thursday, January 11th, 2018

Innovation is increasingly a critical competency for all businesses – in today’s global, dynamic markets. But many businesses lack effective capabilities in innovation. Our latest video on our YouTube channel looks at innovation challenges and the use of ‘best practice’ assessment to drive innovation improvement. We also overview the use of the Codexx ‘Foundations for Innovation’ (F4i) assessment solution – developed in 2006 with the support of John Bessant, then Professor for Innovation at Imperial College Business School in London. And we do all this with a light sprinkling of humour…. and why not?

Take a look:

Why great products are not enough – the story of Nokia

Thursday, January 4th, 2018

The second video in our series ‘Why great products are not enough’ covers Nokia and its fall from market dominance in mobile phones in 2005 to market exit less than 10 years later. There are key lessons to be learned from Nokia’s experience. In this video Alastair Ross reviews Nokia’s fall and analyses why and how it happened and the key weaknesses in Nokia’s business model and capabilities.

 

Why’s your innovation engine misfiring?

Wednesday, November 29th, 2017

Innovation is increasingly critical to business survival

We live in times of major change driven by a combination of globalisation, rapid technology development, the accelerating impact of the internet as a platform for social and business collaboration, security threats and changes in the power balance between the East and West.

The result is a turbulent environment where businesses continually need to adapt their business models and value propositions to meet new competitive conditions. In this challenging environment the ability to effectively innovate is becoming a core competence for businesses seeking to prosper in the short term and survive in the longer term.

How do you ensure that your innovation system is up to the job?

And and if it isn’t, how do you improve it?

Our latest whitepaper tells you how – you can read it here:

Why’s your innovation engine misfiring?

International SAP Conference for Professional Services – October 2017

Monday, September 11th, 2017

How can Enterprise Systems like SAP enhance the performance of professional service firms? To help answer this question, SAP will be hosting their first international conference for Professional Services in Amsterdam on the 10-1th October 2017.

Alastair Ross, Director of Codexx, will be presenting on the 11th October in a special forum on ‘Driving Successful Innovation in Professional Service Firms’. His presentation will address key aspects such as:

  • Forces for and against change within professional services
  • The need for an holistic approach – People, process and IT
  • Establishing an environment for innovation
  • Re-engineering & automating services delivery – Key success factors.

Further information on the conference and presenters.

The new professional will be doing less content but delivering more value

Thursday, August 24th, 2017

How will the form of the professional services firm and the role of professionals change in the next decade?

This is an important question given the importance of professional knowledge workers such as IT specialists, designers, architects, lawyers, management consultants and accountants to the modern economy.

There is a major discontinuity emerging between the established paradigms of professional services and the emerging new paradigms that will be needed in response to key market and technology-driven transformation forces. Understanding these changes and how they will impact existing firms, professionals and those aspiring to a professional services job is important to the future of firms and professionals.

“The lawyer of the future will be doing less law.”

Those were the words spoken by the managing partner of a progressive UK law firm. They were said in one of a number of interviews I recently conducted with knowledge-intensive service firms including lawyers, management consultants and IT services businesses. Whilst these words specifically refer to the legal sector, there was a common theme in these interviews – and in my project work with professional service firms – that knowledge workers – whether they are lawyers, accountants, doctors, management consultants or other specialists – will, in the future, be focusing less on ‘technical content’ (i.e. their specialism) and much more on innovating new services, leading teams, collaborating with partners and building deeper client relationships.

Why will this happen and what does it mean for the future of knowledge workers and their firms?

 

What is driving these changes are major external trends:

  • Global competition – forcing firms to review and enhance their business models.
  • Client demands – driving firms to do ‘more for less’.
  • Global clients requiring consistency in service delivery across their locations.
  • Increasing IT value – enabling automation of repetitive knowledge work.
  • The ‘gig economy’ – offering firms a variable cost resource option.

In response to these trends, progressive knowledge-intensive service firms are taking the following actions in their business:

  • Streamlining and codifying repetitive work to enable lower cost service delivery.
  • Moving lower value work to less experienced and expensive personnel.
  • Applying IT solutions to automate repetitive work elements.
  • Experimenting/piloting AI solutions to automate more complex work.
  • Planning for reduction of core employees through contracting and outsourcing.
  • Broadening the capabilities of their senior professionals in non-technical areas.
  • Establishing more robust approaches for developing and managing services.

Many firms are using mergers to increase their scale which will help with funding major investment in IT and other improvements. However mergers in professional services are often problematic due to cultural misalignment and poor post-merger integration. They also dilute management focus. So the merger response to these challenges is by no means a ‘silver bullet’ – indeed it often results in major collateral damage….

The paradigm of the knowledge professional – be they a lawyer, accountant , consultant or other specialist – focused on performing fee earning work will change.

It will change to one where their time spent delivering expert content will reduce and be replaced by time spent in the following areas:

  • Developing new higher value services and partnerships.
  • Developing methods for delivery using automation or lower-skilled personnel.
  • Building a deeper understanding of client challenges.
  • Managing the delivery of new services and client relationships.
  • Leading and coaching junior personnel.

So how should firms and individuals prepare for these changes?

Firms need to develop new operating models that embrace these trends with strategies to achieve them. These strategies need to cover their organisation and skills development, their services design and delivery and their IT infrastructure. These strategies will deliver new business models that enable them to succeed in this new business landscape.

Individual professionals need to develop their skills portfolio to prepare them for this new world. They need to complement their deep content specialisms with broader capabilities in areas such as consultative selling, team leadership, project management and innovation. A useful model for this new world is as the ‘T-shaped’ specialist. In addition to these skills-based changes they need to take ownership of their individual skills development and branding. For they will increasingly be ‘going to market’ as an individual resource – as a subcontractor for a specific project – rather than as an anonymous professional ‘foot soldier’ working for a firm*.

*Tom Peters was certainly prescient when he wrote his book ‘The brand you 50’ in 1999, with his message to white-collar workers about the need to create their own personal brand.


This article was first published by the author on LinkedIn on 24th August 2017.

Innovating value for global markets – Institute of Export event

Wednesday, June 7th, 2017

Institute of Export logo

Alastair Ross, Director of Codexx, is presenting at the Institute of Export and International Trade event on Thursday 6th July 2017 – ‘Blueprint for Global Britain’ which is being held at the University of Plymouth.

The event is aimed at businesses in the South West of the UK that are working in international trade. The event will examine the issues and opportunities in accessing new markets and the debate will help to shape the future of international trade.

Alastair Ross will present on ‘Innovating product and service value for global markets‘. His presentation will show how businesses can optimise their product or service proposition for different international markets by assessing the value requirements of users and how they vary by market and geography and then tuning their offering – or providing suitable support services – accordingly. The presentation shares learning based on Codexx innovation projects and makes use of the Value Table model.

For more information on the event: Blueprint for a global Britain.

New videos – value-based innovation & behavioural change

Tuesday, April 25th, 2017

Front page 5
New videos have been added to the our YouTube channel ‘Business Innovator’. The Business Innovator channel is our channel for sharing innovation approaches and our professional experience with a wide community of businesses, change agents and students.

Videos are intentionally short – to provide interest and insights within ‘bite-sized’ chunks.

Latest videos include:

Thinking about value and how to innovate it

The importance of behavioural change in business transformation

Why not take a look –  we hope you find them useful – and we welcome any comments!

 

Value myopia – a business killer

Wednesday, March 15th, 2017

glasses for myopia

It all seems pretty straight forward. A business provides a product or a service that a customer values and in return receives payment for it. Those businesses that provide a higher level of perceived value to customers will gain over those that provide less. This is the foundation of our market-based economy. Businesses use Marketing to understand what customers want, R&D to develop it, Manufacturing to build it and Sales to sell it. Basic stuff taught on any elementary business course.

So why do so many businesses get it wrong? How do they lose sight of the value needs of their customers? In effect they have got lost, guided by ‘value maps’ that no longer match the reality of their customers’ environment. Even large, sophisticated businesses are not immune from this disease. Just think about Nokia, Blackberry and IBM.

 

Lessons from the past – Nokia and Blackberry

Nokia started life in 1865 as a forestry business. Over the next one hundred years its business moved from wellington boots to electronics and military equipment and then in 1982 to mobile phones. By 2005 Nokia dominated the global market for mobile phone handsets with more than one third of the market. Yet only nine years later, in 2014, Nokia exited the mobile phone handset business after losses nearly bankrupted the company.

How did this happen? A key reason was that Nokia failed to successfully respond to a new paradigm in mobile phone handsets created by Apple when it launched its iPhone in 2007. Underlying this was that Nokia’s customer value map no longer matched the reality in the market. Nokia’s mobile phones were effectively based on a ‘radio paradigm’, where signal strength, call quality and battery life were key. However customers increasingly valued internet-based services, multiple applications, a fun and slick user experience wrapped in a slim and well designed package and were prepared to trade battery life and call qualities for these value elements. The iPhone was built on a ‘computer paradigm’ that better matched customers’ new value requirements. Nokia could not adjust its mobile phone business model to meet these new requirements fast enough and ended up leaving the market.

Backberry’s fall from market dominance was as calamitous as Nokia’s – with 41% share of the US market in early 2010 dropping to 1% by mid-2015. Whilst Blackberry was successful in selling to corporate customers, consumers became increasingly frustrated at the devices’ limitations in internet access, lack of Apps and usability compared to the more user-focused smartphones provided by Apple, Samsung and HTC. Trends such as BYOD (Bring Your Own Device) and the success of Apple and Google in providing ‘business-level’ applications on their phones meant that it was the users that drove the move away from Blackberry phones. Despite the new Blackberry 10 operating system introduced in 2013 – arguably a superior operating system to IOS and Android – its lack of application support effectively killed it. Blackberry was unable to establish an App ecosystem with sufficient critical mass to provide the required functional value demanded by customers.

 

IBM’s transformation – realising a new map of customer value

IBM successfully managed to realign its value proposition and business model to the needs of its customers – after a serious misalignment became apparent in the early 1990s. Customers were abandoning it for faster, more nimble competitors. Between 1991 and 1993, IBM lost a massive $16 billion. The core reason for IBM’s difficulties was that the IT market was changing and IBM’s value proposition had not. New developments such as personal computing, mobile telephony, integrated software solutions and the internet were moving IT beyond its traditional focus of the IT Data Centre to a strategic business issue.

As a result decision-making for selection and investment in IT was evolving from IT Management to business functions such as Marketing and Operations. IBM’s sales force did not have relationships with these decision makers, Management Consulting firms did and provided strategic guidance on IT issues. Some of these consultants, such as CSC and Accenture were also IT outsourcing companies. Outsourcing of IT meant that other IT providers, such as IBM, would become commoditised as hardware and software suppliers to the outsourcer and their influence and profit margins significantly reduced.

Through a major transformation programme IBM was able to realign its business model to match the new value requirements of its customers. Those value requirements were for an integrated service-based offering that reduced the risks and cost of ownership of IT for customers through consulting and outsourcing offerings. Building the new business model to deliver this was a ten year journey and IBM’s business changed from one where services accounted for 9% of revenue in 1991 to one where services accounted for 40% of revenue in 2001.

So how can businesses avoid the onset of ‘value myopia’ and ensure that their ‘customer value map’ matches what is happening in reality in their customers’ environment?

 

An accurate map of customer value

Here are three key guidelines to help ensure an accurate map of customer value:

1.     Always consider value from the customer’s perspective. Particularly the relative weighting of value elements such as functionality, experience, cost and quality, which vary by customer and the situation that prevails at the point of purchase or use.

2.     Customer and User insight is critical in developing the customer value map.This requires deep understanding of customers and users, their wants and needs. Approaches such as Anthropology, Lead Users and Co-Development are powerful in enabling this insight.

3.     Use structured and responsive methods for developing new and enhanced value propositions to ensure that value innovation improves the fit with how customer and user needs are changing. Techniques such as QFD, Value Analysis and Conjoint Analysis allow a detailed and holistic map of customer value needs to be created. Approaches such as Lean Start-up allow new propositions to be quickly developed and tested – reducing the risk of value misalignment with customer needs. By identifying trends in how customer value requirements are changing, businesses can get early notice of required changes in their value proposition and business model

Businesses need to recognise the ease and danger of a disconnect developing between their value propositions and user wants and needs which are by nature dynamic. They need to continually review and update their ‘value maps’ to ensure they match customer reality.

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Front cover with border for LinkedIn - SMALLFurther information on value mapping can be found in Alastair Ross’s new book ‘Sowing the seeds of business transformation’ and available in paperback on Amazon.

(A version of this article was published on LinkedIn Pulse on February 21, 2017).

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Energizing Change

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