Vlerick Business School Prof Dr Walter Van Dyck

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2 GROWTH THROUGH INNOVATION: POSSIBILITY OR NECESSITY? PROF DR WALTER VAN DYCK

3 1. WHY INNOVATE? 3

4 INNOVATION: THE FOUNDATION FOR GROWTH AND RENEWAL 4

5 WHY? 5

6 EVERYONE BUYS TABLETS 6

7 2. SO HOW TO STRATEGICALLY MANAGE INNOVATION-LED GROWTH & RENEWAL? KEY PRINCIPLES 7

8 PRINCIPLE #1: MANAGE FOR TRANSIENT (INSTEAD OF SUSTAINABLE) COMPETITIVE ADVANTAGE The dominant idea in the field of strategy that success consists of establishing a unique competitive position, sustained for long periods of time is no longer relevant for most businesses. Firms need to embrace the notion of transient advantage instead, learning to launch new strategic initiatives again and again, and creating a portfolio of advantages that can be built quickly and abandoned just as rapidly. For this to succeed will require a new set of operational capabilities (Rita Gunther McGrath, 2013) 8

Firms need to embrace the notion of transient advantage instead, learning to launch new strategic initiatives again and again, and creating a

9 PRINCIPE #2: MANAGE FOR INNOVATION WITHIN THE FIRM S PRESENT AND FUTURE ECOSYSTEM 9

10 PRINCIPLE #3: MANAGE INNOVATION AS A BALANCING ACT PREDOMINANTLY FOCUSED ON EVOLUTION (90-95%), RATHER THAN REVOLUTION (5-10%) 10 Nagji & Tuff (2012)

11 PRINCIPLE #4: HAVE AN INNOVATION PARADIGM GUIDING GROWTH AND RENEWAL? TO WHICH PURPOSE? Science-based Technology-based Service-based Purpose: Build critical mass pushing the scientific frontier Purpose: Recombine technologies to build and occupy market space Purpose: Optimize client- and deliverycritical assets Van Dyck (2014) 11

Science-based Technology-based Service-based Purpose: Build critical mass pushing

12 SCIENCE-BASED INNOVATION PARADIGM: PERSISTENCE AND CRITICAL MASS SOLVING MESSY PROBLEMS Open Innovation Paul et al. (2010) Nature Reviews Drug Discovery v From Closed Innovation to 12

13 TECHNOLOGY-BASED INNOVATION PARADIGM: MODULAR PLATFORMS ALLOWING TO BUILD CREATIVE COMBINATIONS FAST- 13

14 SERVICE-BASED INNOVATION PARADIGM: FAST CUSTOMER LEARNING AND OPTIMIZING ASSET USE Co-bot 14

15 INNOVATION IN FINANCIAL SERVICES THE ACCENTURE INNOVATION AWARD New Financial Research-Based 25 Products Creative Combinations Asset Optimization 5 0 Technology Push Demand Pull 2012 Award 2013 Award 15

Products 20 15 10 Creative Combinations Asset

16 INNOVATION-LED GROWTH AND RENEWAL: GROWING AND TRANSFORMING THE CORE Growing the Core Business Sense & Respond Transforming the Core Business 16

17 GROWING THE CORE: OUTPUT KPI-DRIVEN INNOVATION 17

18 GROWING THE INTEL: ROADMAP-DRIVEN 18

19 PREPARE FOR TRANSFORMATION: SENSE & RESPOND 19

20 PREPARING FOR TRANSFORMATION: SENSE & RESPOND INTERNAL CORPORATE VENTURING-DRIVEN 20

21 SENSE & RESPOND: CONNECTING TO EXTERNAL IDEAS USING EXTERNAL CORPORATE VENTURING, TAKING A MINORITY EQUITY STAKE 21

22 LEADING TO AN EXTERNAL PORTFOLIO OF POTENTIAL BETS FOR THE FUTURE 22

23 TO PREPARE FOR CORE BUSINESS TRANSFORMATION: SENSE IN CORE-RELATED BUSINESS AND TECHNOLOGIES Augmented reality 23

24 RESPOND BY TRANSFORMING. DISRUPT OR BE DISRUPTED; YOUR CHOICE The Economist (2012) 24

25 3. CONCLUSIONS THE INNOVATION RATIONALE REVISITED 25

26 MANAGING INNOVATION-LED GROWTH AND RENEWAL MEANS Know your innovation paradigm. Which purpose is your innovation system built for? Built for critical mass and persistence solving advanced problems? Focused on modular design and launching smart combinations, fast? Understanding customers faster than competition and reacting fast? Geared to optimizing assets? Dynamically manage a balanced innovation portfolio; Predominantly focus on growing the existing core Place bets to prepare for core transformation Know when to add critical mass to promote bets bcoming your next business 26

27 FINALLY, THE MAIN LESSON INNOVATE, OR BE CONDEMNED TO BE A COST LEADER 27 Altomonte et al (2013)

28 THANK YOU!