Creating an Agile and Innovative Organization: Lessons from the Future of Advertising Program Yoram (Jerry) Wind The Lauder Professor and Professor of Marketing Director, SEI Center for Advanced Studies in Management Academic Director, Wharton Fellows Program windj@wharton.upenn.edu Strategic Agility & Innovation Workshop June 17, 2013 1
Premise In the turbulent and uncertain current business environment, agility and innovation are critical mindsets and guidelines for successful strategy and organizational architecture. 2
The challenge, however, is designing and implementing an effective agile and innovative strategy and supporting organizational architecture 3
Our Approach is Motivated by the Findings of our Advertising 2020 Project 4
5
203 Contributors from 16 Countries Titles 46% Founders/CEOs/Presidents 9% Marketing Executives 9% Strategy/Innovation/Planning Executives 7% Research Executives 2% Sales Executives 5% Developers/Technologists 22% Academics/Authors Canada Israel Korea Australia Russia Belgium Netherlands Brazil Denmark Organization Type 47% Advertising Agencies 13% Media Companies 6% Advertisers 9% Data Analytics 6% Industry Associations 13% Academia 6% Technology United States China Germany Singapore India Japan UK 6
Evolving Delivery (Supply) The Results The Changing Market (Demand) Q1: The Initial Passive Consumers (At and With People) Empowered and Skeptical Consumers (With and For People) Scenarios Dynamic Ecosystems & Orchestrators III. Engaged Product, Brand and Campaign - Centric IV. RAVE-Relevance, Actionable, Valuable Experiential Delivered creatively through all touch points Traditional Advertiser Agency Media Model I. Advertiser-Centric Interruption and Persuasion II. Empowered Interactive Messages, Multiple Media 7
Some of the Key Findings I. Advertising as a Newsroom III. Orchestrating a all Touch Points a V. Think and Act Glocal II. On a Demand Advertising IV. An Open a Agency VI. Real Time a 8
I. Adopt a Newsroom Model Brands will have to leave behind organizations and thinking built solely around the campaign model, and instead adopt the defining characteristics of the real-time, data-driven newsroom a model that's prolific, agile and audience-centric. -Baba Shetty & Jerry Wind Advertisers Should Act More Like Newsrooms 9
II. Create On-Demand Advertising On-demand advertising requires timely, relevant, customized and trusted advertising to be present at a consumer s moment of need no matter where or when it is. Jacques Bughin & Jerry Wind On-Demand Advertising 10
III. Break Down Silos through Orchestration Product Design Customer Service Package Design New Media Old Media Store Design Siloed communications development needs to evolve into a carefully orchestrated approach, with a bespoke selection of the best skill sets and technologies for the communication objective. -Jerry Wind Sales Team Toward a New Advertising Model Public Relations Social Networks Empowered Consumers Employees 11
IV. The Open Agency: Leverage Open Innovation When one person with a wireless connection can be an agency, a media company or even a manufacturer, the traditional advertising organizations have to change... to accommodate open innovation. -John Winsor & Jerry Wind Advertising in an Open Innovation World 12
V. Think & Act Glocal Many brands have the potential to become global. Glocal advertising centers on a global theme that can be adjusted to local conditions. -Jerry Wind, Stan Sthanunathan and Rob Malcolm Advertising in the Age of Global Tensions 13
VI. Harness Real Time Big Data and Analytics (while respecting privacy and permission) Marketers will need to master the data to coordinate a constantly expanding surface area of interactivity... which will evolve to connect, track, and manage interactions across physical and digital points through the cloud. -Jacques Bughin, McKinsey Personal data lockers will give Internet users a degree of control over their online personal data that may well transform it into a kind of online currency. www.personal.com -JR Smith, AVG Technology 14
What are the Implications of these Findings? 15
Our Proposed Guidelines 16
17
Agile development, strategy & organization applied throughout the organization, its values, strategies & architecture 18
Agility principles: 1. The goal is speed, value and quality 2. Empower people but have them stay in their roles 3. Build partnership based on trust 4. Kaizen continuous improvement 5. Transparency 6. Legacy mindsets handicap Agility 7. Control economic logic let others make decisions 8. From concept to cash in 10 weeks 9. Iterations, fast prototyping and experimentation 10. Have Fun along the way For the full list of Agility Principles, see Robert Crudup, The Scaled Agile The Dirty Dozen: 13 things you should know about agile 19
Organizational and Network Architecture A Culture & Values Vision Objectives Value Proposition Business models Strategies H Metrics/Dashboard Performance Measures, Incentives B Ownership, Governance, Structure, & Network Orchestration C Value Creation and Network Orchestration Processes The Organizational and Network Stakeholders: Customers Employees Shareholders Partners Suppliers Government Communities Other G Technology F Resources D E People and Competencies Facilities supporting accountable champions 20
Growth momentum 21
Utilize Frameworks for Growth Market 22
Imagine different mental models and world 23
Our Mental Models are a major obstacle to creativity and business transformation. Thus, understanding and challenging our mental models is a MUST! 24
Let s consider What are mental models? Robbery at Knifepoint Updated June 1, 2013 8:55am What just happened? 25
The reality of the situation did not change, our mental model did! Our beliefs, attitudes, feelings and behaviors are driven by our Mental Models, not reality. 26
Why are Mental Models critical? Consider Our Political Views Inner City Alternative Medicine Source: Zogby Analytics, 1/13/13 http://www.jzanalytics.com/data/us_r esults_za_011013.pdf Roger Bannister breaks the 4 Minute Mile on May 6, 1954 27
What is common to these innovations? Microsoft Xbox 360 Kinect Sayaka Endoscope Capsule Google Glasses Samsung SGH- E760 $2000 Car Apple ipad Napster Most Innovative Companies The GM En-V MIT s Media Lab $100 laptop All these breakthrough innovations challenged the mental models of their industries. 28 Nike For a pair of revolutionary new products and a culture of true believers Square For spreading the mobile payments revolution Amazon For speeding up the delivery of change. Splunk For bringing big data to the masses February 2013
In a changing environment challenging our mental models is a must! Without changing our pattern of thought, we will not be able to solve the problems we created with our current pattern of thought. - Albert Einstein 29
Should we challenge our mental models? 30
Leveraging your stake holders and the wisdom of the crowd 31
Leverage All Your Stakeholders Customers Partners Distributors Suppliers Employees Shareholders 32
Leverage Your Customers Designers Pricers Producers Distributers Advertisers Are you doing it? Marketers 33
Leverage Open Innovation Innovation => Creating the 3 rd Dimension Over 225,000 apps!* *http://www.apple.c om/ipad/from-theapp-store/ Value Creation re innovative design, production and marketing with employees, customers, distributors, suppliers and others Are you doing it? 34
Leverage Diverse Disciplinary Perspectives Illustrative InnoCentive s Disciplines Are you doing it? 35
Idealized design and Incubation of new initiatives 36
Idealized Design and Incubation Accelerators of New Initiatives 37
Testing, testing & testing with adaptive experimentation 38
Adaptive Experimentation Response x $ Response - - - - - - - - X X X ½x x 2x $ Have you adopted the adaptive experimentation philosophy? And what have you learned from the natural experiments occurring around you? 39
Yield for all shareholders, stakeholders and society 40
Yield For All Stakeholders Shareholders Consumers Employees & Partners Society Source: Stengel, Jim. Grow. Crown Business: 2011 41
Performance Metrics Break Even Time (BET) % of Revenue and Profit from New Products and Services Share of Wallet Creation of New Industries Other? 42
Our Proposed Guidelines: Agile development, strategy & organization applied throughout the organization, its values, strategies & architecture Growth momentum Imagine different mental models and world Leveraging your stake holders and the wisdom of the crowd Idealized design and Incubation of new initiatives Testing, testing & testing with adaptive experimentation Yield for all-- shareholders, stakeholders and society Questions? 43
Implications To: Research Teaching Practice 44
Reflections & Action Plans 45
Share with us your experience... Jerry (Yoram) Wind windj@wharton.upenn.edu 46