Driving Innovation Within Large Organisations - 383 Byte

- John Newbold from 383
- We’re talking this morning about driving Innovation within large organisations
- Specifically looking at how organisations are achieving both innovative cultures, and executing on their innovation strategies at scale

USE FULBR A N DSPLA Y BO OK .C O M
- but before we start it’s always helpful I think to bring a bit of reality to proceedings when we’re talking about the word innovation.
- It’s a bit of a loaded word, it can conjure up pictures like this in your mind
- I’m sure people are familiar with Skymall … there’s some fantastic products in there. Things like the Noodle splash guard, the back scratch grid
- Amusing, yes. But not the type of innovation we’re talking about today.

- So when we talk about innovation at 383, we often lean on this thinking from Tim Kastelle.
- His definition of an innovation is this;
- something that is a new idea
- that creates new user value
- and that has become a reality
- And the venn diagram, the synthesis of all three of these characteristics is important.
- An idea that could create value but can’t become a reality is just a concept
- And an idea that has become reality, but creates no real user value is just a novelty. That’s the stuff you see in Skymall.

- So we have a definition of what innovation is.
- But what about the environment you need to create to be able to turn a useful idea in to reality at a large organisation?
- I think here there are three key components
- Firstly organisational culture - the people who work at the organisation and how they behave.
- Next a strategy that sets the mandate for how things get delivered
- and lastly the ability to execute, to actually make things.
- You’ll notice from my amazing diagram that that strategy interlocks with the culture. And that’s really to illustrate that in my mind one of the primary reaso
- Organisations try and solve people problems with strategy, or they encourage people to be entrepreneurial but without a culture that allows them to do so

- If you think about it all as one sentence, what I believe organisations need to be pushing towards is this;
- A culture that enables the strategy and a strategy that enables execution.
- Without culture, strategy wont’ happen. And if your strategy isn’t execution focused all you have is process and no product.

- This seemed a good point to bring in some visual metaphors.
- And if you’ve been to a Byte before you’ll know that one of my favourites is to describe culture in large organisations as being very sloth like
- This video of a sloth crossing the road is particularly tedious and this is often what the pace of change can feel like at many large organisations
- Things happen slowly, people need cajoleing along and it takes a long time to head in a different direction.

- I’ve also been fishing over the last year or so for a good visual metaphor for what we see at 383 in a lot of large organisations and I think I’ve hit on it with
- You see, many organisations are not designed to enable innovation. In fact often, getting an idea to transit through an organisation is often a real imposs
- Organisations are slow by design and ideas often get trapped.

- The story often goes like this, it might be familiar to some of you
- so innovation maybe starts with a boot from the board … a big directive of a rallying call for a business to try something new
-an idea then emerges in a team and rolls along, zig zagging through multiple departments and stakeholders
- eventually a project reaches the technical definition phase and you get in to leaky budgets and scoping builds before you’ve actually made anyt
- followed up by a leap of faith with legals
- and ultimately getting locked down by IT.

- So the problem becomes pretty clear
- if you take a slow sloth like people culture and you try and navigate your way through really convoluted organisational design and strategy you’r
- What then is the alternative?

- well today I’m going to look briefly at answering two questions which I hope will help to push toward some of the answers
1) How do you create a stronger innovation culture
and
2) How do you design an execution led innovation strategy, where the emphasis is on making, not just process.
Let’s start with culture

- Now this is of course complete co-incidence but Mousetrap the board game was first released in the 60’s

- and the 60s were interesting too not just for board games, but for organisational design.
-
- so the 60s were really the height of what’s called the ‘burecratic organisation’
- this is an organisational model which had grown out of a period of mass industrialisation and globalisation
- as businesses scaled they became highly bureaucratic,
- so you see lots of layers of management,
- lots of hierarchy,
- lots of people fulfilling very specific types of jobs and tasks
- and also lots of rigid procedures and policies alongside

- then new technology came along, and really during the 1980s lot of new post bureaucratic organisational models emerged
- computers took a lot of the lower level jobs that existed in certain organisations
- technology automated a lot of tasks
- company products and process changed as a consequence
- So as computers ate away at lots of the old ways of doing things a fair few ‘post-burecratic’ organisational models emerged
- things like divisional when business were carved up in to flatter hierarches
- team structures, where people were organised around specific features of a product
- or network, where there was more fluidity between teams and roles

- Gideon Kunda has a very famous book called ‘Engineering Culture’ and he talks about the fact that the post-burecratic era was very much more about com

- So briefly, I wanted to show you 5 examples of post bureaucratic organisational design that exist today so you can see in real world terms how this think

- so firstly, Spotify organise their teams in a super interesting way.
- they have very fluid structures where teams are organised in to chapters, squads and guilds.
- the design here is all about enabling a culture which is product and user focused first, and encouraging people from different teams to have very grey edg

- Zappos, are another company who demonstrate a very innovative post bureaucratic culture.
- They’re incredibly people focused, both obesessionally about their customer but also in realising that their culture is their brand.
- This book, is their 2014 culture book. You can download it for free online.
- Each year they publish this, which is co-written by all the staff, as a manifesto for the values and culture that they believe in.
-
- Inside you’ll find stuff about their core values and vision, their flat self organising structure, notes from new joiners on what joining Zappos has done for th

- It would’ve been hard to touch on innovative culture without mentioning google
- this slide is taken from a great deck I’d recommend you take a look at on slide share called ‘How Google Works’ and it’s a very astute google like observa
- It simply says ‘innovation can’t be owned or ordained, it needs to be allowed. You can’t tell innovative people to be innovative, but you can let them’.
- And it’s thinking like that from Eric Schmidt and the team at Google that has really enabled them to scale this entrepreneurial, inquisitive mindset througho

- I love this example of post bureaucratic thinking from Nordstrom
- This is a company with 67,000 employees and this is there employee handbook. All of it.
- So on one side it says employee handbook and on the other it say ‘our one rule. Use good judgment in all situations’.
- I think this is a real demonstration of a company who are trying to drive culture by focusing on value, not policies.

- Lastly, if you’re looking at innovative work culture, I think it’s good to look at the work environment itself.
- This is a google image search for WeWork, who are a super fast growing co-working space.
- Their business model is essentially to design and rent office space, but the way they describe themselves is as ‘a global platform for people who want to e
- I think it’s key that in this image search as well as cool spaces what you’re also actually seeing is lots of people doing effective work.
- WeWork by the way are valued at $5 billion
- This is Regus, their nearest competitor, valued at about 2 billion. Lots of compartmentalised workspaces, lots of logos, and a lot less people.

- So, that’s a bit on culture.
- The other part then, is what strategies are large organisations pushing towards to do better innovation.

- and I wanted to point out here, that I don’t have a silver bullet
- there are lots of different innovation strategies, many of which you will have heard about at Byte before
- So, companies are choosing to spin out incubated startups and build their own innovations like British Gas with Hive.
- Some organisations are partnering to bring innovation in, which is what Jeremy from Unilever is kindly going to chat to us about in a moment
- Or, organisations are buying innovation in, by changing their offering through acquisition with things like Hoopla buying uSwitch to extend their ecosyst

- but away from those three strategies of build, partner and buy, I wanted to talk to you about another which is much more about how to do innovation along
- And for convenience I’ve called it integrated innovation

- And this is a strategy invented by Steve Blank, which blends a process from about ten years ago called the 3 horizons of innovation, with many of the lean
LEAN INNOVATION MANAGEMENT - STEVE BLANK

- And it looks something like this.
- So, the 3 horizons of innovation first emerged in the late nineties through the work of Bag-hi, Coley and White
- On the bottom of the diagram we have time, and how far off the innovation might be in the future. And on the left we have value, which is representa
- Horizon 1, is about extending the core business models.
- Horizon 2, is focused on developing rapidly growing emerging business models
- And Horizon 3, deals with finding early stage new business models
- At the emphasis here is one organisation executing ideas and thinking across all three of these horizons at the same time.
- Pushing for very near short term gains and placing bets on innovations and future business models which might be much further away.

- And, zooming in a little, I wanted to give you a practical example of what these horizons might look like and show you how we’ve been putting this in to pr
- So, zooming in to horizon 1. This is very much about developing fully known business models.
- Innovation here is focused on doing more around the core services the business already has through sales, operations and process innovation.
- You always expect innovation here to be very execution led because you’re operating very close to the core existing business and can be fairly certain tha

- In real world terms for our work with Hilton, this is a typical Horizon 1 innovation.
- This is a product called Hilton weekender. We have it in the UK and US markets currently and are rolling out worldwide as we speak.
- The aim of this product is to intercept new customers for Hilton further up the sales funnel by offering utility around city guides, content and user generate
- It’s very much a departure from the typical marketing they were doing, by launching a more lifestyle led mobile and desktop product, but it’s working huge

- Horizon 2, is about what we call partially known business
- This is really about searching for new revenue and customer experiences, building prototypes and validating which ones might have the headroom to sca
- Then we take that validated business model which sits outside of the core revenue for the organisation and develop that in to a large asset at scale.

- In practical terms, this is a Horizon 2 innovation we’re piloting for Hilton at the moment.
- It’s a new post authentication wi-fi page which we currently have in around 60 hotels across New York.
- The idea here has been to strike up new partnerships with other providers that provide the guest with a really useful localised start page when they first log
- Here, we’ve got car rental APIs, live flight times, ticketing integrations, weather forecasting and news content, all available for the guest and of course, all o
- I can’t go in to specifics on the revenue here, but suffice to say with over 300 million sessions per year globally this was a really under valued part of the H
- We’re hoping to have this in 3 and half thousand properties by the end of September.

- And finally Horizon 3.
- Horizon 3 is about placing bets on distant and potentially disruptive unknown business models.
- So here, there ideas will typically be very hard to do within a business existing infrastructure, or market, but represent a revenue opportunity that could

- I can’t talk too much about all the projects we’re running in Horizon 3 for Hilton, but one worth mentioning is a current exploration we’re doing to reimagi
- Many of you I’m sure will know that this experience is currently far from optimised,
- and with a bit of imagination you can probably guess the types of things we’re pushing towards without me needing to spell them out!

- so, that’s a quick overview of how the 3 horizons work in practice.
- One thing worth pointing out is that from a large organisation point of view this strategy is great because it allows you to do innovation continuously acros
- So with Hilton, our near term innovations are typically delivered with the marketing & digital teams who work on the here and now.
- Medium stage horizon 2 projects like Wi-fi are co-developed with the new revenue development teams, but then onboard operationally through IT
- And horizon 3 is worked out initially purely with new revenue development.
- As an aside, for the next Byte, Dominic who’s our client at Hilton is going to be sharing in a bit more depth the stories behind some of the projects I’ve sho

- So, if the 3 horizons are the vehicle, then lean tools are kind of the fuel for all of this.
- Many of you will be familiar with tools like the business model canvas, value proposition canvas or sites such as lean launchpad or lean stack
- By combining these two methodologies you have a pretty robust toolkit for exploration, validation and execution in very rapid time frames

- and again, this combination of processes has been pioneered only recently by Steve Blank.
- There’s an article on venture beat which you can read in the background where he talks about putting this strategy in place with the US Government and

- So in summary then, how do you create a stronger innovation culture?
1) By understanding that technology has changed organisational models for the better and enabling people to work creatively in less bureaucratic system
2) By placing faith in trust and values over policy and procedures
and 3) by understanding that there is no strategy without a solid culture to sit in on top of

- Finally, how do you design an execution led innovation strategy
1) Again, by mapping a strategy to your culture and understanding what’s actually going to be an actionable mandate for the type of organisation you are
2) Secondly, by blending tools and methodologies. As I said, there’s no one silver bullet, but there is a ton of god stuff to test and learn on top of
And thirdly, if your a large organisation I’d really encourage you to push for innovating across the there different horizons I’ve showed you today.

So, that’s all I’ve got to say.
- delighted next to welcome Jeremy from Unilever
- mentioned three strategies > Build, Partner, Buy
- welcome Jeremy from Unilever Foundry to talk about brining innovation in through partnering with startups.

Driving Innovation Within Large Organisations - 383 Byte

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Driving Innovation Within Large Organisations - 383 Byte