1. Mastering the Dynamics of Innovation A Capgemini Consulting Point of View October 2008

3. Innovation can be understood both as a process and an outcome, which embodies ideas, conversion of ideas and diffusion that creates an economic impact CREATIVITY AND ADOPTION The mental phenomena skills, cognitive ability, structures, culture and/or tools capable of originating (and subsequently developing) new ideas, innovation, inspiration or insight” Innovation is the process from idea, through development, to received benefits: We do not classify an invention as an innovation until it has been developed and implemented to an extent where it has an economic impact in an organisation and/or society. Idea generation Conversion Diffusion INVENTION “ Converting ideas into something new and specific with value creating potential” IMPLEMENTATION The process of transforming an invention into products or activities in order to successfully create impact of the invention”

4. Innovation moves far beyond the traditional product view and differs strongly in type across four distinct groups Delivery Financial Process Offering Core processes Business model Networking Enabling processes Product performance Product system Service Channel Brand Customer Experience Case Case Case Case Case Case Case Case Case Case Innovation breakthroughs often include several innovation types across these four groups.

10. Norwegian CEO’s recognise severe challenges in pursuing innovation types producing high returns Level of investments Level of returns Low Moderate High Low Moderate High Product performance Product system Delivery channel Brand Customer Experience Business Model Business Network Core Process Enabling Process Source: Doblin analysis; Keeley Innovation type and returns Perceived improvement need Perceived innovation performance Low Moderate High Low Moderate High Product performance Product system Brand Customer Experience Business Model Business Network Core Process Enabling Process Source: Capgemin CEO study 2007 Norwegian CEO’s view on innovation Despite a poor Norwegian position on the EU Innovation Scoreboard, Norwegian CEO’s are confident about their basic innovation capabilities in bringing product innovations to the market!

13. Internet and software players are now recognised as some of the most innovative companies in the world Ranking of Select Companies by Various Innovation Surveys, 2007 BusinessWeek The World Most Innovative Companies , 2007 Top 5 Companies on Future Think Innovation Tracker, 2007 Fortune Top 5 Companies Most Admired For Innovation, 2007 2 2 5 24 35 38 4 2 5 2 3 4 5 1 1 1 Source: Capgemini C4 Lab analysis. BusinessWeek, Fortune, Future Think Innovation Tracker. Online Players Telcos Others

14. Leading Internet and software players have adopted radical innovation methods across the value chain Early Adopters of New Approaches to Innovation In-House Cross-Pollination External Spread Development Selection Idea generation Conversion Diffusion Source: Capgemini C4 Lab analysis. Harvard Business Review, “The Innovation Value Chain”, 2007 20% time Multi-functional teams Hack Days and Code contests Idea submission to top executives Web 2.0 Tools Open APIs and platforms Consumer-led innovation Leverage data from betas Prototypes and beta releases VC funding for employee ideas Initiatives External ideas - Open Innovation Leverage Open Source and Mashups Balanced exploration Leverage customer data from betas Mashup applications Tapping into open developer communities Brainstorming Sessions Distribute development kit broadly Alliances, co-opetition and common standards Social networks

18. Innovation success today requires a marked departure from traditional principles Idea generation New Approach The Innovation Value Chain Conversion In-House Cross-Pollination External Selection Spread Development Diffusion Traditional Prime Source of Ideas is the R&D Department Limited, through formal Channels Partner to Create Proprietary IPR Financing Dependant on Organisation Priorities Linear process Disjoint Ownership Across Teams Limited to market segments or delivery platforms Ideas can Emerge Anywhere in the Organization Provide individual freedom to pursue own ideas Collaboration across diciplines Adequate, through Web 2.0 tools Establish incentives for collaboration Open Innovation - source ideas externally Collaborate to Evolve Common Standards Financing Based on Merit of the Idea Structured prioritising and portfolio management Balance exploration and exploitation projects Iterative process Prototyping and beta-testing End-to-end Ownership with Single Team Strong consumer involvement Rapid diffusion across markets and platforms Consumer involvement and fast upgrades Openness to encourage complementary products Source: Capgemini C4 Lab analysis. Harvard Business Review, “The Innovation Value Chain”, 2007

19. Even other industries give early examples of radical innovation practices Early Adopters of New Approaches to Innovation In-House Cross-Pollination External Spread Development Players ?? Minitel Initiatives Selection Idea generation Conversion Diffusion Source: Capgemini C4 Lab analysis. Harvard Business Review, “The Innovation Value Chain”, 2007. Company Websites. Allows Employees to spent 15% time on own projects Promotes Cross Functional ‘Communities of Practice (Connect+Develop External) Developed Innocentive, an online IPR Trading Forum Launched “Game Changer” for Financing Employee Ideas Realisation of Imagination breakthrough projects Free Sabre Terminals Prioritised American Airlines flights

23. Getting innovation right, organisations have to master seven different, but certainly interlinked, dimensions Select the right people to fuel the organisation’s innovative capabilities 1 Apply appropriate organisational levers to develop a culture of innovation 2 Foster creativity and collaboration across divisions and functional silos 3 Bring structure and discipline to all phases in the innovation value chain 4 Leverage data to prioritise projects and maintain a balanced project portfolio 5 Ensure resources and infrastructure to get speed into project execution and project upgrades based on customer feedback 6 Track innovation performance, learn quickly and continuously upgrade practices 7 Seven dimensions of innovation success The road to innovation leadership is demanding, but rewarding !

25. Backup Anders Rygh Capgemini Consulting Principal | Head of Business Strategy Mobil: +47 95 11 81 33 [email_address]