The Balancing Act of Innovation

the balancing act of innovation

The Balancing Act of Innovation Philippe Silberzahn Walter Van Dyck

The authors wish to thank Bieke Dewulf for managing this book project with drive and efficiency.

cover design Studio Lannoo design Studio Lannoo, Peer De Maeyer & Jurgen Leemans © The authors & Uitgeverij Lannoo nv, Tielt, 2010 LannooCampus is part of the Uitgeverij Lannoo Groep.

d/2010/45/379 – isbn 978 90 209 9345 5 – nur 800 All rights reserved.

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning or otherwise, except as permitted by law, without either the prior written permission of the author and the publisher.

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CONTENTS

FOREWORD

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INTRODUCTION · THE BALANCING ACT OF INNOVATION

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Philippe Silberzahn and Walter Van Dyck The challenge of innovation The worst of times, the best of times Black magic? Innovation remains a challenge Yet another book on innovation?

Innovation management: Managing diversity, journey and balance A diversity of innovation approaches The innovation journey The balancing act of innovation The plan for this book CHAPTER 1 · ARTECONOMY: STIMULATING CREATIVITY AND INNOVATION THROUGH ART

19 20 21 22 24 24 26 26 28

35

Herman Van den Broeck and Eva Cools Breaking the mould: the Arteconomy story Artists and entrepreneurs: a new relationship A series of seminars: cellmates or soul-mates?

The first in-company projects: from pioneers to professionals An artist and business: the Dragon of Deerlijk at Promo Fashion Change, creativity and innovation: the triangular mindset Right Directed Thinking Acknowledgement CHAPTER 2 · A TECHNOLOGY INTELLIGENCE SYSTEM TO ENABLE OPEN INNOVATION AT VIB

38 38 39 41 43 48 51 52

55

Mark Veugelers, Stijn Viaene and Jo Bury VIB and technology transfer The need for a technology radar Linking new ideas to funding

57 58 59

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Technology grants: Early access to breakthrough technologies Why set up a technology intelligence system?

A framework for (competitive) technology intelligence Useful IT tools Sifting the wheat from the chaff: Data mining software Transforming information into action Where do we go from here?

Acknowledgement An interview with Jo Bury, Managing Director of VIB CHAPTER 3 · A SHOWCASE IN SHOW BUSINESS: STUDIO 100 OUTPERFORMS THE COMPETITION THROUGH PRODUCT LEADERSHIP ADDRESSING EVERY ASPECT OF CHILDREN’S ENTERTAINMENT

60 62 63 65 66 69 71 72 72

77

Kurt Verweire and Judith Escalier Revollo Creativity, entrepreneurship and innovation Ideas, teamwork and a stimulating environment Managing people Creativity versus structure: a balancing act The driver behind Studio 100’s success – product leadership Growth through focus on a repeatable formula Product leadership in practice Direction and goal setting: innovation and entrepreneurship as top management priorities Operational processes: from idea generation to the commercialisation of ideas Support processes: innovation governance, resource allocation and knowledge sharing Evaluation and control processes: innovation performance indicators and incentives Organisational behaviour: creating and nurturing an innovation culture Conclusion Acknowledgement CHAPTER 4 · BELGACOM MOBILE: IT-ENABLED PROCESS INNOVATION IN TURBULENT INDUSTRIES

81 81 82 83 84 84 86 90 90 91 92 92 93 94

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Joachim Van den Bergh and Stijn Viaene Case study The SIM card ordering process

97 98

contents

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Project approach Results and lessons learned IT-enabled innovation IT and process innovation capability Process and system flexibility Decoupling process and product CHAPTER 5 · BREAKING INTO AN ESTABLISHED MARKET THROUGH A PROCESS OF EXPERIMENTATION: THE CASE OF GREENPAN

99 104 106 107 110 111

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Miguel Meuleman, Jan Lepoutre, Olivier Tilleuil and Wouter De Maeseneire The need for experimentation Fast forward to uncertainty: the unpredictable world of cooking pans Meet Wim De Veirman The cookware market and industry Distribution channels Trends in cookware Experimenting with different entry strategies Selling through TV: the Home Shopping Network Testing traditional retail channels: Migros and the Swiss experience The licensing option: Royal VKB Door-to-door sales: collaborating with The Party Sales Company Learning from experiments: key principles Building in affordable loss Parallel or sequential?

Dare to be radical The role of discovery, learning and adaptation An interview with Wim De Veirman, co-founder of GreenPan CHAPTER 6 · HOW TO SURVIVE YOUR OWN BUSINESS MODEL INNOVATION: THE STORY OF BONGO

117 118 119 120 121 121 122 123 125 126 127 127 128 130 131 132 133

137

Marion Debruyne 2000: The genesis of Bongo – the Weekendesk box 2000-2005: rapid growth 2007: a new brand is born To be continued…

Something in the air: context factors facilitating innovation The business model analysed Fuzzy early days and gradual tweaking

139 142 145 146 147 149 151

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The growth stage What if the blue ocean turns red?

What’s next?

CHAPTER 7 · THE SAGACITY OF SIGASI: FINANCING AN INNOVATIVE START-UP WITH LIMITED RESOURCES

151 152 154

157

Sophie Manigart and Andy Heughebaert Start-up companies facing financing constraints The Sigasi product (2) Preparing for start-up The start-up phase The first real round of investment The financial life cycle Acknowledgements An interview with Philippe Faes, founder of Sigasi CHAPTER 8 · WINNING THE DISRUPTIVE TECHNOLOGY GAME: THE CASE OF ALCATEL ACCESS NETWORK DIVISION (AND)

159 160 161 163 165 166 170 170

173

Steve Muylle and Pieter Geeraerts Striking Gold The only constant is change The need for speed Winning through innovation Decisions and outcomes CHAPTER 9 · THE BENEFITS OF OPEN INNOVATION IN LOW-TECH SMEs: THE QUILTS OF DENMARK STORY. THE FIGHT AGAINST COMMODITISATION

175 176 179 181 189

195

Wim Vanhaverbeke Quilts of Denmark – open innovation in practice Lessons for other low-tech SMEs CHAPTER 10 · GROWTH BY NECESSITY AND DESIGN: THE BALANCING ACT OF NEW BUSINESS PLATFORMS AT CRONOS

198 205

215

Iris Vanaelst The Cronos Group

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contents

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The Econocom Group DS Textile Platform Growth and innovation Growth by necessity and design The balancing act: creating and integrating new business platforms The new business platform logic How to organise for new business platforms The organisational culture in support of new business platforms Some final thoughts

220 222 223 224 225 227 229 229 230

CHAPTER 11 · GOING BEYOND THE PILL: BUSINESS TRANSFORMATION THROUGH CORPORATE VENTURING AT JANSSEN PHARMACEUTICA

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Walter Van Dyck and Tom Aelbrecht Game-changing challenges in healthcare Future worlds for life sciences The need for new capabilities in future worlds Connecting internal and external worlds Preparing for the future The need for corporate venturing and its role in business transformation Designing corporate venturing for sustained performance Corporate venturing: a portfolio approach Conclusion

235 236 240 240 243 243 244 245 247

EPILOGUE · BIC’S INNOVATION JOURNEY. AN INTERVIEW WITH BILLY SALHA, GENERAL MANAGER EUROPE, BIC

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ABOUT THE AUTHORS

256

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Dear reader,

It is no overstatement to say that innovation is the main challenge facing our economies today. Helping companies to build innovation capabilities is therefore one of the most relevant and most demanding missions for any business school. At Vlerick Leuven Gent Management School we have made it one of our central themes and have selected it as the topic for one of our main cross-functional platforms, bringing together faculties in strategy, marketing, operations management, finance and entrepreneurship, each of them skilled in combining sound theory with pragmatic corporate experience. This book is the result of their interaction with companies both large and small, all of which are attempting to find their own answers to the innovation challenge. It also includes a foreword by Rudy Provoost, who as the head of Philips Lighting has successfully transformed an established and mature lamp company into a vibrant global leader in lighting solutions.

Innovation is not (just) an R&D issue, but is the result of a company-wide intrapreneurial climate, which fosters broad idea capture, disciplined scrutiny of business value, and healthy incubation. It is not technological, but is about changing business models. It is no longer an internal process, but rather an open and a networked one. Most importantly – as the authors agree, in line with Schumpeter – it is about creating profitable change, which must be pursued all the way to adoption by the customer.

As we help companies through our organisation of boot-camps, which provide scientists and engineers with the tools to become more business ‘savvy’, so that they can turn their inventions into innovations; or as we conduct workshops with marketing and operations managers, so that they can think through more innovative business models, we are struck by how all those involved rise to the

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occasion. They all seem to enjoy the process, especially when they succeed in finding the missing link which allows them to go the last mile to market success.

Whether you are a manager searching for your own compass to navigate through the challenging waters of business innovation or whether you are a fellow academic, we hope that these chapters and the practical case studies which they contain will provide you with inspiration for your own ideas and will encourage your own commitment to help your organisation to thrive through innovation. Enjoy ‘Vlerick on Innovation’ – it is well worth reading!

Philippe Haspeslagh Dean, Vlerick Leuven Gent Management School

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FOREWORD

Innovation books frequently try to offer ready-made solutions for the managing of innovation in various dimensions. Or else they claim that the management approaches used by well-know, high-visibility innovators – the ones that we have all heard about – can be applied in any company, large or small, anywhere in the world. This book is different from other books about innovation, since the approach of the authors is to deliberately steer clear of these cookie-cutter recipes and ‘applicable-to-all’, high-profile solutions. Instead, by relying on judiciously chosen case studies, the authors write about innovation as it really happens, in a number of well-known and some less well-known companies. The stories they tell resonate strongly with our own experience in reinventing the business model at Philips Lighting over the past few years.

At Philips Lighting, innovation takes many shapes and forms. We respond to the fast changing dynamics of the business environment by playing chess at many different innovation tables. This allows us to meet the challenge of leveraging and capitalising on our leading position in the conventional lighting segment, whilst at the same time developing and reinforcing our leadership in the new world of digital lighting.

This requires us to continuously question the status quo and to tackle the various innovation dilemmas which confront us by redefining the rules of portfolio management and resource allocation.

Whereas in the past proprietary technology push was the name of the game, winning in the dynamic lighting market of the 21st century is increasingly a matter of more open and more collaborative innovation with communities of customers and strategic partners, allowing us to jointly pull and create competitive advantage from an ecosystem of innovation.

Growth, powered by innovation, is not only determined by our ability to stay ahead of the game as the product champion in the light source domain, but also requires us to continually reinvent ourselves, in order to deliver state-ofthe-art lighting solutions with distinct applications in strategic indoor and outdoor lighting segments. Product leadership remains crucial, but breakthrough innovation is about moving ‘beyond the box’, beyond the light bulb and the ballast. Innovation is about conquering new territory, about entering the world of turnkey projects and new business models, delivered with multidisciplinary,

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cross-functional expertise. For example, architects, designers and developers come to us in search of fully-fledged, energy-efficient solutions for their projects, while decision makers and end-users in both the public and private sector are increasingly looking for a partner who can provide a customised and integrated value proposition.

Innovation is a journey, and plotting the migration path from your current position to the desired position requires deep end-user insight, as well as strategic foresight, with the customer at the centre and technology as the enabler.

This outside-in approach is the only right way to determine the choice of the correct innovation path for your company, and to assess the best way to organise the innovation chain.

Increasingly, innovation is only as effective as the ability of the various players in the eco-system to join forces and work together. In the professional lighting business, teaming up with different stakeholders, such as specifiers, lighting designers, project managers, installers and distributors, is the key factor which makes all the difference.

Sometimes, however, incubators and ventures may provide the best innovation vehicle for the transformation of an interesting idea into a unique value proposition. The chances of success are very much dependent upon the readiness and the ability to follow a structured process with challenging tollgates, whilst at the same time engaging a committed executive sponsor, signing up a lead customer, and articulating the essence of the relevant innovation business model in a compelling way.

Pursuing strategic alliances and partnerships has also proven to be an effective formula for the innovation and development of customer solutions in which, for example, the combination of lighting with other components, such as building automation, energy services and smart controls, can help to provide a breakthrough.

In the new world of lighting, acquisitions are certainly another useful way to unleash new innovation potential and to create new innovation engines, focusing on unique synergies relating to technological control points, application know-how, access to market and business model redesign.

Innovation is a mindset. Innovation is about feeling comfortable outside of your normal comfort zone. Innovation is the pursuit of change. But to turn

foreword

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change into a source of competitive advantage, innovation also requires transformational leadership. As a CEO, I believe that it is crucial to manage the four dimensions of change – capabilities, configuration, culture and commitment – in a balanced but resolute manner. To create the right psycho-dynamics within the organisation, these elements need to be well defined and kept in equilibrium.

Innovation further requires the right configuration of entrepreneurs and managers, and the right inter-connection between resources and functions. In particular, the Technology, Marketing, Design and Strategy departments all need to work together, if the desired result is to be achieved.

Yet in the final analysis – and as far as the organisation makes this possible – it is your people who need to make it happen. The paradox, however, is that the capabilities which ensured your past triumphs are not necessarily the capabilities that will be needed in the future. Striking the right balance of talent for both the present and the future is the ultimate key to success.

From a cultural perspective, the only way to embed innovation in the DNA of your company is to establish an inclusive, open culture of collaboration and courage.

And finally, you will need long-term commitment to resource allocation for innovation, and the patience to see this investment come to fruition.

As you read the case studies in this book, you will no doubt be struck by parallels with your own business situation and innovation challenges. More importantly, you will find a rich source of inspiration, an organisational framework and the building blocks which will allow you to create your own balanced innovation style.

Rudy Provoost Chief Executive Officer, Philips Lighting