The Ten Tensions Powering Innovation in Sourcing

Transcription

1 The Ten Tensions Powering Innovation in Sourcing Chris Wasden, EdD Executive Director & Professor of Innovation Sorenson Center for Discovery & Innovation David Eccles School of Business University of Utah sig.org/eval

2 Orlando, Florida April 19, 2016 Harnessing Tension to Innovate Global Sourcing Minding the 10 Ps & Qs of Innovation Dr. Chris Wasden Executive Director

3 A dynamic and turbulent future is creating unprecedented Tension that we must harness to power innovation The future is already here its just not very evenly distributed. William Gibson 3

4 MINDFULLY Creating Tomorrow MINDLESSLEY Running Today The most powerful tension is between mindlessly running the business of today and mindfully creating the one of tomorrow 4

5 The Innovation Cycle is how we harness tension to drive innovation in our lives and our organizations 5

6 Finding and Enabling Failure and Pain to Create Tension Exponential growth is a leading indicator of future failure, pain and tension 6

7 Exponential changes occurring in society are the leading indicators of emerging tensions 7

8 These tensions will create 200 centuries of change in just the 21 st Century 8

9 These tensions power creative destruction that is decreasing the life of the S&P 500 to just 12 years 9

10 Harnessing Creative Tension by Applying the 10 Ps & Qs We apply our 10 Ps & Qs of Innovation, as outlined in Tension: The Energy of Innovation as our primary innovation framework 10

11 Tension outlines the 10 questions you must answer for success, we call this our 10 Ps & Qs Innovation framework Problem Where s the problem s root cause? 1 6 People/Partners Who must we enlist? Point of View What differentiates us? 2 7 Process/Plan What are our MVPs? Proposition How to create value? 3 10 Ps & Qs of Innovation 8 Possibilities How big can it be? Position How change the industry? 4 9 Promotion How to change behavior? Product How achieve digital success? 5 10 Profit How do we make money? 11

12 1. Problem Q: What is the root cause of failure, pain and tension of the problem? MACRO Social System META Organizational MICRO Individual 12

13 Societal Problem RFID and the IoT are exploding and will revolutionize global sourcing, requiring new capabilities RFID Forecast Billions of Connected Devices 13

14 Societal Problem IoT will be more disruptive than the internet to all aspects of business operations Industrial Devices - Largest 14

15 Societal Problem Virtual reality is a new way of thinking and applying IoT in consumer, commercial and industrial applications VR Revenue (M) Industrial Applications 15

16 Societal Problem And similar growth in augmented reality will enhance products, marketing and retailing AR Revenue (M) Industrial Applications 16

17 Societal Problem Exponential growth in global trade is being accompanied by an exponential increase in cloud data requiring big data analytics Growth in Cloud Big Data Growth of Global Trade 17

18 Societal Problem IoT, Social Media, and Big Data are driving demand for analytics to predict, prevent, prescribe new behaviors Data Scientist Jobs Big Data Tools Jobs 18

19 Societal Problem Artificial Intelligence (AI) and chatbots are considered the next big thing to predict, prevent, and prescribe behaviors Artificial Intelligence Revenue Leaders Enter the Market 19

20 Societal Problem Consumers adoption is skyrocketing and businesses are increasingly able to rent the best AI through APIs Businesses Will Rent AI from IBM Consumers Adoption Skyrockets 20

21 Societal Problem Microsoft has delayed its focus on mobile and smartphones until it first gets AI figured out and delivered 21

22 Societal Problem AI enables firms to deal with changing global cost structures that drive more sourcing closer to home for greater agility Unit Labor Costs in Manufacturing Manufacturing Jobs 22

23 Societal Problem Global labor markets leverage improvements in AI, IoT and analytics to drive changes in industrial automation Automation Market Country Priorities in Automation 23

24 Societal Problem Autonomous driving has completed millions of miles of safe driving and has begun to transform the auto industry Impact of Autonomous Vehicles Autonomous Miles Driven 24

25 Societal Problem It looks like the US may NOT be the market leader in adoption as other countries begin to commit to this technology Singapore Adopting Autonomy Mercedes Benz in Commercial Trucks 25

26 Societal Problem The growth of Uber and its expansion into new markets will likely disrupt other transportation services Uber Driver Growth Uber Entering New Markets 26

27 Societal Problem Drones represent an additional disruptive force in the global supply chain Commercial Drone Revenues Amazon Vision for Drones 27

28 Societal Problem Agricultural automation is exploding and China/Asia is leading the way to address their labor cost growth tensions Agricultural Automation Country Investments in Automation 28

29 Societal Problem Automation, AI are further driving changes in Additive Manufacturing (aka 3D printing) Consumer & Commercial AM AM Manufacturing 29

30 Societal Problem Global leaders like GE are leading the way in applying AM to their core business causing increases in forecasted growth Changing Growth Forecasts 30

31 Additive manufacturing is setting the foundation for the next industrial revolution Justin Courtney, Managing Director, Stephens, Inc. 31

32 Societal Problem Another important form of automation will have a powerful impact on office worker automation the blockchain Startup Investment Google Searches for Block Chain 32

33 Societal Problem 42 global financial organizations have come together through R3CEV to make blockchain a reality 33

34 Societal Problem Global leaders have begun to rapidly test and adopted the blockchain technology for their traditional white collar jobs 34

35 Societal Problem Cryptocurrencies have begun to get national traction where the pain points are the greatest and expanded further 35

36 Societal Problem Blockchain, mobile and other fintech innovations will continue to have a powerful disruptive impact on finance Fintech Financing & Deals Mobile Financial Payments 36

37 Societal Problem Automation, blockchain and AI will create even greater tensions in the labor market Declining Manufacturing Employment Google Betting Big on AI 37

38 Societal Problem Risks will change and likely increasing with the rise in technology, requiring more new technologies to manage it Technological Disasters since 1900 Natural Disasters since

39 Societal Problem Greater connectivity through IoT and social media are leading to an explosion of cyber security costs and incidents Cyber Security is Getting More Costly Security Incidents are Exploding 39

40 Individual Problem Consumers have rapidly changing tastes and become agents of change around sustainability goals and targets 40

41 Societal Problem These changing consumer tastes demand different strategies in global sourcing across the entire value chain Sustainability Reporting Corporate Focus 41

42 Societal Problem Social media market penetration generates huge volumes of data to help better understand consumer tastes Social Networking Use by Age Number of Users of Social Media 42

43 Societal Problem The rate of change has accelerated and enables more agile organizations to succeed at the expense of more rigid ones Technology is Accelerating Economist Measures of Speed 43

44 2. Point of View Q: How do you create a highly differentiated invention? Industry Value Chain Company Value Chain Problem Point of View Proposition Position Product Process/Plan People/Partners Possibilities Promotion Profit 44

45 Forces Tensions in the marketplace require a rethinking and restructuring of the value chain to enable greater innovation Traditional Global Sourcing Value Chain Requirements Sourcing Manufacturing Outbound Logistics Channels Demand Management Block Chain & Payments Cloud Computing & Security Automation Re-shoring AM Big Data Analytics & AI IoT AV Drones Augmented & Virtual Reality Sustainability & Social Media Industry Company Customers 45 Problem Point of View Proposition Position Product Process/Plan People/Partners Possibilities Promotion Profit

46 Two interesting Points of View from my students for Apple and Google Google Secure Works Apple icharge Problem Point of View Proposition Position Product Process/Plan People/Partners Possibilities Promotion Profit 46

47 3. Proposition Q: How do you deliver all 5 Cs of the value proposition? Cost Convenience Confidence Compensation Connection New Value Creation Matrix Remove Reduce Retain Reform Replace How is cost (price) to the customer changing versus current alternatives? How much faster, easier, closer, simpler is this versus alternatives? How much more accurate, reliable, higher quality, more secure is this versus alternatives? Who makes how much more or less money as a result of this versus alternatives? How does this connect with customers better on a technological and emotional basis than alternatives? 47

48 Value is shifting from being cost driven to creating more value through the other four Cs New Value Creation Matrix Remove Reduce Retain Reform Replace Cost Total Cost of Solutions (not just product & service) Convenience Confidence Compensation Speed Agility Ease - Closer Transparency Accuracy Reduced Risk Marketing Inventory Sales and Rapid Turnover Connection Changing Tastes Sustainability Digital Social Media 48

49 4. Position Q: How do you create a sustainable competitive advantage? Threat of New Entrants Bargaining Power of Suppliers Rivalry Among Existing Competitors Bargaining Power of Buyers Threat of Substitution 49

50 Innovative startups are enabling the unbundling of traditional businesses like Fedex, creating new kinds of disruption 50

51 5. Product Q: How do you remove friction through Six Principles? Engaging Integration Interoperability Outcomes Intelligence Socialization Problem Point of View Proposition Position Product Process/Plan People/Partners Possibilities Promotion Profit 51

52 Solutions must have value propositions that remove friction (aka tension) in innovative ways Integration Interoperability Intelligence Outcomes Socialization Remove physical friction by integrating into existing workflows and lifestyles Remove digital friction by providing interoperability among other digital technologies Remove mental friction by analyzing data to provide insights, prediction and prescriptions Remove transparency friction to providing clear, real-time measure of performance towards goals Remove social friction by making it fast and easy to share with stakeholders to gain support Engagement Remove boredom friction by using gamification to make it sticky and to bring users back regularly Problem Point of View Proposition Position Product Process/Plan People/Partners Possibilities Promotion Profit 52

53 6. Process/Plan Q: What do you foresee as the roadmap for your MVPs? 53

54 A key to successful innovation is enabling continual process innovation that enables agility through FFFF MVP 1.0 Build Measure Learn 90 Days 3Fast, Frequent, Frugal Failure MVP 2.0 Build Measure Learn 90 Days MVP 3.0 Build Measure Learn 90 Days 54

55 7. People/Partners Q: How do you attract and structure the team you need? 5 Rs of Structure Along Innovation Lifecycle 5 Rs of Structure & Practice Roles Discovery Incubation Acceleration Scale Relationships Responsibilities Resources Results 55

56 Organizational structures must enable open, rapid, and continual innovation 56

57 8. Possibilities Q: How big could this get in units, sales, impact? Deductive Top Down Inductive Bottoms Up Abductive - Patterns 57

58 The future possibilities will enable early adopters to create network effects and experience more rapid growth 28% 59% 18% 24% 57% 60% 89% 37% 14% 93% 89% 74% 69% 58

59 9. Promotion Q: How do you change human behaviors through engagement? Five Pillars of Change Five Stages of Change Maintenance Learning LARRY Goal Orientations Competent CATHY Avoiding ANNIE Nonworking NORMAN Action Preparation Contemplation Precontemplation 59

60 Behavior change must occur through culture change within organizations, value chains and among customers Five Pillars of Behavior Change Rate of Adoption of Technology 60

61 10. Profits Q: How will you manage risks to generating economic value? $ Profit and Required Investment $ $50.00 $0.00 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 -$ $ Problem Point of View Proposition Position Product Process/Plan People/Partners Possibilities Promotion Profit 61

62 Economics will be increasingly driven by solutions rather than by merely products and services Label A Label B Label C Label D Total Product Service Support Maintenance Solution Problem Point of View Proposition Position Product Process/Plan People/Partners Possibilities Promotion Profit 62

63 Harnessing Creative Tension How do you apply the 10 Ps & Qs to harness your creative tension within your organization 63

64 The 10 Ps & Qs approach ensures you create, enable and harness tensions to power your innovation Where Stakeholders Where to play Problem Innovation Cycle Problem Statement Benefits Why you win Capabilities Why How What How you win Economics What you win Point of View Proposition Position Product People & Partners Process & Plan Possibilities Promotion Profits Value Chains Five Cs & NVCM Five Forces 6 Principles Three Rings Innovation Lifecycle Total Addressable Market Five Pillars Forecast & Cap Table 64

65 Great innovation leaders create, enable and harness creative tension to power the innovation processes My job as a leader is to create discord and to impose deadlines. Eric Schmidt, Chairman, Google 65

66 Forces Managers wait for failure and pain to create tensions to force them to act, leaders create tension in the absence of events Prospective vs Retrospective Block Chain & Payments Cloud Computing & Security Automation Re-shoring AM Big Data Analytics & AI IoT AV Drones Augmented & Virtual Reality Sustainability & Social Media 66

67 Ambidextrous leaders apply both Lean and Innovation Disciplines across the Innovation Lifecycle to harness the most powerful tension between Running the Business of Today and Creating the Business of Tomorrow 67

68 Chris Wasden, EdD Executive Director & Professor of Innovation Sorenson Center for Discovery & Innovation David Eccles School of Business University of Utah C 68