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How Uber, Adidas, and Tesla Use Strategic Relationships To Get Ahead

Nobody has all the answers. Here’s how some of the most successful companies use collaboration to become smarter, stronger, and faster.

Two brains can be better than one. Some of the most successful companies evolve by forming strategic relationships with other innovative minds.

“Even the most progressive companies are forced to constantly think about the evolution of their business,” says David Nour, author of Co-Create: How Your Business Will Profit From Innovative and Strategic Collaboration. “They know what got you here won’t get you there. Strategic relationships allow companies to rethink their businesses and their evolution.” The important word is “strategic,” says Nour. “No one builds relationships because they’re bored,” he explains. “They’re created because nobody has all the answers. The collaboration is to make the end result different–smarter, stronger, faster. It happens when you both have a vested interest in each other’s success.”

RELATIONSHIPS WITH OTHER COMPANIES

Strategic relationships with other companies are different than partnerships, says Nour. “Partnerships are transactional,” he explains. “Strategic relationships are transformational. You create something you wouldn’t be able to do by yourself.”

Hilton and Uber recently joined forces to co-create value in the hospitality industry, says Nour. Hilton had hung a lot of pride on the fact that it was the first hotel brand to place colour televisions in rooms and offer room service, but executives realised that these things aren’t important to the millennial audience. The company had to think beyond its walls.

Recognising Uber’s growing market reach, Hilton created a new service that presets the hotel as the recommended destination on the Uber app. “By joining forces, the two companies are co-creating value when none previously existed,” says Nour. “In other words, the space between a hotel and various events or between the airport and the hotel used to be a bit of an anonymous wasteland. But now it is becoming a seamless extension of both brands.”

Hilton’s guest satisfaction is no longer limited to the experience inside the hotel property; it is deeply linked to the outcome that brought the guest to that hotel location. Uber is getting the opportunity to be the transportation provider to events and activities outside of the hotel.

RELATIONSHIPS WITH EMPLOYEES

Strategic relationships can also happen between companies and their employees. In 2015, Adidas decided to challenge its business model, with its new CEO, Mark King, asking employees for their best ideas to move the brand forward. Nearly 500 viable projects were proposed, and the winner was an idea that included three simple words: Netflix for runners.

A year later, Adidas launched Avenue A, a subscription service for runners that delivers a box of items curated by well-known runners, such as fitness instructor Nicole Winhoffer.

“Adidas’s Avenue A took them way out of their comfort zone as a sports apparel and footwear company and into curated, co-branded merchandising where those curators do not work directly for Adidas but bring their own leading-edge brands to the table,” says Nour. “This activates an army, and now Adidas is taking curation to other parts of their business.”

The success of forming strategic relationships with employees also prompted Adidas to create the Adidas Group Innovation Academy, an online learning platform that encourages employees to be more creative and invites them to submit more ideas. After 1,000 employees had passed through the academy, Adidas announced a Shark Tank-like competition to choose more winning ideas. “This is CEO King putting his money where his mouth is, while at the same time ensuring that the right risks are being taken and firing up employees around the world,” says Nour.

RELATIONSHIPS WITH CUSTOMERS

Tesla has evolved its company by being deeply aware of the customer experience and forming relationships with drivers, says Nour. In September 2015, the company launched its Model X, an electric sports utility vehicle that also competes with traditional SUVs on the interior space and amenities. But the design of its doors is where the Model X leaves iteration in the dust, says Nour.

“Every facet of the design of this car takes into consideration all the complaints about today’s minivans and SUVs,” he says. “The falcon-wing doors solve several of those with amazing elegance.”

For example, buyers with children need to install car seats in the second row, which makes the third row of seats nearly impossible to access. Parking in tight spaces is also challenging to buyers who need to help their children out of the car.

“The Model X’s falcon-wing rear doors rise up and fold out of the way,” says Nour. “While Tesla obviously has bright engineers, I suspect that the company is actively co-creating its future with its customers, anticipating their needs and innovating radical, effective solutions.”

HOW TO FORM A STRATEGIC RELATIONSHIP

To form a strategic relationship with another company, your employees, or your customers, you need five things, says Nour.

  1. Strategic thinking. Strategic relationships aren’t simply about iteration, says Nour. “Too often, companies innovate by coming up with a better product, a new colour, or a new flavour,” he says. “They’re doing the same thing a little bit better. Few companies do that intuitively well, but fewer do disruption. That’s about new things make the old things obsolete…If you don’t disrupt yourself, someone else will,” he says.
  2. A visionary leader. Great companies start with visionary leaders who challenge the status quo, not defend it, says Nour. “Business has to evolve and fundamentally change,” he says. “We don’t admit that we don’t have all the answers. This can be scary because when you co-create, you give up part of yourself, says Nour. “It’s intrusive and invasive, and it’s not for just anybody,” he says.
  3. Another party. Find another party that can bring a unique perspective or lens around common mission, vision, or enemy. “Who has a vested interest in your success?” says Nour. “Who will dramatically benefit? Who can bring a very different part?” Each party needs to bring a piece of the puzzle and together create something that’s different.
  4. Executive buy-in. “If reinventing business isn’t one of the top three priorities of senior leadership or board, it becomes somebody’s pet project, and the rug will get pulled out from under it,” says Nour.
  5. Someone who owns the execution. Someone has to be in charge of the project, identifying what works and creating a prototype. “Be realistic about your resources,” says Nour. “How much time will this take? What does the strategic relationship need to think and execute? What are your milestones and metrics? Then how do we take it to market?” A lot of great ideas die on the vine, says Nour. “Progress trumps perfection every time,” he says.

Written by BY STEPHANIE VOZZA. This article was originally posted on FastCompany.

Contact us at info@brg.co.za to put a strategy in place that will help you create the strategy you need to be transformative.

 

13 of South Africa’s boldest science innovations

By Dominic Skelton

South Africa has been no slouch when it comes to contributing to science and technology.

1. World’s first digital laser

The Council for Scientific and Industrial Research (CSIR) announced the development of the world’s first digital laser. The innovation is expected to spur numerous applications to improve the communication and health sectors, said Professor Andrew Forbes of the CSIR National Laser Centre. The experimental work in the laser project was done by doctoral candidate and CSIR researcher Sandile Nqcobo. “This groundbreaking development is further evidence of the great potential we have in scientific innovation. That the world’s first digital laser should come from our country is testimony to the calibre of scientists that South Africa has,” said former minister of science and technology, Derek Hanekom.

2. The Full-body X-ray scanner

The South African company Lodox Systems produced the only system in the world that provides an excellent quality X-ray image up to 1.83m in length in just 13 seconds. Lodox is also safer, emitting up to 10 times less harmful dose than regular X-ray systems. The Lodox Critical Imaging Technology was initially developed for use on diamond mines to prevent the smuggling and theft of diamonds by mineworkers.

3. Cheaper solar power

An innovation in solar power which uses a micro-thin metallic film was created by Professor Vivian Alberts at the University of Johannesburg. The discovery has made solar electricity five times less expensive than solar photovoltaic cells. Alberts’ solar panels consist of a layer of a unique metal alloy, five microns thick. The photo-responsive alloy can operate on most flexible surfaces. In February 2014 a semi-commercial plant for the production of thin-film solar module technology was opened in Stellenbosch.

4. The bollard

The bollard, an implantable expanding rivet, was developed by a group of CSIR scientists in 1982, comprising Peter Mundell, Dr Michael Hunt and Dr Angus Strover. Thirty years later it is still on the market and over 60 000 of the medical devices have been used. The rivet is used in conjunction with a prosthetic ligament for repair of knee ligament injuries. The device is made from carbon fibre and reinforced polysulfone. In 1984 it received the Chairman’s award for Excellence from the SABS Design Institute. It was the first carbon fibre reinforced composite implant to be approved by the US Food and Drug Administration for human surgery. The company that now manufactures the product is Fibretek Developments.

5. Biomedical stem cell technology

The CSIR’s Gene Expression and Biophysics group generated the first induced pluripotent stem cells (iPSCs) in Africa. The ability to grow these stem cells has revolutionised the way researchers can investigate and understand disease. The medical possibilities of iPSCs are huge. They could be used for restoring sight by replacing defective tissue, transplanting new cells to treat heart disease or give people with anaemia new healthy blood cells. CSIR collaborated with the University of Cape Town Medical School to develop the models.

6. Dolosse

These large concrete blocks, known as dolosse, were invented by South African Eric Mowbray Merrifield in 1963. They are used around the world to protect harbour walls from the erosive force of ocean waves. Anybody who has visited harbours around the world would have seen large concrete blocks with a complex geometric shape.

7. Speed gun for sports

South African engineer Henri Johnson is credited with the invention of the speed gun and other technologies used to measure the speed and direction of sports balls. The South African-made speed gun was formally released at The Oval during the 1999 cricket World Cup.

8. CoSev

CoSev allows you to report service delivery problems from potholes in Sandton to water shortages in the Eastern Cape using a smartphone app or USSM. It then logs the report on a central server where it’s publicly viewable by all until it gets fixed. Similar ideas overseas have transformed local government services, because they force accountability and transparency onto erstwhile dark and bureaucratic corners of councils. Its creator Tshepo Thlaku won second prize for the app at the SA Innovation Summit in 2013.

9. The CAT Scan

The Computed Axial Tomography Scan, or CAT, was developed by Cape Town physicist Allan Cormack and his associate Godfrey Hounsfield.

Cormack provided the mathematical technique for the CAT scan, in which an X-ray source and electronic detectors are rotated around the subject and the resulting data is analysed by a computer to produce sharp maps of tissues within a cross-section of the body. Cormack won the 1979 Nobel Prize in Physiology or Medicine (with Hounsfield) for his work on X-ray computed topography.

He was born in Johannesburg and attended Rondebosch Boys’ High School in Cape Town.

10. 3D Underwater imaging system

The world’s first low element-count 3D underwater imaging system was developed at the CSIR. The researchers also built a technology demonstrator that was successfully tested at the underwater test facility of the Institute of Maritime Technology.

The CSIR’s Kiri Nicolaides said: “Our team developed a range of technology building blocks… which can achieve an image using only 96 sensors. This should make the system much cheaper than 3D underwater imaging systems currently available, due to its acoustic properties, of a much higher resolution.”

11. Fingerprint identification classifier

In 2011 the CSIR developed a world-first fingerprint identification technique. The structural fingerprint classifier is able to correctly classify a fingerprint with only partial information.

CSIR Head of Information Security, Professor Fulufhelo Nelwamondo explained the need for the model. “In fingerprint recognition, fingerprint templates normally sit in a databases, so when going through an identification process, the system has to sift through thousands, if not millions of templates making the system slow in yielding results.”

“The extensible fingerprint classifier… will allow the system to be extremely fast and accurate when a database search is conducted. It will increase the overall efficiency of the entire fingerprint recognition system.”

12. Digital Drum

The digital drum is a co-creation of the CSIR and the United Nations Children’s Fund (UNICEF) was cited in Time magazine as one of the top 50 inventions in 2011.

The drum is a computer system that gives people access to information on issues such as health and education. The design is based on the CSIR’s digital doorway, a stand alone computer system to promote self-learning of computer literacy and information skills.

The CSIR’s Grant Cambridge said: “The Digital Drum design proved to be an innovative way for UNICEF and the CSIR to address a need through a solution developed in the absence of technology.”

13. First ever aero-optic made from flame

Professor Andrew Forbes from the CSIR led the development of the world’s first flame lens. The optic lens uses air to focus and can handle almost unlimited power.

He said: “the beauty of this project is that expertise in two distinctly different fields (aerodynamics and optics), were relied on to develop something that has never been done before.”

“Through this work, we have made a lens that uses just air- no materials- to focus. The flame lens produces a sharp focus with very little stray light. It achieves a fourfold increase in focal power per unit length over previous glass lenses.”

A flame is channeled through a pipe where it spirals along the pipe length, when a laser beam is shot through behind the flame the beam focuses on the respective point.

This article was originally posted on Times Live, 8 July 2014

 

Innovate or Die

by Nicola Tyler 

“The entrepreneur upsets and disorganizes…his task is ‘creative disruption.” – Peter F. DruckerInnovation and Entrepreneurship

The age of digital disruption and rapid agile development requires that we think differently.  It’s not a luxury, it’s a necessity.  It’s not an option, it’s a mandate.  So why are organisations still teetering on the brink of innovation, failing to make the leap of faith required to think differently and take action? Fear is a debilitating emotion.    

Innovate or die is a strong statement. Innovation is an option, death is not. Many companies do everything in their power to avoid death. But great companies know that for something new to be born, something has to die. In fact, the best companies know that the right time to destroy value is on the up, never on the down.  Change when you’re winning if you want to get ahead; that’s the role that innovation can play.

Nothing New

This isn’t anything new.  Like many concepts in business, this message has been around for years. Clayton Christensen from Harvard speaks about it in his book The Innovators Dilemma.  Edward de Bono wrote about it in 1968, when he first exposed us to the concept of lateral thinking – suggesting that there was a scientific and mathematical need for creativity. Alvin Toffler, who has made a Harry Potter-esque comeback, wrote about it in Future Shock, way back in 1970. Charles Handy wrote about it in the 1980s in The Age of Unreason.  Jack Matson wrote about it in 1996, in Innovate or Die. How much more evidence do we need? How many more thinkers do we need to ask? We cannot create new value if we are not prepared to destroy some value in the process. Like a phoenix rising from the ashes, something has to die to give birth to something new. It’s the same in relationships, it’s the same in business, it’s the same in life.  

The Sigmoid Curve Says It Best

In the book The Age of Unreason, Charles Handy talks about the Sigmoid Curve.  The premise is that organisations have a life-cycle, moving from Inception through Growth to Maturity and then Decline.  The theory suggests that you need to destroy value to create value, and that you have two primary opportunities to do that.  You can change at Point A (during the Growth phase) or at Point B (in the Decline phase).  Both points represent change and pain.  But it hurts more to change at point B, than it does to change at Point A.  Changing at Point B can also be catastrophic – it requires more energy to change in decline, and sometimes the momentum of the change around you is greater than the energy or the will you have in the business to execute on the change.  Changing at Point B can be too late – ask Kodak, I’m sure they will tell you.

Think Differently | Act Differently

Wherever you are in your organization’s life-cycle, take innovation seriously.  Innovation is not only about thinking but about thinking in action. Innovation is the successful exploitation of a new idea. If you haven’t made the investment yet, make it now. If you haven’t taken that leap of faith, take it now. If you are debilitated by fear, go for therapy. Innovation isn’t an option – in fact, it’s the life force of your organisation.

Nicola Tyler, is a highly respected strategic thinker. With over 20 years of experience in Strategy, Consulting, Leadership, Development and Coaching, she is an Associate of the Gordon Institute of Business, a Master Trainer in a full range of de Bono Thinking tools. Working both locally and internationally, she delivers her own “Strategic Conversation” methodology to senior teams committed to innovation and driving sustainable results.

Nicola has shared the stage with world renowned thought leaders such as Tom Peters, Robert Kaplan, Ricardo Semler, Edward de Bono, Dave Ulrich, Martin Seligman, Richard Koch and Martin Lindstrom. 

 

Simplicity as a Strategy

New strategic business values emerge over time.  In the 1980s, it was all about quality. In the 1990s, it was about cost cutting. By 2000, innovation had peeked its way through the clouds. What was once new has become the norm: quality and innovation are now widely accepted as common business practice. In fact, if either is not on your business radar, then you’re a laggard, and possibly in trouble. As we witness ever-increasing levels of business complexity, where a plethora of data and information prevails, a new set of values is emerging: the theme of “simplicity” is now pushing its way onto the corporate radar.  How do we make things simpler, for ourselves, for our customers, for our people? If you’re not easy to do business with, the customer will rapidly click somewhere else.

Simplicity is emerging as the next wave of strategic thinking.  Businesses and governments are preparing to make our lives easier.  Paperless offices used to be a pipe dream, but not so today. How can we harness technology to support simplicity? How can we use technology to reduce information overload rather than increase it?  Simplicity, just like quality, will eventually find a home, it will become embedded in other business processes. We need to give it full attention. The next wave is coming, and simplicity will be key to staying on your surfboard!

 

The Paperless Panacea

Before the dawn of the internet, companies were paper prolific and the idea of the paperless office was considered a radical innovation.  Heralded by Lars Kolind of Denmark’s Oticon as a prime business strategy, the concept that businesses could operate without paper seemed like a far-off dream.  Kolind, whose turnaround strategy was coined “Mission Impossible”, created a stand-up-only office on his  building’s top floor.  Employees would review their mail, magazines, etc and then hand it in to be scanned before venturing down to their desk.  Through the center of the building was a  transparent tube through which all things paper were shredded.  Radical.  At the time, it truly was.  

Today a “paperless” world is not only a reality, but an accessible option for all. Or is it? Two recent events have told me otherwise.  Renewing my mobile phone contract was a 1.5 hour process involving no fewer than 27 pieces of paper, (multiplied by two!)  including a copy of my driver licence.  It seems strange that despite having been a customer for over 20 years, they’re still not sure who I am.  Later, an attempt to open a new facility at what I considered to be a world-class bank, involved no fewer than 12 pieces of paper. Two transactions, 66 slices of tree!  Needless to say, these transactions are the company’s way of managing risk and for dealing with the new F word in finance – FICA!  Today, fortunately, there is an opportunity to leverage our advances in technology to support simplicity as a strategy.  Forewarned is forearmed.  

 

Information Overload

There is more content on YouTube today than the history of television ever produced. There are more books written and published in a year than you could read in several lifetimes.  There is more data, and more information, but perhaps less knowledge.  Are we really informed or are we over-informed?  For the most part, my clients cite “information overload” and “too many emails” as being big issues today.  Sometimes it creates acrimony in the corporate dialogue:“Why didn’t your reply to my mail?  I sent you that?  Find out for yourself.  Google it!” are all common conversations.  

What we lack are tools for how to deal with such vast amounts of information.  We need filters so that we can pay attention to what is relevant, rather than be distracted by the shiny and the new.  If there were an addict group for “Shiny Penny Syndrome”, I would have long since been a member.  On the one hand it’s marvelous: we have access to so much new, exciting information; learning is available to us all, quite literally at the swipe of a finger.  But is life really simpler, or is the weight of information a burden on our shoulders?  Does simplicity have a role to play in helping us convert data to information, and information to knowledge?

 

Simplicity as a Strategy

In short, simplicity is emerging as the next wave of strategic thinking.  Businesses and governments are preparing to make our lives easier.  Food manufacturers are reducing their brand SKUs to reduce choice, technology companies are introducing “ease of use” departments to ensure that users don’t have to figure out their complex models, and business engineers are using simplicity as a new way of re-engineering business processes.

Other simpler businesses – your competition – may be just a click away for your customer.  While it is good to ponder on the past, think forward to the future.  The next wave is coming, and simplicity will be key to staying on your surfboard.  Enjoy the ride.

Could you be doing something more smartly, more efficiently and more profitably. We can teach you how to streamline business processes and the world of work. Click HERE for more information or contact us at info@brg.co.za to book a needs assessment.

 

DAVE NORTON IN SEPTEMBER – MAKING STRATEGY A CORE STATE OF THE ART COMPETENCE

create value                                                                  Dave Norton says,  

“Behind every story of shareholder value, there is another story of value creation. That is the real story of strategy execution.”

Having had the privilege today to proof read the delegate materials for the upcoming Dave Norton Progress Conference on the 11th September, I cannot resist offering a little sneak preview of the 100 plus slides he has prepared for his South African audience.

In essence, he says, strategy must be a core competence and his presentation shows you precisely what you need to accomplish to make it a core state of the art competence. You can be assured of rich content with case studies and real life applications relevant to both the Private and Public sectors. His content flows seamlessly, offering delegates a deliberate journey through which they can contextualise their strategy execution efforts. And behind every success he shares with you he also tells the story of how the value was created.

THE STRATEGY MANAGEMENT VACUUM

First and foremost he will show how management systems have STILL not changed to keep up with the way the world has changed.  This is what he calls a Strategy Management Vacuum. He goes on to reveal his research into why strategies continue to fail and offer solutions to overcome this sadly, prevalent reality.

MAKING INTANGIBLE TANGIBLE

I was fascinated by his take on intangible assets and how describing your strategy begins by understanding the value the intangibles offer. He cites Apple, General Electric, IBM and others and will illustrate how Tom Stewart’s thinking in respect of how knowledge that exists in an organisation creates differential advantage. Dave remarks, “A good strategy focusses on the processes and people that have greatest impact on customer satisfaction.”

CLOSING THE STRATEGIC PERFORMANCE GAP WITH CAUSE AND EFFECT LOGIC

Dave has prepared a prolific set of strategy maps, scorecards and themes that have been applied within leading organisations. He asserts that your strategic theme is critical to create change and value.

“Intangible assets are bundled”, he says. “One initiative is not enough to execute strategy. You require a portfolio of several initiatives that are interdependent and cannot be treated on a stand- alone basis.” And again, he provides real management tools to show you how to include specific ways to define your strategic architecture, create robust strategy maps and tailor relevant strategy themes. In particular he provides delegates with specific Balanced Scorecards to show how they consistently fill the strategy management vacuum

LEADERSHIP IMPERATIVES FOR EFFECTIVE STRATEGY EXECUTION

Dave also says, “It is not a simple process for a CEO to mobilize transformation.” But his content goes on to provide tried and tested leadership essentials for certain success. He shows what is required in terms of left and right brain thinking to build your effective strategy management systems and why leadership issues are most often the dominant barrier to effective strategy execution. Just one barrier cited is how politics, in 89% of cases, is the major factor that prohibits the successful execution of strategy. Enter Dave’s right brain change management techniques and priorities, with ways to break down silos, get politics out of the way and cascade the strategy and scorecards to all key executives, business units and departments with appropriate accountability.

What follows on from there are the left brain change management tools that he has observed and that have been shown to achieve desired results.

MAKING STRATEGY EVERYONE’S JOB

Dave illustrates how Hilton Hotels did just this by linking their Balanced Scorecard to education, personal goals, incentive compensation and communication. Looking forward to how he will unpack this for us on the day.

SETTING TARGETS & FUNDING THE STRATEGY

Be prepared for prolific content and techniques to define your measures and targets and determine adequate funding.

SUCCESSFUL HUMAN CAPITAL DEVELOPMENT ATTRIBUTES

An annual survey of CEO’s Presidents and Chairman showed that Human Capital Development is the most important issue facing senior management. “People driven strategies counter slow markets and economic conditions. The Balanced Scorecard Hall of Fame shows that successful strategy execution begins with Human Capital Development”, he says. And then goes on to share the results of Public & Private sector results whilst showing you which are the key Human Capital Value Multipliers. He will also show us how to develop competency profiles for each essential strategic job family and in particular how to determine the gaps between individual and group level.

THE CHERRY ON THE TOP: BUILDING YOUR EFFECTIVE OFFICE OF STRATEGY MANAGEMENT: THE EVOLUTIONARY PROCESS

As he insists that strategy is a core competence and that managing strategy is a whole new ball game very different to managing functions, he will show you why new organisation approaches are needed to facilitate cross-functional alignment. He defines the responsibilities of the office of strategy management and suggests the best practices in terms of conducting your meetings and reviews to keep your strategy on course including frequency and structure.

This blog barely scratches the surface or even does justice to what Dave Norton has in store for delegates on the 11th September, but hopefully provides you with some ideas to provoke and challenge your thinking in respect of your strategy execution efforts.

_______________________________________________________________________________________

Dr David Norton is the co-creator of the Balanced Scorecard and leading global practitioner in applying the Balanced Scorecard in both the Private and Public Sector. Together with Professor Robert Kaplan, he has been acclaimed by Harvard Business Review for his significant contribution to the management profession in the past 75 years. More recently Thinkers 50 have ranked them in their Hall of Fame alongside Tom Peters, Kenichi Ohmae, Warren Bennis, Howard Gardner, Henry Mintzberg, Charles Handy, Philip Kotler and Ikujiro Nonaka for their mammoth contribution to business management and leadership.

On the 11th September 2014 Dr Norton will present a full day seminar in Johannesburg on EXECUTING STRATEGY IN A NEW ECONOMY – Balanced Scorecard Essentials.

HOW TO MEASURE THE EFFECTIVENESS OF YOUR INNOVATION STRATEGY | “ROH-PEE-D’EE” TECHNIQUES FOR YOUR BALANCED SCORECARD METRICS

In the words of Oscar Hammerstein from the legendary musical The Sound Of Music he recommends;; “When you read you begin with ABC and when you sing you begin with Doh-Re-Mi” – when it comes to Innovation, Dr Dave Norton suggests “when you measure innovation you begin with Roh-pee-d’ee.”

STRATEGIC MEASUREMENT CONTEMPLATIONS FOR INNOVATION METRICSYOUR INNOVATION STRATEGY

If innovation ranks as a key strategic objective it will surely be one of your key metrics on your Balanced Scorecard. Some of the measures to consider are as follows:

  1. A ratio of number of new ideas per 100 employees.
  2. Percent of new ideas selected for funding.
  3. A ratio of revenue or net profit from new ideas divided by the average cost of implementation of ideas.
  4. Aggregate ROI of new ideas implemented.

The most important step is to define your intended results for your innovation. This should be ONE of a number of intentions. An essential Balanced Scorecard principle should be applied here. Your intention or OBEJCTIVE should be concise and defined by a quantitative outcome and time frame.

  1. Intended financial performance.
  2. Increased number of new ideas.
  3. Improved quality of ideas.
  4. New markets / customers.
  5. New products / services. etc…

NARROW IT DOWN | BSC ESSENTIAL

These may be good measures, but fall short in terms of a second key Balanced Scorecard principle. Best practice scorecards only have 1 – 2 performance measures per objective which makes it imperative to select the most meaningful measure for your innovation objective. Your selection criteria could consider the following:

  1. Which of these measures can you influence the most?
  2. Which of these measures will make a notable difference in respect of behavioural change?
  3. Can you access the data easily and accurately?
  4. Can you start from where you are; with what you have?
  5. Can you establish meaningful targets and thresholds?
  6. Will your measure work at both an enterprise and business unit level?
  7. What baseline will you use to determine a known value; your historical performance or industry norm?
  8. Use this measure during all stages of the innovation process.

Once this thinking is applied you should be in a position to select one and not more than two metrics for your Innovation Scorecard.

[pronounced ROH-PEE-D’EE]  RoPDE™ = RETURN ON PRODUCT DEVELOPMENT EXPENSE | ROBUST KPI

Traditional ROI measures, such as discounted cash flow analysis are often owned by the finance team and rarely resonate with the other stakeholders and most often result in weak alignment.

RoPDE™ is a comprehensive KPI for measuring the performance of product/service innovation and development.

How do you calculate RoPDE™?

RoPDE = (GM – PDE)

               PDE

Where GM = Gross Margin and PDE = Product Development Expense

 Here are some RoPDE™ key guidelines;

  1. Establish your thresholds comparatively using Operating Income, EBIT or EBITDA.
  2. Chart your enterprise thresholds by fiscal periods.
  3. Derive your data using standard accounting data.
  4. Apply this at both enterprise level and as a business unit strategic measure.
  5. Apply it at any stage gate or product life cycle process.

When you start at the very beginning, be it in ideation, evaluation and selection of innovation you can evaluate the opportunities using RoPDE™. As your innovation progresses you can compare actual revenue and product development expenses relative to your expected financial performance.

SOURCE: www.balancedscorecard.org/whitepapers  How do I Measure Innovation by Gail Perry and Mark Malinoski

In 2014, BRG & GIBS will present Dr Dave Norton – Live and in Person: Executing Strategy: Balanced Scorecard Essentials. The 2014 programme includes the latest findings and experiences in strategy, measurement, leadership, human capital and cross functional priorities and solutions.

Dr Dave Norton has most recently been honoured by Thinkers 50 in their Hall of Fame sharing this acclaim with Tom Peters, Warren Bennis, Howard Gardner, Charles Handy, Philip Kotler, Henry Mintzberg, Kenichi Omae, Ikujiro Nonaka and his colleague Professor Kaplan, for their mammoth contribution to business management and leadership. Harvard Business Review recognised the Balanced Scorecard as one of the most influential management ideas in the past 75 years.