13th of November 2015 Washington DC & Tysons, VA
Swedish Firm with “Game-Changing” Innovation Technology Opens US Office
Demand drives Swedish Innovation Technology company, Innovation360 Group, to open first US Office in Washington DC. CEO Magnus Penker announced the opening of the Tysons Corner, VA office at executive meetings in Washington DC during a recent visit. The demand for measurable improvement in Innovation Acceleration and Achievement drives the decision to establish US Operations. The immediate goal is to functionally replicate the company’s HQ office in Stockholm as rapidly as possible.
Echoing recent pronouncements from global leaders in business and government, Mr. Penker stated, “The future belongs to the Innovators.” He went on to say that the key to sustained innovation is the ability to quickly and accurately capture ideas – the intellectual assets of the organization – and then systematically execute on those which drive corporate value.
Hiring for the office, located in the Uber-Office facility in Tysons, has begun with the announcement that Rick Pfautz, former Air Force Officer and Business Development Executive, will lead the expansion. “Rick’s experience in US Government and Industry, complemented by his Project Management (PMP) background and success as a National Sales Leader for a Fortune 500, will help drive the growth we anticipate.” said Jens Nilsson, International Director, from Stockholm. Several highly-qualified US-based consultants with diverse backgrounds are in conversation with Innovation360Group executives already.
Using research based innovation capability measurements, a huge global innovation database, evidence-based analysis and recommendations and concrete execution plans suddenly sustained innovation becomes tangible and achievable. The results of increased innovation capabilities are improved performance, profit and growth. Clients measurably improve profit and growth through improved strategy, business modelling, ideation, prototyping, commercialization and transformation of vital organizational assets. We believe that key to success is sustained innovation and the capability to rapidly execute and adopt with excellence.
Our mission is to support and strengthen the global innovation capability needed to address humanity’s grand challenges: Food, Energy, Water, Security, Global Health, Education, Environment, Poverty and Space. Our aim in line with the mission is therefore to help 1,000,000+ entrepreneurs, companies, executives and scientists all over the world to become world class innovators through providing our unique innovation measurement tool and database, InnoSurvey™, as a free-to-all digital on-line service complimented with an enterprise tool and consultancy services in order to solve the grand challenges needed to be solved.
We are probably in the middle of the biggest disruptive change in the market since industrialization. The market structure, its nature and the key success factors are undergoing a shift where hypercompetition is putting many of today’s businesses at risk of exclusion from the market. The main causes are increasingly rapid digitization and automation at a time of record low interest rates and more venture capital being available than ever before. And this is happening on a global level.
The external environment creates new conditions that all organizations must address. If companies in the Nordic market do not alter their business models fundamentally, there is a risk that Swedish Innovation miracle (on the Nordic Market) might just become an innovation mayfly. At the same time, for those entrepreneurs who succeed in acting according to the new conditions and who can take advantage of the opportunities, this creates new positions and the ability to achieve success at a pace never seen before.
Happily, there are specific steps that can be taken by those who are threatened by these market changes. The measures we outline below have proven to be successful in real situations with real businesses. However, the measures require some courage, self-awareness and, above all, knowledge. We recognize four distinct scenarios in the Nordic (and European) market which even established companies have fallen into and which have even destroyed businesses and are a real threat to yours if you have fallen into any of the scenarios: ”Analysis paralysis”, ”Booby trapped”, ”No pain, no gain” and ”Too little – too late”.
#1 Analysis paralysis
Many companies find it difficult to generate sufficient and sustainable ideas. Either they find too few ideas or they have the wrong ideas, or, in the worst case, they do a combination of the two. We call this the “Analysis Paralysis” scenario.
#2 Booby trapped
Many companies are stuck with a legacy of fossilized architectures and all that entails, including the need for extensive maintenance and problems with development to keep up with changing markets. Often engineering-talented companies have invested in customized solutions, a development that is reflected for example in Industry 4.0 in Germany and user-generated manufacturing in USA. This trend has led to a situation where the management is either non-existent (chaos) or overly bureaucratic (cement). Both cases may allow rapid improvements to be made, with the potential for high profitability and effective aftersales, to meet new competition. However, in both scenarios companies are seemingly able to innovate rapidly but at the cost of maintaining its products and solutions, due to their expensive legacy architecture (for overmanaged and bureaucratic firms) or due to aftermarket with maintenance issues (for the chaotic unmanaged firms) means that they are unable to obtain full product/service value over time, despite being quick to market.
#3 No pain, no gain
Many companies have business models that no longer work. However, not continuously innovating and/or developing their business models may be a decisive mistake when competitors are faster to act and e.g. maximize the application of new business models of the sharing economy, such as crowdsourcing, crowdfunding and subscription-based models. Uber, the App Store, Dropbox and Spotify are just some examples of new “sharing-based” business models. Basically, this scenario is about understanding the customers’ ”pain” and ”gain” – what do the customers actually want and how are they prepared to pay?
#4 Too little – too late
Many companies feel that they are late to the market. They may be knocked out of the market by new models. For example, nowadays, a global network of actors based on semi-finished products from several distinct steps can create an equivalent value by offering lower prices with attractive business models focused on specific activities or lean start-ups with plenty of venture capital prior to the market when opportunities begin to open up. Typical examples that were caught out and came late to the market include Kodak, which was late to move towards digital photography, the established auto industry, which was too slow to develop electric cars, and energy companies, who were slow to see that consumers could start to produce and sell their own electricity into the grid.
Four ways of using innovation to solve the issues gong for success
Analysis paralysis – to stick or move ahead?
What is it that would make a plant employee with a monotonous job (often performed for many years without any improvement in working practice) go home and seek out or create innovative solutions in areas not related to their work employment, for example building their own electric car or making their homes climate-smart? Or what would make an employee start a new smart app-based service outside of their work area? Or the teacher who suddenly starts their own business? How and why do people make these changes away from their work environment instead of changing and creating ideas in the activities in which they are active at work?
People are often full of new ideas in the areas they are interested in. So, why are businesses so bad at channelling this creativity towards their own business operations?
A natural answer is of course is that some people naturally have the desire to make something on their own, but beyond that, perhaps the most common cause is that in the place of employment, maybe there is no destination for new ideas. This also applies to new ideas from customers or suppliers. When organizations are overconfident, there is a risk that they may stagnate, which ultimately creates a paralyzed situation, where the flow of ideas completely ceases, first as people may feel the company is not responsive to receiving ideas and then as they lose the will to offer ideas in such a negative ideas culture.
To address this, business structure, culture and leadership are some key elements to help identify, encourage, uncover and structure ideas. The ideas are out there in the real world, not behind a desk.
Also, in a typical life cycle of a company with a stable market position, they often reach a point where management’s gaze turns inwards, and becomes focused, even fixated, on efficiency and consolidation. In effect, consolidating the status quo becomes more important than innovating and renewing for the future.
One solution to overcoming this is to insert simple and proven methods of ”ideation scouting”, ”ideation hunting ”and field observations into the business strategy. There are tools available that can help companies collect, illustrate and visualize ideas and solutions in a structured way, so that they then can be rapidly developed further, tested and ultimately discarded or launched as a new product or service.
Practical experience shows that these methods also lead to increased efficiency, a reduced need for write-downs and a shorter time-to-market. To succeed, companies need greater crisis awareness, the right skills and tools, and a clear plan with definite milestones. Then, they can escape from their analysis paralysis.
Booby trapped – Locked away in the market preferences or out-of-the-box thinking?
Customization and specialization have long been important success factors in businesses in the western world. Covering everything from cars to houses, to equipment and to IT-systems; these have been the typical responses to compete against production from low-cost countries.
New technologies such as 3D printers and connected factories have reinforced this trend, particularly in the manufacturing industry.
The demands on platform thinking in everything from design and construction to operation has placed growing demands on the need for flexibility, which in turn has led to the trend for flexibility, rather than the traditional approach of customization and specialization. For instance, now modular development, scalable and flexible architecture and smart hybrid solutions where, for example 3D printers are used produce some special components (e.g. mounts, mountings, fittings) are now beginning to emerge.
However, a company specially producing services and products often suffers from architectural problems, which may make it more difficult to scale up volumes and can lead to higher costs for operating and maintenance, which ultimately ties up working capital.
The solution is an innovation process that shortens the time from prototype to launch. This requires an ability to build in more flexibility in architectures, product-lifecycle management, platform and modular design, engineering, production and operation.
Companies cannot afford to be locked in rigid architectures over time, as this can create obstacles for taking advantage of new business opportunities. While maximizing cash flow from existing platforms, companies need to be working on the next-generation architectures and the generation after that.
A framework that is often used in architectural development is the ”Three Horizon Model”, where companies work on three architectural levels simultaneously: today with existing cash, the future with flexible production, as well as the next level that will next take over. The key is to maximize what you have today without being locked out of the market.
No pain, no gain – Understanding the driving success factors of your market
Understanding a client’s real motive is the key to also understanding how the business model can be developed further.
One known example of selling what customers want is reflected in a quote from Black & Decker’s CEO: ”Last year, one million quarter-inch drills were sold. Note, this was not because people wanted quarterback inch drills but because they wanted quarter-inch holes”. With the realization that there are holes that the company can sell for, the company asked itself, can drill machines be adapted to the different contexts in which clients need these holes as well as for the amount of holes which customers need?
Some models of drills may be slightly easier and cheaper, but are fit-for-purpose as long as they do the job. Others may be of higher quality and more durable, so they can be rented out as may be only sporadic needed for holes.
However, this further improves the dynamic between buyers and sellers, and is another example of today’s diversity of channels and formats to deliver. Consumers are now helping to develop, finance and produce value offerings. In the digital world, channels are being developed by consumers with each other as never before. The sharing economy now gives the established players competition that they could not have imagined just a decade ago.
Therefore, constantly innovating your business model and your offerings is an essential success factor in today’s markets. A strategic continuous innovation of your business model should be based on what you do best (sometimes called your operational DNA) and matched against what your customers most want. And how much this is worth to them!
Static models, a lack of strategic direction, a poor understanding of customers’ dominant motifs and altered behaviours coupled with not understanding their own strengths in depth have led to the demise of probably more companies than the worst recession has ever done.
However, there are several toolkits to help innovate business models, and that can help capture customer needs, design the value proposition and map the actors involved in production and delivery.
Too little, too late – Move faster, sooner
Not to come out on time with new offerings is one of the most common reasons that companies slowly lose value and are eventually knocked out of the market. Typical causes are sluggish internal bureaucracy, lack of runways for innovation, an absence of an external innovative context to work in and a naive approach to the way markets are changing.
Companies that find themselves in such impasses often address it by adopting new business models based on a fast-moving value network of suppliers. Not only are these competitors faster to market when new demand arises, they can also squeeze prices and short-term test different variations of business models.
New value networks, combined with new production techniques can affect the time-to-market radically. Today, for example, it is possible to build a satellite (excluding the launching mechanism) for only US$ 10,000, which is many times cheaper than even a few years ago. This is a consequence of the finished components, specialized industrial clusters and a globalized market.
Future innovation processes are not about doing everything yourself behind locked behind doors, but rather about participating in open platforms in which many players interact. Customers and partners can develop products and services faster, along with the customer prototyping all the ideas and delivery formats into actual products and services.
In this diverse market climate, a stable vision reference point is increasingly important. This is also important in order to “choose the right balls” and then to focus all effort on them instead of randomly kicking the balls that arise in the hope that some of them might go into the net. However, this is only possible with a well thought-out process of innovation.
To implement a structured innovation process that captures and rewards diversity of ideas externally and internally, and then quickly and efficiently boils down the essence and commercially chooses the right idea to quickly take to market is the key to success.
A rapid speed to market is achieved today by utilizing proprietary systems and other benefits so as not to have to invent a new ecosystem and value networks for delivery or worse still, to avoid launching new products without ecosystems and value networks (i.e. no internal runways or external infrastructure, such as service, training, inventory, availability and knowledge).
Demand for competence and capability development on the Swedish and Nordic Market
For an organization to take on innovation seriously, it needs to define its strategy for innovation and the kind of innovation it intends to work with and, not least, ensure that the right ‘innovation capabilities ”are in place.
According to studies conducted by Innovation 360 Group, there are 67 well-defined innovation abilities, which through extensive data collection are utilized as the foundation for the framework included in the method InnoSurvey ™.
The spider graph below compares 16 overall aspects (groupings of innovation cabilities) between the Swedish and North American ”top innovators” who tackled the four main challenges described above. The chart can be seen as an overall picture of the areas of focus to meet the challenges described (in Sweden and according to our data as well on the Nordic Market).
Below are the main innovation capabilities that companies in North America have used in successfully managing to face the four threats described above (which ultimately are about disruption), according to the Innovation 360 Group database. This is something that can be directly used by Swedish and Nordic companies in international competition with North American companies that may have a little stronger capacity for innovation, but that have the same basic profile regarding their innovation efforts.
Development for the Nordic market
Expertise in innovation capability can obviously be acquired in a variety of ways:
Recruit expertise with prior experience;
Bring in outside consultants into teams;
Contrary to many myths, innovation capability is less dependent on talent and is more about acquired skills and experience. Here, interest and commitment, combined with knowledge of the processes and tools are critical success factors.
However, innovation is not well trained for in the Nordic market, particularly in higher education courses for working professionals. Therefore, Innovation 360 Group and the Computer Association have initiated the training #InnovateSweden, a four-day course that addresses the basic tools and also allows participants to apply them to their own business. You are welcome to participate in #InnovateSweden – our contribution to a more successful Nordic market, read more at http://www.dfkompetens.se/utbildning/innovatesweden. You can also join the information event the 5th of October, read more here.
The #InnovateSweden movie (Swedish only)
Magnus Penker, CEO and co-founder Innovation 360 Group
Christer Berg, Swedish Computer Association for Competence Development
Industry 4.0 is the name of the German government’s strategy for the fourth industrial revolution. The goal is the creation of smart factories, where all production is connected. The term first surfaced at the Hannover Messe Industrial Fair in 2011, with the theme Industry 4.0. The first three industrial revolutions were, in chronological order, the steam engine, electricity and electronics. The concept is connected to the Internet of Things, and provides that any product in the production chain can carry information about where and how, with the result that the factory is be able to organise itself. The goals are shorter adjustment and lead times, fewer errors, more flexibility and no time-consuming programming. Industry 4.0 is considered to be the impetus for the re-industrialisation of the Western world.
It could be summarised as an extension of the possibility of connecting machines to other machines and ultimately an end-consumer somewhere in order to organise production in a smart way.
At the same time, other possible future-interlinked trends taking place are:
The 3D printing revolution, where you print everything from spare parts for air crafts to industrial high-speed fans; bio-parts to full-scale cement houses; as well as consumer products, such as toys and food;
The omni-channel in retail and e-commerce, where consumers interact with brand owners, ultimately designing their own products and services using mobile technology for design and access, and brick-and-mortar as service points for training, service and upgrades/modifications. Another example is connected trucks interacting with the nearest service garage when it’s time for a service;
The security revolution, where old paradigms are challenged. Classic LAN and firewall architecture are on longer capable of protecting multi-channel connections. New threats require new architecture; and
The social revolution and global transparency, which have led to increased demand for fair training and a fair labour market but also sustainable thinking and rapid communication, where everybody with a story to tell can have an impact.
So, how do the trends above link to Industry 4.0? Well, in many ways. The possible disruption is not about optimisation of manufacturing or even customising your product; the disruption is about being able to put together, at the speed of light, exciting hard and software (including services) using 3D printing and flexible online-connected manufacturing for producing adaptors, handles, missing parts as well as digitalisation (to write or rewrite software) and taking new innovations to the market:
for a fraction of the price (e.g., you can build you own satellite for less than 10,000 USD);
with extremely short go-to-market lead times (weeks); and
with A and B testing for maximum innovation diffusion.
Ultimately Industry 4.0 will create new echo systems, interlinking consumers to manufactures and innovators all over the globe, increasing the speed and diffusion of good and services substantially.
However, there are also pitfalls. Customising without considering platform thinking, product lifetime management and the aftermarket will erode all possibility of future profit. Supply management and logistics will benefit from the low stock volumes and high stock turnover, but maintenance, training, support and quality assurance in the aftermarket (which is, in many cases, 80 per cent of the total business) will suffer from bad structure and inefficiency. Manufacturing is always more efficient when optimised for a certain range of products and services, meaning that totally flexible production will always be less efficient.
In the aftermarket, increased complexity will lead to QA issues, so it is our view that the road ahead can be flexible and customised but in a structured way with:
A well-defined innovation process from ideation, prototyping to development and commercialisation (diffusion).
Structured platform thinking and architecture, with product lifecycle management implemented, from design, construction and production to the aftermarket, as well as recycling.
An echo system with engaged open communities of suppliers, partners, producers and universities and industry standardisation committees.
A well-defined system and business architecture for secure and easy interaction: from e-commerce to designing and controlling your own production as customer to interlinked suppliers and vendors of products and services all over the globe.
Constant learning, using AI technology to adopt and learn in real time. Some things will go right, others will not; sometimes for no obvious reason.
What´s happening now will have a greater impact on us than the innovation of the railway!
When I talk about the ongoing globalization I talk about it as a series of waves, and right now, I´d say, we are in the midst of the third globalization wave.
This third globalization wave is powered by three distinct factors on the market; the low interest rate ever, the ever increasing pace of digitalization and the likewise increasing pace of automation in general.
Concretely this means, among others, that all jobs that can be digitalized will be digitalized and that will be a good deal. According to a study at Oxford University (quoted in The Economist 2014) at least 50 % of todays jobs will be digitalized and automated within 20 years! Our own measurements even show us that this is likely to happen faster than that! This is also the starting point for the Swedish governement and its future minister, Kristina Persson, when it comes to new ventures to protect the Swedish welfare and create the necessary new replacement jobs.
Very much in the same way as for digitalization, everything that can be automated will be automated, and that too will be a good deal. Investments in digitalization and automation will increase as there are a lot of capital available on the market and as the return on more traditional investments is low.
Due to the fact that companies nowadays can both buy and sell produts and services almost freely on many global markets, competence and technology supplies through smart digital solutions will further increase the pace of digitalization and automation and outperform the pace of development tah depends on local supplies of compentencies and technology only.
Another consequence of the three empowering factors is that many companies in the western world now move their asian/chineese production facilites back home again.
Understanding Red and Blue Oceans will become imperative to success
The increased competition means that it will become even harder to be unique on the market which in its turn will lead to consolidation to larger bodies in many markets.
We see today how small and midsize companies are taken over by industry giants that sell massproduced standardproducts, i.e. commodities. Working with such commodity businesses often means that the market becomes a ”Red Ocean”, i.e. a market where all competitors ”bleed” (hence its name). The Red Ocean i characterised by hypercompetition and tuff price press, which requires continuous rationalization of cost and also means a constant threat of being subjected to hostile overtake or closure/splitting.
The opposite to a Red Ocean is the ”Blue Ocean”. A Blue Ocean is something you create yourself by launching new innovative Business Models, with unique Value Propositions and that are tailor-made to match the needs of well understood and well defined target groups. On the Blue Ocean you create a whole new business logic, that leaves the competition behind as they can not easily copy your Value Propositions right off.
On the Blue Ocean you can apply value based premium pricing and thus increase both revenue and profit in your company (The notion of Red and Blue Oceans were first defined in the book ”Blue Ocean Strategy” by Kim & Mauborgne).
I argue that it is difficult but indeed possible to create innovative Blue Oceans on all markets today. It´s all about mobilizing your core capabilities, what is often referred to as you company´s DNA, in order to create a whole new business logic, at the same time as you reduce or completely eliminate the traditional business logic from the market.
Some examples of Blue Oceans are; Über, whose business model totally changed the groundrules for Taxi; Spotify, with its business model that totally changed the market for music distribution; and LEGO, that based on an old business model and operation were heading towards bankruptcy when they managed to create a Blue Ocean leading to a situation 10 years later where they had a market value equal to the Ericsson group!
To innovate your business model and create a Blue Ocean requires guts, knowledge and guidance of the whole organisation, that also needs to stand on its tiptoe to find power to change. Everything from budgeting, reward systems and career paths to recruiting, research and development processes are affected. But what is the alternative if you don´t want to close the business or sell it off cheaply to be closed down by a new owner?
So, what is Innovation?
Well, a dear child has many names, but what innovation is really all about is to challenge your own thinking, see the market and the customers straight into their eyes, and do what you are absolutely best at in order to create new groundrules that provides competitive advantage at the same time as it eliminates the competitors value propositions. Innovation means that we realize new, unique and valuable ideas not only for new products and services, but also for all aspects of the company, such as finding a new business model or executing a new effective and repetitive innovation process that subsequently leads to new products, services and business models. A company´s innovation capability is heavily correlated with market leadership, growth and profit.
But can we measure and develop Innovation Capability?
Yes, this is quite possible today. You can measure, benchmark and evaluate your organizations innovation capability in order to step-by-step improve it; It´s not easy but possible and above all necessary to assure future success and counteract an as-is situation where you might be heading towards a Red Ocean. You can not simply sit still in the boat and hope that everything will stay the same. It will not happen, even the ancient chineese said that you cant step into the same river twice.
In other words, you havet to equip your company well in order to constantly challenge, sharpen and regularly change, both your products and services as well as your business model and your value propositions. It is the companies with the greatest innovation capability that will be the clear winners during the third vawe of globalization.
So what´s happening now?
As i said in the beginning, -”what´s happening now will have a greater impact on us than the introduction of the railway”!
Just like then, existing power structures will be broken and replaced by new ones, jobs will dissapear and have to be replace by new ones and the welfare in general will be reallocated in our society. To thrive, we must be proactive and influence the development in order to assure that it leads to a positive and sustainable society.
As i see it, Sweden could become a world leader in Innovation and the famous ”swedish model” can thus continue to be a good role model for sustainable community development during the ongoing third wave of globilization and beyond.
I am very proud to officially launch the InnoSurvey online. The worlds first free, and probably most comprehensive, innovation measurement at our new company Innovation 360 Group. .
Get a free comprehensive innovation measurement report with evidence based advice on how to sharpen your Innovation Capability. It´s just a click away and probably the most valuable half hour you can spend if you want to grow your business successfully!
Participate in the most advanced and deepest innovation survey made in the Scandinavian history. In return you will get an extensive and executive innovation report analyzing the innovation capability of the Scandinavian players from small disruptive and lean start ups to large corporations. The report will be sent out when we reached our Big Hairy Audacious Goal of building the largest and most comprehensive innovation databased in the Scandinavian history.
If interested I will give a speech at CFO Executive Day about how to innovate your business model to compete in the new global landscape. Have a look at the program.
Key Focus CFO Executive Day
Global economic instability has kept a tight grip on the market in recent years. Now there are signs of a slow recovery and some indicators indicate that consumer demand may be on the way up. Critical is to maintain growth and profitability and to adapt and innovate in the new global landscape. This places high demands on you as a CFO to pro-actively contribute to your company decides to stop and go in the right place and that you have a strategy for managing the growing risks to the economic uncertainty means.
According to EU we will have a lack of 1,000,000 programmers already year 2020, at the same time as Europe have a high permanent unemployment rate. Due to this and an old friends wish I have funded Sweden’s first specialized education company in programming, robotics and renewable energy. I am very proud to say that today they have lunched there web site as well as their first one-week-camps in Robotics. Have a look at Programming4kids.se !
Now the assignment is closed and results delivered. I maintain status as investor in this fantastic venture. In 2,5 years the assignment has resulted in turning Digital Inn from a €30 M reseller with losses into Scandinavia’s #1 onsite and ecommerce Apple profitable reseller with an annual €50M sales. Shifted from a traditional retailing strategy to a premium branded multichannel supplier of Apple and its surrounding ecosystem, including the start of a large B2B Apple venture.
• Analysed operations; reduced costs; increased profit margins through innovative and strategic work, positioning and assortment work; and optimised inventory and processes.
• Created and executed a turnaround plan that included acquisition, integration and turning around a major competitor.
• Improved gross margins.
• Automated and digitalized sales, marketing, logistics and management systems.
• Introduced an innovative omni-channel approach of selling, supplying and balancing goods in all channels (on and offline).
• Increased stock rotation and reduced stock levels.
For the swedish audience, there is a detailed reportage describing the turn-around. Please read it here.