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How Artificial Intelligence Will Drive the Three Innovation Horizons

juli 30th, 2016 • Entrepreneurship, InnovationsKommentering avstängd

AI long

For the moment, forget all the high profiled media stories about the danger of artificial intelligence (AI). These arguments are based on what AI might become, not on what it is doing now. Business leaders like Steve Wozniak have joined iconic scientists like Stephen Hawking in warning that even benevolent AI could rapidly become dangerous simply though inadequate concern for human safety.

Those discussions have value, but this is not the place for them. What matters in this discussion is the nuts and bolts of how AI — as it exists in the real world today — can impact revenues and drive innovation within Steven Covey’s Three Horizons.

Horizon Refresher

As a refresher, McKinsey defines Horizon One (H1) as incremental enhancements to core businesses that are already well-associated with the brand. The key concept here is “Maximize.” Horizon Two (H2) opens a window into the exciting world of practical magic where entrepreneurs convert resources into wealth. These are the solid business ventures that could take off with the right investment. The key concept here is “Develop.” Horizon Three (H3) is the hazy realm of visionaries who redefine the possible with thought experiments, research projects, pilot programs and theoretical business models. The key concept here is “Imagine.”

For a more detailed review of how to act strategically on all three Horizons at the same time, consult my related blog published for Drucker Forum “Organizing for Simultaneous Innovation Capability.” The point is that for all three Horizons, AI can and should hold an elemental significance for innovative businesses. Many have already begun to profit from strategic deployments of these non-local, silicon-based brains. Here’s how.

H1 Innovation: Radical Improvement

Some of the most successful advances in AI can be observed in the automatic translation of natural languages. For example, the Wall Street Journal announced this year that “The Language Barrier Is About to Fall” thanks to real-time AI translation inside earpieces. Similar advances have brought AI applications for automatic first-line support, advanced data search and price optimisation.

Collaborative development experiments with open source AI from Google, Facebook and Microsoft are making mobile apps and the Internet of Things faster and smarter in surprising ways. That’s partly why Gartner predicted that AI-driven technologies would certainly be the next disruptor for the world of enterprise software in the very near future.

H2 Innovation: Business Model Redefinition

These AI applications are, by definition, still in formative stages, but the outline of what is to come is gaining clarity. The Economic Forum at Davos this year referred to these proposals collectively as The Fourth Industrial Revolution.

Many B2B verticals are expanding to become B2B2C due to more intelligent digitalisation, customisation and smart interactions between customers and their clients. This is also known as forward integration in the supply chain, to distinguish these developments from backward integrations.

Backward integration using AI refers to businesses that encourage customers to take a larger role in the initial design process. End customers can help construct and build items they are just for them. This sort of self-service production line relies on company materials and services, like additive manufacturing (also called 3D printing) of individual items.

Some companies like Inbenta are experimenting with a range of service offerings up and down the supply chain. At the center of their value proposition is an AI program that understands natural language queries.

Cutting out the middleman opens up many new business models that could disrupt a host of industries. Basically, any vertical with a supply chain is a potential target for industry redefinition using AI. Some, like Alibaba’s eCommerce platform, are going for volume (using AI from a sales and logistic perspective). Others go for closer customer intimacy but using AI to make it all cost-efficient and scalable.

H3 Innovation: Intersection of Possibilities

In the speculative future, unrelated disciplines mesh to create original realities that no one can successfully predict. When Dr. Vannevar Bush wrote “As We May Think” in 1945, he predicted the web with eerie accuracy, but not the vast reinvention of society that arose from this global neural network. The logarithmic technological surges over the past few decades have outpaced forecasts and even credulity.

What companies need to do to push themselves on H3 projects in AI is to create an open innovation place for stakeholders where impossibilities are irrelevant. Companies can support university-led research or partner with deep learning organizations like Baidu’s Silicon Valley AI Lab. These are controlled environments where visionaries can explore ideas related to singularity studies, such as picotechnology for matter compilers, bio-AI convergence, transhuman wellness, commercial applications for exotic materials and the future of mankind in space exploration.

The Natural Progression

The simple truth is that AI should not be considered as something apart from humanity. It is as much a part of the human experience as language or commerce. AI arose as a natural progression from the first mathematicians and it will be there to help take global culture to its next plateau. [bctt tweet=”The simple truth is that AI should not be considered as something apart from humanity. It is as much a part of the human experience as language or commerce. AI arose as a natural progression from the first mathematicians and it will be there to help take global culture to its next plateau.” username=”@InnoSurvey”]In the meantime, there are many profitable and easily implemented solutions on the market right now to deploy for greater productivity and profitability. From decision-making to security to customisation, AI deserves to have a seat at the strategic table driving for innovations at all three horizons.

Speaker at The Global Peter Ducker Forum

juli 30th, 2016 • Entrepreneurship, Innovations, NewsKommentering avstängd

DruckerForum artwork GPDF16_Visual_Aula_newI am very proud to announce that I have been appointed as a speaker at the most important forum for global entrepreneurship – The Global Peter Ducker Forum in Vienna. This year’s theme will be “The Entrepreneurial Society” and renowned personalities from the business world such as Alexander Osterwalder, Steve Blank, Clayton Christensen and Philip Kotler will attend this year’s edition of the Forum. Also read my blog post at Drucker Forum  ”Simultaneous Innovation Capability”, a piece of work based on key findings from more than 1,000 companies in 62 countries in all continents.

For more information about the Forum read here.

Awarded as CEO of the year 2016

maj 27th, 2016 • NewsKommentering avstängd

Blue_gold_Awards-03

I am proud to announce that I have been awarded by Business Worldwide Award in the two categories ‘Most Innovative CEO Sweden 2016’ and ‘Growth Strategy CEO of the Year Sweden 2016’. Thanks to all wonderful colleges at Innovation360 making this kind of award possible and meaningsful. Read the full interview made by Business Worldwide here.

Business Worldwide is a comprehensive source of timely, accurate and reliable market intelligence on trading in today’s global corporate marketplace. Our quarterly magazine and online news portal enables an established audience of corporate dealmakers to track the latest trends and developments affecting international markets, corporate transactions, business strategy and changes in legislation. This readership includes of C-suite executives & directors of some of the world’s top companies, – Banks, Corporate Lawyers and Venture Capital/Private Equity Companies.

Today 30 SME Grown-Ups signed up for a super-innovation program

mars 13th, 2016 • Entrepreneurship, InnovationsKommentering avstängd

Today one of the largest innovation lifts in EU was launched – 30 parallell SMEs Grown-Ups with +2,000 employees in the Swedish ”Mittelstand” Småland did sign up to a 3 year journey! The GrowKomp Journey.

The kick-off took place at Kinnarps Arena, in Jönköping and is a program managed by Jönköping, Vaggeryd and Nässjö Business Regions in cooperation with the Jönköping Business School and the leading consultancy firms  Innovation 360 Group and Codeq.


 

GrowKomp is an 8.2 million SEK worth development project financed by the European Union that has as a goal to generate sustainable growth and competitiveness for 30 companies in Vaggeryd, Jönköping and Nässjö. This initiative will be possible through the strategic facilitation of innovation capabilities, competencies, CSR, gender equality and diversity.

The facilitators of the project are Innovation 360 Group and Codeq, that in a period of 3 years offer an analysis of the current situation, a business and innovation strategy intertwined with couching and consulting to all the companies. Together they will also provide individual analysis, feedback, coaching and training hence providing the companies with the necessary expertise to further develop their innovation capabilities. All highly digitalized and very scalable.

Five Levels of innovation assessment, analysis and development.

Assessing, analyzing and developing innovation can be made on five levels as illustrated in the image below. The region represented in the fourth level is one of the most complex and in this case close to be 80% digitalized by using InnoSurvey for assessing competencies, capabilities, collecting data regarding diversity, company facts, industry and market as well as case management, coach facilitation notes and support, digital sign-in on events, and setting, following up and coaching for actions to close the identified gaps.

Screen Shot 2016-03-10 at 14.33.28

Awarded with Deal of the Year Award 2015

februari 12th, 2016 • Innovations, NewsKommentering avstängd

The Innovation 360 client, Netsafe International, a company known by its expert services within the areas data communications, IT security, data centers and operator networks, was acquired by  Danish company Conscia AS during 2015.

The acquisition and merge was part of  well structured innovative business and market strategy that aimed to integrate and complement the best of each company into a new consortium that expands Conscia’s market to Sweden and that has as a goal to be the strongest provider of  system integration of network services in Sweden.

Netsafe International and Conscia A/S are two well known companies within their specialty area, being certified Cisco Golden partners. Therefore the acquisition was a proccess that complemented both companies’ capacities to make them stronger. Quting AI (the organisation awarding the deal of the year) there ”was a strategic fit between the two companies and their agendas”.

The acquisition from the Danish company Conscia has as a goal to make Netsafe,  the leading company within system integration of network services that caters for the most demanding clients in Sweden. It resulted in a profitable business, with a turnover equal to half a billion Swedish Crowns, in a period of 5 years.

The selling team was represented by NetSafe’s founder and CEO Emanuel Lipschütz, Magnus Penker Chairman and strategy consultant and CEO to Innovation 360 Group, as well as lawyer Peter Hummelblad from firm Wåhlin and was the final of a well planned and strategi agenda. Conscia was represented by  the company owners and Danish VC.

The positive results of this purchase has been awarded by the Acquisition International granting of the Deal of the Year Award 2015 to Netsafe International and it´s team due to a successful transaction.

For a full article regarding the acquisition go to the Acquisition International Deal of the Year Award 2015 website.

Davos Innovation Analysis: Will The Fourth Industrial Revolution lead to Households as employers?

januari 29th, 2016 • Globalization, InnovationsKommentering avstängd

The echo form the Davos meeting just begun… To quote Erik Brynjolfsson, Director of the MIT Initiative for the Digital Economy, “The idea that robots will take our jobs is the biggest misconception I’ve heard here at Davos.” Instead, he emphasized technology’s potential as a powerful tool. Or cite US Vice-President Joe Biden said “I believe, on balance, these transformations are changes for the good. But they come with real peril, and they require us to be proactive. For how will the warehouse worker who used to ship your order, or the salesman who used to take it, now make a living when he or she is no longer needed in that venture?”


 

We stand on the brink of a technological revolution that will fundamentally alter the way we live, work, and relate to one another. In its scale, scope, and complexity, the transformation will be unlike anything humankind has experienced before. We do not yet know just how it will unfold, but one thing is clear: the response to it must be integrated and comprehensive, involving all stakeholders of the global polity, from the public and private sectors to academia and civil society.

Are we on the cusp of a Fourth Industrial Revolution? Most participants in Davos think so. And it’s unlike anything we’ve ever experienced: “As a society, we are entering uncharted territory,” Salesforce CEO Marc Benioff told participants on the last day of this year’s Annual Meeting.

The Fourth Industrial Revolution was  on all lips  in Davos, a good thing but let´s recap. 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. Fourth Industrial Revolution is about the re-industrialisation of the Western world and 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.

The possibilities of billions of people connected by mobile devices, with unprecedented processing power, storage capacity, and access to knowledge, are unlimited. And these possibilities will be multiplied by emerging technology breakthroughs in mentioned fields such as artificial intelligence, robotics, the Internet of Things, autonomous vehicles, 3-D printing, nanotechnology, biotechnology, materials science, energy storage, and quantum computing.

Already, artificial intelligence is all around us, from early self-driving cars and drones to virtual assistants and software that translate or invest. Impressive progress has been made in AI in recent years, driven by exponential increases in computing power and by the availability of vast amounts of data, from software used to discover new drugs to algorithms used to predict our cultural interests. Digital fabrication technologies, meanwhile, are interacting with the biological world on a daily basis. Engineers, designers, and architects are combining computational design, additive manufacturing, materials engineering, and synthetic biology to pioneer a symbiosis between microorganisms, our bodies, the products we consume, and even the buildings we inhabit.

Challenges and opportunities

Like the revolutions that preceded it, the Fourth Industrial Revolution has the potential to raise global income levels and improve the quality of life for populations around the world. To date, those who have gained the most from it have been consumers able to afford and access the digital world; technology has made possible new products and services that increase the efficiency and pleasure of our personal lives. Ordering a cab, booking a flight, buying a product, making a payment, listening to music, watching a film, or playing a game—any of these can now be done remotely.

In the future, technological innovation will also lead to a supply-side miracle, with long-term gains in efficiency and productivity. Transportation and communication costs will drop, logistics and global supply chains will become more effective, and the cost of trade will diminish, all of which will open new markets and drive economic growth.

Moreover, technological innovation will also lead to more reuse and less waste of material and energy due to economical reasons and social demands.

At the same time, as the economists Erik Brynjolfsson and Andrew McAfee have pointed out, the revolution could yield greater inequality, particularly in its potential to disrupt labor markets. As automation substitutes for labour across the entire economy, the net displacement of workers by machines might exacerbate the gap between returns to capital and returns to labor. On the other hand, it is also possible that the displacement of workers by technology will, in aggregate, result in a net increase in safe and rewarding jobs.

We cannot foresee at this point which scenario is likely to emerge, and history suggests that the outcome is likely to be some combination of the two. However, I am convinced of one thing—that in the future, talent, more than capital, will represent the critical factor of production. This will give rise to a job market increasingly segregated into “low-skill/low-pay” and “high-skill/high-pay” segments, which in turn will lead to an increase in social tensions. Discontent can also be fueled by the pervasiveness of digital technologies and the dynamics of information sharing typified by social media. More than 30 percent of the global population now uses social media platforms to connect, learn, and share information. In an ideal world, these interactions would provide an opportunity for cross-cultural understanding and cohesion. However, they can also create and propagate unrealistic expectations as to what constitutes success for an individual or a group, as well as offer opportunities for extreme ideas and ideologies to spread.

The impact on business

An underlying theme in general is that the acceleration of innovation and the velocity of disruption are hard to comprehend or anticipate and that these drivers constitute a source of constant surprise, even for the best connected and most well informed. Indeed, across all industries, there is clear evidence that the technologies that underpin the Fourth Industrial Revolution are having a major impact on businesses.

On the supply side, many industries are seeing the introduction of new technologies that create entirely new ways of serving existing needs and significantly disrupt existing industry value chains. Disruption is also flowing from agile, innovative competitors who, thanks to access to global digital platforms for research, development, marketing, sales, and distribution, can oust well-established incumbents faster than ever by improving the quality, speed, or price at which value is delivered.

Major shifts on the demand side are also occurring, as growing transparency, consumer engagement, and new patterns of consumer behavior (increasingly built upon access to mobile networks and data) force companies to adapt the way they design, market, and deliver products and services.

A key trend is the development of technology-enabled platforms that combine both demand and supply to disrupt existing industry structures, such as those we see within the “sharing” or “on demand” economy. These technology platforms, rendered easy to use by the smartphone, convene people, assets, and data—thus creating entirely new ways of consuming goods and services in the process. In addition, they lower the barriers for businesses and individuals to create wealth, altering the personal and professional environments of workers. These new platform businesses are rapidly multiplying into many new services, ranging from laundry to shopping, from chores to parking, from massages to travel.

Household as employers is mot likely the place where we will see most innovations and most new jobs in the future, Magnus Penker CEO Innovation360 Group

On the whole, and according to the Davos Economic Forum, there are four main effects that the Fourth Industrial Revolution has on business—on Customer Expectations, on Product and Service enhancement, on Collaborative innovation, and on Organizational Appartamento, Rendering 3d progetto, interniforms. Whether consumers or businesses, customers are increasingly at the epicenter of the economy, which is all about improving how customers and  consumers are served. As a CEO you need to be able to cope and understand the there are four main effects in relation to other. The diagrams below, based on data from InnoSurvey, show how ready we are in some of the large industries and the conclusion is that household as employer is a very innovative trade and someplace where we most likely will see new jobs of the future. Moreover, we can clearly see that non of the industries are really ready for radical change and disruption and all are more or less lacking of the customer capabilities. Interesting is also how Mining is more innovative industry than Manufacturing and Finance – we can clearly be better prepared and trained for the future and we will most likely see new type of jobs that was not in the focus of the Davos World Economic Forum – the households and the micro economy which in it turn are end consumers driving demand for other industries.

InnoSurvey Analysis of Aspects

Global data snap-shot from InnoSurvey™ describing the four areas pointed ot by Davos as critical. Households as employer (followed by mining) seems to be more ready for appointed aspects than Finance, Manufacturing and Retail which also seems logical as we see a market increasingly segregated into “low-skill/low-pay” and “high-skill/high-pay” segments. 

InnoSurvey Analysis of Strategy

Global data snap-shot from InnoSurvey™. Below 3 means not innovating incremental/radical.  The investigated trades are incremental and not ready for disruption. If Household as employer (and firms organising for household services) will apply radical innovation and disruptive technology we will most likely see new well paid jobs here. 

Innovation360 Group open US Office in Washington DC & Tysons, VA

november 12th, 2015 • NewsKommentering avstängd

PRESS RELEASE

13th of November 2015
Washington DC & Tysons, VA
Stockholm, Sweden

 

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.

Magnus & Rick nov 2015Echoing 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.

More information on Innovation Technology is available at www.innovation360group.com

Contact details

CEO & Founder, magnus.penker@innovation360group.com , +46 708 200 244
US Commercial Director, rick.pfautz@Innovation360Group.com, +1 800-871-1477

About Innovation 360 Group

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.

Four disruptive threats to Nordic businesses: And how to meet them through innovating

oktober 1st, 2015 • Entrepreneurship, Globalization, InnovationsKommentering avstängd

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).

spider

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.

innovation capabilities

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;
  • Educate employees.

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)

Published by
Magnus Penker, CEO and co-founder Innovation 360 Group
Christer Berg, Swedish Computer Association for Competence Development

 

Industry 4.0 – disruption or just a logic extension of WWW?

augusti 1st, 2015 • Globalization, InnovationsKommentering avstängd

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:

  1. A well-defined innovation process from ideation, prototyping to development and commercialisation (diffusion).
  2. Structured platform thinking and architecture, with product lifecycle management implemented, from design, construction and production to the aftermarket, as well as recycling.
  3. An echo system with engaged open communities of suppliers, partners, producers and universities and industry standardisation committees.
  4. 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.
  5. 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.

Leader in Innovation Special Report published in the Swedish Business magazine Dagens Industri

maj 2nd, 2015 • InnovationsKommentering avstängd

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.