VMO-led Innovation Management

A Procurement Perspective

"Without change there is no innovation, creativity,

or incentive for improvement. Those who initiate

change will have a better opportunity to manage

the change that is inevitable."

- William Pollard

Working Draft

Since the word innovation entered the business lexicon, it’s come to mean different things to different people. There’s a tendency to speak of innovation in the context of advanced technologies, futuristic product development and the development of new “game-changing” strategies.

At the root, however, innovation is fundamentally about doing something differently to deliver demonstrable business value, at the top line, bottom line or both. Against that standard, the successful application of new ideas to reduce costs clearly constitutes innovation—at least in theory.

There’s an emerging consensus that the best way for a company to foster innovation is to harvest the best ideas wherever they are, whether it’s inside the company or among customers, suppliers and partners. In generating new ways to reduce costs, the benefit of this broad approach—leveraging collective intelligence —is to extend the breadth and diversity of inputs into a company’s ideation process. More subtle yet powerful is the impact this approach has at a human level, transforming cost reduction ideation from a more expert-driven, adversarial exercise to a participatory experience that—by encouraging “buy-in”— dramatically increases the likelihood of successful implementation.

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What is Innovation

The dirty little secret … is that unlike the mythical epiphany, real creation is

sloppy. Discovery is messy; exploration is dangerous. No one knows what

you’re going to get when you’re being creative

Innovation comes at a price – it might be money, time, sanity, friends, or

marriages, but there will be one

The majority of innovations come from dedicated people in a field working hard

to solve a well-defined problem. It’s not sexy and it won’t be in any major

movie coming to theater near you anytime soon – but it’s the truth

Revolutionary ideas can be too much change for people to handle. Innovations

often need to be explained in terms of the status quo, which is why

automobiles are rated in horsepower

Innovative ideas are rarely rejected on their merits; they’re rejected because of

how they make people feel

3

What is Innovation?

The inconvenient truth

4

Innovation: What’s in it for you?

’s Idea Marketplace

Advanced Idea

Management

Basic Idea

Management

Suggestion

Program

Idea

List

Raw

Ideas

Elaborated

Concepts Significant ROI

across range

of activities

Benefits limited to

cost savings and

“Small idea”

Consumers Suppliers Partner

Idea Marketplace

Data store

Product / Services / Pricing / Branding

Innovation Development

New Markets for Existing Products

New Products and Concepts

Revenue Acceleration / Margin Improvement / market share gain

Cost Reduction and Productivity improvement

Process Replacement

Avoiding Waste by Selecting Quality Concepts

Employee Involvement

Innovation Benefit Focus Areas

ROI depends on the quality of the process

and of the ideas

Suggested Approach for the VMO

6

The Character of the Innovation Process

Innovation is….

An individual process

Hidden in the R&D laboratory

Ungovernable, uncontrollable

More or less accidental

Something that’s been going on for ages

No effective governance

No correlation with trending or consumer /

customer demand and insight

No correlation with corporate strategy, or

execution capabilities

Innovation is…

A multi-disciplinary group process

Supported top down and driven bottom up

Guided, facilitated, controllable

More than just incremental improvements to

product

A process by jumps and starts

Surrounded by a risk management envelope

Effective governance

Effective measurements

Bleeding edge portfolio management

methodology

Innovation is an

Unpredictable

Process ?

Innovation becomes

A predictable, measured

process !

Classical Approach Recommended Approach

Create an Innovation Environment – Process, Discipline, Behaviors

This is a business management service, NOT a technology solution; there is no magic software wand to wave to realize

10X innovation investment returns. We help clients focus on process, discipline, a dedicated team and deep skills in

engaging and facilitating people in large numbers to focus on solving problems and solutions

Effectively Engage the Organizational, Manage Complexity

We leverage the collective organizational wisdom to optimize the innovation process and results

Establish Long-term Capabilities, Target Quick Wins

By tapping into the brainpower of the greater organizational community, we create an effective and sustainable

innovation environment that produces quick wins.

Drive Business Benefits

Through effective execution of ’s Innovation management techniques and tools, we improve margins (Pricing

Optimization) and boost revenue (Market share gain through innovative products, services or processes), improve

customer satisfaction scores, launch new products, and generate cost savings on a variety of levels

7

The VMO-led Innovation Differentiation

We focus on key areas of process and target 10X ROI

We accomplish this by a flexible but proven approach to managing innovation, implementing and

customizing Innovation Idea technology, and incorporating suppliers, partners, customers and

employees holistically in the process.

8

VMO Innovation Management Framework

1. Available technologies

2. Available experience

3. Potential Technologies

4. Consumer insights

5. Competitor behavior

6. Emerging Technologies

7. Emerging business models

8. Emerging Partnering opportunities

9. Academic Innovation development

10. Trending

11. Ideation

Commitment

1. Operational Guidance

2. Portfolio and selection strategies

3. Funding strategies

4. Project strategies

5. Communications

6. Marketing

7. Performance Indicators

Org

an

iza

tion

1. Vision

2. Urgency

3. Strategy

4. Structure

5. Insight in competitive behaviors

6. Skill sets

7. Support

8. Dedication

Competitive Consequence

1. Team composition

2. Partner composition

3. Effective leadership

4. Risk tolerance

5. Career management

6. Cultural commitment

7. Ideation encouragement & Reward

Kn

ow

Ho

w &

Fle

xib

ilit

y

Speed

CHANGE

Does the strategy take advantage of change?

Yes/No

VALUE

Is the value preferred by the majority of

customers?

Yes/No

ACTIVITIES

Is the Firm performing the right activities

Yes/No

APPROPRIABILITY

Does the strategy enable the Firm to make money

Yes/No

Competitive Consequence

9

Our Approach

Phase 1: Organizational Awareness Phase 2: Innovation Ideation

Innovation

Preconditions

Assessment

Create

Innovation

Preconditions

.

Ideation and

Selection to

Portfolio

.

Innovation

Portfolio

Management

Innovation

Program

Management

Innovation

Project

Management

Portfolio Management Program Leadership

Enterprise Project Delivery

Conduct Innovation

Diagnostic using the

Innovations

Dimensions model

Develop an innovation

vision and strategy to

fit the organization’s

culture. using ’s

Strategic Innovation

Framework

Collect, evaluate,

prioritize, and select

an optimized mix of

innovation programs

and projects.

Manage innovation

portfolio delivery.

Manage the

innovation portfolio

benefits realization

Drive Innovation

Program delivery

Drive Innovation

Project delivery

The VMO approach leads the client though six progressive areas to focus to drive effective innovation management.

Enablers

AVAC Portfolio

Management Innovation

Diagnostic

Portfolio

Optimization

Consumer /

Customer

insight Articulated needs,

unarticulated needs,

inspired solutions

Strategic

Alignment Rapid , smart

decisions, effective

execution

Organizational

Readiness Culture

Structure

Processes

Industry

Foresight Future-oriented

business and

success drivers

Core

Technologies

and

Competencies Capabilities and

assets Disciplined

Implementation Systematic Portfolio.

Program, support

management

Pcubed

Managed Innovation Creativity

Methodology

Strategic Thinking

Execution

Strategic Innovation

Framework Program

Management Project

Management

Innovation PMO

Phase 3: Innovation Delivery

10

Strategic Innovation Framework

Consumer /

Customer

insight Articulated needs,

unarticulated needs,

inspired solutions

Strategic

Alignment Rapid , smart

decisions, effective

execution

Organizational

Readiness Culture

Structure

Processes

Industry

Foresight Future-oriented

business and

success drivers

Core

Technologies

and

Competencies Capabilities and

assets Disciplined

Implementation Systematic Portfolio.

Program, support

management

VMO

Managed Innovation Creativity

Methodology

Strategic Thinking

Execution

The VMO Strategic Innovation

Framework weaves together seven

dimensions to produce a portfolio of

outcomes that drive growth. :

A Managed Innovation Process Combining Non-Traditional and Traditional

Approaches to Business Strategy

Strategic Alignment Building Support

Industry Foresight Understanding Emerging Trends

Consumer/Customer Insight Understanding Articulated and

Unarticulated Needs

Core Technologies & Competencies Leveraging and Extending Corporate Assets

Organizational Readiness The Ability to Take Action

Disciplined Implementation Managing the Path From Inspiration to

Business Impact

Seven Dimensions of

Strategic Innovation

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AVAC Innovation Framework

Does the strategy take

advantage of change?

Is the value preferred by the

majority of customers?

Is the organization performing

the right activities?

Does the strategy enable the

business to make money?

Competitive

Consequence

CHANGE VALUE

ACTIVITIES

APPROPRIABILITY

Is the Firm performing \the

Right services?

Is the value created preferred

By many customers?

Does our strategy take

advantage of change?

Does our strategy enable

The Firm to generate cash?

Do Activities…

Contribute to low cost, differentiation, etc.

Contribute to improve the Firms' position vs. competitors?

Take advantage of Industry Value Drivers?

Contribute to building or translating distinctive resources / capabilities?

Conform to parsimony and comprehensiveness?

Value…

Do customers perceive value as unique?

Do many customers perceive this unique value?

Are customers valuable?

Are there white spaces nearby?

Appropriability…

Is there superior competitive positioning?

Are competitive positioning and customer benefits exploited?

Is the company difficult to imitate?

Are there few substitutes but many complements?

Does or will the organization take advantage of…

New ways of creating or capturing value?

Distinctive resources/capabilities?

First-mover advantages or disadvantages and competitor’s handicap?

Competitors’ reactions to actions?

Opportunities or threats of environment?

12

Strategic Innovation Framework

Managing the path from inspiration to business impact with

systematic Portfolio Management, Program Management, and innovation environment management

The VMO Strategic Innovation Framework weaves together seven dimensions to

produce a portfolio of outcomes that drive growth.

Disciplined Implementation

Organizational Readiness Core Technologies and Competencies

Strategic Alignment Consumer / Customer Insight

Future-oriented business and success

drivers that reflect emerging trends

Industry Foresight and Trending

Innovatique

Managed Innovation

♦ Creativity ♦ Methodology ♦

♦ Strategic Thinking ♦

♦ Execution ♦

Combining non-traditional and

traditional approaches to

business strategy

Leveraging and extending corporate

assets and capabilities

Rapid , smart decisions, effective

execution – tied to strategies

Inspired solutions, created with an

understanding of articulated and

unarticulated needs

The Ability to Take Action

Culture Structure Processes

Building Capability and Driving Results

14

Building Innovation Capability

Leadership and

Organization

Process

& Tools

Culture

& Values

People

& Skills

Innovation

capability

Company Leaders and

Organization aligned around a

common vision of innovation

Collaborative, open culture and

incentives that reward

challenging the status quo

Disciplined approach to

building innovation capabilities

across the organization

Systematic approach and

supporting tools to enable idea

capture and generation,

pipeline and portfolio /

program and project

management

15

VMO Framework for Strategic Innovation

Incremental

Substantial

Breakthrough

Low Customer Impact High

Value Drivers (External Perspectives)

Industry foresight

Future-oriented Success Factors

Customer Insights

Articulated and Unarticulated Needs / Trends

Organizational Drivers (Internal Capabilities and Limitations)

Managed Innovation process

Strategic / Commercial and Economic

Alignment

Insights and Understanding

Ideation / Idea marketplace / Idea Trading

Opportunity Identification

Economic , Competitive and Investment

Drivers

Opportunity Prioritization

Innovation Risk management

Innovation Program Planning

Innovation Project Execution

Innovation value measurements

Risk management

Negotiation

Idea Factory

New Products

New Strategies

New Markets

New Business Models

Branding / Sales /

Marketing

New Partnerships

Sustainable Innovation

New Revenue

Core Technologies

& Competencies

Risk

Management

Disciplined

Implementation

Organizational

Readiness

Closing Thoughts on Innovation

The crux of the VMO Innovation approach is to capture a company’s far-flung,

diverse and often overlapping knowledge and ideas and harmonize them into a

coherent, workable action plan. Underpinning the approach is the idea that

when an abundance of brains is connected within the right kind of network—

and are backed up by processes that enable and encourage the exchange of

ideas—the rules all change.

Even with current technologies, how companies solicit their employees’ ideas

share the same fundamental shortcoming as the old-fashioned suggestion box

from which they evolved. If participants can’t see the ideas of their peers, ideas

often overlap (some 60 percent, research shows). What’s more, the fact that

the community lacks a reference point as to what constitutes a “good” idea

tends to drag down the quality of submissions.

Contributors also tend to suggest ideas that— unbeknownst to them—have

already been considered. Together, these factors can significantly diminish the

efficiency and effectiveness of the ideation process.

17

Gaining Focus

The VMO Idea Marketplace solution transforms ideation by making it more

transparent and collaborative.

• Unlike black-box solutions, Idea Marketplace has the built-in intelligence to filter out

duplicate ideas—as well as ideas that have already been implemented—at the front

end of a process.

• Once in the pipeline, the best ideas rise, evolve and improve through the scrutiny

and collaboration of the employees and other enterprise stakeholders taking part in

the ideation campaign. It ensures that the best ideas reflect the “wisdom of the

crowd” by putting the right challenge to the right people at the right time.

The VMO’s track record in collaborative cost reduction reveals that this path is

seldom linear and that experts don’t have a monopoly on wisdom. The fact that

critical knowledge can reside anywhere in the enterprise makes broad

participation in the ideation process the key to success. When the goal of

innovation is cost reduction and higher efficiency, it’s important that the process

remain constructive and not devolve into a forum for complaints.

18

Wisdom Rising

Recognize good ideas, develop them organically and collaboratively, and

evolve them to fruition through a rigorous framework.

Be it cost reduction or any other focus of a company’s innovation efforts, the

key to success is in managing the ideation process from input to output to

action plan.

19

A Call to Innovate

The VMO recognizes that when it comes to collective intelligence, it isn’t the quantity

of ideas that leads to success – it is the ability to recognize good ideas

It’s seen in the way the VMO works with each supplier to build an environment that

leverages the culture and organizational dynamics to produce the most successful

innovation ideas.

Through its Idea Marketplace solution, professional services capability, and unparalleled

track record, the VMO has emerged as the clear leader in this space – and has the results

to prove it.

The VMO knows the importance of reflecting each company’s uniqueness.