Strategic Innovation & Design Thinking HRMA 30093 PDF

Strategic HRMA 30093: Innovation and Design Thinking P R O F. C R E S I L D A M. B R A G A S , M B A  STRATEGIC INNOVATION & DESIGN THINKING OVERVIEW OF STRATEGIC INNOVATION AND DESIGN THINKING Learning Objectives:  Define key terms strategy, in...

Strategic HRMA 30093: Innovation and Design Thinking P R O F. C R E S I L D A M. B R A G A S , M B A  STRATEGIC INNOVATION & DESIGN THINKING OVERVIEW OF STRATEGIC INNOVATION AND DESIGN THINKING Learning Objectives:  Define key terms strategy, innovation and design thinking;  Discuss key features of a strategy;  Understand the concept of innovation;  Explain briefly the three major types of innovation and its process;  Recognize the concept of Design Thinking (DT)  Analyze the IDEOs’ 3 I model; and  Determine how could managers think like designers THE THREE BIG WORDS…  Strategy  Innovation  Design Thinking STRATEGY WHAT IS A STRATEGY?  Strategy is a term that comes from the Greek word strategia, meaning "generalship.“  In the military, strategy often refers to maneuvering troops into position before the enemy is actually engaged. WHAT IS A STRATEGY?  In this sense, strategy refers to the deployment of troops. Once the enemy has been engaged, attention shifts to tactics. Here, the employment of troops is central.  Substitute "resources" for troops and the transfer of the concept to the business world begins to take form. PROFOUND MEANING OF STRATEGY  The basic directional decisions, that is, to purposes and missions.  Consists of the important actions necessary to realize these directions.  Is the answer to the questions: What should the organization be doing and what are the ends we seek and how should we achieve them? KEY FEATURESOF STRATEGY Strategy is Significant because it is not possible to foresee the future. Without a perfect foresight, the firms must be ready to deal with the uncertain events which constitute the business environment. It deals with probability of innovations or new products, new methods of productions, or new markets to be developed in future. Strategy deals with long term developments rather than routine operations, i.e. it Strategy is created to take into account the probable behavior of customers and competitors. Strategies dealing with employees will predict the employee behavior. REMEMBER… A strategy is a well-defined roadmap of an organization. COMPARING BUSINESS AND MILITARY STRATEGY EXAMPLES OF BUSINESS STRATEGIES INNOVATION  DEFINITION OF INNOVATION  The process whereby an invention is further researched, designed and engineered into a form suitable for the commercial marketplace or public- sector use.  The introduction of a new good or a new quality of the good and method for production.  The conquest of a new source of supply and the opening of a new market and carrying out of the new organization of an industry TO ILLUSTRATE INNOVATION… WHY ORGS. INNOVATE? TURBULENT AND ORGANIZATION RAPIDLY CHANGING PREPARE ECONOMY THEMSELVES TO INNOVATE ON A CONTINUING BASIS OTHERWISE THEIR SURVIVAL CHANCES ARE SERIOUSLY THREATENED CHARACTERISTICS OF INNOVATION There is an object or target which is being changed. It can be a product, a process, an individual’s lifestyle, an organization's strategy, a society culture. Innovation varies in an extent or magnitude. For instance, degree to which one deviates from the past. It is closely related to problem solving since generation and implementation of ideas for change never transpire without difficulty. A final characteristic is the impact of the change, the significance or range of its effects. GOALS OF INNOVATION Improving quality Creation of new markets Extension of the product range Reducing labor cost Improving production process Reducing materials Reducing environmental damage Replacement of products/services Reducing energy consumption Conformance to regulations  SOURCES OF INNOVATION ORGANIZATIONAL STRUCTURE LONG TENURE IN MANAGEMENT  SOURCES OF INNOVATION ABUNDANCE OF RESOURCES INTERUNIT COMMUNICATIONS 3 CORE TYPES OF INNOVATION  3 CORE TYPES OF INNOVATION TRANSFORMATIONAL SEEDLESS WATERMELON This is usually (but not always) the introduction of a technology that creates a new industry and transforms the way we live and work. This kind of innovation often eliminates existing industries or, at a minimum, totally transforms them. For this reason, transformational innovations tend to be championed by those who aren't wedded to an existing infrastructure.; this innovation is exceedingly rare. SPACECRAFT TO MARS  BREAKTHROUGH This innovation is exceedingly rare. Extremely unique innovations often establish the platform on which future innovations in an area are developed. These innovations should be protected as much as possible by strong patents, trade secrets and copyright. 3 CORE TYPES OF INNOVATION INCREMENTAL These numerous innovation usually extend a technological innovation into a better product or service or that has a different – usually better market appeal. These innovations usually come from market analysis and pull and not technology push. In other words, the market has a stronger effect on the innovation (market pull) than the technology (technology push). THE INNOVATION PROCESS DESIGN THINKING  THE CONCEPT OF DESIGN THINKING  It is understood as a complex thinking process of conceiving new realities, expressing the introduction of design culture and its methods into fields such as business innovation.  Design Thinking (DT) is not only now a motor for innovation promoted by designers, but it offers new models of processes and toolkits which help to improve, accelerate and visualize every creative process, carried out not only by designers, but in multidisciplinary teams in any kind of organization.  The new use of the term DT, specifically the combination of "thinking" and "design", offers fields such as Innovation Management the opportunity to apply design tools to other problem-solving-contexts not directly related with the appearance and functionality of artefacts, but with the form of businesses, services and processes  THE CONCEPT OF DESIGN THINKING  Design Thinking today is not only a cognitive process or a mindset but has become an effective toolkit for any innovation process, connecting the creative design approach to traditional business thinking, based on planning and rational problem solving.  Organizational managers in the DT process with DT tools means giving them some of the abilities have, to identify – to visualize, to solve and to preview problems in a systematic and creative way.  MEANING OF DESIGN THINKING  Design Thinking (DT) is understood as a way of thinking which leads to transformation, evolution and innovation, to new forms of living and to new ways of managing business.  A term used to represent a set of cognitive, strategic and practical processes by which design concepts are developed.  Design Thinking is a human-centered, iterative process that designers use to tackle problems  THE 3 MAIN CHARACTERISTICS OF DESIGN THINKING (DT) 1. Human needs and new visions of living well, 2. Available material and technical resources, and 3. The constrains and opportunities of a project or business  THE IDEOS’ 3 I MODEL The DT model of 3 I’s (Inspiration, Ideation, Implementation) was developed by IDEO agency, a design and consulting firm founded in California in 2001 in the context of social innovation. 1. Inspiration, the first Design Thinking space of the model, includes the following design activities: the identification of the design problem or opportunity, the elaboration of the design brief to give the design team a framework, and the observation of the behavior of the target group in their daily living environment.  THE IDEOS’ 3 I MODEL Cont’d 2. Ideation, space of the Design Thinking process starts: an interdisciplinary team goes through a process of synthesis in which they distil what they have observed and learned, into insights that lead either to opportunities to change, or immediately to new solutions. During this brainstorming process, visual representations of concepts are encouraged, to help others to understand complex ideas.  THE IDEOS’ 3 I MODEL Cont’d 3. Implementation, the space in which the best ideas are turned into an action plan. According Brown and Wyatt (ibid.), prototyping is the core of the implementation process. Through prototyping, new ideas and material solutions are tested, iterated and improved. After the final product or service has been created, the last activity of the implementation space is the development of a communication strategy, to help communicate the solution inside and outside the organization. HOW COULD MANAGERS THINK LIKE DESIGNERS? THE 5 STAGES IN THE DESIGN THINKING PROCESS 5 STAGES IN THE DT PROCESS: EMPHATIZE  The first stage of the DT process is to gain an empathic understanding of the problem you are trying to solve. This involves consulting experts to find out more about the area of concern through observing, engaging and empathizing with people to understand their experiences and motivations.  Empathy is crucial to a human-centered design process such as Design Thinking, and empathy allows design thinkers to set aside their own assumptions about the world in order to gain insight into users and their needs.  Depending on time constraints, a substantial amount of information is gathered at this stage to use during the next stage and to develop the best possible understanding of the users, their needs, and the problems that underlie the development of that particular product. 5 STAGES IN THE DT PROCESS: DEFINE (THE PROBLEM)  During the define stage, you put together the information you have created and gathered during the Empathies stage. This is where you will analyze your observations and synthesize them in order to define the core problems that you and your team have identified up to this point. You should seek to define the problem as a problem statement in a human-centered manner.  This will help the designers in your team gather great ideas to establish features, functions, and any other elements that will allow them to solve the problems or, at the very least, allow users to resolve issues themselves with the minimum of difficulty. 5 STAGES IN THE DT PROCESS: IDEATE  In this stage, designers are ready to start generating ideas. You’ve grown to understand your users and their needs in the empathize stage, and you’ve analyzed and synthesized your observations in the define stage and ended up with a human-centered problem statement.  With this solid background, you and your team members can start to "think outside the box" to identify new solutions to the problem statement you’ve created, and you can start to look for alternative ways of viewing the problem.  It is important to get as many ideas or problem solutions as possible at the beginning of the Ideation phase. You should pick some other Ideation techniques by the end of the Ideation phase to help you investigate and test your ideas so you can find the best way to either solve a problem or provide the elements required to circumvent it. 5 STAGES IN THE DT PROCESS: PROTOTYPE  In this stage, the design team will now produce a number of inexpensive, scaled down versions of the product or specific features found within the product, so they can investigate the problem solutions generated in the previous stage. Prototypes may be shared and tested within the team itself, in other departments, or on a small group of people outside the design team.  This is an experimental phase, and the aim is to identify the best possible solution for each of the problems identified during the first three stages. The solutions are implemented within the prototypes, and, one by one, they are investigated and either accepted, improved and re-examined, or rejected based on the users’ experiences.  By the end of this stage, the design team will have a better idea of the constraints inherent to the product and the problems that are present and have a clearer view of how real users would behave, think, and feel when interacting with the end product. 5 STAGES IN THE DT PROCESS: TEST  Designers or evaluators rigorously test the complete product using the best solutions identified during the prototyping phase.  This is the final stage of the 5 stage-model, but in an iterative process, the results generated during the testing phase are often used to redefine one or more problems and inform the understanding of the users, the conditions of use, how people think, behave, and feel, and to empathize.  Even during this phase, alterations and refinements are made in order to rule out problem solutions and derive as deep an understanding of the product and its users as possible. THE KEY TAKE AWAYS In essence, the Design Thinking process is iterative, flexible and focused on collaboration between designers and users, with an emphasis on bringing ideas to life based on how real users think, feel and behave. Design Thinking tackles complex problems by:  Empathizing: Understanding the human needs involved.  Defining: Re-framing and defining the problem in human- centric ways.  Ideating: Creating many ideas in ideation sessions.  Prototyping: Adopting a hands-on approach in prototyping.  Testing: Developing a testable prototype/solution to the problem.. End of Session CLASSWORK #1  Name 3 business organizations engaged in strategic innovation and identify the major reasons behind this strategic change.  What do you think are the major things to consider of the design thinking manager in terms of managing human capital in the organization to increase employee productivity? Cite an example to justify your answer.  Strategic HRMA 30093: Innovation and Design Thinking P R O F. C R E S I L D A M. B R A G A S , M B A  DRIVING GROWTH WITH BUSINESS MODEL INNOVATION Learning Objectives Discuss the concept of Business Model Innovation; Explain briefly the 4 Approaches of BMI; Understand the concept and Characteristics of Sustainable Business Model Innovation (SBM-I) and; Identify the building blocks of SBM-I.  Business Model Innovation It is the art of enhancing advantage and value creation by making simultaneous and mutually supportive changes both to an organization’s value proposition to customers and to its underlying operating model. The 3 Key Terminologies Value Creation – when an organization exercises its effort and resources to generate something of value that is sold to a customer or to the market. Value Proposition – addresses the choice of target segment, product or service offering, and revenue model Operating Model – focuses on how to drive profitability, competitive advantage, and value creation through these decisions on how to deliver the value proposition. Four Approaches to Business Model Innovation The Reinventors Approach The Adapters Approach The Mavericks Approach The Adventurer’s Approach  Four Approaches to Business Model Innovation This approach is deployed considering a fundamental industry challenge, such as commoditization or new regulation, in which a business model is deteriorating slowly, and growth prospects are uncertain.  Reinventors respond to intense pressure by rethinking their existing operation. For these companies, there are two key steps THE to remaking the business model: REINVENTORS Redefine value for customers. Dismantle proactively. Example of Reinventors Approach  Four Approaches to Business Model Innovation This approach is used when the current core business, even if reinvented, is unlikely to combat fundamental disruption.  Adapters focus on finding a way to exploit their core business expertise to break into new markets and businesses. In order to succeed, they must address two issues: THE ADAPTERS Find untapped value in current assets and capabilities. Make adversity an advantage. Example of Adapter Approach  Four Approaches to Business Model Innovation This approach deploys business model innovation to scale up a potentially more successful core business that requires an ability to continually evolve the competitive edge or advantage of the business to drive growth.  Mavericks zero in on what established companies often overlook. They commonly THE leverage two key approaches: MAVERICKS Target the sleeping giant. Minimize the barriers that stand between you and the customer. Example of Maverick Approach  Four Approaches to Business Model Innovation This approach aggressively expands the footprint of a business by exploring or venturing into new or adjacent territories and requires an understanding of the company’s competitive advantage and placing careful bets on novel applications of that advantage in order to succeed in new markets.  For adventurers, a primary challenge is managing the trade-off between innovating and protecting the core business. This implies two imperatives: THE ADVENTURERS Stabilize the core. Establish a permanent, dedicated innovation team to place bets in new spaces. Example of Adventurers Approach  The Model… (Momentum) The Reinventors Approach The Adapters Approach The Mavericks Approach The Adventurers Approach  THE QUEST FOR SUSTAINABLE BUSINESS MODEL INNOVATION  Sustainable Business Model Innovation (SBM-I) It builds on traditional business model innovation but applies it to a much-expanded context. It explores business model innovations by applying a combination of modular “transformations” to address limits and leverage potentials. It connects business model innovations back to the core drivers of business advantage and financial performance in order to assess how they can deliver both value and sustainability.  Characteristics of a Sustainable Business Model Innovation (SBM-I) It scales effectively without diminishing returns or increasing the risk of failure. It increases differentiation and competitiveness. It reduces the potential for commoditization. It creates an environmental and societal surplus. It remains durable against emerging socioenvironmental trends.  Characteristics of a Sustainable Business Model Innovation (SBM-I) It exhibits network effects that accumulate value and reshape value chains. It harnesses or reshapes business ecosystems for advantage and sustainability. It increases returns to shareholders and net positives to stakeholders on environmental and societal dimensions. It animates the purpose of the company in ways that propel engagement and affinity for employees, customers, investors, and other stakeholders. Spectrum of Company Maturity  Building Blocks of Sustainable Business Model Innovation (SBM-I) Business model transformations to use as building blocks for SBM-I are: Own the origins Own the whole cycle Expand societal content Energize the brand Relocalize/Regionalize Expand the chains Build across sectors End of Session  CLASSWORK #2 Enumerate the important findings of the research study titled “Characterizing B Corps as a sustainable business model”. Connect the article to our discussion about sustainable business model.  Strategic HRMA 30093: Innovation and Design Thinking P R O F. C R E S I L D A M. B R A G A S , M B A TECHNOLOGICAL INNOVATION, INNOVATION DIFFUSION, & INNOVATION CHALLENGES  LEARNING OBJECTIVES Explain the Concept of Technological Innovation Understand Diffusion of Innovation Identify Factors Affecting the Diffusion of Innovation Enumerate Examples of Diffusion of Innovation Determine Innovation Challenges REMEMBER… Innovation is the key to competitive advantage for your business. WHY? CONCEPT OF TECHNOLOGICAL INNOVATION It is a function which new technologies are introduced into the Economic System to improve its processes.  PROS CONS Technology gives us access to more Technology creates dependencies. information. We can communicate more efficiently We must have laws in place that protect because of technology. individual freedoms. It inspires us to become innovators. Technology creates a social disconnect. We have developed better learning It becomes much easier to copy or methods because of technology. plagiarize information.  PROCESS OF TECHNOLOGICAL INNOVATION 1. Basic research (for general nature laws) 2. Applied research (for specific problems) 3. Development (design for prototyping) 4. Engineering (design for assembly) 5. Manufacturing (design for efficiency & quality) 6. Marketing (design for acceptance & affordability) 7. Promotion (design for diffusion) 8. Improvement & enhancement (design for sustainability) DIFFUSION OF INNOVATION (DOI) Theory, developed by E.M. Rogers in 1962, is one of the oldest social science theories. Originated in communication to explain how, over time, an idea or product gains momentum and diffuses (or spreads) through a specific population or social system Result: part of a social system, adopt a new idea, behavior, or product. DIFFUSION OF INNOVATION (DOI) The key to adoption is that the person must perceive the idea, behavior, or product as new or innovative.  DIFFUSION OF INNOVATION MODEL : Innovators - people who want to be the first to try the innovation. Early Adopters - people who represent opinion leaders. They enjoy leadership roles, and embrace change opportunities Early Majority - people are rarely leaders, but they do adopt new ideas before the average person Late Majority - people are skeptical of change, and will only adopt an innovation after it has been tried by the majority  DIFFUSION OF INNOVATION MODEL : Laggards - people are bound by tradition and very conservative; very skeptical of change; hardest group to bring on board. FACTORS AFFECTING THE DIFFUSIO OF INNOVATION Impacted by socio-economic, cultural, technological as well as legal factors; it is also impacted by individual determinants like psychological variables and demographics; these are all forces are in most cases “uncontrollable” by the marketer. There are also the more relevant forces, related to the innovative product and /or service which constitute what is called the “controllable”, and which are in the hands of the marketer;  FACTORS AFFECTING THE DIFFUSION OF INNOVATION RELATIVE ADVANTAGE The relative advantage of the innovative product/service offering over already existing products/services accelerates its rate of adoption by the target market  COMPATIBILITY The compatibility of the innovative product and service offering with the existing backgrounds, behavior and lifestyle patterns of consumers also affects its adoption by the consuming public.  COMPLEXITY The level of complexity in a product purchase and usage also affects the diffusion process TRIALABILITY ease with which the product or service can be tested and tried also determines the rate of acceptance. OBSERVABILITY refers to the ease with which the product can be observed. EXAMPLES OF DIFFUSION OF INNOVATION During the last years of 90s the mobile phones were introduced to common people even though it was there in market the cost was much higher. When it was introduced it wasn’t something which comes with 500+ killer applications as today it was merely a portable land line.  Typewriters experienced declining sales as more consumers switched to computers or other word processing equipment. INNOVATION CHALLENGES  People Desirability Defines whether or not your customers desire a product or whether there is a market for it is the first innovation challenge that design teams must contend with. Asks the question, ''Is there a place for this product or service in the market?‘’ Understanding the desirability of your product or service is knowing whether it solves a customer need or not. If it does not, it may be nice to have, but it won't be desirable. Example When Toyota launched its Prius worldwide in 2000, it was desirable to consumers for several reasons. First, its gas efficiency meant filling up at the pump less, making it cheaper for its owners to operate. Second, it is kinder to the environment, reducing pollutants released into the air. Those two traits alone (and there are others) made the hybrid a desirable vehicle for many. Business Viability Concerned with making sure that an innovative idea fits with a company’s business goals and can be accomplished both in terms of the money it costs to create and the time it takes to produce. Asks the question ''Should we do this? Is it sustainable?‘’ Design thinking is about focusing on solving customers' needs, but if it costs too much or takes too long to create, is it a smart business decision? Example A company is creating a new way for patients to receive their prescriptions, but the cost for the new system is prohibitive to the patients themselves, is the solution viable or, will the company have a lot of money and time in designing a new prescription program that only a handful of patients will be able to afford? Technical Feasibility Asks the question ''Will this idea work?'' Does your team or your company have the processes, resources, skills and tools to make this product or service feasible for your organization?  End of Session CLASSWORK 3: Discuss at least 3 companies that adapt technological innovation. Describe the opportunities and challenges of these innovations.