Workshop APG
Driving Performance through Entrepreneurial Growth: Combining Innovation and Control Prof.dr. Justin J.P. Jansen June 5, 2015
The IPod should have been a successful product of Sony.. WHY NOT?
..and why do airliners have difficulty responding to the Raynairs of today? Het Financieele Dagblad Ryanair en de spelregels VANDAAG DOET DE Europese Commissie een uitspraak over de kwestie van de steun die Ryanair heeft ontvangen van de luchthaven van Charleroi. De leiding van de Ierse luchtvaartmaatschappij vreest straf en voert bij voorbaat publiekelijk campagne tegen het besluit van de Commissie. Als we Ryanair mogen geloven, beraamt de Commissie een aanslag voor op
het 'business model' dat ten
grondslag ligt aan het succes van de prijsvechters. De vrije luchtvaartmarkt in Europa zou daarmee gevaar lopen. In werkelijkheid ligt de zaak precies andersom. De Europese Commissie neemt de vrije luchtvaart in bescherming tegen cowboys die de grenzen ervan opzoeken. Ryanair
behoort tot die cowboys. Net als veel andere prijsvechters hanteert de Ierse
met een homogene vloot, snelle omdraaitijden, elementaire dienstverlening en goedkope distributie via luchtvaartmaatschappij een uitgekiend 'business model'. Zij werkt
internet. Maar daarnaast heeft Ryanair het
sluiten van deals met ambitieuze regionale luchthavens tot een kunst verheven.
4
Ondernemen in Crisistijd | Prof. Dr. Justin Jansen
As never before, innovation
The product-life
is crucial for organizations…
cycle of products and services becomes shorter and
organizations tend to introduce new business
models
Dutch entrepreneurs have become
more optimistic about their future success..
45% of Dutch organizations expects growing revenues for the coming year. 35% of Dutch companies even expects to hire new people.
they have slowly changed their mindset from…
..moreover,
an exclusive
focus on
cost-cutting short-term results.. and
Still, the
longer-term focus on innovation and change.. ..to a
50%
50%
2013
2014
majority of Dutch firms remains to have a short-term orientation
..Yet, an entrepreneurial mindset is crucial for innovation and disruptive The impact of Entrepreneurship on growth.. the performance of organizations +75% New Products and Services
has doubled during the last year. +46% Business Model Innovation
It has become THE differentiator between winning and losing companies +34% Productivity
Source: Erasmus Entrepreneurship Index 2014
But largely absent at Dutch firms.. Accounting en administratieve dienstverlening Juridische dienstverlening
Groothandel
Industrie & mijnbouw
Zakelijke dienstverlening Onvoldoende Financiele dienstverlening
Voldoende Goed
High-tech
Creatieve Industrie
Life Sciences & Health
Agri & Food
Chemische industrie 0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Source: Erasmus Ondernemerschapsindex 2014
The Importance of Exploitation
10
..Its all about looking ahead..
..with a smile and ambition..
11
Exploration vs. Exploitation
Exploration Strategic initiatives emerging outside scope of current strategy
Exploitation Strategic initiatives within the scope of current strategy
Aimed at entering new product-markt domains
Aimed at extending current product-markt domains
Creating new options for future actions; dealing with emerging competitive forces
Creating incremental changes; dealing with existing competitive forces
Differentiation Advantage
Cost Advantage
Investing or divesting? 180 160 140 120
Still relevant in 2015!
100
Bedrijven die tijdens crisis vasthouden aan investeren en vernieuwen
80
Of the listed firms at the AMX and AEX
60
Reducing costs and improvement of productivity has About 75% has focused on led to improved financial results. But consolidation during 2000-2002 Bron: Mom & Jansen investments in innovation much more. About 25% invested in these Up to 35% bettertimes results! of crisis. Bedrijven die zich tijdens crisis richten op desinvesteren, snijden en consolideren
40 20
0
2000
2001
2002
2003
2004
2005
2006
Bron: Erasmus Ondernemerschapsindex 2014
What does that mean for a firm’s leadership?
Ambidexterity?>!*??
am·bi·dex·trous Pronunciation: \ˌam-bi-ˈdek-strəs\ Function: adjective Etymology: Late Latin ambidexter, from Latin ambi- + dexter right-hand — more at dexter Date: 1646 1 : using both hands with equal ease 2 : unusually skillful : versatile 3 : characterized by duplicity : double-dealing — am·bi·dex·trous·ly adverb
And what would you consider exploration and exploitation for APG?
Managing Ambidexterity: the Dutch Challenge…
Informatie & Communicatie Technologie
LEADERS
Exploration/ Innovation
CREATORS
Media & Entertainment Food & Agribusiness Business services Other Services Transport & Trade Construction
Pulp, Paper, Foods
Industry Chemicals Financial services
Energy (supplies)
LAGGARDS
REFINERS
Exploitation/Efficiency
Intrapreneurs versus Independent Entrepreneurs
Opportunities and Challenges
Which barriers do emerge for employees?
19
..don’t blame the manager!.. Vernieuwing van organisaties loopt spaak (Het Financieele Dagblad) Weerstand tegen verandering zit diep in veel organisaties. Ook verandermanagers zelf zijn somber over hun pogingen om de vernieuwingen door te voeren, zo blijkt uit het eerste Nationaal Onderzoek Verandermanagement. 'Het is onhandigheid.' Kort en goed: de innovatie komt in Nederland niet op gang. Niet door een tekort aan ideeen, maar door managers die niet in staat zijn om bedrijven te vernieuwen. Ze luisteren slecht naar medewerkers en zijn onduidelijk over wat ze willen. Wat ze zeggen te willen veranderen, doen ze niet. Daarmee voeden ze de weerstanden die heel veel organisaties vergiftigen. In het eerste Nationaal Onderzoek Verandermanagement, dat deze week aan VNO-NCW-voorzitter Jacques Schraven werd overhandigd, geven tweeduizend ondervraagde managers en professionals zichzelf over de hele linie een onvoldoende. Ideeen en vondsten genoeg, daar ligt het niet aan. Het probleem zit in het management, aldus Mastenbroek. Een gebrekkig aanpassingsvermogen, onvoldoende deling van kennis, slome aansturing, trage absorptie, eindeloze weerstanden en veel onnodige rompslomp. Managers zijn niet in staat om de aanwezige creativiteit te vermarkten. Het veranderpotentieel van Nederlandse bedrijven schiet tekort. De hoogleraar vond twee grote blokkades waarop veranderingen vastlopen. Allereerst maakt de top van de organisatie niet duidelijk wat er beter moet. Daarbij komt dat verschillende bedrijfsonderdelen niet leren van elkaar. Ten tweede staan medewerkers in de organisatie al snel met de hakken in het zand.
Spreek de managers daar niet op aan. Die wijzen meteen met het vingertje naar andere managers. De uitvoerenden vinden dat de top geen visie heeft en dat het middenkader niets leert. Het middenkader vindt de top onduidelijk en verwijt uitvoerenden structurele weerstand. En het topmanagement vindt weer dat het middenmanagement de visie en beleid niet over weet te brengen.
Balancing Exploration and Exploitation is VERY challenging…
1
Organizations tend to accentuate the status quo and are pre-occupied with smoothening existing processes
Balancing Exploration and Exploitation is VERY challenging
2
Exploratory initiatives are essentially risky, unproven and generally lack hard data
Balancing Exploration and Exploitation is VERY challenging …
3
Organizational Ambidexterity creates paradoxical challenges within established organizations
But who says incumbents can’t renew and survive over time… Organizations that host entrepreneurial and exploratory activities alongside ongoing businesses – or ambidextrous
organizations - are associated with up to nine times higher performance levels
exploration
exploitation
But who says incumbents cannot renew over time?
DSM has transformed from a traditional chemical-based company to a specialist in Life Sciences and Materials Science. “..Innovation and Entrepreneurship are key elements of our strategy. They are the driving forces behind further growth and implementing sustainable changes in our organization..”
CoreCo en NewCo Which tendencies within organizations
may make the development of new business activities to be rather difficult?
26
Replication versus Isolation
Forgetting and Borrowing
Distinct but Linked! Business definition Competences Predictability 27
Establish links Favorable conditions Ongoing interactions
Wiki leaks meets Stephen Elop
“…….there is intense heat coming from our competitors, more rapidly than we ever expected. Apple disrupted the market by redefining the smartphone and attracting developers to a closed, but very powerful ecosystem.” 28
Wiki leaks meets Stephen Elop
“……They changed the game, and today, Apple owns the high-end range. Google has become a gravitational force, drawing much of the industry’s innovation to its core. …..”
29
And here you go, NOKIA is losing gravity in a fast-growing market
30
I am sorry ?!? Why doesn’t NOKIA lead the game?
“…We poured gasoline on our own burning platform. I believe we have lacked
accountability and leadership to align and direct the company through these disruptive times. We had a series of misses. We haven’t been
delivering innovation fast enough. We’re
not collaborating internally. Nokia, our platform is burning.”
31
I am sorry ?!? Why doesn’t NOKIA lead the game? “.. As of April 1, Nokia will have a new company structure, which features two distinct business units: Smart Devices and Mobile Phones. They will focus on Nokia's key business areas: high-end smartphones and mass-market mobile phones. Each unit
will have profit-and-loss responsibility and end-to-end accountability for the full consumer experience, including product development, product management and product marketing…”
2007 32
now
Meeting the challenge: strategic leadership in dual organizations
Leaders have to get their organization ‘there’
Meeting the challenge: senior executives face paradoxical demands
“To improve our teamwork and to have a shared goal, only three of four parachutes will open. So, let’s try to 34
overcome our difficulties and work together”
Fuelling existing organizations with new opportunities…
What are the roles you see regarding the generation of exploration and exploitation within your organization?
Top management? Middle management? Front-line management?
(Sociale) innovatie
Ready for action!?!
Philips in the highest gear..
“…Innovation is the core business of Philips. It is our ambition to become a winner through innovation. To reach this position, we are going to increase the investments in R&D. But maybe more important: we would like to make the investments in R&D
more effective..” 37
Philips in the highest gear..
“…Our employees should be empowered to feel responsible and to respond to changes rapidly. They should act like an entrepreneur within the context of Philips. With Accelerate, we would like to renew Philips and boost the innovative outcomes..” 38
Diversity is a precondition…
.. for an entrepreneurial spirit.. .. Long-term orientation .. Improvisation and multitasking .. More effective decision-making
A collective identity..
..is necessary to nurture collaboration between the old and the new..
An umbrella structure..
43
Locates exploration where necessary..
Low
Operational Relatedness
Special business units
Spin-off
Independent business units
Outsourcing New Product/ Business Department
High
Integrating exploration & exploitation
New Venture Division Alliance
High Low
Strategic importance 44
A high-performance work context..
..creates ambition and room for empowerment.. Performance Management
Social Support
Discipline
Trust
Performance Management without Social Support (and vice versa) leads Stretch Support to failure. Entrepreneurship needs an integrated approach to both
Entrepreneurial spirit and High Performance change!
High Country Club Context Social Support
Context
Average
Low Performance Context
Burnout Context
Low
Low
Performance Management
High
..Engage with Startups..
48
..to enhance disruptive growth.. Yes Corporate Venturing Participate in the success of external innovation and gain strategic insights into new markets
Equity involvement
Corporate Incubation High
Provide a viable path Performance to new products and markets Context for promising non-core innovations
Average
StartUp Program (insource) Low
Insource external innovation
Performance to stimulate and generate new opportunities for innovation Context and growth
StartUp Program (platform) Spur complementary external innovation in technologies and markets to push an existing corporate innovation
No
49
Inward
Direction of Innovation flow
Outward
50
Diversity
+ Identity + dual structure
+ HP Context
+ Getting connected
Building Leading firms (1) Understanding the exploration and exploitation balance frequency of change, slow vs. fast-cycle markets, and the firm’s resources and capabilities (2) Structuring and leading stability and change Grouping of exploratory and exploitative activities, balanced resource allocation, and visionary leadership (3) Reintroducing the middle-level manager Seizing, facilitating, and championing opportunities for growth and renewal
(4) Experimenting with novel approaches Engaging with startups to enhance corporate innovation and growth
52
Exercise: how to setup innovative projects within existing organizations
THANK YOU ~
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