MBA 6607 Corporate Entrepreneurship
MBA 6607 Corporate Entrepreneurship 6607
Popular in Corporate Entrepreneurship and Innovation
Popular in Business Administration
verified elite notetaker
One Day of Notes
verified elite notetaker
anthropology, evolution, sphr
verified elite notetaker
One Day of Notes
verified elite notetaker
One Day of Notes
verified elite notetaker
One Day of Notes
David B. Faulk College of Sport & Human Dynamics
verified elite notetaker
This 264 page Bundle was uploaded by Jose on Thursday October 2, 2014. The Bundle belongs to 6607 at University of San Francisco taught by Roger Chan in Spring2014. Since its upload, it has received 359 views. For similar materials see Corporate Entrepreneurship and Innovation in Business Administration at University of San Francisco.
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Date Created: 10/02/14
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tran5itnry p9 4th P 2 w y V u r T cuts on B13ck bird s IE diEfShip tall us F4mm Dw v r P v M Q ut s C 4 L A 39 2 L fquot L quotfh r A quot J u Ms E39 grquot quot M an o p pCD m W A 33 3r L E 2 rs 3 Ifa bT1S1I139E 5 project is 5111 V re do these pmje 13 go Elf sa1es channeIsA C F u 0s5 EQ1 3 739 D06 IPO 5 0 iaratVio STA1IF ORD GRADUATE SCHOOL OF BUSINESS CASE SM172 DATE 061908 INNOVATION AT HP THE ROLE OF THE INNOVATION PROGRAM OFFICE IPO INTRODUCTION The emphasis on pro table growth ran like a mantra from the executive suite at Hewlett Packard With his highly successful focus on operational efficiency HP s CEO Mark Hurd led a quiet transformation at the Silicon Valley stalwart However by 2008 having made several difficult organizational and structural changes HP faced a renewed challenge brought on by its success how to grow Specifically how could the company with over 104 billion in annual revenue grow by a rate acceptable to its management and investors How would it continue to find profitable growth opportunities This was not easy In order to satisfy its leaders and investors HP had to add incremental revenue equivalent to the total revenue of a Fortune 100 company every year Operational efficiency while necessary was not sufficient to achieve the scale of profitable growth HP was pursuing It needed innovation too Innovation had long held a special place at HP In particular HP Labs with its focus on long term research and development continued to be a richly creative place But executives at HP thought it would take nearerterm innovation either in areas adjacent to current products and services or in new products or services that were closer on the horizon to produce the kind of financial results that would give HP steady and massive growth To pursue these kinds of nearerterm innovations one business unit at HP created for itself a small group it called the Innovation Program Office IPO The concept of the IPO was to create a business grouplevel separately funded organization to explore and develop innovation opportunities in adjacencies of that business group or even in entirely new areas that could extend its strategic reach In mid 2008 the leadership of the IPO continued to examine the challenges facing the IPO and how it could best ensure that it met the growth needs of its Professor Robert A Burgelman and Philip E Meza prepared this case as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation Copyright 2008 by the Board of Trustees of the Leland Stanford Junior University All rights reserved To order copies or request permission to reproduce materials e mail the Case Writing Oj ce at cwogsbstanford edu or write Case Writing Ojfce Stanford Graduate School of Business 518 Memorial Way Stanford University Stanford CA 943055015 No part of this publication may be reproduced stored in a retrieval system used in a spreadsheet or transmitted in any form or by any means electronic mechanical photocopying recording or otherwise without the permission of the Stanford Graduate School of Business Innovation at HP The Role of the Innovation Program O ice SM172 p 2 business group In addition HP s top management had become interested in examining whether and how the IPO concept could perhaps be adopted more widely within the company THE IPO AT THE PERSONAL SYSTEMS GROUP The concept of the IPO was originated at HP in its Personal Systems Group PSG one of HP s seven business segments1 PSG was responsible for commercial and consumer PCs workstations handheld computing devices digital entertainment systems calculators and other products and services It was the secondhighest grossing business unit at HP Exhibit 1 Within PSG the IPO was led by Philip McKinney vice president and chief technology officer of PSG McKinney had come to HP in September 2002 and moved to PSG in November 2005 The IPO was launched in March 2006 Prior to joining PSG McKinney had been vice president and chief technology officer for the network and service provider business at HP Before joining HP he held a variety of positions including senior vice president and founding chief information officer for Teligent a global provider of fixedwireless services and had been the senior executive responsible for the communication industry consulting practice at consulting firm Computer Sciences Corporation Within PSG McKinney was responsible for the group s long range technical strategy as well as research and development He was also the general manager of the group s gaming business unit As vice president and chief technology officer CTO of PSG McKinney reported to Todd Bradley executive vice president of PSG McKinney discussed how the IPO group was initiated within PSG In late 2005 Todd Bradley and I were both new PSG We were looking at our then current product roadmaps and noticed that over 95 percent of our RampD budget was spent on PSG s core products Less than 5 percent of our RampD budget was directed to developing products or services that were adjacent to current offerings or represented fundamentally new potential growth engines 2 Bradley and McKinney felt this left a gap for PSG McKinney explained It is hard for large RampD organizations to eat their own young that is create disruptive businesses that attack the current businesses Bradley and McKinney established the IPO in PSG with the intention of changing how innovation and hence growth was pursued in that business group McKinney said We put together the IPO to be operated by a separately funded organization to focus on adj acencies and fundamentally new areas In addition we set out to change the RampD budgeting strategy Instead of spending over 95 percent of our RampD budget on funding core products we wanted to shift the funding to ensure proper funding of the core while increasing the funding for innovations in adjacencies and new areas Back in late 2005 our goal was by the 1 HP described itself as being organized into seven business segments Enterprise Storage and Servers ESS HP Services HPS HP Software Personal Systems Group PSG Imaging and Printing Group IPG HP Financial Services HPFS and Corporate Investments The seventh business segment was Technology Services Group TSG an umbrella group that included ESS HPS and HP Software Source HP l0k 2007 pp 142143 2 All quotes from Philip McKinney are from the authors interview on January 15 2008 unless otherwise cited Subsequent quotes from the January 15 2008 interview will not be cited Innovation at HP The Role of the Innovation Program O ice SM172 p 3 end of our scal year 2008 to shift to a 702010 model where 70 percent of RampD funding within PSG went to the core 20 percent went to adjacencies and 10 percent was targeted to new growth engines We hoped by making an explicit focus on adjacencies and potential new growth areas this would give RampD teams in PSG the impetus to create new businesses By early 2008 PSG was on track to achieve this goal Between March 2006 when the IPO was officially announced and early 2008 PSG s IPO had 26 projects underway The first project to graduate from the IPO was the Blackbird PC a stylishly designed high performance PC optimized for gaming With the development of HP s homegrown Blackbird and its acquisition of a small Canadian gaming specialty PC maker called Voodoo in September 2006 gaming had become a separate segment within PSG McKinney recalled how Blackbird came about In October 2005 soon after I joined PSG Todd Bradley and I were ying down to San Diego to perform due diligence on a possible acquisition I had asked an engineer Tom Szolyga and a marketing manager Paul Campbell to accompany us on the visit While waiting for our ight I introduced myself to Tom and asked him what he was working on that excited him the most After some hesitation Tom described a secret project he was working on a brand new motherboard with screaming performance Tom described the specs to me and I said The only people who are going to buy that are gamers Tom said Exactly In the course of a 30 minute conversation we discussed the idea When we got on the jet I pitched Tom s idea to Todd By the time we landed in San Diego Todd gave us 10 headcount and 1 million That s how our gaming business got started The Importance of a Champion McKinney believed that a critical element of success for any project undertaken by the IPO was the champion McKinney said Successful projects have a champion this person will stand on my desk with their hair on fire and be as annoying as they need to be to fight corporate inertia to move fast and to create and deliver the project You cannot artificially create a champion you cannot hire somebody to champion a project For these people it is more of a calling rather than job In the case of Blackbird Tom Szolyga was clearly the project s first champion Project originators were often their initial champions But Szolyga was not the only Blackbird champion McKinney said When we started Blackbird we had the resources to build high performance computers but we were missing an understanding of market subtleties because we had not been really serving the highend gaming segment So we acquired Voodoo and Innovation at HP The Role of the Innovation Program O ice SM172 p 4 incorporated it directly into the IPO Voodoo s founder Rahul Sood stayed with HP becoming the chief technologist for the gaming business and helping to champion Blackbird and gaming In addition HP industrial designer Mark Solomon also became a Blackbird champion obsessing over the look of the machine McKinney said Give me passion ie a champion and I can add a management team engineering team and business executive around that Linking to the Company Project champions were not necessarily or indeed usually highly placed in the company Nor did they usually have wideranging connections in the rm Champions acted as catalysts to innovation but sustaining the development of a project required a different kind of leadership than a champion could provide McKinney stressed that Champion does not equal leader We make that clear up front to the champion In the case of Blackbird McKinney said Tom Szolyga went on to become a product architect in the gaming business his dream job where he can indulge his passion for building highperformance products As mentioned above managing projects often requires skills different from those of the project s initial champion In the case of Blackbird and the subsequent gaming unit that was created by Blackbird and Voodoo HP s gaming acquisition there were different leaders at different stages McKinney said We bring in the leadership we need as we need it We take leaders from the core business and put them into the new business Blackbird initial RampD leader Gene Becker came out of HP Labs We needed Becker because he was able to drive the Blackbird roadmap and make linkages to the larger HP Next we incorporated Bill Norris who used to run operations for PSG s consumer PC business to run operations for the subsequent gaming business Mike Perkins who had been vice president of RampD for consumer PCs became the vice president and general manager of the gaming business unit These are career growth opportunities for these executives and because they come from within HP and have established informal networks they have linkages to the broader company that help the new group to survive and grow These executives know how to plug into the operations side of HP they know how we work with ODMs original device manufacturers and our supply chains But there was a balance to achieve in introducing established players into the nascent projects McKinney said You don t want to bring the linkages too early because you can crush the business But if you bring them in too late you waste resources duplicating things McKinney surmised Blackbird is not going to be a billiondollar business but Blackbird with a roadmap and followon project can be a billiondollar business To reach its potential Blackbird and indeed any successful IPO project would need to find or create a home within HP Innovation at HP The Role of the Innovation Program O ice SM172 p 5 Finding Homes for Businesses The Emerging Business Unit As Blackbird and its adopted sibling Voodoo continued to grow as with all successful IPO projects the question of where to put them in the HP organization eventually had to be faced McKinney said Gaming is now getting ready to graduate where does it go It can t stay in IPO We grow a business to the point where it is able to resist the HP elephant the aspects of a large company inimical to startups while making sure it can plug in to take advantage of the bene ts offered by big HP such as the economies of scale that a large company can offer The IPO can develop programs up to a certain level When they are ready to scale they need to go somewhere else McKinney said Our traditional product groups have massive engines For example our notebook business earns half of PSG s revenue and has been growing at 30 percent quarter over quarter Such an environment might not be suitable for a recent IPO graduate For those projects Bradley and McKinney created a new business group the Emerging Business Unit EBU in November 2007 McKinney said Businesses in the EBU have different sales channels and requirements HP put its gaming business in EBU along with the company s Managed Home and Handheld businesses3 There was a pathway for businesses to outgrow the EBU McKinney said When businesses start to earn more than 500 million to 1 billion in annual revenue they become big enough to develop their own sales channels and can consider becoming their own global business unit GBU HAVE I GOT AN IDEA FOR YOU GETTING INTO AND THROUGH THE IPO GROUP The IPO considered a wide variety of business ideas from a variety of sources It would look at products or services in any region it would look at supply chain enhancements or just about anything it considered worth pursuing according to its established criteria The IPO received an annual budget that McKinney directed It was these funds that supported the various IPO projects In some respects the IPO at least at its front end was like a suggestion box on steroids The group s standing staff of seven people received ideas from employees and people outside the company Individuals could submit their ideas through an internal HP website called Idea Central or via email McKinney reported that the IPO received around 1000 idea submissions per year Getting into the IPO Each person who submits an idea gets clear feedback on the idea The IPO committed to giving a response and feedback in less than 30 days after submission and typically did so within two weeks McKinney said We do not ask people to submit full business cases Often the 3 Managed home focused on consumer entertainment products and the handheld group was responsible for small digital devices Innovation at HP The Role of the Innovation Program O ice SM172 p 6 traditional kind of data or market analysis does not exist for the ideas we are seeking If you are quoting from a research report you are already too late Instead the IPO team evaluated ideas according to ve key questions and felt the answer needed to be yes to at least one of the first three 1 Does the idea fundamentally change the customer expectation or experience 2 Does this idea change the fundamental competitive landscape Be number 1 or 2 in a segment 3 Does this fundamentally change the economics of the industry We don t want to create a metoo product If evaluators felt that they could answer yes to at least one of the three questions above they next looked to give positive answers to each of the following two questions 4 Does HP have a contribution to make with its assets 5 Is this going to generate sufficient margin McKinney said The answers are not usually clear but we try to scale them If necessary we have teams to work with the person who submitted the idea to help them quantify the idea If we are interested in an idea we ll have one of our managers spend time working with the submitter to make the idea better We bring in experts like HP technology expert Paul Martin or HP experience designer Mickie Calkins to work with the person to develop the vision Indeed the IPO used two different teams working in tandem one team tasked with developing and qualifying ideas into IPO and the other focused on pushing IPO projects forward McKinney said It can take weeks to months to qualify an idea that interests us Once an idea is qualified and accepted by the IPO it faces a new set of hurdles Getting Through the IPO It was a small team indeed seven fulltime executives and a halftime resource here and there that operated the IPO McKinney placed his trust in seasoned executives that he hand picked These included Christian Pape operations manager for the IPO who had 19 years of experience at HP Steve Balsiger project manager for the IPO who also had 19 years of experience with the company and Mickie Calkins senior producer for experience design who had 21 years experience with HP Each of these executives relied heavily on their deep knowledge of the company and their personal networks of friends and contacts within HP and elsewhere to help them develop and evaluate the projects under their care Christian Pape described his role on the IPO Working with Phil McKinney is a constant ballet Phil comes up with an idea and I figure out how to make it happen 4 This usually meant tuming to Steve Balsiger Pape said Steve manages the ideas coming in and manages the 4 All quotes from Christian Pape are from the authors interview on February 8 2008 Subsequent quotes from this interview will not be cited Innovation at HP The Role of the Innovation Program O ice SM172 p 7 schedule of idea reviews see the description of gate review below He is the spear tip for managing daytoday input of ideas To do so Balsiger worked closely with the content owners Pape Balsiger and Calkins were horizontal resources who touched each project in some way The IPO team included three vertical resources usually performing a program management role executives who were assigned to individual projects that the IPO was sponsoring To fill the vertical positions Pape said We made a point of finding executives with diverse experiences One has a background in marketing the other has hardware engineering expertise and the third has software engineering expertise These three managers bring their experiences to our roundtable discussions of the ideas Another important executive resource on the IPO team was Mickie Calkins mentioned above the team s advocate for the customer experience that ultimately emerged from each project in the pipeline She was passionate about user design and was usually involved in at least the beginning stages of each project Calkins said The tasks of my job can be pretty nittygritty I usually come in at the beginning when we are trying to figure out exactly what the experience is that the product is trying to offer I make sure very early on that the team interacts with real live users If you do not design with real people in mind you will have a disaster 5 Calkins who had two stints at HP having worked for startups for a few years began her career at the company in 1984 Earlier in her career at HP Calkins had known and interacted with HP s founders William Hewlett and David Packard Calkins said the closeknit design process that the IPO used was a lot like old school HP under Bill and Dave and the next bench process we used to use where you build to the guy at the design bench next to you which gives a very intimate relationship in design Calkins described her role on the Blackbird highend gaming project that started in the IPO and graduated in 2007 My role was to help the designers get in tune with who serious gamers really are While the team did secondary research to explore the gaming segment I started to seek out and meet gamers to leam about the gaming world I leamed gamers are everywhere but often quiet about it Since heavy gamers often shy away from mainstream gaming sites they are difficult to reach and to communicate with To better reach a crosssection of gamers we decided to form a stealth council of gamers I put out the message to gamers I knew to spread the word Participation in the council would be voluntary but it offered an opportunity to in uence a product that is going to market I had around 150 people respond to my message I interviewed each on the phone and narrowed down the list I then visited each final candidate in their homes to corroborate that they were as they said they were 5 All quotes from Mickie Calkins are from the authors interview on April 3 2008 Subsequent quotes from this interview will not be cited Innovation at HP The Role of the Innovation Program O ice SM172 p 8 We assembled a council of 12 that represented different personality and gaming types During the design phase of Blackbird the council would meet once a month for dinner where we would look at whatever the design team had created It was very intimate and produced excruciatingly honest feedback For the price of dinner we got great feedback from 12 different angles on gaming life The feedback became more trusted I saw designers really open up making themselves more vulnerable and asking for deeper more rooted questions This led to innovations in the product like the sideways slot load disk drive lighting inside the case and others Calkins stayed involved with a given IPO project as long as she was needed and then moved on to other projects This required a balance of personal investment in projects Calkins said In the IPO group we have a propensity to kill projects quickly We have developed the ability to drop projects and move on fast and not moum for cancelled projects But while a project was still alive Calkins and the other managers fiercely advocated their points of view Calkins said Sometimes a project will make it late in the process where it is perfectly functional but in my opinion does not yet offer what I think is a good enough customer experience I will put my foot down and say this is not ready The program manager might disagree In such cases we agree to disagree and take the problem to Phil McKinney or Todd Bradley to decide Since both Phil and Todd are steeped in the customers experience and committed to doing the right thing for the customer release date will take a back seat to customer experience The operational aspects of the IPO differed from some of those used elsewhere in HP Pape said There is the expectation that we will push the envelope But a large organization such as HP needs predictability and efficiencies For example HP has lists of approved vendors By de nition what we are doing usually requires that we go outside of approved processes such as using already approved vendors for things We bump up against these kinds of issues constantly It often becomes a risk management exercise When we run into walls we take the problem to senior leaders We have cultivated an informal network of senior executives who help us Typically we will work through Phil when accessing this network They back us and see that it gets done Balsiger added Our Human Resources HR department has been very helpful Sometimes we can t use the standard HR mechanism We have to stretch HR quite a bit 6 Interestingly Pape said There has not been any backlash Sometimes I wonder if I am stepping on toes hard enough Most of us in the IPO are experienced enough to know the boundaries and be diplomatic and operate within HP s culture Pape elaborated on the lPO s processes We consider 200 qualified ideas per year out of the 1000 raw ideas that are submitted Ninety ve percent of these ideas are processed within four weeks which is to say that the person who submitted the idea will hear back from us 6 All quotes from Steve Balsiger are from the authors interview on February 8 2008 Subsequent quotes will not be cited Innovation at HP The Role of the Innovation Program O ice SM172 p 9 regarding our preliminary evaluation and whether we will pursue the idea further within a month of submitting it We have a venture capitaltype mentality we can t take on too many ideas We try to kill 99 percent of our ideas We only expect 1 percent of our ideas to reach the nish line We want to rapidly get to decision points In the mechanism we use IPO funds the program champion s time by paying the person s salary But the person continues to belong to the organization he or she came from This can be a problem because there is a high correlation between these people and high performers that is to say program champions tend to be stars in their departments and what manager is excited to lose one of their high performers to an IPO project The manager has to wear the big HP hat and see that it is best for the company and for the good of the employee too Asked if he thought there was a natural size limit to the IPO group Pape said People gravitate to adding more people to solve more problems In my view being small keeps us honest We have to apply our limited resources to only those ideas we think are most promising If we had more resources these hurdles might be a little lower The small IPO team looked like it would refresh itself frequently too Mickie Calkins said We are structured so most of the positions in the IPO are somewhat transitory We already have had one individual move on to the gaming group Luckily Phil McKinney believes that successful people follow their passion and he endorses and encourages his team to be successful in this way even if it means he must refresh his own team A key hallmark of the IPO group is that its members are not reluctant to discontinue projects they start McKinney said We are not afraid to kill projects We have the same bonus structure for teams that are successful and those that fail so a team that puts its heart and soul into a project that gets discontinued does not lose compensation and is recognized for taking the risk The IPO established objective criteria or gates that each project must successfully enter to move forward through development a process that usually lasted 12 to 18 months if the project did not get killed along the way McKinney described the four gates Gate lCustomer Validation Perform market validation and develop initial feedback7 Gate 2Deep Customer Validation Here we will develop a prototype observe it in hands of customers Gate 3Limited Launch Introduce the product into one region or one market outside of the normal HP processes Gate 4 Go At this gate we blast the product around the world8 7 This generally cost on the order of tens of thousands of dollars 8 Spending to market and distribute the product in this launch could cost tens of millions of dollars Innovation at HP The Role of the Innovation Program O ice SM1 72 p 10 It was a fastpaced process McKinney said A generation in the kinds of businesses that PSG operates is about 24 months If an idea takes longer than that to develop I want HP Labs to work on it on my behalf 9 Interestingly there was a kind of limbo that McKinney was still trying to sort out In the market validation gate we might say no or no not right now We are still working out how to freeze projects You don t want to under invest and miss the market But you don t want to overinvest too By early 2008 IPO had 26 projects underway It graduated its first project Blackbird in September 2007 In 2008 and beyond the IPO wanted to graduate two programs per year McKinney said Our biggest challenge is keeping the development funnel filled In order to graduate two projects per year we need 200 qualified ideas each year which roughly works out to be one quali ed idea each business day 10 Working with Others at HP Initially there was resistance to the IPO concept at PSG McKinney said Some executives viewed the IPO idea as a distraction and thought that the money could be better used developing more core products McKinney had to be cautious in setting up the IPO We needed to be non threatening to the established businesses and we needed to be on a path to getting clear wins Our objectives were ideas in areas that the established businesses were not pursuing McKinney also needed the support of his boss Todd Bradley McKinney said Just as I am a sponsor to some the champion needs to get sponsorship from above I came to PSG due to Todd Bradley He gets it and is a product guy through and through He s willing to go to the mat According to McKinney the idea of the IPO seemed to be catching on at HP The group was co funding efforts with established business groups and transferring ideas that successfully made it through the first two gates to established business units which wanted them and seemed well suited to develop them McKinney said More and more ideas are coming from global business units themselves Any fear that product groups might have had about drastically changing their businesses is going away Indeed HP was introducing IPO groups to other business units beyond PSG deploying a common set of tools developed by the initial IPO 9 Interestingly McKinney reports that the development timeline for other HP business groups can be much longer For example there is a kind of Moore s Law equivalent for print head technology but there performance doubles and costs halve over an 8year period instead of the roughly 18month cadence that Moore s Law predicts for semiconductors 10 NB By the middle of 2008 the IPO graduated three additional projects Voodoo Envy 133 DreamColor Display and Mobile Thin Client Innovation at HP The Role of the Innovation Program O ice SM172 p 11 THE LEADERSHIP OF HP S PERSONAL SYSTEMS GROUP While Philip McKinney ran the daytoday operations of the IPO in addition to his role as PSG s CTO PSG itself was run by Todd Bradley as mentioned above the executive vice president for the Personal Systems Group Outwardly the two executives were quite different from each other McKinney was an innovation and technology evangelist who had established and run companies prior to joining HP Bradley the former chief executive of palmOne seemed primarily interested in what technology could do to help HP s clients and thus drive more sales This was perhaps natural since Bradley was also in charge of sales and marketing for both commercial and direct sales channels When Bradley arrived at HP to lead PSG in 2005 the group had tumed in unimpressive results for a couple of years Describing the situation at PSG at that time Bradley recalled I was certain there was a gotomarket problem and I was certain there was an innovation problem 11 For Bradley the IPO was a means for generating efficient innovation Bradley said We set up the IPO to do three very speci c things One we wanted to focus on innovation that matters to our customers and our products Two we wanted to create a funnel to provide structure around the innovation that was going on all over the place at PSG It seemed like everybody and their dog was working on something and the IPO helped make this more efficient Three we wanted to create a process that engaged with HP Labs so they could help us develop what we need or enable PSG to help HP Labs commercialize what they already have Bradley was proud that PSG had been able to launch the IPO while also working to improve the group s overall performance Bradley said When we started the IPO PSG was breakeven or making just a little money Last quarter we reported 55 percent operating profits So we re investing time and money in the future while we deliver results each quarter Asked if the IPO mechanism could be transplanted to other groups at HP Bradley said It can easily be replicated someplace else at HP He continued It requires leadership and a willingness to take risks and spend money and just as important a vision about what you want the industry to be like The vision that Bradley and McKinney had for PSG was to move the group deeper into entertainment Bradley explained In the past our biggest customers had been financial institutions that paid for the fastest processing power the highest resolution displays to handle their needs around instantaneous analytics and decision support tools The IT industry overall had been directed toward that sector s needs We see a shift though Over the next five years I expect our biggest customers will be related to the media and entertainment industry Solving the technical challenges of creating storing and delivering rich digital media 11 All quotes from Todd Bradley are from the authors interview on May 28 2008 Subsequent quotes from this interview will not be cited Innovation at HP The Role of the Innovation Program O ice SM172 p 12 sets a new performance bar At the consumer end this space forces us to tackle challenges related to user interaction and the overall experience customers have with our devices and the content they want to access The IPO supported this shift in focus Bradley said An IPO product that recently launched was a display using HP s DreamColor technology Our new DreamColor display delivers accurate and consistent color for the highest visual fidelity on the planet It was created specifically for digital animation studios who need this accuracy and consistency when collaborating on feature animation films We ve expanded the available color pallet from 16 million to over a billion And we re able to deliver this for about l4th the cost of a comparable professional studio solution on the market today The product took only 16 months to develop In contrast to the Blackbird gaming PC which was driven entirely within PSG the DreamColor display was a part of an HPwide suite of color technologies many of which reside in HP s highly successful Imaging and Printing Group For all of the interesting products and services percolating in the IPO Bradley and McKinney maintained a relentless focus on the bottom line Asked how he measures the success of the IPO and innovation in general at PSG Bradley said One way continuing profitable growth I don t use metrics around adoption of products or failure of products Managers are not compensated on any innovationspecific metrics We compensate managers on cash ow and profitable growth I do not want people fixating on something very specific because they are compensated on it I want them focusing on the whole picture of our performance That way we are focused on innovation that matters to customers We try to stay focused on how it is going to impact customer and why they are going to care about it CONCLUSION The initial products to graduate from the IPO seemed to be on the way to success The leadership of PSG was pleased with the IPO s performance Nevertheless they were asking themselves how to institutionalize the IPO in PSG for the long run especially for the time that the current leadership might move on to other responsibilities Also for the concept to have real impact at HP it would have to scale and replicated by other business groups in the company HP top management wondered whether it was worth trying Was the IPO concept something that other groups at HP which had longer records of strong performance should consider And if so what would be the keys to doing this successfully Innovation at HP The Role ofthe Innovation Program Office SM172 p 13 Exhibit 1 HP Selected Financial Information HP Income Statement 20052007 2007 2006 2005 Net revenue Cost of sales Gross profit Research and development Selling general and administrative Amortization of purchased intangible assets Inprocess research and development charges Restructuring charges Pension curtailments and pension settlements ne Earnings from operations Interest and other net Gains losses on investments Earnings before taxes Provision for taxes Net earnings Source Company reports In millions 104286 78887 25399 3611 12226 783 190 387 517 8719 444 14 9177 1913 7264 In millions 91658 69427 22231 3591 11266 604 52 158 6560 606 25 7191 993 6198 In millions 86696 66440 20256 3490 11184 622 2 1684 199 3473 83 13 3543 1145 2398 Innovation at HP The Role of the Innovation Program O ice SM1 72 Exhibit 1 continued HP Selected Financial Information HP Revenue Data by Business Segment USD in millions Technology Solutions Group Enterprise Storage and Servers HP Services HP Software Technology Solutions Group Total Personal Systems Group Imaging and Printing Group HP Financial Services Corporate Investments Total segments Source Company Reports 2007 18769 16646 2325 37740 2006 17308 15617 1301 34226 p 14 2005 16717 15536 1061 33314 36409 28465 2336 762 29166 26786 2078 566 26741 25155 2102 523 105712 92822 87835 35 c Corporate Entrepreneurship and Innovation Introduction and Practices o Definition Program a group of projects to achieve some intention o Definition of Corporate Entrepreneurship The process by which teams within an established firm conceive foster launch and manage a new business that is distinctive but leverage the company39s current assets markets and capabm es o Balancing Today and Future I Three Horizons of Business o xaxis Timeyears yaxis Growth Potential 0 Horizon 1 o Extend and defend core business Adult business Set projects used to pay employees 0 Horizon 2 o Building emerging businesses Teen business Young unknown future 0 Horizon 3 o Create viable options Kindergarden business Seed idea I Three Horizon Example 0 Village Roadshow o Late 1980s To become an international film and entertainment company I H1 Australian cinemas Australian movie distribution I H2 Multiplex cinemas Thema parks I H3 Cinemas in Asia TVmovie production Radio Music o Mid 1990s To become the biggest cinema operator and one of the most notable entertainment and leisure companies in the world by 2000 I H1 Theme parks Cinemas in Australia and New Zealand Movie distribution I H2 Australian multiplex cinemas International expansion of multiplex cinemas TVmovie production Radio Music I H3 Entertainment centers Retail stores Entertainment software International movie distribution International radio I n I i l 39 Healthy A e393939 x Unhealthy Horizons 1 2 3 0 Under siege 3 1 A x F1 6 M j fo 39 Losing the right y 01 SHlquotmzg is 5 to gmwTnAu39nL x V quot pm 2 4 501 Running x 3 out of steam Inventing a 3 I 8 new future 3 x I Generating ideas but qt 3 not new businesses H Failing to seed I is X for the future 0 Difference Between Existing and Emerging Business I Differences o Well understood customers amp products vs UncertainUnknown markets amp offerings Quantitativefinancial data vs little meaningful data Discipline efficiency vs free trial exploration Measures profit amp margin growth vs revenue growth amp marketsegment share gains Short term profits vs long term uncertainty Core beats EM unless leadership has an innovation goal People Critical gt Organizational Critical Active change gt Controlled change Ambiguity gt Certainty Many trialslow expenses gt One planhigh capital expenses Many failures gt One opportunity for success Arguments gt Consensus 0 Challenges of Exploring New Biz in Established Companies I Challenges o Existing biz dominating if resource constraints skillknowledge conflicts o RR Donnelly printing firm 0 Existing sales Long term contract customers sales manager Personal relationship per page based pricing model Digital printing solution senior executives 0 Not willing to share leads or customer knowledge with digital dept o If meeting their goals can not balm them o Xerox mouse spreadsheet PDF etc o realized competitors can also make copy machines for a cheaperpnce o IBM canceled high growth potential projects in biotechnology and life sciences 1999 sold opticallaser equipment low support from Microelectronics div o IBM Survey 2000 o Reasons for cancelling emerging biz projects I Rewards execution on shortterm I Preoccupied with current markets existing o enngs I Biz model emphasize sustained profits and earnings per share improvement driven by reducing ExpenseRevenue ratio I Lack of disciplines of selecting experimenting funding terminating new projects eg how to manage mind share shaping mkt evolution I Lack of leaders and people to develop new ventures I Incentives at Business Units o Pressures for short term results not for long term o Little data Can t know if an emerging market is or is not developing o Need different managements systems o Budget Long term vs Uncertainty uncontrollable frequent changes o Talents capabilities Strategy innovation risk taking and adaptable o Case Diversified Industries Key Biz key commodity components and deliver to large businesses June 99 formed Breakthrough Innovation Group BIG Head George Madison five full time staff Mission producing a potential next big thing contributing breakthrough innova on Internal Ventures Program IVP o Processresources support to innovators formulate develop evaluable ideas THe aim of projects in the IVP was to exploit known technologies for commercial gain in new markets or new applications Innovation Lab Workshop ILVV o Generate new novel business or technical ideas that would be the source of new RampD projects Advanced Technology program o Develop novel technologies that could create future opportunities for the company I External Scan program o Volunteers monitored key technology developments that were emerging outside the firm and considered ways those technologies could either disrupt the company s competitive advantage or provide opportunities for leaps fonvard I Idea finders group o Shared ideas trends and contracts Identified discontinuities and suggested new focus areas for proposal generation 0 Questions on Diversified Case from reading I Reading Grabbing Lighting p43 3rd para If an IVP proposal 0 c was a strategic fit with business units and one of them deemed it interesting it would be developed through the business unit s funds with the goal of eventually moving from the Breakthrough Innovation Group to the unit that sponsored it I Did IVP receive a lot of support and resources for their IVP innovation projects o Given very little funding IVP had little supportresources to support their incubation of new venture projects I Did people who lead the projects have business experience How do they work with IVP managers business oriented o No they re from RampD projects People who lead new venture projects had very little biz experience I Reading Grabbing Lighting Once the program was initiated C p44 to p44 1st para o results did not meet expectations I Were people in business units interested in working on BIG IVP s projects Why p44 2nd para o No Projects failure is high Prefer to work on BU projects success rate is higher Not viewed as a path to promotion There was greater reward for working on business units projects rather than breakthrough projects I P44 last paragraph what was Paul James VP of technoogy s criteria for new innovation projects and its impact on Madison head of BIG vision for BIG o Wanted BIG to work on current projects to improve them o More conservative and wanted incremental changes o Madison working for the next big thing o Paul James39s vision operational excellence process improvement model Different from BIG heads vision of building next big thing I P45 4th 5th para 1st para on page 46 o The five members of the Breakthrough Innovation Group began to drift apart I P45 3rd para What happened in 2003 to core biz to structure and to BG s budget Note BG s budgets 55m 2001 42m 2002 o Core biz decline o BIG was combined with strategic planning new group Strategy and Innovation Group o BIG Budget 25 million out of the 100 million RampD budget I What happened to Paul James VP of Technology in Von of 2003 What happened to the function of BIG and the five people at BIG now Strategy Innovation Group SIG o James was replaced o Add a think tank future scenario to SIG o Think tank cannot replace innovation o No Increase budget or staff to help coach nascent business teams o Key people left I Discussion o Key observations of the story P46 3rd paragraph c Issues Involved o No talent to develop new biz o Mismatch between Breakthrough Innovation Group s set up and its mission I No resources to develop idea only do discovery I Can not hire outside experience people Limited BU support People not motivated to join Different view on the missions of BIG I Among senior leaders CEO amp CTO I CTO and BIG leaders I Within BIG Challenges in Core Biz Challenges of senior leaders Change of homes and responsibilities of BIG Changes of people within BIG I Corporate Innovation Assessment o Grabbing Lighting p4850 OOOO 320 Theme Managing Innovation Center incubator Topic Operation of Innovation new venture incubator o Four Corporate Venture Models o Organization Ownership I Who within the firm has primary ownership responsibilitiesaccountabilities of the creation of new business I Focused Centralized eg corporate level I Diffused Decentralized eg at BUs o Resource Authority I Regularplanned funding for innovation I Dedicated part of regular budget I Ad Hoc invest if having good projects and money not part of budgeting process Incubation Locations Corp perspective Resources Dedicated Resources Enabler Producer Ad Hoc Resources Opportumsts voca or 39 Ad t Org T Owners Di used Centra11zed O o Opportunist Model I No planned owners and dedicated resources I Project o Project Leaders passionate champions mavericks personal connectionsinfluences key o Adjacencies I BUEMP c Having people who want to and are able to innovate I Corporation o Top leaders open minded willing to support new projects to allowmanage exceptions out of system projects o Culture tolerant at the top if not everyone trusting innovation o Responsive passive at top o Enabler Model I Project Google o First 20 free time o 2nd Product Council decides not key on how to leverage Google cap o 3rd Google Product Strategy Forum plays more active role how to leverage Google core more important gt Enabler model rore p102 3rd para I Corporate Google o Everyone o Culture support ubiquitous innovations notjust top leaders tolerant innova on o System enables ubiquitous innovation Google Product Strategy forum support p102 absgoogecom to project s own page VP coordinate speacial committe etc p103 2nd para a Financial rewards I Project Whirlpool o Marketsareas of focus existing white goods not white space o Early stage send money more diffused mid stage IBoards more centralized p106 Book Growth from within I BU Whirlpool o BU money to support new concept development c Pressure BU complete for corporate innovation money to support new ideas if not use the corporate fund be reduced Book Grow from within p106 I Corporate Whirlpool o Fixed corporate budget to BU o Developing lnnov Culture Training developing people amp top executives involvement o Clear criteria for project selections strategy clarity I Project o Early Small scale o Late big stage changes funding sources o Adjacencies empBUs innovation relates to what they do I BUEMP o Motivate to innovate reward pressure o Ability to innovative o Resources BU separate money or 20 of time o People be able to innovate o Diversity BUs are different from each other difficult to do centralized I Corporation No centralized unit to incubate new biz opportunistic model Ubiquitous bottom up Dedicated fundcentral unit supporting System sustaining ubiquitous innovation activities different from opportunistic model Culture o Clear strategic focus guidance o Advocate Model DuPont I Corporate Incubator MarketDrive Innovation MDI initiativesmethod work with BUs Step1 Strategic Framing mission growth domain funding criteria for opportunities where to play under what conditions Step2 Develop amp Surface Ideas 46 weeks biz plan Step3 Concept validation 180day contract discoverydriven planning Business units participation in MDI initiatives Not forced see the value to participate Pay their own money to participate o Advocater Model Project Adjacent to core goals high autonomy Willing and capable of innovation Healthy performance limited power limited budget Sharing innovation expertscapabilities Evangelists Work with BUs in innovation Stay with existing biz portfolio BU drives growth agenda o Producer Model Cisco EMTG With funding New Space Consumer market Stage by stage to incubate new biz stage change dif people passion tech market then operation people Incubate new biz longer than advocater DuPont s MDI MDI advocater works with BUs and EMTG does it alone o Producer Model Project White space Nascent market opportunities Needs longer incubationprotection separate form core biz BU Core is not growing Even for adjacencies can help when BU is small or has low cap resourcesmotivation for new biz project Corporate High involvement Vulnerable when corp is not doing well Graduation folding back problem o How to leverage BUs resources c When corp wants to grow outside of core o Top support especially important Reading Innovation at HP The Role of the Innovation Program Office IPO o RampD Structure 0 Healthy I 90Core 10Adjacencies New growth engines o Project ChampionsLeaders o Early Champions I idea creatorsowners passion o Project Leaders I developinggrowingcommercializingideasprojects I Leveraging corporate resources multidepartments functions I Professional management o Early Champions amp Leaders I Different personalities skills o Timing of bring leaders to the projects o Too early may kill the project o Too late not leverage corporation resources duplication of resources o Operations of the IPO o Submitting ideas to the IPO I Just ideas not full business plans I Feedback time typical 2 weeks 95 within 30 days I Five criteria to evaluate ideas Change consumer experience Change competitive landscape Changes economics of industry later why Does HP have a contribution with its assets can HP win or gain enough biz o Sufficient margin I Consider 200 ideas out of 100 20 I 1 is expected to reach this line I Ideas evaluated by IP full time staff o Getting through the IPO I PSG CTO overall charge I 3 Horizon roles o Operating manager page o Project manager managing idea evaluation project progression gono go decisions Balsiger o Producer for customer experience design Calkins I Key dedicated staff 3 vertical roles o 3 program managers each on a few projects o Backgrounds marketing hardware software o Being involved in gono go decisions I Project Leaders o For each project the leader may change Backbird s leaders first HPlab then PSG consumer PC business o IPO borrow them from other orgsunits the IPO pays them I 4 Project Gates o Validation Deep validationprototype limited launch go I Incubator Cycle o 12 18 months longer than 24 months HP lab o After IPO and Other I Where do they go and why 0 EBU I IP operation amp Corporate Policies o Exceptions HR vendors etc o PSG CTO IPO chief helps to leverage resources within HP Questions Answers 1 The case indicates that PSG Personal System Group intended to change its RampD budget strategy or how RampD money is allocated What did they want to change a Existing budget 95 on core products change to 70 on core products 20 on adjacencies and 10 on new growth engineers 2 What does the case say about project champions a What type of people High Level Widely connectedrespected in the company b Why does the case say that Champion does not equal eader p4 4rd paragraph a Champion passion about the technology product at conceptual level or early stage Emotionally attached to the idea b Project Leader sustaining and developing the project Commercialize the project Perform multiple functions More like professionamanagers leaders They help project leverage company resources 3 What does the case say about bringing these professional managers into the projects as early as possible a At different stages you need different leaders b Too early kill the project Lack passion without exploring all potentials c Too later not too late to leverage company resources champions tend to duplicate resources wasted resources Missed opportunities 4 Let s say you for work the IPO how would you describe to people who are interested in giving you ideas the following a What to submit full business plan i No just ideas and it doesn t even have to be a complete idea b How fast they will hear feedback i Typically in two weeks 95 of ideas will hear feedback within 30 days c Does the IPO use certain criteria to evaluate ideas If so what are their evaluation criteria in general no need for details i Does the idea fundamentally change the customer expectation or expenence ii Does this idea change the fundamental competitive landscape Be number 1 or 2 in a segment iii Does this fundamentally change the economics of the industry We don t want to create a metoo product iv Does HP have a contribution to make with its assets v is this going to generate sufficient margin d How many ideas does the IPO receive and how many they tend to consider success rate i Normally receive 1000 ideas to evaluate 200 20 will be considered Expect 1 ideas will reach finish line p5 p6 last paragraph p8 last paragraph amp p9 1st para e Who evaluate the ideas i Full time staff 5 Let s say you for HP s IPO and you are asked to meet with a group of executives for other companies who want to learn the IPO set up and how does an ideaproject get through the IPO More specifically they want to know the following a The organization structure of the IPO and the roles of key positions in the structure What are the horizontal and vertical roles i Top person Phi McKinney PSG CTO and is responsible for the IPO ii 3 Horizontal full time executives 1 Christian Page Operating manager 2 Steve Balsiger Project manager for the IPO manage and schedule project gatesreviews manage the collection of ideas 3 Mickie Calkins Senior producer for experience design identify understand customersexperience see p7 last paragraph iii 3 Vertical Roles 1 Each is a program manager guess not clear from the case each manage several projects at this time 26 projects at the IPO Each is assigned to several individual projects 2 Background one marketing one hardware and one from software p7 2nd para iv Are they involved in project gono go decisions 1 Some time Calkins disagree with program manager on whether or not a project is ready to move next phase move b For people leading each project where they full time staff at the IPO WHo pays these peoplepositions and which unitsorganizations do they belong to why the case say that most positions in the IPO are somewhat transitory p9 4th para What does McKinney s comments on Backbird s leadership tell us P4 4th para 6 325 For the same project the leader may change Backbird s leader Gene Becker HP Lab later Bill Norris PSG s consumer PC business p4 4th para They were transitioning positions Brought leaders in as needed They belong to the org where they originally come from IPO pays for their time as they work on each project Roughly projects will go through what stagesgates if not killed iv Gate 1 Customer Validation Perform market validation and develop initial feedback Mostly conceptual Gate 2 Deep Customer Validation Here we will develop a prototype observer it in hands of customers Limited tests Gate 3 Limited Launch Introduce the product into one region or one market outside of the normal HP processes Gate 4 Go At his gate we blast the product around the world What is their bonus structure to different project teams p9th 5 para Same bonus to successfulfailed team so a team that puts its heart and soul into a project that gets discontinued does not lose compensation and is recognized for taking the risk How long is the incubation cycle how long is the entire ideaproject development cycle i 12 to 18 months Later if a project is longer than 24 months PSG will ask HPLab to help on PSG s behalf p10 1st para So IPO doesn t run out of money To move project to either horizon 2 or 3 Corporate Innovation Center is more risky taularent Keep the momentum with innovations in IPO If a business project is successful and is growing will it always stay at the IPO If not where do these projects go lfthey are put in new homes do these projects use the same sales channels a When a project grows becomes too big for the IPO it will be moved to EBU emerging business units Use different sales channels b EBU is not a core business because it still needs support It s in the teenage phase How does the PO s operation follow HP corporate policiesrules in areas such as HR vendors etc How does the IPO tap into resources of other parts of HP a Not always not always use corporate approved vendors sometimes stretch HR policy They need exceptions or projects would die Ask Phil McKinney for help to access resources in other parts of HP Also project leaders use their personal connections IPO boss is needed to bypass some policiesrules Companies install policiesrules for their well established businesses which limit IPO projects b Theme Organizational Structure in CEampl Topic Funding Structure and Organizational Homes of Innovation ventures Four Innovation Models 0 IBM EBO Case Analysis 0 IBM EBO Program Intro locum w 0 mm mu m vmanol om Mom 53 mltmcm Percent of Total Revenue mltmcmm 403 mmom 88 08 BB 88 BE 88 B8 83 xmltmEm mmmbmm mmwmmm mmrpmm mmmpwp 38 mmnh mmi mlt an 3o umnm8mm H8 wx ax Bx HA3 Ex MEX mmo wmltmm mum mmum memo mmmzw mmi a min Hm mwrm O O am1n sq 10 pass 01 3ueq sassaugsnq Vmau mu mq seep ug1z1aua r A V PR Pw Pw p T V 0 l93 S 39J3Pquotfli t Z 1 suozgxol 1 f V b P fin z W xa gxl r l l gt if i W 5 t E 3 Vi 2000 EBO program established I 2000 to 2008 o Launched total 25 projects 3 failed amp closed 22 projected produce 22 billion revenue by 20082009 I Lessons Applying Three Horizon Idea I H1 Extend and defend core business I H2 Build emerging businesses I H3 Create viable options IBM EBO Intro I Starting of EBO 2000 o What did Gerstner CEO do on Thompson before Thompson started the EBO o Thompson s background p6 4th paragraph I Thompson Era 20002002 o Was EBO successful Did EBO have well developed process E5 p7 5th para I EBO is managed out of what corporate office p7 last para I Gertsner need EBO czar early 2000 I Thompson o Vice Chairman Have led several production projects Led several sensitive crossbusiness initiatives Strategist amp operating skill Well respected Message CEO was very serious about EBO I Corporate Strategy Office powerful lead EBO o Discussion of Elements of EBO System I Case Leadership Competency o Use young or experienced people Outsider or insider Pros and cons BM s past practice amp current practice o Young they re more energetic Experienced people manage corporate IBM Cons Don t want experts to leave their own BU Know how to work within existing system important if the existing system is complicated o What are important competencies 0 Have to convince people to leave BU o Battler cajoler entrepreneurs o Different leader for H2 and H3 optional o Explore experiments challenge assumptions Build organizations focus on growth others H2 H3 same I C Leadership Recruitment and Selection o Do experienced managers want to be EBO leaders What were the problemsconcerns o Risk of failure Report to man people and can not please everyone Step down o What did IBM do to make manager be willing to become EBO leaders o Mature EBO program Publicize successful EBO stories Give EBO leaders visibility o In early days how did IBM select its EBO leaders Laer how did the company select its EBO leaders o Handpicked Normal executive succession process I C Leadership Career Path o Normal rotation of managersexecutives or repeatable role What does the case say Your view I C Leadership Performance Evaluation o What were the basis to evaluate EMO eader s performance Main Difference from leaders in existing biz o Nonfinancials milestones o Who were responsible to evaluate the EBO teamsleaders O Biz unit leaders home leaders corporate people o Does IBM use separate compensation system eg stock options for EBO teams Reasons for their decisions your view O EBOs need to work with rest of the company Group work Avoid Haves and havenots No separate incentive system I C Resources Securing Funds o What should EBO teams do to get funding How much is invested to a new EB project Got funding after becoming an EBO No detailed quantitative analysis No elaborated plan Need highlevel assessments of market business tech Attractiveness and maturity organizational fit Amount enough for a new EBO to get started Protected from shortterm pressure from other areas of the business o In general who fund EBO projects o What is their corporate pool of EBO funds How do they use it O O 100 million not publicized used only as last resort Contingency fund when an EBO needs extra help plug some holes Require biz units to provide matching funds to have some skin in the game I C Resources Finding People o Members ofa typical EB team O Leader Strategy andor marketing expert operations andor finance expert and a technologist o Other requirements of the members O Be at a high enough organizational level to deliver commitments knowledgeable about the subtleties of the IBM matrix and willing to take risks I C Resources Maintaining Support o What did IBM do to ensure that biz unitsgroups do not cut their promised fundsupport to their EBOs when things are tight O Finance team monitored each EBO on a regular basis using newly devised tracking systems to ensure that commitments and support were honored Monthly meeting of EBO team corporate amp group executives reminder of continuous support I C Strategy Development o What are the main responsibilities of EBO teams please be specific o Knowledge of market clarity of target customers capabilities needed next steps According to Thompson what are the dynamics and uncertainties of milestones and strategies of EBO projects o Change 3 to 4 times Meet some milestones miss others I C Strategy Development Engaging the marketplace How to build initial commitment from potential customers to sell perspectives point of view of new product Mindshare o Simple and compelling stories PR and media communications work with analysts thought leaders experts etc positive mentions of the new concepts o Work with existingpotential customers What should EBO teams do to translate mindshare into marketsegment share o Goal select and execute a few elements from the biz plan to test strategy o Persuaderecruit early adopters to try new products Potential risks of new product test to company reputation o Product quality I C Strategy Development Reviewing Meetings Normally who attend the review meetings How often are the EBO review meetings held Do the meetings have formalstructured agenda eg focusing on financials Should business group people attend the meetings Normally who set the meeting agenda o EBOL set Corporate EBO strong influence Agenda Loose Focus on milestones Location Corporate EBO executives decide EBO leaders corporate EBO executives appropriate BU people What are the common mistakesproblems in estimating market size assessing new markets setting realisticmanageable goals strategic intent o Size over optimistic o Markets wishful thinking conventional wisdom guessing o Broad not focused In the review meeting discussions corporate executives tend to focus on what your view o Assumptions of EBO teams discusschallenge o 3 Key Qs paint point value who are competitors our differentiatedmore value I C Tracking and Monitoring Milestone Reporting o For an EBO in its early stage the monitoringtracking mainly focuses on what type of measures o business fundamentals formation of leadership team forming advisory committees agreement on a welldefined strategy efforts to create mindshare external perceptions etc o For an EBO in midlate stage the monitoringtracking mainly focuses on what type of measures o Expected near term sales of pilot customers of designins the conversation of designsins to design wins formation of new partnerships ecosystem development etc I C Tracking and Monitoring Financial Metrics o Why the financial group need to develop a business case for each EB before an EB could be launched Normally how many years a case lasts o Financial discipline 5 years also 7 to 10 years c Does IBM trackreview EBO s financials revenue expense etc if so how o The financials basis for monthly financial reviews EBO s finance amp operation people corporate strategy and finance people o How often do they check the metrics are the reviewing meetings long o Please explain the practice of simultaneously comparing budgeted expenses against the targets milestones o If an EBO is both below budget and target need to check if the line is cutton from the funding to the EB o Key simultaneously check the expense and the milestone I C Tracking and Monitoring Strategy and Business Maturing o What kind of color coded system they have developed to rate EBOs What are the purposes of such ratings 0 Color red yellow green o Areas separate color for each area developing a clear strategy defining an executable model and winning in the market place 0 Summary report gt senior corporate executives monthly and quanedy o Summary Discussion I In IBM systems are the primary EBO funds ad hoc or dedicated diffused or centralized I Who are primary owners supervising early stage EBOs supervisingshaping milestones monitoring progress checking expensesrevenues etc The IBM EBO is most similar to which of the four models we discussed Funds Groups In the EBO system corporate strategy key I Similar to UI16 Model o Transition folding back I Conceptually what are the prons and cons for a EBO to stay for a long time in a separate EBO management systemunit Are any limitations of EBO system in growing EBos after certain stage I How to find new homes biz units for EBOs that do not have obvious fit with existing biz lines I Should companies set clear rigit criteria for EBOs to graduate be fold back to existing biz syste Pros and cons of having such clear criteria I Potential concerns problems associated with graduation c From EBO project perspective from Biz group perspectives I Material H3 to H2 I Material Reading H3 to H2 o Transition from H3 to H2 Future of EBO System I Status of EBO in 2003 Total 18 EBOs success Two 1b revenue others gt 100 m rev I Questions H3 gt H2Scale Up o What is the management system in EBO program o Who find projects leaders supervisingmonitoring setting metrics management milestones locations of the ewview meetings etc Who play the lead role 0 Transition from H3 to H2 I what does it mean Why this is necessaryimportant o Different options for H2 biz what is halfway house p14 3rd para I How to find new homes biz units for EBOs that do not have obvious fit with existing biz lines I Potential concerns problems associated with graduation c From EBO project perspective c From Biz group perspective o Transition CaseB I Material Reading CB I Do you agree that EBO system only focus on strategy on clarity and maturity of leaderp let lines to take care the execution issue I Agree with its practice of graduating all EBOs at the same time I Better practices of folding back to help EBO team leaders new home execu ves I Attention new management relationships with EBOs after folding back o Case B Reading amp Questions I Graduation Criteria Harreld thought about 3 questionshurdles to evaluable the graduation of each EBO project what are they I According to Harrled EBOs need to pass which two hurdles in order to graduate which issues can be addressed by Biz group new home Agree I What is the new managementmonitoring set up on EBOs after folding backgraduation I Agree with graduating all 13 EBOs at the same time Better practices of folding back to help EBO team leadersteams to help Biz groups to learn to handle them o Transition and Scale Up I Why graduation o Goal EBO program need to contribute 2 corporate revenue growth No graduation no creatingexpanding new EBO projects need 180 EBO projects to really grow this company now 18 EBO projects I Graduation means o HQ reduces supervisionmonitoring to EB projects monthly to quarterly BUs assumes more responsibility I Clear criteria for graduation o Strategy clarity o Leadership clarity o Execution BU take care I EBO Projects issuesconcerns on Graduation o Lose protection from EBO program o Fight for investments to maintain growth trajectories o Performance Measures too much financial driven o One EBO leader good to be financial drive good for developing discipline I Biz group s issuesconcerns on graduation o Do not have a systemprocess to manage EBO capability o Do not understand believe in the new market a EBO project is pursuing o GraduationScale Up I Ensure the Buy In from BUs to the Graduated Projects o BU summary report to senior corporate executives the status of EB projects o Senior EBO executives meet with BUs to remind and ensure their support to the graduated EBOs o Senior EBO executives meet with EBO projects semiannually to check their progress o Additional THought I The importance of nonproducer model especially enabler model the limitation of producer model in corporate innovation I The challenges of scale up in corporate entrepreneurship IPO o Incubator Process o Idea Generation o Innovation Center o Structure HP Failure o Existing structure was too skewed toward existing business 2 Dimensions o Ownership o Resources Diffused o Anyone can be part of innovation Intro Challenges o 3 horizons o Loosing it s right to do innovation X Y o Y X Y o Y X X o Challenges of doing innovation Incubator Innovation Center o Structuring IPO o HP Case o Process Cisco o Crowdsourcing to generate new EBU o Operating Model o 4 ways a company can be in I 2 Dimensions accountability and money o IBM o How to manage an innovative program structure Incubation Locations Resources vs Organization Owners X axis diffused gt centralized Y axis Ad Hoc Resources gt Dedicated Resources 4 Quadrants Producer Enabler Advocater Opportunists Organization Models Structure o GE Energy Case O O Where is your home Who do you report to We need to understand the organization structure to know who is responsible for what Every company has multiple zilos so who is in charge of putting them together Illustrative the purpose of having homes for projects Corporate Innovation Programs 0 IBM 4152014 Program a group of projects set to achieve something Companies with a high percent of total revenue is from EBU revenue is very healthy and strong IMB was in deep trouble in 1990 s They got rid of their CEO and got an outside CEO They were planning on splitting the business into separate businesses New CEO wanted IBM to be more innovative Needed a systematic owner to push creativity and hold them accountable EBO is managed out of the corporate strategy office The corporate strategy office is not part of a business unit EBO manages many emerging products c Microsoft CVC O OOOO O Everything comes through the BU They were investing in really late business that weren t innovative at all BU driven decisions made here Strategic benefit driven by BU Short term driven not enough innovation They were very broad in innovation solutions o Xerox Model OOOOOO XTV very detached from BU XTV had an innovation center XTV formed to capture products being developed to link them back to BU Financial driven Remember examples BU complained why they needed XTV I They weren t helping the BU I They had a lot of autonomy I Making very little profit I Ideas are leaving the company because they aim to only own 1050 of the projects I o XNE came after XTV failed I More strategic edge o Differences between Eli Lily s XTV is not sustainable because the main power comes from the BU and they need to support them Both extremes are going to fail 2 huge mountains in corporate innovation 1 Design thinking Creativity be innovative a How to make individuals be creative b Market research 2 Organization Structure Barriers a How do you grow the baby within a company b Xerox had great ideas but failed to profit from them Compensation is more aligned with corporate if CVC is strategic driven Leverage External Innovation o Bring idea into company 0 Scale up expand the idea using your companies resources and structure into a real business o What resources did they use I Sales channels I Marketing machines I Production I Redesign of the product Similar to early stage H2 Magic eraser brought from Japan and made into an H1 business 0 PNG o PNG is looking for something That was the starting point Suppliers then worked to meet those needs o Is it easy for employee to accept this new practice I it wasn t easy at first I They feel like they failed because they found ideas outside they want to protect their resourcesturfjob Common reason for a company to resists change I Forcing them to go outside Make it a performance criteria Reward BUs based on speed and cost o cost reduction o Levering external sources to benefit the company Eureka Catalog internal website for external solutions Post discoveries on it Used standardized templates to organize and sort the products It has all the important information Ask the importantcriticalcrucial questions for the company Where do these products go to different managers to assess the product Market Driven Customer driven o Start and end with customer Identify customers top 10 needs How do they minimize risk o They need to see the numbers o Have a clear target What are you looking for 422 Nike o A1 Structure o Structure I 3 BUS o Aparrael Footwear Equipment I 3 Dimension o Geographic Region o Sport Categories 0 3 BUS o Dropped adding gender dimension in organizational structure I Hard for employees who are passionate about women innovation o Cooperation I Very little cooperation I Very different release cycles o Womens Business I Before 1977 o Nothing substantial in product simply changed the story o Tried it but it wasn t successful I After 1977 o Made a change in footwear division towards women o 3 people to work in this division o Dedicated group o Corporate Level I New Opportunities I Created a dedicated resource for new innovation o Innovation 0 Came up with a few innovation ideas o Forming tasks force to explore each innovation idea o Phase1 o Fact Finding Strategic Thinking I Internal 0 I External o Customers o Segment o Competitors o Opportunity o Then you think about recommendation as to what to focus on 0 Start with small win dance O o Phase 2 o Work out a workable plan Make it more tangible and more specific o Made a collection of managers from different organizations to collaborate o Demonstrate Integrated Development is possible to convince skeptics in the company that it s doable I Someone tried it in Europe and it worked So attempt to replicate it o Leverage existing resources as much as you can to convince skeptics 424 The importance of a People Map o Shows who has the power in the company o Which helps with knowing who to contact GE o Use Management System to create and sustain innovation o Production Creative Process 429 Management System o Has many components but quantity isn t important How to use them is important o Components Dev People Process Performance Goals Structure Capabilitites o Use Holistic Management System 0 Help company sustain innovation o Regular meetings Corporate core process where execs meet with business leaders Session C leaders from BU and exec discuss how they re developing leaders in BUs o Developing people is one management component 0 Change criteria for business leaders I risk takers how much they re willing to risk Meal Piece Innovation o Part of the company structure supports innovation while others do not Cisco o Does a lot of acquisitions 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1 0 p p 0 CTrcing V pU X 0 T trategy an Busmess Vatun 0 d o coir cedsystem they mtraet egelpe to rate E S were th ursef such ratinQ5 I lor d I I I yellow Areas separate coir for each area l ADeveoping clar strategy e ning an execu I Winning in the mjrket 2 p i reprt gtsenior corporate tives monthly t Guamquot rups system corpo rte P at Tranition frm H3 t H 2 Futu of E Systm 13 o b9 P92 pN S M V A ntribute 0 resnsib iIitiA I Clear criteria Leade trin to P ly to ua wrly for L W W W new 2 7 v9 I 9 is pS Professor Roger Chan 1 Corporate Entrepreneurship and Innovation Team 2 Final Group Paper In this paper we will present four international companies which are Amazon Sony Siemens and Hitachi They were founded in different countries and in different times Amazon was founded in the United States and is the youngest Sony and Hitachi were both founded in Japan while Siemens was founded in Germany In each company we will describe their innovation strategies some of which will sound familiar with cases that we studied in corporate innovation We will be discussing the company s background organization structure strategy and mission and also compare them with each other Amazon Amazon is an american international electronic commerce company with headquarters in Seattle Washington United States It was founded in 1994 by Jeff Bezos after leaving his employment as vicepresident of the Wall Street firm DE Shaw amp Co It is the world39s largest online retailer It started as an online bookstore but soon diversified selling DVDs VHs CDs video MP3 downloading software video games electronics apparel furniture food toys and jewellery After reading reports about the future of the internet Bezos created a list of 20 products which could be marketed online He narrowed the list down to the top five most promising products which included compact discs computer hardware computer software videos and books 1 He decided that he needed focus on one specific product and that product would be books due to the high demand for literature This process was similar to the way Nike selected Dance as the product they should focus on to enter the market Amazon now has over 28300 employees and they sell a side range of products Their mission is To leverage technology and the expertise of our invaluable employees to provide our customers with the best shopping experience on the planet 2 and their company vision is To be earth s most customer centric company to build a place where people can come to find and Professor Roger Chan 2 Corporate Entrepreneurship and Innovation Team 2 discover anything they might want to buy online 2 Their corporate strategy is To Get Big Fast by investing aggressively in new product categories and new businesses by spending money on brand awareness and getting new customers 2 According to the former employee Eugene Wei Amazon is a classic fixed cost business model it uses the Internet to get maximum leverage out of its fixed assets and once it achieves enough volume of sales the sum total profits from all those sales exceed its fixed cost base and it turns a profit Amazon turns a profit on almost all transactions It posts quarterly losses because of its massive investments 9 Wei believes that Amazon simply has to stop investing in new business lines to be a very profitable business These business lines are derived from Amazons creative innovation centers Amazon owns two innovation labs Lab126 and A9 Lab126 is an RampD company that focuses entirely on developing hardware that s tightly integrated with Amazon services such as the Kindle 2 They researched ereaders and came to the conclusion that It was the one thing that wasn t being done well by anyone else out there 5 After receiving an unlimited amount of funds they began to develop the Kindle Within a few hours after it s launch in the fall of 2007 the entire first batch of Kindles were sold out Lab126 had completely underestimated how popular the Kindle would be They faced additional problems when they discovered that their Taiwanese supplier discontinued a key part which delayed further Kindle s for months until they found a replacement 5 Lab A9 located in Palo Alto works on innovations in search and advertising 3 If you ve ever done a search on Amazon you ve used the A9 Product Search engine 4 Their innovation team is small from diverse backgrounds consists of recent grads to veterans and have an exceptionally high ratio of PhDs 4 Professor Roger Chan 3 Corporate Entrepreneurship and Innovation Team 2 3 Horizon Model Market leadership I l39E quotquotlP3m9Flli5 audlblemm amazon kindle a fir amlaion F H571 Amaon lurlstant ll39ideu kindle Software Dnwnllloads a g nappstnre kindle fire New entry Mlature business This figure displays a graph with 9 of Amazons business units 6 The graph represents a 3 horizon model where the xaxis is the maturity of the business and the yaxis is how much of the market that business unit has This is slightly different than the other 3 horizon models we ve seen in class because most of those based the maturity of the business by how much profit they were earning Amazon aims to own a significant part of the market before focusing on generating income Amazon has a lot more business units than the ones shown in the graph Amazon has become so huge that suppliers can t ignore Amazon or they risk going out of business They have a brand that everyone trusts which gives them the power to negotiate discounts from suppliers to keep the prices low 6 Amazon s impressive shipping network is what makes them a hard company to compete against Surprisingly enough Amazon poached Richard Dalzell CIO and Jimmy Wright CLO from Walmart who were responsible for Wamart s secret computerized supply chain and their supply chain and distribution network 7 Walmart sued Amazon for violation of trade secrets in 1998 7 Amazon s strategy to accelerated development stems from the motto build buy or partner up with a company Their goal is to get a market share from every market they can even if there s already a clear market leader They re not the only company with this strategy Professor Roger Chan 4 Corporate Entrepreneurship and Innovation Team 2 Netscape co founder Marc Andreesen said market share now equals revenues ater 6 For example Amazon launched MyHabit to compete against VentePrivee the market leader in members only shopping for high quality brands excess inventory 6 Companies that can match Amazon s selection price and customer service are quickly acquired Amazon purchased Zappos Diapers and SOAP because they were well established in their areas and Amazon decided to improve upon them with their resources instead of competing against them 5 Amazon was ranked 1st and Zappos was ranked 3rd in customer service in 201 1 by the NRFFoundation 8 Zappos has a dedicated customer service Twitter account with highly skilled employees to offer immediate service 6 In some cases Amazon chooses to partner up with a company and offer them their technological services and ecommerce expertise For example they partnered up with Toys R Us to distribute their products using Amazon s distribution network in 2000 6 In 2011 Amazoncom partnered with DC Comics for the exclusive rights to many popular comics such as Superman and Green Lantern which caused Barnes amp Nobles to remove those titles from their shelves 1 The most recent partnership was on 2012 where Amazoncom partnered up with the United States Postal Service to begin delivering orders on Sundays but it was limited to select cities 1 SONY Background Sony was founded on May 7 1946 after World War II by Masaru Ibuka and Akio Morita Sony was initially named Tokyo Tsushin Kogyo KK The first business in Tokyo for Tsushin Kogyo was a radio repair shop After Ibuka was joined with Morita the company changed its name to Sony in 1958 In 1970s Norio Ohga took up the role of president Later on he was CEO He supported to develop Compact Disc and PlayStation in the early 1990s Ohga purchased CBS Record and Columbia Pictures in 1989 In 2012 Kazuo Hirai was promoted to Professor Roger Chan Corporate Entrepreneurship and Innovation Team 2 president and CEO Sony s Headquarter is located at Minato Tokyo Japan Sony s main products are PayStationgame Sony EricssonMobie VaioComputer Cybershot Digital Camera Digital Camera WakmanMP3 and BraviaTeevision Organization Structure New Management Structure EEO Km Hirai CFONl Kato CSOTSa39rto EIIEItj39FlZI IFIIIITS EIFITETIIEIIHHWEFIIII Fina I39IIIIIa SEIWIEES SNen1oto Icsuzuki K Hirai TSozuki H r39o5hiioka lIlIIyn1on Ilhara E1uf3ELu e1 a suc1no5 euossaoId quot5I0II39I 39539 DIVA suolleoiuntutuog eiiqow 139uos 1uaLuuE39JJaI1u3 JBI1FIdUl0j Auog 1IuaLuuE39LIa1u3 euioH 1uaLuuE391Ja1u3 1iom391aN M05 so 1 gtnpucoLua5 5II01I3910395 amen 1uaLuuE39JJe1u3 sainnid Auog I1ueLuI1E391ia1u3 Jsnw M05 sE1upoH EDLlELl hues 0 IIeadcuuarlers 0 Global Sales 8 Marketing 0 Corporate RampD System and Sor tware Teclhnology Advanced Device Technology 0 U I Product Strategy I Creative 0 Mamnufacturing Logistics Procurement and Quality Sony uses centralized organization although in each division or business unit can make its own ideas to approve the project Sony has midterm and long term innovation Sony has Research and development center over the world such as Europe North America and Asia Sony has also strived to regain their innovation culture and allow their employees to develop ideas Sony provides dedicated resources for their innovation Thus we can conclude that Sony is closest to using the Producer model Sony reminds me of the cases of Cisco IBM and Cargill that also use producer model In the producer model one uses centralized organization and dedicated resources Producer organizations are connected to the corporate strategy and leadership integrating successful project business units remains an inherent difficulty for a separated organization Professor Roger Chan 6 Corporate Entrepreneurship and Innovation Team 2 Strategy Sony s mission is To be a company that inspires and fulfills customer s curiosity and unlimited passion for technology content and services and relentless pursuit of innovation Everything Sony does it moves you emotionally According to their slogan it can empower their employees to drive and strive for innovation Also Sony announces that they do new products all the time Sony emphasizes the power of emotion in people Sony s innovation focuses on midtolong term strategies and developing differentiated technologies such as gaming computer camera and mobile They also find the opportunity to get new business that related with core business For example Sony planned to enter medical equipment components business that is related with digital imaging technologies business Sony has great innovation histories In another example the Sony Walkman became the first portable device that enabled a personal playlist in 1979 In 1982 the compact disc was introduced The innovation improved recording storage and sound quality when PlayStation was introduced it became a game changer and disrupted the market as the living room now revolved around the home entertainment console in 1994 Thus SONY uses all three horizontals There are H1 Extends and defend core business short term H2 Build emerging business midterm and H3 Create viable options Long term Sony also promotes internal innovation Employees can share their idea by using software Sony can get amount of ideas quickly For example Sony Electronics uses Microsoft s SharePoint Server 2010 and Fast Search Server 2010 Employees in each business units can share their ideas through this software This is another strategy that Sony uses to find new innovation projects and empowering a empoyee s work skill and interests It is the same case study as with Whirlpool that they use IBroad to generate new business concept Professor Roger Chan 7 Corporate Entrepreneurship and Innovation Team 2 Sony also uses Facetoface communication among their staff all over the world This strategy produces great results for product marketing like the MP3 and Walkman It is the same case study with General Electric Company GE GE supports the new business idea by meeting facetoface or brainstorming the idea Sony focuses on their empoyee s capabilities Sony explained that employees are the most important asset to the company because they believe that the process of development and innovation are derived by the human capital Sony focuses on three major strategies There are developing business leaders fostering engineering talents and enhancing abilities and skills of individual employees It is the same case study with General Electric Company GE GE supports developing people For example GE uses Session C to discuss who will be the leaders of tomorrow and that is just another component in their management system to develop people Sony offers resource for Research and Develop investment The majority of Sony RampD costs are allocated on the Networked Products and Services NPS segment Over half than electronics segment has been used for develop new products The rest were used in developing midlong term technology According this information I can surmise that they have the adecuate resources for future innovation Sony uses the same resource strategy as HP There are 70 percent for short term 20 percent for midterm and 10 percent for longterm Sony would like to invest with other companies to improve their portfolio so they formed Sony Venture Capital Sony Venture makes early stage company which can support their services and technologies Younger companies often develop a work relationship with Sony s business units Their goals wants to find company that have a technology product or service with significant sustainable growth potential a competitive business strategy Sony Venture Capital has many partnerships such as ACCESS IFILM i3 Mobile etc It is the same case study with Intel Capital Sony s objectives are Ecosystem investment and Eyes and Ears investment Professor Roger Chan 8 Corporate Entrepreneurship and Innovation Team 2 Ecosystem investment is finding company that develop technology to support the final products Eyes and Ears investment is finding company that might produce something useful in three to five years The investment stage is also the same Intel capital that they invested in early stage company Sony also promote to research with many universities over the world It is one strategies of their innovation For example RampD activities in China supported collaborations with Chinese universities and research institutions Sony China Research Lab has started RampD projects with Tsinghua University They have been working on intellectual information processing technologies Sony also corporate with BUPT that they have been working on information security related technologies In the UK the University of South Wales also has been supported by Sony to develop technologies capabilities The Sony funds dedicated researcher to work at Sony for three years to develop vision recognition technology It is the same case study with PampG Sony and PampG use connect amp develop innovation model They were a partner with many research labs and universities over the world Siemens Siemens was founded by Werner von Siemens and Johann Georg Halske in Berlin Germany in 1847 The company has four main sectors Energy Healthcare Industry and Infrastructure amp Cities which are a part of Siemens decentralized operating structure Inside the main sectors there 18 division which are divided by many business units at Siemens Each part of Siemens were known as global entrepreneurs The decentralized structure gave the opportunity for innovation but the communication between business units or divisions were hard to build and continue Dr Norbert LuetkeEntrup was the leader of Technology and Innovation Management group within Siemens Corporate Technology CT unit which also had Open Innovation amp Professor Roger Chan 9 Corporate Entrepreneurship and Innovation Team 2 Scouting initiative The head of the Open Innovation is Dr Thomas Lackner After they launched the Open Innovation project 35000 employees from more than 80 countries have participated Lackner and his team wanted to solve challenges and create new ideas and products applying Open Innovation Most of RampD activities of Siemens were led by sectors divisions and business units Also CT was a part of these activities and a centralized corporatebased innovation organization Siemens always wanted to be a first mover or a fast follower in the new or existing markets with new or existing technologies The budget Siemens had for RampD activities was 4 billion 54 of Siemens revenue 17 of total RampD expenses belonged to CT s budget funded by business units 70 of total budget or centrally funded approx 30 of total budget Open Innovation was built in opposite of Siemens decentralized structure and silo thinking to power external opportunities Lackner realized at meetings with executives that there isn t any tool to identify technology experts at Siemens 18 divisions were silos and there was no connection between them Like the Enabler Model at Google the culture of Siemens Open Innovation focus on supporting ubiquitous innovations The system could create an opportunity so everyone will be a part of the open innovation which should not just tolerate top leaders innovation The key may be the Siemens IT system TechnoWeb which connects many technology experts at Siemens Just from the start executives were against TechnoWeb with social platform addon But the system was started in 2009 gained more than 32000 users internally who could join public discussions and allowed a bottomup selforganization model Globally TechnoWeb created a dynamic knowledge networks and solved real problems within the technical community at Siemens Siemens also looked for external technologies or products and scaled up through internal capabilities or platforms to amplify the value of external technologies or products Like PampG did Professor Roger Chan 10 Corporate Entrepreneurship and Innovation Team 2 Siemens created partnerships with external entities Siemens leveraging external innovations opened its Centers of Knowledge Interchange which is similar PampG s Eureka Catalog including successful schools like Massachusetts Institute of Technology University of California Berkeley RWTH Aachen University etc Lackner didn t believed that he will reproduce a community which can solve internal company problems PampG had the open network for example NineSigma For PampG it was very important how to leverage capabilities of NineSigma Siemens wanted to build an External Knowledge Brokers community within the company and to convert capabilities to shortterm and midterm innovation projects Siemens worked also with NineSigma and they developed a proposal system Request for Proposal RFP 54 entries were submitted to RFP during the first contest Due to the internal resistance the winning idea wasn t implemented because teams at Siemens never had official status at implementing of new ideas and didn t want help from external networks One of open innovation processes Idea Generation Contents was created between Siemens and Osram Osram wanted to take the first place in the market by LED lighting technology Ulrich Weiss from Osram and Lackner moved fonNard to build a lighting innovation in the market With the help of the innovation agency HYVE three companies hosted a contest on IdeaNet For example Nike has also looked for opportunities lead to consumer needs and competitors in the Phase 1 to show something tangible to executives On deaNet platform anyone in the world could post his ideas about new LED lighting products The best 3 idea was awarded with prizes of 3000 15OO and 500 To choose the best idea they followed a similar path like Cisco s Idea participants wrote comments and gave feedback to other participants ideas After submitting all ideas a committee ofjudges ranked each idea on a scale based on different criteria Overall the contest was successful for Siemens and Osram Professor Roger Chan 11 Corporate Entrepreneurship and Innovation Team 2 Siemens believed in championing Open Innovation in the company and across teams Lackner thought that they need to convince business units so they can continue to innovate and to scale up them Thus a long term capabilitybuilding exercise will be provided at Siemens in Managing ora Sartora x I39Ernarg3r Er Haatlhoara K Inouatrryr 2 tnrfraatrurot39o ra St Cltlaa Croaa Sootor f oainoaaoa Eooarato Eoainoaa CroaaaEaotor SIrrainIa Q Fl r1El39lE lEEE F n39 CEEt GER391vl39 ll 3 Global El39tEF39E E f Stamens Root 3 Eaar39na na Saroiooa Estate llanagarnart Conau39 tino 39EQilIttquot ll Cluatara 45 lquotjl39IETlI3EIS 4quottaia LitlUEtT39ii i EEoraoa ClE Aitfriaa 39rliaaa Eaat i is LS il39 53 l39l1jlquotl 1 EE1llF39aoi io j 139 Africa I Brazil it Japan I 3r Cantral Eaatarn Eur39nna Z ltor39th trnarioa 2 Ellottn Eaat3aia 7 k Garatany it South 139Eli in hlilzlolo East Jr llorth Woof Eorooo la HIJSEEE 39 C ontrafl t taia South West Europe Cororrata llJn rta fa Cizarparata 2 Corooraquot7a Fin anon 15 Corooratra Hurnan 3 Coroorata Legal anal 3 Corporate TCanolo m ant and Controltlnrg Roaooroaa Corrolianoa T aohno lao39rr gza Caroarata Eoogrelga i Corror39ar39a 3 Corooratra Ia Coroorata toov La la Corporate Ctta Chalrl lalanaoornonet CommunIoatIona anon lnforrnation Coroorata Cualntr Protaotlon Ga 39a 39s39HE lFEp 39r aaorl1nolog39y 3 Manragamant P Corararta Eooorrtar Coroorrato 3 Erlanigan florarmlargi ll ff CE Euatainaolrhr Erftioa Regional I39l39ltquot39ioa Hitachi History Hitachi Ltd is a Japanese multinational engineering and electronics conglomerate giant based out of Chiyoda Tokyo Japan The company was founded in 1910 Hitachi was founded by electrical engineer Namihei Odaira and it s first product was a fivehorsepower induction motor Since then they have become the leader in their industry and had a consolidated net sales of Professor Roger Chan 12 Corporate Entrepreneurship and Innovation Team 2 9041 billion yen for the fiscal year ending on March 31 2013 Hitachi has 458790miion yen in capital and 326240 employees as of end of March 2013 Being such a large company you can imagine that there corporate structure is filled with many divisions and groups On there website they have a really awesome chart of their corporate company structure and you can see that they almost made it look like Nike s power directory without their names Exhibit 1 Hitachi is a highly diversified company that operates eleven business units Information amp Telecommunication Systems Social Infrastructure High Functional Materials amp Components Financial Services Power Systems Electronic Systems amp Equipment Automotive Systems Railway amp Urban Systems Digital Media amp Consumer Products Construction Machinery and Other Components amp Systems Hitachi s company mission is to further elevate its founding concepts of harmony sincerity and pioneering spirit to instill a resolute pride in being a member of Hitachi and thereby to contribute to society through the development of superior original technology and products HITACHI V Hitaoloii GIIFUUP Ideotirty Tito roiooion toot Hiioohi A I IEonttiIoii39Io to Eooiotgr lJliIfi39tIQ5Ij I ilio t loI oiit1oot of oooitoo to fulfill tn ooiziotgt oopotiot oriinl tooootolooy orttl protoiooio Too uoitioo crucial to A HALU E5 the IIitooI1ii I rooo in V quot quot 3395ilEEli liF39f 5i39tii Etoint oooomoiioltiing its mission Hormony Ei ooorior PIEtlquotli 39IE I39iEl i39lQ Spirit I I Hitooti ooIiuoro ioootroitiooo quottoot ooooiot WiI1o39t tho Hitoohi Gtoooi 1 VEIQN ooeoiotfo oooljloogoo 1iquotquotaI39iquotI our totootoo oiroo oi ooorrio toom and 39I393939i39 l391 IquotiiI39fI39lEEIi IEiI39lEll io global in lglta fuiILurte tquot1 iau toIE Iito mitt r39ti5Iir aEIa1l1ie iIroir l Professor Roger Chan 13 Corporate Entrepreneurship and Innovation Team 2 Strategy The Hitachi Corporate Venture Capital Fund Hitachi CVC Fund was founded on July 1 2000 as a 10 billionyen investment fund to create new business opportunities by investing in promising technology startup companies or ventures The mission of the Hitachi CVC Fund will be to explore new business frontiers H3 and accelerate the creation of new business opportunities H2 in line with the objectives of core business strategies of Hitachi so that they may leverage their current corporate assets in order to better scale up the projectsSpecifically the main aim of the Hitachi CVC Fund is to seek out external global opportunities and invest in promising technological entrepreneurial ventures develop and innovative technologies in the hopes of building future competitive advantages and business opportunities in new markets Thus creating the next billiondollar business opportunity resulting in more value to Hitachi39s customers shareholders and other stakeholders Much like the producer model and the IBM EBO amp Eli Liy s CVC example where they choose an internal senior champion and leader a finance expert an operation s expert and a technologist to head an EBO team These leaders were well respected in the company in order to influence change Knowledgeable in their business units in order to understand how they can integrate and leverage Bu s strengths and resources thus facilitating the graduation process transitioning ideas ie fold them back from H3H2 ideas to back into their core business units And technology specialist in the RampD department to make sure these ideas could even be implemented The Hitachi fund is managed by the CVC Office which consists from experts of business planning finance and members from RampD division having a profound knowledge on the technology in the investment area The CVC s Investment criteria is to invest at any stage H1 H2 H3 of a company39s development including seed stage and later rounds of financing Professor Roger Chan 14 Corporate Entrepreneurship and Innovation Team 2 Open innovation Hitachi has developed a cooperative or cocreation whereby they bring their customers in as research partners to play an integral part of their RampD this is like PampG develop and connect model where they brought the end user and the developer together to see if they could come up with new ideas In this Model the company seeks out external solutions to enhance internal capabilities the whole purpose of this is to see where the current market trends and opportunities lie and to bring the next billion dollar idea faster online thereby increasing the RampD speed The RampD maintains an open research environment for science and technology exchange to promote open innovation like that of Eli LiIy s Opensource innovation Globally information exchange is promoted through the overseas research hubs and through comprehensive collaborations with major universities in Japan and around the world thus accelerating RampD and strengthening Hitachi s business portfolios The CVC fund has dedicated funding and RampD expenditure of the Hitachi Group is currently being maintained at around 4 percent of total revenue or about 3143 billion yen and has more than 5298 employees dedicated to innovating Sixty percent of RampD is being spent on Social Innovation Business which acts like their open innovation where they research and partner with a laboratory around the world to promote and inspire growth in the global market for their business area There are currently seven research hub s located in Japan Europe North America China Asia India and South AmericaThe RampD investment target is to deliver an Return on Investment ROI operating income dividedRampD expenditure of more than 1 This is required so that they don39tjust spend money By being focused and pressured on at least returning a positive net present value they can ensure that their investments on average are going in the right direction Hitachi has also set up growth targets in notjust increasing the triple Professor Roger Chan 15 Corporate Entrepreneurship and Innovation Team 2 bottom line but in expanding and strengthening their innovation vision they have set up a couple of targets that are to be attained by mid 2015 which are to expand RampD centers outside Japan promote RampD in 7 areas globally Increase RampD staff by 400 people by 2015 and strengthen Open Innovation Hitachi is setting up a culture and an infrastructure that promotes innovation Fquoturp EE Frrwrnotion of pen Ir1nswatior1 In EaeEnl up Eff Ilit llill an lzilusiinesa devell pment R V il Ereatiun of ll39E 391 IerdIuil a5 aiincl EEliquotI39iEEE 139hr rI39ugh the fzewchintnlgicall Fu5ivnn 91 miultiplea areas I Cr eatiaznr1 czrf EIiEflliti39Ia 39E tE1EIquotI I IDIg ES tn rellize IiquotEIdiI39i39l 5hif39l5 and Esta Izrliahnment I new EIIIIJEif39IrE E E quot EIfIquot7EquotEl39IiiiEiI1 iirrarmgaaITErtI tiquot3anrIcmrI ZiII395EIZiI IIEE FE Er quot5 i acinililalhitinratilziri EaIquotI39IeI391emquot 53quot3 l7quot3quotquotquoti39539 39 Hm 7F39iquot3quotquot39339 quotquot 3quot5339 5 Iquotquot339 39 49 rquotn i quot3E5iquotiI395 WI 3 IZ39E5 1393 quot IZEZ5i39k39Z39 If H IEEIIIJTCEE P0 0 lII39quotIIIlquotIJSIl3iI l uIi aI3irquota39iiIuiria IIIlI I I39ii iElaminIInIa quotquot3 A 0 iili39Cii39f Fi5 EtiC4 J iii gig ArH FE i39quot39lIE lE5I 1 quot gain n E f Tguhku Llmils quot391quot39 II Llni39a siF ElIE39E39i E LI 3 r r I 1omrn tunrcarticn15 Hi cu LIr iiee siI 1 quotI Univ IF T39igS quot393 p 3939I nquot ff 39aaquoti39aseaas ilni A quot53393 39 a Lin 39 IslitiE arrian quot r39IB5s 39Iir39iEI Uquotr ni3939 39TuIna Iiquotum F ia gn39uIare amp Tezh iolcaagw EdTag Ir set of 1 r s quotI I1 I a u IRE D1 araeeasi T5i nghya le ltherst E quot393 g IF gt 7 iin EIIllilII39Esflii 39739E aii rllill i 1 A 39 39 L I 4 p nl 39IIrIni39ua1iian l739rurnmlziaizali H i ilill EurIIui Hitachi llI i39I CI 1 u n II I Fl i39 I i39IJ39Iquot1 3939lu39E39 3 39392 13 39fIT iquotquot39 39Fgt113913953 M A 5Elzarr at gigs I l J FEEEI IEI 39EH1quot E39r1l Ltd Iquot is Fm 37 3 a a a VIme Professor Roger Chan Corporate Entrepreneurship and Innovation Team 2 Emird s Eenin 139 E 1iEil quotII 39I E Gromp EiatgquotIa39 Tl Fulazuehima F39rojeot Supervieorv Cffioe Smart Traneformation F39rojeot Initiativee Divieion EncltoEncl Suppl39 Chain Projeot D iv ie ion Sooial Innovation Elueineee Fquotrojeot Divieion Chief Executive Cffioer for Fleia Paeifio 39 Chief Executive for China Chief Executive for Fleia Chief Executive for Europe Chief Executive for the Flmerioae Strateg39 Planning Divieion A Croup Compan39 Cffioe l eeearoh 3 Development Croup Health Care Croup l Health Care Co mpanv Power Svete me Croup l Power S39ete me Co mpan39 Infraetruoture S39ete me Group Infraetruoture S39ete me Co mpang39 Hail S39ete me Co mpan39 Lrluan Planning and Development Sveteme Compan39 Defenee Svete me Co mpang39 Information 3 Teleoommunioation S39eteme Group Information 3 Teleoommunioation Sjveteme Companv Semiooncluotor Elueineee l Finanoe Croup D iv ie ion Smart Life 3 Eoofriencll39 Human Capital Group Legal and Communioatione Croup S39ete me Divieion Il39Illtl motive Svete me Elueineee l Ftielaz Management Group Management Divieion ml 1T Strateg39 Divieion I Corporate Salee 3 Marketing Croup Cl Corporate Proourement Divieion MC HCE Ll K Ll HI Strateg39 D iv ie ion i Corporate Cualitv Fleeuranoe D iv ie ion 1T Servioee Divieion Intelleotual F39ropert39 Group i i HR Cperatione and Puzlminietration Center I Eloarcl of Direotore Cffioe 1 39 39 39 finteolterm organization Hoklltainlo Flrea Cperation Toholazu Flrea Cperat ion Kanto Fhrea Cperation folaoha ma Flrea Cperat ion Holurilu Flrea Cperation Chulu Fhrea Cperation Kaneai Flrea Cperation Chugoku Ftrea Cperation Shikoku Flrea Cperation K39uehu Purea Cperat ion aralai Hoepital Center 16 Professor Roger Chan 17 Corporate Entrepreneurship and Innovation Team 2 Compare companies According to our deep insights above we can now compare and contrast the different criteria There are mission statements merging model three horizon s corporate venture capital and connect amp development As far as mission strategies are concerned they all have innovation mission For example Sony wants to produce new technologies all the time and they focus on the emotions of their customer Amazon wants to leverage technology and exploit it s expertise of their business units We can see that all four companies have an innovation center and are innovating all over the world and have overlapping strategies to create the next billion dollar innovation project In the three horizon s Amazon Sony and Hitachi support all times and don t discriminate in stages as they fund short mid and long term innovation project Siemens supports short term and midterm innovation projects but gives less emphasis for H3 For Siemens IP management with open innovation was a major issue for global RampD management In connected amp development all four companies have strategies to promote external ideas through their version of connected amp development They promote and fund research labs and universities all over the world in order to find new technologies In corporate venture capital all four companies promoted external innovation Some like Hitachi Sony and Siemens were more focused on developing strategic returns and like microsoft but not to their extend their focus is in finding their next competitive advantage and support or create their core business units Amazon having such a diverse line of products was a less narrow innovation window and thus is more free to explore anything However they invested in different stages For example Amazon and Hitachi invested startup mid and late stages company but Sony usually focuses on investing in startup stage company Siemens invests in startup and mid stage company Siemens CT functions as a partner for innovations for regional companies globally Professor Roger Chan 18 Corporate Entrepreneurship and Innovation Team 2 TIME Connected amp COMPANY MODEL HORIZONS CVC Stages Development H1 H2 H3 Startup Mid Amazon Producer Y Y Y Late stages Y Startup Sony Producer Y Y Y stages Y Startup and Siemens Enabler Y Y N Mid stages Y Startup Mid Hitachi Producer Y Y Y Late stages Y Professor Roger Chan 19 Corporate Entrepreneurship and Innovation Team 2 Amazon References httpenwikipediaorgwikiAmazoncom httpNvvwsIidesharenetVlackeamazonbusinessmodel httpwvvwbusinessinsidercomcoolestskunkworks20132op1I2vNN httpwvvwa9com httpNvvwforbescomsitesstevedenning201 10930howamazoncreatedthekindlefir epart1 1 httpNvvwsIidesharenetfaberNoveIamazoncomthehiddenempire httpsNvvwamazoncom httpwvvwnrffoundationcomcontentcustomerschoiceawards httpwvvweugeneweicomblog20131025amazonandtheprofitlessbusinessmode narrative F quotquotF Sony References 1 httpNvvwsonynetSonylnfoIRfinancialar2012policypage04htm 2 httpwvvwsIidesharenetfazdperfectionistaonboardsonycorporation10597513 httpinvestingbusinessweekcomresearchstocksprivatesnapshotaspprivcapd945 httpwvvwcIoverIeafinnovationcomblogsecretsinnovativecompaniesinnovation httpknowledgeinseadedubloginseadblogstrategyandorganizationinsony2815 httpvisiblebusinessbogspotcom201306sonyorganizationalchart2012htm httpwvvwsonyvccomportfoliohtml 9 F quotquot Siemens References httpwvvwsiemenscomabouten Boutellier Roman Oliver Gassmann and Maximilian Von Zedtwitz Managing Global Innovation Uncovering the Secrets of Future Competitiveness Berlin Springer 2000 695708 Print Lakhani Karim R Katja Hutter Stephanie H Pokrywa and Johann Fuller quotOpen Innovation at Siemensquot 2013 n pag Harvard Business School Web Hitachi References 1 httpwvvNhitachicom 2 httpjmngrecruithitachicojpenjobdetail1URL KEYhcird 3 httpNvvNhitachicomNewcnewsE2000000622Chtml 4 httpsenwikipediaorgwikiHitachi a 34 quot FJr orporate Venture vod I esource Auth 0 Regularplannd funding for innovation eicat part of regular bud et 4 P invest if having P proj v and money not part of udgting process Incubatin Locations Corp Ppv A 0 4Licated J esources Producer I x Lea dears passionate champiuns Lnal connyT ansin uen P J P P P P Adjacencies BUE i Having gop le who want to and ar able ta innovate F r C rp rat pportunist Model n minded Vwilling sup new Top Ieders C allow manage excep ons 0 p of A L C A Q 0 j pI Ang innovation Reswnsive ive at top 0 p px M I Enabler Model Pk P Pt Pt p w leaders ierant InnovatiA 0 F 7 PC J V 10 Enabler Mdel I Arporate whirlpow corporat budget Developing Innov Culture Training developing m le D tap executives i nvolvement P M project sezections strategy ur Crpo rate Ve ntu u foe mpBUS innavatin d I Aivoca tor od ei Corp Ii m ited power limited budget Sharing Innovation ex P I Eivangeiists Work with BUS in innovationi a stay with existing biz portfolio P agenda u Producer P Four Corprate Venture 0 oiei Cisco pd Ei n funding H Sipaci Stage by 0 dif PEOliaSSion nsuemesr market P t p 0a quot P i K 1 quot39 i 1 39 ICU I P P P 0 0 0 0 1 b I A A P V and L dw x aiine P p P ulneravible 0 0 p 0 p C 0 T C P 1 V quot 3 xiv 392a 5 p a 11 E T 5 0 0 B L 39 F 7 Z I u g r EL Y7r ii up 39 r 39 EB quot r B r L n n V L x B h V A 3 393939393939 9quot W g 39 quotF 7 z 7 W F wr 9391 2 1 V17 quot quot 39 e P9 B Q 112 P A J T A 39 p A me S in Is To build sufficient orders to achieve an operating pr t 0 N P x by Bhatt targeted projects defense dept 1 2m Toronto shopping Ontarillo Hospital l0ml 5 Fl W if 9 F 0 4 4 s 5quot H 1 l 39 quot quotquotquot 39 z p was the result 1 4 o is r q Lo HospitaJ failed l0tler pmjc39ctsl don39t 5 0 m 39 pn m m f m l 0m bo g 3 m was die bad news GE Supply and the m a GE Supply not interested in being the parent of Emrg l Businc s 5 45 r h S I mquot e 3 4 s 39 39 i k fr 5 cf 39 Law in 5 391 E an 5 5e 1 39 3 V E Reason GE supply as a unit is not doing well Change its strategic focus ua its US d Hospital bid in d d 6 rs l lsquot quot 41 a 5 ss Encrgy Management Bi p3 para from the bottom losing a ox 0 8 I 25 b c J p x V if 5 V E I is I cU i V 391 7 G J 39 if 5397 T 4 5 ir4quot S 5 f N if M 39 4 diifelgnt options pros and cons of each tiptionl a lDmp the initiative 13 8 it within Canadian Management function as a X assume p Y other US dlvision s Energy Mgt Business in Canada sinilar to dirapping in 3 Make it as an quotindependent unit in Canada if E em 9 pU 4 d Blhatl Join GE Power Systems 5Discuslsi0n W 39 i 3 K p P 3 hf Assume GE should comlnue this progect not debate on t lus Canada Energy Ef lciency Initiatives 3 Do you think Oppcntunisl and Producer model are good O for GE M lf we use Enable and Advwocatorl models to design the 0 I poctcmial iprrcbl 39n1S islslues39the c0mpanynesd1L0 address egs D 0 G ity 6K rr139ncalEe n me to make either enlablerfadvocator models work J M 9 r 5 v 3 43 C 5xi lwis p Ls F D W5 3 3 7 v s ass v wt quot 3 3 quotF fl I il p A 739 D gb H7 D 0 T w s is is39 w as p Design a system for GE to help the company better manage 0 like GE 139 E39quot P to liriia E EiiEf 3G53 il11 1lV fV f5w gquot 41e47A 2 1 5L 6 3 TLL m P p J L k 0 c m ini T annua y g orcrate Innovative yste 1 Part 1 AcitiviitiesfSyste f P Corporate 16 val Part O Ev Pmgjiect activities 0b n Transpo D 4 tion 7 V 39 rInV r39 A1 4 5 quot39naI in F 39w39 39i yr 1I39I139vr39 quotr quot c rw am q n IiesaE3aui W1 7 I I 39 j I N we as mrhsamg L E 39 T 39 JP 1 9 39 c T 39 A K a Pc 1 r b W i rquot quotaw Pn 39quot 39 r r u 39 2 395 a p w mm54 mazrh n quotquotnL quot v 139 I I l 1 lv 0 w V H O 1 gt gt v l 4g I V 1 F 39 E quot I1 rf I I I Ld quot V VF I 39 39 w gt V 39 39 V gt A l i n n I gt I I I 39 mf 39 quotA 1 w an F s T V W M quotW 39 39 quotL 4iquot iss s913t fi tmratw ww 39 i In 7 r 11 1 E quot quotnu s z 13 u r391 41lkvII r s c 0 0 c b b e e f q A 0 p 0 m p a g 6w 394 p 0 is i ii in tmr 1 LH ii 1 Q as M 6 M 9 HI 39TE lIIltH E Transp0 Perre amp Brett l Jv i p6 H 1 K T j rrmI4 gm Q I 1139 a w viani39zi Li r eI 139 4 39ifv I 1 39 9quot T g l ru dquot3939aJIiq l 7 vI i139IIrlquotquotgtl lJ 339i39 s J9 f V Emmi I rquot11JulLirLnu39 IA Fquot bquot Iii l iiLr 239 1 I dull w 1 i u P Q wk 1 04 in ii iii zgj iifli vi Hi quot r mIE quot31 iquot139395quot P an arIa 5 E 39Iaaav5 is 5 M I 139 H quotII I F39amp 139I139I 5 W M ri 1393is395 nquotquot E nu 1quota3939i39THZ 39l ruW 39d39 dP 39 w ra 139r 13914 re E Pi ad F p q4 quotn IL aJ n n A V l J H 1 I pf mi 1 1quot M x Hquot39 w 39 I39 39 izi IMFi 3943 c 39 i u 39sqI Ia E19 in L g pn g d u as4 KHIM cu aaggvua 5n ME 1 5 0 1 l l p I4 Vh M 0 g A Building 39ew Cquotu1a39bi itieI P 3 e I139mpmraeIe lnenmalion System i Lepahililie5fTaenets What 0 competencies capabilities did GE r Ii t 13 urmnic growth Strategy What did the CEO irnmelt do to devee pJinvest M 2 e P unI 1 plerMieeS39 What was unintended byproduct of WeelehV s en C1Ti ic39l391Cy cms1 culL1ing philosophy Techenulngy lenvest in RampD vI1rIlteteing aChief Marketing officer WccI1 s emphasizieng on ee iciency focusin g on internal process inward on emcrnal market hlj jgJflgmjtuiPevrsouui Cgrn ererxrcies D3 last Darg 2 a Capahimies39taIeentes who are growth leaders what their charaeteristilts39ewha1 did lnlnneelt do 110 deeseIope such leaders 0 l39 xten1aI focus Tltinking clearly 0 I IIElgIlIallDI and courage gt effx H lneclusiveneses and connection with people 6 e E e 2rue S ln deeplIe1expemse 1 A J s7PL Q I Acleioells p4 3 para q 0 Training on these traits 0 Without these traits no career success at GE perfonnance evalualion 1 Slow mlation give leaders time to develop deep expe isee of market and customers V739ruI zfe1ireiH 3 01WIefr1 roe ws am efefricese D4 LeAl n uv What are GE s three core processes in its operating System Session C Session I timwtlx 39Pleaylmak and session I1 How does GE use each to support its iI1l1U li1111fgF0 ll1 strategy lmckegreoeuenmdt C2Lpl31i Ilquotl sessions HQ people talk to BU pcoepk Scs5 inn C HR Recreuilr promote and deploy teehfmarlceting two key competencies taien1se lfleveelup growth leaderts 39 cssiuIm I SM 11Leg39 re39view gr0wthquotplaykV39 nun dcm39n discusS market trends met customers needs Growtll Oppn uue iei strategies to capture them 39 Sessicm 11 Operating Budget Focus stretch targets less on line item expense reVi quot quot5 39 39 Eacli bits commitment to invwt in and w on growth projects rm cut u tn enhance short term ebjecteive5 q Mgn Haw gg H1 15 b au wl W I5 393939V39quotquotquotquotquot quotquot T quot 39 quot 39 in key c in cm A 0 pwplen F M g x T Now ex Asmion pY Aplayboak In idaiivet 5 abmrc GDP fd uble GE 0 I Session An Net M i T u Agni U Elmiai e39 L3939 m0quot quot J T X I New business idaa5 Q BLF5 W a 3 Pr 0P0Scd to CEO am y marketing cmnmitre fr quot3 2 W A T 1 P quot Review and select CEO approves 35 out mi 50135 a H lE 39lOnlte selected BL y to P v imcubm it quot i CEO persona juquot re cws y Es t peri0dicaHy 39 Note IBM use EEO to du r vwen v g the feel do not have p w EH05 in c0I1tribu1e 2 of carp gwmxth5 thought CEO at moniitur t gpmjiects tn 1 8s on1r ibut2 p s e i p 3 q r p 0 r quota4 Jg E JL Ia q q q J q Tran3pormn 0n o F rlr5 IB grhxe Em Stone I35 5 o p q Baczkgrnund of Evolmicm Locomcm39c EVDVI l1rOjeIt f9 45 E 3 J 1 J 0FfEI39i5 afme E10fLunf0P1Lv 4nz0me n irvttl P l jmr Ki ta pi 14 AC44D LDng haml sucVc es Jl hx0m0rtive Domil1ate If E h j 5 pc I AC6U0 S laned in 95 Earl day rim 5 r 39 0 d ii i T i i c d 2 0 b Iquot s quot39quot 1 Em Becanwesgnd LB 6 39 Hot tb Manage llnnm alien Pm ecI5 N g H 5 d I 6Strucmire A er Em becan391e an IE CE nm itm WIEM if manage me progress of 1e Bi prcgien1 7 Hum b I5 G Mm mmd A Ii P what do Il16quot d iscus5 T39 i a i a Y Miaa quotquotquotquotquot quot 39 V T 0 U P S CEO mDmM ineemi39m1t n remu sewmral mprujeuis 4 If ii O f3 15quotR 39 quotEach IB meet ufmh C0 6 3 5 m m395 X T Mee1iang cm mevor A W ND ppm quot0 mom V mg V document lmensc QampA 39 10 W V T U S S 139f39mf PHT CT E 0 Q e S q 3 nllquot 39 1 quot 1 ilE U lt1quot 2 15 5 5 3939 395 all gsan z J 0 9 V 5 I l quot n V h e rquot pfY 4 7 ah i 39 quotF n V W n 2 r 39 3974 Total What is CECOR see also Exhibit 5 who mued it out far whom IE are rqquirciy use the tool we U gJ hl El p p qi Elhgill l In the IB meeting how did lmmellt challmge the Evo sales team about stralveg39y What is his view of getting pro t margiln in deflationary and nOEl de amptiDnmy time queue at39ll1e end of 5quot paragraph of page T same 3 In a lde atliolnary world you get margin through working productivity New in la 0 time rmndeflationary time you need marketing to get a price to get margin l 0 Pz 0 39 g IfALf4 pr H4 9 optilonal By 2006 was Evo project a success Mlana in rlhel Li 39ag1cle3939 Raisin the Era Babies T T CreaIllngfl lanagin g lxmm ation System BU Level ll 0 Structurea MlerlFol1n Dineen become CEO of GE Transportation in 2005 he Q Growth Council what lSl 3 purpose and how does it work p8 539 paragraph 39 I 5 l B n5 l p lgF tar 0 ad 1 f BU levelfhtg lly ramp iw cf all growth inliltiatives lrojects of39GE P unit 39quot g l l 39y11illarlloc0rpora39te Cir0w39th l3layb0ok process meeting D V W P E r Ht 1 r r n i S 2 T s P E lf4u M1 3 2quot Jr st V H 5 l ll a NVew CapalJllliliesf39ll al entsi M19 339 para Dineen assigned l Bayhan to be the 39 Inarketling leader for the Ll0cmnoltivc PampL unit reporting to r was rm reason behind tllls assignment Wlmt signal did Dineen to send mt l I I 7 u 9 y T 4 K 43 T 1 ln the past scrwlmg good talents to fleclgmg bll 15 hard l2l New lquotrlDccss This secliun also cliscusscd the challenge fort marketing must pFs people to blreak imo well establlislmd pmcilesS mat was dominated by product PNp mcnt l and c nginetrinlg p9 lth paraglrapllml Wl1at is the challenge and the Sq for Bo s 7l clmfllurnge lell you whv llincen triecl to assign a well reoogiizecl leader P l to l q lsnm11miv l ampl unit lt m as clml lenging For marlacting most of marketing people are n 7l j Uutslllerl En be integralted into GE39s traditional new producUbusiIms u1 process quot0vl IlCl139WaS dominated by product developmm 51135 af C quot Sl 0 f htlallns to break this Inpass Jim 6 39 CmatingfManaging lmuzwation Sysunt BU Level eg 13 Stmctume In quotMay 2006 Pierre Comte e p d Chief Mukctimg lquot339fGE 39 quot 39 b a quotI Transpanatilan Can you use the a chart in axhibil 7 to cxplai aigni cwce 39 E E quot quot uppolntmtxnt or why this h positi la CMO makes Marketing as a n1a39it1s I 39 l391 39 39 T ptmriously menIion d challlangns for In be39i1IegrIIed7u1lolGE s MX f 39 GV Z bX hX n Y E I quotaquotquot7laa2i kff VY 395 ll 39quot 4 6 I E 39 LL quot639 a 8X 39 if tV X an instead alga ask it an innovatinn might be valauatsh E a r E i f f greatest torts vaiue mam the innirvaiiun Mow innmalors enough freedam tuer1able break hmugm n a or re envisian the core the to 01 campIemen tary name can or Pg 39 ATma E39V E U2E cn5 amugggL3 2 P 39Ys39 P 39J39 quotf 52xii uni K 39 m PercentagE O IBM P 8M ptl uiI H quoti I 391 Build emergilig aresseqs A Arlmm core bus inessesA Time yea P Hmizona 1 Under t a as Running out of steam a an i Euratlng but aim bmineasu the 21 an3 u 3 9 1 35 I E l H L n q 5 H H quot391 quot iquot39 39 1 K T A 0I ev separate co nsation 0 eg h options for v H L v easons for decisions yur 14 6 teams do to ng Ho 2 much is finvestegdi to new Securing Funds eneral who J p V W Pq k ps 0 or business FOUPS Itsquot i J ca I 39 1 I I 39 v v39 2 3 H J hY k 39 39 39 w 39quot 39 I 1 I V PGY V V V I w I gt I I 3 V 7 0 m 1 i 39 I 391 w 39 I 1 39 r V m K I I v PO a 9 i Fa i b h h lquot n j39 F9 53i39fI fji quot 4 4 08 LEquotH39Jquot 39 i7 w1 in E A 1 F 9 E 395 rszFr I f tmjr Eh FA quotn Tr mi kF E dT r1I5T 39 Sryq AEgg 1gid iiilth 39i 1 391rIquotEo 4 V I K a g A 4 79 E iIL Zr W gg r z 1 5341 ha igT mg mgni pF HEELi P p6 b s ma rketseg ment psha re PT P prduct t tin A cm any repll 3391 W istakProble A 0 T 1 p ze assessing new A f 0 realistikcmanaeabal C Trackin Jlestone rprtin 1 u P an 5 in i erly stage the monitoringtrackn mainly focuses on wht r f measures Tracing 0 0 reorti 1 For an in midlate stae the monitoringtracking mainly 8 8 of measures C Trac n nd ng inancial p R p 1 they Q p A reviewin V 0t 1 I Pe E V 1 Evquot i gt l V 72 g n Innc I i in L J A p lease explain the ra of usly comparing bu iutaw 0 4 target P p Sirate9Y and P z x V 03 a What kind of co 1 V devep A p 0 I 01 Tra n sit 0 n ffin A 0 0 k cmpani P p 0 o A 0 I j existing biz d having such Iear n A 0 0 p P n iP1 l i39 3 g 1La n34 In m n1a n nIa r1nAr n l39 ltFnF5Ii39 ie i TJhv ijIaE15lift 3 3quotquoti 3 I 733 39T 3 IL quot145 39339 hquot IBM Preram M5l39U 1rnia W adclxitienal and updated lnfennastiieinl G2 u if In 1999 Cara lvimrae was ruwnnlng a 700 p ersen business wlthin lBMr39s research a rg rani2atli on ln she wins askedr to st art a new Life Sciences msilnessl witgh one person rerpertilng to P2 This the epiperttunfity 4 to help custernerrs in academia gcwernmeent jpharmia ands hospIitaIis initegraite the rnassive alrnreuntsl of infermaltii nn the new cheamistry and h ielegy glenerated Harrell Cnrporate EBO program head notecl that the epportunitlries were enerrmseusl it was he rd to figurrer out where to starts lA Itlheugh the initial instinct was to target a half dozen tent iall epp0rtunlities the decision was smede to focus on only a compiler Otzhierwise lHairriel d said quotyou end up thrashing everything and we end up with nolthingquotXl The rsucceed would req uire lBM nevi to sell eixiisting prndm39ts but to help customers ldevelop integrated rselwultfilonsi This requiredi bath ltheug ht leederslhrip and integrati un aerossi fuur majnr uw TS DT m worse frern the lperrsperstilve lei the hreacl of each or these lsliilos any life science business weuld he seen as a small incrernent in saIelsi pmrebab lv not wertzh the effort Hewever frern the filrml 5 pelrislpelcitive this new market representserd a perternltialz p billions marlget within 34 yealrss Wetxween uprilliri 2000 when she bieagan and Nmremhelr 2 when she left the Life Science brusiness grew to as 5 biilinrn hrusinae5s In mlasrnaginrg this pr te s Carole gruadiuaterd some of her eiariy biursinesrsies and has generated a new EEO in infier ma tienbasesd rnedirzirne happenetzl iberau se she established an 39rganiz atil0rn with di erent pieeeple svistemxsi istructurres rewards and cultlulre freirn the larger line of 9business through whiten she areportldi It is else lbgecause of the EEO process whit he prrcnridledi her with the lsuippoiri necessang to leverage across the four silols wirthinl R lFnr esarnple wlhen she needed the senrer gre up to prmride surppartl for KO ihirghr rfoirmance clemlrputii nigl Cerrperlatse EEO leader ensured that it happened amp when shielIFer1med new partnerships and ice used frizcti n F the part of IBM in charge of developer rellationlsihLipsil senior support was Errlfti ll wh erlnl she needed an n SUItii1n g and sales supnorrt frrorn the lcensiultilnlg arm of the mrnpany EOE seeders age I1 hmkened th at Carrels peianterrd nut that sihorbterm goals of rnarture Hmizion 1 hL55quot39F selvtierri ehgn with those of heniwn 3 businesses in ng on what the leadership chalienges were Carrel natedi that One of P key jabs af seniuar leadears is ten protect the E30 and take away some oil the celnslraampilntsl You O tn the innmratien p r jfEE t so tihev can be mostly external in do time she Kdise39ilp1Iilne and has more internal fncurs hecernes rnnre neceiggaryl But p7 emu graduatg was garlyi risk ggetting eval uated as a mature business o o o V s w t p x 0 pH X 04 T T Var c svensairs and mctuators iinfoimatLio i I i I ireitaii iiiiiian WebFa Lmtain and tmsiness mndels for emerging ecanomie5i A 25 p p 0 i T S at i BM s iEiB O S i as a perceint of total reveniue was 24 tn i LIE for acquiiisitiun EEO leader wuui i to a business unit heawzi ike hardware 1 are p would aim report to the sen1iorexec ut iue at Coirirate Strategy Group I program p new oppartuniitieis pR duai repoirting prmajided corporate P EHSULIFE that imiiestonies we re being met and rresnvuzrces aillincated as p as pirmri1deforimlia bomtion EIEFJDSS husineisses and the D39iP il3 i tu nitv39 to qguickiy resolve iisauies as they arose identiwinig Tn icjientifi new ein1iergingiTbu5ii nEss CQpU1rtUi 39MtiiE S that waerrant the attention of seniur A 0 iwi c e a year tihsere is a fEiir39IFi1ai pmcess in which ide are saiisciitiedi fmrn both iwithin FE39IiLjT uPuquot E and Distinguiisih ed1 Engineers RAEuDi Marketing Sales and others 0 eg T T UEl 1E LIi39E irapitailiszts extearinai ercpvertsifi These siuieisitions help iidentify A 8 tmsisness mimdeisi and aatitrracitwe new ma riketsi This e nwrt typiiicailiy in than 0 p Tiimae are 15 mt ixniiized and rediuited to 20 or so and smali tean1 iaire fD l1TlEd to din ai i39itIPEiE aniaiysiis Bgaseci on tihease f n dimESj Harrreild head of Cnirporaite EBB will then Py tn prI1i139IIi4539ing ideas armng senior exieic uitiveii5 and CiUStDImIEl39S to determine aceptancei Once Aideas have Lit E SiZ d this test the cmip raitie s tra tegyg r1Q uip wili then dun B 39 deepz diivequot to ma s0 wet the j anmsu1trminiIy hm Zp a rm1d idaie for an BBQ the business should represent a patentiai for n in h i q 0 c iIIE mquota r391S i39 prom PCc nd i i iai 3kPtI leiiadeirshi provide for cmssIBM ilevemgie hand o eir a j mums at r U ail us I ii 9 Arr urn I ii E iThq Ie v pirincirpm Esta biished for the siuiccess uf an EEO are g e g A e at tfhe lamns learned in iEM s ifaiiiiures to enter new biusinesses d the 1 b a zd q M aittieintmsn F to new veinturesi To snive this P ail E 305 are 0gc C c Pc 0h d A k V 0 b P of m 0 Vc pM ph CAQ quot 39 itE39 Corporate X leaders meet muntihiy both 39 Mriain in the ling Inf business E301 reports in review miiesta A th39ampr i p uf itrta 39 iIin t iiIIf s 0o alignmeinit 0 provide p 0 7 i 0 0 E E pr j IEEIS inviite very expieiirienee di peopled iwhe have buiit big b uisines5ers have learned a let aiming the way who understand 0 z a nd are cernferta bie knowing what te change and what to tesrt IBM also train these pie the skins needed for the emerginig eipporiuinitiesi Mn aiinsrseci env Aiianment Since an eixpliiciit goal of the EEO process is to add re 55 business oppe rtunities across the corn pansy carefui attention is paid in E l15ili iI39ig tnat the line businiesses provide the requisi te suzepepert even when it rnay run CDLii1tEVl39iit0 their shrtetierm iinter estsi Fer E al11wp iE ea fly in builidi ngi one of the EBO s it became ciear k Vt h t it was nercessaiw to build as consulting team to support clients iHcawerver doing so W uld negiiaitiiivey irnpact the cen5uitingi grzupis utiiizatiien and ipmifits To cwercerne this shortterm obstacle the EEO tearn agreed to fund the staffirng wiwilei the censuiltiing greup did the actual hifring and training This assured timely building of itine censulting team w39ithcrut cen1 premising the longer term iinitegsriatien of these cenau Iiian39ts inize the ia rger tzcinsiuitinigi groupK Hieisources Fenced and Menitaereiidto Amid Premature Cuts it is one t391ii l lgt l afliocate funds for a new iiniiiaiive and another to ensure xthat the funds are spent iacicerdinng tn plan IBM EBUS are funded tlnrougrh their Iinie ofabiusinieiss but the fund alienation process is riair efiuihr meniie red iby Ce rpera ire EBO tie rna ke sure that the new business r39ecei vies its fuii funding and wheri needed they can rieeeriae further Tinjerztiens nf resources from Cl3tl39JOTIquotElttE Awrnnris Linked to Criticai Miiiesiienieis A iceir learning ireim the EEO experience has been the need to carefully define and rnenfiter pregress in meEting r39 ilE5t39DiFIE These b U5iii E5i5E395 are rneasured against these miieStonies and net the fine ncrial rnetriics of their iineefih usiinie55i quick srrerti auicik siitiieg IBM has iearned that speed is often essentiailv in estahflisihing new ventures Thieirefiere if the new be siness deesrnit meet its milestones and connect withi cuistcmners P needs to stopped or rnerphed irnto r1nething else The intent is to get into the market quickly with an experiiment iearn it and adjgust EICl0r39 i i39IgIV or stop the effort Scourge frem quotGrganiaatienel Am bidexter ity IBM pk Business ppeartunnies Juries G39R 39il1rJ Bruce Haneld E Mi iaei L Tushrnan Mair 2 ca ilfurnia 0 Reviewquot p and ii gene by man gm Jose Alvarado Individual Learning Corporate Innovation Nintendo was founded in 1889 and it was one of the pioneers of video game consoles in the early 198os5 Nintendo s mission statement is to create games which are fun for every member of the family Nintendo is one of the world s biggest video game developing companies In the 198o s it was the most successful game developing company at the time1 but lost most of it s market share to Sony and Microsoft in the 199o s The Nintendo Software Planning and Development division is the premier development arm at Nintendo The division is divided into nine different groups within two departments the Software Planning and Development or SPD and Software Development amp Design Department or SDD where each group is led by a designated producer and group manager 1 The Software Development Groups are each dedicated to their own genre of games For example the Software Development Group1 or SDG1 is primary responsible for developing titles from WarioWare series Rhythm Heaven series Friend Collection series and Metroid series The Sound Group is responsible for managing and developing music The UI Design Group is responsible for developing additional Wii Channels the Nintendo DSDSi General Interface and the Nintendo 3DS general interface The Character Design Group is responsible for managing and developing characters for Nintendo SPDSDD internal and external projects Each of these groups are dedicated to different projects but one of Nintendo s greatest weaknesses is preventing these groups from innovating outside their respective domains This restrains Nintendo s innovation groups to their classic genre of games which ultimately limits their customer reach Similar to HP the corporate level of the company needs to focus on innovation There needs to be a change at the corporate level to in uence the groups to pursue other innovation practices Nintendo s controllers have been one of the most innovative in history setting the trend for all future controllers The FamicomNES controller goes down in history as the first widespread success for the humble d pad on a home console controller3 It was also the first major system to lean left The Super Nintendo was the first home controller to quietly add shoulder buttons The Nintendo 64 s analog stick was the first seen on a home console controller since the demise of the Vectrex in 1983 and has been copied on every major controller ever since3 It was also the first to install a Rumble Pack making it the first widespread use of force feedback technology in a home video game console controller5 The Nintendo GameCube s Wavebird was the first official controller to use radio frequency as a means of communication making them far more reliable than the old Satellite pads3 The Nintendo Wii was the first major use of motion controls as a standard input device for a home console3 It s difficult to imagine future game controllers that don t have at least one of these features The UI group was given freedom to innovate as they pleased and that s why their controllers became so so popular The Nintendo Wii was probably the most successful product that Nintendo ever produced The Nintendo Wii quickly outsold its competitors It was so successful that Nintendo started creating a lot of supplementary products to support their core product Developers used the Blue Ocean strategy when developing the Wii by targetting families while Sony and Microsoft were focused on young adults This relates back to our class discussion where companies develop supplementary products to increase sales of their core product Nintendo has also missed a lot of great opportunities for innovation For example when Satoru Iwata president of Nintendo was asked about Nintendo s future in developing app games that can be downloaded on phones he responded with No one knows the future but I don t think that s going to happen with Nintendo 4 This seems to be a case where management refuses to explore innovation in an idea where other game development companies have been very profitable It was estimated that by 2014 50 of all games are being played on phones That s an incredibly huge market that isn t being explored Red Bull jokingly responded to Iwata s remark by presenting 6 Nintendo favorites on their video game site2 The site depicted images of what these famous games would look like in a mobile device One of Nintendo39s greatest weakness besides mobile games was failing to innovate products intended for hard core games5 Nintendo needs to go beyond their classic game styles and develop more series games to reclaim its lost market share Relating back to the idea of Champions within a company president Satoru Iwata himself proposed to take their Brain Age globally after seeing how successful it was in Japan None of the department managers thought expanding the sale of Brain Age to different countries would be profitable but Iwata was determined to make it happen and within a year sales in Europe far exceeded any other country This was only possible because of his position in the company and because idea generation is limited to high level employees which limits the creative ability of the company Nintendo has also refused to open up their game consoles to indie developers This wasn t always the case Nintendo used to allow partnerships with other companies to develop games for their consoles One of the requirements for this partnership was that the companies couldn t develop any other games that were not intended for Nintendo for the first 2 years of the partnership Nintendo stopped partnering with other companies when they got sued by one of their partnering companies over legal rights to a product that was developed Nintendo has also refused to allow its games to be played on machines built by competitors tablets or other mobile devices that are used by gamers References 1 List of Nintendo Development Teams Wikipedia The Free Encyclopedia Wikimedia Foundation Inc 2 April 2014 2 Narcisse Evan 2014 March 7 Let s hope these Nintendo Mobile Games Never Happen Retrived from http kotakucom 3 Plunkett Luke 2011 June 22 A Look at Decades of Nintendo Controller Innovation Retrieved from http kotakucom 4 Martin Rick 2013 October 8 Before J apan s startup elite Nintendo President talks innovation and the search for something new Retrieved from http thebridgej p 5 Turkarslan Ozan 2013 June 23 Nintendo Reviving a Company Transforming a Market Retrieved from httpwwwslidesharenet 6 Tsukayama Hayley 2014 January 29 Nintendo is stuck between the past and the future of gaming Retrieved from http Z wwwwashingtonpostcom 7 Kim Chang Ran 2014 January 17 Nintendo heads for third consecutive annual loss as Wii U ops Retrieved by httpwwwreuterscom 8 Singh Arjun Pratap 2011 Innovation Management and New Product Development Nintendo Wii Retrieved by httpwwwscribdcom 9 Cook Daniel 2005 September 16 Nintendo s Genre Innovation Strategy Thoughts on the Revolution s new controller Retrieved by http Z wwwlostgardencom Sources http k0takuc0m5814278decadesofnintend0 c0ntr011er inn0Vati0n http thebrid2ej p en 2013 10 nintend0 sat0ru iwata bdash http Z Zwwws1idesharenet Z duman023 Z nintend0 case study 23362686 http Z Zwwwwashingt0np0stc0mZbusinessZtechn010gyZ nintend0 is stuck betwe en the past and the future 0f gaming Z 2014 Z 01 Z 29 Z aaccd4za 88fd 11e3 833c 33098f9e5267 storyhtm1 7 http Z Zwwwreutersc0m Z article Z 2014 Z 01 Z 1zZusnintend0 earnings idUSBREA0 G09M20140117 8 http Z Zwwwscribdc0mZd0cZ 63992146 Z Inn0Vati0n Management and New Pr0d uct DeVe10pment Nintend0 Wii 9 http Z Zwww10stgardenc0m Z 2005 Z 09 Z nintend0s genre inn0Vati0n strategyhtm 1 10 PC 11 http i360institutec0m Wp c0ntent up10ads 2011 10 Nintendo ReV01uti0npd f 12 http Z Zwwws1idesharenet Z MathieuLacaze Z mathieu 1acaze strategy and inn0va ti0n f0r nintend0 13 http Z Zwwwwashingt0np0stc0m Zblogs Z innovations Zwp Z 2014 Z 02 Z 0zZthe the0r y exp1aining h0w 0ne man0utperf0rms nintend0s 5195 emp10yeesZ 14 http WWWs1idesharenetsk001007tnintend0 wii disruptiVe pr0duct strategy 15 16 17 http sch01arbanknusedus2termsofusejsessi0nidBBA942DAFD100F04BDE FE54FQF1E46A5 18 httpwwwgrinc0mene b00k140601wii inn0Vate h0w nintend0 created a new market thr0ugh the strategic inn0Vati0n 19 http scholar g00g1ec0m sch01arstart 10ampqnintend0inn0vati0namph1enampas sdt05 21 http WWWdestructoidcomh0w inn0VatiVe is nintend0 rea11y 28892phtm1 22 http wwwignc0m boards threads 0pini0n why nintend0 sh0u1dnt be 1abe1e d as inn0VatiVe45RR8768Q 23 A A 4 engines Passion an Proje v Leadrs A dev eIo 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quot quot p T c vh 1 392 p H 4 quotL39139un I FEM k v C C x y s A u 139 ifs pi p P quot quot n 4Inte rAnaI Resou PB P v P P x u n 3 2 pP 1 3 R V 0 H Rn 39m 395 39 iFjquot39Ii1quotf39ia39 39 f 395I IE Lr 393 1 me 531 u ILI V F 39 5 quotquot quot r quotv r 9 4 n EI Jwl mn 5E55 in umu J 739K Fquot v39 quotEi a 39 ea39a a T 7 u wim Himr u ungr M w nma m a p r w 39 P a u 2 2 a n 39 391HvruwvVu71 q W V eay ew target ll of 39 four yiears Culture empowered employees f it Comlnunication amongst employ bh I Reward for good innovation at Robust RampD preijects External innovation 0 CVC I Startups investment in Customer Innovation Centers List of seven keys success 1 Every employee in 3M from the CEO senior L must commit to innovation 39 2 3M is actively maintaining its innovation cull 3 Employees can access to multiple platforms or 4 Encouraged networking both formal and info 5 Set individuals expectations and reward emp 6 Quaintify efforts or measured accountability 7 Research must be tied to the customer Link to in class learning 3M is very P8Ii 39 b I Sharing ideas through in What are il1 e custo Corporate Entrepreneurship and Innovation CEampI MBA6607O1 Spring 2014 Professor Roger Chen Time and Day Tuesdays and Thursdays 300pm to 450pm Classroom Room 453 Howard 101 Downtown campus Office Faculty office at Downtown Campus Contact Phone 4154226546 EMail chenrusfcaedu preferred Office Hours Tuesdays amp Thursdays 200pm to 300pm or by Appointment COURSE OUTLINE Corporate entrepreneurship intrapreneurship and innovation is key for companies long term survival Yet corporate innovation remains to be a major challenge to many companies This Course will discuss key practices challenges and solutions in corporation entrepreneurship and innovation It will also help students learn how to become successful entrepreneurs and innovators in corporate environments Lecture case analyses and class discussions will be the main learning method of the course READING MATERIALS Course Reader available at the bookstore Other required materials Will be provided Additional and optional Readings Every year Business Week and Fast Company publish most innovative company lists These materials are good sources for extra readings Please consult with the instructor for other learning materials ASSIGNMENTS Individual Writeup on corporate innovation In this assignment each student will either analyze a company s corporate innovation practices minicase or to analyze a corporate innovation topicpractice through multiple examples and stories You shall try to link your individual assignment to the corporate innovation topics covered in our class You can do this assignment through attending seminars interviewing managers andor collecting materials from the Internet Your report shall provide rich evidences convincing analysis and clear learning points The report shall be about 3 pages long not including appendixes double space You will also need to share your learning in the class We will arrange two classes for sharing about 3 minutes one will be on April 15 the other April 29 Students in the class will be assigned to one of the sharing class But all the write up assignment will be due on April 29 Exam There will be one exam at the end of the class The exam will be open book and open notes The exam is to test your understanding of key conceptsframeworks discussed in the class and the application of the learning materials to corporate entrepreneurship and innovation issues In general there will be no makeup exam Except extenuating circumstances eg medical emergency reasons requesting different exam dates will result in penalties Final Team Project There will be a team project in the class The project will fall into one of following five categories a Consulting project eg helping a company solve corporate entrepreneurship problems including set up its corporate innovation program improve its corporate innovation activities etc b Case analysis successful corporate entrepreneurship cases both at corporate business unit or at project levels Each year BusinessWeek and Fast Company publish most innovative companies These publications are good sources of case companies You are also encouraged to do some original researchinterviews for your case project c Corporate entrepreneurs individual levels lessons and best practices of being a corporate entrepreneur data source combination of secondary and primaryinterview research d Current trend of corporate innovation practice Corporate innovation in emerging markets or by companies in emerging markets Key Requirements of the Team Projects a Project Support Meetings with the instructor Each team will need to meet with the instructor to discuss your project preparations The meeting is to give you feedback and comment on your project designs and preparations To benefit from the meeting each team shall prepare detailed materials and questions regarding your project b Project Presentation At the end of the semester you will need to present your project to the class When you present you will need to provide the entire class a one page summary sheet and a hard copy PPT of your presentation to the instructor Length of the presentation will be around 12 to 13 minutes We may adjust the presentation time depending on the number of the teams c Project Report Each team will also need to submit a report and the report shall be around 15 pages long not including appendixes The report will be due on October 9th Wednesday 500pm d Project Quality Requirement Please remind yourself of and compare your preparation work with the following requirements 0 Applying you should make best efforts to apply the course materials to your project 0 ExamplesFacts Your project shall not be based on perceptionsspeculations You need to provide sufficient factsdata both quantitative and qualitative to support your analyses and conclusions Please avoid long and pure theoreticalconceptual discussions 0 Quality of Analysis Your analysis shall be logical insightful and based on facts and effectively apply the learning materials to enhance your analysis It is important to note that just describing the innovation activities or stories are far from enough your analysis shall also discuss the causes tools approaches process and methods that ENABLEED or FACILITED innovations in your companies 0 Focus and Clarity Although you will need to cover sufficient content breadth in your projects each team will need to clearly convey your key messages and make sure that your audiences fully understand your key points especially when you explain complicated arguments As long as your projects have enough breadth cover enough content doing an excellent work on a few selected topics is better than doing a mediocre job on many topics This clarity is especially important given that each team only has a limited amount of time to present and limited space in your report At the beginning of your presentations I suggest you clearly explain what do you expect audiences to learn from your presentation at the end of your presentations you may want to restate what do your examplesworks tell us what are the key insightful not shallow learning points of your works 0 Engaging amp Interesting It is important to engage audience when you present Peer Evaluation At the end of the class each team member will need to INDIVIDUALLY submit their confidential peer evaluation on the contributions of each team member to all team works The evaluation form is included in the later part of the syllabus Class Participation and Your Professionalism in Learning The top criteria for your career success are the strength integrity and professionalism in companies you work for Therefore students will be evaluated explicitly on their professionalism as well as their mastery of the course content Students should consider each class session a formal business meeting and they will be expected to conduct themselves in an appropriate manner eg browsing the internet checking emails texting doing other homework thus are not allowed Please silence your cell phones prior to entering the classroom During classes please close your computer and do not text or email If you must communicate with someone outside of class please leave the classroom and return when you are done An approximation of your individual participation grade may be made by the following matrix Grade Participation Performance A Full attention and frequent informed contribution to class discussion complete preparation of all assignments prompt attendance to all classes B Full attention and regular informed contribution to class discussion complete preparation of all assignments prompt attendance to nearly every class C Occasional contribution to class discussion adequate preparation of most assignments prompt attendance to most classes or occasionally texts emails or browses internet in class DF Little or no contribution to class discussion inadequate preparation of assignments absentlate to many classes or frequently texts emails or browses internet in class POLICIES Academic Honesty Academic honesty is required for examinations and all other course works The instructor will use specialized internet sources to analyze suspected cases of plagiarism A grade of quotFquot andor other University actions may result from dishonesty Grade Distribution Quiz Individual Write Up and Sharing 8 Exam 37 Participation amp Professionalism 15 Team Project report 30 Team Final Project Presentation 10 Grade Definition A A A Superior or exceeds assignment expectation B B B B Mostly meets assignment expectation C C C C Partially meets assignment expectations D and Below Does not meet assignment expectation Following is a general guidelines Letter Final Grade Score A or A 945 and above C 60699 A 90944 C 50599 B 85899 C 40499 B 80849 D Below 399 B 70799 Note I may curve the nal letter grade if the scores in the class are skewed Schedule Date Theme Topics and Reading Materials Mini Topic Assignment 3 l 8 Corporate Topic Innovation 0 Course Policy IIltI 0dllCtIOIl and 0 Corporation Practice EntrepreneurshipInnovation Introduction amp Challenges Reading 0 Chapter 2 Assessing Your Organization s Capacity for Breakthrough Innovation from Book Grabbing Lighting USF Site 320 Managing Topic Innovation Center 0 Operation of Innovation incubator new venture incubator Reading 0 Case Innovation at HP The Role of the Innovation Program Office IPO USF Site 325 Org Structure in Topic CEampI 0 Funding Structure and Organizational Homes of Innovation ventures Four Innovation Models Reading 0 Chapter 3 Emerging Models of Corporate Entrepreneurship from book Grow from Within USF site 327 Org Structure in Topic CampI Innovation 0 Homes of CEampI Activities Reading Case the GE Energy Management Initiative A USF site Case B will be provided Schedule cont Date Theme Topics and Reading Materials Mini Topic Assignment 41 Corporate Topic Innovation 0 Corporate Innovation Programs Program Reading 0 Case Emerging Business Opportunities at IBM A USF Site 43 Corporate Topic Innovation 0 Graduating Emerging Programs Business Projects and Scaling up Reading Case Emerging Business Opportunities at IBM B class handout 48 Guest Lecture 410 Leveraging Topic External 0 Corporate Venture Innovation Capital Reading 0 Case Corporate Venture Capital at Eli Lilly USF Site 0 Other Reading UST Site waiting for instruction 415 Leveraging Topic Individual External 0 Open Innovation Learning Innovations Sharing 1 Reading Article Connect and Develop Inside Procter amp Gamble39s New Model for Innovation Harvard Business Review USF site Schedule cont Date Theme Topics and Reading Materials Mini Topic Assignment 4 17 Individual Topic Class Ends at Entrepreneur s Managers as Corporate 400pm View I Entrepreneurs I Remaining class time is Reading used to 0 Case Nike s Global Women s Fitness eempensate Business Driving Strategic for your Integration USF site individual learning assignment 422 Individual Topic Entrepreneur s Managers as Corporate View II Entrepreneurs II Innovation Topic Operation Building Innovation into Operating Routine Routine Reading 0 Chapter 8 Managing the Risks of Innovation USF Site 0 Innovation Review reading USF site Note focus on Operating Routines 424 Management Topic System and 0 Building an CEampI InnovativeEntrepreneurial Corporation part 1 Reading 0 Case GE s Imagination Breakthroughs The EVO Project USF site 429 Management Topic Individual System and 0 Building an Learning CEampI InnovativeEntrepreneurial Sharing II Corporation Part 2 51 Guest Speaker 2 Exam Review Individual Learning Sharing 56 Learning o Exam Assessment 58 Re ection 0 Presentations 4 teams TEAM PROJECT PEER EVALUATION FORM Individual and Confidential Your Name Your Project type and title Names of all team members Contributions to group projects pick Note optional including yourself one from below 1far below group average 2beloW group average 3at average 4above group average 5far above group average 1 2 3 4 5 ooeW ou r2gIING NOTES P 0UP so lt12Gm zozTiorEowooM1ms Bosmoss i3EFORE L gfj SI1CTiCl1 p p L R p t CfgoniLat o n Strutmre 39 o o 9 Cidwhat off the Bohuosiness units and whiclm busincssooitiso1i1eboig eSt R 1 I X Who are xo Stiimcnsions Nikvfs 11m1rix 0Iga11iZamp i0l I no X hisinatrigt39 stfuoture decision making and ipriority souing are riv39 39 don391ii39at db N H soi oh 1imoosio39n V L o 39 ooooimdo3 3 oW15d Ted a1dir1g gender Fema1 Ma1e to its mam oganizationxxh3v7A p 0 7 itdidoroioohappenop4 L V o L 4 o n 6 aamionoxwitoin Nike cmpmtion Do hoof ac poop1 ooopcate coordinate across different business H P 8 1 p Pf ofp3 P page 4 rs1severalparagraph P I 7 Wlzat for the dif oulties in cross unit cooperation How do ocyclensj of p quot quot ni pr u t i 1 3meni in cachbiz unit cause challenges to cross unit cvooperatioIi 39 quot teams p4 A3 Ni1c s Women husintss before CfIquotjao39gi tlio Scofion p7 y quot Q3 PS ivitl1in a are funoctioonal people soaj branding Y Y p vhhred in new product do t 1opn1o11t from catty on p41ELstpa1fagfapl1 p quot quot 39 an each business unit are busit139ESS39gifiori1ies3 9 21 Does Niknfs culture and OPCFEW3 5 E1o39irti1re favor poaquotrti ular geiidcr noalefeziiaj oo7 X 0i b Before 1997 what were Nikc s effoiff1 gquot J71ci739ivquotEa ii I3SSquotiAii u 39 0Q paragraph 39 p pw 6 c rquot f3c 399quot did Nike make more i 3dil1Stingstmotoro5aIid39addiI1g K wm non 39J39oocr3 135 hquot DE Li W h39i isc r ir39s39s collection P gm p I P it corporate39l 1 l i itia1iveoWha1 waSt11e39outcoo11e39quot D p 994 quot l1 1t P4 L o i i f wk 2D V A5 Wlmi llGl ih39t39 l1mquotI l 7 rs ue Hawk fmrw in 1ili39h39tTi pAime Jjl WM L rmmIIm f mi II 3quot a rairrMe Hi We fsiBfIi I7nrm39 Ah xjlumt mac Wmmtnquots 1lixiaMltIarcr H 1 Hm tl391 39WZ fV iiiffd Ingciht lau rmr um I ha 1l1my1t139a39siaI the wmnm s huincas cr1fm15iMii m n1g7i fEi3 quoti i iTi 7W 4 39 uh II21411 11391mI1Lquot in H1at M5113 l1ad 3 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from the bottom C15 The case mentioned cveryoneJscntior39 m tement p m talking MH wmmk business six to nine months into the pmjcctquot and the team sint1crpreta ion of sitwficrn p18 2quot para if your new irti attive tproject facets d sistuation would you be lI Kb Would you do to tmanagetdeal with the situationl C l 6 What was the challenges causctl by team member especially the b level people change p13 2 P mfl l L Summary on Nick Strurrmrc 5 early Wumm Iii eftnHn liackgmundz l0rgSlrL1tur c39 1 dim nm ix 1 V quot P09 8 0G E W urm regmn categnm Jinn gm 4 0 0 2 Sitaltns of C10rl il 11liOnE IifTicul t1nlv special M eJ1lsj5J mfzfs f i 7 39I 1h iquot sc1cdulcs read last para of p3 I T g F L J t mm 3 Wmncnis business before flhange ame Iu1i aliver Piaf 97 Only Marketing tricks nun suh lam E mnng i Mater 97 Crca1 c a separate team in 9 I3 pieng e first wmmih Fi irquoti91 h et3frl M Mtia hjz an the same xgatcgcnziy then a di39visirim EMU I hm mly in hjiii11fquotl339 ll39 rmtnmh llmuadess 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