Driving Performance throughEntrepreneurial Growth:Combining Innovationand ControlProf.dr. Justin J.P. Jansen
June 5, 2015
Workshop APG
The IPod should have been a successful product of Sony.. WHY NOT?
..and why do airliners have difficulty responding to the Raynairs of today?
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Het Financieele Dagblad
Ryanair en de spelregels
VANDAAG DOET DE Europese Commissie een uitspraak over de kwestie van de steun die Ryanair heeft ontvangen van de luchthaven van Charleroi. De leiding van de Ierse luchtvaartmaatschappij vreest straf en voert bij voorbaat publiekelijk campagne tegen het besluit van
de Commissie. Als we Ryanair mogen geloven, beraamt de Commissie een aanslag voor op het 'business model' dat ten grondslag ligt aan het succes van de prijsvechters. De vrije luchtvaartmarkt in Europa zou daarmee gevaar lopen.
In werkelijkheid ligt de zaak precies andersom. De Europese Commissie neemt de vrije luchtvaart in bescherming tegen cowboys die de
grenzen ervan opzoeken. Ryanair behoort tot die cowboys. Net als veel andere prijsvechters hanteert de Ierse
luchtvaartmaatschappij een uitgekiend 'business model'. Zij werkt met een homogene vloot, snelle omdraaitijden, elementaire dienstverlening en goedkope distributie via
internet. Maar daarnaast heeft Ryanair het sluiten van deals met ambitieuze regionale luchthavens tot een kunst verheven.
On
de
rne
me
n in
Cri
sist
ijd
| P
rof.
Dr.
Ju
stin
Jan
sen
As never before, innovation is crucial for organizations…
The product-life cycle of products and services becomes shorter and
organizations tend to introduce new business models
Dutch entrepreneurs have become
more optimistic about
their future success..
45% of Dutch organizations
expects growing revenues for the
coming year. 35% of Dutch companies even
expects to hire new people.
..moreover, they have slowly changed
their mindset from…
50%
2014
..to a longer-term
focus on innovation
and change..50%
2013
an exclusive focus on
cost-cutting and
short-term results..
Still, the majority of Dutch firms remains to have a short-term orientation
..Yet, an entrepreneurial
mindset is crucial for innovation
and disruptive
growth..
+46%
Business
Model Innovation
+75%
New Products
and Services
+34%
Productivity
The impact of Entrepreneurship on
the performance of organizations
has doubled during the last year.
It has become THE differentiatorbetween winning and losing companies
Source: Erasmus Entrepreneurship Index 2014
But largely absent at Dutch firms..
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Chemische industrie
Agri & Food
Life Sciences & Health
Creatieve Industrie
High-tech
Financiele dienstverlening
Zakelijke dienstverlening
Industrie & mijnbouw
Groothandel
Juridische dienstverlening
Accounting en administratievedienstverlening
Onvoldoende
Voldoende
Goed
Source: Erasmus Ondernemerschapsindex 2014
The Importance of Exploitation
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..Its all aboutlooking ahead..
..with a smileand ambition..
Exploration vs. Exploitation
Exploration
Strategic initiatives emergingoutside scope of currentstrategy
Aimed at entering newproduct-markt domains
Creating new options forfuture actions; dealing withemerging competitive forces
Exploitation
Strategic initiatives withinthe scope of current strategy
Aimed at extending currentproduct-markt domains
Creating incrementalchanges; dealing withexisting competitive forces
Differentiation Advantage Cost Advantage
0
20
40
60
80
100
120
140
160
180
2000 2001 2002 2003 2004 2005 2006
Bedrijven die tijdens crisisvasthouden aan investeren envernieuwen
Bedrijven die zich tijdens crisisrichten op desinvesteren, snijdenen consolideren
Of the listed firms at the AMX and AEX
About 75% has focused on consolidation during 2000-2002
About 25% invested in these times of crisis.
Bron: Mom & Jansen
Still relevant in 2015!
Reducing costs and improvement of productivity has
led to improved financial results. But
investments in innovation much more.
Up to 35% better results!Bron: Erasmus Ondernemerschapsindex 2014
Investing or divesting?
What does that mean for a firm’s leadership?
Ambidexterity?>!*??
am·bi·dex·trousPronunciation: \ˌam-bi-ˈdek-strəs\
Function: adjectiveEtymology: Late Latin ambidexter, from Latin ambi- + dexter right-hand — more at dexter
Date: 16461 : using both hands with equal ease
2 : unusually skillful : versatile3 : characterized by duplicity : double-dealing
— am·bi·dex·trous·ly adverb
And what would you consider exploration and exploitation for APG?
Transport & Trade Pulp, Paper, Foods
Other Services
Media & Entertainment
Industry
Informatie & Communicatie Technologie
Food & Agribusiness
Financial services
Energy (supplies)
Construction
Chemicals
Business services
LEADERS
LAGGARDS
CREATORS
REFINERS
Exploitation/Efficiency
Exp
lora
tio
n/ In
no
vati
on
Managing Ambidexterity: the Dutch Challenge…
Intrapreneurs versus Independent Entrepreneurs
Opportunities and Challenges
Which barriers do emerge for employees?
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..don’t blame the manager!..
Vernieuwing van organisaties loopt spaak (Het Financieele Dagblad)
Weerstand tegen verandering zit diep in veel organisaties. Ook verandermanagers zelf zijn somber over hun pogingen om de vernieuwingen door te voeren, zo blijkt uit het eerste Nationaal Onderzoek Verandermanagement. 'Het is onhandigheid.' Kort en goed: de innovatie komt in Nederland niet op gang. Niet door een tekort aan ideeen, maar door managers die niet in staat zijn om bedrijven te vernieuwen. Ze luisteren slecht naar medewerkers en zijn onduidelijk over wat ze willen. Wat ze zeggen te willen veranderen, doen ze niet. Daarmee voeden ze de weerstanden die heel veel organisaties vergiftigen.
In het eerste Nationaal Onderzoek Verandermanagement, dat deze week aan VNO-NCW-voorzitter Jacques Schravenwerd overhandigd, geven tweeduizend ondervraagde managers en professionals zichzelf over de hele linie een onvoldoende. Ideeen en vondsten genoeg, daar ligt het niet aan. Het probleem zit in het management, aldus Mastenbroek. Een gebrekkig aanpassingsvermogen, onvoldoende deling van kennis, slome aansturing, trage absorptie, eindeloze weerstanden en veel onnodige rompslomp. Managers zijn niet in staat om de aanwezige creativiteit te vermarkten. Het veranderpotentieel van Nederlandse bedrijven schiet tekort. De hoogleraar vond twee grote blokkades waarop veranderingen vastlopen. Allereerst maakt de top van de organisatie niet duidelijk wat er beter moet. Daarbij komt dat verschillende bedrijfsonderdelen niet leren van elkaar. Ten tweede staan medewerkers in de organisatie al snel met de hakken in het zand.
Spreek de managers daar niet op aan. Die wijzen meteen met het vingertje naar andere managers. De uitvoerenden vinden dat de top geen visie heeft en dat het middenkader niets leert. Het middenkader vindt de top onduidelijk en verwijt uitvoerenden structurele weerstand. En het topmanagement vindt weer dat het middenmanagement de visie en beleid niet over weet te brengen.
Balancing Exploration and Exploitation is VERY challenging…
1Organizations tend to accentuate the status quo andare pre-occupied with smoothening existing processes
Balancing Exploration and Exploitation is VERY challenging
2Exploratory initiatives are essentially risky, unprovenand generally lack hard data
Balancing Exploration and Exploitation is VERY challenging …
3Organizational Ambidexterity creates paradoxical
challenges within established organizations
But who says incumbents can’t renew and survive over time…
Organizations that host entrepreneurial and exploratory activities alongside
ongoing businesses – or ambidextrous organizations - are
associated with up to nine times higher performance levels
exploration exploitation
DSM has transformed from a traditional chemical-basedcompany to a specialist in Life Sciences and MaterialsScience. “..Innovation and Entrepreneurship are key
elements of our strategy. They are the driving forces behind
further growth and implementing sustainable changesin our organization..”
But who says incumbents cannot renew over time?
Replication versus Isolation
CoreCo en NewCo
Which tendencies within organizations
may make the development ofnew business activities to be rather difficult?
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Forgetting and Borrowing
Business definitionCompetencesPredictability
Establish linksFavorable conditionsOngoing interactions
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Distinct
but
Linked!
Wiki leaks meets Stephen Elop
“…….there is intense heat coming from our competitors, more rapidly
than we ever expected. Apple disrupted the market by redefining the smartphone and attracting developers to a closed, but very powerful
ecosystem.”
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Wiki leaks meets Stephen Elop
“……They changed the game, and today, Apple owns the high-end range.
Google has become a gravitational force, drawing much of the industry’s
innovation to its core. …..”
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And here you go, NOKIA is losing gravity in a fast-growing market
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I am sorry ?!? Why doesn’t NOKIA lead the game?
“…We poured gasoline on our own burning platform. I believe we have lacked
accountability and leadership to align and direct the company
through these disruptive times. We had a series of misses. We haven’t been
delivering innovation fast enough. We’re not collaborating internally. Nokia, our platform is burning.”
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I am sorry ?!? Why doesn’t NOKIA lead the game?
“.. As of April 1, Nokia will have a new company structure, which features two distinct business units: Smart Devices and Mobile Phones. They will focus on Nokia's key business areas: high-end
smartphones and mass-market mobile phones. Each unit will have profit-and-loss responsibility and end-to-end accountability for the full consumer
experience, including product development, product management and product marketing…”
2007 now
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Meeting the challenge: strategic leadership in dual organizations
Leaders have to get their organization ‘there’
Meeting the challenge: senior executives face paradoxical demands
“To improve our teamwork and to have a shared goal, only three of four parachutes will open. So, let’s try to
overcome our difficulties and work together”34
Fuelling existing organizations with new opportunities…
What are the roles yousee regarding the generation of
exploration and exploitation withinyour organization?
Top management?Middle management?
Front-line management?
(Sociale) innovatie
Ready for action!?!
Philips in the highest gear..
“…Innovation is the core business of Philips. It is our ambition to become a winner through innovation. To reach this position, we are
going to increase the investments in R&D. But maybe more
important: we would like to make the investments in R&D more effective..”
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“…Our employees should be empowered to feel responsible and
to respond to changes rapidly. They should act like an entrepreneur within the context of Philips. With Accelerate,
we would like to renew Philips and boost the innovative outcomes..”
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Philips in the highest gear..
Diversity is a
precondition…
.. for an
entrepreneurial
spirit..
.. Long-term orientation
.. Improvisation and multitasking
.. More effective decision-making
A collective identity..
..is necessary
to nurture
collaboration
between the old
and the
new..
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An umbrella structure..
Op
erat
ion
al R
elat
edn
ess
Strategic importance
HighLow
High
Low Spin-off
Integratingexploration &exploitation
Outsourcing
Specialbusiness units
New VentureDivision
Independentbusiness units
New Product/Business
Department
Alliance
Locates exploration where necessary..
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A high-performance
work context..
..creates ambition and
room for empowerment..
Stretch
Discipline
Support
Trust
Performance Management Social SupportPerformance Management without
Social Support (and vice versa) leads
to failure. Entrepreneurship needs
an integrated approach to both
Performance
Management
Social
Support
Low
Low
High
High
High
Performance
Context
Low
Performance
Context
Average
Burnout
Context
Country
Club
Context
Entrepreneurial
spirit and
change!
48
..Engage with Startups..
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..to enhance disruptive growth..
Direction of
Innovation flow
Equity
involvement
Inward
No
Outward
Yes
High
Performance
Context
Low
Performance
Context
Average
Corporate VenturingParticipate in the success
of external innovation and
gain strategic insights
into new markets
StartUp Program
(insource)Insource external innovation
to stimulate and generate
new opportunities for innovation
and growth
Corporate IncubationProvide a viable path
to new products and markets
for promising non-core
innovations
StartUp Program
(platform) Spur complementary external
innovation in technologies
and markets to push an
existing corporate innovation
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Diversity + Identity+ HP
Context+ dual structure
+ Getting
connected
Building Leading firms
(1) Understanding the exploration and exploitation balancefrequency of change, slow vs. fast-cycle markets, and the firm’s resources and capabilities
(2) Structuring and leading stability and changeGrouping of exploratory and exploitative activities, balanced resource allocation, and visionary leadership
(3) Reintroducing the middle-level managerSeizing, facilitating, and championing opportunities for growth and renewal
(4) Experimenting with novel approachesEngaging with startups to enhance corporate innovation and growth
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Exercise: how to setup innovative projects within
existing organizations
THANK YOU ~
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