VMO-led Innovation Management A Procurement Perspective "Without change there is no innovation, creativity, or incentive for improvement. Those who initiate change will have a better opportunity to manage the change that is inevitable." - William Pollard Working Draft
A proper VMO does more than just contract and supplier management. One of the components of VMO value capture is to work with suppliers and cappture innovation in order to accelerate Time to Market, shorten cycle times in competitive differentiation, or grow market share. Here is a possible framework VMO directors could use to make "the right decision for the right reasons" and leverage supplier-initiated innovation initiatives
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VMO-led Innovation Management
A Procurement Perspective
"Without change there is no innovation, creativity,
or incentive for improvement. Those who initiate
change will have a better opportunity to manage
the change that is inevitable."
- William Pollard
Working Draft
Since the word innovation entered the business lexicon, it’s come to mean different things to different people. There’s a tendency to speak of innovation in the context of advanced technologies, futuristic product development and the development of new “game-changing” strategies.
At the root, however, innovation is fundamentally about doing something differently to deliver demonstrable business value, at the top line, bottom line or both. Against that standard, the successful application of new ideas to reduce costs clearly constitutes innovation—at least in theory.
There’s an emerging consensus that the best way for a company to foster innovation is to harvest the best ideas wherever they are, whether it’s inside the company or among customers, suppliers and partners. In generating new ways to reduce costs, the benefit of this broad approach—leveraging collective intelligence —is to extend the breadth and diversity of inputs into a company’s ideation process. More subtle yet powerful is the impact this approach has at a human level, transforming cost reduction ideation from a more expert-driven, adversarial exercise to a participatory experience that—by encouraging “buy-in”— dramatically increases the likelihood of successful implementation.
2
What is Innovation
The dirty little secret … is that unlike the mythical epiphany, real creation is
sloppy. Discovery is messy; exploration is dangerous. No one knows what
you’re going to get when you’re being creative
Innovation comes at a price – it might be money, time, sanity, friends, or
marriages, but there will be one
The majority of innovations come from dedicated people in a field working hard
to solve a well-defined problem. It’s not sexy and it won’t be in any major
movie coming to theater near you anytime soon – but it’s the truth
Revolutionary ideas can be too much change for people to handle. Innovations
often need to be explained in terms of the status quo, which is why
automobiles are rated in horsepower
Innovative ideas are rarely rejected on their merits; they’re rejected because of
how they make people feel
3
What is Innovation?
The inconvenient truth
4
Innovation: What’s in it for you?
’s Idea Marketplace
Advanced Idea
Management
Basic Idea
Management
Suggestion
Program
Idea
List
Raw
Ideas
Elaborated
Concepts Significant ROI
across range
of activities
Benefits limited to
cost savings and
“Small idea”
Consumers Suppliers Partner
Idea Marketplace
Data store
Product / Services / Pricing / Branding
Innovation Development
New Markets for Existing Products
New Products and Concepts
Revenue Acceleration / Margin Improvement / market share gain
Cost Reduction and Productivity improvement
Process Replacement
Avoiding Waste by Selecting Quality Concepts
Employee Involvement
Innovation Benefit Focus Areas
ROI depends on the quality of the process
and of the ideas
Suggested Approach for the VMO
6
The Character of the Innovation Process
Innovation is….
An individual process
Hidden in the R&D laboratory
Ungovernable, uncontrollable
More or less accidental
Something that’s been going on for ages
No effective governance
No correlation with trending or consumer /
customer demand and insight
No correlation with corporate strategy, or
execution capabilities
Innovation is…
A multi-disciplinary group process
Supported top down and driven bottom up
Guided, facilitated, controllable
More than just incremental improvements to
product
A process by jumps and starts
Surrounded by a risk management envelope
Effective governance
Effective measurements
Bleeding edge portfolio management
methodology
Innovation is an
Unpredictable
Process ?
Innovation becomes
A predictable, measured
process !
Classical Approach Recommended Approach
Create an Innovation Environment – Process, Discipline, Behaviors
This is a business management service, NOT a technology solution; there is no magic software wand to wave to realize
10X innovation investment returns. We help clients focus on process, discipline, a dedicated team and deep skills in
engaging and facilitating people in large numbers to focus on solving problems and solutions
Effectively Engage the Organizational, Manage Complexity
We leverage the collective organizational wisdom to optimize the innovation process and results