Post-ONS 2014; Now What?

“Changes” the theme from ONS2014 was loud and clear,
But “Changes”, how and excactly what?

ONS 2014 is a few weeks away. This years’ theme, “Changes” was clear across speakers, conference tracks and all media fronts. Everyone, it seemed, agreed on the need for change.

But now, a few weeks later, where does the industry begin?

Finding growth or cutting costs?

“The cure for Apple is not cost-cutting.
The cure for Apple is to innovate its way out of its current predicament”

– Steve Jobs, 1999

The big question for any organization in the oil and gas industry; what’s our strategy moving forward? Should we be cutting costs; streamlining operations, making ourselves more efficient and show a stronger financial return in the short-term? Or should we be developing a more innovative organization, developing the people, culture, strategy and processes to truly stand out as a leading, innovative company?

The problem is, most executives in large companies today have the tools and training (and incentives) to cut costs. Yet, as Josh Linkner states; “I also realized how creatively bankrupt most companies are today. With a constant focus on cost cutting, efficiency gains, and top-down control, too many organizations have lost their mojo.”

Innovation: only getting harder

At ONS, “Innovation” was on everyone’s lips. Some of it marketing, much of it genuine. But what most people really talked about was usually “Technology innovation” or “Process innovation” – and then, even incremental in nature.

On our earlier work with Statoil, Aker Solutions, GDF Suez, Halliburton and other key industry players, we’ve identified an industry with a driving energy (!) around these two elements of innovation, “Tech” and “Processes”. While both are crucially important, these two areas are only two of the nine levels of innovation.

Using the Innovation Pyramid to understand innovation

The Innovation Pyramid - ONS2014

 

 

 

 

 

 

 

The Nine levels of innovation

  1. Design & marketing innovation

The external facing design, marketing and communications. This is where most marketing, ad and design-studios have their expertise. While creative in nature, innovation at this first level rarely induce significant change on the organization as a whole.

  1. Product innovation
    New or improved products. Much innovation here centers on incremental product extension.
  2. Service innovation

Developing new services is for many the “next big field of innovation”. Much research is currently going into service innovation development.

  1. Markets, customers and channels innovation

The go-to-market strategy offers chance for innovative thinking across markets, segments, customer profiling and of course channels. Today we’re seeing a significant growth in digital channels across established industries. Any retailer today needs to understand and innovate for a local-global, omnichannel world.

  1. Technology innovation

Developing and putting new technologies to use. The Norwegian oil & gas industry recently ranked #40 globally in putting new technology innovation to actual use, yet tech innovation still receives the largest focus of innovation.

  1. Process innovation

Changing how we work requires process innovation. Much of Statoil’s STEP program is focused on “simplifying the way we work”

STEP - Statoil technical efficiency program

7. Management innovation

Changing the way we build and lead organizations and networks requires management innovation. It is a little known and understood area of innovation, but rapidly gaining acceptance, through excellent work by Gary Hamel, Julian Birkinshaw and many others.

For the industry, Management innovation is a requirement for significant change, and something also Statoil addresses in its’s STEP presentation.

STEP - Management Innovation -

  1. Business model innovation

Business model innovation allows us to change the revenue models, change the cost structure and eventually take a system-level perspective on all the aspects of your business model. Industries facing significant disruptions today, like media, newspapers, education and A multitude of business model perspectives exists, with Innosight, Girotra  Business Models Inc and Strategyzer offering the most common ones. Today, most firms also understand the need for a portfolio of business models and the tools, like Three Levels of Business Models, to make this happen.

9. Industry innovation

Industry innovation is probably the least understood and by far the most challenging aspect of innovation. How do you get started on creating a new industry? On radically upsetting and changing the norms, mental models and dynamics of an established industry? Disruptive cases like Nokia and Kodak shows us how strong established industry norms can be, as most significant innovations come from outside the established industry.

Much of the talk at ONS, while only implicit in nature, implied significant innovation required at both a business model, management and industry level. As we know from working with the Innovation Pyramid across organizations and industries, these three levels of innovations are significantly more difficult to succeed in.

For the oil & gas industry, the key players are really leading a move to Management innovation, Business model innovation and significantly, industry innovation. The talk at ONS 2014, was mostly “Tech” and “Processes”. But from our point of view, the story emerging is much more on the more challenging levels of innovation. This is crucial, for the ability to succeed, requires far more work and far stronger innovation efforts to succeed at the lower three levels of the Innovation Pyramid.

To succeed, new tools, new thinking and new collaboration models, revenue models, cost-sharing models, industry incentives and industry dynamics will be required.

Recommended thinking ahead

For the industry, moving forward, a significant level of change is to be expected.  This is also the core of our Executive education program, ‘’Strategic Innovation in the Global Oil & Gas industry”, run at BI – Norwegian Business School. In this program, we recommend the following four management books to best understand the forces of change, innovation and leadership.

The End of Competitive Advantage
Our #1 recommendation for strategy executives today.

Strategic Transformation: Changing While Winning
A fantastic piece of research on how to lead transformation while still running your old core business.

What Matters Now
On the challenges of leading in highly innovative and disrupted environments

Accelerate: Building Strategic Agility for a Faster-Moving World
Leading change – faster. The latest work by Change management expert John Kotter.

We feel strongly, the combined ideas in these four books, can help lay the foundation for change and build a roadmap for more innovation, faster change and better handling of multiple levels of the Innovation Pyramid going forward.

Because one thing is sure, looking back at ONS 2014, the industry will surely need it.

Note:
Early next month I will be speaking at a strategy and leadership session at Statoil. I’ll be sharing the stage with top Statoil executives presenting the next steps of the STEP program. I’ll be looking forward to learning more how Statoil will handle multiple levels of innovation here.

Post-ONS 2014; Now What?

The need for new strategy tools

What strategists need _ Engage Innovate Blog

Since 2010, we’ve been on a misson to “develop and share new strategy tools”. Our work goes under the title, ”Strategy Tools for the Next Generation“. In the the latest McKinsey Quarterly, the consulting firm lays out their case for a world in need of new strategy tools. It’s a strongly recommended read

The evidence is abundant. The world needs new strategy tools. The process of strategy; how companies shape their own future is rapidly changing. Yet the challenge remains; how do we solve tomorrow’s challenges using yesterday’s tools. Well, simply put. We don’t. Most of the strategy tools in actual use around the world were built for a time of slower change, less integrated markets, a more stable industry structure and a far longer life-time of most large companies.

This is just the reason we are in need of new tools, new thinking and a fundementally new logic around strategy. We’ve been proposing this for a number of years through “Two Lenses on Strategy“.

Two lenses on strategy
Two lenses on strategy by: Engage // Innovate’s Strategy Tools for the Next Generation

With this background in mind, we found McKinsey’s recent “What the Strategists Need: A Meeting of the Minds”, to be an incredibly valuable contribution to the field.  In a lenghty conversation between Strategy Officers, CEO’s, Strategy Professors and McKinsey’s Head of Strategy Practice, we get a great look into the current thinking around ”the state of the discipline,…with an emphasis on innovation in a changing world”.

We’ve chosen a few sections for summary of the talk (in italic) and our own comments below.

Old tools are actively misleading

”Yes, I think we may need new tools or frameworks. When the environment changes profoundly, the maps with which we navigate it may need to shift as well. For instance, from telco to healthcare to computers, sector boundaries are changing or dissolving, and new business models are redefining the competitive landscape. So tools such as Michael Porter’s five forces, created for a more stable, more easily definable world, don’t just lose their relevance—they become actively misleading”

This is a crucial point. The stable industry structure most strategists are comfortable with is increasingly getting challenged. Rita McGrath suggests “arenas” as fields of competitive thinking. A failure to acknowledge and understand these forces, will lead executives to view the world through wrong and directly misleading lenses.

We use what we know

”One reason our frameworks often seem out of date is that managers persevere to the point of desperation with the familiar things they learned 10, 20, or 30 years ago”

This is something we see often with clients and workshop participants  – and it also explains why the field of strategy is moving slowly in established companies. Today’s top executives went to school 20-30 years ago, and the theories and tools they learned were already getting out-dated. It’s no wonder, and quite a natural explanation on “the stuff we learned, is the stuff we feel comfortable using”.

Our tools are getting out-paced 

“A major problem is that the theoretical and empirical research in strategy has moved so quickly… that its distillation into intuitive concepts and frameworks applicable to strategy-making processes of firms has lagged far behind”

Yet, the challenge is not only the executives learning slowly (see our previous point). It’s also very much a problem of academy moving too slowly. A typical strategy research project can take years to design and complete, and yet several more years and multiple reviews to get published. In the meantime, the research and emerging tools simply get out-dated. Erik Wilberg, a senior lecturer on strategy at BI – Norwegian Business School and a long-time researcher on the media industry stated, “by the time my research gets published, it’s already out-dated”. Yet, this is changing. Crowd-sourcing, built on an open, global platform is now driving speed in academic research and time-to-market. The best example has been the “The Capitalist’s Dillemma“, with it’s unique approch to research. We can expect to see more creative, disruptive models of research in the future.

First, think. Different

My view is that we need …to help executives rethink what they do”

A key starting point for any strategy process; what’s our mind-set.Our starting point is always to help explore existing dominant logics and thinking modes. Without this, most teams simply fall into the mental trap of “more of the same, within our hidden, predominant view of the world”, i.e. trapped deeply in the box.

Innovation Thinking Modes -by Strategy Tools for the Next Generation
Innovation Thinking Modes -by Strategy Tools for the Next Generation

There’s a superb selection of books, helping Strategy Officers challenge their existing mind-set. We recommend:
Creative Confidence, by the Kelly Brothers
Creating Minds, by Howard Gardner
Mindset, by Carol Dweck

Questions drive creative thinking

”Framing questions is the other tough challenge, and it’s one of the most important yet underappreciated parts of strategy development”

Yes! A core skill for any Strategy facilitator, Strategy Officer and CEO, is the ability to find and ask the right questions at the right time. The skill to ask mind-opening, exploring and energizing questions, while most people around the table simply expect another PowerPoint presentation is a trigger for good stratey processes.

Strategy is fundamentally a creative excercise 

”A strategy is not the obverse of an analysis. It usually comes from some creative insight”

Gary Hamel, Clayton Christensen, Rita McGrath, Bill Fischer, Alex Osterwalder and Yves Pigneur, Costas Markides, Scott Anthony and Mark W. Johnson are just a hand-ful of the strategy experts arguing strategy being a fundementally creative excercise. Yet, few executives are trained in the skills and tools to make this happen. Yet.

Strategic innovation is challenging 

”…but it’s darned difficult to create truly innovative strategy options.”

Strategy; from "linear plan" to "a portfolio of business models"
Strategy; from “linear plan” to “a portfolio of business models”

We see the field of strategy moving from “a linear plan” to “juggeling a portfolio of overlapping and competing business models”. Rita McGrath calls this “balance a transient portfolio” of business models.

Developing a series of strategy options is one thing. Developing and running a series of business models, and reinventing the company again and again around these various business models, that’s a whole other challenge. Today, Amazon and Apple are the two leading examples. Tesla Motors is emerging as another. Yet, the truth is, for most strategy executives today, ”…it’s darned difficult to create truly innovative strategy options.”

This is why we find our work around Strategy Tools for the Next Generation to be highly energizing and a fantastic challenge. The world is learning to work differently with strategy – and we hope to contribute to that movement. The McKinsey Roundtable is another great conversation on the topic and we will see more of these in the future. For us, the next will be in Vienna, in November, we’re we’ll be joining the 6th annual Global Drucker Forum, The Great Transformation. With many of the world’s leading strategy academics in session, we’re looking forward to the conversations on changing how the world works with strategy and innovation.

The need for new strategy tools

A line-up of new workshops

Stftng2

Over the last few months we’ve been hard at working in developing new workshops around our strategy & innovation tools.

We’ve been working with companies like Statoil, Aker Solutions and Tekna to test and refine our concepts. We’ve held keynote talks for companies like Siemenes, Schibsted/Stavanger Aftenblad, Aarbakke and Atea to share our thinking.

At the same time we’ve been invited back to both the World Innovation Convention and the Front End of Innovation to run new innovation workshops.

We are pleased to share our new work and hope to see many of you at some of these amazing innovation events.

blog-Italy013

Making [X]happen” and ”Your Innovation Toolkit” are both developed for the World Innovation Convention in Cannes. A global platform for innovation leaders, the WIC is a superb arena to share, launch, test and experiement with new workshop formats. These two are both designed to give hands-on training in making innovation happen in established organizations.

FEI2014

Front End of Innovation is one of Europe’s leading innovation event. For 2014, The World Leader in Advancing Innovation invite global innovators to join in both Munich (february) and Venice (March). Google, Samsung, IBM, HP and McLaren are just some of the top cases to be presented. Innovation experts Rowan Gibson (author of the excellent ”Innovation to the core” and Navi Radjou and John Bessant will share some of their latest thinking.

We are excited to run two half-day workshops. Our goal: help global innovators make innovation happen.We focus on powerful, hands-on, learning. and will help people master new visual innovation tools. Welcome. and hope to see you in 2014.

Learn more about the upcoming workshop Your future innovation tools: Strategy Tools for the Next Generation

——————————————————————————————–
Run these workshops in-house?

Are you interested in learning new strategy & innovation tools?
Are your company looking for new ways of creating strategy?
Do you want to make innovation happen faster?
Contact us to see how we can run these workshops at your company.

FEIMunich

A line-up of new workshops

What I learned from my first startup

I joined my first startup in the summer of 2000. Not a good year for tech, but nevertheless a highly ambitious and inspirational group called NST. NST, or Nordic Speech Technology, was developing next generation speech recognition software and human-machine interaction via speech. Today, most know this as Siri.

At the time, this was truly groundbreaking stuff.

I got hired – while still running through school – to “be a business analyst”.  To NST, that meant work on strategy analysis and business planning. My job was something like;

– Lead strategy analysis for emerging technologies in speech technologies. 
– Write strategy analysis for advanced human-computer interaction market, industry and business opportunities. 
– Develop business plans for startup technology firm.

Still today, a pretty cool job by itself. Only difference. Today I have very different tools and I would do the job radically different. Radically.

On the very first day of the job, this was early June 2000, I was shown my office. Turns out, I would be sharing with two slightly older guys, just about to finish their Master’s degree in industrial economics. As I introduced myself and we got talking, I explained the job ahead of me.

“oh, cool”, one of the Industrial economics guys, cried out.
What he said next has stuck with me ever since.
“Which strategy tool will you be using? Porter’s, Pestel or SWOT?”

My reply at the time, “I haven’t decided yet’’.

The honest answer, however, was I had no idea. None.
At the time, I hadn’t done a single class on strategy. I hadn’t learned a single one of these tools, or any other for that matter. I was just coming off my first year bachelor studies in business & marketing, and all the strategy stuff would be in the third year.

But, with unlimited confidence in my own ability, I figured, how hard can it be?

So, I sat down, opened Google.com and typed “Strategy”.

The following weeks were spent digging into the available strategy literature available online some 13 years ago. I learned tons. The SWOT grew as my insight deepened. The PESTEL got more and more detailed. Porter’s Five Forces analysis revealed  the overly reliance of a single software supplier, should that company fold, NST would be left without their core technology platform; which of course happened a few years later.

But, all through this, a growing band among us, agreed that we needed “…something else”. Building a company like NST, with 250 highly skilled professionals, should be like building a true knowledge-driven company. Nestled among the Norwegian mountains at Voss (primarily a ski and extreme sports resort), NST management had managed to attract Professors of linguistics, highly advanced IT programmers from large European cities and of course, a number of IT programmers from Norwegian Universities. A hi-tech hub in the middle of a mountain village.

But the tools and the fundamental ideas behind the company were not. We were still left with industrial management principles and strategy tools made for large, established companies. As a Norwegian tech-startup, we were groping in the dark.

Later that summer, we came across two books. First, Ole Udsholt, brought back Lars Kolind’s book, “Vidensamfundet” (the knowledge society). A bit later we came across Christensen’s “The Innovator’s Dillemma”. Combined, these two books sparked a very different discussion with Ole, Thomas Bilgram and others at NST. These two works held fundamentally different ideas for a company like NST.

But still, something was missing. Over the coming year (I worked at NST until August 2001), we were searching for a viable business model. We were searching for customers. We were searching for revenue streams. But, in reality we were not. In reality we were so obsessed with getting the technology to work. On developing and expanding our technology base. All through 2001 we failed at market and customer development. We failed at running experiments and we failed at iterate and pivoting as we failed fast to learn more.

A few years later, the company ran out of funds and shut down, after having blown through some$50 million dollar. But the technology worked fine…

NST

Looking back, it’s easy to blame a number of reasons for the demise of NST. But one thing is clear. The board, the management, the business development team and me as a “business analyst”, we did not have the right tools for the job. We were trying to build a hi-tech startup using the wrong mind-set and the wrong tools.

HBR May

Today we celebrate, yes, celebrate, the May issue of the Harvard Business Review. It’s dedicated to Entrepreneurship. Steve Blank’s “Why the lean startup changes everything” is an excellent piece of work.  Blank, Eric Ries, Alexander Osterwalder are three of the front-runners in the lean startup movement. For years they’ve been working to develop new tools and new ideas for building better startups.  Steve Blank shares his own reflections in When hell froze over.

Today, Elisbeth and I are developing Strategy Tools for the Next Generation. We firmly believe we need new strategy tools for the future.The next generation of leaders, entrepreneurs, risk takers and pirates need new tools to master strategic innovation.We’re also fortunate to  be a part of a larger movement in Norway, around the Startup Weekeend. A fantastic event, network and startup energizer.

SWS-•-logo-RGB-copy

Tonight we jump on the plane to Berlin for the Business Design Summit where 250 visionary leaders come together to share, learn and develop the next series of hands-on, business tool.

None of this, of course, will change anything for NST. But our ambition is helping the future entreprenuers, risk takers and pirates develop wildly successful start-ups or internal ventures. To do this, we need radically different tools than the SWOT, The PESTEL and Porter’s.

They exist. And you can start by reading the most recent HBR issue.

What I learned from my first startup

Discussing Strategy Tools for the Next Generation

This blogpost shares a discussion following our Sparking Strategic Innovation Workshop in Copenhagen this March.
It shows how we are constantly learning, developing and expanding our understanding of the various strategy and innovation tools once we put them into the field.

—-

Hi again,
It’s great to hear from you.
I hope you and your family had a great eastern. Here it was sunshine all around.

Thanks also for your helpful comments. This is much appreciated.

It’s fantastic to hear you’ve used several of the tools already. Experiement and learn, that’s much to our liking 🙂

You also touch on something that is right on the top of our plate; the how-to use guides for each tool. It’s something we are busy at work on these days. For what it’s worth, here’s a few pointers from our side.

Change ladder (Change stairs)
Most of the classic literature on change managemenet is “change is difficult”. But, there’s also a substansial body of knowledge around the ”positive sides of change”. Problem is, few executives and managers are trained in this aspect. This tool highlights the various phases of change; toward the positive, or towards the negative and opens up for the facilitation of ”how to drive engagement towards the positive sides of change?”. Or more simply; “How might we make change fun”?

Spider Web (or A Holistic View on Innovation; in search for a better name…..)
This innovation mapping tool is gaining more and more traction in large, diverse groups within the same company to get a shared understanding of the company’s innovation capabilities. It can be used in multiple ways:
– One-to-one coaching
Great for reflection and discussion.

– Large group interventions
Indidvidual profiling, then sticking the posters to the wall.
Recently ran a workshop in this with Aker Solutions Leadership Forum with great results.
Opens up excellent discussions on our company’s strenghts and weaknesses in the area of innovation capability.

– Employee survey
The 18 items can be set up as a analytical tool, through an online, employee survey. This works well to get a significant data set, for analysis. yet, it does not provide the action we sorely need to drive innovation capabilities. So far, we have not used this tool in this manner, but it’s easy to set up and design.

Project Selection (Action Road Map)
Probably our most important tool.
Going from ”just great ideas” to ”execution and all action”. All innovation efforts need this execution drive.

The Action Road Map has three categories,
– Easy: can get done by Monday
– Impact: will have powerful effect! Wow!
– Fun: this would be so much fun to do

This design allows for a balance in the execution portfolio. It also forces groups to balance “right now! completed by Monday”, with the more long-term aspects. The fun part is, well, just fun. But hence also more likely to have a long-term positive influence on the group and group dynamics itself. Celebrate this last one wildly!

I hope these comments where useful.
We are working on expanding this ”how-to” text online.

Let us hear what you think about these inital comments.

Keep up the Experiment & Learn mind-set.

All the best,

Christian

Discussing Strategy Tools for the Next Generation

A CEO who can Dream Bigger; Larry Page

Probably the best CEO interview we’ve ever read. That was the first idea that hit us  as we read “Google’s Larry Page on Why Moon Shots Matter“, by Steven Levy at Wired.

Page, the co-founder, now CEO, at Google gives a personal, insightful interview on his leadership philosophy and innovation thinking at Google. One of the defining moments, writes Levy, ‘’As an undergrad at the University of Michigan, he found inspiration in a student leadership-training program called LeaderShape, which preached “a healthy disregard for the impossible.” According to Page, this strongly shaped his thinking that led to the Google we know today.

This is exactly the kind of  innovation thinking, the kind of program we have been developing and running over the last two years. Walt Disney said ‘’It’s kind of fun to do the impossible’’, and that’s the essence of our last book ‘’Dream Bigger’’.  It is this philosophy we believe will be required to reinvent dying industries and launch amazing strategic transformations. It’s the leadership mindset for a new breed of leaders. For innovation leaders.

Larry Page calls this “Living by the gospel of 10x. Most companies would be happy to improve a product by 10 percent’’, not Google. Instead, Larry and his team drive for ’’Thousand-percent improvement, this requires rethinking problems entirely, exploring the edges of what’s technically possible, and having a lot more fun in the process’’. This is Google thinking big, Google’s “Moon shot Philosophy”.

In “Dream Bigger” we write:

What if you could change the future of your company?

Where would you begin?

What would be your radically ambitious dreams?

What would be your mind-numbingly awesome first steps?

Through our teaching and consulting we meet thousands of people.

Too few are truly recklessly ambitious.

Too few are truly trying to achieve the impossible.

We want to change that.

Our goal is to help you and your company Dream Bigger

– and execute successfully.

Because we fundamentally believe,

“if you can dream it, you can do it”.

So let us.

But not all executives have the courage to do just this. Too few are recklessly ambitious. Too few have moon shots. Too many are stuck in an operational mindset, trying to defend their core legacy business model, rather than inventing the future.

Says Page “I worry that something has gone seriously wrong with the way we run companies. If you read the media coverage of our company or of the technology industry in general, it’s always about the competition. … That’s why most companies decay slowly over time. They tend to do approximately what they did before, with a few minor changes… But incremental improvement is guaranteed to be obsolete over time. Especially in technology, where you know there’s going to be non-incremental change”

Page’s view is reflected in the theme of the upcoming Strategic Management conference, Inside Outliers: Driving Systemic Change states “Being positively different is the goal of strategic management” That of course requires us to think differently, act differently and the courage to break out of industry norms.

‘’Why don’t we see more people with that kind of ambition?’’ (10x), asks Levy.

Page’s reply is very, very insightful: It’s not easy coming up with moon shots. And we’re not teaching people how to identify those difficult projects. Where would I go to school to learn what kind of technological programs I should work on? You’d probably need a pretty broad technical education and some knowledge about organization and entrepreneurship. There’s no degree for that. Our system trains people in specialized ways, but not to pick the right projects to make a broad technological impact’’.

To develop organizations for the future, we believe Innovation and Innovation thinking needs to become everyone’s job. We need to fundamentally rethink training, development and education. To succeed in this paradigm, leaders need to rethink their roles, master new skills, learn new tools and understand how to drive strategic innovation. They can all begin by reading Larry Page and his leadership philosophy.

Take a look at ”Dream Bigger” here.

A CEO who can Dream Bigger; Larry Page