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Our 35-page comprehensive innovation guide covers the key areas why innovation fails. While it cannot cover all the solutions (that would take books to fill), it provides you with a convenient starting point for your analysis and provides further resources and links to the corresponding UNITE models, ultimately allowing you to work towards a doubling and tripling your chances of success.
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Strategy is about making choices between a number of feasible options to have the best chance at “winning”, and innovation is just one of the means to achieve your strategic goals.
Without a good one, it’s actually quite difficult to achieve long-term success and orient your business for speed in order to secure competitive advantage.
What’s interesting is that according to statistics , 96% of executives have defined innovation as a strategic priority . However, the lack of clear innovation strategy is a fundamental problem especially for established companies when optimization of existing business becomes a priority.
While developing an innovation strategy isn’t necessarily difficult in itself, aligning it with your overall business goals and ways of working is what takes most of the time and effort.
This time, we’ve decided to try to make sense of the broad topic by introducing five steps for developing your own innovation strategy. In addition, we’ll introduce a few tools that can be used when mapping your strategic goals in order to make the best choices for long-term success.
The strategy choice cascade.
Pick your focus, align innovation strategy with your business goals, communicate and integrate your strategy to the ways of working, measure systematically and adapt, conclusions.
Innovation is about creating new value people are willing to use and pay for, whereas strategy is the plan for harnessing for example marketing, operations, finance and R&D to support achieving the competitive goal.
To clarify, innovation strategy isn’t about innovation tactics, such as setting up an idea challenge , but more about mapping organization’s mission, vision and value proposition for defined customer markets. It sets boundaries to your innovation performance expectations by simplifying and structuring your innovation work to achieve the best possible outcome.
Innovation strategy can be described as an explicit roadmap for desired future.
Before moving forward, it’s important to mention that your innovation goals shouldn’t be separated from your overall business objectives as having a unified vision and common goals for innovation will help fight the silo effect and increase your operational efficiency.
If you think about marketing, for example, you wouldn’t want to separate your marketing strategy from your overall business objectives but rather make sure your marketing strategy and initiatives help contributing to your overall business plan and vision.
The same goes for innovation. There’s no point of innovating just for the sake of it, as it has to contribute to your bigger plan. So, before starting to develop an innovation strategy, make sure you’re aware of how innovation helps you to achieve your goals .
Building innovation into your strategy development process starts with making a deliberate choice of focusing on the best possible way to win as well as justifying the reasons behind that choice.
Often, the best approach to this is to make a set of choices you’re more capable of putting into practice compared to other players in your field.
One relatively solid framework for making those strategic choices is The Strategy Choice Cascade. The cascade is introduced in a strategy book called Playing to Win , by A.G. Lafley, the former CEO of P&G and Roger L. Martin, Dean of the University of Toronto's Rotman School of Management.
Needless to say that these two gentlemen have a lot of experience on business and innovation strategy consulting.
The purpose of the strategy choice cascade is to turn strategy from a complicated, messy and often deeply confusing and divisive chore, to a systematic and simple exercise.
The cascade consists of five steps that can help develop and implement sustainable strategy at any organization:
Next, we’ll look into each of these steps separately from the perspective of innovation.
1. determine objectives and strategic approach to innovation.
The first step in the strategy choice cascade is to define your winning aspiration. In other words, your innovation objectives and the why behind your innovation strategy.
As any other strategy, the planning process of your innovation strategy starts with defining your objectives: What do you want to achieve with innovation?
If we take a step back, think about your long-term business goals and the things that are most likely to drive your business forward even after some time. As already mentioned, your innovation strategy should help supporting your business objectives and vice versa.
An example of a good strategic approach introduced in Playing to Win is Olay. Olay's winning aspiration is to become a leading skincare brand that wins convincingly in their chosen markets and channels. Along with hair care, it will help establish a key pillar in the Procter & Gamble beauty-care business.
It's likely that your approach to innovation will be something different. Typically, there are two different approaches to innovation strategy: b usiness model innovation and leveraging existing business model .
Business Model Innovation
Business model innovation is the development of new, unique concepts supporting an organization's financial viability, including its mission, and the processes for bringing those concepts to fruition. The primary goal of business model innovation is to realize new revenue sources by improving product value and how products are delivered to customers.
The purpose of business model innovation is to address the choice of target segment, product or service offering, and revenue model. At the operating model level, the focus is on driving profitability, competitive advantage, and value creation.
Business model innovation is the art of enhancing advantage and value creation by making simultaneous, and mutually supportive, changes both to an organization’s value proposition to customers and to its underlying operating model. — Boston Consulting G roup
Business model innovation requires a deep understanding of your company’s competitive advantage and can be approached in four different ways:
Leveraging Existing Business Model
Leveraging existing business model refers to continuous improvements and incremental/sustainable innovations. As opposed to the business model innovation, the strategic focus with organizations that leverage existing business model is on improving the core business rather than building new business models to create new value.
Based on these two approaches to innovation, we can identify three innovator archetypes:
The second step in the strategy choice cascade is defining the right playing field, as in, the market you’re operating in and the customer segment you’re offering value for.
To be able to innovate and to respond to your customers’ needs, you should listen and understand what your customers really want and remove the rest. To be able to do that, knowing what happens in the market is essential.
Next, and probably the most important step is to define that unique value proposition. How will you win? What type of innovations allow the company to capture that value and achieve competitive advantage?
Because the purpose of innovation is to create competitive advantage, you should focus on creating value that either saves your customers money and time or makes them willing to pay more for your offering, provides larger societal benefit, makes your product perform better or more convenient to use, or becomes more durable and affordable compared to the previous product and the ones in the market.
To be able to create a unique value proposition, the ability to identify and exploit new uncontested markets is recommended. This can be done through value innovation.
Value Innovation
Value innovation was first introduced in the HBR article called Blue Ocean Strategy and later in the classic book bearing the same name.
The purpose of value innovation is to achieve sustainable competitive advantage by looking beyond your current understanding of the industry and reforming your value proposition to stand apart from the competition.
Securing new competitive advantage is done by making competition irrelevant , also referred to as the blue ocean. To succeed, one must adapt existing products or services through differentiation and lower cost .
Often, companies imitate their competitors offering slightly improved products and services with slightly more competitive price. Because rivals and imitators are about to attack fast, both the value proposition and the profit proposition should be outstanding.
This makes your business model more difficult to imitate and gives the best chance for you to be able to swim in that blue ocean.
To reach value innovation, try to clarify which customer segments your competitors are focused on, and how do these segments overlap with the ones your new offering targets. Is it possible to adapt any of your existing products to differentiate them further for the geographies or segments that will face the most pressure?
The first three steps in the strategy choice cascade really come down to one thing; your fundamental capabilities required for winning.
When assessing your set of capabilities that need to be in place, consider the following:
For example, if you want to win at delivering breakthrough technology, you must have internal skills and knowledge to be able to build that. The ability to connect and develop these capabilities is key to innovation.
Last but not least, to be able to execute your innovation strategy in a scalable and integrated manner, you should find out what systems need to be in place.
Define: which innovation techniques and systems do we need in to be able to link our innovation infrastructure elements together? What are the most important systems that support and help measuring the results of our innovation strategy?
According to a recent study , Christopher Freeman defines the system of innovation as 'the network of institutions in the public and private sectors whose activities and interactions initiate , import , modify and diffuse new technologies' .
This includes the following elements:
The Play-to-Win Strategy Canvas
Now that you know which strategic choices you need to make in order to succeed in innovation, you should map these choices. This will help you to identify what must be true for your strategy to be valid.
A simple and visual tool for the job is The Play-to-Win Strategy Canvas:
Reverse engineering is a technique a part of the strategy canvas that can be used to ensure your strategic choice is sound. Instead of relying on opinions, reverse engineering allows you to design and conduct valid tests in order to make informed choices.
It helps you to involve all of the decision makers (VP’s included) to critically assess the viable options and make them committed to the process and strategy.
Reverse engineering helps identify the “nice to have conditions” vs. must have conditions and to find an answer to : what would have to be true instead of what is true. This question helps you to focus on analyzing things that really matter.
Since testing is often the most time-consuming and expensive part of developing a strategy, the fewer tests you need to make, the better. Use reverse engineering to pinpoint only what you really need to know.
So, to find out what would have to be true for your strategy to work, consider the following aspects:
The Choice Process
In the end, only viable strategic options remain, as all other conditions failed to pass the test.
After you’ve picked your strategic approach to innovation and mapped all of the most important elements related to it, it’s time to put your innovation strategy to work.
To make sure innovation remains a strategic priority, stay focused on your goals and execute your innovation strategy in a systematic manner.
"Choosing what kind of value your innovation will create and then sticking to that is critical, because the capabilities required for each are quite different and take time to accumulate ” – Gary Pisano
Your strategic long-term goals give structure and support to your innovation work. Having boundaries and staying focused on your end goal is the only sure way to get there.
As already mentioned, aligning innovation strategy with your overall business goals is one of the most difficult tasks when it comes to succeeding in innovation. So much so that 54% of innovating companies struggle to bridge the gap between innovation strategy and business objectives.
According to Deloitte 2016 Global Board Survey , one of the reasons for this might be that the overall understanding seems to be weak with regard to talent management and innovation/R&D strategy. Other common issues are uncertainty and the unusual time horizon of innovation results.
To succeed with strategy alignment, aim for communicating the role of innovation within the entire portfolio to drive innovation across all units in your organization. Ensuring that innovation is fully embedded into an overall business strategy is the only way to allow your organization to innovate in the long term.
No matter how great your innovation strategy is, it won’t get you far if you fail to get people committed to your innovation management processes .
Often, the root cause of these types of challenges is the top management. If senior managers fail at the top-down communication, even a good strategy won't work if not integrated into the actual ways of working.
Because senior leaders are often the ones making the decisions, prioritizing active communication and engagement can help motivate people to be more active. When your employees are aware of the goal and purpose, as in, why you’re doing what you do, it will make the long-term commitment much easier.
To integrate innovation into the ways of working, you might want to consider partnering with your key people and set individual goals that support your innovation strategy. Providing clear direction and guidance can help you to make innovation a part of your everyday work.
Last but not least, to be able to tell how your innovation strategy works in practice, you should be able to measure it in a systematic manner. Picking the optimal metrics and setting the right expectations helps monitor your progress.
Systematic measuring is the only way to be able to adapt to changes to achieve better outcomes in the future. So, don’t do it in a silo, but aim for bigger impact by making a systematic measuring a part of your innovation strategy.
Innovation strategy is about making the best educated choice between a number of feasible options. To succeed in developing the best possible innovation strategy for you, you need to identify and map your best possible strategic choices required to win.
However, making those choices is only half the battle as it’s equally important to test and validate your approach.
For your innovation strategy to work, strategic alignment and seamless integration to the ways of working is the key. By clear communication as well as supporting metrics on company and individual level will help you make innovation a continuous practice.
Succeeding in innovation takes a combination of knowledge, the right skills and practices, as well as a lot of hard work. To help you succeed, we designed The Innovation System , a program to support you across all facets of the journey.
We've recently put together a framework that helps you address all of the aforementioned challenges: The Flywheel of Growth . We've also created a workbook that comes with tips on how to use the framework, as well as concrete examples and PowerPoint templates. You can download it here .
We've also written quite an extensive guide to innovation management which you might find useful.
When you have the right innovation strategy in place, the next step is to build a systematic process for generating, developing, evaluating and implementing new ideas.
Most executives will admit that their companies don’t innovate in a reliable, orderly way. Too many breakthroughs happen only because of serendipity or individual heroism. Great ideas remain locked inside employees’ heads, and the concepts that are developed often aren’t the most promising. But there is a way to make innovation more systematic—without massive investments, restructuring, or even a single hire. In this article three consultants explain how a company can build a “minimum viable” innovation function, in just three months, by doing the following:
Day 1–30: Define your innovation buckets, looking at how much growth innovations in your core can produce and how much will need to come from new-growth initiatives.
Day 20–50: Zero in on a few strategic opportunities, after talking to customers to identify growing needs that match your capabilities.
Day 20–70: Dedicate a small team to begin developing innovations.
Day 45–90: Set up a committee to shepherd projects, borrowing venture capitalists’ best practices.
Drawing on the experiences of a financial services firm, a water utility, a hospital, and a 100-year-old nonprofit, the authors describe how to use this approach to build systems that ensure that good ideas are encouraged, identified, shared, prioritized, resourced, and developed.
HBR Reprint R1412C
Get a reliable system up and running fast.
Practically every company innovates. But few do so in an orderly, reliable way. In far too many organizations, the big breakthroughs happen despite the company. Successful innovations typically follow invisible development paths and require acts of individual heroism or a heavy dose of serendipity. Successive efforts to jump-start innovation through, say, hack-a-thons, cash prizes for inventive concepts, and on-again, off-again task forces frequently prove fruitless. Great ideas remain captive in the heads of employees, innovation initiatives take way too long, and the ideas that are developed are not necessarily the best efforts or the best fit with strategic priorities.
As companies prepare for the recovery from the pandemic, many leaders hope innovation will set them up for the next phase of growth. In this episode of the Inside the Strategy Room podcast, Laura Furstenthal, whose client work focuses on healthcare organizations and innovation transformations, and Erik Roth, leader of McKinsey’s global innovation practice, explain how to establish a sustainable innovation process . This is an edited transcript of the discussion. For more conversations on the strategy issues that matter, subscribe to the series on Apple Podcasts or Google Podcasts.
Sean Brown: Laura, perhaps you can set the stage. How do you define innovation in the corporate setting?
Laura Furstenthal: If you look up “innovation” in a dictionary, you see definitions like creating novel ideas or even just the word “creativity.” We believe you have to think about the impact, so our definition of innovation incorporates delivering net new growth that is sustainable, repeatable, and substantial. You can focus on new products, markets, customers, or business models, but however you measure it, innovation has to increase value and drive growth.
Erik Roth: The word “substantial” is really important. Organizations often experiment with incremental initiatives that take up a lot of resources, but if innovation is to be the growth engine, it has to be large enough to matter.
Laura Furstenthal: For successful organizations, innovation is a choice. It has to be backed by a commitment. Putting your organization on a new growth trajectory requires both deliberate action and resource allocation. However, while innovation is at the top of most organizations’ agenda, far more fail than succeed at driving successful innovation. In fact, 86 percent of executives we surveyed told us that innovation is a top three priority, yet fewer than 10 percent say they are satisfied with their organizations’ innovation performance.
Sean Brown: How should business leaders decide what innovations to prioritize, especially when there is still so much uncertainty?
Laura Furstenthal: We have found that every successful innovation throughout history has come at the intersection of three lenses: an unmet customer need, or the who; a technology that generates a solution, or the what; and a business model that enables you to monetize that solution, which is the how. Another way to think about it is to ask yourself the three questions. First, does what you are doing matter? Will customers benefit from it? Second, can you build it, and what technologies do you need to do that? And third, will it win? Is there an opportunity for the innovation to take on a market? Because all of these lenses are required for successful innovation, the best way to generate new concepts is to collide them in a very structured and purposeful way.
Every successful innovation comes at the intersection of three lenses. The lens we find organizations often spend the least amount of time on is building a scalable operating model. Laura Furstenthal
Think about the famous inventor Thomas Edison. In every case, he did not just invent the what, he also invented a how. He was often not the first person to create the innovation, whether it’s the light bulb or the motion-picture player, but his unique contribution was to make it salable and scalable. In the case of the light bulb, he created the filament and the vacuum tube that allowed it to turn on and off, and he developed the production process that enabled mass production. That’s a great example of all three lenses, and the lens we find organizations often spend the least amount of time on is building that scalable operating model.
Sean Brown: You both mentioned that the innovation has to be substantial to merit the resources you allocate to it. How do you determine if the innovation concept will deliver that substantial outcome?
Laura Furstenthal: We often find that people come up with ideas and build business plans, laying out all of their assumptions, but those assumptions become assertions over time and their teams end up trying to prove that their assumptions were right rather than testing them. Instead of building a business plan, we recommend building what we call a reverse P&L: What would need to be true for this idea to meet your hurdle rate and get to the level that you would consider a success? Then take those assumptions and rank them by the level of uncertainty and the degree of impact they have on the business case, and test the highest ranked first. If those assumptions fail, you know you need to pivot early. We often find people test the customer interface first, but it’s the business model or the supply chain or the technology that require early testing.
If you are going to innovate, start with the size of the business you want and work backward. If nobody can conceive of a way to get it to that size, maybe it’s not the right business for your company. Erik Roth
Erik Roth: We recommend getting rid of business cases altogether. They are a waste of energy and time. I will go so far as to say they actually increase risk, for the reasons that Laura mentioned: everybody writes down their assertions, showing hockey-stick growth at the end, and I am willing to bet the models are dominated by market growth as the dominant variable, not growth driven by your innovation. If that’s the case, there is no point in creating something. The point is, if you are going to innovate, start with the end goal. Start with the size of the business you want and work backward. If nobody can conceive of a way to get it to that size, maybe it’s not the right business for your company. Many teams then apply what looks like a new product development (NPD) process, which is a sequential risk-management tool. The problem is that innovation processes are iterative and learning based, not linear and risk management based.
Sean Brown: The past year has forced companies to get innovative to overcome constraints the pandemic imposed on us. What are your favorite examples of organizations coming up with clever and valuable solutions to these challenges?
Erik Roth: It’s always interesting how the old becomes new again. The pandemic obviously hit retail in an unprecedented way, and retailers’ ingenuity in leveraging their store assets, retaining some level of customer experience, and reconnecting the brands with people was incredible. One of the more fun examples is Walmart using their giant parking lots as drive-ins to create entertainment and connectivity to the brand in a time when we were all hungering to be outside of our homes but still safe.
Sean Brown: Did innovation take a back seat during the pandemic at most companies?
Laura Furstenthal: We did some research looking at pre-COVID-19, during COVID-19, and the expectations for the post-COVID-19 environment, and we found that most organizations battened down the hatches during the crisis and focused on the core business, with the expectation that they would focus on innovation projects once they recovered from the crisis. So we asked, is this the right thing to do? We looked across multiple crises, including the SARS epidemic that ravaged Asia and became the impetus for widespread adoption of online transactions, and back to World War II when we saw rapid growth in manufacturing of convenience technologies to capitalize on the fact that women were working. During the financial crisis, stranded assets and an unemployed workforce spurred the sharing economy, among other things. The lesson is that those who innovate through a crisis come out stronger (exhibit).
Sean Brown: How do you determine if your organization has the capabilities it needs to innovate successfully?
Erik Roth: Innovation is a context-specific sport. However, our research on about 5,000 companies over the past seven years has identified about 100 activities that we know promote, support, and enable innovation, and that research allows us to quantitatively understand the state of play in terms of an organization’s innovativeness. Those activities are grouped into eight categories that we call the “ eight essentials of innovation ,” and they in turn fall into four buckets. One is about strategy and portfolio, and another is about the ability to create distinctive value propositions that are not only products but business models and other forms of value creation. Launching and scaling up is another bucket, which refers to accelerating those innovations’ paths to market and making them as big as they can be. The last one is about mobilizing your culture and external partners so you get reinforcement and celebration of success.
Normally, organizations track their R&D spending or patents or other indirect indicators of innovation. We instead looked at how public companies stack up in terms of economic profit creation when they apply those essentials. Organizations that satisfy up to seven or eight of the essentials generate 2.4 times the amount of economic profit as their competitors.
Sean Brown: Can you offer any examples that illustrate what these activities involve, and how companies can determine whether they have those capabilities?
Erik Roth: Each essential has a test question. For “aspire,” for example: Does your organization find innovation or net new growth critical to meeting its future objectives, and has it cascaded those objectives down to the right parts of the organization? If you answer yes, then you are probably well on the way to meeting the biggest challenge of innovation, which is reallocating resources to the best opportunities. Why is that so hard? We use a heuristic to assess whether an organization is prepared to be a great innovator: Does it have a green box? The green box represents the gap between your aspiration and what your organization can expect to deliver on its regular growth trajectory. Say on one side you have today’s revenue and on the other is revenue you want five years out. There are four ways to get from one side to the other. One is selecting the right market segments. If you did nothing else but get the average growth rate in those segments, that tells you your baseline. You could then outperform your competition through all the activities in your annual plan and some incremental innovation, such as ingredient changes or functionality improvements.
If you only do those two things, how close do you get to the five-year aspiration? Is it a small gap, no gap, or a big gap? Companies that have no gap are the ones that struggle the most with innovation. No matter how many times executives make speeches to inspire people to innovate, if the business model and the growth model tell employees, “Just keep doing what you’re doing,” they will cheer at the speech, then keep doing what they were doing—because there is no green box. The business can achieve its objectives by performing those first two steps. Sometimes M&A fills in the gap, which is the third way. But unless there is a green box designed into the strategic plan that only innovation can address, it is hard for an organization to reallocate resources toward risky propositions like innovations.
What is interesting is that when organizations don’t have a green box and their executives get frustrated, they start creating appendages like accelerators and corporate venture-capital units and incubators that are meant to satisfy the green box but actually sit on the side and struggle. They might create interesting things but the core business does not need them to satisfy its growth ambition.
Sean Brown: How can companies identify the innovations that will fill that gap the green box represents and meet the threshold you mentioned of being substantial?
Erik Roth: Great innovation, as Laura said earlier, starts with a valuable problem to solve. It starts with the outcome, or the value of a potential opportunity. Then we use a formula. How many customers are excited about that outcome? How much do they pay today and how frequently does that occur? The most important thing, which is often forgotten or never asked, is the customer’s frustration level with the existing solutions. If that level is high, the likelihood of the customer switching and being willing to pay more goes up. You can quantify the opportunity using this formula and understand which problems are valuable and the degree of difficulty in solving them.
Sean Brown: So if I am a leader frustrated with the lack of innovation in my organization, Laura, what should I do tomorrow?
Laura Furstenthal: First, make sure you are reallocating toward the future. As we say, innovation is not an ideas problem, it is a resource reallocation problem. COVID-19 has caused a massive disruption and customer needs have changed. You probably have a long tail of innovation initiatives in your organization, and there is an opportunity to redeploy those resources toward a few big, bold moves that will really move the needle.
Secondly, embed flexibility. It is important to put a structure in place where it is not okay to say, “This is the way we’ve always done it.” You need to find the “way we now do it” and role-model that in your organization. Finally, hack your processes. Over time people develop a compliance mindset, risk aversion, and process discipline. They put in place various things that get in the way of what is at the core of innovation, which is finding ways to delight the customer.
Laura Furstenthal is a senior partner in the San Francisco office. Erik Roth is a senior partner in the Stamford office. Sean Brown , global director of communications for the Strategy & Corporate Finance Practice, is based in Boston.
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Redmond, Wash., June 3/Tokyo, June 4, 2024 – Hitachi Ltd. (TSE:6501) and Microsoft Corp. announced a projected multibillion-dollar collaboration over the next three years that will accelerate social innovation with generative AI. Through this strategic alliance, Hitachi will propel growth of the Lumada business, with a planned revenue of 2.65 trillion yen (18.9 billion USD) *1 in FY2024, and will promote operational efficiency and productivity improvements for Hitachi Group’s 270,000 employees.
“Hitachi has been driving transformation by applying AI across the Hitachi Group to improve productivity and will invest 300 billion yen(2.1 billion USD) *1 in GenAI to capture new growth opportunities in FY2024. Hitachi and Microsoft have already been working on a variety of co-creation projects including the development of next-generation digital solutions for the manufacturing and logistics fields *2 and the development of a field-extended metaverse that runs on Microsoft Teams,” said Keiji Kojima, president and CEO of Hitachi. “Under this new agreement, we are excited to further accelerate social innovation by expanding our efforts to social infrastructure areas such as energy and mobility, and by applying generative AI, to improve the productivity of frontline workers, which will become even more important in the future. By combining our capabilities, we can help solve the issues faced by our customers and society, and contribute to a more sustainable future.”
“We are entering a new era of AI with the promise to deliver transformative business outcomes across every role and industry,” said Satya Nadella, chairman and CEO, Microsoft. “Our expanded partnership with Hitachi will bring together the power of the Microsoft Cloud — including Microsoft Copilot — with Hitachi’s industry expertise to improve the productivity of 270,000 Hitachi employees and help address customers’ biggest challenges, including sustainability.”
Hitachi’s business transformation:
Hitachi Rail is leveraging GenAI for predictive maintenance, enhancing equipment monitoring and refining forecast accuracy. This proactive approach prevents breakdowns, increases service quality, reduces operating expenses and augments safety. For example, a cloud-based platform on Microsoft Azure was used to streamline data visualization and analysis, empowered by AI to furnish data-driven insights to digitally monitor rail infrastructure. These insights were translated into actionable steps for Network Rail , enhancing decision-making for predictive maintenance of overhead lines.
Develop innovative digital solutions
Hitachi is enhancing its Lumada solutions by incorporating the capability of generative AI. As part of the initiative, Hitachi has already started to use Microsoft’s Generative AI for JP1 Cloud Services, a SaaS version of JP1, its integrated operations management software with approximately 20,000 customers. This will accelerate response times to address failures, and enable improved operational efficiencies for IT departments, financial and public institutions. In an internal verification test conducted earlier, Hitachi confirmed that the time required for the operator to make an initial response to an alert was reduced to approximately two-thirds by using generated AI to respond to the alert and displaying the source of the citation, such as a manual, that provided the basis for the response.
In addition to this, Hitachi and Microsoft will also support the energy transition with improved access to and strengthening of digital solutions for asset performance management, energy trading, and risk management to reduce downtime and increase profitability. Increased computing power and cloud infrastructure are both critical to scaling these applications. Hitachi Energy’s Enterprise Software Solutions technology and its partnership with Microsoft are key to optimizing the energy network, from generation, through transmission and distribution, and ultimately in delivering reliable and sustainable energy to customers.
Joint projects to promote sustainable growth
Multiple Hitachi Group Companies including GlobalLogic, Hitachi Digital Services and Hitachi Solutions, deliver a wide range of digital engineering, IT and managed services, and application services for the cloud. Additional development efforts through this partnership will focus on enhancing this broad range of services with the aim of sustainable innovation with Microsoft.
As the impact of CO2 emissions from AI on the global environment increases, Hitachi and Microsoft will work toward zero carbon, starting with a data center project in Europe, to reduce environmental impact.
Strengthen digital skilling and talent development
Hitachi will train more than 50,000 GenAI Professionals. As part of the partnership, Hitachi will incorporate training to acquire advanced software development skills using GitHub Copilot and Azure OpenAI Service into the program to develop GenAI Professionals, talents who support customers’ transformation using AI.
*1 Forecast as of April 26, 2024, calculated at 140 yen to the U.S. dollar.
*2 Hitachi News Release (June 26, 2020) “Hitachi and Microsoft form a strategic alliance to advance next-generation digital solutions for manufacturing and logistics across Southeast Asia, North America and Japan” https://www.hitachi.com/New/cnews/month/2020/06/200626.html
*3 Hitachi News Release (May 15, 2023) “Hitachi Establishes New ‘Generative AI Center’ to Accelerate Value Creation and Improve Productivity in the Lumada business by promoting the use of Generative AI” https://www.hitachi.com/New/cnews/month/2023/05/230515.html
*4 Hitachi News Release (May 21, 2024) “Hitachi to Accelerate System Development Transformation With Generative AI” https://www.hitachi.com/New/cnews/month/2024/05/240521.html
About Hitachi, Ltd.
Hitachi drives Social Innovation Business, creating a sustainable society through the use of data and technology. We solve customers’ and society’s challenges with Lumada solutions leveraging IT, OT (Operational Technology) and products. Hitachi operates under the 3 business sectors of “Digital Systems & Services” – supporting our customers’ digital transformation; “Green Energy & Mobility” – contributing to a decarbonized society through energy and railway systems, and “Connective Industries” – connecting products through digital technology to provide solutions in various industries. Driven by Digital, Green, and Innovation, we aim for growth through co-creation with our customers. The company’s revenues as 3 sectors for fiscal year 2023 (ended March 31, 2024) totaled 8,564.3 billion yen, with 573 consolidated subsidiaries and approximately 270,000 employees worldwide. For more information on Hitachi, please visit the company’s website at https://www.hitachi.com.
About Microsoft
Microsoft (Nasdaq “MSFT” @microsoft) creates platforms and tools powered by AI to deliver innovative solutions that meet the evolving needs of our customers. The technology company is committed to making AI available broadly and doing so responsibly, with a mission to empower every person and every organization on the planet to achieve more.
Media Contacts
Microsoft Media Relations, WE Communications for Microsoft, (425) 638-7777, [email protected]
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Innovation can help you stay ahead of the curve and grow your company in the process. Here are three reasons innovation is crucial for your business: It allows adaptability: The recent COVID-19 pandemic disrupted business on a monumental scale. Routine operations were rendered obsolete over the course of a few months.
Business innovation is defined as the process of creating and implementing new ideas, methods, products, or services within an organization to improve its sales performance, competitiveness, and value creation of customers. ... Once ideas are prioritized, develop a detailed plan for each selected innovation initiative. Define the scope ...
In a business context, innovation is the ability to conceive, develop, deliver, and scale new products, services, processes, and business models for customers. Successful innovation delivers net new growth that is substantial. As McKinsey senior partner Laura Furstenthal notes in an episode of the Inside the Strategy Room podcast, "However ...
An innovation strategy is a detailed roadmap with a series of strips that helps your organization reach its future goals. This roadmap isn't just a guide for business success — it's a guide that helps you keep up in your industry by thinking of new and innovative ways to tackle problems. These innovations can be creating new products to ...
A few benefits of innovation for both old and new business models include: Gain a competitive advantage. Innovation can help you develop unique products and services that set you apart from competitors. Over 80% of digitally mature companies cite innovation as one of their core strengths. Meet customer demands.
An innovation strategy framework provides a structured approach for organizations to develop and implement their innovation strategy. While the framework may differ from company to company, here is the wireframe of the widely used four-step innovation strategy framework: Step 1. Analysis and Assessment.
Business-model innovations—which change the economics of the value chain, diversify profit streams, and/or modify delivery models—have always been a vital part of a strong innovation portfolio. As smartphones and mobile apps threaten to upend oldline industries, business-model innovation has become all the more urgent: established companies ...
A company's innovation strategy should specify how the different types of innovation fit into the business strategy and the resources that should be allocated to implement these innovations. An innovation strategy paves the way to. Improve the ability to retain customers. Reduce competitive intensity.
Learn from your innovation efforts. You've probably heard the mantra "fail fast, learn fast." After each innovation, list what you would do again and what you wouldn't. And don't overthink failure; the key is learn from it and apply those lessons to your next innovation. We've seen these steps work at all levels in an organization.
What is innovation in business? In business, innovation refers to the dynamic process of conceiving, developing, and scaling novel products, services, processes, and business models to meet customers' needs. It revolves around revolutionizing existing ideas or products, as well as introducing groundbreaking solutions to address market gaps.
Organizational innovation is the adjustment of a business's practices that streamline, automate, or adjust operations for the overall benefit of the company. Social innovation handles sticking points in social spaces and workplace environments, generally to the benefit of teamwork and group wellbeing.
An innovation strategy focuses on driving creativity and implementing new ideas, while a business strategy is a broader plan outlining how a company achieves its goals. Innovation strategy is a subset of business strategy, specifically addressing creativity and new product development, which can significantly impact a company's success.
What is Innovation in Business? Innovation Definition in Business. In the dynamic landscape of business, innovation serves as the linchpin that harmonizes business strategy orchestrating a symphony of positive change and sustained value creation. Beyond the conventional realm of product development, business innovation is a strategic imperative interwoven with overarching business strategy.
Critics tend to discount "routine" innovation that leverages a company's existing technical capabilities and business model and extol "disruptive" innovation, but that is a simplistic view.
An innovation strategy is a clearly-defined plan of structured steps a person or team must perform to achieve the growth and future sustainability goals of an organization. ... For many, the most appealing benefit of a business innovation strategy is its capacity to generate entirely new ideas. Innovation can birth new products and services to ...
This innovation strategy plan is more than just a guide for business success; it functions as a compass, steering the organization through new and creative approaches to address challenges. Developing a company innovation strategy includes clearly defining an innovation mission, aligning activities with long-term business goals , and promoting ...
The strategic innovation tool kit has two elements: a strategy summary framework and an innovation basket. Leaders start by clarifying a unit's strategy and determining what needs to change to ...
What is Innovation Strategy? Innovation is about creating new value people are willing to use and pay for, whereas strategy is the plan for harnessing for example marketing, operations, finance and R&D to support achieving the competitive goal.. To clarify, innovation strategy isn't about innovation tactics, such as setting up an idea challenge, but more about mapping organization's ...
control all intellectual property and profit within your organisation. maintain strong boundaries of a project. 4. Find support and guidance. Connect with a business adviser or find a grant or program to help drive innovation in your business. 5. Update your business plan. An innovation strategy is just one part of your business plan.
This is the real magic in creating an Innovation Plan — when it supports the vision and goals of the organization, it fits naturally into the daily activities of the business. Innovation Teams ...
What is the business model? Successful innovation requires answers to each of these questions. An example from inventor and businessman Thomas Edison helps illustrate the concept. "In every case, ... Leadership created a vision and strategic plan connected to financial targets cascaded down to business units and product groups. Doing so
Day 1-30: Define your innovation buckets, looking at how much growth innovations in your core can produce and how much will need to come from new-growth initiatives. Day 20-50: Zero in on a ...
Business model innovation is defined as the process of creating, modifying, or defining the fundamental structure and components of a business model to create new value propositions, capture new market opportunities, and gain a competitive advantage. Learn more about business model innovation framework, examples and best practices.
A business innovation plan is a valuable tool for conveying an organisation's goals effectively. Also known as business presentation plans, many entrepreneurs use them to explain what a company envisions and hopes to achieve. A strong business plan informs and engages the audience while being easy to understand. In this article, we define ...
The business can achieve its objectives by performing those first two steps. Sometimes M&A fills in the gap, which is the third way. But unless there is a green box designed into the strategic plan that only innovation can address, it is hard for an organization to reallocate resources toward risky propositions like innovations. ...
Amazon and Meta executives told CNN this week that some of the fears about artificial intelligence are overblown and that the European Union's sweeping new AI rules risk holding back innovation.
Hitachi drives Social Innovation Business, creating a sustainable society through the use of data and technology. We solve customers' and society's challenges with Lumada solutions leveraging IT, OT (Operational Technology) and products. Hitachi operates under the 3 business sectors of "Digital Systems & Services" - supporting our ...
Build your business case for the cloud with key financial and technical guidance from Azure. Customer enablement. Plan a clear path forward for your cloud journey with proven tools, guidance, and resources. Customer stories. See examples of innovation from successful companies of all sizes and from all industries. Azure innovation insights
A legacy of defying legacy. Last year we celebrated our 2nd annual Unconventional Awards, establishing a new tradition of putting our most innovative customers in the spotlight. Here's to those winners—the pioneers who took their industries to new places through their unconventional thinking. Watch the video.