Creating a culture of innovation in the Plastics Industry

1 petroliam Nasional Berhad (PETRONAS) 20151 2015 petroliam NASIONAL BERHAD (PETRONAS)All rights reserved. No part of this document may be reproduced, stored in a retrieval system or transmitted in any form or by any means (electronic, mechanical, photocopying, recording or otherwise) without the permission of the copyright a culture of innovation in the Plastics IndustryRoss GilmourPETRONAS Chemicals Group1 October 2015 Malaysian Plastics Manufacturers Association Annual ConferenceFuture of innovation for the Plastics Industry petroliam Nasional Berhad (PETRONAS) 20152 OutlineDefining why culture importantIdentifying your innovation strategyAssessing your innovation readinessDesigning innovation program setup petroliam Nasional Berhad (PETRONAS) 20153 Determinants of organizational capabilities for innovationOpenLeadership & governance CEO leadership style Top management team capabilities BoardOrganization Mission, goals, strategy Structure & systems Resource allocationCulture(norms, behaviours, assumptions)

2 Climate Learning & knowledge managementBusiness processes Decision making Portfolio & project management Business intelligenceAdapted from Crossanand Apaydin2010 petroliam Nasional Berhad (PETRONAS) 20154 Organizational culture definitions reference shared norms and values Patterns of interpretation composed of the meanings associated with various cultural manifestations, such as stories, rituals, formal and informal practices, jargon, and physical arrangementsMartin 2002 The normsand valuesshared among employeesHill 2007 The things that happen when no instructions are givenRajeev Peshawaria(pers. comm.) culture implies structural stability, refers to the deepest unconscious part of the group, covers all of a group s functions, invokes patterning or integration of cultural elementsSchein 2010 petroliam Nasional Berhad (PETRONAS) 20155 Managers often promote development of the particular cultural types: a right kind of culture a culture of quality a culture of customer service Implies culture is associated with certain values that managers are trying to inculcate Also implied are key assumptions: there are better or worse cultures stronger or weaker cultures the right kind of culture will influence how effective the organization is There is often an implication that having a culture is necessary for effective performance, and that the stronger the culture , the more effective the organizationWhy should we concerned about culture ?

3 Adapted from Schein 2010 petroliam Nasional Berhad (PETRONAS) 20156 culture must be considered in its environmental context culture can only be considered in the contextof the environment in which it exists It cannot be good or bad, effective or ineffective , nor ideal or suboptimal in absolute terms Cultural insights are most useful when they helps us to better understand the hiddenand complexaspects of life in groups and organizations petroliam Nasional Berhad (PETRONAS) 20157 innovation strategy is a key environmental factor determining innovation culture How many conference participants here today are conscious of your company s innovation strategy? What rules does the strategy define for how you will participate in innovation activities? What are the implications of the environmental factors for your company s innovation culture ? How does the strategy and culture define how innovation is supported in the company?Internal petroliam Nasional Berhad (PETRONAS) 20158 innovation strategy is a key environmental factor determining innovation cultureInternalTechnologydriverMarket readerNeed seekerUOPS iemens AGAppleXeroxProctor & GambleDellAdapted from Strategy& petroliam Nasional Berhad (PETRONAS)

4 20159 innovation strategies are contrasted by customer interactions and usage of technology Technology driver -the company creates leading technologies that solve customer needs Must be a technology leader Inside-out innovation the company creates innovations that find or create markets Driven by R&D and technology, not needs Need seekers seek out customers unmet needs and develop and supply solutions The companies are actively engaged with their customers Outside-in innovation discovering needs among existing and prospective customers Identify needs, then link to capabilities Market readers evaluate competitive landscape, forecast trends to identify opportunities Active in corporate foresightingand competitive intelligence Outside-in innovation rather than discovering needs, discover opportunities and generate ideas to address themInternalAdapted from Strategy& petroliam Nasional Berhad (PETRONAS) 201510 innovation strategies require specific capabilities and must be aligned with business needs for successInternal Market readers Resource management excellence Strong supplier / development partner engagement Need seekers Generate deep customer insights Enterprise wide launch Strong market potential assessment Rigorous evaluation of emerging technologies Broad consumer and customer insights Strong customer engagement Pilot-user selection and roll-out Open innovation Strong technical risk assessment Technology drivers Detailed understanding of emerging technologies and trends Product life-cycle management Rigorous decision makingAdapted from Strategy& petroliam Nasional Berhad (PETRONAS)

5 201511Co-existence of different thinking styles supports business outcomes and innovation outcomes Open Logical Seek guaranteed conclusion Requires proof Looks for precedents Quick to decide There is right and wrong Uncomfortable with ambiguity Wants results Business outcomes Adapted from Martin 2009 petroliam Nasional Berhad (PETRONAS) 201512Co-existence of different thinking styles supports business outcomes and innovation outcomes Open Logical Seek guaranteed conclusion Requires proof Looks for precedents Quick to decide There is right and wrong Uncomfortable with ambiguity Wants results Business outcomes Intuitive Take your best shot Asks what if? Unconstrained by the past Holds multiple possibilities There is always a better way Relishes ambiguity Wants meaning innovation outcomes Adapted from Martin 2009 petroliam Nasional Berhad (PETRONAS) 201513 Our personal innovation Style is also a key determinant of innovation team outcomes We are all unique individuals Each one of us has different approaches to innovation We all have the capacity to be innovative, but we approach innovation and change in different ways Everyone has the capacity to be innovative The key question is not am I innovative It is how am I innovative We use a mixture of at least 4 different approaches (styles)

6 Each style represents a different strategy for innovating Styles are the result of our preferences for different ways of thinkingPreferences, habits, talents, knowledge, values, interests, and ways of expressing ourselves define our innovation stylesOpenAdapted from Miller 2007, 2012 petroliam Nasional Berhad (PETRONAS) 201514 Two dimensions form the four innovation Styles:1. What stimulates your innovative thinking?2. How do you approach the innovation process?VisioningImaginean ideal future. Let long term goals be the guide. Envision and ,improve and optimize what has already been new and novel possibilities they challenge and combinations or ideas and learn from the from Miller 2007, 2012 petroliam Nasional Berhad (PETRONAS) 201515 Two dimensions form the four innovation Styles:1. What stimulates your innovative thinking?2. How do you approach the innovation process?Modifyingand VisioningFocused, well-planned and outcome ideal future. Let long term goals be the guide.

7 Envision and exploringIntuition, insights & ,improve and optimize what has already been new and novel possibilities they challenge and ExperimentingFacts,details & combinations or ideas and learn from the ExperimentingBroad, perceptive and learning from Miller 2007, 2012 petroliam Nasional Berhad (PETRONAS) 201516To build innovation capabilities, give people experiences doing innovationOpen5%10%20%30%50%75%90%Lectur eReadingAudio visualDemonstrationDiscussion groupLearning through doingTeaching othersAdapted from E. Dale, Audiovisual Methods in Teaching, 1969, NY: Dryden I hear, I forgetWhat I see, I rememberWhat I teach, I understandAdapted from Confucius petroliam Nasional Berhad (PETRONAS) 201517 innovation readiness assessment underpins appropriately constructed change management programs for building innovation capabilitiesOpenAlignmentInnovation mandateLeader readinessEmployee engagementInnovation supportSystematic approachInsightsDiverse perspectivesExternal orientationCulture / climateIdea flowIdea selectionMobilizationResourcesGovernance PortfolioChange managementExecutionAdapted from Desai (2013) petroliam Nasional Berhad (PETRONAS)

8 201518 innovation readiness assessments are a key diagnostic to be implemented before program launchFactorAssessmentIssues addressedAlignment1 innovation MandateInnovation is see as critical to the future of our ReadinessLeaders are prepared to guide the organization's innovation EngagementIndividuals throughout the organization are motivated to contribute to SupportOur organizational systems and processes support Approach We apply a systematic approach to PerspectivesWe incorporate a wide range of perspectives in generating and OrientationWe actively engage with the external environment (including customers and vendors).8 Climate/CultureOur organizational climate and culture supports FlowWe have a strong flow of creative SelectionWe select the best ideas from those that are We allocate sufficient resources to innovation -related We have effective governance structures and processes for effectively manage our innovation -related ManagementWe successfully manage any disruptive impact of innovation -related achieve effective results from the initiatives we executeOpenDesai (2013) innovation Engine petroliam Nasional Berhad (PETRONAS) 201519 Enterprise wide innovation taps cultural and operational aspects of the businessInternalDetermines their their EXPERIENCESwe give from Connors & Smith 2011 Produces the RESULTSC ultureOperations petroliam Nasional Berhad (PETRONAS)

9 201520 InnovationchallengesIdeasConceptsInnovat ionProjectsIdea GenerationIdea EvaluationInnovation Portfolio ManagementStrategic innovation AreasThe Front End of InnovationThe Back End of InnovationEnd-to-End Idea& innovation ManagementInnovation challenge campaigns are best practice innovation management processes OpenAdapted from petroliam Nasional Berhad (PETRONAS) 201521 Specific actions are required to develop the leadership, culture and tools required for building an organizational culture for innovationOpenCase for ChangeCreate a mandate for change, backed by a strategy that embrace the desired innovation strategyInnovation readinessComplete situational assessment. Model the necessary steps for the organization to become more innovativeLeadershipPromote the vision and communicatethroughout the organizationExperiences & beliefsEnable the capabilities that give people the necessary experiences and promotes the required beliefs petroliam Nasional Berhad (PETRONAS) 201522 InternalThank you