Prof. Yesha Sivan, CEO of i8 Ventures, was invited to give a lecture about the “Digital Era – Risks & Opportunities in the Changing Role of Auditing” at the convention organized by the Audit Department of the Municipality of Jerusalem (Hebrew).

The convention’s theme and focus is the digital era, innovation, and the transformations in auditing, specifically in municipalities.

Details (in Hebrew) in the attached image.

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Innovation is a must, and most companies recognize this need. The challenge is the source of new and fresh innovations. Many companies believe that innovation must come from internal sources (like R&D labs) and external sources (like Hackathons and startup incubators). Only a few companies use crowdsourcing to find and introduce new and fresh innovations. The famous Danish Carlsberg brewery is one of them. Let’s have a look at how they do it.

For a number of years, the Carlsberg Group has been an honorary partner of Copenhagen Business School’s (CBS) annual Case Competition, which is one of the largest university case competitions for undergraduates, attracting students from top universities around the world.

Carlsberg has defined a strategy based on the assumption that digital has an important role to play and has set a strategy titled SAIL’ 22 as a multi-year digital transformation of the brewery group. Digital has a powerful role to play in fueling the company’s traditional business with innovative growth opportunities and smart operational efficiencies.

Carlsberg has decided to leverage the 2019 CBS Case Competition as a response to the increasingly digitalized world. More than 3,000 undergraduate students from 61 countries have signed up to participate in the Global 2019 online competition through CBS Case Competition’s own online platform.

Through this competition, the students will contribute ideas and concepts for how Carlsberg can further leverage digital innovation to disrupt the on-trade scene and transform its partnership with bars, restaurants, and cafes in Western Europe. The top three teams will be invited to Copenhagen to compete in the finals.

“From a strategic perspective, the rationale to invest in digital products and services is simple: if Carlsberg is able to provide insightful and valuable experiences and services to its customers alongside its great beer and beverage portfolio, it will enhance Carlsberg’s value as a successful, professional and attractive business partner and not just as a legendary brewery group,” says Nancy Cruickshank, Senior Vice President, Digital Transformation.

”We’re investing heavily in digital transformation activities across our business, and we were intrigued by the Global 2019 online competition to learn how the world’s best undergraduate students would prioritize if they ran this brewery group. We want to learn from digital natives how they would address high-impact, strategically important areas with multi-market potentials, such as customer engagement, distribution or e-commerce. The goal is to improve Carlsberg’s competitive position, and to stay at the forefront of innovation within our industry,’’ says Nancy Cruickshank.

Unlike the incubator model used by many large corporations, in which small teams are tasked with disrupting traditional business almost as an external start-up, the lighthouse projects are intended to be deeply embedded in the brewery group. This is to ensure the relevance of the business issue in question and to minimize integration and roll-out difficulties.

One of the projects already rolled out in markets such as Denmark, Sweden, Norway, Finland, the UK and lately also Switzerland is Carlsberg Online. With Carlsberg Online, the Carlsberg Group became an international front-runner on the brewery scene, which is still characterized by being relatively analog. In addition to online ordering, the team behind Carlsberg Online is constantly expanding the platform, improving content with do-it-yourself videos and providing insights never before available for on-trade customers on markets, consumer behaviors, new trends, etc.
By participating in the CBS Case Competition, Carlsberg aims to harness even more innovative ideas that can potentially be applied to the business, while providing an opportunity for students to apply theory to a real-life business case.

Link to the WebWire news site that published the article

In Chapter 5 of our e-book (Hebrew) “Doing Digital,” we describe the importance of innovation, and we show several models and ways companies innovate. The idea of “Innovating innovating” we love to use, is the idea behind the need to innovate the way companies innovate. Using crowdsourcing and competitions is a great example of this idea. Not all good ideas can be created internally or even by hackathons with startups. Using a well-established competition, as the CBS one, provides the company access to many students who are digital natives, and can provide new and outstanding ideas for digital innovation. That’s the world they are living in.

“The pace of change has never been this fast, yet it will never be this slow again” – what a great line from Justin Trudeau, Canada’s Prime Minister’s speech at the Davos 2018 World Economic Forum meeting. The pace of change and disruption is accelerating and will continue to accelerate in the future. To cope with this challenge, organizations will have to rely more and more on innovation and agility.

Innovation by itself has to change, what we call “Innovating innovating.” One of the changes in the innovation process and management was highlighted by Steve Blank, the developer of the methodology that, eventually, became the foundation of the Lean Startup movement and he’s currently an adjunct professor of entrepreneurship at Stanford University and lecturer at other universities. On February 2019 He published an HBR (Harvard Business Review) article titled “McKinsey’s Three Horizons Model Defined Innovation for Years. Here’s Why It No Longer Applies.”

Steve Blank’s article.

McKinsey’s experts published in 2016 a model of three-time horizons for managing the innovation portfolio, in their article “Now, New, Next: How Growth Champions Create New Value.” The model describes the idea that companies should manage their innovation portfolio in three-time horizons (time-buckets):

• Horizon 1: Now – new ideas based on the current business model and existing core capabilities to provide continuous innovation (also called sustainable by Prof. Christensen).
• Horizon 2: New – new ideas that extend a company’s existing business model and core capabilities to new customers or markets.
• Horizon 3: Next – the creation of new capabilities to take advantage of or respond to disruptive opportunities.

McKinsey’s article.

This model was also described in chapter 5 of our e-book “Doing Digital” (https://bit.ly/2odl5th). Steve Blank now claims that in the 21st century, this model has a fatal flaw that risks making companies lag behind their competitors. His main claim is that the focus on the horizons is based on time-frame of each horizon. The Horizon 1 focused on innovations that could be delivered in a short term of 3 to 12 months. Horizon 2 could be delivered in 24 to 36 months and Horizon 3, focused on creating new disruptive business models, could be delivered in 36 to 72 months. This time-based definitions made sense in the past, but are no longer valid in our current and future dynamic business environment. Today, Horizon 3 innovations could be delivered as fast as Horizon 1 innovations.

To make his point Steve Blank uses some examples. Companies like Uber, Airbnb, Lyft, Tesla, Netflix built their disruptive business models using existing technologies (smartphones, GPS, Mobile internet, Big Data and many more) and deployed their solutions in extremely short periods of time. They have used the Minimum Viable Product concept to enter the market with barely finished, iterative, and incremental prototypes (what we call agile working methods). Incumbent companies can’t wait 36 to 72 months to deploy their counter solutions. It’s too late! Therefore organizations must find ways to shorten the Horizon 3 innovations.

Steve Blank provides some ways that incumbent organizations can deal with that challenge:

• Using startups to build and deliver products rapidly for incumbent organizations.
• Acquiring external innovators who can operate at the speed of the disruptors.
• Copy some of the new innovations and use the incumbent business model to dominate.
• Innovate better than disruptors.

None of the above alternatives are easy for incumbents, but waiting 36 to 72 months for Horizon 3 innovations to be deployed is not an option, in some cases.

In chapter 9 of the e-book “Doing Digital” Raz Heiferman & Prof. Yesha Sivan propose organizations to understand the five platforms for innovation. This conceptual framework provides some ideas of how organizations can speed up their innovation processes (e.g., using ready-made digital components for innovation).