Leadership and Innovation

Teachers:
Mariano Corso
Luca Gastaldi

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1. Leadership and Innovation Relationship
We must study leadership and innovation together, since they are two faces of the same coin.

Why innovation? Because if we don’t innovate, we cannot be forever in the market.

Running operations is a routinary process, but then there are innovation projects, which are very different
because they start with the objective of dying since they have a beginning and an end. The real difficulty is
not the process itself, but the point is to make the outcome of the project the new operation, so the
overlapping is the tricky point. Change management process is very challenging and difficult to
standardize: for years managers had to choose between running operations and developing innovative
processes. Today the pace of innovation process is increasing drastically everyday: innovation and change
are seen as an everybody and everyday challenge. Therefore, companies must behave in an
ambidextrous way.

Today, we are living in the Fourth Industrial Revolution, characterized by these new characteristics:
• Pace: time available before the full impact of innovation is shorter and shorter.
• Pervasiveness: innovation is not something episodic or sporadic but rather it is an everyday and
everybody business.
• Openness: sources of innovation are more and more outside the company boundaries with actors that
in many cases are non-contractible by the company.

Why leadership? Because to promote and realize innovation nowadays being a good manager is not
enough, because innovation is not something that can be done in R&D anymore, but it is an act of
inspiring people, designing new services and new communication and, to do it, we need to be a leader.
Indeed:

A manager is someone who gets things done

through other people in organisations.

A leader is someone who is able to influence a

group of followers toward the achievement of a
vision or goals. Engaging followers is very
important because followers are the ones who
recognize leadership in the leader.

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To go more in dept with the differences between managers and leaders, there is this metaphor:

Then Covid-19 arrived, with the following effects on innovation investments by some Italian companies:

In the future we will have less managers with a different kind of skills from the ones they used to have for
many years. Particularly, there are four metaphors for a manager valuable for the tomorrow organization:
• Being an Architect to develop bridges of meanings in
the organization and between the organization and
the environment in which the company is.
• Being a Personal Trainer to be able to have a
personal relationship with each employee, to help
him to develop his strengths and performances.
• Being a Broker in terms of sharing flexibility,
because we don’t have only to give flexibility to
people letting them to be autonomous, but because
we want also to have this flexibility back.
• Being an Orchestrator to deal with diversity.

In the more traditional kind of organizational model

(mechanic organization), we think that a leader is
someone in the centre or top of the organization;
however a real leadership model should be based on
a more organic organizational model.

Therefore, leaders need to know how to get the

most out of people, and teamwork, cross-cultural,
communication, conflict handling and negotiation
skills are needed early and often in today’s
organizations.

According to Peter Drucker: “Management is doing things right; leadership is doing the right things”.
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2. Innovation Strategies
A company has two choices: innovate or perish. Considering the most important 250 firms in the Down
Jones Index in 1900, only one firm survived till 2000 and it was General Electrics:

Indeed, according to Miko Kosonen (Former CIO of Nokia): “Most companies die not because they do the
wrong things, but because they keep doing what used to be the right things for too long”. So, basically,
most companies die because they do not innovate.

Innovation needs the right attitude to change. For example, the beginning of the end for Nokia was not
considering Apple because at the time it was a niche in the computer industry. However, it is not the
hardware to make the difference, but how Apple developed a perfect ecosystem. Then, also Microsoft did
it. Like it happens in most of the cases, Nokia did not understand this innovation because it was a successful
company with a successful product, so this signed the beginning of Nokia’s failure in mobile industry.

Innovation is about bringing something new. It could either be about creating something new or
improving something already existing.
An innovative company is a company that plays with technologies and develops new products or services.
According to Oslo Manual: “An Innovation is the implementation of a new or significantly improved product
(good or service), or process, a new marketing method, or a new organisational method in business
practices, workplace organisation or external relations”. So, it doesn’t mean that something has to be new,
because it can also be an improvement of something already existing. Then, innovation must be
implemented in the real world, creating value and progress.

Coca Cola has always been an innovative company along the years. The innovations made by Coca Cola
were about the production system and the package (a more resistant and lighter package), the shape of the
Coca Cola bottle as a powerful way of communication, and the distribution system, distributing the product
to the army during the war and during the Olympic Games, since it was one of the main sponsors.
Therefore, now Coca Cola has one of the highest brand awareness in the world, because it is extremely
good in communication. The most valuable asset is still nowadays the brand and not the formula.

Historical definitions of innovation are:

• According to Schumpeter: “Innovation is the implementation of new combinations. Innovation is a
source of competitive advantage and the main source of progress through a process of creative
destruction”.
• According to Freeman: “Innovation is different from Invention! Invention is an idea, a sketch or a model
for a new or improved device, product, process or system. Innovation (in the economic sense) is
accomplished only with the first commercial transaction involving the new product, process”. So, there
is not innovation if it is not sold into the market; in this case we have the invention, which is something
valuable, but it is not an innovation.

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• According to managerial viewpoint: “Innovation is to shift the trade-off among performance to better
fulfil existing needs or to generate new performance dimensions for new needs”.

Inventors vs Innovators

Meucci invented the first prototype of phone; the telephone itself was not invented by Bell, but he was the
innovator, while Meucci was the inventor. Bell took the idea from Meucci and brought it into the market,
so Bell was the innovator.
The inventor of vacuum cleaner was not Hoover, but his brother-in-law that invented and patented it as a
suction cleaner, while Hoover was the innovator changing the name in vacuum cleaner and
commercializing it.
Hatcher developed RC cola (inventor), so the first cola sold in cans instead of bottles; it was not RC Cola
taking advantage of this invention but mainly Pepsi and Coca Cola, the innovators.

So, it is not compulsory being an inventor for being an innovator. For instance, Apple has other companies
creating components and Apple knows how to put them together, so these companies are the inventors,
while Apples that combines these already existing components together is the innovator.

Many times, the innovators are nothing more than very smart technology/solution brokers:
• Technology Brokers. In 1866 Mr Sholes (a mechanical engineer form Milwaukee)
created the first typewriter by combining (brokering) existing technologies: the
forward movement (one step for each pressed key) was taken from watches, the
back movement leverage was taken from sewing machines, the keyboard was
taken from telegraphs, and the hammer mechanical movements for printing each
letter was taken from pianoforte.
So, he did not create anything, but he found out the way to put parts together. Innovators are very
good in spotting things around, putting them together in different ways to fulfil the needs. They
recombine them in a very smart answer to the existing needs, so they are technology brokers.
• Solution Brokers. United Colours of Benetton became famous when it changed the way of designing
sweaters, enabling personalization. They started to sell a huge quantity of different colours, more than
30 for each sweater.
The problem was related to the safety stocks. To overcome this problem, they changed the production
process, creating the sweater and only after deciding the colours based on the market requests. So,
there is a postponement of the moment in which the product is characterized and, thanks to this, it is
possible to have more freedom to reduce the number of sweaters into the safety stocks.
More than 20 years later, Dell did the same thing. On Apple website, it is possible to choose among a
fixed number of options, while on Dell website, it is possible to customize the computer because in the

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 warehouses they have the components and not the final products. Dell delays the transformation in
the final product by postponing.
Therefore, to work on innovation, it is necessary to look around recognizing that even if the industry is
different (computer and clothes), the problem may be the same and the solution transferred. It is
necessary to decompose the problem, understanding the key problem. By abstracting the problem, it is
possible to find solutions coming from other industries, broking the solution.

The innovator is able to learn and replicate the innovation process, so he is able to learn from failure and
develop something new. Apple has not always been successful, for instance it had an important invention
Apple II, even if Apple III was much better in terms of innovation with better technologies, but it was a
commercial disaster. It was a disaster because of a wrong process to create it: it was paid by customers but
delivered only a year after. Due to this, Apple went near bankruptcy. However, learning from this mistake,
then Jobs created Macintosh, one of the greatest success of Apple which became the second more sold
computer in the history of computers.

Product Service System

Product Service System is a system composed by products, services and communication, all designed
together. Nowadays companies hardly sell products or services, but normally a customer buys a bundle
of them.
The coffee machine is a device but there is also a shopping online. The product innovation of Nespresso is
almost nothing; what the company did was to create a new kind of experience sponsored by
communication. Particularly, Nespresso made a mass product a luxury one; it is mainly a communication
kind of innovation, because coffee used to be a commodity and Nespresso redesigned the experience.
The iPod was something that had to stay in the pocket. Apple had to find a way to make the product
communicating itself. The wires of the headphones were the only things visible: they made them white so
that it was possible to notice them. In this way, a product not seen is communicated only through the
wires. Nespresso did something similar using the capsules.
Another example is iPhone (product) with the possibility to personalize it downloading apps (services),
sponsored by a lot of advertising on how its photo camera is good for example (communication).
Therefore, product, service and communication cannot be innovated separately, but they need to be
innovated together.

Types of innovations

A general framework to classify innovation is people (who), meaning (why) and solution (how).

People are of paramount importance as innovation is done to improve people’s lives.

Meaning means to change the why. The thermostat is used to manage the temperature in an interior. It
ranges from 20€ to 300€. There is a strong correlation between the price and the time spent to use and

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program it. So, there are now many new options for the thermostat. The company Nest created the
thermostat Nest, that uses artificial intelligence and reduces visual information. The system learns the
desired temperature and every time it detects that someone is in the house, it raises the temperature.
Just by using it, after one week the system can reduce the cost for the heating system of 20% in one year.
Nest did not create something new but told the opposite thing: the traditional thermostat (first picture) is
bought to have the power to control, while Nest (second picture) is bought to have not a relationship with
the thermostat. So, it is clear that Nest innovated the meaning, changing the reasons why to buy a
thermostat.

Moreover, Nest started to create an ecosystem, because innovations can be combined.

Jawbone, for instance, is a wearable to study the sleeping. During the night, it can detect the sleep pattern
understanding the right temperature. Jawbone and Nest communicate to create the perfect environment.
Nest also did a partnership with Mercedes-Benz: the connection with the car identifies if someone is
coming home, starting to increase the temperature.

So, the product is not bought because it does something better than others, but the reason why it is bought
is the opposite and for this reason Google decided to buy Nest for 3.2 billion dollars.

Artemide is one of the most popular Italian companies related to lights. Artemide used to produce icons
lamps. It introduced in the market the most famous lamps starting from the 60s. Around the year 2000, it
had a problem: they were good in leveraging design, but it recognized that currently design was no more
source of competitive advantage, so Artemide needed to change its value proposition.
To be recognizable and to maintain the competitive advantage, Artemide decided to stop selling lamps and
start selling lights. So, the company created a set of lamps that can create an environment, creating the
right chromatography environment matching the mood of the person.
To do this, Artemide started scientific researches on how human
brain reacts according to the light environment. In the office, it
creates always the perfect system of lights to make the brain work
better for example. So, the company did not change the product,
but radically changed the company itself, becoming a lighting
company. This is a change of why: the lamp in the past was bought
for the design, while today the shape of a lamp is not important
anymore, but only the light is important.

Talking about meaning changing, it is generally about changing the reason why a product is bought or the
meaning of the company itself.

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Similar design-driven innovations are the ones by Alessi following fiction (pictures on the left) and Kartel
worm (picture on the right):

Solution means to change the how. The fan is normally bought

to have fresh air, but normally it is not a nice tool. However,
one company created a radical new fan, completely changing
the way to think at it. Once, a fan used to be on the ceiling.
Creating the portable one is an incremental innovation.
Normally, by doing an incremental innovation, there is not the
innovation either of the architecture or of the components.
There are the same mechanics, with the central axes and the
blades connected to it, with the same physical effect.
With the new solution, a radical innovation, there is a
different technology that do not even leverage the same
physical effect. They are two completely different concepts.

Particularly, to classify radical and incremental innovation, it is necessary to take into account:
• Functions: we have to ask ourselves if the product is enabling new functions. For instance, the first
smartphone allows a new function, which is the possibility of talking in mobility, which was a radical
innovation.
• Performances: the new product can do the same things of the previous products, but in a better way.
For instance, at the beginning, there was a modem connecting the PC with the telephone line, because
there was not the ADSL. Every time the performances were doubled. Then, the optical fibre introduced
higher speed, and this was a radical innovation.
• Product architecture.

Another classification of innovation, intrinsically linked to the incremental-radical innovation one, starts
from the definition of product architecture. In most of the cases, the products sold are assembled, so in the
production process, there is an assembly phase. So, there is a distinction between the product as a whole
and the product in its parts. The product can be described as a list of components linked in a specific way.
Putting them together in the correct way, the product is created. Product architecture is the list of
components and the way in which they interact. For example, a room fan’s major components can include
the blade, the motor, the blade guard, the control system and the mechanical housing. The overall
architecture of the product lays out how the components work together.

Perceiving a product in this way, innovation can be made either on the components or on the
architecture. So, it is possible to make an innovation by changing a component, for instance if gasoline
engine in the car is replaced with an electric one, there is a radical change in the component and it is a
radical innovation, because there is a complete change of the technology and of the physical aspects.
Furthermore, it is possible to keep the same components but changing how they are put together, so this
is an architectural innovation. For instance, years ago cars had the engine connected with the tyres, while
now they are connected with the front tyre. The physical aspect is different as the car is pulled. There is a
radical change of the driving experience without changing the components, so it is possible to radically
innovate the product by changing radically the architecture.

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The fact that the joystick became the joypad is an architectural
based innovation. Components have been modified (there is a
change of shape of the stick, different buttons and so on), but the
main change was in the architecture because in this way it was
easier to change the game experience. In the old one, there was a
small combination of possible actions during the game. With the
joypad, there were many different possibilities: the aim was to
change the architecture as it allows more easily to change the
game experience. The basic technology was still sticks and buttons,
but there were many more options.
After some years, the motion control of the Wii was introduced: the radical innovation was in the
interactions as, thanks to an accelerometer, the actions came from the movement in the real environment.
The change was mainly a component-based innovation: there were still buttons and components, but the
real innovation was in the interactions thanks to the accelerometer, which was the new component, that
made possible to move in the real world seeing the effects on the screen. Particularly, Nintendo was just
the innovator, because the inventor of accelerometer was STMicroelectronics and that technology was
used for many years until Nintendo moved it in the world of consoles, changing the game experience.

Many times, the Service Concept requires the additional definition of a group of components (products
and services). The idea of architecture could be applied to services, calling it the service package. A person
hardly buys just one service, but a bundle of services. For instance, a person normally buys not only a flight
but also the services during the flight, the comfort and so on. Indeed, buying a ticket for an airplane, there
is a bundle of different services linked together in different ways.

This is the relationship between incremental and radical innovation:

If the improvements are made through incremental innovations, every time the performances improve.
However, normally there is a limitation to the possible improvements. After a while, it is more difficult to
improve a product; indeed there is a decreasing marginality: the cost for small improvements becomes
high. So, at a certain point, a radical innovation is needed.
An incremental innovation is small, and this implies small investments, little time and the risk connected is
low. The risk is the probability of investing in innovation without getting the results. Doing many
incremental innovations, a great part will get to a result, because by doing many, there is risk sharing.
On the other hand, radical innovation is big, therefore it requires a lot of investments, a lot of time and a
higher risk: failing means that all money is lost. Companies, however, cannot just do incremental

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innovations. For example, Apple launched more than 300 products in the last years, but with no more than
5 innovations: the majority are incremental.
Finally, after a radical innovation, there is once again incremental innovation to sustain this radical
innovation during the time.

Finally, we can distinguish between competence enhancing and competence destroying innovations.
Now, the focus is on the user perspective, but originally it was defined from the company perspective:
• Competence-Destroying Discontinuities: they require new skills, abilities, and knowledge in either
process or product design. The skills needed for the core technology shift, causing power and structure
shifts in organizations. They are usually initiated by new firms.
For example, asking someone who plays tennis to play squash is a competence-destroying innovation,
since he has not just the necessity to learn how to play squash, but he also has the necessity to
destroy/erase his default behaviour in playing tennis.
• Competence-Enhancing Discontinuities: they are order-of-magnitude improvements in
price-performance trade-off that build on existing know-how within a product class. These
discontinuities tend to consolidate industry leadership. For example, changing the wood racket with a
carbon-fibre racket to play always tennis is a competence-enhancing innovation, since tennis players
can manage a faster ball without erasing their existing knowledge, but leveraging on it.

Innovation strategies can be:

These 3 (+1) strategies can be clustered on two dimensions: functionality of the solution provided, so
exploiting technologies to carry out radical or incremental innovation, and meaning, which can be
innovated leveraging on the language spoken by the product or service.

Innovation of meaning is not an alternative to innovation

in technology and functionalities; they could be
combined, so in this case we talk about technological
epiphanies, which are products or services with an
improvement both in meaning and technology, such in
Nintendo Wii, where there was a new radical technology
(the motion control) and a new meaning in console
games (no more something for geeks in a virtual
environment, but something to create a positive social
environment that could be exploited also by non-
gamers, like families).

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Considering the Nest thermostat presented before:
• It is a radical innovation in its first version, which is called MVP (Minimum Viable Product) and is very
simple and then is improved over time with incremental innovation.
• It is a component-based innovation because new components were introduced.
• It is a competence-enhancing innovation, because we don’t need the manual to use it since it is very
intuitive, and so we don’t need to read anything; the Nest system is self-learning and so is preventing
the need for us to learn how to program the thermostat.
• It is a design-driven innovation since there is an innovation of meaning concerning why to buy a
thermostat.

Why innovating is a tough challenge? 2 projects out of 3 are failures. We are in a phase where we have to
survive because we have exponential change. When we work on daily activities, we focus on immediate
tasks and we don’t see what is happening outside of our daily activities. Therefore, we need ambidexterity
because continuous innovation requires something that is against our nature, so being able to stay at the
same time on two dynamics that are different. We should be able to exploit the present situation
(exploitation), but at the same time explore, looking to the big picture, to the changes in the environment,
to the opportunities and the threats, searching for an innovation to help our company to survive also in the
future (exploration).

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3. Technology Push Innovation
A technology push innovation is a process driven by scientific or technological competences, that bring to a
product/process innovation that typically revolve around the physical attributes of the product.

Products, the way of working and all the society are changing due to technologies. According to Dosi:
“Technology is a set of practical and theoretical knowledge, know-how, methods, procedures, success and
failure experiences and, obviously, of physical assets and machineries”. So, a technology is how we do
things and not the tool that we use.
According to Zeleny: “Technology is a set of hardware, software, brain-ware and their sustain network”.

The typical dynamic of technology innovation is represented by S-shape curves model, which consider the
time-based evolution of a single parameter of a technology.
The idea is that over time technology evolves and we can identify 3 phases:
• Initiation: the daily progress of the technology is quite slow, because
the technology still needs to be understood and improved.
• Development: people start to increasingly adopt the technology, which
evolves in terms of performances, based on users’ needs.
• Maturity: the technology reaches the limit on a specific performance.

The assumptions to build these curves are: limited growth (L), 3 phases and constant innovation effort (b).
Basing on these assumptions, we can develop the following analytic formula:

Assuming that innovation effort is constant; its marginal productivity depends on the level of the current
performances (y), but when we are near to the limit, the effectiveness of the effort starts slowing down.
If we are able to understand where we are, we can decide whether to invest or not in a technology or we
can understand the time to invest in another technology than the one we are currently using.
So, as said, there are four possible uses of S-shape curves model:
• To understand the development stage for a technology (investment policy).
• To foresee L.
• To foresee when a given technology will reach a specific level.
• To drive the technology switch.

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The curve also helps in the long period. Envelope curve explains how
different technologies are working together to see an increase on a single
performance. In the example, there are different technologies that helped
the development of the speed performance.

However, the model has some limits.

The first strong hypothesis is that there is constant effort in the development of the curve, but we can
decide to stop in investing in a technology (first picture), because someone or the market decides that this
technology is not interesting anymore. If we don’t invest anymore, the performances will not improve
anymore, and so the level of performances of that technology will become a flat line, like it happened for
Apollo I.
However, we can also decide to increase the level of investments (second picture), increasing b, the
parameter that drives the shape of the curve, reaching a higher level of performance sooner in time.
Therefore, the shape of the curve is modified, because, even if the limit in terms of performances is always
the same, it is reached sooner.

Other two limits are that the model considers just one performance at a time and that it is not possible to
foresee directly the limit, even if it is possible to understand how close it is looking to the growth rate of
the performance (therefore it is a theoretical model).

To better understand, we can consider the electric vs petrol engine in automotive example:

Electric engines are today more competitive than petrol engine technologies. The electric engine was
already evaluated into the market years ago, so the two curves (the petrol and the electric engine) started
at the same time. Indeed, the idea of a car being powered by a battery is nothing new, since the first model
of this type was invented way back in the 1830s, and the first one to be made commercially available,
complete with rechargeable batteries and all, hit the market in 1881.
This example tells that the two technologies were there, but the market decided to invest in just one.
Following the end of World War I, it was believed that petrol cars were more reliable, especially with the

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improvements being made to the internal combustion engine at the time. Couple that with the fact that
petrol was more available at the time and highway infrastructures were rapidly expanding, the electric
vehicle quickly fell out of favour with the consumer.
Therefore, according to some of the performances considered, there can be a mistake in terms of betting
on a technology. It is necessary to know that this model has a limit in terms of the fact that only one
performance is considered at the time and therefore there may be some mistakes. For example,
acceleration, speed and the way of reacting of an electric engine is very great; moreover it is less costly and
more ecological, so now each company has to decide when to jump on the new curve.

Innovative market dynamics

We can have immediately an idea about innovative market dynamics thanks to the typewriter case:

With the first model, it was not possible to see what the user was writing. There was an improvement, but
it was still a not great technology as it was still difficult to use it. However, in those years, it was a fair
result. With the second model, they introduced the possibility of using upper and lower case. It was a
greater success because market was already used to it since in past years, people became able to
understand how to use it, which are the benefits of using it instead of stenography.

It is possible to analyse this by the Roger diffusion/lifecycle of innovation:

Roger’s model about lifecycle of innovation shows that there is an increasing difference in segmentation of
the users when dealing with innovation.
At the beginning there are techno-enthusiastic people (innovators) that want to buy the new technology
just to have and try it, even if it is risky. The second group is the early adopters that want to have the
technology once they know that it really works, so they don’t buy like innovators only for the taste of

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having and test the technology, but because they want to use it, so they are basically opinion leaders, while
innovators are technical people. Then, we have the early majority and late majority (they buy the
technology late), who adopt the technology when it is more diffused, and finally there are the laggards, so
the people that have aversion to the change, by adopting the new technology.
We have to understand the characteristics of each segment because, every time we deal with a technology,
we have to convince different groups with different decisional parameters.

Remington typewriter improved over the years. Particularly, there were different companies proposing
their own version of typewriter in the market, trying to make it better. The idea was to try to understand
where there was more room for improvement. Normally, a product is recognized with a clear shape, so
there is a concept of dominant design, a certain shape emerging into the market that represents the
product. The Underwood N°5 was a dominant design.
Analysing the competition in the typewriter market, at the beginning other two companies decided to
enter the race. A few years after, other companies entered the market. At the end of the century, the
dynamic was different with someone entering and other exiting. After a peak of diffusion, competition
started decreasing; this happened because of the presentation of Underwood N°5 of the company named
Underwood. It was the best-selling typewriter of those years and after its presentation, all companies used
its shape, since the dominant design product has features to which competitors and innovators must
adhere, if they hope to command significant market share following. For example, even if the Dvorak
keyboard proved to be better, due to dominant design, companies had to adhere to Qwerty keyboard,
which is worse, since designed in order not to click very fast all the buttons.

Particularly, dominant design is the architecture winning on the market:

• Winning architecture able to summarize innovations introduced by previous products. Usually, it is
not introduced by the first company that proposed the innovation to the market, but by the one that is
able to summarize the best things that are present into the market, being able to summarize the
innovations.
• Archetype of the product in both the designer and the user imagination.
• It gives an answer to the need of a large number of people. Particularly, best things do not mean the
best performances ever, but the best for the average customer. Indeed, it may happen that in the
transaction some functionalities introduced by other companies are lost in order to make the product
simpler for the vast majority of the people using it.
• It reduces the number of requirements to be satisfied.
• It may imply constraints.
• It normally freezes the socio-economic context.

The drivers that bring to the emergence of the dominant design are:
• Complementary assets, so all those assets which are not directly related to the supply chain the focus
is on, but they might enhance the value. An example is the distribution channel: it can enhance the

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 value of a product but not directly; indeed it is easier to launch a new product into the market having a
privilege asset, such as distribution channel. Other examples are brands, additional services or capacity.
• Ability to understand customers’ needs, in order to have a better understanding of them compared to
competitors. The company that is able to bet on the functionalities more valuable for users, has higher
probabilities to introduce a dominant design.
• Leverage or have an influence on the regulation bodies such as rules and laws.
• Strategic manoeuvring (externalities).

According to the Abernathy-Utterback model, there is a

relation between product and process innovation. We can
see that it is possible to have a high innovation rate on the
product dimension until a certain point, where the
innovation rate starts decreasing. Indeed, once reached the
dominant design, the product innovation rate decreases. It
does not mean that companies do not foster it, but it only
decreases, and probably, there will be incremental
innovations and no changes in the architecture.
Once reached the dominant design at the product level, it starts the one at the process level, in order to
make the production process faster, introducing a more standard process.

Regarding product, there are different architectures

in the fluid phase that then in the transition phase
become a dominant design. When it is impossible to
find differences between the product of two
companies, there is the entrance in the specific
phase, where the products become standard.
Smartphones are not in the specific phase because,
having two different smartphones, it is still possible
to understand where they are coming from and their
features, even if there is a dominant design in the
smartphones. Examples of products that reached the level of specific phase are insurances, tennis balls,
salt, fuel (there are standards related to the brand, so it is not possible to differentiate a product of a brand
from the same of another brand).

Therefore, the model tells that generally innovation starts with a high innovation rate of the product until it
reaches a dominant standard. Starting from it, innovation rate starts decreasing and there is a higher focus
on process as the competition is completely on price. Then, the innovation rate reduces too also
considering process.

There is also a cyclic dimension of this model. Once a dominant design is set, it is not over yet as the
struggle will start again. Tushman said that cycle innovation has two levels:
• There is technology discontinuity that brings to a fluid
phase, where companies compete with different
technologies and architecture.
• There is a selection of a dominant design and after
that there is an era of incremental innovations:
innovation is not over but it becomes incremental,
trying to get closer to the vast majority of the market.
The cycle starts once again once a technology
discontinuity enters the market. Both a dominant design
or a standard can be disruptive, such as the VHS that has
been disrupted by the DVD, then disrupted by Blu-ray.

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Why are radical innovations (technological discontinuities) so difficult for the incumbents? Due to the
incumbent curse: by being an innovative leader into the market, there is an underestimation of the
impact that other innovations may have. Particularly, incumbents generally prefer to underestimate what
is coming from outside. Moreover, it may happen also in the other dimension by overestimating the room
for improvements. Probably a company wants a technology continuing growing, overestimating the room
for improvements in that certain area and underestimating what is coming from the outside. There is also
inertia (the company wants to go on doing what it usually does) and the fear of cannibalization.
Generally speaking, radical innovations are so difficult for the incumbents because of:
• Marginal costs (path dependency).
• Uncertainty about feasibility and profits, since starting everything from the beginning, there will
always be a huge uncertainty.
• Overestimation of the technology potential (technology myopia, so there is a lack of ability of seeing).
• Innovation implies change management.

An incumbent reaction may be analysed taking into consideration Olivetti vs Wang.

In 1974, Koplow’s interface program was developed into the Wang 1200 Word Processor (first picture), an
IBM Selectric-based text storage device. The operator of this machine typed text on a conventional IBM
Selectric: when the return key was presses, the line of text was stored on a cassette tape. One cassette held
roughly 20 pages of text and could be played back (the text retrieved) by printing the contents on
continuous-form paper in the 1200 typewriter’s print mode. The stored text could also be edited, using
keys on a simple, six-key array. Basic editing functions included insert, delete, skip and so on.
Olivetti was one of the first manufacturers to introduce electronic daisywheel printer-based word
processing machines called TES401 and TES501. Later the ET series typewriters without or with LCD and
different levels of text editing capabilities were popular in offices. In 1988 Olivetti released the last and
most advanced electronic typewriting machine ET2500 (second picture), in order to beat Wang.

There is another face: the incumbent may be cursed, but there

are also first mover disadvantages. Being first mover, there are
not also advantages, but also disadvantages:
• Research and development expenses.
• Undeveloped supply and distribution channels.
• Immature enabling technologies and complements.
• Uncertainty of customer requirements.

Generally, there are different ways to do innovation: to go on

improving something already existing or to create something
new. Being an incumbent, it is easier to find alibis that convince
not to go through radical innovation.

Disruptive innovation

The entire theory of disruptive technologies by Christensen and Rosembloom has been based on the
example of the 14’’ disk drives that dominated the market with a large storage for mainframe computers

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and that could hold a lot of data. However, it was disrupted by the 8’’ disk drives, based on similar
technology, similar architecture and similar organizational capabilities, which then was disrupted by the
5.25’’ disk drives.

The disruptive innovation model says that there are technologies underestimated because they are not
able to satisfy the demand of the high end of the market. There might be technologies not considered
because not able to satisfy even the need of the low end of the market, but by investing in them, their
performances may increase so much that they can go beyond the performance demanded of the high end
of the market, overcoming them with an innovation rate extremely high.

According to Christensen and Rosembloom, disruptive innovation is not a kind of innovation but a process,
a way about how a technology evolves in the market. Companies do not look at them, but they have huge
potentials because putting a huge innovation effort on them, the development path is so huge that can
overcome other paths. Disruptive innovation is a process and an entry condition is necessary: performance
level at the beginning is low. For example, when Netflix entered the market, it did not challenge TV shows
but Blockbusters. At the beginning it did not even allow to choose the movies. However, even if it came
from the low performance side, then it disrupted the market.

The disruptive innovation model says that it is necessary to be aware of what is happening in the market
even if today is not so powerful.

Few key points on disruptive innovation made by Christensen and Rosembloom are:
• Disruption is a process.
• Disrupters often build business models that are very different from those of incumbents.
• Some disruptive innovations succeed; some don’t.
• Disruptive innovations start from the low end of the market that demands different performances
from the one currently valued in the mainstream market (high end market), compared to which the
disruptive technology has lower performances.
• The mantra disrupt or be disrupted can misguide us.

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4. Blockchain and DLT
Blockchain and DLT are technologies used nowadays at the basis of some technology push innovations.
When we think about blockchain, usually we think about cryptocurrencies; they are part of blockchain, but
it is not only about them. When there was the Cryptowinter, a lot of people thought at the blockchain as a
bubble and that was its end. But, even if for cryptocurrencies was a bad time, the technology behind (the
blockchain) is still there and nowadays a lot of banks are trying to create digital money out of it.

The idea is to move from an ecosystem in which each

actor has its own version of the truth to one in which
everyone shares a single source of truth.
Particularly, there are two different methods to obtain a
single source of truth: TTP (Trusted Third Party, such as a
consortium authority) and leader.

Potential challenges for a single source of truth are:

• No trustworthy entity capable of managing data.
• No entity willing to manage the data.
• Multiple participants with different ERP and DB.

In the light of this, it seems very difficult to obtain a single source of truth. Therefore, we need Blockchain
and DLT (Distributed Ledger Technology) to enable a single source of truth.

Nowadays who was focusing on application specific platforms is moving to general-purpose ones, because
a lot of time and effort is necessary to create a platform, so using it only for one application is not worth it.

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The pillars of these general-purpose platforms are:

Therefore, we can classify platforms in:

Some platforms born as application specific intend to develop more applications, approaching general-
purpose platforms. Moreover, there is still a clear distinction between projects that rely on permissioned or
permissionless platforms. However, an effort to bring the two worlds together is increasingly evident.

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Blockchain and DLT are based on:

Timestamp works like this:

Smart contract is a set of instructions expressed in computer language and visible to all, which are
automatically executed by a Blockchain network upon the occurrence of predetermined events.
Once the smart contract is activated, its execution is guaranteed and not stoppable.

Decentralized applications (DApp) have the following features:

• They are not censurable.
• The code is intrinsically open source.
• The code upgrade rules are clear and unavoidable: anyone can see them.
• They work independently from centralized marketplace.
• Very low risk of interruption of the network.

Tokens can be classified in:

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Cryptocurrencies value is increasing, as we can see from the following graphs:

Here there are some applications of Blockchain and DLT for coming up with technology push innovations:

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24
5. Open and Collaborative Innovation
Traditional innovation funnel is one of the most traditional and famous models on innovation.
When companies start an innovation process, they start to scout as many new ideas as possible, then they
evaluate inside the company these ideas, and finally they select and implement the more coherent ideas
with the needs of the company. So, there is a certain number of selection gates, and then there are only
few ideas that arrive in the market; depending on their success they will create the value to be
reinvested in other innovation processes. We must be very good in selecting the best ideas as soon as
possible in order not to waste time, money and resources in ideas that are not promising enough.
The larger is the beginning part, the more are the ideas, the better is the situation. The rest of the funnel
should be closed enough because we have to protect our intellectual property.

Managing innovation was historically focused on internal organizational issues by creating an innovative
climate, selecting the right projects and executing projects, creating R&D departments to protect
innovation projects from the on-going activities. These things are all still important, but we observe a crisis
in the traditional approaches to innovation, since:
• Not always more R&D is better: increased R&D expenditure without the corresponding link to new
products leads to serious questions from shareholders. Therefore, not always the optimum is to have
many and many R&D projects inside, because often the company does not have the complementary
resources needed to succeed in a project, so on one hand it is worthy to divest from it and on the other
hand it is not worthy to leave these ideas.
• The ability to capture ideas from R&D and convert these into products and services that people want
to buy is more significant than idea-generation. Particularly, idea generation might be simple, but the
ability to capture ideas from R&D is difficult if it is isolated from the operations and from the market,
because companies lack in awareness about how the requirements of the market are changing over
time.
• Investing in new Ideas for the existing businesses may not be enough: the European Industrial
Management Association (EIRMA, 1985) recognised R&D as having three distinct areas, each requiring
investment, which are R&D for existing businesses, R&D for new businesses and R&D for exploratory
research. Therefore, investing for existing businesses in traditional innovation is not enough and we
should be open to new business opportunities that can come from different areas, which are not
currently part of our business, so it is important to have an idea about the exploration for the future.

For all these reasons, the traditional process of innovation is becoming less effective; at the same time, we
have two phenomena:
• Shortening Lifecycles of Innovations: there is a short lifecycle of the product because technology
evolves very quickly and therefore the advantage we have thanks to innovation cannot be so long as it
was in the past; this means shortening the useful time in the market and so the economic returns
thanks to the success we have in the market only for short time.

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• Rising Costs of Innovation Development: the risks and costs of developing new ideas are becoming
higher.

So, we have lower market revenues and higher costs for innovation.
Moreover, due to faster technological change, global competition and demanding customers, we have
intensified competition.
Moreover, we should also be aware of the Not In My Industry (NIMI) syndrome, which brings to enlarged
competition, which is becoming the rule everywhere. So, today competition does not only come from
direct competitors, but also from the part of our business that is not eroded by direct competition, but by
different start-ups and companies from other markets that are trying to erode part of our business. For
example, digital payment is one revenue area for a bank, but now we have so many start-ups such as
Satispay that are trying to take part of the value; in the media sector we have entertainment companies
that compete among themselves, but also with products and services developed in other industries that
have resources to spend in order to try to enter the market.

There are new challenges, but there are also new opportunities that where
not there before, for example private financial companies that may help us to
fund new ventures also outside the boundaries of the company, knowledge
workers to work together to develop new ideas, and rapid diffusion of
knowledge (knowledge must be disseminated).
A simple and powerful idea is about opening the boundaries of the
innovation process, involving not only the internal R&D, but also all company’s
employees, customer and suppliers, start-ups or research centres, crowds or
communities, in order to have more stimuli and inputs with lower costs and
risks. This is the concept of open innovation.

The growing number of innovations in Netflix is not developed by R&D, but by its employees.

Lego looked to what customers were already doing and discovered a platform where customers were
sharing ideas and working together to develop new things, so Lego saw the potential there and decided to

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acquire the platform, since it was a powerful idea. For Lego, product innovation should be democratized
opening the boundaries of the process to the customers, because not only in this way the company can
gain ideas, but it can also create a market, so the users become marketers, with free promotion and
advertising.

We can add in the innovation process other companies, not only suppliers, but smaller companies such as
start-ups with important ideas, commitment and capabilities, not hiring the engineer of them, but working
with them and maybe then acquiring these companies. For example, in 2004 Google acquired Where 2
Technologies, an Australian start-up founded by Jens and Lars Rasmussen that were unable to get funding
from Sequoia Capital for their Maps application, and then created Google Maps.
Particularly, a lot of companies base their innovation strategies scouting new ideas and buying them in
order to develop new products.

Threadless is a platform that develops design ideas for t-shirts. The company has developed a new business
model about involving people in developing new ideas and it was a success.

It was Parc to create the mouse and the following computer program. Parc was a Xerox company.

Xerox had a very effective innovation funnel, but also a close innovation funnel with a lot of confidentiality
and effort to exploit internal intellectual property. The company had the idea that not all the products,
ideas and technologies developed must be used by Xerox itself, but many others were exploited and
licensed out and sold to different companies and somehow this Parc R&D laboratory in Xerox became a
profit centre inside the group. It is unlikely that the best (or even very good) ideas are all located in one
organization and, even with an idea in hand, should one organization really manage all of the technical and
markets risks associated with commercializing technologies? In many cases spinning out the idea may be a
good alternative, like Xerox did with its Parc lab.

Now, we can finally give a definition of open innovation. Open innovation is the use of purposive inflows
and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of
innovation, respectively.

The boundaries of this innovation funnel should be made much fuzzier, so input and output are not only at
the beginning and end of the funnel, but the funnel should be smart enough to include flows of knowledge
in all the phases.

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Chesbrough compared closed innovation with open innovation with the fuzzier boundaries. Today we live
in a knowledge society, so we have a network of knowledge, where the distinctive capability in
technological innovation shifts from know-how to know-where, so, even if we are very big, we should
know how and where the best knowledge in our sector is. In order to do this, we have to create an open
culture internally and a minimum amount of critical knowledge, in order to assure absorptive capacity, to
have a propter access to external knowledge.

There are four enabling factors of open innovation:

• Vision and Strategy about how innovation will happen in our industry to see opportunities around us.
• Agile and Open Organization and Processes in order to include new ideas when possible.
• Culture and Competences.
• Ecosystem of different actors around ourselves to create new things and exploit them outside.

Open innovation actions are the following ones:

We can classify these actions in three processes of open innovation:

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• The Outside-In Process (or Inbound) enriches the company’s own knowledge base through the
integration of suppliers, customers, and external knowledge sourcing.
• The Inside-Out Process (or Outbound) refers to earning profits by bringing ideas to market, selling IP,
and multiplying technology by transferring ideas to the outside environment. Companies, that establish
the inside-out process as key, focus on externalizing their knowledge and innovation in order to bring
ideas to market faster than they could through internal development.
• The Coupled Process refers to co-creation with (mainly) complementary partners through alliances,
cooperation, and joint ventures, during which give and take are crucial for success. Companies that
establish the coupled process as key combine the outside-in process (to gain external knowledge) with
the inside-out process (to bring ideas to market) and, in doing so, jointly develop and commercialize
innovation.

Here, we will focus on outside-in open innovation actions:

More specifically:
• Call4Ideas involves internal employees, actors or student.
• Hackathons are ideas marathons in order to develop new ideas with actors that work together for a
very limited time frame to accelerate idea generation.
• Partner Scouting is about finding a partner for innovation.
• Innovation Procurement is a process that may help companies to scout and buy innovation.
• M&A is done to buy other companies especially start-ups.
• Idea Crowdsourcing is about finding ideas from a crowd of potential stakeholders.

Particularly, in practice we have the following data from outside-in open innovation:

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So, the possible sources of outside-in/inbound open innovation are:

We have already seen some examples on customers involvement with Lego and Threadless.

Start-ups are becoming the most important

resource for innovation. In many industries a lot
of innovation resources are not used in
incumbent companies, but rather they are used
in start-ups. When they are funded, they have to
use money in a very limited amount of time, so
there is a lot of innovation effort, especially in
digital arena, by start-ups and this is why a lot of
companies are working with start-ups exploiting
this big innovation potential.

Instead of contrasting or copying from Skype, Microsoft decided to buy it and bring all the potential and the
competences and resources of Skype in the company, and now we have Microsoft teams, which was born
based on the capabilities obtained with this acquisition. Other acquisitions of start-ups are WhatsApp and
Instagram acquired by Facebook, YouTube acquired by Google, and Siri and Shazam acquired by Apple.

Working with start-ups is a win-win approach for an enterprise for the following reasons:

Most start-ups start with exactly the idea of trying to be bought by a larger company (exit strategy), so the
purpose of what they develop is not to win in the market, but to be acquired by a more traditional and
consolidated company. Not always the final solution is to buy them and integrate them; in many cases the
best idea is work together in order to have innovation potential for the company and having access to the
market and references for the start-up.

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We can motivate employees to have the best from the innovation potential of our employees.
In many cases there are good ideas and talents in our company, but they are hidden because sometimes
people are frustrated while working in our environment.
We should make employees more engaged in
creative processes and innovation processes.
An example is what we have seen for Netflix,
which has every year an update that involves
all the employees asked to develop
innovations and ideas basing on some
suggestions; the same happens for Facebook
that relies a lot on new ideas developed
everywhere in the company.

In many cases suppliers are bounded by our market relation and they are not able to develop something
that is outside their normal business; L’Oréal developed a program to push most innovative suppliers to
develop together with its employees something that could be beneficial for all the network.

Wikipedia exploits the power of crowds and this becomes extremely powerful when we can work with the
web, because we can reach so many actors and coordinate their efforts in an efficient way; the business
itself for Wikipedia is the involvement of the crowd.

There are several possibilities: we can engaged crowds (many and different) or a confined community
(users and customers, employees or other stakeholders). The drivers of it are the level of control and
commitment, the level of heterogeneity and the size of the community.

Nowadays crowdsourcing is a growing

phenomenon. Crowdsourcing is defined as the
process of obtaining needed services, ideas, or
content by soliciting contributions from a large
group of people, especially an online
community, rather than from employees or
suppliers.

These people are not monetary awarded, but

they have an intrinsic motivation to be in the
crowd, like it happens for InnoCentive.

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Engage crowds can be powerful not only for innovation,
but also for marketing, such as for model 3 of Elon Musk
for the brand Tesla, which is becoming a very engaging
brand. Indeed, Tesla got 200,000 orders for Model 3 in its
first day.

The organizational forms for outside-in open innovation are:

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The different forms can be analysed looking at their managerial and organizational characteristics, so
looking to: level of integration, time horizon, risk, start-up time and costs, reversibility and level of
contractual formalisation.

Embracing open Innovation is a change management and collective leadership challenge. At this regard,
we can have three different approaches:
• T (Top Down): get executives onboard, personally committed to innovation. Without executive
support, no change occurs.
• B (Bottom Up): value creation begins with people, one by one, team by team. Nothing happens unless
we get employees engaged.
• X (Across): middle managers get the job done (for good and bad) by setting the right objectives and
incentives.

Finally, we can do the example of open innovation at Siemens.

Siemens adopted open innovation to:
• Develop new ideas.
• Overcome the problem of business units as silos.
• Resolve technological gaps and the lack of centralised information problem.
• Change the cultural background with an open mindset.
• Maximize the use of competences by exploiting competences that are not inside the company.
• Scout and acquire talented people with some kind of competences that are not inside the company.

The approaches to open innovation chosen by Siemens were:

• Corporate Technology, a corporate-based innovative organization that worked across business units.
• Innovation Jams focused online discussion on specific topics.
• Techno-Web 2.0, a self-defined network that enabled the cross-sharing of tech-knowledge and the fast-
response in solving urgent problems.
• Internal Involvement, with specific contests of questionable success.
• External Knowledge Brokers. This approach was the only one unsuccessful due to the difficulty to come
up with the right RFP (Request For Proposals), due to the questionable validity and transparency of the
involvement of the submitters (the ones who decide to embrace the challenge proposed by the
company with the RFP), and due to the resistance from business units to review gimmicks rather than
working on fundamental technology.
Particularly, a lot of times companies think that launching an external contest will be successful, but to
get all the benefits from it, we need to align vision and strategy and to do a lot of set-ups activities,
because people outside the company do not have all the knowledge and competences for it, so we
need to write a very clear brief and the topic of the contest (a very clear RFP).

To conclude, we can note that the approach adopted by Siemens is mainly outside-in: companies try to
introduce inside their boundaries ideas coming from outside, such as start-ups.
Moreover, we must highlight the importance of marketing and communication, since a lot of external
contests are done thanks to them, because we need to communicate these activities to the potential
people interested in them and therefore we need to have a very good marketing and brand reputation.

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6. Design Driven Innovation
Design driven innovations are the innovations more relevant for the challenges that we have today.
Few years ago, to be innovative, we needed ideas. Having ideas is very easy, the difficulty is to know where
to go and to implement our ideas. Ideas now are commodities, so they are very easy to find. Therefore, we
have a lot of possibilities to be creative, but we are blind because there are too many ideas; indeed most
of the times organizations have the ideas in their hands, but they cannot see them.

As we can see, the more are the ideas, the less is the
value, which is the idea paradox. However, if people work
in teams to develop ideas, the value increases; they
should only find a direction. Indeed, we should cut ideas rather than having too many ideas, because there
is no direction in having a lot of ideas; this was the challenge of Apple, where Steve Jobs cut 70% of them.

At this regard, we can identify two types of innovation: innovation to go on a certain direction better than
before or innovation that helps us to change direction doing different things. So, innovation is about what
is the right thing to do.

How do we find a new direction? We should consider what is something that makes people fall in love.
What do people love? In Scandinavia there is a love for candles; in other counties of the world candles are
not used unless there is a power loss. But everyone has candles, and the industry of candles is growing a
lot. Price’s candle was used to be the leader (largest manufacturing candles company), but this company
doesn’t exist anymore and went in bankruptcy when there was the growing demand in the industry.

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We can see that during the crisis, candles went not down, but food yes. This because companies had a lot
of ideas to improve candles: not only candles to illuminate, but maybe Yankee Candles to spread perfume
and not only light. Thanks to this, Yankee candle has now the largest market share in candles industry.
People love Yankee candles because they have a good smell and are stylish.

P&G also has candles that have perfume too (Febreze

candles), but they cannot sell these candles for 40€ like
Yankee Candle and people don’t love them. There is a
different meaning: P&G candles are about fragrance.
People don’t love Yankee candles only for the smell, but for
other reasons.
To understand these reasons better, we can ask ourselves if we would like to give a Febreze candle for gift
to someone. We gift someone with a Febreze candle because there is a bad smell in his house, so it is not a
good gift. Rather we can create atmosphere by giving this person a Yankee candle to be put in the centre of
the table. The jar of Yankee candle is very important (the meaning is cosiness), so the design is very
important.

At the beginning of 20th century, we had a candle in case the power went off, so the meaning was
illuminating. The innovation of Yankee Candle is a change in the meaning (so in the reasons why people
buy that object): a candle meant to create cosiness. Is it better a candle that illuminates or makes
fragrance? We cannot compare two different things, but the meaning of Yankee candle is more meaningful
in the world of nowadays, because it is very easy to access light and so there is no need of a candle that
illuminates. So, basically the two products serve two different purposes.

The meaning of a traditional thermostat is about controlling the temperature day

by day, hour by hour, room by room, and the humidity. Let’s assume that we
have 45% humidity here, what we should do, increase or decrease it? There is an
assumption here: people love to control and change the temperature.
Then, Nest entered in the market with Nest thermostat, that does exactly the
opposite: it is not designed to let us control the temperature, but the only thing
to do is to switch it on and off. It is slower in changing the temperature in the
room than the traditional thermostat, but it is more meaningful, and people love
it so much. So, Google paid 3.5 billion dollars few years ago to buy Nest
thermostat. Also with Nest we can program the thermostat, like it happens with a
traditional one, but the meaning of the object is different; if we want to program
the thermostat, it is better to buy the traditional one.

When we talk about innovating the way of taking pictures, we

usually fall in the Gillette syndrome: if we want to innovate razors,
we add more blades; if we want to innovate photos on a phone, we
add one camera more.

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However, we can have an instant camera that take photos and then immediately prints them; this was the
successful idea of Fujifilm. Even if the quality of these photos is very bad compared with a phone; this is not
about taking photos, but about giving photos, because these are photos to be given as a gift. The meaning
is that this is not a photo as a matter of communication, but this is a photo as an object. People care a lot
about physical photos, so Fujifilm’s photos are more meaningful.

Philips changed a lot the experience of children to go in an MRI exam, changing the meaning of this
experience putting cartoons for children inside the MRI machine not to scary them and to, for example, use
the metaphor of the diver in the sea to say to children to take their breath and scan the body without
saying brutally to take their breath. The change of meaning is not buying an MRI because it is faster and
powerful, but because it lets people feel more relaxed during the examination.

Design is really about this, so making things more meaningful. According to Krippendorff: “The etymology
of design goes back to the Latin de-signare and means making something, distinguishing it by a sign, giving
it significance and so on. Based on this original meaning, one could say that design is making sense (of
things)”. For example, designate means that we designate someone to be the king of Sweden with his
crown and the crown is just a symbol to give meaning to this.

In the traditional approach, we should question the problem and come out with an innovation, which must
make sense for who is going to use the product/technology. So, to make business, we need an innovative
technology and to create a product that people love, in order to make money.
The perspective of design is very different, making things that people love and are meaningful to them. If
we do this, it is much easier to make money, so business is a consequence and meaning is the purpose.

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The first driver of meaning is marketing.
Artemide totally changed the meaning of lamps
in 1950, from something that illuminates to
something that is beautiful, so people bought
them because they looked great in their rooms.
Now who sells more lamps is Ikea. Artemide
stayed small and is still nowadays a luxury
successful company. Artemide didn’t grow as
Ikea because of marketing, with Ikea that was
always able to understand what people want, so
it changed during the years, except for the logo,
which still reminds to Swedish flag.

The second driver of meaning is change

technology. In the hotel chain Mariotte, we can
book the type of pillow, or the breakfast for
example. However, the company that is making
money from this technology is not Marriott, but
Airbnb, which meaning is home, changing the
meaning of why going to a hotel.

According to Miko Kosonen, Former CIO of Nokia: “Most companies die not
because they do the wrong things, but because they keep doing what used
to be the right things for too long”. Indeed, Nokia is an example of meaning
not changed, keeping going in the same direction, not realising that it
should change the direction.
So, if we don’t change the meaning of things, it is a disaster; Nokia was
the leader of mobile phone industry for a long time, now it is disappeared.
The cover page of Forbes aside is of November 2007 and Steve Jobs
launched iPhone in January 2007, so nobody really understood what was
happening with iPhone; the funny thing was that Nokia had all the
technologies, but it had a problem because it used the technologies in the
same direction (Nokia connecting people). Nokia was the first one to have
touch screen and all the technologies, but it was not able to go in another
direction; the meaning of iPhone is our life in a pocket, so the meaning is
changed not connecting people anymore, but taking our life with us.

When we want to create a direction, the mindset we

need is absolutely different from the one of the solution.

According to IDEO: “By looking at what users do, we learn

how to design a better shopping kart”, so for IDEO
innovation comes from outside-in. Particularly, IDEO
created the chart in the first picture because nowadays
people shop on demand, deciding what to cook in the

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evening and then going to the supermarket to buy
the things. IDEO’s chart was not successful, but
thanks to their ideas, the small chart in the second
picture was developed and we can find it in all the
supermarkets. So, the more we get close to users,
the more we can improve experience; however we
cannot improve the meaning.

Honeywell had the idea of having a self-learning thermostat, before Nest, and
found that consumers prefer to control the thermostat (the company was in
the wrong direction), instead of being controlled by it. So, the company closed
the program.
Mc Donald’s took off the waiters, because it wanted the best and fastest
burgers, and introduced the drive-in, which at that time customers didn’t love.
Why did Honeywell thermostat stop, and Mc Donald’s continue? Mc Donald’s
had a vision that came from inside-out, a visionary idea, representing our
understanding about how society is changing, about what is possible to do
thanks to technologies and about our will and wish to make the life of people
better (if we believe that people will love this, this is a sort of gift).

However, sometimes we get what we want, but not what we need. Getting what we want can be as
terrible as losing the love of our life. It means that not always giving customers what they want is
something meaningful, so not always the solution has a meaning.
Users do not always know what they need; Mc Donald’s proposed a new vision instead of following market
needs. Who can decide what is more meaningful if customers don’t know it? We have duty as leaders to
start from inside-out, bringing ideas into the market, basing on our understanding of technologies and life
changing, and try to understand which of them are more meaningful for customers, knowing that people
will not love, what we don’t love. So, we don’t only design the product, but we design also the user.

Therefore, there is a complete change of mindset:

• Dealing with finding a solution, we should have an outside-in approach, encouraging
ideation of wild ideas and restraining from criticism.
• Dealing with finding a direction, we should have an inside-out approach aimed at
creating criticism. Particularly, the process of criticism is a critical reflection about
what we see, and we start this process by meeting other people (peers, colleagues
inside the company and people outside the company for example) and getting their
feedback.

To go more in dept on criticism, we can talk about curious criticism, whose main rule is: “If a person says
something, there is a reason”.
Other rules are:

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So, when dealing with the process for making a design-driven innovation, criticism is fundamental, in order
to evaluate all the ideas with the right glasses. To better understand, we can use the following example:
there are two friends who have a discussion about who is right and who is not. There are two ways of
solving this problem:
• Decide who is right and who is not (picture on the left).
• Put the two perspectives together and understand that the solution is a cylinder (in the example), so
both are partially right (pictures on the right). The only way to discover this is through integration and
combination of the two perspectives.

To conclude, this is a way of making innovation that has the same kind of mindset of making a gift, so
first we don’t ask people what they want and secondly the gift cannot be always the same because people
are constantly change, so we need to reinterpret what we see and their needs, by changing the meaning of
things.

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7. Market Pull and User Driven Innovation
Market pull innovation is when innovation is gathered through the analysis of users’ current needs.
If we listen carefully to users, we have a very big space for innovation, so we
should not engage the users at the end when the product is developed, but the
sooner they are engaged the better it is, in order to get their feedback.
Therefore, the sooner we do the prototype, the sooner we are given the
feedback.
An example of this approach is given by Amos Winter’s wheelchair, developed by
improving the prototype, which was given to users to receive their feedback.

An equal amount of effort should be put not only in developing and designing the right innovation strategy,
but also in designing the innovation process to engage users as soon as possible. At this regard, we can see
that all the consultancy firms are acquiring design agencies for their capabilities of considering users and
developing users-oriented innovation processes.
According to Eric Von Hippel: “70% to 80% of new product development that fails does so not for lack of
advanced technology, but because of a failure to understand users’ needs”.

So, market pull innovations are innovations that typically involve the way in which the product is
commercialized in terms of organization, distribution and/or advertising. Therefore, we should put
attention on product presentation, distribution channel innovations, incremental product
performance innovations and sales process innovations.

IDEO is specialized in innovation process: here we can see the example of the creation of IDEO’s shopping
cart thanks to a market-pull approach.
It is better to see experienced users, not simple users, even if it is risky because we risk reducing the
diverging idea generation at least in the first phases, so this is quite the opposite compared to innovation
of meaning.
Particularly, we have a modular approach where elements are tested to understand with trial and errors if
they are worthy or not. Therefore, we need to generate a lot of ideas, which will be filtered and then we
will focus only on the most promising ones, which are selected by allowing the designer to put himself in
the environment, in order to understand better the need of the consumer and take the right decision on
the best ideas to implement.
Even if, the whole shopping cart didn’t succeed, several ideas that IDEO’s team had were implemented in
the market. So, this process generated some good ideas that could be exploited for something else, even
if the product was not successful.

One of the main legacies of IDEO is that we have not only to set the best strategies and pick the one we like
more, but we have also to pursue the selected strategy in the correct way. So, we must consider the
innovation process as a funnel with inputs that produce potential ideas, which must be filtered, in order
to screen and select the best ideas with respect to goals, targets and budget. Then, we have to tunnelling,
so we should speed-up the development of some ideas trying to launch them as soon as possible in the
market, in order to get better the feedback from users.

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Ferrero and Apple are companies very good at filtering, while Space X, Zara and Amazon are very good at
tunnelling.

According to an Accenture study, these are the main reasons why an effective innovation process is so
important:

Particularly, the innovation process is a set of coordinated activities to create a new solution (product or a
service) that has value for the customer. These activities are:

Google Venture proposes methods to compress as much as possible this process (sprint by Jake Knapp), so
it proposes sprint methods to squeeze the innovation process. Digital technologies accelerate the pace and
the complexity to be faced in all these phases, with users that can be engaged in each one of these phases,
but the sooner we engage them, the better it is.

This is called human-centred design approach to innovation developed by IDEO. Particularly, human-
centred design is a creative approach to problem solving. It is a process that starts with the people we are
designing for and ends with new solutions that are tailor made to suit their needs.
So, human-centred design is all about building a deep empathy with the people we are designing for by:
• Generating tons of ideas.
• Building a bunch of prototypes.
• Sharing what we have made with the people we are designing for.
• Eventually putting our innovative new solution out in the world.

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At the end, we can say that this is a process made by inspiration, ideation and implementation:

All of the things said until now fall into the concept of design thinking, which is an umbrella concept that
contains user-centredness, prototyping, gathering users’ feedback and so on. There are different ways to
accomplish design thinking, such as creative problem solving or innovation of meaning.

It is very important to spot the right users (expert users) to interact with and listen to them carefully,
engaging them and analysing their needs. According to the following survey by Pichler of 2016, lead users
are the most important source for innovation nowadays and then we have customers, so people who are
not expert users in using and exploiting our product, but they buy it.

Several products were developed by users; for example:

• A surgeon invented the first robot for brain surgery, so it was not invented by a medical company.
• Linux, which is the most secure software, was developed by users.
• Snowboard was built by users as well as windsurf.

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• Counter Strike, a famous videogame, was developed by users and then the company was built out of
this effort.
• This happened or continuously happens also for Gatorade, Mountain bikes, Wikipedia, Lego, Internet
and so on, so there are entire industries developed by users. In the following graphs there are the
percentages of major innovations developed by users in certain industries:

We should define who are users:

• They directly benefit from using the product (utility maximisers).
• They are not manufacturers or sellers, who benefit from selling (profit maximisers).
• They are not only the customers of a product.
• Consumers with use experience in a specific product category.
• Consumers in a specific product category, that are already customers of the company (in B2C markets).
• Consumers in a specific product category, that are (so far) not costumers of the company.
• Companies (in B2B markets) who are (potential) users of the product.
• Users from analogous domains.

There are two methods to search for innovative users: direct search (red approach) and indirect search
(blue approach).

The first method is direct search: the company actively looks for specific people and understands if they
have enough innovative potential to help the company in solving the problem. It is called pyramiding
because we use the interview to identify as soon as possible the top experts (in the upper part of the
pyramid) and they will help us in the innovation endeavour, for instance 3M asks suggestions to medics.
So, basically, we start with the identification of the right people and then we focus on their ideas.

The second approach is the indirect search: the company broadcasts a potential issue to be solved and
activates a process of self-selection through which those users, perceived to be potentially useful, could

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answer and help the company to resolve the problem. So, we broadcast the problem to a crowd of
potential solvers and hope that, exploiting the mass, we can identify promising ideas and pick the right
people behind them to continue the innovation.
Innocentive uses this type of approach, since this is a community in which companies can launch a
challenge and the platform matches those who want a solution with the ones who want to find it, in order
to find the right solver. The company pays a fee to the platform in order to do this.
The method basically is to create a challenge, decompose it in modular tasks (quite effective when there
are digital technologies and coding capabilities to do this), define the rules and then broadcast the
question, in order to find the best solver out there.

The two methods have opposite strengths and weaknesses:

There are market pull innovations in which users are not engaged in the innovation process, so companies
limit only to their observation; in this case we are accomplishing a market pull innovation without an open
innovation process. However, we can pursue market pull innovation through open innovation by
engaging users in the innovation process; if we don’t engage them, it is a pure market pull innovation.

To do this, we must analyse users’ needs. We need to

analyse needs to:
• Better understand the current underlying context.
• Reduce the uncertainties inherent in the
innovation process.
• Better satisfy the explicit and latent needs of our
consumer.
• Streamline and optimize the costs, duration and
quality of the innovation process.
• Generate knowledge that will allow the company
to survive in tomorrow’s markets.

Evaluating customer needs is a subtle process and even companies with elaborate processes in place to
gather consumer input are not always successful. The issues may lie in:
• The information that was accumulated.
• The methods used to accumulate information.
• How it was translated into product requirements.
• The timing of the user investigation.

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So, to find the right user, leveraging on which we can develop the innovation, we should consider:

Particularly, the methods for innovating with users are:

Stickiness considers the incremental expenditure to transfer that unit of information to a specific locus, so
it considers how complex is to transfer information from a user (the one with the information) to a third
party (the company). In this case, it is better to provide people with an active role. So, once picked the right
user, then we need an active role of the user to co-develop the innovation with him.

More in dept:

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This is a brief recap of the main aspects of each method:
• Questionnaire and Interviews: we should design a proper questionnaire that is not introducing biases
in the information collected, where people have also to understand the question.
• Focus Group: the choice of representatives is critical, so they do not only have to be expert in the field,
but they have also to interact in a confident way one to each other.

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• Ethnographic Research: by looking at what users do, we learn how to design a better shopping cart, for
example, so what IDEO did was to appreciate those needs that are observable but not explicit. This
method is not so efficient, since it is quite costly in time and resources, but it is very effective to
understand observable needs. The ethnographer is not a passive observatory of a given context, but
he is embedded in it and acts as a real user.
• Lead Users Analysis: this method is used when the needs are tacit or latent. When we deal with this
kind of needs stickiness is very high, so it is quite complex to extract information from the user.
Therefore, we have to engage a specific kind of user: the lead users, who have an expert knowledge of
the needs they have. Lead users have an incentive, not necessarily economic, because they will have a
benefit from the usage of the product. When the user need is very sticky, companies have to find out
the right user with whom interact and work together. They are not the same of early adopters, who are
the first that face needs in a specific market, while lead users face needs that already don’t exist in the
market.
• Beta Testing: development of a product involving customers in the innovation process to gain feedback
by engaging them far away before the launching of the product, but involving them within the process.
So, we develop an MVP that we test in order to gather feedback.
• User Toolkits: we allow the user to accomplish innovation on its own, so instead of providing a
solution to the user, we provide tools to them in order to design innovation on their own, such as Nike
that provides a platform where consumers could design the product on their own.

So, we can see that with beta testing and, even more, with lead users and user toolkits, we have a co-
development of innovation:

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8. Digital Transformation and Future of Work
We are in the middle of an industrial revolution, which is different from the others due to its speed, dept
and pervasiveness.

According to Hard Martec Law, the pace of technological change

today is exponential both because of the inner characteristics of
digital technologies that evolved in an exponential way, but also due
to the convergence of different technologies that make it
exponentially.
Finally, there is a strong push from some organizations that are
developing new markets, changing the society and their strategy,
increasing even more the speed of this exponential grow.

However, our pace of change and learning as humans is linear, and this creates the first difficulty, which is
a competence mismatch from an individual viewpoint.
Moreover, traditional organizations tend to delay the possibility of changing of individuals, so they are not
even linear in their ability to change; rather there is a chain of delays that makes traditional organization
intrinsically logarithm in the way they change. We have another gap, which is digital disruption, that is
increasing, so this is why there is a lot of anxiety at society and political level.

This creates a digital vortex:

Digital vortex classifies the different industries in terms of level of distance from digital disruption status,
which is represented from the centre of the vortex.

There are five industries (the ones in orange) completely disruptive, because they are in the centre of this
vortex: media and entertainment, tech product and services, telecoms, retail and financial services. For
example, media and entertainment were completely disrupted, because there is a new way to use the
services compared to few years ago, and this had a lot of influence on competition inside, so the
incumbents, leader companies for decades, were completely beaten by newcomers, such as Netflix, that
played the game with completely different rules.

Not only these 5 industries were disrupted, but it is a vortex, so it is attracting every sector. In 2019 the
sectors near to change were the yellow ones, where we still had incumbents as leaders and new entrants

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that were changing the rules of the game, and their trajectories of changing is becoming clear nowadays, so
if the incumbent do not change anything, now maybe it will be too late for it to change.

Finally, in green industries there is a movement towards disruption, but it is only a direction, and the
newcomers are not really so clear.

As a result of this vortex, the new leaders for media entertainment are not the past leaders, but Netflix and
Amazon Prime Videos, that are changing the shape of the industry completely; in tech product the new
leaders are not only IBM and Microsoft, but also Amazon web service, which is becoming the leader in tech
services. They become leader because they change the rules and the assets to compete. So, it is very hard
to compete with them, because they are so different.
The best example of these dynamics can be found in the financial service industry. If we look at Visa (9th in
the ranking of top valued companies in terms of capitalisation) and how much today is a digital company,
we can have problems to classify it as a digital bank or digital service company; this happens also for JP
Morgan that is now 15th in the ranking of top valued companies in terms of capitalisation and before was in
the first places. Now in the first places there are Apple, Microsoft, Amazon and Alphabet of Google,
Alibaba, Facebook and Tencent (the Chinese WhatsApp), and they make a lot of money. All of them are
now leader in digital payments.

Andrew McAfee, a MIT research scientist, wrote the manifesto of the fourth industrial revolution. He used
the legend of chess and rice (2 pieces of rice at the power of n, where n is the number of the square of the
chessboard, but to fill all the 64 squares of the chessboard we need more than the whole production of rice
done in all human history), saying that now we are on the second part of the chessboard and this is why in
the last years we have seen this disruption. However, we haven’t seen anything yet, since it is very difficult
to go on with the chessboard.

Technology is accelerating change:

According to McKinsey: “Digitization, like electricity, is a general-purpose technology that underpins a huge
share of economic activity. More than two-thirds of US adults have smartphones and the shift toward
mobile has led to skyrocketing usage in areas from e-commerce and digital payments to social media
engagement”. So, digital is the new general-purpose technology, which has a high impact on productivity:

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Particularly:

The second machine age is digital, exponential and combinatorial:

There are risks in digitalization, but the main risk is not

investing because we are in a new era; this is what is
happening in our country and the root of our today
problems. ICT factor shows even more the level to which
not investing in the last two decades timely in ICT was the
main source of declining of our industry and our economy.
It is not that Italian companies did not invest in last years,
but it is that they invested in different things. This caused a
different level of growth in terms of productivity.

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The countries where companies invested more in ICT had a
big growth in productivity, while in Italy our progress is flat.
This is why it is important to monitor the level of ICT factor.

Moreover, the following new converging technologies will change economy:

Due to these technologies, a lot of industries, such as autos and transport, retail, healthcare, financial
services, aerospace and defence, and hospitality and tourism, will be reshaped. Particularly:
• Autos and transport: self-driving cars and self-driving trucks.
• Retail: with Amazon Go we can see the grocery store of the future with no cashiers, no registers and no
lines.
• Healthcare: some operations can be done by robots.
• Financial services: online payment services (PayPal) or usage of bitcoin.
• Aerospace and defence: drones.
• Hospitality and tourism: Airbnb instead of hotels, or robots that cook dinner for people instead of
chefs.

Of course, digital transformation has a potential impact on employment and wealth distribution.
Many jobs are at risk (picture on the left), while new needs and so new jobs will emerge (picture on the
right):

Moreover, some jobs should be reskilled, and some others are lucky in terms of supply.
Every industrial revolution does so, making some of the existing jobs obsolete but at the same time
creating new competences and jobs, and this as a whole creates much more needs, wealth and

51
opportunities at society level. 85% of Italian population was employed in agricultural 200 years ago, and so
we had a lack in production of food; now 25% is employed in agricultural and we have a surplus in
production of food: there are framers, but they have different competences and the fact that they are less
is an opportunity because we have freed a lot of energy employed and used to fulfil new needs. This
improvement is given by the change. However, the problem now is the speed of this change (the other
industrial revolutions had a speed that took generations), while now the speed of technologies is faster.

The effect of autonomation can increase the productivity. Particularly,

while few occupations are fully automatable, 60% of all occupations
have at least 30% technically automatable activities, according to
McKinsey.

When we look at this phenomenon, it is not so much about

being replaced, but about productivity of the work developed
by the technologies; this explains the agricultural paradox
above, but there are inequalities. What is astonishing is the
trend, which is decreasing: fewer people are gaining all. Indeed,
in 2016, the 62 richest men in the world had the same wealth
as the poorest half of the population. But in 2017 the number
fell to 8. The real gap we are creating is the gap between real
GDP and median GDP: richer people are becoming richer and
poor people are becoming poorer and this cannot work.

To cope with these problems, we have a set of possible actions at different levels:

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Particularly, at individual level, individuals should believe and invest in their own digital superpowers.
According to a study by Observatory Polytechnic related to HR innovation practice, at individual level this is
how much these practices are used: knowledge networking (28%), virtual communication (37%), digital
awareness (25%), creativity (18%), self-empowerment (27%).

Moreover, we should specify more the possible actions at company level:

• Embrace digital innovation at all levels.
• Invest in mid-term people employability.
• Manage and lead change.
So, at company level, beside an industry vision, a company vision and a business vision, we need a vision
about how people will be impacted and will have to change. An innovative leader should develop a
sustainable people first strategy, which is related to the deployment of business strategy in a company-
wide long-term strategy to transform and align competences, jobs and leadership styles.

In this view, organizations are investing more, but this is not enough, since the risk of failure is very high,
unless the conditions for success are not created.

Why change projects fail? Due to:

• People engagement low (44%).
• Culture not open to change (41%).
• Top management sponsorship low (35%).
• Low change capabilities of internal change agents (30%).

Moreover, we should consider the reactions of individuals in front of a change and their emotions (fear,
anxiety, sense of powerlessness, closure, prejudice against what is new or diversity rejection):

Three suggestions from companies that perform better in change management, in order to increase
change success rate are:
• Investing in an Agile Organization, because it has 40% of change success rate, compared to the 25% of
change success rate of traditional organizations. The methodologies we can use to achieve an agile

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 organization are continuous improvement methodologies and tools, advanced analytic tools and
academic models.
• Involving People in Change Projects, which is successful as we can see in the following graph.

• Creating Urgency but Avoiding Fear and Anxiety, because when the perceived urgency level
increases, change success rate increases too, but if the perceived urgency level increases too much,
then change success rate decreases, as we can see in the following graph:

As already said, in the end, it is fundamental to develop a people first strategy to make change more
effective. This strategy is made by the following steps:

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9. Exponential Organizations
An Exponential Organization (ExO) is an organization whose impact is disproportionately large (at least
10 time larger), compared to its peers because of the use of new organizational techniques that leverage
exponential technologies.
Basically, exponential organizations are agile, digital and fast-growing companies.

The current context puts us in front of a complete paradigm shift on three main levers, which are:
• From Scarcity to Abundance.
• From Material-based to Information-based.
• From a Linear Mindset to Exponential Mindset.
Exponential organizations fully embody these changes and therefore achieve exponential growth.

When dealing with exponential organizations, we deal with MTP (Massive Transformative Purpose), a
concept which comes from a new mindset called moon-shot thinking, that invites everyone to:
• Think big.
• Choose huge problems to solve.
• Propose radical solutions that exploit digital technologies.

An MTP:
• Is a higher and aspirational purpose.
• Is a guiding principle for key decisions.
• Has a positive global impact.
• Guides people both inside and outside.

An exponential organization is a purposeful

driven project:

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An MTP is not:
• A mission statement.
• Tech-specific or narrowly focused.
• Representative of what is possible today.
• Motivated solely by profits.
• Just a big goal.

As said, the first attribute of exponential organizations is SCALE: Staff on demand, Community and
Crowds, Algorithms, Leveraged assets, Engagement.

We need staff on demand, since, according to Bill Joy, “most of the bright people do not work for us, no
matter who we are”; therefore rather than owning employees, exponential organizations leverage external
people for simple and complex works, even for critical processes.

Then, we should leverage on communities. Indeed, according to

Chris Anderson, “if we build communities and we do things in
public, we don’t have to find the right people, but they will find
us”. Particularly, communities are groups of people passionate
about a cause and devoted to collaborating on it. Exponential
organizations leverage their community and crowd in order to
scale.

Moreover, according to Francisco Palao: “If a person can do something, an artificial intelligence is either
already better at it or it will be in the future”. Algorithms, including machine learning and deep learning
provide insights into customers and products. Self-learning software recognizes patterns in text, images,
videos, languages and so on.

We need also leveraged assets; indeed exponential organization access, rent or share assets to stay
nimble/agile, outsourcing even in mission-critical assets.

Finally, digital reputation systems, games and incentive prizes provide opportunity for virtuous and positive
feedback loops, which in turn allow for faster growth, increasing engagement.

The second attribute of exponential organizations is IDEAS: Interfaces, Dashboards, Experimentation,

Autonomy, Social technologies.

We need interfaces to select, filter and manage the outputs of all external attributes of exponential
organizations (SCALE attributes) as inputs into the internal organization in an effective, targeted and
seamless manner. Interfaces are UX/UI and APIs.

Then, we should use dashboard to measure. Particularly,

according to Galileo Galilei: “Measure what is measurable
and what is not measurable make it measurable”. So, in order
to measure and manage the performance of an exponential
organization, a real-time and adaptable dashboard with

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essential company and employee metrics and short feedback loops Is implemented. This must be accessible
and transparent to everyone in the organization.

Moreover, we need experimentation, since, according to Steve Blank, “no business plan survives its first
contact with customers”.

We need also autonomy, since, according to Andrew Carnegie, “no person will make a great business who
wants to do it all himself or get all the credit”. So, exponential organizations have a flat structure, allowing
self-organizing, multidisciplinary teams and individual employees to operate with decentralized authority.
Moreover, autonomy enables agile/scrum cycle:

Finally, according to Google: “As we have seen repeatedly, a team composed of a few percent of a
company’s workforce, acting in concert toward an ambitious common goal, can change an entire mature
industry in less than two years”. Therefore, exponential organizations should leverage on collaborative
tools (social technologies) to manage real-time and zero-latency conversations. These tools create
transparency and drive collaboration.

At the end, we must consider the 6D’s framework for every digitized innovation:

Moreover, in the near future, every company will only grow by finding
its place in the ecosystem, so the focus is no longer on competition,
but on collaboration to improve everyone, including the planet.

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10. Platform Thinking
There are different kinds of platforms: internal or product platforms, industrywide platforms and
platforms as two-sided markets both transactional and orthogonal.

Internal or product platforms

According to Gawer and Cusuamno: “A firm, either working by itself or with suppliers, can build a family of
related products or sets of new features by deploying these components”.

Gawer and Cusuamno were the first to notice that lot of companies were making a huge competitive
success by creating different platforms. Internal platforms are solutions, strategies that allow companies
to create a family of related products.

The automotive sector is a perfect example for explaining the internal platforms.

The Volkswagen Group MQB platform is the company's strategy for shared modular construction of its
transverse, front-engine, front-wheel-drive layout. Volkswagen spent roughly $60bn developing this new
platform and the cars employing it. The platform underpins a wide range of cars from the supermini class
to the full-size SUV class. MQB allows Volkswagen to assemble any of its cars based on this platform across
all of its MQB ready factories. This allows the Volkswagen group flexibility to shift production as needed
between its different factories.

So, internal platforms are a set of assets

organized in a common structure from which a
company can efficiently develop and produce a
stream of derivative products.
Therefore, the platform can be seen as a set of
components, along with and the linkages among
them, that are common to different products.
A platform is not a product itself; platforms are
a sub-part of components of final product.

Walkman in the 80s was able to disrupt the music industry with
the first portable music device. The platform that the company
has been able to explore was the pressman concept: create a
device that through a single button could reproduce the music.
To do it, the company created an engine activable through a
single play button. Beside the solution of stereo, Walkman was
an element that could create a huge competitive advantage
because it could create different derivatives from this platform.

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Sony created a lot of models of Walkman in order to cover all the niches. The company was developing a
mass customization strategy. The average obsolescence time (from launch time to the 50%-off time) was 2
years for Sony, while 1.2 years for competitors. This longevity was due to the market strategy of covering
all the possible niches (sport, kids, Hi-Fi addicted and so on). Competitors could not get into these niches
already filled by Sony and were forced to stay on the mass market competing through higher innovation
frequency. Particularly, here we have the aggregated project plan (on the left) and the generational one (on
the right):

The success of Sony was the ability in understanding the core of the Walkman, miniaturising it, creating the
platform strategy that is a combination of 3 core elements: the platform itself (the backbone), the
derivative (different product categories inside the family of products) and the components that would
change form product to product.

Industrywide platforms

External or industry platforms are products, services,

or technologies developed by one or more firms, and
which serve as foundations upon which a larger
number of firms can build further complementary
innovations and potentially generate network effects.

There is a similarity to internal platforms, since industry platforms provide a foundation of reusable
common components or technologies, but they differ in that this foundation is open to outside firms.
The degree of openness can also vary on a number of dimensions, such as level of access to information on
interfaces to link to the platform or utilize its capabilities, the type of rules governing use of the platform,
or cost of access.

Industrywide platforms are products, services, or technologies that act as a foundation upon which
external innovators, organized as an innovative business ecosystem, can develop their own
complementary products, technologies, or services.

Platforms as two-sided markets: transactional two-sided platforms

There is a growing world of platforms, which are all services, matchmaking two (or even more) set of
customers (sides).

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Two-sided markets are markets in which one or several
platforms enable interactions between end-users and try to get
the two (or multiple) sides on board by appropriately charging
each side.
Visa would benefit by the presence of a lot of merchants
because they will attract more consumers. It is a transactional
platform since there is a direct transaction between consumers
and merchants. Visa is a platform because allows transaction
between people through a single technology.

When dealing with these platforms, we should talk about network externalities:
• Direct Network Effects: an increase in usage leads to a direct increase in value for other users. For
example, telephone systems, fax machines, and social networks all imply direct contact among users.
A direct network effect is called a same-side network effect.
• Indirect Network Effects: increases in usage of one product or network spawn increases in the value
of a complementary product or network, which can in turn increase the value of the original.
Examples of complementary goods include operating systems and game consoled. This is why Windows
and Linux might compete not just for users, but (also) for software developers. This is also called
across-side network effect and it is typical of two-sided markets.

There are three necessary conditions to be a two-sided transactional market platform:

• Two or more distinct groups of customers are required, since we need to have at least one side that
will pay for that platform; if not, it is not a two-sided platform.
• Cross-side (or indirect) network effects associated with two or more groups of customers must exist.
In some cases, the indirect effects have got a reciprocal impact (then there are two indirect network
effects), but one suffices.
• An intermediary, that can internalize the externalities, must exist.

The case of Uber is an interesting example of transactional two-sided market platform:

There was a huge underestimation of the

investors: the Uber platform enabled to
change completely the ecosystem.

How can a major business segment be

invaded and conquered in a matter of
months by an upstart with none of the
resources traditionally deemed essential for
survival, which gained alone market
dominance?
The answer is the power of the platform, a new business model that uses technology to connect people,
organizations, and resources in an interactive ecosystem in which amazing amounts of value can be
created and exchanged. Due to this, Uber was valued 70 billion dollars.

At the end, we can say that two (or multi) sided platforms are products or services where two or multiple
groups of customers are getting together through a platform that internalize indirect network
externalities.

Platform became a buzzword; in the innovation field it has different meanings that range from internal or
product platforms to transactional two-sided platforms. However, we focus always more on two-side
platforms.

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How do (successful) transactional two-sided platforms create, deliver, and capture value? Due to three
reasons:
• Solving market frictions, which are the difficulties that demand finds when trying to meet the offer
and vice versa. The role of platforms is to be a sort of intermediary to better connect demand and
offer, diminishing market frictions.

• Exploiting the critical mass.

These platforms should take the opportunities of
scalability (they are often based on zero marginal cost
structures, so adding a new user is basically costless),
and of the potential for disruption (fast diffusion in
multiple markets), in order to reach the critical mass
on one side, in order to attract the others. However,
to reach this critical mass, they have to solve the
chicken and egg paradox, for which getting on board
the two sides, without having the other, is difficult,
since the platform is worthless if there are not enough
users on both sides, and they have to create a double
(or multi) sided value proposition, which needs to be
designed, leveraging the right ingredients.
Uber thought that the customers were going around the city and had also to eat; on the other hand the
drivers were going around the city not only to move customers and so they decided to include in
the platform also the restaurants and so uber became a multisided platform with Uber Eats. Uber as a
complex is a multi-side hybrid platform.
• Capturing unaware co-created value, for example the
high amount of data obtained by the platform itself
during the various transactions of each user.
Uber, during the years, obtained a lot of data and
decided to put all these data together and created
Uber Movement. We can ask the access and use these
data for research purposes.

Therefore, successful platforms are idle-asset hunters:

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Platforms as two-sided markets: orthogonal two-sided platforms

We can think to a newspaper as a platform. It can be:

• Transactional: there are bidirectional advertisers.
• Orthogonal: it has not bidirectional externalities, so the
more are the readers, the more the platform is valuable
for the advertisers, while the more advertisers we have,
the more is not going to be more valuable for readers to
join the platform (newspaper example). Here we were
talking about advertisers and no advertising, if there are
too many advertisings there may be a negative
externality, but this is not a defining thing in this type of
platforms.

Strava is an example of traditional orthogonal two-sided platform.

Strava built a community of athletes tracking
their fitness activities through the app. The
community is made by more than 7 million
users.
At the beginning it does not had the
advertising and its revenue structure was
only the data revenue. The data put in Strava
are sold to municipalities to let them
understand what is happening in the urban
area, inside the streets, the traffic and so on.

Going more in dept, we can identify different types of orthogonal two-sided platforms:

Particularly, when dealing with orthogonal two-sided platforms, platform providers link the two sides
through one of the following strategy:
• Client-As-a-Target: the first side is a target for the second side, that provides advertisements (and pays
the platform to get the attention of the first side, which receives a free or a subsidized service).
• Client-As-a-Source: the first side receives a service from the platform, and during the delivery of the
service the platform receives a huge amount of data from the first side, which are interesting for the
orthogonal player (the second side).

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On the contrary, transactional two-sided platforms link two sides that enter in a direct transaction among
them.

The three strategies (transactional/Client-As-a-Target/Client-As-a-Source) can coexist on the same

platform. For example, in Uber there is a multi-sided solution: we have the people who are asking for the
service, than we have the drivers, and moreover there is the Uber Eats solution in the same platform,
where there is the transaction with restaurants, with the advertising made on the platform depending on
where we are and where we are moving. All these data are also sold to third parties (like municipalities or
new restaurants to understand where to open and so on). These multisided markets are much more
complicated.

Platform thinking

We can talk about platform thinking, starting from an

established linear value chain. Amazon transformed
itself from a linear chain organization to a transactional
two-sided platform which connected sellers and buyers.

Particularly, platform thinking is the ability to think about multi-sided platforms as a framework to foster
innovation orchestrating resources in a novel way for established (linear value chain) firms or existing
platforms.

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11. Leadership Theories
According to Google Oxygen project, a manager should be identified by the following 8 attributes:

However, the concept of leader is quite different from the concept of manager. Indeed, a manager is
someone who gets things done through other people in organization, while a leader is someone who is
able to influence a group toward the achievement of a vision or of goals. For this reason, not all managers
are leaders and not all leaders are managers (Bernard Bass). However, organizations need both because:

Particularly, leadership matters are:

• Traditional Management (decision making, planning and controlling).
• Communication.
• HR Management (motivating, managing conflict and training).
• Networking (socializing and politicking).

A successful manager differs from an average one because he

has less traditional management and more networking.
However, an effective manager (quality of performance and
satisfaction of employees) differs from a successful manager
because has few networking but more communication and HR
management.

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By the historical point of view, the prescientific and classical periods were focused on the division of labour
and the basic functions of managers. Later, during the neoclassical ages and then the modern ones, the
focus shifted on the cooperative systems, the work group dynamics, the leadership style and so on.

The organizational behaviour is the field of study that investigates the impact that individuals, groups and
structure have on behaviour within organization, for the purpose of applying such knowledge toward
improving organization’s effectiveness. In other words, it is the study of what people do in an organization
and how their behaviour affects the organization’s performance. Particularly:
• Individuals: measuring, explaining and changing human behaviours (psychology).
• Groups: focus on peoples’ influence on one another (social psychology) and studying people relation
with their social environment (sociology).
• Organizations: studying the society to learn about human being and their activities (anthropology).

The leadership theories are divided in three categories:

1. Leader-centric Perspective: focus on personal qualities, traits and behaviours that are most commonly
in leaders.
2. Interactional Perspective: effective leadership results from the effective interaction of a leader with
the situation and his followers.
3. Follower-centric Perspective: focus on followers and the reasons why they follow certain leaders.

Leader-centric perspective

According to leadership traits theory by Kirkpatrick and Locke, individual behaviour is characterized by
personality, that gives the individual his identity and that is determined by heredity and environment in
which the individual grow, and by personality traits.
Particularly, leaders were born with some inborn abilities to lead.
A leader trait is a physical or personality characteristic that can be used to differentiate leaders from
follower. For example:
• Albert Einstein: intelligence.
• Napoleon: dominance.
• Iron Man: self-confidence.
• Inside Out: level of energy.
• Doctor Gregory House: task-relevant knowledge.

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Particularly, the main traits identified by Kirkpatrick and Locke are:
• Drive: achievement, ambitions energy, tenacity and initiative.
• Leadership Motivation: personalised versus socialised.
• Participation: activity, sociability, cooperation, adaptability and humour.
• Honesty: integrity.
• Self-confidence: including emotional stability.
• Personal Abilities: intelligence, vitality, verbal agility, originality and critical abilities.
• Expertise: knowledge of the business or of the situation.
• Proven Achievement: academic, general culture and athletic.
• Status: social and popularity.

Myers-Briggs identified other indicators, such as:

• Extraverted (outgoing, sociable, assertive) vs Introverted (shy, quiet).
• Sensing (practical and focus on details) vs Intuitive (unconscious process).
• Thinking (reason and logic to handle problem) vs Feeling (rely on personal values and emotions).
• Judging (word ordered and structured) vs Perceiving (flexible and spontaneous).

The Big Five Personality Dimensions by Hogan is another model to map the traits of a leader:
1. Extraversion: comfort level with relationship,
so a person with extraversion is gregarious and
sociable. The more people are extroverted, the
higher the chances that they will be innovative
leaders.
2. Agreeableness: individual’s propensity to defer
the others, so a person with agreeableness is
cooperative and trusting.
3. Conscientiousness: it is a measure of reliability,
so a person with conscientiousness is
responsible and organized.
4. Emotional Stability: it is a person ability to
withstand stress, so a person with emotional
stability is calm, self-confident and secure.
5. Openness to Experience: it is the range of
interests and fascination with novelty, so a
person with openness to experience is creative
and curious. Particularly, such people are more
adapted to change.

Here some examples of the Big Five Personality Dimensions for some important and well-known leaders
(Mother Teresa, Steve Jobs, Mark Zuckerberg and Donald Trump):

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There are also three other personality traits:
• Proactive: actively taking the initiative to improve their current circumstances, so a proactive person
identifies opportunities, shows initiative and takes action.
• Self-monitoring: individual’s ability to adjust his behaviour to external factors, so a self-monitoring
person is highly sensitive to external cues.
• Self-perspective: people see themselves effective, capable and in control.

These personality traits can predict leadership and they do a better job predicting the emergence of
leaders than distinguishing between effective and ineffective leaders. Indeed, the fact that a person
exhibits these traits does not necessarily mean that the leader is successful at getting the group to achieve
its goals. Anyhow, there are also negative personality traits, and we can evidence the Dark Triad:
1. Machiavellianism: the degree to which an individual is pragmatic, maintains emotional distance and
believes that ends can justify means.
2. Narcissism: the tendency to be arrogant, have a grandiose sense of self-importance and have a sense
of entitlement. Often, they are selfish and exploitive.
3. Psychopathy: the lack of concern for others and of guilt or remorse when their action causes harm.

Then, we have behavioural theories, for which it is possible to train people as a leader.
Particularly, as already said, traits are good in predicting the emergence of leaders, but may fail in
distinguishing between effective and ineffective leaders. On one side, it is possible to predict that someone
will emerge as a leader, but once identified that in a group he may become the leader, the information
about the quality of his leadership is missed. This leads to the most famous question in terms of leadership:
is it nature or is it nurture? So far, the presence of some inborn characteristics is
taken for granted: by having them, it is more likely becoming a leader and vice
versa. In that case, the assumption is that leadership is mainly based on nature.
However, it is possible to overcome nature and learn. We can take Alex Zanardi’s
story as an example, that shows that, according to nature, after the accident he
could not be able to go to Olympics. However, he was able to do it.

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So, in terms of attitude, it is not difficult to overcome nature, so it is possible to develop the leadership
side. Therefore, through practice, learning, dedication and motivation, it is possible to overcome nature.

Is leadership a trait? Different theories start from this viewpoint. Leadership skills of
CEOs are not predictive of which companies will succeed; there is little evidence
linking personality to leadership. There could be also the head of the table effect or
the fewest chair effect. So, in the world of leadership, the trait approach is going
down and the incremental approach is going up.

The Ohio State Studies collected 1800 samples of leadership behaviours, which were classified in 150
functions. Then, these 150 functions were summarized in two leadership styles:
• Initiating Structure: the extent to which a leader is likely to define and structure his role and those of
his employees in the search of goals attainment (for example, expect workers to maintain determinate
standards of performance, emphasis on deadline and so on).
• Consideration: the extent to which a person’s job relationship are characterized by mutual trust,
respect for employees’ ideas and regard for their feelings.

In roughly the same time, the University of Michigan identified two other leadership styles:
• Employee-oriented Leader: it emphasizes interpersonal relationships by taking a personal interest in
the needs of employees and by accepting individual differences among them.
• Production-oriented Leader: emphasized the technical or task aspects of the job, focusing on
accomplishing the group’s task.

It is evident that these two classes of dimensions are strictly related and very similar. So, according to these
theories of the leader centric perspective, leaders who have certain traits and display consideration and
structuring behaviours do appear to be more effective. But some leaders may have these traits and
display the right behaviours and still fail because the context also matters.

Interactional perspective

It owns four main categories: the contingency theory, the Managerial Grid by Blake and Mouton,
situational leadership and transformational leadership.

The contingency theory says that a key factor in leadership success is individual’s leadership style.
Particularly, the Fledler’s contingency model proposes that effective group performance depends on the
proper match between the leader’s style and the degree to which the situation gives the leader control.
Fledler created the least preferred co-worker questionnaire to identify the leadership style by measuring
whether a person is task (production) or relationship (employee) oriented.
He also assumed that an individual’s leadership style is fixed, at least in the short-term. This means that, if
a situation requires a task-oriented leader and the person in the leadership position is relationship
oriented, either the situation has to be modified or the leader has to be replaced to achieve optimal
effectiveness.

Fledler identified three dimensions:

• Leader-Member Relations: the degree of confidence, trust and respect, that members have in their
leader.
• Task Structure: the degree to which the job assignments are procedures.
• Position Power: the degree of influence a leader has overpower variables such as hiring, firing,
promotions and salary increases.

Combining the three dimensions yields 8 possible situations in which leaders can find themselves: task-
oriented leaders perform better in situation very favourable for them or very unfavourable (situations 1, 2,

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3, 7, 8). Instead, relationship-oriented leaders perform better in moderately favourable leader’s power to
control factors.

The Managerial Grid by Blake and Mouton assumes that leadership

style is fixed too (it cannot be changed in short term) and
contingent to the situation.
However, leaders can combine task and supportive behaviours,
obtaining 5 different leadership styles that can be applied in
different situations.

The situational leadership theory by Hersey and Blanchard focuses on the follower and says that
successful leadership depends on selecting the right leadership style contingent on the followers’
readiness, or the extent to which they are willing and able to accomplish a specific task.

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So, a leader should choose the one of four behaviours depending on followers’ readiness:

• Telling: if followers are unable and

unwilling to do a task, the leader needs to
give a clear and specific directions (leader
makes decision, high task orientation).
• Selling: if followers are unable and willing, the leader needs to display high task orientation to
compensate for followers’ lack of ability and high relationship orientation to get them to buy into
leader’s desires (leader makes decision).
• Participating: if followers are able and unwilling, the leader needs to use a supportive and participative
style (leader and followers make decision, high relationship style).
• Delegating: If followers are both able and willing, the leader doesn’t need to do much (followers make
decision, low task and low relationship style).

This theory acknowledges the importance of followers and builds on the logic that leader can compensate
for their limited ability and motivation.

The transformational leadership theory views leaders as individuals who inspire followers through their
words, ideas and behaviours.

The previous theories describe transactional leaders

who guide their followers toward established goals by
clarifying role and task requirements. So, transactional
leadership involves motivating and directing followers
primarily through appealing to their own self-interest.
Therefore, there is a sequence of transactions where the
actions of subordinates result in either a reward or a
punishment.

Transformational leader, instead, inspire followers to

transcend their self-interests for the good of the
organization and can have an extraordinary effect on
their followers. They pay attention to the concerns and
needs of individual followers, and they excite and
inspire followers to put out extra effort to achieve
group goals.

Transactional and transformational leadership complete

each other, but transformational leadership can
improve the transactional one, and not vice versa.

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Leaders are generally more effective when they regularly use each of the four transformational behaviours.
Transformational leaders are more effective because they are more creative and encourage followers to
be creative too. Companies with transformational leaders have more decentralization of responsibility.
But we must pay attention because there is also a dark side of transformational leadership: a research
showed that narcissistic individuals are also higher in behaviours associated with charismatic leadership,
so they can be successful in convincing people (followers) to pursue a vision that can be disastrous.

Follower-centric perspective

In the attribution theory of individuals by Jeffrey Pfeffer, leadership, as a phenomenon, has nothing to do
with the exceptional qualities of gifted individuals, but rather with the gullibility of their followers.
So, basically followers deliberately choose someone to follow.

Putin and the baby are the leaders in the photos, because of the position in the table. The follower tends to
attribute to the leader characteristics that maybe the leader doesn’t have.
Indeed, people tend to simplify the reality when they make casual inferences and they do so in order to
make predictions about the future, which gives them a measure of control over their environment. The
problem is that reality is complex, and people have
limited cognitive abilities. They thus need to simplify the
world and one way is to look for salient objects,
circumstances, or people in their environment.
Particularly, a person (or object) is salient when he
stands out in contrast to the background (for example
Eminem, a white skin rapper in a black skin type of
music). So, Pfeffer concluded that because leaders are
highly visible, their followers attribute special power to
them, assuming that they are the cause of organizational
performances, when they have a very modest influence
on it.

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Leadership is a mystification caused by the followers.
Indeed, leaders have an important role but their
actions are symbolic rather than real.
Effective leaders are those who associate themselves
with positive organizational outcomes, pretending
they caused them more than they actually did and
divest themselves from negative outcomes, blaming
them on the system or on someone else. Pfeffer’s
assertions were found to be exaggerated but enforce
the notion that leadership does not just reside with the
leader, but also involves followers, and the notion that
leadership concerns both real and symbolic actions.

In conclusion, there are no leaders without followers (and vice versa). Followers vary in terms of the
extent to which they commit, comply, and resist a leader’s influence attempts. A follower should:
• Understand the leader.
• Understand himself.
• Understand the gap and accommodate the leader.

Finally, followers imitate other followers, not leaders. For example, if we start clapping our hands and
nobody follows us, we will feel ashamed, but if someone starts to follow us, and then this someone is
followed by other people, followed by other people too and so on, we will have a great noise of people
clapping their hands. But only the initial people have followed the leader, while the majority has followed
the already existing followers.

Leadership in modern organizations

A growing body of research examines leadership not as a property of individuals and their behaviours, but
as a collective phenomenon that is distributed or shared among different people, potentially fluid, and
constructed in interaction.
Shared leadership is a dynamic, interactive influence process among individuals in groups in which
people share responsibility for leading.
Shared leadership suggests that leadership might be distributed around the team equally, unilaterally, or in
any number of ways; and decisions and actions made by the team are not the result of a single leader
acting toward the team.
It involves peer, or lateral, influence and upward/downward hierarchical influence. So, leadership is not
only vertical, but also horizontal.
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Particularly, shared leadership occurs in:
• Self-managed teams.
• Executive teams.
• Democratic organizations.
• Groups of people working on tasks or projects requiring
interdependence and creativity.

It requires:
• A leader above who empowers and enables the conditions for the team to be self-managed/led.
• Team design, onboarding, training and development.

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12. Whole Brain Model for Teamwork
While working in team, we have to take into consideration the following things:
• There are stakeholders, so people with an interest, with which we have to work, keeping good
relationships.
• People feel more comfortable in working in a team where people are similar each other. It is not
about prejudice, but about reducing conflicts.
• When we deal with innovation teams, there are theories that demonstrate something opposite:
groups with different competences have more ideas and different perspectives, which imply better
effectiveness, so in these cases diversity is very good.

Our way of thinking is our cognitive style. To understand it, we can use the Whole Brain model by Ned
Herrmann. He was interested in how the brain could help explain the clever/dumb issue. Indeed, there
were people considered normal in terms of knowledge and competences (not genius), but really happy in
managing relationship and collaborating with people at work, while genius people not so much. How
people can be so clever and so dumb at the same time, not understanding that we can be a genius, but if we
misbehave or don’t respect other people, they will reduce their performances?

Leveraging on previous brain researches and on his own studies, Herrmann discovered four patterns that
emerged in terms of how the brain perceives and processes information.

The first model analysed is the Triune brain, which is the model of the
evolution of the vertebrate forebrain and behaviour, proposed by the
physician and neuroscientist Paul MacLean in the 60s. Particularly:
• Reptilian Brain: the inner part that controls our instinct and vital
functions; it is the reason why we can breathe without thinking.
Thus, it is a rigid part we cannot control so much or work on it.
This is the part we have in common with other animals.
• Limbic Brain: part of the brain in charge to feel emotions.
We share also this layer with animals.
• Neocortex Brain: it allows us to think about abstract things, so it is
the origin of the imagination, but it can help also to understand
better the language.

The second model analysed is the Split Brain by Roger Sperry in

1981, according to which our brain is divided into two chambers:
the structural chamber (order, rationality and so on) is the left
brain and the unstructured chamber (things that do not follow a
structure, such as creativity, passion and so on) is the right brain.

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By combining the limbic brain with the chambers of the split brain, we obtain the Whole Brain model,
which highlights four different colours with different characteristics. Particularly, we can try to explain each
colour, referring to the following TV series characters:

Blue characters are cortical and structural:

Olivia says to Susan to listen to data
(structural), and she tries to persuade Susan to
boost her image, but she is not interested if
Susan is sad because she has to change her
image, so Olivia is not emotionally connected
while saying to Susan that she is ugly (she is not
limbic in the way she manages people). So, blue
characters are very goal-oriented, because the
most important thing for them is the objective,
and they do whatever it takes to reach it.

Green characters are limbic and structured:

Sheldon is emotional (limbic), and he is a
physician (so he is structured). So, green
characters are details-oriented. They need a lot
of time to take and trust their decision, but then
the decision is correct, because they have done
a very detailed and meticulous analysis. They
are not able to handle the emotion of the other
people and the relations with them, even if they
recognize other people’s emotions. So, they
have difficulties in sharing emotions.

Red characters are limbic and unstructured:

Will is very keen at relations and is emotionally
connected with the team, celebrating with all
the job opportunity in Broadway, obtained by
the friend Rachel (limbic), but he is
untraditional in the way he manages his team,
without giving roles to people, but only talking
to them about Rachel’s result, trying to
motivate them to achieve it too (unstructured).
So, red characters are relations-oriented.

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Yellow characters are cortical and unstructured:
Patrick is not following a standard process to
solve the case (unstructured), and he does care
about others’ feelings and emotions (cortical).
So, yellow characters are vision-oriented.
Indeed, Patrick is not interested in reaching the
goal, but his goal is to try a new case-solving
process, generating innovation, independently
from following a structured, standard and
reliable method. So, yellow people are
considered confused, because they follow their
own process; thus they are not well seen for
working in group, since their way of working is
considered unrealistic or risky.

Particularly:

Is there a colour for leaders? No, indeed there are very good examples of perfect popular leaders in all the
colours. For example, the physician Stephen Hawking was a blue leader, Steve Jobs, Einstein and Kennedy

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were yellow leaders, Gandhi, Lady Diana, Mother Teresa or Martin Luther King were red leaders, and
Margaret Thatcher was a green leader.

Can we change the colour, or do we need to stick to our comfort zone?

We need to adapt ourselves, so we can learn how to change colour, trying
walking in others’ shoes.

However, we should be aware of the GLOP (General Labelling Of People).

“He’s unfriendly”, “He is rude”, “She is authoritarian”; they are not descriptions, but they are judgements,
which means jumping from focusing on specific behaviours to conclusions.
Why is it that we automatically put labels on people and then start acting in accordance with those labels?
We tend to categorize or type people based on that judgment, and then act as if it’s a fact which in turn,
determines how we treat them.

Using labels is easier to focus on differences and we go on searching for behaviours that confirms
Judgement. However, we should use behaviours, not labels, to describe people without judgements. So,
we need to learn how to overcome these labels.

To sum-up: Whole Brain model is a four-quadrant metaphoric model, based

on brain research, concerning nature vs nurture and preferences vs
competences. All the 4 styles are neutral (strengths vs weaknesses).
We have a dominant style, often different from personal and professional
life, but we can practice and learn how to use the others. Organizations
need all the styles, so we should be able to understand the value of different
styles.

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13. Smart Working
There are different words to explain the evolution of working model:

The future of work should be smart, using technologies to provide more opportunities and to pursue
continuous improvement. Moreover, if we give more autonomy to workers in the choice of working space,
working times and tools, we can ask them more accountability on results, so smart working is working on
results.

Then, Covid-19 arrived. However, what we have experimented this year is not a smart way of working, but
a flexible answer to a need/emergency; this was remote working, the best answer on two opposite needs:
physical distance and business continuity.

Here there are some data gathered thanks to a survey (with 3788 workers in private companies and 4526
workers in Public Administrations) about impact on performances and criticalities respectively:

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So, at the end, smart working is a new organizational model characterized by higher flexibility and
autonomy in the choice of working spaces, time and tools in return for more accountability on results.
Particularly, we expect that people independently choose the most suitable place and the ideal time to
carry out a certain activity.

The transition to smart working is a process that requires time: it involves a transformation of the
organization's culture and behaviour and leadership styles and ways of living the job.

Thanks to Covid-19 emergency, this is what we have learned:

This is what we should learn for the future:

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We should not talk about work-life balance because work is life, but we have to talk about engagement,
because people that are engaged lose the sense of time, so it is no more about hiring a part of their time
for something they don’t like so much, but for something they love and they are fully engaged on, no
matter how much time they spent on it.

The digital revolution has changed behaviours, aspirations, and needs of people that ask for and offer
increasing flexibility, but work organization has remained inflexible, stuck on stereotypes and prejudices of
a technological era that no longer exists, so there is a growing sense of frustration among people.

If before fighting with traffic jam every day, the way we were using physical spaces, the way we were
organising meetings, or our management style were not considered smart, it is also true that we cannot
consider smart now the way we use mails or organise our web conferences. Indeed, for example, the use of
mails kills productivity, because they are not instant messaging for which we receive immediately an
answer, but we have to wait maybe cumulating a lot of mails to answer.

So, this is what smart working should not be:

While this is what smart working should be:

Particularly, these are the reasons why and why not companies were using smart working before Covid-19:

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The following three cases are worth to be analysed.

Tetra Pack worked on three levers:

• Physical Workplace Layout, with transparency
and acoustic isolation of the offices, by building
automation, and with a better document logistics
thanks to the digitalization of the archive.
• Supportive Digital Technologies, with unified
communication and collaboration tool.
• HR Practices and Organizational Model, with full
autonomy in the choice of the workplace, self-
certification of working hours, and corporate
benefits such as children school in the company.

Thanks to the great results obtained in terms of paper

saved and satisfaction of employees, Tetra Pak was
awarded in 2012 as the greatest workplace to work in
Italy and Europe.

Plantronics decided to give no limits to the use of smart working, and the project was extended to the
entire workforce with new rules for increasing working efficiency and virtual collaboration through digital
tools.
Basically, the company applied an
activity-based working theory,
considering the specific needs people
have when they are in the office: they
should be able to concentrate and not
being interrupted; they should be isolated
not to disturb the other colleagues; they
need contemplation spaces to recharge
themselves with colours and socialization;
they should be able to collaborate and to
communicate.
Thanks to these adjustments, the
company created a more productive
space, saving a lot of space and so costs.

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Barilla regards smart working as trust. Particularly, Barilla used smart working creating an international
culture, with international people participating in the pilot project. Then, in parallel to this worldwide
experience, Barilla introduced the Smart Working Discipline to communicate and collaborate virtually,
together with a re-organization of company’s workspaces.

After these examples, we can conclude something about the smart working framework:

Particularly, the levers can be exploited in the following ways:

• Organisational Policies: work time flexibility, workspace flexibility, tool choice flexibility.
• Digital Technologies: collaboration, social network, blog, community, new devices, Bring Your Own
Device, tablets, cloud, mobile workspace, business apps, instant messaging, semantic search or wiki.
• Physical Layout: collaboration, communication, concentration and contemplation.

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• Behaviours and Leadership Styles: sense of community, empowerment, flexibility and virtuality.

Here there are some benefits obtained by companies, that have adopted smart working, expressed in
terms of NPS (Net Promoter Score), so in terms of the number of people that are very happy and engaged.

More in general, the benefits are:

These are the visible and not visible elements (the part of the iceberg below the water) respectively of
smart working:

The actual issues of smart working are:

• Maturity and discipline are necessary.
• Work intensification issues.
• Technology often is a false commodity.
• Important planning and coordinating efforts.

Behaviours and leadership styles of smart working

The impact of leadership in smart working is huge, because it is a new managerial philosophy.

Sense of community is made by: sense of belonging and trust among people; shared cultural values, vision
and goals; adoption of collaborative behaviours; collaborative working across internal and external
networks.

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Empowerment is made by: accountability on individual and company’s goals; collaborative definition of
goals; results-based management.

Flexibility is made by: flexible organization of activities; adaptive balancing of work and personal needs.

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Virtuality consists of the right mix of digital technology and physical interaction that is consistent with
objectives and types of activities. So, we should find the best channel to work with people either working
together in-presence or virtually.

With all of this, we can evolve toward a result-based culture, based on sharing objectives, measurement
aptitude, feedback relevancy, results-based evaluation and empowerment and tolerance of mistakes.

Considering all of this, a smart working project should be approached as following:

We can go deeper regarding the

monitoring phase:

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At the end, the successful factors for a smart working project are:

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14. Personality Awareness and Feedback
The Johari Window was invented by Joseph Luft and Harrington Ingham in the 1950s as a model for
mapping personality awareness. Johari is the acronym of the two authors of the model.
Particularly, by describing ourselves from a fixed list of adjectives, then asking our friends and colleagues to
describe us from the same list, a grid of overlap and difference can be built up.

The model helps people to better understand their interpersonal communication and relationships; it can
be used in group dynamics, team development and intergroup relationships; it builds self-awareness
through both disclosure and feedback; it leads to a greater understanding of ourselves, plus a greater
understanding of others.

The concept is that there are some characteristics

about us that are only known to us (private/hidden
area), some characteristics that we don’t know
about ourselves, but they are evident to others
(blind area), and some characteristics that we both
know (public/open area), because evident or
because we have told other people about these
personal traits.

So, Johari Window can help in receiving feedback

from others about our behaviour, or in providing
feedback to others concerning their behaviour,
even when they are not asking for is (unsolicited
feedback).

Particularly, we can have these situations:

• Big Blind Area (Bull in a China Shop): behaviour hard to sustain within an organization, because these
people are direct in providing a lot of unsolicited feedback and not sensible to others’ opinions in a
team; this creates a problem of trust.
• Big Private Area (Interviewer): he asks a lot for feedback from the others but doesn’t say anything to
them (no unsolicited feedback). This kind of behaviour is not completely transparent, so we don’t
know if he is a nice person, or a terrorist and this creates a problem of trust too.
• Big Unknown Area (Mystery Box): when we don’t care, so we don’t provide or ask for any feedback.
• Big Public Area (Glass House): people are transparent, so they ask and give feedback. So, we may like
or not working with them, but we trust them because they will not cheat, so they make the internal
dynamics simpler and create trust.

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Just to have an idea, these are the attributes on which Johari Window is created:

A behavioural feedback is a feedback about behaviour, so it is a feedback given from one person to
another in a unidirectional mode. We can reinforce the behaviour thanks to:
• Positive Reinforcement: description of the behaviour and of its effects.
• Constructive Criticism: description of the behaviour and of its effects, but then we should provide
positive alternative behaviour and explain why this new behaviour is better and why the feedback
receiver should adopt it.

The 4 rules to give a feedback are:

• Seek for a Neutral Disposition, so we should be as neutral as possible, without giving feedback when
we have a particular emotion, because we can be influenced by it.
• Avoid Generalizations, for example we should not say “You always/often/never do this”, but we should
say “Today you have done this”.
• Avoid Feedback Sandwich. In many cases, we care of
people, and we try to avoid offending them (this is a
weakness because it is our responsibility as a manager to
give them feedback), so we give the employee some
compliments and a criticism.
• Awkward Silence.

What should we do after having received a feedback? We should not justify ourselves or feel angry or
aggressive, but we should say “Thank you for your feedback”, because people that give feedback are doing
a very difficult job (especially when unsolicited), since they are risking something, putting themselves in a
difficult position in our relationship. In case we want to answer, we should not answer immediately, but
before we should think. Particularly, we should thank the feedback provider because feedback is a gift.
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Here some results of different research on feedback:

There are different leadership styles in giving feedback.

At this regard, we can use the Radical Candor model by
Kim Scott, a manager in Google.

The two axes describe how much a person cares

personally in work-relationships and how much the person
challenges directly in the way he provides feedback, telling
people what is ok and why something is not correct.

A real manager should behave like a Radical Candor: Sean

from the movie Good Will Hunting is a radical candor
because he doesn’t quit and he takes personally care of
Will Hunting, a genius but problematic boy, and he is direct
with him.
Walt Kowalski from the movie Gran Torino is Obnoxious Aggression, so he gives challenges directly, but he
does not really care since he is offensive, cynical and bitter, however this is the second-best behaviour
according to Kim Scott. Indeed, the two equal worse behaviours are:
• Manipulative insincerity: we stay silent because we don’t care about the person, and we use
something wrong done by this person in the past to make him apart.
• Ruinous Empathy: we care a lot and, because we care, we do not want to put in danger the
relationship with that person and so we stay silent, without giving a feedback.

As a manager, when providing feedback, we should not fake, because people will notice it. Also, we should
avoid the broken window effect: if we have two old factories and we broke a window, other people will
break other windows of the other factory; the same if we repair them, they will repair too, so people tend
to imitate us, and we should be imitated for positive behaviours rather than negative ones.

A relevant example in terms of feedback is given by General Electric’s Performance Development Process:
the real manager develops performances of its employees.
Whenever there is a situation where managers think that employee needs a certain behaviour, they give a
feedback to him through an app, with limited number of characters (they have to be specific), and classify
it in continue (positive reinforcement) or in consider (constructive criticism).
Moreover, employees can send a feedback request to managers if they want a feedback, or book a
touchpoint (formal or informal coaching moment), which is a face-to-face meeting with the managers to
discuss employees’ behaviour. Finally, we have the talent review (twice per year), where the history of the
exchanges of feedback and the overall valuation of the employee is discussed.

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15. Team Leadership
A team is a small number of people (even 2) with complementary skills who are committed to a common
purpose (performance and goals) and approach for which they hold themselves mutually accountable.

Teams can be:

• Formal, if defined by the organization’s structure.
• Informal, if they are alliances that are neither formally structured nor organizationally determined.

The concept of team is different from the concept of group:

Teams are increasingly important because they are on average more flexible and have more speed than an
individual, because the sound of the group is major than the individual sound, and because they can
maximize efficiency and effectiveness. Therefore, to better compete, organizations are using teams. In
particular: many organizations use cross-functional teams to lead and manage innovation processes.

According to Schein:

A first model for group development for temporary groups with deadlines is the punctuated-equilibrium
model. First, we have the inertia phase to establish boundaries among the team. Then we have the

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punctuated-equilibrium because we change from the inertia phase to a boost and transition toward a quite
finished group work. Before the last effort, phase in which we are able to produce a complete output, a bit
of inertia is necessary for psychologically find a pattern of connection.

We are going to see a 4(+1) phases model. According to Bruce Tuckman, these phases are all necessary and
inevitable in order for the team to grow, to face up challenges, to tackle problems, to find solutions, to plan
work, and to deliver result.
The purpose of the Tuckman Model is to identify and understand which stage of the teamwork a team is
operating in. So, the effectiveness of the team is contingent to the peculiar phase in which it is.

The phases are the following ones:

The model works by answering to 32 questions, giving them a score between 1 and 5. Particularly:
• Lowest score possible in a phase: 8.
• Highest score possible in a phase: 40.
• The highest of the four scores indicates which stage we perceive our team to normally operates in. If
our highest score is 32 or more, it is a strong indicator of the stage our team is in.

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• The lowest of the four scores is an indicator of the stage our team is least like. If our lowest score is 16
or less, it is a strong indicator that our team does not operate this way.
• If two of the scores are close to the same, we are probably going through a transition phase, except:
¨ If we score high in both the Forming and Storming Phases, then we are in the Storming Phase.
¨ If we score high in both the Norming and Performing Phases, then we are in the Performing Stage.
• If there is only a small difference between three or four scores, then this indicates that we have no
clear perception of the way our team operates, or the team's performance is highly variable.

The questions are the following ones:

As said, there is also a fifth phase, the adjourning:

As we can see, when we adjourn, there is less dependence because our success does not depend so much
anymore on what the others are doing in the team, since it is a temporary team with a limited number of
tasks to perform.

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Teams proceed through Tuckman’s phases at different paces:
• Those with a strong sense of purpose and strategy rapidly achieve high performance and improve over
time.
• Similarly, groups that begin with a positive social focus appear to achieve the performing stage more
rapidly.
• Groups don’t always proceed clearly from one stage to the next.

We can do a parallelism between group development and situational leadership:

The building blocks of team behaviour are roles and norms.

Roles are a set of expected behaviour patterns attributed to someone occupying a given position in a
social unit. Particularly, we can distinguish between:
• Role Perception: one’s perception of how to act in a given situation.
• Role Expectations: how others believe one should act in a given situation.
Norms are acceptable standards of behaviour (attitude, opinion, feeling and action) within a group that
are shared by the group’s members. Particularly, we have performance norms, appearance norms, social
arrangement norms, and resource allocation norms.

When things are not working, we have conflict, which is a process that begins when one party perceives
that another party has negatively affected, or is about to negatively affect, something that the first party
cares about. Of course, conflict matters, but the right amount.

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The Thomas-Kilmann Conflict Mode Instrument (TKI) is designed to assess an individual’s behaviour in
conflict situations (in which the concerns of two people appear to be incompatible).
In such situations, we can describe a person’s behaviour along two basic dimensions:
• Assertiveness: extent to which the individual attempts to satisfy his or her own concerns.
• Cooperativeness: extent to which the individual attempts to satisfy the other person’s concerns.

Kilmann discovered five different modes to handle conflicts.

The first one is avoiding:

The second one is accommodating:

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The third one is compromising:

The fourth one is competing:

The fifth one is collaborating:

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We can have some possible mistakes or biases, called team working pitfalls:
• Group Polarization: tendency for group discussion to intensify group opinion, producing extreme
judgment.
• Asch Effect: the distortion of individual judgment by a unanimous but incorrect opposition (conformity
pressure). Particularly, team members especially if they don’t know each other so much make decisions
just to confirm the viewpoint of others’ perspective.
According to the experiment below, the actors answered A and 76% of the other people made a
conforming judgement, even if they truly believed that the right answer was B, because they felt the
pressure to confirm the decision of the other members of the team, adhering to a share perceptive. In
the experiment, we know what was right and not; in reality not and we can take something wrong for
granted. We can mitigate the effect with anonymous surveys or through exploiting conflicts properly,
playing a specific role.

• Groupthink: a mode of thinking that people engage in when they are deeply involved in a cohesive in-
group. So, there is the tendency to not consider alternative actions in cohesively group.
Groupthink occurs when:
¨ Members’ strivings for unanimity override their motivation to realistically appraise alternative
courses of action.
¨ Consensus is above all other priorities, including using good judgment.
Groupthink causes deterioration of mental efficiency, and to avoid it, we should monitor team size,
face-savings mechanisms, risk techniques, devil’s advocate, problem solving, and evaluate different
perspectives.
• Social Loafing: tendency for individual effort to decline as group size increases. According to the rope-
pulling experiment, people in groups often do not work as hard as they do when they are alone.
So, social loafing considers the risk of free-riders if the number of the people in the team increases. To
handle it, we should split the team in sub-teams, or we have to tell people that they are acting like free-
riders.

• Escalation of Commitment: it is a human behaviour pattern in which an individual or group facing

increasingly negative outcomes from some decisions, actions, or investments, nevertheless continues
the same behaviour rather than alter course. The actor maintains behaviours that are irrational but
aligns with previous decisions and actions.
So, basically the social tyres among team members push the team highly committed to achieve
results, even if there are signals that the team is going in the wrong direction.
To cope with this problem, we should ask to an external person to the team to give his perspective on
how the team is going and on what is the right direction.

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Finally, it is possible to define two different types of roles in a team:
• Task Roles: define, clarify and purse a common purpose to keep the group on track.
• Maintenance Roles: foster supportive and constructive interpersonal relationships to keep the group
together.

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16. Employee Engagement
Employee engagement is not about job satisfaction, organizational commitment, job involvement or flow.
Particularly, there are different definitions about employee engagement, triggered by 7 drivers:

This is why employee engagement is so important:

Therefore, employee engagement is so important because it impacts positively on the well-being of the
employee and on the organization, leading companies to achieve organizational workflow.

We can also have a dynamic view of engagement:

Particularly, state working engagement is during the whole working day, while momentary work
engagement measures the specific engagement in a moment, when we are doing something particular.

Before the current situation influenced by Covid-19 remote working was considered as a job characteristic
and not as a mandatory condition for working. The relationship between digital technologies, social
interactions and employee engagement appears an interesting research gap to cover and deeply
investigate.

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Organizations that offer telecommuting have employees more engaged.
Remote working and/or virtual teams, characterized by the use of alternative workplaces and technology
support impact positively engagement, enhancing especially the sense of autonomy.
An adequate technology support helps supervisors to give feedbacks and employees to receive them,
permitting to offer and receive social support.

The shift from a physical to a virtual space and remote working have changed the way to be engaged.
However, we have new possible issues, such as loneliness, procrastination, hyper-connection and
technostress.
The application of digital technologies, to regulate social interactions within the new virtual workspace,
impact on engagement. For example, we have different digital platforms used within organizations
(Microsoft Teams, Zoom and so on) to enhance communication and collaboration among employees.

All of this has some managerial implications:

• Measuring and fostering engagement dynamically using the remarkable amount of data generated by
companies.
• Exploring new approaches for example through the identification of algorithms or/and the content and
sentiment analysis of emails and social platforms used by employees to communicate/collaborate.

To measure engagement, we can use different methods:

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Bakkeret has tested and validated the effectiveness of the short version of UWES through a multi-level
factorial analysis. Only the third item related to the Vigour dimension seems to lose effectiveness. Research
also highlight show SWE level affects overall WE.

At global level, 84% of the employees is disengaged and millennials are less engaged than boomers.
However, this is an average; indeed there are organization with a very high level of engagement, thanks to
leadership.

As noted, the share of employees who are fully engaged more than doubles if they are on a team. Then, it
more than doubles again if they strongly trust the team leader.

There are the prerequisites for flow, when organisations:

• Provide people with clear and unambiguous goals and activities.
• Become promoters and develop systems that support constant feedback.
• Assign people challenging goals, but consistent with each other and balanced according to their skills
and abilities.
• Empower people to face and overcome the challenges they have been assigned (sense of control).

Flow is a state of complete focus on the activity that is taking place

and of total absorption in this, which occurs in situations where there
is a perceived balance between the challenges that a person is called
to face and the assessment of possessing adequate resources to deal
with them (skills). Flow is an optimal and inherently motivating
experience (Csikszentmihalyi).

Particularly, flow status not only improves individual and

organizational performance, but also increases the well-being of
workers.
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To create flow, the concept of trust is fundamental:

The 7 pillars of engagement are:

Going more in dept:

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At the end, each individual in an organization can position himself in the flow map:

As said, the concept of flow is a state of complete focus on the activities that drives to a total absorption
and occurs when there is a perfect balance on the challenges we give employees and their level of skills and
competences. So, the state of flow is the best state for an employee.

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17. Engagement in Innovation
The large majority of people who is using our innovation is not us but somebody else. So, we should
analyse how people react to change, for example thanks to the Kübler-Ross Model of Change.

We can have the burning platform phenomenon: destroy the old platform to force during the change
management employees to use the new one, with the basic assumption that people do not want to change
and so we have to force them to make the change.

However, this is not always true, but there are people that go out of their comfort zone actively to change.
So, we should change the paradigm, engaging people not only in the normal work but also into
transformational projects, even if they are putting people out of their comfort zone. Particularly, to engage
people in innovative activities, we should distinguish between engagement as an attitude and engagement
as involvement:

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Engagement as involvement deals with concepts of co-innovation as the
result of collaborative efforts between either employees or agents
external to the company. Companies are expected to learn from these
co-innovation activities engaging external stakeholders. The actors
involved can be employees, customers, users, stakeholders, online
communities, or other companies, all contributing to create value within
co- innovation efforts.

Engagement as an attitude changes the perspective with a movement towards the confidence in doing
innovation, which shows the substantial shift from a view on engagement as pure involvement to an actual
attitude.
Engagement in innovation means to have the right attitudes and mindset, which brings directly to a
cultural and behavioural dimension.

How can we create the mindset to have people engaged? We can use the concepts from IDeaLs: Innovation
and Design as Leadership.

According to IDeaLs, the right approach to transformation should be:

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Particularly:
• We can find a direction thanks to innovation of meaning.
• To build ownership, we can start from an anecdote about
instant cakes in the 50s. The psychologist Ernest Dichter,
the father of motivational research, suggested to remove
powdered eggs in the cake mix with the requirement to add
fresh eggs. What are the fresh eggs of a transformation?
How can we own a transformation? The answer is people,
thanks to their ideas, experiences and knowledge. Kosslyn
reviews evidence that perception and representation are
inextricably linked and goes on to show how quasi-pictorial
events in the brain are generated, interpreted, and used in
cognition.
• To commit to change, we should move from images to stories. According to the Theory of Mind,
storytelling is a form of cognitive play that hones our minds, allowing us to simulate the world around
us and imagine different strategies, particularly in social situations. However, we believe that being
part of the change and make it happen is more engaging than just look at it. Therefore, rather than
tell others how things are going to change, we want them to make them happen, through stories.

To sum up:

Therefore, transformation needs to move from individuals to the whole organization; to do it design-
driven dialogue is fundamental:

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