The Innovation Management Stage

You have to be able to get in and out of products and services with the competitive energy of a kid playing a video game rather than with the analytical consistency of a grand master trying to hang on in a three day chess match.

- Jan Carendi9

The gist of Skandia's business model is outsourcing fund management and distribution of prod­ucts so that Skandia can focus on what it does best - product development, IT solutions, and sales support - in short, innovation management (TM). Skandia's IM system is characterized by fast new product/service development process with customer-driven strategies. This is based on leveraging information from partners by managing the portfolio of alliances and creating specialized competence centers across the organization. The other major innovation process, which is linked to Skandia's ability to reinvent itself, is future scenario planning used to antic­ipate emerging market trends, and to inform strategic planning. Skandia's Future Centers (SFCs) are places where Skandia employees from all over the world and various subsidiaries can meet to brainstorm and share ideas on the future of their industry and companies.

Structure - Competence Centers, Alliances, and Central Unit. Skandia's IM system has a flexible structure that allows the formation of project teams from across Skandia and its many networks and alliances. From the start, Carendi managed innovation by recognizing operating units as strategic competence centers whenever they developed a particular capability throughout Skandia. As a result, "Spain became a competence center for design of bank products, the United States for IT, and Colombia for administrative support and back office functions."10 Project teams from various subsidiaries, countries, and expertise work together on development of systems and software packages that advance Skandia's product packaging and distribution model. In line with the network-based model of innovation, competence centers are sometimes developed in con­junction with a strategic partner where Skandia maintains a considerable degree of control over the competence. An example of this is the system developed by SkandiaLeben in conjunction with one of the largest banks in Germany for online processing of the bank's customers' applica­tions. This competence was leveraged later by Skandia in developing new bank accounts to its distributors called the Cash Management Account.11

Managing innovation over the networks of alliances is facilitated by the coordination of a number of units and contact points. The Sales and Marketing Executives staff pay regular visits to customers' back offices two to three times annually to facilitate knowledge sharing and inter­action. In addition, Skandia developed a Customer Asset Management System that can be used by each unit to manage such relations with customers. Similarly, the Key Account Program, developed at American Skandia, is used to share knowledge with brokers, fund managers, and other partners to work on strategies to grow Skandia's business through them. Each Key Account Executive works with a number of partners on opportunities for offering additional services from American Skandia including repackaging of existing products in training programs or support services. The Key Account Program has also helped American Skandia develop and innovate its own work processes and systems.

With the innovation process in Skandia being spread over the various competence centers inside Skandia and multiple external networks, a strong central and leadership direction of inno­vation is required. The Strategic Team, the CEO group, and the Cabinet perform this role on var­ious levels. The Strategic Team is made up of people representing Skandia's various businesses who define "the right questions that lead the company strategically."12 These questions are then referred to the CEO Group, which is a 13-member group of people including the CEO and other executives from the Strategic Team and the Cabinet, to allocate resources. The Cabinet is made up of 35 executives from the various businesses who then take the identified question to their business units and work on finding the right answers. Involving many departments and personnel from various operating units and companies in Skandia in the innovation process fosters the right culture for innovation.

Innovation Culture and Idea Generation. The same "ask the right question" culture that is practiced at the strategic planning phase of IM is used at the frontline. This is achieved by empowering employees to ask and own the question, and hence look for the answer. Employees are not only encouraged to submit new ideas, but to take them into their hands and implement them as well. Active delegation of decision making designed to foster individual creativity is instrumental to Skandia's business model. This led to the development of KenNet, an idea bank linked to Skandia's intranet. KenNet classifies ideas into four main categories: proposed innova­tions, ideas for improvement, knowledge needs (further research), and a bulletin board and dia­logue forum (for brainstorming on new product concepts). In addition, the Skandia Opportunity Program manages a global internet to encourage employees to seek and seize entrepreneurial opportunities.

Skandia takes developing its human capital very seriously and in addition to establishing knowledge cafes, it established the Future Center (SFC). SFC is a center located in Sweden in a place removed from the corporate headquarters where employees from all around Skandia can meet to brainstorm on ideas for the future. The SFC is more of an incubator of ideas where the focus is on predicting future trends, and devising ways to deal with future challenges. Employees are encouraged to go to the SFC for its creative environment, where they are away from everyday responsibilities and hence have the time to develop new ideas and experiment with new proto­types. The SFC is equipped with virtual libraries and tools.