8 steps to innovation: An introduction

Rishikesha T. Krishnan & Vinay Dabholkar rishi@iimb.ernet.in; vinay@catalign.com

8 Steps to Innovation:

Building a Systematic Innovation Capability

April 26, 2013

1

Build a

pipeline

3 Improve

Batting Avg

2 Improve idea velocity

From Jugaad to Systematic Innovation:

Innovation by

Firms

Inputs

People

Funding

Knowledge

Infrastructure

Capacity to Innovate

Incentive to

Innovate

Benefits

Competition

Appropriability

Rewards

Social

Environment

Political

Environment

Economic

Environment

Technology

Environment

Government Policy

International

Environment 3

Innovation by

Firms

Inputs

People

Funding

Knowledge

Infrastructure

Capacity to Innovate

Incentive to

Innovate

Benefits

Competition

Appropriability

Rewards

Social

Environment

Political

Environment

Economic

Environment

Technology

Environment

Government Policy

International

Environment

Improved since

1991

Remain areas

of concern

4

INNOVATION STRATEGIES

DEPEND ON YOUR SOURCE OF

COMPETITIVE ADVANTAGE….

Look at the

disciplines of market leaders….

6

1. Operational Excellence

Provision of consistent quality at the best price

through a standardized business system that minimizes the cost & difficulty faced by the customer in acquiring the product

• Wal-Mart • Southwest Airlines

Low-cost transaction processing systems Optimization of business processes

7

2. Customer Responsiveness

Emphasis on careful tailoring and adaptation

of products & services to increasingly specific requirements

• Merrill-Lynch • Nordstrom’s

Microsegments Long-term relationships Empowerment

8

3. Performance Superiority

Continuous, fast-paced innovation that yields a steady flow of leading-edge products that

consistently push the state-of-art

•3M •Sony •Gillette

Openness to new ideas Sensitive to latent needs Mobilize NPD teams

9

8 Steps to Innovation:

Building a Systematic Innovation Capability

1

Build a

pipeline

3 Improve

Batting Avg

2 Improve idea velocity

Build a Pipeline

1. Lay the Foundation

2. Create a Challenge Book

3. Build Participation

11

Improve the Idea Velocity

4. Experiment with Low Cost at High Speed

5. Go Fast from Prototyping to Incubation

6. Iterate on the Business Model

12

Increase the Batting Average

7. Build an Innovation Sandbox

8. Create a Margin of Safety

13

LAY THE FOUNDATION

STEP 1 14

8 Steps to Innovation Excellence

Build a Pipeline

1. Lay the Foundation

Create Innovation Program

E.g. Jeff Immelt “Imagination Breakthroughs” - $1B potential

3 Key Processes

Idea Management

Buzz Creation

Training & Development

15

3 Key Processes

in an Innovation Program

Idea

Management

Buzz

Creation

Training &

Development

(who submits?

who selects?

who funds?)

(campaigns,

communication,

rewards,

innovation day)

(prototyping,

TRIZ,

design thinking,

idea communication,

leadership development)

Idea Box

source scope stages

technology selection funding

Idea Management

Year No of Suggestions Participation Adoption

suggestions per person Rate(%) Rate(%)

1951 789 0.1 8 23

1971 88,607 2.2 67 72

1986 2.6million 48 95 96

40 years, 20 million ideas

The Power of Small Ideas

“There is no genius in our company. We

just do whatever we believe is right, trying

every day to improve every little bit and

piece. But when 70 years of very small

improvements accumulate, they become a

revolution”

From Interview with Katsuaki Watanabe

in HBR, July-Aug 2007

19

Build a Pipeline

Lay the Foundation

Create Innovation Program

E.g. Jeff Immelt “Imagination Breakthroughs” - $1B potential

3 Key Processes

Idea Management

Buzz Creation

Training & Development

20

Buzz Creation (creative campaigns)

21

Garib Rath

(Heavier & longer) Axle load

Heavier, faster and longer

Some Titan Innovation Campaigns

2004: “What is new?”

Identification and implementation of 5 new ideas by

every supervisor on the shopfloor

2006: HOD Fund

Every head of department authorised to spend upto Rs. 1

lakh on an idea without any approvals

2008: “Simplify & Automate”

Most successful theme at Titan

2009: “Innovation School of Management”

Making every employee an innovator

24

Titan: The 3M of India? 25

Karatmeter resulted in transformation of jewellery

business

“Anyone can be an Innovator”

Innovation School of Management

Process innovations result in 100s of crores savings

Build a Pipeline

Lay the Foundation

Create Innovation Program

E.g. Jeff Immelt “Imagination Breakthroughs” - $1B potential

3 Key Processes

Idea Management

Buzz Creation

Training & Development

26

Training & Development

Titan Innovation School of Management

“Everybody an innovator by 2015”

27

Focus area Techniques

Design thinking Immersive research, rapid

prototyping, brainstorming

Systems thinking TRIZ

Systems archetypes

Theory of constraints (TOC)

Lateral thinking Edward de Bono’s six thinking

hats

CREATE A CHALLENGE BOOK

STEP 2 28

8 Steps to Innovation Excellence

Build a Pipeline

2. Create a Challenge Book

U & I Portal at HCL

Petition Box at Tihar Jail

Feel the Pain

Sense the Wave

See the Waste

29

The Bajaj Pulsar exploited a discontinuity.. 30

7 Themes

Digital consumers

Emerging economies

Sustainable tomorrow

Smarter organizations

New commerce

Pervasive computing

Healthcare economy

31

http://jugaadtoinnovation.blogspot.in/2012/04/infosys-innovation-to-build-tomorrows.html

Disguster Delighter

Annoyance Frills

Negative Positive

Low

High

Emotions

Importance

to

customer

A Relentless Focus

on User Experience is Critical

Source: H. Rao, Stanford GSB, 2007

32

Disguster

Delays

Missing Bags

Delighter

Upgrades

Annoyance

Pepsi instead

of Coke

Frills

Inflight

Magazine

Negative Positive

Low

High

Emotions

Importance

to

customer

A Relentless Focus

on User Experience is Critical

Examples from the Airline Industry

Source: H. Rao, Stanford GSB, 2007

33

BUILD PARTICIPATION

STEP 3 34

8 Steps to Innovation Excellence

Examples

Role model

Community of practice

Innovation catalyst

Rewards & recognition

35

Improve the Idea Velocity

4. Experiment with Low Cost at High Speed

5. Go Fast from Prototyping to Incubation

6. Iterate on the Business Model

36

EXPERIMENT WITH LOW COST

AT HIGH SPEED

STEP 4 37

8 Steps to Innovation Excellence

Improve the Idea Velocity

4. Experiment with Low Cost at High Speed

38

itch idea

demo impact

Feasibility Loop Viability Loop

2 months

Sep 2003

Nov 2003

Feb 2004

3 months 2 months

Apr 2004

Creating a Climate for Experimentation

Failure plays a critical role in innovation

Post-It Notes & failed adhesives

Nylon: a lab experiment that went wrong

TVS Spectra failed, but Victor succeeded

Time-to-market is important…but don’t forget the role

of earlier innovations

Separate intelligent failure from unnecessary failure -

in language and managerial response

Create infrastructure, give resources for expts

Have a high trial rate: fail fast, learn fast

Can you do the “last” experiment first?

40

Avoid the “Failure Fallacy” 41

GO FAST FROM PROTOTYPE

TO INCUBATION

STEP 5 42

8 Steps to Innovation Excellence

Improve the Idea Velocity

5. Go Fast from Prototyping to Incubation

43

ITERATE ON THE

BUSINESS MODEL

STEP 6 44

8 Steps to Innovation Excellence

Improve the Idea Velocity

6. Iterate on the Business Model

45

Difficult to

make money

Holder of

complementary

resources makes

Money

(EMI, Coke)

Inventor

makes

money

Party with

Innov .+ Compl.

resources makes

Money

(Pixar vs Disney)

Freely available or unimportant

Tightly held and important

Low

High

Complementary Assets

Ease of Imitation

Inimitability/Complementary Assets Framework

Source: Afuah, 2004

BUILD AN

INNOVATION SANDBOX

STEP 7 47

8 Steps to Innovation Excellence

Increase the Batting Average

7. Build an Innovation Sandbox

48

The Power of Platforms

7 Themes

Digital consumers

Emerging economies

Sustainable tomorrow

Smarter organizations

New commerce

Pervasive computing

Healthcare economy

49

WalletEdge

Platform Offering

http://jugaadtoinnovation.blogspot.in/2012/04/infosys-innovation-to-build-tomorrows.html

Open Innovation 50

As one of the biggest players

in the water purification market,

Eureka Forbes is a natural

partner for new technologies.

EFL keeps itself open to new

ideas from all over the world

E.g. : Nanoceram technology

developed by Argonide Corp.

USA – takes care of viruses

without chemicals

CREATE A

MARGIN OF SAFETY

STEP 8 51

8 Steps to Innovation Excellence

Increase the Batting Average

8. Create a Margin of Safety

52

THANK YOU

53

rishi@iimb.ernet.in

http://jugaadtoinnovation.blogspot.in