Innovation in Exports - EDC · Innovation in Exports Paris de l’Etraz, PhD Managing Director...

Innovation in Exports

Paris de l’Etraz, PhD

Managing Director Venture Lab, IE Business School, Spain

Chairman Applied Innovation Institute, Silicon Valley, Singapore

@parisdeletraz

Dec 5th, Manila, The Philippines

What is Innovation?

1. Creativity

2. Impact

3. Leonardo Da Vinci vs. Thomas Edison

MRI for Kids

MRI for Kids

The GoPro

Story

Where is the Innovation here?

What caused the Disruption here?

Business Model

or

Brand Strategy?

What types of Business Models are

Disrupting across many industries?

1. Peer to Peer: AirBnb, Uber

2. Subscription: Netflix, Spotify

3. Revenue Sharing: Apple App Store

4. Open Source: Mozilla, Red Hat

5. Freemium: LinkedIn, Gmail

6. Experience Selling: Starbucks, Nespresso

7. Auction: Ebay, Winebid

8. Crowdsourcing: Threadless, Myfab

9. Ecommerce: Amazon, Zappos

The Business Model Navigator

Innovation Potential

1. Business Model Innovation

2. Process Innovation

3. Product Innovation

More Impact

The Business Model Navigator

What forces are making Brand engagement

easier?

1. Social Media

2. Cloud computing

3. Video

4. Mobility

5. Big Data

6. Internet of Things

7. Location

Whose Customers are more Loyal?

Business Model Strategies

1. Brand

2. Products

3. Technology

4. Limited or controlled Distribution

HOW DO YOU DEVELOPABRAND

MODEL?

THE ROLE OF

EMOTIONS

Emotions

Look at your watch

Did you spend more than $30 on it?

That was an emotional decision

Luxury & Emotional Decisions

1. Luxury sparks emotion

2. It Conveys passion

3. There is a terrific story behind every luxury brand

4. In the past, many companies spoke more about technology than emotions, fashion changed that

Internet PenetrationbyRegion

North America

Central America

South America

Western

Europe

Africa

Central/Eastern

Europe

Middle

East

Central Asia

South

Asia

East Asia

Southeast

Asia

Oceania

81

%

34

%

47

%

78

%

54

%

29

%

48

%

63

%

25

%

12%

37

%

18

%

Sources: US census bureau, Internet World Stats

0

50

100

150

200

250

300

Mobile Devices Penetration by Country

Sources: US census bureau, Internet World Stats

12.40%

8%

6.90%

5.60%

5.60%

5.30%

4.20%

4%

3.80%

3.70%

3.60%

3.50%

3.40%

3.30%

2.80%

2.50%

2.40%

2.30%

1.50%

0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00%

UK

South Korea

China

India

Japan

US

Mexico

Germany

Saudi Arabia

Australia

Canada

Italy

France

Argentina

Russia

South Africa

Brazil

Turkey

Indonesia

Internet Economy as a Percentage of 2016 GDP

Sources: US census bureau, Internet World Stats

69.80%

63.50%

58.70%

57.10%

49.20%

44.40%

28.60%

17.50%

12.70%

11.10%

9.50%

7.90%

6.30%

4.80%

1.60%

0

0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00%

BioTech&Healthcare

Big Data/Analytics (including Al)

Internet of Things (loT)/Wearables

Virtual Reality/Augmented Reality

Security Software

FinTech (including Blockchain)

CleanTech

Infrastructure Apps

eCommerce

Other Enterprise Software Apps

New Media

Other Mobile or Web Consumer Apps

Social Media/Messaging

Gaming (including video games)

AdTech

Online Travel

Ranking of Disruptive Innovation Areas

Sources: Fifth Era LLC

0

10

20

30

40

50

60

70

80

90

Social Technologies Penetration by Country

Sources: US census bureau, Internet World Stats

11%

6.40%

6.30%

5.40%

5.20%

3.90%

3.40%

3%

3%

2.20%

2.10%

1.70%

0% 2% 4% 6% 8% 10% 12%

Real Estate

Financial Services

Healthcare

Construction

Discrete Manufacturing

Transportation

Internet

Education

Communication

Agriculture

Utilities

Mining

Contributionof Selected Sectors to GDP

Sources: US census bureau, Internet World Stats

2016 Rank Company Geography Industry R&D Spend

($Bn)*

1 Apple United States Computing & Electronics 8.1

2 Alphabet United States Software & Internet 12.3

3 3M United States Industrials 1.8

4 Telsa Motors United States Automotive 0.7

5 Amazon United States Software & Internet 12.5

6 Samsung South Korea Computing &Electronics 12.7

7 Facebook United States Software & Internet 4.8

8 Microsoft United States Software & Internet 12.0

9 General Electric United States Industrials 4.2

10 IBM United States Computing & Electronics 5.2

2016: Top 10 Most Innovative Companies

Sources: PWC Strategy

Symbol Company Cap Rank on

2/28/17

Market Cap on

2/28/17

AAPL Apple 1 718,7

GOOGL Alphabet 2 584,2

MSFT Microsoft 3 494,4

BRK-a Berkshire Hathaway 4 423,4

AMZN Amazon.com 5 403,2

FB Facebook 6 391,7

XOM Exxon Mobil 7 337,2

JNJ Johnson & Johnson 8 332,5

JPM JPMorgan Chase 9 323,6

WFC Wells Fargo 10 290,3

Largest Companies by Market Capitalization

Sources: PWC Strategy

1. Internet, broadband, www2. PC/laptop computers3. Mobile phones4. E-mail5. DNA testing and sequecing/human genome mapping6. Magnetic Resonance Imaging (MRI)7. Microprocessors8. Fiber optics9. Office software (spreadsheets, Word processors)10. Non-invasive laser/robotic surgery (laparoscopy)11. Open-source software and services12. Light-emitting diodes13. Liquid crystal display (LCD)14. GPS systems15. Online shopping/e-commerce/auctions16. Media file compression (jpeg, mpeg, mp3)17. Microfinance18. Photovoltaic solar energy19. Large-scale wind turbines20. Social networking via the internet

Forbes List of the Top Innovations of the Prior 30 years - 2009

So what is Corporate

Innovation Today?

Four Types of Innovation

1. Marketing Innovation : Better ways to market a product or service

2. Incremental Innovation: incrementally improve existing products

and services

3. Dis-Continuous Innovation: Find new business models

4. Disruptive Innovation: Change the rules

What types of Business Models are

Disrupting across many industries?

1. Peer to Peer: AirBnb, Uber

2. Subscription: Netflix, Spotify

3. Revenue Sharing: Apple App Store

4. Open Source: Mozilla, Red Hat

5. Freemium: LinkedIn, Gmail

6. Experience Selling: Starbucks, Nespresso

7. Auction: Ebay, Winebid

8. Crowdsourcing: Threadless, Myfab

9. Ecommerce: Amazon, Zappos

The Business Model Navigator

Starbucks as a Business

$.50

Cost to Produce

Next Best Alternative:

Needs served: coffee,

quality, addiction,

convenience, social status…

$5.00?

Selling Price = $3.00

Value Captured = $2.50

Value Created

Value Proposition for a cappuccino:

And if this is the value proposition,

what is the business model?

What is the role of Big

Data

in Innovation?

Case: How Does Target Know?Hypothesis-based model formation:

1. Noticed: that women on the baby registry were buying larger quantities of unscented lotion around the beginning of their second trimester.

2. First 20 weeks: supplements like calcium, magnesium and zinc. Also, soap and cotton balls.

3. Example signal of close to delivery: suddenly buying lots of scent-free soap, extra-big bags of cotton balls, hand sanitizers and washcloths, it

4. Pole found about 25 products, when analyzed together, allowed him to assign each shopper a “pregnancy prediction” score.

5. Take a fictional Target shopper named Jenny Ward, 23, Atlanta: I. In March bought cocoa-butter lotion, a purse large enough to double as a

diaper bag, zinc and magnesium supplements and a bright blue rug. II. There’s, say, an 87 percent chance that she’s pregnant and that her

delivery date is sometime in late August.

Target statistician

Andrew Pole

Case: How Target Figured Out A Teen Girl

Was Pregnant Before Her Father Did?

1. Father to Target Customer Service: “My daughter got this in the mail!” he said. “She’s still in high school, and you’re sending her coupons for baby clothes and cribs? Are you trying to encourage her to get pregnant?”

2. Later:

3. Father on phone: On the phone, though, the father was somewhat abashed. “I had a talk with my daughter,” he said. “It turns out there’s been some activities in my house I haven’t been completely aware of. She’s due in August. I owe you an apology.”

Top Business Models for Using Data1. Knowing your customer, leading to better targeting and

relationship. E.g. Target, Disney, Netflix

2. Information based better services. E.g. UPS, FedEx

3. Data driven reliability. E.g. GE and Siemens

4. Information Brokers, Arbitrage, and Trading Opportunities: Investment funds.

5. Improving the customer journey/experience.. E.g. Harrah’s

6. Risk Management, regulation, and compliance

7. Efficiency or Better Performance per dollar cost

8. Functional Applications: HR/Hiring, Operations etc..

Top Business Models for Using Data

1. Knowing your customer, leading to better targeting and relationship. E.g. Target, Disney

2. Information based better services. E.g. UPS, FedEx

3. Data driven reliability. E.g. GE and Siemens

4. Information Brokers, Arbitrage, and Trading Opportunities: Investment funds.

5. Improving the customer journey/experience.. E.g. Harrahs

6. Risk Management, regulation, and compliance

7. Efficiency or Better Performance per dollar cost

8. Functional Applications: HR/Hiring, Operations etc..

Usage Models• Efficiency

(save money)

• Wallet Share

(top customers spend

more time and money

with you)

• Brand alignment

(It reinforces how

people think positively

about the company)

Value to Business Customers

More

Value

Ikhlaq, de l’Etraz

In 2013, 90% of the world’s data

had been created in the last 2 years

Do you have a data strategy?

Customers are seeking Outcomes and

Experiences

Most companies are selling products and

services

New Ideas can only be found outside of current

concepts

but

90% of successful business model innovations

recombine existing business model elements

Decision making needs to move

from gut & instinct

to data-driven decisions

Decision making needs to move

from gut & instinct

to data-driven decisions

Boston Whaler: An example of Lean Innovation

to Increase Sales & Exports

An Innovation Case in Agriculture:

Philippine Coconut Sugar

CHINA

15.8 Million Metric Tons

EU

18.7 Million Metric Tons

INDIA

25.7 Million Metric Tons1

2

3

1

Sugar Consumption Worldwide

2

3

85

3

1

EuropeHow much sugar the average person consumes each day

2

3

GERMANY

102.9 grams

UNITED KINGDOM

93.2 grams

SPAIN

70.1 grams

ITALY

57.6 grams4

1

2

4

el mejor azúcar de la naturaleza…

Azúcar de Coco

Harvested from the

sap of the flower of the

Cocos Nucifera

Premium Quality

100% Traceability

Azúcar de Coco

Azúcarde

CocoNO Pesticides

NO Fertilizers

NO Chemical process

Glycemic Index 35

Contains Minerals

Potassium, Magnesium,

Zinc, Amino Acids

SUBSTITUTE PRODUCTS

COMPETITORS

Box of 40 Sachets: 5 grams each & 150 grams total

Box: 250 grams total

Glass Bottle: 150 grams total

el mejor azucar de la

naturaleza…

100% Organic

Azúcar de Coco

We are the

growers &

producers of the

finest sugar on

the planet

We have full quality and ethical

control from

seed to sugar

The Team

Philippines

Sugar Producer

Spain

Marketing Startup

United States

Marketing Startup

el mejor azúcar de la naturaleza

Some Advice on Exports1. Move from Commodities to “Value Added” products, the Companies that are exporting

the most have done this well.

2. Customers today are moving from buying products to buying experiences and outcomes, B2B as well as B2C, we need to apply more EQ…

3. Think Globally as a Firm and as a Country, and take your story abroad.

4. Train your people to deliver value added work.

5. Collaborate with your peers to make Grown in the The Philippines or

Made in the The Philippines a value added reference.

Paris de létraz, PhD

paris.deletraz@ie.edu

+34 677 986 695

Thank You