INNOVATION –INNOVATING FOR

RESULTS

Bob GrabillPresident & CEO

Chief Executive Network

CEN PresidentCEN President’’s Report on Innovations Report on Innovation

I. The Language of Innovation & the Case for…

II. Innovation Models – learning from the best. “How ordinary companies create disruptive innovations.”

III. “Innovation – Innovating for Results”How the “ordinary and busy” company can innovate to make a significant difference.

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Innovation BooksInnovation Books

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QuotesQuotes

“If America were a company, freedom and exploration would be our core competencies.”

“If Americans stopped innovating, we’d stop being Americans.”

“Innovation will be the single most important factor in determining America’s success through the 21st century.”

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A Brave New WorldA Brave New World

! 54% of Chinese companies cited innovation as one of their top objectives, while only 26% of U.S. respondents did.

-Business Week. December 6, 2004.

! China overtook the United States in 2003 as the top global recipient of foreign direct investment

! Asia now spends as much on nanotechnology as the United States

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Presentation OverviewPresentation Overview

I. Innovation Myths

II. World Class Efficiency is necessary but not sufficient

III. Best companies are clearly differentiated/Brand Identity is the “fuel”

IV. How do we get there?5 The Chief Executive Network

Innovation MythsInnovation Myths

1. Innovation is for big companies

2. Innovation can take place without a fundamental culture shift

3. Innovation is risky

4. Innovation is about the big idea

5. Innovation is expensive6 The Chief Executive Network

Innovation Myths contInnovation Myths cont……

6. Innovation is primarily about products

7. The best time to innovate is when times are good

8. Innovation is for Consumer Product or High TechCompanies

9. Innovation can’t be systemized/can be trained

10. Our Management team is too set in their ways to “seriously” innovate

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““The China PriceThe China Price””

! “30% to 50% less than what you can make something for in the United States”

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““The China PriceThe China Price””

Speed – Competition arrives en masse & quickly

Breadth – Low tech to high tech

Competition – Chinese manufacturers compete with themselves, creating sharper competition

Business Week: Dec. 6, 20049

“The China Price” cont…

Alliances – foreign ventures account for 60% of exports…can’t complain China is closed

Size – Export power & own biggest market…unparalleled economies of scale

Access – Retail giants (e.g. Wal-Mart) import directly reducing China’s investment in distribution

Business Week: Dec. 6, 200410

ConclusionConclusion

Significant change required

…possibly even complete business model revision!

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Innovation Building BlocksInnovation Building Blocks

! Company Differentiation

! Focused Value Proposition

! Clear Brand Identity

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Value Discipline ChoicesValue Discipline Choices

1. Operational Excellence

2. Product Leadership

3. Customer Intimacy

“When a company selects and pursues one of these value disciplines, it ceases to resemble its competitors.”

-Michael Treacy and Fred Wiersema

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Market Differentiation Market Differentiation ““Jump StartJump Start””

! What does the customer value? (each discipline produces a different kind of value)

! Choosing one discipline does not mean that the company abandons the other two

! The dimension picked is what the CEO bases the company’s market reputation on

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Value Proposition Value Proposition

! CANNOT! Be general! Be close to what someone else is already

doing

! MUST be ! BOLD

! Better if…! Complete “experience” created

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““The ExperienceThe Experience””

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The Grocery IndustryThe Grocery Industry……

! shareholder returns ranging from -49% to -78%

The Big Hitters:

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““Helping you make great meals easyHelping you make great meals easy””

! Massive prepared foods department

! Hires passionate people/pays more

! True one-stop-shopping for everyone! Pharmacy, Video rentals, Florist, Photo lab, Dry

cleaners! Bookstore, child play center, wine shop, international

newspapers, espresso machines

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Its About the Experience!

What “experience” can you create?

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What is a brand?What is a brand?

“A brand is a product or service with an identifiable set of benefits wrapped in a recognizable personality.”

-Roger Blackwell, Brands that Rock

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Elton John BrandElton John Brand

! Developed functional and emotional elements! Created a distinct personality! Unique position and message to fans ! Brand promise – “the concert experience”

Roger Blackwell. Brands that Rock. 200429

Brand Identity Brand Identity -- CadillacCadillac

! Reinventing Cadillac

• Full Product Line

• Custom Design

•Personal Rep

•Competitive Comparison

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Southwest AirlinesSouthwest Airlines

“You are now free to move about the country”

! Company Spirit! Creative Culture! Pride! Personality! ?! ?

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What does your brand mean?

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A Story of 3 BrandsA Story of 3 Brands……

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Brand Jump StartBrand Jump Start

I. Your Brand Must be Based Upon a Unique, Compelling Story

II. Your Brand Must be Meaningful & Relevant to Your Customers or Potential Customers

III. Your Brand Must be Understood, Lived, & Extended by your Employee Base

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Innovation Jump StartInnovation Jump Start

1. Strategy First! Is Value Proposition Clear to Everyone?! Are Implementation metrics laid out?

2. Culture Critical! Start at the top! Inclusive! Is Challenging Assumptions the Norm or the Exception?

3. Manage Innovation as a Process! No different than lean initiatives like TQM, Six Sigma, Etc.

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