Innovation and Collaboration: Focus on Payback June 2, 2010 Innovation and Collaboration: Focus on Payback June 2, 2010

Innovation and Collaboration:

Focus on Payback

June 2, 2010

Innovation and Collaboration:

Focus on Payback

June 2, 2010

2Berz-Innovation-19May10-TOR-KB-sjb.ppt

A few thoughtsA few thoughts

What is Innovation and why collaborate?

The "cash traps" in innovation

Leadership principles for success

True innovation comes from collaboration

What is Innovation and why collaborate?

The "cash traps" in innovation

Leadership principles for success

True innovation comes from collaboration


What exactly is innovation and why do we do it better when we collaborate?What exactly is innovation and why do we do it better when we collaborate?

How do you define innovation?

'A process that uses new knowledge to generate

change and impact'

Collaboration is critical

'I recognize innovation, when I see something

done differently from an existing way of doing

things'

'Finding new ways of solving problems'

'... radical new approach to business model, a new differentiated

product or service, or a change in how products

are delivered'

'...combination of unique product, design, and

customer insights wrapped with an artful business model and structure'

'... ability to identify new trends, create

needs and satisfy them'

'... ability to create uniqueness coupled

with an ability to capture value from that

uniqueness'

'... development of new technologies and

business approaches to create value for all

stakeholders'

'... creating new value in providing new business models, technologies'


Innovation can impact all parts of a companyInnovation can impact all parts of a company

Services

Products1

2

Customer experience

3

Businessmodel Process5 4

InnovationInnovation


Many components to successful innovationMany components to successful innovation

Customerinsight

New technology

Competitivepatterning

What concepts get developed?

What gets tested?

What gets launched?

Testing EvaluationMarketlaunch

Concept developme

nt

Launch preparatio

n

Measurement/Evaluation/Adjustment

Do we create unique insights?Do we turn unique insights into ideas?

Do we leverages the possibilities of technology?

Do we have awareness?

How do we measure, learn and

adapt?


3 stages of the innovation cycle3 stages of the innovation cycle

Idea generation

1

Commercialization

2

Realization

3


Typical path to impactTypical path to impact

Idea generatio

nCommercialization Realization

Time

Cumulativecash flow

Launch


4 factors determine the shape of the cash curve4 factors determine the shape of the cash curve

Idea generatio

nCommercialization Realization

Time

Cumulativecash flow

Launch

Cash Trap!

Start-upcosts

1

Speed tomarket2

Time toScale3

Supportcosts

4


Manage your portfolio of ideas with disciplineManage your portfolio of ideas with discipline

Measures customer

acceptanceMeasures

overall likelihood of

success

Likelihood of success• Fit with company

assets (eg, distribution system)

• Competition• etc

2 57

13

Reallocate

AccelerateReconfigure

Customer relevance score

Manage the innovation portfolio

X

X

U

X

UX U

U

U

U

U

Stage 1 Stage 2 Stage 3 Stage 4 Launched

X Project Killed U Project un-fundedSteady stateIncremental profit

Stage of NPD process:


The seven roles of a leader in innovationThe seven roles of a leader in innovationConvincing an

organization that innovation matters

'Getting people to believe in what they did was a challenge.'

'Getting people to believe in what they did was a challenge.'

Allocatingresources

'Sometimes you don’t get 100% success, but if you have no risk, you have little chance of a breakthrough.'

'Sometimes you don’t get 100% success, but if you have no risk, you have little chance of a breakthrough.'

Choosing the innovation

business model

'Sometimes we can’t find a good model in our company ... but there are many ways to go.'

'Sometimes we can’t find a good model in our company ... but there are many ways to go.'

Focusing onthe right things

'You have to be prepared to argue very hard, even to your own board, to stop a project — it's not so easy.'

'You have to be prepared to argue very hard, even to your own board, to stop a project — it's not so easy.'

Reshaping dynasties'We knew that the new technologies were coming, but our business was still extremely successful ... that success delayed our shift.'

'We knew that the new technologies were coming, but our business was still extremely successful ... that success delayed our shift.'

Assigning the right people to the right

place

'Hiring the right people is important, but it’s even more important to put them in the right place.'

'Hiring the right people is important, but it’s even more important to put them in the right place.'

Encouraging and modeling risk-taking

'Intelligent failure is the way you react and learn — but if you want to learn, you have to work at it.'

'Intelligent failure is the way you react and learn — but if you want to learn, you have to work at it.'


Three business models to achieve paybackThree business models to achieve payback

Orchestrator LicensorIntegrator


Choice of innovation business models ishighly strategic . . .Choice of innovation business models ishighly strategic . . .

Allocation of non-cash benefits

Knowledge

BrandEco-system

Organization

Allocation of risk

Amount and allocation of cash


. . . and can affect an idea’s potential. . . and can affect an idea’s potential

Owns and manages entire innovation process

Shoulders all risk, but also reaps highest cash payback

Manages all aspects of innovation, but executes only parts of the process

Risk (and reward) sharing

Primarily owner of the idea, with no ownership of commercialization

Less total cash, but high margins

Orchestrator LicensorIntegrator

Model choice is strategy choice and dramatically impacts payback


“High-speed trains are impossible because passengers would die of suffocation“ D. Lardner, professor at the London University (1850)

"What could our company possibly do with electric games?“ William Orton, CEO of Western Union, refusing to purchase A. Graham Bell's telephone (about 1876)

"It is impossible to fly objects that are heavier than the air“ Lord Kelvin, Chairman of the Royal Society (1895)

"Horses will always remain while automobiles are but novelties that will disappear“ CEO of the Michigan Savings Bank, advising Henry Ford's lawyer against investing in the automobile industry (1903)

"Airplanes are amusing gadgets, but without any military interest“ Maréchal Ferdinand Foch, in charge of the French military strategy and war commandant (1911)

How good are we in judging the prospects of changes?

"But who may possibly wish to hear movie actors speak?“ Harry M. Warner, CEO of Warner Bros (1927)

"I think there is a worldwide market of about five computers“ Thomas Watson, CEO of IBM (1943)

"Guitarists bands are dying out“ Decca Corporation, justifying the refusal to sign with the Beatles (1962)

"There is no reason why people would ever have a computer at home “ Ken Olsen, CEO of Digital Equipment (1977)

"Thanks to the greatness of the Shah, Iran is a pocket of stability in the Middle East“ Jimmy Carter, President of the US (1977)

"A 640K-memory should be enough for everyone“ Bill Gates (1981)


120 ways to kill a new idea (I)120 ways to kill a new idea (I)It will not workWe have no timeIt is not included in the budgetIt is not seriousStop talking nonsenseIt is contrary to the rulesIt is too expensiveWe already triedIt is already doneWhat will our clients think?We'll talk of it another timeLet's do a market survey firstIt's been working like this for 20 yearsWe've always done soBasically, it…Let's to back to basicsWe like people like youIt is politically unacceptableYou don't mean itI've got a better ideaIt is not a simple as you thinkIt only solves part of the problemEven if we wanted to do it…It is technically impossibleThe computer is not powerful enoughI'd like to see his face...You might as well say that we are closing downIt would take a lot of time

We're not in America hereYou must be realisticWell, of courseWe'll not change the world"We must keep the church at the center of the village"Don't dreamThere is no miracleLet's stick to the pointPeople will not understandFrench people think that…Let's keep our feet firmly on the groundWe're not a labWe're losing our wayNothing will come of itA bit of common sense!While we're at it, why not...Let's form a committeeIt's not our problemIt's none of our businessThey'll think we're nutsWait and seeThere aren't all that many solutionsIf ifs and ands were pots and pans there's be no need for tinkersLet's put it in writingWe already said itIt will enrage trade unions


120 ways to kill a new idea (II)120 ways to kill a new idea (II)I don't see the relationshipIt does not belong to the planIt's not in line with strategyIt is not our businessIt will give us more workIt's too earlyIt's too lateThey will be shockedMaybe that isn't stupid, but...That is a great idea!I am not a specialist, but…You shouldn't bit off more than you can chewToo academicThe only problem is that…We can see what you're leading up toIt would be a good topic for another meetingThere are only 24 hours in a dayTalking is easyDid you read my memo?Business is businessThis it not a priorityI already heard this idea somewhereWe are too smallThis is not concrete enoughWhat do you want?You don't understand our problemDon't exaggerate

Don't make me laughThis is unworkableThis is not legalIt's against the rulesThe boss will never acceptBeautiful idea, but not for usThis is a good theory, but practically…Let's get back to the subjectPeople don't want to changeCalm downOur competitor doesn't do it eitherYou can laugh, but...Let's ask the opinion of an expertThere's nothing to addI'll have warned youIs there any precedent?You'll never change...One can fantasize, but…Why do you want to change at any price?This it not the pointThis is not in our cultureLet's come to the pointIt's obvious that...Did you measure the risks, consequences?We cannot take this riskWe don't need thatWe don't have the staff, the equipmentWe'll get back to it laterEtc.


True Innovation comes from collaborationTrue Innovation comes from collaboration

Clear focus on managing the innovation process and impact

Committed, consistent, visible leadership

True innovation comes from collaboration1. Idea generation: connecting many different capabilities2. Implementation: collaborating in a web of partners3. Realization: measuring the total impact and contribution of

each partner

Clear focus on managing the innovation process and impact

Committed, consistent, visible leadership

True innovation comes from collaboration1. Idea generation: connecting many different capabilities2. Implementation: collaborating in a web of partners3. Realization: measuring the total impact and contribution of

each partner

Documents

Innovation and Collaboration: Focus on Payback June 2, 2010 Innovation and Collaboration: Focus on Payback June 2, 2010