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Polyurethanes Investing for Growth with Customers Worldwide
Keith DayVP Global Business DevelopmentHuntsman Polyurethanes
Lessons LearnedEstablishing an Entrepreneurial Innovation Teamin a Large Corporate Setting
Geneva Innovation ForumOctober 6, 2011
Polyurethanes Investing for Growth with Customers Worldwide
Why Listen to Me?
Since 2004 VP Business Development for Polyurethanes Division
Most of my career has been spent in roles where innovation was a constant and dominant theme to protect share and pricing to generate new business, expand customer and geographic coverage to transfer technology between regions to localise technology imported from another business
These are lessons I have learned – you need to figure out what they mean for you!
Polyurethanes Investing for Growth with Customers Worldwide
First thought to share -
…don’t take it!!
If someone offers you this role….
At least until you have had a serious discussion about
• Expectations
• Tools & Processes
• Metrics
• Communications
Polyurethanes Investing for Growth with Customers Worldwide
Setting the Scene
“What you see depends on how you see it”
Polyurethanes Investing for Growth with Customers Worldwide
What your Boss (board etc) sees is affected by where they sit
Slow
Plodding
Trapped by history
Polyurethanes Investing for Growth with Customers Worldwide
From there what does an entrepreneur look like?
Fast
Nimble
Unencumbered
“Ready, Fire, Aim!”
Polyurethanes Investing for Growth with Customers Worldwide
And what do they want from innovators?
Big Delivery
Little Spend
…Now
And great stories to tell investors
Polyurethanes Investing for Growth with Customers Worldwide
From their view these expectations are not unreasonable
Tangible Good ThingsAnd Intangible Bad Things
Attitudes
Big companies have a lot to offer….
Hunt this way!!
Risk IntoleranceSize & Inertia
….but they are organised to be really efficient at what they do today
Inappropriate Metrics
Polyurethanes Investing for Growth with Customers Worldwide
Ist Critical Learning Clarify Your Remit - Create Space for the team
“Where should we spend our time?”
Growth Options
Organic > < Step-out > < Acquisition
Customers
Ap
pli
ca
tio
ns
Modified Ansoff
70%Outside the Core
30%Support the Core
Create a stand-alone team Network / Lobby intensively for your own space Get this on paper
Polyurethanes Investing for Growth with Customers Worldwide
2nd Critical LearningBe careful what you wish for
Core Commercial Teams
Established uses Customers Pricing reference points Products Supply Chain Production assets Known competitors
Core Commercial Teams
Established uses Customers Pricing reference points Products Supply Chain Production assets Known competitors
New Business Arenas
Unknown markets Emerging applications New products Uncertain value proposition Different assets Different supply chain New competitors
New Business Arenas
Unknown markets Emerging applications New products Uncertain value proposition Different assets Different supply chain New competitors
Managing uncertainty & risk requires different skills, metrics and disciplines
A new world requires new tools…
Most of this succeeds Most of this fails
Polyurethanes Investing for Growth with Customers Worldwide
The risk is mainly around unknown marketsGet people using tools suitable for the task
Markets
Te
chn
olo
gy
Same Adjacent New
Same
Ad
jace
nt
New
25-40%
45-60%
40-50%
60-75% 75-90%
Probability of Failure
Entering new markets is riskier than introducing new technology
People
Package
Place
Product
Price
Product Marketing – 4Ps
Arena Advantage
Access Activities
Market Assessment – 4As
Which makes the ability to assess and understand new
markets critical to our success
Which makes the ability to assess and understand new
markets critical to our success
G.S. Day – Is it real? Is it worth doing? Can we win?
Polyurethanes Investing for Growth with Customers Worldwide
Where to look for the 70%?
Imagine the future
Megatrend impacts – what does it mean for us?
What can we substitute?
Demographics
Sustainability
Water
Climate Change
Do our current offers excite people we are unaware of?How do you know – don’t be arrogant – ask for help!
“Long-term growth does not come from doing the same things you did yesterday and hoping for a different result”
Why will anyone buy what I am offering?
Polyurethanes Investing for Growth with Customers Worldwide
Critical LearningGranularity NOT Averages
Industries grow at average ratesIndustries grow at average rates
Segments / sub-segments grow faster or slower than average
Segments / sub-segments grow faster or slower than average
Developing a ‘granular’ understanding of application space is criticalDeveloping a ‘granular’ understanding of application space is critical
Polyurethanes Investing for Growth with Customers Worldwide
Outside the CoreFocus on the experience, not the product
Your business model needs to be capable of delivering
the Value Proposition
What You Sell
How YouGet Paid
InfrastructureRequired
Arena Advantage
Activities Access
Existing Markets – Use 4As
Invention
Enabling(Processing)
Content(Applications)
Ecosystem
Un-metNeed
The critical bottleneck is often lack of ecosystem – not inventionsThe critical bottleneck is often lack of ecosystem – not inventions
Polyurethanes Investing for Growth with Customers Worldwide
Critical LearningCarefully negotiate any interactions with the core business(30% of resource defending the core)
Define the product line of the future Agree incremental vs. step-out elements and who does what
Formal techniques like Road-mapping
Innovation projects required to prove feasibility and achieve the needed features / functionalityProjects
Detailed technology development planning and timeframes to deliver key features
Technology
Detailed plan for key features / functionality over the time periodFeatures
(Functionality)
Detailed product planning & description.
Product range required and life cycle of individual products
Products
Main concepts to address market trends & opportunites – key parameters & timelines
Big Ideas(Concepts)
Market & Technology trends depicting future demand – including timeline
Trends
2011 -----------------------> 2016 Content
Mar
ket
Pul
lT
echn
olog
y P
ush
12
P1
P3
P2 P4
F2
F1
T2
T1
P1
P2
P4P3
Innovation projects required to prove feasibility and achieve the needed features / functionalityProjects
Detailed technology development planning and timeframes to deliver key features
Technology
Detailed plan for key features / functionality over the time periodFeatures
(Functionality)
Detailed product planning & description.
Product range required and life cycle of individual products
Products
Main concepts to address market trends & opportunites – key parameters & timelines
Big Ideas(Concepts)
Market & Technology trends depicting future demand – including timeline
Trends
2011 -----------------------> 2016 Content
Mar
ket
Pul
lT
echn
olog
y P
ush
12
P1
P3
P2P2 P4P4
F2
F1
T2
T1
P1
P2
P4P3
Polyurethanes Investing for Growth with Customers Worldwide
Managing Projects – Focus Intently On What Matters Right Now
Project Attractiveness
Stra
tegi
c G
uida
nce
Stra
tegi
c G
uida
nce
Idea Phase
Market(pull)
Technology (push)
MegaTrends
BrainStore(Ideation)
Idea Phase
Market(pull)
Technology (push)
MegaTrends
BrainStore(Ideation)
Idea
Firs
t Scr
eeni
ngId
ea F
irst S
cree
ning
Pre-Project Phase
Market & Concept Feasibility
Pre-Project Phase
Market & Concept Feasibility
Proj
ect A
sses
smen
tPr
ojec
t Ass
essm
ent
Inve
stm
ent P
lan
Inve
stm
ent P
lan
CommercialLaunch
CommercialLaunch
Development ProjectsDevelopment Projects
Go / No_Go
Go / No_Go
Go / No_Go
Go / No_Go
Formal Selection& Prioritisation
Formal Selection& Prioritisation
Building & Testing the Business CaseBuilding & Testing the Business Case
Project ManagementProject ManagementCommercialisationCommercialisation
Idea Management Idea Management
Portfolio ManagementPortfolio Management
MarketingExecutionMarketingExecution
Market FeasibilityProof of ConceptMarket FeasibilityProof of Concept
Stra
tegi
c G
uida
nce
Stra
tegi
c G
uida
nce
Idea Phase
Market(pull)
Technology (push)
MegaTrends
BrainStore(Ideation)
Idea Phase
Market(pull)
Technology (push)
MegaTrends
BrainStore(Ideation)
Idea
Firs
t Scr
eeni
ngId
ea F
irst S
cree
ning
Pre-Project Phase
Market & Concept Feasibility
Pre-Project Phase
Market & Concept Feasibility
Proj
ect A
sses
smen
tPr
ojec
t Ass
essm
ent
Inve
stm
ent P
lan
Inve
stm
ent P
lan
CommercialLaunch
CommercialLaunch
Development ProjectsDevelopment Projects
Go / No_Go
Go / No_Go
Go / No_Go
Go / No_Go
Formal Selection& Prioritisation
Formal Selection& Prioritisation
Building & Testing the Business CaseBuilding & Testing the Business Case
Project ManagementProject ManagementCommercialisationCommercialisation
Idea Management Idea Management
Portfolio ManagementPortfolio Management
MarketingExecutionMarketingExecution
Market FeasibilityProof of ConceptMarket FeasibilityProof of Concept
“Smart entrepreneurs aren’t cowboys – they’re methodical managers of risk” – HBR May 2010
Critical learningTechnical teams will focus on the most intriguing problem
Critical learningTechnical teams will focus on the most intriguing problem
Critical Uncertainties•Market•Technology•Capability
Derailment Risks•Value Proposition•Engagement of Key Senior Sponsors
Develop common and consistent details for all projectsDevelop common and consistent details for all projects
Polyurethanes Investing for Growth with Customers Worldwide
Stay true to your strategy - Portfolio ManagementSimple Concept – Hard to implement
Driven by the Innovation Strategy
Define the arenas / bucketsAgree the spend split
Insist on uniform data for all projects
Align projects with buckets & prioritise projects within each bucket
Deploy resource in each bucket until available
resources are consumed
20%
- A- B- C
40% 30% 10%
- A- B- C- D
- A- B- C- D- E
- A- B- C- D
A, B, C, D, E, F, G, H, I, J, K
Execute strategy = spend where you intend to spend
Polyurethanes Investing for Growth with Customers Worldwide
Critical LearningMake Sure You Use Appropriate Metrics
Portfolio
Health
Portfolio
Productivity
Business
OutcomesNumber of projects in active development
% of projects in Core vs. step-out projects
% of resources deployed on step-out projects
% of projects on time
Total patents filed / granted
Value of the portfolio pipeline
CM delivery and growth
CM/te delta for tagged sales vs not tagged sales
Number of products released YTD and LTM
Revenues from new products released in last 5 years
Innovation FC as % of CM generation
Current year % of sales due to new products released in last 5 years
Return on Innovation (revenue over last 5 years/ spend over last 5 years)
Polyurethanes Investing for Growth with Customers Worldwide
Visible Leadership Counts
Creating a vision, agreeing targets, clearing the road, visible engagement and persistence are more important than only inventions
This requires leadership, judgment and risk taking
Intensity and desire alone are not enough -If you are only doing the same things as before – your future will look like your past.
In a corporate setting this means break some eggs.