Innovate to Grow. July 14, 2017 Terry Loughrin:

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1 Innovate to Grow July 14, 2017 Terry Loughrin:

2 Expertise Across Illinois With more than 50 full-time staff and partners positioned statewide, IMEC assists more than 500 companies each year with successful improvement and innovation projects.

3 About IMEC Mission Committed to Driving Growth through Enterprise Excellence Vision Leading the way for organizations to create their competitive future

4 A Validated Leading Edge Model

5 Innovation - something new Discussion Why? Importance of Innovation in Profitability Leadership Innovation Process

6 Are Manufacturers Innovating? Continuous Improvement ONLY 34% of Small MFGs (<$10M) are world class in processes* Skill Standards 75% of companies have some skill standards/training aligned; 15% have NONE Customer-focused innovation ONLY 42% are at/near achieving this; though, 83% see need *Source: 2013 Next Generation Manufacturing Study,

7 Why should you care? Forsaken Revenue Growth: Roughly $160 Billion more to top innovators over five years split over 359 companies - $500M each!

8 Why the gap in Innovation? Copyright Illinois Manufacturing Excellence Center.

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10 Innovation is about: People Who you have and who you need Culture and environment Processes How you lead How you manage and implement Products / services How much you get it ( shooting ahead of rabbit ) Copyright Illinois Manufacturing Excellence Center. 10

11 What your Peers say Products People Processes

12 How do you know where to begin? Assess for innovation elements: Innovation Culture and Strategy Identified Management and Support Process Monitoring Customer and Stakeholder Input Process Operational Excellence and Governance Talent Needs and Workforce Aligned Incentive Structures Integrated

13 Assessing Innovation Start the journey here: Facilitated Self- Assessment 1 full day in 2 sessions Small team Action Plan PROBE report Mature Co. Approach Interest Application Review Volunteer assessment team 1 year process Entire Organization Feedback Report

14 How IMEC Assesses Innovation

15 PROBE: Comparative Report Copyright Illinois Manufacturing Excellence Center.

16 PWC believes in Excellence Framework

17 Cascading Innovation Traits 1. Have business and innovation objectives 2. Develop an Innovation Strategy 3. Nurture innovation with good leadership 4. Foster your innovation culture with behaviors / incentives 5. Identify current and needed talent 6. Focus on expanding your innovation ecosystem (network) 7. Establish well-defined innovation processes 8. Categorize your innovations to determine growth potential 9. Ensure governance promotes innovation model integration 10. Align innovation organization to and across business units 11. Protect funding for innovation from competing with daily budgets 12. Determine metrics that track process and business targets

18 Develop an Innovation Strategy Three Key Questions: 1. How much innovation do we need? 2. What balance of innovation do we need? 3. In which areas should we focus our innovations?

19 Foster your innovation culture with behaviors / incentives Products People Processes

20 Establish well-defined innovation processes Pipeline Ideas Concepts Commercial & Tech. Dev. Prepare for constant iteration: Dyson created 5,721 prototypes in 4 years before entering the market with cyclonic upright vacuum Monetization

21 Categorize your innovations Internal: Investments, tools, or processes External: Market focus, risk, closeness to customer Bridging: Service / MFG mix, network relationships Incremental: Target 50% Steady growth, low investments Breakthrough: Target 25 40% New operating models Radical: Target 8 10% Moonshots

22 Categorize your innovations

23 Determine metrics that track process and business targets % of sales / outputs from recent innovations Proportion of revenue from new products / services Internal rate of return exceeds xx% Quantity / quality of ideas in pipeline

24 Protect funding for innovation from competing with daily budgets Growth arises from effectively spent $$ Innovation doesn t operate on an annual cycle Sources: R & D tax Credits Government grants

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26 Resources Steve-Jobs *Source: 2013 Next Generation Manufacturing Study, 3.pdf