Breakthrough Innovation

Transcription

1 Breakthrough Innovation Peter Koen All Rights Reserved Breakthrough 34% Current Market Idea genesis via technology driven inventions Idea genesis via ethnography Idea genesis via partnering White space disruptive market knowledge Current Market Knowledge Opportunity Analysis 29% Idea Generation and Enrichment ENGINE Opportunity Identification Idea Selection Concept Definition 30% 36% White Space Technology Inventions Idea selection process Experimentation Concept Definition (i.e. Developing a solid business case) Selection Mgt Process Using Risk Tools 2

2 Why is it so difficult for large and successful incumbent firms?

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6 Why is it so difficult? Large companies are not innovative

7 90 Sales P&G Income Billions Compounded Annual Sales Growth = 2.9%

8 Be sure to ask about the side effects OK large companies are innovative BUT not in developing new business models

9 What do we mean by a new business model?

10 Was itunes a new Business Model for Apple? 1. Yes 2. Not sure 3. No

11 Is the Tool Management system new Business Model for HILTI? 1. Yes 2. Not sure 3. No

12 Is the Celeron Chip a new Business Model for Intel? 1. Yes 2. Not sure 3. No Immelt, J. R., Govindarajan, VJ, and Trimble, C. (2009) How GE is Disrupting Itself, Harvard Business Review.

13 Is the low cost GE EKG machine a new Business Model OUTSIDE the core? 1. Yes 2. Not sure 3. No No frills, bulk prices sold through the internet

14 Is Xiameter a new Business Model OUTSIDE the core?? 1. Yes 2. Not sure 3. No

15 Why? 4

16 Business Model Rigidity Leaders will make significant investments in breakthrough innovation, but will force the solution into the sustaining business model

17 Business Model Rigidity Kodak invests $5 billion in digital over the next 10 years (40-50% of R&D budget)

18 Sustaining businesses execute a business model, breakthrough innovations need to search for one

19 The true product of the breakthrough innovation team is the business model NOT the solution 2

20 The Church of New Finance Adopted from a Clay Christensen presentation

21 Common methods of financial analysis systematically bias against high risk innovation

22 Embrace financial uncertainty and SLOW diffusion rates Diffusion of Breakthrough Innovations Chandrasekaran, D and Tellis, G. Global Takeoff of New Products: Culture, Wealth, or Vanishing Differences, Marketing Science, 2008, pp 1-17

23 Units sold in thousands ,000 units sold 937,000 units sold Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Year 1 Year 2 4,416,0 00 units sold 22,497, 000 units sold Year 3 Year 4

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25 Breakthrough 34% Current Market Idea genesis via technology driven inventions Idea genesis via ethnography Idea genesis via partnering White space disruptive market knowledge Current Market Knowledge Opportunity Analysis 29% Idea Generation and Enrichment ENGINE Opportunity Identification Idea Selection Concept Definition 30% 36% White Space Technology Inventions Idea selection process Experimentation Concept Definition (i.e. Developing a solid business case) Selection Mgt Process Using Risk Tools 49 Some facts from start-ups 50

26 9/10 starts-up fail Quoted from Ash Maurya And the ones that succeed change their original business plan 66% of the time Quoted from Ash Maurya

27 90% of breakthrough innovation projects change their business models 4 times before they get it right Quote from Mark Johnson, author of Seizing the White Space, HBR,

28 Apply the same leadership practices that we use in sustaining to transformational innovations Which CEO s embrace breakthrough thinking?

29 Ambidextrous Leaders

30 5 Apply the same management methods we use in sustaining to breakthrough innovations

31 Stage 1 Gate 1 Gate 2 Scoping Stage 2 Business Plan Stage 3 Gate 3 Gate 4 Development Stage 4 Testing Gate 5 Stage 5 Launch For managing breakthrough in the Front End of Innovation 62

32 Lean start-up How do you manage Breakthrough Innovation? 1. Stage Gate 2. Lean Start-Up 3. Other 4. I don t have a clue

33 Are you using Lean Start-Up in your company? 1. Proficient how we do breakthrough 2. Applied to 1 or 2 projects 3. Just learning about it 4. Don t know what it is Business Model Lean Start-Up Very early customer/user visits Minimum Viable Prototype

34 Uses the business model as a converging tool for brainstorming for breakthrough innovation business hypothesis

35 69 Business Models Osterwalder s Business Model Canvas FEI Canvas (Purposely developed for breakthrough innovations in large companies)

36 2. Early and abundant customer visits We often wait too long to talk with customers Adopted from Blank and Dorf, The Startup Owner s Manual, KS Ranch, 2012

37 No business model survives the first contact with the customers Adopted from Blank and Dorf, The Startup Owner s Manual, KS Ranch, VERY EARLY, fast low fidelity prototyping

38 Show this Don t wait for this

39 Words blah, blah, blah. Sketch..worth a 1000 words Prototype..worth a 1000 pictures from IDEO Minimum Viable Prototype (MVP) Minimum set of features that are necessary to get early customer validation of the business model

40 4. Rapid Learning Business Model Customer Visits Prototype Business Model Customer Visits Prototype Business Model Customer Visits Prototype

41 Some Rules Adopted from a Alex Osterwalder presentation One thing per each note 82

42 No bullet points 83 Start with the PROBLEM 84

43 Problem formulated as a POV point of view: components user be specific need use verbs Insight empathy why is this problem important

44 POV for Nespresso Customer/ Consumer Circumstance How can we define the customer/ consumers in terms of who they are and their circumstances in the form of personas

45 Customer Circumstance? 89

46 Problem: A commuter facing a long drive to work needs food to provide both stimulation and relief from hunger Problem: An exhausted, impatient and harried care giver needs to placate their children so they feel like loving parents Solution Attributes: Something that will stave off hunger Can be held in one hand Not gooey or sticky Takes a long time to eat Solution Attributes: Something that will make the child happy Something the parent can say yes to Something that takes little time to do Customer/ Consumer Circumstance How can we define the customer/ consumers in terms of who they are and their circumstances in the form of personas

47 Solution Attributes What attributes do we need to deliver to the customer? Which of our customer problems are we solving with these attributes? and in conclusion 94

48 Excellence in Developing and Executing a Front End Strategy is the SINGLE Most Important Variable in the Front End 95 Effective Networked Teams and their Leaders are MORE important to success than any Tools or Techniques 96

49 Incremental and Breakthrough Projects Require Fundamentally Different Innovation Management Practices Emerging Business Breakthrough SBU Senior Management Mfg Sales R&D Existing Business Incremental Mfg Sales R&D 97 Breakthrough Innovation Challenges 98

50 Ambidextrous Leaders Small, Full Time Co- Located Teams

51 Not Worshiping at the Church of New Finance Embracing Lean Start-Up Business Model Very early customer/user visits Minimum Viable Prototype