Innovation in Innovation Breakthroughs
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1 Demystifying Innovation Innovation in Innovation Breakthroughs Dr. Hitendra Patel Locations: May 2009
2 Copyright & Property of IXL Center Innovation Theory Our Research IXL Center and its leaders have produced leading-edge thinking on the topic of innovation breakthroughs and innovation management Firm Level 400 Companies Country Study Books By R. Jonash e T. Somarlaite By Patel and Gackstatter Copyright Monitor Group Sustainability Innovation Indonesian 101 By Patel and Chakarian Copyright IPS Innovatior Newsletter Research studies with InnovationTools 2
3 Copyright & Property of IXL Center Innovation Theory Study of Innovation Breakthroughs We have completed a broad study of innovations across industries and geographies Examples * Study done while at Hult/IXL Center and Monitor Group 3
4 Copyright & Property of IXL Center Innovation Theory Benefits Innovation leaders create greater shareholder returns, customer loyalty, partnership preferences, and employee attraction Capturing the Innovation Premiums Who is Capturing the Premium? The Company to Invest In or Companies who pursue Sustainable Profitable Growth through Innovation The Brand to Buy The Partner of Choice or or A Great Place to Work or * Innovation Premium, Ronald Jonash and Tom Somarlaite 4
5 Copyright & Property of IXL Center Number of Examples Innovation Theory Study of Innovation Breakthroughs - Multiple Choices Many innovations include changes in business models, partners, experience, delivery, and markets Distribution of Innovation Choices Business Model Production Offering Delivery Experience What Business / Pricing Model and Partners Do We Use? How Is the Offering Produced? What Should Be the Offering? How do you Deliver the Offering? What Customer Experience will You Offer? 5
6 Copyright & Property of IXL Center Innovation Theory Definition DEFINITION: Business Innovation is the Creation and Capture of New Value in New Ways Creation Capture New networks and partners New business models New Value New Markets & Customers New Revenues & Savings New Strategic Premiums New ways to produce New offering New ways to deliver New customer experience Source: Work done with Hult MBA students and Innovation Management, Inc. 6
7 Innovation Theory Innovation Breakthroughs We extracted four principles that drive innovation breakthroughs Powerful Business Models Intel Inside Co-create Pricey Refillables Right Serve Emerging Trends Available Anywhere Anytime Underserved Segments Sustainability and Green Trust and Transactions Innovation Breakthrough Basic Human Needs Customized for Me Safe and Secure Sensible and Simple Combine Capabilities Source: Work done at IXL Center Copyright & Property 7
8 Examples of Innovation Example: CVS/Minute Clinic Most illnesses are fevers and colds and they don t need a doctor Intel Inside: CVS powered by Minute Clinic Co-create: CVS locations/minute Clinic services Pricey Refillables: Low cost diagnosis/pricey CVC drugs Right Serve: Nurse treats sniffles 3. Powerful & Winnable Business Models 1. Emerging & Converging Trends Available Anywhere Anytime Available in CVS stores 24 hours / day Underserved Segments People who avoid doctors Low income or non-insured Trust and Transactions Nurse practitioner conveys health message Quick affordable and convenient health care for minor aliments 2. Meeting & Delighting Human Needs Sensible and Simple Quick, simple and reliable Lower cost Safe and Secure Nurse practitioner Inside a pharmacy 4. Compelling & Differentiated Combinations Production Offering Delivery Customer Experience Partners Standardize care Automated processes Nurse Practitioners Quick service Rapid diagnosis Referral for serious ills In drug stores 24 hours / day Quick and convenient Low cost Trustable advise CVS Payors 8 Copyright & Property
9 Examples of Innovation Example: Enterprise People still need a temporary car after an accident, mechanical repair, theft or for special occasions Right Serve: Customer pickup at the comfort of their home or site of the accident 3. Powerful & Winnable Business Models 1. Emerging & Converging Trends Available Anywhere Anytime Office locations within 15 miles of 90 percent of the U.S. population Underserved Segments People stuck due to a breakdown or accident Trust and Transactions Enterprise connects to customers through referrals from insurance companies, auto repair shops and local store signage Convenient pick up during a car accident or breakdown 2. Meeting & Delighting Human Needs Customized for Me Personalized, one-on-one treatment Sense and Simplicity Car brought to you 4. Compelling & Differentiated Combinations Production Offering Delivery Customer Experience Partners City-neighborhood network Rental payment collection system Personalized, door-todoor service Convenient locations Car sent to your location Offices open 8am-6pm Convenient, personalized service that calms you in a frustrating situation Insurance companies and auto repair shops 9 Copyright & Property
10 Examples of Innovation Example: Apple People want to be cool and still retain their individuality Pricey Refillables Cheap phone and music player Pricey applications and music download Right Serve: Download only the songs and apps you want 3. Powerful & Winnable Business Models 1. Emerging & Converging Trends Available Anywhere Anytime Music and application downloads through itunes website Underserved Segments People who do not want or cannot afford Cds can buy music one song at a time Legalized online downloading Stylish and simple gadgets with customized music and applications 2. Meeting & Delighting Human Needs Customized for Me Ipod has different colors, styles Music playlists reflect personality Sensible and Simple Simple and ergonomic ipod designs Integrated download itunes site for music and applications 4. Compelling & Differentiated Combinations Production Offering Delivery Customer Experience Partners Faster, more secure software and stylish ergonomic hardware Integrated website One song/app downloads Stylish and robust music players, phones and laptops itunes website Apple stores Helpful sales people Free to tryout gadgets Trendiness having an ipod or imac is in Individuality Recording and music companies ipod application developer companies 10 Copyright & Property
11 Innovation Theory Innovation Breakthroughs - Trends Breakthroughs take advantage of emerging and sustaining trends EMERGING TRENDS Available Anywhere Anytime Underserved Segments Sustainability and Green Trust and Transactions Convenience Anytime Always Available Any Location Pervasiveness Eliminating Nuisance On the Move Focus on necessities Hybrid/Middle of the road Niche Neglected Convenient Economical Efficient Universal Green Environment No Sacrifice Cost Saving Conserve Sustainable Family/friends Universal needs Transactions Connecting Trust Interact Convenience Virtual Source: Work done at IXL Center Copyright & Property 11
12 Innovation Theory Innovation Breakthroughs - Human Needs All innovation serve a few basic human needs Basic Human Needs Customize for Me Safety and Security Sensible and Simple Personalized Convenience Comfort Customization Special Stylish and simple Compliance Safety & Security Protection Confidence Controls Assurance Insurance Reduce fear Efficient Maintenance-Free Convenient Simple No-frills Inexpensive Source: Work done at IXL Center Copyright & Property 12
13 Innovation Theory Innovation Breakthroughs - Business Models Simple but proven business models are key to capturing value POWERFUL BUSINESS MODELS Intel Inside Co-create Pricey Refillables Right Serve Best Quality Price Premium Technology Inside Visibility Specialized Virtually Unite Simple Governance Infrastructure Co-develop Building Blocks Personalized Communities Accessible & Informative Efficient Stylish Expendables Expensive Replacements Affordable base Must Have Trim Service Price Right Segment Offering Match Need Self-Select 13 Copyright & Property
14 Copyright & Property of IXL Center Innovation Theory Innovation Breakthroughs - Combine Breakthroughs wow customers and build barriers to competitors by combining capabilities in unique ways Innovation Capabilities Combination = Breakthrough Innovation Choices Networks and Partners Delivery Customer Experience Financial Model Offering Production Source: 101 Innovation Breakthroughs, H. Patel and Steffen Gackstatter 14
15 Copyright & Property of IXL Center Innovation Theory Innovation Breakthroughs - Key Takeaway We extracted four principles that drive innovation breakthroughs 1. Breakthroughs take advantage of emerging and sustaining trends 2. All innovations provide for basic human needs 3. Simple but proven business models are key to capturing value Delivery Offering Financial Model Customer Experience 4. Breakthroughs wow customers and build barriers to competitors by combining capabilities in unique ways Production 15
16 Copyright & Property of IXL Center We find that most companies are focused on their strategy and are stuck in their sandbox Innovation Theory Innovation Challenge Board of Directors Executives Strategy requires you to define your sandbox Execution requires you to play inside your sandbox There are other cool things to play outside of your sandbox 16
17 Copyright & Property of IXL Center To get out of the sand-box to keep an eye on the ball and to look around for what s next 17
18 ABOUT INNOVATION IXL CENTER THEORY Overview Plans About IXL Center THOUGHT LEADERSHIP GLOBAL LOCATION OFFERINGS INNOVATION NETWORK PARTNERS 101 Innovation Breakthroughs Examination of innovations to extract the common themes, elements and pathways for breakthroughs Making Innovation Real Thinking and Acting Differently building innovation capability in companies in many industries across the globe Cambridge London Dubai Shanghai São Paulo Speeches Acting & Thinking Differently Power of Platforms Lessons from the Leaders Training Focus Capability Discipline Innovation Officers in Corporations MBA Professors Innovation Consultants Academic Partner and Global Locations Leading Innovation Software Provider with over 90 clients in the Fortune 500 The Innovator Monthly newsletter about key innovation issues State of Innovation at the Firm-level in Countries Surveys at the firm level in Brazil, India, Korea, Singapore and the US Black Belt Certification Workshops Growth Platforms Business Ideas Capability Gaps Culture Top Innovation Portal with 200,000 unique visitors and > list 18
19 Hitendra Patel Ph.D. Director One Education Street Cambridge, MA
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