Innovate or Perish... 5 Steps To Accelerate Growth and Increase Profits

Innovate or Perish… Five Steps to Accelareate Growth and Increace Profits!

HOW MANY OF YOU ARE SELF EMPLOYED?

BIG QUESTIONS

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HOW MANY OF YOU ARE ENTERPRENEURS?

Startling Facts

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The greatest transferance of wealth in the history of mankind…!

Startling Facts

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Startling Facts

Entrepreneurs are the drivers behind this massive transfer of wealth

Who is an Enterpreneur?

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How is this Transfer of Wealth Happening?

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What is Innovation?

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Innovation Defined…

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Innovation is the process that take new ideas and implements them in a way that creates value in solving unmet needs

Innovation vs. Invention!

Invention is the process of taking capital and turning it into knowledge

Innovation is the process of taking knowledge and turning it back into capital

A New View of INNOVATION

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Innovation allows companies to create, deliver, capture, and sustain value

Alvin McBorrough Strategist

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" "" " !

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Thought Leaders on Innovation

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Clay Christensen The Innovator’s Solution Disruptive Innovation

Eric von Hippel Democratizing Innovation Customer Centric Innovation

Dick Lee Value Innovation Works Value Innovation

Gary Hamel What Matters Now Management Innovation

Costas Markides All the Right Moves Strategic Innovation

Kim & Mauborgne Blue Ocean Strategy Value Innovation

Peter Drucker Innovation & Entrepreneurship

12 Masters of Innovation…

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Henry Chesbrough Open Innovation Open Innovation

Vijay Govindarajan Reverse Innovation Reverse Innovation

Gina O'Connor et al Radical Innovation Radical Innovation

Tony Ulwick What customers want Outcome Driven Innovation

John Bessant Managing Innovation Classical Innovation

Gina O'Connor et al

Lee’s Value Innovation Process

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Why is Innovation so Vital Today?

New Playing Field + New Players + New Rules + New Game = INNOVATION!

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Why is Innovation so Vital Today?

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“Innovation is front and center on the Corporate Agendas!according to a global survey. Executives are adding more !breakthrough innovations and business model changes to !their Portfolios to fuel the growth engine”!

Source: Business Week, November 16, 2006

Led their respective industries at one point Combined Market Capitalization $420 Billion Combined Revenue in FY 2005 - $338 Billion Combined EBITDA $150B Product Innovation Portfolio 12%

The Other Side of Innovation

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Qwest

What Happened?!Failure to address changing Business Model shift -  Telecom – Communications

Solutions Neglected two significant technologies -  Mobility -  Video Hubris Born of Success

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Borders

What Happened?!Failure to conform to industry changes -  Growth of Online distribution Neglected significant technological shift -  eReader Capitulation to Irrelevence and Death

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AOL

What Happened?!Lost track of market innovation -  Dial up vs. Broadband Failed Acquisition -  Time Warner AOL 2.0 The Media Company

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Companies that Drove Innovate

Undisputable Market Leaders Combined Market Capitalization $ 1 Trillion Combined Revenue in FY 2011 - $620 Billion Combined EBITDA $330B Product Innovation Portfolio 40%

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Tesla Motors

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Tesla Quick Facts

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Tesla Model S

Transformational Facts!

Founded – 2003 Manufacturing – Fremont, CA (NUMMI) Founder – Elon Musk Employees Count – 1,400 Revenue - $204 Million (FY’11) Net Income - $-254 Million (FY’11) Products – Telsa Roadster

Tesla Model S Tesla Model X

Purchase Price - $50K - $120K Miles Range – 160 – 320 Miles

Carbon Motors Corporation

Design by Law Enforcement for Law Enforcement !

“An innovative, fast, efficient new American car you can't buy…”

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Carbon Motors Quick Facts

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Transformational Facts!

Founded – 2003 Manufacturing – Cornernsville, IN Founder – William Santana Li Planned Introduction – 2012 Pre–Orders – 21,000 Products – Police Vehicles Product Specifications: Engine – BMW Turbo Diesel Body – Aluminium Drive – Rear Wheel Transmission – Automatic Life Span – 250,000 miles

Carbon Motors Quick Facts

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ET3

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ET3 Quick Facts

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Transformational Facts!

Space Travel on Earth Silent, Low Cost, Safe, Faster than Jets Electric

Why Are These Companies Winning?

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5 Steps to Accelerate Growth and Increase Profits through Innovation

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2 Rule Breakers 3 Nimble & Agile

4 Game Changers

5 Execution Driven

Perf

orm

ance

Value

Low

H

igh

1 Need Seekers

Need Seekers are companies that focus on identifying unmet and unaticulated needs!

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Distinct Characteristics of Companies

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Process and Capabilities

The Global Innovation 1000 – Booz and Co.

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Blue Ocean Ideas…

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§  Created a disruptive business model for the music industry

§  Results §  RCA regained margins §  A-la-carte for consumers §  Boost of +10 B

downloads

§  Disputed the mobile industry as a formidable player

§  Results §  Focus on customer

needs §  10 million SGS3 – July §  #1 Mobile company

§  Extensive use of analytics throughout the company

§  Results §  World’s #1 Bookstore §  World’s #1 HCS Provider §  Market Leaders in

Customer Experience

Rule Breaker

1.  Gary Hamel, “Strategy as Revolution”, Harvard Business Review, July-August, 1996, 69-82 2.  Gary Hamel, “Leading the Revolution – How to Thrive in Turbulent Times by Making Innovation a Way of Life”, Plume,

2000

Gary Hamel’s Thesis1, 2: Companies fall into one of three categories:

ü  Rule Maker [#1 in the market; Sets the rules for all other companies]

ü  Rule Taker [Plays by the rules set by the Rule Maker] ü  Rule Breaker [Defines new rules]

Mantra of Rule Breakers

Reinvent Your Company - Hamel’s Ten Rules for bubbling up Billion Dollar Ideas!

Set Unreasonable Expectations Offer and Open Market for Capital

Stretch Your Business Definition Open up the Market for Talent

Create a Cause, not a Business Lower the Risks of Experimentation

Listen to New Voices Make Like a cell – Divide and Divide

Design an Open Market for Ideas Pay Your Innovators Well – Really Well

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Gary Hamel, “Reinvent Your Company, 10 Rules for making billion-dollar business ideas bubble up from below”, Fortune, June 12, 2000, pp 98-118

Classic Examples

Industry! Rule Maker! Rule Taker! Rule Breaker!

Consumer Packaged Goods!

Procter & Gamble

Colgate Palmolive, Unilever Nu Skin, Avon

Consumer Electronics! Samsung Sony, Phillips Vizio, LG

UK Airline! British Airways British Midland Virgin Group

Indian Airlines! Jet Airways Indian Airlines Kingfisher

Vacuum Cleaner! Dyson Ltd Hoover, Electrolux LG

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Industry Game Changers!

Utilities, Oil & Gas

•  Netflix broke the rule that consumers only wanted to rent the latest movies from a store down the street. They created a multi-billion dollar industry of renting mostly older movies on laptops and living room set-top boxes

A & E, Construction

•  Amazon.com broke the rule that books were meant to be read in hard copy — that groceries and electronics couldn’t be sold from the same website. They generate more online book business than all other online retailers combined with tens of billions

Public, Aerospace & Defense

•  Craigslist broke the rule that web technologies need to look sexy. Without any advertising or an attractive user interface and with only a handful of people they booked hundreds of millions of dollars by providing simple functions that users really want

Advertising

•  IKEA broke the rule that do-it-yourself furniture couldn’t be stylish yet inexpensive. Today, they offer 12,000 products, employ 127,000 workers, and help 450 million consumers find the perfect piece of furniture for their home. You might call it a pretty big success

RETAIL

•  Zappos broke the rule that helping customers too much is wildly unprofitable. They built a $1 billion company in less than 10 years by delivering an outrageous client experience

6

Project-intensive Industries Require Enterprise PPM

• Deliver high-quality projects on-time and within budget• End-to-end visibility for improved, timely decision making

IT and Services

High Tech & Manufacturing

Utilities, Oil & Gas

Public Sector, Aerospace &

Defense

Architecture, Engineering & Construction

• Prioritize projects based on strategic objectives

• Optimize assignment of scarce resources

• Bring the right products to market within market windows

• Collaborate across the global supply chain

• Manage short-duration, high-intensity outages and shutdowns

• Increase productivity and speed of project delivery

• Manage large programs with multiple suppliers and subcontractors

• Improve accountability and meet regulatory requirements

• Improve coordination and collaboration

• Avoid and protect against claims

Key

Indu

stry

Req

uire

men

ts

6

Project-intensive Industries Require Enterprise PPM

• Deliver high-quality projects on-time and within budget• End-to-end visibility for improved, timely decision making

IT and Services

High Tech & Manufacturing

Utilities, Oil & Gas

Public Sector, Aerospace &

Defense

Architecture, Engineering & Construction

• Prioritize projects based on strategic objectives

• Optimize assignment of scarce resources

• Bring the right products to market within market windows

• Collaborate across the global supply chain

• Manage short-duration, high-intensity outages and shutdowns

• Increase productivity and speed of project delivery

• Manage large programs with multiple suppliers and subcontractors

• Improve accountability and meet regulatory requirements

• Improve coordination and collaboration

• Avoid and protect against claims

Key

Indu

stry

Req

uire

men

ts

6

Project-intensive Industries Require Enterprise PPM

• Deliver high-quality projects on-time and within budget• End-to-end visibility for improved, timely decision making

IT and Services

High Tech & Manufacturing

Utilities, Oil & Gas

Public Sector, Aerospace &

Defense

Architecture, Engineering & Construction

• Prioritize projects based on strategic objectives

• Optimize assignment of scarce resources

• Bring the right products to market within market windows

• Collaborate across the global supply chain

• Manage short-duration, high-intensity outages and shutdowns

• Increase productivity and speed of project delivery

• Manage large programs with multiple suppliers and subcontractors

• Improve accountability and meet regulatory requirements

• Improve coordination and collaboration

• Avoid and protect against claims

Key

Indu

stry

Req

uire

men

ts

Rule Breakers Impact...

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Nimble and Agile

Focus of Relentless Innovation!

§  Challenge the Status Quo §  Buy into Business Model Innovation §  Tirelessly seeking new opportunities

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How does Relentless Innovation Happen?

Focus of Relentless Innovation!

§  Right Condition §  Right Processes §  Right Insights

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Customer Segment Value Proposition Key Partners

Channels

Customer Relationships

Key Resources

Key Activities

Cost Structure Revenue Stream

Growth Ideas

Who are you going to sell to? Who is going to pay for your service/products?

What problems need to be solved? What product/service is best?

How does your customers find, buy, and use your product?

What resources do you have to solve your customers problems?

What critical activities are you going to perform to create value?

Who are you suppliers and service providers

What is the total cost of production? Where does your revenue comes from?

What Business Are You In?

How do you interact with your customers?

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Pursue New Markets

Use Existing Products & Assets

Innovation Ambition Matrix!

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CORE

ADJACENT

TRANSFORMATIONAL

Optimizing existing products for existing customers

Expanding from existing business “in to new to the company businesses

Developing breakthroughs and things for the market they don’t need yet

HOW TO WIN!

Add Incremental Products & Assets

Develop New Products & Assets

WH

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Serv

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Ente

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erve

Ad

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Crea

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Mar

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Targ

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New

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ers

Starbucks the Relentless Innovator

Any business that expects business to stay stable – business as usual - is dead

Howard M. Schultz CEO

Starbucks

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Starbucks the Relentless Innovator

Transformational Facts!Founded – 1971 Number of Stores – 19,555 Revenue - $11.7 Billion (FY’11) Net Income - $1.7 Billion (FY’11) Subsidiaries – Starbuck Coffee

Tazo Tea Company Seattle Best Coffee Torrefazione Italia Ethos Water Hear Music Evollution Fresh

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Game Changers

THE HEART OF A COMPANY’S BUSINESS MODEL should be game-changing innovation. This is not just the invention of new products and services, but the ability to systematically convert ideas into new offerings that alter the very context of the business. A.G. Lafley Former CEO P&G

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What Is a Game?

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A game is a contest between 2 or more players in which the outcome and payoffs depend on the action of the players

Who or What is a Game Changer?

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GAME!

“A visionary strategist who alters the game his business plays or concieves an entirely new game” [Lafley & Charan (2008)]

CHANGER!

“A breaker of the chain of commoditization who creates differentiated and value-added brands through innovation”

General Perception about the Game

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Only big players can change the game!

The Information •  Common knowledge •  Percetions, beliefs, and attitudes

The Payoffs •  Rewards & Penalties •  Financial & Non-Financials

The Actions •  Observable & Non •  Sequential or Simultaneous

The Field •  The context of the game •  Landscape

The Players •  Their Identities and Interest •  Their A-R-C

The Rules •  Explicit or Implicit •  Complete or Incomplete

The 6 Elements of any Game

The Enforcer

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Characteristics of Game Changers

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Driven By !Analytics!

Opposes The !Status Quo!

Focus On Customer Experience!

Tesla Motors

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"All the geniuses here at General Motors kept saying lithium-ion technology is 10 years away, and Toyota agreed with us -- and boom, along comes Tesla. So I said, 'How come some tiny little California startup, run by guys who know nothing about the car business, can do this, and we can't?’ Robert Lutz!Former Vice Chairman!GM!

Winning with Analytics

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§  Used Sabermetrics to change the way baseball is played

§  Results §  2 World Titles (‘04 & ‘07) §  Won over 90 games/yr §  Multiple Post Seasons

§  Uses data, analytics, and metrics for decision making

§  Results §  3 World Titles in 4 years §  Perennial contender §  Multiple Post Season

§  Extensive use of analytics throught the company

§  Results §  World’s #1 Bookstore §  World’s #1 HCS Provider §  Market Leaders in

Customer Experience

Execution Driven…

ex-e-cu-tion (ek si kyoo shun) !

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Why Execution Is Needed…

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Job for the Business Leader Core Discipline Company’s Culture

§ Execution should be embedded throughout the organization

§ Leaders should establish an accountability culture

§ Execution should begin with Senior Leaders

§ The core of any successful business strategy

§  Execution is the discipline that drive the 3 core processes

§ Execution delivers success

§ Leaders are paid to ensure that business is deliver value – results – revenue

§ Leaders must use execution to drive the 3 core processes

§  Set winners apart from loosers

Winning with Execution at GE…

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Bringing It Home…

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2 Rule Breakers 3 Nimble & Agile

4 Game Changers

5 Execution Driven

Perf

orm

ance

Value

Low

H

igh

1 Need Seekers

Bringing It Home…

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The Inspiration of …

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“It is impossible to live without failing at something, unless you live so cautiously that you might as well not have lived at all - in which case, you fail by default.”

JK Rowling

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Innovator & Entrepreneur

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2 Rule Breaker

3 Nimble & Agile

4 Game Changer

5 Execution Driven

1 Need Seeker

“Rock bottom became a solid foundation on which I rebuilt my life” JK Rowling Harvard Commencement, 2008

Want More….?

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Alvin McBorroughManaging Partner The OMNI Consulting Group amcborrough@omni-pm.com303-261-6320

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