Innovation is ppyrobably different than you think… · Ten types of innovation: move beyond...

1Copyright © 2009 Doblin Inc ABPMP • On Innovation Processes • Keeley • June 2009 •

Innovation is probably p ydifferent thanyou think…

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On innovation effectiveness…A quick look at key processes

1 Fundamentals: look for the right things22Processes: look in more effective ways

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2Copyright © 2009 Doblin Inc ABPMP • On Innovation Processes • Keeley • June 2009 •

Innovation fundamentals.1fundamentals

R hi ki h i i i[ ]

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Rethinking what innovation is…[ ]

Structural drivers behind the growth in “innovation”

A new discipline of innovation is emerging today because:• Companies need new discoveries and strategies to drive organic growth• Innovation successes are now noticed and even expected by analysts• Industries and enterprises must grapple with an increased rate of change• Operational excellence is no longer differentiating enough• Methods and tools are emerging that vastly improve innovation success rates• Design, from cell phones to hotels, is now an imperative for competitiveness• Innovation has evolved beyond technology planning to embrace a broad

array of strategy, market opportunity and operational questions• It adds new options to consider along with where to play and how to win

A B P M P • O N I N N O V A T I O N P R O C E S S E S • J U N E 2 0 0 9 4

It adds new options to consider along with where to play and how to win…

3Copyright © 2009 Doblin Inc ABPMP • On Innovation Processes • Keeley • June 2009 •

“It is not the strongest of thespecies that survive, nor the mostintelligent, but the ones mostresponsive to change ” Except in responsive to change.Charles Darwin

pKansas…

“If you are not moving at the speed of the marketplace you’re already dead—you

just haven’t stopped breathing yet.”Jack Welch

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Don't know our customers well enough. Worse yet, many here think we do. • We're too inwardly focused.We look at EVERYTHING through our company lens, all the time. • Keep trying to fix the problems of thepast instead of looking for future opportunities. • We always look in the same places for innovation ideas.• No implementation/ execution. Good ideas go to a shelf. • Our problems are in generating sales of ourexisting products, not making new products. We’re good at that. • We never talk to each other aboutinnovation. • People are afraid to try anything innovative. Failure is punished severely, so just don't stickyour neck out. • Our systems/ structures inhibit/ punish people for trying to innovate. • Our seniorleaders are not fully committed. • Our culture is anti-innovation, pro-incrementalism. • We don't have theright mindset/ culture for innovation. • Pressured to exceed quarterly expectations or Short termincentives = incremental innovation. • Innovation seen only as new products. • We have too manyproblems fighting off our competitors me to products • We're stuck right where we were 5 years ago Iproblems fighting off our competitors me-to products. • We re stuck right where we were 5 years ago. Idon't know what the obstacle is! • No burning platform to innovate. • If it ain't really, really broken . . . •We fear cannibalization. • We can't bring big ideas from 50,000 feet to the ground. • Lack the ability toturn a bright idea into reality. • The ideas we have just aren't big enough to significantly impact our topline • We don't have the guts to take a risk. • Too many internal factions among our business leaders. •Other business units don’t want to play nice together. • We can't even see across the organization. Wedon't share information or ideas. We may have 5 groups working on similar initiatives. • Our departmentdoesn't have the right skill-sets for innovation. • We're all too busy. Nobody has time. • R&D is the placeresponsible for innovation, not here. • We only have one person who is allowed to innovate (CEO or othersenior leader). • We think we know all the answers already. • We prioritize judgment over passion,predictability over validity. • Our Innovation management process strangles any powerful ideas through

Obstacles Abound—there are plenty of excuses not to innovate

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p y y g p g y p gthe hurdles. • We never invest in major innovation, except with our IT spend. • We have an engineeringculture. We focus on product performance and functionality alone. • We need proof of success beforewe'll invest anything. • We don't know how to prioritize ideas, or what to do with our huge database ofideas. • We don't know how to be creative/ generative, only analytical/evaluative. • We are soentrenched in our value chain – they dictate what we do. • We don't partner well with others. We fight withour partners on price. • Our channel resists change and innovation, so we're wasting our time. • Wehave to concentrate on our core market to garner any support & that business has too many legacyproblems to deal with. • We can't break away from competitors. We're fast followers. ‘Not invented here…’

4Copyright © 2009 Doblin Inc ABPMP • On Innovation Processes • Keeley • June 2009 •

What if almost everythingwe believe aboutwe believe aboutinnovationi ?

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is wrong?

Effective innovation blows up many cherished myths…

Start with brainstorming!Mostly enhance

your creativity…Build on your

segmentation…

Think outsidethe box…

Protect your patents!Innovation is

pla f l

Do financial analytics after brainstorming…

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Study your users! Trust the

stage gates…

playful…

Build fast prototypes…

5Copyright © 2009 Doblin Inc ABPMP • On Innovation Processes • Keeley • June 2009 •

Effective innovation blows up many cherished myths…

Abandon thebrainstorming!Use discipline

above creativity…Ditch your

segmentation…Apply multiple

Use several innovation types… Pursue platformsnot products!

Think insidethe box…

Share your patents!It isn’t playful,

Do financial analytics after prototypes…

pp y pdiagnostics…

Use explicit step

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Study non-users! Crash the

stage gates…

it’s brutal…

Build conceptprototypes…

Use explicit step-by-step protocols…

Ten types of innovation: move beyond products to win

6. Product systemextended system that surrounds an offering

5. Product performancebasic features, performance and functionality

2. Networkingenterprise’s structure/

l h i & t i

1. Business modelhow the enterprise makes money

7. Servicehow you service your customers

Product performance

OfferingProduct system

ServiceBusiness model

FinanceNetworking

value chain & partnering

Core process

Process.Enabling process

3. Enabling process

Channel

DeliveryBrand Customer

experience

8. Channelhow you connect your offerings to your customers

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assembled capabilities you typically buy from others

4. Core processproprietary processes that add value

10. Customer experiencehow you create an integrated experience for customers

to your customers

9. Brandhow you express your offering’s benefits and ideas to customers

6Copyright © 2009 Doblin Inc ABPMP • On Innovation Processes • Keeley • June 2009 •

Dell: innovation assessment

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Eight types:

Apple integrated music offering…

iPod familyThird party accessories

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Eight types:

7Copyright © 2009 Doblin Inc ABPMP • On Innovation Processes • Keeley • June 2009 •

Google: Innovation assessment

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Eight types:

Target: innovation assessment

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Seven types:

8Copyright © 2009 Doblin Inc ABPMP • On Innovation Processes • Keeley • June 2009 •

Time to play: Spot the innovation!

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All companies need to innovate… – Innovation improves the appeal and value of your brand– Innovation protects your margins

Fundamentals: some basics

p y g– Innovation helps you stand out in a crowded marketplace– Innovation helps you attract and keep talent throughout the firm– Innovation can help change negotiations with tough customers– The topic is heating up—in firms, in schools and for governments

But most innovations fail!– A “normal” failure rate worldwide is 96%!

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A normal failure rate worldwide is 96%!– Most firms generate too many ideas and don’t execute well

This is evidence of bad assumptions compounded by bad methods

9Copyright © 2009 Doblin Inc ABPMP • On Innovation Processes • Keeley • June 2009 •

Innovation processes.2processesGetting innovation to work…[ ]

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Use proven innovation protocols…

Protocols help people do what is f f

p

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most useful in the heat of battle…

10Copyright © 2009 Doblin Inc ABPMP • On Innovation Processes • Keeley • June 2009 •

So what’s the deal with stage gate processes?

Stages

Conception Preliminary investigation

Detailed investigation

Development Testing and validation

Full production and launch

Idea funnel

Second screen

Business case

Post-development

reviewPre-launch

analysisInitial

screenGates

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Source: adapted from R. G. Cooper

foster initiativesdiagnose situation

Innovation Discipline Model

declare intent

set conditions

authorinitiatives discover invent launch extend

Leaders are responsible for defining prioritizing,

Project teams are responsible for managing innovation programs -

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fo defining p io iti ing, developing and managing the firm’s innovation resources and capabilities – the units of optimization

g g p gthe units of action

11Copyright © 2009 Doblin Inc ABPMP • On Innovation Processes • Keeley • June 2009 •

AbstractInnovation operations

Know

Know Make

FrameInsights

Know

ExploreConcepts

MakePlans

KnowCompany

KnowUsers

Real

KnowIndustry

KnowContext

RealizeOfferings

Platform developmental protocols…Innovation toolkits replace brainstorming…

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12Copyright © 2009 Doblin Inc ABPMP • On Innovation Processes • Keeley • June 2009 •

Invent: grounded, collaborative ideationInnovation prototypes–clarify your boldest business bets...

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How do you sell insurance to 18-35 year old people convinced that there is nothing in the world less cool than insurance?

PerceptionsAffordabilityTrust

Design principles were developed for use in concept development.

• Use channels that are

WellPoint: Creating value for non-users

Entitlement

BehaviorsProcrastination

ComprehensionComplexityChannelsShopping beliefs

familiar to this demographic

• Limit plan variations to reduce complexity

• Focus on the risk of accident from active lifestyles

• Communicate the high cost of uninsured hospital care

• Provide some kind of benefit to people who use minimum

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ProcrastinationBudgeting

to people who use minimum care during a year

• Market to parents of the prospect as well as the prospect

13Copyright © 2009 Doblin Inc ABPMP • On Innovation Processes • Keeley • June 2009 •

The role of Business Concept Illustrations…

The surprising impact of faking a new business fast and cheap

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business fast and cheap…

Business Concept Illustrations—two types

1. Brand & business experienceStep-by-step scenario of the customer experience how it will feel

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2. Business operational conceptValue proposition and clear operational consequences—how it will work

experience—how it will feel

14Copyright © 2009 Doblin Inc ABPMP • On Innovation Processes • Keeley • June 2009 •

Business Concept Illustrations—type 1: experience story

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Business Concept Illustrations—type 1: experience story

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15Copyright © 2009 Doblin Inc ABPMP • On Innovation Processes • Keeley • June 2009 •

Business Concept Illustrations—type 1: experience story

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Business Concept Illustrations—type 2: operational story

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16Copyright © 2009 Doblin Inc ABPMP • On Innovation Processes • Keeley • June 2009 •

Tonik: the business concept, as implemented

Tonik is a health plan aimed at 19-29 year olds, a population that is hard pressed to see the need for, let alone shop for health insurance. Tonik is Blue Cross of California’s f t t lli h lth l ith thfastest selling health plan with more than 50% of sales going direct, bypassing the agent channel.The plan provides first dollar coverage for doctor’s visits, eye exams and dental work, features young

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people care about.

Tonik: the business concept, as implemented

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17Copyright © 2009 Doblin Inc ABPMP • On Innovation Processes • Keeley • June 2009 •

Working with the client and prospective customers, the business concept was refined and implemented in record time.

Helmet: Impact

Went to market as Tonik33,000 customers in year one

(443% over plan)

>$2 million contribution to the bottom line in year one.

More than 70% of sales are being made online, bypassing the

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, yp gagent channel.

Six innovation types:

Develop a signature innovation competence

Sometimes HOW you do something proves to

p

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be as important as WHAT you choose to do…

18Copyright © 2009 Doblin Inc ABPMP • On Innovation Processes • Keeley • June 2009 •

Decoding P&G’s Connect & DevelopSM, 2001-2008

Technology &

Invent it in-house

Leverage others

DesignBusiness

ManufacturingTechnology

Game Boards

Study convergences

Choose where to play

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Top Ten Consumer Needs

Adjacencies

Embed designers within BUs

Engineeringdriven

Customerdriven

Innovate with teeth

A huge shift in innovation success rates occurs

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when it is tied to metrics and incentives…

19Copyright © 2009 Doblin Inc ABPMP • On Innovation Processes • Keeley • June 2009 •

GE Imagination Breakthroughs… 2007

GE under Immelt has attached innovation to global variable pay– 130 projects that are getting direct CEO-level attention– Designed to move its organic growth rate from 5% to 8%g g g– Blockbuster projects that will take GE into a new lines of business,

geographic areas or customer bases. – Each IB needs to give GE incremental growth of at least $100

million in 3 to 5 years – CEO Jeff Immelt has agreed to invest $5 billion in 130 IB’s—from

microjet engines to the GE Money Bank in Europe—to generate $25 billi i b YE’09

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$25 billion in revenue by YE’09

Each division integrates sustainable product & production

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20Copyright © 2009 Doblin Inc ABPMP • On Innovation Processes • Keeley • June 2009 •

GE commits $6B towards sustainable healthcare by 2015

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Consumer health media

So how do we act effectively amid uncertainty?

Look backwards to discern facts, conditions & trendsKey fields: business analysis; trend tracking; innovation diagnostics

Look sideways to find out what else is going onLook sideways to find out what else is going onKey fields: benchmarking; pre-cursor analysis; pattern recognition

Look at people to understand their behaviors and needsKey fields: behavior modeling; ethnography; behavioral economics

Look ahead to predict future possibilities and situations Key fields: demography; simulation; scenarios; genetic algorithms

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21Copyright © 2009 Doblin Inc ABPMP • On Innovation Processes • Keeley • June 2009 •

A short summary… the basics that matter for innovation

Know the fundamentals1Get beyond productsUse many types of innovationDiagnostics help here

Have an innovation goal2

Build fewer, bolder concepts3

Make customer discoveries Identify changing themesBuild an innovation intent

Use clear protocols Have teams author platformsBusiness development toolkits

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4 Implement clearly & swiftly

You should now expect innovation hit rates between 35 and 70%

Prototypes not spreadsheets Focus on hardest challengesBusiness concept illustrations

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Innovation effectiveness

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