Keynote Management Circle Munich Nov 2014

Innovation Circle 2014 © Copyright Insitum 2014

INNOVATION IN LATIN AMERICAPrinciples to succeed innovating for a

“survival” environment

LUIS ARNAL, Founder / President INSITUM

@luisarnal

Notes here are intended to give more context to the slides on slideshare


ACERCA DE INSITUM

CHICAGO

SÃO PAULO

BUENOS AIRES

BOGOTA

MÉXICO CITY

LIMA

A little bit about INSITUM


1. Survival vs. Creative

2. Innovation culture framework

3. Six considerations when innovating in LatinAmerica

4. The Law of the Skillful Design Thinker


Who has played ?

I will use Minecraft as an analogy for how Innovation is played. In Minecraft there are basically 2 modes of playing: Survivaland Creative mode. Emerging countries do Innovation in survival mode, while in developed countries you do Innovation in creative mode.

Innovation Circle 2014 © Copyright Insitum 2014In creative mode you can do everything!


MinecraftCREATIVE*

• No big dangers (zombies, creepers)

• You control the weather, time

• Unlimited resources available

• No ‘crafting’ tools—they are ready to use

• Unlimited lives

• You can fly

= experimentation, testing, learning

* Source: Alfonso Arnal (my 8 year old son)

Innovation Circle 2014 © Copyright Insitum 2014In Survival mode, most of your time you have to mine, craft and… survive.


MinecraftSURVIVAL*

• Start with bare hands, you have to ‘mine’ all

resources and ‘craft’ everything

• Evil creatures want a piece of you (zombies,

creepers, spiders, skeletons)

• Lack weather / time control (dangerous nights)

• No flying, tread carefully

• You die or get killed means you have to restart

the game

= resilience, careful, focus on short-term gains

* Source: Alfonso Arnal (my 8 year old son)


Latin America innovation = Minecraft ‘Survival’


Arrogance

Common sense

not common

Lack of knowledgeShortsightedness

(time and geography)

Market pressure

Focus on incremental

improvements

Inadequate

metrics

Inadequate

process

Not used to

cooperation

Mistakes are punished

(fear)

“Not invented here”

syndrome

Latin America innovation = Minecraft ‘Survival’

Success = certainty

Slow learning

Latam is full of innovation dangers. These dangers make your life more challenging.


How to create an innovation culture in

Latin American organizations?

I have developed a framework to help organizations understand where they can focus their innovation efforts.


Strategy

INNOVATION

CULTURE

• Vision, intent, plan to focus

• Understand competitive

advantages

• Have investments, metrics and

incentives in place


Structure

Strategy

INNOVATION

CULTURE

• Corporate governance and system

• Create the right alliances

• Responsabilities well defined


Tools

Structure

Strategy

INNOVATION

CULTURE

• Methodologies, techniques,

frameworks

• Knowledge management

systems

• Collaboration catalyzers (i.e.

space, infrastructure)


Competencies

Tools

Structure

Strategy

INNOVATION

CULTURE

• Develop capabilities in people

• Hire the right profiles

• Develop the right culture and values (in org

and partners)


Structure

Strategy

Competences

Herramientas

• Innovation responsibility was turned to

Marketing (not CEO or R&D)

• Formal structure with independent

Budget

• Needs-based user Segmentation

• Innovation projects focused on

most important / strategic brands

• Segmentation model

• Formal process (adapted stage-gate)

• Balance between in-house and external

collaboration

• Trained top management and formal training

to all organization on “design Thinking” skills

HERDEZ


140 new products launched

INSITUM first engagement


Guacamole

sauce


HOW?6 principles to design by in a survival

environment


A HETEROGENEOUS MARKET

(Economic, Social, Political, Cultural

differences)


HOME WORK

Washing machines, mobile phones are used as income-generating devices as well as for personal use.


DIY

Some products are designed for DIY or personal use, but at the end they are adaptedfor business purposes.

Innovation Circle 2014 © Copyright Insitum 2014Kidzania is a good example of an entertainment product adapted to the realities of emerging economies. It would have been hard to justify such a blatant brand exposure to your kids in developed markets. Otherwise Disney would have done it better!


QUALITY THRESHOLD IS LOW

(excessively low for German standards)


Many examples of sub-optimal products being more successful that the top of the line products in latin America. Some consumers are blind to the quality standards that developed markets have—simply because they have not been exposed to the highest quality products yet! Always (P&G) case in HBR is a good example.


BOMBRILYPA JABON

Genomma lab

Although I don’t personally endorse Genomma Lab (because they have destroyed a lot of value in OTC market), they are a good example of a sub-optimal quality product that has used very compelling communications and low prices to attract users.


Low quality is seen everyday. This is not photoshop but a real bridge in Mexico city. Clearly people prefer to “Make it work before you make it better”. Function comes first, form… never


BUT VALUE / BENEFIT IS HIGH

(make the savings visible)


If people buy audio equipment and TV’s as separate devices…

Innovation Circle 2014 © Copyright Insitum 2014Why not integrating both into a single product? (this is a real example of an INSITUM Project)


Anti humidity cement provides a visible benefit. 2 products in one!


MONEY IS SCARCE, BUT TIME IS PLENTY

(No holistic view for the efficient use of resources,

effort, benefit & time)


money

time

EuropeWhile in Europe people have little time and lots of money…


money

time

Germany Latam

money

Time, effort

In Latam people have lots of time and little money.


DIY

Another example of DIY not working in Latam. People always know someone else who can do the work for them!

Innovation Circle 2014 © Copyright Insitum 2014People dont mind spending a 2 hour line for a 5% discount.


SUCCESSFUL INNOVATION

COMES FROM

UNDERSTANDING PEOPLE

AND CONTEXT

(‘importing’ without adapting

is risky)


If you want to understand how a

lion hunts, don’t go to the zoo.

Go to the jungle savannah.”

Based on an erroneous quote by Kevin Roberts (CEO Saatchi).

Lions don’t live in jungles

Innovation Circle 2014 © Copyright Insitum 2014Success does not mean doing the same as what Works in other markets. Clip is a Copy of Square!

Innovation Circle 2014 © Copyright Insitum 2014Virtualmarketmx.com is a better solution because it is designed considering themom+pop channel so prevalent in latam (100k+ POS in Mexico alone!)



IMPROVISATION HAPPENS

(lack of planning is compensated

with creative improvisation =

Lean Startup)

Innovation Circle 2014 © Copyright Insitum 2014Beleza Natural is a good example of a very successful business that started as animprovised business. Good to start but not good to ensure sustainability




ALLOW PEOPLE TO MAKE

MONEY WITH IT

(benefit the ecosystem)

Innovation Circle 2014 © Copyright Insitum 2014For an Innovation to take traction, you have to benefit economically lots of people. This is why multi-level direct sales strategies have worked so well in the región. From BonIce Street vendors (quala)


in favelas?

To established companies, such as Loreal investing in direct sales. Google Loreal+favelas Brasil for thestory


Even Natura is pushing this model further than anybody. Allowing their salesforce to establish their own online presence.



“An organization (or person) ability to develop

great innovations depends on their self-esteem

[courage to take risks] and their expertise [how much they

know and practice] ”

law of the resilient design thinker


“I am completely sure I know

what I am talking about”“I found this… i think”

Instinct-drivenFear-driven

Courage / self esteem

+-


Attends this conferenceIs not aware of what he

does not know

Quality / expertise+-

“insight? I am just

passing by”

“after 3 months in the field and using a

variety of research methods I am extracting

its meaning, interpreting, categorizing, seeing

patterns, creating frameworks that are

truthful, non-obvious, relevant and with a

direct implication to our business”


Self Esteem

Experience


Self Esteem

Experience


loser

Lchicken

“jackass”

Self Esteem

Experience

conqueror

Innovation Circle 2014 © Copyright Insitum 2014At the end of the day, a good innovator needs to combine skills from Porter (strategic thinking, long term, systems thinking, sustainability)

Innovation Circle 2014 © Copyright Insitum 2014With those from Leonardo Da Vinci (visual thinking, ideation, imagination, divergent thinking)

Innovation Circle 2014 © Copyright Insitum 2014And those from Sherlock Holmes (observation, empathy, connecting dots, analysis, imagination to recreate a scenario, evidencing)

Innovation Circle 2014 © Copyright Insitum 2014And those from Wile E Coyote (prototyping, fearless, patient, calculated risk, tireless, no fear, stubborn)


¡Gracias!

Danke!

[email protected]

@luisarnal

Business

Keynote Management Circle Munich Nov 2014