Innovation Definition & Criteria

Innovation Definition and CriteriaObjectives

Recognize the importance and purpose of having an innovation definition

Understand the elements of an innovation definition

Innovation is the key element in providing differentiation, top-line growth and for increasing (bottom-line) results. Organizations cannot grow through cost reduction and reengineering alone.*

Why do companies want to innovate?

* Adapted from Making Innovation Work, Davila, Epstein and Shelton

Recall: 10 Types of Innovation

Innovation radar: 12 dimensions of business innovation

Innovation can take place on any dimension of the business system.

One must choose what we are going to focus our innovation efforts in order to resource them appropriately and extract value from them.

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Initializing Your Innovation Effort

We need to define how the organization is going to play the innovation game so we know if we are winning or losing.

We must define how we will categorize and define innovation in our organization.

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Whirlpool’s Strategy

“What truly distinguishes Whirlpool Corporation is our commitment to building strong brands and a loyal consumer base. Around the globe, our customers trust Whirlpool to make their lives easier. Everything we do contributes to building unmatched levels of loyalty to our brands through lifelong relationships with our customers.”Jeff Fettig, Chairman and CEO

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Shareholder Value Creation Targets

Growth

► Geographic expansion► Innovative product line extension► Adjacent revenue streams

Margin Expansion

► Leading brands & innovation► Extend cost leadership► Extend quality leadership

Cash Generation

► Disciplined capital investment► Increased asset turnover

+5 – 7% Revenue Growth

4 – 5% FCF % to Sales

8% Operating Margin

+10 – 15% EPS Growth

Whirlpool’s Roadmap for Value Creation

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Whirlpool’s Innovation Definition

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Measuring Differentiated Value

Other Innovation Definitions

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Innovation is the creation of new value for our consumers, our customers and for our enterprise

• A pharmaceutical company: – A unique product or service that improves a patient’s life .– Furthers the business strategy.– Creates a positive and sustainable ROI.

• A department of a state government: – Substantially improves efficiency in existing processes and procedures.– Creates significant savings in either employee time or budgetary cost.– Improves or enhances the value of current services within budgetary

constraints.– Create new services of material value to citizens without increasing the total

bottom line of the state/agency budget.

• A services company:– Provides services that are unique, risk-aware and reliable.– Helps creates new markets or extends reach from the core.– Increases efficiency of operations by cutting costs without impacting

headcount.

Other Innovation Definitions

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• Customer needsSatisfies important unmet (even unarticulated and/or unknown) customer needs

• TrendsBuilds on current and emerging customer, industry, technology, societal, and governmental trends

• Competencies and AssetsLeverages our core competencies and assets

• Opportunity SizeIt has a level of magnitude in revenue and/or profits that creates relevance for our business

• FeasibilityCan conceivably be done whether we have, build, buy, or partner with the ability needed

(See complete list of i-filters on handout)

Innovation Intent

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Class DynamicYou have 30 minutes to identify:

• How the definition links with the corporations’ strategy.• What dimensions of innovation can fit in the definition.• What is the primary type of innovation the definition

focuses on.

Class DynamicYou have 30 minutes to identify:

• How the definition links with the corporations’ strategy.• What dimensions of innovation can fit in the definition.• What is the primary type of innovation the definition

focuses on.

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Debrief and Discussion

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Conclusions

• Innovation must be linked to your corporation’s strategy.

•An articulated innovation definition that links with the strategy is essential to create alignment of people and resources.

•An embedded innovation definition is a scaling mechanism.

Vanity Fair

http://www.vfc.com/about/our-strategySomething “new” that creates value

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http://phx.corporate-ir.net/phoenix.zhtml?c=80574&p=irol-IRHome

Applying creativity to get a practical output which is novel.

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New products, services or solutions that satisfy an unmet or unarticulated consumer need and do so in a different and better way than what’s

currently in the marketplace. The opportunity leverages (and sometimes stretches) Hallmark’s core capabilities and possesses a sustainable

economic model.

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