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Carter, Kelly & MadhuMBA from University of Toronto, Canada
EMBA from University of St. Gallen, Switzerland
TorontoBuenos AiresSao PauloRio de JaneiroShanghaiHong KongMacauGenevaSt Gallen (Zurich)BudapestViennaChennaiJaipurAgraNew DelhiMumbaiIstanbulDubaiVancouver!
APPLIED INNOVATION
INNOVATE OR DIE
George E. P. Box one of the great statistical minds of the 20th century
“Essentially, all models are wrong, but some are useful.”
APPLIED INNOVATION
Applied Research
Phase I
Entrepreneurship Curriculum
Disruptive Innovation
+
Phase II
Early Adopters
Paid Pilot
Disruptive Innovation
+
Phase III
Scale
Paid Pilot
+
Commercialization
a b
d f
g i
c
e
h
c
e
need solution
THOUGHT PROCESS
h
PROUST “THE REAL ACT OF DISCOVERY CONSISTS NOT IN FINDING NEW
LANDS, BUT IN SEEING WITH NEW EYES
✤ We focus on bias - and the decision making process.✤ We explore new ideas and other perspectives.✤ We use foresight to contemplate and discuss possible futures.
”
✤ We leverage this to create new realities
BIAS
Image: http://www.sgha.net
BIAS VS FACTS
• We hold a number of Cognitive Biases (+170)
• This Limits our Ability as Managers to make good decisions
• Cause of Decision Paralysis and Doomed Projects
• So what is the solution...
BIAS FRAMEWORK
UNDERSTANDTHINK
REFLECT
FRINGE
3RULES
IS IT CRAZY?
CAN YOU FEEL IT?“NOT EVERYTHING THAT CAN BE COUNTED COUNTS, AND NOT EVERYTHING THAT COUNTS CAN BE COUNTED.”
IS IT CRAZY ENOUGH?“IF AT FIRST THE IDEA IS NOT ABSURD, THEN THERE IS NO HOPE FOR IT.”
What is the Context?
Why?
QUESTION
WHAT IS THIS ?
AND THIS ?
AND THIS ?
Image: le monde “Atlas der Globalisierung”
Export
Import
WEAPONS TRADE
HUMAN TRAFFICKING
DRUGS
Image: le monde “Atlas der Globalisierung”
You
Other FamiliesOther Tribes
Other Communities Friends of Friends Friends of Family Other People
TYPICAL APPROACH
Frien
ds Family
Industry
Alternate Services
Inputs & Producers
Other Users of Inputs
New Entrants Related Services Other Buyer Demands
DISCOVERING THE FRINGE
Supp
liers
Consumers
DIVERGE
Create Choices
CONVERGE
Make Choices
CONVERGENCE
DIVERGENCE
Industry
Alternate Services
Inputs & Producers
Other Users of Inputs New Entrants Related Services Other Buyer Demands
DISCOVERING THE FRINGE
Supp
liers
Consumers
Cheese
Gro
cery
Sto
re Connoisseur
Cheese Shop Restaurant
Cake BakerRefrigerators
Aircraft Manufacturing Energy Companies
DIVERGE
Create Choices
CONVERGE
Make Choices
CONVERGENCE
DIVERGENCE
SCENARIO PLANNING
“SCIENCE JUST PREDICTS DISASTER, SINCE IT’S BOUND TO COME TRUE
SOONER OR LATER.”
AnecdoteMastlin’s advice to Kepler, Taleb
THE BLACK SWAN
SCENARIO PLANNING PROCESS
DRIVERS ASSUMPTIONS
SCENARIO 1
SCENARIO 2
SCENARIO 3
IMPLICATIONS
IMPLICATIONS
IMPLICATIONS
Hypothesis Fringe Indicators
Hypothesis Fringe Indicators
Hypothesis Fringe Indicators
+ -
+ -
+ -
P E S T LE
FRAMEWORK
Polit
ical
Econ
omic
al
Soci
al
Tech
nolo
gica
l
Envi
ronm
enta
l
Lega
l
Source: Emma Coats, http://www.slideshare.net/powerfulpoint/pixar-22rulestophenomenalstorytellingpowerfulpointslideshare
STORY TELLING
APPLIED INNOVATION
Applied Research
Phase I
Entrepreneurship Curriculum
Disruptive Innovation
+
Phase II
Early Adopters
Paid Pilot
Disruptive Innovation
+
Phase III
Scale
Paid Pilot
+
Commercialization
– Ben Horowitz
“By definition they are not obvious. In fact, they seem insane. If they didn’t seem insane at the time,
they wouldn’t be breakthroughs”
Source: http://ilovefaygoslushies.deviantart.com/art/Insane-Base-415796210
“ASK YOURSELF THREE QUESTIONS.”
1. WHAT KIND OF INNOVATION DO I WANT?2. HOW MUCH INNOVATION DO I WANT?3. WHEN DO I WANT IT?
Projected cash stream from investing in Innovation & Marketing
More likely cash stream resulting from doing nothing
DCF and NPV methodologies implicitly make this comparison
Companies should be making this comparison
Assumed cash stream resulting from doing nothing
B
A
C
PETER DRUCKER, “BECAUSE THE PURPOSE OF BUSINESS IS TO CREATE A CUSTOMER, THE
BUSINESS ENTERPRISE HAS TWO – AND ONLY TWO – BASIC FUNCTIONS: MARKETING AND INNOVATION. MARKETING AND INNOVATION
PRODUCE RESULTS; ALL THE REST ARE COSTS. ”
The Unexpected SuccessFailureOutside Event (Eureka Moment !)
Incongruity in Reality Asymmetry in Experience
Innovation on Process Need
Bridging a Gap
Change in Market Structure
Demographics
Changes in Perception Society Bites Back
New Knowledge
Drucker 7-Sources Christensen Disruption
Problem is Undefined
New Market (blue ocean)
Innovation is a dramatic
game changer
Customer doesn’t know
Market is Unpredictable
Traditional Models Fail
Talk to Early Adopter
Customer Development
The Domain of the Outsider (Fringe)
What:
1) Simpler, Cheaper, & Good Enough
2) Micro-Market Underserved & Uncontested
How:
1) Job-to-be-Done 2) Combinatory 3) Adjacencies 4) Trade-offs
TOGETHER BE OPEN AND LISTEN
Breakthrough DisruptionOptimization Sustaining
Horizon 1 Horizon 2 Horizon 3
TOGETHER BE OPEN AND LISTEN
Breakthrough DisruptionOptimization Sustaining
Saving $ Defend your Core
Spending $ Build Momentum
Networks & Fans Create Options for futures
TOGETHER BE OPEN AND LISTEN
Breakthrough DisruptionOptimization Sustaining
Efficiency Sustaining Empowering
TOGETHER BE OPEN AND LISTEN
Breakthrough DisruptionOptimization Sustaining
TOGETHER BE OPEN AND LISTEN
Breakthrough DisruptionOptimization Sustaining
TOGETHER BE OPEN AND LISTEN
Breakthrough DisruptionOptimization Sustaining
Soon to be Non-‐Customers
Customers Refusing Non-‐Customers
Unexplored Non-‐Customers
TOGETHER BE OPEN AND LISTEN
Breakthrough DisruptionOptimization Sustaining
TOGETHER BE OPEN AND LISTEN
Breakthrough DisruptionOptimization Sustaining
Soon to be Non-‐Customers
Customers Refusing Non-‐Customers
Unexplored Non-‐Customers
TOGETHER BE OPEN AND LISTEN
Breakthrough DisruptionOptimization Sustaining
Soon to be Non-‐Customers
Customers Refusing Non-‐Customers
Unexplored Non-‐Customers
Efficiency Sustaining Empowering
TOGETHER BE OPEN AND LISTEN
Breakthrough DisruptionOptimization Sustaining
Soon to be Non-‐Customers
Customers Refusing Non-‐Customers
Unexplored Non-‐Customers
Saving $ Spending $ Networks & Fans
TOGETHER BE OPEN AND LISTEN
Breakthrough DisruptionOptimization Sustaining
Soon to be Non-‐Customers
Customers Refusing Non-‐Customers
Unexplored Non-‐Customers
TOGETHER BE OPEN AND LISTEN
Breakthrough DisruptionOptimization Sustaining
TOGETHER BE OPEN AND LISTEN
Breakthrough DisruptionOptimization Sustaining
Soon to be Non-‐Customers
Customers Refusing Non-‐Customers
Unexplored Non-‐Customers
TOGETHER BE OPEN AND LISTEN
Breakthrough DisruptionOptimization Sustaining
Soon to be Non-‐Customers
Refusing Non-‐Customers
Unexplored Non-‐Customers
Finite
Infinite
TOGETHER BE OPEN AND LISTEN
Breakthrough DisruptionOptimization Sustaining
Soon to be Non-‐Customers
Refusing Non-‐Customers
Unexplored Non-‐Customers
Finite Infinite
Efficiency Sustaining Empowering
TOGETHER BE OPEN AND LISTEN
Breakthrough DisruptionOptimization Sustaining
Soon to be Non-‐Customers
Refusing Non-‐Customers
Unexplored Non-‐Customers
Finite Infinite
- $ $ + $$$
TOGETHER BE OPEN AND LISTEN
Breakthrough DisruptionOptimization Sustaining
Soon to be Non-‐Customers
Refusing Non-‐Customers
Unexplored Non-‐Customers
FiniteShort-term
InfiniteLong-term
TOGETHER BE OPEN AND LISTEN
Breakthrough DisruptionOptimization Sustaining
Soon to be Non-‐Customers
Refusing Non-‐Customers
Unexplored Non-‐Customers
Comfortable
Uncomfortable
TOGETHER BE OPEN AND LISTEN
Breakthrough DisruptionOptimization Sustaining
High individual project probability in short term Low aggregate sustaining probability in long term (virtually all industries disrupted at some point of time)Line of business oriented
Low individual probability (virtually infinite number of plausible disruptive scenarios) High aggregate probability of disrupting industry (virtual certainty disruption will come from below/fringe) Core competency + bottom up / fringe application
TOGETHER BE OPEN AND LISTEN
Breakthrough DisruptionOptimization Sustaining
TOGETHER BE OPEN AND LISTEN
Breakthrough DisruptionOptimization Sustaining
Saving $ Spending $ Networks & Fans
TOGETHER BE OPEN AND LISTEN
Breakthrough DisruptionOptimization Sustaining
Order Chaos
More Options & Possibilities
More Insights & Patterns
TOGETHER BE OPEN AND LISTEN
Breakthrough DisruptionOptimization Sustaining
Order Chaos
TOGETHER BE OPEN AND LISTEN
Breakthrough DisruptionOptimization Sustaining
Conceptual KnowledgeUnderstanding &
Organization
Source: Knowledge System (Artistry Unleashed - Hilary Austen)
Order Chaos
Directional KnowledgeIdentity & Motivation
Experiential KnowledgeSkills & Awareness
– Albert Einstein
“I rarely think in words at all. A thought comes and I may try to explain it in words afterwards.”
TOGETHER BE OPEN AND LISTEN
Breakthrough DisruptionOptimization Sustaining
TOGETHER BE OPEN AND LISTEN
Breakthrough DisruptionOptimization Sustaining
Directional KnowledgeIdentity & Motivation
Conceptual KnowledgeUnderstanding &
Organization
Experiential KnowledgeSkills & Awareness
Source: Knowledge System (Artistry Unleashed - Hilary Austen)
Mastery: Applying Developed Knowledge
Recognition, Effectiveness, Expertise, Purpose, Focus
Guides
Guides
Informs
Informs
Originality: Generating New Knowledge
Perception, Creativity, Innovation, Flexibility, Openness
Directional KnowledgeIdentity & Motivation
Conceptual KnowledgeUnderstanding &
Organization
Experiential KnowledgeSkills & Awareness
Source: Knowledge System (Artistry Unleashed - Hilary Austen)
Mastery: Applying Developed Knowledge
Recognition, Effectiveness, Expertise, Purpose, Focus
Guides
Guides
Informs
Informs
Originality: Generating New Knowledge
Perception, Creativity, Innovation, Flexibility, Openness
THE LEARNING & INNOVATION LOOP
BUT
WHO WILL IMPLEMENT IT?
WE HAVE ALREADY MOVED FROM MANAGEMENT TO LEADERSHIP – AND
NOW WE’RE GOING BEYOND LEADERSHIP TO INSPIRATION…
TO SENSE
OPPORTUNITIES AS THEY ARISE IN TODAY’S FAST PACED ENVIRONMENT
LEADERS MUST HELP PEOPLE ACCESS THEIR SOURCES OF INSPIRATION, INTUITION AND IMAGINATION…
“SO ASK YOURSELF THREE QUESTIONS.” (AGAIN)
1. WHAT KIND OF INNOVATION DO I WANT?
2. HOW MUCH INNOVATION DO I WANT?
3. WHEN DO I WANT IT?
=Innovation Evolution==
Innovation
Leadership
Change Management
Change Management
Before After
SEA SQUIRT
https://goodheartextremescience.wordpress.com/2010/01/27/meet-the-creature-that-eats-its-own-brain/
“INNOVATE OR DIE”
@carterhurlburt @margomartins15 @madhuvenkatesan
AppendixInnovation concepts as a story
Forget about looking for good ideas, find good people.
Don’t love your idea until the world loves it, too.
Test your hypothesis and key assumptions, when you get a better question, test that.
If you can’t tell it as a story, it probably won’t work.
When you Converge, subtract… change the system logic
What is your competitive advantage? What happens when that goes away or market logic changes?
Know where you want to end up...not how to get there (or even the exact destination...but get close)
Test something, launch something and Practice, Practice, Practice.
Remember buff-naked Einstein...the absurd - even remotely plausible - may hold the best path forward.
Know your bias.
Write/Draw things on paper. We learn by writing.
Go for the fringe...mainstream doesn’t have the best “stuff ”...surprise is your friend !
Don’t be lame. Push boundaries, think strategically, think opposite of your natural disposition.
Have conviction in your strategy...break it down into the most basic fundamentals.
Context.
Solve the big, “game changing”, industry wrecking problems...brand yourself as the protagonist.
Keep trying...don’t be afraid to shelve a great idea for something that is possible now v. probable then.
Test, test, test...solve up to the next bottleneck...don’t “refine” the plan to avoid them.
The fringe will knock you off balance...the likelihood you will be able to capitalize on another fringe event is small.
What don’t you like...fix it...but keep most if not all of the same pieces. Justify - plausibly - anything you remove.
Don’t hunt for “the-next-big-thing”, find something that makes you want to take action.
Can you test the basic assumptions at little to no cost?