Book summary of 8 steps to innovation—going from jugaad to excellence

8 steps to innovation—going from Jugaad to Excellence by Vinay Dabholkar & Rishikesh T Krishnan

Short summary for class discussion ByProf.S.Suryanarayanan

8 steps to innovation-going from jugaad to excellence byVinay Dabholkar and Rishikesha T Krishnan

ANYONE CAN INNOVATE provided conditions are right

D Udaykumar, an Architect designed the symbol for rupee. Thiagarajan Ramaswamy, an engineering student, designed now

popular commercial wet grinder different from hand driven rational grinder.

Nagaraja, a diploma holder in BEL came up with idea of replacing gold headed transistors to nickel headed transistors saving Rs 18 crores in 2008.

What is innovation Innovation happens when an idea is implemented to create an impact.

Impact can be profit or social good. Innovation begins with curiosity, not necessarily creativity Innovation is iterative process, not linear. Innovation is not just risk taking, but assessing and mitigating risks.

Process innovation—Arvind Eye Hospital Product innovation--- hybrid car Customer experience– Cafe Coffee Day Business model innovation—IPL, Narayana Hrudalay

Most organisations incorporate multiple dimensions of innovations.

Idea management Innovation is basically about managing the idea funnel

effectively. Idea funnel:

Building and sustaining idea funnel—suggestion box, quality circles

Improving idea velocity– more ideas and experiments Improving the batting average– singles or sixers

Challenges to idea management Overcoming resistance to change Overcoming prediction disability

Challenge to idea management is analogous to elephant and rider conflict

Elephant—emotions, traditions, inertia( resistance to change) Rider---logic and rationality (prediction disability—fails to correct the

incorrect instinctive verdict of the elephant). Companies use different methods to direct the rider, motivate the

elephant and shape the path to overcome elephant-rider conflict.

PART ONEBUILD AN IDEA PIPELINESTEP 1LAY THE FOUNDATION

Innovation programmes, Imagination breakthroughs,Examples: M&M, 3M, Toyota, Galaxy(surfactant)Key processes of Innovation programme:1.Idea Management ( who submits, who selects, who funds)2. Buzz creation ( campaigns, rewards, innovation day)3. Training and development( prototyping, TRIZ, idea communication, leadership development)

Idea Management System. Six levers are;1.Source: where idea comes from ( employee, customer, supplier,..)2. Scope: ( What is the scope-Improvements ,process or product, customer experience, business models etc.)3. Stages: number of stages before implementation.4. Technology: presentation of ideas-suggestion box, website, and so on.5. Selection: selection process-committee, voting, and such methods.6. Sponsorship: Allocation of resources, physical, financial, human.

BUZZ CREATION “ Power of ideas” campaign launched by Economic Times in 2009:

“ Of all the things you can lose your heart to, an idea is the most obstinate. It will set your heart aflutter with whispers of success and riches. It will share your bed, your shower, your desk. It will sit next to you at dinner. Some learn to ignore it. Some learn to love it. People call them entrepreneurs.”

START UP.

Turn around of Indian Railways in 2008: Constraints: Passenger fares can not be raised; political

decision. Freight fares can not be raised since competition from road transport intense.

Innovative approach:1. Modify freight rates to target high value

commodities.2. Carry more freight per train3. Increase the number of trains by reducing their

turnaround time.o Buzz creation by slogan “ Heavier, faster and longer” .

BUILD AN IDEA PIPELINESTEP 2 CREATE A CHALLENGE BOOK

Curiosity and problem consciousness Challenge book—identifies organizations’ problems,

future desires and needs. Three important sources of identifying problems:

1. Feel the pain2. Sense the wave3. See the waste

CHALLENGE BOOK

BUILD AN IDEA PIPELINESTEP 3BUILD PARTICIPATION

Four elements of building participation:1. Role Model—people who inspire2. Community of practice— groups of people

informally bound togather by a shared expertise and passion

3. Innovation catalysts– encourage idea givers, offer constructive inputs

4. Rewards and recognitions

PART TWOIMPROVE IDEA VELOCITY

1. How do we improve the speed at which ideas move forward?

2. Is it possible to organise ourselves better so that idea velocity can improve?

3. Are there any competencies that can be built to facilitate this process?

IMPROVE IDEA VELOCITYSTEP 4EXPERIMENT WITH LOW COST AT HIGH SPEED

Fail early, fail often, fail inexpensively Four types of assumptions in conducting

experiments of an idea:1. Need-what customers need2. Technical—how we can put together what we

have3. Production—prototype to field ‘ scaling up4. Commercial—how we can make profit

o The real outcome of experiment is LEARNING, more than experiment works or not. ( failure fallacy).

IMPROVE IDEA VELOCITYSTEP 5GO FAST FROM PROTOTYPING TO INCUBATION

1. Idea communication – story telling helps; good stories are concrete, curiosity flow, rich in emotion and have credibility)

2. Idea championing ( examples—George Fernandez, Einstein and Customer as champion and co creator) )

o Organisations help ideas move faster by effective innovation reviews and supporting incubation of new ideas.

o ( iPod, Adsense, Dandhi march)

STEP 6ITERATE ON THE BUSINESS MODEL

Who is our customer? What do we offer him? How do we reach him? How do we make money?

Examples: Shaadi.com / Bharat Matrimony

Who is my customer? Identify your customer. Example: Air Deccan;

different types—CEO’s wife, Sai Baba, Medical evacuation, exploratory survey.

What to offer? Product or service to solution Red bus– selling software to selling on line

tickets. IBM—product to solution; Airtel-IBM

How to reach the customer? Patent protection, partnership,

complementary assets.

How to make money from innovation? Ease of imitation and ease of finding

complementary assets decide your competitive position.

PART 3INCREASING THE BATTING AVERAGESTEP 7BUILD AN INNOVATION SANDBOX 1. Innovation process is like a sand box; there

are constraints or boundaries within which experimentation tales place.

Example of sandbox through AurolabSandbox element Aurolab element

Fixed walls Constraints such as low cost, IOL,quality and scalability

Sand Environment for experimentation like making no frills IOLs ( without shape and colour) in the basement of a hospital.

Tools Equipment

Kids A cross functional team .

2. Affordable loss heuristic( or rule of thumb) To find out more about the potential of an

innovation, how much we can afford to lose today.

Biocon—oral insulin project—affordable loss heuristic—then commit the resources to the project.

3. Create a platform- platform is a configuration of technologies and interfaces that allows customisation to meet the needs of different user groups or construction of new applications.

Microsoft—Windows platform Biocon—Fermentation process; enzymes to

biopharmaceuticals. Reva—electric car; In future, Reva technology

may become a platform for Mahindra. Tata 407– tipper, pickup van, bus, trick etc. 4. Open innovation—open source platform like

linux.

INCREASING THE BATTING AVERAGESTEP 8CREATE A MARGIN OF SAFETY

Story of Air Deccan, low cost airline, great innovative idea; crash of IT system leading to business failure and sell off. How do we guard against failure?

How do we avoid the ‘ optimistic bias’ tendency to exaggerate future forecast. Steve jobs failed on Lisa project.

Three precautions: Creating alert:1. Refer baseline rate– a kind of gestation period (

IT system in airline industry will take years to be mature for use)

2. Look at historical events.3. Premortem –failure scenario ( not risk analysis )

Do last experiment first; identify ‘ leap of faith ‘ assumptions and then validate with experiment.

Idea Leap-of-faith assumption

Pringles chips to carry images to make eating them more fun (P&G)

We can print images/ text on pringle chips

Make a cinema with India mythological stories in cities and villages ( palke)

Indians in cities and villages will pay to watch the movie

Start a helicopter taxi service in bengaluru ( air Deccan)

There will be people who will pay rs 35000 per hour and hire helicopter service

Start an online portal for matchmaking ( shaadi.com)

People will pay for bio data submitted to this site.

Innovation protection mechanism:1. Liability insurance2. Innovation portfolio; multiple products3. Innovation engine; “ only the paranoid

survive” .

INNOVATION MANAGEMENT DASHBOARD

No

Parameter Lead indicaor Lag indicator

1 Pipeline Number of challenges in the challenge book

Number of ideas in the pipeline; number of ideas per person per year.

2 Idea velocity Average time to give relevant feedback on the idea of the author; number of experiments/protoypes, feasibility studies,invention disclosures,white papers in a year; average time for the first customer feedback; frequency of innovation review; avergae time to get support from a champion

Number of experiments in exploring new types of customers defining new offerings/products,exploring new partnerships and new pricing models,average time from formal approval to cash/saving/impact

contd…..

3 Batting average Number of innovation sandboxes, number of innovation platforms

Percentage of revenue from innovations in the last five years

4 Participation Number of people giving ideas/ comments/ votes, mentors/ catalysts/ champions

Number of active Communities of Practice (CoPs), role models, customers engaged

SUMMARY OF APPROACHES IN MANAGING INNOVATIONDirect the rider Motivate the

elephantShape the path

1. How to build and

sustain the Idea Pipeline

Build a challenge book ( U&I portal, HCL and Petition Box, Tihar Jail)

Create internal role models Ajay Bhat, Intel)

Roll out an idea management process ( Maruthi, P&G, GE )

Launch a campaign ( e.g: ‘ Heavier faster and longer’ , Indian Railways)

Rewards and recognition ( TATA group and Maruti motors)

Establish a regular innovation review programme ( GE,P&G)

Create innovation catalyst ( Cognizant, intuit)Create communities of practice ( Mind Tree, Tihar Jail)

Direct the rider Motivate the elephant

Shape the path

2. How to improve Idea velocity

Define low cost high speed experiments ( quick wins)

Showcase prototypes

Ensure effectiveness to the innovation reviews ( P&G, Google)

Publish a metric on idea velocity

Reward learning from failed experiments ( ‘ Dare to try’, TATA group )

Create a lab for experimentation ( Edison )

Find champions for selected ideas.

Get customer feedback ( Lego, Tata steel )

Assigned a dedicated team to the project ( Nano)

Direct the rider Motivate the elephant

Shape the path

3. How to improve

batting average

Give tough challenges ( Arvind Eye Hospital, Nano)

Senior management attention ( TATA motors, P&G)

Create an innovation sandbox.

Affordable loss heuristic ( Biocon)

Create a compelling vision ( ‘ Eradicate needless blindness’, Arvind )

Create a venture fund( Cognizant)

Surf big waves ( oral insulin, Biocon)Do the last experiment

Create an innovation platform, Premortem