Innovation 2

Innovation

What is innovation?

The 12 Different Ways for Companies to Innovate

Sawhney, Wolcott and Arroniz, The 12 Different Ways for Companies to Innovate, MIT Sloan Management Review, Spring 2006

Innovation

• Ford (2005) – “..will adopt innovation as its core business strategy going forward”

• Immelt (2004) – “The Innovation Imperative”

• Balmer (2005) – “Microsoft’s priority is Innovation”

Sawhney, Wolcott and Arroniz, The 12 Different Ways for Companies to Innovate, MIT Sloan Management Review, Spring 2006

What is Innovation?

• Starbucks - $4 for coffee

• HDTV

• NeXT Cube

Sawhney, Wolcott and Arroniz, The 12 Different Ways for Companies to Innovate, MIT Sloan Management Review, Spring 2006

Business Innovation

“The creation of substantial new value for customers and the firms by creatively changing one or more

dimensions of the business system”

Sawhney, Wolcott and Arroniz, The 12 Different Ways for Companies to Innovate, MIT Sloan Management Review, Spring 2006

The Innovation radar

Sawhney, Wolcott and Arroniz, The 12 Different Ways for Companies to Innovate, MIT Sloan Management Review, Spring 2006

OFFERINGS (WHAT)Platform

Solutions

CUSTOMERS (WHO)

Customer Experience

Value CapturePROCESSES (HOW)

Organization

Supply Chain

PRESENCE (WHERE)

Networking

Brand

Apple i-pod

• Offerings • Platform• Supply Chain• Presence• Networking• Value Capture• Customer Experience• Brand

Sawhney, Wolcott and Arroniz, The 12 Different Ways for Companies to Innovate, MIT Sloan Management Review, Spring 2006

Collaborative Innovation

Huston & Sakkab, Connect and Develop: Inside Procter & Gamble’s New Model for Innovation, HBR March 2006

P&G – Connect & Develop

The Process

• Where to play• How to network• When to engage• Push the culture• Adapt or die - Lafley

Huston & Sakkab, Connect and Develop: Inside Procter & Gamble’s New Model for Innovation, HBR March 2006

Where to Play?• Top 10 consumer needs

- “reduce wrinkles, improve skin texture and tone- “prevent the severity and duration of cold symptoms”

• Adjacencies- Oral care Crest expanded to include whitening strips, power toothbrushes and flosses

• Technology game boards- Which of our key technologies do we want to strengthen?- Which technologies do we want to acquire to compete better?- Which do we want to sell, license or co-develop?

Huston & Sakkab, Connect and Develop: Inside Procter & Gamble’s New Model for Innovation, HBR March 2006

How to Network?

• Proprietary Networks- 70 technology entrepreneurs out of 6 C&D hubs in China, India, Japan, Western Europe, Latin America and USA.- 10,000 products, product ideas and technologies

• Suppliers- Top 15 suppliers have an R&D staff of 50,000- Created a secure IT platform- Has led to a 30 % increase in joint innovation projects

Huston & Sakkab, Connect and Develop: Inside Procter & Gamble’s New Model for Innovation, HBR March 2006

How to Network?

• Open Networks- NineSigma (Tech briefs to 7L people, 100 proj completed)- InnoCentive (has 70k contract scientists – graduate student in Spain, a chemist in India)- YourEncore (800 high performing retired scientists – Boeing engineer with virtual aircraft design for virtual product prototyping)- Yet2.com (many Fortune 100 companies are investors – IP exchange -brokers technology into and out of companies, universities and government labs)

Huston & Sakkab, Connect and Develop: Inside Procter & Gamble’s New Model for Innovation, HBR March 2006

Reverse InnovationFrugal Innovation

Constraint Based Innovation

Immelt, Govindarajan & Timble, How GE is Disrupting Itself, HBR October 2009

GE’s changing outlook

• 10 years ago GE managers spoke of the global marketplace as “The US, Europe, Japan and the rest of the world”

• Now they talk about -“resource rich regions – Middle East, Brazil, Canada, Australia and Russia”; - “people rich regions – China and India”- “rest of the world – US, Europe and Japan”Immelt, Govindarajan & Timble, How GE is Disrupting Itself, HBR October 2009

Reverse InnovationFrugal Innovation

Constraint-based Innovation

• Tata Nano• CISCO - $ 1 billion second Global HO in Bangalore• Black & Decker is invisible in India and China• Polycentric innovation• Huawei has become the worlds 4th largest patent

applicant• Hand held ECG for $ 800 as against $ 2000 cost

of ECG $ 1 per patientThe Economist, The world turned upside down: A special report on Innovation in Emerging Markets, April 17-23, 2010

Reverse InnovationFrugal Innovation

Constraint-based Innovation

• Godrej & Boyce - $ 70 fridge that runs on batteries• Bharti Airtel – business model• Narayana Hrudayalaya – 1/10th the cost 7.7%

PAT as compared to 6.9% for average American hospital

• Jugaad• Guanxi• Shanzai

The Economist, The world turned upside down: A special report on Innovation in Emerging Markets, April 17-23, 2010

Reverse InnovationFrugal Innovation

Constraint-based Innovation

• Developed countries are ripe for embracing frugal innovation

• Debt fuelled spending and spiraling budgets• Changing demographic profiles demand greater

healthcare spends

The Economist, The world turned upside down: A special report on Innovation in Emerging Markets, April 17-23, 2010

How many of you have stayed in a hotel at least once?

Assignment