Innovation is ppyrobably different than you think… · Ten types of innovation: move beyond products to win 6. Product system extended system that surrounds an offering 5. Product
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Rethinking what innovation is…[ ]
Structural drivers behind the growth in “innovation”
A new discipline of innovation is emerging today because:• Companies need new discoveries and strategies to drive organic growth• Innovation successes are now noticed and even expected by analysts• Industries and enterprises must grapple with an increased rate of change• Operational excellence is no longer differentiating enough• Methods and tools are emerging that vastly improve innovation success rates• Design, from cell phones to hotels, is now an imperative for competitiveness• Innovation has evolved beyond technology planning to embrace a broad
array of strategy, market opportunity and operational questions• It adds new options to consider along with where to play and how to win
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It adds new options to consider along with where to play and how to win…
“It is not the strongest of thespecies that survive, nor the mostintelligent, but the ones mostresponsive to change ” Except in responsive to change.Charles Darwin
pKansas…
“If you are not moving at the speed of the marketplace you’re already dead—you
just haven’t stopped breathing yet.”Jack Welch
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Don't know our customers well enough. Worse yet, many here think we do. • We're too inwardly focused.We look at EVERYTHING through our company lens, all the time. • Keep trying to fix the problems of thepast instead of looking for future opportunities. • We always look in the same places for innovation ideas.• No implementation/ execution. Good ideas go to a shelf. • Our problems are in generating sales of ourexisting products, not making new products. We’re good at that. • We never talk to each other aboutinnovation. • People are afraid to try anything innovative. Failure is punished severely, so just don't stickyour neck out. • Our systems/ structures inhibit/ punish people for trying to innovate. • Our seniorleaders are not fully committed. • Our culture is anti-innovation, pro-incrementalism. • We don't have theright mindset/ culture for innovation. • Pressured to exceed quarterly expectations or Short termincentives = incremental innovation. • Innovation seen only as new products. • We have too manyproblems fighting off our competitors me to products • We're stuck right where we were 5 years ago Iproblems fighting off our competitors me-to products. • We re stuck right where we were 5 years ago. Idon't know what the obstacle is! • No burning platform to innovate. • If it ain't really, really broken . . . •We fear cannibalization. • We can't bring big ideas from 50,000 feet to the ground. • Lack the ability toturn a bright idea into reality. • The ideas we have just aren't big enough to significantly impact our topline • We don't have the guts to take a risk. • Too many internal factions among our business leaders. •Other business units don’t want to play nice together. • We can't even see across the organization. Wedon't share information or ideas. We may have 5 groups working on similar initiatives. • Our departmentdoesn't have the right skill-sets for innovation. • We're all too busy. Nobody has time. • R&D is the placeresponsible for innovation, not here. • We only have one person who is allowed to innovate (CEO or othersenior leader). • We think we know all the answers already. • We prioritize judgment over passion,predictability over validity. • Our Innovation management process strangles any powerful ideas through
Obstacles Abound—there are plenty of excuses not to innovate
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p y y g p g y p gthe hurdles. • We never invest in major innovation, except with our IT spend. • We have an engineeringculture. We focus on product performance and functionality alone. • We need proof of success beforewe'll invest anything. • We don't know how to prioritize ideas, or what to do with our huge database ofideas. • We don't know how to be creative/ generative, only analytical/evaluative. • We are soentrenched in our value chain – they dictate what we do. • We don't partner well with others. We fight withour partners on price. • Our channel resists change and innovation, so we're wasting our time. • Wehave to concentrate on our core market to garner any support & that business has too many legacyproblems to deal with. • We can't break away from competitors. We're fast followers. ‘Not invented here…’
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All companies need to innovate… – Innovation improves the appeal and value of your brand– Innovation protects your margins
Fundamentals: some basics
p y g– Innovation helps you stand out in a crowded marketplace– Innovation helps you attract and keep talent throughout the firm– Innovation can help change negotiations with tough customers– The topic is heating up—in firms, in schools and for governments
But most innovations fail!– A “normal” failure rate worldwide is 96%!
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A normal failure rate worldwide is 96%!– Most firms generate too many ideas and don’t execute well
This is evidence of bad assumptions compounded by bad methods
Tonik is a health plan aimed at 19-29 year olds, a population that is hard pressed to see the need for, let alone shop for health insurance. Tonik is Blue Cross of California’s f t t lli h lth l ith thfastest selling health plan with more than 50% of sales going direct, bypassing the agent channel.The plan provides first dollar coverage for doctor’s visits, eye exams and dental work, features young
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people care about.
Tonik: the business concept, as implemented
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GE under Immelt has attached innovation to global variable pay– 130 projects that are getting direct CEO-level attention– Designed to move its organic growth rate from 5% to 8%g g g– Blockbuster projects that will take GE into a new lines of business,
geographic areas or customer bases. – Each IB needs to give GE incremental growth of at least $100
million in 3 to 5 years – CEO Jeff Immelt has agreed to invest $5 billion in 130 IB’s—from
microjet engines to the GE Money Bank in Europe—to generate $25 billi i b YE’09
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$25 billion in revenue by YE’09
Each division integrates sustainable product & production
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GE commits $6B towards sustainable healthcare by 2015
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Consumer health media
So how do we act effectively amid uncertainty?
Look backwards to discern facts, conditions & trendsKey fields: business analysis; trend tracking; innovation diagnostics
Look sideways to find out what else is going onLook sideways to find out what else is going onKey fields: benchmarking; pre-cursor analysis; pattern recognition
Look at people to understand their behaviors and needsKey fields: behavior modeling; ethnography; behavioral economics
Look ahead to predict future possibilities and situations Key fields: demography; simulation; scenarios; genetic algorithms
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