Innovation and Collaboration:
Focus on Payback
June 2, 2010
A few thoughts
What is Innovation and why collaborate?
The "cash traps" in innovation
Leadership principles for success
True innovation comes from collaboration
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What exactly is innovation and why do we
do it better when we collaborate?
'I recognize innovation,
when I see something done
differently from an existing
way of doing things'
'Finding new ways of
solving problems'
'...combination of unique
product, design, and customer
insights wrapped with an artful
business model and structure'
How do you define innovation?
'A process that uses new
knowledge to generate change
and impact'
'... ability to create
uniqueness coupled with an
ability to capture value from
that uniqueness'
'... development of new
technologies and business
approaches to create value
for all stakeholders'
Collaboration is critical
'... radical new approach to
business model, a new
differentiated product or
service, or a change in how
products are delivered'
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'... ability to identify new
trends, create needs and
satisfy them'
'... creating new value in
providing new business
models, technologies'
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Innovation can impact all parts of a company
2
1
Services
3
Products
Customer
experience
Innovation
5
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Business
model
4
Process
3
Many components to successful innovation
Customer
insight
New
technology
Competitive
patterning
Concept
development
Testin
g
Evaluation
What gets tested?
Launch
preparation
What gets
launched?
Market
launch
Measurement/
Evaluation/
Adjustment
How do we
measure, learn
and adapt?
What concepts get developed?
Do we have awareness?
Do we leverages the possibilities of technology?
Do we create unique insights?
Do we turn unique insights into ideas?
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3 stages of the innovation cycle
1
Idea generation
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2
Commercialization
3
Realization
5
Typical path to impact
Cumulative
cash flow
Launch
Time
Idea
generation
Commercialization
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Realization
6
4 factors determine the shape of the cash curve
Cumulative
cash flow
Launch
2
Speed to
market
Support
costs
3
1
Time to
Scale
4
Start-up
costs
Time
Cash Trap!
Idea
generation
Commercialization
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Realization
7
Manage your portfolio of ideas with discipline
Manage the innovation portfolio
13
Accelerate
Reconfigure
Likelihood of success
• Fit with company assets
(eg, distribution system)
• Competition
• etc
U
U
U
X
X
Measures
overall
likelihood of
success
U
U
Measures
customer
acceptance
U
X
Reallocate
7
2
Stage of NPD process:
5
Customer relevance score
Stage 1
X Project Killed
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U
X
Stage 2
Stage 3
U Project un-funded
Stage 4
Launched
Steady state
Incremental profit
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The seven roles of a leader in innovation
Convincing an
organization that
innovation matters
'Getting people to believe in what they did was a challenge.'
Allocating
resources
'Sometimes you don’t get 100% success, but if you have no
risk, you have little chance of a breakthrough.'
Choosing the innovation 'Sometimes we can’t find a good model in our company ... but
business model
there are many ways to go.'
Focusing on
the right things
Reshaping dynasties
'You have to be prepared to argue very hard, even to your own
board, to stop a project — it's not so easy.'
'We knew that the new technologies were coming, but our
business was still extremely successful ... that success
delayed our shift.'
Assigning the right
'Hiring the right people is important, but it’s even more
people to the right place important to put them in the right place.'
Encouraging and
modeling risk-taking
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'Intelligent failure is the way you react and learn — but if you
want to learn, you have to work at it.'
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Three business models to achieve payback
Integrator
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Orchestrator
Licensor
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Choice of innovation business models is
highly strategic . . .
Amount and allocation of cash
Allocation of non-cash benefits
Eco-system
Knowledge
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Allocation of risk
Brand
Organization
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. . . and can affect an idea’s potential
Integrator
Owns and manages
entire innovation
process
Shoulders all risk, but
also reaps highest cash
payback
Orchestrator
Licensor
Manages all aspects of
innovation, but
executes only parts of
the process
Primarily owner of the
idea, with no ownership
of commercialization
Risk (and reward)
sharing
Less total cash, but
high margins
Model choice is strategy choice and
dramatically impacts payback
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How good are we in judging the prospects of
changes?
“High-speed trains are impossible because
passengers would die of suffocation“ D. Lardner,
professor at the London University (1850)
"But who may possibly wish to hear movie actors
speak?“ Harry M. Warner, CEO of Warner Bros
(1927)
"What could our company possibly do with
electric games?“ William Orton, CEO of Western
Union, refusing to purchase A. Graham Bell's
telephone (about 1876)
"I think there is a worldwide market of about five
computers“ Thomas Watson, CEO of IBM (1943)
"It is impossible to fly objects that are heavier
than the air“ Lord Kelvin, Chairman of the Royal
Society (1895)
"Horses will always remain while automobiles are
but novelties that will disappear“ CEO of the
Michigan Savings Bank, advising Henry Ford's lawyer
against investing in the automobile industry (1903)
"Airplanes are amusing gadgets, but without any
military interest“ Maréchal Ferdinand Foch, in
charge of the French military strategy and war
commandant (1911)
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"Guitarists bands are dying out“ Decca
Corporation, justifying the refusal to sign with the
Beatles (1962)
"There is no reason why people would ever have a
computer at home “ Ken Olsen, CEO of Digital
Equipment (1977)
"Thanks to the greatness of the Shah, Iran is a
pocket of stability in the Middle East“ Jimmy
Carter, President of the US (1977)
"A 640K-memory should be enough for everyone“
Bill Gates (1981)
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120 ways to kill a new idea (I)
It will not work
We have no time
It is not included in the budget
It is not serious
Stop talking nonsense
It is contrary to the rules
It is too expensive
We already tried
It is already done
What will our clients think?
We'll talk of it another time
Let's do a market survey first
It's been working like this for 20 years
We've always done so
Basically, it…
Let's to back to basics
We like people like you
It is politically unacceptable
You don't mean it
I've got a better idea
It is not a simple as you think
It only solves part of the problem
Even if we wanted to do it…
It is technically impossible
The computer is not powerful enough
I'd like to see his face...
You might as well say that we are closing down
It would take a lot of time
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We're not in America here
You must be realistic
Well, of course
We'll not change the world
"We must keep the church at the center of the
village"
Don't dream
There is no miracle
Let's stick to the point
People will not understand
French people think that…
Let's keep our feet firmly on the ground
We're not a lab
We're losing our way
Nothing will come of it
A bit of common sense!
While we're at it, why not...
Let's form a committee
It's not our problem
It's none of our business
They'll think we're nuts
Wait and see
There aren't all that many solutions
If ifs and ands were pots and pans there's be no
need for tinkers
Let's put it in writing
We already said it
It will enrage trade unions
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120 ways to kill a new idea (II)
I don't see the relationship
It does not belong to the plan
It's not in line with strategy
It is not our business
It will give us more work
It's too early
It's too late
They will be shocked
Maybe that isn't stupid, but...
That is a great idea!
I am not a specialist, but…
You shouldn't bit off more than you can
chew
Too academic
The only problem is that…
We can see what you're leading up to
It would be a good topic for another
meeting
There are only 24 hours in a day
Talking is easy
Did you read my memo?
Business is business
This it not a priority
I already heard this idea somewhere
We are too small
This is not concrete enough
What do you want?
You don't understand our problem
Don't exaggerate
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Don't make me laugh
This is unworkable
This is not legal
It's against the rules
The boss will never accept
Beautiful idea, but not for us
This is a good theory, but practically…
Let's get back to the subject
People don't want to change
Calm down
Our competitor doesn't do it either
You can laugh, but...
Let's ask the opinion of an expert
There's nothing to add
I'll have warned you
Is there any precedent?
You'll never change...
One can fantasize, but…
Why do you want to change at any price?
This it not the point
This is not in our culture
Let's come to the point
It's obvious that...
Did you measure the risks, consequences?
We cannot take this risk
We don't need that
We don't have the staff, the equipment
We'll get back to it later
Etc.
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True Innovation comes from collaboration
Clear focus on managing the innovation process and impact
Committed, consistent, visible leadership
True innovation comes from collaboration
1. Idea generation: connecting many different capabilities
2. Implementation: collaborating in a web of partners
3. Realization: measuring the total impact and contribution of each partner
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