innovation BREAKTHROUGHS edited by Hitendra Patel and Steffen Gackstatter www.innovation-management.com © 2000-2006 by Monitor Group. All rights reserved. xxii www.innovation-management.com © 2000-2006 by Monitor Group. All rights reserved. ix Foreword xi Introduction SANIFAIR, Sanitary Facilities Stop here — I want to use this restroom 14 Autobahn Tank & Rast xvi Innovation Themes Across The 101s xxi How Other People Have Used This Book Book Vending Machines 2 Accessible and affordable books to provide a quick escape or learning during travel or down-time 24x7 Cultural Privacy Filters for Notebooks Now I see it, now they don’t — my own space in a crowded place 4 3M Company Intelligent Sports Shoe 6 A shoe that adjusts to provide the right cushion or spring for my environment adidas Cutting-edge acoustics quality and artistic design for my discerning taste 16 Bang & Olufsen (B&O) Bank of America Tower Contributing to the environment through my bank 18 Bank of America Mujer Banorte A bank that makes me feel comfortable and understands my issues 20 Banorte The Kids Hotel Knowing my kids are fine allows me to enjoy my night out 22 Bengel & Engel Head-Up-Display (HUD) “Strictly No Frills” Supermarket 8 BeoSound and BeoLab Speakers Cut the trimmings in the store, not the fat in the products Aldi Keeping an eye on the road while getting relevant information 24 BMW Solar Infrastructure Project Simpler, faster and lower cost alternative to power my community Havaianas A sandal that says that I am relaxed, simple yet elegant 10 Alpargatas 26 BP Solar “Clean & Renew” System iPod and iTunes Customized, seamless and affordable access to entertainment through a portable stylish device 12 Apple Computers The feel of a brand new shaver every day 28 Braun Water Filters Great tasting, clean water at affordable prices 30 Brita table of contents www.innovation-management.com © 2000-2006 by Monitor Group. All rights reserved. Personalized Stuffed Animal Creating my unique “best friend” as I would define him/her 32 Build-A-Bear Workshop Spreading the Word I trust my friends’ or family members’ judgment around products 34 BzzAgent 3D Real Time Localization System Goal or no goal, the chip will tell us 36 Cairos Technologies Top Brands to the Poor Top brands at rock bottom prices paid in monthly installments 38 Casas Bahia (CB) Patrimonio Hoy Realizing my goal of having my own house 40 CEMEX The Minivan Provides space and convenience for loading and transporting growing suburban families 42 Chrysler Circus Theatrics Provides entertainment of a circus and sophistication of a drama for the whole family 44 Cirque du Soleil Canned Beverage Packaging Always a cold beverage in the fridge 46 Coca-Cola Computer Direct Selling Model Computer you want — not more, not less 48 Dell Call-A-Bike Rent a bike anywhere, any time 50 Deutsche Bahn Packstation Send and receive parcels 24 hours a day from anywhere to everywhere 52 Deutsche Post/DHL Dolby Noise Reduction Technology Professional quality sound in every listening experience 54 Dolby Laboratories Online Auction Site Buy and sell anything you can imagine quickly and easily 56 eBay Twin Clean Keeping my house clean and not the tools 58 Electrolux Regional Jets Experiencing fast and comfortable regional travel previously reserved only for major markets 60 Embraer City-Home Car Rentals They really pick me up — physically and mentally 62 Enterprise Rent-A-Car www.innovation-management.com © 2000-2006 by Monitor Group. All rights reserved. Networking Generation Y Staying connected and amplifying my profile within my community 64 Facebook Electrolyte Sports Drink Quenches my thirst and prepares me to Go Go Go 66 Gatorade Water Desalination Facility From abundant unusable salt water to life-sustaining sweet water 68 GE Water & Process Technologies Good-Looking Resins Adding a personality and flair to functional devices 70 GE Plastics Soil Enhancer Growing plants in harsh environments or using less water 72 Geohumus “Mach3” Razors Cool handle and the anticipation of a new shaving experience 74 Gillette Search Engine Understands what I mean and gives back what I want 76 Google Google Earth Mapping Service Bringing the world to me as if I was there 78 Google Credit for the Rural Poor Micro-loans allow me to realize my aspirations and also be seen as a member of society 80 Grameen Bank Fashion Retail Hot designer labels at affordable prices 82 H&M (Hennes & Mauritz) Get Chauffeured In Your Own Car Being in the back seat is better than being in the driver seat 84 Harry Service Affordable Personal Care Allowing access to hygiene products that were out of my reach 86 Hindustan Lever Limited America’s Best Warranty A warranty that eliminates consumer fear around quality and defects 88 Hyundai Self-Assembly Furniture Affordable, attractive, easy-to-carry, and easy-toassemble furniture 90 IKEA Offshore Global Outsourcing Allows me to focus on my products and markets 92 Infosys www.innovation-management.com © 2000-2006 by Monitor Group. All rights reserved. ING Direct A simple and accessible online bank with high interest and no hidden fees 94 ING Group Open R&D Platform Matches solution seekers with problem solvers 96 InnoCentive Intel Inside: Microprocessors It is the microprocessor chip that is the computer 98 Intel Corporation Second Life My second chance to have a different life 100 Linden Lab Open Source Operating System A reliable open source with no designed lock-in or lock-out 102 Linux QuietCare Independence and privacy with the comfort of knowing that care-providers can help me when I need help 104 Living Independently Flex-Fuel Technology Options to fill the tank with gasoline, ethanol, or both 106 Magneti-Marelli Global Sports Team A club that embodies the will to win — that is me 108 Manchester United iv Service-Oriented Luxury Hotel Service that is gracious and sincere and steeped in the values of the orient 110 Mandarin Oriental MerckMedicus Accurate up-to-date unbiased medical information 112 Merck & Co. Economies of Scale in R&D Helps specify the focus of my research and customer 114 Millennium Retail Clinics Quick, affordable and convenient health care for minor ailments 116 MinuteClinic Monster.com More reach and structure to make me visible to them and them to me 118 Monster RAZR Going back to basics — thinner is better and less is more 120 Motorola Natura’s Door-to-Door Sales Model It must be good — she understands me and also uses it 122 Natura Online DVD Rental Service Watching the movie that I want to watch when I want to watch it 124 NetFlix www.innovation-management.com © 2000-2006 by Monitor Group. All rights reserved. Product Placement Made Easy Beyond the 30 second ad — product placement in other mediums 126 NextMedium Video Game Consoles Engaging, interactive videogames which even I can figure out 128 Nintendo Wii The $100 Laptop Affordable tools for students to learn on their own 130 One Laptop Per Child Smart Spot If it has the green spot, then it must mean that it is healthy 132 PepsiCo Exubera, the Inhalable Insulin New breath of life for millions of people with diabetes 134 Pfizer Power Saving LCD Televisions Watching TV while saving on my power bill 136 Philips Verve Hearing System Improved hearing to enhance my quality of life 138 Phonak Computer Generated 3D Animation Movies that delight my children and amaze me 140 Pixar Remote Deposit Capture Anti-Aging Cosmetic Patches Smoother and healthier looking skin that provides instant gratification 144 PowerCosmetics Mr. Clean, the Magic Eraser The ones that make the mess can now clean it 146 Procter & Gamble Swiffer Sweeper Revolutionized and simplified mundane and arduous household cleaning 148 Procter & Gamble Energy Drink Energy to play all day and party all night 150 Red Bull BlackBerry Allows me to work without boundaries 152 Research In Motion Sears Catalogue Shopping the world from home — not limited by the general store 154 Sears, Roebuck and Co. SIA’s Singapore Girl Serene, caring, and elegant hospitality in the air that is second to none 156 Singapore Airlines (SIA) Satellite Radio Compelling content on high fidelity, commercial-free radio available everywhere 158 SIRIUS Improves my cash position and simplifies my operations 142 PNC Financial Services Group v www.innovation-management.com © 2000-2006 by Monitor Group. All rights reserved. Internet Telephony Stay connected with friends around the world at a fraction of the cost 160 Skype Micro Cars A Smart solution that addresses both parking and gas issues. Plus, it’s also cute. 162 Smart Low-Cost Carrier Inexpensive and friendly service that gets me to my destination on time 164 Southwest Airlines Premium Coffee A “third place” away from home and the office for a premium experience to indulge in quality coffee 166 Starbucks Healthy Fast Food He really lost a lot of weight eating great tasting food at Subway 168 Subway Customized Bill Promotions Staying up-to-date on my account and your new offers 170 Symcor The Rs. 1 lakh Car Four wheels are better than two 172 Tata Motors Generic Pharma Business Model Providing my patient affordable, quality drugs 174 Teva Digital Video Recording Watch your favorite TV shows, commercial-free, whenever you want to 176 TiVo Scion Making a car adjust to my life rather than me adjust to the car 178 Toyota UNIPOL Process Stronger, cheaper and cleaner plastics 180 Union Carbide Velcro Easy-to-use, durable fastening for a range of applications 182 Velcro Industries Mobile Services Without a Network A phone company with a personality that appeals to me and delivers on service 184 Virgin Mobile Thermomix Chop, blend, and cook all in one pan, eliminating the need to wash numerous bowls and utensils 186 Vorwerk Special Polymer Products Stay dry, stay comfortable, stay safe, stay effective, stay healthy… 188 W. L. Gore www.innovation-management.com © 2000-2006 by Monitor Group. All rights reserved. 360 Packaging Reduction Initiative Drives breakthrough innovation in our products, packaging and delivery 190 Wal-Mart Eye Surgery Revolutionary vision correction—faster, safer, and permanent 192 WaveLight “Heavenly” Bed and Bath Decadently comfortable that I want to come back or take it home 194 Westin Hotels & Resorts Wikipedia A reliable encyclopedia at your finger tips 196 Wikimedia Banking Solution for the Unbanked Connecting me virtually to what is important — my money and my relatives 198 WIZZIT Bank Online Video Sharing Broadcast myself or be entertained by others 200 YouTube A Car “Timeshare” Conveniently located personal car available for as little as 30 minutes 202 Zipcar 205 Core Contributing Team 206 Other Contributors 206 Administrative Support 206 Design Team 207 Index www.innovation-management.com © 2000-2006 by Monitor Group. All rights reserved. www.innovation-management.com © 2000-2006 by Monitor Group. All rights reserved. FOREWORD The Innovation Practice at the Monitor Group has worked with hundreds of companies on the topic of innovation. We have consistently found that stories of innovation breakthroughs are key to getting both the leadership and the employees of companies excited about the importance of innovation. Literature is scattered with examples of innovations, but they are often not presented in a systematic manner nor in sufficient number to represent the range of innovations and industries. This book is our effort to compile and systematically organize a large set of exciting innovations to make them accessible to all those interested in innovation. The examples have been selected by seasoned consultants in the innovation space, drawing on their experience of proven examples of innovations that have excited real clients. We also found during the compilation of these innovations that most companies like to have stories of innovation breakthroughs written about them. All these companies implicitly recognize the benefits of having had innovation breakthroughs, validating what we have found in our previous research. Specifically, there are four premiums that companies enjoy as a result of being viewed as innovative: (1) they have excited and motivated employees, (2) they have other innovative companies who want to partner with them, (3) they have customers that love their products and services and (4) they have a disproportionately positive return on the stock market. Never has innovation been more appreciated or viewed as important by executives — and yet it remains too complex for them to easily implement. Innovation Management is the business discipline for driving Innovation Breakthroughs. However, in our experience it would be a mistake to talk only about innovation management and the underlying concepts of platforms, partners, portfolios, processes and people. Only when Innovation Management is complemented with examples of innovation breakthroughs do executives get charged up about the range and breadth of their opportunities and take action. As with most efforts within a professional services organization, this work is built on the shoulders and minds of great thinkers before us and the smart colleagues surrounding us. We would like to acknowledge the members of the Monitor Innovation Practice for their support and contribution in identifying and shaping the content. Specifically, we would like to thank Ron Jonash for his overall mentorship, support and encouragement for this project. We foreword ix www.innovation-management.com © 2000-2006 by Monitor Group. All rights reserved. INNOVATION BREAKTHROUGH Offering Title Goes Here would like to thank Nanja Strecker for her driving this projectcommolore forward with her own ideas Ecte modit, commolore ting ex continuous exer sedsupport euisofniam, modit, and external research activities. Michael Baltay, Ashok Boghani, Holger Koehler, Iason Onassis and Alex Roth for ting ex exer sed euis their belief in the need for such a document and their overwhelming individual support for generating some of the examples. We would like to thank Ben Jonash, Karen Long, Tyler McNally and Andre Dovalle for tirelessly adding and fleshing out many of the “101s.” Company Name Here This could not have been a truly global book without the tremendous support from Todd Roberts, Fernando Musa and Maarten Kelder, the leaders of our Canadian, Latin American and Asian practices. It is through their help that we were able examples from Brazil, Canada, China, India, Japan, Korea and Mexico. What is to theevaluate offering? How has it left a mark? Ommy numsan ut iustrud tinit nim veleniam vero odionseOverall, we would like to acknowledge Maria Taborszki for helping coordinate this project to completion Ugait laoreet ulla aut and in ea quat utat. Alisis num iustisl eum quipit ad magna. staying on top of all the moving parts. Her persistence and patience were key to its success. We appreciate ad tet ut loreet luptate What the andscenes who does it satisfy?support and direct help of Mary O’Brien and Michelle Medico. Lastly, ea the behind administrative feugait lorem zzrit ip elis Os Julia niatem zzrilis eum quisl dolutat ipissequat la from the Design we wouldLisciduisi. like to thank Frenkle, Lily Robles and Julie Sherman Studio at Monitor for the nos autem venibh eumfaciduisi. elegant design and illustrations. molobor adiam dolutat Ommy numsan ut iustrud tinit nim veleniam vero odionsequat utat. Alisis num iustisl eum quipit ad magna. nosto do od tat. What else was out there? Ommy numsan ut iustrud tinit nim veleniam vero odionsequat utat. Why is it unique? Ommy numsan ut iustrud tinit nim veleniam vero odionsequat utat. Alisis num iustisl eum quipit ad magna. Ommy numsan ut iustrud tinit nim veleniam vero odionsequat utat. Why is it difficult to replicate? x what Ommy numsan ut iustrud tinit nim veleniam vero odionsequat utat. Alisis num iustisl eum quipit ad magna. Ilit irit am venisci liquissim veliquatum in hent atis ad tem volumsan henis dolorem eui ea con ut nullandre enim zzriurer sit lutpat. Lisciduisi. Os niatem zzrilis eum quisl dolutat ipissequat la faciduisi. Duisis aliquisit nullaore modolor sequi endiam quatin et, consed molore dolore faci blaorer sustissi bla adipit dolorpero od minit nos ex eugait ip euipsuUd eros ad dolobore volenibh erit, www.innovation-management.com © 2000-2006 by Monitor Group. All rights reserved. INTRODUCTION Innovation is widely recognized as one of the best sources for driving business growth and enabling business survival. Until very recently the word “Innovation” was associated primarily with R&D and technology and “new” product. But now innovation has come to mean much more — it includes any change, across and beyond the organization, which results in high impact and value creation. This book contains 101 examples of such innovations, to inspire and energize your organization. • 101 Innovation Breakthroughs is a booklet that highlights the diversity and range of innovations that are changing the world • Innovation happens in all industries, even the most mundane and boring and cuts across all markets and economies • Innovation Breakthroughs deliver on a combination of met and unmet market needs around Survival, Safety, Belonging, Esteem or Self-actualization • Market / consumer experience with these innovations is often expressed in terms of Affordability, Convenience, Relevance and Meaning Innovation is ubiquitously recognized as one of the best source for business growth and survival. • Most innovations combine insight and multiple elements beyond just products to deliver a unique experience to the market that range from acquisition to use to disposal • Changes in how, what, when, where, whom and with what partners and business models are key for creating innovation breakthroughs xi www.innovation-management.com © 2000-2006 by Monitor Group. All rights reserved. • Flipping through the 101 Innovation Breakthroughs will be fun and will hopefully trigger new insights and ideas for yourself and your organization. It could even inspire you to implement them! This list by no means represents only the best and most successful examples in a respective field. Many other anecdotes could have been told and might be told at other places or at later times. Also, some of these could seem exaggerated by the market, and we only take them at face value! We have aspired to provide you with an insightful spectrum of innovations from different sources, application fields, industries and geographies. The stories include well-known “classics” as well as new innovations, where the positive impact is not yet visible or guaranteed. A note of caution though — most information is collected from public sources. We cannot, therefore, take any responsibility for misleading data, neither do we guarantee that all examples will remain success stories in the future! A spectrum of Innovation Breakthroughs to inspire you. This book is meant to inspire — so we recommend that you flip through a few stories whenever time permits, be it the daily commute, during quiet evenings or other relaxing moments. But if you find yourself reading it from cover to cover, we will understand! Range of Innovations Innovation breakthroughs are not limited to any one geography or to any one industry. Our large collections of innovation examples, although not statistical, supports this statement. We do find that U.S., Japanese or Western European companies tend to be the innovation leaders, however, there are quite a few companies like CEMEX in Mexico, Infosys Technologies in India and Natura in Brazil, that are driving innovation breakthroughs in their own economies and worldwide. xii www.innovation-management.com © 2000-2006 by Monitor Group. All rights reserved. 101s by Geographic Area South America 7% Africa 1% 101s by Industry Industrial Manufacturing 2% Agriculture 1% Telecommunications 3% Food and Beverages 5% Resource Industries 6% Asia 11% Leisure and Transportation Services 12% Banking and Financial Services 6% Europe 30% Consumer Products and Services 14% North America 51% Business Services 7% Media 10% Health Care and Pharmaceuticals 8% Automotive and Aerospace 8% Retail 10% Computer and Electronics 9% Similarly, some may believe that innovation is the realm of high tech companies like Apple and Motorola, and not for their industry. This would be short-sighted. We have examples of innovation across a range of low and high tech industries, product and service industries, and fast and slow moving industries to challenge that misconception. xiii www.innovation-management.com © 2000-2006 by Monitor Group. All rights reserved. Consumer Voice Innovation Voices Shareholder Voice The analysis of each innovation is consistently presented in a structured yet simple and fun manner. The content may appear light but is surprisingly dense and will be insightful. To increase the understanding of these innovations, we deliberately use the voice of key stakeholders to simulate their thinking around the innovation. To have an Innovation Breakthrough, it is usually necessary for all these voices to be aligned. • The Consumer/Customer is portrayed through word-of-mouth, which brings awareness to the benefit of the innovation, be it affordability, convenience, relevance or meaning. • The Shareholder should find meaning around revenue, earnings and market share growth and other intangibles that make impact on the share price. Innovator Voice Competitor Voice • The Innovator has to be able to articulate a compelling and meaningful business insight to get support for the idea and commitment for investment. • The Competitor has to concede that it is difficult to replicate or overtake the offering. As you think about innovation in your organization, ask yourself the following: what is your insight and what will the competitor, customer/consumer and shareholder say about the innovation. xiv www.innovation-management.com © 2000-2006 by Monitor Group. All rights reserved. Pathways for Innovation Impact A look across these 101 Innovation Breakthroughs reveals that innovation is much more than new products or new processes. In fact, in all cases the innovators focused on changing a combination of two to four elements across the innovation value chain instead of focusing change on just one element. It is this combination of changes that “wows” the customer, and makes it hard for competitors to replicate. Using the Pathways for Innovation Impact framework, you should ask your innovation teams some of the following questions: What should the What business offering be? How is the model do we use? offering made? What’s next? INSIGHTS BUSINESS MODELS TECHNOLOGIES EXPERIENCES PROCESSES PRODUCTS CHANNELS MATERIALS SERVICES LOGISTICS ASSETS BRANDS Use the Pathways for Innovation Impact Framework to get an Innovation Breakthrough. LOCATIONS MARKETS OCCASIONS NETWORKS AND PARTNERS Which networks & partners should we use? Where, when and at what price should we offer it? Whom do we target with this offering? xv www.innovation-management.com © 2000-2006 by Monitor Group. All rights reserved. INNOVATION THEMES ACROSS THE 101s The 101 Innovations profiled in this book represent a wide range of “breakthroughs” across the globe that are cutting across a wide range of markets, products & services, technology applications and new business models. Across these innovations, a number of common patterns are clearly emerging: • Anywhere, Anytime, for Everyone • Find, Connect, and Transact • Cults of Customized Comfort • No Frills Convenience • Sustainability and Energy Independence Making offerings available to you wherever you are and whenever you want! • Making the Market • Build the Infrastructure and Co-create • Give away the Lamp, Sell them the Oil • Silent No More xvi www.innovation-management.com © 2000-2006 by Monitor Group. All rights reserved. innovation BREAKTHROUGHS xxiii www.innovation-management.com © 2000-2006 by Monitor Group. All rights reserved. INNOVATION BREAKTHROUGH Book Vending Machines Accessible and affordable books to provide a quick escape or learning during travel or down-time 24x7 Cultural What is the offering? Pick a book anywhere — through vending machines at unusual locations like subway stations 24 hours a day, 7 days a week. A tempting offer, most books cost less than $2.30. The selection includes translations of Sherlock Holmes, Paulo Coelho and even a dictionary of mathematics. What and who does it satisfy? Nearly everyone, people who do not usually visit bookstores and are seeking a distraction while traveling. This is reading made popular and accessible. What else was out there? People can either plan their reading in advance and buy their reading material in a store or read the billboards on the subway. Why is it unique? 24x7 Cultural is the only company selling books through vending machines. Why is it difficult to replicate? Inexpensive products on wafer-thin margins would be daunting for most competitors; others may lack the holistic view and synergy (the company is also a publisher). 2 what How has it left a mark? A revolutionary way to encourage new readers and promote the habit of reading. 24x7 Cultural sells 10,000 books monthly from its over 40 vending machines in São Paulo and Rio de Janeiro. The book vending machines are now spreading throughout Brazil. www.innovation-management.com © 2000-2006 by Monitor Group. All rights reserved. INSIGHT Occasions for reading occur all through the day, similar to occasions for drinking beverages—if soft drinks fulfill this need through vending machines then can we not do the same for books? KEY INNOVATION CHOICES BUSINESS MODELS ASSETS Being a publisher, 24x7 Cultural, has economies of scale and by selling via vending machines they have eliminated the middleman/book store. This allows them to sell the books at a discount and expand their business further upstream. Soda vending machines that have been adapted to display and dispense books. LOCATIONS The vending machines are located in subways and other crowded waiting areas, where people would welcome a distraction or an escape. Next port of call–shopping malls, hospitals. CHANNELS Vending machines, a new and ingenious channel for selling books. OCCASIONS MARKETS The books are available 24 hours a day, 7 days a week. Reached out beyond the on-line and book store buyer to a new market, the consumer in transit or in a waiting situation looking for a distraction. BUSINESS MODELS INSIGHTS TECHNOLOGIES EXPERIENCES PROCESSES PRODUCTS CHANNELS MATERIALS SERVICES LOGISTICS ASSETS BRANDS NETWORKS AND PARTNERS LOCATIONS OCCASIONS MARKETS how 3 www.innovation-management.com © 2000-2006 by Monitor Group. All rights reserved. WANT MORE INNOVATIONS? Innovation is ubiquitously recognized as one of the best sources for business growth and survival. Interestingly, until very recently the word ‘Innovation’ was associated only with R&D and technology. But now innovation has come to mean much more, it includes any change, across and beyond the organization, which results in high impact and value creation. 101 Innovation Breakthroughs is a booklet that highlights the diversity and range of innovations that have changed the world. It is meant to inspire and energize your organization. For more information visit: www.innovation-management.com/innovations.html ABOUT INNOVATION MANAGEMENT INC. Innovation Management, Inc., a part of the Monitor Group, helps companies grow through innovation. We achieve this objective by: • Identifying innovative opportunities • Implementing growth platforms • Developing new business models • Improving innovation strategy, processes and culture • Implementing technology strategy We have helped numerous firms around the world achieve results. For more information visit: www.innovation-management.com