ASAP Annual Conference Play In The Creative Economy St. Petersburg, FL Jan. 27, 2006
WARM UP THOUGHTS: Read before the presentation 1. P&G used outside technology to pioneer “whitestrips” - a breakthrough, successful product; within 12 months there were over 100 competitive, teeth-strip clones & varied products. 2. What are google scenarios for local pharmacies when google allows first “local” searches for specific items, then “froogle” price comparisons (with merchant ratings)?
WARM UP THOUGHTS: (2) 3. Global, micro-manufacturers are designing, manufacturing, selling & distributing their products all over the US with 1 or 2 employees working out of their homes with broadband connection -- so what?
WARM UP THOUGHTS: (3) 4. The exponentially growing & compounding factors for: -- computing power -- connecting possibilities via the net -- bandwidth -- digital storage capacity will continue as their costs also drop exponentially. How do these affect: competition, creative problem solving, business outsourcing, business start-up costs, etc.?
WARM UP THOUGHTS: (4) 5. Your company’s future is already here, it is just unevenly distributed & understood from the micro (amongst all your employees) to the macro (amongst all innovative companies in the world). Will we see our future, understand it, accept it & run with it when it passes by?
ASAP Annual Conference Play In The Creative Economy St. Petersburg, FL Jan. 27, 2006
QUESTIONS TO EXPLORE 1. No time for how-to, but provocative? 2. What is the “creative economy”? 3. Is it real? 4. Who’s leading the way? 5. What’s “innovation management? 6. How are the best doing it? 7. What should my firm start doing? 8. How do we learn more?
INNOVATE UP “EXPERIENCE CHAIN” 1. By the wholesale bag 2. By branded retail bag 3. Served retail 4. Starbucks experience 1 - 2¢/cup 5 - 25¢/cup 75¢ - $1.50 $2 - $5 Coffee:
IPOD: 7 CHANGE LEVERS Type 1. Business model 2. Alliances 5. Performance 6. Product system 8. Channel 9. Brand 10. Customer exp. negotiated more licensing solution with music publishers & accessory producers Line of hardware Hardware + software + itunes + stores Breakthrough deal to sell music online Bolstered Apple’s image iPod is cooler & more expensive than MP3
TEN TYPES OF INNOVATION* (1) 1. Business model 2. Alliances 3. Enabling process 4. Core processes How you make $ Synergize w/others Premium compensation Add value Dell’s working capital Sara Lee outsourcing Nucor, Costco’s, UPS, FedEx, Starbucks Wal-Mart; Nike & Cisco *www.doblin.com Type Description Example
TEN TYPES OF INNOVATION* (2) 5. Product preference 6. Product system 7. Service 8. Channel 9. Brand 10. Customer experience Design of offering Link products Communicate tot. value prop. VW Beetle old & new Microsoft Office Singapore Airline: CAT dealers CAT; M. Stewart Absolut Harley D.; Starbucks Type Description Example
GOOGLE CHANGES EVERYTHING <ul><li>Any fans here? </li></ul><ul><li>Why how-to book sales have dropped? </li></ul><ul><li>Search: “Innovation Management (987,000) </li></ul><ul><li> [ “images” (3,600)] </li></ul><ul><li>+ article (261,000) </li></ul><ul><li>+ PDF (81,200) </li></ul><ul><li>+ ERP (619) or software (39,400) </li></ul><ul><li>or “mature industries” (164) </li></ul><ul><li>or “service industries” (531) </li></ul>
GOOGLE + RSS + BLOGS Don’t search “innovation management”, go to blogs like: www.innovationtools.com Needle-in-haystack traffic generates real ad $ via sponsored ad’s from complimentary niche providers/partners
GOOGLE: “LOCAL (+) “FROOGLE” = ? <ul><li>Anyone tried “local” or “froogle”? </li></ul><ul><li>Pharmacists’ presence for “local froogle”? </li></ul><ul><li>Meanwhile, Help my Mom (SRs) </li></ul><ul><li>-- buy “long-tail” wellness items (fees, commissions, package receiving) </li></ul><ul><li>-- provide e-mail & general e-shopping services </li></ul>
GOOGLE OVERALL EFFECTS <ul><li>Advertised funding of info-solutions? </li></ul><ul><li>Matching new, better, buyer-seller & </li></ul><ul><ul><li>outsourcing partners (global, micro-mfg’rs) </li></ul></ul><ul><li>Adds big living & dying edges to all business models (from info. perspective) </li></ul><ul><li>Let’s all rethink our advertising & PR efforts around Google (+ RSS/Blogs) </li></ul>
BACK TO: “CREATIVE ECONOMY” <ul><li>Mature markets </li></ul><ul><li>Growing, global, glut </li></ul><ul><li>supply; margins </li></ul><ul><li>Optimization done </li></ul><ul><li>Lifecycle collapse </li></ul><ul><li>Eroding brands </li></ul><ul><li>Delight deeper needs </li></ul><ul><li>Dynamic outsourcing </li></ul><ul><li>Info 2 + web 2.0 </li></ul><ul><li>Bisociation </li></ul>C.E. Threats Opportunities Turn ad hoc, art of innovation into a continuous science; corporate habit
NOT ENOUGH “CREATIVE” (?) <ul><li>“ National Innovation Initiative” (www.compete.org/nii/) </li></ul><ul><li>Business Week’s Special Report issue (8/1/05) “Welcome To The Creative Economy” www.businessweek.com/innovate/index.html </li></ul><ul><li>Many books, etc. on “creativity - innovation” </li></ul><ul><li>Lots of agreement “talk”, but little “walk” </li></ul>
WHAT’S OUR INNOVATION GAP? Revenue (Millions) Today 5 Year Target Market expansion Base revenue New products currently in pipeline Traditional mergers & acquisitions ? Innovation Gap Target Future Revenue
P&G’S INNOVATION GOAL “ Proctor & Gamble of 5 years ago (‘99) depended upon 8000 scientists & engineers for the vast majority of innovation. The P & G we are trying to unleash today asks all 100,000+ of us to be innovators. We’re trying to get 70% of our new technology from outside the company.” A. C. Lafley, 2004 from Fortune Magazine What culture changes to support 100% innovators?
DEFINE “INNOVATION” (“SCIENTIFICALLY”) The profitable implementation of strategic creativity. 1. Strategic: focus, novel insight, foresight 2. Creative: idea flow; many good too few great 3. Implementation: buy-in, clarity, prototypes, etc. 4. Fills real needs, price > cost = profits
ONE DEPICTION OF INNOVATION “PROCESS” Selection Execution Creation of Value (New Product Development-NPD) Radical Innovation Generation of Ideas Generation of Ideas Incremental Innovation *“Fuzzy front end” (FFE) *Google it under “images” Generation of ideas
FFE VS. NPD Nature of work Completion date Funding Revenue Expectations Activity Measure of Progress Experimental, often chaotic, “ Eureka” movements. Can’t schedule invention. Unpredictable or uncertain Variable: bootlegged; ex-budget-strategic Scenario guesses Small team Strengthened concepts Disciplined & goal oriented with a plan High degree of certainty Budgeted Increasingly predictable to release date Multifunction Milestone achievement Fuzzy Front End NPD
DON’T RUSH TO ANSWERS FFE Generation Cook & Stew (NPD) Convergence Generate possibilities & study Process & innovate Coalesce & arrange into a system
A GOOD IDEA COMES FROM A LOT Time # of ideas 60 10 5 20 Initial screening Business analysis Customer prototype feedback Funnel down quickly, ramp up investment 1. Adv. prototype 2. Wider cust. testing 3. Roll-out of winner 1 SUCCESS
BUT, WHAT TYPE OF “GOOD IDEAS”? 1. Sporadic, ad hoc continuous flow 2. Unfocused Strategic intersection of: -- core competencies -- best customer needs -- viable technology 3. Balance of: incremental next level, breakout value semi-radical radical, disruptive
WHAT MIX & PATH OF INNOVATIONS? Customer Need Current Emerging New (A) Semi-radical Semi-radical (B) Radical Semi-radical Next Level (C) Semi-radical Next Level Next Level Due Diligence RISK Technology Know-How Current Emerging New
VALUABLE ARTISTRY? <ul><li>The unique strategic insight(s) for your </li></ul><ul><li>corporate context to focus idea generation real, unique value prop’s. </li></ul><ul><li>How we lead and develop: </li></ul><ul><ul><li>-- An innovative corporate culture </li></ul></ul><ul><ul><li>-- Evolving innovation mgt. system(s) </li></ul></ul><ul><ul><li>-- The FFE, new concept phase </li></ul></ul>
LEAD NEW CONCEPT DEVELOPMENT (FFE); NON-LINEAR, ITERATIVE - Leadership - Corp. culture capacity Opportunity analysis (2) OPP identification (1) (3) Idea gen. & enrichment (4) Idea selection (5) Concept definition (6) Concept selection NPDP TechDo
BOOK SOURCES See appendix for key concepts Making Innovation Work by Davila, et. al. Blue Ocean Strategy by Kim & Mauborgne Beyond The Core by Zook The Only Sustainable Edge by Hagel & Brown Presence by Senge, et. al. (merrifield.com’s “Innovation Mgt.” tab)
SUMMARY POINTS (1) 1. Hyper-competition (+) Web 2.0 = Creative Economy 2. “Innovation Mgt.” -- a continuous system for all thrivers by 2007 (?) 3. Lean-n-mean is antithetical to innovation 4. Harvest dying edge activity to feed living edge
SUMMARY POINTS (2) 5. Pursue “open innovation” guidelines to get best, most, unique-strategic-insights to focus all innovation activity 6. Getting to - 100% innovators habitually - is a journey -- gather a small team & start learning -- choose a chief innovation champion -- do small, quick, cheap steps consciously -- crawl, walk, run -- keep expanding the participation circle(s)
CLOSING QUOTES (1) 1. Insanity is doing the same thing over & over & expecting different results Einstein 2. A problem cannot be solved by the same consciousness that created it. Einstein 3. The future is already here. It’s just not evenly distributed yet. William Gibson
CLOSING QUOTES (2) 4. Creativity is about divergent thinking. Innovation is about convergent thinking Ikerjivo Nonaka 5. The real difficulty in changing the course of any enterprise lies not in developing new ideas, but in escaping old ones. John Maynard Keynes 6. People support what they help create. Anonymous
CLOSING QUOTES (3) 7. “Nothing is as powerful as an idea whose time has come.” Victor Hugo 8. “Never doubt that a small group of committed citizens can change the world. Indeed, it’s the only thing that ever has.” Margaret Mead
APPENDIX Highlights From Reference Books In Slide # 29
MAKING INNOVATION WORK, by Davila 1. Leading innovation 2. Integrating innovation & business strategy 3. Balancing creativity & value capture 4. Weaving innovation into the fabric of business 5. Neutralizing organizational “antibodies” 6. Building innovation networks 7. Measuring & rewarding innovation
THE SIX PRINCIPLES OF BLUE OCEAN STRATEGY (B.O.S.) Formulation principles : Reconstruct market boundaries Focus on the big picture, not the numbers Reach beyond existing demand Get the strategic sequence right Execution principles: Overcome key organization hurdles Build execution into strategy
THE STRATEGY CANVAS OF SOUTHWEST AIRLINES (B.O.S.) Price Friendly Service Speed Frequent point-to- point departures Setting class choices Lounges Meals Hub connectivity High Low Average Airlines Car transport Southwest
THE STRATEGY CANVAS OF CIRQUE du SOLEIL (B.O.S.) Price Fun & humor Multiple productions Artistic music & dance Aisle concessions Animal shows Star Performers Multiple show arenas High Low Ringling Bros. & Barnum & Bailey Value Curve Theme Refined watching enjoinment Thrills & danger Unique venue Cinque du Soleil Value Curve Smaller Regional Circuses
ELIMINATE-REDUCE-RAISE-CREATE GRID (B.O.S.) THE CASE OF CIRQUE DU SOLEIL Eliminate Star performers Animal shows Aisle concession sales Multiple show arenas Create Theme Refined environment Multiple productions Artistic music & dance Raise Unique venue Reduce Fun & humor Thrill & danger
VOCABULARY OF ADJACENCIES `04* Local Internet Global expansion New Geographies New Value Chain Steps New Products New Customer Segments Microsegmentation of current segments Complements New to world New to world needs New models New subs. New Channels New Businesses Dist. Indirect Sell capability outside Backward Integration Forward integration Unpenetrated segments New segments Support services Next generation *Modified from Beyond The Core, Zook (B.T.C.)
SUCCESS DECLINES WITH DISTANCE FROM THE CORE Core Declining odds of success Economic distance from core Diversification From: Beyond The Core , Chris Zook, 2004
CONTRASTING COMPANY PAIRS UK grocery Wholesale drug Mass merch. `83 Retail drug TESCO Cardinal Wal-Mart Walgreen’s Sainsbury McKesson K-Mart Eckerd’s Industry Winner Fizzler (B.T.C.)
COMPANY PAIR LESSONS <ul><li>Winners: </li></ul><ul><li>Organic, living edge innovation & </li></ul><ul><li>incremental acquisitions </li></ul><ul><li>Deep insight of customers (un)seen needs </li></ul><ul><li>Stay focused, disciplined & humble </li></ul><ul><li>Fizzlers: </li></ul><ul><li>Past success cash & hubris </li></ul><ul><li>New CEO (from the outside) “next big thing” </li></ul><ul><li>Over-reach too far from the core (Mattel & Learning Co.; Time Warner & AOL) </li></ul>(B.T.C.)
. . . SUSTAINABLE EDGE : GUIDELINES Multiply 3 waves Dynamic specialization: outsource all but # 1 essentials x Connectivity: use outside-in I.T. achieve “performance fabric” for partners x Leverage capability building new partner network -- push each other to share other partner apps. -- set stretch performance metrics Think: Nike & Cisco: (“closed”) & Li & Fung for apparel (“open”) (S.E.)
MORE ON DYNAMIC SPECIALIZATION <ul><li>1. Shed all non-differentiating activities </li></ul><ul><li>2. New can’t afford to fail incentive </li></ul><ul><li>3. New can work a broader range of customers -- less legacy reseller constraints/resistance </li></ul><ul><li>4. Act faster </li></ul><ul><li>5. Partner with #1 best outsource/off-shore partners </li></ul><ul><ul><li>Mfg: Celestica, Solectron, Flextronics (+) many new Asian companies </li></ul></ul><ul><ul><li>Logistics: UPA, FedEx, 3PLS, (& 3PL channel utility) </li></ul></ul><ul><ul><li>Call Centers: Philippines, India </li></ul></ul>(S.E.)
OUTSOURCING/OFF-SHORING EXERCISE I. Amount spent on doing these activities past 12 months? Versus II . Resource budget & plans for 0/0 next 12 months? (S.E.)
“LEVERAGE CAPABILITY” TEST 1. Will they discuss most innovative ideas with you? 2. Why? What do they expect to happen? 3. What valuable lessons from you? 4. What gurus have they created for you? 5. Ways to improve the network for both/all sides? 6. Ways to deepen the capabilities on both sides? 3rd party assessor ASKS most innovative ??? (S.E.)
PRESENCE* -- IT’S “U” 1) NOVEL INFORMATION 4) REDIRECTING 9) INSTITUTIONALIZING 5) LETTING GO 8) PROTOTYPING 6) EMERGENCE 7) CRYSTALLIZING *”Presence” by Senge, Scharmer, Jaworski & Flowers. SoL, Cambridge, MA See Exhibit 39 @ merrifield.com “ AHA” 2) QUESTION MAPS 3) SUSPENDING
# 1 NOVEL INFORMATION <ul><li>Our (financial) information supply ruts? </li></ul><ul><li>Interview the most: </li></ul><ul><li>- Progressive customers & non-customers </li></ul><ul><li>- Progressive suppliers & their suppliers </li></ul><ul><li>- Supply-chain, bissociation-able consultants </li></ul><ul><li>- Profitable & un-profitable customers </li></ul><ul><li>Ideas = fuel for innovation </li></ul><ul><li>Best way to a good idea is to have lots </li></ul>(Presence)
GUIDELINES FOR INFO IDEAS (1) <ul><li>Steps 1 - 6 of the “U” all generate ideas </li></ul><ul><li>The ones that occur between 5 & 6 are most </li></ul><ul><li>powerful </li></ul><ul><li>We see the world like we are; not the way it is </li></ul><ul><li>We think in (unspoken): stereotypes, </li></ul><ul><li>patterns, paradigms </li></ul><ul><li>The world is changing, not the way we think/see </li></ul><ul><li>Bad decisions due to mindsets, not quality of info </li></ul><ul><li>Mindset shifts are key to breakthrough ideas </li></ul><ul><li>What would we do if we couldn’t fail? </li></ul>(Presence)
<ul><li>For novel info we must observe differently </li></ul><ul><li>-- be open to aberrational news items </li></ul><ul><li>-- rediscover the power of astonishment </li></ul><ul><li>-- look at problems with eye of the artist </li></ul><ul><li>Raise questions about questions </li></ul><ul><li>Build a corporate, creative, suggestion/idea pipeline system </li></ul><ul><li>Imagine & build first, judge later; try a “yes and” response instead of “yes, but. .” </li></ul>GUIDELINES FOR INFO IDEAS (2) (Presence)
# 2 QUESTION MAPS <ul><li>How to outline living edge, new-frontier space with questions? </li></ul><ul><li>Those with quick answers see only what their mindsets allow & have reflexive, old-paradigm conclusions </li></ul><ul><li>First, get all of the right questions </li></ul>(Examples of Question Maps are at www.merrifield.com Exhibits # 30 - 33) (Presence)
# 3 - 5: SUSPEND, REDIRECT, LET GO <ul><li>Don’t debate, have “dialogue” (www.merrifield.com, Exhibit 6) </li></ul><ul><li>Name, claim & challenge “groupthink” “What are your underlying facts, assumptions, etc.? (m.com, Exhibit 34) </li></ul><ul><li>Redirecting: What are jet stream forces blowing over our business ecosystem? - Go with the bigger flow. </li></ul><ul><li>Let go: retreat, relax, gestate, reflect to see what emerges. No quick, pragmatic decisions </li></ul>(Presence)
THE “AHA” MOMENT <ul><li>(5) Letting - AHA - (6) Emergence: all at once; sometimes oscillates </li></ul><ul><li>Archimedes & Newton moments </li></ul><ul><li>Revelations, epiphanies & grace too </li></ul><ul><li>At birth, most such ideas aren’t: </li></ul><ul><ul><li>seen by all </li></ul></ul><ul><ul><li>“ great”; need careful work </li></ul></ul><ul><ul><li>welcomed by defenders of the past </li></ul></ul>(Presence)
# 6 & 7: EMERGENCE & CRYSTALIZATION <ul><li>Initial visions have to get enough people moving </li></ul><ul><li>Effective visions are not: </li></ul><ul><ul><li>made by top-down process imposed on team </li></ul></ul><ul><ul><li>rooted in old ways </li></ul></ul><ul><li>They are: </li></ul><ul><ul><li>uncovered within a team process </li></ul></ul><ul><ul><li>embraced by enough people </li></ul></ul>(Presence)
# 8: PROTOTYPING <ul><li>Avoid fear of failure & analysis-paralysis, do some quick, cheap, simple experiments </li></ul><ul><li>Fail forward toward vision; each prototype communicates our current collective understanding </li></ul><ul><li>Without a recipe or roadmap: </li></ul><ul><ul><li>feel the way </li></ul></ul><ul><ul><li>learn by doing </li></ul></ul><ul><ul><li>stay connected to deepest inspiration sources </li></ul></ul><ul><ul><li>stay with flow, let the world help </li></ul></ul>(Presence)
# 9: INSTITUTIONALIZING <ul><li>Turn successful experiments into scalable, lasting success </li></ul><ul><li>Lock in right governing ideas & values </li></ul><ul><li>The corporate “Kinetic Chain*” must be un-woven & re-woven to insure total, energetic alignment. </li></ul><ul><li>In theory, the “U” is circular </li></ul>*Exhibit 16 @ www.merrifield.com (Presence)
<ul><ul><li>Bruce Merrifield is a strategic advisor </li></ul></ul><ul><ul><li>and planning facilitator who specializes in </li></ul></ul><ul><ul><li>converting GroupThink to NewThink. </li></ul></ul><ul><ul><li>For more on his services and published </li></ul></ul><ul><ul><li>areas of expertise go to: </li></ul></ul><ul><ul><li>www.merrifield.com </li></ul></ul><ul><ul><li> Merrifield Consulting Chapel Hill, NC 27517 </li></ul></ul><ul><ul><li> 919/933-7474 </li></ul></ul>
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