The 4Cs of innovation


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Based on over 10 years of working in Innovation in large companies, here are some of the key considerations in how to move innovation products from concept to market.

Understanding the "4Cs" will help avoid some of the pitfalls which can derail innovation portfolios.

Customer Focus

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  • This is a bit simplistic and not really helpful in an organization because obviously no one wants to sell things that customers don’t want- but there are a variety of factors that hinder companies from delivering and we will take a look at a few in this presentation.
  • This is a quote from Nancy Duarte, who recently spoke at TED on presentations. Point is that you have ability to create and part of how we are interacting today gives us the ability to change the status quo.
  • We have all asked this question at one time or another (or been asked by an Executive or Prof!)Don’t we all wish that it was this easy?
  • In reality, finding the true road to innovation is probably somewhat more complex (at least according to the Oracle that is Google)In my opinion the innovation program in a company should not be overly reliant on a single person- that is, it should be part of many different people’s objectives. The sources of ideas and concepts shouldn’t solely come out of one person’s head but should also be informed by a customer-focused concept extraction process.Although its been said that customers can’t give you the exact ingredients for a disruptive product, the building blocks should be there and can prompt the team to ask “Why” or “Why not” that can drive down to the deep needs that customers have (but perhaps can’t articulate). Also, there is usually no lack of ideas in a company, but if we can’t execute and create products then that’s a critical flaw in the system.
  • Customer FocusCultureConsensusCommitment
  • Not just who, but what is this? The Diamond Rio PMP-300 that inspired Apple to create the iPod was "about the size of a deck of cards" and had only 32MB of storage. It was difficult to get music (Napster etc or CDs) and uploading it to the device. Not that easy.The man is Tony Faddel- But the primary question Tony asked was- why should playing music on a mobile device be difficult? He thought about the whole ecosystem of music: how to get it and how to play it. He shopped around his idea for a integrated media player and desktop interface to many companies in Silicon Valley before ending up at Apple in late 2000.His idea was to take an MP3 player, build a Napster-like music sale service to complement it, and build a company around it.
  • Around 2005 Apple (and other companies) noticed that the mobile phone was the device people hardly ever left home without- It was always present.Apple said wouldn’t it be great if you could have the best parts of a phone, the web and music and not have to give up anything? Why should you have to compromise just because it is a mobile device?Make it simple and people will use it- the base technology had been around for years- needed to make it easy to use so my mother could not call me up for tech support! Apple had just 3 things in mind when they created the iPhoneit was a revolutionary phoneit was the internet in your pocketit was the best iPod ever created (Adam Lachinski’s recent book – “Inside Apple”) Apple’s consistent success is its ability to describe a complex and powerful product in the simplest terms possible.Would their customers have been able to tell them to build the iPhone? Probably not, but the basic ingredients were there and Steve Jobs elevated the components with a simple to use touch interface.
  • What would that type of company look like?Are there any companies out there now that look like this?
  • There is some trepidation with the unfamiliar from executives and board members. Often they are brought in for their domain expertise in running/improving the current model.How to think about something that’s inherently risky with no guaranteed payoff. (e.g. If a 10% investment in a plant can drive 10% incremental profit it is difficult to compare to a 10% investment in innovation where the results are not as clear cut)
  • Experiment- choice 1: getting $1,000 with certainty, or having a 50% chance of getting $2,500, (most people will choose the certain $1,000 — even though the expected value (the average value over repeated trials) of the uncertain option is $1,250. Furthermore , most people would reject a gamble where they would gain $100 if a fair coin lands on heads, and lose $100 when the coin lands on tails, because losses have a much higher impact than gains.
  • Firms and their executives, have an aversion to losses, and a tendency to undervalue gains. An innovation that disappoints in development — or worse, in the marketplace — can be a career path setback.Estimation of the prospects for substantial innovation will depend on some uncertain market factorsThe large, established business units within a firm usually control or have a heavy influence over budgets and strategiesThe limitations of the resulting offering, coupled with pessimism about technological advances, provide justifiable "no-go" decisionsInnovation is still a strategic conversation in many organizations- and needs to have high level support. Important- ask the question ‘Why do innovation?” What is the corporations goal with this program? These goals should not veer too far from what are strategic objectives that are being talked about in the corridors and around the water cooler (or will be seen as threatening)One way to help move the discussion forward is to enable criteria that are relevant to the corporation’s culture (e.g. revenue or engagement etc.). The criteria should reflect the ‘stories’ which inform the culture of the organization to help generate support.
  • Wouldn’t we all like to work in an organization like this?
  • Need to involve others to build support so that commitment (or execution) risk is lessened. Change is difficult and innovation (or challenging the status quo) can be threatening to people in the organization.Innovation cuts horizontally across many parts of the organization so consensus building is learning to operate in a matrix-like organization.Executives have stakeholders that they need to considerBoard members have shareholders/investors that they also need to listen to (and justify their actions)
  • What would this type of firm look like?Would there be many leaders working across different delivery areas or a skunk works that is isolated from the main corporation?Shouldn’t just be ‘roll the dice’ and we will see what happens. Should build on the previous 3 areas to mitigate risk (and also get organizational support) for the program.Innovation is about commitment and bringing concepts to markets. Its easier if there is a framework which can help make sense of the possibilities
  • This is the only 2x2 matrix you will see! In terms of evaluating opportunities, making innovation less of a ‘bet the farm’ endeavor vs a risk/reward matrix helps executives understand that there is a spectrum of opportunities and that you don’t need to swing for the fences each time.You also could be well served to develop a track record of small wins to build credibility before taking on larger more disruptive projects. I guess credibility is another “C” word.
  • In 2005 I was investigating a concept for Bell Canada called the “Broadband Phone”- it was a touch screen device that had an internet connection coupled with a traditional wire line phone. On the screen was local information, restaurant reviews and small applications that could be downloaded from a marketplace such as a financial calculator etc. Wouldn’t this be great to have this device in millions of homes across North America?I didn’t build this- I didn’t get a vendor to build this- I held a student design competition to leverage the thinking of a set of minds distinct from our corporate status quo. This helped us get buy-in from executives because sometimes a tangible example makes a concept come to life.
  • The 4Cs of innovation

    1. 1. Innovation: The 4 CsOr the few things I have learned over the past decade about innovation in large companies
    2. 2. Disclaimer- these are observations from my experience, no textbooks were harmed in the making of this presentation- your mileage may vary3/13/2012 2
    3. 3. 3/13/2012 3
    4. 4. A little about me….3/13/2012 4
    5. 5. • Always wanted to find out how things work • „Is there a better way?‟ • But what happens when you ask why or why not? • What does Immunology have to do with Architecture anyway?3/13/2012 5
    6. 6. “The future is not a place we will go: it is a place that you get to create.”3/13/2012 6
    7. 7. 1. Customer Focus 2. Culture 3. Consensus 4. Commitment3/13/2012 7
    8. 8. For most organizations innovation is not easy But it is a fundamental way to create value3/13/2012 8
    9. 9. What is Innovation?3/13/2012 9
    10. 10. • Over 409M results • Maybe the question is not what but how?3/13/2012 10
    11. 11. Importance of Innovation to Senior Executives in the US3/13/2012 11
    12. 12. Obstacles to generating a return on innovation3/13/2012 12
    13. 13. 1. Customer focus (Markets are conversations, but you have to actively participate to hear the right words)3/13/2012 13
    14. 14. Who is this?3/13/2012 14
    15. 15. What do some companies notice about how their customers use their products?3/13/2012 15
    16. 16. 2. Culture3/13/2012 16
    17. 17. Wouldn‟t it be great if an organization would be able to continually innovate and release products that were significantly better than its competitors‟ ?3/13/2012 17
    18. 18. In reality what I‟ve observed is that there is an inherent tension in corporations between improving the current model and investigating new models/new markets3/13/2012 18
    19. 19. Experiment: Choice 1: Get a certain $1,000 Choice 2: Get $2,500 50% of the time, $0 the rest3/13/2012 19
    20. 20. 1.Firms and key decision makers are simply risk-averse 2.Its difficult to make assumptions about the unfamiliar 3.Its difficult to get a budget for new ideas 4.Its easy to kill an innovation project.3/13/2012 20
    21. 21. 3. Consensus (or “why wasn‟t I consulted?”)3/13/2012 21
    22. 22. In a totally aligned organization • Everyone feels like they contribute • Executives are comfortable with innovation (because it is not just a „trophy‟ but part of everyones objectives) • Other stakeholders are able to give feedback to the process willingly3/13/2012 22
    23. 23. But in reality, need to involve stakeholders from all levels of the organization • There are domain experts who might feel threatened • There are executives who might want credit • There are others who just want to be heard3/13/2012 23
    24. 24. 4. Commitment3/13/2012 24
    25. 25. So, what if we could design a firm that is committed and easily moves into execution mode to drive from concept to prototype?3/13/2012 25
    26. 26. Framework for evaluating new innovative opportunities Create new markets Incremental Disruptive Low risk but many High risk/ high reward competitors (e.g. must be balanced Minimal product changes Significant product changes Twitter) against opportunity Key consideration cost of other initiatives is developing a (e.g. iPod) portfolio approach in order to mitigate risk in any one Sustaining Augmentation quadrant Member experience; High risk but a requires reduced cost defensive strategy to serve for success against other (e.g. Walmart) competitors (e.gHulu) Enhancement Breakthrough © Incite Design and Strategy Existing markets3/13/2012 26
    27. 27. © Tim MacKay New ways of approaching challenges3/13/2012 27
    28. 28. What I try with my innovation portfolio:1. Build in 1:1 customer feedback2. Help people in organization understand need for change in existing model3. Allow people to have voice heard4. Portfolio approach (and prototyping) to lessen perceived risk3/13/2012 28
    29. 29. Thank you! @jeffreyveffer Jeffrey.veffer@incited.ca3/13/2012 29