Innovation: The Intersection of Invention and Value. Jose A. Briones, Ph.D.

ProductCamp Austin – August 2012Jose A. Briones, Ph.D.@Brioneja

• In this introduction to the Beyond Stage Gate series we describe how the proper definition of innovation and the use of the right management process increases the probability of successful new product and service introductions Twitter: @Brioneja www.Brioneja.com

• 1 • How do you or your company define innovation? • Has this definition changed in the past few years? 2• • How do you define invention? 3• • Do you believe that invention is equivalent 4 to innovation? • Do you believe that innovations can be classified 5 or segmented and if so how?3

• How do you or your company define value?6 • How do you relate innovation and value?7 • What management system or process do you or your company8 use to manage the development of innovation? • Is your current innovation development process adequate for9 your needs? • How would you improve your current innovation development10 process? • Do you believe that different types of innovation need different11 management processes? Twitter: @Brioneja www.Brioneja.com

Legalese• Stage-Gate® is a registered trademark from Stage-Gate International’s Product Development Institute Inc.• “The fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright” - Copyright Act of 1976, 17 U.S.C. § 1075

Problem Product innovation has been described as the way out of today’s difficult business environment. The rate of success of development projects, in particular disruptive innovation projects remains too low. We believe that a reason for the low success rate is the erroneous application of analysis and management methods designed for incremental innovation to projects with high levels of uncertainty Twitter: @Brioneja www.Brioneja.com

Problem One of the biggest problems that a product manager encounters when starting an innovation program is to reach consensus on the definition of innovation. This is more than a semantics issue. Without agreement on exactly what the goal is the team is unlikely to achieve it. Many companies suffering from innovation fatigue, driven by confusion between innovation & invention7

Twitter: @Brionejawww.Brioneja.com

• “So Mr. Sullivan why don’t you tell me what you think is going on here, and please speak as you might to a young child or a golden retriever, I didn’t get here on my brains I can assure you of that” • John Tuld, CEO of the fictional Wall Street financial firm in the 2011 movie Margin Call Twitter: @Brioneja www.Brioneja.com

• The traditional definition of innovation has been simply “a new method, idea or product”.• We believe that this definition of innovation is obsolete, and that being new is not enough for something to be called innovative. Twitter: @Brioneja www.Brioneja.com

• “An invention is a new (previously undiscovered) method, device, process, algorithm, or tangible material that can be used for a specific purpose” Twitter: @Brioneja www.Brioneja.com

• Classical definitions of innovation and invention overlap each other!!• We must establish the difference between innovation and invention. Twitter: @Brioneja www.Brioneja.com

• Theres nothing wrong w/continuing path of incremental innovation – • Must improve product features to keep up with competition• Issue when continuing to add features – • 1. Increases cost of product: power users ask for additional features • 2. Too complex Twitter: @Brioneja www.Brioneja.com

• Incremental or sustaining • Occurs in linear fashion Product Product Product 1 2 3• Radical or disruptive • Occurs in non-linear, discontinuous or iterative fashion Projects Product Twitter: @Brioneja www.Brioneja.com

Maslows hierarchy of needs Twitter: @Brioneja www.Brioneja.com

A measure of • The magnitude an unmet need is met • Desirability The degree by which a product or service meets a need either functional, pragmatic or psychological Magnitude of value in marketplace tied to segment – essentialTwitter: @Brioneja Twitter: @Brioneja www.spyrotek.com

• “Big new ideas more often result from recycling and combining old ideas than from eureka moments” @stevenbjohnson Twitter: @Brioneja www.Brioneja.com www.Brioneja.com Twitter: @Brioneja

• We propose a definition of innovation as the intersection of invention and value.• The magnitude of incremental value that the invention brings to the user or market subsequently defines the innovation further as incremental, radical or disruptive. Twitter: @Brioneja www.Brioneja.com

Incremental or Radical or Disruptive Sustaining Breakthrough Innovation innovation innovation• Marginal • Order of magnitude • Delivers value improvements improvement or along a different along current increase in benefits feature set not feature set. along the same prioritized by the• Product line features existing offering extensions: Bigger, • Digital vs. Analog and user base better, faster. technology: • Results in an order Plasma vs. CRT of magnitude TV’s increase in rate of adoption or change in user behavior • Features vs. Design - iPhone Twitter: @Brioneja www.Brioneja.com

VsTwitter: @Brionejawww.Brioneja.com

Value and Innovation Innovation exists at the intersection of invention and value If your new product/invention/service does not offer value, it is just novel - not innovative. Your new offering must deliver value Meet an unmet need Innovation is not a measure of the change you make. It is a measure of the need you address Twitter: @Brioneja www.Brioneja.com

• This definition applies not just to products but to services, business models or business processes.• The implications of this definition are that different types of innovations must be managed differently in the development process Twitter: @Brioneja www.Brioneja.com

• Standard processes for innovation management reflect the linearity of incremental innovation • Stage Gate • Waterfall Stage 1 • Discovery • Business Stage 2 Case Stage 3 •Development• Do not work well in disruptive or radical innovation Twitter: @Brioneja www.Brioneja.com

“The Stage-Gate system is not suited to the task of assessing innovations whose purpose is to build new growth businesses, but most companies continue to follow it simply because they see no alternative” Clayton M. Christensen28

ClassicalBusiness DisruptiveManageme Innovation nt Efficien cy Iterative Forecas Estimat t es Progres s Flexibilit Measure y ment Resourc e Virtual allocatio teams n Twitter: @Brioneja www.Brioneja.com

• For Disruptive innovations, 1 round of VOC’s is not enough to be the cornerstone of a project • Customers cannot say that they want what they do not know • Customers can only provide feedback on incremental modifications on what they do know • Iterations are needed where customers evaluate a prototype and a new cycle starts, complete with a new VOC, market and business analysis 30

Project Portfolio Classification1 By Uncertainty Spiral Approach to Innovation 2 Management Use Of Different Tools At Each3 Level Of The Spiral Twitter: @Brioneja www.Brioneja.com

High Positioning Options Stepping • Projects are StonesTechnical Uncertainty classified by how much we Medium Platform Launches do NOT know Scouting • Degree of Options uncertainty Enhancement defines the Low Launches track they take Low Medium High Market Uncertainty Twitter: @Brioneja Source: The Entrepreneurial Mindset

• Analysis iterated Level 1• Different Tools Selected Level 2• Level 1 tools feed subsequent levels Level 3• WHEN Vs. WHICH Twitter: @Brioneja www.Brioneja.com

The SpyroTek™ Method for Innovation Management Resources Launch Quadrant IV Quadrant I Roadmap/Timeline Level Idea Generation Risk Analysis 3 2 VOC Customer Testing 1 Time Time Technology Supply Chain Assessment Analysis Business Value in Use Case Analysis Regulatory Quadrant III Prototype IP Strategy Quadrant II Development Resources Twitter: @Brioneja www.Brioneja.com

• We have proposed a new definition of innovation that directly relates it to value• Different types of innovation correlate to the magnitude of value delivered• This definition underpins the need to use different management approaches beyond classical waterfall or Stage Gate depending of the type of innovation outcome desired Twitter: @Brioneja www.Brioneja.com

• Jose A. Briones, Ph.D. (Brioneja)• Twitter: @Brioneja• Brioneja@spyrotek.com• www.Brioneja.com37

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Innovation: The Intersection of Invention and Value. Jose A. Briones, Ph.D.

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Innovation: The Intersection of Invention and Value. Jose A. Briones, Ph.D. Presentation Transcript