Kill Bad Innovation Theory and
Revolutionize the Innovation Process
An Introduction to Outcome‐Driven
Innovation
Chris Lawer, MD, Strategyn UK

How do you innovate the banana?
*

Innovation is the process of devising
a product or service concept that
satisfies the customer’s unmet needs.
satisfies the c stomer’s nmet needs
-1
Growth Strategy
Stage-Gate® is a trademark of Stage-Gate Corporation
1

Distinguishing The Innovation Process
Innovation Process
Uncover all the Determine what Devise concepts
Companies devise solutions that
customers’ “needs” are that address
address the customers unmet
“needs” unmet unmet needs
“needs”.
Concept Approval
Process
Validate the Build a business The product champion works to
feasibility of the case to support Secure funding
show the concept can be
concept the concept
designed and built and obtains
backing and funding from
management.
Product Development
Define the
Process
product’s Design the
Test the product The product development and
technical product
design team turns the concept into a
g p
specifications
real product that can be
manufactured.
4

Principles of
Outcome Driven
Outcome‐Driven
Innovation

\"People don't want to buy a
quarter inch drill.
quarter‐inch drill They want a
quarter‐inch hole!“
Theodore Levitt, 1975

There is a better way to think about market segmentation and new product
innovation. The structure of a market, seen from the customers' point of view, is very
simple: They just need to get things done as Ted Levitt said When people find
done, said.
themselves needing to get a job done, they essentially hire products to do that job
for them.
Clayton Christensen, 2005

JOB
Defines the functional and/or
Defines the functional and/or
emotional task, event, goal or
activity that people want to
accomplish
p
Defines the action for which a
product or service may be
needed

Customer’s HIRE …………… SOLUTIONS …………… to get a JOB DONE
g
Functional
Emotional
E i l
BENEFITS
NEEDS SERVICE
PRODUCT ACTIVITY
JOB
COMPANY
SPECIFICATIONS BRAND PROBLEM
9 MSc Relationship Marketing

The job is the primary unit of analysis
Functional
Emotional
E i l
1. Jobs come and go .. New jobs can be
discovered
2.
2 Products come and go – the job is a more
Products come and go the job is a more
stable, long‐term focal point around which
value creation must be centered
3. The job’s perfect execution reflects the
customer’s true definition of value
4.
4 Requirements are not captured on the
R i t t td th
ACTIVITY
JOB
product – they are captured on the job the
product or service is intended to perform PROBLEM

The innovation task
1. Understand what jobs periodically arise in Functional
Emotional
E i l
customers' lives for which they might hire
products the company could make.
a.
a Understand the job
Understand the job
b. Design a product and associated
experiences in purchase and use to do that
job
c. Deliver it in a way that reinforces its
intended use
intended use
ACTIVITY
JOB
2. When customers find themselves needing to get
PROBLEM
that job done, they will hire that product.
j , y p

Example jobs …
Example jobs
Take Notes
Stay in touch with
Make a Financial Decision
M k Fi i lD i i colleagues
ll
Communicate in an
Emergency
Perform Arterial
Surgery
Make a Straight Cut in
Wood
Care for a Patient’s
Wound
12
MSc Relationship Marketing
9 April 2009

Discovering new or Knowing how
adjacent jobs is key customers want to
to new market get existing jobs
creation / expansion
/ done better is key to
core platform growth

What are all the jobs or activities within
the home that would be easier if you were
the home that would be easier if you were
able to share data between devices?
Discovering new or
What information sharing jobs that you
What information sharing jobs that you
adjacent jobs is key are not currently performing that would
to new market you like to perform? i.e., what devices
within your home would you like to share
within your home would you like to share
creation / expansion
/ information between?

Microsoft was able to
identify and prioritize
the outcomes on the
job of taking notes to
Discovering new or see where traditional
pencil and paper fell
pencil and paper fell
adjacent jobs is key short. It led them to
create a new market –
to new market note‐taking software
creation / expansion
/ … the latest addition
to the Office suite.

A jobs focus enables market definition from the customer’s
viewpoint
Product View
P d t Vi
Handheld wireless device market
Palm, Handspring, HP, Sony Clio etc
Customer View
Travelling Businessperson
Stay in touch with
St i t h ith Notebooks, Airport and Hotel Wireless
N b k Ai d H l Wi l
Access, Business Cards, Satellite
colleagues
Navigation, Mobile Phone
Home Office User
Jobs View
Use Small Snippets of Time Productively
All the above plus Financial Times, Mobile
All the above plus Financial Times Mobile
phones, Airport TV Screens, Notepad and
pen, handheld games, boredom, Free
newspapers!
MSc Relationship Marketing
9 April 2009

Customer’s Measures of
Value (Desired Outcomes)

Customers Intuitively Employ a Logical Value Measurement System
Customers buy products and services to
Customers buy products and services to
• Job
help them get functional and emotional
“jobs” done, e.g., tasks, goals or activities, Outcomes
etc.
t 1
Customers intrinsically use “metrics” to 2
•
define the successful execution of a specific 3
job
Importance
4
These are their desired outcomes
•
n
Satisfaction
n = 50 to 150
For any j there may be 50 to 150 outcomes
y job y

The “Customer Job Map” of Access the Internet From In and Around
the Home
hH
Evaluate
Service
Determine Providers
Choose an
Identify
Household
Service Internet Access
Internet Access
Providers
Package
Needs Evaluate
Access
Packages
Purchase Internet
Access
Access the Set‐Up / Install
Internet Internet Access
Internet Access
Troubleshoot
Internet Access
Internet Access
Problems
Obtain Support from Internet Service
Provider

The precise measurable structure of a desired outcome statement
Direction of improvement Unit of measure Object of control
Minimise the likelihood that an electrical cable is damaged
when making a hole in a wall, e.g., it is cut, it comes loose, etc.
Contextual clarifier Example of object of control
• The statement’s structure, content and format limit variability
• The statement prompts a course of action
• It is not open to interpretation
• Does not confound the way it or other statements are prioritized

The “Customer Job Map” of Access the Internet From In and Around
the Home
hH
Evaluate
Service
Determine Providers
Choose an
Identify
Household
Service Internet Access
Internet Access
Providers
Package
Needs Evaluate
Access
Packages
Purchase Internet
Access
Access the Set‐Up / Install
Internet Internet Access
Internet Access
Outcomes Troubleshoot
fInternett Access
Internet Access
44. Minimise the likelihood of having to be at home to receive a delivery of internet access equipment
44 Mi i i th lik lih d f h i t b t h t i d li it i t
Problems
45. Minimise the amount of packaging used to supply the internet access equipment
Obtain Support from Internet Service
46. Minimise the time it takes to understand the set‐up instructions provided by the internet service provider
Provider
47. Minimise the likelihood that support for installing internet access is only provided during certain time periods
48. Minimise the number of different steps required to set‐up internet access

The “Customer Job Map” of Access the Internet From In and Around
the Home
hH
Evaluate
Service
Determine Providers
Choose an
Identify
Household
Service Internet Access
Internet Access
Providers
Package
Needs Evaluate
Access
Packages
Purchase Internet
Access
Access the Set‐Up / Install
Internet Internet Access
Internet Access
Outcomes
Troubleshoot
62. Minimise the likelihood of having to be in a fixed location for accessing the internet in the home
62. Minimise the likelihood of having to be in a fixed location for accessing the internet in the home
Internet Access
Internet Access
Problems
63. Minimise the amount of space that is needed for the equipment required to access the internet
Obtain Support from Internet Service
64. Increase the likelihood that the colour of the equipment used to access the internet fits with the décor of the home
Provider
65. Minimise the time it takes to establish a connection to the internet
65 Minimise the time it takes to establish a connection to the internet
66. Minimise the number of attempts needed to establish a connection to the internet

Which Customers’ Needs
are Unmet?
are Unmet?

When is a need unmet?
If a desired outcome is both important and unsatisfied, it is unmet
p ,
•
The more important and less satisfied an outcome is (the more unmet it is) the
•
greater it represents an opportunity for value creation
Outcomes are prioritized based on their attractiveness as opportunities for value
•
creation
Importance
Importance
Opportunity
Opportunity
Satisfaction
Satisfaction

What is the Opportunity Algorithm?
What is the Opportunity Algorithm?
If 90% of the respondents rate an
f fh d
• OUTCOME IMP SAT OPP
outcome a 4 or 5 for importance, the Increase the degree to which the music
9.0 3.0 15.0
sounds like it is being performed live
Importance value entered into the Minimize the likelihood of hearing
fluctuations in the volume level from
algorithm is a 9.0. 8.5 3.5 13.5
song to song, e.g., one is louder or
softer than another, etc.
If 30% of the respondents rate an
•
Minimize the likelihood of
8.0 5.0 11.0
outcome a 4 or a 5 for satisfaction,
outcome a 4 or a 5 for satisfaction inadvertently selecting the wrong song
inadvertently selecting the wrong song
the Satisfaction value entered into Minimize the time it takes to queue
7.5 6.5 8.5
the songs in the order in which they
the algorithm is a 3.0 are to be played
Opportunity = Importance + max (Importance – Satisfaction, 0)

What Does The Opportunity Landscape Reveal?
10
9
Over‐Served
8
Table Stakes Limited
Opportunity
7
Ripe for
faction
Opp >10
Disruption
6
Solid Opportunity
Satisf
5
Opp >12
High Opportunity
4 Potential for
TARGETS FOR
Disruption
VALUE‐
VALUE
3
CREATION
2
Opp >15
Extreme
Opportunity
Opportunity
1
Appropriately Served Under‐Served
1 2 3 4 5 6 7 8 9 10
Importance
26

What Does The Opportunity Landscape Reveal?
10
9
THREAT OF
Over‐Served
DISRUPTION
8
Table Stakes Limited
Opportunity
7
Ripe for
faction
Opp >10
Disruption
6
Solid Opportunity
Satisf
5
Opp >12
High Opportunity
4 Potential for
Disruption
3
2
Opp >15
Extreme
Opportunity
Opportunity
1
Appropriately Served Under‐Served
1 2 3 4 5 6 7 8 9 10
Importance
27

What Does The Opportunity Landscape Reveal?
10
9
ADJACENT
Over‐Served
GROWTH
8
Table Stakes Limited
Opportunity
7
Ripe for
faction
Opp >10
Disruption
6
Solid Opportunity
Satisf
5
Opp >12
High Opportunity
4 Potential for
Disruption
3
2
Opp >15
Extreme
Opportunity
Opportunity
1
Appropriately Served Under‐Served
1 2 3 4 5 6 7 8 9 10
Importance
28

Innovation growth paths and market opportunity landscape
Jobs Jobs Jobs To optimize
r Job(s)
growth, a
company must
company must
2
Other
be able to
discover and
address the
address the
Outcomes Outcomes Outcomes
ore Job(s)
opportunities
that exist for
value creation.
Co
1
Core Platform New Value Delivery Platform
Current Job Executor New Executor

Six organic growth paths
All markets follow these 6 paths – so if you do not choose to pursue a path, a competitor will….
New Platform Creation Related Growth in a
Related Market Growth
A new job can be
Disrupted Market
Other Job(s)
addressed through
Construct a feature set on a
Add a set of features to the
any of the 6 growth
any of the 6 growth
2 platform to help
new platform to help
new
2 a set of features to the
Add a set of features to the
Add
core platform to help
core platform to help
2 paths, enabling the
customers get the core job new platform to help new
customers get a related job
job executor to
and related jobs done better. customers get a related job
or jobs done.
perform a job that
or other jobs done.
3 6
2 never existed
Core Platform Disruption
Core Platform Disruption Core Market Disruption
Core Market Disruption
Core or Sustaining Market
Core or S staining Market before, e.g., a job
bf jb
Growth that resulted from
ore Job(s)
Construct a feature set on a Construct a feature set on a new knowledge, a
new platform to help new platform to enable new
Add a set of features to the new trend, new
customers get a core job or customers to perform the
core platform to help policy or to support
Co
jobs done cheaper and/or core job of a specialist.
customers get a core job or new solutions, etc.
better.
jobs done better.
4 5
1
Core Platform New Value Delivery Platform
Current Job Executor New Executor

Turning Outcome‐Driven
Insights into Action
Concept
Outcome‐Based Development
Segmentation Pipeline
Positioning and Focused
Review
Proposition Creativity
Development

Discovery of market‐level opportunities
OPP
DESIRED OUTCOME IMP SAT
N=526
Minimise the time it takes for pages to load when surfing the
internet 8.0 3.5 12.5
Minimise the frequency that a connection to the internet is lost 8.0 3.5 12.5
Minimise the likelihood of needing to access the internet to fix a
problem when access to the internet is unavailable 7.6 2.8 12.4
Minimise the time it takes to get a refund for failure in internet
Minimise the time it takes to get a refund for failure in internet
access caused by the internet service provider 7.4 2.6 12.2
Minimise the likelihood of having to describe a problem more
than once when contacting technical support
than once when contacting technical support 7.4 2.6 12.2
Increase the likelihood of being able to understand the
instructions provided by technical support 7.7 3.2 12.2

Outcome‐based segments of opportunity
10
9
Over‐Served
8
Table Stakes Limited
Opportunity
7
Ripe for
faction
Opp >10
Disruption
6
Solid Opportunity
Satisf
5
Opp >12
High Opportunity
4 Potential for
Disruption
3
2
Opp >15
Extreme
Opportunity
Opportunity
1
Appropriately Served Under‐Served
1 2 3 4 5 6 7 8 9 10
Importance
33

Outcome‐based segments of opportunity
Segment 4 Segment 3
Segment 1 Segment 2
10 Demanding Competent
Settled and Frustrated
Price‐Sensitive Self‐Servers
Simple Newbies
9
Over‐Served
8
Table Stakes Limited
Opportunity
7
Ripe for
faction
Opp >10
Disruption
6
Solid Opportunity
Satisf
5
Opp >12
High Opportunity
4 Potential for
Disruption
3
2
Opp >15
Extreme
Opportunity
Opportunity
1
Appropriately Served Under‐Served
1 2 3 4 5 6 7 8 9 10
Importance
34

Outcome‐based segments of opportunity
Groups customers who find the
•
same outcomes important and
unsatisfied … with the same
Segment 2
Segment 1
underserved needs
Frustrated
Settled and
Newbies
Simple
Drives tailored marketing messages
•
to specific segments
p g
Targets specific segments for growth,
•
new market entry and disruption
Segment 4
Segment 3
Sizes the market segments
Sizes the market segments
•
Demanding
D di
Competent
C tt
Price‐Sensitive
Self‐Servers Enable customers to be found, and
•
sold to effectively
35

How is the optimal value proposition defined?
p pp
The position/message is tied to
• “This insight enabled
the key opportunities that are us to identify a
unique competitive
unique competitive
effectively addressed by the position for our skin
product or service and wound care
business. Upon
Product features are tied to
• repositioning, we
repositioning we
specific underserved outcomes went from stagnating
growth to double
A meaningful competitive
• digit growth in 6
analysis is conducted
analysis is conducted months.
months ”
The message connects solidly
• David Hotchkiss
VP Sales & Marketing
with the targeted customers Coloplast Corp.
Prevent
Complications

What makes this approach unique?
What makes this approach unique?
• The initiatives with the best chance
The initiatives with the best chance OUTCOME OPP
for success are identified Minimize restenosis, i.e., the recurrence of the
15.3
blockage
• Likely product failures are identified
and aborted – the justification to
kill a project is made
“Using this approach
• Resources are placed on the likely
Resources are placed on the likely we reprioritized
we reprioritized
winners, speeding time to market resources so we
could be the first
• … more winning products, less to market with the
development expense
dl t stent, an opportunity
that became a
$1 billion product in less than 2 years – the fastest
growing medical device in history.
growing medical device in history ”
Cordis (J&J) VP of Marketing
Rick Faleschini

Focused idea generation
Focused idea‐generation
Ideas were brainstormed for the top 14 opportunities. The new features
could not add cost to the product.

The Cutting Wood “Job Map”
g p
Operate the
Adjust the Saw
Plan the Cut Start the Cut
Saw
Outcomes
Minimize the time it takes to change the table
Minimize the time it takes to change the blade
Increase the accuracy of saw gauge calibrations, i.e., the angle/mitre and cut width calibrations
Maintain the Complete the
Making a Cut
Saw
Minimize the movement in the handle position (angle) when setting the blade to a different depth
Minimize the movement in the handle position (angle) when setting the blade to a different depth
Straight Cut
Minimize the time it takes to set the blade to the desired cut depth
Minimize the time it takes to set the saw to the desired cut angle
Ensure Safety

Cutting Wood Opportunity Landscape
10
9
Over‐Served
8
Table Stakes Limited
Opportunity
7
Ripe for
faction
Opp >10
Disruption
6
Solid Opportunity
Satisf
5
Opp >12
High Opportunity
4 Potential for
Disruption
3
2
Opp >15
Extreme
Opportunity
Opportunity
1
Appropriately Served Under‐Served
1 2 3 4 5 6 7 8 9 10
Importance

Creating the Bosch CS20 Circular Saw
OUTCOME OPP
Minimize the cost of repairs due to cut cords
Minimize the cost of repairs due to cut cords 11.5
11 5
Direct Connect; removed the
Minimize the likelihood of snagging the cord on
12.7 cord
the material
Minimize the likelihood of dropping the saw
10.5
05
when lower it
hl i
OUTCOME OPP
Blower is aimed down and at
Minimize the amount of debris that is thrown the cut line to blow debris
11.4
up into the users face away and provide line of
sight
Minimize the likelihood of inadvertently
13.5
moving off the cut line/path
Served
Value Delivered perfectly

ODI Addresses
Your Innovation Challenges
Your Innovation Challenges

Your innovation challenges ….
How do I reduce failure rates?
How do I reduce failure rates?
•
How do I identify value‐creation / growth opportunities with more predictability?
•
How do I gain agreement and buy‐in from senior management and from the organisation?
•
How do I release the creativity and imagination of employees in a controlled, cost‐
•
effective way?
How do we know we are backing the biggest opportunities?
g gg pp
•
How can we kill projects that won’t deliver value?
•
How do we define a clear growth path and strategy
•
How we do fail less and if we have to, fail faster?
How we do fail less and if we have to fail faster?
•
How do I add some system and structure to creative chaos?
•
How do I manage the apparent anarchy of open innovation?
•

Outcome‐Driven Innovation Methodology
Outcome Driven Innovation Methodology
Improve
Identify Position
Formulate
6
1 Opportunities Current
Innovation
Offerings
Strategy
Measure
Define
Capture Prioritize
3
2 7
Identify
Customer Development
Opportunities
Inputs Pipeline
Control
Define
Segment
8
4 Breakthrough
The
Concepts
Market
Address
Define
5 Opportunities
Targeting
Analyse
Strategy

*

Further reading
Giving Customers a
Fair Hearing, MIT
Sloan Management
Review, Spring 2008
The Customer‐
What Customers Want
Centred Innovation
details the 8‐step
Map, Harvard
outcome‐driven
Business Review,
innovation methodology
May 2008

Outcome‐Driven Innovation™
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47