Innovation – What, Why, How…

Innovation – What, Why, How…
Why small and large firms depend on each other in their innovation process?
Anand Subramaniam

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“Without tradition, art is a flock of sheep without a shepherd. Without innovation, it is a corpse.”
- Winston Churchill

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Highlights
Innovation Overview
Innovation Metrics / Measures

Innovative Companies 2010
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Source – Business Week

Innovation Overview

Innovation – Open vs. Closed
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Innovation and Customer Need
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Target Audience
Objective
Mechanism
Target Audience
Objective
Mechanism
Target Audience
Objective
Mechanism
Target Audience
Objective
Mechanism

Innovation - Drivers
Increased demand for accountability
Stricter regulation
Technologies coupled with a need to exceed the competition in these technologies
Rising customer expectations regarding service and quality
Changing economy
Drivers
Increased competition
Demographic, social and maket changes
Industry & community needs for sustainable development
Shorter product life cycles
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Innovation Types
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Incremental Innovations
Focused on making small but significant improvements to existing products or services (when industry is mature)
Breakthrough Innovations
Introduces an existing technology into a new market, a new technology into an existing market or changes the way the offering is delivered
Disruptive Innovations
Game Changers who disrupt an existing market or create a whole new market

Innovation - Sustaining vs. Disruptive
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Sustaining
Focused on demanding customers; both incremental and radical.
Incumbents have resources and motivation
Disruptive
Introduce products and services not as advanced as existing ones, but offering other advantages (simpler, cheaper, more user friendly, ...) and focus on new or less demanding customers.

Innovation - Enablers
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Climate for Creativity
Working environment where inspiration thrive & creativity flourishes
Idea Generation
Secure a continuous source of creativity and flow of new ideas
Incubation Structures
Support the development and growth of ideas from innovation to delivery
Metrics & Incentives
Measure outcomes from creative processes and recognise talent at the organisation and individual levels
Role of Collaboration & Partnering
Work externally and internally with organisations and specialists who have the strongest capabilities for innovation
Integration of Business & Technology
Integrate technological capabilities with business insight to achieve innovation

Innovation - Dependency
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Small Firms depend on large firms for ..
as suppliers or customers
venture finance,
exit opportunites,
knowledge (production, markets and R&D)
opening new markets
Large Firms depend on small firms for ..
New Product Development,
as suppliers of new knowledge (which they cannot develop themselves),
organisational renewal, for experimentation with busienss models,
opening new markets

Innovation – Process Steps
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$
Pre-IPO
Viable
Market acceptance
Heading to IPO or M&A
Expansion
Legal Entity
Founders = Mgt Team
Minimal Revenue
Slow Growth
High Growth
Head Count
Multiple Cycles
Bright Idea
Experimental
Research
Business Plan
Proof of Concept
Start-Up
Support Functions
Administration
Marketing
Revenue Growth
Seed
Idea / Concept
Time

Innovation – Detail at each Step
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Recruitment
Business Development
Market Access
Financial
Training
PR / Marketing
Networking
Business Development
$
Expansion
Business Plan
Prototype
Project Management
Business Premises
Management Training
International support
Market Access
Recruitment
Training and Incentives
Diversification strategies and support
Start-Up
Seed
Idea / Concept
Time

Metrics & Measures

Innovation – Product / Service Measures
Growth rate in share of key customers’ purchases
Time to market for new products / services
Growth rate in number of customers
Number of patents
% age of revenue / sales / gross margins from new products / services
Customer satisfaction with product / service features
Product / Service Measures
ROI for new products / services
% of new products / services achieved initial business objectives
Time to profitability for new products / services
% age of products / services making up the 80% of sales volume
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Innovation – Business Model Measures
Number of sales channels used
Number of channel partners / alliances appointed / created
Revenue growth
Profit growth
Number of new sales channels created during the year
Business Model Measures
% age business components or processes outsourced
Number of joint ventures created during the year
Average time to act on identified business opportunities
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Innovation – Operation Measures
Warranty expenses as a % age of sales
Cost of goods sold as a % age of sales
On time delivery
Cost reduction
Customer retention
Operation Measures
Perfect order fulfilment
Full time equivalents
Customer satisfaction from order taking to delivery
Order fulfilment cycle time
Inventory turnover rate
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“No one asks you to throw Mozart out of the window. Keep Mozart. Cherish him. Keep Moses too, and Buddha and Lao Tzu and Christ. Keep them in your heart. But make room for the others, the coming ones, the ones who are already scratching on the window-panes.”
- Henry Miller

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Good Luck
http://www.linkedin.com/in/anandsubramaniam

Innovation – What, Why, How…

by Anand Subramaniam on Jul 19, 2010

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