Translating innovation into profit innovation day 2009

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Duncan Smith's keynote at Innovation Day, Boston, 20th October 2009

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Translating innovation into profit innovation day 2009

  1. 1. Translating innovation into profit Using technology to overcome difficult market conditions Innovation Day 2009 Duncan Smith 20 October 2009
  2. 2. Innovation Creativity: The generation of novel and useful ideas Innovation: Making money out of creativity Many ways of being innovative, for example: – Business model innovation – Service innovation – Brand innovation – Technology led innovation 2
  3. 3. Translating innovation into profit Agenda: Using technology to… 1 Resist your product becoming a commodity 2 Create a new market with existing R&D output 3 Dramatically shift product price point 4 Radically differentiate your product 3
  4. 4. Fighting commoditisation: LauraStar Irons – a commodity 4
  5. 5. Fighting commoditisation: LauraStar Ironing science Heat the cloth, flatten the cloth, cool the cloth down 1986 – World’s first ironing ‘system’ patented by LauraStar Separate boiler for 3.5 bar, 160°C steam – Less frequent refill Steam delivered through ‘mono-tube’ Press button for steam on forward stroke – HEAT Release button on backward stroke – FLATTEN Fan blows through board – COOLS Cuts ironing time in half – hence a premium product 5
  6. 6. Fighting commoditisation: LauraStar Increasing competition with similar performance 6
  7. 7. Fighting commoditisation: LauraStar How could Laurastar stay ahead? Opportunity for improvement Press button for steam on forward stroke – HEAT Release button on backward stroke – FLATTEN Steam on automatically with forward stroke Steam off automatically when left alone or backwards Steam off when picked up 7
  8. 8. Fighting commoditisation: LauraStar How to detect iron motion and direction relative to a board (LauraStar iron) Relative movement Relative movement between Movement of iron between iron & board iron, board & other sensor independent of board Sensor in board Sensor in iron Other sensor Backward step - Physical contact Non-contact tried before unsuccessfully Not workable - too complex Undesirable element - Ball Switch Optical IR ‘map’ Vision system risk notable - needs solution correlator of board aimed at iron/ board Loads placed Time of Accelerometer Triangulation Air pressure/ Differential on handle flight flow acting non-contact on iron moisture Route sensor eventually Strain Sliding chosen gauges switch Handle Soleplate ‘Draw’ Temp profile Pressure Robot Scanning Capacitive Dielectric Electrostatic Inductive IR proximity Track wire sensors in sensor arm laser coupling absorption field pattern pick-up/ sensor radioactive sensor board array Magnetised iron source 8
  9. 9. Fighting commoditisation: LauraStar 18-month project yielded world’s most advanced ironing system Steam delivered in 1/1000th of a second (from pushing iron) Self-calibrating & correcting over time 9
  10. 10. Fighting commoditisation: LauraStar Jan Beekman, LauraStar’s chief operating officer… “Based on market surveys and inside market knowledge, we estimated that ca. 30% of our products sold would be with the intuitive iron. In reality we note that in the last 12 months almost every second product sold has been the intuitive iron.” 10
  11. 11. Translating innovation into profit Agenda: Using technology to… 1 Resist your product becoming a commodity 2 Create a new market with existing R&D output 3 Dramatically shift product price point 4 Radically differentiate your product 11
  12. 12. Using existing R&D output: SK-II In 1987 the Montreal Protocol banned the use of chlorofluorocarbons (CFCs) as aerosol propellants Caused concern for P&G In early 1990’s P&G licensed ‘Electrodyn’ spray technology from ICI 12
  13. 13. Using existing R&D output: SK-II Electrodyn? ++ + + + + + + + + + + +++ + + + + + + + + +++ + + + ++ +++ ++ ++ + + + Preferential deposition Even coverage Uniform dispersion (even under leaves) 13
  14. 14. Using existing R&D output: SK-II Too expensive for general aerosol use So it sat on the shelf…. …until Cambridge Consultants were asked to identify other potential applications for the technology in P&G’s business Nasal spray Foundation spray 14
  15. 15. Using existing R&D output: SK-II Strong lead application emerged Feature Benefit Low flow rate achievable Local application preferred, from portable device where low flow rate an advantage Can’t feel liquid application Use in sensitive areas? Uniform deposition Ideal for even colour depth Earth return path needed Hand-held device favoured Preferential deposition on No over-spray earthed surface Semi-conducting fluid required Oil based product ideal Device likely to be relatively Need high value product expensive (> $5) No current high performing Very high performance deposition technique 15
  16. 16. Using existing R&D output: SK-II SK-II Air Touch Foundation spray 16
  17. 17. Using existing R&D output: SK-II SK-II Air Touch Foundation spray Charged droplets disperse evenly on face – Avoid non-conducting media – hair or clothing Device retails for $150 – Twin pack (2x 5ml) retails for $90 – 5ml lasts approx. 3 months 17
  18. 18. Using existing R&D output: SK-II SK-II Air Touch Foundation spray “Today the world wide SK-II cosmetic business is worth over $400 million in sales. The Air Touch foundation product was a critical initiative in this business whose objective is to meet the needs of the highly discerning cosmetic consumer”. Rowena Pullan, Director Research & Development, Global Personal Healthcare, P&G 18
  19. 19. Translating innovation into profit Agenda: Using technology to… 1 Resist your product becoming a commodity 2 Create a new market with existing R&D output 3 Dramatically shift product price point 4 Radically differentiate your product 19
  20. 20. Radically changing the product price point: Iona Radio Internet radio – the “next generation of radio” Many thousands of stations - local radio wherever you are “listen again” content available on demand BUT Mainly tied to the PC – standalone internet radio products were expensive (~$300) Products were “techy” network devices, not targeted at average radio listeners Opportunity existed for a low cost, simple to use radio – connected anywhere in the world there was an internet connection 20
  21. 21. Radically changing the product price point: Iona Radio Our client CSR 2” 21
  22. 22. Radically changing the product price point: Iona Radio 22
  23. 23. Radically changing the product price point: Iona Radio 23
  24. 24. Radically changing the product price point: Iona Radio 24
  25. 25. Radically changing the product price point: Iona Radio RadioPro: From concept to platform launch in 10 months “RadioPro is a breakthrough design that enables our customers to penetrate this market quickly, at lower risk and at low- cost to the consumer. Tracy Hopkins, CSR, Vice President, Consumer 25
  26. 26. Radically changing the product price point: Iona Radio Cube Radio “At last, here was a way to make internet radio fun, and to turn it into a truly novel consumer product with mass appeal.” Kevin Taylor, e-commerce and Marketing Director, Armour Group 26
  27. 27. Translating innovation into profit Agenda: Using technology to… 1 Resist your product becoming a commodity 2 Create a new market with existing R&D output 3 Dramatically shift product price point 4 Radically differentiate your product 27
  28. 28. Radical product differentiation: Round tea bag A highly competitive market 28
  29. 29. Radical product differentiation: Round tea bag Market intelligence All the brands had high quality products – Blanket advertising – Shoppers had tried them all.. – ...couldn’t remember which one last… – ...bought the one on offer Lyons Tetley thought a different form factor may help – how about a round bag? – Couldn’t approach IMA (bag manufacturer) – Wouldn’t do confidential or exclusive deal – Approached Cambridge Consultants 29
  30. 30. Radical product differentiation: Round tea bag Secrecy paramount ‘Need-to-know’ basis within Cambridge Consultants AND at Lyons Tetley – Machines in cordoned off area – Headed paper/envelopes banned – Assumed names for CC staff How hard can it be? Many engineering challenges – Heat sealing and alignment – Cutting 30
  31. 31. Radical product differentiation: Round tea bag Many engineering challenges Heat sealing and alignment at 1200 bags per minute on 2 lanes Lack of concentricity spoils visual appeal 31
  32. 32. Radical product differentiation: Round tea bag Many engineering challenges Cutting – square bag is easy ? High quality D2 tool steel Optimised hardening process Development project saw tool life extended from 20 hours to >300 hours between re-grinds 32
  33. 33. Radical product differentiation: Round tea bag The improved brand recognition generated a huge return on investment Converted more than 50 machines worldwide – For approximately $2.5M including the development contract Lyons Tetley increased market share by 30% – Moved to number 1 in the UK Tetley PG Tips Typhoo/ Fresh brew 33
  34. 34. Summary There are many potential courses of action in turbulent market conditions 34
  35. 35. Summary There are many potential courses of action in turbulent market conditions Technological innovation, combined with market insight, can provide a spectacular return on investment, a protectable position and a manageable level of risk. 35
  36. 36. Contact details: Cambridge Consultants Ltd Cambridge Consultants Inc Science Park, Milton Road 101 Main Street Cambridge, CB4 0DW Cambridge MA 02142 England USA Tel: +44(0)1223 420024 Tel: +1 617 532 4700 Fax: +44(0)1223 423373 Fax: +1 617 737 9889 Registered No. 1036298 England info@CambridgeConsultants.com www.CambridgeConsultants.com © 2009 Cambridge Consultants Ltd, Cambridge Consultants Inc. All rights reserved. 36

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