The document discusses innovation management and Oracle's solutions. It describes innovation management as selecting and translating the best ideas into profitable customer offerings. Oracle's innovation management connects information and processes across idea generation, portfolio optimization, proposal development, and requirement definition to close the loop between strategy and execution. The benefits are outlined as increasing ROI on R&D, building a stronger pipeline of ideas, better satisfying customer needs, and aligning product portfolios with corporate strategy to drive profitable growth.
This is Oracle’s Safe Harbor Statement…which essentially states that if I discuss Product Direction or the Roadmap for any reason during the presentation, then it would be for Informational Purposes Only.
First, let’s talk about what’s driving the need for aligned Innovation Management.
Be it addressing customer interests, delivering novel products, or protecting share and margins… innovation is critical for companies to create a sustainable competitive advantage.
There’s a long list of products that have failed to sustain innovation. Products which were innovative in their time may fall out of sync with market requirements and trends and can find themselves falling behind the competition. [CLICK]
[CLICK] and herein lies the challenge… its difficult enough to come up with 1 great product, but market leaders come up with many by continuously innovating and commercializing the best ideas in line with their corporate strategies.
Through rare leadership and culture, a few companies have managed to position themselves as leaders and enjoy unparalleled growth and profit. But what do these leaders and cultures create to enable their businesses to be so successful?
They have operational-ized the process – harnessing all their assets, aligning them, and going-to-market with a carefully balanced portfolio of incremental and radical innovation.
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Theres a long list of failed innovation
These leaders balance iterative and radical innovation and ensuring each new product
This enables them build a full and balanced pipeline.
… what they truly have done is ‘operational-ized’ the process
Not just identifying an idea, but fully capitalizing on it
successful companies have a continuous innovation process which
Several companies stand out, although its hard to find too many.
Innovation comes in many forms – and can continue once a product is released – e.g. packaging, Product line extensions, new features -- these are important to stay competitive but do not offer the same level of impact that breakthrough innovation offers. To deliver breakthrough innovation, companies have to accept higher levels of failure and uncertainty; move forward without, or against, consumer insights.
Innovation on minds of most CEOs --
Profitable Growth
Do nothing is not an option
Innovation comes through out a product lifecycle and disruptive, evolutionary, packaging, process, etc.
Bring innovation to the marketplace
that’s driven by unparalleled customer insights, creativity, and the ability to execute quickly and expertly.
Drive efficiency and profitable growth
through process simplification, cost-consciousness and a dedication to continuous improvement.
New Product Introductions
We have been among the first in the industry to introduce innovative products in response to new research and clinical
studies, media attention and consumer preferences. Given our presence in multiple distribution channels, we are well-positioned to identify trends and demand for new products, and we have the
manufacturing scale, expertise and supplier relationships to respond rapidly and bring new products to market. During fiscal
2013, we introduced approximately 155 new products.
innovation has become an imperative for most CEOs. “It’s a word that I live and breathe,”
If there’s one word companies aspire to be, it would be innovative. Some people get caught up in the definition of innovation, whether it’s the disruptive kind that transforms what exists or creates what doesn’t, or the incremental kind that comes from one small improvement building upon another.
at its core, what do companies aim to achieve from innovation?
Drive growth, delight customers, optimize ROI.
Growth – access new markets and retain customers through differentiated offerings
Energized customers – rapidly converting the “voice of the customer” to products; and taking that one step further by anticipating their needs and creating a market pull
ROI – investing in the right products within operating constraints of time, resources, and budget
Combine these benefits with leading time to market, and companies will rapidly move to the next level of brand value.
Although the benefits are immense, many are not able to realize them.
49% - amount of projects that meet market share objectives
64% - companies struggle to convert great ideas into great products
50% - companies are not satisfied with their returns on innovation
So why are many companies falling short of their own expectations – why aren’t these numbers higher?
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The challenges are clear and the failures measured.
Sustain successful innovation
Consider John K’s metrics?
Transparency of product feedback (on web) means that failures are public and may taint consumer adoption
A gap that develops between corporate strategy and how companies execute to it
At the top level – there is a great strategy – well researched, defined, and driven by financials
At the bottom level – the business and valuable resources are executing against project plans like crazy
But the right decisions are not being made in the middle to keep the 2 in alignment … which results in those statistics from before
So what creates this gap?
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Oracle’s Agile PLM suite has been wildly successful at helping companies bring products to market on time, at cost, with high quality.
Companies with great strategies are challenged with providing effective direction to their execution processes.
There is a gap between this bottom execution layer and the people and processes leading innovation strategies.
The gap must be filled to properly Execute on Innovation, failure to do so will yield marginal disconnected products.
Lets look at the impediments creating this chasm. …what creates this gap
Evaluate potential investments across critical levers
With both a bottoms-up approach where stakeholders participate in the product invention, definition and translation processes and a tops-down financial impact and strategic fit analysis, IM drives a systematic approach to the portfolio selection of offerings that best aligns with company objectives.
Many systems and disconnects that support critical innovation processes…
To stay aligned, a significant amount of information needs to be shared between key stakeholders and various processes.
Unfortunately most companies have silos of information which is a result of competing processes and multiple systems.
These disconnects create inaccurate information which vital decisions are being made on.
For example… a marketing requirement to certify a product for distribution in the EU was not outlined in the original scoping document may not be communicated to R&D … the product as a result missed its market window and 30% of the projects planned revenue.
Or another example… a radical, new design project is pursued at the expense of 4 incremental design projects which, in sum, would have produced a greater net profit.
The inability to collaborate around accurate portfolio information greatly undermines the potential of their innovation pipeline.
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Innovation is more than just a vision. Constituents from all functional areas contribute and validate the “idea to product” funnel.
It is not enough to envision a radical new product, but to bring it to market on time, at cost with the right feature set is an all hands on deck collaboration.
Decisions must be made quickly on the right information, any mistake will be the weakest link in the chain, drastically raising the risk of failure.
A solution is needed that brings everyone together to create/refine/commit to the innovation pipeline of products
Typical scenario: Marketing needs a new product for global distribution to compete against another company’s product. Engineering creates a product that is non-compliant with Europe with features not requested. Mfg’s launch slips 12 weeks as sourcing for the required components have long lead times not anticipated. The product misses crucial launch price advantages and loses 30% of the total anticipated margin.
So how do you close the gap and align strategy with execution?
[CLICK] With intelligent decision making on accurate portfolio information…
To provide portfolio managers the essential information they need to determine how to fill the pipeline, a set of measureable qualification and vetting processes is needed.
[CLICK] This includes collaboration around raw ideas; visibility to scope information, joint definition of conceptual designs, and all of this in line with a clearly defined business cases.
Good portfolio decisions have great impact at all levels of the company:
[CLICK] In terms of execution – optimal use of resources – from human capital to budget to schedule, ensuring resources are being maximized
[CLICK] Portfolio – having visibility into the pipeline and pursuing the right mix of incremental and radical innovation
[CLICK] Executive – greater confidence that is in-line with the top-level roadmap and will deliver upon its financial objectives.
With alignment through the portfolio, the well oiled execution engine is driven by the top-level’s strategic planning.
Now let’s take a look at how the Oracle Innovation Management Solution provides this portfolio layer.
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[TIE BACK TO THE BULLET POINT STATS] [COLLABORATE, TRACEABILITY, VISIBILITY, OPTIMAL]
Innovation Management can best be defined as a need to both Select the best ideas and then Translate those ideas into offerings that deliver the business case.
Most companies don’t have a shortage ideas – they have a challenge turning Innovation Management into a rigorously maintained company/organization process that balances enhancements to core offerings (new features) , with adjacent move (new markets, line extensions) and transformational initiatives (net new vision) vs. an ad-hoc, stand-alone initiative, process.
Oracle’s Innovation Management solution bridges the gap and by filtering out or enriching information as it progresses through the innovation funnel.
[CLICK] It starts with an collaborative ideation phase. Ideas can come from many places – customers, internally, CRM systems – and its critical to capture and expose it all to the community for enrichment.
[CLICK] Ideas with high potential and traction are selected and moved forward into the scoping and proposal phase. A business case is formalized and refined in terms of resources required and benefits. Maintained as part of the proposal are the requirements and ideas sourced for the product.
[CLICK] This prevents mismatches or miscommunications as the concept design is established.
[CLICK] Proposals are grouped into portfolios to help with roadmap decisions on when to launch products. Hundreds of metrics and real time business intelligence are available to make proper informed decisions weighting resource usage against risk and market needs.
[CLICK] This insight ensures that right mix of projects pass the money gate and are fed into Oracle PLM for execution (which includes CAD design, project management, cost management, compliance, and quality management).
[CLICK] By closing the gap and connecting these processes, companies can transform a fuzzy disconnected process into a repeatable accelerated innovation with more predictable results.
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This is how you can drive growth / delight customers / optimize the ROI
A disciplined innovation process that optimizes alignment of the critical ‘levers’ … connected processes
Operationalize innovation process
Requirements + concepts – checklist? …accurate proposal, not a guess
An iterative and collaborative innovation process that optimizes the innovation portfolio
The funnel starts with enterprise collaboration on ideas submitted by employees and customers. Social networking and voting helps separate the good from the bad.
Product proposals collect the best and brightest ideas and from the roadmap containers collecting critical information about costs and resources required. Requirements fulfillment against conceptual designs guarantee marketing/development alignment and provide the most accurate assumptions to refine the proposal metrics.
Proposals are grouped into portfolios to help with roadmap decisions on when to launch products. Hundreds of metrics and real time business intelligence are available to make proper informed decisions weighting resource usage against risk and market needs.
Launched products flow into the Oracle PLM for execution including CAD design, project management, cost mgmt, compliance, and quality mgmt. Critical information on execution and supply chain knowledge flows back into the innovation process to accelerate new products while reducing risk.
ideas leverage human capital
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One of the challenges is that Like a needle in a haystack, value is hard to find among the large volumes, velocity, and variety of innovation inputs
Another challenge is defining and adhering to a systematic process to select and progress into the innovation funnel the best ideas that fit within the business/company strategies and have the best opportunity to meet their business case.
Innovation Management enables companies to first collect and then identify the high value ideas to fuel the innovation funnel – then begin to build out a business case to capture costs, resource needs, expected revenue and other business justification—and then evaluate consistently against other ideas --- apples to apples--- within the context of the portfolio objectives (revenue, margin, costs) and constraints (time, resources)
The final challenge is then taking the ideas with the best value and translating them into the winning product
No matter what anybody tells you, words and ideas can change the world.”Robin Williams, Good Will Hunting
With innovation management – companies can develop product requirements that will translate the initial ideas into concepts and products that will achieve their business goals (meet requirements, target cost, supply chain risk)
The translation process will help expose new products that can’t achieve the strategic fit and proposed business case earlier in the development lifecycle so they can be eliminated sooner allowing scarce resource & budgets to be re-positioned on more feasible opportunities.
Patent: Link Requirements within Concept Structure
Patent: Traceability view
Oracle Innovation Management (IM) enables companies to identify and translate the best ideas into profitable product offerings. A single repository for the collection, collaboration, enrichment and traceability of ideas, requirements , product concepts and product proposals With both a bottoms-up approach where stakeholders participate in the product invention, definition and translation processes and a tops-down financial impact and strategic fit analysis, IM drives a systematic approach to the portfolio selection of offerings that best aligns with company objectives
Systematic approach to analyzing potential product investments across a 360 degree view of cost, supply risk, resources, ability to meet requirements, business case against the corporate strategy and available budgets
Integration with PLM to turn quality issues into actionable ideas/concepts; manage proposals ‘ progress through phase gate processes, re-use items and publish new concepts to item master
Benefits:
Lower Development Cost and Improve Utilization
Focus on products that meet the strategies
Improved Revenues and Market Responsiveness
Build stronger idea pipeline, improve selection of the best ideas and convert them into business value faster
Better visibility of customer needs, product requirements & development’s ability to fulfill them
Systematic process to optimize investment decisions leveraging a 360 degree view of product proposals
Increase Return on Innovation Investment (ROI)
Better alignment of product portfolio with corporate strategy to achieve Profit, Sales and Market Share objectives
Better Visibility & Collaboration Drives Better Decisions Which Drives Better Innovation
Kerrie really owns this slide and her team’s ok
Scale, Accelerate, Commercialize -
By aligning innovation with upstream corporate goals and downstream execution, organizations can capture and invest in the right ideas to drive more predictable, regular returns.
Your innovation process becomes Repeatable. Consistently sort through the noise of Crowdsourcing and big data to identify the best ideas systematically and analytically evaluate the impact of alternate investment scenarios. Your final products will meet all requirements every time thanks to ongoing evaluations of concepts against constraints and goals.
Your innovation process becomes Scaleable. Build an innovation pipeline that is fueled by a steady stream of high-value ideas that can be translated into profitable market offerings.
And your innovation process becomes Strategic. Increase resource utilization and lower development costs with a strategic focus on fewer, better products.
There are 2 different studies – one (PwC) looks at priorities and the other (Accenture) looks at challenges.
Curiously, while most of CEOs know that innovation is key for their future business, they are not confident on the ROI of the investments, why ?
Mainly because, the innovation is not structured, lacking of ideas, …
#1: PWC & Accenture
02-Jul-2013 Chief executives around the world are ramping up their efforts to innovate and find new ways to do business, in a move to stimulate growth in a challenging global business environment. PwC Pulse Survey of 246 CEOs in North and South America, Europe, Asia Pacific, and the Middle East reveals that 97% of CEOs see innovation as a top priority for their business. The Pulse Survey was conducted as a follow-up to the recent PwC CEO Survey of 1,330 CEOs around the globe which showed innovation to be a major and lingering CEO concern. Chief executives around the world are ramping up their efforts to innovate and find new ways to do business, in a move to stimulate growth in a challenging global business environment.
A new study from Accenture, “Why Low Risk Innovation Is Costly,” revealed that fewer than one in five chief executives believes their company’s strategic investments in innovation are paying off.
Main challenges in R&D is to :
First get ideas
Then turn those ideas into product that can be build in lesser cost.
Do you know that 80% of Supply cost are from the way product are designed and component are sourced ?
Accenture.“Product lifecycle management: The innovation enabler goes mainstream” By Kevin P. Prendeville and A.J. Gupta. 2010
“Accenture research confirms that PLM activities fall short of what is needed today. The main conclusion
of our recent study across a range of industries is that most companies have only basic capabilities in key
product development areas. While those capabilities may once have sufficed, they are outmatched by the
complexities of doing business today.
Our research revealed that median revenue growth from new products is only 20 percent. Those companies
that have mastered PLM, however, see revenue growth from new products of 40 percent. Similarly, for the
typical company, median return on innovation investments comes to just 25 percent; by contrast, the ROI for
companies that do product lifecycle management well is an impressive 66 percent.”