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Sample Innovation Concepts

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This presentation gives some expamples on how to turn inventions into innovations and was used for MBA students and entrepreneurs.

This presentation gives some expamples on how to turn inventions into innovations and was used for MBA students and entrepreneurs.

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  • 1. Guest LectureModified for LinkedIn Profile Hans Ludi, PhD
  • 2. DEFINITIONS  New Product Company decision  Innovation vs. Invention  An invention is doing something once.  Innovation starts with a market need.  An innovation is transforming an invention into profits.  Sustainable innovation is innovating “over and over” again. 2Copyright © Hans Ludi. All rights Reserved.
  • 3. DEFINTIONS NEW PRODUCT DEVELOPMENT PROCESS SUMMARY enterprise wide development functions enterprise wide 3% of R&D budget  7 – 15% COMMERCIALIZE CONCEPT DEFINITION DESIGN to RAMP -UP & SUPPORT Release Approval Approved Begin for Sale Obsolescence to write BP * BP Stage Gate Ideas BP: Business Plan Feasibility Develop - Valid - ment dation Sensi - good Physical ? tivity to go Model RFS RIP 1 yes   2 no ’s Dev. Contract • Dates: • COGS: • Sales Price: •... •... ? BOM COGS 80% fixed Product Concept •... • does it fit with strategy • does it fit with company Advanced Technology Group * 3Copyright © Hans Ludi. All rights Reserved.
  • 4. CHALLENGE On average 40% of new products fail to meet revenue and profit targets after launch. On average about 1 to 3-5 new products are cancelled during development. In consumer and high-tech industries these numbers are much higher (90% fail after launch). R.G. Cooper, S.J. Edgett & E.J. Kleinschmidt, Research Technology Management, Jan.-Feb. 2004, pp. 31 ff WHY is this and WHAT should the number be? 4Copyright © Hans Ludi. All rights Reserved.
  • 5. Example 1 Trade-Off Analysis & Business Priorities: Sensitivity Analysis Time Product To Cost Market Development Feature Cost Set 5Source: P.G. Smith $ D.G. Reinersen in “Developing Products in Half The Time”, Van Nostrand Reinold, 1991
  • 6. Example 2 Better Expensive Than Late 33% 22% Percent Loss in Total Profit 3.50% 50 % Development Product Cost 9% Ship Product 6 Cost Overrun Too High Month Late 6Source: Reinertsen, Donald, McKinsey & Company, “Blitzkrieg Product Development”, Electronic Business Magazine, August 1983
  • 7. Example 3 Technology Management vs. Market Development Customers know Technology Gorilla Market exactly what Development Price Competition they want Customers do not Market AND Market really know what Technology Development they want Development Existing technologies Existing technologiesModified from Barry Siadat, “Technology do not provide do provideDelivers Challenges at W.R. Grace, “Research-Technology Management, © 1996. desired features desired features 7IRI, Inc. Oct. 1996, 36-43, Fig. 11
  • 8. Example 3 con’t Modified from Barry Siadat, “Technology Delivers Challenges at W.R. Grace, “ Research-Technology Management, © 1996. IRI, Inc. Oct. 1996, 36-43, Fig. 11 Technology Gorilla Market Development Price Competition Market AND Market Technology Development Development On a global basis 14 % of new products are launched in this segment. They make up W. C. Kim & R. Mauborgne, “Blue Ocean Strategy”, Harvard Business Review, 2005, Harvard Business for 38% of the revenues and School Publishing Corporation, p. 7. 61% of the profits of all new products. 8Copyright © Hans Ludi. All rights Reserved.
  • 9. Example 4Effectiveness vs. Efficiency Achieving the desired result vs. Output Input 9
  • 10. 10Source: USA Today, November 3, 2004. Data analyzed by MaryJo Sylwester
  • 11. Innovation Metrics  Vitality Index  Return on Innovation (ROI)  Staffing Matrix 11Copyright © Hans Ludi. All rights Reserved.
  • 12. Return on Innovation Cumulative N-Year Net Profits from new productsROI = Cumulative N-Year Expenditures from new products 12
  • 13. SUSTAINABLE INNOVATION The right people make the right decision(s) at the right time!The customer will tell you that you made the right decisionbecause they are “wowed” by your product and the profitswill tell you that you made the decisions at the right time.A state-of-the-art metrics system will combine these two andtell you that you made the right decision(s) at the right time.Continuous success with new products and sustainableinnovation will ultimately tell you that you have the rightpeople. 13Copyright © Hans Ludi. All rights Reserved.
  • 14. “I contend that people like me – CEOs,CFOs, and other business types – mustadopt the attitude that we, in fact, work for R&D if we truly want to succeed!” Leonard Schleifer, CEO, Regeneron 14
  • 15. AppendixHeilmeiers CatechismGeorge Harry Heilmeier (born May 22, 1936) is an Americanengineer and businessman, who was a pioneering contributor toliquid crystal displays.credits these observations to G. Heilmeier, "Some Reflections onInnovation and Invention," Founders Award Lecture, NationalAcademy of Engineering, Washington, D.C., Sept. 1992.http://en.wikipedia.org/wiki/George_H._Heilmeier 15
  • 16. Heilmeiers Catechism What are you trying to do? Articulate your objectives using absolutely no jargon. How is it done today, and what are the limits of current practice? Whats new in your approach and why do you think it will be successful? Who cares? If youre successful, what difference will it make? What are the risks and the payoffs? How much will it cost? How long will it take? What are the midterm and final "exams" to check for success? 16