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Why Innovation Is Broken and What To Do About It To Drive Organic Growth
Why Innovation Is Broken and What To Do About It To Drive Organic Growth
Why Innovation Is Broken and What To Do About It To Drive Organic Growth
Why Innovation Is Broken and What To Do About It To Drive Organic Growth
Why Innovation Is Broken and What To Do About It To Drive Organic Growth
Why Innovation Is Broken and What To Do About It To Drive Organic Growth
Why Innovation Is Broken and What To Do About It To Drive Organic Growth
Why Innovation Is Broken and What To Do About It To Drive Organic Growth
Why Innovation Is Broken and What To Do About It To Drive Organic Growth
Why Innovation Is Broken and What To Do About It To Drive Organic Growth
Why Innovation Is Broken and What To Do About It To Drive Organic Growth
Why Innovation Is Broken and What To Do About It To Drive Organic Growth
Why Innovation Is Broken and What To Do About It To Drive Organic Growth
Why Innovation Is Broken and What To Do About It To Drive Organic Growth
Why Innovation Is Broken and What To Do About It To Drive Organic Growth
Why Innovation Is Broken and What To Do About It To Drive Organic Growth
Why Innovation Is Broken and What To Do About It To Drive Organic Growth
Why Innovation Is Broken and What To Do About It To Drive Organic Growth
Why Innovation Is Broken and What To Do About It To Drive Organic Growth
Why Innovation Is Broken and What To Do About It To Drive Organic Growth
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Why Innovation Is Broken and What To Do About It To Drive Organic Growth

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  • 1. Why Innovation Is Broken and What To Do About It To Drive Organic Growth Urquhart Wood Innovation and Growth Strategy Advisor Strategyn Consulting
  • 2. Innovation is Shrouded in Confusion Without agreement on these fundamental concepts, how can a company ever expect to excel at innovation? It can’t. Is there agreement among managers in your company as to … YES NO What innovation is? 95% What a customer need is? 95%
  • 3. The Innovation Process Is Broken Because …
    • Lack of structure
    • It is being executed:
    • With the wrong inputs
    • In the wrong sequence
    1 “ Nothing is more important than innovation, but if you think you can organize it you are nuts … really nuts. Orderly innovation is an oxymoronic phrase, believed only by morons with ox-like brains.” Tom Peters, HSM 2007 Bad theory and false beliefs 2 “ Innovation begins with an idea.” “ Customers often do not know, or cannot effectively communicate, their actual needs and requirements.” Wikipedia, 2007
  • 4. … is the process of devising a product or service concept that satisfies the customer’s unmet needs. Product/Service Innovation… Development is the process of designing/engineering a product or service concept that has been approved for creation. 1 Stage-Gate® is a trademark of Stage-Gate Corporation -1 Innovation & Growth Strategy
  • 5. It’s Like Solving an Algebraic Equation … X = 3 and Y = 1 2(3) + 1 = 3? No X= 1 and Y = 1 2(1) + 1 = 3? No X = 2 and Y = 2 2(2) + 2 = 3? No 2y + yz 3 x zy 3 + yz 3 x zy 3 - x 2 y 3 z 6 + 2x 2 + 2y + yz 3 x zy 3 - x 2 y 3 z 6 + 2X + Y = 3 and X - Y = 4
  • 6. Two Innovation Paradigms: Ideas-First Vs. Needs-First
  • 7. Dynamics of the Ideas-First Approach
    • Successful innovation is a numbers game … the more ideas, the better
    • The goal is to fail fast – quickly evaluate ideas to see which are best
    • Evaluations are conducted without knowing all the customers needs
    • This approach is guesswork – it leads to failure 70-90 percent of the time
    • It’s inherently flawed for 3 reasons:
    • You never know ALL the customer needs
    • Brainstorming more ideas without knowing the customer’s unmet needs won’t increase the probability for success
    • The evaluation and filtering approach is flawed
    Brainstorm Evaluate and Filter Select a Concept
  • 8. Failing Faster Doesn’t Work “ Nothing is less productive than to make more efficient that which should not be done in the first place.” Peter Drucker 70% - 90% Failure Rates Brainstorm Evaluate and Filter Select a Concept
  • 9. The Process Must Be Executed Needs-First
    • First, companies must uncover ALL the customers’ needs
    • Next, they must determine which are unmet
    • Only then are they prepared to devise product & service concepts that address the unmet needs
    But isn’t this what VOC does now? 2X + Y = 3 and X - Y = 4
  • 10. The Sought After Customer Needs Are Undefined There is no agreement on what a “need” is There is no way to know if ALL the needs have been captured See Giving Customers a Fair Hearing , Sloan Management Review, Spring 2008 Delighters Specifications WANTS NEEDS constraints BENEFITS Solutions latent needs Exciters must haves WISHES IDEAS expectations unarticulated needs
  • 11.
    • Companies do not know what inputs to capture, what’s needed for innovation
    • Customers offer “needs” in a language that is convenient to them
    • Many firms try to translate the inputs into something useful
    • A mix of input types is the result
    • Bad inputs cause the product failures managers are trying to avoid
    Poorly Defined Customer “Needs” Are the Norm See Giving Customers a Fair Hearing , Sloan Management Review, Spring 2008 “ You have to listen to me … I know exactly what customers want!” Strategyn Cartoon - 2006 R&D Marketing Sales
  • 12. "People don't want to buy a quarter-inch drill. They want a quarter-inch hole!“ Theodore Levitt, 1975 The drill is a solution The hole is the need
  • 13. The Universal Job Map (Not a Process Map) See The Customer-Centered Innovation Map , HBR, May 2008
    • Prepare
    • Set up
    • Organize
    • Examine
    • Modify
    • Update
    • Adjust
    • Maintain
    • Confirm
    • Validate
    • Prioritize
    • Decide
    • Monitor
    • Verify
    • Track
    • Check
    • Execute
    • Perform
    • Transact
    • Administer
    • Locate
    • Gather
    • Access
    • Retrieve
    • Define
    • Plan
    • Select
    • Determine
    • Conclude
    • Store
    • Finish
    • Close
    A job map provides the structure needed to ensure all customer needs are captured
  • 14. Customers Intuitively Employ a Logical Value Measurement System
    • Customers use “metrics” to define the successful execution of a specific job – these are their desired outcomes.
    Process Step 2 Process Step 3 Process Step 5 For any job there may be 50 to 150 outcomes Process Step 1 Job Activity Map
    • Metric 41
    • Metric 42
    • Metric 43
    • Metric 44
    • Metric 45
    Process Step 4
    • Metric 1
    • Metric 2
    • Metric 3
    • Metric 4
    • Metric 5
    Outcomes are customer needs
  • 15. Jobs and Desired Outcomes are Stable Over Time
    • Products come and go, but the job is stable over time
    • The job’s perfect execution reflects the customer’s true definition of value
    • Requirements are not captured on the product – they are captured on the job the product or service is intended to perform
    Job of Storing and Retrieving Recorded Music Satisfaction Vinyl CD MP3 Increase the number of songs that are available 4 5 8 Minimize the amount of distortion that is heard 5 8 9 Minimize the amount of damage during normal use 3 6 9 Minimize the amount of storage space that is needed 4 6 9 Increase the degree to which the music sounds live 5 7 6 Cumulative Satisfaction 42% 64% 82%
  • 16. Uncovering and Prioritizing Opportunities
    • Administer a survey (web, phone) to a significant population
    • Determine the importance of each outcome
    • Determine the degree to which each outcome is satisfied, given the solution(s) they are using today
    • Use the Opportunity Algorithm to identify opportunities
    How important is it that you are able to….? Not Important At All Somewhat Important Important Very Important Extremely Important Increase the likelihood that all potential investment options are considered  1  2  3  4  5 Minimize the time it takes to learn what is necessary to know about an investment  1  2  3  4  5 How satisfied are you with your ability to….? Not Satisfied At All Somewhat Satisfied Satisfied Very Satisfied Extremely Satisfied Increase the likelihood that all potential investment options are considered  1  2  3  4  5 Minimize the time it takes to learn what is necessary to know about an investment  1  2  3  4  5
  • 17.
    • If 90% of the respondents rate an outcome a 4 or 5 for importance, the Importance value entered into the algorithm is a 9.0.
    • If 50% of the respondents rate an outcome a 4 or a 5 for satisfaction, the Satisfaction value entered into the algorithm is a 5.0
    What is the Opportunity Algorithm? Opportunity = Importance + max (Importance – Satisfaction, 0) OUTCOME IMP SAT OPP Minimize the time it takes to read the information about an investment 9.0 5.0 13.0 Minimize the likelihood of failing to know the right questions to ask 7.0 3.0 11.0 Minimize the likelihood that the promotional materials fail to provide needed information, e.g., cost, benefits, etc. 5.0 1.0 9.0
  • 18. The Opportunity Landscape TM Satisfaction Importance Opp >15 Extreme Opportunity Opp >10 Solid Opportunity Opp >12 High Opportunity Under-Served Appropriately Served Limited Opportunity 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10 Table Stakes Sustaining or Breakthrough Innovation Over-Served Opportunity = Importance + max (Importance – Satisfaction, 0) Ripe for Disruption Potential for Disruption See Turn Customer Input Into Innovation , HBR, January 2002
  • 19.
    • People know and agree on what needs are unmet before idea generation
    • With a focus on specific unmet needs (desired outcomes), individuals are able to generate ideas they know in advance will be valued by customers
    • Companies do not have to brainstorm hundreds of ideas and hope that one of them is a breakthrough idea
    • Outcome statements provide an unprecedented clarity about what a product or service must do to create value; they’re highly actionable
    Focused Idea Generation Replaces Brainstorming
  • 20. Concept Generation and Evaluation Patent Portfolio Development Pipeline Prioritization Messaging, Positioning, and Selling Purpose Brand Development R&D & Mergers Competitive Intelligence Market Segmentation Applying Outcome-Driven Data ODI Aligns Cross-Functional Strategies

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