Introduction To The Killer Innovation Approach Ver 5

Killer Innovations Introduction to a better way to innovate Philip McKinney [email_address] www.killerinnovations.com

Why Innovation?
Other Approaches
A Better Approach
Benefits
Lessons Learned
Agenda

Innovation Acceleration Time Impact
Innovations are having a larger impact
The lifecycle of innovations is getting shorter

Technology Adoption is Accelerating Phone 74 years Radio 38 years PC 16 years TV 13 years Internet 2 years Blogs 1 year How long does it take to get to 50 million users?

The Innovation Reality Innovation Gap The shortfall between a organizations rapidly rising need for ideas/innovations and their inadequate supply Innovation Delay The delay between the time when decisions to adopt strategic innovations are made and their eventual impact to the organization.

Innovation Impact Innovation has increased in importance over the last 10 years Innovation plays an important role in assessment of company value Confident in ability to manage and measure innovation impact 35% 73% 92% Source: Arthur D. Little Research 0% 20% 40% 60% 80% 100%

Executive View of Innovation
87% rank innovation as one of their top 5 priorities
Executives boast that their companies excel at innovation
Executives, however couldn’t differentiate between incremental improvements and breakthroughs
Very few executives said their firms have any kind of structured approach to innovation
Source: DiamondCluster International, Techtrend Group

The Challenge of Innovation
Maintain efficiency while fostering innovation
Stressing bottom-line results without restricting innovation
Adapting to changing markets and environments while maintaining stability

Value From Innovation R&D Incremental Innovations to existing offerings Creating new offerings/markets/industries Source: Harvard Business Review, October 2004 86% 14% Revenue 62% 38% Margin 39% 61%

What’s wrong with the current approaches to find ideas?

What’s wrong with current brainstorming approaches?
Innovations are either incremental or totally unrealistic
Rarely any real follow-up
No confidence that there aren't better ideas to be had
Lack of executive/organizational support

Incremental versus Breakthrough
Incremental improvements
Reduce expenses
Extend brand/product line
Breakthrough improvements
Find new markets
Create new strategic assets
Launch new businesses
Evolutionary change tools
BPR/TQM/Six Sigma
Feature enhancement
Revolutionary change tools
Killer Innovation
Lateral Thinking
TRIZ/TIPS

Killer Innovations

What is a killer innovation? A Killer Innovation is defined as significant and highly profitable departures from current offerings or practices that is difficult to imitate

Tools
The tools to find/create, rank and execute against killer ideas
Skills
Tricks to help change your perspective and improve your ability to apply empathic design through observation
Killer Innovation Approach

Killer Innovation Tools Using FIRE
Focus The Innovation Search
Focus the problem
Depth is better than breadth for idea quality
Ideation
Structured questions that drive discovery/insight
Rank The Ideas
Will this idea change the customer expectation?
Will this idea change the competitive landscape?
Will this idea change the economics of the industry?
Execution
Define clear milestones
Kill projects early

Question based methodology
Based on Socratic method of asking questions to eliminate ideas … the best ideas are the ones left standing
Build around a core of +70 killer questions
Based on “reverse” innovation analysis
Designed to unlock unique insights
Structure is based on a “gated” model
Tested
HP, Agilent, CSC and many start-ups
History of the KI Approach

Tool: Focus

Focus the search Moving into new competitive arenas Expansion into new geographies Improvement in industry structure New or existing customers Innovation in products or services Innovation in value delivery system

Search Areas for Innovation Six degrees of freedom Such as … Creating a new business by selling existing products/services to existing or new, unfamiliar customer segment Creating a new product or service, normally in a cocooned manner Creating an innovation that redesigns the business system sufficiently to alter the value proposition Changing the value proposition, value delivery system, or competitive relationships that improve/change the industry structure or redefine the industry Expanding into a new geographic area with high value-added transfer from existing geography or when the activity is new Developing a new business in an industry within which a company has not previously competed or when there is no overlap in customer value proposition New/Existing customers Innovation in products or services Innovation in value delivery system Improvement in industry structure Expansion into new geographies Moving into new competitive arenas Source: Techtrend Group

Focus on the customer YUPPIES Young Urban Professionals YUFFIES Young Urban Failures MOBY/DOBY Mom/Dad Older – Baby Younger WOOFS Well Off Older Folks SKIPPIES School Kids with Income + Purchasing Power “ Sandwichers” Adults caught between caring for their children and their older parents Which are the right segments?

Tool: Ideation

The typical brainstorming session begins with a simple question ….
“ Create some new product ideas”
“ Develop some differentiators for x”
… . you get simple answers.
The Current Method ….

Better Questions = Killer Ideas
New or Existing Customers
What emotional, psychological, or status benefit do (could) people derive from using the product?
How can you create a social or group experience with the product?
Industry Structure
What are some of the basic assumptions under which the industry operates?
What external jolts have the potential to significantly impact the operational rules of the industry?
Product & Services Innovation
Who uses the product because of some benefit we did not foresee?
What regularly used makeshifts can we capture in a product design?

Exploring Beyond the Obvious S Substitute? C Combine? A Adapt? M Modify – Magnify? P Put to other uses? E Eliminate or minify? R Reverse – Rearrange?
Everything that is new is an addition or modification of something that already exists
Based on the answers to the questions, use SCAMPER to generate a wide variety of ideas

Idea Quota
Idea quotas force you to actively generate ideas and alternatives
The first 1/3 of the quota will be the easiest
The second 1/3 will typically extensions from first 1/3
The final 1/3 will be the hardest yet typically contain the kernel of a killer innovation
Always fill the quota even if the ideas seem far fetched or outlandish.
The best ideas come to those that work at it ….

Characteristics of the Best Killer Ideas
Purpose - the yield of high quality ideas is significantly higher with a clear business purpose and a supportive business sponsor.
Timeliness - the difference between a great idea and a so-so idea is market/technology timing.
Diversity - the pool of contributors needs to be broad, broader than you intuitively think.
Perspective Change - the very best ideas come through individuals looking at things in a different way.
Collaborative Development - environment, where people can comment and build on ideas thereby significantly increasing the overall yield of high impact ideas.

Suspend Disbelief Let’s shelve that for the time being Who is going to do it? I have something better. We tried that before. It won’t fit our operation. It’s against all our combined logic. Not enough return on investment. It’s great, but . . . . . . Someone must have already tried it. I thought of that a long time ago. We can’t afford that. You’ll never get approval. You’re on the wrong track. Don’t rock the boat. The market it not ready yet. It’s not a new concept.

Tool: Rank The Ideas

Idea Criteria: Key Questions
Must have a YES to at least one of the following:
Will this idea change the customer experience/expectation?
Will this idea change the competitive landscape/position?
Will this idea change the economic structure of the industry?
Must have a YES to the following:
Do we have a contribution to make in this space?
Will this idea generate sufficient margin to the business?
For each key question, give a score from 0 to 5.

Idea Criteria: Ability To Execute
For the top 10 ideas based on the Key Questions, score each idea from 0 to 5 for the following questions:
Can we get our groups/teams excited?
Will senior management support it?
Do we have the skill/expertise to pull this off?
Can we access the customers preferred channel?
You now have a ranked list of your best ideas.

Tool: Execution

Execution = Stage Gate Management Source: Techtrend Group “ The Best” use some from of a Milestone/Stage Gate process to introduce new products and services

Skills: Observation

What do you see?

What do you see? Minimum space which can represent the full alphabet! Look beyond the obvious ….

Empathic Design (observational design)
In-house visits/recording
In-the-world observations
Trend Safari
Ethnographic Studies/Analysis
Deep study of a “customer” social group
Objective
Discover unspoken needs and wants of the target customer segment
Observation Skills

Skills: Changing Perspective

What is half of thirteen?

Half of thirteen 6.5 6 or 7 (rounded) “ thir” and “teen” XII = VII and IIV(split horizontal) 1 and 3 . . . How many more can you come up with? Be careful .. Don’t assume the definition of words (e.g. “half”)

Benefits of KI

360° search for innovations ensures you avoid a blind spot
Six degrees of innovation
Generate higher quality ideas
Killer Questions based on reverse innovation approach
Forces participants to dig deeper for answers
Work on the right ideas
Process to rank the best ideas
Execution management
Gated/Milestone to ensure alignment of funding and execution
The benefits of the KI Approach

Lessons Learned

Changing the culture
Metrics
Finding Innovation Champions
Reward failures & successes
Adapt to your organization
Lessons Learned

Thank you Q & A

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Introduction To The Killer Innovation Approach Ver 5

by Phil McKinney

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