INNOVATION TO THE CORE
Peter Skarzynski, CEO Strategos
Copies: PCS@Strategos.com

AN INNOVATION IMPERATIVE?
Gary Hamel
“Innovation is
the only way to
stay ahead of
the curve”
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OR
OVER-HYPED?
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A BIG problem…
OF INNOVATION USUALLY FAILS
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WHY THE
FAILURE?
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MAYBE BECAUSE IT IS DIFFICULT?
Dilbert: © Scott Adams/Dist. By United Feature Syndicate, Inc.
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REFLEXIVELY
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INSTINCTIVELY
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SEVEN INNOVATION MYTHS:
1. Innovation is risky.

FOR ONCE, IT’S NOT ABOUT THE MONEY!
“THERE IS NO RELATIONSHIP BETWEEN R&D
SPENDING AND THE PRIMARY MEASURES OF
ECONOMIC OR CORPORATE SUCCESS, SUCH
AS GROWTH, ENTERPRISE PROFITABILITY,
AND SHAREHOLDER RETURN.”

DARE TO BE RADICAL
Does it have the power to change
1.
customer expectations?
Does it have the power to change the
2.
basis for competitive advantage?
Does it have the power to change
3.
industry economics?
Source: Professor Gay Hamel

Low High
Risk Risk
Source: Professor Gay Hamel

SEVEN INNOVATION MYTHS:
1. Innovation is risky.
2. Innovation is (only) about products.

Cost?

RADICAL: LOW COST AND STYLE
Redefining Expectations
A Wine Cellar With Refined Taste
Your finest wines will be preserved and safe in this wine cellar. Settings
for red and white wine make it easy to select the optimum temperature to
maintain quality and taste. The grey-blue tinted glass door provides a full
view of your collection while protecting it from harmful UV rays. With 7
slide-out wood racks and room for 54 bottles of wine, you can keep all of
your favorites on hand in this modern, stylish wine cellar. This wine cellar
also has a dual electronic FlexZone™, with two separately controlled
temperature zones so you can store combinations of white wine, red
wine, and champagne in the same cellar.

Experience?

Management Innovations?

BUSINESS MODEL INNOVATION

Simply Said
“…the key to sustained success is business model innovation.”
- Clay Christensen, Harvard Business School
Who do we serve?
How do we What do we
make money? provide?
How do we
differentiate & How do we
sustain advantage? provide it?

SEVEN INNOVATION MYTHS:
1. Innovation is risky.
2. Innovation is (only) about products.
3. Innovation is about \"big\" ideas.

INNOVATION MATH
Ideas Innovation’s
1,000 Arithmetic
Experiments
Number of options
100
Projects
10
Winners
1
Increments of risk

Easier than you think

…but, please link to operating processes

SEVEN INNOVATION MYTHS:
1. Innovation is risky.
2. Innovation is (only) about products.
3. Innovation is about \"big\" ideas.
4. Innovation can't be taught.

“It‟s always „Sit,‟ „Stay,‟ „Heel‟--never
„Think,‟ „Innovate,‟ „Be yourself.‟ ”

ENCOURAGE, TEACH, & SUPPORT
Out of context to Risk of bizarre
business flow overreaction
Not grounded in
Irrelevant to us any observed
(our competences) customer need

FRAME BREAKING NEW PERSPECTIVE
1 2
Challenge Harness
industry emerging
orthodoxies trends
3 4
Address Leverage
unarticulated Know How
needs Assets

SELL BY THE TANK?

SERVING CARE GIVERS
2001 Winner
An all-in-one portable medical
oxygen system
• Eliminating the need for a
separate regulator, flow meter,
cylinder wrench, and special valve
seal
• Allowing medical personnel to
easily adjust oxygen flow with the
turn of a dial and verify contents
at a glance

WORK FROM THE FUTURE BACK
Future Stretch
We Create
Future-based
migration path
Future Fit
We Accept
Present Traditional
extrapolation
Past
37

38

Crash in the Garage!
Discontinuities Core Competences
An Example Low cost
From: Bedroom suburbs high-quality,
To: McMansions stationary
electro-
mechanical
Men are Appliances
relegated to are sold to
the garage women
Orthodoxies
Customer Insight

Gladiator Solution

START HERE…
Discontinuities Core Competences
An Example
Better life
From: Mom approved
through “color
To: Kid preferred
chemistry”
Surprising
experiences which Perfection is the
are “mine” are only acceptable
exciting and more standard
attractive
Consumer Insight Orthodoxies

End Here
“No Mess” but still fun (i.e., messy) for kids!
Aspiration
XXXX
New
Oppty 5
Color
Explosion
Outdoor
Oppty 7
Capabilities
Oppty 6
Color
Wonder
Erasable
Existing
Washables
Existing New
Markets

SEVEN INNOVATION MYTHS:
1. Innovation is risky.
2. Innovation is (only) about products.
3. Innovation is about \"big\" ideas.
4. Innovation can't be taught.
5. Innovation is a diversion.

Beyond the Suggestion Box

AN INNOVATION PROCESS
Managing
Building a Generating
a pipeline of
foundation of a portfolio of
strategic
truly novel game-changing
experiments
insights ideas
Innovation
Discovery Opportunity to the core
How efficient in terms
How widely & deeply How radical and
of risk-reward?
understood? coherent?

Perspectives from Different
Sources…Inside Your Organization
“We are sixty thousand employees around the world in 170 countries,
with efficiency and productivity unparalleled in any industry. We have
thirteen high-tech manufacturing facilities and eighteen world-class
technology centers with engineers designing in virtual teams from
around the world…Hundreds of innovators from all levels and types of
jobs, sometimes from where you might least expect them, are working
to invent on behalf of the customer, enjoying and maximizing their
contributions to the company.”
Nancy Snyder – Strategic Innovation

…FINDING GOLD
The Goldcorp Inc. Challenge
• First global brainstorming
Challenge: Where to find the gold
 Half a million hits in four months
1400 people from 50 countries

Accelerated the exploration program


SEVEN INNOVATION MYTHS:
1. Innovation is risky.
2. Innovation is (only) about products.
3. Innovation is about \"big\" ideas.
4. Innovation can't be taught.
5. Innovation is a diversion.
6. Innovation is expensive.

INNOVATION EFFICIENCY
No. of innovators
1
K No. of employees
E
No. of radical ideas
Y 2 Total no. of ideas
R Ideas from outside
3
A Ideas from inside
T Learning
4
I Investment
O
Commitment
S 5 Priorities
Source: Adapted from Professor Gary Hamel 50

Learn, Fail, Scale
Experiment #
2 3 4 5
1
2. Can we do it?
Competencies?
Operating Model?
3. Can we make
money?
Revenues? Costs? Profit?
1. Do they want it?
Customer Value Proposition --who, what,
how differentiated?
Time
51

SEVEN INNOVATION MYTHS:
1. Innovation is risky.
2. Innovation is (only) about products.
3. Innovation is about \"big\" ideas.
4. Innovation can't be taught.
5. Innovation is a diversion.
6. Innovation is expensive.
7. Innovation is an exception.

HOW FRIENDLY?
Leadership &
Organization
Processes & Culture &
Innovation
Tools Values
Effectiveness
People &
Skills

Take you back – an analogy

SUSTAINING AT CEMEX

W.L. GORE:
1. No VPs, no directors, no
managers, no titles.
2. Every employee can spend 10%
of his or her time \"dabbling.\"
3. There's a \"market for talent.\"
4. No division can grow to more
than 200 people.

$3.3 Billion in
Innovation Value
Source: Business Week; Creativity Overflowing, May 8, 2006

MAKE IT INESCAPABLE
\"Tomorrow, if I went to the organization
and said, „Well, we've had enough of
this [innovation], let's go back to cutting
costs and running the business like
everyone else is running the business
in the appliance area I think I'd have a
revolt on my hands.\"
David Whitwam, Former CEO, Whirlpool

ASK YOURSELF…
1. Are you creating the time and space?
2. What new conversations and connections?
3. What % portfolio should meet the test of radical?
4. What am I doing to make growth inescapable?

Thank you for your time
Copies? pcs@strategos.com
www.strategos.com