Stagegatesummit J Ic

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Presentation at first global Stagegate(R) summit 2007

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Stagegatesummit J Ic

  1. 1. Pushing the Envelope – Driving Innovation in a Mature Market Dr. John Irven, Director of Technology, Packaged Gases, Air Products Visiting Professor , Queen Mary, University of London February 20-21, 2007 / St. Pete’s Beach, FL
  2. 2. Number # 1 in Electronics Helium Hydrogen A ~$9bn industrial gases & special chemicals company Diversified markets & geographies in 30 countries, 50% outside USA First International Stage-Gate Leadership Summit Slide 2 February 20-21, 2007 / St. Pete’s Beach, FL © 2007 Air Products © 2005
  3. 3. Air Products - some examples of our businesses Helium MRI scanning Cryogenic liquid, space Cryogenic Air Separation Electronics, analytical Cylinder packaged gases Hydrogen fuelling First International Stage-Gate Leadership Summit Slide 3 February 20-21, 2007 / St. Pete’s Beach, FL © 2007 Air Products © 2005
  4. 4. Air Products Global business PG ~$1.0bn within a $30bn Industrial Gases market Regional & Technology Centres Countries where we operate or partner Cylinders and packages to users in many industries First International Stage-Gate Leadership Summit Slide 4 February 20-21, 2007 / St. Pete’s Beach, FL © 2007 Air Products © 2005
  5. 5. Gases Supply chain Old model New agent model Customer On-site Bulk Cylinder Direct Retail Production Gases Fill Distribution Distribution Best 1.5x % x% x% 2x % >4x % Performer OROI 100,000s customers, transaction intensive commodity business Old Business model - Strategy New Business Model - Strategy • No real opportunity for change • If we don’t change we die • Supply chain dominated • Refocus on high value ‘retail end’ • Operations & distribution focused • Use new agent distribution model • Target cost reduction in filling & • Cost reduce, but drive profit growth distribution by differentiated offerings • Low profit expectations • High profit expectations ‘Lead don’t follow’ First International Stage-Gate Leadership Summit Slide 5 February 20-21, 2007 / St. Pete’s Beach, FL © 2007 Air Products © 2005
  6. 6. BUT - Size of innovation challenge in mature, commodity, conservative industry no new products in decades ! 1900 2000 KEY FEATURES : KEY FEATURES : •Cylinder •Cylinder •Cylinder Valve & Cap •Cylinder Valve & Cap •Compressed Gas •Compressed Gas The only change had been the colour of the paint…... First International Stage-Gate Leadership Summit Slide 6 February 20-21, 2007 / St. Pete’s Beach, FL © 2007 Air Products © 2005
  7. 7. Changing the paradigm BIP® - a purifier inside the cylinder BIP in Cylinder HIGH VALUE BUT – DESPITE great response from Customers – ‘NIH’ attitude was preventing take–up WHY? – we had an un-integrated innovation approach Analyser NEW APPROACH Improved – developed & applied Purity Quality RESULT – our first success Reliability External ‘hassle’ Reduced – UK Queen’s Award for Innovation Purifier – BIP commercialised in > 20 countries, Cylinder HIGH VALUE becoming global analytical standard LOW VALUE First International Stage-Gate Leadership Summit Slide 7 February 20-21, 2007 / St. Pete’s Beach, FL © 2007 Air Products © 2005
  8. 8. Effect of globalisation on BIP Europe UK, Ireland France, Germany Belgium, Netherlands Luxembourg, Spain Portugal, Italy Switzerland Scandinavia Americas USA (Airgas) Canada, Mexico Puerto Rico, Brazil Asia Singapore, Malaysia India Africa/M.East S.Africa Regional & Technology Centres Dubai Countries where we operate or partner First International Stage-Gate Leadership Summit Slide 8 February 20-21, 2007 / St. Pete’s Beach, FL © 2007 Air Products © 2005
  9. 9. So what were the key strategic initiatives ? 1. Embed technology in business & strategy, linked to defined market segmentation 2. Demand differentiated offerings, ‘lead not follow’ 3. An integrated process and cross functional approach 4. Drive VOC at all stages of development 5. Manage the Gate 4 and launch aggressively 6. Use tools & metrics to support the culture change Best practices have fed into our corporate wide “Innovate” process First International Stage-Gate Leadership Summit Slide 9 February 20-21, 2007 / St. Pete’s Beach, FL © 2007 Air Products © 2005
  10. 10. Strategic initiative # 1 Embed technology in business strategy • Integrate technology into the business programs and strategy • Link to market segmentation & selection • To ‘Lead not follow’ the market First International Stage-Gate Leadership Summit Slide 10 February 20-21, 2007 / St. Pete’s Beach, FL © 2007 Air Products © 2005
  11. 11. Strategic initiative # 2 Demand differentiated offerings Customer IntegraPerfect Party medical Integra welding Int Helium balloons eg rat ion 50 ℓ 200 bar‘Conventional wisdom’ - value 2 + 2 = 4 New opportunity - value 2 + 2 = 5 ! Reduced size/weight Incorporate functionality & safety to capture value, and meet ‘VOC’ needs for light, easy to use packages First International Stage-Gate Leadership Summit Slide 11 February 20-21, 2007 / St. Pete’s Beach, FL © 2007 Air Products © 2005
  12. 12. Strategic initiative # 3 An integrated process & cross functional approach • Cross-functional and cross-regional participation in strategy, planning and prioritisation in a steering team – Technology/ R&D – Marketing – Operations, Engineering, Supply chain • Use staged development pipeline, with gatekeepers from key functions R&D Group + Dev Group + Commercial Group • Rank & select ideas by financial impact & Introduction risk analysis Ideas Development • All aimed at avoiding the ‘NIH’ issue 0 Gates 4 First International Stage-Gate Leadership Summit Slide 12 February 20-21, 2007 / St. Pete’s Beach, FL © 2007 Air Products © 2005
  13. 13. Strategic initiative # 4 Drive VOC at all stages • Stage-Gated process with VOC at all stages • Understand customer and market need, recognising ‘unmet’ or unstated needs with a truly innovative offering Commercialisation Development Prototype Feasibility Concept Ideas $ ‘Voice of customer’ Gates ’ VOC at all stages i s ce ch ps 0 ps 1 l s 2 3 lots 4 tion a ia pi c c ho ear m o u t r l is fa to res eam gr ia at s c es et t r cu s EM d tr e r s vey oi ar k es Fo e r/O iel m sur ‘V m lu m F st o & Va ust o Cu C First International Stage-Gate Leadership Summit Slide 13 February 20-21, 2007 / St. Pete’s Beach, FL © 2007 Air Products © 2005
  14. 14. Strategic initiative # 5 Manage the Gate 4 & launch aggressively Gate 4 Launch & Development commercialisation • Gate 4 determines move into commercialisation Business Plan • Tied to mandatory Business & Launch plans • Targets baked into our – Plan & commitment process, regional marketing & sales budgets – individual and team appraisals for accountability – “Innovate” make-good tracking • Driven and supported by senior business executive & team • Linked to market-communications & branding strategies First International Stage-Gate Leadership Summit Slide 14 February 20-21, 2007 / St. Pete’s Beach, FL © 2007 Air Products © 2005
  15. 15. Strategic initiative # 5 Manage the Gate 4 – understand/optimise the process • Heading to the Gate 4 decision, & post Gate 4 ‘Launch’ • An Environment of : • Intense Communication & change • Commitment ! • Hand-Over and Changing RACI • ‘How to’ – optimise effective transfer to the market – industrialise the product • So that the offering becomes part of our ‘standard’ portfolio in a sustainable way as soon as possible First International Stage-Gate Leadership Summit Slide 15 February 20-21, 2007 / St. Pete’s Beach, FL © 2007 Air Products © 2005
  16. 16. Strategic initiative # 5 Manage the Gate 4 – understand/optimise the process • CI role mapping Commercial R&D Group Dev Group Group Ideas Development Introduction Standard Gates 0 4 activity Development proven with field trials Concept/ Feasibility/ Prototype/ Development Launch/commercialisation First International Stage-Gate Leadership Summit Slide 16 February 20-21, 2007 / St. Pete’s Beach, FL © 2007 Air Products © 2005
  17. 17. Strategic initiative # 5 Manage the Gate 4 – understand/optimise the process • CI role mapping • Transition from ‘end development’ to ‘routine’ development routine Commercial R&D Group Dev Group Group Ideas Development Introduction Standard Gates 0 4 activity Development proven with field trials Concept/ Feasibility/ Prototype/ Development Launch/commercialisation Launch plan First International Stage-Gate Leadership Summit Slide 17 February 20-21, 2007 / St. Pete’s Beach, FL © 2007 Air Products © 2005
  18. 18. Strategic initiative # 5 Manage the Gate 4 – understand/optimise the process • CI role mapping • Transition from ‘end development’ to ‘routine’ development routine Commercial R&D Group Dev Group Group Transition Transition Ideas Development Introduction Standard Gates 0 4 activity Development proven with field trials Concept/ Feasibility/ Prototype/ Development Launch/commercialisation Launch plan First International Stage-Gate Leadership Summit Slide 18 February 20-21, 2007 / St. Pete’s Beach, FL © 2007 Air Products © 2005
  19. 19. Strategic initiative # 5 Manage the Gate 4 – understand/optimise the process • Marketing & Sales – The (Central) Launch Manager Role – Linking Strategic & Tactical marketing to Sales • Engineering & Operations – Use ‘Pilot Field trials’ pre-Gate 4 – Management Of Change (MOC) Best Practice • Procurement & Supply Chain – Supplier/partner engagement – ‘open innovation’ • Knowledge management – Training & skills development – Build Manuals, Procedures & documentation First International Stage-Gate Leadership Summit Slide 19 February 20-21, 2007 / St. Pete’s Beach, FL © 2007 Air Products © 2005
  20. 20. Strategic initiative # 6 Tools & metrics – Air Products & PG • ‘Make-good’ predicted v actual Air Products Corporate Portfolio • Number of new offerings 120 35 through Gate 4 over time 100 30 Impact benefit (normalised) • Predicted impact of offerings in 80 25 Number gate 4 pa pipeline 20 Predicted 60 Actual • # ideas in each stage 15 Gate 4s p.a. 40 • Times in each stages 10 20 – Development cycle time 5 – Product life cycles 0 0 99 00 01 02 03 04 05 • Customer loyalty 19 20 20 20 20 20 20 Year First International Stage-Gate Leadership Summit Slide 20 February 20-21, 2007 / St. Pete’s Beach, FL © 2007 Air Products © 2005
  21. 21. Strategic initiative # 6 Tools & metrics – AP corporate metrics Forecast Impact of Completed Gate 4 Projects (2000-2005) 20.0 Cumulative Impact of projects Predicted impact in pipeline 04 15.0 03 05 10.0 Impact (MM$) 02 01 5.0 0.0 0 20 40 60 80 100 120 140 160 0 5 10 15 20 25 30 35 -5.0 Number of Projects Project Number First International Stage-Gate Leadership Summit Slide 21 February 20-21, 2007 / St. Pete’s Beach, FL © 2007 Air Products © 2005
  22. 22. Strategic initiative # 6 Tools & metrics – Packaged Gases ‘make good’ New Revenue Growth in Market, AP PG Sales & 160 Differentiated Offerings SRLD 140 Experis 30.0% 120 Home Medical 25.0% Market growth Normalised basis Medical 100 % Licensing 20.0% 80 Oxy DA AP PG Sales Percent 15.0% Growth % 60 Acetylene (DMF) Carbon Black 40 Linx Gases/Inframix 10.0% Differentiated Party Perfect offerings CAGR 20 5.0% Heligas / Ballonium % 0 BIP 0.0% C 01 03 05 03 04 02 05 06 07 P& Maxx FY FY FY 20 20 20 20 20 20 -5.0% 07 FY Integra Welding Year Year Differentiated offerings grow > 25% pa CAGR even in flat mature markets First International Stage-Gate Leadership Summit Slide 22 February 20-21, 2007 / St. Pete’s Beach, FL © 2007 Air Products © 2005
  23. 23. Strategic initiative # 6 Tools & metrics – Packaged Gases Customer loyalty measure 100% • Support culture change, with 90% metrics showing progress 80% 70% • Demonstrate price premiums 60% over standard offerings at much higher profit/OROI 50% At Risk Indifferent 40% Favourable secure 30% • Measure and demonstrate the Category benefit in customer loyalty 20% of risk surveys (part of VOC) 10% 0% GI Non Premium Commodity Maxx Heligas BIP 38 First International Stage-Gate Leadership Summit Slide 23 February 20-21, 2007 / St. Pete’s Beach, FL © 2007 Air Products © 2005
  24. 24. Key learnings Business & Technology together Strategic initiatives 1. Embed technology in business & strategy, linked to defined market segmentation 2. Demand differentiated offerings, ‘lead not follow’ 3. An integrated process and cross functional approach 4. Drive VOC at all stages of development 5. Manage the Gate 4 and launch aggressively 6. Use tools & metrics to support the culture change First International Stage-Gate Leadership Summit Slide 24 February 20-21, 2007 / St. Pete’s Beach, FL © 2007 Air Products © 2005
  25. 25. The future-what’s next ? • Idea collection from wider sources • Better assessment/prioritisation tools MacMillan matrix – Different ‘incremental’ v ‘step out’ Scoping Stepping Stones Options – DDP, ‘MacMillan’ & risk analysis Technical Uncertainty • Improved idea selection Platform Scouting – related to strategic marketing and Launches Options segment analysis • Forward-looking metrics Incremental Expansions • Reduce cycle time through – Improved project management – CI & lean techniques Market Uncertainty First International Stage-Gate Leadership Summit Slide 25 February 20-21, 2007 / St. Pete’s Beach, FL © 2007 Air Products © 2005
  26. 26. 2006 Winners of Dow-Corning Chemical Industry Innovation award, Queens Award for Innovation Silver award UK Chartered Institute of Marketing Party Perfect Linx Gases OxyWalker “Maxx” Welding Gases Integra Heligas BIP Medical © 2007 First International Stage-Gate Leadership Summit Slide 26 February 20-21, 2007 / St. Pete’s Beach, FL Best gas © 2007 Air Products supplier award Externally recognised 7 © 2005
  27. 27. Key take aways Believe in your product and approach - if you don’t the market won’t ! Recognise and nurture innovation – it’s quite hard to do ! Thank you February 20-21, 2007 / St. Pete’s Beach, FL
  28. 28. Bibliography ‘Stage-Gate systems: a new tool for managing new products’ Robert G Cooper, Business Horizons, May-June 1990 pp 44-56 ‘Voices into choices’ C.Brodie, G.Burchill, Center for Quality management, Cambridge Mass, Joiner Associates 1997 ‘The entrepreneurial mindset’ R.G.McGrath, I MacMillan, Harvard Business School Press Publishing Corp, 2000 ‘Open Innovation’ H. Chesbrough , Business & Economics 2003 ‘The Lean design solution’ B.Hulthwaite, The Lean design solution, 2004 ‘Lean, rapid & profitable:new product development’ Robert G Cooper, Cambridge Mass, Perseus Books 2005 ‘Market busters’ R.G.McGrath, I MacMillan, Harvard Business School Press Publishing Corp, 2005 First International Stage-Gate Leadership Summit Slide 28 February 20-21, 2007 / St. Pete’s Beach, FL © 2007 Air Products © 2005
  29. 29. Biographical sketch Professor John Irven MA, PhD, CSci, CChem, FRSC John Irven is Director of Technology for Air Products, Packaged Gases Group, where he is responsible for the global R&D and innovation of new products, processes and applications in industrial gases technology. A particular area of focus is on gases for welding and fabrication processes, as well as applications across Electronics, Specialty and Helium gases businesses. Before joining Air Products, John read Natural Sciences at St. John’s College Cambridge, worked for the Plessey Company on Electronic materials and semiconductor processing, and Standard Telecommunication Laboratories on optical fibre technology, in which his PhD is based. He is a chartered scientist, chartered chemist, and Fellow of the Royal Society of Chemistry, and is visiting Professor in Chemistry at Queen Mary University of London. He chairs the TWI (Welding Institute) Cambridge Research Board activities on welding and fabrication, and is member of EPSRC, and RSC solid state committees. New products developed by John’s team have received a number of external recognitions, including a UK Queen’s Award for Enterprise, Innovation 2004, the inaugural ECN Dow Corning Chemical Industry new product innovation award 2004, and endorsements from the UK Chartered Institute of Marketing and TUV Germany. He has over 60 published papers, 25 patents, and has presented a number of invited talks at scientific meetings, as well as on the topic of Innovation. First International Stage-Gate Leadership Summit Slide 29 February 20-21, 2007 / St. Pete’s Beach, FL © 2007 Air Products © 2005
  30. 30. Back-up slides February 20-21, 2007 / St. Pete’s Beach, FL
  31. 31. Strategic initiative 6 Tools & metrics – Packaged Gases Product lifecycle studies Revenue & profit Integra-Maxx revenue $mm pa Develop Introduce Grow Mature Harvest Retire 40 New 100 New 35 80 Improved 30 Improved Improved 60 25 Rev 20 40 Improved $ Profit 15 20 10 New 0 5 1 3 5 7 9 11 13 15 0 -20 FY00 FY01 FY02 FY03 FY04 FY05 FY06 year First International Stage-Gate Leadership Summit Slide 31 February 20-21, 2007 / St. Pete’s Beach, FL © 2007 Air Products © 2005
  32. 32. Key lessons learned • Ensure ongoing integrated cross functional support to avoid the ‘black hole’ syndrome at ‘hand-overs’ Non-aligned, non-integrated processes Commercial R&D Group Dev Group Group Ideas Development Introduction 0 4 FINIS Integrated OLM, P&C & Strat Plan process H R&D Group + Dev Group + Commercial Group Introduction Ideas Development First International Stage-Gate Leadership Summit Slide 32 February 20-21, 2007 / St. Pete’s Beach, FL © 2007 Air Products © 2005

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