Innovate or Perish…Five Steps to Accelareate Growth and Increace Profits!
BIG QUESTIONSHOW MANY OF YOU ARE SELF EMPLOYED?  HOW MANY OF YOU ARE   ENTERPRENEURS?Page § 2
Startling FactsThe greatest transferance of wealth in the history of mankind…!Page § 3
Startling FactsPage § 4
Startling Facts                   Entrepreneurs are                    the drivers behind this                    massive ...
Who is an Enterpreneur?Page § 6
How is this Transfer of WealthHappening?Page § 7
What is Innovation?Page § 8
Innovation Defined…                                                          Innovation is the process                     ...
A New View of INNOVATION                            !                            Innovation allows                        ...
Thought Leaders on InnovationPage § 11
12 Masters of Innovation…         Clay Christensen           Henry Chesbrough        Vijay Govindarajan          Gina OCon...
Lee’s Value Innovation ProcessPage § 13
Why is Innovation so Vital Today?   New Playing Field + New Players + New Rules + New Game = INNOVATION!Page § 14
Why is Innovation so Vital Today?    “Innovation is front and center on the Corporate Agendas!    according to a global su...
The Other Side of InnovationLed their respectiveindustries at one point  Combined MarketCapitalization $420 BillionCombine...
Qwest                    What Happened?!             Failure to address changing Business             Model shift         ...
Borders         What Happened?! Failure to conform to industry changes -  Growth of Online distribution Neglected significa...
AOL                   What Happened?!             Lost track of market innovation             -  Dial up vs. Broadband    ...
Paris or               Companies that Drove InnovatePoughkeepsie?                                              Every event...
Tesla MotorsPage § 21
Tesla Quick Facts                                  Transformational Facts!                              Founded – 2003    ...
Carbon Motors Corporation                Design by Law Enforcement for Law Enforcement !             “An innovative, fast,...
Carbon Motors Quick Facts             Transformational Facts!         Founded – 2003         Manufacturing – Cornernsville...
Carbon Motors Quick FactsPage § 25
ET3Page § 26
ET3 Quick Facts Transformational Facts! Space Travel on Earth Silent, Low Cost, Safe, Faster than Jets ElectricPage § 27
Why Are These Companies Winning?Page § 28
5 Steps to Accelerate Growth andIncrease Profits through Innovation    High                                                ...
Need Seekers are companies that focus         on identifying unmet and unaticulated         needs!Page § 30
Distinct Characteristics of CompaniesPage § 31
Process and Capabilities
The Global Innovation 1000 – Booz and Co. Page § 33
Blue Ocean Ideas…  §  Created a disruptive business          §  Disputed the mobile industry     §  Extensive use of an...
Rule Breaker                            Gary Hamel’s Thesis1, 2: Companies fall into one of three                         ...
Mantra of Rule Breakers    Reinvent Your Company - Hamel’s Ten Rules for bubbling up Billion Dollar Ideas!    Set Unreason...
Classic Examples              Industry!       Rule Maker!         Rule Taker!         Rule Breaker! Consumer              ...
Project-intensive Industries Project-intens                                Project-intensive Industries Require           ...
Nimble and Agile                         Focus of Relentless Innovation!                      §  Challenge the Status Quo...
How does Relentless Innovation Happen?                 Focus of Relentless Innovation!             §  Right Condition    ...
What Business Are You In?                                                            Growth                               ...
Pursue New Markets  Innovation Ambition Matrix!                                                                         TR...
Starbucks the Relentless Innovator                               Any business that expects                                ...
Starbucks the Relentless Innovator                                      Transformational Facts!                           ...
Game Changers   THE HEART OF A COMPANY’S   BUSINESS MODEL should be   game-changing innovation. This is   not just the inv...
What Is a Game?                   A game is a contest between 2 or                   more players in which the outcome    ...
Who or What is a Game Changer?                      GAME!                       CHANGER!             “A visionary strategi...
General Perception about the GameOnly big players can change the game!Page § 48
The 6 Elements of any Game     The Field                                 The Information     •  The context of the        ...
Characteristics of Game Changers        Opposes The !                     Driven By !        Status Quo!                  ...
Tesla Motors             "All the geniuses here at General Motors kept saying lithium-ion technology             is 10 yea...
Winning with Analytics   §  Used Sabermetrics to change              §  Uses data, analytics, and          §  Extensive...
Execution Driven…                     ex-e-cu-tion                     (ek si kyoo shun) !Page § 53
Why Execution Is Needed…                                        Job for the Business             Core Discipline          ...
Winning with Execution at GE…Page § 55
Bringing It Home…    High                                                                     4   Game Changers           ...
Bringing It Home…Page § 57
The Inspiration of …                        “It is impossible to live without                          failing at somethin...
JK RowlingPage § 59
Innovator & Entrepreneur 1    Need Seeker2    Rule Breaker3    Nimble & Agile4    Game Changer5    Execution Driven       ...
Want More….?Page § 61
Alvin McBorrough
         Managing Partner 
         The OMNI Consulting Group                amcborrough@omni-pm.com
    ...
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Innovate or Perish... 5 Steps To Accelerate Growth and Increase Profits

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With the current global economic slog, it is amazing that there are companies today that are still making supernormal profits, while others are folding up. One word that explains this phenomenon is - INNOVATION. In this presentation we examine the innovative recipes that have made these companies successful in accelerating growth and increasing profits…

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Innovate or Perish... 5 Steps To Accelerate Growth and Increase Profits

  1. 1. Innovate or Perish…Five Steps to Accelareate Growth and Increace Profits!
  2. 2. BIG QUESTIONSHOW MANY OF YOU ARE SELF EMPLOYED? HOW MANY OF YOU ARE ENTERPRENEURS?Page § 2
  3. 3. Startling FactsThe greatest transferance of wealth in the history of mankind…!Page § 3
  4. 4. Startling FactsPage § 4
  5. 5. Startling Facts Entrepreneurs are the drivers behind this massive transfer of wealth
  6. 6. Who is an Enterpreneur?Page § 6
  7. 7. How is this Transfer of WealthHappening?Page § 7
  8. 8. What is Innovation?Page § 8
  9. 9. Innovation Defined… Innovation is the process that take new ideas and implements them in a way that creates value in solving unmet needs Innovation vs. Invention! Invention is the process of taking capital and turning it into knowledge Innovation is the process of taking Page § 9 knowledge and turning it back into capital
  10. 10. A New View of INNOVATION ! Innovation allows companies to create, deliver, capture, and sustain value Alvin McBorrough Strategist ! " " " " !Page § 10
  11. 11. Thought Leaders on InnovationPage § 11
  12. 12. 12 Masters of Innovation… Clay Christensen Henry Chesbrough Vijay Govindarajan Gina OConnor et al The Innovator’s Solution Open Innovation Reverse Innovation Radical Innovation Disruptive Innovation Open Innovation Reverse Innovation Radical Innovation Costas Markides Kim & Mauborgne John Bessant Peter Drucker Managing Innovation All the Right Moves Blue Ocean Strategy Innovation & Strategic Innovation Value Innovation Entrepreneurship Classical Innovation Eric von Hippel Gary Hamel Tony Ulwick Dick Lee Democratizing Innovation What Matters Now What customers want Value Innovation Works Customer Centric Management Innovation Outcome Driven Innovation Value Innovation InnovationPage § 12
  13. 13. Lee’s Value Innovation ProcessPage § 13
  14. 14. Why is Innovation so Vital Today? New Playing Field + New Players + New Rules + New Game = INNOVATION!Page § 14
  15. 15. Why is Innovation so Vital Today? “Innovation is front and center on the Corporate Agendas! according to a global survey. Executives are adding more ! breakthrough innovations and business model changes to ! their Portfolios to fuel the growth engine”! Source: Business Week, November 16, 2006Page § 15
  16. 16. The Other Side of InnovationLed their respectiveindustries at one point Combined MarketCapitalization $420 BillionCombined Revenue inFY 2005 - $338 BillionCombined EBITDA $150B Product InnovationPortfolio 12%Page § 16
  17. 17. Qwest What Happened?! Failure to address changing Business Model shift -  Telecom – Communications Solutions Neglected two significant technologies -  Mobility -  Video Hubris Born of Success Page § 17
  18. 18. Borders What Happened?! Failure to conform to industry changes -  Growth of Online distribution Neglected significant technological shift -  eReader Capitulation to Irrelevence and Death Page § 18
  19. 19. AOL What Happened?! Lost track of market innovation -  Dial up vs. Broadband Failed Acquisition -  Time Warner AOL 2.0 The Media Company Page § 19
  20. 20. Paris or Companies that Drove InnovatePoughkeepsie? Every event starts here. Whether you’d like to travel to an exotic locale or stay in your own backyard, your next Xerox event starts at the Real Business Live web site. From productivity to sustainability, it’s your single source for Xerox events focusing on the topics you care about most. See what’s happening. Visit www.xerox.com/realbusinesslive today. Undisputable Market Leaders machines. Trusted parts. Combined Marketts provide owners of older Caterpillar products with low cost repair ® inimize the risk Capitalization $ 1 Trillion © 2010 Xerox Corporation. All rights reserved. Xerox®, Xerox and Design® and Ready for Real associated with non-genuine parts. Business are trademarks of Xerox Corporation in the United States and/or other countries. engines have long and productive lives. Caterpillar is committed to orking lives. CatCombined Revenue providing a Classic Parts help manage repair costs by in ge of parts and service options for your Cat machines and engines FY 2011 - $620 Billionr maintaining older Cat equipment.provide another repair alternative for those select, cost-driving parts ct the overall cost of the repair. Cat Classic Parts offer: Combined EBITDA $330B es and availability repair option offered by your Cat Dealer erpillar warranty Product Innovation Portfolio 40% Page § 20
  21. 21. Tesla MotorsPage § 21
  22. 22. Tesla Quick Facts Transformational Facts! Founded – 2003 Manufacturing – Fremont, CA (NUMMI) Founder – Elon Musk Employees Count – 1,400 Revenue - $204 Million (FY’11) Net Income - $-254 Million (FY’11) Products – Telsa Roadster Tesla Model S Tesla Model X Tesla Model S Purchase Price - $50K - $120K Miles Range – 160 – 320 Miles Page § 22
  23. 23. Carbon Motors Corporation Design by Law Enforcement for Law Enforcement ! “An innovative, fast, efficient new American car you cant buy…” Page § 23
  24. 24. Carbon Motors Quick Facts Transformational Facts! Founded – 2003 Manufacturing – Cornernsville, IN Founder – William Santana Li Planned Introduction – 2012 Pre–Orders – 21,000 Products – Police Vehicles Product Specifications: Engine – BMW Turbo Diesel Body – Aluminium Drive – Rear Wheel Transmission – Automatic Life Span – 250,000 milesPage § 24
  25. 25. Carbon Motors Quick FactsPage § 25
  26. 26. ET3Page § 26
  27. 27. ET3 Quick Facts Transformational Facts! Space Travel on Earth Silent, Low Cost, Safe, Faster than Jets ElectricPage § 27
  28. 28. Why Are These Companies Winning?Page § 28
  29. 29. 5 Steps to Accelerate Growth andIncrease Profits through Innovation High 4 Game Changers 1 Need Seekers Performance 2 Rule Breakers 3 Nimble & Agile 5 Execution Driven Low ValuePage § 29
  30. 30. Need Seekers are companies that focus on identifying unmet and unaticulated needs!Page § 30
  31. 31. Distinct Characteristics of CompaniesPage § 31
  32. 32. Process and Capabilities
  33. 33. The Global Innovation 1000 – Booz and Co. Page § 33
  34. 34. Blue Ocean Ideas… §  Created a disruptive business §  Disputed the mobile industry §  Extensive use of analytics model for the music industry as a formidable player throughout the company §  Results §  Results §  Results §  RCA regained margins §  Focus on customer §  World’s #1 Bookstore §  A-la-carte for consumers needs §  World’s #1 HCS Provider §  10 million SGS3 – July §  Boost of +10 B §  Market Leaders in downloads §  #1 Mobile company Customer Experience Page § 34
  35. 35. Rule Breaker Gary Hamel’s Thesis1, 2: Companies fall into one of three categories: ü  Rule Maker [#1 in the market; Sets the rules for all other companies] ü  Rule Taker [Plays by the rules set by the Rule Maker] ü  Rule Breaker [Defines new rules] 1.  Gary Hamel, “Strategy as Revolution”, Harvard Business Review, July-August, 1996, 69-82 2.  Gary Hamel, “Leading the Revolution – How to Thrive in Turbulent Times by Making Innovation a Way of Life”, Plume, 2000
  36. 36. Mantra of Rule Breakers Reinvent Your Company - Hamel’s Ten Rules for bubbling up Billion Dollar Ideas! Set Unreasonable Expectations Offer and Open Market for Capital Stretch Your Business Definition Open up the Market for Talent Create a Cause, not a Business Lower the Risks of Experimentation Listen to New Voices Make Like a cell – Divide and Divide Design an Open Market for Ideas Pay Your Innovators Well – Really Well Gary Hamel, “Reinvent Your Company, 10 Rules for making billion-dollar business ideas bubble up from below”, Fortune, June 12, 2000, pp 98-118Page § 36
  37. 37. Classic Examples Industry! Rule Maker! Rule Taker! Rule Breaker! Consumer Procter & Colgate Palmolive, Nu Skin, Avon Packaged Goods! Gamble Unilever Consumer Samsung Sony, Phillips Vizio, LG Electronics! UK Airline! British Airways British Midland Virgin Group Indian Airlines! Jet Airways Indian Airlines Kingfisher Vacuum Cleaner! Dyson Ltd Hoover, Electrolux LGPage § 37
  38. 38. Project-intensive Industries Project-intens Project-intensive Industries Require Enterprise PPM Enterprise PPM Enterprise PPRule Breakers Impact... • • Deliver high-quality projects on-time and•within budget Deliver high-quality projects on-time and Deliver high-quality p • • End-to-end visibility for improved, timely • End-to-end visibility End-to-end visibility for improved, timely decision making making Architecture, Architecture, Public Sector, Public Sector, Utilities, Utilities, Architecture, High Tech & & Pub RETAIL Engineering & Engineering & Public, Aerospace Aerospace & Aerospace & Utilities,& Gas Oil &Oil & Gas Oil Gas A & E, Engineering & Manufacturing Manufacturing Aer SS Advertising Construction Construction & Defense Defense Defense Construction Construction D •  Zappos broke the •  IKEA broke the •  Craigslist broke Key Industry Requirements Key Industry Requirements •  Amazon.com Key Industry Requirements •  Netflix broke the rule that helping Improve do-it- rule that • • Improve • •Managethat web the rule large Managelarge rule that •• Manage short- Manage short- •• Bring the rule that broke the right Improve right • Pri Pr • •Man customers too yourself furniture technologies need consumers only books were meant much is wildly coordination coordination couldn’t be stylish programs with programs with to look sexy. duration, high- duration, high- products to coordination pro pro prog wanted to rent the to be read in hard unprofitable. They and inexpensive. and yet multiple multiple Without intensity intensity latest movies from market that within and — within copy on on mult built a $1 billion collaboration collaboration Today, they offer suppliers and suppliers and any advertising outages and outages and a store down the market windows windows collaboration groceries and ob obj supp company in less 12,000 products, or an attractive us subcontractors subcontractors street. They shutdowns shutdowns electronics subc than 10 years by employ 127,000 er interface and created a multi- couldn’t be sold delivering an • • Avoid and help workers, and Avoid and • •Improve a handful with only Improve billion dollar •• Increase Increase from the same •• Collaborate • Op Op • •Impr outrageous client 450 million Avoid and of people they industry of renting website. They experience protect against protect against consumers find accountability accountability booked hundreds productivity and productivity and mostly older across the protect against generate more as ass acco claims claims the perfect piece and millions of andmeet of meet speed of project speed of project movies on laptops globalbook online supply claimssupply sc sca and of furniture for dollars by regulatory regulatory delivery room delivery and living chain than all business res res regu their home. You providing simple set-top boxes other online might call it a requirements requirements requ functions that retailers combined pretty big success users really want with tens of billions Industry Game Changers!Page § 38
  39. 39. Nimble and Agile Focus of Relentless Innovation! §  Challenge the Status Quo §  Buy into Business Model Innovation §  Tirelessly seeking new opportunitiesPage § 39
  40. 40. How does Relentless Innovation Happen? Focus of Relentless Innovation! §  Right Condition §  Right Processes §  Right InsightsPage § 40
  41. 41. What Business Are You In? Growth Ideas Key Partners Key Activities Value Proposition Customer Customer Segment Relationships Who are you What critical What problems How do you interact suppliers and activities are you Who are you going need to be solved? with your to sell to? service going to perform to customers? providers create value? What product/ Who is going to pay service is best? for your service/ products? Key Resources Channels What resources do How does your you have to solve customers find, buy, your customers and use your problems? product? Cost Structure Revenue Stream What is the total cost of production? Where does your revenue comes from?Page § 41
  42. 42. Pursue New Markets Innovation Ambition Matrix! TRANSFORMATIONAL Developing breakthroughs and things New Customers for the market they don’t need yet Markets Target Create New ADJACENT Expanding from existing business “in to Adjacent Customers new to the company businesses Enter Adjacent Markets Serve CORE Optimizing existingWHERE TO PLAY! products for existing customers Serve Existing Customers Markets & Use Existing Products Add Incremental Products & Develop New Products & & Assets Assets Assets HOW TO WIN! Page § 42
  43. 43. Starbucks the Relentless Innovator Any business that expects business to stay stable – business as usual - is dead Howard M. Schultz CEO StarbucksPage § 43
  44. 44. Starbucks the Relentless Innovator Transformational Facts! Founded – 1971 Number of Stores – 19,555 Revenue - $11.7 Billion (FY’11) Net Income - $1.7 Billion (FY’11) Subsidiaries – Starbuck Coffee Tazo Tea Company Seattle Best Coffee Torrefazione Italia Ethos Water Hear Music Evollution Fresh Page § 44
  45. 45. Game Changers THE HEART OF A COMPANY’S BUSINESS MODEL should be game-changing innovation. This is not just the invention of new products and services, but the ability to systematically convert ideas into new offerings that alter the very context of the business. A.G. Lafley Former CEO P&GPage § 45
  46. 46. What Is a Game? A game is a contest between 2 or more players in which the outcome and payoffs depend on the action of the playersPage § 46
  47. 47. Who or What is a Game Changer? GAME! CHANGER! “A visionary strategist who “A breaker of the chain of alters the game his business commoditization who plays or concieves an creates differentiated and entirely new game” value-added brands through innovation” [Lafley & Charan (2008)]Page § 47
  48. 48. General Perception about the GameOnly big players can change the game!Page § 48
  49. 49. The 6 Elements of any Game The Field The Information •  The context of the •  Common knowledge game •  Percetions, beliefs, •  Landscape and attitudes The Players The Payoffs •  Their Identities and •  Rewards & Penalties Interest •  Financial & Non- •  Their A-R-C Financials The Rules The Actions •  Explicit or Implicit •  Observable & Non •  Complete or •  Sequential or Incomplete Simultaneous The EnforcerPage § 49
  50. 50. Characteristics of Game Changers Opposes The ! Driven By ! Status Quo! Analytics! Focus On Customer Experience!Page § 50
  51. 51. Tesla Motors "All the geniuses here at General Motors kept saying lithium-ion technology is 10 years away, and Toyota agreed with us -- and boom, along comes Tesla. So I said, How come some tiny little California startup, run by guys who know nothing about the car business, can do this, and we cant?’ Robert Lutz! Former Vice Chairman! GM!Page § 51
  52. 52. Winning with Analytics §  Used Sabermetrics to change §  Uses data, analytics, and §  Extensive use of analytics the way baseball is played metrics for decision making throught the company §  Results §  Results §  Results §  2 World Titles (‘04 & ‘07) §  3 World Titles in 4 years §  World’s #1 Bookstore §  Won over 90 games/yr §  Perennial contender §  World’s #1 HCS Provider §  Multiple Post Seasons §  Multiple Post Season §  Market Leaders in Customer ExperiencePage § 52
  53. 53. Execution Driven… ex-e-cu-tion (ek si kyoo shun) !Page § 53
  54. 54. Why Execution Is Needed… Job for the Business Core Discipline Leader Company’s Culture § The core of any successful § Leaders are paid to ensure § Execution should be business strategy that business is deliver embedded throughout the §  Execution is the discipline value – results – revenue organization that drive the 3 core § Leaders must use § Leaders should establish processes execution to drive the 3 an accountability culture § Execution delivers core processes § Execution should begin success §  Set winners apart from with Senior Leaders loosersPage § 54
  55. 55. Winning with Execution at GE…Page § 55
  56. 56. Bringing It Home… High 4 Game Changers 1 Need Seekers Performance 2 Rule Breakers 3 Nimble & Agile 5 Execution Driven Low ValuePage § 56
  57. 57. Bringing It Home…Page § 57
  58. 58. The Inspiration of … “It is impossible to live without failing at something, unless you live so cautiously that you might as well not have lived at all - in which case, you fail by default.” Page § 58
  59. 59. JK RowlingPage § 59
  60. 60. Innovator & Entrepreneur 1 Need Seeker2 Rule Breaker3 Nimble & Agile4 Game Changer5 Execution Driven “Rock bottom became a solid foundation on which I rebuilt my life” JK Rowling Harvard Commencement, 2008 Page § 60
  61. 61. Want More….?Page § 61
  62. 62. Alvin McBorrough
 Managing Partner 
 The OMNI Consulting Group amcborrough@omni-pm.com
 303-261-6320Page § 62

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