CHAPTER 3 DISCUSSION QUESTIONS 1) Why does Starbucks exemplify what Drucker considered to be true innovation? 2) What are ...
INNOVATION “ THE BEST WAY TO PREDICT THE FUTURE IS TO CREATE IT.” PETER DRUCKER -A CHANGE IN THE THOUGHT PROCESS FOR DOING...
INNOVATION IS ABOUT: 1) PARADIGM CHANGE: CHANGING PEOPLE’S MINDSET. -PARADIGM:  A STANDARD SERVING AS A MODEL. 2) BREAKING...
WHY DOES STARBUCKS EXEMPLIFY WHAT DRUCKER CONSIDERS TO BE TRUE INNOVATION?
PARADIGM CHANGE STARBUCKS CHANGED OUR EXPECTATIONS ABOUT THE FAST FOOD COFFEE INDUSTRY. BEFORE STARBUCKS: -COFFEE WAS SOME...
JACK KEROUAC (ON THE ROAD) INTRODUCED THE PHRASE “BEAT GENERATION” IN 1948 TO CHARACTERIZE THE UNDERGROUND, ANTI-CONFORMIS...
 
STARBUCKS PROBLEMS
1) TOO MANY STORES 2) POOR EMPLOYEE TRAINING 3) HONEYMOON EFFECT 4) BETTER COFFEE COMPETITION 5) BRAND CONFUSION
1) TOO MANY STORES <ul><li>12,500 STORES IN U.S. </li></ul><ul><ul><li>$10.7 BILLION IN SALES. </li></ul></ul><ul><li>6,77...
2) POOR EMPLOYEE TRAINING FEBRUARY 26, 2008 STARBUCKS NATIONWIDE EMPLOYEE TRAINING DAY “ I NEED MY STARBUCKS.” “ THEY DON’...
3) HONEYMOON EFFECT
4) INCREASED COMPETITION
WWW.DUNKINBEATSTARBUCKS.COM -A&G RESEARCH, INC. CONDUCTED 2008 TASTE TEST. -54.2% PREFERRED DUNKIN DONUTS -39.3% PREFERRED...
5) BRAND CONFUSION
MYSTARBUCKSIDEA.COM
SYSTEMATIC ABANDONMENT   -THE DELIBERATE PROCESS OF LETTING GO OF FAMILIAR PRODUCTS IN FAVOR OF THE NEW OR UNKNOWN.
-FOR OVER 100 YEARS K-C WAS MAINLY A PAPER MANUFACTURER. -DARWIN SMITH (NEW CEO) SAW MAKING PAPER AS BECOMING A MEDIOCRE B...
ABANDONMENT IS NOT JUST ABOUT ABANDONING A BUSINESS UNIT OR PRODUCT…..IT’S ABOUT ABANDONING ASSUMPTIONS AND MAKING ROOM FO...
-PIONEER IN GROCERY HOME DELIVERY. -ABANDONED THE IDEA OF KEEPING ITS OWN INVENTORY(GROCERIES). -PARTNERED WITH STOP & SHO...
SEEKING OPPORTUNITIES -ORGANIZATIONS NEED TO BE CONTINUALLY ON THE OFFENSIVE (SEARCHING FOR NEW PRODUCTS/IDEAS). INNOVATIO...
<ul><li>7 KEY SOURCES OF OPPORTUNITIES </li></ul><ul><li>THE UNEXPECTED </li></ul><ul><li>INDUSTRY & MARKET DISPARITIES </...
<ul><li>THE UNEXPECTED </li></ul><ul><li>-UNEXPECTED OCCURRENCES (SUCCESSES & FAILURES) SIGNAL THAT BUSINESS EXPECTATIONS ...
2 ) INDUSTRY & MARKET DISPARITIES -OCCURS WHEN THERE IS A MISMATCH BETWEEN SUPPLY & DEMAND. -THE COMPANY HAS STAYED CONSTA...
3) INCONGRUITIES -A CUSTOMER VALUE INCONGRUITY IS A DISCREPANCY BETWEEN WHAT THE CUSTOMER WANTS & WHAT THE COMPANY THINKS ...
4) PROCESS VULNERABILITIES -REFERS TO SOME PIECE OF THE WORKFLOW OR OPERATION THAT IS MISSING, DIFFICULT, OR NOT WORKING T...
5) DEMOGRAPHIC CHANGES -CHANGES IN AGE POPULATIONS & THEIR DISPOSABLE INCOME CREATE DEMAND & MISMATCHES WITH HISTORICAL SU...
6) PERCEPTION & PRIORITY CHANGES THAT SHIFT BUYING HABITS -CHANGES IN PERCEPTION DON’T CHANGE THE FACTS, THEY JUST CHANGE ...
7) NEW KNOWLEDGE -SCIENTIFIC BREAKTHROUGHS TEND TO HAVE LONG LEAD TIMES & ARE BOTH HIGH RISK & HIGH IMPACT
<ul><li>THE ONLY WAY TO PREDICT THE FUTURE IS TO CREATE IT </li></ul><ul><li>-INNOVATION IS A TOOL THAT GIVES AN ORGANIZAT...
FIRST OWNER OF THE SPACE -THE COMPANY THAT POPULATES THE NEW MARKET FIRST WITH THE MOST INTEGRATED SOLUTION. -TEMPORARY BE...
SPACE DEFINER -CREATES SOMETHING (PRODUCT OR IDEA) THAT DEFINES THE NEW SPACE IN SOME FASHION.
NICHE PLAYERS PURPOSEFULLY LET THEIR COMPETITORS DEFINE THE OVERALL SPACE & THEN BECOME PROVIDERS TO THESE LEADERS WITH PR...
-THERE IS A RISK TO JUST STICKING TO WHAT YOU ARE GOOD AT. -IF YOU DON’T INNOVATE/DIVERSIFY THE PRODUCT MAY DISAPPEAR & SO...
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Drucker chapter 3

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Drucker chapter 3

  1. 1. CHAPTER 3 DISCUSSION QUESTIONS 1) Why does Starbucks exemplify what Drucker considered to be true innovation? 2) What are Drucker's 4 basic questions about innovation? 3) In your own words define innovation. 4) Pick a company that you think is innovative (other than Apple). Why do you consider the company innovative? What are the company's strengths? 5) What is systematic abandonment? 6) How do the companies, Kimberly-Clark & Peapod, exemplify Drucker's concept of systematic abandonment? 7) What are Drucker's 7 key sources of opportunities?
  2. 2. INNOVATION “ THE BEST WAY TO PREDICT THE FUTURE IS TO CREATE IT.” PETER DRUCKER -A CHANGE IN THE THOUGHT PROCESS FOR DOING SOMETHING, OR THE USEFUL APPLICATION OF NEW INVENTIONS OR DISCOVERIES.
  3. 3. INNOVATION IS ABOUT: 1) PARADIGM CHANGE: CHANGING PEOPLE’S MINDSET. -PARADIGM: A STANDARD SERVING AS A MODEL. 2) BREAKING FREE FROM YESTERDAY AND CREATING TOMORROW. 3) MAKING A PRODUCT/SERVICE BETTER. 4) INCREASING VALUE.
  4. 4. WHY DOES STARBUCKS EXEMPLIFY WHAT DRUCKER CONSIDERS TO BE TRUE INNOVATION?
  5. 5. PARADIGM CHANGE STARBUCKS CHANGED OUR EXPECTATIONS ABOUT THE FAST FOOD COFFEE INDUSTRY. BEFORE STARBUCKS: -COFFEE WAS SOMETHING WE GOT BETWEEN PLACES (HOME TO WORK, WORK TO KIDS’ SPORTS GAMES, ETC.) AFTER STARBUCKS: -COFFEE BECAME A GO-BETWEEN DESTINATION. PEOPLE STOPPED IN STARBUCKS & STAYED.
  6. 6. JACK KEROUAC (ON THE ROAD) INTRODUCED THE PHRASE “BEAT GENERATION” IN 1948 TO CHARACTERIZE THE UNDERGROUND, ANTI-CONFORMIST YOUTH GATHERING IN NEW YORK AT THAT TIME. “ BEAT GENERATION” WAS TRANSFORMED TO “BEATNIK” BY THE MEDIA IN THE LATE 1950’S & EARLY ’60’S TO CHARACTERIZE THE ATTITUDE OF THE HIPPIE GENERATION.
  7. 8. STARBUCKS PROBLEMS
  8. 9. 1) TOO MANY STORES 2) POOR EMPLOYEE TRAINING 3) HONEYMOON EFFECT 4) BETTER COFFEE COMPETITION 5) BRAND CONFUSION
  9. 10. 1) TOO MANY STORES <ul><li>12,500 STORES IN U.S. </li></ul><ul><ul><li>$10.7 BILLION IN SALES. </li></ul></ul><ul><li>6,772 DUNKIN DONUTS IN U.S. </li></ul><ul><ul><li>$6 BILLION IN SALES. </li></ul></ul>
  10. 11. 2) POOR EMPLOYEE TRAINING FEBRUARY 26, 2008 STARBUCKS NATIONWIDE EMPLOYEE TRAINING DAY “ I NEED MY STARBUCKS.” “ THEY DON’T SHUT DOWN MCDONALDS FOR TRAINING, OR EVEN, DUNKIN’ DONUTS. TRAINING IS DONE WHEN YOU FIRST START & THEN CONTINUOUSLY ONWARD.” ANONYMOUS
  11. 12. 3) HONEYMOON EFFECT
  12. 13. 4) INCREASED COMPETITION
  13. 14. WWW.DUNKINBEATSTARBUCKS.COM -A&G RESEARCH, INC. CONDUCTED 2008 TASTE TEST. -54.2% PREFERRED DUNKIN DONUTS -39.3% PREFERRED STARBUCKS -6.3% EXPRESSED NO INTEREST
  14. 15. 5) BRAND CONFUSION
  15. 16. MYSTARBUCKSIDEA.COM
  16. 17. SYSTEMATIC ABANDONMENT -THE DELIBERATE PROCESS OF LETTING GO OF FAMILIAR PRODUCTS IN FAVOR OF THE NEW OR UNKNOWN.
  17. 18. -FOR OVER 100 YEARS K-C WAS MAINLY A PAPER MANUFACTURER. -DARWIN SMITH (NEW CEO) SAW MAKING PAPER AS BECOMING A MEDIOCRE BUSINESS. -ABANDONED INVESTMENT IN PAPER MAKING TO PUT MORE RESOURCES INTO 2 K-C OWNED BRANDS: KLEENEX & HUGGIES.
  18. 19. ABANDONMENT IS NOT JUST ABOUT ABANDONING A BUSINESS UNIT OR PRODUCT…..IT’S ABOUT ABANDONING ASSUMPTIONS AND MAKING ROOM FOR NEW IDEAS
  19. 20. -PIONEER IN GROCERY HOME DELIVERY. -ABANDONED THE IDEA OF KEEPING ITS OWN INVENTORY(GROCERIES). -PARTNERED WITH STOP & SHOP & USED ITS WAREHOUSES SO IT DIDN’T NEED TO SPEND A FORTUNE ON INFRASTRUCTURE.
  20. 21. SEEKING OPPORTUNITIES -ORGANIZATIONS NEED TO BE CONTINUALLY ON THE OFFENSIVE (SEARCHING FOR NEW PRODUCTS/IDEAS). INNOVATION TIME OFF: GOOGLE ENCOURAGES ITS ENGINEERS TO SEPND 20% OF THEIR WORK TIME BRAINSTORMING NEW IDEAS.
  21. 22. <ul><li>7 KEY SOURCES OF OPPORTUNITIES </li></ul><ul><li>THE UNEXPECTED </li></ul><ul><li>INDUSTRY & MARKET DISPARITIES </li></ul><ul><li>PROCESS VULNERABILITIES </li></ul><ul><li>INCONGRUITIES </li></ul><ul><li>DEMOGRAPHIC SHIFTS </li></ul><ul><li>CHANGES IN PERCEPTION </li></ul><ul><li>NEW KNOWLEDGE </li></ul>
  22. 23. <ul><li>THE UNEXPECTED </li></ul><ul><li>-UNEXPECTED OCCURRENCES (SUCCESSES & FAILURES) SIGNAL THAT BUSINESS EXPECTATIONS ARE OUT OF SYNC WITH REALITY. </li></ul><ul><li>-RECOGNIZING & UNDERSTANDING THE REASON FOR THIS MISMATCH IS A POWERFUL TOOL FOR INNOVATION. </li></ul>
  23. 24. 2 ) INDUSTRY & MARKET DISPARITIES -OCCURS WHEN THERE IS A MISMATCH BETWEEN SUPPLY & DEMAND. -THE COMPANY HAS STAYED CONSTANT WHILE ITS INDUSTRY OR MARKET HAS CHANGED.
  24. 25. 3) INCONGRUITIES -A CUSTOMER VALUE INCONGRUITY IS A DISCREPANCY BETWEEN WHAT THE CUSTOMER WANTS & WHAT THE COMPANY THINKS THE CUSTOMER WANTS.
  25. 26. 4) PROCESS VULNERABILITIES -REFERS TO SOME PIECE OF THE WORKFLOW OR OPERATION THAT IS MISSING, DIFFICULT, OR NOT WORKING THAT PREVENTS USERS FROM EMBRACING THE PRODUCT.
  26. 27. 5) DEMOGRAPHIC CHANGES -CHANGES IN AGE POPULATIONS & THEIR DISPOSABLE INCOME CREATE DEMAND & MISMATCHES WITH HISTORICAL SUPPLIES OF SERVICES.
  27. 28. 6) PERCEPTION & PRIORITY CHANGES THAT SHIFT BUYING HABITS -CHANGES IN PERCEPTION DON’T CHANGE THE FACTS, THEY JUST CHANGE THE CUSTOMERS’ INTERPRETATION OF THE FACTS. -PERCEPTION IS REPRESENTED BY BOTH VULNERABILITY & CUSTOMER RECEPTIVITY.
  28. 29. 7) NEW KNOWLEDGE -SCIENTIFIC BREAKTHROUGHS TEND TO HAVE LONG LEAD TIMES & ARE BOTH HIGH RISK & HIGH IMPACT
  29. 30. <ul><li>THE ONLY WAY TO PREDICT THE FUTURE IS TO CREATE IT </li></ul><ul><li>-INNOVATION IS A TOOL THAT GIVES AN ORGANIZATION A DEGREE OF CONTROL OVER THE FUTURE. </li></ul><ul><li>CATEGORIES OF SPACE OWNERSHIP </li></ul><ul><li>FIRST OWNER OF THE SPACE </li></ul><ul><li>SPACE DEFINER </li></ul><ul><li>NICHE PLAYERS </li></ul><ul><li>LAST BUGGY WHIP MANUFACTURERS </li></ul>
  30. 31. FIRST OWNER OF THE SPACE -THE COMPANY THAT POPULATES THE NEW MARKET FIRST WITH THE MOST INTEGRATED SOLUTION. -TEMPORARY BECAUSE IMITATORS WILL FOLLOW.
  31. 32. SPACE DEFINER -CREATES SOMETHING (PRODUCT OR IDEA) THAT DEFINES THE NEW SPACE IN SOME FASHION.
  32. 33. NICHE PLAYERS PURPOSEFULLY LET THEIR COMPETITORS DEFINE THE OVERALL SPACE & THEN BECOME PROVIDERS TO THESE LEADERS WITH PRODUCTS, COMPONENTS, OR SOLUTIONS
  33. 34. -THERE IS A RISK TO JUST STICKING TO WHAT YOU ARE GOOD AT. -IF YOU DON’T INNOVATE/DIVERSIFY THE PRODUCT MAY DISAPPEAR & SO MAY YOUR COMPANY. LAST BUGGY WHIP MANUFACTURERS

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