Innovation Benefits Realization for Industrial Research (Part-1)

Technology Innovation Management
Framework for Industrial Research
Part-1
Dr. Iain Sanders

January 2005

What is Strategic Innovation?

A. Create an Innovation Mindset
 Define the environment required to nurture an innovation
mindset, and the benefits obtained by achieving it.
B. Develop an Innovation Strategy
 Create and implement a framework for achieving an
innovation mindset.
C. Change Management
 Develop a plan empowering others to implement the
changes necessary to create an “Innovation Culture”.

5

Develop an Innovation Strategy

 3 Innovation Strategy Platforms:
 Platform 1: Planning for Innovation
 Platform 2: Defining the Development Process
 Platform 3: Crafting a Holistic Innovation Organization

6

TECHNOLOGY INNOVATION STRATEGY

Three Platforms,
Nine Stages

Integrating Technology Innovation with Business Function – Part I: Laying the Foundation

Innovation Strategy Platforms
 Platform 1: Planning for Innovation
I. Create an Innovation Vision & Blueprint
II. Develop an Innovation Strategy
III. Design a Technology & Innovation Portfolio
 Platform 2: Defining the Development Process
IV. Design a Staged Development Process
V. Innovation Project Management
 Platform 3: Crafting a Holistic Innovation
Organization
VI. Form Innovation Teams
VII. Establish Reward Systems
VIII. Measure Progress & Returns
IX. Infuse Innovation Norms & Values
8

PLANNING FOR INNOVATION

Platform 1:
(Stages I-III)


PLATFORM 1: I

I Create an Innovation Vision &
Blueprint
 THE VISION
 The vision is critical for setting the stage to develop an innovation
mindset
 It better enables employees to envision the end results of
innovation
 It should offer a way for employees to see & feel the eventual
contributions of innovation to the enhancement of the company
 THE BLUEPRINT
1. Include the overall growth role for new products
2. Include the estimated five-year budget
3. Include the people requirements
4. Include the revenue target for new products to fill
5. Include the role innovation will play with other growth modes
6. Include top management's expectations & the type of involvement &
participation they will have in the innovation process

10

INNOVATION STRATEGIC FOCUS

Platform 1:
(Stages I, Part 1)


PLATFORM 1: I (1)

I (1) Innovation Strategic Focus

What is Our Common Objective?
IRL’s Mission:
“We CREATE VALUE for New Zealand”.
Personal Mission:
“Empowering EVERYONE in IRL to create
MORE value for New Zealand through
innovation and creativity”.

12

PLATFORM 1: I (1)

How can this be Achieved?
 There are a number of extremely useful innovation
tools and resources, that can significantly benefit
IRL‟s bottom line if properly applied and managed.
 These tools can support: The Operations Groups,
The Technology Platforms, Business Development,
and Project Management.
 Everyone in IRL can benefit from using these tools:
whether or not they have a scientific / engineering /
technical / administrative / financial / HR / PR job or
project or background.
 Everyone can learn to use appropriate tools to do a
better job AND achieve their career aspirations!

13

PLATFORM 1: I (1)

Organizational Benefits –
Different Perspectives
 Operations Groups Perspective
 Provide the quickest and most effective way of ensuring that
every person can make a positive contribution to IRL’s
technology platforms and / or business development objectives.
 Technology Platforms Perspective
 Ensure IRL’s Technology Platforms target and capture actual
customer needs and requirements.
 Business Development Perspective
 Develop effective strategic partnerships to support FRST bids
etc., and secure new commercial contracts.
 Project Management Perspective
 Apply effective R&D metrics and innovation yardsticks to
measure the contribution of new concepts generated towards
achieving project requirements.
14

PLATFORM 1: I (1)

How Can We Manage Innovation
More Effectively?
1. Setting strategic outcomes for directing technology
innovation and investment.
2. Solving technical problems for realizing new market
opportunities.
3. Applying scientific knowledge-based and analytical tools for
developing new product, process and service concepts.
4. Building collaborative R&D partnerships for testing and
commercializing new concepts developed.
5. Measuring and improving the effectiveness of the R&D
process for delivering practical and profitable outcomes.
6. Setting up and coordinating technology innovation
excellence teams.
7. Facilitating the dissemination and effective application of
appropriate innovation tools and metrics by everyone in the
company.
15

PLATFORM 1: I (1)

Five Keys to Innovation Success

 Five Analogies For Five Strategies

16

PLATFORM 1: I (1)

1st Analogy: A New Renaissance -
World Famous In New Zealand
 EXAMPLE: During the Renaissance Period (1450-1600)
there was a great revival of interest in art, literature,
science and learning. Furthermore, the Renaissance
Period ushered in a grand age of exploration. People like:
Leonardo da Vinci, Christopher Columbus and Johann
Gutenberg were trail-blazing pioneers of the Renaissance
Period.
 APPLICATION: IRL should nurture more of its own trail-
blazing pioneers – people like Richard Furneaux and Jeff
Tallon, who can inspire (champion) and lead our very own
„IRL (NZ?) Renaissance‟.

17

PLATFORM 1: I (1)

1st Strategy: Create A New
Corporate Identity

Provide incentives to stimulate innovative
behaviour, and role models that emulate
innovation excellence.

18

PLATFORM 1: I (1)

2nd Analogy: The Economic Rebirth
Of A Nation - The Japanese Quality
Revolution
 EXAMPLE: Japan‟s economic and industrial
infrastructure was destroyed by the Second World War.
In order to rebuild their shattered economy, Japan
adopted, developed and adapted American Total Quality
Management methodologies. These methodologies were
effectively responsible for the miraculous turn around of
Japanese Industry after 1945.
 APPLICATION: Today, ISO 9000 quality management
standards are sweeping the world. They represent a
prominent measure of business performance, attitudes
and growth potential. Research and Innovation
standards should be created and elevated to the status
currently enjoyed by ISO 9000.
19

PLATFORM 1: I (1)

2nd Strategy: Develop Targets To
Meet And Exceed

Define research and innovation standards
to meet, and the outcomes they must
achieve.

20

PLATFORM 1: I (1)

3rd Analogy: The Space Race -
Necessity Is The Mother Of Invention
 EXAMPLE: As the Space Race began, the United States and the
Soviet Union were building rockets to use as long-range
weapons. The United States initially favoured bombers, but the
Soviets preferred missiles and thus took an early lead in rocket
technology. JFK focused the Space Race on a clear goal:
landing a man on the Moon before the Soviets. Along the way,
many new technologies were tested and refined: e.g.
photovoltaics, fuel cells, microwaves etc.
 APPLICATION: Low technology products dominate New
Zealand‟s exports. Meanwhile, other economies have
vigorously applied research and technological innovation to
develop high value goods and services. It will not be enough for
New Zealand to do more things, better and faster to catch up.
The country also needs to be different, smarter, more profitable
and competitive to get ahead.
21

PLATFORM 1: I (1)

3rd Strategy: Find The Right
Challenges To Face

Provide problems to solve, and
opportunities to realize.

22

PLATFORM 1: I (1)

4th Analogy: Eureka (I‟ve Found
It!) - But Why Does It Work?
 EXAMPLE: Several psychological methods have been
developed to „force‟ people to generate ideas and think
„outside the box‟. The difficulty of obtaining objective
information through such means however, is that these
results are neither measurable nor reliable. On the other
hand, technical information is objective in nature and can
be easily observed.
 APPLICATION: Consequently, the process of innovation
has been studied by screening over 2 million patents and
10,000 scientific effects. From these results, inventive
achievements have been recorded and inventive
principles derived. Problem-solving tools apply these
principles reliably and effectively.

23

PLATFORM 1: I (1)

4th Strategy: Provide Resources
That Equip And Empower

Provide tools to develop innovative
solutions, and technical resources to
deliver them.

24

PLATFORM 1: I (1)

5th Analogy: The New Rules Of
Engagement - The Internet Tsunami
Effect
 EXAMPLE: Speed, range and accessibility of information
on the Internet, and the low cost of distributing and
capturing it, create new commercial possibilities.
Entirely new companies and business models are
emerging in industries ranging from chemicals to road
haulage to bring together buyers and sellers in super-
efficient new electronic marketplaces.
 APPLICATION: By harnessing the power and reach of the
Internet, IRL can utilise the tools to compile and qualify
business investment proposals. Furthermore, funding
might come from around the block or around the world.

25

PLATFORM 1: I (1)

5th Strategy: Deliver The Means To
Make A Difference
Provide business resources to
commercialize research & innovative
solutions, and investors to maximise the
wealth created from them.

26

CREATE AN INNOVATION MINDSET

Platform 1:
(Stages I, Part 2)


PLATFORM 1: I (2)

I (2) Create an Innovation Mindset

I. Definition
II. 10 Benefits of Instilling an Innovation Mindset
III. Top 10 Innovation Insights
IV. 7 Changes Driving Innovation
V. Instilling Innovation at a CEO Level
VI. 7 Initiatives of Innovation Mind-Setters
VII. Formula for Successful Innovation
VIII. The Innovation Creed

28

PLATFORM 1: I (2)

Definition

 “Creating newness across all dimensions of the
organization”

29

PLATFORM 1: I (2)

10 Benefits of Instilling an
Innovation Mindset
1. An expanded, futuristic vision of the business, including the strategic roles that innovation
can satisfy
2. Motivated team members who are rewarded financially, commensurate with the market
performance of the new products they launch
3. Effective measurement indices enabling the company to determine its return from innovation
investments & calibrate future expenditure levels, depending on strategic roles
4. Improved up-front consumer research, which explores the problems & unmet needs in a
defined category to help guide idea generation
5. An alignment of technology & R&D resources against new product strategic roles to increase
both efficiency & effectiveness
6. Committed & supportive functional & senior managers to ensure the "right" people resources
& funds are dedicated to innovation
7. A pervasive & optimistic attitude about innovation that is felt & endorsed by all employees
8. A systematic development process that enables new product participants to know their roles
at each step of the process & to understand their accountability & decision-making criteria
9. Acceptance of business judgement, intuition, experience, & insight as additional "tools" to use
in the development process
10. Values that encourage & foster a belief in innovation as a legitimate & leverageable "intangible
asset" for accelerating stock price & increasing future earnings

30

PLATFORM 1: I (2)

Top 10 Innovation Insights
1. Failure is an intrinsic part of innovation
2. Companies that have a new products strategy in place are more successful
3. Using multi-functional teams with dedicated team members is critical for success
4. A systematic, well-defined, & commonly understood new product development
process is a given - not a differentiator for successful innovation
5. Compensation incentives that stimulate an entrepreneurial environment are more
likely to motivate participants on new products & innovation teams
6. Top management commitment is the foundation on which successful innovation is
built
7. Companies that are successful innovators keep track of their results & know how
much bang they are getting for their innovation buck
8. Developing a portfolio of new product types helps to diversify risk & provide a
balanced investment approach to innovation
9. Companies should begin the new product development process with customer
problem identification & need intensity research
10. Identify innovation values & new product team norms to guide behaviour &
communications among team members

31

PLATFORM 1: I (2)

7 Changes Driving Innovation

1. Shareholders will want annual reports to describe & detail a company's
innovation initiatives & returns generated from new product development
efforts
2. Companies will develop a new financial measurement tool - Return on
Innovation (ROI)
3. Innovation will be established as a separate yet integrated function within
companies
4. New products & innovation managers will be viewed as potential COOs &
CEOs
5. A new type of market research will focus on consumer problems & needs
identification prior to idea generation
6. Larger financial investments will be made in radical innovation & technology
breakthroughs as the proliferation of line extension & "me-too" new products
dramatically declines
7. Companies will establish dramatically new compensation incentives for
innovation managers, departments, & teams

32

PLATFORM 1: I (2)

Instilling Innovation at a CEO
Level
1. Trust your Teams & Functional Managers
2. Ensure recognition, rewards, & respect
3. Be positive, buoyant, & supportive
4. Don't cut the funding

33

PLATFORM 1: I (2)

7 Initiatives of Innovation
Mind-Setters
1. Develop a new product strategy
2. Use a consumer-driven development process
3. Conduct up-front consumer problems / needs
research
4. Develop concepts with high concepts need
intensity
5. Use cross-functional, dedicated, & accountable
teams
6. Motivate teams with rewards, incentives, &
reinforcers
7. Measure & track cumulative returns on
innovation
34

PLATFORM 1: I (2)

Formula for Successful
Innovation
 LOW COSTS + HIGH-DEMAND PRODUCTS & MARKET SHARE +
NEW PRODUCTS + MOTIVATED & VALUE-BASED EMPLOYEES =

HIGH PROFITS & STOCK PRICE GROWTH

 Top Executive endorsement required:
1. Innovation will be linked to & integrated with business strategy
2. Innovation will become a separate function or department within the company
3. Shareholders will appreciate & reward innovation more, & stock prices will reflect a
company's effectiveness in innovation
4. Companies will measure returns on innovation as the level of investment &
performance expectations increase
5. Team structures that reinforce an innovation mindset will be kept in place for long
periods, & innovation will have its own career path
6. New compensation mechanisms will be developed to reinforce a more entrepreneurial
& risk-sharing environment
35

PLATFORM 1: I (2)

The Innovation Creed
1. I believe innovative new products & services are integral to my company's future success
2. I believe I control the future success of innovation for my company
3. I believe new-to-the-world products can be our most valued currency
4. I believe successful internal innovation will yield greater returns than equally risky
acquisitions
5. I believe long-term investments in innovation will yield profitable returns if managed correctly
6. I believe innovation will pay for itself & generate high returns if a balanced new products
portfolio is maintained
7. I believe that quantity of new products is as important as their quality
8. I believe new solutions to existing problems will provide big-hit new product opportunities
9. I believe that I am one of the biggest assets or most impenetrable barriers that can make or
break innovation
10. I believe that an effective innovation mindset can motivate my employees to perform better &
be more productive
11. I believe that the death or success of innovation lies directly in my hands
12. I believe that measuring return on innovation is as important as measuring return on equity
13. I believe that failure is an intrinsic component of innovation, & I accept that
14. I believe that maintaining a positive, proactive, & buoyant attitude about innovation is critical
for morale
15. I believe innovation should be one of my top five priorities & remain on my to-do list

36

PLATFORM 1: STAGE II
DEVELOP AN INNOVATION STRATEGY

PLATFORM 1: II

II Develop an Innovation Strategy

1. Define the financial growth gap that new products &
services will try to fill during the next five years
2. Define the financial objectives to be met through
innovation efforts
3. Define the strategic roles that new products & services will
try to satisfy
4. Define the screening criteria to be used for moving ideas &
concepts through the development process

38

WHAT DRIVES TECHNOLOGY
INNOVATION?
Platform 1:
(Stage II, Part 1)


PLATFORM 1: II (1)

What Drives Technology Innovation?

 A. Two Reasons, Many Motives
 Stimulate invention / innovation motivated by purpose-driven
research and creativity.
 B. Charting the Future
 Develop future scenarios and roadmaps defining the
technological environmental constraints and possibilities
available to work with.
 C. Finding Ideas
 Generate dozens of ideas for every researcher to target at
least one significant market, product or process of importance
they can improve.

40

PLATFORM 1: II (1)

What Drives Technology
Innovation (Continued)?
 D. Assessing Concepts
 Determine the cost-benefit relationship of the new market,
product or process concept developed.
 Determine the strategic fit-difficulty of implementation
relationship of the new market, product or process concept
developed.
 E. Critical Factors
 Identify the critical business development factors, and
measure their impact.

41

PLATFORM 1: II (1)

A. Two Reasons, Many Motives

 TWO REASONS
 A PROBLEM ARISES OUTSIDE THE TECHNIQUE (e.g.
Demand from society, Creativity of an inventor)
 A PROBLEM ARISES INSIDE THE TECHNIQUE (e.g. Cost
reduction & quality improvement efforts or new materials or
technology available)

42

PLATFORM 1: II (1)

A. Many Motivations
 As a response to a threat - e.g. radar, weapons  Through cost reduction & quality improvement
 As a response to an existing need - e.g. can efforts - e.g. float glass
opener  Through finding new uses for waste products - e.g.
 As a response to a future need - e.g. high- aluminium flakes in roofing
temperature ceramics
 Through continuous improvement of work done by
 For the fun of it - e.g. as an expression creativity others
 To satisfy intellectual curiosity
 By finding new applications for existing
 As a response to an emergency - e.g. Band-Aid technology
 To increase one's chance of survival & security
 Through having new materials available
 To increase comfort & luxury in lifestyle
 To win a prize or recognition - e.g. human-powered
 Better problem solving - e.g. hydraulic
propulsion system aircraft
 Turning failure into success - e.g. Post-It notes  Meeting tougher legal & legislated requirements -
 To overcome flaws - e.g. "Magic" tape e.g. catalytic converter
 Accidentally, on the way to researching  By having research funds available to solve a
something else - e.g. polyethylene specific problem - e.g. superconductors
 As a deliberate synthesis - e.g. carbon brakes  By being a dissatisfied user of a product
for aircraft  Responding to a challenge or assignment
 Through brainstorming with experts or outsiders  Because "it's my job" - e.g. "I do it for a living"
- e.g. courseware
 To improve the organization's competitive position
 From studying trends, demographic data, &
customer surveys  To get around someone else's patent

43

PLATFORM 1: II (1)

B. Charting the Future
 FUTURE SCENARIOS
 What will the ECONOMIC ENVIRONMENT look like in X years?
 What will the POLITICAL ENVIRONMENT look like in X years?
 What will the REGULATORY & LEGISLATIVE ENVIRONMENT look like in X years?
 What will the DEMOGRAPHIC & SOCIAL ENVIRONMENT look like in X years?
 What will the MARKETS look like in X years?
 What will CUSTOMER / USER PROFILES & HABITS look like in X years?
 What will the COMPETITIVE ENVIRONMENT look like in X years?
 What will the next two to three GENERATIONS OF TECHNOLOGY look like in X
years?
 What FEATURES & CONTENT will PRODUCTS have in the next X years?
 What will MANUFACTURING PROCESSES & CAPABILITIES look like in X years?
 What will SALES / MARKETING METHODS look like in X years?
 What will DELIVERY / DISTRIBUTION METHODS & SYSTEMS look like in X years?
 What will HUMAN, FINANCIAL, & NATURAL RESOURCES look like in X years?

44

PLATFORM 1: II (1)

B. PULL or PUSH Economy?
 PULL ECONOMY  PUSH ECONOMY
 SUPPLY VS. DEMAND  DEMAND VS. SUPPLY
 CUSTOMER-DRIVEN  PRODUCER-DRIVEN
 MARKET FRAGMENTATION  MARKET SEGMENTATION
 SMALLER NUMBERS OF
CUSTOMERS, DISSIMILAR  LARGE NUMBERS OF
NEEDS CUSTOMERS, SIMILAR NEEDS
 TAILORED PRODUCTS  GENERIC PRODUCT
 PREMIUM PRICES  COMMODITY PRICES
 SHORTER PRODUCTION RUNS  LONG PRODUCTION RUNS
 FLEXIBLE, EFFECTIVE  EFFICIENT MANUFACTURING
MANUFACTURING  LONG PRODUCT CYCLES
 SHORTER PRODUCT CYCLES
 STRONG BRAND LOYALTY
 LITTLE BRAND LOYALTY
 PRODUCT INNOVATION
 PROCESS INNOVATION
 CHANGING RULES  FIXED RULES
 FAST & NIMBLE  STURDY & STABLE

45

PLATFORM 1: II (1)

B. Creating the Future

 “The best way to manage the future? Create it!
 The best competitive position to be in is to have no
competition
 This position can only be achieved by NOT playing the way your
competition plays the game but rather by controlling the game, by
creating products and services that change the rules in your
favour.

46

PLATFORM 1: II (1)

B. How to Create the Future
 Use a framework that classifies best-practice business processes for
identifying, developing and retaining customers
 The first-level processes in this framework for identifying best-
practice business opportunities, define a company‟s basic operations,
such as:
1. Understand markets and customers
2. Involve customers in the design of products and services
3. Market and sell products and services
4. Involve customers in the delivery of products and services.
5. Provide customer service
6. Manage customer information
 Supporting these basic operations, management and support
processes maximize the value and use of human resources,
information and technology, and financial and physical resources, to
name a few
47

PLATFORM 1: II (1)

 The sub-processes (second-level processes) supporting the first-level
processes are as follows:
1. Understand markets and customers:
i. Understand the market environment
ii. Understand customers‟ wants and needs
iii. Segment customers
2. Involve customers in the design of products and services:
i. Develop new concepts and plans for products and services
ii. Design, build, and evaluate prototypes
iii. Refine and customize products or services, then test their effectiveness
3. Market and sell products and services:
i. Secure channels of distribution
ii. Establish pricing
iii. Develop advertising and promotion strategies
iv. Develop and deploy a sales force
v. Process orders
vi. Develop customers
48

PLATFORM 1: II (1)

 The sub-processes (second-level processes) supporting the first-level
processes are as follows (continued):
4. Involve customers in the delivery of products and services:
i. Offer broad delivery options to become the „supplier of choice‟
ii. Use delivery customization to attract and retain core customers
iii. Identify customers‟ delivery needs
iv. Develop distribution capability
5. Provide customer service:
i. Establish „points-of-contact‟ excellence
ii. Build cross-functional „points-of-contact‟ cooperation
iii. Train employees to improve customers‟ expectations for products and services
6. Manage customer information:
i. Build customer profiles
ii. Establish service information
iii. Measure customer performance and satisfaction

49

PLATFORM 1: II (1)

1. Best-practice agenda for understanding markets and customers:
 Understand that the market is more than just the customer. In its broadest sense, the market
environment includes the company‟s supply chain and merchant partners as well as intermediary
customers and end users. A company‟s understanding of government regulations, trends in
consumer purchasing, and unpredictable events can dramatically affect its production and
relationship with customers
 Systematically create an image of the company‟s value chain, from suppliers to end users.
Prominently displayed, this diagram serves to inform all employees how they fit into the market
environment as well as how other stakeholders with whom they deal (customers, suppliers, and so
forth) also fit into the market environment
 Survey your customers frequently, systematically, directly, and personally. Review the surveys and
then share them with the people in our organization who need to know what those customers have to
say. Responding personally to every survey, for example, should provide the norm for executive
behavior. If you don‟t have time to respond personally, make sure someone in your company does
 Revise your products or services as customers request or tell them why they can‟t have it their way.
Promote the new version and resurvey customers to assess their satisfaction. Survey every
customer, for example, and require every employee linked to that customer to read and respond to
those comments. Requests for new products and services can lead to expanded offerings and even
new companies being launched
 Segment customers so that you can meet demands more directly and profitably. Establish the criteria
by which customers should be grouped (by age, income, credit history, purchases, demographic
factors, and so forth), then offer products and services tailored to those segments. When appropriate,
partner with merchants and suppliers to create greater value for customers
50

PLATFORM 1: II (1)

1. Top ten best-practice diagnostic questions for understanding markets and
customers:
1. Can you describe in detail all the major suppliers in your company‟s value chain and list substitute
suppliers who could provide raw materials and component parts in an emergency? Do you need a
week‟s review to do so? (You won‟t have a week if a fire destroys a supplier‟s production plant.)
2. How often do you survey your customers? Once a month? Once a year? Once a millennium?
3. Which customers do you choose to survey? Only those who call you first?
4. How good is your process for responding to customer concerns expressed in surveys?
5. What quick, tangible rewards do you offer customers who take the time to complete one of your
surveys or requests for information?
6. What external sources other than surveys do you typically use to gather information about your
customers? About competitors? About suppliers? About trends in the marketplace?
7. What other internal sources do you use to collect this information?
8. List five (or more) segmentations that your company currently uses. Can you explain succinctly the
benefits it realizes from grouping customers as it does?
9. Name a product or service your company provides that has come about as a result of a customer
request or survey and has since improved your overall profitability.
10. Does your company have a process for customers to evaluate your employees and departments? Is it
similar to the Net Satisfaction Index that Dickens Data Systems has developed? Do you support
cross-functional teams to analyze customer needs and fulfill them?

51

PLATFORM 1: II (1)

2. Best-practice agenda for involving customers in the design of products and
services:
 Survey customers for their opinions, ideas, feelings, likes, and dislikes about products or services.
Whenever possible, meet them face-to-face to discuss their views. Most important, listen closely to
what they have to say
 From these surveys and other customer interactions, collect, categorize, and deliver information
about product use to the people in our organization who need it
 Describe to your customers how they can help you understand their needs, then create products and
services that meet those demands. Define the values that this step of the process has for them: more
precisely customized products and services, speedier development, increased opportunities to
participate in the design stages, and greater savings in production and use
 Make refinements in existing products and services, partnering with your customers either on their
premises or yours when possible. Share information both at home and at the customer‟s site
 Test the refinement in a controlled environment with targeted segments of customers
 Market the successfully refined product, but keep the doors open to further improvements as you
receive suggestions from your customers and as their needs change

52

PLATFORM 1: II (1)

2. Top ten best-practice diagnostic questions for involving customers in the
design of products and services:
1. How do you gather customer input about product design and use? Telephone or mail surveys?
Internet bulletin boards? Focus groups? Feasibility studies?
2. Do you have a team comprising representatives from various groups – manufacturing, engineering,
marketing, sales, and so forth – that goes out to meet with customers?
3. Have you ever allowed your customers to decide whether or not you should implement a change, as
Disney did in creating Mickey‟s Starland and character breakfasts?
4. To what extent do you involve customers in the design of prototypes? What about their customers?
5. Do you look for customer insights before making refinements or customization changes to existing
products, as Black & Decker did in creating its VersaPak line?
6. Do you get wisdom and insights from customers at each step of development? Do you have a
customer advisory board?
7. Do you partner with customers so that they allow your employees to visit their sites? If so, how many
of these relationships do you have?
8. Do you have space reserved in your plant for your best clients (or suppliers) to collaborate with you in
design, production, and other areas? (A mailbox slot or coffee mug doesn‟t count.)
9. How much do you share information with clients? Do you give them the right to attend design and
engineering meetings? Get input on upcoming advertising and sales campaigns?
10. How easy is it for clients to reach someone at your company with a proposed change or refinement?
How long does it take your company to respond? How many people get to see and discuss the
proposal?
53

PLATFORM 1: II (1)

3. Best-practice agenda for marketing and selling products and services:
 Make sure you know all links in your value chain – all suppliers, distributors, advertisers, marketers,
salespeople, and customers. By its thorough understanding of its value chain, Lexus was able to
overcome potential distribution problems
 Establish a competitive pricing strategy, as Southwest Airlines has done by looking outside its
industry (namely, to automobile rentals and other modes of transportation) to determine pricing
policies
 Develop strong advertising strategies, seeking input from all levels of your company to develop an
appropriate image that can distinguish your company from others in the industry. As Nike has
proven, developing a good product is only half the battle. You also have to get the message to your
customers
 Train your employees, especially those who will sell your products and services, to know everything
they need to know about the market, the item they are selling, and the customers to whom they are
selling. As Cutler-Hammer illustrates with its team-selling approach, this melding of individuals with
different talents and degrees of expertise makes good business sense
 Develop an integrated system for processing orders tailored to customers‟ needs. Through its
ValueLink program, Allegiance Healthcare serves over 150 acute-care hospitals in the United States
with 98 percent fill-rate accuracy
 Do business with the customers you choose and in the ways you choose – by surveys, interviews,
point-of-sale contacts, repair calls, and the like. As Peapod, Inc., and American Airlines have
demonstrated, it is possible to partner with customers, establishing key drivers of greater value and
lower prices

54

PLATFORM 1: II (1)

3. Top ten best-practice diagnostic questions for marketing and selling products
and services:
1. The foundation of a successful sales effort is knowledge of customer needs and an ability to
communicate how your products and services best fit those needs. What training systems does your
company use to educate your salespeople and service technicians on: (i) identifying customers‟ key
needs; and, (ii) differentiating your products and services from those of the competition?
2. How often do you retrain your employees in these and other areas? What tests do you give them?
3. When was the last time you critically evaluated your channels of distribution? Have you considered
emerging channels such as the Internet?
4. Do you monitor your price performance and that of your competitors? How do you determine what
customers are willing to pay?
5. Does your advertising strategy address current and developing trends in your market?
6. Have you studied non-customers and your lost customers to identify their needs? Have you
responded to them appropriately?
7. How do you go about building a positive image for your company and its products? How do you help
potential customers understand that they need your products and services
8. What degree of integration (such as EDI) do you have in place for processing orders?
9. What special offers or incentives do you offer selected segments of your customers?
10. Do you know what differentiates your products and services from your competitors‟ products and
services? How do you communicate those differences?

55

PLATFORM 1: II (1)

4. Best-practice agenda for involving customers in the delivery of products and
services:
 Become the „supplier of choice‟ by using out-of-box thinking to generate customer delivery solutions
not bound by conventional wisdom, as New Pig Corporation, Norrell Corporation, and Holy Cross
Hospital have done
 Customize delivery systems to fit the needs of core customers, in particular by creating channels of
communication and service offerings to meet their demands. Establish a program similar to the
CERRFS initiative undertaken by SARCOM
 Identify customer delivery requirements through a complete understanding of the impact that
distribution has on a customer‟s business. As Granite Rock and Cemex show, often a best-practice
company builds extensive lines of communication within its own system before streamlining its
delivery services to customers
 Develop distribution capability as exemplified by Campbell‟s, paying close attention to small details –
such as pallet size – that combine to solidify the customer-supplier relationship

56

PLATFORM 1: II (1)

4. Top ten best-practice diagnostic questions for involving customers in the
delivery of products and services:
1. How do you respond to customer delivery needs in emergency situations?
2. How do you identify the delivery service needs of individual customers? Do you use these needs as a
method of customer segmentation?
3. Do you have just-in-time supply and continuous replenishment services?
4. What steps have you taken to ensure reliability in your delivery process? How do you communicate
this process to your customers?
5. Do you have in-plant reps at customer sites? If so, what do you consider the biggest advantages of
these relationships?
6. What is your delivery channel strategy? Do you align your delivery strategies to service specific
customer needs?
7. Can you continuously track products from the production line to the customer‟s door?
8. Do you offer special delivery deals for large-scale purchases such as same-day shipping? Twenty-
four-hour delivery? Any other customization features in packaging and delivery?
9. How do you differentiate your delivery strategy from competitors‟ trying to become the supplier of
choice?
10. What methods of feedback (other than a payment) do you get from customers regarding delivery and
repair information? How do you elicit this input – via phone surveys, the Internet, or other means?

57

PLATFORM 1: II (1)

5. Best-practice agenda for providing customer service:
 Establish primary „points of contact‟ between your employees and customers, instilling in customers
the feeling that their needs are being met personally and promptly. At the same time, information can
be used to alter company-wide business processes
 Build cross-functional cooperation by training employees to understand and enhance the entire
customer experience, then holding them responsible for customer satisfaction. This training could
come via improving lines of communication between management and frontline employees – much as
Coldwell Banker Relocation Services does – or by instructing employees how to treat customers from
the first point of contact, such as Hyatt and Disney
 Create a database to identify customer service failures and embrace their identification, recalling the
principle that drives customer satisfaction at IBM and FedEx: Your customers know best what they
don‟t like and what they can‟t understand
 Raise customer expectations for products and services by giving them high-quality treatment each
step of the way. Whether it is greeting guests at the front door, as the Red jackets do at East
Jefferson General Hospital, or helping guests locate keys to their locked cars, as Disney World
attendants do, the best-practice company personalizes its customer service at every point of contact
 Make sure each employee has at hand all information needed to process a customer‟s request
promptly and efficiently. Providing this information may require sophisticated databases such as
those used by Hyatt Hotels to identify specific guests‟ needs and FedEx has in place to help
customers track shipments. Or the organization may assemble data from customer surveys and
distribute it as needed to appropriate personnel, much as East Jefferson General Hospital has done
by collecting information from groups such as senior citizens to better prepare employees associated
with its Elder Advantage program
58

PLATFORM 1: II (1)

5. Top ten best-practice diagnostic questions for providing customer service:
1. What is your customer retention rate? Does it indicate any trends you can act upon?
2. What is the level of cross-functional communication between your company and its customers?
3. Do you train employees throughout the organization in various tasks so that any of them can handle
any problem that arises during the customer cycle?
4. What financial empowerment do you provide to your frontline employees to solve customer
problems? Do you give them additional authority to make decisions on the spot?
5. Do those frontline employees have access to executive groups such as IBM‟s customer action
councils where they can receive additional assistance and powers of authority?
6. Do you have in place a cross-functional database to track and analyze customer service highlights
and lowlights?
7. How do you explicitly gauge your customers‟ satisfaction? Do focus groups play a role?
8. Is any portion of your company‟s merit system based on customer service?
9. Do you have a client advisory board? How often does it meet? What does it accomplish?
10. Do you surprise your customers with great customer service as East Jefferson general Hospital does
with its red-jacketed representatives who accompany visitors to their destinations?

59

PLATFORM 1: II (1)

6. Best-practice agenda for managing customer information:
 Design and build profiles using a common database to track customer information. As American
Express demonstrates, a complete and flexible database allows a company to capture significant
information about customers and merchants, thereby controlling this three-way relationship by virtue
of its involvement in each transaction
 Collect observations about customer preferences from point-of-contact employees who serve as
„listening posts‟, as the Ritz-Carlton does
 Communicate customer satisfaction throughout the company. By using the chain‟s extensive
database, each Ritz-Carlton hotel can combine its own employees‟ observations with those from
employees who encountered the same guests on visits to other Ritz-Carlton hotels. This process
helps the company prepare for guests‟ visits and secure long-term relationships
 Establish service information by studying how customers use (or misuse) products and services.
Black & Decker discovered that it could actually instruct customers how best to use its VersaPak
product, thereby altering customers‟ perceptions and ensuring sales. Peapod, Inc., on the other hand,
finds that by understanding customers‟ buying patterns and preferences, it can capture present and
future sales
 Gauge customer performance and satisfaction through both internal measures such as sales growth
and revenues, and external ones such as industry analyses and customer surveys. As the Orange
County Teachers FCU shows, it is possible to preserve customers‟ privacy while simultaneously
establishing acceptable levels of risk and tracking how the company ranks against its competitors in
terms of customer satisfaction

60

PLATFORM 1: II (1)

6. Top ten best-practice diagnostic questions for managing customer
information:
1. Do you know your customers‟ purchasing patterns s o well that you can pinpoint when they will likely
make their next purchase of one of your products? Are you holding your breath, or are you taking a
jar of Skippy off the shelf as Peapod is doing?
2. Do you study customer profiles to determine how much individuals are willing or likely to spend for
products or services?
3. Where will customers make their next purchase of one of your products? At a discount store, through
a catalog, over the Internet? Will you be there to make the sale wherever the order occurs?
4. Can you track customer preferences and how they change over time? If so, what do you do with this
information?
5. What means do you have for collecting, organizing, and sharing customer data with people
throughout your company? Why do you want to keep your people in the dark?
6. Are you constantly surprising and delighting customers with your products and services? How do
you know?
7. How do you build long-tern loyalty? (See „Building Customer Loyalty‟ below)
8. Does our organization have the capability for identifying customers to target with promotions specific
to their needs? Can you find fans of a particular merchant or product as adeptly as American
Express?
9. Can you deal with „ugly guests‟ as effectively as the Ritz-Carlton does?
10. Does your company try to educate customers in the proper use of products and services as Black &
Decker does, or do you pray they‟ll educate themselves?
61

PLATFORM 1: II (1)

C. Finding Ideas

1. Unexpected Successes
2. Unexpected Failures
3. Unexpected External Events
4. Process Weaknesses
5. Industry / Market Structure Changes
6. High-Growth Areas
7. Converging Technologies
8. Demographic Changes
9. Perception Changes
10.New Knowledge

62

PLATFORM 1: II (1)

C(1) Unexpected Successes
1. What unexpected product success have you had recently?
2. In which geographic areas have you had unexpected success
recently?
3. In which market / industry segments have you experienced
unexpected success recently?
4. What customer segments have provided unexpected success
recently?
5. What unexpected successes have your suppliers had recently?
6. What unexpected successes have your competitors had recently?
7. Which of your technologies has had unexpected success recently?
8. What unexpected customer / user groups have bought from you
recently?
9. What unexpected sources have asked to sample, distribute, or
represent your product recently?

63

PLATFORM 1: II (1)

C(2) Unexpected Failures
1. What unexpected product failures have you had recently?
2. In which geographic areas have you had unexpected failures
recently?
3. In which market / industry segments have you experienced
unexpected failures recently?
4. What customer segments have provided unexpected failures
recently?
5. What unexpected failures have your suppliers had recently?
6. What unexpected failures have your competitors had recently?
7. Which of your technologies has had unexpected failures recently?
8. Which customer / user groups have had unexpected failures
recently?
9. Which distributors, dealers, & / or agents have had unexpected
failures recently?

64

PLATFORM 1: II (1)

C(3) Unexpected External Events

1. What unexpected external events have occurred
recently?
2. What unexpected internal events have occurred
recently?
3. Have any expected external & internal events
combined in an unexpected way recently?

65

PLATFORM 1: II (1)

C(4) Process Weaknesses
 Every process or system in existence has one of three
things wrong with it:
1. A bottleneck
2. A weak link
3. A missing link
 Checklist
1. What self-contained processes exist in the organization?
2. What process weaknesses exist in our customers' organization?
3. What weakness or "missing link" prevents better process
performance?
4. Why do some processes perform better at some times than at
others?
5. What bottlenecks do each of these processes have?
6. What process weaknesses among our competitors might we be
able to improve on?

66

PLATFORM 1: II (1)

C(5) Industry / Market Structure
Change
1. What major structural changes are occurring among your
customers?
2. What major structural changes are occurring in your
geographic markets?
3. What major structural changes are occurring within your
market / industry structure or in the conduct of your
business?
4. What major structural changes are occurring among your
competitors?
5. What major structural changes are happening in your
customers' businesses?
6. What major structural changes are occurring within your
regulatory environment?
7. What major structural changes are occurring in your
supplier relationships?
67

PLATFORM 1: II (1)

C(6) High-Growth Areas
1. What parts of the business are growing faster than
economic or population growth?
2. What other businesses are growing faster than economic
or population growth?
3. What potentially high-growth businesses related to yours
are dominated by only one or two companies?
4. What parts of your competitors' businesses are growing
faster than economic or population growth?
5. What parts of your customers' or suppliers' businesses are
growing faster than economic or population growth?

68

PLATFORM 1: II (1)

C(7) Converging Technologies

1. What technologies in your business are
converging or merging?
2. Which of your technologies is now being joined
to outside technologies?
3. Which of your technologies can be more
effective if deliberately converged?
4. What would be the ideal convergence of
technologies in your business?

69

PLATFORM 1: II (1)

C(8) Demographic Changes
 4 categories of demographic changes need to be monitored in a firm's
end customers:
1. Income
2. Age
3. Education
4. Mix
 Checklist
1. How is the age distribution of your customers & users changing?
2. How will the educational level of your customers & users change in the next few
years?
3. How will the income distribution of your customers & users change in the next few
years?
4. How will the geographic distribution of your customers & users change in the years
ahead?
5. How might the buying habits of your customers & users change in the years ahead?
6. What are the customer demographics that might change over the years ahead?
7. How will the mix of your users & customers change in the next few years?

70

PLATFORM 1: II (1)

C(9) Perception Changes
1. What changes are occurring in how your products &
services are perceived?
2. What changes are occurring in the values of your
customers?
3. What changes are occurring in the lifestyle, image, & status
of your customers?
4. How will changes in perception affect your customers &
suppliers?
5. For what new purposes have customers purchased your
products & services recently?
6. What intangible reasons are customers developing to
support your products & services?
7. What societal, peer, & normative pressures will affect your
products & services in the future?

71

PLATFORM 1: II (1)

C(10) New Knowledge

1. What new knowledge has recently become
known about your business?
2. What combinations of knowledge have created
new insights into your business?
3. What new sources of information about your
business have recently been tapped?
4. What new patents or discoveries have been
announced relating to your business?

72

PLATFORM 1: II (1)

D. Assessing Concepts

 COST-BENEFIT RELATIONSHIP
1. What is the cost of this new product or market opportunity?
2. What is the benefit of this new product or market
opportunity?
 CHECKLIST Costs Benefits
People Market Share
Materials Return / Profit
Equipment Prestige / Image
Research Service / Satisfaction
Marketing Earnings / Dividends
Legal Fallout / Residuals
Promotion Safety / Security
Time Quality
Pilot Morale / Motivation
Contingency Growth / Size 73

PLATFORM 1: II (1)

D. Assessing Concepts

 Strategic Fit / Difficulty of Implementation
Relationship
 Strategic Driving Force
 What is Driving the Business?
 What Should be Driving the Business?
 Identify Strategic Fit
 Assess Difficulty of Implementation

74

PLATFORM 1: II (1)

D. Strategic Fit / Difficulty of
Implementation Relationship
 Strategic Driving Force
1. Product Concept-Driven Company: e.g. automobile industry
2. Market category-Driven Company: e.g. American Hospital Supply
3. User Class-Driven Company: e.g. Johnson & Johnson's strategy of
making products for "doctors, nurses, patients, & mothers"
4. Production Capacity / Capability-Driven Company: e.g. paper
companies because of enormous capital tied up in their mills
5. Technology / Know-How-Driven Company: e.g. Du Pont & 3M
6. Sales / Marketing Method-Driven Company: e.g. Mary Kay,
Tupperware, Amway
7. Distribution Method-Driven Company: e.g. telephone operating
companies, department stores
8. Natural Resources-Driven Company: e.g. Exxon
9. Size / Growth-Driven Company: e.g. conglomerates
10. Return / Profit-Driven Company: e.g. Virgin

75

PLATFORM 1: II (1)

 What is Driving the Business?
1. Which strategic driving force is currently acting as the heartbeat of
your business & driving your strategy?
2. Which driving force do you think each of your key subordinates would
say drives your company & acts as the strategic heartbeat of the
business?

76

PLATFORM 1: II (1)

 What Should be Driving the Business?
1. What component of the business should drive the strategy of the
business in the future?
2. Should we continue to be driven as we have been, or should we
explore another driving force?
3. If we explore a new driving force, which one should that be?
4. What implications will that have on the choices that we make on the
nature of products, customers, & markets that we do or do not offer?
5. What will our future strategic profile look like if we change the driving
force of our company?

77

PLATFORM 1: II (1)

 Identify Strategic Fit
1. How similar are the products this opportunity brings compared to the products we
currently offer?
2. How similar are the markets (segments or geographic) this opportunity brings compared
to the markets we currently serve?
3. How similar are the customers this opportunity brings compared to the customers we
currently serve?
4. How similar are the production capabilities & / or processes this opportunity brings
compared to the production capabilities we currently have?
5. How similar is the technology this opportunity brings compared to the technology we
currently know?
6. How similar are the sales / marketing methods this opportunity requires compared to the
ones we currently use?
7. How similar are the distribution / delivery methods this opportunity requires compared to
the ones we use currently?
8. How similar are the human resources & skills this opportunity requires compared to those
we have currently?
9. How will size / growth & return / profit criteria compare with current levels of achievement?
78

PLATFORM 1: II (1)

 Identify Strategic Fit Checklist
 PRODUCT / SERVICE
 CUSTOMER BASE
 MARKET SERVED
 TECHNOLOGY / KNOW-HOW
 PRODUCTION CAPACITY / CAPABILITY
 METHOD OF SALES / MARKETING
 DISTRIBUTION METHOD OR SYSTEM
 NATURAL RESOURCES
 SIZE / GROWTH
 RETURN / PROFIT

79

PLATFORM 1: II (1)

 Assess Difficulty of Implementation
 How much change will be required, in each of the following areas, to implement this new
product or market opportunity?
 ORGANIZATION STRUCTURE
 PROCESSES & / OR SYSTEMS
 SKILLS & / OR TALENTS
 MANUFACTURING METHODS & CAPABILITIES
 SELLING & / OR MARKETING METHODS
 DISTRIBUTION OR DELIVERY METHODS
 TECHNOLOGIES
 CAPITAL & FINANCING
 LEGAL & REGULATORY ISSUES
 IMAGE, REPUTATION, & QUALITY
 COMPENSATION SYSTEMS
 RAW MATERIALS
 CUSTOMER SERVICES
 CORPORATE CULTURE
80

PLATFORM 1: II (1)

E. Critical Factors

1. Technical Factors
2. Timing Factors
3. Stability Factors
4. Position Factors
5. Growth Factors
6. Marketability Factors
7. Production Factors
8. Financial Factors
9. Protection Factors

81

PLATFORM 1: II (1)

E(1) Technical Factors

 Availability or requisite scientific / technical skills
 Adequacy of research resources
 Quality & quantity of support personnel
 Probability of technical success & validation
 Government & / or regulatory position

82

PLATFORM 1: II (1)

E(2) Timing Factors

 Research completion versus market need
 Market penetration & development
 Known & assumed competitive actions

83

PLATFORM 1: II (1)

E(3) Stability Factors

 Durability of the market
 Chances for a dominant or preeminent position
 Probability & impact of down markets
 Stability of largest projected users
 Volatility of the approach

84

PLATFORM 1: II (1)

E(4) Position Factors

 Impact on other products & services
 Impact on overall credibility
 Ability to assume a rapid leadership position
 Ability to facilitate other opportunities

85

PLATFORM 1: II (1)

E(5) Growth Factors

 Diversification
 Possibility of substantial future growth in volume,
units, & / or revenue
 Possibility of a family of products
 Possibility of changes or shifts in the industry of
which this product & / or service can take
advantage
 Short-term market potential
 Long-term market potential
 Impact on market share

86

PLATFORM 1: II (1)

E(6) Marketability Factors
 Market potential in the immediate future
 Market potential in the long-range future
 Compatibility with current & long-range marketing objectives
 Competitive environment
 Promotional requirements to launch
 Promotional requirements to sustain
 Adequacy of present distribution systems
 User view of cost versus value
 Applicability to current customers
 Servicing requirements
 Impact on reputation

87

PLATFORM 1: II (1)

E(7) Production Factors

 Capabilities of production facilities
 Utilization of familiar production processes
 Availability of human resources

88

PLATFORM 1: II (1)

E(8) Financial Factors

 Calculation of DCF
 Expected ROI
 Expected increase in profits or earnings per share
 Expected new capital outlays for equipment
 Expected cost to complete the project
 Expected cost to complete the development

89

WHERE ARE THE BUSINESS
OPPORTUNITIES?
Platform 1:
(Stages II, Part 2)


PLATFORM 1: II (2)

Where are the Business
Opportunities?
 Business Opportunity
 Use the critical business development factors to determine
whether the ideas / concepts created are worth pursuing.

91

PLATFORM 1: II (2)

Business Planning & Development

A. Establish Current Position
B. Assess Business Environment
C. Identify Critical Success Factors
D. Set Strategic Direction
E. Establish Clear Objectives
F. Develop Marketing Strategy
G. Outline Business Processes
H. Determine Business Capability
I. Secure Finance and Resources
J. Implement, Monitor and Review

92

PLATFORM 1: II (2)

 What is the current position of the business?
1. What does the business do & why?
2. How long has the business been operating?
3. What stage of growth is the business at?
4. What is the form of the business? (Limited Company etc.)
5. Is the current form of business appropriate for future operations?
6. What makes the business different?
7. What are the major accomplishments of the business?
8. What major setbacks have you met?
9. What are the major challenges facing the business in the future?
10. Who are your business partners or who do you have important relationships with?
11. Are there well-defined business agreements & levels of service drawn up with
business partners?
12. Why is the business attractive to you & potential investors?
13. How stable is the business financial performance?
14. Does the business have a good reputation in its industry?

93

PLATFORM 1: II (2)


 FIVE STAGES OF GROWTH
1. EXISTENCE
2. SURVIVAL
3. SUCCESS
4. EXPANSION
5. MATURITY

94

PLATFORM 1: II (2)

 What is happening in the business environment & what are
the implications for the business?
1. POLITICAL FACTORS: What is the Government doing? - still the
major influence in the economy, consider pending elections, de-
regulation, tax policy, & public confidence
2. ECONOMIC FACTORS: What is the economy doing? - Inflation,
leading indicators, interest rates, exchange rates, employment
levels etc.
3. ENVIRONMENTAL FACTORS: What is happening in the general
environment? - Controls on business activity, regulations,
availability of resources, climatic events
4. SOCIAL FACTORS: What are the factors affecting society? -
Population drift, immigration, wage rises, unemployment, mortgage
rates, racial & cultural issues
5. TECHNICAL FACTORS: What is happening in your particular
industry or sector? - New products & services, organizational
trends, market trends?
95

PLATFORM 1: II (2)


 ENVIRONMENTAL FOCUS
 External Focus
 Identify the 7 most significant factors in the business
environment
A. Impact on Business
B. Action Required
 Internal Focus
 SWOT Analysis: List as many factors about our organization
that you can think of

96

PLATFORM 1: II (2)

C. Identify critical Success Factors
 What does the business need to be good at to succeed?
1. Critical Success Factors (CSFs): List between 5-7 factors that are essential to the
future success of the business
2. How often are the CSFs reported on?
 Weekly?
 Monthly?
 Quarterly?
 Six Monthly?
 Annually?
3. Does the management information system provide the necessary information to
monitor CSF performance at the appropriate level of detail?
 TYPES OF CRITICAL SUCCESS FACTORS
1. INDUSTRY FACTORS
2. BUSINESS CAPABILITY
3. FUNCTIONAL
4. ENVIRONMENT

97

PLATFORM 1: II (2)

C. Identify critical Success Factors

 IDENTIFY CRITICAL SUCCESS FACTORS
 Identify 7 Critical Success Factors for your business, how
they impact, & how they should be measured, examining:
A. Critical Success Factor
B. Impact on Business
C. How Measured

98

PLATFORM 1: II (2)

 Which way is the business heading?
1. What (if anything) gives this business distinctiveness?
2. What skills does this business currently have that are better than those of the
competition? Can this advantage be sustained for a period of more than a few years?
3. How is this organization generally regarded in the industry or by outside experts?
How do outsiders see the business's strategy? What do they think about it?
4. What are this organization's strengths in creating a high performing business?
5. What are the biggest roadblocks to this business becoming a high performing
business?
6. What does the business do? Why?
7. What does it not do? Why not?
8. Who are its customers / Who are not its customers?
9. What are its products / What are not its products?
10. What are its markets / What are not its markets?
11. Why is the business in this business & not another?
12. Why is the business focusing on these customers & not others? Why is it providing
these services (or making these products) & not others?
13. Does this business have more than one strategy?
99

PLATFORM 1: II (2)


 BUSINESS STRATEGY ISSUES
1. VISION, VALUES, PURPOSE
2. OVERALL DIRECTION
3. DESIRED OUTCOMES
4. LONG TERM OBJECTIVES
5. STRATEGY TO ACHIEVE OBJECTIVES
 IDENTIFYING BUSINESS STRATEGY ISSUES
 Identify 7 business strategy issues that need to be
addressed in your business plan, examining:
A. Strategic Issue
B. Impact
C. Action Required

100

PLATFORM 1: II (2)

 What is the business trying to achieve in the near future?
 STRATEGIC
1. Has the business developed clear & formal objectives for the long-term as well as the
immediate future?
2. Are those objectives quantified in terms of rate & return, growth, market share, product
or service development?
3. Does the business know at what stage in their life cycles its products currently are?
4. Does the business consider the following in its development of strategic objectives:
 Economic conditions, including the effects of inflation?
 Political conditions?
 Labour requirements?
 Capital requirements?
 Tax implications?
 Production capacity?
5. Have the strategic objectives been embodied in a formalized financial plan looking a
number of years ahead?
6. Are the objectives & plans reviewed regularly & is the actual performance monitored
against the plan?

101

PLATFORM 1: II (2)


 What is the business trying to achieve in the near future?
 OPERATIONAL
7. Is the role to be played by each individual Advisor in achieving the plan
clearly identified?
8. Have the Advisors developed their own business plans?
9. Is the business planning to expand in the coming year into a new:
 MARKET?
 SERVICE?
 CUSTOMER BASE?

102

PLATFORM 1: II (2)


 DEVELOP CLEAR OBJECTIVES & PLANS
 S: SPECIFIC
 M: MEASURABLE
 A: ATTAINABLE
 R: REASONABLE & RESOURCED
 T: TIME BOUND
 KEY STRATEGIC OBJECTIVES
 Identify 7 key strategic objectives for your business, the
desired outcome, & how it can be measured, examining:
 STRATEGIC OBJECTIVE
 OUTCOME
 HOW MEASURED

103

PLATFORM 1: II (2)

 What market is the business in, & who are its
customers?
1. Does our current marketing strategy give us the share of the local
market we might expect?
2. What kind of demand is there for our products & services?
3. Will our strategy provide us with a sustainable competitive
advantage?
4. Will this marketing strategy help us accomplish our business
objectives?
5. What kind of future opportunity is there if the business objectives
are achieved?
6. What are the vulnerabilities of this strategy?
7. Is this strategy consistent with the environment & changing
8. How does this strategy fare in future mapping or scenario analysis?

104

PLATFORM 1: II (2)

 DEVELOP MARKETING STRATEGY
1. DEFINING YOUR MARKET
2. IDENTIFYING TYPES OF CUSTOMERS
3. COMPETITORS
4. MARKETING STRATEGY
5. PRODUCTS & SERVICES
6. CUSTOMER SERVICE
 MARKET SEGMENTATION
 Identify the 7 key market segments for your business, identify their
future potential & what action is required:
A. SEGMENT
B. NUMBER OF CUSTOMERS PER MONTH
C. AVERAGE SPEND
D. ON WHAT?
E. POTENTIAL FOR DEVELOPMENT (HIGH, MEDIUM, LOW)
F. HOW TO DEVELOP
105

PLATFORM 1: II (2)

 What activities need to occur to achieve the business objectives?
1. What are our major business processes? How many are there?
2. What are our Units of Competitive Advantage (UCA) - those things that
distinguish us from competitors & create an advantage in the market?
3. What is our Value-added Support Work (VA) that facilitates the accomplishment
of UCA work?
4. What is our Essential Support Work (ES) that does not directly create an
advantage of facilities that work, but which must be done if we are to continue to
operate?
5. What is our Non-essential Work (NE) - work that has lost its usefulness but
continues to be done because of tradition?
6. Which areas of our work could be regarded as industry best practice?
7. Which areas of our work could benefit from comparison & improvement to meet
industry best practice?
8. Is taking risks accepted & used as a learning experience?
9. Is creativity & innovation rewarded?
10. Are all key business processes well under control?
106

PLATFORM 1: II (2)

 OUTLINE BUSINESS PROCESSES
1. INPUTS: Time & resources you require for yourself & others to perform key
activities
2. ACTIVITIES / PROCESSES: Tasks you perform to add value to inputs you have
received
3. OUTPUTS: Your work product or services that meet your customer's
requirements
 BUSINESS PROCESS
 Select one of your main business processes, then:
1. Start at the first step, & note (for each step) the activity that takes place
2. Work through each step in the process until you reach the end result
3. Categorize each activity I - IV ranging from:
(I) UCA - unit of competitive advantage
(II) VA - value-added support work
(III) ES - essential support work
(IV) NE - non-essential support work
4. Identify possible process improvements

107

PLATFORM 1: II (2)

 How is the business organized, who are the key people involved, & is it
capable of high performance?
 A. BUSINESS CAPABILITY
1. What is this business really good at?
2. What skills does this business currently have that are better than those of
competitors?
3. What capabilities are needed with this strategy?
4. Where do customers say we need to improve?
5. What is the gap between current capabilities & those capabilities needed to give
the company an advantage?
6. How easy is it to acquire or build the needed capabilities?
7. How much time & money will be needed to develop these skills?
8. What clients or contracts have been lost & to whom were they lost?
9. Where & how is the competition beating this company?
10. What programs does the company need or have in place that are designed to
improve capabilities?

108

PLATFORM 1: II (2)

 How is the business organized, who are the key people involved, & is
it capable of high performance?
 B. BUSINESS STRUCTURE
1. What parts of the business are well aligned to delivered our business strategy?
2. What current beliefs, policies, procedures, systems, or other elements are not
aligned to deliver our business strategy?
3. What business initiatives are going well?
4. What are the things that get in the way of the business achieving its objectives?
5. What are the things in the business that are working well to support the
business strategy?
6. What does the business need to do better to execute the business strategy
effectively?
7. What gets in the way of people doing their work? Are there areas where effort is
wasted?
8. How do people spend their time?
9. Where should efforts be focused to ensure competitive advantage?
10. Where are the opportunity areas for improving efficiency & effectiveness?
109

PLATFORM 1: II (2)

 Determine Business Capability
 Governance
 Structure
 Organization
 Management
 Capability
 Organization Capability
 Identify key individuals in our organization and for each specify:
1. Name 2. Area of responsibility
3. Length of service in industry (years) 4. Length of service in this office / area
5. Key strengths 6. Weaknesses
7. Key areas for specialization 8. Development actions required
9. Successor if person left

110

PLATFORM 1: II (2)

I. Secure Finance & Resources

 What resources are required to ensure the
business can operate effectively?
 BUDGETS
 FINANCIAL REPORTS
 CASH
 DEBTORS
 FIXED ASSETS
 SALES
 Secure finance & resources
 Monthly & annual costings

111

PLATFORM 1: II (2)

 Budgets:
1. Are annual operating budgets prepared?
2. Are the budgets consistent with the tactical objectives of the business & its long-term plans?
3. Are key individuals, in close liaison with each other, responsible for preparing their own sections of
the budget based on objectives & criteria established by management?
4. Are budgets based on detailed assumptions which are evaluated each year in particular to avoid the
dangers of the "last year plus inflation" approach?
5. Do these budget assumptions consider:
 External economic trends? Policy changes that may have an effect on the structure of revenues
or costs e.g. lease versus purchase, use of computer bureau? Capacity? Personnel
requirements? Market trends?
6. Do the budget assumptions contain a detailed projection of sales volume, sales mix & of contribution
by product / service?
7. Are the business unit budgets carefully reviewed by management from the points of view of:
 Their individual adequacy? Their co-ordination? Their overall compatibility, when combined into
one budget with the board's stated objectives?
8. Are budget assumptions consistently & thoroughly documented to support variance analysis?
9. Is the budget subjected to sensitivity analysis in order to assess the effect on profitability of
alternative eventualities?
10. Are budgets prepared in such a way as to permit month-by-month comparison of actual with budget?
11. Is the completed budget available, & its constituent parts distributed among those responsible for its
achievement, well in advance of the start of the year?
112

PLATFORM 1: II (2)

 Financial Reports:
1. Do the monthly financial reports:
 Highlight exceptions? Show percentage of revenue for the major products / services? Contain
statistics & ratios that focus attention on the "critical success factors" for the business?
Reconcile with the annual financial accounts with proper investigation of major discrepancies?
2. Are financial statements produced within a few days of the period end?
3. Is this target met consistently?
4. Are the financial reports organised so that there is a summary sheet that highlights results, supported
by detailed schedules?
5. Are reports derived from the overall accounts provided for Advisors to enable them to review their own
performance against budget?
6. Are Advisors required to provide oral or written explanations to senior management of significant
variances?
7. Where variances suggest that the overall plans will not be achieved, are such plans adjusted
accordingly?
8. Do the financial statements contain other ratios including:
 Current ratio (current assets / current liabilities)? Does the company calculate a "quick ratio"
(cash & debtors / current liabilities)? Expenses to revenues?
9. Do the financial statements contain measures of profitability by:
 PRODUCT? CUSTOMER GROUP? GEOGRAPHIC AREA? EMPLOYEE?
10. Does management appear to make full use of the information available?

113

PLATFORM 1: II (2)

 Cash:
1. Is a cashflow forecast for the year ahead produced as part of the budgeting process?
2. Are Cashflow forecasts reviewed by management throughout the year?
3. Is actual Cashflow updated monthly against the most current projection so as to identify peak
demands for cash?
4. Has the business arranged for adequate sources of credit?
5. Is there a link between the Advisor's budgets & the Cashflow analysis?
6. Is the forecast subject to sensitivity tests so as to assess the likely effects of possible alternative
evaluations?
7. Is this link preserved as the budgets or the Cashflow projections are modified?

 Debtors:
1. Does the business have a formal credit policy & is it adhered to?
2. Does the business calculate debtor days? (State the level)
3. Are new accounts checked for credit worthiness before being opened or actioned?
4. Are invoices sent out immediately are purchase of services?
5. Are statements sent out regularly within a few days of each month-end?
6. Are bad debt risks regularly reviewed & quantified?
7. Is firm action, including a system of reminder letters, taken against late payers?
8. Does management receive a regular credit control report?

114

PLATFORM 1: II (2)

 Fixed Assets:
1. Does the business have a plan for long term capital acquisitions, improvements, including financing?
2. Are major fixed acquisitions supported by a capital expenditure assessment?
3. Are capital acquisitions reviewed to determine if projected results were achieved?
4. Is the business's investment in fixed assets adequately safeguarded through:
 Regular maintenance? Sufficient insurance?
5. Has the business made adequate use of borrowing?
6. Is the business adequately capitalised?
7. Have all lease, rental or purchase options been considered?
 Sales:
1. Are substantial variances from the sales forecast adequately analysed & explained?
2. Does the business have adequate information on clients?
3. Does management investigate the effectiveness of its methods of:
 MARKETING? ADMINISTRATION?
4. Does management investigate the effectiveness of its marketing support, such as:
 ADVERTISING? TECHNICAL SERVICES? DELIVERY PERFORMANCE? COMMISSION
STRUCTURE?
5. Are trends in sales performance identified & appropriate action taken?

115

PLATFORM 1: II (2)

J. Implement, Monitor & Review
 What controls are in place to keep track of progress, & how do we
know if the business is successful?
1. Has management defined the "critical success factors" for its business?
2. Has management specified the information it wishes to receive periodically (daily,
weekly, monthly, quarterly) in order to manage the business?
3. Does this information include:
 Reports comparing actual performance to tactical plans & budgets?
 Basic financial reports such as: Statement of Financial Position? Statement of
Financial Performance? Cashflow Forecast?
4. Do the financial reports:
 Highlight exceptions?
 Show for example percentage of revenue for the major products / services?
 Contain statistics & ratios that focus attention on the "critical success factors" for the
business?
 Reconcile with the annual financial accounts with proper investigation of major
discrepancies?
5. Are financial statements produced soon after the period end?

116

PLATFORM 1: II (2)

J. Implement, Monitor & Review
 What controls are in place to keep track of progress, & how do we
know if the business is successful? (Continued)
6. Is this target met consistently?
7. Are the financial reports organized so that there is a summary sheet that
highlights results, supported by detailed schedules?
8. Are reports derived from the overall accounts provided for management to
enable them to review their own performance against budget?
9. Are Advisors required to provide oral or written explanations to senior
management of significant variances?
10. How good are we compared with other Advisors or Financial Practices?
11. What can we learn from others?
12. How good is our relationship with other Financial Practices & similar types of
business?

117

Innovation Benefits Realization for Industrial Research (Part-1)

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Viewers also liked

Viewers also liked (20)

Similar to Innovation Benefits Realization for Industrial Research (Part-1)

Similar to Innovation Benefits Realization for Industrial Research (Part-1) (20)

More from Iain Sanders

More from Iain Sanders (20)

Recently uploaded

Recently uploaded (20)

Innovation Benefits Realization for Industrial Research (Part-1)