In today’s business environment, there is constant need to look for new opportunities. The risk of doing business as usual means failure. How can we take advantage of new emerging technologies? We get overload of new products and services, but it is not easy to see the real trends. In this lecture we look at how to spot trends and how to recognize shift in people’s behaviour. We also explore some tactics we can apply to find new business models and introduce the Innovator´s Method, a framework for starting a business in a lean way.

1. LECTURE L12
THE INNOVATOR’S METHOD

2. ...a kind of shadow future,
hovering on the edges of
the present state of things,
a map of all the ways in
which the present can
reinvent itself
Steven Johnson
Adjacent Possible

3. Why is IBM still alive and
thriving after so long, in an
industry characterised
perhaps more than any other
by innovation and change?
Economist: 1100100 and counting
Case Study

4. Tabulating machines
Electronic machines - Mainframes
Distributed systems - Minis and PCs
Services
Economist: 1100100 and counting
Platform Shifts

5. Economist: 1100100 and counting
Platform Shifts

6. “IBM is not a technology
company, but a company
solving business problems
using technology”
– George Colony
Economist: 1100100 and counting
Platform Shifts

7. Economist: 1100100 and counting
Platform Shifts

8. 1. Maintain connection to customers
2. Less hierarchical and more open
3. Business relevant research
4. Globally integrated
5. Financial planning – get out of
commoditized business
Economist: 1100100 and counting
Platform Shifts

9. WHAT IS THE SECRET TO BE SUCCESSFUL
ENTREPRENEUR?

10. "There is no real formula."
- Peter Thiel
Author: Zero to One

11. Innovation
In the history of
business,
things happen only
once

12. Against the Norm
TRUTH IS SOMETHING
EVERYBODY
AGREE ON
MAY NOT BE RIGHT

13. Economist: 1100100 and counting
Against the Norm
WHAT
GREAT BUSINESS
IS
NOBODY STARTING?

14. Peter Thiel

16. Definition of Losers
PEOPLE THAT ARE
NOT GOOD ENOUGH
OR
PEOPLE JUST DOING
THE WRONG THING?

17. "All happy companies are different
because they found something
unique to do, all unhappy
companies are alike, because they
failed to escape the sameness that
is competition."
- Peter Thiel

18. The Nature of Progress
0 to 1
1 to n
Technology
doing new things
Vertical
Globalisation
copying existing things
Horizontal
Peter Thiel: Zero to One

19. The Nature of Progress

20. Looking for Opportunities

21. Targeting overshot customers or
non-consumption
“Good-enough” can be great
Do what competitors won’t
Looking for Opportunities

22. Targeting overshot customers or
non-consumption
Removes barriers that constrain
the ability to consume
Overshooting customers needs
Hidden beauty in undesirable or
invisible markets

23. Remove barriers that constrain the ability to
consume
Remove the skill required for photography
Kodak’s Brownie
Camera

24. Remove the skill required to operated a computer
Apple’s iPad
Remove barriers that constrain the ability to
consume

25. Make computing affordable to more people
The Personal
Computer
Remove barriers that constrain the ability to
consume

26. Make access to telephony easier
Mobile phones
Remove barriers that constrain the ability to
consume

27. Make access to niche movies
Youtube Lego
Star wars
Remove barriers that constrain the ability to
consume

28. Make buy/selling things fast saving time
Ebay auction
Remove barriers that constrain the ability to
consume

29. 1. Creating a Computer Game for mobile
What is the barrier for these:
4. Health Care
5. University level education
2. Making an Music Album
3. Publishing a Novel
6. Rent your house
Remove barriers that constrain the ability to
consume

30. Targeting overshot customers or
non-consumption
Make the complicated simple
Don’t let the mainstream derail you
Innovate, don’t force

31. Targeting overshot customers or
non-consumption

32. Targeting overshot customers or
non-consumption

33. Nintendo Wii
Targeting overshot customers or
non-consumption
Gaming for the family

34. Portable music players
disrupted by Apple, 2001
1000 songs in you pocket!
Targeting overshot customers or
non-consumption

35. Mobile phone, 2007
Apple reinvents the phone
Targeting overshot customers or
non-consumption

36. “Good-enough” can be great
Sustainable innovations compete
on getting better
Disruptive innovations compete on
doing it differently

37. “Good-enough” can be great
Netflix
Subscribe, no late fees

38. Do what competitors won’t
Unattractive or uninteresting
market
Does not seek head-on collision
with established competitors

39. Personal Computers
Do what competitors won’t

40. CRM as a Service
Do what competitors won’t

41. THE INNOVATOR’S METHOD

42. Case Study
Intuit is a successful software company makers of TurboTax,
Quicken and other financial software solutions
However, by 2008 they reached a performance plateau and
market value was falling
Intuit was focusing on making things easier to use but did not
do many customer reviews
NPS was flat

43. The Innovation Crisis: Unprecedented Uncertainty

46. Net Promoter Score
How likely are you, on a scale of 0 (not at all likely) to 10
(extremely likely), to recommend this product or service to a
colleague or friend?
A product’s NPS is the percentage of promoters (those who
score themselves 9 or 10) minus the percentage of detractors
(scores 0–6).
Net promoter score = % promoters minus % detractors

47. Design for Delight
Most successful companies didn’t just offer products that were
easier to use; they offered products that delighted customers.
• Gain deep customer empathy
Understand customers better than they understand themselves
• Go broad to go narrow
Generate lots of solutions before winnowing the list
• Experiment rapidly with customers
Seek feedback early and often

48. Innovator’s Method
Four steps to solve high uncertainty problems and turn
insight into a successful innovation

49. Innovator’s Method
Step 1. Insight: savor surprises
Step 2. Problem: discover the job-to-be-done
Step 3. Solution: prototype the minimum
awesome product
Step 4. Business model: validate the
go-to-market strategy

50. Leverage the behaviors, questioning, observing,
networking, and experimenting — to search broadly for
insights about problems worth solving.
Step 1. Insight: savor surprises
What problem is nobody solving?
Innovator’s Method

51. Rather than starting with solutions, start by exploring the
customers’ need or problem— the functional, social, and
emotional job-to-be- done— to be sure you’re going after a
problem worth solving.
Step 2. Problem: discover the job-to-be-done
What is the customer really buying?
Innovator’s Method

52. People don’t want to buy a quarter-inch drill.
They want a quarter-inch hole.
Job to be Done

54. Instead of developing full-scale products, leverage
theoretical and virtual prototypes of multiple solution
dimensions. Then iterate on each solution to develop a
minimum viable prototype and eventually a minimum
awesome product.
Innovator’s Method
Step 3. Solution: prototype the minimum
awesome product

55. Once you’ve nailed the solution, you’re ready to validate
the other components of the business model, including the
pricing strategy, the customer acquisition strategy, and the
cost structure strategy.
Innovator’s Method
Step 4. Business model: validate the
go-to-market strategy.

56. NEXT
L13 The Rise of the Machine