Design for Innovation (D4I) has defined 7 levels of innovation to manage to achieve a sustainable competitive advantage.

1. Strategic Innovation Management Creating a Sustainable Competitive Advantage By Dr. Iain Sanders Design for Innovation Ltd, 2009 1

2. What you don’t know about your customers and your business may be costing you millions! Design for Innovation Ltd, 2009 2 For example : technology, product & service value-creation urgent needs For example : The best customer solutions to maximize your customers’ profitability For example : Your business model is now obsolete, limiting your effectiveness and ability to achieve a sustainable competitive advantage

3. 7 levels for maximizing potential innovation value-creation 3 Business Focus : Effectiveness – Business Proactivity Business Focus : Efficiency – Business Responsiveness

4. Creating, Defining and Improving a Company’s Business Model Design for Innovation Ltd, 2009 4 FINANCE INFRASTRUCTURE CUSTOMER VALUE PROPOSITION OFFER gives an overall view of a company's bundle of products and services PARTNER NETWORK portrays the network of cooperative agreements with other companies DISTRIBUTION CHANNELS describes the channels to communicate and get in touch with customers VALUE CONFIGURATION describes the arrangement of activities and resources CUSTOMER RELATIONSHIP explains the relationships a company establishes with its customers COST STRUCTURE sums up the monetary consequences to run a business model REVENUE STREAMS describes the revenue streams through which money is earned TARGET CUSTOMERS describes the customers and customer segments a company wants to offer value to CORE CAPABILITIES outlines the capabilities required to run a company's business model

7. Identify and Qualify New Opportunities Design for Innovation Ltd, 2009 7 Exploited Opportunities Unexploited Opportunities Unexploited Opportunities Unexploited Opportunities Served Customers Unserved Customers Unarticulated Needs Articulated Needs Articulated-Served Customers : known world of customer needs Articulated-Unserved Customers : offerings developed & perfected for existing customers extended to new customers in different markets Unarticulated-Unserved Customers : proactive and visionary companies like Honda seek to get inside he heads & experiences of unaddressed customers Unarticulated-Served Customers : potential for satisfied customers to become frustrated or uninterested if unexpressed but felt needs not addressed

10. Design for Innovation Ltd, 2009 10 REVENUES STREAMS COSTS STRUCTURE CORE CAPABILI-TIES VALUE CONFIG-URATION PARTNER NETWORK CUSTOMER RELATIONS VALUE PROPOSI-TION TARGET CUSTOMER SEGMENTS DELIVERY CHANNELS Linking Opportunities Process weaknesses Industry / Market Structural changes High-growth areas Converging technologies Demographic changes New knowledge Perception changes Unexpected successes Unexpected failures Unexpected external events

11. Quantify Opportunities with a SWOT analysis Exploit Search Confront Avoid or Prepare Internal Environment Strengths External Environment Threats External Environment Opportunities Opportunity is matched with strength. Business’s growing edge – where it can capitalize on areas of strategic advantage Opportunity is matched with weakness. Opportunities exist that the organization can recognize but is not equipped to tackle Threat matched with weakness. Some threats avoidable, and others are not. Confronting competitive threats with weakness is not only dangerous but drains resources Threat is matched with organizational strength – mobilize to limit and control the looming danger Internal Environment Weaknesses 11

12. 12 REVENUES STREAMS COSTS STRUCTURE CORE CAPABILI-TIES VALUE CONFIG-URATION PARTNER NETWORK CUSTOMER RELATIONS VALUE PROPOSI-TION TARGET CUSTOMER SEGMENTS DELIVERY CHANNELS Improving Opportunities Threats Opportunities Weaknesses Strengths

13. Design for Innovation Ltd, 2009 13 RELATIONS PARTNERS KEY ISSUES TO SOLVE ACTIVITIES COSTS REVENUES OFFER CLIENTS CHANNELS Value Proposition 1 Costing Issue1 Customer Relations 1 Customer Segment 1 Configure Value 3 Core Capability 4 Partner Network 1 Revenues 1 Delivery Channel 1 Configure Value 2 Core Capability 2 Configure Value 1 Core Capability 1 Core Capability 3 Costing Issue 2 Delivery Channel 2 Mapping Opportunities

14. Design for Innovation Ltd, 2009 14 RELATIONS PARTNERS KEY ISSUES TO SOLVE ACTIVITIES COSTS REVENUES OFFER CLIENTS CHANNELS Selling Stuff on the Web IT Infra-structure Automated CRM Mass Custom-ization Data Services Amazon Data Grid Partner Network 1 Selling Stuff Amazon.com Warehous-ing and Distribution Distribution Content Management Product Selection Product Search Marketing Affiliates Example: Amazon.com

16. Design for Innovation Ltd, 2009 16 VALUE PROPOSITION CUSTOMER RELATIONSHIPS REVENUE STREAMS PARTNER NETWORKS COST STRUCTURE COMPETITIVE STRATEGY KEY CAPABILITIES & RESOURCES KEY CUSTOMER / MARKET SEGMENTS VALUE CONFIGURATION CASHFLOW MANAGEMENT DELIVERY CHANNELS BUSINESS (INVESTOR) VALUE COMPETITORS

17. Evaluate Strategic Alternatives 17 Strategic alternatives / value proposition Value What we are striving for Valuation filter Operational filter Strategic filter Economic filter Sources of value

18. 18 Mapping Problems / Opportunities Target Segments (TS) Value Propositions (VP) Value Configurations (VC) Core Capabilities Customer Domain Functional Domain Physical Domain Resource Domain WHAT? HOW? Vision Design Phase: Customer wants & needs WHAT? HOW? Mission Design Phase: Strategies to satisfy needs WHAT? HOW? Implementation Design Phase: Processes to execute strategies (CC) Strategy Formulation & Implementation

19. Where [are our customers going]? 19 [1] CUSTOMER WANTS & NEEDS FOR PROVIDING CONTRIBUTIONS [2] STRATEGIES TO SATISFY KEY CUSTOMER WANTS & NEEDS [3] CRITICAL PROCESSES TO EXECUTE STRATEGIES [4] CAPABILITES TO OPERATE & ENHANCE PROCESSES [5] CUSTOMER CONTRIBUTIONS TO SUSTAIN CAPABILITIES Target key stakeholders’ unmet wants and needs

20. Customer Contributions – what contributions do we require from our customers if we are to maintain and develop our capabilities? VALUE PROPOSITION DISTRIBUTION CHANNELS CUSTOMER RELATIONSHIP REVENUE STREAMS TARGET CUSTOMERS Design for Innovation Ltd, 2009 20

21. Customer Satisfaction – who are our customers and what do they want and need? VALUE PROPOSITION DISTRIBUTION CHANNELS CUSTOMER RELATIONSHIP REVENUE STREAMS TARGET CUSTOMERS Design for Innovation Ltd, 2009 21

22. Other Stakeholder Contributions – what contributions do we require from our other stakeholders if we are to maintain and develop our capabilities? VALUE PROPOSITION VALUE CONFIGURATION CORE CAPABILITIES COST STRUCTURE PARTNER NETWORK Design for Innovation Ltd, 2009 22

23. Other Stakeholder Satisfaction – who are our other stakeholders and what do they want and need? VALUE PROPOSITION VALUE CONFIGURATION CORE CAPABILITIES COST STRUCTURE PARTNER NETWORK Design for Innovation Ltd, 2009 23

27. E.G… Design for Innovation Ltd, 2009 27 CUSTOMER VALUE-DRIVEN STRATEGIES CUSTOMER PROCESS-DRIVEN CAPABILITIES CUSTOMER STRATEGY-DRIVEN PROCESSES CUSTOMER CONTRIBUTION CUSTOMER SATISFACTION Easy Affordable Right Fast Trust Feedback Growth Profit Grow share of target market segments Retain profitable existing customers Attract potentially profitable new customers Extend / renew products and services offered Plan and manage enterprise Fulfill demand Generate demand Build market offering alliances Develop products and services Quality management (etc.) Customer relationship management After-sales service Order fulfillment operations Technical services Salesforce effectiveness Sales and distribution channel mgt. Alliance management Marketing campaigns and brand mgt. Pricing management Merchandising / product range Research and Development

28. Thank you for your time! For more information please visit: http://www.designforinnovation.com Tel: +64(273)566-401 Email: iain@designforinnovation.com Design for Innovation Ltd, 2009 28