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Similar to The CEO’s Dilemma - How to drive efficient innovation in the organization
Similar to The CEO’s Dilemma - How to drive efficient innovation in the organization (20)
The CEO’s Dilemma - How to drive efficient innovation in the organization
- 1. The CEO’s Dilemma How to drive efficient innovation in the organization Joe Barkai
- 2. Out of the Recession – It’s All About Innovation What structural changes do you expect to be affecting your industry in 5 years from now (end of 2014)? Less innovations Stricter consumer lending standards Business' inability to get credit Increased reliance on local suppliers Increased reliance on local sales Customer shifting to less expensive products / services Increased reliance on global sales Increase reliance on low cost suppliers Lower risk tolerance New competition Stricter regulation Decrease in industry growth rate More innovation Industry Consolidation 0% 10% 20% 30% 40% 50% 60% Source: McKinsey Study, 2009 n=1549 © IDC Manufacturing Insights Page 2
- 3. And We Do… 600,000 500,000 400,000 Filed 300,000 Issued 200,000 100,000 0 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Israel U.S. Patents Netherlands China (PRC) France 60,000 2007 UK 2006 Canada 2005 50,000 2004 Taiwan 40,000 Germany Korea Domestic 30,000 Foreign Japan 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 20,000 Foreign Patents Filed in the U.S. 10,000 Source: USPTO, 2009 0 Minyuan Zhao, University of Michigan 1998 1999 2000 2001 2002 2003 2004 2005 Patents Filed in China © IDC Manufacturing Insights Page 3
- 4. It’s All About Innovation $300,000 3Com 3M Apple $250,000 Applied Materials MSFT Boeing Boston Scientific Caterpillar $200,000 Cisco Apple Deere & Co. Mkt Cap J&J Dell IBM EMC $150,000 Google Cisco HP HP IBM $100,000 Intel J&J Qualcomm Juniper Networks Medtronic $50,000 Microsoft Juniper Oracle Dell Qualcomm $0 Sun Texas Instruments 0% 5% 10% 15% 20% 25% R&D (% Revenue) Internal R&D spend. Many invest in innovation through acquisitions. Size = Revenue FY 08 Source: IDC Manufacturing Insights, 2009 © IDC Manufacturing Insights Page 4
- 5. The Tipping Point 200 180 160 140 120 100 80 60 40 20 0 Jul-01 Jul-02 Jul-03 Jul-04 Jul-05 Jul-06 Jul-07 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Oct-01 Oct-02 Oct-03 Oct-04 Oct-05 Oct-06 Oct-07 Apr-02 Apr-03 Apr-04 Apr-05 Apr-06 Apr-07 Source: Adapted from Sketching User Experience (Buxton, 2007), TechDigest.tv, Yahoo! Finance © IDC Manufacturing Insights Page 5
- 6. Return on Innovation 60% 50% 40% Yes 30% No Not Sure 20% 10% 0% 2007 2008 2009 Productivity Neutralization Waste Differentiation Source:Business Week, September 2009 Geoffrey Moore: Dealing with Darwin © IDC Manufacturing Insights Page 6
- 7. Ridiculous Wasteful Innovation U.S. Patent 6,805,657: Body-connected Bike US Patent 5,443,036: Method of Exercising a cat U.S. Patent 6,796,467: Device for quick and U.S Patent 7,475,086 (IBM): Method of automatically easy use of a small size cellular phone removing leading and trailing space characters from data being entered into a database system U.S Patent 4,555,775 (AT&T Bell Labs): Dynamic generation and overlaying of graphic windows for multiple active program storage areas U.S. Patent 6,368,227: Method of swinging The Dot Com Era! on a swing Source: USPTO, 2009 © IDC Manufacturing Insights Page 7
- 8. The CEO’s Dilemma Innovation isn’t enough – Apple’s Newton – Microsoft’s Bob – Segway – Gateway Thinking Circa 1997 – Your favorite – now defunct – startup It’s all about disruptive innovation Boost innovation while maintaining Companies feel much more comfortable with sustaining balance and efficiency technologies for existing markets – Thoughtful vs. reckless innovation Companies that do not invest in disruptive technologies fail – Disruption vs. continuity Companies that lead in adopting disruptive technologies are new entrants, not incumbent leaders © IDC Manufacturing Insights Page 8
- 9. The Vitality-Stability Balance High Aggressive Leaders Vitality Laggards Defensive Low Low High Stability © IDC Manufacturing Insights Page 9
- 10. The Archetypes High End Disruption New Technology Visionaries Innovation • MSFT (Windows) • Apple • Toyota (Prius) • RIM • Gillette / P&G • Cisco Technology Fast Product Followers Innovation •Autodesk • GE •Teva • Salesforce.com • Starbucks Existing Low End Disruption Existing New Market © IDC Manufacturing Insights Page 10
- 11. Product Innovation 100% U.S. Automakers 95% 90% Technology barriers going down 85% Low cost competitors 80% 75% Customer loyalty? What’s that? 70% 6.5 7 7.5 8 8.5 9 9.5 Products as platforms 100% Derivatives 95% IT Value add services 90% 85% 80% 75% 6.5 7 7.5 8 8.5 9 9.5 Source: IDC Manufacturing Insights from JD Powers & Associates Data and other sources © IDC Manufacturing Insights Page 11
- 12. Exploring New Markets From globalization to localization to “glocaliziation” What’s next? © IDC Manufacturing Insights Page 12
- 13. Reverse Innovation New markets as catalysts to expansion in established markets – P&G. Cheaper brands for emerging economies to penetrate new low-cost segments in the US – GE Healthcare. ECG for the rural Indian market comes back as a product for emergency room and EMT How GE reinvents itself – Segmentation – Decentralization of innovation – Getting close to the market (local P&L) Source: GE Healthcare © IDC Manufacturing Insights Page 13
- 14. Reuse Products as platforms – Multiple product and services derivatives – Expanded demographics © IDC Manufacturing Insights Page 14
- 15. Technology leadership through innovation M&A – Technology acquisition & integration – Foundation and options (50 acquisitions during 1998-2000) – New market segments (Linksys) Products as platforms – Security – Telepresence – VOIP Next? – NAS – Mass storage? Content? – WiFi Audio Streaming – Connected home? Globalization strategy – Cloud services? © IDC Manufacturing Insights Page 15
- 16. Purposeful Innovation Technology & Product Customer Innovation Market Innovation $$$ Innovation Protect Brand & Market Share Accelerate Market Market Extension Penetration Renewal Accelerate Time to Value/Volume Manage End of Life Growth Maturation Decline End of Life Operation Innovation Accelerate Product Innovation © IDC Manufacturing Insights Page 16
- 17. Opportunities are Abound Minimize Time & Costs Minimize Improve Minimize Costs & Inventory Waste Segmentation Research Design Make Sell Sustain End of Life Maximize Maximize for Maximize Maximize Maximize Maximize Reuse Performance, Efficiency & Channel Service Level Compliance Quality & Productivity; Efficiency & Value-add Compliance Quality Services Reapply Amend Enhance Continuous Improvement © IDC Manufacturing Insights Page 17
- 18. Balancing and Harmonization Voice of Sustainability • Supply chain • Regulations • Lean Voice of Voice of the Technology Customer • Innovation Cost • Customer information • Market Value Analysis intelligence Utility Voice of the Business • Portfolio planning Collaboration Platform © IDC Manufacturing Insights Page 18
- 19. The CEO’s Solution: Lean Innovation Align innovation with business strategy Innovation for growth – Bolster customer loyalty – New products vs. new markets Role of business disruption Leaning innovation – Innovate as necessary – Reuse as much as possible – Outsource when appropriate Open innovation networks Goals and strategies change as a function of lifecycle phases – Product – Market – Customer © IDC Manufacturing Insights Page 19
- 20. Thank You jbarkai@idc.com To learn more • Best Practices: The Value Engineering Process in Technology-Oriented Value Chains • Knowledge Management Improving Assets Failure Rate • Global PLM Study: Implementation Landscape and Investment Priorities • Global PLM Study: Observations and Lessons Learned • Asia/Pacific (Excluding Japan) Product Life-Cycle Drivers in the Manufacturing Sector • Redefining Design for X • Engineering Change Management — How Manufacturers Manage Product Design Changes Join Our Community: http://idc-insights-community.com © IDC Manufacturing Insights Page 20