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Innovation story


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This presentation gives actionable insight on your innovation project helping you to improve your ability to formulate innovation projects. The presentation provides five must-do's of innovation management and making innovation soar.

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Innovation story

  1. 1. Formulating Great InnovationDavid Matheson, President and CEOSmartOrg,
  2. 2. David MathesonDr. David Matheson has helped senior management of firms in theUnited States and Europe improve their results from portfoliomanagement, product development, innovation, R&D, capitalinvestment and strategy, and is an expert on measuring value andmanaging uncertainty.His practical experience covers a wide variety of industries, includingprinting, softwaredevelopment, biotechnology, telecommunications, chemicals, pharmaceuticals, medical devices, manufacturing, electric power andentertainment.He is co-author of the best selling book, The Smart Organization:Creating Value through Strategic R&D (Harvard Business School Press)and has authored numerous articles on innovation, portfoliomanagement and decision making.In addition to SmartOrg, his executive roles include: currently memberof the board at Photozini, Inc. and prior to founding SmartOrg in 2000, aprincipal at Strategic Decisions Group.His Ph.D. is from Stanford University, where he currently teaches onStrategic Portfolio Management and other topics at the StanfordCenter for Professional Development© 2000-2013 SmartOrg. | Confidential and Proprietary.2
  3. 3. SmartOrg software and services helps companies findthe most profitable projectsLife science Aerospace Technology Other© 2000-2013 SmartOrg. | Confidential and Proprietary.3
  4. 4. When heroes fail© 2000-2013 SmartOrg. | Confidential and Proprietary.4
  5. 5. A great technology and a compellingcustomer need are necessary but notsufficient to change the world.What is missing?© 2000-2013 SmartOrg. | Confidential and Proprietary.5
  6. 6. The work of innovation: answering threequestions.6Market/ customerneedTechnology/ ProductSolutionDoesanybodycare?Can weDo it?Shouldwe doIt?Winning OpportunitiesStrategic andEconomic value© 2000-2013 SmartOrg. | Confidential and Proprietary.
  7. 7. Formulating Great InnovationCourse PurposesTo give you actionable insight on an innovation projectyou are working on.To improve your ability to formulate innovation projects.To continue to build a community of innovators at HP.© 2000-2013 SmartOrg. | Confidential and Proprietary.7
  8. 8. Our image of innovation© 2000-2013 SmartOrg. | Confidential and Proprietary.8
  9. 9. The reality© 2000-2013 SmartOrg. | Confidential and Proprietary.9
  10. 10. Asking executives what worked and what didn’t:• What have you tried in the last ten years or so?• What worked really well and should become (or remain in) theinnovation canon?• What did not work well, was significantly oversold or under delivered,and should fade from memory?© 2000-2013 SmartOrg. | Confidential and Proprietary.10
  11. 11. The five must-do’s of innovation management:1. Use iterative, learning-based processes.2. Make uncertainty and ambiguity your allies.3. Allow innovation to challenge strategy.4. Experience your customers.5. Find and support committed innovators.© 2000-2013 SmartOrg. | Confidential and Proprietary.11Go to andsearch for “assessing the state ofinnovation” to download awhitepaper and view a webinar.PDMA Visions
  12. 12. Making Innovation Soar.12FormulateIdeate Incubate AccelerateReformulateCommittedInnovators withactionable insightAlignedLearningPlanProvenOpportunityScalableBusiness© 2000-2013 SmartOrg. | Confidential and Proprietary.
  13. 13. Ideation: finding the committed innovator withunique insight.© 2000-2013 SmartOrg. | Confidential and Proprietary.13
  14. 14. Niccolò Machiavelli on Innovation:© 2000-2013 SmartOrg. | Confidential and Proprietary.14“It ought to be remembered thatthere is nothing more difficult totake in hand, more perilous toconduct, or more uncertain in itssuccess, than to take the lead inthe introduction of a new order ofthings. Because the innovator hasfor enemies all those who havedone well under the oldconditions, and lukewarmdefenders in those who may dowell under the new.”
  15. 15. A common misconception:“People think ideas are the inputto the process. This is wrong.Ideas are the byproduct of thecommitted innovator.”© 2000-2013 SmartOrg. | Confidential and Proprietary.15Alberto SavoiaSerial EntrepreneurCurrently at Google
  16. 16. In every field, HHMI grants generated the mostimportant and innovative research.© 2000-2013 SmartOrg. | Confidential and Proprietary.16Funds projects based onrating proposals on multiplecriteria.Funds researchers andencourages them to exploreinteresting topics.Source: Jonah Lehrer, author of How We Decide, from his blog “TheNecessity of Funding Failure.”
  17. 17. Having committed innovators is not enough;your innovator needs actionable insight.© 2000-2013 SmartOrg. | Confidential and Proprietary.17Market Customer Technology Trend Etc.
  18. 18. Formulation: aligning on a learning plan.© 2000-2013 SmartOrg. | Confidential and Proprietary.18
  19. 19. Success FactorsShelter the project from internalmetrics and processesBanish supplier / procurement thinkingHave the tough conversations upfrontNegotiate based on principlesNever over estimate yourknowledgeof your partnerEvery decision needs to improverisk adjusted valueCommunicate your vision (preparethe market, build your brand)Market disruptions are often drivenby technology innovationNew businesses fail for commercialreasonsInternalPartnerValueCreationMarketDisruption123456789The more outrageous the vision,the more resilient the program10Real-time trafficconditionsSecurity/AccessClimate monitoringWater/GasInfrastructure healthHome automationHome security© 2000-2013 SmartOrg. | Confidential and Proprietary.19
  20. 20. © 2000-2013 SmartOrg. | Confidential and Proprietary.20
  21. 21. Aspirations are low© 2000-2013 SmartOrg. | Confidential and Proprietary.21
  22. 22. Can we distribute motor oil in a cardboard box?© 2000-2013 SmartOrg. | Confidential and Proprietary.22
  23. 23. Frost & Sullivan wrote up a best practiceguidebook for the Formulation Phase.© 2000-2013 SmartOrg. | Confidential and Proprietary.23See a webinar or download at:
  24. 24. How to develop a DVD burner that writes its ownlabel? (circa 2002)© 2000-2013 SmartOrg. | Confidential and Proprietary.24A feature in ourcomputers
  25. 25. Multiple strategies – need to learn which is best.© 2000-2013 SmartOrg. | Confidential and Proprietary.25A feature in ourcomputersLicense outA consortium-based inside brand
  26. 26. Which uncertainties matter?© 2000-2013 SmartOrg. | Confidential and Proprietary.26Future disc usage? Bill of Materials Cost?Strong growth supportedby multiple third-partyexperts.Detailed engineeringestimates and contractsshow BOM within 5%.Team not concerned. Team very worried estimatesmight be 10% off.
  27. 27. Lightscribe sensitivity analysis (Tornado Diagram)Loss Small OK Good GreatNPV given launch successThe team was focusing on the wrong factors.© 2000-2013 SmartOrg. | Confidential and Proprietary.27If mp3 playerstake off, thenbusiness is smallIf copyright favors discdistribution, thenbusiness is greatBOMuncertaintyhas limitedimpact onbusiness
  28. 28. Incubation: delivering on the proof points.© 2000-2013 SmartOrg. | Confidential and Proprietary.28
  29. 29. Work vs. proof: HP’s idea for the “ATMof photo printing.”• What is the biggest source of risk?• Supply Chain― Very difficult to set up, very complex― Large source of schedule and budgetvariance.© 2000-2013 SmartOrg. | Confidential and Proprietary.29
  30. 30. Work vs. proof: HP’s idea for the “ATMof photo printing.”• What is the biggest source of risk?• Supply Chain = needs work― Very difficult to set up, very complex― Large source of schedule and budgetvariance.― HP is world class at this!• Behavior change = needs proof― Will someone encountering a stationon the street pull out their cameracard and print?― To get evidence, saturate an areawith prototypes.
  31. 31. 31TechnicalPhase Cost ($M) UncertaintyProbabilityof SuccessProduct Development 2$ 47%Performance 95%Reliability 90%Channel Partner Trials 55%Scale -Up 10$ 8%Ease of Use 25%Business Model Validated 35%Channel Partner Commitment 90%Total Cost 12$ Million 4%Expected Cost 10.9$ MillionCommon plans: morale building, strengthfocusedBig questions left unanswered until late in the project—anexpensive way to fail. Note Expected Cost and Total Costare close.A risky project. The overall probability of technical success is theprobability of overcoming all the hurdles in all the phases.© 2000-2013 SmartOrg. | Confidential and Proprietary.
  32. 32. 32TechnicalPhase Cost ($M) UncertaintyProbabilityof SuccessProduct Development 2$ 5%Ease of Use 25%Business Model Validated 35%Channel Partner Trials 55%Scale -Up 10$ 77%Peformance 95%Reliability 90%Channel Partner Commitment 90%Total Cost 12$ Million 4%Expected Cost 2.48$ MillionVenture plans: manic anxiety, uncertaintyfocusedRevised Project PlanReordering plan to “fail fast”radically reduces expected cost.© 2000-2013 SmartOrg. | Confidential and Proprietary.
  33. 33. Print EngineFast 4x6 Print EngineAddressing the needs of incumbents“Dry” Photofinishing labSemi-Attended EnvironsLow Volume Stores“Can I get the printer partof the kiosk”“Just chop the head off,add an Ethernet, andI’ll write you a check!”
  34. 34. Acceleration: growing up.© 2000-2013 SmartOrg. | Confidential and Proprietary.34
  35. 35. What is the best first major account for your newbusiness?You have launched a business.• Customers are enthusiastic about the product.• You are making money (gross margin), but still require investmentto grow.• The product is in version 1.0.• Manufacturing is ramping up.© 2000-2013 SmartOrg. | Confidential and Proprietary.35OR
  36. 36. Adolescent businesses need adult challenges ina safe environment.Need P&L discipline withoutcrushing pressure.Require the flexibility to adjust.Have lots of awkward issues thatneed to be worked through.Metrics that transition to full P&Laccountability.© 2000-2013 SmartOrg. | Confidential and Proprietary.36
  37. 37. Making Innovation Soar.37FormulateIdeate Incubate AccelerateReformulateCommittedInnovators withactionable insightAlignedLearningPlanProvenOpportunityScalableBusiness© 2000-2013 SmartOrg. | Confidential and Proprietary.
  38. 38. SmartOrg® provides software and services to help companies evaluate their opportunitiesand make the best decisions about where to invest, especially when the future is cloudedwith uncertainty. Customers use SmartOrg® to build their capability in driving innovationfrom idea to commercial results and in selecting projects, improving returns in theirportfolio.SmartOrg® helps companies to attain the highest value from projects and portfolios.855 Oak Grove, Suite 202Menlo Park, CA 94025 USAT:© 2000-2013 SmartOrg. | Confidential and Proprietary.38