The Path to Breakthrough Innovation: Strategies for Growth in Mature Markets

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For those companies operating in mature markets, the challenge of rapid growth comes down to a numbers game. When your core markets are growing at 1% to 3% per year, how do you grow at a higher rate that attracts outstanding employees and satisfies your shareholders? In recent years, a new organizational concept has shown how breakthrough innovation can be achieved.
During this webcast, Mark will discuss the emerging concept Hybrid R&D that shows how breakthrough innovation can be achieved by building an organization based on:
⦁ A mission to create entirely new product categories.
⦁ Restructuring a traditional R&D group to include the role of commercial managers.
⦁ A Stage Zero process which is critical to filter and promote breakthrough ideas.
If your idea-to-launch process is so refined that breakthrough innovation ideas may not be advanced, or if all available funding is committed to core products, this is a webcast you won't want to miss: http://budurl.com/kv44

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The Path to Breakthrough Innovation: Strategies for Growth in Mature Markets

  1. 1. The Path to Breakthrough Innovation: Strategies for Growth in Mature Markets June 10th 2014 Live tweet with #InnoGrowth
  2. 2. Mark Adkins Founder/President Smart Hammer Innovation Mark@smarthammerin.com
  3. 3. 3 Agenda 1. Current Dilemma 2. Propose a Solution 3. Discuss the Barriers 4. How to Overcome Them 5. Describe Success
  4. 4. 4 Current Dilemma  Achieve Profitable Growth in Mature Markets • Attract & Retain Outstanding Employees • Satisfy Shareholders  The Market Share Conundrum • Successful Companies That Own Large Share
  5. 5. 5 Proposed Solution  More Breakthrough or Radical Innovation But first…
  6. 6. PDMA’s CPAS  Product Development & Management Association  Comparative Performance Assessment Survey  or just CPAS  Conducted Four Times – 1990, 1997, 2004, 2012  2012 Edition Involved 453 Companies 6
  7. 7. 7 Define Breakthrough or Radical Innovation  PDMA CPAS New to the World or Breakthrough Products  Gina O’Connor in Grabbing Lightning …the creation of a new platform or business domain that has high impact on current or new markets in terms of offering wholly new benefits…  Naji & Tuff …inventing things for markets that don’t yet exist…  Adkins New Product Category or New Business Unit
  8. 8. Poll Question: What is your mix of Incremental vs. breakthrough projects? 1. All Incremental 2. Mostly Incremental 3. Evenly split between incremental and breakthrough 4. Mostly breakthrough 5. All breakthrough 8
  9. 9. Breakthrough Innovation’s Impact Investment Profile: • 70% Core • 20% Adjacent • 10% Transformational Total Return Profile: • 10% Core • 20% Adjacent • 70% Transformational Naji & Tuff www.hbr.org 9
  10. 10. Barriers to Breakthrough Innovation 1. Restrictive Idea-to-Launch Process • Is Everything Built Around Incremental Projects? • Stages, Gates, Templates, Reports 2. Weak or Non-Existent Portfolio Management • Do You Have a Portfolio Management Process? • Do You Invest by Strategic Buckets or the Loudest Voice? 3. Risk Adverse Culture • Does Management Understand the Mortality Curve? 10
  11. 11. 11 Mortality Curve (CPAS)
  12. 12. CPAS Best vs. the Rest
  13. 13. Innovation & Risk Taking (CPAS)
  14. 14. Questions 1. Do we have an adequate definition for Breakthrough Innovation? 2. Are there other barriers to Breakthrough Innovation? 14
  15. 15. 15 Overcome the Barriers – Hybrid R&D 1. The Mission 2. The Immersion 3. The Process
  16. 16. 16 Prioritize, Select and Resource Innovation Investments Execute on the Development of New Products Applying the Right People at the Right Time Ideation, Collaboration, Review Hybrid R&D – Where does it fit? Hybrid R&D
  17. 17. The Mission 17 1. Develop Radical New Products Within Strategic Arenas 2. Empowered to Go-to-Market if a Core BU Declines 3. Direct Reports, Budget, Reports to Group Leader
  18. 18. The Immersion 18 1. Bring Commercial Professionals into the Hybrid R&D Organization 2. Physically Co-locate or Strong Virtual Connections 3. Get Cross Functional Opportunity Teams Going
  19. 19. 19 More on The Immersion Staffing breakthrough projects with the right skills 1. By definition these breakthrough ideas are coming from the R&D organization but at what point do the researchers need to be replaced with product developers? 2. Leading larger development teams, hitting major milestones and passing management gates are sometimes new to the research team and could lead to missteps.
  20. 20. The Process 20 1. Remove Gate Terminology and Constraints 2. Early Testing (Technical or Customer) 3. Flexibility to Recalibrate 4. Milestone based not Gate based 5. Iterate as Required
  21. 21. More Flexibility from 2004 to 2012
  22. 22. However, More Formal Idea Generation
  23. 23. Poll Question What percentage of ideas get promoted into Stage Gate projects each year? 1. <10% 2. 11-30% 3. 31-50% 4. 51-70% 5. >70% 23
  24. 24. Core Business Unit #1 Stage Gate Process Core Business Unit #2 Stage Gate Process Gate 1 Idea Approval Gate 2 Business Plan Approval Business Innovation Group Go To Market Hybrid R&D Process Model 5 Projects10 Projects20 Opportunities50 Ideas
  25. 25. Question Are there other dimensions to this Hybrid R&D model? 25
  26. 26. 26 Successful Outcomes The creation of a new product category 1. Rejection 2. Adoption 3. Disappointment 4. Pride
  27. 27. 27 Successful Outcomes The creation of a new business unit 1. Rejection 2. Realization 3. Staffing Concerns 4. Acquisition/Merger
  28. 28. Innovation Management KPI’s 28 1. What are the Right Key Performance Indicators (KPI’s)? 2. Business Goals, Not Silo Goals 3. Not Too Many nor Too Granular 4. Predictive of Performance
  29. 29. Key Performance Indicators (CPAS) 29
  30. 30. Mark’s KPI’s 30 1. Opportunities to Projects Conversion Rate 2. Pipeline Risk Adjusted NPV (Only Projects, not Opportunities) 3. Core Business Adoption Rate
  31. 31. 31 Wrap-up 1. Current Dilemma – Low Growth 2. Propose a Solution – Breakthrough Innovation 3. Discuss the Barriers – Investment, Culture, Gated Process 4. How to Overcome Them – Hybrid R&D 5. Describe Success – New Businesses or New Product Categories
  32. 32. Thank You! Questions? Mark Adkins mark@smarthammerin.com References: Harley Davidson’s “The Lean Machine” by Dante Oosterwal PDMA 2012 CPAS Study Managing Your Innovation Portfolio by Naji & Tuff Grabbing Lightning by Gina O’Connor 32
  33. 33. A global supplier of end-to-end solutions for Enterprise Innovation Performance, providing best-in-class software, domain expertise, and best practices Who we are What we do Enable our customers to improve innovation and new product development performance for sustainable, profitable revenue growth How we do it • Strategic Innovation Planning and Roadmapping • Idea and Concept Development • Process and Project Management • Portfolio and In-Market Management • Resource Planning Sopheon’s Accolade® solution provides unique, fully-integrated processes for the entire innovation management and new product development lifecycle: Where innovation means business™ 33
  34. 34. Mark Adkins, Founder/President, Smart Hammer Innovation Mark@smarthammerin.com Thank You for Attending Stay up to date on upcoming webinars by following us @sopheon

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