Innovate or Perish

Five Steps to Accelareate Growth and Increace Profits!

BIG QUESTIONS

HOW MANY OF YOU ARE SELF EMPLOYED?

HOW MANY OF YOU ARE ENTERPRENEURS?

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Startling Facts
The greatest transferance of wealth in the history of mankind!

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Startling Facts

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Startling Facts

Entrepreneurs are the drivers behind this massive transfer of wealth

Who is an Enterpreneur?

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How is this Transfer of Wealth Happening?

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What is Innovation?

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Innovation Dened

Innovation is the process that take new ideas and implements them in a way that creates value in solving unmet needs

Innovation vs. Invention!

Invention is the process of taking capital and turning it into knowledge Innovation is the process of taking knowledge and turning it back into capital

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A New View of INNOVATION

!
Innovation allows companies to create, deliver, capture, and sustain value Alvin McBorrough Strategist

! " " " " !

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Thought Leaders on Innovation

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12 Masters of Innovation

Clay Christensen

The Innovators Solution Disruptive Innovation

Henry Chesbrough
Open Innovation Open Innovation

Vijay Govindarajan
Reverse Innovation Reverse Innovation

Gina O'Connor et al
Radical Innovation Radical Innovation

Costas Markides
All the Right Moves Strategic Innovation

Kim & Mauborgne

Blue Ocean Strategy Value Innovation

Peter Drucker
Innovation & Entrepreneurship

John Bessant

Managing Innovation Classical Innovation

Eric von Hippel

Gary Hamel

Tony Ulwick

Dick Lee

Democratizing Innovation Customer Centric Innovation

What Matters Now Management Innovation

What customers want Outcome Driven Innovation

Value Innovation Works Value Innovation

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Lees Value Innovation Process

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Why is Innovation so Vital Today?

New Playing Field + New Players + New Rules + New Game = INNOVATION!

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Why is Innovation so Vital Today?

Innovation is front and center on the Corporate Agendas! according to a global survey. Executives are adding more ! breakthrough innovations and business model changes to ! their Portfolios to fuel the growth engine!

Source: Business Week, November 16, 2006

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The Other Side of Innovation

Led their respective industries at one point Combined Market Capitalization $420 Billion Combined Revenue in FY 2005 - $338 Billion Combined EBITDA $150B Product Innovation Portfolio 12%
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Qwest

What Happened?!
Failure to address changing Business Model shift - Telecom Communications Solutions Neglected two signicant technologies - Mobility - Video Hubris Born of Success

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Borders

What Happened?!
Failure to conform to industry changes - Growth of Online distribution Neglected signicant technological shift - eReader Capitulation to Irrelevence and Death

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AOL

What Happened?!
Lost track of market innovation - Dial up vs. Broadband Failed Acquisition - Time Warner AOL 2.0 The Media Company

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Companies that Drove Innovate

Paris or Poughkeepsie?
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Undisputable Market Leaders machines. Trusted parts. Combined Market ts provide owners of older Caterpillar products with low cost repair inimize the risk Capitalization $ 1 Trillion associated with non-genuine parts. engines have long and productive lives. Caterpillar is committed to ge of parts and service options for your Cat machines and engines orking lives. CatCombined Revenue providing a Classic Parts help manage repair costs by in r maintaining older Cat equipment. FY 2011 - $620 Billion provide another repair alternative for those select, cost-driving parts ct the overall cost of the repair. Cat Classic Parts offer: Combined EBITDA $330B es and availability repair option offered by your Cat Dealer erpillar warranty Product Innovation Portfolio 40%

2010 Xerox Corporation. All rights reserved. Xerox, Xerox and Design and Ready for Real Business are trademarks of Xerox Corporation in the United States and/or other countries.

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Tesla Motors

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Tesla Quick Facts

Transformational Facts!
Founded 2003 Manufacturing Fremont, CA (NUMMI) Founder Elon Musk Employees Count 1,400 Revenue - $204 Million (FY11) Net Income - $-254 Million (FY11) Products Telsa Roadster Tesla Model S Tesla Model X

Tesla Model S

Purchase Price - $50K - $120K Miles Range 160 320 Miles

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Carbon Motors Corporation

Design by Law Enforcement for Law Enforcement !

An innovative, fast, efcient new American car you can't buy

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Carbon Motors Quick Facts

Transformational Facts!
Founded 2003 Manufacturing Cornernsville, IN Founder William Santana Li Planned Introduction 2012 PreOrders 21,000 Products Police Vehicles Product Specications: Engine BMW Turbo Diesel Body Aluminium Drive Rear Wheel Transmission Automatic Life Span 250,000 miles

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Carbon Motors Quick Facts

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ET3

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ET3 Quick Facts

Transformational Facts!
Space Travel on Earth Silent, Low Cost, Safe, Faster than Jets Electric

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Why Are These Companies Winning?

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5 Steps to Accelerate Growth and Increase Prots through Innovation

High

1
Performance

Need Seekers

Game Changers

Rule Breakers

Nimble & Agile

5
Low

Execution Driven

Value

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Need Seekers are companies that focus on identifying unmet and unaticulated needs!
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Distinct Characteristics of Companies

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Process and Capabilities

The Global Innovation 1000 Booz and Co.

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Blue Ocean Ideas

Created a disruptive business model for the music industry Results RCA regained margins A-la-carte for consumers Boost of +10 B downloads

Disputed the mobile industry as a formidable player Results Focus on customer needs 10 million SGS3 July #1 Mobile company

Extensive use of analytics throughout the company Results Worlds #1 Bookstore Worlds #1 HCS Provider Market Leaders in Customer Experience

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Rule Breaker

Gary Hamels Thesis1, 2: Companies fall into one of three categories:

Rule Maker [#1 in the market; Sets the rules for all other companies] Rule Taker [Plays by the rules set by the Rule Maker] Rule Breaker [Denes new rules]

1. Gary Hamel, Strategy as Revolution, Harvard Business Review, July-August, 1996, 69-82 2. Gary Hamel, Leading the Revolution How to Thrive in Turbulent Times by Making Innovation a Way of Life, Plume, 2000

Mantra of Rule Breakers

Reinvent Your Company - Hamels Ten Rules for bubbling up Billion Dollar Ideas!
Set Unreasonable Expectations Stretch Your Business Denition Create a Cause, not a Business Listen to New Voices Design an Open Market for Ideas Offer and Open Market for Capital Open up the Market for Talent Lower the Risks of Experimentation Make Like a cell Divide and Divide Pay Your Innovators Well Really Well

Gary Hamel, Reinvent Your Company, 10 Rules for making billion-dollar business ideas bubble up from below, Fortune, June 12, 2000, pp 98-118
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Classic Examples

Industry!
Consumer Packaged Goods! Consumer Electronics! UK Airline! Indian Airlines! Vacuum Cleaner!

Rule Maker!
Procter & Gamble Samsung British Airways Jet Airways Dyson Ltd

Rule Taker!
Colgate Palmolive, Unilever Sony, Phillips British Midland Indian Airlines Hoover, Electrolux

Rule Breaker!
Nu Skin, Avon Vizio, LG Virgin Group Kingsher LG

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Rule Breakers Impact... Deliver high-quality projects on-time and Deliver high-quality p Deliver high-quality projects on-time andwithin budget
End-to-end visibility for improved, timely decision making End-to-end visibility for improved, timely End-to-end visibility making
Architecture, Architecture, Engineering & Engineering & Advertising Construction Construction Public Sector, Public Sector, Public, Aerospace Aerospace & Aerospace & & Defense Defense Defense Utilities, Utilities, Utilities,& Gas Oil Gas Oil &Oil & Gas

Project-intensive Industries Require Project-intensive Industries Project-intens Enterprise PP Enterprise PPM Enterprise PPM
Architecture, High Tech & & A & E, Engineering & Manufacturing Manufacturing Construction Construction

RETAIL

Pub Aer S S D

Key Industry Requirements Key Industry Requirements

rule that helping customers too much is wildly unprofitable. They built a $1 billion company in less than 10 years by delivering an outrageous client experience

rule that Improve Improve do-ityourself furniture coordination coordination couldnt be stylish and inexpensive. and yet Today, they offer collaboration collaboration

12,000 products, employ 127,000 workers, and Avoid and help Avoid and 450 million protect against protect against consumers find claims claims the perfect piece of furniture for their home. You might call it a pretty big success

the rule large Managethat web Managelarge technologies need programs with programs with to look sexy. multiple multiple Without any advertising suppliers and suppliers and or an attractive us subcontractors subcontractors

er interface and with only Improve a handful Improve of people they accountability accountability booked hundreds and millions of andmeet of meet dollars by regulatory regulatory providing simple requirements requirements functions that users really want

rule that Manage shortManage shortconsumers only duration, highduration, highwanted to rent the intensity intensity latest movies from outages and outages and a store down the street. They shutdowns shutdowns

Netflix broke the

Key Industry Requirements

Zappos broke the

IKEA broke the

Craigslist broke

created a multibillion dollar Increase Increase industry of renting productivity and productivity and mostly older speed of project speed of project movies on laptops and living delivery room delivery set-top boxes

broke the right Bring the rule that Pri Pr Improve right Man books were meant products to pro pro coordination prog to be read in hard market that within on on and within mult copy groceries and market windows windows ob obj collaboration supp electronics subc couldnt be sold from the same Collaborate Avoid and website. They across the protect against generate more globalbook claimssupply online supply business chain than all other online retailers combined with tens of billions

Amazon.com

Op Op Impr as ass acco sc sca and res res regu requ

Industry Game Changers!

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Nimble and Agile

Focus of Relentless Innovation! Challenge the Status Quo Buy into Business Model Innovation Tirelessly seeking new opportunities

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How does Relentless Innovation Happen?

Focus of Relentless Innovation! Right Condition Right Processes Right Insights

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What Business Are You In?

Key Partners Who are you suppliers and service providers Key Activities What critical activities are you going to perform to create value? Value Proposition What problems need to be solved? What product/ service is best?

Growth Ideas

Customer Relationships

Customer Segment Who are you going to sell to? Who is going to pay for your service/ products?

How do you interact with your customers?

Key Resources What resources do you have to solve your customers problems?

Channels How does your customers nd, buy, and use your product?

Cost Structure What is the total cost of production?

Revenue Stream Where does your revenue comes from?

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Pursue New Markets

Innovation Ambition Matrix!
TRANSFORMATIONAL
Create New Markets Target New Customers

Developing breakthroughs and things for the market they dont need yet

ADJACENT
Expanding from existing business in to new to the company businesses

Enter Adjacent Markets Serve Adjacent Customers

CORE
Optimizing existing products for existing customers

WHERE TO PLAY!

Serve Existing Markets & Customers

Use Existing Products & Assets

Add Incremental Products & Assets

Develop New Products & Assets

HOW TO WIN!
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Starbucks the Relentless Innovator

Any business that expects business to stay stable business as usual - is dead
Howard M. Schultz CEO Starbucks

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Starbucks the Relentless Innovator

Transformational Facts!
Founded 1971 Number of Stores 19,555 Revenue - $11.7 Billion (FY11) Net Income - $1.7 Billion (FY11) Subsidiaries Starbuck Coffee Tazo Tea Company Seattle Best Coffee Torrefazione Italia Ethos Water Hear Music Evollution Fresh

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Game Changers

THE HEART OF A COMPANYS BUSINESS MODEL should be game-changing innovation. This is not just the invention of new products and services, but the ability to systematically convert ideas into new offerings that alter the very context of the business. A.G. Laey Former CEO P&G

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What Is a Game?

A game is a contest between 2 or more players in which the outcome and payoffs depend on the action of the players

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Who or What is a Game Changer?

GAME!
A visionary strategist who alters the game his business plays or concieves an entirely new game [Laey & Charan (2008)]

CHANGER!
A breaker of the chain of commoditization who creates differentiated and value-added brands through innovation

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General Perception about the Game

Only big players can change the game!

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The 6 Elements of any Game

The Field
The context of the game Landscape

The Information
Common knowledge Percetions, beliefs, and attitudes

The Players
Their Identities and Interest Their A-R-C

The Payos
Rewards & Penalties Financial & NonFinancials

The Rules
Explicit or Implicit Complete or Incomplete

The Actions
Observable & Non Sequential or Simultaneous

The Enforcer

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Characteristics of Game Changers

Opposes The ! Status Quo!

Driven By ! Analytics!

Focus On Customer Experience!

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Tesla Motors

"All the geniuses here at General Motors kept saying lithium-ion technology is 10 years away, and Toyota agreed with us -- and boom, along comes Tesla. So I said, 'How come some tiny little California startup, run by guys who know nothing about the car business, can do this, and we can't? Robert Lutz! Former Vice Chairman! GM!

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Winning with Analytics

Used Sabermetrics to change the way baseball is played Results 2 World Titles (04 & 07) Won over 90 games/yr Multiple Post Seasons

Uses data, analytics, and metrics for decision making Results 3 World Titles in 4 years Perennial contender Multiple Post Season

Extensive use of analytics throught the company Results Worlds #1 Bookstore Worlds #1 HCS Provider Market Leaders in Customer Experience

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Execution Driven

ex-e-cu-tion (ek si kyoo shun) !

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Why Execution Is Needed

Core Discipline
The core of any successful business strategy Execution is the discipline that drive the 3 core processes Execution delivers success

Job for the Business Leader

Leaders are paid to ensure that business is deliver value results revenue Leaders must use execution to drive the 3 core processes Set winners apart from loosers

Companys Culture
Execution should be embedded throughout the organization Leaders should establish an accountability culture Execution should begin with Senior Leaders

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Winning with Execution at GE

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Bringing It Home

High

1
Performance

Need Seekers

Game Changers

Rule Breakers

Nimble & Agile

5
Low

Execution Driven

Value

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Bringing It Home

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The Inspiration of

It is impossible to live without failing at something, unless you live so cautiously that you might as well not have lived at all - in which case, you fail by default.

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JK Rowling

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Innovator & Entrepreneur

1 2 3 4 5

Need Seeker

Rule Breaker

Nimble & Agile

Game Changer

Execution Driven

Rock bottom became a solid foundation on which I rebuilt my life JK Rowling Harvard Commencement, 2008

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Want More.?

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Alvin McBorrough Managing Partner The OMNI Consulting Group amcborrough@omni-pm.com 303-261-6320

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