Introduction To The Killer Innovation Approach Ver 5

Killer Innovations Introduction to a better way to innovate Philip McKinney [email_address] www.killerinnovations.com

Why Innovation? Other Approaches A Better Approach Benefits Lessons Learned Agenda

Innovation Acceleration Time Impact Innovations are having a larger impact The lifecycle of innovations is getting shorter

Technology Adoption is Accelerating Phone 74 years Radio 38 years PC 16 years TV 13 years Internet 2 years Blogs 1 year How long does it take to get to 50 million users?

The Innovation Reality Innovation Gap The shortfall between a organizations rapidly rising need for ideas/innovations and their inadequate supply Innovation Delay The delay between the time when decisions to adopt strategic innovations are made and their eventual impact to the organization.

Innovation Impact Innovation has increased in importance over the last 10 years Innovation plays an important role in assessment of company value Confident in ability to manage and measure innovation impact 35% 73% 92% Source: Arthur D. Little Research 0% 20% 40% 60% 80% 100%

Executive View of Innovation 87% rank innovation as one of their top 5 priorities Executives boast that their companies excel at innovation Executives, however couldn’t differentiate between incremental improvements and breakthroughs Very few executives said their firms have any kind of structured approach to innovation Source: DiamondCluster International, Techtrend Group

The Challenge of Innovation Maintain efficiency while fostering innovation Stressing bottom-line results without restricting innovation Adapting to changing markets and environments while maintaining stability

Value From Innovation R&D Incremental Innovations to existing offerings Creating new offerings/markets/industries Source: Harvard Business Review, October 2004 86% 14% Revenue 62% 38% Margin 39% 61%

What’s wrong with the current approaches to find ideas?

What’s wrong with current brainstorming approaches? Innovations are either incremental or totally unrealistic Rarely any real follow-up No confidence that there aren't better ideas to be had Lack of executive/organizational support

Incremental versus Breakthrough Incremental improvements Reduce expenses Extend brand/product line Breakthrough improvements Find new markets Create new strategic assets Launch new businesses Evolutionary change tools BPR/TQM/Six Sigma Feature enhancement Revolutionary change tools Killer Innovation Lateral Thinking TRIZ/TIPS

What is a killer innovation? A Killer Innovation is defined as significant and highly profitable departures from current offerings or practices that is difficult to imitate

Tools The tools to find/create, rank and execute against killer ideas Skills Tricks to help change your perspective and improve your ability to apply empathic design through observation Killer Innovation Approach

Killer Innovation Tools Using FIRE Focus The Innovation Search Focus the problem Depth is better than breadth for idea quality Ideation Structured questions that drive discovery/insight Rank The Ideas Will this idea change the customer expectation? Will this idea change the competitive landscape? Will this idea change the economics of the industry? Execution Define clear milestones Kill projects early

Question based methodology Based on Socratic method of asking questions to eliminate ideas … the best ideas are the ones left standing Build around a core of +70 killer questions Based on “reverse” innovation analysis Designed to unlock unique insights Structure is based on a “gated” model Tested HP, Agilent, CSC and many start-ups History of the KI Approach

Focus the search Moving into new competitive arenas Expansion into new geographies Improvement in industry structure New or existing customers Innovation in products or services Innovation in value delivery system

Search Areas for Innovation Six degrees of freedom Such as … Creating a new business by selling existing products/services to existing or new, unfamiliar customer segment Creating a new product or service, normally in a cocooned manner Creating an innovation that redesigns the business system sufficiently to alter the value proposition Changing the value proposition, value delivery system, or competitive relationships that improve/change the industry structure or redefine the industry Expanding into a new geographic area with high value-added transfer from existing geography or when the activity is new Developing a new business in an industry within which a company has not previously competed or when there is no overlap in customer value proposition New/Existing customers Innovation in products or services Innovation in value delivery system Improvement in industry structure Expansion into new geographies Moving into new competitive arenas Source: Techtrend Group

Focus on the customer YUPPIES Young Urban Professionals YUFFIES Young Urban Failures MOBY/DOBY Mom/Dad Older – Baby Younger WOOFS Well Off Older Folks SKIPPIES School Kids with Income + Purchasing Power “ Sandwichers” Adults caught between caring for their children and their older parents Which are the right segments?

The typical brainstorming session begins with a simple question …. “ Create some new product ideas” “ Develop some differentiators for x” … . you get simple answers. The Current Method ….

Better Questions = Killer Ideas New or Existing Customers What emotional, psychological, or status benefit do (could) people derive from using the product? How can you create a social or group experience with the product? Industry Structure What are some of the basic assumptions under which the industry operates? What external jolts have the potential to significantly impact the operational rules of the industry? Product & Services Innovation Who uses the product because of some benefit we did not foresee? What regularly used makeshifts can we capture in a product design?

Exploring Beyond the Obvious S Substitute? C Combine? A Adapt? M Modify – Magnify? P Put to other uses? E Eliminate or minify? R Reverse – Rearrange? Everything that is new is an addition or modification of something that already exists Based on the answers to the questions, use SCAMPER to generate a wide variety of ideas

Idea Quota Idea quotas force you to actively generate ideas and alternatives The first 1/3 of the quota will be the easiest The second 1/3 will typically extensions from first 1/3 The final 1/3 will be the hardest yet typically contain the kernel of a killer innovation Always fill the quota even if the ideas seem far fetched or outlandish. The best ideas come to those that work at it ….

Characteristics of the Best Killer Ideas Purpose - the yield of high quality ideas is significantly higher with a clear business purpose and a supportive business sponsor. Timeliness - the difference between a great idea and a so-so idea is market/technology timing. Diversity - the pool of contributors needs to be broad, broader than you intuitively think. Perspective Change - the very best ideas come through individuals looking at things in a different way. Collaborative Development - environment, where people can comment and build on ideas thereby significantly increasing the overall yield of high impact ideas.

Suspend Disbelief Let’s shelve that for the time being Who is going to do it? I have something better. We tried that before. It won’t fit our operation. It’s against all our combined logic. Not enough return on investment. It’s great, but . . . . . . Someone must have already tried it. I thought of that a long time ago. We can’t afford that. You’ll never get approval. You’re on the wrong track. Don’t rock the boat. The market it not ready yet. It’s not a new concept.

Idea Criteria: Key Questions Must have a YES to at least one of the following: Will this idea change the customer experience/expectation? Will this idea change the competitive landscape/position? Will this idea change the economic structure of the industry? Must have a YES to the following: Do we have a contribution to make in this space? Will this idea generate sufficient margin to the business? For each key question, give a score from 0 to 5.

Idea Criteria: Ability To Execute For the top 10 ideas based on the Key Questions, score each idea from 0 to 5 for the following questions: Can we get our groups/teams excited? Will senior management support it? Do we have the skill/expertise to pull this off? Can we access the customers preferred channel? You now have a ranked list of your best ideas.

Execution = Stage Gate Management Source: Techtrend Group “ The Best” use some from of a Milestone/Stage Gate process to introduce new products and services

What do you see? Minimum space which can represent the full alphabet! Look beyond the obvious ….

Empathic Design (observational design) In-house visits/recording In-the-world observations Trend Safari Ethnographic Studies/Analysis Deep study of a “customer” social group Objective Discover unspoken needs and wants of the target customer segment Observation Skills

Half of thirteen 6.5 6 or 7 (rounded) “ thir” and “teen” XII = VII and IIV(split horizontal) 1 and 3 . . . How many more can you come up with? Be careful .. Don’t assume the definition of words (e.g. “half”)

360° search for innovations ensures you avoid a blind spot Six degrees of innovation Generate higher quality ideas Killer Questions based on reverse innovation approach Forces participants to dig deeper for answers Work on the right ideas Process to rank the best ideas Execution management Gated/Milestone to ensure alignment of funding and execution The benefits of the KI Approach

Changing the culture Metrics Finding Innovation Champions Reward failures & successes Adapt to your organization Lessons Learned

Introduction To The Killer Innovation Approach Ver 5

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Introduction To The Killer Innovation Approach Ver 5