Innovation Model Facets All materials © NetCentrics 2008 unless otherwise noted

Welcome Our goal for the next hour is to examine the concept of an innovation model and the characteristics or “facets” that should be carefully considered We’ll also consider how these decisions influence and map to your innovation process

What We Want to Accomplish

Goals for today Define an innovation model Identify the innovation “facets” and their importance Establish a starting point for the innovation model for each of the facets

Key Points Innovation operates best within a framework or context – what we call an innovation model This model is composed of a number of facets which influence how innovation works within your business Defining the innovation model and facets will improve your success rate and your ability to communicate your scope and goals

Models Models create a visible representation of what we want to define. A stated innovation model provides scope and focus for the team.

Business Model You may be familiar with the concept of a business model – For example, a firm can sell to consumers or sell to other businesses or other kinds of customers – These decisions influence how the business operates, who its customers are, the kinds of products or services it offers, its price points and many other factors

Educational Model Most universities follow a traditional education model – Introductory courses to establish breadth of learning – Advanced courses in specific areas to establish depth of knowledge in specific subjects – A many to one relationship between student and professor

Innovation Model Similarly, innovation exists within a context or model, shaped by a number of characteristics or “facets” Making decisions about these facets is important, as these facets dictate the kinds of ideas you’ll generate, who will participate and how they’ll be evaluated Clarity around the model helps improve innovation effectiveness

Visible innovation models We can examine some innovation models that are working in firms today: – Proctor & Gamble – Apple – Google – Gore All of these firms are successful innovators yet use different models in their innovation work

Apple Apple seeks to innovate around customer experience They are rarely “first” to market, in fact often late to a technology market but attract customers through vastly improved customer experience Apple’s innovation model is driven from the top down, in very small teams, with an expectation of disrupting a specific market

Apple Examples MacIntosh – Late to the PC market – Niche software and market size – Yet easy to use and learn – Developed by a very small team within Apple – Tried to disrupt the microcomputer market, based on customer experience iPhone – Late to the cellular market – Compelling user experience – Developed by a very small team within Apple – Disrupted the market for handhelds, commanded a premium over other handhelds

Google Seeks to innovate around the management of online information Ideas bubble up from the average employee with little centralized direction Ideas quickly beta tested by a large audience and moved into commercial development or quickly killed Just as open to acquisition as they are to internal development

Apple and Google Examples of two clearly innovative companies with very different innovation models Let’s examine some of the key facets that they share in the innovation model

Innovation model We’ve found that defining an innovation model for your team provides clarity about: – The ideas that are generated – How the ideas are evaluated – Who should participate Let’s examine a number of the model “facets”

Innovation Facets Open/Closed Participative/Skunkworks Decentralized/Centralized Suggestive/Directed Incremental/Disruptive Individual/Team Wisdom of crowds/Experts Product/Service/Process/Business Model

Open/Closed Will we invite students, alumni and partners to participate? Open/Closed

Skunkworks / Participative Who can participate in this innovation project? Participative/Skunkworks

Decentralized / Centralized Will the work be decentralized or centralized? Decentralized/Centralized

Suggestive / Directed How will we direct the origination of ideas? Suggestive/Directed

Incremental / Disruptive What kinds of ideas are we willing to ask for and receive? Incremental/Disruptive

Technology New Near to Existing New Business Model Near to Existing Incremental Breakthrough Game Changer Incremental - Disruptive

Individual / Team Who should work on the ideas? Individual/Team

Wisdom of Crowds / Experts How should we evaluate the ideas? Wisdom of crowds/Experts

Product / Service / Business Model Products – physical products or a “packaged” service Services – how we deliver our products or capabilities Processes Business models Product/Service/Process/Business Model

Doblin’s Innovation Types TypeDefinitionExample Business ModelHow you make moneyDell Networks and alliancesHow you work with other companies Sara Lee outsources manufacturing Enabling ProcessesHow you support the company’s core processes Starbucks Core ProcessesHow you create and add value to your offerings Wal-Mart Product PerformanceHow you design your offerings VW Beetle Product SystemHow you link your products to create a system Microsoft Office From: Doblin Group

Doblin Types (cont) TypeDefinitionExample ServiceHow you provide value to customers beyond product Singapore Airlines ChannelHow you get your offerings to market Martha Stewart BrandHow you communicate your offerings Absolut Customer ExperienceHow your customers feel about the company Harley Davidson

Flexible Continuums Clearly most facets are continuums – a selection early in the process does not eliminate other options later For the most part, these facets are not either/or selections. A firm can run incremental AND disruptive innovation programs at the same time

Right Answer / Wrong Answer Note that there aren’t necessarily “right” or “wrong” choices for these models Rather there are implications to making the choices – What you encourage – What you ignore – Where you place your focus – How you choose to evaluate

Initial Deployment Open/Closed Participative/Skunkworks Decentralized/Centralized Your initial deployment may look like the selections above – a closed model that is partially participative and centralized seeking primarily incremental ideas that will be evaluated by experts Incremental/Disruptive Suggestive/Directed Individual/Team Wisdom of crowds/Experts

Maturity Open/Closed Participative/Skunkworks Decentralized/Centralized Over time your innovation model could morph to represent these choices, which reflect more open and participative innovation that seeks more disruptive ideas and uses a broader evaluation panel. Incremental/Disruptive Suggestive/Directed Individual/Team Wisdom of crowds/Experts

Why is this important Making these decisions explicitly early in your innovation effort help people understand the scope of your efforts and where to spend their time It provides clear markers for areas of interest where innovation is concerned and how the innovation model can be deployed A clearly defined model aids communication to those who wish to participate

What can you do? Think carefully about your innovation goals, strategy and expectations Develop an innovation model that recognizes existing strengths and challenges in your business Recognize that the model is adaptable as your team gains innovation experience Define your model and communicate the facets to everyone

Key Takeaways Defining the innovation facets establishes a clear scope and “operating model” for the project or team These facets are flexible and may change from project to project, or as the team gains experience Failure to establish these facets or poor choices will frustrate the innovation process

Questions Questions or more discussion?

Exercise Let’s define the innovation model facets for your innovation initiative