Innovation Management for Winning Products

George YoungCEO Kalypso

Terry RuttanVP, ITNBTY

Deanna FellVP, Engineering & PMOMary Kay

The Kalypso Difference

Kalypso was created in 2004 to address the need for industry-specific innovation expertise in the professional services marketplace.

We have been on a journey to help our clients deliver on the promise of innovation ever since.

Our Mission is to help our

clients deliver on the promise of

innovation

SUSTAINED RESULTS

INFORMED OPINIONS

COMPREHENSIVE CAPABILITY

FLEXIBLE DELIVERY

EXCLUSIVE FOCUS

Our Services are designed to deliver sustained business results through key innovation practices

Business & Innovation Strategy

Business Intelligence & Innovation Analytics

Product Lifecycle Management Technology

Innovation & Change Leadership

Front End of Innovation

Portfolio & Pipeline

Management

New Product Development

Execution

Value Management

Intellectual Property Management

2

Innovation is a broad concept

New Platform

Adjacent

Core

REW

AR

D

RISK/DEVIATION FROM COMPETENCIES3

3

Growth from Innovation remains a top priority for organizations

Growth dominated CEOs’ strategic priorities in the last four year, with more than 50% of the growth expected to come from new products and new markets1

1.Gartner, June 2015

“Innovation is the driving force behind

our strategy…”

“We are executing the strategy as planned,

with unrelenting focus on innovation.”

“This strategy…leveragesour core strengths…most importantly, innovation.”

“Our primary response to slow-growth markets

is innovation…”

“Improved productivity frees up resources to invest in innovation”

2.Recent CPG Company Annual Report

4

However various research shows that few do it well 50%

Gartner2015

New products, across industries, that fail to meet one or more of their critical metrics for success

66%IDC 2012

76%PDMA2013

60-80%HBR2011

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Representative data for new product failure rates per industry

CPG90%+ (IRI)

Food & Beverage –94%

Personal Care – 90%

Fashion75%(Gartner)

Communi-cation SPs95%(Gartner)

Chemical65-70%(McKinsey)

76%(Gartner and Nielsen)

Industrial Manufac-turing50% +(Forbes)

5

Challenges we’re hearing from our clients

“FEI does not have a clear linkage to our company strategy”

“Difficulty in identifying the product requirements necessary for success, and what our customers are willing to pay for”

“Difficulty in getting leadership alignment and decisions on the right opportunities for investment”

“Lack of visibility to the pipeline and understanding what is required to deliver our business results”

“Setting up an effective corporate incubator that is more than ‘innovation theatre’”

“Innovation in an environment of continuously changing quality and regulatory requirements”

6

1. Articulate and align on an Innovation strategy

2. Manage the Fuzzy Front End

3. Systematically turn ideas into qualified concepts

4. Actively manage Innovation portfolio and investment allocation

5. Organize and reward for success

6. Measure your results and learn to improve

Leading practices for managing innovation like a business

7

Commercial World (In-market)Iterative Development World (NPD)Creative World (FEI)

Different tools need to be employed in the different phases of the innovation process from ideation to commercialization

Product Hub/MDMProduct Lifecycle ManagementInnovation

ManagementERP

Systems

Business Intelligence and Analytics8

9

Terry Ruttan

VP, IT

NBTY

Deliver and Measure Sustainable Innovation

with Innovation Management

10

Broad range of global supplement brands and products

Going to market through Wholesale, Retail and Direct

Direct Response / E-Commerce

European Retail

Wholesale

11

Agile PQM and Oracle PDH

2013

Launch of a large business transformation initiative

2012

Agile PC

2014 & 2015

Innovation Management Implementation Principles

Start with Crawl, Walk, Run approach

Initial goals are to provide:• A single place to capture project

proposals for all business units

• Enforce consistent format and information on proposals

• Provide a means to analyze the project portfolio to ensure the best allocation of resources to innovation.

Build on this foundation for future –Ideas, Requirements, complex Portfolio Analytics, Results Analysis

2015 - Phase 3, Innovation Management

NBTY Key Innovation Objectives1. Providing the internal capabilities required to deliver

measureable and sustainable results from Innovation.

2. Enabling the set of measures and leading indicators to evaluate the alignment of the innovation portfolio to strategy.

3. Supporting data-driven decision making for project and portfolio management using information systems.

12

Innovation Management summary

12

13

Innovation Management Phase 1 1 2 3 4 5 6 7 8 9 10 11

Planning, Kickoff, and Requirements definition

Solution Design Workshops CRP UAT

Configuration Development Production

Training

Go-Live P

Innovation Management implementation approach

Business

leadership

makes

decision on

proposal

Initiative Leader

creates proposal

in Innovation

Management

Populate portfolio

attributes, Cash

Flows, and attach

gate document

Portfolio Manager

reviews proposal for

completeness and

gate readiness

Proposal is added to Gate

Meeting Agenda

GateMeeting

Submit proposal

Approve

Kill

Redirect

Approves and versions,moving to next stage

Rejects and versions,moving stage to “Cancelled”

Rejects and versions. Proposal stays in the same stage

Portfolio Manager

14

Demo

Demo

Demo

Demo

Business Unit 1

Innovation proposals

capture the key

information needed to

make strategic portfolio

decisions

Innovation Proposals

Demo

15

How is Innovation Management helping?

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Portfolio Initiative Mix

7 - Tactical and/or Maintenance

6 - Minor Renovation

5 - Major Renovation

4 - Minor Line Extension

3 - Major Line Extension

2 - New to NBTY

1 - New to the World

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

20

40

60

80

100

120

140

Projected Revenue By Initiative

Top 20 Initiatives

11

40

69

52 1

0

100

200

300

400

500

600

700

800

05

1015202530354045

Q1 Q2 Q3 Q4 Q1 Q2 Q3

2016 2017

# o

f In

itia

tives

Projected Launch Fiscal Quarter

Initiative Launches By Quarter

Supporting data driven decisions during Gate meetings

Evaluation of innovation portfolio during quarterly portfolio review meetings

2016 2017 2018 2019

Pro

jecte

d Y

early

Rev

Projected Yearly Revenuesby Launch Year

comprise 83% of portfolio value

Number ofInitiatives

Projected 3Y Revenue in $MM

16

Innovation Management – next steps

17

Deanna Fell

VP, Engineering & PMO

Mary Kay

Improving Innovation and NPD Execution

with Agile PPM

18

Mary Kay

company overviewToday, Mary Kay is one of the largest direct sellers of skin care and color cosmetics in the world.

Wholesale sales for Mary Kay Inc. are $4 billion.

Mary Kay has more than 3.5 million independent beauty consultants around the globe.

Mary Kay opened its first international subsidiary in 1971.

Today, Mary Kay has a strong international presence in more than35 markets around the world.

The largest markets are China, Mexico, Brazil and the United States.

19

Mary Kay 2011

• Centralized product development

• No portfolio management strategy

• Time to market at ~24 months

• Multiple sources of data

• US centric cross-functional resources

Mary Kay 2015

• Decentralized product development

• Increasing number of SKUs to support

local variants

• Time to market at 18 months or less

• Single product record

• Collaborative, global cross functional

resources

• Proactively managed product lifecycle

Complexity

Valu

e

Global Product Strategy

Business Case Review

20

Project Implementation 2011 2012 2013 2014 2015

Global Design & Project Planning

Implement Product Collaboration (PC - Items Only) and Project Management (PPM)

Implement BOMs in PC, Add Integration with JDE, Develop Data Warehouse Reporting

Implement Item Lifecycle Management

Implement Artwork Management Solution

Implement Product Governance and Compliance (PG&C)

Phase

0

Phase 3

Phase 1

Phase 2

Phase 2

Phase 2

Business Case Review

21

Mary Kay

in 2011

Global

Product

Strategy

Model

New Capabilities To Be Realized

Decision based on dated

information

Limited Project &

Resource Visibility

Multiple Point of Product

Information

Labor intensive product

launch processes

Manual & Sequential

planning cycle time

Focused on regional

processes & resources

Real-time intelligence

driven decisions

Global visibility of Project

& Resource

Single Point of Product

Information

Workflow driven product

launch process

Real-time collaborative

planning & execution

Global alignment of

processes & resources

Task Management Results / Accountability

22

BenefitsSingle Product Record

2015

ProjectsProduct

Compliance

Bill of Material

Product

Specifications

Formula

Approved

Manufacturers

Ingredients

Marketing

Information

All this information in one system - Agile

Packaging

Artwork

Compliance

23

2012• Process not well defined.

• Home grown Track It SharePoint system.

• No visibility to resource utilization.

• Timelines manually maintained.

• No visibility to project critical path.

• Very few project canceled.

• Numerous scope changes.

• Project managers were coordinators.

• Information was scattered everywhere.

• Difficult to determine where our products

were manufactured.

2015• Disciplined Phase Gate Process

• Enterprise world class, work flow enabled

Agile PLM system.

• Visibility into our projects like never before.

Allows us to see how to achieve our Speed

to Market goal.**

• Quantitative visibility into resource

utilization.**

• Non productive projects now being

canceled.

• Project Managers are strengthening/ driving

projects. PMO office begins.

• Regional involvement allows better support

of market needs.

• Information is centralized in one place.

• Visibility to part manufacturers.

Benefits

New Product Development Process

24

Establishing the Foundation

Reengineered NPD process with a

Phase-Gate model

Defined Gate criteria and scoring to

support Go/No-Go decisions

Built regional involvement and

forecasting commitments

into the NPD process

Defined project types with risk and

priority ratings

Redefined project team roles and

responsibilities

Provided global visibility to product

launch calendar

Established product data model to support

project deliverables

25

Global Visibility to Information

Information is centralized in

one place

Provided global visibility to

product launch calendar

Visibility into our projects like

never before allows us to see how

to achieve our Speed to Market

goal.**

Project

Type B

27%

Project Type C

64%

Project Type D6%

Project Type A 3%

0%

40%

80%

120%

160%

200%

240%

280%

Oct-

13

Jan-1

4

Apr-

14

Jul-14

Oct-

14

A

B

D

E

% Utilization by Resource

Quantitative

visibility into

resource

utilization.**

Information availability

and accessibility improves

analysis to support key

portfolio decisions

26

We’ve seen significant time-to-market

improvements for all project types

32% for higher complexity

projects

43% for medium complexity

projects

33% for low complexity projects 0

5

10

15

20

25

30

35

40

High Medium Low

2012

2015

Average Time to Market (Months)

Faster Time-to-Market

27

Next Steps

Capture early ideation before a project is defined

Dashboard visibility of key metrics

Closing thoughts

28

Two leading examples of companies employing

Innovation Management and

Agile PPM to deliver measurable and sustainable results from innovation

Oracle offers an enterprise solution to manage the full process from ideation to commercialization

IM is the most significant product development software launch since Agile 9

There’s flexibility on how you get started

Traditional Innovation use cases

IT project prioritization use case

Pilot with one use case and then expand with additional functionality

Many use IM as a way to get started with PLM Cloud