innovation - what, why, who, types, metrics
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TRANSCRIPT
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InnovationWhat? Why? Who?
Types? Metrics? Case study
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“The business has two and only these two basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs.”
~Peter Drucker
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What is innovation?
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For something to be called innovative, it has to be:1) New/different and 2) Have value
(commercialization)
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Invention vs. Innovation
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Hard science + social science
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Why does it matter?
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Do-nothing assumed cashStream (common thinking in big corporations, RIM Blackberry as latest example)
Do-nothing likely cash stream
Innovate cash stream
DCF & NPV
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Types?
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Incremental Radical (disruptive)
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Types of innovation
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Famous innovators
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http://www.youtube.com/watch?v=fW8amMCVAJQ
How to create a movement as a leader in less than 3 minutes?
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“Never doubt that a small group of thoughtful, committed people can
change the world. In fact, it is the only thing that ever had.”
~Margaret Mead
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What about metrics?
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3 types of metric
InputProcess
Output
Resources put behind ($, FTE)# of patents
# of ideas# of NP% of sales from NPROI
Time from PoC to FDPBreadth of ideasPathway approach
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Metrics recommendations
•3 broad types•First vision & strategy, than metric•No magic metric•Choose few•Measure vs. competition•Get buy-in•Embed in performance review
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InnovationWhat? Why? Who?
Types? Metrics? Case study
Question(s)?
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Founded 1867225.000
employees$70b sales
495 factoriesRisk averse
....but 4% growth target by new CEO
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Coffee market in 90s
30%
70%
Sales
InstantRoast & Ground
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Nestle coffee business in 1990’s
•Present since 1938
•Owns instant coffee market (30% of total coffee market)
•Wants presence in high-end coffee market
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Coffee market in 90s
30%
70%
Sales
InstantRoast & Ground
95% filter5% gourmet (mostly out of home)
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Simple outside, complex inside; 3 steps to making coffee:
1974 - Simple outside, complex inside
•Individualized taste
•Simple steps to making coffee
•3 steps technology:
• Pre-wetting
• Aeration
• Extraction
•Strong IP protection
•Licensed machines to others
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1986 (12 years later)
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1987 failure launch in office sector in Italy
Photo of Turmix, Italy, results
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1988 – Jean Paul Gaillard hired
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Tiger team
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New segment identified through observation
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1989 – step1: switch to high end household market
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1989 – Step 1: household strategy endorsed
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Step 2: Broadening strategic partnerships
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Focus on capsules
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Distribution?
Losing profits
Supermarket=luxury?
3 months shelf-life
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Step 3: Nespresso club
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Rules of Nespresso club
24 hours ordering
Personal advice
Prompt delivery
Calls replied within 3 rings
Focus on training and experience
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Nespresso club – raving success
Sho w statistics from case study
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Airway companies sign contract with Nespresso
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Minimal advertisingLoyal customer at the center
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1995 break-even7 years since JPG arrival21 years since acquiring technology
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“Our problem is not a lack of good ideas – we have too many of them. The key is to be able to extract an idea, carry it forward in the organization and
transform it onto the market.”~CEO Nestle
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Key take-aways
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Innovation takes time and involves multiple failures
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Leadership and team
matter
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Culture
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Focus on core, partner on rest
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Experiment
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Observe
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InnovationWhat? Why? Who?
Types? Metrics? Case study
Question(s)?
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How would you define 3 years innovation vision for you and your
team?
THINK BIG!How will you know that you are
achieving it?