Lecture L10 THE INNOVATOR’S METHOD

Reading:

•IBM 1100100 and counting •Competition is for Losers •Understanding the Job Clayton Christensen, professor at Harvard Business School talks about the job to be done

•The Innovator´s Method

...a kind of shadow future, hovering on the edges of

the present state of things, a map of all the ways in

which the present can reinvent itself

Steven Johnson

Adjacent Possible

Why is IBM still alive and thriving after so long, in an

industry characterised perhaps more than any other

by innovation and change?

Economist:  1100100  and  counting

Case Study

Tabulating machinesElectronic machinesMainframesMini-computersPC computers

Economist:  1100100  and  counting

Platform Shifts

Economist:  1100100  and  counting

Platform Shifts

“IBM is not a technology company, but a company

solving business problems using technology” – George Colony

Economist:  1100100  and  counting

Platform Shifts

Economist:  1100100  and  counting

Platform Shifts

1. Maintain connection to customers2. Less hierarchical and more open3. Business relevant research4. Globally integrated5. Financial planning – get out of

commoditized business

Economist:  1100100  and  counting

Platform Shifts

WHAT IS THE SECRET TO BE SUCCESSFUL ENTREPRENEUR?

"There is no real formula." - Peter Thiel

Author: Zero to One

Innovation

In the history of business, things happen only

once

Economist:  1100100  and  counting

Against the Norm

TRUTH IS SOMETHING EVERYBODY

AGREE ONMAY NOT BE RIGHT

Economist:  1100100  and  counting

Against the Norm

WHAT GREAT BUSINESS

ISNOBODY STARTING?

Peter Thiel

Definition of Losers

PEOPLE THAT ARE NOT GOOD ENOUGH

ORPEOPLE JUST DOING THE WRONG THING?

"All happy companies are different because they found something

unique to do, all unhappy companies are alike, because they failed to escape the sameness that

is competition." - Peter Thiel

The Nature of Progress

0 to 1

1 to n

Technology doing new things

Vertical

Globalisation copying existing things Horizontal

Peter Thiel: Zero to One

The Nature of Progress

Looking for Opportunities

Targeting overshot customers or non-consumption

“Good-enough” can be great

Do what competitors won’t

Looking for Opportunities

Targeting overshot customers or non-consumption

Removes barriers that constrain the ability to consume

Overshooting customers needs

Hidden beauty in undesirable or invisible markets

Remove barriers that constrain the ability to consume

Example: photography

Kodak’s Brownie Camera

Skill

Skill Example: Computers

Apple’s iPad

Remove barriers that constrain the ability to consume

Wealth Example: Computing

The Personal Computer

Remove barriers that constrain the ability to consume

Access Example: Telephony

Mobile phones

Remove barriers that constrain the ability to consume

Access Example: Niche movies

Youtube LegoStar wars

Remove barriers that constrain the ability to consume

Time Example: Auction

Ebay auction

Remove barriers that constrain the ability to consume

1. Creating a Computer Game for mobile

What is the barrier for these:

4. Health Care

5. University level education

2. Making an Music Album

3. Publishing a Novel

6. Rent your house

Remove barriers that constrain the ability to consume

Targeting overshot customers or non-consumption

Make the complicated simple

Don’t let the mainstream derail you

Innovate, don’t force

Targeting overshot customers or non-consumption

Targeting overshot customers or non-consumption

Nintendo Wii

Targeting overshot customers or non-consumption

Gaming for the family

Portable music players disrupted by Apple, 2001

1000 songs in you pocket!

Targeting overshot customers or non-consumption

Mobile phone, 2007

Apple reinvents the phone

Targeting overshot customers or non-consumption

“Good-enough” can be great

Sustainable innovations compete on getting better

Disruptive innovations compete on doing it dif ferent ly

“Good-enough” can be great

Netflix

Subscribe, no late fees

Do what competitors won’t

Unattractive or uninteresting market

Does not seek head-on collision with established competitors

Personal Computers

Do what competitors won’t

CRM as a Service

Do what competitors won’t

THE INNOVATOR’S METHOD

The Innovation Crisis: Unprecedented Uncertainty

Net Promoter Score

How likely are you, on a scale of 0 (not at all likely) to 10 (extremely likely), to recommend this product or service to a colleague or friend?

A product’s NPS is the percentage of promoters (those who score themselves 9 or 10) minus the percentage of detractors (scores 0–6).

Net promoter score = % promoters minus % detractors

Design for DelightMost successful companies didn’t just off er products that were easier to use; they off ered products that delighted customers.

• Gain deep customer empathy Understand customers better than they understand themselves

• Go broad to go narrowGenerate lots of solutions before borrowing the list

• Experiment rapidly with customers Seek feedback early and often

Innovator’s MethodFour steps to solve high- uncertainty problems and turn insight into a successful innovation

Innovator’s MethodStep 1. Insight: savor surprises Step 2. Problem: discover the job-to-be-doneStep 3. Solution: prototype the minimum awesome productStep 4. Business model: validate the go-to-market strategy

Leverage the behaviors, questioning, observing, networking, and experimenting — to search broadly for insights about problems worth solving.

Innovator’s MethodStep 1. Insight: savor surprises

What problem is nobody solving?

Problem: What to Wear

Rather than starting with solutions, start by exploring the customers’ need or problem— the functional, social, and emotional job-to-be- done— to be sure you’re going after a problem worth solving.

Innovator’s MethodStep 2. Problem: discover the job-to-be-done

What is the customer really buying?

People don’t want to buy a quarter-inch drill. They want a quarter-inch hole.

Job to be Done

Instead of developing full-scale products, leverage theoretical and virtual prototypes of multiple solution dimensions. Then iterate on each solution to develop a minimum viable prototype and eventually a minimum awesome product.

Innovator’s MethodStep 3. Solution: prototype the minimum awesome product

Once you’ve nailed the solution, you’re ready to validate the other components of the business model, including the pricing strategy, the customer acquisition strategy, and the cost structure strategy.

Innovator’s MethodStep 4. Business model: validate the go-to-market strategy.

Early Innovators

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Assignment 2