leading the way to innovation success
TRANSCRIPT
Leading the Way to Innovation Success
Tarun KhuranaTarun Khurana ([email protected])(BE(Comp Sci.), MS (Software Systems), LLB, MBA(IIM Lucknow))
Partner and Patent AttorneyKhurana & Khurana, Advocates and IP Attorneyswww.khuranaandkhurana.com
PartnerIIPRD www.iiprd.com
“The first step in winning the future is encouraging innovation,” said President Barack Obama in January 2011
Innovation – What is it?• Creation of new ideas/processes which will lead to change in an
enterprise’s economic or social potential[P. Drucker, ‘The Discipline of Innovation’, Harvard Business Review, Nov-Dec, 1998, 149]
• Innovation is also about looking at people and seeing things from their viewpoint and not your own
• An innovation is the implementation of a new or significantly improved product (good or service), or process, a new marketing method, or a new organisational method in business practices, workplace organisation or external relations.
• The process of turning ideas into money
• Implementation of great ideas
• Convergent thinking
• Quality driven process
Why do we need Innovation?• For business survival
• For better returns
• For a more constant flow of innovation
• To take advantage of opportunity
• Desire for higher business revenues
• Because cost-cutting is not enough anymore
• For competitive advantage
• For the progression of human well-being
• For economic growth
What do we want from Innovation?
• Minor changes to existing products and services
• Cost reductions to existing products and services
• New to world products/Differentiators
• New products and services to expand/engage with
new customers
• New products and services for existing customers
The World's Most Innovative Companies (Forbes, 2014)
• Nike
• Microsoft
• Amazon
• General Electric
• Toyota
• Samsung
• Hitachi
• Daimier
• Vodafone
• Apple
• 3M
• Telefonica
• American Express
• Sony
• Intel
• Siemens
• Infosys
Innovation – Composition• Innovation Starts the Top
▫Leaders Need to Create Vision and live the values• Innovation Relies of Trust
▫Listening to Ideas, Rewarding Good Ideas, Embracing Risk to Evaluate them, and Learning from Failures
• Innovation Involves objective measure of success• Innovation is a team sport
▫Collaborate• Create A Strategy that defines the environment• Innovation can happen anywhere
▫Anyone can do it, but everyone may not be good at it
Why has Apple been so successful?
Apple Inc.• One of the most successful technology companies worldwide
• Apple is the largest publicly traded corporation in the world by
market capitalization, with an estimated value of US $446 billion as
of January 2014
• 60 million Mac users worldwide
• As of September 2012, Apple reported that total number of iPods sold
worldwide was 350 million.
• iTunes is the number 1 music store in the world
• Apple has not always been so successful, though
First Rise and Fall of Apple• In 1985, Jobs was relieved of his management duties.
• The introduction of the Macintosh in 1986, and the PowerBook in
1991 made Apple very successful.
• For a time, Apple was the market leader in personal computer
technology
• After 1993 though, Apple began to slip, launching a long list of
failing products, and losing market share to Microsoft
• In 1996, the company was on the verge of bankruptcy, and Jobs
was brought back into the company.
Return to Profitability• Between 1997 and 2005, Jobs returned Apple to a profitable state.
• The iMac, featuring modern technology and modern design, was released in 1998
• Purchased several companies in digital production on the professional and
consumer level.
• In 2001 the first Apple Retail Store and iPod were announced, followed by the
iTunes music store in 2003, which has become the largest music store in the world.
• In 2006 the switch to Intel processors was announced, boosting Apple’s market
share of Personal Computers to 8%, but still far behind other manufacturers using
Microsoft.
Massive Success• The iPod marked the beginning of the Apple revolution
• In 2010, Apple surpassed Microsoft, valued at $222 billion and $219
billion, respectively
• In 2005, Apple Computers Inc. became Apple Inc., shifting focus from
computers to mobile devices
• Windows is still the most widely used operating system, but through
product differentiation, Apple has put their products into the hands of 1 in
3 Americans
– iTunes
– iPod
– iPhone
– iPad
ConclusionFor 35 years, Apple has been a trend setter
company able to forsee future of domestic computer and consumer electronics. It will probably continue during the next, because their strength is the innovation. And they know, how to ‘think different’. Apple go on innovating …..
Apple: Innovate to Stay on Top• Apple’s commitment to innovation can be seen in both
its number of patents, and the quality of these patents.
• In 2010, Apple was granted a total of 566 U.S. utility patents, a fivefold increase over the 110 U.S. utility patents it was granted in 2006.
• Purchased the Nortel Networks patent portfolio
• Since introducing the iphone in 2007, the company has filed nearly 1,300 patents
Types of Innovations• Product innovation: introduction of a good or service that is new or significantly
improved with respect to its characteristics or intended uses. This includes significant
improvements in technical specifications, components and materials, incorporated
software, user friendliness or other functional characteristics.
• Process innovation: implementation of a new or significantly improved production or
delivery method. This includes significant changes in techniques, equipment and/or
software.
• Marketing innovation: implementation of a new marketing method involving
significant changes in product design or packaging, product placement, product
promotion or pricing.
• Organisational innovation: implementation of a new organisational method in the
firm’s business practices, workplace organisation or external relations.
Invention and Innovation• An invention is an idea or concept for a new product or
process.
• An innovation is the successful entry to the market of a novel product, process, or business model.
• Creating an innovation from an invention is a high risk venture.
• While invention depends upon creativity, successful technological innovation requires integrating new knowledge with multiple business functions.
What is Innovative Thinking?
• A means of generating innovation to achieve two objectives that are implicit in any
good business strategy:
1. make best use of and/or improve what we have today
2. determine what we will need tomorrow and how we can best achieve it
• Innovative thinking has, as a prime goal, the object of improving competitiveness
through a perceived positive differentiation from others in:
1. Design/Performance
2. Quality
3. Price
4. Uniqueness/Novelty
“The greater the amount of innovation, the greater market
and financial performance”
How to make Innovation Happen
How to make Innovation Happen• Recognizing promising ideas (locating them at the right time and in the
right manner)
• Changing Mindset to detect innovations in minor activities in order to change thinking
• Optimizing creativity
• Innovation strategy
• Developing research methodology
• Look for breakthrough ideas
• Indentify unknown and unmet need
• See opportunities that others miss
• Create an environment for teams that nurture deep insights
How to make Innovation Happen• Identify Differentiating Areas that ONGC has most
competence/expertise and focus on.
• Identify Strategic Intent behind above focus area and identify internal and external parameters that will play a role in implementing the above areas.
• Look at following exemplary parameters before moving forward on the above:
–Value potential of the technology –Overall and business area strategy–Current and future assets–Technological capabilities–Organisational capacity–Technology status by suppliers–Competitors ambitions and actions–Governments expectations etc.
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Categorise and prioritise
Calculate value Identify technologies
•Map technologies to develop a gross list of promising technologies in each cluster
•Assess overall attractiveness of the mapped technologies
•Select key technologies to be further evaluated
•List of key technologies to be evaluated
• Identify value creation opportunities of the selected technologies
• Identify and understand key uncertainties
• Identify options •Calculate the value
•Estimate value for individual technologies
•Evaluate value creation potential vs. ease of capture for individual technologies
•Evaluate connectivity between technologies
• Identify and prioritise groups/clusters of technologies
•Prioritisation of technology clusters and individual technologies
What
End products
Systematic valuation of your technology portfolio is vital for investment decisions
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Level of uncertainty
• True ambiguity
• High uncertainty
• Continuous or discrete uncertainty
• Useful prediction
• Stable situation
•Low uncertainty
Appropriate metrics
• Preliminary analysis of option value
• Detailed real option valuation (ROV*)
•Discounted cash flow
• Economic Profit (IRR)
Development and early implementation
Commer-cialisation
Mature products
Level of flexibility
• Very high • High • Medium
IdeaLife cycle stages
* ROV methodology is discussed further in the Appendix
Use an appropriate valuation methodology according to the development stage
Top R&D Spenders (Forbes, 2011)
• Toyota
• Novartis
• Roche Holdings
• Pfizer
• Microsoft
• Samsung
• Merck
• Intel
• General Motors
• Nokia
• Volkswagen
• Johnson and Johnson
• Sanofi
• Panasonic
• Honda
• GlaxoSmithKline
• IBM
• Cisco Systems
• Daimer
• Astrazeneca
Myth about R&D and Innovation
• Many people equate spending on R&D with investing in innovation. The logic goes that R&D spending is lab spending, and out of labs come innovations. Hence, those who spend a lot on R&D are innovative.
• Note that most of these companies which appear on the list of top R&D spenders are not on the list of most innovative companies.
Big Spenders• Nokia, which is so floundering some consider it a likely bankruptcy candidate,
is #7! Despite spending nearly $8B on R&D in 2011 Nokia is now completely
reliant on Microsoft if it is to even survive.
• Toyota, GM, Volkswagen, Honda and Daimler are all on the list, spending a
whopping $36B. Yet, even though they give us improvements nobody
considers these companies innovative. That award would go to little Tesla
Motors. Or maybe Tata Motors in India.
• Novartis, Roche, Pfizer, Merck, Johnson and Johnson,
Sanofi, GlaxoSmithKline and AstraZeneca are all here – spending a cumulative
$54B in just one year! Yet, they have all failed to give the world any incredible
new drugs, all have profit struggles, and the industry is rife with discussions
about weak product pipelines. The future of modern medicine increasingly is
shifting to genetic solutions, biologics and more specific alternatives to the
historical drug regimes from these aging pharma R&D programs.
Newer Strategies for Innovation• Gone are the days of R&D teams huddled behind closed doors, designing the “next
big thing.” The companies most known for innovation don’t keep spending money
year after year on their old business. Instead of digging deeper into what they
already know, they invest laterally.
• When it comes to innovation today,
- collaboration is the key to success. This means establishing a culture of innovation
and involving every employee in the organization.
- Spending money putting the pieces together in new, unique ways.
- Trying to find new solutions to old problems, using new – even fringe – technologies
- trying to develop disruptive solutions that actually change the marketplace, rather
than trying to make something that already exists better, faster or cheaper
What have Innovative Companies done?
• 3M - corporate goal of achieving 30% of sales from newer products. “3M 15% Rule” allows
employees to spend 15% of their time on projects of their own choosing
• Google – holds 8 brainstorming sessions a year with 100 engineers. All engineers can dedicate
20% of their time to pet projects
• Toyota – OObeya = big, open office. Brings together people from all parts of the company every
month to discuss design, costs, mistakes, bottlenecks. Has saved Toyota millions of dollars
• P&G – shifted from R&D as the innovation pipeline to C&D, “Connect and Develop”. P&G acquires
50% of its innovations outside the company, resulted in 3 successful new products in the first 6
months
• Whirlpool – group of employees serve as innovation consultants to assess best ideas and strategies
to market. Employees submit ideas and strategies to market. Employees submit ideas via a
corporate – wide virtual bulleting board. A third of senior leader pay is tied to innovation.
Whirlpool has record results in 2005
• GE – GE workout – 60% of projects initiated in this creativity program become successful products
Case Study 1: From Heavy to Light: Accelerating Commercialization through Open Innovation
• Name: Research Institute of Petroleum Industry
• Organization Type: Commercial Enterprise, University / Research Institute / Spin-off
• Industry: Chemicals
• Country/Territory: Iran (Islamic Republic of)
• Object of Protection: Distinctive Signs / Commercial Names, Inventions
• Instrument of Protection: Patents, Trademarks
• Focus: Commercialization, IP Management, Licensing, Partnerships, Research and Development
Case Study 1: Background
• The Research Institute of Petroleum Industry (RIPI) is a major
research institute in the Islamic Republic of Iran (Iran) and is
the largest of its kind in the Middle East.
• Established in 1959, throughout the years RIPI underwent
many transformations in its research and development (R&D)
activities and has become a major technology provider for
Iran’s petroleum industry.
• In 2002, it developed a revolutionary new technology that
converts heavy crude oil into the more desirable and
economically profitable light crude oil, which can produce a
much higher percentage of fuel.
Case Study 1: Research and Development
• RIPI’s main activities were initially to provide Iranian petroleum industry with
laboratory services (such as analysis of chemical samples and testing of new materials),
but its mandate quickly expanded to provide more in-depth research activities.
• RIPI relied primarily on domestically developed technologies, and while it moved
towards developing marketable products, it still could not compete with foreign
technology in the petroleum industry.
• After 1998, RIPI entered a new era of a more open approach to R&D, in which it would
also look at developments and new technologies coming from abroad and identify those
that it deemed feasible and useful for the Iranian economy.
Case Study 1: Invention• Heavy Residue Hydroconversion (HRH©), a revolutionary processing technology
that converts heavy and extra heavy crude oil into the more profitable light crude
oil.
• HRH provides many specific advantages:
- it yields a higher conversion rate (90 – 95%) than other technologies (which can be
as low as 40% and as high as 90%);
- it can further upgrade residue (5 – 10 %) heavy crude oil into light crude oil,
resulting in no waste and 100% light crude product output;
- it reacts in lower temperatures;
- its applications are more flexible for different types of oil;
- it completely eliminates heavy metal impurities;
- it is a more economical process;
- it reduces sulfur compounds in the oil by 60 – 80%; and
- it has a low catalyst cost.
Case Study 1: Partnerships• One such technology RIPI found was developed by Russian
company Naphta Technologies and Investment (NTI), which was
testing it in the laboratory on a small scale.
• A team of RIPI researchers visited NTI to assess the potential of
the technology by conducting various technical tests along with
their Russian counterparts.
• The tests proved successful, and in August 2002 RIPI and NTI
entered into a joint development agreement, in which NTI was
bound to supply RIPI with the already developed know-how on
hydroconversion technology, while RIPI would conduct further
R&D and ultimately commercialize the end product.
Case Study 1: IP Management, Licensing and Commercialization
• RIPI’s first national patent was filed in 1986, and by 2003 researchers at
the Institute had registered nearly 50 national patents.
• HRH technology got patented in many countries – Iran, United States,
Korea, Mexico, Canada
• RIPI was able to successfully enter into a licensing agreement with
Khouzestan Refinery Company (KRS)
• Under the terms of the multi-million US$ licensing agreement, KRS used
RIPI’s HRH technology to build a full 180,000 bpd industrial plant in the
southern Iranian city of Abadan.
• With 180,000 barrels per day coming out of the KRS plant in Abadan,
HRH technology represents a possible new chapter in the development of
the Iranian oil industry, and an opportunity for RIPI to develop even more
successful technologies.
Little Changes Matter A Lot•Sometimes little tweaks solve big
problems
•For one thing, a few simple and small changes can result in big new things.
•Innovation most often happens from adding or subtracting one or two pieces that are already in place.
Exemplary Halliburton Improvement Patents
• Correction in Measurements made through Gamma Detectors
• Analysis of High Pressure Liquid Chromatography (HPLC) by addition of solvents, and interplay of phase of fluid sample
• Improving Lost Circulation
• Improvement in Suspending Agents
• Correction of Gas Extraction at Surface
• Improvement in Communication between rotating and non-rotating member of a downhole tool
• Enhancing Torque of Electric Motor Drive
Apple’s IPOD: A history of Incremental Innovation
Thank You