© All rights reserved Slide # 1 BMGI * Problem Solved * Making Innovation Work in a Growing Economy...

© All rights reserved Slide # 1BMGI * Problem Solved *

Making Innovation Work in a Growing Economy

Phil Samuel, Ph. D.




Conventional Ultrasound$100,000-$350,000

Customers – Sophisticated hospitals and imaging centers

Uses:• Cardiology

• Obstetrics

• General radiology


2008$278 MM

$4 MM2002

In 2002 GE China develops a cheap portable ultrasound machine that utilizes a laptop computer and a probe

In 2007 GE China launched a dramatically cheaper model and sales took off.

Portable Ultrasound (2002)$30,000

Portable Ultrasound (2007)$15,000


Lessons in Innovation

• Focus on the jobs customers are trying to

get done

• Think beyond your hot products

• Identify non-consumption and non-

consuming contexts

• Look beyond your industry for ideas

• Burn your ladder


1

Focus on the Jobs Customers are Trying to Get Done


“People who want to buy power drills don’t necessarily want to buy a quarter-inch drill. They want a quarter-inch hole”

- Prof. Theodore Levitt, Harvard Business School


Job To Be Done

“Job-to-be Done”

“Solutions”

• Customers don’t just buy products or services.

• They hire products or services to get functional and emotional aspects of jobs to be done


The Job of “Cleaning Clothes at Home”


“Solutions”

Clean Clothes

Detergent andWashing Machine

Zero DetergentWashing Machine


What’s the Job Looking for a Better Solution?


VIDEO


Structure of Jobs

Main Job Category

Ancillary Job 1

Process Step 1 Process Step 2

Process Step n

Social Jobs Personal Jobs

Process Step ..

Ancillary Job 2

Ancillary Jobs ..

Ancillary Job n

Functional Jobs


Under-Served Jobs

0

1

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3

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0 1 2 3 4 5 6 7 8 9 10

Importance

Sat

isfa

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Opp>10

Opp>12

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Opp>18

Ready for Disruption

Potential for Disruption


Under-Served Jobs

Job FocusIdentify jobs to be done where ad hoc or no solutions exist.

Customer were trying get the job of “reselling and buying goods efficiently”. Ebay created a solution to achieve this job.


Creating Valuable Brands

1. Design a solution that does a job well.2. Give it a brand that uniquely links that

product to that job.3. As people hire it to do that job and find

that it does it well, they learn to trust the brand for that purpose.

4. They begin hiring it whenever they land on that “job space” – and talk about it.

5. Advertising can then remind other people that they, too, land on this job, and that they should hire this branded product when they do.

• FedEx• Crest• OnStar• Google• eBay• Starbucks• Blackberry• Xerox• Kleenex• Lunchables• Hill-Rom


Over-Served Jobs

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Importance

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Over-Served Jobs

Disruptive GrowthBring disruption by entering the low-end or new markets with lower performing, cheaper products to non-consumers

Online Stock TradingDIY, Less cost,Easy to access

Micro LendingMotivation for new and

first-time Investors

Insurance Provider Group

Creating products to reach the under-served

markets

White StripsNo Skill needed, DIY, Less cost


What Drives Non-Consumption

Skills

Price

What constrains

consumption?Access

Time


Help new customers do a job that others were already doing.

Often these jobs couldn’t be done due to high cost or skill required

Enable less skilled people to get important/ unsatisfied jobs done in less centralized location



Jobs that are Served Right

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Related Market GrowthBringing newer solutions to existing customers get related or ancillary jobs done

iTunes Download, Listen

to, Organize, Access and Share

music


Job FocusInnovation that enables customers to do related jobs that are underserved.

Related Market Growth


Outcome Expectations – Job Hiring Criteria

• Customers define success and failure criteria for hiring solutions for each of these jobs. These criteria are called Outcome expectations

• There are two kinds of outcome expectations – desired outcome expectations and undesired outcome expectations

• Jobs and outcome expectations form the basis for identifying opportunities for innovation, growth and new value creation


Outcome Expectations (Hiring Criteria)

Desired

Outcome

Expectations

Easy to Clean

Efficacy of Cleaning

Easy Stain Removal

Clothes Smell Fresh

Clothes Look Fresh

Safety

Reliable Cleaning

Undesired

Outcome

Expectations

Excessive Cost

Time to Clean Clothes

Damaged Clothes

Use of Resources (Water, Electricity, etc)

Wrinkled Clothes

Allergens

Special Skills Required


“Solutions”


The Job Map

Define

Locate

Prepare

Confirm

Execute

Monitor

Modify

Conclude

Jobs To Be Done


The Job of Cutting Wood


The Job of Cutting WoodDefine – type of cut, material, length, width, angle, etc…

Locate – the saw, cord, wood, tape measure, pencil, straight-edge, clamps, etc…

Prepare – unwind cord, plug in the saw, knot cord,

clamp wood, etc…

Confirm – check measurements, work area, saw function, safety

gear, etc…Execute – cut the wood

Monitor – observe cut line,

surrounding area, etc…

Modify – file splinters or burrs, check cut line, re-measure, etc….

Conclude – set saw down, unknot cord,

unclamp wood, wind cord, etc…

Cut Wood on the Jobsite


Underserved Hiring Criterion (outcomes)

0

1

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Importance

Sat

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Opp>10

Opp>12

Opp>14

Opp>16

Opp>18




Bosch Circular Saw

• “Direct-Connect” Cord: Minimizes chances of cord connection snags, offers quick and easy replacement if cord is cut, minimizes saw “prep” time (wrapping/unwrapping cord for storage).

• Anti-snag lip on the lower blade guard: Minimizes the chances of the lower blade guard interfering with the cut, minimizing the chance of cutting error.

• Dust port on the rear of the upper blade guard: Directs dust down and away from the cut-line, improving visibility of the cutting line and minimizing the chance of cutting error.

• Dust blower: blows dust from the cutting line, improving visibility of the cutting line and minimizing the chance of cutting error.

• “Vari-Torque” clutch: Allows the blade slip on the arbor if the resistance suddenly increases, like when pinched in a board, reducing the chances of kickback and improving the saw safety.


Served-Right Hiring Criterion (outcomes)

0

1

2

3

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9

10

0 1 2 3 4 5 6 7 8 9 10

Importance

Sat

isfa

ctio

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Opp>10

Opp>12

Opp>14

Opp>16

Opp>18




Over-Served Hiring Criterion (outcomes)

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Mapping the Job of Installing Drywall / Commercial Carpentry

Current strength

NPD/New Entrant

Acquisition Target


2

Think Beyond Your Hot Product


Your Innovation Portfolio

Types of Innovation

Product/Service

Process Business Model

Breakthrough

Substantial

Incremental

Deg

rees o

f Inn

ovatio

n


Innovation at Apple

Types of Innovation

Product/Service

Process Business Model

Breakthrough

Substantial

Incremental

Deg

rees o

f Inn

ovatio

n

Recent study by Kaiser Associates revealed that iPod—along with other Apple products affected by its halo—created $70 billion in shareholder value in just three years.


Doblin Model for Innovation Types

Business Model

Networks and Alliances

Enabling Processes

Core Processes

Product Performance

Product System Service Channel Brand

Customer Experience

Finance Processes Offerings Delivery

Source: Doblin Inc.


Passenger Airline Landscape


Core process

Process.

Enabling process

Product performance

OfferingProduct system

Service Channel

DeliveryBrand Customer

experienceRevenue model

FinanceNetworking

Industry innovation activity

high

low

Industry Innovation Landscape

Your business innovation activity

high

low


3

Identify Non-Consumption and Non-Consuming Contexts


Conventional Ultrasound$100,000-$350,000

Portable Ultrasound$15,000


The World Economic Pyramid

Population

(Millions)Tier

Annual Per

Capita Income

75 - 100 1 > $20,000

1,500 – 1,750 2 and 3 $1,500 - $20,000

4,000 4 < $1,500

Tier 1

Tier 2& 3

Tier 4



Skills

Price

What constrains consumption?

Time

Access


Disruptive Innovations: A driver of failure and the source of new growth opportunities

Per

form

ance

Time

Performance that customers

can utilize or absorb

Pace of

Technological

Progress

Sustaining innovations

Disruptive innovations

Incumbents nearly always win

Entrants nearly always win


Beat Competitors with Asymmetry of Motivation

7%

4%12%

8%

18% 22%

% of tons

Ste

el

Qu

alit

y

19801975 1985 1990

Rebar

Angle iron; bars & rods

Structural Steel

Sheet steel

25–30%55%

Quality of in

tegrated mills

’ steel

Quality of m

inimill-produced steel


The Strategies for Asymmetric Competition

Non-c

onsu

mer

s

or N

on-

cons

umin

g

occa

sions

Diff

ere

nt

measu

reO

f Pe

rform

ance

Time

New-market

disruption:

Compete against

non-consumption

Low-end disruption

Address over-served

customers with a lower-

cost business model

Per

form

ance

Time

Bring a better product into an established market


Disruptive Strategies

Core Market Growth

Bringing better solutions to existing customers to get the job done better

Disruptive Growth

Bring disruption by entering the low-end or new markets with lower performing, cheaper products to non-consumers

Related Market Growth

Bringing newer solutions to existing customers get related or ancillary jobs done

New Market Growth

Bringing newer solutions to perform jobs for which ad hoc or no good solutions exist

NON-CONSUMER

Outcome FocusHelp new customers do a job that others were already doing.

Often these jobs couldn’t be done due to high cost or skill required

CU

RR

EN

T J

OB

S


Expensive failure always results when disruption is framed in technological rather than business model terms

Non-c

onsu

mer

s or

Non-c

onsu

min

g

occa

sions

Dif

fere

nt

mea

sure

Of

Per

form

ance

Time

Per

form

ance

Time

Pocket radios

Portable TVs

Hearing Aids

Tabletop Radios, Floor-standing TVs, Computers

Path taken byvacuum tube

manufacturers


Galanz Enterprise

• In 1992, developed a new microwave oven for the tiny Chinese kitchens;

• After winning the Chinese low-end market, moved up-market to serve both local and global markets.

• In 2005, holds 75% of Chinese market and nearly 50% of global market in microwave ovens. ( >600 patents in microwave technologies)

• Since 2004, has started to replicate the same strategy by developing air-conditioners for tiny Chinese homes. Within 4 years, became No. 2 Chinese air-conditioner exporter.


Disruption in Business Models

Disruption has been the dominant historical mechanism for making things more affordable and accessible

Today Toyota Wal-Mart Dell Southwest

Airlines Fidelity Canon Microsoft Oracle Cingular Merrill Lynch

Tomorrow Chery Internet retail RIM Blackberry Air taxis ETFs Zink Linux Salesforce.co

m Skype E-Trade

Yesterday Ford Dept. Stores DEC Delta Hamilton Xerox IBM Cullinet AT&T Dillon, Read


4

Look Beyond Your Industry For Ideas


T

Where do Ideas Come From?

Team

Individual

Industry

Outside Industry

TeamIndustry

Outside Industry

Nature

Nature


Russian Lunar Vehicle Light Bulb

• The Russians launched an unmanned Lunar Probe to the moon’s surface with the intention to transmit TV pictures to the Earth. A projector using a light bulb was designed to illuminate the lunar surface ahead of the vehicle. However, existing light bulbs would not survive the impact of landing on the Moon surface.

• The most durable bulbs were ones used in tanks, but even those bulbs would crack at the joint between the glass and the screw base during tests.

• Problem – How to keep the light bulb from cracking at the interface between the glass bulb and the base?


Psychological Inertia

PROBLEM

SOLUTION

IDEAL SOLUTION

EMOTIONALBOUNDARY

EXPERIENTIALBOUNDARY

INTELLECTUALBOUNDARYBELIEF

BOUNDARY

REAL BOUNDARYCONSTRAINTS


T

Where do Ideas Come From?

Team

Individual

Industry

Outside Industry

TeamIndustry

Outside Industry

Nature

Nature


Catching Errors in New Car Models

• GM had a problem. It took GM over 70 days to track an error introduced while assembling a new car model

• GM used Process Benchmarking and Forced Association techniques to innovate

• Who is good at catching errors very quickly?

• Answer: CDC


Center for Disease Control

• CDC is able to track down the source of food poisoning within 72 hours of event

• By adapting the principles from CDC, GM reduced the time it takes to track vehicle errors from 70 days to less than 10 days resulting in savings of billions of dollars from recall expenses


“Someone, Somewhere Already Solved Your Problem”


Patent Research

Key discoveries:1. Problems and solutions were repeated across

industries and sciences 2. Patterns of technical evolution were repeated

across industries and sciences3. Innovations used scientific effects outside the

field where they were developed

> 5,000,000 Patents

Set of system levelInnovation principles


Eliminating Contradictions

Systems often reaches its limits due to contradictions built into the system


RQ-7 Remote Reconnaissance Unmanned Air Vehicle


Patent Research: Contradictions

>200,000 Patents

~1,250typical

system contradictions

~40techniques

for overcomingsystem conflicts

Key discoveries:• Progress is hindered due to contradictions in the

systems – Technical Contradiction– Physical Contradictions


Leveraging the Knowledgebase

Yes

EffectsSolution

TreeContradiction

Matrix

Want to Know How to Do it?

Contradiction?

Separation Principles

Yes Needs

Improvement?

TrendAnalysis

Predict Evolutionary

Potential?

Yes Yes

TechnicalContradiction

PhysicalContradiction

Kn

owle

dgeb

ase

Too

l


Innovation Is…

recognising that the ‘root cause’ of your innovation problem is that your system has hit a ‘yes, but’ limit…


…and that your job is to resolve Contradiction…

High Quality or Low Cost

Affordable or Customized

First Cost or Life Cycle Cost

Flexible or Rigid

Big or Small

High Quality and Low Cost

Affordable and Customized

First Cost and Life Cycle Cost

Flexible and Rigid

Big and Small

A or B A and B


…using a database describing how other people in other industries already solved similar contradictions

What youwant to

improve

What’s stopping you…

15, 17

23, 40

How otherssolved the

problem


Typical Design Compromises - The Bicycle Saddle

• Saddle must be WIDE to provide comfortable support

AND• Saddle must be NARROW to permit pedaling

action


Contradiction Map – Bicycle Saddle

SuccessfulSaddle

Comfortable Support

PedalingAction

WideSaddle

NarrowSaddle

AND AND

Because

Requires



Conflict Elimination - Bicycle Saddle

• Improving Factor: Length of Stationary Object• Worsening Factor: Shape

“Make movable parts fixed and fixed parts movable”

“divide an object into parts capable of moving relative to each other”

“if an object is rigid or inflexible make it movable or adaptable”


Hobson Adjustable Seat


Leveraging the Knowledgebase

Yes

EffectsSolution

TreeContradiction

Matrix

Want to Know How to Do it?

Contradiction?

Separation Principles

Yes Needs

Improvement?

TrendAnalysis

Predict Evolutionary

Potential?

Yes Yes

TechnicalContradiction

PhysicalContradiction

Kn

owle

dgeb

ase

Too

l


Three possibilities

Thinking FUNCTION

Direct a variation in PROPERTY.

Conflicting PROPERTIES


What Are “Effects”?

• Established rule or principle from wide range of disciplines

• Effects from many disciplines

PhysicsRheologyChemistry

BiologyGeometry

EngineeringTribologyAcoustics

InformationPsychologyEducationMotivation


Why Use “Effects”

• To figure out how to achieve a result• No contradiction exists, but there are no specific

solutions• Contradiction results in theoretical solution that

needs to be made practical• Practical solution is unknown


Example -Technology

• Power plant in Northern California was emitting selenium in waste water

• Conventional design for water treatment facility would cost more than 50% of the cost of the power plant

• Look for ways outside conventional water treatment to perform the function “remove selenium from water”

• Solution: cattails and ragweed are plants that will extract selenium from water, and bind it in their tissues. – Create a swamp where plants can purify the water


Example

Remove water from glass

“Solutions change, functions stay the same”

(Don’t touch the glass)


Property Variation for function MOVE LIQUID

soundAcoustic Cavitation

Acoustic VibrationsArchimedes’ Principle

volume

temperature

BoilingEvaporation

Capillary Condensation

Capillary Evaporation

Capillary Pressure

porosity

Ferromagnetism

Magnetostriction

weightGravity

shapeFunnel Effect

Ellipse

Osmosis

Super Thermal Conductivity

Surface Tensionsurface

Thermocapillary Effect

Thermomechanical EffectThermal ExpansionSpiral

ResonanceShock Wave

pulsation

Wetting

Electrophoresis

Ultrasonic Capillary Effect

Ultrasonic Vibrations

Use of foam

Absorption

pressureBernoulli’s Theorem

Brush Constructions

Coanda EffectCondensation

Dessication

field

Electrocapillary Effect

Electrostatic InductionElectrolysis

Electroosmosis

Ionic Exchange Inertia

Jet Flow

Lorentz Force

Pascal LawPump

Superfluidity

Forced Oscillations



The Job of “Cleaning Clothes at Home”


“Solutions”


OBJECTIVE: To sell more washing powder

OBJECTIVE: To sell more ‘cleaned clothes’


Working Backwards from Perfect

IdealInnovation

1… 2… 3…. n.…Generation

CurrentSituation

Function achievedwithout resource

Intermediatesolutions

….CurrentDesign

Clothes that cleanthemselves

Cleaningwithout external agent

Re-usablewashing method

Detergent and Washing Machine


Desorption Acoustic cavitation Acoustic vibration Cavitation Jet erosion Electro-erosion Electron impact desorption Laser evaporation Ion beam Redox reactions Hydrodynamic cavitation Laser gettering Longitudinal ultrasonic oscillation Ultrasonics Friction Cryolysis Photo-oxidation Optohydraulic effect Electrical explosion Thermo-destruction Dissolution Electro-rheological effect Brushes Electrolysis

Classification of Effects by FUNCTION

CLEAN


Function: CLEANS LIQUID


"Wash with Ultrasonic Waves and Electrolysis" washing machine. By combining Electrolyzed Water's dirt dissolving and bacteria-removing properties with the cleansing power of Ultrasonic Wave technology SANYO has brought to realization the World's first "Zero-Detergent course" washing machine.

http://www.designboom.com/weblog/read.php?CATEGORY_PK=&TOPIC_PK=27


Where do Ideas Come From?Nature

Nature

T

Team

Individual

Industry

Outside Industry

TeamIndustry

Outside Industry


Biomimicry (a.k.a. Biomimetics)

• Nature runs on sunlight• Nature uses only the energy it needs• Nature fits form to function• Nature recycles everything• Nature rewards cooperation• Nature banks on diversity• Nature demands local expertise• Nature curbs excesses from within• Nature taps the power of limits

Biomimicry is the science that studies nature’s models and then imitates or takes inspiration from these designs and processes to solve human problems.


Why Learn from Nature?

• If you put the history of the planet on a calendar year, bacteria arrived in March. Other species followed. The human species came at 11:45 pm on the last day of the year. Therefore, other species have been evolving and doing “R&D” a lot longer than we have; let’s learn from them.

• Nature has experience from 3.8 billion years of R&D generating 10-100 million survivors of well adapted solutions.

• These are extremely well matched to the types of problems we have and need to solve.


How does Nature Create Materials

• In nature, designs are organic, they are very small (only as big as they need to be to fit the function). Human designs are very geometric and our inventions are very brittle, stiff and most of them depend on wheels for mobility.

• Nature manufactures its materials under life-friendly conditions -- in water, at room temperature, without harsh chemicals or high pressures

High TemperatureHigh PressureChemical Treatment Process


Kevlar vs Spider Webs

VS


Cricket Inspired Speakers

Imagine making high-end audio speakers based on a cricket that uses its burrow to amplify sound. New Kilpsch speakers are created by studying how Egyptian mole crickets amplify sounds


Termite Inspired Building

A termite mound can seem eerily like a skyscraper, especially when you consider the mount’s efficient regulation of air flow, temperature and humidity.


Solving World’ Water Problem

Namibian Beetle

Pill Bug


Tardigrades and Vaccines

• There are serious issues with shipping worldwide due to breakdown of refrigeration.

• Tardigrades can deal with extreme dehydration, vacuum and UV radiation

Researchers from University in Sweden shipped two species of tardigrades aboard a 2007 European Space Agency mission that reached160 miles up in low orbit. Some of the water bears were exposed to the vacuum of space only, while others were exposed to vacuum and ultraviolet radiation. Researchers reported that the tardigrades survived vacuum-only conditions quite well.


Natured Inspired Business Models

• The Land Institute is studying prairies as a model for an agriculture that features edible, perennial polycultures and that would sustain, rather than strain, the land

• Various researchers in Industrial Ecology are looking for ways to apply nature's lessons of economy, efficiency, cooperation, and rootedness to the marketplace.


5

Burn Your Ladder


VIDEO


Contact InformationDr. Phil Samuel

[email protected](303)-827-0010www.bmgi.com

“The Stone Age didn't end because they ran out of stones…”

- Sheikh Yamani


If one does not know to which port one is sailing, no wind is favorable.

- Lucius Annaeus Seneca

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