Peter Merrill - Canada

Improvement and Innovation Understanding the difference

INLAC Forum May 2102

by Peter Merrillwww.petermerrill.com

Agenda

1. Introduction2. Culture3. Creativity4. Strategy5. Execution6. Path Forward

1. Introduction

Improvement and Innovationn “Big I” or “Small i” Innovation?q Challenge is to manage “Big I”

n Need a Processn Need Peoplen Need an Organization

n You must Manage q Processq Peopleq Organization

Managing for Improvement

Do you just want….n “Improvement”or do you want….n Improvement with Growth and Profit!

Innovative Improvement meansn No Competition,n Price is not an issue and son You have Growth and Profit

Innovation Creates Growth and Profit….n IBM CEO Survey

q Companies with fastest profit growthq ….have twice as much emphasis on Innovation

n Morgan Stanley showsq Companies with ‘Radical Innovations’q ….generate ten times more shareholder value

n Accenture Surveyq Companies who commercialize patents fastq ….outperformed the market by 1000% over a ten year period

n Proctor and Gamble – Open Market Innovation q 100 new products in two yearsq ….Share price doubled

n Apple from the launch of the I-Podq Share price from $10 to $140 in five years

Innovation creates Companies of High Value

n Apple, Google, Research in Motion, Intel

n Cirque de Soliel, Yellow Tail Shiraz

n Southwest Airlines, Boeing, Fedex

n Home Depot, IKEA, Tumi

n Kodak, Proctor and Gamble, 3M,

Innovation must beContinuous

n Apple, Google, Research in Motion, Intel

n Cirque de Soliel, Yellow Tail Shiraz

n Southwest Airlines, Boeing, Fedex

n Home Depot, IKEA, Tumi

n Kodak, Proctor and Gamble, 3M,

The Innovation Process

n Driver; tomorrows customern Customer does not yet exist n The Process is a ‘Cycle’ n Cycle changes mode n “Loose” and “Tight”

Find the Opportunity

Connect to the Solution

Make it User Friendly

Get toMarket

Select the Solution

The Innovation Cycle – The Players

n generating Opportunitiesneeds ‘Creators’

n linking opportunities to Solutions needs ‘Connectors’

n Decision Making needs Strategists

n making ideas Practicalrequires ‘Developers’ and

n Getting to Market is the job of ‘Doers’

Creator Connecter

DeveloperDoer

StrategicPlanners

Your Role in the Process?

How will I make the best contribution to Innovation?

q generating ideas, q linking those ideas together, q turning ideas into practical solutions or q implementing solutions + getting things done?

1 I ‘Connect the Dots’ I get things done I like Possibilities I bring things ‘down to earth’

2 I need to understand I make things work Everything has a good and bad side

There has to be a right answer

3 Don’t tell me what to do

Give me facts not theory

I create choices I like to analyze data

4 A Concept must be sound

I like ‘energy’ Don’t fuss with details I like precision

5 I think things through

I take risks I like to hear about problems

I focus

6 I like the big picture I find a way that works I want to own the problem

I am thorough

7 I like to define the problem

I push for acceptance I find out the facts I Plan

TOTAL TOTAL TOTAL TOTAL

Creator, Connector, Developer, Doer?

Now pick your Badge

Creator Connector

DeveloperDoer

The Innovation Cycle – A Paradox

n Driver; tomorrows customern Customer does not yet exist n The Process is a Cycle n Cycle changes mode n “Loose” and “Tight”

Loose

Tight

Find the Opportunity

Connect to the Solution

Make it User Friendly

Get toMarket

Select the Solution

Concerns and Opportunities

n What is your primary concern about your organizations ability to Innovate?

2. An Innovative Culture

Communities of Innovation Release Knowledge

n ‘Explicit’ (documented) knowledge is less than 20% of our knowledge.

n ‘Innovative Behaviours’ release Tacit and Subconscious knowledge

Explicit

Tacit

Subconscious

Release Knowledge through New BehavioursYou need to….

q Exploreq Observeq Interactq Collaborateq Experimentq Embrace Failure

Exploringn Victim of Time Management’ - Best ideas not forced

n Step out of the box - Archimedes ‘Eureka’

n Go places, meet people, ‘Network’ face to face.

Observingn Always be learning. - Have an open mind.

n Learn about people, what ‘bugs’ people?

n Pocket Note book…keep a diary

Interactingn Interesting people.

n Release collective subconscious,

n Visualizationq Relax, Feel Good, You look interesting q You will draw someone to you

Collaboratingn Innovation Community - People share passion

n Read articles or ideas

n Exchange knowledge - Triggers ideas for you.

Experimentingn Use Storyboards and Video n Involve business partners - show multiple ideasn Be prepared to fail; - ‘Post It’ notes - WD40

Embracing Failuren People distance from failure…. n We avoid “Lessons Learned” –

q ‘we ran out of time’ q ‘people got moved’

n Big source of knowledge! - Like customer complaints!

Even more Knowledge ‘Outside the Box’n Offer Knowledge to othersn Renaissance - Textiles in Tuscanyn ‘Network’ Concept

n Network Organizerq Recruit Participantsq Build Trustq Loose Operation – Tight Action Points

3. The Creativity Challenge

Creativity

n Is the ability to produce new ideas through q imagination and q unconventional approaches.

n Occurs when q people have freedom to think q interact with new stimuli.

n Opportunity removed from most of us n Result of the daily work we do.

Finding the ‘Opportunity’ …. ‘Creators’ n Creators find an unsatisfied need q ‘Loose’ mode allows subconscious ideas

n Understand the customers mind q Customer needs…not yours q Customer doesn’t recognize need

n Don’t q tell them you have a really cool idea q or ask ‘what new product are you looking for’ ?

n Askq What are you having trouble getting done?

Finding the ‘Need’

n What Causes your Customer to Waste Time?n What causes your customer their Biggest

Hassles?n What does your customer have trouble

getting done? n When does your Customer have Unclear

Requirements?

A Problem is an Opportunity

n IKEA –q aggressive sales staff and a confusion of choices.

n Southwest Airlines –q bad meals and leg room for 1st Class.

n Cirque de Soleil –q 3 Ring confusion and concern about Animals.

n Yellow Tail Shiraz; q ‘Antique’ Labels and Complex Flavour

n You find the ‘Customers Pain’

Find ‘Green Field’ The Market of the Future

The Innovator looks for the market with no competition.

§ Cirque de Soleil found a niche in the Theatre market,

§ Yellow Tail Shiraz in the Party market

§ Fedex created a whole new ‘courier’ market

§ Intuit found Small Business with its ‘Quicken’ software.

§ Swatch moved from jewelry to fun fashion

What Activities Cause My Customer’s Biggest Hassles?Which are the Activities Where my Customer gets Dumped On?

q ..............................................................

q ..............................................................

q ..............................................................

q ..............................................................

Which Activities Cause my Customer to Waste Time?What are the Activities where my Customer does not know Requirements?

q ..............................................................

q ..............................................................

q ..............................................................

q ..............................................................

Innovation Process AssessmentCreating is Finding the Opportunity Strongly

AgreeAgree Disagree Strongly

Disagree

1 Our people frequently come up with good Ideas on their own

2 We find out what problems our customers experience

3 We interact with outside people to find new opportunities

4 We explore outside the organization for market opportunities

5 The work environment makes it easy to put forward new ideas

x4 x3 x2 x1

Grand Total x5 = %

The Innovation Cycle

Find the Opportunity

Connect to the Solution

Make it User Friendly

Get to Market

Select the Solution

Connecting to the Solution

n Define problem in process terms q IKEA – aggressive staff, confusing choices q Airlines – Bad Meals, Legroom

n Connect with other industries q Henry Ford’s idea for mass production

n ‘Breakthrough’ means radical solutionsn Epiphanies – exciting! - Archimedesn Willingness to change, requires ‘loose mode’

Find Radical Solutions… ‘Connectors’

n Solutions do not come from a single genius n No sudden insight. –q Build on collective experience.q Need an ‘Open Network’….

n Sacrifice the Sacred…. q Attributes of today’s Product that block the solutionq Somebody will have once said….‘you can’t do that’!

n Try Alternatives - “One is not enough” n Find Lots of Ideas

You are more creative than you think!

1. On your list four uses for a man’s sock2. Share your ideas with your neighbour

q Add any new ideas you think of3. Share your ideas with your other neighbour

q Add any new ideas you think of4. Share your list back with your first neighbour

q Add any new ideas you think of5. Total the number of ideas you have

You are more creative than you think!

Think of four uses for a man’s sock!1. .............................................. 2. .............................................. 3. .............................................. 4. ..............................................

Innovation Process AssessmentConnecting is finding the solution Strongly

AgreeAgree Disagree Strongly

Disagree

1 We work with Clients to find solutions

2 We find markets where there is no competition

3 We use a defined solutioning process for our opportunities

4 We find solutions by going outside the organization

5 We find the best solution

x4 x3 x2 x1

Grand Total x5 = %

4. Strategic Choices

The Innovation Cycle

Find the Opportunity

Connect to the Solution

Make it User Friendly

Get to Market

Select the Solution

‘Selecting Solutions’ - Major Risks

n Collect Risk Data prior to Strategic Planningn First major risk - failure to assess riskn Pursue too many options - “under resource”.n Unusual idea (no merit) gains attention n Kill the best ideas with aggressive ROI. n Assess risk internally and not externally

External risk; Partners

n New product or service - new supplier q probably not a conventional source.

n Assess supplier. q Assess Management (QMS) not just product (QA). q Evaluate Design and Development process.

n Better to pursue a new product with q high internal risk that you manage and mitigate

n Encourage ‘risk taking’ and be prepared to fail.q Address Risk .v. ROI – Time – Radical Nature

Exercise on Partner Risk

n Four new suppliers

n three at 90% probability of deliveringn fourth at 40% probability of delivering

n Probability of success; ………………………?%

n Would you accept this as “internal” risk without mitigation…………Yes/No.

High R.O.I.– Highly Radical –Low Risk …..The Perfect World

The Perfect WorldHigh R.O.I.

Highly RadicalLow Risk

RiskRadical

R.O.I.

Low

High

High

High

Aim here

Connect and Develop; P&G Strategy

n Goal; 50% of Innovation from Outsiden R & D Productivity; 60% Increasen Innovation Success; Doubledn R&D Cost as % of Salesq Down 4.8% to 3.4%

n 100 New Products in Two Yearsn Share Price Doubled

Innovation Process AssessmentStrategic Planning

is the Tipping Point StronglyAgree

Agree Disagree StronglyDisagree

1 We do not go for short term ROI

2 We assess external risk

3 We assess internal risk

4 We have sufficient data to make decisions

5 We provide resources to support our decisions

x4 x3 x2 x1

Grand Total x5 = %

5. Executing the Strategy

The Shift in Team Content and Culture

Find the Opportunity

Connect to the Solution

Make it User Friendly

Get toMarket

Creators

Connectors

DevelopersDoers

The Innovation Cycle

Find the Opportunity

Connect to the Solution

Make it User Friendly

Get to Market

Select the Solution

The Game Changes.n Switch from ‘loose’ to ‘tight’. n Narrow focus, n Move with speed n Leadership monitor change in behaviourn Review Meetings Monthly or Quarterlyn Core group of strategic planners.n Six to eight peopleq Include Customers, Suppliers, Partners

n ROI and Risk of the portfolio is checked.

Development

n For 3000 ideas only 1 makes itn Development Mission;q make solution “user friendly”

n Fast and Not secretiveq Discipline becomes vital. q ‘Thinkers’ - go wrong here by staying ‘loose’

n 1% inspiration 99% perspiration’.

Make it User Friendly; ‘Behaviour Change’

n Sellersq Overestimate perceived benefit by factor of 3

n Buyers q Overestimate existing perceived benefit 3 times

n Barrier to new Product 3 x 3 = 9n To overcome this Barrier...n Need a 10 x increase in Perceived Valuen ...an ‘exponential’ increase

Behavior Change and InnovationSure Failures

Dvorak Keyboard

Long Hauls

Cell phone

Easy Sells

Angled Toothbrush

BehaviourChange

Product Change

LOW

HIGH

HIGH

Success!

Big Product ChangeSmall Behaviour Change

Q U E S T

Innovation Process AssessmentDeveloping is making the solution work Strongly

AgreeAgree Disagree Strongly

Disagree

1 We fund novel projects

2 We are willing to take risks with new ideas

3 We are able to get people who can work on new projects

4 We closely monitor project progress

5 Our Projects finish on time

x4 x3 x2 x1

Grand Total x5 = %

The Innovation Cycle

Find the Opportunity

Connect to the Solution

Make it User Friendly

Get to Market

Select the Solution

Doer

n Make it Happen, Get it donen Project Manager, Sales, Productionn Learn from Practical Experiencen Closed delivery networkn Doers make it happen

n Doers and Connectors are opposites

n For Success your need a ‘Mix’ of People

Delivering the Solution

n Primarily the Doers n Best ideas don’t always make itn Involve Operations and Sales in the earlier stages

q Advance notice is their biggest advantage. q They now have to ‘run for the line’.

n Found your obstacles at the ‘Tipping Point’ q During risk assessment.

n Found your ‘Early Adopters’ q when looking for “Opportunities”.

Manage External Risk; Delivery

n Adoption Cycles –q Key to showing start of revenue

n Distributor or Subcontactorq decision time cycle? q This impacts the time to market.

n data more difficult to obtain n “heads up” for your competition.n partner with market skills if in a new market?

Value Proposition

n Switch from ‘Features’ to ‘Benefits’n 2 – 3 key Benefits - Address customers pain

n You can go to regular gas stations q (concerns like buying propane).

n Your existing software will not be impacted q (new software damaging existing software).

n You can store the mop easily q (user thinking in the context of existing equipment).

Innovation Process AssessmentDoing it is getting the product to market Strongly

AgreeAgree Disagree Strongly

Disagree

1 We get new products to market quickly

2 We get the ROI we want on new products

3 Few competitors are able to copy our products

4 We penetrate all market channels and regions with new products

5 We withdraw products that fail

x4 x3 x2 x1

Grand Total x5 = %

The Innovation Cycle

Find the Opportunity

Connect to the Solution

Make it User Friendly

Get to Market

Select the Solution

Execution of Innovation Strategy

6. The Path Forward

Align Team and Process

n generating Opportunities needs ‘Creators’

n linking opportunities to Solutions needs ‘Connectors’

n making ideas Practicalrequires ‘Developers’ and

n Getting to Market is the job of ‘Doers’

Creator Connecter

DeveloperDoer

Creativity

Speed

Two Team Types and Two Cultures

Find the Opportunity

Connect to the Solution

Make it User Friendly

Get toMarket

Creators

Connectors

DevelopersDoers

Creativity Execution

"I" Team PlanOpportunityIdentify Market ShiftsDevelop NetworkIdentify Customer PainPotential MarketsConnect to SolutionDefine the ProblemAdjust the NetworkExplore and SolutionSpecify RisksTipping PointSelect SolutionsChange Team MembershipDevelopmentClose NetworkEngage Customers/SuppliersEngage Production/SalesPilot TestingExecuteValue PropositionPilot OperationsPilot MarketFeedback to Development

1 I ‘Connect the Dots’ 1 I get things done 4 I like Possibilities 2 I bring things ‘down to earth’

3

2 I need to understand

2 I make things work 3 Everything has a good and bad side

4 There has to be a right answer

1

3 Don’t tell me what to do

4 Give me facts not theory

2 I create choices 3 I like to analyze data 1

4 A Concept must be sound

2 I like ‘energy’ 1 Don’t fuss with details

4 I like precision 3

5 I think things through

3 I take risks 2 I like to hear about problems

1 I focus 4

6 I like the big picture 2 I find a way that works 3 I want to own the problem

1 I am thorough 4

7 I like to define the problem

2 I push for acceptance 1 I find out the facts 3 I Plan 4

TOTALCONNECTOR

16 TOTALDOER

16 TOTALCREATOR

18 TOTALDEVELOPER

20

Individual Assessment

e-version at www.petermerrill.com/self-assessment

Have your colleagues complete this

The Innovative Future

n The Market has no Competition

n Price is not an Issue – You are Unique

n You have Growth and Profit and a….

n A High Value Company

n You have great Personal Achievement

n It is Exciting and Fulfilling!

The Path Forwardn Identify Individual Aptitudes

n Assess your Organization

n Find the Need

n Align Team and Process

n Execute a Project

n pm@ petermerrill.comn www.petermerrill.comn +1 905 319 8600

The Path Forward

n Identify Individual Aptitudes

n Find the Need

n Align Team and Process

n Execute a Project

n pm@petermerrill.comn www.petermerrill.com

“Innovation Generation” published by Quality Press

To purchase…

Go to home page of www.petermerrill.com

Click on tab“Innovation Generation”

Takes you to the book page in Quality Press

Annex

Innovation Process Assessment

Creating is Finding the Opportunity StronglyAgree

Agree Disagree StronglyDisagree

1 Our people frequently come up with good Ideas on their own

2 We find out what problems our customers experience

3 We interact with outside people to find new opportunities

4 We explore outside the organization for market opportunities

5 The work environment makes it easy to put forward new ideas

x4 x3 x2 x1

Grand Total x5 = %

Innovation Process Assessment

Connecting is finding the solution StronglyAgree

Agree Disagree StronglyDisagree

1 We work with Clients to find solutions

2 We find markets where there is no competition

3 We use a defined solutioning process for our opportunities

4 We find solutions by going outside the organization

5 We find the best solution

x4 x3 x2 x1

Grand Total x5 = %

Innovation Process AssessmentStrategic Planning

is the Tipping Point StronglyAgree

Agree Disagree StronglyDisagree

1 We do not go for short term ROI

2 We assess external risk

3 We assess internal risk

4 We have sufficient data to make decisions

5 We provide resources to support our decisions

x4 x3 x2 x1

Grand Total x5 = %

Innovation Process Assessment

Developing is making the solution work StronglyAgree

Agree Disagree StronglyDisagree

1 We fund novel projects

2 We are willing to take risks with new ideas

3 We are able to get people who can work on new projects

4 We closely monitor project progress

5 Our Projects finish on time

x4 x3 x2 x1

Grand Total x5 = %

Innovation Process Assessment

Doing it is getting the product to market StronglyAgree

Agree Disagree StronglyDisagree

1 We get new products to market quickly

2 We get the ROI we want on new products

3 Few competitors are able to copy our products

4 We penetrate all market channels and regions with new products

5 We withdraw products that fail

x4 x3 x2 x1

Grand Total x5 = %