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A century of systematic innovation: From Edison to Lafley
1947 -1847 - 1931
Vinay Dabholkar, Ph.D.
Catalign Innovation Consulting
04-Mar-2010
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Let’s get on the same page• What is innovation?• Why innovate?
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A working definition of innovation
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Idea Implementation
Definition-1: I2P (I-squared-P)
Profit
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Definition-2: I2P (I-squared-P)
IdeaImplementation in a System
Performance improvement
System can be organization, village, society, college
Performance can be revenue, wealth, health, education, harmony
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Why innovate?
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Future-proofing Make work interesting
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Innovate
Produce &Sell
Our Focus
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Can we become more innovative systematically?
Without any assumptions regarding:
• Size – 1 to 1 Lakh
• Sector – Low tech to high-tech
• Culture – Google to Government
• Leadership – With/without Steve Jobs/Ratan Tata
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Has anything of this sort happened before?
Dr. Joseph Juran, Architect of Quality 1904 - 2008
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Can we do to innovation, what TQM did to Quality?
- Gary Hamel, Innovation to the Core, 2007
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We are all set on our “systematic innovation” journey
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1847 - 1931
Let’s start with Thomas Edison
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What did Edison nickname his first 2 kids?
“Dot” and “Dash”
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What would he nickname them today?
“Dot-com” and “Dash-board”
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Edison’s dashboard
Hit a maiden century in 1882
A bad patch
Second inning
No of patents
Total score: 1093 over 61 years Batting avg: 1 patent / 20 days
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Light bulb
Phonograph
Movie camera
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Where is innovation here? I2P
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Anything that won't sell, I don't want to invent.
Edison was an innovator
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Edison’s business empire
Automobile Edison General Electric Cement
Film studio Storage battery Phonograph
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Edison’s business legacy
Edison General Electric National Phonograph
Thomas A Edison Inc
18921985
1896
1911
McGraw-Edison1957
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What was Edison’s greatest innovation?
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Method of innovation
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“Invention Factory” at Menlo Park (1876)
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Method of innovation: Electricity story
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1878
• Edison watched miners drilling for ore manually
• Prof. Barker said – sub-divide light like gas system
• Saw a generator system – with 8 lamps in series
• Stops phonograph work, re-starts electricity work
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1878
• Edison & co study established coal gas system
• Establish price goals to match the gas system
• Report injuries and deaths due to gas
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Arch lamps of 1870sIllumination: 2000 candle power
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1878
Top 2 goals (Totally 8 goals)
1. The lamp must give moderate illumination
2. Each lamp can be lighted separately
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1878 1879
• Assigns filament experiments to Upton & Batchelor
• Upton & Batchelor perform several thousand experiments
• Successful filament experiment with carbon (Oct 1879)
• Upton & Batchelor get stocks and portion of royalty
“gang” members
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1878 1879
Demo at Menlo ParkDec 31, 1879
We will make electricity so cheap that
only rich will burn candle
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1878 1879
• Commercial production begins
• Cost of each bulb: $1.10 and price $0.40
• Sale: Approx 20K to 30K bulbs
1880
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1878 1879 1880 1882
• More experiments
• Cost down to: $0.50 and price $0.40
• Loses more money than all previous years
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1878 1879 1880 1882
• More experiments
• Cost down to: $0.37 and price $0.40
• Starts making profit
1883
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1878 1879 1880 1882
• Introduces automation in production
• Cost down to: $0.22 and price $0.40
• Makes tons of money
• Sells his business (GE formed)
1883 1892
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What is Edison’s method of innovation?
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Commercialization MarketOpportunity Identification
SystematicExperimentation
CEO model
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Commercialization MarketOpportunity Identification
SystematicExperimentation
Idea FunnelManagement
Idea Funnel: CEO model
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Commercialization MarketOpportunity Identification
SystematicExperimentation
Idea FunnelManagement
CEO model: Edison Method
Need (miners)1
Risk (8 lamps)2
Know the known (gas system study)4
Establish goals & use-cases (8 goals)5
6 Experiment 7 Demo
3
Manage portfolio(drops phonograph)
8 Sell
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Edison’s method: 3 principles (UPX)
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Establish use-cases
Edison Principle #1
1. Letter writing, dictation
2. Books – speaking to blind
3. Teaching of elocution
4. Reproduction of music
5. Family record – last words
6. Music boxes and toys
7. Clocks announcing time
8. Language preservation
9. Explanations by teachers
10. Connect with telephone
- Phonograph use-cases written in 1878 before suspending work
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Manage a portfolio
Magnetic ore separation Electric railway
Secondary batteries Telegraph & telephones
Edison patents during 1880-1885
To have a great idea, have a lot of them.
As soon as I find that something I am investigating
does not lead to practical results, I drop it.
Edison Principle #2
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Experiment systematically: Fail early, fail often
I have not failed. I've just found 10,000 ways that won't work.
Edison Principle #3
Great ideas originate in the muscles
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Organize for rapid experimentation
To invent, you need a good imagination and a pile of junk.
eight thousand kinds of chemicals, every kind of screw made, every size of needle, every kind of cord or wire, hair of humans, horses, hogs, cows, rabbits, goats, minx, camels ...silk in every texture, cocoons, various kinds of hoofs, shark's teeth, deer horns, tortoise shell ...cork, resin, varnish and oil, ostrich feathers, a peacock's tail, jet, amber, rubber, all ores ...
-“a pile of junk” in Edison’s laboratory
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Commercialization MarketOpportunity Identification
SystematicExperimentation
Idea FunnelManagement
Edison Method
Need1
Risk2
Know the known4
Establish goals & use-cases5
6 Experiment 7 Demo
3 Manage portfolio
8 Sell
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StopStart Demo
Innovation is more like a marathonwith two experimentation loops
Idea-to-demo loop Demo-to-cash loop
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1947 -
Let’s fast forward to 21st century
A. G. Lafley, ex-CEO of P&G
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Why is AG interesting?
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We started from the premise that it is possible to
run an innovation program much the same way we
run a factory.
- AG, Game-Changer, 2008
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AG’s Dashboard
Revenue
2000 2009
$40 B $80 B
$B brands 10 23
$0.5B-1 brands 4 18
R&D as %Rev 4.5% 2.7%
Success rate 15% 50%
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Pringles Prints
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Why was the tech spec sent out ?
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For every 2 ideas that reach market,
1 should have a partner outside P&G
Innovation Goal
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How does P&G find these needs?
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P&G’s baby discovery center
Immersive research
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So, what has changed?
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1. Scope of innovation
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Types of
innovationsProcess
Product /Offering
Business
Model
Innovation is broader than patents & products
Customer
Experience
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2. Capacity of innovation
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Collaboration increases innovation capacity
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3. Efficiency of innovation
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Do the last experiment first
Lower your batting average
Finding killer issues early
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President’s fail-forward award
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Commercialization MarketOpportunity Identification
SystematicExperimentation
Idea FunnelManagement
Idea Funnel
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Commercialization MarketOpportunity Identification
SystematicExperimentation
Idea FunnelManagement
Idea Funnel
Scope 1
Capacity2
Efficiency3
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Innovation Factory Metric
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apacityC
E
O
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Do we have a “challenge book”?
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Toyota: 40 years, 20 million ideas
Year No of Suggestions Participation Adoption
suggestions per person Rate(%) Rate(%)
1951 789 0.1 8 23
1971 88,607 2.2 67 72
1986 2.6million 48 95 96
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Idea/person 5 6 4 4 4
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Invention Disclosures / Patents per person
Experiments / Prototypes per person
No of idea points per person
Additional capacity metric
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C
fficiencyE
O
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How fast do the ideas move?
Daily, weekly, monthly, yearly?
Rigor and rhythm of innovation review
Efficiency metric
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C
E
utputO
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Savings / idea 35K 24K
Output metric
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No of ideas implemented (yr)
% Revenue from new products / brands
Batting average (success rate)
Output metric
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Recap
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Innovation Engine
Opportunity
Identification
Experimentatio
n
Commercializatio
n
Use-cases
Portfolio
Experimentation
Invention Factory
Innovation scope
Immersion
Open idea funnel
100 year journey
Innovation Factory
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apacityC
fficiencyE
utputO
Innovation Factory Metric
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Innovation books
Blog: www.catalign.com
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Additional innovation books
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1875 1900 1925 1950 1975
Suggestion box
Edison’s Invention Laboratory
Brand innovation
LafleyInnovationFactoryDrucker
Reality show
VC industry
Kaizen
Ev RogersDiffusion of innovations
Gabriel TardeS-curve & ideaadoption
Ford Model-Tcontinuousimprovement
CorporateResearch Lab
Future Demands Dept
Margin of safety
15% Rule
SchumpeterCreative Destruction
Scheinculture change
A brief history of systematic innovation
TalebBlackSwanHeathMade
to stick
2000
ThomkeExperi-mentationMatters
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