april 9, 2015 innovation everywhere nacfam annual conference stephen ezell, director, global...
TRANSCRIPT
April 9, 2015
Innovation Everywhere
NACFAM Annual Conference
Stephen Ezell, Director, Global Innovation Policy
Information Technology and Innovation Foundation
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ITIF is a Washington, D.C.-based think tank that seeks to design novel innovation policies and examine how innovation will create new opportunities to boost economic growth and improve quality of life. We focus on:
Innovation “verticals”: energy, life sciences, telecom, manufacturing, and Internet and IT transformation
Innovation “horizontals”: trade, tax, talent, and tech policy
“Innovation economics” as an alternative to mainstream economics
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Innovation—The improvement of existing or the creation of entirely new products, processes, or services. (The Economist)
Innovation—The transformation of existing conditions into preferred ones. (John Kao)
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What is Innovation?
Why didn’t Western Union buy the telephone?
Why didn’t Kodak commercialize the digital camera?
Why didn’t IBM keep the operating system?
Why didn’t Microsoft create the browser?
Why didn’t AT&T create AOL?
Why didn’t Sears create Wal-Mart?
Why didn’t American Airlines create Southwest?
Why didn’t Citibank create Paypal?
It takes effort to stand in the future and see new possibilities.
Just because you aren’t willing to disrupt your own business, doesn’t mean somebody isn’t willing to do it for you.
Many companies don’t sense the need to innovate until it’s too late.
Innovation Isn’t Easy…Some Puzzles to Ponder…
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Competitive Separation
Create separation from your competitive set
Do something that customers value highly and that your competitors either cannot or will not do
Thereby gaining bargaining power to earn revenues and margins
*Competitor 1
*You
*
Competitive Set
Competitor 2* Competitor 3*© 2006, TCG Advisors LLC
Used with permission
Source: Jon Pittman, Director of Corporate Strategy, Autodesk
Impossible Impractical Possible Expected Required
Innovation Continuum
Source: Jon Pittman, Director of Corporate Strategy, Autodesk
Impossible Impractical Expected RequiredPossible
BreakthroughInnovation
Impossible Impractical Expected RequiredPossible
SustainingInnovation
BreakthroughInnovation
New Solutions
Unexpected Surprises
Experimentation
Leveraging Trends
SustainingInnovation
Constant Improvement
Reliability
Scale
Responding to Trends
A Balanced Allocation of Innovation Resources/Efforts
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Expected Returns from Innovation Investments
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The Ten Types of Innovation
How the enterprise makes money
How you create your offerings
How your products and services complement each other
How you deepen relationships
How you connect your offerings with customers and users
How you convey your offerings and business
How you enable optimal experiences
How you differentiate your offerings: features,performance, functionality
How you join with others to create value
How you support and structure your business
Source: Larry Keeley et al., The Ten Types of Innovation: The Discipline of Building Breakthroughs (April 2013)
Innovation in PracticeUsing Innovation Types Strategically
Platform-Ledextending
capabilities and offerings to deliver
value
Business Model-Ledconfiguring partnerships, revenue models, and assets to deliver value
Customer Experience-Led
providing and engaging customers in optimal
experiences to deliver value
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Volume of Innovation Efforts
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Volume of Innovation Efforts
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3–4 Types of Innovation59 companies
5+ Types of Innovation45 companies
S&P 500
1–2 Types of Innovation34 companies
5-Year Indexed Stock Price Returns of the Top Innovators vs. S&P 500
2007 2008 2009 2010 2011
Sto
ck P
rice
(in
dex
ed t
o 1
00)
Source: Larry Keeley et al., The Ten Types of Innovation: The Discipline of Building Breakthroughs (April 2013)
Integrating more types of innovation delivers superior financial returns
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Quiz: Is This a Product or a Service?
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Quiz: Which Has Superior Market Share?
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Perhaps some comparative data will help you decide.
Cleans best
Rinses cleanest
Best fragrance
Cost-efficient bottle
Lowest cost/ounce
Best shelf placement
Highest ad budget
Market share? ?
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Get Out Into the Field With Your Customers Macro
Micro
ExplicitLatent
videoethnography
Empathic and
observational research
marketresearch
focusgroups
budget
distribution for
most firms
Adapted from Alan South, IDEO London
key area for
customer
experience
innovation
customersatisfaction
surveys
EthnographyPsychographyAnthropology
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Why It Matters – The Smile Curve
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Twitter: @sjezell
Facebook: facebook.com/innovationpolicy
Blog: www.innovationpolicy.org
Website: www.itif.org
Follow ITIF:
Thank YouStephen [email protected]