innovation 101 - ideas for entrepreneurial thinkers
DESCRIPTION
Many professionals and entrepreneurs fail to innovate despite being highly creative. Most of the time these people have great vision, compelling ideas, and an abundance of energy for launching new opportunities. However, creativity and ideation are not equal to innovation. True innovation usually fails to occur because people attempt to create a new idea within the limits of their current information and experience. The solution is to work with strategic frameworks that offer challenging questions, introduce new data, and apply a methodology that synthesizes the innovation process into "bullet-proof" actionable activities. The following work-through is a mini-exercise in starting to use strategic frameworks for creating informed innovation. Three (3) of the models for Blue Ocean Strategy have been modified for those who want to apply slightly broader business overviews that address a few more business challenges that are part of a wholistic innovation process. Innovation 101 - Ideas for Entrepreneurial Thinkers is just a starting point. There are a wide variety of approaches for achieving innovation; the objective of this framework is to assist a beginner with putting their foot in the water of challenging topics that can take years to master. Please feel free to leave your comments on this brief work-through and share your own innovation exercise in the comment section below.TRANSCRIPT
Strategic
Innovation
101
A Hybrid Application ofBlue Ocean StrategyJanuary 22, 2011
Today’s Agenda
Competitive Landscape
Four Actions Framework
Going to Market
Taking S.M.A.R.T. Action
Content Sources: Blue Ocean Strategy W. Chan Kim and Renee MauborgneFrameworks – http://slidesha.re/fN2z8R Case studies – http://www.blueoceanstrategy.com
Making it Work for You
Suggested Tips
1. Have fun
2. Use all time to keep
working
3. Go with first thoughts
3. Don’t over analyze
4. No wrong ideas
5. Be open to others
6. Get to first draft
Making it Work for You
Work Flow
1. Presentation of framework
2. 7’sh minutes personal
work
3. 15 minutes group
discussion
3. 20 minutes room
discussion
Take any item on your table – redefine what it could be
Ice Breaker
A pen could be
- A hair bun holder- A measuring tool- A window prop- A game item- A part of art work- Something to chew on- A storage unit- A weapon- Litter- Learning instrument
Competitive
Landscape
Products or services that have different forms but offer the same functionality or core utility are often substitutes for each other. Take the example of Intuit’s Quicken. To sort out their personal finances, people can buy and install a financial software package, hire a CPA, or simply use pencil and paper. The software, the CPA, and the pencil are largely substitutes for each other. They have very different forms but serve the same function: helping people manage their financial affairs.
Instead of benchmarking the competition Intuit created a blue ocean by looking to the pencil as the chief alternative to personal financial software to develop Quicken software. Intuit focused on bringing out both the decisive advantages that the computer had over the pencil – speed and accuracy; and the decisive advantages that the pencil had over computers – simplicity of use and low price - and eliminated or reduced everything else.
With Quicken’s user-friendly interface resembling the familiar chequebook, it was faster and more accurate than the pencil, yet almost just as simple to use. The program eliminated the accounting jargon and the sophisticated features traditional financial software offered, offering only the few basic functions that most customers use. Moreover, simplifying the software cut costs. Quicken retailed at about $90, a 70% price drop. Neither the pencil nor other software packages could compete.
Quicken – Industry Innovation
The goal of a competitive landscape map is to help you step out of how you see your business and look at what your competitors are doing that could be stifling your success.
Competitive Landscape
Industry Competing Factors
Demand
Saturation
Price
Features
Distribution
Service
Maturity
Advertising Spend
Sales Force
Database
Overheads
1.
Weighting
1. Less/Low
2. Same/Median
3. More/High
3.
A. 1st Competitor
B. 2nd Competitor
C. 3rd Competitor
D. You
Competitors
2.Identify where you are clearly different.
4.
Your Uniqueness
Competitive LandscapeIn
dust
ry C
om
peti
ng F
act
ors
Demand
Saturation
Price
Features
Distribution
Service
Maturity
Advertising Spend
Sales Force
Database
Overheads
A. __________________
B. __________________
C. __________________
D. You
Competitors
Less /Low
More /High
Same /Median
Weighting
YourUniqueness?
_________________________
_________________________
_________________________
_________________________
Value
Innovation
Costs
Buyer Value
Value Innovation
Value innovation is created in the region where a company’s actions favorably affect both its cost structure and its value proposition to buyers.
Cost savings are made by eliminating and reducing the factors an industry competes on. Buyer value is lifted by raising and creating elements the industry has never offered.
Over time, costs are reduced further as scale economies kick in due to the high sales volumes that superior value generates.
Value Innovation
At the heart of QB House’s blue ocean strategy is a shift in the Asian barbershop industry from an emotional industry to a highly functional one. In Japan the time it takes to get a man’s haircut hovers around one hour. Why? Numerous hot towels are applied, shoulders are rubbed and massaged, customers are served tea and coffee, and the barber follows a ritual in cutting hair, including special hair and skin treatments such as blow drying and shaving. The result is that the actual time spent cutting hair is a fraction of the total time. The price of this haircutting process is $27 to $45.
So QB House stripped away the emotional service elements of hot towels, shoulder rubs, and tea and coffee. It also dramatically reduced special hair treatments and focused mainly on basic cuts. QB House then went one step further, eliminating the traditional time-consuming wash-and-dry practice by creating the “air wash” system—an overhead hose that is pulled down to “vacuum” every cut-off hair. These changes reduced the haircutting time from one hour to ten minutes.
QB House was able to reduce the price of a haircut to $9 while raising the hourly revenue earned per barber nearly 50 percent, with lower staff costs and less required retail space per barber. QB House created this “no-nonsense” haircutting service with improved hygiene.
QB Hair Cutting – Service Innovation
The four actions framework offers a technique that breaks the trade-off between differentiation and low cost and to create a new value curve.
This framework provides four immediate benefits:
• it pushes them to simultaneously pursue differentiation and low costs
• identifies companies who are only raising and creating thereby raising costs
• transitions from being theory into a tool for creating true industry innovation
• and it drives companies to scrutinize what the industry competes on
ReduceWhich factors should
be reduced well below industry standards?
CreateWhich should be
created that the was never offered?
EliminateWhat does the
industry takes for- granted that should be
eliminated?
Four Actions Framework
A New Value Curve
RaiseWhich factors should be raised well above
the industry’s standard?
Reduce
Eliminate
Create
Raise
Which factors should be reduced well below
industry standards?
Which should be created that the was
never offered?
Which factors should be raised well above
the industry’s standard?
What does the industry takes for-
granted that should be eliminated?
Four Actions Framework – current offer
1.________________________________________________________________
2.________________________________________________________________
3.________________________________________________________________
4.________________________________________________________________
What can change?
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
Is it really innovation?
Take 7 minutes and create a fictitious product or software that could be
used in the office to save time at work. Give it a name.
Select 1 person to keep notes and present
7 minutes to create
3 minutes to present per group
Go!
Brain Liberator
Going
to
Market
Many industries afford similar opportunities to create blue oceans. By questioning conventional definitions of who can and should be the target buyer, companies can often see fundamentally new ways to unlock value.
Consider how traditional copy machine manufacturers targeted office purchasing managers. The purchasing manager wanted machines that were large, durable, fast, and required minimal maintenance. Defying the industry logic, Canon, the Japanese company, created the small desktop copier industry by shifting the target customer of the copier industry from corporate purchasers to users.
With their small, easy-to-use desktop printers Canon created new market space by focusing on the key competitive factors that the mass of noncustomers, the secretaries that used copiers wanted.
Canon Copier – Goods Innovation
3. Buyer Utility
What are the exceptional differences in your business idea?
4. Pricing - Price / Cost
Is your price easily accessible to the mass of buyers? What is your optimal volume of business to minimize cost?
5. Delivery
How can you get your offer to clients in a way that is different than your
competitors and delivers more value?
1. Adoption
What prevents the customer from seeing the value of your idea?
Going to Market
2. Advertising / Sales
How will you uniquely make your prospects aware of your offer?
When bringing an innovative concept into reality it is ideal to look at your concept from the customer’s perspective. At the same time we want to keep in mind:
• Innovative ideas need to transition into low effort, low cost, and easy to reproduce tangible outputs in order to achieve high profit margin success.
• The test of great innovation is not just how original the concept is but how effectively it can be brought into reality.
• Great innovation doesn’t shy away from rigorous review, in fact, true innovation shines brightest when it is under pressure.
Always ask yourself -
how would your target customer answer these questions?
Going to MarketCustomer’s view Out-of-the-box rethink?
3. Buyer Utility
What are the exceptional differences in your business idea?
4. Pricing - Price / Cost
Is your price easily accessible to the mass of buyers? What is your optimal volume of business to minimize cost?
5. Delivery
How can you get your offer to clients in a way that is different than your
competitors and delivers more value?
1. Adoption
What prevents the customer from seeing the value of your idea?
2. Advertising / Sales
How will you uniquely make your prospects aware of your offer?
Taking
S.M.A.R.T.
Action
Taking Action
Specific – don’t over-generalize about the outcome, be accountable
Measurable – stands up to anyone’s ability to review outcome
Achievable – do you have the resources, time, expertise
Realistic – keep it on par with past stretch goals
Timebound – have a date it has to be accomplished by
Taking Action
Product Development
In 6 months I will have completed the prototype and taken it to 20 qualified people to critique.
Prospect Identification
In 45 days I will have identified 50 potential customers and booked 5 demonstration meetings.
Revenue and Profit Goals
In 9 months we will have achieved $150,000 in closed contracts with an operating margin of 65%.
Taking Action
Specific Measurable Achievable Realistic Time-bound
1. Goal
2. Goal
3. Goal
How was
your
leap today?
Competitive LandscapeIn
dust
ry C
om
peti
ng F
act
ors
Demand
Saturation
Price
Features
Distribution
Service
Maturity
Advertising Spend
Sales Force
Database
Overheads
A. ____________________________
B. ____________________________
C. ____________________________
D. You
Competitors
Less /Low
More /High
Same /Median
Weighting
Your Uniqueness?
_______________________________
_______________________________
_______________________________
_______________________________
© Andrew Ballenthin [email protected]
1. Reduce
2. Eliminate
3. Create
4. Raise
Which factors should be reduced well below industry standards?
Which should be created that the was never offered?
Which factors should be raised well above the industry’s standard?
What does the industry takes for- granted that should be eliminated?
1._________________________________________________________________________
2._________________________________________________________________________
3._________________________________________________________________________
4._________________________________________________________________________
___________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
What can change? Is it really innovation?
Four Actions Framework
© Andrew Ballenthin [email protected]
Customer’s view
3. Buyer UtilityWhat are the exceptional differences in your idea?
4. Pricing - Price / CostIs your price appealing to the greatest mass of buyers?
5. DeliveryHow can you give your customers more value in the transaction than competitors?
1. AdoptionWhat prevents customers fromseeing the value of your idea?
2. Advertising / SalesHow will you uniquely make your prospects aware of your offer?
Going to MarketOut of the box rethink?
S.M.A.R.T.
Specific Measurable Achievable Realistic Time-bound
1. Goal
2. Goal
3. Goal
© Andrew Ballenthin [email protected]