innovation - what, why, who, types, metrics

InnovationWhat? Why? Who?

Types? Metrics? Case study

“The business has two and only these two basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs.”

~Peter Drucker

What is innovation?

For something to be called innovative, it has to be:1) New/different and 2) Have value

(commercialization)

Invention vs. Innovation

Hard science + social science

Why does it matter?

Do-nothing assumed cashStream (common thinking in big corporations, RIM Blackberry as latest example)

Do-nothing likely cash stream

Innovate cash stream

DCF & NPV

Types?

Incremental Radical (disruptive)

Types of innovation

Famous innovators

http://www.youtube.com/watch?v=fW8amMCVAJQ

How to create a movement as a leader in less than 3 minutes?

“Never doubt that a small group of thoughtful, committed people can

change the world. In fact, it is the only thing that ever had.”

~Margaret Mead

What about metrics?

3 types of metric

InputProcess

Output

Resources put behind ($, FTE)# of patents

# of ideas# of NP% of sales from NPROI

Time from PoC to FDPBreadth of ideasPathway approach

Metrics recommendations

•3 broad types•First vision & strategy, than metric•No magic metric•Choose few•Measure vs. competition•Get buy-in•Embed in performance review

InnovationWhat? Why? Who?

Types? Metrics? Case study

Question(s)?

Founded 1867225.000

employees$70b sales

495 factoriesRisk averse

....but 4% growth target by new CEO

Coffee market in 90s

30%

70%

Sales

InstantRoast & Ground

Nestle coffee business in 1990’s

•Present since 1938

•Owns instant coffee market (30% of total coffee market)

•Wants presence in high-end coffee market

Coffee market in 90s

30%

70%

Sales

InstantRoast & Ground

95% filter5% gourmet (mostly out of home)

Simple outside, complex inside; 3 steps to making coffee:

1974 - Simple outside, complex inside

•Individualized taste

•Simple steps to making coffee

•3 steps technology:

• Pre-wetting

• Aeration

• Extraction

•Strong IP protection

•Licensed machines to others

1986 (12 years later)

1987 failure launch in office sector in Italy

Photo of Turmix, Italy, results

1988 – Jean Paul Gaillard hired

Tiger team

New segment identified through observation

1989 – step1: switch to high end household market

1989 – Step 1: household strategy endorsed

Step 2: Broadening strategic partnerships

Focus on capsules

Distribution?

Losing profits

Supermarket=luxury?

3 months shelf-life

Step 3: Nespresso club

Rules of Nespresso club

24 hours ordering

Personal advice

Prompt delivery

Calls replied within 3 rings

Focus on training and experience

Nespresso club – raving success

Sho w statistics from case study

Airway companies sign contract with Nespresso

Minimal advertisingLoyal customer at the center

1995 break-even7 years since JPG arrival21 years since acquiring technology

“Our problem is not a lack of good ideas – we have too many of them. The key is to be able to extract an idea, carry it forward in the organization and

transform it onto the market.”~CEO Nestle

Key take-aways

Innovation takes time and involves multiple failures

Leadership and team

matter

Culture

Focus on core, partner on rest

Experiment

Observe

InnovationWhat? Why? Who?

Types? Metrics? Case study

Question(s)?

How would you define 3 years innovation vision for you and your

team?

THINK BIG!How will you know that you are

achieving it?