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"Anyone can look for fashion in a boutique orhistory in a museum. The creative explorer looksfor history in a hardware store and fashion in an

airport." Robert Wieder

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July 2000 -- Toyota Introduces the U.S.to the Prius, Grows Market for HybridCar

In 2003, Scientific Americanamed Toyota "BusinessLeader of the Year"

Now, Ford, Mercury, Lexus,Nissan and others havehybrid cars on the market.But the Prius is still thebest-selling car in its class

In March 2009, the hybridcommunity witnessed twomilestones: Toyota said itsold its one millionthhybrid car in the U.S. andFord said it produced its100,000th

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January 15, 2001 -- The launch of Wikipedia sparks the rise of user-generated content

Wikipedia, the free user-generated onlineencyclopedia, came onlineand quickly became the

reference site of choice forInternet users. In February 2005, the user

generated video-sharingWeb site YouTube waslaunched

2006 Time magazinenamed "You" its Person of the Year.

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March 2003 -- Friendster Kicks Off the Social Networking Revolution

Status updates,following, friendingunfriending. None of that meant anythingto anyone 10 yearsago

After effects:Facebook, Twitterand loopt

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April 2003 -- Human Genome ProjectCompleted

Task had beenlikened to splittingthe atom or going to

the moon. Project has helpedshed light on humanmigration, commondiseases, new energysources and manyother scientific fields

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June 29, 2007 -- Launch of Apple'siPhone Introduces Smart Phone Frenzy

In 74 days, Apple sold 1million of its smart phones.

More than 40 million usersaccess the Internet fromiPhone and iPod touch models

Apple's App Store alone holdsmore than 100,000applications that let usersdoing everything from playgames and track stocks torun background checks andfind public rest rooms

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All of them are some of the prominent

innovations of last decade

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But what is an Innovation ? Innovation is a process by which an idea

or invention is translated into a goodor service for which people will pay.

Idea must be replicable atan economical costIdea must satisfy a specific need.

Management of process is innovationmanagement

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Is Innovation New ???

Nope ! Was coined in 1912 ! By Joseph Schumpeter

Joseph Schumpeter defined economic innovation in

"Theorie der Wirtschaftlichen Entwicklung" (1912).(The Theory of Economic Development, 1934,Harvard University Press, Boston.)

Coined the word Creative Destruction when the old

is replaced by something better and new

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Schumpeters InnovationDefination

The introduction of a new good that is one with which consumers are notyet familiar or of a new quality of a good.

The introduction of a new method of production, which need by no meansbe founded upon a discovery scientifically new, and can also exist in a newway of handling a commodity commercially.

The opening of a new market, that is a market into which the particular

branch of manufacture of the country in question has not previouslyentered, whether or not this market has existed before. The conquest of a new source of supply of raw materials or half-

manufactured goods, again irrespective of whether this source alreadyexists or whether it has first to be created.

The carrying out of the new organization of any industry, like the creation of a monopoly position (for example through trustification) or the breaking upof a monopoly position

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Schumpeters Wave (Creative Destruction)

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Historic Roadblocks to Innovation

I think there is a world market for maybe five computers. ThomasWatson, Chair, IBM, 1943.

Computers in the future may weigh no more than 1.5 tons. Popular Mechanics , 1949.

So we went to Atari and said, ...Well give it to you. We just want todo it. Pay our salary, well come work for you. And they said no.So then we went to HP, and they said We dont need you, youhavent got through college yet. Steve Jobs, co-founder, AppleComputers.

640K of RAM ought to be enough for anybody. Bill Gates,Microsoft, 1981.

"I have traveled the length and breadth of this country and talked withthe best people, and I can assure you that data processing is a fadthat won't last out the year."

--The editor in charge of business books for Prentice Hall, 1957

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Historic Roadblocks toInnovation

Who the hell wants to hear actors talk? H.M. Warner,Warner Bros., 1927.

Stocks have reached what look to be a permanently highplateau. I. Fisher, Prof. of Economics, Yale, 1929.

We dont like their sound, and guitar music is on the wayout. Dick Rowe, Decca Records executive, rejecting theBeatles demo tape, 1962.

This telephone has too many shortcomings to beseriously considered as a means of communication [and]is inherently of no value to us. Western Union, 1876.

Heavier-thanair flying machines are impossible. Lord Kelvin, President, Royal Society, 1895.Everything that can be invented has been invented. C. H.

Duell, Commissioner, U.S. Office of Patents, 1899.

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Time

Reven ue Gr owth

Technology AdoptionLife Cycle

EarlyMain Street

MatureMain Street

DecliningMain Street

Indefinitelyelastic

middle period

End of Life

A

FaultLine!

E

DC

B

Innovations LandscapeThe Category Maturity Life Cycle

B d U i f I i T

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DisruptiveInnovatio

n

ApplicationInnovation

Product

Innovation

PlatformInnovation

Enhancement

Innovation

Integration

Innovation

Experiential

Innovation

ProcessInnovation

Marketing

Innovation

Broad Universe of Innovation TypesDifferent Types Get Traction at DifferentPoints

Value MigrationInnovation

Line

Extension

Innovation

ValueEngineerin

gInnovation

Harvest& Exit

Renewal Innovation

OrganicRenewal

AcquisitionRenewal

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Managing InnovationFour Innovation Zones

DisruptiveInnovatio

n

ApplicationInnovation

ProductInnovation

PlatformInnovation

EnhancementInnovation

Integration

Innovation

ExperientialInnovation

ProcessInnovation

MarketingInnovation

Business ModelInnovation

LineExtension

Innovation

ValueEngineerin

gInnovation

Harvest& Exit

Renewal InnovationProduct

LeadershipZone

OperationalExcellence

Zone

CustomerIntimacy

ZoneValueRenewalZone

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Innovating for Growth MarketsThe Product Leadership Zone

DisruptiveInnovation

ApplicationInnovation

ProductInnovation

PlatformInnovation

Enterprise: Genentech (recombinant DNA) Consumer: Skype (VOIP)

Enterprise: Landmark (3-D seismicinterpretation)

Consumer: Amazon (Internet retailing)

Enterprise: Cisco (Internet routers) Consumer: Cuisinart (food processors)

Enterprise: Oracle (relational databases) Consumer: Sony (game machines)

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Innovation Types for Mature MarketsThe Customer Intimacy Zone

ExperientialInnovation

Line ExtensionInnovation

EnhancementInnovation

MarketingInnovation

Enterprise: Cognos (executive dashboards) Consumer: Swatch (fashion watches)

Enterprise: McKinsey (relationship marketing) Consumer: Mattel (American Girl franchise)

Enterprise: World Economic Forum (Davos) Consumer: Disney (theme parks)

Enterprise: Boeing (7x7 line of aircraft) Consumer: Google..

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Innovation Types for Mature MarketsThe Operational Excellence Zone

ProcessInnovation

IntegrationInnovation

ValueEngineeringInnovation

Value MigrationInnovation

Enterprise: Toyota (lean manufacturing) Consumer: McDonalds (fast food)

Enterprise: IBM (hardware to software &services) Consumer: HP (printers to inkjet cartridges)

Enterprise: SAP (Enterprise Resource Planning) Consumer: Victorinox (Swiss army knives)

Enterprise: TSMC (silicon foundry) Consumer: Samsung Electronics( consumerelectronics)

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Innovating for Declining MarketsThe Category Renewal Zone

OrganicRenewal

AcquisitionRenewal

Harvest& Exit

Enterprise: Alcatel (from switched voice to IP video) Consumer: Apple (from PCs to consumer electronics)

Enterprise: EMC (from storage hardware to software) Consumer: Altria (from tobacco to food & beverage)

Venture Capital

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In addition:Henderson & Clark model of Innovation

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Innovation is now Human Centric (User) ThanObject Centric its about designing

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So how do we go about thiscourse

Less Talk.. More work.. More Design1 exam =50 % weight and the rest

Redesign a Product :20MarksPublish your Innovation: 20 Marks

Writeups=10/15 Marks

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Design Thinking (Innovation)

CollaborativeThinking ProcessMindedness Multi-DisciplinaryApproach

Human-centered

Tech/Businessfocus

Systemsthinking

Synthesis Rapid ConceptGeneration

Envisioning RapidPrototyping

Visualizing Catalyzingdecision-making

Storytelling Realizing Road-mapping Managingtransformation

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The importance of innovationGartner Group Study

More than 50 percent of enterprisesthat derive more than 25 percent of their annual revenue from new products have formalized innovationby leveraging their intellectual assets.

Boston Consulting Group Study 73 % of companies worldwide willincrease spending oninnovation

Operations in Asia-Pacific 78percent of companies planningincreases,North America 73 percent andEurope 70 percent in InnovationSpending

.

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Price Waterhouse Coopers Study-Respondents anticipated an averageof 16.2% revenue growth in thenext year, versus their peers givingthe innovation leaders a 30% edge infaster revenue growth

Three-quarters of CEOs of fast-growing companies cited innovationas their strongest competitiveadvantage.

Bain & Co.s Innovation Study-(500 senior executives in 47countries and all major industries)

91% of executives across allindustries believe in increasingtheir company's capacity forinnovation

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What is a Product

Need Form

Technology NewProduct

C=Concepts

CC

C

Figure 4.4

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A Product

Form ( the physical thing created,or, for a service, the set of stepsby which the service will becreated)

Technology (the source bywhich the form is to be attained)Benefit/Need (benefit to thecustomer for which the customer sees a need or desire)

Technology permits us todevelop a form that provides thebenefit .

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What is a Product Concept?

A product concept is a verbal or prototypestatement of what is going to be changed

and how the customer stands to gain or lose.Rule: You need at least two of the threeinputs to have a feasible new productconcept, and all three to have a newproduct.

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Why Do You Need a Product Concept and NotJust an Idea?

Needed to judge whether it is worthy of developmentPotential customers do not

have enough informationto judge the worthiness of an idea: the productconcept gives them therequired information.

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The Designer Decaf ExampleBenefit: Consumers wantdecaffeinated espresso thattastes identical to regular.Form: We should make a

darker, thicker, Turkish-coffee-like espresso.Technology: Theres a newchemical extraction process thatisolates and separates

chemicals from foods; maybewe can use that for decaffeinating espresso coffee.

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The Toilet Brush ExampleIdea: A new and improvedtoilet brush.Concept: A toilet brush thatcontains detergent, refillable,

and easy for the customer toattach to the handle.Product (executions of thisconcept):

Lysol Ready BrushScrubbing Bubbles FreshBrushClorox Toilet WandOthers?

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What a Concept Is and Is Not

IS: Learning needs of computer users can be met by usingonline systems to let them see training videos on theleading software packages. (good concept; need andtechnology clear)

IS NOT: A new way to solve the in-home training/educationalneeds of PC users. (need only; actually more like a wish)

IS NOT: Lets develop a new line of instructional videos.(technology only, lacking market need and form)

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Open Innovation at Work: P&GP&Gs Connect and Developprogram, assigned a team to findexternal partners, build brand equity,access new technologies, and createnew product categories.Examples:

SunHealth Solutions (a P&G partner)developed the UV sensingtechnology used in Huggiesswimpants with UV sensors, thathelp parents monitor their childsexposure to UV radiation.Mr. Clean scrubbing brush uses

technology originally used asinsulation in the auto industry.Magic Eraser cleaning pad wassourced from a German chemicalscompany, and first noticed by P&G inuse in Japan.

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Success Rate (innovation index) Entirely New ProductsSuccess Rate (innovation index) Entirely New Products

3000 rawideas

300 submittedideas

.

125 beginningprojects

.

9 largedevelopments4 major

developments

1.7 launches

1 commercialsuccessStevens and Burley,

RTM May-June

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End Note for the Class -4 th November Best Innovation (Design ) ProductsTouched briefly Design ThinkingEvaluation PlanBusiness Need for InnovationHistorical RoadblocksDefined InnovationWhat is a Product

Form , Benefit & TechnologyWhat is a Product ConceptSuccess Rate /Innovation Index

P&G Connect & Develop-Open InnovationMOVIE OBJECTIFIED

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WEBSITES FOR TODAY

www.ideo.com

www.smartdesignworldwide.comwww.pg connectdevelop.com

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