mti the big idea group
DESCRIPTION
BIGBig Idea GroupGroup 5 – MTIAAKASHDEEP - PGP/14/126, AMEYA - PGP/14/004, ARIFUDDIN - PGP/14/014, EMILIA - IE/14/05, GERHARD - IE/14/06, GOUTHAM - PGP/14/143, KUMARESAN - PGP/14/150, MORTEN - IE/14/10, OBULESU - PGP/14/156, TOBIAS - IE/14/11, UMESH - PGP/14/310 SHARATH –PGP/14/ 241 VARUN-PGP/14/ 122Company OverviewBig Idea Group at a GlanceFounded 2000 Intermediary company between investors and idea-buying companies Assist large manufacturing & retail companies in their innovation effTRANSCRIPT
BIGBig Idea Group
AAKASHDEEP - PGP/14/126, AMEYA - PGP/14/004, ARIFUDDIN - PGP/14/014, EMILIA - IE/14/05, GERHARD - IE/14/06, GOUTHAM - PGP/14/143,
KUMARESAN - PGP/14/150, MORTEN - IE/14/10, OBULESU - PGP/14/156, TOBIAS - IE/14/11, UMESH - PGP/14/310 SHARATH –PGP/14/ 241 VARUN-PGP/14/ 122
Group 5 – MTI
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Company Overview
� Founded 2000� Intermediary company between
investors and idea-buying companies� Assist large manufacturing & retail
companies in their innovation efforts � Use holistic process to use ideas as
resource and transform them into valuable products
� Start business in Toy industry
Big Idea Group at a Glance People Behind the Scene
Michael Collins (CEO & Founder)� Deep insights in venture capital industry
due to former job at a leading VC firm� Founder of a specialty toy company with
award-winning product lines� MBA from HBS� Entrepreneurial spirit & innovation
George d’Arbeloff (Chairman of AB)� Deep insights in equipment
manufacturing & service industry � Established manager with long business
experienceOffering companies a new way of
managing innovations
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BIG’s Philosophy of Inventions & Problems of Large Companies
Inventions are popping-up in different places
BIG‘s Philosophy &
Understanding of Inventions
Problems of Product Development
Departments of Large Companies
� Concentration on own ideas to evolve existing product lines
Inventions are unpredictable
Inventions don’t only come via well-founded product develop departments within large companies, but also from independent thinkers
BIG taps into & seeks for entrepreneurial power of legions of
individual inventors
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3 � Different companies need different investments in product development (e.g. for creating prototypes)
� Exclusion of thousands of individual “tinker-ers” & independent innovators generating new product ideas
� Wrong investment decisions because employers are emotionally down & drained by their product category
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Toy Industry as Starting Point for BIG – An Overview
� Market size: prox. $ 30 bn. (in 2000)� Multiplicity of industry segments
� Video games� Fashion dolls� Plush toys� Skating accessories� …
� Retailer: from large, well-known retailers (e.g. Toys “R” us) to smaller retailers
� Retailers purchase toys from many different distributers & wholesalers
� Toy producers range from large companies like Hasbro or Mattel to small niche players like Kid Galaxy
Toy Industry at a Glance Trends in Toy Industry
� Kids behavior and wishes are changing due to faster development, replacing toys with sport & music earlier
� Introduction of high-tech gadgets and products (e.g. CD or cell phone) gaining attention from kids and stimulating kids wishes & demand
� Personalization & niche markets becoming a new trend and tackle traditional mass market
Toy manufacturers and retailerlacking new innovation & fresh content
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BIG’s innovation process
STEP 1 STEP 2 STEP 3 STEP 4
Hunts
Outsourced
Flow
Professional
Inventors
Industry
Outreach
Orphaned Products
& Ideas
Internet Request
Programms
WINNOWING REFININGCAPTURING
VALUE DEAL
1000 + 100+ 20-305-6 deals per year
per verticalIde
as
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STEP 1
Hunts� Roadshow for finding ideas and entrepreneurs� Inviting local entrepreneurs showing their
concepts to industry experts� + pooling inventors
Overview of Elements
Outsourced Flow� Cooperation with major toy companies� Unsolicited idea submissions each month, BIG
helps in evaluating, winnowing and refinement� + avoids good ideas from “ slipping through the
cracks”
Professional Inventors� Network of professional investors through hunts
and WOM� + Helped BIG connect with more inventors
Industry Outreach� Publishing research on industry trends� + Giving BIG awareness and
validation of trends
Orphaned industries and Ideas� Products never brought to market/
stopped developed/ promotion� + Products are revitalized through BIG
process
Internet request programs� Solicitation of suggestions from inventors
through website and newspaper� +helping big adding ideas to lines under
consideration, more targeted concepts
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STEP 2 & STEP 3
STEP 2: WINNOW STEP 3: REFINE
� Manageable number of ideas for refinement
� Pursue highest potential ideas� Hunts: Evaluation by panel of industry
experts incl. Collins� Breadth of knowledge� Reduced personal bias� New mix of panelists for each event� Approximately 15 panelists� Short form filled out for every invention
� Other idea sources: same criteria
� Close cooperation with inventor� Make concepts more appealing to kid’s
companies� Draw on BIG’s knowledge of what
companies look for� Production of appropriate presentation
material
� 3-6 months of refinement� Company research� Repositioning� Design� Engineering � Field testing etc.
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STEP 4 & Key Success Factors
STEP 4: CAPTURING VALUE Key Success Factors of Process
� Three ways of monetizing the product� Licensing the product to a company� Develop the concept internally as a
private label� Bundle several concepts to sell to
entrepreneur
� Monetized 35 different products through five contracts (Sept. 2001)
� Licensing deals:� Advance payment� Royalty� Guarantee
� Network of professional inventors� Broad variety of backgrounds and
perspectives in panels� Constantly looking for new “athletes” � Collins himself
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Why does BIG seem better able to identify and bring to market innovative toy concepts, whereas the major toy companies feel they are in a period of “lack of innovation”
How proprietary or defensible is BIG’s system? Could one of the major toy companies replicate it? Why or why not?
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Dimension Definition Example
Offerings Develop innovative new products or
services.
Looks for innovation from the most unpredictable
ways.
Captures the power of parallel processing for
innovation from people from outside an organization
who might not be affected by the organization’s
critical data like sales information, etc
Platforms Use common components or building blocks
to create derivative offerings.
Designed the business model like that of a venture
capital business with little overhead.
Solutions Create integrated and customized offerings
that solve end-to-end customer problems.
Raw ideas , unsolicited inventor and vendor
submissions which toy companies get frequently
are forwarded to BIG
BIG then performs a feasibility check and refining of
the ideas
Adapted from : Sawhney et, al. (2006). The 12 different ways for companies to innovate.
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Dimension Definition Example
Value Capture Redefine how company gets paid or
create innovative new revenue
streams.
Licensing a product to company
(advances, royalty, guarantee for both
BIG and inventor)
Subcontract a product as a private-label
Bundling of many concepts to sell to
entrepreneurs
Processes Redesign core operating processes
to improve efficiency and
effectiveness.
Acts as a intermediary between
inventors and idea-buying companies
(manufacturers/retailers)
Supply Chain Think differently about sourcing and
fulfilment
“Innovation engine” tries to capture
innovation and idea flows from the
broadest range possible : hunts,
outsourced flow, etc.
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Dimension Definition Example
Networking Create network-centric intelligent
and integrated offerings
According to Collins, “…you can’t replicate the human side
of business.”
Backed by his own charismatic personality, inventor’s
approach and good relationship with inventor communities,
BIG has created a valuable network of manufacturers,
retailers, entrepreneurs, inventors, etc.
Brand Leverage a brand into new domains With the foray into the Home and Garden business, BIG
would be venturing into a bigger market and would turn
profitable provided it applies the business sense that has
enabled it to succeed in the toy industry
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How proprietary or defensible is BIG’s system? Could one of themajor toy companies replicate it? Why or why not?
VC experience Domain experience
Personality, Creativity, Intelligence
Perspective of the Inventor: Higher probability of ‘idea to revenue’ conversion with BIG than any single toy company
Perspective of a Toy Company: Engaging with BIG would provide readymade and better solutions cost effectively compared to trying to replicate the model on its own
More cost effective for the toy companies to pay for licences than take upthe entire work on its own – huge work and time involved in idea screeningto idea refining, testing, customizing. Even if it could, the solutions would notbe as great and out of the box
Collins
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How proprietary or defensible is BIG’s system? Could one of themajor toy companies replicate it? Why or why not?
• Ad-hoc rotating panel sourced from multiple associations and companies across the industry -> Impossible to replicate for a single company owing to (i) Industry competition, (ii) Full time employment (HR issues)• In absence of ad hoc rotating panel, seasoned thinking sets in
Lower Transaction Costs and Economies of Scale: Analogous to distributor or wholesaler in SCM
BIG
Inventor1
Inventor2
Inventor3
Inventor4
Company1
Company2
Company3
Company4
Brand already established as an idea incubator company
Finally, even BIG is facing considerable challenges trying to replicate its own model for a different industry – just about sums it up!
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Can BIG replicate its system in other industries such as lawn and garden?
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Major Constraints
Availability of a pool of large inventors: Products which involve high costs likeengines etc., find less tinkerers than low cost items like toys. Hence the pool of ideas isinversely proportional to costs involved
Finding the right Screeners/ winnowers : Winnowing is the crucial aspect of thismodel. It requires, different personality with vast industry experience, intuition,knowledge, judgment and taste
Tacitness and specificity Involved: The process involves application knowledgewhich is tacit in nature which cannot be simply transferred to all industries and is moresubjective The configuration of people, process, screeners, Managers , Innovators andgiving them a fair share , companies all involved form an ecosystem
Idiosyncratic nature of these eco systems : The technologies involved, level ofmanufacturing capacities, constraints
Network Externalities: Externalities play a huge role in these system and carries riskof networked systems
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Adoption of Process for Garden and lawns
BIG may replicate with gardens and lawns, however, success is subject to the leadership and people involved
� Basic process applicable in any industry� Sponsorship gives a more solid base
compared to angel funding� Low Revenue/High profit model
combined with low investment in assets gives BIG good flexibility
� Garden and lawns apparently have a large pool of inventors
� Finding “Mike Collins” in the home and garden segment is crucial for success
� Right of first refusal for Skil-Bosch might handicap BIG’s process of finding the right partner for the right product
� ROFR for Skil-Bosch might limit the will of cooperation from inventors and/or potential qualified panelists
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THANK YOU !!