Product-Service Value-in-Use (Jobs) InnovationOUTCOME-DRIVEN INNOVATION CASE-STUDIESStrategyn UK, March 2010

OUTCOME-DRIVEN INNOVATION CASE-STUDYGrowing Microsoft’s Software Assurance Business

“In a market under immense price pressure, Strategyn’s outcome-driven approach to innovation allowed us to grow a struggling business.” Dave Wascha, Director – Microsoft Corporation

Microsoft’s Software Assurance was a business under pressure, facing declining renewals that put substantial revenue at risk. Using Strategyn’s outcome-driven innovation (ODI) methodology, Microsoft was able to:

• Discover hidden opportunities for value creation over the lifecycle of PC software

• Repackage and reposition the Software Assurance offering to meet customer needs without developing new products

• Turn Software Assurance into a growth business and dramatically increase annual renewal rates

Drawing on the responses of 28 procurement managers, Microsoft dissected the job of purchasing a license agreement, uncovering 76 desired outcomes (customer needs). Microsoft then conducted interviews with 30 IT professionals, uncovering 58 desired outcomes related to their role in purchasing, 81 outcomes on the job of managing a software license, and 34 other jobs related to managing software licenses. Next, using ODI-based quantitative research techniques, Microsoft had 100 procurement managers and 298 IT professionals prioritize those needs. Not surprisingly, the results revealed dissatisfaction with current licensing practices, with 94 of 215 desired outcomes (39 for procurement managers, 55 for IT professionals) being underserved. The same was true of 10 of the related jobs. Importantly, the ODI results revealed many opportunities for innovation that Microsoft had not previously considered.

The opportunity landscape for purchasing and managing software licenses revealed a number of jobs and desired outcomes that were underserved. Many could be addressed by products already developed but not previously integrated into the offering.

OUTCOME-DRIVEN INNOVATION CASE-STUDYService Innovation at Advanced Medical Optics

“Strategyn’s outcome-driven innovation approach was key to helping AMO develop a customer-driven strategy.” Angelo Rago, Senior Vice President, Global Customer Services, Abbott Medical Optics

Abbott Medical Optics found it was losing customers due to poor customer service. Working with Strategyn and using the outcome-driven innovation (ODI) methodology, the company was able to:

•Discover unique service innovation opportunities by looking at customer needs from the perspective of the job the customer is trying to get done• Satisfy customer needs with innovations in service delivery and new

offerings•Realize a 10 percent increase in its Net Promoter score and a 14 percent

increase in its customer loyalty index•Win a prestigious award for world-class customer service

Drawing on the responses of 20 materials managers, AMO dissected the job of replenishing ophthalmic lenses for cataract implant surgeries, uncovering 83 outcomes that materials managers desired in doing this job – outcomes relating to various steps in the job, from determining lens replenishment needs to returning lenses to the vendor. By studying the job, AMO discovered that a traditional distinction between front-office and back-office responsibilities for materials management was artificial. AMO also uncovered 22 desired outcomes related to materials managers’ service and support interactions with an ophthalmic vendor. Next, using ODI-based quantitative research techniques, AMO had 192 materials managers prioritize the outcomes it had uncovered. The opportunity landscape revealed considerable opportunity for innovation, with 46 of the 83 lens replenishment outcomes being underserved and 19 of the 22 service and support interaction outcomes being underserved.

The opportunity landscape revealed a number of underserved outcomes for materials managers. Many of these opportunities arepromising targets for service innovation.

OUTCOME-DRIVEN INNOVATION CASE-STUDYCreating the Bosch CS20 Circular Saw

“Strategyn’s outcome-driven approach to innovation made it possible for us to hit a home run in the mature and competitive circular saw market. The Bosch CS20 is a breakthrough innovation and a hit with both users and our channel partners.” Bosch product manager Jason Schickerling

Bosch faced many challenges when it decided to enter the North American professional circular saw market. Using Strategyn’s outcome-driven innovation (ODI) methodology, the company was able to:

• Discover hidden opportunities in a mature market among a segment of circular saw users

• Focus its idea generation on features to satisfy each of 14 underserved outcomes

• Introduce a new product – the CS20 circular saw – that dramatically improved customer satisfaction and enabled Bosch to gain the distribution support of Lowe’s and Home Depot

Drawing on the responses of 30 circular saw users, Bosch dissected the job of cutting wood in a straight line, uncovering 85 desired outcomes (unmet customer needs). Next, using ODI-based quantitative research techniques, Bosch had 270 users prioritize those needs. Not surprisingly, the results showed that in the market as a whole, there were no unmet needs. This meant that to discover unmet needs, powerful outcome-based segmentation practices would be required. Strategyn’s proprietary segmentation methods revealed four segments of opportunity, one of which made a perfect target for Bosch. This newly discovered target segment, which was comprised of primarily finish and advanced carpenters, represented over 30 percent of all users. The opportunity landscape for this segment clearly revealed that 14 of the 85 desired outcomes were unmet.

The opportunity landscape for this outcome-based segment revealed a number of targets (unmet needs) for value creation. This segment represented over 30 percent of all users and became the target for Bosch’s entry into the North American market.

OUTCOME-DRIVEN INNOVATION CASE-STUDYInnovation at Line 6: The BackTrack Digital Recorder

“When you are trying to provide solutions, knowing the prioritization of customer needs can have a big impact on what features you include and how you communicate with customers about a new product.” Michael Murphy – BackTrack Product Manager, Line 6

Having already made a name for itself in the guitar business, Line 6 realized that it needed a detailed understanding of its customers’ needs if it wanted to continue to meet its aggressive growth goals. Using Strategyn’s outcome-driven innovation (ODI) methodology, the company was able to:

• Discover opportunities for new market creation related to the jobs guitarists are trying to get done

• Develop a revolutionary digital recording device called BackTrack, which focused squarely on the unmet needs of guitarists

• Introduce a product to the market that is capturing significant market share and receiving glowing accolades from customers and professionals

Drawing on the responses of 51 guitarists, Line 6 uncovered 108 functional jobs (jobs related to the act of playing the guitar) and 18 emotional jobs (jobs related to how guitarists want to feel when playing) in a broad spectrum of areas, including preparing to play, learning material, developing skills, playing for inspiration, composing, and capturing a performance. Next, using ODI-based quantitative research techniques, Line 6 had 668 guitarists prioritize those jobs. The opportunity landscape revealed that 17 of the guitarists’ functional jobs and 13 of their emotional jobs were underserved – that is, current offerings by Line 6 and others were not helping customers get the jobs done satisfactorily. These underserved jobs highlighted opportunities for Line 6 and provided indispensable direction to the company’s innovation efforts.

The opportunity landscape for guitarists’ jobs revealed a number of opportunities for productinnovation. Underserved functional and emotional jobs led to the development and launch of the BackTrack, which opened up a completely new market for Line 6.

Outcome-Driven Innovation allows innovators to…

• Embed a new way of thinking about how to understand, discover and address customer needs across the organisation.

• Identify new and highly valuable market opportunities for product and service innovation.

• Define robust, market-driving strategies for predictable organic growth.

• Help you to instil a repeatable innovation process

• Achieve continuity, transparency and alignment of the innovation effort whilst removing variability and risk.

• Build advanced opportunity-based segmentation practices for multiple business and marketing decision-making purposes.

• Focus your idea and concept generation efforts and remove redundancy from the current and future project pipelines

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Execute ODI Projects using StrategynExecute ODI Projects

using Strategyn

Strategyn UK Outcome-Driven Innovation Consultancy Typical Project, Training, Mentoring and Programme Pathways

A

BOPTIONAL OPTIONAL OPTIONAL

Strategyn UK consultants undertake your ODI project quickly and with needed precision

Strategyn UK consultants mentor you to run your own ODI projects (post-training)

Strategyn UK consultants train you to become proficient in ODI

Strategyn UK consultants support you to establish your own internal ODI process / capability

Strategyn UK consultants undertake your ODI project quickly and with needed precision

We demonstrate the process and the benefits of using ODI quickly on a significant job / market opportunity , enabling you to move to Pathway B with confidence. Many clients prefer us to continue to deliver their projects…

Map your Markets and Strategy for ODI

Assess competitive situation

Formulate a growth strategy

Assess technology enabler potential

Segment markets for growth

Review Current Innovation &

Marketing

Build robust business cases

Generate powerful ideas / concepts

Additional services can be added on a per engagement basis

NOTE: Pathway B requires the client to nominate at least 1 employee to complete the 5-day education program and for the organisation to license Strategyn’s IP and tool set. The license package includes rights to Strategyn's patented innovation process, web-based data analysis and reporting tool, and the 100-plus tools and templates housed on Strategyn’s web-portal.

Execute 1st Project using Strategyn

Obtain Ongoing Strategyn Expertise

Train Employees as ODI Practitioners

Build a Corporate ODI Capability

Execute ODI Projects using Strategyn

Execute ODI Projects using Strategyn

Frame your Markets / ODI Programmes

Further reading

Giving Customers a Fair Hearing, MIT Sloan

Management Review, Spring 2008

The Customer-Centred Innovation Map, Harvard

Business Review, May 2008

Turn Customer Input into Innovation, Harvard Business

Review, January 2002

Best Business Idea Winner

What Customers Wanta bestselling book by Strategyn CEO Tony Ulwick, details the

theory and practice of outcome-driven

innovation

The Innovator’s SolutionIn Professor Clayton

Christensen's book - The Innovator's Solution - he explains why Strategyn's

thinking and segmentation methods are critical to the successful management of

new market creation

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You Experience Innovation Success ®

Strategyn UKCranfield Innovation Centre

Cranfield University Technology Park Cranfield

Bedfordshire UNITED KINGDOM

MK43 0BTTel: +44(0)844 561 0401

Email: uk@strategyn.comWeb: www.strategyn.co.uk