About Hector
I started working about 20 years ago, been in product management/marketing for about 10 years
What does it mean when your execs tell you, "We must innovate". What is your role in this process? Is your organization set up to do this?
Poll: What is the biggest barrier to fostering innovation within your company?
- Poor management, insufficient investment, lack of innovative people, inadequate planning, or cannot afford the risk
Fortune's Most Innovative Companies
All the companies (Apple, Google, Nike, Amazon, Schwab, 3M, Statoil, Exxon, Disney, Whole Foods) are ranked at 1 or 2 in their industry and their stock prices are very high
- These companies have an innovation process in place - and everyone understands their role in what it means to innovate
IBM 2010 Global CEO Study
- Most CEOs believe the business environment is becoming increasingly complex
- only 49% believe their companies are equipped to manage complexity effectively
McKinsey 2010 Global Survey
- 84% believe innovation is extremely important
- 50% need a more robust pipeline of big ideas
- Only 55% innovate better than their peers
Defining innovation:
- Experts say innovation is complex, involves risk, and its outputs are unpredictable
- But I don't agree with this!
Innovation is...
- A change in the thought process for doing something, or the useful application of new inventions or discoveries
- An incremental emergent or radical and revolutionary change in thinking, products, processes, or organizations
- Requires a formal process to capture ideas and find ways to implement them
Harnessing innovation: ideas aren't enough - you must find a way to integrate them into your company's culture, strategy, processes, and portfolio - and make a profit!
What is the failure rate for launching new products into the market? Money is spent on building them
- Around 90%
They fail because they don't have a product management framewok in place
- Phase gates: Conceive, Plan, Develop, Qualify, Launch, Deliver, Retire
Innovation is basically a funnel
- You start with a lot of ideas and filter them until you get a set of outcomes
- Ideas come from both internal and external sources: customers, competitors, executives
- Not just product management
- 7 steps: Gather, Conceive, Analyze, Build, Test, Adopt, Deliver
Story: 2 biggest innovations in modern history: adding "repeat" in the instructions for shampoo, and opening the top of Arm & Hammer baking soda and put it in the refrigerator
- Both of these innovations didn't require any product development
- They were all about market positioning
Marketing Mix Innovation: Product, Price, Promotion, Place (Distribution), People, Process, Physical Proof
- You don't change the product but you alter one of these factors, one at a time
- Ask the question, why should people buy our product?
Case study: Online DVD Rental Market
- Blockbuster was the leader 5 years ago
- Netflix came along - the product was the same but distribution was different
- Blockbuster responded with a mail distribution service
- Redbox came along with a new distribution model
- Blockbuster partnered with NCR to come up with kiosks
- But they couldn't shut down stores fast enough because of long term lease agreements - so they went bankrupt
- This shows the power of a change in distribution model and how it can ruin a huge business
Key takeaways about innovation:
1. Essential for your company's survival
2. Can foster innovation while reducing risk
3. Focus on increasing product value for customers
4. Improves business efficiency
5. Increases your company's value and profitability
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