BYShay MerrittéErin KeelerAndy IretonShawn White

UNDERProf. Michael LiebleinProf. Michael Bills

FORBUS MHR 894.60 Innovation Field StudiesFisher College of Business,The Ohio State University

JUNE 7 2011

OUTLINE

- PROBLEM DEFINITION- INNOVATION OVERVIEW- INTRODUCTION TO RIBS- INTRODUCTION TO 20 Q- FURTHER RESEARCH

PROBLEM STATEMENT

Create the underlying structure for an Innovation Brief that captures the

development criteria, business case and commercialization aspects of a proposed innovation. The brief should be able to be easily evaluated by an executive council for funding and further development in relation to Resource Interactive’s core

competencies and business objectives.

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DELIVERABLES

A 3-Piece Toolkit 4

DELIVERABLESResource Innovation Brief 1:

Is this a valuable idea?

A 3-Piece Toolkit 5

DELIVERABLESResource Innovation Brief 2:

What is the value of this idea?

A 3-Piece Toolkit 6

DELIVERABLESTwenty Questions:

How can the ideas value be captured?

A 3-Piece Toolkit 7

A 3-Piece Toolkit

DELIVERABLESTaken Together:

A way to capture the development criteria, business case and commercialization aspects of a proposed innovation

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STAGE-GATING IMPLEMENTATION

Stage #1

Stage #2

Stage #3

Gate #1

Gate #2

Resource Interactive employees populate RIB #1.

Executive Director of RI Labs reviews RIB #1 and selects ideas with merit and provides feedback.

Innovation Council Reviews RIB #2 and selects projects to move forward to fund and possibly commercialize.

Innovation Council completes the 20Q questionnaire to determine the best strategic decision moving forward.

RI employees who developed a meritorious RIB #1 refine the concept through RIB #2.

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PHASES OF INNOVATION

PHASE 1VALUE CREATION

PHASE 3VALUE DELIVERY

PHASE 2VALUE CAPTURE

How will consumer needs &technological solutions evolve?

What is the central source of innovative advantage? How can we best protect this

advantage? How is this advantage

affected by change

What projects should we fund? How

should we organize to support

innovation within the firm? What

work should we do inside and what

should we outsource?

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PHASES OF INNOVATION

PHASE 1VALUE CREATION

PHASE 3VALUE DELIVERY

PHASE 2VALUE CAPTURE

How will consumer needs &technological solutions evolve?

What is the central source of innovative advantage? How can we best protect this

advantage? How is this advantage

affected by change

What projects should we fund? How

should we organize to support

innovation within the firm? What

work should we do inside and what

should we outsource?

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CORPORATE INNOVATION OPPORTUNITY

Macro Socio-Political

FORESIGHTS

Consumer/Customer

INSIGHTS

Technological &Scientific

CAPABILITIES

BUSINESSCASE

CORPORATE INNOVATION

OPPORTUNITY

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RESOURCE INNOVATION BRIEF (RIB) 1

SubmiSSion Date:innovation #:

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point peroSn: commraDeS: front

How?

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orga

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cLient Srv. tecHn. creative Soc Strat XDD

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contract / LicenSe internaL Dev. partnerSeLL Spin-off

comm

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proc

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Captures anidea, is it appropriate for Resource?

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PORTFOLIO ANALYSISNew Product/

Market

Radi

cal

Nex

t Gen

erat

ion

Impr

ovem

ent

Incr

emen

tal C

hang

e

NextCustomer

Better Service:Existing Customers

Market Impact

BREAK THROUGH

NEXT GENERATIONPLATFORM

DISRUPTIVEINNOVATION ENHANCEMENTS

HYBRIDS &DERIVATIVESTe

chn

olo

gic

al C

han

ge

Enhance CurrentProducts

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RESOURCE INNOVATION BRIEF (RIB) 2

SubmiSSion Date:innovation #:

What iS the project’S value propoSition (What value/benefitS DoeS it Deliver to itS cuStomer)?

Who iS the target market/cuStomer?

What are cuStomerS currently paying for the next beSt alternative? What are the next beSt alternativeS?

hoW DoeS the innovation fit Within reSource’S current Strategic plan?

iS the timing of thiS project appropriate? iS the market reaDy? iS the technology there?

point peroSn: commraDeS: front

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BUILDS A BUSINESS CASE FOR THEIDEA

KEY CONSIDERATIONS FOR INNOVATION

INDUSTRY

• Physical Assets of the Industry• Importance of Brands• Complexity of Supply Chain• Intensity of Rivalry

• Type of Innovation: Radical or Incremental• Product’s Complements• Infrastructure Necessary to Innovate Ideas

• Will the Product Produce what it Promises?• Consumers Interest into the Good/Service?• Likelihood of a Substitute Product?• Amount of Investment to Commercialize Idea?

INNOVATION

RISK

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DECIDING WHAT TO DO WITH THE IDEA

CONTRACT

INTERNAL DEVELOPMENT

SPIN-OFF

SELL

Less Control &Smaller Investment

More Control &Greater Investment

5 DIFFERENT WAYS TO PURSUE

AN IDEA

• No “Black Box” exists to ensure Executive Management makes correct decisions.

• Management needs to be cognizant of its own capabilities & limitations when choosing a route to pursue.

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OUR COMMERCIALIZATION DEFINITION

COMMERCIALIZATION(k-mur’she-li-za’shen) noun

Commercialization is the means by which an organization captures

value by moving an idea from inception to maturity, ultimately

benefiting the company’s intangible and tangible assets.

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EVALUATION OF MODEL AVAILABLE TO RI

INTERNAL DEVELOPMENT

Provides the most amount of control over Project

Company can utilize Complementary Assets if they relate to innovation proposal

Great to use if current infrastructure already exists within organization

Beneficial if organization innovation proposal mirrors Company Culture

Involves high amount of Proprietary Information

CONTRACT/LICENSE

Provides a certain amount of control over project and direction

Company can extend beyond its Complementary Assets

Does not involve same amount of investment in idea as Internal Development

Consider if a great amount of Proprietary Information

A better option if current infrastructure does not exist

PARTNER

Outsourcing to gain complementary assets

Organization gives up control, but also decreases investment

Good to use if there is a constant need for innovation

Allows for organization to extend beyond its current customer base

Allows organization to respond quickly in changing landscape

SPIN-OFF

Generate new business ideas in collaborative environment with RI

Allow RI to focus more clearly on Core Competencies

Avoid confusion regarding services provided to client and project objectives

Organization avoids large spend in project that does not match what company does best

Company loses control and direction of idea

Company loses ownership of the idea

SELL

Should be considered if organization would have to develop infrastructure

A good alternative if idea does not match core competencies

Avoid confusion regarding services provided to client and project objectives

Organization decreases its risk if innovation proposal is not successful

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20 QUESTIONS TO COMMERCIALIZATION

The questionnaire asks 20 yes/no questions, the answers to which feed an algorithm which generates a graph which shows the comparative amplitude of each commercialization option, and then the individual strength of each commercialization option.

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20 QUESTIONS BACKGROUND1. Complimentary assets – Assets, infrastructure or capabilities needed to support the successful commercialization and marketing of a technological innovation, other than those assets fundamentally associated with that innovation.

2. Inherent assets - Assets that are existing as a permanent, essential, or have characteristic attributes to the organization

3. Core competencies – Features of Resource Interactive, or their employees, that are vital to the way the organization operates. - digital consumers (example)

5. Innate culture - Inherent in the essential character of a business that is a set of shared attitudes, values, goals, and practices

6. Risk - The potential that a chosen action or activity (including the choice of inaction) will lead to a loss (an undesirable outcome). The notion implies that a choice having an influence on the outcome exists (or existed).

7. Confusion - The inability to think with your usual speed or clarity, including feeling disoriented and having difficulty paying attention, remembering, and making decisions.

8. Control - To exercise authoritative or dominating influence over

9. Secrecy - Concealing information from certain individuals or groups, perhaps while sharing it with other individuals.

9. Proprietary information - Information that is sensitive, which is owned by a company and provides advantages over the competition

10. Systems - A set of detailed methods, procedures, and routines established or formulated to carry out a specific activity, perform a duty, or solve a problem.

10. Hierarchy - Is an organizational structure where every entity in the organization, except one, is subordinate to a single other entity

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20 QUESTIONS BACKGROUND11. Speed to Market- This means, it is important to introduce your product in the market as fast as possible. The reason is stiff competition, globalization and access of technology to all competitors. The idea of new product penetrates the market rapidly. Therefore, first company to hit the market is likely to capitalize the virginity of market.

12. Proven Technology- technology that has already been marketed and proven to work.

13. Consumer Tastes- are the tastes of intended consumers for this product likely to vary in the near future?

14. Strong Substitutes- are there products already being marketed that would be a strong substitute/competition for this products?

15. Incremental Innovation- one that leads to small improvements to existing products and business processes or involves modest technological changes on existing products and the existing products on the market will remain competitive.

16. Customer Base Needs- would the innovation exceed the needs of the intended customer base?

17. Branding- would the innovation need to be branded in order to be successful?

18. Market Space- is the innovation outside of retail, technology or packaged goods?

19. Intended Investment- has it been determined that Resource looks to spend as little money as possible developing this idea?

20. Infrastructure- would this innovation require the development of an new infrastructure (organizational structure, including facilities, services or ways of conducting business)?

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20 QUESTIONS BACKGROUND Question 1&2 – An organization needs to identify and understand the assets that are already integrated into the business. An innovation idea that mirrors skills previously existent within the company will be more likely to succeed as the organization can rely upon these talents and not need to invest in outside resources. However, if the organization does not have a high historical aptitude in this area they will need to increase their investment, which will also increase the risk associated with the innovation idea. Question 3 & 4, 18 - The need for a company to compare its inherent core competencies to the innovation proposal is essential because it helps determines if the organization already has established knowledge in the area it is looking to compete. If the organization already has proven methods for competing in this industry, it will be able to support the innovation idea as it can it rely on its historical practices. However, if the organization does not have core competencies in the identified field the innovation could struggle to in understanding the industry and how to best achieve success. The organization will have no ‘frame of reference’ to determine its strategy or be able to seek competitive advantages. Question 5, 10 & 20 – A solid understanding of the innate culture is necessary for determining how well the innovation proposal will fit within the organization. If a new project does not match already established ways of thinking, it will not provide the necessary fertility for the idea to blossom into a profitable business venture. Employees should be able to understand how the idea matches other processes or practices already being produced by the company. Question 6 – Understanding the level of risk involved in the innovation proposal will help management determine how much investment is necessary. An organization must realize up-front the amount of risk it is willing to assume. Failure to understand the risk quotient could lead to underestimating the amount of cash necessary to fully fund idea that would result in a loss for the organization. Question 7 – An organization must determine if the innovation idea would confuse its core customer base. If its core customers would not understand the concept, or worse be insulted by it, then the organization should consider alternative strategies than internally developing this product. By understanding how the concept relates to its core customer base allow the company to determine what it is they are looking to obtain from producing the innovation proposal. Question 8 – At the initial stage of the innovation production process, the organization must consider how much ownership and direction it wishes to demonstrate in creating the idea. This will also allow the company to determine the amount of risk it is willing to undertake. Question 9 – The organization must acknowledge how secretive its innovation proposal is.

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20 QUESTIONS BACKGROUNDIDEAS

MARKET

Technical/Operational

Opportunity Creation Strategic Fit Opportunity Assessment

Proof of Concept Strategic Analysis & Choice

Feasibility & Business Planning

Market Readiness Market Pathways Implementation Plan

Strategy Commercial

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IMPORTANCE OF CULTURE

As Resource Interactive grows in size, retaining a strong entrepreneurial and innovative culture will become more difficult.

Characteristics of a Strong Culture:1. Clear philosophy about how business is to be conducted2. Considerable time spent communicating values and beliefs3. Explicit statements made that describe organizational values4. Set of values and norms exist that are shared widely and rooted deeply5. New employees are screened carefully to ensure cultural fit

The use of slogans, symbols, ceremonies and statements of principle can be all be utilized in order to ensure the sustainability of a strong organizational culture.

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HOW TOP COMPANIES SUPPORT INNOVATION3M

MICROSOFT

GE

NOKIA

Scientists inside the company apply independently for “Genius Grants” that give them generous budgets for funding the development of new products.

Each year, “Hack Day” is held in which software developers are pulled from their routines, coming together for a fun event that relieves pressure and hopefully inspires creativity.

Among more traditional bases for evaluation, GE’s 5,000 top managers are rated on innovation-related themes such as “imagination and courage.”

Nokia rewards engineers who have at least 10 patents by inducting them into its prestigious “Club 10.”

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INNOVATION SYSTEM

Efficiency

Communication

Coordination

Learning

Alignment

Efficiency- Standardized processes that bring prospective ideas from concept to commercialization

Communication- Platform that allows employees to interact with each other and external partners, promoting collaboration and continuous learning

Coordination- Promotion of cross-functional teams and partnerships in order to utilize respective talents

Learning- Continuous commentary and feedback for all submissions

Alignment- Integration of executive guidance through executive strike zone concept to ensure the business case pro-posals adhere to company strategy

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CONNECTING INNOVATION CHANNELS

INDIVIDUALSUBMISSION

Provides opportunity for employees passionate about their ideas to continue to strive for possible implementation and receive valuable feedback

EXECUTIVESTRIKE ZONE

Leadership of the organization is dynamically involved in the projects, thus ensuring that innovation and ideation is an organization priority.

COUNCILEVALUATION

Provides opportunity for organization to meet and discuss ideas that would provide the use of company’s resources to pursue corporate initiatives

INDIVIDUALSUBMISSION

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EXECUTIVE STRIKE ZONE

Proposal StrikeZone

RISK

REWARD

• Specific areas of focus that have strategic objectives for the business that employees can concentrate on ideation

• Each employee must choose to submit one proposal directly from the specific topics provided by executive management

• Tied back to employee reviews – incentives

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HOW TO MEASURE INNOVATION

PROCESSINPUT OUTPUT OUTCOME

Resources devoted to innovation.

Real-time measures

tracking progress toward creation

of outputs

Results of innovation effort

Value Creation

Describes quality,

quantity and timeliness

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INNOVATION HEAT INDEX

1

2

3

4

5

6

7

8

9

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FINANCE1. Business Model- What is the project’s value proposition (how the innovation makes money)?2. Networking- Do the project’s value chain & partners make this offering distinctive?

PROCESS3. Enabling Process- Does this innovation assemble capabilities typically bought from others?4. Core Processes- Does this innovation create proprietary processes that add value?

OFFERING5. Product Performance- Does the innovation offer valuable features and functionality?6. Product System- Is there an extended system surrounding the offering? 7. Service- Does this innovation service its customers?

DELIVERY8. Channel- Is there a strong, clear connection of the customer to the offering?9. Customer Experience- Is there an integrated experience?10. Brand- Is the innovation’s value properly expressed to customer?

INCREMENTAL ECONOMIC VALUE(THE SUM OF THE INCREASED REVENUE OR DECREASED COSTS ASSOCIATED WITHEACH INNOVATION TYPE)

REFERENCE VALUE(WHAT CUSTOMERS PAY FORTHE NEXT-BEST ALTERNATIVE)

IEV ÷ RV = EVE FACTOR31

INNOVATION HEAT INDEX

FIRST, TAKE YOUR IDEA’S AMBIENT TEMPERATURE:To find out if your idea is hot enough, consider how it is kindled. Each flame represents one of the Ten Types of Innovation, developed by Doblin (a part of Monitor Group) on the basis of research with hundreds of companies. The more ways in which your idea is innovative, the better able it is to stand up to competitors’ offerings. According to our research, ideas that innovation six or more areas are well positioned for success. Fewer than three types and your idea is cold: Chances are, it’s not distinct enough from products already on the market. Most companies focus their innovations on product offerings, but you’ll get more heat from ideas that also innovate new business models and customer experiences.

NEXT, MEASURE YOUR IDEA’S HEAT INDEX.So your idea is hot, but will it deliver measurable value to customers? Doblin and Monitor have developed a simplified version of the pricing tool Economic Value Estimation (EVE) to calculate, by innovation type, how much increased value your idea offers over what’s already available. Interpreting the EVE factor depends on the industry. A hot number in a B2B business could be as low as 1.5, whereas in a CPG context, where brand matters so much, the number will most likely need to be much higher, say 3 to 5. Anything below 1.1 would be cold, and anything less than 0.75 would be a nonstarter.

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NEXT STEPS

Pilot: Test with Distributed Commerce Platform

Feedback: Important to Continue Culture of Ideation

Catalog of Ideas: Portfolio Analysis Used for Quick Reference to Past Ideas

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DISCUSSION

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