The process of innovation
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Transcript of The process of innovation
Adapted from: Faley, T (2007). Innovation Process. Ann Arbor, MI: University of Michigan Price, J (2007). New Venture Creation. Ann Arbor, MI: University of Michigan
The Process of Innovation
November 2014
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What is “innovation”? It depends…
Innovation is one of the most overused words in business world. As of 2014:
@ 20 million+ ‘innovation’
search results from Google 65,000+ “innovation” books on Amazon.com
It describes everything from incremental improvements in technology to revolutionary changes that impact society.
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Innovation is the “glue” between invention and investment
Invent
• Create new ideas and concepts
Innovate
• Match inventions with people’s problems to form solutions
Invest
• Commercialize solutions via businesses
“Research is the transformation of money into knowledge.
Innovation is the transformation of knowledge into money.”
Dr. Geoffrey Nicholson, 3M
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The process of innovation transforms ideas into businesses
Ad-hoc
Gut-feel
Disorganized
Opportunistic
Fortunate
Individual
Structured
Disciplined
Organized
Purposeful
Planned
Scalable
Invention Innovation Investment
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The Process of Innovation
Is the business proposition strong enough to justify moving forward?
Is the business feasible?
Ideas and Solutions
Business Proposition
Business Feasibility
Business Plan
Is the idea strong enough to justify moving forward?
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The Process of Innovation
Ideas and Solutions
Business Proposition
Business Feasibility
Business Plan
• Persona Mapping
• Technology Mapping
• What is the product or service?
• Who are the users?
• Why will they use the product?
• How does your business make money?
• Industry
• Market
• Product
• Company
• Team
• Investor Pitch
• In-Depth Planning
The Process of Innovation
Step 1) Ideas and Solutions
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The Process of Innovation
Ideas and Solutions
Business Proposition
Business Feasibility
Business Plan
• Persona Mapping
• Technology Mapping
• What is the product or service?
• Who are the users?
• Why will they use the product?
• How does your business make money?
• Industry
• Market
• Product
• Company
• Team
• Investor Pitch
• In-Depth Planning
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The first solution is rarely the best solution…
Idea / Invention
Concept
Technology Map People
Personas
Community Map
Affects &
Effects
Perceptions &
Valuations Outcomes &
Results
Potential Solutions
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Deconstruct an idea to discover affects and effects
Idea / Invention
Concept
Technology Map
Describe the idea:
• What does it do?
• What is special about it?
• What does it compare to?
• What is its effect?
• What allows it to do have an effect?
• What is essential for it to do what it does?
• What are the limits of what it does?
Beg
in
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The best “market research” models how people think and choose
People
Personas
Community Map
Describe the community:
• Who are the users, experts, and influencers?
• What are their needs?
• What outcomes do they desire?
• What experiences do they desire?
Beg
in
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Link technology & community to uncover novel solutions to people’s problems
Idea / Invention
Concept
Technology Map
People
Personas
Community Map
Causes &
Effects
Perceptions &
Valuations
• Effects of technology push versus market pull • Results where most value is likely to emerge • Limits of technology and markets • Combinations of multiple technologies and/or markets
Outcomes & Results
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Refine the idea until it is strong enough to merit deeper investigation
Causes & Effects
Perceptions &
Valuations
How can we do “it”?
Who will value what “it” does?
Remember, all innovations begin as inventions, but not all inventions are innovations.
Similarly, commercialization starts with innovations, but not all innovations can be commercialized.
The Process of Innovation
Step 2) Business Proposition
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The Process of Innovation
Ideas and Solutions
Business Proposition
Business Feasibility
Business Plan
• Persona Mapping
• Technology Mapping
• What is the product or service?
• Who are the users?
• Why will they use the product?
• How does your business make money?
• Industry
• Market
• Product
• Company
• Team
• Investor Pitch
• In-Depth Planning
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Creating the business proposition is iterative
Crafting the business proposition establishes the path to commercialization
• What is the product?
• Who is the customer?
• Why do they buy?
• How do you make money?
Business Proposition
Business Influences
Business Offering
Sol
utio
ns
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Formulate an initial Business Proposition for your “solution” What is your product/service?
• What does your business do?
Who are your target customers? • Are their needs compelling enough to justify buying the
product concept? Why will your target customers use your product?
• Value proposition to the user?
How does your company make money? • Company’s value capture mechanism • Is the product pricing consistent with the value created
for the user?
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Create influence diagrams for the business by mapping the market
Causal loop diagram of a model examining the growth or decline of a life insurance company https://en.wikipedia.org/wiki/Causal_loop_diagram
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Business influences define the offering as a Feature, Product, or Business Feature = Licensing or joint ventures are most likely business outcome
• Can’t acquire complimentary assets • Don’t control ancillary IP
Product = Product development effort that gets acquired is most likely business outcome • Market channel is unavailable • “Product” must be sold with other products (i.e. bundled) • Supply chain is non-existent or monopolized
Small / Niche Business = Assets that get acquired by large business the most likely business outcome
• The market small or narrow • Product line extensions non-existent or limited • Limited ability to cross into other markets
Large business = IPO or acquisition is most likely business outcome • Control of Assets • Viable Supply Chain • Growing primary/secondary markets
Feature, Product, Business (Faley, 2007)
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Is the business proposition strong enough to merit deeper investigation?
Perceptions &
Valuations
Causes & Effects
Business Proposition
Overlapping the technology, community, and influence “maps” provides a clear picture of the business landscape.
Refine the potential solution and business proposition by iterating through the process, knowing that you may have to revisit the technology and community maps to “regroup”
The Process of Innovation
Step 3) Feasibility Study
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The Process of Innovation
Ideas and Solutions
Business Proposition
Business Feasibility
Business Plan
• Persona Mapping
• Technology Mapping
• What is the product or service?
• Who are the users?
• Why will they use the product?
• How does your business make money?
• Industry
• Market
• Product
• Company
• Team
• Investor Pitch
• In-Depth Planning
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Business feasibility from a market, industry, and product perspective
Market Attractiveness
(Potential expansion
to new segments, etc.)
Target Segments, Benefits,
& Attractiveness
(Personas, Needs, & Wants)
Industry Attractiveness
(Porter’s 5-forces,
etc.)
Sustainable Advantage
(Product
Differentiation, Intellectual Assets)
Market Domain Industry Domain
Mac
ro-le
vel
Mic
ro-le
vel
The New Business Road Test, John Mullins © 2003.
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Market Attractiveness
(Expanding to new
segments, etc.)
Target Segments, Benefits,
& Attractiveness
(Personas, Needs, & Wants)
Industry Attractiveness
(Porter’s 5-forces,
etc.)
Sustainable Advantage
(Product
Differentiation, Intellectual Assets)
Market Domain Industry Domain
Mac
ro-le
vel
Mic
ro-le
vel
Business feasibility from a company and team perspective
The New Business Road Test, John Mullins © 2003.
TEAM DOMAIN
Cohesive value chain
Ability to execute
Missions, aspirations
Step 4) Business Planning
The Process of Innovation
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The Process of Innovation
Ideas and Solutions
Business Proposition
Business Feasibility
Business Plan
• Persona Mapping
• Technology Mapping
• What is the product or service?
• Who are the users?
• Why will they use the product?
• How does your business make money?
• Industry
• Market
• Product
• Company
• Team
• Investor Pitch
• In-Depth Planning
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Start with the investor presentation and use the graphics as exhibits in the plan
Leverage the content retention hierarchy to make your presentation memorable
Incr
easi
ng R
eten
tion
• Generic Text
• Text with clearly marked headings
• Bullet points
• Tables
• Graphs
• Diagrams & pictures
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Key elements of an investor presentation (pitch deck) Solution
• Value proposition / Advantages Business Model
• Value Capture Mechanism / Value Chain Market / Industry
• Users / Size / Segmentation / Growth rate / Stage of development Competition
• Relative comparison and competitive positioning Marketing and Sales
• Go-to-market strategy Operations
• Company-building timeline / Key value-building milestones Finance
• Historical results / 5-year projections / Key milestones / Capital requirements Management
• Bio’s of Key personnel / Org charts
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Key elements of an investor presentation (pitch deck)
Solution Business Model
Business Proposition (Steps 1 & 2)
Feasibility Study (Step 3)
Business “Planning” (Step 4)
Market / Industry Competition
Marketing & Sales Operations Finance Business Management
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The business plan is a living document
Business planning is an ongoing activity. You’re never really done. Keep your plan alive by reviewing it regularly. Start each review by listing the assumptions in your plan and how well they’re holding up. At this stage, the goal isn’t to finish a business plan…the goal is to quickly adjust it as you move forward.
This publication provides general information and should not be used or taken as business, financial, tax, accounting, legal or other advice. It has been prepared without regard to the circumstances and objectives of anyone who may review it; therefore, you should not rely on this publication in place of expert advice or the exercise of your independent judgment.
The author makes no representation or warranties of any kind regarding the contents of this publication, and accepts no liability of any kind for any loss or harm arising from the use of the information contained in this publication.
The views expressed in this publication reflect those of the author and contributors and does not guarantee that the information contained in this publication is reliable, accurate, complete or current. The author and contributors assume no responsibility to update or amend the publication.
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Joel Wenger