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MASTERING DEVELOPMENT WHENTECHNOLOGY LEADS INNOVATIONThriving in a world of disruptive innovation

Simon MillerApril 2014

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Thriving in a world of disruptive innovation

Technology used to be an enabler for innovation development

Ensure alignment between technologies and business aims

Embrace failure as the route to success

Secure portfolio sustainability

Agenda


Thriving in a world of disruptive innovation

In 1993 after 5,127 prototypes and 15 years of frustration and perseverance Dyson launched the first bagless vacuum cleaner. Dyson recently set out to quadruple its UK engineering force by 2020.

Apple launched the iPOD in 2001 – since then:• Classic 6 generations ~ 24m mean• Mini/Nano 9 generations ~ 13m mean• Shuflle 4 generations • Touch 5 generationsApple launched the iPhone in 2007:• 7th generation launched in 2013 ~ 12m meanThe first iPad was released in 2010:• 5th generation iPad Air & 2nd generation iPad

mini launched in 2013 ~ 10m mean

In 1993

Thriving in a world of disruptive innovation...

Many organisations aspire to use disruptive innovation to gain competitive edge. Dyson and Apple have demonstrated how successful this strategy can be.

Even with increasing product complexity innovation life cycles are ever shorter


Technology used to be an enabler for innovation developmentnow it is often the driver

Technologies emerge much faster than before

This brings a set of challenges for organisations not used to being inspired and led by step changes in technology.

They have to move quickly to reap new value and maintain or enhance their market position.

These challenges need to be understood and addressed or they can lead to organisational tension and ultimately value destruction

To get 50 million users took:Radio 38 years

TV 13 years The internet 4 years

IPOD 3 years Facebook 200+ million <1 year


Electronic cigarettes were introduced in China in 2004 for smoking cessation & replacement

Major cigarette companies ignored the technologies

Since 2012 most of these majors have acquired companies to exploit these technologies

Many of the necessary capabilities, materials, supply chains and regulatory environments are fundamentally different .

The impact on their innovation delivery is huge

So what do organisations need to do to adapt to mar ket disruption without destroying themselves?


Align your technology and core business aims and take risks whilst establishing those new capabilities that will enable a sustainable and dynamic portfolio



ENSURE ALIGNMENT BETWEEN TECHNOLOGIES AND BUSINESS AIMS

1



Manage the technologies through an innovation dialogue


Develop road-maps with different horizons


Expose the business to new technologies in environments that will drive creativity

Reactive Proactive

Giant Leaps

Small steps

Car sharing dominates

Evolved working patterns

Dyn

amic

ally

reco

nfig

urab

le

netw

ork

usag

e

Indu

stria

l foc

us o

n ad

apta

tion

Effective linkage between infrastructure investment and land value

Transport investment creates wealth

Fina

nce

freel

y av

aila

ble

Transport responsive to future challengesD

emol

ish

and

rebu

ild

Green, smart, cheap infrastructure costs

Infrastructure re-invents city structure and sets framework for growth

Prim

arily

nat

iona

l fun

ding

InnovationE

cosystem

Impr

ovem

ent

Silo

s

Car ownership dominates

Unchanged working patterns

Fixe

d ne

twor

k us

age

Indu

stria

l foc

us o

n co

nser

vatis

m

No linkage between infrastructure investment and land value

Transport investment follows demand

Fina

nce

rest

ricte

d

Transport reflects current thinking and assumptionsH

erita

ge in

corp

orat

ed

into

new

pla

nnin

g

Expensive, dumb, high carbon infrastructure costs

Infrastructure follows/meets demand

Prim

arily

loca

l /re

gion

al fu

ndin

g

Planned Integrated

Evolved

Travelling “customers”

Pac

ket s

witc

hed

rout

ing

Sec

urity

bas

ed o

n tru

st

Safety leads agenda

Overall value captured for business case

Ope

n, in

tegr

ated

dat

a an

d in

sys

tem

s

Trav

elle

r beh

avio

ur w

ell

unde

rsto

od

Enf

orce

d M

aste

r pla

ns

Pla

nned

and

inte

grat

ed

trans

port

syst

em

Education and messaging promote behaviour change

Travelling “users”

Rou

ting

deci

ded

by

indi

vidu

als

One

rous

“one

siz

e fit

s al

l” se

curit

y

Safety side-lined

Limited business case ignores overall value

Silo

d, p

ropr

ieta

ry d

ata

and

info

rmat

ion

syst

ems

Trav

elle

r beh

avio

ur p

oorly

un

ders

tood

Ligh

t tou

ch fr

ee m

arke

t pl

anni

ng a

ppro

ach

Frag

men

ted

and

com

petin

g tra

nspo

rt sy

stem

“Sin

gle

syst

em” p

lann

ing

appr

oach

dom

inat

es

Future Scape: How will transport evolve to meet the

challenges of World Cities in 2025?

Disparate

“Jou

rney

-bas

ed” a

ppro

ach

to p

lann

ing

and

desi

gn

Transport linked to health agenda

No link between transport planning and health

Education and messaging maintain status quo

Evolutionary driver

Ove

rall

appr

oach

to in

pl

anni

ng a

nd d

eliv

ery

City Landscapes

Moving Targets

Don’t Panic

Hyperlinked

Fast Follower

• FutureWorlds is a collaborative approach to creating plausible future scenarios.

• You can explore uncertainty by exposing and challenging assumptions, scenarios and their implications

• This can inspire and catalyze innovation

FutureWorlds – inspiring innovation through scenarios



Innovation must align with business strategy and generate profitable revenue at acceptable levels of risk


The technology scenarios need to be translated into:

• Market impacts

• Organizational or capability impacts


EMBRACE FAILURE AS THE ROUTE TO SUCCESS

2

Embrace failure as the route to success...


Potential applications include:

• Field servicing and engineering

• Consumer product finding/ information and pricing

• Providing hands free instructions and responses

No-one really knows what works (or does not) or which devices will succeed:

• Device evolution will be unpredictable driven by fashion and societal response

• There is relatively low cost of entry to develop apps and services

• So its time to prototype and explore

Back a number of horses simultaneously

Wearable electronics are proliferating…

And it’s not just gadgets, it’s clothing too…

Under Armour E39

Hug Shirt™

E39



This involves a different mind-set – counter to many of the traditional norms:

• Take a quick and dirty approach to early proof in principle

• Be ruthless with your portfolio - cutting your losses early is a good thing

• But don’t throw away good ideas – 3M took 15 years from concept to getting the Post-it to a successful market launch!

• Full analysis of risk during initiation but recognising low levels of certainty

• Selective use of expert resources

Encourage rapid development as a way to unearth failures quickly


Know your own strengths

• Many of the innovation capabilities required involve technologies, materials, supply chains and regulatory environments which are fundamentally different

• It takes years to build them and few organisations have time to do this

• Benchmark your innovation capabilities to assess the development challenge

• Open Innovation is a powerful way to play to your own strengths and leverage the strengths of others


CORE INNOVATION STRATEGY

CONSUMER INSIGHTS

EXPLORATION

PIPELINE MANAGEMENT

DELIVERY CAPABILITY

IP MANAGEMENT

SUPPLIER MANAGEMENT/

OPEN INNOVATION


SECURE PORTFOLIO SUSTAINABILITY

3

Secure sustainability...


Prioritise development across technologies offering innovation platforms

• People have a tendency to think of “point” solutions

• You can reduce risk through aiming to avoid one hit wonders or solutions for specific segments or markets

• Look for ideas that have a range of outcomes

• You also need to pay attention to technology life-cycles and know when to stop or rebalance investment


...

Technologies have a shelf life. Microreplicationhas a life of perhaps 15 years. We need to get as much out of the platform in the time that we can.

Then, we’ll migrate to something else.

Robert Finocchiaro, Technical Director, Engineered Adhesives Division, 3M


Recognise that as a disruptive innovator you will be a target for second movers

• A leading hotel chain used social media analysis to predict future demand

• It adopted variable pricing to increase room utilisation and build its profits

• Within a few months its competitors realised what it was doing and adopted “me-too” tactics

• The advantage was lost and other avenues had to be explored

This trend and reducing product life cycles means that business case assumptions of multi-year benefits needs to be treated with caution



Exploit all your Intellectual Property, even that you don’t need in your organisation

• Take a dynamic approach to your technology portfolio

• You need a value strategy and decision making process to exploit your IP

• Many organisations have invested in IP that has just been shelved


...

At 3M we’re a bunch of ideas. We never throw an idea away because you never know when someone else may need it. Art Fry, 3M

Business Strategy

Our cast-off is another’s treasure

Develop Idea

Add to IP Portfolio

Competitor assessmentMarket

Product Matrix

Obtain Externally

Obtain Internally

Patent decision

Value Opportunity

Value Extraction Sell/licence

Develop new

product

Store for Later

New tech. need

Cancel


Align your technology and core business aims and take risks whilst establishing those new capabilities that will enable a sustainable and dynamic portfolio
