BMGT352 Consumer Centric Innovation Professor Yogesh Joshi Check Canvas under assignments for things to do before after class CUSTOMER CENTRIC INNOVATION How do great firms big and small innovate What do we mean by innovation Working definition thinking about all the different needs and all different possible solutions Novel match of solution and need to create value Example iPod People always had need to listen to music There were already many solutions and mp3 players The innovation was the novelty in matching the new iPod with consumers WHY IS IT IMPORTANT TO INNOVATE New products services are a big driver of sales What of sales comes from these new products On average 1 3 sales come from new products is higher for top performers 1 2 of sales Innovation can yield high ROI Harry Potter and Sorcerer s Stone movie Budget was 125 million revenue of 1 billion iPod iTunes Multiple billion in revenue Innovation also creates intangible benefits Apple Samsung Google Microsoft etc all named top innovative companies Culture workers feel more empowered and work well in innovative cultures Brand Recognition people immediately think of you when deciding what to buy better sales and loyalty Leverage with suppliers and dealers if you re at the top of your industry Innovation is a top strategic priority ranked in top 3 priority among 75 of top executives TECHNOLOGY PUSH MODEL Have solution identify need sell to consumer Teflon Roy J Plunkett found something unusual while experimenting New polymer extremely slippery and inert to all chemicals Trademarked as Teflon in 1945 first used by military in artillery shell After WWII DuPont found wide range of uses Electrical cable insulation Soli and stain repellant Coating for non stick cookware Found a solution and then company figured out the need that it fits Pushed the product on to the consumers CUSTOMER CENTRIC MODEL Focus on consumer identify needs develop solution Ford Fiesta development process Designers focused their attention on a target consumer Antonella age 28 single lives in Rome and likes partying Considered a design progressive Everything put into this car was put in by asking Would Antonella like this Think about what the customer wants and then come out with solutions TYPES OF INNOVATION Horizon 1 improvements extensions variants and cost reductions Diet Lime Coke A variant of what you re already selling Horizon 2 company tries to come up with next generation of products and services for core markets Existing solution we don t use and existing market we serve Adjacent growth Exiting solution we don t use and existing market we don t address Horizon 3 Exploration with new solutions and approaches New solution and existing market we currently serve Exploration into new markets Existing solution we currently use and exploration into new markets New category products services New solution and new need See his PowerPoint for clarity Most innovations are Horizon 1 55 KIMBERLEY CLARK CORPORATION SPRING 2001 Introducing new product called Rollwipes New innovation in toilet paper category First in 100 years First dispersible pre moistened wipe on a roll Thought product would fuel growth of TP category Believed new product would not cannibalize their products Spent a lot on R D and patents Completely failed in 2002 K C S MARKETING MISTAKES Requires a bulky dispenser never tested consumers reactions Was never available in trial sizes Never pre tested the ad slogan wetter is better Found that this took longer than regular TP to disintegrate in your toilet IDEO CASE Phase 0 first phase of innovation that set the context for design initiative Simmons CEO wanted IDEO to find new opportunities for a mattress company That s very vague 1 29 15 IDEO Case WAS SIMMONS PROJECT A SUCCESS Yes Goal was to look for unmet needs which they did No Didn t do anything No new product was introduced Culture Very open Fail often Playful bike rack coming from the ceiling Collaboration Child like atmosphere playful SHOPPING CART VIDEO AGAIN Process People anthropology learn about experts in the shopping cart category Reached out to and observed the people went to supermarkets and found people who shop often and are familiar with shopping carts Observed people who build shopping carts to find problems and areas for modifications Store managers different perspective costs of buying carts and theft Covered a wide spectrum of people who will be interacting with their product shoppers builders owners employees etc Not just the end user Deep Dive Focused chaos constructive process no shooting down stupid ideas Brainstorm as many crazy ideas as possible Split up into need based teams Organization Flat horizontal structure Teams are restructured often project manager in one team may just be a member in another team No permanent titles Everyone had a very different background PHASE ZERO More observation based and research based N0 real goal in mind In the video the goal was to build a better shopping cart That would be the goal of phase zero Phase zero what should our goal be Answer goal should be to build a better shopping cart What does IDEO need to be successful in phase zero Less focus on product and more focus on consumer Phases 1 4 we know the product and desired outcome INNOVATION STUDIES ACROSS MANY CATEGORIES REVEAL COMMON THEME Successful innovations are ones that survive a rigorous development The film Cars arose from a tournament that began with about 500 pitches short paragraphs that described possible plots 500 pitches 3 5 years Cars Toothbrush development involved exploration of dozens of forms before final design of Oral B cross action brush was made As mort ergonomically designed toothbrush the CrossAction gave Oral B an additional 5 market share Same idea with captions for cartoons in newspapers SURVIVAL RATES FROM PATENT ACTIVITY Crown jewel patent patent with good value is only about 1 in 3 000 Venture Capitalists typically find 1 good idea in 3 000 HOUR GLASS MODEL FOR INNOVATION Find the right problem Understand the Problem Invent and Validate Create Market Acceptance Execute LINEAR PROCESS Stages 1 Opportunity Identification 2 Concept Generation 3 Design 4 Testing 5 Launch 2 3 15 Design Thinking at Apple APPLE CASE Founded by Steve Jobs and Wozniak IPO in 1980 introduced Apple III targeted at companies Technical problems and relaunched without much success IBM had been big on business side was thinking about entering consumer market Apple focused