Innovation

What is innovation?
 The 12 Different Ways for
Companies to Innovate

Sawhney, Wolcott and Arroniz, The 12 Different Ways for Companies to Innovate,
MIT Sloan Management Review, Spring 2006
 Innovation

• Ford (2005) – “..will adopt innovation as its core

business strategy going forward”

• Immelt (2004) – “The Innovation Imperative”

• Balmer (2005) – “Microsoft’s priority is Innovation”

Sawhney, Wolcott and Arroniz, The 12 Different Ways for Companies to Innovate,
MIT Sloan Management Review, Spring 2006
 What is Innovation?

• Starbucks - $4 for coffee

• HDTV

• NeXT Cube

Sawhney, Wolcott and Arroniz, The 12 Different Ways for Companies to Innovate,
MIT Sloan Management Review, Spring 2006
 Business Innovation

“The creation of substantial new value for customers

and the firms by creatively changing one or more
dimensions of the business system”

Sawhney, Wolcott and Arroniz, The 12 Different Ways for Companies to Innovate,
MIT Sloan Management Review, Spring 2006
 The Innovation radar
OFFERINGS (WHAT)
Brand Platform

Networking Solutions

PRESENCE (WHERE) CUSTOMERS (WHO)

Supply Chain Customer Experience

Organization Value Capture

PROCESSES (HOW)
Sawhney, Wolcott and Arroniz, The 12 Different Ways for Companies to Innovate,
 Apple i-pod

• Offerings
• Platform
• Supply Chain
• Presence
• Networking
• Value Capture
• Customer Experience
• Brand
Sawhney, Wolcott and Arroniz, The 12 Different Ways for Companies to Innovate,
MIT Sloan Management Review, Spring 2006
 Collaborative Innovation

Huston & Sakkab, Connect and Develop: Inside Procter & Gamble’s New Model for
Innovation, HBR March 2006
P&G – Connect & Develop
 The Process

• Where to play
• How to network
• When to engage
• Push the culture
• Adapt or die - Lafley

Huston & Sakkab, Connect and Develop: Inside Procter & Gamble’s New Model for
Innovation, HBR March 2006
 Where to Play?
• Top 10 consumer needs
- “reduce wrinkles, improve skin texture and tone
- “prevent the severity and duration of cold symptoms”
• Adjacencies
- Oral care Crest expanded to include whitening strips, power
toothbrushes and flosses
• Technology game boards
- Which of our key technologies do we want to strengthen?
- Which technologies do we want to acquire to compete better?
- Which do we want to sell, license or co-develop?

Huston & Sakkab, Connect and Develop: Inside Procter & Gamble’s New Model for
Innovation, HBR March 2006
 How to Network?
• Proprietary Networks
- 70 technology entrepreneurs out of 6 C&D hubs in
China, India, Japan, Western Europe, Latin America and
USA.
- 10,000 products, product ideas and technologies

• Suppliers
- Top 15 suppliers have an R&D staff of 50,000
- Created a secure IT platform
- Has led to a 30 % increase in joint innovation projects
Huston & Sakkab, Connect and Develop: Inside Procter & Gamble’s New Model for
Innovation, HBR March 2006
 How to Network?
• Open Networks
- NineSigma (Tech briefs to 7L people, 100 proj
completed)
- InnoCentive (has 70k contract scientists – graduate
student in Spain, a chemist in India)
- YourEncore (800 high performing retired scientists –
Boeing engineer with virtual aircraft design for virtual
product prototyping)
- Yet2.com (many Fortune 100 companies are investors –
IP exchange -brokers technology into and out of
companies, universities and government labs)
Huston & Sakkab, Connect and Develop: Inside Procter & Gamble’s New Model for
Innovation, HBR March 2006
 Reverse Innovation
Frugal Innovation
Constraint Based Innovation

Immelt, Govindarajan & Timble, How GE is Disrupting Itself, HBR October 2009
 GE’s changing outlook

• 10 years ago GE managers spoke of the global

marketplace as “The US, Europe, Japan and the rest of
the world”

• Now they talk about

-“resource rich regions – Middle East, Brazil, Canada,
Australia and Russia”;
- “people rich regions – China and India”
- “rest of the world – US, Europe and Japan”
Immelt, Govindarajan & Timble, How GE is Disrupting Itself, HBR October 2009
 Reverse Innovation
Frugal Innovation
Constraint-based Innovation

• Tata Nano
• CISCO - $ 1 billion second Global HO in Bangalore
• Black & Decker is invisible in India and China
• Polycentric innovation
• Huawei has become the worlds 4th largest patent
applicant
• Hand held ECG for $ 800 as against $ 2000  cost
of ECG $ 1 per patient
The Economist, The world turned upside down: A special report on Innovation in
Emerging Markets, April 17-23, 2010
 Reverse Innovation
Frugal Innovation
Constraint-based Innovation

• Godrej & Boyce - $ 70 fridge that runs on batteries

• Bharti Airtel – business model
• Narayana Hrudayalaya – 1/10th the cost  7.7%
PAT as compared to 6.9% for average American
hospital
• Jugaad
• Guanxi
• Shanzai
The Economist, The world turned upside down: A special report on Innovation in
Emerging Markets, April 17-23, 2010
 Reverse Innovation
Frugal Innovation
Constraint-based Innovation

• Developed countries are ripe for embracing frugal

innovation
• Debt fuelled spending and spiraling budgets
• Changing demographic profiles demand greater
healthcare spends

The Economist, The world turned upside down: A special report on Innovation in
Emerging Markets, April 17-23, 2010
How many of you have stayed in
a hotel at least once?
Assignment