The Innovation Bootcamp University of California Irvine Presentation by Sanjay Dalal on Jan 12, 2009

The Innovation Bootcamp

WELCOME!!

THE INNOVATION BOOTCAMP
January - 2009
Brought to you by:
Creativity And Innovation
Driving Business

www.InnovationMain.com


What do you See?



What do you See?

Obvious: Zero, Circle, Dot
Less Obvious: Wheel, Plate, Dish
Even Less Obvious: New Moon, Solar
Eclipse, Mole, Seed
Hidden: Top of a Nail, Sphere, Cylinder
Answer: Top of a Head


What do you See?

INNOVATIONMAIN COM



What do you See?

www.scientificpsychic.com


www.scientificpsychic.com


Today’s Agenda
• About me
• Wisdom from Innovators
• The Innovation Index
• Business Innovation Success
• Apple Case Study
• Web 2.0
• SCAMPER
• Key Takeaways



Sanjay Dalal

Chief Innovator



Sanjay Dalal
• Innovator, Entrepreneur and Investor
• Author of Faculty eBook on Innovation in Business
• Founder of the Innovation Index
• President & Managing Director, Innovation Index Group
• Fifteen years leadership experience at High Tech companies
• Joint U.S. Patent, First Position Putnam Math Competition
• B.S.E.E., UT, Austin; Management Certification Cornell University
• Member, Dean’s Leadership Circle, UC Irvine Business School
• Basketball Coach, Art Master, Student Site Council
• Active Rotarian and philanthropist



Creativity And Innovation Driving Business
INNOVATION SERVICES, STRATEGY & CONSULTING
http://www.InnovationMain.com

• No-nonsense insights, strategy and solutions with
proven processes that drive Creativity and
Innovation at your business, create real market
growth and success for your products and services,
and achieve market leadership



$$
SUCCESS New People
Business Processes
Culture
Innovations Partners
Networks
Ideas

Creativity



Who is an Innovator?
• A business
• A person – employee or partner?
• Do businesses create innovators?
• Do innovators create businesses?
• Is there a difference: Innovator vs.
Entrepreneur?



Wisdom from Innovators
• quot;Failure is our most important product.quot;
R W Johnson, Jr., Former CEO, Johnson &
Johnson

Never Lost Money



Wisdom from Innovators
• quot;Our company has, indeed, stumbled
onto some of its new products. But
never forget that you can only stumble
if you're moving.quot; Richard P. Carlton,
Former CEO, 3M Corporation
• Considered as perhaps most innovative
company of last century – Scotch, Post-it



Leadership and Innovation
• Sam Walton, founder of Wal-Mart:
“I have always been driven to buck
the system, to innovate, to take
things beyond where they've
been.”



Thomas Alva Edison – An Innovator
unlike any other
• quot;Genius is one per cent inspiration and
ninety-nine per cent perspiration.
Accordingly, a 'genius' is often merely a
talented person who has done all of his
or her homework.”
• The three things that are most essential to
achievement are common sense, hard
work and stick-to-it-iv-ness...


Leonardo Da Vinci – An age-old
Innovator

• “There are three classes of people:
Those who see. Those who see
when they are shown. Those who do
not see.”
•Innovators foresee – Art,
Science & Experience


Steve Jobs – Today’s Innovator

• “Innovation distinguishes between a
leader and a follower.”
• “Innovation has nothing to do with
how many R&D dollars you have…It’s
about the people you have, how
you’re led and how much you get it.”



Steve Jobs – Today’s Innovator

• Leadership – Leader & Follower
• People – Culture – Co-creators
• Processes – How you’re led
• Comprehension – How much you get
it
Get it, Got it, Good!


Six Ways to Find Innovation

#1
Stand in different
places
www.InnovationMain.com Chuck Palus and David Horth



#2
Use the lenses of
other domains



#3
Ask powerful
questions



#4
Foster new
knowledge



#5
Create a visual verbal
journal



#6
Change the pace of
attention


Three Takeaways
• Innovators see beyond the ordinary,
and yet have real common sense
• Innovations necessitate lots of failed
experiments & hard work to uncover the
latent customer need
• Innovations require processes to think
creatively, ideate and experiment



The Innovation Index
• Founded in December 2006
• Weighted Index of the Top Innovative
Companies
• The Innovation Index is a performance
index of the Top 20 Innovators in North
America
• Correlates stock, business and innovation
performance



Top 20 Innovators - 2008
3M Company Google
Amazon.com Hewlett-Packard
America Movil Intel
Apple IBM
AT&T Merck
Best Buy McDonald's
Cisco Systems Microsoft
Costco NIKE
eBay Research In Motion
General Electric Proctor & Gamble



Top Global Innovators
• Business Models – Netflix News Corp Reliance HP
eBay Vodafone Apple Dell Web 2.0
• Products – Apple Sony Nintendo Microsoft Nokia TATA
RIM Honda 3M GM Audi Boeing Intel Samsung Daimler
Cisco Siemens Verizon
• Customer Experience – Google BMW Disney Virgin
McDonald’s Southwest Air Amazon Nike Costco
Singapore Air Facebook AT&T Target Starbucks
• Processes – Toyota GE HP P&G IBM Wal-mart Exxon
Mobil BP
Source: BusinessWeek
Excludes Financials


• Innovation Index Performance (2006-07)
• Average of 67 innovations per Innovator
• 805 new and enhanced products
• 411 strategic collaborations & partnerships
• 95 new acquisitions
• Combined market cap grew by 11% to $2.23
trillion from $2.01 trillion in 2006, an average
increase of $11 billion per Innovator


Top-Down Bottom-Up
Innovations Innovations
Management / Customers and
Source of ideas
Partners
Your Organization users
Internal resources, Deep
Drivers Innate
product, understanding of
need
positioning customer needs
Structured and Spontaneous and
Interaction
Open
managed non-linear
Go to the customer Invite customer to
Strategy
Co-creation
participate
Linear and strictly Emergent and
Processes Ordered
defined serendipitous Chaos
Communities,
Methods Market research,
crowdsourcing,
surveys, focus Web 2.0
peer-production,
groups
social media

Source: dicole.com


Three Takeaways
• Top Innovators grow their business
even in tough economic times
• Top Innovators innovate through
new products, collaborations,
partnerships, and acquisitions
• Top Innovators increasingly learn
and leverage Bottom-Up approach
for new innovations


Innovation Success

• Question:
• How do you measure
Innovation Success?
• What is the benchmark?



Business Innovation Success
• An Innovation that produces at least 5% of
company's total revenue (up to equal
margins) within three years after
commercial launch, and grows to at least
15% of company's total revenue (with
equal or better margins) within eight years
of commercial launch is 100% successful.


At least $500 million annual revenue or
Company A
5 years in business
Innovation ABC Launch

Time Within 3 years from Launch
Innovation Revenue At least 5% of company annual revenue
Innovation Margins Close to equal margins
FIRST MILESTONE Innovation ABC 50% Successful
REACHED
CONTINUE / EXPAND Innovation ABC Funding
Time Within 8 years from Launch
At least 15% of company annual
Innovation Revenue
revenue
Innovation Margins Equal or better margins
SECOND MILESTONE Innovation ABC 100% Successful
REACHED
FUND NEW INITIATIVES


Successful Innovation
Apple iPod


Successful Innovation
Apple iPhone


Three Takeaways
• Create metrics to benchmark
business innovation
• Measure the success of your new
innovations (don’t be mislead by PR)
• Create institutional memories to
repeat success and avoid same
mistakes


www.InnovationMain.com Apple.com

Apple
• Apple Computer, Inc.
• or
• Apple, Inc.
• Question:
• What is Apple?


Apple today
• “We’re armed with the strongest
product line in our history, the most
talented employees and the best
customers in our industry. And $25
billion of cash safely in the bank
with zero debt,” Steve Jobs, CEO of
Apple


Apple iPhone

Launched June 2007
Over 5 million sold in 1 year
Over 10 million sold in 2008

At $499 an iPhone 
$2.5 Billion to $5 Billion in annual
Business. #3 Cellphone maker
Liftoff: 0 to $2.5 Billion+ in <1 year



How did Apple do it?
• Increase revenue more than 400% in 8
years and some…
• Increase net profit more than 650% in 8
years and still growing…
• Increase market cap more than ten times
to over $85 billion in 8 years and
counting…


Innovation in Products
• Redefined Macintosh line of desktops and laptops
beginning with iMac in 1998 and iBook in 1999
• iTunes store and iPod player in 2001.
• Innovative Macintosh desktops and laptops with new
line of MacBook, Mac Pro and Mac Mini in 2006
• Smartphone revolution with iPhone in 2007 and
iPhone 3G in 2008
• Software innovation with OS X – Leopard, Safari, the
new App Store for iPhone / iPod touch apps



Innovation in Business Model
• Apple created industry first business model
on iTunes store by offering music downloads
to consumers for only 99 cents a song
• Apple created strategic partnerships with
major music labels to get royalty per sale
• Apple expanded these partnerships to movie
studios and TV networks to offer movie
rentals, new movies and TV shows



Innovation in Business Model
• Apple created an exclusive relationship with
AT&T in U.S. for the iPhone launch – a first!
• Apple obtained subscription payment from AT&T
from the monthly data plans – a first!
• Apple significantly expanded iPhone 3G
distribution by establishing carrier relationships
in over 70 countries – still exclusive with AT&T



Innovation in Customer Experience
• Apple introduced Apple Retail Stores in 2001
• Over 200 stores worldwide including 8
countries outside the U.S.
• Theme: “Come to shop. Return to learn”
• All things Apple. Great experience.
• Apple sells Apple products and accessories
through Apple Online Store
• iTunes store: Music, Movies, TV, Apps


Innovation in Customer Experience
• Apple Retail Stores
• Highest sales per square foot
• Innovative storefront design
• Open, customer-friendly atmosphere with
highly knowledgeable sales reps
• Great customer experience
• Apple Online Store
• iTunes store - #1 Music Store + Movies, TV, Apps



iPod Opportunity

iTunes App Store potentially redefines iPod touch
into a hand-held gaming console and can
significantly expand Apple’s footprint into the
gaming market! Games are way cheap!

www.InnovationMain.com (source: Forbes)

• Advanced chemistry, intelligent monitoring of the
system and battery, and Adaptive Charging
technology to create a revolutionary new
notebook battery that delivers up to eight hours
of wireless productivity on a single charge and
up to 1,000 recharges without adding thickness,
weight or cost to the MacBook Pro’s incredible
design.* The longer battery lifespan equals
fewer depleted batteries and less waste, which
is better for the environment.

Apple.com


How Apple Innovates?
• Establish Apple as the best COOL brand
• Marketing, Website, Retail stores, Products – Everything!!
• Envision & Create the best COOL products
• iPod, iPhone, MacBook, Air, Pro, Retail Stores..Next generation
• Deliver best-of-breed, highest quality products & service
• Precision, Performance, Design, Technology, Experience
• Capture emerging consumer landscapes & trends
• Media & Entertainment confluence, Entertainment + Hand-held
gaming consoles, Business & Leisure, Green, Software apps
• Grow the ecosystem of partners


Apple – Top Innovator
• Innovation and Leadership
• Innovation in Products
• Innovation in Business Model
• Innovation in Customer Experience
• Innovation in People and Processes



Web 2.0

• Question:
• What is Web 2.0?



Business Model Innovation
• New Web 2.0 framework,
and the new Web 2.0
Business Models



2.0
1.0

Web 2.0
• Strategic Shift – One way Interaction between
people and computers (websites), to Multi-way
Interactions between people and people, and
people and machines where people become
co-creators.
• People and networks share and co-create all
types of content, and provide context to business
processes. Biggest successes: Myspace,
Youtube, Facebook, Blogger, Wikipedia


Web 2.0 business models
■ Create a large/focused niche user community (many)
■ Sell API access (Google)
■ Sell services to a large group of SMEs (Salesforce.com,
Citrix, NetSuite, Sugar CRM)
■ Sell data to partners (Facebook? :))
■ Get a revenue share from transactions (eBay)
■ Sell advertisements (MySpace, Google, Yahoo)
■ Sell value-added platform (Amazon Web Services)
■ Freemium - Sell premium memberships (Livejournal)
■ Sell your company (Youtube)

Source: dicole.com


Types of Business Models
• •
Brokerage Affiliate
• •
Advertising Community
• •
Infomediary Subscription
• •
Merchant Utility
• Manufacturer
(Direct)

www.InnovationMain.com Source: Michael Rappa


Three Takeaways
• Web 2.0 is for real (just like eBusiness)
• Business must redefine itself to
embrace Web 2.0 for new innovations
• Processes to “open up” & “extend out”
to partners and build the network –
co-creation, participation, openness,
standards, decentralization, users


SCAMPER
Generation of
ideas to change
something.
Use powerful
action verbs.

www.InnovationMain.com Source: eCornell


SCAMPER examples
• Business Process Outsourcing – Substitute
• Apple iPhone, Smartphones – Combine
• Digg, RSS feeds, News subscriptions – Adapt
• MP3 Technology and MP3 Players – Minimize
• Online Super Stores – Magnify
• Grocery Store Check Out Receipt – Put to other uses
• Standard versions of Software and Trials – Eliminate
• Department Stores – Rearrange



SCAMPER Problem
• iTunes Store: New business model of
69 cents, 99 cents, $1.29 for songs
• What could have Apple done
differently?
• Substitute, Combine, Adapt,
Minimize, Magnify, Put to other Uses,
Eliminate, Reverse, Rearrange



Key Takeaways
• Successful Innovations accelerate & grow business,
and provide sustainable competitive advantage
• I can be an Innovator – Learn, Learn, Learn
• Questions, Institutional memory, Mistakes,
Common sense, Hard work, Six ways, Bottom-Up,
Creativity Tools, Successes – Never give up!
• Build an Innovation Factory e.g. Apple
• Products, Design, Experience, People, Culture,
Processes, Partners, Networks, Web 2.0



Questions?
• Creativity begins with asking questions…
• Innovation happens when you find
answers…
• No questions, no answer
• More questions, better answer
• “The important thing is never to stop
questioning.” - Albert Einstein


Contact Us

Main: 1-877-904-6660
Fax: 1-949-861-9320
info@innovationmain.com

Creativity And Innovation Driving Business


The Innovation Bootcamp University of California Irvine Presentation by Sanjay Dalal on Jan 12, 2009

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