1. Facilitating innovation with software Wilbour Craddock Architect Evangelist Microsoft

3. Status symbol

4. Male economic buyer

5. No late fees

6. Watch movies via Xbox

7. Stay at home

8. Online marketplace

9. Social recommendations

11. Marketed as lifestyle product

13. Where does Innovation come from? Anywhere - Innovation is a phenomenon that can come from anywhere Product Groups Employees Research Customers & Partners Labs

14. Taxonomy of innovation

15. Examples of Product Group innovation New Features within an existing Product Group Windows Search, Office Ribbon, Hotmail drag & drop support New Marketing / Packaging or Bundling Effort Office Suite, Enterprise Agreements Revitalized service offering / New Partnerships Ford Sync, Mergers & Acquisitions New Member for and existing Product Family OneNote, SharePoint

16. Characteristics of startup businesses Build new market capabilities. Create real options in the face of market shifts that ensure long-term leadership Build new technology capabilities Seed new growth areas for the company Venture Capitalist Initially funded by senior leaders –chief software architect or chief of research and strategy

17. Challenges of startup businesses Disruptive models face resistance from existing product groups Tendency to address new markets with ‘proven’ mindset and technology Gray line between product adjacencies and ‘new technology’, must ensure high-powered teams are being aimed at innovation Need strong sponsorship to build and maintain momentum. Struggle to raise funding in performance metric-based budgeting process

18. Examples of startup businesses Development Concept Center Under the CSA – grow ideas from concept to product. Examples: New storage solutions, Simple Sharing Extensions Unlimited Potential Group Integrates new business models, technology solutions, and expanded citizenship efforts to address the needs of people in developed and developing nations Microsoft Start-up Labs An entrepreneurial new product group that develops ideas and prototypes into early-stage, market-proven products.

20. Looking 10-15 years beyond current product-development

21. Collaborating with the entire research community

22. Tech Transfer - incorporate the latest innovations into the company’s products

23. Academics - Building relationships with key universities

25. - Innovation practices Innovation practices © 2011 Microsoft Corporation. All Rights Reserved. 12

26. Business need: new approach Yesterday’s thinking Only the top minds can make a meaningful contribution Ideation is a strategy for innovation Today’s practices Ideas are potential investments Ideas need to be managed Everyone has a voice Innovation is a process © 2011 Microsoft Corporation. All Rights Reserved. 13 - Innovation practices

27. Focus & filtering: identify the best ideas Challenge Focused ideation on a topic, subject, etc Collect only pertinent ideas Tournament Progressive evaluation independent of “challenge” Bake-off of best ideas Akin to Portfolio Analytics and Assessment - Innovation practices Karl T. Ulrich CIBC Professor and Chair Operations and Information Management Department © 2011 Microsoft Corporation. All Rights Reserved. 14

29. Bill Gate’s time away from Microsoft to “think” about new ideas for the business

30. A think tank for evolving ideas and concepts

31. The neutral party for enhancing collaboration and new ideas in OfficeCommunities Of Practice

32. Microsoft ResearchWorldwide Presence 16 MSR India Redmond MSR New England Redmond, Washington Sept, 1991 San Francisco, California Jun, 1995 Cambridge, United Kingdom July, 1997 Beijing, China Nov, 1998 Silicon Valley, California July, 2001 Bangalore, India Jan, 2005 Cambridge, Massachusetts July, 2008 MSR Cambridge, UK MSR Asia (Beijing) Silicon Valley, California

34. Rapidly transfer innovative technologies into Microsoft products

36. Microsoft Research  Product Impact20 years of technology transfer 19 DOS Disk Compression Algorithms 1992 Windows and Office Performance Tools 1995 Windows Media Audio encoding 1996 Office Grammar Checker 1997 Terraserver (leading to Bing Maps) 1998 Windows IPv6 2000 ClearType 2001 Office Speech Recognition 2001 Tablet PC 2001 Spam Filter (Outlook, Exchange, Hotmail) 2003 SQL Server Data Mining 2003 Xbox “Drivatars” 2004 MSN/Live/Bing Search 2006 Windows Desktop Search 2006 Xbox TrueSkill Player Matching 2006 AdCenter Pricing Algorithm 2007 MultiPoint Mouse 2007 Robotics Studio 2007 Bing Translate 2007 Surface 2007 F# 2007 Bing Maps Clearflow 2008 Kodu 2008 Bing Maps 3-D Aerial View 2009 Tag 2009 Bing Maps Street View 2010 Windows Phone Virtual Keyboard 2010 Kinect 2010

37. Scope of Microsoft Research Significant Investment Investing > $9B in R&D (MSR & product dev) Staff of over 850 in 55 research areas International Research lab locations : Redmond, Washington (Sept, 1991) San Francisco, California (1995) Cambridge, United Kingdom (July, 1997) Beijing, People’s Republic of China (Nov, 1998) Mountain View, California (July, 2001) Bangalore, India (January, 2005) Cambridge, Massachusetts (February, 2008) - Xbox Kinect

38. Microsoft Research HEALTH AND WELL-BEING INITIATIVES Computational Modeling of Immune System Processes Medical Image Analysis Microsoft Biology Initiative Stochastic Pi Machine Domestic 2.0: Constructing Ideas of the Family Connecting and Partitioning the Domestic Space Healthcare Privacy Participant in the mHealth Summit 2010 - Xbox Kinect

39. Xbox kinect

40. What is Kinect? Combination of RGB camera, depth sensor and multi-array microphone RBG camera delivers three basic color components Depth sensors “sees” the room in 3-D Microphone locates voices by sound and extracts ambient noise Software makes all the magic possible - Xbox Kinect

41. Idea to innovation: joining the dots © 2011 Microsoft Corporation. All Rights Reserved. 24 - Xbox Kinect Object Recognition HUMAN BODY TRACKING “We need a body tracker with All body motions … All agilities … 10x Real-time … For multiple players … and it has to be 3D ” J. Shotton, J. Winn, C. Rother, A. Criminisi, TextonBoost: Joint Appearance, Shape and Context Modeling for Multi-Class Object Recognition and Segmentation. European Conference on Computer Vision, 2006 R Navaratnam, A Fitzgibbon, R Cipolla The Joint Manifold Model for Semi-supervised Multi-valued RegressionIEEE Intl Conf on Computer Vision, 2007 A match between technology and a need

42. Software provides the magic © 2011 Microsoft Corporation. All Rights Reserved. 25 - Xbox Kinect

43. Programmers View - Xbox Kinect

44. Your fitness evolved © 2011 Microsoft Corporation. All Rights Reserved. 27 - Xbox KIneCT

45. Where can Kinect go? Consumer Air Guitar Hero Shopping in 3D Remote Control Replacement Dance Instructor Education Personal Trainer Physical Therapy Commercial/Government Identity authentication Conferencing Simulation Training - Xbox Kinect

47. Several teams with competing ownership of the technology and/or product

48. Too many managers pushing their own agenda’s

49. No single team owning the problem and working towards a common cross group solution.

50. Too much too fast.

51. Too many people on it all at once, before we really figure out the problem.

53. Thank you! © 2011 Microsoft Corporation. All rights reserved. Microsoft, Windows, Windows Vista and other product names are or may be registered trademarks and/or trademarks in the U.S. and/or other countries. The information herein is for informational purposes only and represents the current view of Microsoft Corporation as of the date of this presentation. Because Microsoft must respond to changing market conditions, it should not be interpreted to be a commitment on the part of Microsoft, and Microsoft cannot guarantee the accuracy of any information provided after the date of this presentation. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.