1. Entrepreneurship Some Frameworks for Setting Innovation Strategy Geoffrey Moore Managing Director

2. 2 Darwin and the Demon © 2004, TCG Advisors LLC October 4, 2015 Agenda Some thoughts about Entrepreneurship Overarching Model Innovation Types and the Market Maturity Life Cycle Examples of Innovation Types for Growth Markets Mature Markets Declining Markets Discussion

3. 3 Darwin and the Demon © 2004, TCG Advisors LLC October 4, 2015 Thoughts about Entrepreneurship Key Attributes of Entrepreneurs Drive to accumulate personal capital Desire for accountability and P&L responsibility Sees innovation in terms of competitive advantage Invests in self and career for long term Entrepreneurship and Other Institutions Non-profits: social entrepreneurship, spiritual capital Corporations: entrepreneurs vs. line executives, staff analysts Incubators: disconnect with survival-of-the-fittest ethic Academic disciplines: no correlation, but not a fit for MBA Engineering: source of innovation and competitive advantage

4. 4 Darwin and the Demon © 2004, TCG Advisors LLC October 4, 2015 Time Revenue Growth Technology Adoption Life Cycle Early Main Street Mature Main Street Declining Main Street Indefinitely elastic middle period End of Life A Fault Line! E D C B Overarching Model Market Maturity Life Cycle

5. 5 Darwin and the Demon © 2004, TCG Advisors LLC October 4, 2015 Disruptive Innovation Application Innovation Product Innovation Platform Innovation Process Innovation Line Extension Innovation Business Model Innovation Marketing Innovation Integration Innovation Structural Innovation Value Chain Innovation Broad Universe of Innovation Types Experiential Innovation Renewal

6. 6 Darwin and the Demon © 2004, TCG Advisors LLC October 4, 2015 Disruptive Innovation Application Innovation Product Innovation Platform Innovation Innovating for Growth Markets

7. 7 Darwin and the Demon © 2004, TCG Advisors LLC October 4, 2015 Governing Model Technology Adoption Life Cycle Pragmatists create the dynamics of high-tech market development InnovatorsEarly Adopters Early MajorityLate MajorityLaggards Techies: Try it! Pragmatists: Stick with the herd! Conservatives: Hold on! Skeptics: No way! Visionaries: Get ahead of the herd!

8. 8 Darwin and the Demon © 2004, TCG Advisors LLC October 4, 2015 Market Development Model Chasm Early Market Innovation strategy changes at each stage Bowling Alley Tornado Main Street

9. 9 Darwin and the Demon © 2004, TCG Advisors LLC October 4, 2015 Innovating for Growth Markets Disruptive Innovation Application Innovation Product Innovation Platform Innovation Complex Systems: Oracle relational database (vs. hierarchical) Volume Operations:eBay auctions (de novo – no precedent) Complex Systems: Agile PLM (distributed ECO management) Volume Operations:Nokia SMS (text messaging on cell phones) Complex Systems: EMC SANs (Storage Area Networks) Volume Operations:Palm Pilot and Treo (PDAs done right) Complex Systems: Salesforce.com (Internet as a computing platform) Volume Operations:Sony Playstation (entertainment computing)

10. 10 Darwin and the Demon © 2004, TCG Advisors LLC October 4, 2015 Process Innovation Line Extension Innovation Business Model Innovation Marketing Innovation Integration Innovation Innovating for Mature Markets Experiential Innovation

11. 11 Darwin and the Demon © 2004, TCG Advisors LLC October 4, 2015 Governing Model The Fractal Structure of Maturing Markets Tornado Phase Roll out new infrastructure Focus on standards Mature Main Street - 1 Differentiate experiences Focus on narrow segments Early Main Street Expand functionality Focus on broad segments Total Available Market PC Mobile Laptop Server PDAs Task-specific Devices Smart Phones Cost Reduction Mature Main Street - 2 Reduce cost & complexity Focus on lower base price

12. 12 Darwin and the Demon © 2004, TCG Advisors LLC October 4, 2015 Fractal Marketing: The Nth Device The Example of Telephones Security System PDA Kitchen Phone Office Phone Bedroom Phone Car Phone Cordless Phone Broadband Line Cell Phone Intercom Baby cam Email Device Game Phone Speaker Phone Fax Emergency Phone WiFi Phone VOIP Phone Video Phone Ring Tones The “Aneurism” Effect

13. 13 Darwin and the Demon © 2004, TCG Advisors LLC October 4, 2015 Innovating for Mature Markets PC Process Innovation Integration Innovation Business Model Innovation Marketing Innovation Experiential Innovation Line Extension Innovation Add value at the surface Reduce costs at the core

14. 14 Darwin and the Demon © 2004, TCG Advisors LLC October 4, 2015 Complex Systems: Cognos Scorecards & Planning (added to BI base) Volume Operations:HP inkjet printers (home, photo, portable, commercial) Complex Systems: Cambridge Technology Partners RAD methodology Volume Operations:Amazon’s one-click sales process Complex Systems: Cisco IBSG (free Internet strategy use consulting) Volume Operations:Apple retail stores (“better together” value proposition) Complex Systems: McKinsey Quarterly (thought leadership) Volume Operations:AOL’s email (“You’ve got mail!”) Complex Systems: Synopsys pricing (from license to lease) Volume Operations:Netscape browser (the power of free) Complex Systems: SAP R3 (ERP) Volume Operations:Microsoft Office (productivity & collaboration suite) Innovating for Mature Markets Marketing Innovation Experiential Innovation Business Model Innovation Line Extension Innovation Integration Innovation Process Innovation

15. 15 Darwin and the Demon © 2004, TCG Advisors LLC October 4, 2015 Structural Innovation Value Chain Innovation Broad Universe of Innovation Types Renewal

16. 16 Darwin and the Demon © 2004, TCG Advisors LLC October 4, 2015 Innovating for Declining Markets Renewal Innovation Value Chain Innovation Structural Innovation Complex Systems: IBM IGS (from product-led to services-led) Volume Operations:Adobe Acrobat (from PC franchise to Internet) Complex Systems: Solectron outsourcing (contract manufacturing) Volume Operations:Dell Direct (disintermediating retail) Complex Systems: BEA acquiring WebLogic (beyond Tuxedo legacy) Volume Operations:Visio getting acquired by MSFT (out of market runway)

17. 17 Darwin and the Demon © 2004, TCG Advisors LLC October 4, 2015 Discussion

18. 18 Darwin and the Demon © 2004, TCG Advisors LLC October 4, 2015 Thank You gmoore@tcg-advisors.com gmoore@tcg-advisors.com