MANAGING INNOVATION ACTIONS

Action Pathway

Sources of Ideas Global Multi Products Chile Key Accounts Best Buy Discovery Phase Global Multi Products Chile Integrated Solutions Harvard University Wyss Institute Innovation Communities P&G’s InnovationNet IBM’s AlphaWorks Google Labs

Controlled versus Open Learning  Organizations choose between make, co- create or buy strategies of innovation.  What are the pros and cons of creating innovations in-house versus through an open peer development system?  Innovation Communities: Connecting your company with people outside the organization “whose passions match your problems” (Gary Hamel).

Larry Huston, former VP for Innovation and Knowledge at P&G “You can’t possess all the science and brilliant minds … In our R&D organization we have 7,500 people in 150 science areas, but there are 1.5 million high- quality people outside P&G. It doesn’t take a genius to figure out that if you can engage the brains of your 7,500, plus the key ones from that 1.5 million, you can build better products.”

The Lone Wizard or the Masses What is the contribution of Open Source? On May 22, 1997, a little- known software programmer from Pennsylvania named Eric Raymond presented a paper at a technology conference in Würzburg, Germany. Titled “The Cathedral and the Bazaar.” Traditionally, sophisticated programs had always been “built like cathedrals, carefully crafted by individual wizards or small bands of mages working in splendid isolation.” An open source project, in contrast, was the product of a large and informal community of volunteers who in aggregate “seemed to resemble a great babbling bazaar of differing agendas and approaches.” Raymond coins Linus’s Law, after Linus Torvalds, Linux’s founder and presiding genius. “Given enough eyeballs, all bugs are shallow.” The Ignorance of Crowds by Nicholas G. Carr 05/31/07, enews Strategy+Business.

Effective use of peer development systems EXPERT TEAM Torvalds’ hierarchy of talented software programmers to help manage the contributions. IDEA GENERATION Linus Torvald, founder and presiding genius of Linux PEER DEVELOPMENT Public contributions to the refinement of Linux

Sources of Ideas Global Multi Products Chile Key Accounts Best Buy Discovery Phase Global Multi Products Chile Integrated Solutions Harvard University Wyss Institute Innovation Communities P&G’s InnovationNet IBM’s AlphaWorks Google Labs IDEO

DESIGN INNOVATION  How to design breakthrough inventions: IDEO’s David KelleyIDEO  What is the design process?

FROM DESIGN TO VALUE- ADDED INNOVATION  How many ideas?  How often?  What to do with them?

“Long Tail” of innovation L. Fleming (2007) “Breakthroughs and the “Long Tail” of Innovation. MIT Sloan Management Review.

Making the tough choices:  “On May 1, HP’s new labs director, Prith Banerjee, plans to unveil a list of 20 to 30 major projects HP Labs will pursue, a dramatic cut from the 150 or so currently on its docket.  Ideas with little hope of payoff will be cut – others will be consolidated. BW April 28, 2008

Product Life Cycle

MICHELIN’S INNOVATION TIME LINE

Projects and Portfolios  Project Management Managing an individual project Managing project resources Achieving project goals  Portfolio Management Managing a group of projects Managing organisational resources Achieving organisational goals

Types of Projects (Source: Wheelwright and Clark, 1992) How many innovation projects does Michelin engage in?

Stage Gate Process

Project Planning  A project can represent a large investment of time, money, and resources  Planning a project effectively can: Maximize contribution to goals Fundamental to the financial considerations Crucial to scheduling of resources and the control of progress and costs

Project Scheduling  A schedule is the conversion of a project action plan into an operating timetable  Scheduling of people, equipment, information and their interrelationship  Fundamental basis for Understanding project complexity Monitoring and controlling project activity and budget Tool for the management of projects.

Project Control  Once operational, control of the project is necessary to: Measure progress Identify deviations Take corrective action (when needed)  Continuous cycles of planning, implementation, and reviewing take place throughout the project lifecycle

Payback  Capital  Recurrent Costs  Recurrent Revenues Additional Revenues Cost Avoidance Cost Savings  Payback=(Capital-Costs)/Revenues

Qualitative techniques  Fit with organizational goals and objectives  Fit with competitive necessity for sustainability  Fit with existing product or service range  Fit with available resources  Fit with existing competencies  Fit with desired future competencies  Fit relative to competitor direction  Fit relative to risk quotient  Fit with other innovation projects, ongoing or planned

Commercializing New Products  Compliance with industry standards  Compatibility with existing products  Production costs  Distribution capability  After-sales service  Production Plan  Market Launch Plan

Feasibility Studies  Marketing Screen  Operations Screen  Finance Screen  Competitor Analysis  Price-performance Screening  Financial Analysis

Adoption of New Products

Innovation at Procter & Gamble  Jun 23, 2008 Jun 23, 2008  An interview with A.G. Lafley, Chairman and CEO, Procter & Gamble. Innovation is at the core of P&G's business strategy. See how P&G makes innovation an everyday practice in their organization.