1. Mar 15, 2007 Version 1.3 Copyright 2007 1 Robert Porter Lynch 401-640-1166 RobertLynch@warrenco.com The Great Problems in the World Today will be Solved on a Foundation of Collaborative Innovation

2. Mar 15, 2007 Version 1.3 Copyright 2007 2 Challenge without Inspiration Desire without a Dream Drive without Destiny Falling into the Abyss between what’s Real versus what’s Possible Without a an organization risks: Alignment + Collaboration + Innovation  Synergy

3. Mar 15, 2007 Version 1.3 Copyright 2007 3 Key Problems, Priorities, Issues: (We are not a Solution In Search of a Problem) Growth & Innovation are Top of Mind for CEOs –Poor Connection between Innovation & Revenue Generation –Don’t See Innovation as a Strategic Initiative at the Value Chain level – it remains a set of tactical processes Innovation is a confusing pastiche of Slogans, Tools, Techniques, Aphorisms, and Platitudes –CEOs were not trained in Innovation at MBA level – little/no management skills/experience in innovation –No Concrete Innovation Management System Innovation is confused with Technological Invention –CTOs are being re-knighted as Chief Innovation Officers –Up to 80% of Innovation is non-technical (Potential is untapped) The Innovation Onslaught –Will require companies to Double, even Triple their Innovation Output

4. Mar 15, 2007 Version 1.3 Copyright 2007 4 Why Do we Need a Collaborative Innovation Architecture? Too many Slogans, Platitudes, High Aspirations Not Enough real results Chief Technology Officers are unclear about their role as Chief Innovation Officers Killing of Innovation during Acquisitions Lots of Tactical/Small Scale Efforts Little Strategic Initiatives Too Many Tools & Techniques Confusing: What to Use & When The Results in the Field:

5. Mar 15, 2007 Version 1.3 Copyright 2007 5 Consequences 1.Loss of Competitive Advantage: –Because Innovation is the #1 Competitive Advantage in a Fast-Moving World, is vulnerable to being “out-innovated” in the marketplace 2.Falling Behind: –Innovations that should be occurring at a rapid rate are not surfacing 3.Migrating Innovation into your Company: –Innovations that are developed by alliance partners & strategic suppliers are not being migrated into your Company –Customers are a vital source of innovation 4.Top & Bottom Line: –Innovation potentially could provide Billions in New Revenues and Millions in Bottom Line Impact. The Consequences of having no Innovation Architecture or Strategic Program could be extremely dangerous:

6. Mar 15, 2007 Version 1.3 Copyright 2007 6 Why & What of “Architecture of Innovation” What is Architecture? The Compelling Imperative How this is Different

7. Mar 15, 2007 Version 1.3 Copyright 2007 7 What is “Architecture” Systematic Set of Strategies, Processes, Practices, Tools, and Methodologies that, when applied masterfully, produces a consistent, high quality result that lasts and regenerates. Without an “Architecture” there is no way to take the learnings of individual builders and artisans and transmute these into other diverse situations. From Wikipedia –Architecture (from Greek, "master builder“) is the art and science of designing structures. –Today, architecture is the art and discipline of creating an actual, implied or apparent plan of any complex object or system: implied architecture of abstract things such as music or mathematics, apparent architecture of natural things, such as geological formations or the structure of biological cells, or explicitly planned architectures of human-made things such as software, computers, enterprises, and databases, in addition to buildings. –Architecture is a mapping of the elements or components into some kind of structure or system, which preserves the relationships among the elements or components.

8. Mar 15, 2007 Version 1.3 Copyright 2007 8 Architecture of Collaborative Innovation B.CULTURE Systematically Pervades an Organization Strategy Process Culture C OLLABORATIVE I NNOVATION IS A POWERFUL & COMPELLING IMPERATIVE A.STRATEGY Implemented Across the Value Chain with suppliers, with customers within the company C PROCESS to manage relationships, productivity to channel creativity internally Scaleable from Macro to Micro

9. Mar 15, 2007 Version 1.3 Copyright 2007 9 How is Architecture Different? STRATEGIC Imperatives, Policies, Programs, & Alliances for Competitive Advantage at every point in the Value Chain OPERATIONAL Within a Business Unit’s Culture Tactical Tools &Techniques within Teams Most Companies & Consultants focus here

10. Mar 15, 2007 Version 1.3 Copyright 2007 10 Key Principles of Innovation Innovation: Simple Definition Six Elements of the Innovation Engine Competitive Advantage Differential as Source of Innovation Innovation on the Edge

11. Mar 15, 2007 Version 1.3 Copyright 2007 11 “Simple” Innovation Definition Strategies, Systems, Structures & Processes that Generate New Sources of Value & Growth for an Organization

12. Mar 15, 2007 Version 1.3 Copyright 2007 12 Six Different Kinds of Innovation  80% of Innovation is Non-Technical (Solutions, Process Innovation, New Business Models, etc.)  Must Capture All Forms & Sources of Innovation to Compete

13. Mar 15, 2007 Version 1.3 Copyright 2007 13 Innovation Travels with Two Companions

14. Mar 15, 2007 Version 1.3 Copyright 2007 14 Innovation is the Critical Driving Force in Today’s Business World In a Fast Moving, Rapidly Changing World, the Most Sustainable Source of Competitive Advantage is.. Collaborative Innovation

15. Mar 15, 2007 Version 1.3 Copyright 2007 15 What is the Fundamental Issue that is Difficult to Master in Innovation? Differentials in Thinking are the Principle Source of Innovation

16. Mar 15, 2007 Version 1.3 Copyright 2007 16 New Paradigm Generation comes from people Who Do Not Think Alike Collaborative Innovation Generates New Paradigms through the Synergy of Compatible Differences Locked Inside the Collaboration Structure lies the Hidden Potential for Co-Creative Breakthroughs

17. Mar 15, 2007 Version 1.3 Copyright 2007 17 Innovation Occurs on Edges of Eco-Spheres & Interfaces of Dissimilar Structures

18. Mar 15, 2007 Version 1.3 Copyright 2007 18 Purpose of Collaborative Innovation Architecture TM Harness & Align the Powerful Synergy of Differentials Thinking –Analysis –Synthesis –Genesis –Mimesis –Systemesis Mind Strengths –Linear & Logical –Strategic & Conceptual –Creative Energy –Relationships Capabilities to make things happen –Action & Empowerment –Learning & Knowledge –Design & Create –Location & Physical Presence Wisdom – as the synergistic unity of: –Commitment to Innovation –Thought & Intellectual Capital –Capacity to Take Action –Willingness to Produce Results –Desire to Collaborate

19. Mar 15, 2007 Version 1.3 Copyright 2007 19 Outcome We provide a collaborative innovation architecture that generates breakthroughs which produce: –Extraordinary Results, –Organizational Growth, –Innovation Across the Value Chain, –Generation of New Wealth, and –Deep Level of Personal Meaning, Coupled with a Renewed Sense of Purpose For senior organizational leaders who face intense global competition and increasing pressure for growth in a complex and fast-changing environment..

20. Mar 15, 2007 Version 1.3 Copyright 2007 20 What is “Innovation Architecture” StrategiesSystemsStructuresSolutions Skill Sets Use Best Processes & Best Practices ReplicableScaleableTrainableAdaptable Produce Consistent Results

21. Mar 15, 2007 Version 1.3 Copyright 2007 21 COLLABORATIVE INNOVATION ARCHITECTURE SM (High Level View) Strategic Gives Direction & Purpose Systemic Provides Leadership & Organization Performance Enables Action & Results Support Provides Functional Integration The lack of a Conscious, Systematic, Best Practices-Based Architecture means most companies have no capability of turning Vision into Value, relegating their Innovation to a slogan or tools & techniques, not a system of success

22. Mar 15, 2007 Version 1.3 Copyright 2007 22 COLLABORATIVE INNOVATION ARCHITECTURE SM (Mid-Level View)

23. Mar 15, 2007 Version 1.3 Copyright 2007 23 Four Main Elements of the Collaborative Innovation Architecture sm Strategic Elements Rationale: –Set Direction, Purpose, Value –Establish Competitive Advantage Components –Strategic Imperative & Competitive Rationale –Value Chain Linkage & Network Design –Strategic & Internal Alliances –Policies, Principles, & Programs Systemic Elements Rationale: –Pervade the Innovation Territory –Enable the Strategic Elements –Empower the Core Elements –Align the Support Elements –Coordinate & Synchronize Components: –Leadership & Innovation Championing –Organizational Design –Innovation Culture –Personal Relationships & Trust Building Performance Elements Rationale: –Processes & Practices that produce innovation –Linkages that connect the Processes & Practices Components: –Processes & Practices –Tools & Techniques –Pilot Projects –Coordination & Synchronization Support Elements Rationale: –Prevent Misalignment, Dysfunction, and Dysphoria –Augment the Strategic, Systemic, and Core Action Elements Components: –Metrics, Rewards, & Diagnostics –Legal & Contractual –Capability Building (Training & Development) –Supply & Procurement

24. Mar 15, 2007 Version 1.3 Copyright 2007 24 Challenge & Call to Action for Your Organization For Too Many Companies Innovation is: Slogans Not a Strategy Slogans Not a Strategy Platitudes Not a Program Platitudes Not a Program Aspirations Not an Architecture Aspirations Not an Architecture

25. Mar 15, 2007 Version 1.3 Copyright 2007 25 What we encourage our clients to do 1.Start Thinking about Innovation Strategically 2.Identify Business Units Where Innovation will have an impact 1.Technical Invention 2.Product Improvement 3.System Solutions 4.Process Innovation 5.Market Extension 3.Appoint Innovation Champions 4.Address Six Leverage Points – Apply Best Practices 1.Strategy 2.Leadership & Relationships 3.Legal & Contractual 4.Organization Design 5.Performance Processes 6.Econometrics 5.Launch Innovation Pilot Projects 6.Measure Results, Make Adjustments, Expand & Proliferate

26. Mar 15, 2007 Version 1.3 Copyright 2007 26 Our Value Proposition We will create a significant jump in the level of collaborative innovation, resulting in quantifiable increases to revenues & profits.

27. Mar 15, 2007 Version 1.3 Copyright 2007 27 This is a Senior Executive Responsibility Make COLLABORATIVE INNOVATION a TOP PRIORITY Vision without Execution is Hallucination! Manage Your Imagination!

28. Mar 15, 2007 Version 1.3 Copyright 2007 28 The Time is NOW The Battle of Value Chains Has BEGUN! The Alliances are being formed Innovation is the Field of Battle I can regain lost ground, BUT CAN NEVER REGAIN LOST TIME -- Napoleon

29. Mar 15, 2007 Version 1.3 Copyright 2007 29 What’s At Stake? Knowledge lets us Understand our PAST Imagination lets us Design our FUTURE Collaborative Innovations becomes the Engine for Creating Synergistic Futures Contact @warrenco.com For more Information

30. Mar 15, 2007 Version 1.3 Copyright 2007 30 Mission, Vision, Purpose Positioning Statements Why The Warren Company Appendix 1 The Warren Company

31. Mar 15, 2007 Version 1.3 Copyright 2007 31 Mission The Warren Company works with senior executives in organizations that are committed to achieving extraordinary results through breakthroughs generated from a foundation of collaborative innovation.

32. Mar 15, 2007 Version 1.3 Copyright 2007 32 Vision Year after year, The Warren Company’s compelling strategic and operational architectures in collaborative innovation will be recognized as the standard of excellence by business, government and non-profit organizations, the press, media and analysts throughout the world. We are dedicated to the universal adoption of the architecture, skills and philosophies of collaborative innovation to think, create and work together producing sustainable strategic and economic results far beyond what has heretofore been possible. Purpose

33. Mar 15, 2007 Version 1.3 Copyright 2007 33 Positioning Statement Our Collaborative Innovation Architecture TM is composed of key –strategies, –systems, –structures, –solutions, and –skill sets that will be the foundation of the world’s most successful companies, networked enterprises and organizations.

34. Mar 15, 2007 Version 1.3 Copyright 2007 34 Positioning Statement Unlike Consultants, We are “Architects and Capability Builders" who deliver a tested and effective strategic system and process methodology that harnesses the innovative power of differentials across internal and external boundaries.

35. Mar 15, 2007 Version 1.3 Copyright 2007 35 Why The Warren Company? We are Architects & Capability Builders –We Design/Co-Create Innovation Systems –We Qualify & Work with Artisans and Engineers –We Give Clients Long-Term, Sustainable Capabilities We are NOT Consultants (we are Resultants) –While we: Give Advice, that is not our primary purpose Do Analysis, that is not our primary purpose –Our Job is to co-create, with our clients, the most sustainable, regenerative system of useful competitive advantage through Collaborative Innovation Architecture TM

36. Mar 15, 2007 Version 1.3 Copyright 2007 36 1.Performance Processes Mapping 2.12 Standards of Collaborative Innovation Architecture Appendix 2

37. Mar 15, 2007 Version 1.3 Copyright 2007 37 EXAMPLE: Technical Innovation Across Boundaries Six joint process sets: Pipeline, Portfolio, Intellectual Property, Cooperation, Interactions, Commercialization Development Ideation Processes Proof of concept Incubation External Idea Search Collaborative Networks Testing Pipeline Risk Project Management Terminate Launch Gates Economics Prioritization Portfolio Management Review Scheduling Strategic Fit Intellectual Property Disclosure Agmt Joint DevelopmentAgmt. Collaboration Agmt. Rights in field Cooperation Trust Mutuality Openness Respect Commercialization Tech Development Scale up prototype Capital appropriation Prepare for supply Commercial agreement Success criteria Joint meetings Web Project Technology Telecom Co-location Co-Creative Ideation Patent strategy Symposiums Shared data bases Cross Licensing Interaction Invention ownership Voice of the Customer NOTE: 1) Overlay Innovation Engine Onto this Map 2) Use with 10 Solution Sets Framework Chemistry Fit Innovative Culture Operational Fit Legal Fit & IP Regeneration Innovation Triggers

38. Mar 15, 2007 Version 1.3 Copyright 2007 38 TWELVE STANDARDS FOR BEST PRACTICE ALLIANCE ARCHITECTURE 1)Applicable: Does the principle have applicability to nearly all situations, regardless of industry or culture? 2)Actionable: Will the principle truly work in practice, or is it just nice theory? 3)Understandable: Can this principle be simply communicated to those involved? 4)Verifiable: Can we clearly observe the changes when the principle is put into place? 5)Measurable: Is there a method of measuring this principle's effectiveness in action? 6)Controllable: Will the principle enable more effective control of direction, intensity, speed, etc of the alliance? 7) Diagnosable: When there is a problem, can we see the problem clearly, do we have a way to recognize the misapplication of the principle? 8) Prescribable: If an element is missing, can the principle be injected into the system to cause a cure? 9) Replicable: Can we recreate a positive result, time and again? 10) Trainable: Can operational managers successfully acquire the skills and knowledge required for implementation? 11) Valuable: Is the principle really essential, or merely a superfluous nicety? 12) Predictable: Can we foresee, in advance, the positive or negative results? During our assessment of Best Processes and Best Practices, we apply stringent standards to ensure the quality of the outcome.