Ron Neumann's presentation from the 2013 LiFT Conference: Driving Innovation-based Growth

1. Innovation and the S-Curve
Practical tips for managing innovation
within your company
Ron Neumann
March 19, 2013

2. Agenda
• Innovation
– Definitions
– Types of Innovation
– Invention & Improvement
– Adoption
• S-Curve
– 4 Stages of Growth
– Continual Growth
– Innovation within an Industry / Company
– Speed of Change

3. Agenda (cont)
• Managing Your Innovation – Jumping the S-Curve
– BEMI – Big Enough Market Insight
– Managing Talent
– Picking the Right Time
– Getting Ideas
• 3 Horizon Growth
• Disruptive Innovation
• The Role of Culture and Leadership
• Case Study – SlipStream
• Innovation Assessment

4. Good Starting Definition of Innovation
in•no•va•tion (ĭn ə-vā shən) n. Significant, positive change. ant:
STATUS QUO
Not necessarily technological.
Doesn‘t have to be commercial.
Not incremental or just different (anymore), but significant.
“Innovation distinguishes between a leader and a follower.”

5. Innovation – Many Things to Many
People
“Innovation is the specific tool of entrepreneurs, the means
by which they exploit change as an opportunity for a different
business or a different service. It is capable of being
presented as a discipline, capable of being learned, capable
of being practiced. Entrepreneurs need to search
purposefully for the sources of innovation, the changes and
their symptoms that indicate opportunities for successful
innovation. And they need to know and to apply the
principles of successful innovation.”
- Peter Drucker

6. Many Types of Innovation
1) Product – good or service that is entirely new or has significantly
improved characteristics or uses;
2) Process – new or significantly improved method of production or
delivery of a service;
3) Organizational – new method of organizing business practices, the
workplace, or relations with outside organizations; and
4) Marketing – new developments in the design or packaging of
products, the channels for distribution, promotion or pricing.
Oslo Manual of the OECD

7. Invention & Improvement
Innovation differs from invention in that innovation
refers to the use of a better and, as a result, novel
idea or method, whereas invention refers more
directly to the creation of the idea or method itself.
Innovation differs from improvement in that
innovation refers to the notion of doing something
different rather than doing the same thing better.

8. S-Curve & Innovation
• S-Curve is a measure of the speed of
adoption of an innovation.
• First used by in 1903 by Gabriel Tarde,
who first plotted the S-shaped diffusion
curve.
• This process has been proposed as the
standard life cycle of innovations can be
described using the ‗S-Curve‗.

9. Adoption and the S-Curve

10. Adoption and the S-Curve

11. Stages of the S-Curve
Point of Diminishing Returns

12. 4 Stages of the Curve
• Startup
• Growth - Scale
• Maturation - Compete
• Decline - Transition
• Innovation is different at each stage

13. Challenges
• Startup
– Survival, market validation, funding
• Scale
– Increasing market, expanding to new geography,
increased manufacturing, hiring
• Compete
– Increased number of competitors, lower margins,
heads down
• Transition
– Compromises to stay alive, staff layoffs

14. Double S-Curve Model

15. Innovation within a Company - Apple

16. Technical Innovation in an Industry

17. Not All Innovations are Successful
Zenith
– Radio
– TV
– Zenith Data Systems
– HD TV (jumped into it too early)
• Bought by LG

18. New Pressure - Increasing Speed of Adoption

19. Jumping the S-Curve
According to Accenture‘s research, high performers:
• pursue ―big-enough‖ market insights—ones based on
changes in the marketplace that are certain to occur—
and sure to shake up the competitive landscape
• resolve the conflicting needs of today and tomorrow—
trading some of today‘s performance for tomorrow‘s gain
• build a hothouse of talent to nurture employees, which
then attracts more people with skills and vision
• change top management while business is still thriving
• refuse to scale up for scale‘s sake and actively manage
the downsides of scale at every turn

20. BEMI
• Big Enough Market Insight
– Big enough (relative term)
– Valuable enough
– Certain enough
Example: Nintendo understood that if they
made video games fun and interactive they
could attract a whole new demographic.
Creating the Wii

21. Talent Hothouse
• If you are no longer attracting or
developing stars, and your proven players
are expectedly leaving, It‘s a sign that
overall performance has peaked and
stagnation is settling in.
• It may also be a sign that your staff sees
you have entered a mature market even if
your sales have not started slowing down

22. Picking the Right Time
• It is hard to start investing in the next major
change when your company is profitable and
growing rapidly
• It is better to use this momentum to grow into
a new area or consciously decide it is time to
maximize your profits in the current area
• If you are involved with trying to attract a
buyer for your company that can further
complicate investing in new growth

23. Managing It
Constant high performance and innovation
requires managers to break the future into
manageable chunks. Apple moves smoothly
from iPod to iPhone to iPad by plotting out
cycles, and then working systematically
within each one, using past success and
resources to fuel market domination.

24. Where Do Ideas Come From?
• Great ideas do not necessarily come from
tech-focused research. They‘re often
derived by studying demographic, geo-
political, societal, economic and other
global dynamics
• Brainstorming for ideas does not often
work
• Customer centric thinking is ideal, but hard
to execute well

25. Features or Sustaining Innovations
• Continuing to add features to one product is
not the same as innovation
• It really just slightly modifies the one single
s-curve. (i.e. There are 37 different iPods)
• a sustaining innovation does not create
new markets or value networks but rather
only evolves existing ones with better value,
allowing the firms within to compete against
each other's sustaining improvements.
Sustaining innovations may be either
"discontinuous" or "continuous"

26. 3 Horizon Growth
• Horizon 1 – current business
• Horizon 2 – related business
• Horizon 3 – completely new business
• Alchemy of Growth
– Simple type of portfolio management
– Great starting point
– Teaches about the differences of innovation

27. Disruptive Innovation

28. Examples of Disruptive Innovation
Innovation Disrupted Market Details of Disruption
Digital Chemical based First examples of digital cameras were very
photography photography poor quality and laughed at
LCD CRT LCD were first monochromatic and low
resolution
Wikipedia Traditional Encyclopedia Britannica ended print
encyclopedias production in 2012
LED lights Light bulbs Initial LED lights were only strong enough to be
indicators, now replacing most lighting

29. Role of Culture & Leadership
• There is no innovation without leadership
• Innovation is a collaborative activity
• No single person can manage the innovation for an
organization
• Innovation often happens outside of normal process
• Essential roles for managers
– Promoting an attitude and expectation of innovation
– instituting policies and strategies that makes innovation
real
– enabling innovation while engaging in dedicated obstacle
obliteration
– Remove obstacles for staff

30. Case Study
• SlipStream
– Professors created compression technology
– Designed solution to accelerate Internet
– Eventual target was wireless
– Initial market was dialup
– I was hired as CEO in 2001

31. SlipStream - Plan & Outcome
• Designed the company to sell in 4 years
• Horizon 1 & 2 planning
– Started in a declining market – Dialup
(to reduce competitors and increase
ability to dominate)
– Needed the credibility of many users
to move into wireless
– BEMI analysis
• Dialup large enough to get started
• ISPs needed us
– Wanted to sell during growth phase when we
reached the wireless market

32. SlipStream - Plan & Outcome
Wireless Market
Original Plan
Dialup Market
4 years

33. SlipStream - Plan & Outcome
Outcome
• Created a new industry
• Execution took an extra year, but
exceeded our plan.
• Sold to RIM only a few months after
moving into wireless for > 2x original
plan
• Interesting that 2 competitors that
started in wireless were out of
Original Plan business when we moved into that
market
5 years

34. Innovation Assessment
• What stage are you on your primary project?
• How many innovation projects do you have under
consideration?
• How would you define a BEMI?
– How would you define a ―large market‖ for your
marketplace?
• Do you have the right team available to grow?
• What skills are missing?
• Do you have a 3 Horizon plan?
This is a starting point to your Innovation Plan

35. THANK YOU