andy hall - innovation and value creation
TRANSCRIPT
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Sustainable Value Cycle Solutions€
“Innovation and Value Creation”Ellen MacArthur Foundation webinar 24 April 2012
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Invention or Innovation ?
Invention:The creation of an idea or a method
Innovation:The use of a new idea or method
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Where does innovation take place?
Technical environmentJet engine, Digital revolution, nuclear fusion, synthetic fibre (Nylon)
Business ModelAmazon, MacDonalds, Zara, EasyJet, Dell
System LevelHarley Davidson, Facebook, Google, Ford
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Where does innovation take place?
Technical environmentJet engine, Digital revolution, nuclear fusion, synthetic fibre (Nylon)
Business ModelAmazon, MacDonalds, Zara, EasyJet, Dell
System LevelHarley Davidson, Facebook, Google, Ford
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Henry Ford’s real legacy
Ford’s vision was a car for every home….
"I will build a car for the great multitude. It will be large enough for the family, but small enough for the individual to run and care for. It will be constructed of the best materials, by the best men to be hired, after the simplest designs that modern engineering can devise. But it will be so low in price that no man making a good salary will be unable to own one – and enjoy with his family the blessing of hours of pleasure in God's great open spaces”
Personal mobility
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"Companies cannot grow through cost reduction and re-engineering alone... Innovation is the key element in providing aggressive top-line growth, and for increasing bottom-line results."
Davila et al. ”Making Innovation Work” (2006)
? Innovation Value Creation
Revenue and business growth
Innovation Business
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Drivers for InnovationRe
sour
ces
• Historical issue
• Materials• Labour• Water• Fuel• Crisis/war
Tech
nolo
gy • 1950-70s• Mass
production and manufacturing
• Consumption• Push to
consumer
• “company is King”
Cons
umer
/Mar
ket
• 1980-00s• Marketing/
Brand driven• Experience• Consumer
Insights
• “customer is King”
Socia
l
• 2005+• People/network
driven• Transformation• Co-creation
and content
• “Customer is my best friend”
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“..Traditional approaches to business will collapse, and companies will have to develop innovative solutions. That will happen only when executives recognize a simple truth: Sustainability = Innovation..”Source: HBR, Sept 2009
“It is more intriguing that outperformance on revenuegrowth is correlated with superior creation of stakeholder value”Source: “The granularity of growth”, McKinsey Quarterly, 2007
..but something else is changing
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The additional drivers for innovation
Drivers InnovationStakeholder
value creation
Revenue and business growth
CostTechnologyConsumer needs
Resources/wasteSocial Environmental
Traditional
Holistic
…a formula for business success
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Current economy
Resources
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“We can't solve problems by using the same kind of
thinking we used when we created them”
– Albert Einstein –
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Albert Einstein Gene Simmons - KISS
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Circular Economy
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The only sustainability strategy that should be considered is one that is integral with the business and does not compromise it; a systems approach.
..a cyclic process of innovation, value creation and value recovery.
.. a "Value Cycle"
Design for Value Innovation
Stakeholder value
creation
Revenue and business growth
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From concept to reality
1. Communicate the concept simply2. Design “value”products for the system3. Use “Trustful and Recoverable” materials4. Consumer is my best friend
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Create
Recover
Collect
Source
1. Value Cycle concept
Design injectionpoint
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2. Design “value” products for the system
Great product Added value
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• Deliver on brand promise• Designed for recycling & value recovery• Defined periods of use
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€
Source
Content
Usage
Source
Content
Usage
3. Use trustful and recoverable materials
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• Managed/renewable source• 100% known & evaluated content• Known use scenario• Technically recylable• Commercially recoverable• Second life target product• Safe end of life
Select and retain materials value
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4. Consumer is my best friend
Your design
Health and happiness
Do more good, not less bad
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The result
• Great products• Delighted consumers• Lower costs through better design• Return on materials investment• Eimination of toxins and waste• Materials and chemicals (risk) management• Brand image enhancement• Improved employee engagement
Multi stakeholder value creation
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Maximising Value
• Brand promise• Social & Ethical
positionBran
d• Primary function• Primary proposition
Product
• Additional value• Supporting
argument
Product discriminato
rs
Value Cycle design
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Case study… Desso AirMaster
• Brand promise: “Creativity, Ambition, Flexibility, Cradle to Cradle”
• Social & Ethical position: Cradle to Cradle company & productsBran
d• Primary function: floor covering• Primary proposition: high quality, durable, trending designs
Product
• Additional value: improves indoor air quality• Supporting argument: C2C certified, take back & recycling
ProductDiscriminat
or
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Not just a one off
60% accousitc damping
+10dB sound reduction
More Innovation..
• Light reflecting carpets• Aviation carpeting
2006 2008 2010
9%
4.5%
<1%
Desso profitability (EBIT)
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The ValueInternal value
• New consumer value spaces/ideas• Innovative and critical designs• Materials risk and flow management• Reduced data set of materials• Reduced BoM• ROI from materials recovery• Employee engagement
External value• Brand enhancement• Superior primary function• Additional functionality
(descriminator)• Supported sustainability program• Option to certify or label• Delighted consumers• Market and business growth
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Sustainable Value Cycle Solutions€
“Value creation in sustainability”
Staff training Strategic advice Interim expert management• Workshops• Coaching
• Specialist competences• Partner selection & engagement
• Materials development• Supply chain development• Ideation for innovation
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Preferred Materials Program
Consumer Lifestyle -C2C and resource effectiveness team
Corporate Sustainability office CL Board of management
Sustainability Innovation Manager
Andy Hall