institute for entrepreneurship and innovation 1 1 the innovation process the northwoods economic...

Institute for Entrepreneurship and Innovation1

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The Innovation Process

The Northwoods Economic Summit V

October 2009


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A Framework for Innovation

Innovation is about peopleIt results from products and services that fulfill user needs

Invention is not innovationInnovation has an effect on the market place

Major innovations result in new business models

There is no formula to guarantee successThere is a process we can follow to minimize risk

Key: Focus is on people and their needs


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An example….


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The Fridge Pack

• Developed by…

• Why– Sales of aluminum to beverages companies

was becoming flat

– Competitive threat from plastic bottles

• Initiated a ethnographic study to understand peoples behaviors

– Studied people while shopping in stores, in their homes, etc

– Understood the product life cycle from the end user’s perspective

• Purchase through consumption

Original 12 packs

Fridge Packs


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Fridge Pack Continued

• What they learned:• There was a storage problem

– People keep individual cans cold in the refrigerator– People stop drinking if there are not cold sodas

available

• Solution: Move storage from the pantry to the refrigerator without impacting useable space…but how?

– Space inside the fridge is a premium

1. Change the shape of the pack to allow cans to get to the back of the refrigerator

2. Keep the cans inside of the packaging carton3. Orient the cans to lay on their sides so they can

roll forward to help people grab themThe Fridge Pack in action


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Fridge Pack Continued

Results*

• Alcoa grew their business– Launched by Coke in Atlanta and Chicago– Canned beverage sales in the fridge pack

increased more than 10% in the first 6 months after launch in both markets

– Eventually adopted by all of the major beverage companies

• Coke discovered that packaging was a bigger influence on purchases than the brand itself

*Wall Street Journal 8/2/2002

The Fridge Pack in action


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Value Chain

End UsersMaterial Suppliers

Component Manufacturers

OEM’s/ODM’s

Sales Channel

Focus here drives the business for everyone


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An Innovation Model

What is Desirable?

What is Good?

What is Possible?

What is Valuable?


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An Innovation Model

What is Desirable?

What is Good?

What is Possible?

What is Valuable?

What will create measurable value for business?


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An Innovation Model

What is Desirable?

What is Good?

What is Possible?

What is Valuable?

What can benefit society while minimizing environmental impacts?


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An Innovation Model

What is Desirable?

What is Good?

What is Possible?

What is Valuable?

What can be solved by innovative but proven engineering standards?


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An Innovation Model

What is Desirable?

What is Good?

What is Possible?

What is Valuable?

What is desired by users and satisfies their needs?


• Most markets are growing slowly– Exception might be alternative energy / green technology or

possibly Biotech

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Why is Innovation Important?


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• Competition in most industries has become a fierce battle between giants

• The balance of power has shifted away from manufacturers– Market consolidation has forced this change

• Manufactures selling to fewer customers

Private Label

Major Brands


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• Radical ideas change the basis for competition– Consider Dell computers

• Direct to consumer model• Customized• Lower cost• Customer Service


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• Product life cycles have shortened– Decreases the value of technology?


The Types of Innovation

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Types of Innovation

Improvement Evolution Invent Game Changer

Improve efficiency and profitability of

existing product

Evolve the product to a new level of performance

Invent new

product solution

Products that transform the market or the organization

DisruptiveSustaining


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Types of Innovation

Improvement Evolution Invent Game Changer

Sustaining Disruptive

Existing Stable Categories

Based on existing technology

New Categories

Requires New Knowledge

Broader Contextual Understanding



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• The innovation process can be broken down into 7 steps:– Steps 1 and 2 deal with learning

– Step 3 is strategic – Should we do this

– Steps 4-7 are about creating solutions for users

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1. Get Smart!Gather market intelligence– Who are the players in the market?– How big is the market?– Who is our competition?

– What do they sell?– What do they do well?– What do they do poorly?– How are their products or

services distributed?– Is there IP we need to be

aware of?

– Are there people we can bench mark in this or a similar industry?

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Data Sources

Sources of information include:• Internet• Annual reports• Industry Reports• Tribal knowledge• Surveys and focus groups• Store audits

Get Smart!


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2. Understand the End Users

– End users are the ultimate users of our products and services– Keep in mind that end users and customers may be different

– Study end user behaviors to uncover their needs– a[x]4 process is straightforward

– Understand the needs of secondary stake holders

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3. Identify opportunities

Step 1 – We understand the marketStep 2 – We understand the users and

stake holders

Now we look strategically at the business situation

• Is there a place where we feel we can gain a foot hold?

• Is the opportunity big enough?• Can we win?

• Once we have the buy in, we move forward with product and service solutions

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4. Brainstorm Solutions • List the identified needs and opportunities

• Brainstorm ways to fulfill the needs and opportunities• Try to stay away from product and service concepts if possible at this

stage• Stick the ideas up on the wall

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5. Create Concepts• Begin to combine ideas from brainstorming into concepts

• Generate a ton of concepts• Make sure some of them are “out there”

• Visualization allows for collaboration– “A picture is worth 1000 words”

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5. Create Concepts

• Create a “war” room

• Many times innovations result from familiar things• Often it is the combination of the existing that create the new

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6. Create Solutions and Refine

• Combine concepts into user solutions• Sketch the ideas / create simple

models• “A model is worth 1000 pictures”• Quick and dirty

• Fail fast – quick and dirty– Do not expect to get it right the first

time– We learn from our mistakes

• Refine the concepts• We want several iterations– Involve users and customers

where we can

• Narrow many options to a few29



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6. Tell the story

• Create persona’s for potential users• Descriptive tools to describe

important characteristics of users

• Create Story Boards - “A day in the life”• Helps to sell concepts to stake

holders

• Create higher end models that fully define the concept(s)

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7. Prototype It

• Make the real thing - top few ideas• Identify risk areas and test for functionality

• Should be done as early as possible• Test concept with users if possible

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Chevrolet Volt


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Uncovering User Needs

The a[x]4 process

• Every human experience involves 4 elements– Activities - what the people actually do– Artifacts - the tools we use– Actors - the people involved– Atmosphere - the environment

• The data is used to create activity models and identify key relationships


Example

• Lets say we all work for a cross country ski company and are responsible for new products– We decide to do some research to understand our users better

Activities– Skiing

– Loading and unloading gear

– Putting gear on taking gear off

– Warming hut

– Observing wildlife or photography

– Social aspects

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Cross Country Ski Example

Artifacts– Skis, poles boots, warm clothing

– Cars

– Ski racks

– Back packs

– Food and drink

– Accessories• Wax, cameras

– Camping gear

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Actors– People…but that is not an interesting way to look at things

– Male vs. female

– Recreational vs. hard core

– Young vs. old

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Atmosphere– It is probably cold outside

– Snow on the ground

– Snowing

– Cloudy vs. sunny

– Day or night

– Indoors in the shelter or warming hut

– Inside of the car

The process enriches our potential pool of solutions– Helped us move beyond the act of skiing to the total experience

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The Value of “Experiences”

• We need to think beyond products when innovating– Great innovations will result in new business models

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Starbucks is not about coffee- Coffee is the product that is used to deliver the experience

What is OnStar about?


The IEI at UW-Green Bay

Entrepreneurship

Innovation

Leadership

The Entrepreneur

The heart of the entrepreneur lies at the intersection of three areas:


The IEI at UW-Green Bay

• Our goal is to be a resource for the New North Region– Creating economic development for the region

• Our customers include– Businesses and non profits

– Public sector

– Students

• We plan to offer the following:– Seminars and training

– Networking events

– Mentoring programs

– Start up resources (future)


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Thank You

Paul Lemens920-465-2691 (O)602-918-0528 (M)

[email protected]

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