OPERATIONAL EXCELLENCE IN INNOVATIONDAVE MADIGAN

DIAGEO AT A GLANCE

34,300 Diageo employees

£12bn NSV

6.5 billion litres of drinks

180Markets worldwide

200,000+ customers

30,000+ suppliers

15,000 Supply

employees worldwide

£

OUR PURPOSE: CELEBRATE LIFE EVERY DAY EVERYWHERE

OUR AMBITION: BE THE BEST PERFORMING, MOST TRUSTED ANDRESPECTED CONSUMER PRODUCTS COMPANY IN THE WORLD

SOME OF OUR BRANDS

Can we apply operational excellence practices to improve our innovation

performance?

THE CHALLENGE

Standard KPI’s &

benchmarks

Standard, Codified Ways of Workingfor all Supply Chain Activities

Capabilities built in all our teams to drive performanceRoles and organisation optimised

Standard systems

Standard Performance Management - run the business

&improve the business

Verification to global best practice

OPEX FRAMEWORK

CREATIVITY VERSUS CONTROL

CREATIVITY VERSUS CONTROL

CONCEPT DEVELOPMENT• Consumer centric• Highest standards of

product• No constraints

COMMERCIALISATION• Codified, fast and

efficient• Focus on quality,

speed, productivity

‘4C’ OPEX APPROACH TO INNOVATION

Creativity – lay the R&D groundwork for future product innovations

Codification – one, simple, consistent and fast way of doing things

Control – understanding performance and improving it

Capability – everyone has the tools and capability to do their job brilliantly

‘4C’ OPEX APPROACH TO INNOVATION

Creativity – lay the R&D groundwork for future product innovations

Codification – one, simple, consistent and fast way of doing things

Control – understanding performance and improving it

Capability – everyone has the tools and capability to do their job brilliantly

R&D GROWTH MODEL

R&D GROWTH MODEL

R&D GROWTH MODEL

R&D GROWTH MODEL

R&D GROWTH MODEL - APPLICATIONS

Fermentation Science

Wood Science

‘4C’ OPEX APPROACH TO INNOVATION

Creativity – lay the R&D groundwork for future product innovations

Codification – one, simple, consistent and fast way of doing things

Control – understanding performance and improving it

Capability – everyone has the tools and capability to do their job brilliantly

INNOVATION STAGE GATE PROCESS

Opportunities

Idea and

concept

exploration

Product

concept

development

Commercial

developmentLaunch

Gate 1Idea

Approval

Gate 2Project Scope/Concept Idea

Gate 3Concept Approval

Gate 4Test Market

Approval

Gate 5Launch

Approval

Gate 6Quarterly

Innovation Review

Life cycle

Stage

0Stage

1Stage

2Stage

3Stage

4Stage

5Stage

6

Test

market

BEST PRACTICE IN PLANNING & EXECUTION

Pipeline

Planning

Prioritization

3P WCC

#SIMPLIFY

‘4C’ OPEX APPROACH TO INNOVATION

Creativity – lay the R&D groundwork for future product innovations

Codification – one, simple, consistent and fast way of doing things

Control – understanding performance and improving it

Capability – everyone has the tools and capability to do their job brilliantly

GARTNER HIERARCHY OF NPI METRICS

GARTNER HIERARCHY OF NPI METRICS

INNOVATION AND BRAND CHANGE KPIS

Business Performance

NSVProject ScaleGrowthSustainability

Operational Excellence

Perfect Project Delivery

Speed to marketProductivity / ROIProject Scale

KPI EVOLUTION – RAISING THE BAR

Perfect Project Delivery vs Gate 5

commitments

Perfect Project Delivery vs Gate 3

commitments

Innovation misses (absolute)

Innovation misses (absolute) enhanced definition*

TimeCostQualityBudgetCase fill 3 mthsQuality 3 mthsExpeditionReworkCost absorption

TimeCostQuality

TIERED PERFORMANCE MANAGEMENT

VISUAL MANAGEMENT

‘4C’ OPEX APPROACH TO INNOVATION

Creativity – lay the R&D groundwork for future product innovations

Codification – one, simple, consistent and fast way of doing thins

Control – understanding performance and improving it

Capability – everyone has the tools and capability to do their job brilliantly

CAPABILITY: E-LEARNING

CAPABILITY: DIAGEO TV

CAPABILITY: R&D LEADERS PROGRAMME

R&D Leaders Master Classes

Focused development of key R&D Leadership skills

Planned Experiential Learning

Combining training, responsibility and exposure

Strong baseline Technical / Management

Embedding the core technical / management skills

‘4C’ OPEX APPROACH TO INNOVATION

Creativity – lay the R&D groundwork for future product innovations

Codification – one, simple, consistent and fast way of doing things

Control – understanding performance and improving it

Capability – everyone has the tools and capability to do their job brilliantly

CASE STUDIES

• Text or graphic

AGILE MANUFACTURING – THE CUBE

RAPID TESTING – OPEN GATE BREWERY

THANK YOU