Many professionals and entrepreneurs fail to innovate despite being highly creative. Most of the time these people have great vision, compelling ideas, and an abundance of energy for launching new opportunities. However, creativity and ideation are not equal to innovation. True innovation usually fails to occur because people attempt to create a new idea within the limits of their current information and experience. The solution is to work with strategic frameworks that offer challenging questions, introduce new data, and apply a methodology that synthesizes the innovation process into "bullet-proof" actionable activities. The following work-through is a mini-exercise in starting to use strategic frameworks for creating informed innovation. Three (3) of the models for Blue Ocean Strategy have been modified for those who want to apply slightly broader business overviews that address a few more business challenges that are part of a wholistic innovation process. Innovation 101 - Ideas for Entrepreneurial Thinkers is just a starting point. There are a wide variety of approaches for achieving innovation; the objective of this framework is to assist a beginner with putting their foot in the water of challenging topics that can take years to master. Please feel free to leave your comments on this brief work-through and share your own innovation exercise in the comment section below.

1. Strategic Innovation 101 A Hybrid Application of Blue Ocean Strategy January 22, 2011

2. Today’s Agenda Competitive Landscape Four Actions Framework Going to Market Taking S.M.A.R.T. Action Content Sources: Blue Ocean Strategy W. Chan Kim and Renee Mauborgne Frameworks – http://slidesha.re/fN2z8R Case studies – http://www.blueoceanstrategy.com

3. Making it Work for You Suggested Tips Have fun Use all time to keep working Go with first thoughts Don’t over analyze No wrong ideas Be open to others Get to first draft

4. Making it Work for You Work Flow Presentation of framework 7’sh minutes personal work 15 minutes group discussion 20 minutes room discussion

6. A window prop

7. A game item

8. A part of art work

9. Something to chew on

10. A storage unit

11. A weapon

12. Litter

14. Quicken – Industry Innovation Products or services that have different forms but offer the same functionality or core utility are often substitutes for each other. Take the example of Intuit’s Quicken. To sort out their personal finances, people can buy and install a financial software package, hire a CPA, or simply use pencil and paper. The software, the CPA, and the pencil are largely substitutes for each other. They have very different forms but serve the same function: helping people manage their financial affairs. Instead of benchmarking the competition Intuit created a blue ocean by looking to the pencil as the chief alternative to personal financial software to develop Quicken software. Intuit focused on bringing out both the decisive advantages that the computer had over the pencil – speed and accuracy; and the decisive advantages that the pencil had over computers – simplicity of use and low price - and eliminated or reduced everything else. With Quicken’s user-friendly interface resembling the familiar chequebook, it was faster and more accurate than the pencil, yet almost just as simple to use. The program eliminated the accounting jargon and the sophisticated features traditional financial software offered, offering only the few basic functions that most customers use. Moreover, simplifying the software cut costs. Quicken retailed at about $90, a 70% price drop. Neither the pencil nor other software packages could compete.

15. Competitive Landscape The goal of a competitive landscape map is to help you step out of how you see your business and look at what your competitors are doing that could be stifling your success. Industry Competing Factors Your Uniqueness Weighting Demand Saturation Price Features Distribution Service Maturity Advertising Spend Sales Force Database Overheads 1. Less/Low Same/Median More/High 3. Identify where you are clearly different. 4. Competitors A. 1st Competitor B. 2nd Competitor C. 3rd Competitor D. You 2.

16. Competitive Landscape Weighting Competitors Less / Low More / High Same / Median Industry Competing Factors Demand Saturation Price Features Distribution Service Maturity Advertising Spend Sales Force Database Overheads A. __________________ B. __________________ C. __________________ D. You Your Uniqueness? _________________________ _________________________ _________________________ _________________________

17. Value Innovation

18. Value Innovation Value innovation is created in the region where a company’s actions favorably affect both its cost structure and its value proposition to buyers. Cost savings are made by eliminating and reducing the factors an industry competes on. Buyer value is lifted by raising and creating elements the industry has never offered. Over time, costs are reduced further as scale economies kick in due to the high sales volumes that superior value generates. Costs Value Innovation Buyer Value

19. QB Hair Cutting – Service Innovation At the heart of QB House’s blue ocean strategy is a shift in the Asian barbershop industry from an emotional industry to a highly functional one. In Japan the time it takes to get a man’s haircut hovers around one hour. Why? Numerous hot towels are applied, shoulders are rubbed and massaged, customers are served tea and coffee, and the barber follows a ritual in cutting hair, including special hair and skin treatments such as blow drying and shaving. The result is that the actual time spent cutting hair is a fraction of the total time. The price of this haircutting process is $27 to $45. So QB House stripped away the emotional service elements of hot towels, shoulder rubs, and tea and coffee. It also dramatically reduced special hair treatments and focused mainly on basic cuts. QB House then went one step further, eliminating the traditional time-consuming wash-and-dry practice by creating the “air wash” system—an overhead hose that is pulled down to “vacuum” every cut-off hair. These changes reduced the haircutting time from one hour to ten minutes. QB House was able to reduce the price of a haircut to $9 while raising the hourly revenue earned per barber nearly 50 percent, with lower staff costs and less required retail space per barber. QB House created this “no-nonsense” haircutting service with improved hygiene.

21. identifies companies who are only raising and creating thereby raising costs

22. transitions from being theory into a tool for creating true industry innovation

23. and it drives companies to scrutinize what the industry competes onCreate Eliminate A New Value Curve Which should be created that the was never offered? What does the industry takes for- granted that should be eliminated? Raise Which factors should be raised well above the industry’s standard?

24. What can change? Is it really innovation? Four Actions Framework – current offer 1.________________________________________________________________ __________________________________________________________________ Reduce Which factors should be reduced well below industry standards? 2.________________________________________________________________ __________________________________________________________________ Eliminate What does the industry takes for- granted that should be eliminated? Create 3.________________________________________________________________ __________________________________________________________________ Which should be created that the was never offered? Raise 4.________________________________________________________________ __________________________________________________________________ Which factors should be raised well above the industry’s standard?

25. Brain Liberator Take 7 minutes and create a fictitious product or software that could be used in the office to save time at work. Give it a name. Select 1 person to keep notes and present 7 minutes to create 3 minutes to present per group Go!

26. Going to Market

27. Canon Copier – Goods Innovation Many industries afford similar opportunities to create blue oceans. By questioning conventional definitions of who can and should be the target buyer, companies can often see fundamentally new ways to unlock value. Consider how traditional copy machine manufacturers targeted office purchasing managers. The purchasing manager wanted machines that were large, durable, fast, and required minimal maintenance. Defying the industry logic, Canon, the Japanese company, created the small desktop copier industry by shifting the target customer of the copier industry from corporate purchasers to users. With their small, easy-to-use desktop printers Canon created new market space by focusing on the key competitive factors that the mass of noncustomers, the secretaries that used copiers wanted.

29. The test of great innovation is not just how original the concept is but how effectively it can be brought into reality.

31. Taking S.M.A.R.T. Action

32. Specific – don’t over-generalize about the outcome, be accountable Measurable – stands up to anyone’s ability to review outcome Achievable – do you have the resources, time, expertise Realistic – keep it on par with past stretch goals Timebound – have a date it has to be accomplished by Taking Action

33. Product Development In 6 months I will have completed the prototype and taken it to 20 qualified people to critique. Prospect Identification In 45 days I will have identified 50 potential customers and booked 5 demonstration meetings. Taking Action Revenue and Profit Goals In 9 months we will have achieved $150,000 in closed contracts with an operating margin of 65%.

34. Taking Action Specific Measurable Achievable Realistic Time-bound 1. Goal 2. Goal 3. Goal

35. How was your leap today?

36. Competitive Landscape Weighting Competitors Less / Low More / High Same / Median Industry Competing Factors Demand Saturation Price Features Distribution Service Maturity Advertising Spend Sales Force Database Overheads A. ____________________________ B. ____________________________ C. ____________________________ D. You Your Uniqueness? _______________________________ _______________________________ _______________________________ _______________________________ © Andrew Ballenthin 2011 andrew@e-m-3.com

37. Four Actions Framework What can change? Is it really innovation? 1._________________________________________________________________________ ___________________________________________________________________________ 1. Reduce Which factors should be reduced well below industry standards? 2._________________________________________________________________________ ________________________________________________________________________ 2. Eliminate What does the industry takes for- granted that should be eliminated? 3._________________________________________________________________________ ________________________________________________________________________ 3. Create Which should be created that the was never offered? 4. Raise 4._________________________________________________________________________ ________________________________________________________________________ Which factors should be raised well above the industry’s standard? © Andrew Ballenthin 2011 andrew@e-m-3.com

38. Out of the box rethink? Customer’s view Going to Market

39. S.M.A.R.T. Specific Measurable Achievable Realistic Time-bound 1. Goal 2. Goal 3. Goal © Andrew Ballenthin 2011 andrew@e-m-3.com