Given today's economy, it is easy to justify focusing your innovation efforts around cost or resource reduction. But is that really the right focus? Or is this the time you really should be looking at break-through innovations? Drawing from numerous customer examples, Jim will make the case that the current economic environment is not only right for innovation around constraints other than cost - it is essential.

1. P OW E R TO I NNOV A TE | OCTOB E R 2 5 -2 7 2 0 1 0 | B OS TON, MA
Jim Belfiore, Certified Innovation Master
Sr. Director of Client Innovation and Practices
Invention Machine
Where to Innovate in This
Economy

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Definition: Where
where: [hwair, wair]
adverb:
• in or at what place?:
Where is he?
• in what position or circumstances?:
Where do you stand on this question?
• in what particular respect, way, etc.?:
Where does this affect us?
• to what place, point, or end? wither?
Where are you going?
• from what source? whence?:
Where did you get such a notion?

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Where Do You Stay Informed?

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Staying Informed in Science & Innovation…

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Staying Informed in Business & Innovation…

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Staying Informed in Finance and Economics…

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Where Have We Been?

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Back in 2008…

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Back in 2008…
• “When do you innovate?”
 „When we have time‟
 „When we have budget.‟
 „…in response to a crisis.‟
• Looking towards 2011…
 The real crises have just begun
 The impacts to your lines of
business and innovation strategies
will be swift and profound

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Where Are We Now?

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Innovation is Driven By Need
“Innovation must meet a consumer need - the consumer
must be willing to part with their money for it, and it
must provide value to both us and the customer.”
- A. G. Lafley, CEO,
October 5, 2010
All of us in this room are impacted by the needs (and
health) of consumers of every type
 Government, Corporate, Individual
 Understanding trends in 2011 will be more important than in any
previous year

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Government Trends are Astronomical…
• We’re increasing deficit spending
• U.S. debt crossing $14 Trillion
 If each dollar of debt was a star, we’d now owe 140 galaxies

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Corporate Trends are Harder to Spot…
One statistic speaks for itself…
Source: Bloomberg - October 14, 2010

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The Consumer is a System
• Just as with any product or process design, the consumer
is a system that is comprised of many interacting parts,
and external environments that can convey positive or
negative effects

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Consumer Trends are not looking so good…
• Higher unemployment
• Fewer jobs
• Less disposable income
• Increased debt
• Lower purchasing power

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Consumer Trends are not looking so good…
• Higher unemployment
• Fewer jobs
• Less disposable income
• Increased debt
• Lower purchasing power
• Less mobility
• Poorer diet
• Decreased health
• Greater crime risks
• (Hyper)inflation?

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Where Are We Going?

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Everything is Rapidly Evolving
• Tomorrow’s service and manufacturing leaders will
succeed because of rapidly evolving:
 Global supply chains
 Modern finance
 Government policies
 Population demographics
 Information ecosystems
 Geophysical transformations
 Natural
 Synthetic
• In today’s world, there’s no place left to hide.

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Innovation is No Longer About…
• Making small improvements in existing products
• Gaining single-digit market share in a crowded space
• Re-inventing a brand
 If it is, then I’ve got a new product announcement
Radical Innovation must be your 12-mth survival plan

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Innovation for Survival Means…
• Making generational leaps
on a rapid schedule
 Knowing your S-curves
and how to navigate them
• Business Model Innovation
 Re-inventing your existing
products’ value propositions
through New Market Analysis
 Discovering (and dominating) new markets
that are outside of your core competencies
which align to your value and growth

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Innovation for Survival Means…
• Obsoleting:
 Your Products
 Your Services
 Your entire industry
• If you do your job right, you’ll put yourself,
and your competitors out of a job
(at a nice profit)

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Constraints are Key to Radical Innovation
• In 2008, I told you:
 Look for conflicts,
tradeoffs, or compromise
 When you find the box, you’ll
drive high-value innovation
• Good News / Bad News
 Good News: We are all going to be surrounded by rapidly
increasing compromise and conflicts in our respective markets
for the foreseeable future
 Bad News: (See, “Good News”)

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(Consumer) Constraints Apply to Everything
• Cost (lower cash-flow)
 Not going to spend as much
when cash / credit is
available
• Lifecycle / Function
 “Pent-up demand” is, at
best, unpredictable
 Products at all price-points
will be working longer & harder
• Supersystem Trends
 Increasing impacts of Energy, Transportation, Environment, Food,
Policies, etc.

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Where Would Innovation Happen?

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Aerospace (Civilian)
• Challenges:
 Environmental Pressures
 Upper S-Curve Plateau
 Industry Volatility (Fuel)
• Innovation Opportunity:
 Complete re-think of
fuselage design; targeting of
non-passenger constraints
 Constraints: Fuel Consumption,
Environmental Impact (Sound,
Emissions)

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Aerospace (Civilian)
• Case Study: N+3 “Double Bubble”
 180-Passenger (B737 class)
double fuselage design
 “Boundary Layer Ingestion”
(slow-speed top-side air intake)
 70% less fuel, 75% less NOx emissions
 Phase 2 underway
 Market entry: 2035

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Energy
• Challenges:
 Hydrocarbon (Production / Supply)
 Most alternatives obsolete only the fuel,
bringing new problems along for the ride
 Existing HC fleets / infrastructure
• Innovation Opportunity:
 Disruption of manufacturing
methods for current (high-demand)
fuel products
 Constraints: Cost, Resources,
Environment

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Energy
• Case Study: Joule BioTech
 Bioreactors: Artificial Microbes
 Consume Sunlight and CO2
 Produce Ethanol and Diesel
 20,000 Gallons / Acre / Year

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Electronics / Automotive
• Challenges:
 Accelerated introduction of
transformational commodities
 Fundamental shift in
transportation power plants
 Critical, exponential dependency
on rare-earth materials
 Finite, geo-politically volatile
• Innovation Opportunity:
 Find RE-free, high-anisotropic
materials; RE recycling; NPM
 Constraints: Cost, Form Factor, Supply Chain

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Electronics / Automotive
• Case Study: ARPA-E
 High-Energy Permanent Magnets Project
 New technologies to double power densities
 Expand market from $7 billion to $20 billion
in 10 years
• Case Study: Tesla Motors
 RE-free induction
motor
 245 miles / charge
 0-60mph: 3.7 sec

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Medical
• Challenges:
 Rising costs:
 Manufacturing / Delivery
 Disease State
 Treatment Efficacy
 Regulation / Policy
• Innovation Opportunity:
 Develop products that
eliminate life-critical needs (devices / procedures / pharma)
long before the end of current (product / services) lifecycles
 Example: Drug-Eluding Stent

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Medical
• Case Study: Nanoburrs
 Revolutionary combination
of drug-delivery biophysics
and pharmacology
 Wide applications
 Coronary disease
 Cancer
 Endoskeletal
 Changes the game in
disease-state management
in the next 2-5 years

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Where Should You Innovate?

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Communities of Innovation
• The single inventor is a myth
 The path from concept to commodity
involves many people
 In Innovation, there is no evil genius
• Two essential questions:
 “Has this already been done?”
 Freedom to operate tells you
the size of your neighborhood
 “Who’s doing anything like this?”
 Turn k(now)-how, into k(now)-who
 Share your Problems / Use the Expert Finder

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Business Model Innovation
• Problem:
 Increasing invasion of new and
disruptive business models
 Typical response is to adopt
the new business model alongside
new competitors
 Many companies are unsuccessful at
simultaneously managing and
integrating multiple business models
• Typical Solution: Business Unit Separation
 Often leads to failure
 Key considerations need to be researched before innovating a
competing business model

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Business Model Innovation
• Assess “Market Attractiveness”
 Examine the new market for:
 Size, Growth
 Demographics, …
• Examine your own
organization
 Core Competencies:
 Do your core competencies
apply to the new market
in a unique way?
 Can your core competencies
“disrupt a disrupter”?

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Business Model Innovation
• (Re)Assess the Value Chain
 Are the potential new customers
representative of an entirely new
market?
 Are the potential new customers
just a new segment of an existing
business model?
 …
• Invention Machine Goldfire’s Tasks
are Uniquely Suited
 Research, Find and Disrupt New Markets
• Obsolete Yourself, Everyday

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Business Model Innovation
“If you make a widget that has become dominant in the marketplace,
work on getting rid of it now. If you don't…you‟ll find yourself playing
your competitor's game.”

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Where Next?

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Your Innovation Goal is K(now) Where
• Knowledge is the first step
 Staying informed is essential
 Past, Present, and Future
• Trends are critical insights
 Know where changes are leading
 Demographics, Landscapes, Supersystems, …
• S-curves are more than wavy lines
 Know where your products
are along the ideality curve
 Know what the next generation
looks like…today
 Goldfire facilitates effective research

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Your Innovation Goal is K(now) Where
• Radical Innovation will become the norm
 Flat or small growth won’t cut it
 Obsolescence must be planned out, not in
• K(now) constraints
 Recognize, embrace, and innovate
 Opposing traffic always drives in the passing lane
• K(now) boundaries…and use them
 Figure out the game changers, then
track them
 Were you disrupted today?
 Use Goldfire to research expertise, and
innovate new business models

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Where Are You?

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Where Do You Want To Be?

44. P OW E R TO I NNOV A TE | OCTOB E R 2 5 -2 7 2 0 1 0 | B OS TON, MA
Jim Belfiore, Certified Innovation Master
Sr. Director of Client Innovation and Practices
Invention Machine
Where to Innovate in This
Economy

45. P OW E R TO I NNOV A TE | OCTOB E R 2 5 -2 7 2 0 1 0 | B OS TON, MA
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