With the current global economic slog, it is amazing that there are companies today that are still making supernormal profits, while others are folding up. One word that explains this phenomenon is - INNOVATION. In this presentation we examine the innovative recipes that have made these companies successful in accelerating growth and increasing profits…

1. Innovate or Perish…
Five Steps to Accelareate Growth and Increace Profits!

2. BIG QUESTIONS
HOW MANY OF YOU ARE
SELF EMPLOYED?
HOW MANY OF YOU ARE
ENTERPRENEURS?
Page § 2

3. Startling Facts
The greatest transferance of wealth in the history of mankind…!
Page § 3

4. Startling Facts
Page § 4

5. Startling Facts
Entrepreneurs are
the drivers behind this
massive transfer of
wealth

6. Who is an Enterpreneur?
Page § 6

7. How is this Transfer of Wealth
Happening?
Page § 7

8. What is Innovation?
Page § 8

9. Innovation Defined…
Innovation is the process
that take new ideas and
implements them in a way
that creates value in solving
unmet needs
Innovation vs. Invention!
Invention is the process of taking
capital and turning it into knowledge
Innovation is the process of taking
Page § 9 knowledge and turning it back into capital

10. A New View of INNOVATION
!
Innovation allows
companies to create,
deliver, capture, and
sustain value
Alvin McBorrough
Strategist
!
" "
" " !
Page § 10

11. Thought Leaders on Innovation
Page § 11

12. 12 Masters of Innovation…
Clay Christensen Henry Chesbrough Vijay Govindarajan Gina O'Connor et al
The Innovator’s Solution Open Innovation Reverse Innovation Radical Innovation
Disruptive Innovation Open Innovation Reverse Innovation Radical Innovation
Costas Markides Kim & Mauborgne John Bessant
Peter Drucker Managing Innovation
All the Right Moves Blue Ocean Strategy Innovation &
Strategic Innovation Value Innovation Entrepreneurship Classical Innovation
Eric von Hippel Gary Hamel Tony Ulwick Dick Lee
Democratizing Innovation What Matters Now What customers want Value Innovation Works
Customer Centric Management Innovation Outcome Driven Innovation Value Innovation
Innovation
Page § 12

13. Lee’s Value Innovation Process
Page § 13

14. Why is Innovation so Vital Today?
New Playing Field + New Players + New Rules + New Game = INNOVATION!
Page § 14

15. Why is Innovation so Vital Today?
“Innovation is front and center on the Corporate Agendas!
according to a global survey. Executives are adding more !
breakthrough innovations and business model changes to !
their Portfolios to fuel the growth engine”!
Source: Business Week, November 16, 2006
Page § 15

16. The Other Side of Innovation
Led their respective
industries at one point
Combined Market
Capitalization $420 Billion
Combined Revenue in
FY 2005 - $338 Billion
Combined EBITDA $150B
Product Innovation
Portfolio 12%
Page § 16

17. Qwest
What Happened?!
Failure to address changing Business
Model shift
- Telecom – Communications
Solutions
Neglected two significant technologies
- Mobility
- Video
Hubris Born of Success
Page § 17

18. Borders
What Happened?!
Failure to conform to industry changes
- Growth of Online distribution
Neglected significant technological shift
- eReader
Capitulation to Irrelevence and Death
Page § 18

19. AOL
What Happened?!
Lost track of market innovation
- Dial up vs. Broadband
Failed Acquisition
- Time Warner
AOL 2.0
The Media Company
Page § 19

20. Paris or
Companies that Drove Innovate
Poughkeepsie?
Every event starts here. Whether you’d like to travel to an exotic locale or stay in your own backyard,
your next Xerox event starts at the Real Business Live web site. From productivity to sustainability, it’s
your single source for Xerox events focusing on the topics you care about most.
See what’s happening. Visit www.xerox.com/realbusinesslive today.
Undisputable Market
Leaders
machines. Trusted parts.
Combined Market
ts provide owners of older Caterpillar products with low cost repair
®
inimize the risk Capitalization $ 1 Trillion
© 2010 Xerox Corporation. All rights reserved. Xerox®, Xerox and Design® and Ready for Real
associated with non-genuine parts.
Business are trademarks of Xerox Corporation in the United States and/or other countries.
engines have long and productive lives. Caterpillar is committed to
orking lives. CatCombined Revenue providing a
Classic Parts help manage repair costs by in
ge of parts and service options for your Cat machines and engines
FY 2011 - $620 Billion
r maintaining older Cat equipment.
provide another
repair alternative for those select, cost-driving parts
ct the overall cost of the repair. Cat Classic Parts offer:
Combined EBITDA $330B
es and availability
repair option offered by your Cat Dealer
erpillar warranty
Product Innovation
Portfolio 40%
Page § 20

21. Tesla Motors
Page § 21

22. Tesla Quick Facts
Transformational Facts!
Founded – 2003
Manufacturing – Fremont, CA (NUMMI)
Founder – Elon Musk
Employees Count – 1,400
Revenue - $204 Million (FY’11)
Net Income - $-254 Million (FY’11)
Products – Telsa Roadster
Tesla Model S
Tesla Model X
Tesla Model S
Purchase Price - $50K - $120K
Miles Range – 160 – 320 Miles
Page § 22

23. Carbon Motors Corporation
Design by Law Enforcement for Law Enforcement !
“An innovative, fast, efficient new American car you can't buy…”
Page § 23

24. Carbon Motors Quick Facts
Transformational Facts!
Founded – 2003
Manufacturing – Cornernsville, IN
Founder – William Santana Li
Planned Introduction – 2012
Pre–Orders – 21,000
Products – Police Vehicles
Product Specifications:
Engine – BMW Turbo Diesel
Body – Aluminium
Drive – Rear Wheel
Transmission – Automatic
Life Span – 250,000 miles
Page § 24

25. Carbon Motors Quick Facts
Page § 25

26. ET3
Page § 26

27. ET3 Quick Facts
Transformational Facts!
Space Travel on Earth
Silent, Low Cost, Safe, Faster
than Jets
Electric
Page § 27

28. Why Are These Companies Winning?
Page § 28

29. 5 Steps to Accelerate Growth and
Increase Profits through Innovation
High
4 Game Changers
1 Need Seekers
Performance
2 Rule Breakers 3 Nimble & Agile
5 Execution Driven
Low
Value
Page § 29

30. Need Seekers are companies that focus
on identifying unmet and unaticulated
needs!
Page § 30

31. Distinct Characteristics of Companies
Page § 31

32. Process and Capabilities

33. The Global Innovation 1000 – Booz and Co.
Page § 33

34. Blue Ocean Ideas…
§ Created a disruptive business § Disputed the mobile industry § Extensive use of analytics
model for the music industry
as a formidable player
throughout the company
§ Results
§ Results
§ Results
§ RCA regained margins
§ Focus on customer § World’s #1 Bookstore
§ A-la-carte for consumers
needs
§ World’s #1 HCS Provider
§ 10 million SGS3 – July
§ Boost of +10 B § Market Leaders in
downloads
§ #1 Mobile company
Customer Experience
Page § 34

35. Rule Breaker
Gary Hamel’s Thesis1, 2: Companies fall into one of three
categories:
ü Rule Maker [#1 in the market; Sets the rules for all other
companies]
ü Rule Taker [Plays by the rules set by the Rule Maker]
ü Rule Breaker [Defines new rules]
1. Gary Hamel, “Strategy as Revolution”, Harvard Business Review, July-August, 1996, 69-82
2. Gary Hamel, “Leading the Revolution – How to Thrive in Turbulent Times by Making Innovation a Way of Life”, Plume,
2000

36. Mantra of Rule Breakers
Reinvent Your Company - Hamel’s Ten Rules for bubbling up Billion Dollar Ideas!
Set Unreasonable Expectations
Offer and Open Market for Capital
Stretch Your Business Definition
Open up the Market for Talent
Create a Cause, not a Business
Lower the Risks of Experimentation
Listen to New Voices
Make Like a cell – Divide and Divide
Design an Open Market for Ideas
Pay Your Innovators Well – Really Well
Gary Hamel, “Reinvent Your Company, 10 Rules for making billion-dollar
business ideas bubble up from below”, Fortune, June 12, 2000, pp 98-118
Page § 36

37. Classic Examples
Industry! Rule Maker! Rule Taker! Rule Breaker!
Consumer Procter &
Colgate Palmolive,
Nu Skin, Avon
Packaged Goods! Gamble
Unilever
Consumer
Samsung
Sony, Phillips
Vizio, LG
Electronics!
UK Airline! British Airways
British Midland
Virgin Group
Indian Airlines! Jet Airways
Indian Airlines
Kingfisher
Vacuum Cleaner! Dyson Ltd
Hoover, Electrolux
LG
Page § 37

38. Project-intensive Industries Project-intens
Project-intensive Industries Require
Enterprise PPM
Enterprise PPM Enterprise PP
Rule Breakers Impact...
• • Deliver high-quality projects on-time and•within budget
Deliver high-quality projects on-time and Deliver high-quality p
• • End-to-end visibility for improved, timely • End-to-end visibility
End-to-end visibility for improved, timely decision making
making
Architecture,
Architecture, Public Sector,
Public Sector, Utilities,
Utilities, Architecture,
High Tech & & Pub
RETAIL
Engineering &
Engineering & Public, Aerospace
Aerospace &
Aerospace & Utilities,& Gas
Oil &Oil & Gas
Oil Gas A & E,
Engineering &
Manufacturing
Manufacturing Aer
SS
Advertising
Construction
Construction & Defense
Defense
Defense Construction
Construction D
• Zappos broke the • IKEA broke the • Craigslist broke
Key Industry Requirements
Key Industry Requirements
• Amazon.com
Key Industry Requirements
• Netflix broke the
rule that helping Improve do-it-
rule that
• • Improve • •Managethat web
the rule large
Managelarge rule that
•• Manage short-
Manage short- •• Bring the rule that
broke the right
Improve right • Pri
Pr
• •Man
customers too yourself furniture technologies need consumers only books were meant
much is wildly coordination
coordination
couldn’t be stylish
programs with
programs with
to look sexy.
duration, high-
duration, high- products to
coordination pro
pro
prog
wanted to rent the to be read in hard
unprofitable. They and inexpensive.
and
yet multiple
multiple
Without intensity
intensity
latest movies from market that
within
and — within
copy on
on
mult
built a $1 billion collaboration
collaboration
Today, they offer suppliers and
suppliers and
any advertising outages and
outages and
a store down the market windows
windows
collaboration
groceries and ob
obj
supp
company in less 12,000 products, or an attractive us
subcontractors
subcontractors street. They
shutdowns
shutdowns electronics subc
than 10 years by employ 127,000 er interface and created a multi- couldn’t be sold
delivering an • • Avoid and help
workers, and
Avoid and • •Improve a handful
with only
Improve billion dollar
•• Increase
Increase from the same
•• Collaborate • Op
Op
• •Impr
outrageous client 450 million
Avoid and
of people they industry of renting website. They
experience
protect against
protect against
consumers find accountability
accountability
booked hundreds productivity and
productivity and
mostly older across the
protect against
generate more as
ass
acco
claims
claims
the perfect piece and millions of
andmeet
of meet speed of project
speed of project
movies on laptops globalbook
online supply
claimssupply sc
sca
and
of furniture for dollars by
regulatory
regulatory delivery room
delivery
and living chain than all
business res
res
regu
their home. You providing simple set-top boxes
other online
might call it a
requirements
requirements requ
functions that retailers combined
pretty big success
users really want
with tens of
billions
Industry Game Changers!
Page § 38

39. Nimble and Agile
Focus of Relentless Innovation!
§ Challenge the Status Quo
§ Buy into Business Model Innovation
§ Tirelessly seeking new opportunities
Page § 39

40. How does Relentless Innovation Happen?
Focus of Relentless Innovation!
§ Right Condition
§ Right Processes
§ Right Insights
Page § 40

41. What Business Are You In?
Growth
Ideas
Key Partners
Key Activities
Value Proposition
Customer Customer Segment
Relationships
Who are you What critical
What problems
How do you interact
suppliers and activities are you Who are you going
need to be solved?
with your to sell to?
service going to perform to
customers?
providers
create value?
What product/ Who is going to pay
service is best?
for your service/
products?
Key Resources
Channels
What resources do How does your
you have to solve customers find, buy,
your customers and use your
problems?
product?
Cost Structure
Revenue Stream
What is the total cost of production?
Where does your revenue comes from?
Page § 41

42. Pursue New Markets
Innovation Ambition Matrix!
TRANSFORMATIONAL
Developing breakthroughs and things
New Customers
for the market they don’t need yet
Markets Target
Create New
ADJACENT
Expanding from
existing business “in to
Adjacent Customers
new to the company
businesses
Enter Adjacent
Markets Serve
CORE
Optimizing existing
WHERE TO PLAY!
products for existing
customers
Serve Existing
Customers
Markets &
Use Existing Products Add Incremental Products & Develop New Products &
& Assets
Assets
Assets
HOW TO WIN!
Page § 42

43. Starbucks the Relentless Innovator
Any business that expects
business to stay stable –
business as usual - is dead
Howard M. Schultz
CEO
Starbucks
Page § 43

44. Starbucks the Relentless Innovator
Transformational Facts!
Founded – 1971
Number of Stores – 19,555
Revenue - $11.7 Billion (FY’11)
Net Income - $1.7 Billion (FY’11)
Subsidiaries – Starbuck Coffee
Tazo Tea Company
Seattle Best Coffee
Torrefazione Italia
Ethos Water
Hear Music
Evollution Fresh
Page § 44

45. Game Changers
THE HEART OF A COMPANY’S
BUSINESS MODEL should be
game-changing innovation. This is
not just the invention of new
products and services, but the
ability to systematically convert
ideas into new offerings that alter
the very context of the business.
A.G. Lafley
Former CEO
P&G
Page § 45

46. What Is a Game?
A game is a contest between 2 or
more players in which the outcome
and payoffs depend on the action
of the players
Page § 46

47. Who or What is a Game Changer?
GAME! CHANGER!
“A visionary strategist who “A breaker of the chain of
alters the game his business commoditization who
plays or concieves an creates differentiated and
entirely new game”
value-added brands through
innovation”
[Lafley & Charan (2008)]
Page § 47

48. General Perception about the Game
Only big players can change the game!
Page § 48

49. The 6 Elements of any Game
The Field
The Information
• The context of the • Common knowledge
game
• Percetions, beliefs,
• Landscape
and attitudes
The Players
The Payoffs
• Their Identities and • Rewards & Penalties
Interest
• Financial & Non-
• Their A-R-C
Financials
The Rules
The Actions
• Explicit or Implicit
• Observable & Non
• Complete or • Sequential or
Incomplete
Simultaneous
The Enforcer
Page § 49

50. Characteristics of Game Changers
Opposes The ! Driven By !
Status Quo! Analytics!
Focus On
Customer
Experience!
Page § 50

51. Tesla Motors
"All the geniuses here at General Motors kept saying lithium-ion technology
is 10 years away, and Toyota agreed with us -- and boom, along comes
Tesla. So I said, 'How come some tiny little California startup, run by guys
who know nothing about the car business, can do this, and we can't?’
Robert Lutz!
Former Vice Chairman!
GM!
Page § 51

52. Winning with Analytics
§ Used Sabermetrics to change § Uses data, analytics, and § Extensive use of analytics
the way baseball is played
metrics for decision making
throught the company
§ Results
§ Results
§ Results
§ 2 World Titles (‘04 & ‘07)
§ 3 World Titles in 4 years
§ World’s #1 Bookstore
§ Won over 90 games/yr
§ Perennial contender
§ World’s #1 HCS Provider
§ Multiple Post Seasons
§ Multiple Post Season
§ Market Leaders in
Customer Experience
Page § 52

53. Execution Driven…
ex-e-cu-tion
(ek si kyoo shun) !
Page § 53

54. Why Execution Is Needed…
Job for the Business
Core Discipline Leader Company’s Culture
§ The core of any successful § Leaders are paid to ensure § Execution should be
business strategy that business is deliver embedded throughout the
§ Execution is the discipline value – results – revenue organization
that drive the 3 core § Leaders must use § Leaders should establish
processes execution to drive the 3 an accountability culture
§ Execution delivers core processes § Execution should begin
success § Set winners apart from with Senior Leaders
loosers
Page § 54

55. Winning with Execution at GE…
Page § 55

56. Bringing It Home…
High
4 Game Changers
1 Need Seekers
Performance
2 Rule Breakers 3 Nimble & Agile
5 Execution Driven
Low
Value
Page § 56

57. Bringing It Home…
Page § 57

58. The Inspiration of …
“It is impossible to live without
failing at something, unless you
live so cautiously that you might
as well not have lived at
all - in which case, you fail by
default.”
Page § 58

59. JK Rowling
Page § 59

60. Innovator & Entrepreneur
1 Need Seeker
2 Rule Breaker
3 Nimble & Agile
4 Game Changer
5 Execution Driven
“Rock bottom became a solid foundation on which I
rebuilt my life”
JK Rowling
Harvard Commencement, 2008
Page § 60

61. Want More….?
Page § 61

62. Alvin McBorrough
Managing Partner
The OMNI Consulting Group
amcborrough@omni-pm.com
303-261-6320
Page § 62