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Making Innovation Work in a Growing Economy. Phil Samuel, Ph. D. Conventional Ultrasound $100,000-$350,000 Customers – Sophisticated hospitals and imaging centers Uses: Cardiology Obstetrics General radiology.
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Making Innovation Work in a Growing Economy Phil Samuel, Ph. D.
Conventional Ultrasound • $100,000-$350,000 • Customers – Sophisticated hospitals and imaging centers • Uses: • Cardiology • Obstetrics • General radiology
In 2002 GE China develops a cheap portable ultrasound machine that utilizes a laptop computer and a probe Portable Ultrasound (2002) $30,000 In 2007 GE China launched a dramatically cheaper model and sales took off. Portable Ultrasound (2007) $15,000 $4 MM 2002 2008 $278 MM
Lessons in Innovation • Focus on the jobs customers are trying to get done • Think beyond your hot products • Identify non-consumption and non-consuming contexts • Look beyond your industry for ideas • Burn your ladder
1 Focus on the Jobs Customers are Trying to Get Done
“People who want to buy power drills don’t necessarily want to buy a quarter-inch drill. They want a quarter-inch hole” - Prof. Theodore Levitt, Harvard Business School
Job To Be Done • Customers don’t just buy products or services. • They hire products or services to get functional and emotional aspects of jobs to be done “Job-to-be Done” “Solutions”
The Job of “Cleaning Clothes at Home” Clean Clothes “Job-to-be Done” “Solutions” Detergent and Washing Machine Zero Detergent Washing Machine
Structure of Jobs Main Job Category Ancillary Job 1 Functional Jobs Social Jobs Personal Jobs Emotional Jobs Ancillary Job 2 Job Steps Ancillary Jobs .. Process Step 1 Process Step 2 Ancillary Job n Process Step n Process Step ..
Under-Served Jobs Job Focus Identify jobs to be done where ad hoc or no solutions exist. Customer were trying get the job of “reselling and buying goods efficiently”. Ebay created a solution to achieve this job.
Creating Valuable Brands • Design a solution that does a job well. • Give it a brand that uniquely links that product to that job. • As people hire it to do that job and find that it does it well, they learn to trust the brand for that purpose. • They begin hiring it whenever they land on that “job space” – and talk about it. • Advertising can then remind other people that they, too, land on this job, and that they should hire this branded product when they do. • FedEx • Crest • OnStar • Google • eBay • Starbucks • Blackberry • Xerox • Kleenex • Lunchables • Hill-Rom
Over-Served Jobs Micro Lending Motivation for new and first-time Investors Online Stock Trading DIY, Less cost, Easy to access Insurance Provider Group Creating products to reach the under-served markets White Strips No Skill needed, DIY, Less cost
What Drives Non-Consumption Price Access Skills Time What constrains consumption?
What Drives Non-Consumption Help new customers do a job that others were already doing. Often these jobs couldn’t be done due to high cost or skill required Enable less skilled people to get important/ unsatisfied jobs done in less centralized location
iTunes Download, Listen to, Organize, Access and Share music
Related Market Growth Job Focus Innovation that enables customers to do related jobs that are underserved.
Outcome Expectations – Job Hiring Criteria • Customers define success and failure criteria for hiring solutions for each of these jobs. These criteria are called Outcome expectations • There are two kinds of outcome expectations – desired outcome expectations and undesired outcome expectations • Jobs and outcome expectations form the basis for identifying opportunities for innovation, growth and new value creation
Outcome Expectations (Hiring Criteria) “Job-to-be Done” “Solutions”
The Job Map Jobs To Be Done
The Job of Cutting Wood Cut Wood on the Jobsite
Bosch Circular Saw • “Direct-Connect” Cord: Minimizes chances of cord connection snags, offers quick and easy replacement if cord is cut, minimizes saw “prep” time (wrapping/unwrapping cord for storage). • Anti-snag lip on the lower blade guard: Minimizes the chances of the lower blade guard interfering with the cut, minimizing the chance of cutting error. • Dust port on the rear of the upper blade guard: Directs dust down and away from the cut-line, improving visibility of the cutting line and minimizing the chance of cutting error. • Dust blower: blows dust from the cutting line, improving visibility of the cutting line and minimizing the chance of cutting error. • “Vari-Torque” clutch: Allows the blade slip on the arbor if the resistance suddenly increases, like when pinched in a board, reducing the chances of kickback and improving the saw safety.
Mapping the Job of Installing Drywall / Commercial Carpentry Current strength NPD/ New Entrant Acquisition Target
2 Think Beyond Your Hot Product
Your Innovation Portfolio Degrees of Innovation
Innovation at Apple Degrees of Innovation Recent study by Kaiser Associates revealed that iPod—along with other Apple products affected by its halo—created $70 billion in shareholder value in just three years.
Doblin Model for Innovation Types Source: Doblin Inc.
Industry Innovation Landscape high low Industry innovation activity Delivery Offering Process. Finance Channel Brand Customer experience Revenue model Networking Product performance Product system Service Enabling process Core process high low Your business innovation activity
3 Identify Non-Consumption and Non-Consuming Contexts
Conventional Ultrasound $100,000-$350,000 Portable Ultrasound $15,000
The World Economic Pyramid Tier 1 Tier 2& 3 Tier 4
What Drives Non-Consumption Price Skills Access Time What constrains consumption?
Disruptive Innovations: A driver of failure and the source of new growth opportunities Pace of Technological Progress Performance that customers can utilize or absorb Disruptive innovations Incumbents nearly always win Sustaining innovations Performance Entrants nearly always win Time
Beat Competitors with Asymmetry of Motivation 25–30% 55% 22% 18% 8% 12% Quality of minimill-produced steel 4% 7% % of tons Sheet steel Steel Quality Structural Steel Quality of integrated mills’ steel Angle iron; bars & rods Rebar 1975 1985 1980 1990
The Strategies for Asymmetric Competition Bring a better product into an established market Performance Low-end disruption Address over-served customers with a lower-cost business model Different measure Of Performance Time Non-consumers or Non-consuming occasions Time New-market disruption: Compete against non-consumption
Disruptive Strategies NON-CONSUMER CURRENT JOBS Outcome Focus Help new customers do a job that others were already doing. Often these jobs couldn’t be done due to high cost or skill required
Expensive failure always results when disruption is framed in technological rather than business model terms Performance Time Path taken by vacuum tube manufacturers Tabletop Radios, Floor-standing TVs, Computers Different measure Of Performance Portable TVs Pocket radios Non-consumers or Non-consuming occasions Hearing Aids Time
Galanz Enterprise • In 1992, developed a new microwave oven for the tiny Chinese kitchens; • After winning the Chinese low-end market, moved up-market to serve both local and global markets. • In 2005, holds 75% of Chinese market and nearly 50% of global market in microwave ovens. ( >600 patents in microwave technologies) • Since 2004, has started to replicate the same strategy by developing air-conditioners for tiny Chinese homes. Within 4 years, became No. 2 Chinese air-conditioner exporter.
Disruption in Business Models Disruption has been the dominant historical mechanism for making things more affordable and accessible Yesterday • Ford • Dept. Stores • DEC • Delta • Hamilton • Xerox • IBM • Cullinet • AT&T • Dillon, Read Tomorrow • Chery • Internet retail • RIM Blackberry • Air taxis • ETFs • Zink • Linux • Salesforce.com • Skype • E-Trade Today • Toyota • Wal-Mart • Dell • Southwest Airlines • Fidelity • Canon • Microsoft • Oracle • Cingular • Merrill Lynch