Innovation Implementation

1. Innovation Implementation A platform to design and manage business model implementations

2. Hi, I’m Digit

3. Today, I’m here to talk to you about. . . Innovation Implementation

4. This presentation is about using a common platform to design and manage the implementation of a business model innovation.

5. Let’s start with. . . “What is Innovation Implementation?”

6. Innovation implementation is the design and management of a project that reduces the costs associated with failure, while increasing the rewards and likelihood of success.

7. By using a common platform to describe the implementation of a business model innovationwe can . . . . . . have a common language to describe our innovation projects.

8. . . . make better decisions about the fit of an innovation to our overall strategy. By using a common platform to describe the implementation of a business model innovationwe can . . .

9. . . . increase the speed of our business model innovation projects. By using a common platform to describe the implementation of a business model innovationwe can . . .

10. . . . reduce the risks associated with their implementation. By using a common platform to describe the implementation of a business model innovationwe can . . .

11. By using a common platform to describe the implementation of a business model innovationwe can . . . . . . and don’t forget, we can increase the rewards too.

12. . . . use it manage a portfolio of innovations faster and more effectively. By using a common platform to describe the implementation of a business model innovationwe can . . .

13. Okay, we're convinced. A common platform to describe business model innovation implementation would be great. But what is this platform?

14. Risks Rewards The implementation platform starts with a listing of possible risks and rewards

15. Risks Organization Rewards Next it describes how the project is organized and managed

16. Risks Organization Rewards Cost/Benefit That’s it, only 4 categories? Finally, it creates a Cost/Benefit profile of success and failure

17. Risks Organization Rewards Cost/Benefit There’s more. Nine factors define the key relationships between these four areas.

18. Risks Organization Rewards 3. Operations Scaling 2. Pilot 1. Prototype Cost/Benefit First, what are the likely rewards of the innovation through three development stages? Makes sense. Rewards grow as the project grows.

19. Risks Organization Rewards 1. Strategic 3. Operations Scaling 2. Operations 2. Pilot 3. Project 1. Prototype Cost/Benefit • Second what are the risks to the: • host entity (strategic), • the new business model (operations) • and the project itself?

20. Risks Organization Rewards 1. Strategic 3. Operations Scaling Structure 2. Operations 2. Pilot 3. Project 1. Prototype Cost/Benefit Third, how will the project be funded, structured and protected from negative influences?

21. Risks Organization Rewards 1. Strategic 3. Operations Scaling Structure Team 2. Operations 2. Pilot 3. Project 1. Prototype Cost/Benefit Four, who will become the diverse, creative, energetic evangelists that make up the team? Oh! Oh! Can I join?

22. Risks Organization Rewards 1. Strategic 3. Operations Scaling Structure Team Process 2. Operations 2. Pilot 3. Project 1. Prototype Cost/Benefit Five, how will the tension between maintaining speed and momentum versus failing the project when it doesn’t achieve success hurdles be managed?

23. Risks Organization Rewards 1. Strategic 3. Operations Scaling Structure Team Process 2. Operations 2. Pilot Uncertainties 3. Project 1. Prototype Cost/Benefit Six, what are the critical uncertainties stemming from the risks and rewards that need to be resolved to ensure project success?

24. Risks Organization Rewards 1. Strategic 3. Operations Scaling Structure Team Process 2. Operations 2. Pilot Uncertainties Actions 3. Project 1. Prototype Cost/Benefit Seven, what rapid low-cost experiments, prototypes, learning etc. are run to reduce the prioritized uncertainties to known quantities?

25. Risks Organization Rewards 1. Strategic 3. Operations Scaling Structure Team Process 2. Operations 2. Pilot Uncertainties Actions 3. Project 1. Prototype Cost/Benefit Cumulative Costs Success and Failure Probabilities X I bet these probabilities change based on learning derived from the actions. Eight, what are the costs associated with failure of and their probabilities.

26. Risks Organization Rewards Structure Team Process Stages Stages Stages Stages Stages Types Uncertainties Actions Cost/Benefit Cumulative Costs Success and Failure Probabilities Cumulative Rewards X X Great. Can you show us an example? Finally, what are the gains associated with success?

27. Implementation Canvas (9 Factors Determine Your Implementation Profile) Sure, but before we talk about that, take a moment to review the implementation canvas.

28. I’m sure you know Apple and the iPod. . . And Sony and their MP3 player. Yeah, except Apple launched with the iTunes Store and Sony just launched with the player. I wonder why?

29. It could be as simple as Sony didn’t think about it. But let’s use the canvas to see why else they might have done what they did. Okay

30. In 2003, Sony was a large music label company suffering from pirating. So an e-store platform would cannibalize their existing sales. However, it might slow pirating. • Large music label • Sony e-store sales cannibalize existing sales • Could slow pirating • Medium reward • All sales are incremental • High reward For Apple, all sales would be incremental.

31. Sony opening an e-store would likely cause a revolt in existing channels. Divisions responsible for channel sales would push back. “Why are we hurting our partners?” • Distribution channels revolt • Organization resists • High Risk • Large music label • Sony e-store sales cannibalize existing sales • Could slow pirating • Medium reward • Fits with organization • Low risk • All sales are incremental • High reward For Apple, the new business model has no such conflict with channels or the organization.

32. The both face similar risks in access to music. Will the music labels sell through them? Sony has its own music. But the other labels are competitors. However, sales are down so everyone needs sales. • Distribution channels revolt • Organization resists • High Risk • Large music label • Sony e-store sales cannibalize existing sales • Could slow pirating • Medium reward • Fits with organization • Low risk • Music label companies won’t sell through them • High Risk • All sales are incremental • High reward Let’s call it a wash and say high risk, medium prob.

33. To respond to these risks Sony would need to create strong separation between the existing organization and the project to protect it. This will drive up cost of implementation. • Distribution channels revolt • Organization resists • High Risk • Requires separation from organization to protect it • Large music label • Sony e-store sales cannibalize existing sales • Could slow pirating • Medium reward • Uses normal innovation structures and team • Fits with organization • Low risk • Music label companies won’t sell through them • High Risk • All sales are incremental • High reward • Separation increases costs Apple can structure as a normal project with normal costs.

34. Distribution channels revolt • Organization resists • High Risk • Requires separation from organization to protect it • Large music label • Sony e-store sales cannibalize existing sales • Could slow pirating • Medium reward • Uses normal innovation structures and team • Fits with organization • Low risk • Will consumers buy through a new e-platform Finally, they would both face the critical uncertainty of will consumers buy through this new channel? • Music label companies won’t sell through them • High Risk • All sales are incremental • High reward • Separation increases costs

35. Distribution channels revolt • Organization resists • High Risk • Requires separation from organization to protect it • Large music label • Sony e-store sales cannibalize existing sales • Could slow pirating • Medium reward • Uses normal innovation structures and team • Fits with organization • Low risk • Will consumers buy through a new e-platform • Music label companies won’t sell through them • High Risk • All sales are incremental • High reward So now let’s compare the risk reward profiles of Sony and Apple. • Separation increases costs

36. Distribution revolt • No access to music labels It’s no wonder Sony just launched the player by itself. It’s risk/reward profile was far worse than Apple. More risks items for an inferior gain. • Few incremental sales • Organization pushes back • Consumers won’t buy • No access to music labels • Consumers won’t buy • All sales incremental

37. It’s not enough to have a great idea. Your implementation profile determines your risk/reward. And that determines whether the project will get traction. So maybe it wasn’t just because they didn’t think about it.

38. So, that’s what business model implementation is all about.

39. Imagine if your organization had a common understanding of how to implement innovations?

40. What value could you unlock?

41. If you’d like more info. Call us and ask for John. Tell him Digit sent you. Ennova Inc. Toronto, Ontario 1-888- 6ennova 905-294-8050 (local) John @ennova.ca

42. Sorry, I’m busy listening to a great podcast from iTunes. Hey Digit, can you give me a hand with this?