Managing the solution specific investments in innovation

1. Service / Product Innovation Managing the solution specific investments in innovation Anand Subramaniam

2. 2 “I once knew a chap who had a system of just hanging the baby on the clothes line to dry and he was greatly admired by his fellow citizens for having discovered a wonderful innovation on changing a diaper.” - Damon Runyon

3. 3 Highlights Service Innovation Product Innovation New Business Model Innovation Project Portfolio Management

4. New Service Development (NSD)

5. Innovation - New Service Development Involves implementation & improvement of information technology Solution specific investments in innovation More on investments in human capital (skills, knowledge) & org. changes than on tangible innovation SMEs produce more innovation but at lower rates than large service companies & are less frequent adopters Majority of service providers are SMEs, which may face particular impediments in innovation Service Innovation Heavy use of trademark protection & brand loyalty Traditional view that services are less innovative than manufacturing & tend not to have R & D Service firms often implement patented technologies & so transactions costs matter Difficult to measure innovation inputs and outputs 5

6. Traditional Small & weak technologically, with un-demanding customers & limited managerial skills System Firms Large & sophisticated: (banks, retailers, insurers, airlines) with heavy dependence on technology & excellent managerial skills Knowledge Intensive Firms All sizes (legal & accounting, engineering & design, advertising, market research & management Consultancy) with heavy dependence on professional employees & close connections to customers Innovation - Service Firms Types

7. Standardisation of the Service Mix of Physical Goods and Intangible Services Customer Contact (high / low level) in Delivering the Service New Services – Design Focus

9. Start-up Business: new service for existing market

11. Service Improvements: changes in features of currently offered service

13. Service Innovation Charter 10 Problem Statement : What service related innovation policy seeks to achieve? Outcomes : What outcomes do the service users / stakeholders seek to achieve from the service policy program? Goal : What is the aim / impact of the service policy program ? Rationale : Why undertake this program & what results are expected? Outputs Verifiable products or services related to innovation policy Resources Money, Materials, Methods, Measures, Machines, Manpower Tasks Tasks and activities under-taken to achieve the desire results / targets Assumptions: What factors are necessary and are in place? External Factors : What external factors influence the service program policy results / outcomes?

14. Service Innovation – Interrelationship 11 Business Models Substantial change how revenues and profits earned (business model); often accompanied by organisational changes / restructure and extend the enterprise Process / Systems / Operations Changes in how information is exchanged between customers & service providers and improve effectiveness and efficiency of core functional areas Products / Services / Markets Introduction of entirely new services – customer focused / go-to market strategies All three are interrelated and is an iterative process

15. Integrated Service Innovation System 12 Capacity & Manpower Planning, Training Employees & Stockholders Value Value Value Community Service Provider Customer Value Facility Location & Design Service Experience Partners Governance Social Networking Competition Competitive Strategy Customer Flow & Service Delivery Service Concept Realised Market Segmentation Society Operating Strategy Society

16. New Services - Stage-gate Process 13 Customers Generate & assemble ideas Immerse with Customers Focus your energies Gate Strategy, Organisation, Culture fit Gate Design service solution Gate Evaluate / Feedback into NSD Market Test / Launch Gate Gate

17. Knowledge Protection Methods 14

18. New Product Development (NPD)

19. Autonomous design and development teams Improved time to market and cost Simultaneous (concurrent) engineering Continuous interaction between product / service design and product process Computer-aided design / computer-aided manufacturing (CAD / CAM) Generate many views of parts, rotate images, magnify views, and check for interference between parts New Product – Design Focus

20. New Product - Roadmap Technical & economic feasibility studies Prototype design (form, fit, function) Performance testing / redesign of prototype Market surveys, sensing & economic evaluation of the prototype Design of production model (product evolution) Market / performance / process testing & economic evaluation of production model Continuous modification of production model (adapt to changes in market, IT)

21. New Product – Stage Gate Process 18

22. New Product - Inter-disciplinary 19

23. New Business Model Innovation

24. Innovation - Business Model Process Formulate value proposition, i.e. the value delivered to the customer by the product based on specific technology Identify marketsegment, ie. users to whom the technology brings value and performs the job to be done Define structure of the value chain, required for the product creation and distribution Specify the mechanism of profit creation and evaluate product coststructure and target margin Describe the company position in the value network that connects suppliers and customers, including identification of potential alternative producers and competitors Formulate competitive strategy enabling to the innovative company to gain and keep competitive advantage

25. Innovation – Technology Significance Using extensive use of technology where it becomes difficult to replicate and can often be protected (patented) First mover advantage High level of scalability Technology High level of initial risk which can be translated into high levels of return Barriers to entry Adding value for to customers 22

27. Enhance market share for existing players

28. Fill an existing unmet demand

29. Offer significant improvement over current solutions

32. Return on Investment

34. High risk projects with high potential vs. lower-risk sure bets

36. 27 “Innovation is hard to schedule.” - Dan Fylstra

37. 28 Good Luck http://www.linkedin.com/in/anandsubramaniam