Beyond StageGate Faster and More Profitable New Business

  • Slides: 59
Download presentation
Beyond “Stage-Gate: ” Faster and More Profitable New Business Development ECMRA New Contenders, New

Beyond “Stage-Gate: ” Faster and More Profitable New Business Development ECMRA New Contenders, New Approaches Greg Stevens, President, Win. Ovations , Inc. October 9 -11, 2000 London SM Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 1

Outline A. State of the Art: “Stage-Gate” Processes B. Killer Myths Inhibiting the Fuzzy

Outline A. State of the Art: “Stage-Gate” Processes B. Killer Myths Inhibiting the Fuzzy Front End (F. F. E. ) of New Business Development (NBD) C. Debunking Myths & Achieving Six Sigma Improvements in New Business Development v D. In Speed & Profitability Specific Applications Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 2

A. Stage-Gate® Systems Are “State of the Art” for New Business Development v Today’s

A. Stage-Gate® Systems Are “State of the Art” for New Business Development v Today’s NBD Processes First Published Broadly in 1957 -58* § § SC Johnson, Booz-Allen Little New Today v Widely Adopted in § By 60% of Firms Ø § Last 20 Years Per PDMA “Best Practices” Study “Stage Gate ®”: Trademark of Robert G. Cooper Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 3

B. Several Myths Inhibiting New Business Development (NBD) Today v Many Grains of Truth

B. Several Myths Inhibiting New Business Development (NBD) Today v Many Grains of Truth § v In Current NBD Paradigm And Much Confusion § “Get the Assumptions Wrong, and Everything that Flows from Them Is Wrong. ” Ø Peter F. Drucker, “Management’s New Paradigms” Forbes, Oct. 5, 1998, pp. 152177 Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 4

Problem: “NBD” (& Other) Experts Are Often Wrong v WSJ Survey of Expert Economists

Problem: “NBD” (& Other) Experts Are Often Wrong v WSJ Survey of Expert Economists Forecasting 30 -Year Treasury Interest Rates (WSJ: 1/4/99): § Got the Direction of the Changes Right Only 28% of the time Ø § 9 of 32 Forecasts: 1982 -1999 When Experts Said Rates Would Rise, 72% of the Time They Fell 30 Technology Companies Highly Recommended in 1968 Lost an Average of 98. 3% Value in 3 Years* v Same Happening Today for “Dot Com’s: ” v § Bankrupt: Ø Boo. com; Surf. Buzz. com; Red Rocket; Epidemic Marketing. com Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 *Devoe, Raymond F. , The Devoe Report, “More Bugs on the Windshield of Financial Life (Past Visits To the Elephant’s Graveyard), Vol. 21, #2, Jan 15, 1999. 5

Myth #1: Stage-Gate Processes Work (Better than Nothing)! v Reality: No Correlation Between Companies

Myth #1: Stage-Gate Processes Work (Better than Nothing)! v Reality: No Correlation Between Companies with Stage-Gate or other NPD Processes and Commercial Success* § Per Latest IRI/CIMS R&D Database Study: Ø *Research • Technology Management, Roger L. Whiteley, Alden S. Bean and M. Jean Russo. July-August, 1998, 15 -16. § & Even Per R. G. Cooper’s Own Research** Ø Stage-Gate®: Trademark of Robert G. Cooper • **J. Prod. Innov. Manag. 1999; 16: 115 -133 Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 6

Doing Activities Well in the F. F. E. of NBD Correlates with Success, But

Doing Activities Well in the F. F. E. of NBD Correlates with Success, But Having a Stage-Gate Process Does Not Stage-Gate Process “Success Factor Studies” Are Like Saying: If You Score a Lot of Points, This Correlates with Winning. v But Installing a Stage-Gate System Does Not Ensure that the F. F. E. -NBD Activities Are Done Any Better than Before: v § § § Most of the Stage-Gate Activities Were Already Being Done Before, Just Less Formally Even After Installation, Most Firms Do Not Rigorously Use the Process (So In Reality there Is Little Change) & The People Doing & Managing the Activities Are All the Same Ø v Yet the Players Make an Enormous Difference, both in Sports and NBD Little Change Brings Little Benefit Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 7

Reality: Stage-Gate Processes Little Changed Since 1950’s in Either Processes or Results v Reality:

Reality: Stage-Gate Processes Little Changed Since 1950’s in Either Processes or Results v Reality: No Measurable Improvements in 40 Years! § In Spite of All the “Changes” & “Best Thinking” § Indicating Few Substantive Changes v& § Same Globally: Americas, Europe, Asia 60% Success from Launch* Ø Ø § Same Globally: Americas, Europe, Asia Per Robert Cooper (3/99 JPIM), & Many Other Studies 11% Success from Early Development Stage Ø One in Nine Success Rates Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 *Cooper et al, J. Prod. Innov. Manag. 1999; 16: 115 -133 8

Like the Fable of The Emperor’s Clothes v No Better Off With, or Without

Like the Fable of The Emperor’s Clothes v No Better Off With, or Without Them v Also § v Like Medicine in the 1800’s: When Patients Staying Home Got Well Just as Often as Those Visiting a Doctor And Witch Doctors v “If a Factory Produced Such Low Quality, it Would be Shut Down. ” § Cooper et al, J. Prod. Innov. Manag. 1999; 16: 115 -133 Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 9

v“Insanity Is Doing the Same Thing Over and Expecting Different Results. ” Ø Benjamin

v“Insanity Is Doing the Same Thing Over and Expecting Different Results. ” Ø Benjamin Franklin Ø (40 Years with No Improvement Would Probably Qualify for the “Over and Over” Part) Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 10

Myth #2: “Most NBD Efforts Do Succeed!” Title of Article, by Robert G. Cooper*

Myth #2: “Most NBD Efforts Do Succeed!” Title of Article, by Robert G. Cooper* v Reality: § 89% Fail from Early Development Stage Ø Ø Many Examples Iridium Satellite Phones • • § Most NBD Efforts Fail Poor F. F. E. NBD Activity Now Bankrupt F. F. E. of NBD Is the Most Difficult of All Business Activities** Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 *R. G. Cooper et al, Research Management, Vol. 26: 20 -25, Nov. Dec. 1983 **G. Stevens et al, “Creativity + Business Discipline = Higher Profits Faster from NPD, ” J. Prod. Innov. Management, Vol 16: 455 -468, 9/99 11

Universal Industrial Success Curve Shows Most NBD Efforts Unsuccessful* 10, 000 Number of Ideas

Universal Industrial Success Curve Shows Most NBD Efforts Unsuccessful* 10, 000 Number of Ideas 3000 Raw Ideas (Unwritten) 60% Success Rate from Launch Unchanged in 40 Yrs. In Spite of All the “Improvements” 1000 300 Ideas Submitted 100 125 Small Projects * ** 9 Early Stage Devel. 10 4 Major Devel. 1. 7 Launches 1 Success 1 1 2 3 4 5 6 Stage of NBD Process 7 *Reference: G. Stevens and J. Burley, “ 3000 Raw Ideas = 1 Commercial Success!” Research • Technology Management, 40(3): 16 -27, May-June, 1997. Runner-Up, IRI “Best Paper of the Year. ” Win. Ovations, Inc. Copyright 2000 ** Hultink, [email protected] com Jan; Susan Hart, Henry S. J. Robben and Abbie Griffin. Launching new products in consumer and industrial markets: a multi-country empirical international 12 comparison. Product Development and 1 -530 -831 -5650 Management Association Research Conference Proceedings , October, 1997, 93 -126 Tel: 1 -517 -832 -0075, FAX

Myth #3: Failures Are Good! v Myth: “If You Are Not Failing Enough, You

Myth #3: Failures Are Good! v Myth: “If You Are Not Failing Enough, You Aren’t Trying Hard Enough” § Like Saying “Bad Quality is Good!” v Reality: § “There Is a Quality Crisis in Product Innovation” Ø § § R. G. Cooper: *J. Prod. Innov. Manag. 1999; 16: 115 -133 Because Most New Business Efforts Do Fail Today, We Desperately Search for Excuses! What We Really Need: Ø More Successful Systems; Higher Quality Results, & Profits Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 13

Profiting From Failures Can Happen (the Grain of Truth), But Mostly Failures Are Routine

Profiting From Failures Can Happen (the Grain of Truth), But Mostly Failures Are Routine & Devastatingly Wasteful v Average Life of Fortune 500 Co’s is 40 Years v One Major Chemical Co. : § § § ‘ 82 -’ 92: Spent $13 Billion “With No Contribution to Bottom Line” per CEO ‘ 60’s-’ 70’s: Spent $16 Billion on R&D, “Technological Black Hole” per Wall St. Journal While Doing “Everything Right” per Today’s Standard Practices Ø § Frightening Massive Layoffs: Over 30% Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 14

Myth #4: NBD Processes Work Linearly v Mythic Linear View of Traditional “Stage-Gate®” NBD

Myth #4: NBD Processes Work Linearly v Mythic Linear View of Traditional “Stage-Gate®” NBD Processes: 1 2 Idea v Myth § § 3 4 5 6 >> Stages >> 7 Launch #5: “Our Stage-Gate Is Unique” Reality: 5 -7 Stages in Most Stage-Gate Processes Reality: Most Companies Just Reinventing Cooper’s (or 1958 S. C. Johnson) Linear “Stage Gate” Models, & Spending Millions Doing It. Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 *Trade Name of R. G. Cooper & Associates 15

Reality: NBD Is Non-Linear in Early Stages. Requires Leaps of Creativity, “Morphing, ” To

Reality: NBD Is Non-Linear in Early Stages. Requires Leaps of Creativity, “Morphing, ” To Identify Winners 1 2 3 4 Non-Linear F. F. E. 5 6 7 Linear Stages & Gates Still Exist but Real View of NBD Process Is Non-Linear, Especially in Fuzzy Front End (F. F. E. ) Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 16

Myth #6: Everyone Is Creative! Or Can Be Taught to Be Creative Fa La!

Myth #6: Everyone Is Creative! Or Can Be Taught to Be Creative Fa La! v Therefore Everyone Can Create New Products in the “Fuzzy Front End” of NBD v Just Read the Manual, Follow the Steps Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 17

Myth #6 Restated: “The Environment (Nurture) Largely Determines Personality” v 67% of Americans Believe

Myth #6 Restated: “The Environment (Nurture) Largely Determines Personality” v 67% of Americans Believe Can Readily Change Personalities* § Popular belief, & “Politically Correct” v Standard Psychology Texts of 1970’s & ’ 80’s: Taught Individual Personality Was Determined Largely by Environment, or Nurture: § Said: “If Identical Twins Raised Apart Could Be Studied, Their Personalities Would Be “Enormously Different**’’ Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 *Roper Reports, 1993, 93 -8 (November), Roper Starch Worldwide Inc. , NY **Introduction to Personality, Walter Mischel, Holt Reinhart and Winston, 1976, 2 rd Ed. , p. 290 -291 18

Reality: ~80% of Core Unchanging Adult Personality & Creativity Determined by Genetics v Stable

Reality: ~80% of Core Unchanging Adult Personality & Creativity Determined by Genetics v Stable Core Adult Perso. Nality v Overall Personality Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 19

Data for New Genetic Paradigm of Creativity: 2 Key Experiments Addressing Effects of Nature

Data for New Genetic Paradigm of Creativity: 2 Key Experiments Addressing Effects of Nature and Nurture on Personality: 1. Study of Personality of Identical Twins Raised Apart § Same Genetics, Different Environments Ø § Separated at 3 Months Key Review Article: 1990 Science: * 2. Study of Adoptees § Different Genetics, Similar Environments Ø The “Reverse Experiment” of Twins Raised Apart Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 *Thomas J. Bouchard, Jr. , David T. Lykken, Matthew Mc. Gue, Nancy L. Segal, Auke Tellegen. . Sources of Human Psychological Differences: The Minnesota Study of Twins Reared Apart. Science. 1990. 12 October. 250. 223 -228. 20

Reality: Identical Twins, Raised Apart Have Very Similar Personalities Win. Ovations, Inc. Copyright 2000

Reality: Identical Twins, Raised Apart Have Very Similar Personalities Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 21

Reality: Identical Twins Raised Apart Are As Alike As Those Raised Together v v

Reality: Identical Twins Raised Apart Are As Alike As Those Raised Together v v Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 Both Fire Chiefs Both Bachelors Both Flirts Both Raucous v “We kept making the same remarks at the same time, and using the same gestures. It was spooky. ” v Suggests Zero Contribution from Childhood Environment 22

EEG Brainwaves of Identical Twins Raised Apart Show 95% Correlations * Similarity Due to

EEG Brainwaves of Identical Twins Raised Apart Show 95% Correlations * Similarity Due to Genetics, As Share No Common Nurture After Separation Identical Twins Raised Apart Non-Identical Twins Raised Together 95% Correlation Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 *“How Individual Are Human Brainwave Patterns? ” by H. H. Stassen, Psychiatric University Hospital Research Department, Zurich, Switzerland, 1992 p. 75 & 83. 23

Correlations Between Any Environmental Factors During Upbringing, and Adult Personalities Are Totally Lacking: Zero

Correlations Between Any Environmental Factors During Upbringing, and Adult Personalities Are Totally Lacking: Zero v True For Adopted Identical Twins Raised Apart v & For Adoptees in Same Household Environment § “Reverse Experiment” of Identical Twins Raised Apart: No Genetic Similarity, But Same Environment During Childhood. Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 *Thomas J. Bouchard, Jr. , David T. Lykken, Matthew Mc. Gue, Nancy L. Segal, Auke Tellegen. . Sources of Human Psychological Differences: The Minnesota Study of Twins Reared Apart. Science. 1990. 12 October. 250. 223 -228. 24

New Data Is Remarkably Consistent Supporting Strong Genetic Basis for Personality & Creativity Win.

New Data Is Remarkably Consistent Supporting Strong Genetic Basis for Personality & Creativity Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 25

Re-emerging “New” Paradigm: “Genetics Is the Most Powerful Determinant of Most Psychological Traits*” v

Re-emerging “New” Paradigm: “Genetics Is the Most Powerful Determinant of Most Psychological Traits*” v “New” Since Plato, Christ, Buddha, Schumpeter, Maslow. . . v “This Sudden Switch. . . From a Belief in Nurture, in the Form of Social Conditioning, to Nature, in the Form of Genetics and Brain Physiology Is the Great Intellectual Event. . . of the Late 20 th Century. ” “The Fix Is in! We’re All Hard Wired. ” Ø Tom Wolfe, Author, Forbes ASAP, December 2, 1996, p. 218 Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 *Bouchard, Jr. Thomas J. , “Twins and Type, ”Presentation at the Association for Psychological Type, 10 th Biennial International Conference, July 6 -11, 1993, Long Beach, CA 26

Myth #7: That Personality & Creativity Can Be Lastingly Taught v Reality: It Is

Myth #7: That Personality & Creativity Can Be Lastingly Taught v Reality: It Is More Productive to Teach Business Discipline to Creative Types Than to “Teach” Creativity (Largely Genetic) Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 27

So: Is Everyone Creative? Reality: Only In the Sense that Everyone Is Tall We

So: Is Everyone Creative? Reality: Only In the Sense that Everyone Is Tall We Are All “Tall. . . ” v And Can All Be Taught to Jump a Little Higher. . . v v But. . . Only a Few Can Play in the World-Class NBA Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 Willy & Wilt: Differently Gifted 28

C. Achieving Six Sigma Improvements in Speed & Profitability By Incorporating Latest Thinking into

C. Achieving Six Sigma Improvements in Speed & Profitability By Incorporating Latest Thinking into the F. F. E. of NBD Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 29

Could Personality Traits of Individual Analysts Involved in the Early Stages 1 -4, or

Could Personality Traits of Individual Analysts Involved in the Early Stages 1 -4, or “Fuzzy Front End (F. F. E. ) of NBD Affect Profits When Later Commercialized? Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 30

Population Studied by Win. Ovations : SM v From § Dow Chemical v 69

Population Studied by Win. Ovations : SM v From § Dow Chemical v 69 § F. F. E. -NBD Analysts & Projects Profiled >95% of Analysts & Projects Measured v 267 § v In § a Fortune 500 Chemical Co. Staged Projects Spanning 10 Years 1984 -1994: Gave Time to Measure Profits Europe and North America In Effect a 10 Year, $20 Million Experiment Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 31

Consistent Process Used by All F. F. E. -NBD Analysts Evaluated v Evolved from

Consistent Process Used by All F. F. E. -NBD Analysts Evaluated v Evolved from Planned Innovation Opportunity Analysis § § Bacon & Butler, 1982 Testing Critical NBD Hypotheses, or “Draft Propositions: ” Ø Ø Ø § § Need Value Opening Advantage Fit Rigorous Training & Coaching Through 1 -2 Projects Staged Analyses, Periodic Management Review “Gates” Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 32

“Fuzzy Front End” (F. F. E. ) of NBD Process: End of Individual’s F.

“Fuzzy Front End” (F. F. E. ) of NBD Process: End of Individual’s F. F. E. Analysis Profits WHAT IS THE VALUE OF MEETING UNMET NEEDS? Winning Actions Unspoken Needs New Ideas WHAT ARE THE SYSTEM COSTS? ` Gap-Analysis Ideas Prioritized Draft Propositions Idea Management Gut-Level-Screen Stages: Ideation Winning Tactics HOW IS THE FUNCTION DONE? `` WHAT ARE THE SPOKEN UNMET NEEDS? 2. Success-Wheel Shaping Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 Analysis Validation Individual Analyst Predominates Develop & Implement Teams Predominate 33

Personality of Analysts in the F. F. E. of NBD Was Measured Using MBTI

Personality of Analysts in the F. F. E. of NBD Was Measured Using MBTI Instrument & Correlated with Profits ® v Two MBTI Personality Measurements Correlated With NBD Profits Earned After Project Was Later Developed & Commercialized by the Business: § § “N” for Intuition (Vs. “S” for Sensory) “T” for Thinking (Vs. “F” for Feeling) Ø No Benefit from Including Other Two Personality Measurements: • • E/I (Extroversion – Introversion), or J/P (Judging – Perceiving) Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 34

Result: Rainmaker-Index * SM (Based on MBTI ) ® Mean Rainmaker-Index Scores of F.

Result: Rainmaker-Index * SM (Based on MBTI ) ® Mean Rainmaker-Index Scores of F. F. E. -NBD Analyst Groups -78 Min. Bottom 1/3 (23 Analysts) Middle 1/3 (23 Analysts) Top 1/3 (23 Analysts) = -14. 7 = 27. 8 = 70. 4 102 Max An 85 Point Increase in the Rainmaker-Index Correlates with $8. 7 Million Additional Profits Earned Per Analyst* § Corresponds to the Difference Between the Mean Scores of the Top Third and Bottom Third of the Rainmaker-Index v Rainmaker-Index Also Correlates with MBTI Creativity Index: Rainmakers are Highly Creative* v *See References: #2 & #6 by Win. Ovations, At End of Presentation. Selected as “Outstanding Research Paper” Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 from October, 1997 PDMA Research Conference Rainmaker-Index: Service Mark, Win. Ovations, Inc. 35

Rainmaker. SM Index: Correlates Strongly With Later NBD Profits (Even Better Than MBTI®-CI) Personality

Rainmaker. SM Index: Correlates Strongly With Later NBD Profits (Even Better Than MBTI®-CI) Personality Index Profit per Analyst, $ Millions Bottom Third Middle Third N = 23 Analysts Rainmaker Index $0. 09 MBTI-CI Index $0. 65 $0. 93 Top Third N = 23 Analysts $8. 23 Rainmakers! Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 $1. 37 $7. 37 Times More Effective, Top Vs. Bottom Third 95 X 11 X 36

All Personality Types Needed in Business Development v “Rainmakers” (With Business Discipline) Needed §

All Personality Types Needed in Business Development v “Rainmakers” (With Business Discipline) Needed § Having Business Discipline Training & Coaching § Starters: For the “Fuzzy Front End” of New Business Development v Many Other Types Also Needed § Finishers: For Later Stages of New Business Development and Implementation v In § Fact: Need More of Other Types than Rainmakers Because Later Development Stages Take Far More Effort Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 37

Analysts’ Recommendations After Detailed Analyses Stage Consistently Profitable When Later Developed & Commercialized v

Analysts’ Recommendations After Detailed Analyses Stage Consistently Profitable When Later Developed & Commercialized v 97% of Positive Recommendations from F. F. E. of NBD Process Later Commercialized Were Profitable § § Vs. 11% Typically from Stage 4 of 7 Stages on Success Curve More Than a Six Standard Deviation Improvement Vs. Benchmark “Universal Success Curve” for NBD Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 38

Getting the Right Answer Consistently Provides Profits/Unit Effort Nine Times Faster Vs. Benchmark $$

Getting the Right Answer Consistently Provides Profits/Unit Effort Nine Times Faster Vs. Benchmark $$ Profits 97% of Time, >Six Sigma Improvement 1 Effort with Best Practices 1 2 3 4 5 6 7 8 9 Profits 11% of Time 9 Efforts Needed with Typical NBD Systems Negative, Discouraging Outcomes: Helps Explain Why Typical Staged-Gate Systems Are Underutilized Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 39

Pick the One in 10 that Wins? Done That v More Exciting: Achieve Success

Pick the One in 10 that Wins? Done That v More Exciting: Achieve Success With Almost All Early-Stage NBD Projects By “Morphing” Them § Done That Too Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 40

The New NBD System Provides More Than a Six-Sigma Improvement Vs. The “Universal” NBD

The New NBD System Provides More Than a Six-Sigma Improvement Vs. The “Universal” NBD Success Curve 10, 000 95% Success Rates From Stage 4 Are Achieved vs. the Benchmark for Traditional Stage. Gate Processes of 11% (1 in 9). This Represents More than a Six Sigma Improvement. Number of Ideas 3000 Raw Ideas (Unwritten) 1, 000 300 Ideas Submitted 100 125 Small Projects Benchmark 9 Early Stage Developments From Here 4 Major Developments 1. 7 Launches 6 s 10 Win. Ovations 1 Success 1 1 2 3 4 5 6 7 To Here Stage of NBD Process Win. Ovations, Inc. Copyright 2000 Ref: Stevens & Burley, May-June 1997, [email protected] com Ref: Stevens & Burley, May-June Research • Technology Management Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 1997, Research • Technology Management 41

Dramatically Increases the Probability of Success by Selecting Inherently Creative People When Needed v

Dramatically Increases the Probability of Success by Selecting Inherently Creative People When Needed v As in Fuzzy Front End of New Business Development (F. F. E. of NBD) § Creativity Needed Because Starting Ideas Are Rarely Commercial, & Must Be Morphed v Key: Train & Coach Creative Types in Business Discipline – Described Next § “Leash Your Creativity ” Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 SM 42

Process Step 1: Determine Top Management’s Gut-Level-Screen SM Manager 1 Manager 3 Manager 2

Process Step 1: Determine Top Management’s Gut-Level-Screen SM Manager 1 Manager 3 Manager 2 v “Group” § Zone of Agreement & Excitement Their Gut-Level-Screen Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 43

Step 2: Prioritize Platforms, Groups & Projects Vs. Gut-Level-Screen Platform A Use Success-Wheel on

Step 2: Prioritize Platforms, Groups & Projects Vs. Gut-Level-Screen Platform A Use Success-Wheel on These Projects First, & Leverage Findings Across Entire Group Platform B Platform C Group 1 Group 2 Group 3 Project 1 Project 2 Project 3 Project 4 Project 5 Project 6 Project 7 to to to Project “n” Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 Functional Groupings Specific New Product Level Ideas 44

Steps 3 -4: Success-Wheel Project Analysis Forms and Tests Draft Propositions That Must be

Steps 3 -4: Success-Wheel Project Analysis Forms and Tests Draft Propositions That Must be Proved A. Internally Tested Propositions: § § Fit Vs. Gut-Level-Screen & Sustainable Competitive Advantage B. Marketplace Tested Propositions § Customer Visits: How Done, Spoken Needs, Costs, Value C. Iterative-Propositions : SM § Unspoken Needs, New Ideas, Winning Way in World Ø When Know How to Win, It’s Time for Commercial Development Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 45

Final F. F. E. -NBD Analysis Step: Cost Per Unit Performance In The Customer’s

Final F. F. E. -NBD Analysis Step: Cost Per Unit Performance In The Customer’s Eyes Is Key ($/Part, or $/Ft. Bonded: Not $/Lb. Sold) In This Example, the Highest Cost Per Pound Raw Material Still Wins Vs. The Best Global Competitors v Vs. Today’s Processes. . . And More Importantly Tomorrow’s v Then Go!! Activate Teams, Develop & Commercialize $ Per Unit Performance v Wins! Best Global Approaches Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 46

D. Applications of New System at Honeywell (Allied. Signal): v The new approach “combines

D. Applications of New System at Honeywell (Allied. Signal): v The new approach “combines creativity with a high degree of business discipline. … we ended up with winning business plans that fully identified over $100 million per year in new sales potential. … with the likelihood of developing into several hundred million dollars per year businesses. ” v “As a result of their work…we know the costs of the best competitors in the world, and how to beat them, by better meeting customers’ spoken and unspoken needs. ” Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 47

Application of New Approach at Dow Chemical, in (Insite®) Metallocene Polymer Catalysis: v Helps

Application of New Approach at Dow Chemical, in (Insite®) Metallocene Polymer Catalysis: v Helps § Identify “Starters” and “Finishers” Key Personnel Issue v Has Resulted In Over 3 Billion Pounds of New Polymer Capacity, Much in New Areas § v& Projected in 1991, and Now Come True It’s Just the Beginning Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 48

Myth #8: “We’re Already Doing Something Pretty Much v Like This” With Due Respect,

Myth #8: “We’re Already Doing Something Pretty Much v Like This” With Due Respect, Saying the Traditional Staged-Gate Approach and the New Approach Are Alike… “Is Like Saying Veterinarians And Taxidermists Are In the Same Business, Because Either Way You Get Your Dog Back. ” Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 Sen. Joe Lieberman, Wall St. Journal, 8/22/00, p. 1. 49

Reality: Most NBD Systems Need Dramatic Improvement v You § Know Your NBD System

Reality: Most NBD Systems Need Dramatic Improvement v You § Know Your NBD System Is Really Working IF: 95% of NBD Efforts Succeed After Early Development Ø § Your Company Greatly Exceeds Your Industry In: Ø Ø Ø § Vs. 11% Per Universal Success Curve Corporate Growth Rates, Profitability & Consistency Stock Appreciation & Book Value You & Most of Your Co-Workers Are Heavily Invested In Your Company. New Employees Want to Work There, With Options Economist, Forbes, Fortune, or BW: Ø Picks Your Company as a Gem in that Industry Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 50

Six Sigma Improvements in Speed and Profitability Have Been Achieved in Early. Stage NBD

Six Sigma Improvements in Speed and Profitability Have Been Achieved in Early. Stage NBD Systems via Breakthroughs In 1. Personnel, 2. Process & 3. Coaching “A Well Directed Imagination is the Source of New Approaches and New Contenders. ” Chinese Proverb Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 51

Key Reference Articles 1. Stevens, Greg A. “Shattering Myths and Achieving Higher Profits Faster

Key Reference Articles 1. Stevens, Greg A. “Shattering Myths and Achieving Higher Profits Faster from Six Sigma 2. 3. 4. 5. 6. 7. 8. Improvements in New Business Development. ” Technology Transfer and Innovation ’ 99 Conference, September 29, 1999, Melbourne, Australia. Also at the Project Management Institute (PMI) 9 -00, Houston, TX. Stevens, Greg, James Burley, and Richard Divine. “Profits and Personalities: Relationships Between Profits from New Product Development and Analyst’s Personalities. ” Product Development and Management Association (PDMA) 1998 Research Conference, October 5 -7, Atlanta, GA. pps. 157 -175. Stevens, Greg. A. and James Burley, “ 3, 000 Raw Ideas = 1 Commercial Success. ” Research · Technology Management 40(3), 16 -27 (May-Jun, 1997). “Innovation in Industry Survey. ” The Economist. Feb. 20, 1999. p. 15. [Shows the Universal Success Curve for New Business Development from Ref. #3. ] Bacon, Jr. , Frank R. and Thomas W. Butler, Jr. Achieving Planned Innovation®, A Proven System for Creating Successful New Products and Services. The Free Press/Simon & Schuster, 1998. Stevens, Greg, James Burley, and Richard Divine. “Creativity + Business Discipline = Higher Profits Faster from New Product Development. ” Journal of Product Innovation Management, 16: 455 -468. 1999. [& Selected as “Outstanding Research Paper” from October, 1997 PDMA Research Conference. ] Stevens, Tim. “The Nature of Creativity. ” Industry Week, Viewpoint Archive. Industry. Week. com. June 29, 1999. pps. 1 -4. Others Are Listed Within the Body of the Presentation Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 52

Contact, & Additional Background Information v Greg Stevens, President v Win. Ovations , Inc.

Contact, & Additional Background Information v Greg Stevens, President v Win. Ovations , Inc. 240 W. Main St. , Suite 1200 Midland, MI 48640 USA Tel: 1 -517 -832 -0075 FAX: 1 -530 -831 -5650 email: [email protected] com www. winovations. com SM Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 53

Win. Ovations Projects Done In: Americas, Japan, Australia, Western Europe, Eastern Europe, Russia, Middle

Win. Ovations Projects Done In: Americas, Japan, Australia, Western Europe, Eastern Europe, Russia, Middle East SM v Clients Since 1995 Include: l l l l l Baker Oil Tools Destec Energy Dow Chemical Co. Dow Corning Essex Specialty Products GM Honeywell (Allied. Signal) Huber Irwin Seating l l l l l Johnson & Johnson 3 M NCR Owens Corning Reilly Industries Solutia Velsicol Wacker Chemical Others Results Published Internationally: § § Associations: IRI, PDMA, PMI, ACA, ASC, TTI, SIRF, CDMA, CMRA Journals: The Economist, Industry Week, The Journal of Product Innovation Management, Researchl. Technology Management Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 54

Project & Training References from Large, Medium & Small Businesses Win. Ovations, Inc. Copyright

Project & Training References from Large, Medium & Small Businesses Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 55

Honeywell (Allied. Signal) Project Recommendation Win. Ovations, Inc. Copyright 2000 gstevens@winovations. com Tel: 1

Honeywell (Allied. Signal) Project Recommendation Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 56

Honeywell (Allied. Signal) Training Recommendation Win. Ovations, Inc. Copyright 2000 gstevens@winovations. com Tel: 1

Honeywell (Allied. Signal) Training Recommendation Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 57

Essex Specialty Products, Subsidiary of Dow Chemical Project Recommendation Win. Ovations, Inc. Copyright 2000

Essex Specialty Products, Subsidiary of Dow Chemical Project Recommendation Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 58

Oliver Products P Training Recommendation Win. Ovations, Inc. Copyright 2000 gstevens@winovations. com Tel: 1

Oliver Products P Training Recommendation Win. Ovations, Inc. Copyright 2000 [email protected] com Tel: 1 -517 -832 -0075, FAX 1 -530 -831 -5650 59