Innovation Tim Schindele Lean Six Sigma Black Belt
Innovation Tim Schindele Lean Six Sigma Black Belt timschindele@outlook. com
Combine Methods and Approaches • Innovation • Design • TRIZ (“theory of inventive problem solving”) • Lean Six Sigma • Human Factors • Theory of Constraints • PDSA Continuous Improvement
Categories of Innovations • Breakthrough Innovations • Sustaining Innovations • Disruptive Innovations
Breakthrough Innovation Revolutionary Science Typically involves a paradigm shift • Transistors • Structure of DNA • Quartz Watch Movement 1. Non-consumers or 2. Consumers who would not typically used the products - are now able to consume
Sustaining Innovation • Occurs naturally in an industry • Almost always an improvement to the bottom line • If the innovation is not recognized or is ignored – the company could suffer • Generally, the innovation is handled well and there is a natural transition in the industry • Changes the “rules of the game”
Disruptive Innovation • Typically originates from outside of an organization and frequently outside of the industry • It is like a wrecking ball in the way it changes the industry • Disruption changes the “the game itself” • Industry leaders typically try to stop or negate its impact – a losing proposition
Well Defined Not Well Defined Problem Definition Innovation Matrix Breakthrough Innovation Skunk Works Mavericks Open Innovation Prizes Sustaining Innovation R & D Labs Outsourcing Basic Research Disruptive Innovation Not Well Defined Research Grants Academic Affiliations Venture Capital Innovation Labs Domain Definition
Disruptive Innovation • The leading companies were destroyed because it brought to market a product that was: – Good Enough – Simpler – More Affordable • These innovations inevitably improve, march up-market and "disrupt" incumbents by gradually pushing them out of ever more complex and margin-rich product segments
Disruptive Innovation The term “Disruptive Innovation” is broadly misunderstood Many people think it’s just new and different, or radical improvements Instead, disruptive innovation changes industries because: 1. It makes complicated and expensive processes simple and 2. Opens them up to a wider audience
Disruptive Innovation Sustaining Innovations Performance Brings increasingly better products into an established market Technological Improvements can progress faster than customer demand Time
Smart Phone Disruption? One of the most popular smartphone manufacturers in the world is Xiaomi A Chinese company whose devices draw frequent comparisons to the i. Phone Models include: • Redmi 2 • Mi 3 and • Mi 4 i • The most expensive model (Mi 4 i) costs $219 off-contract Its current focus is on developing countries, regions of the world that haven’t already pledged allegiance to the i. Phone or mass-market Android
Some Examples of Disruptive Innovations… Minicomputers in the 1980 s… • Digital Equipment Corporation (DEC) was once the leading minicomputer manufacturer (second-largest computer company after IBM) • Other manufacturers were: IBM Wang Laboratories Data General Honeywell Prime Computervision
Some Facts on Minicomputers… • Minicomputers were sold directly to the customers • Price Range $50, 000 - $500, 000 • High cost of Training, Support and Service • Gross Profit Margin of about 45% for a $250, 000 sale • Gross Profit Margin of about 60% for a $500, 000 sale
Microcomputers - The Disruptive Competition… • Sold through distribution networks • Price Range $2, 000 • Low cost of Training, Support and Service • Gross Profit Margin of about 20% • Why Bother Worrying, Right? !! 1. None of the existing Minicomputer customers could even use these microcomputers to take care of their needs! 2. Why give up 45 – 60% gross margins for smaller sales and 20% margins?
Examples of Disruptive Innovations Minicomputers in the 1980 s got disrupted • The microprocessor was the Breakthrough Innovation • It destroyed Digital Equipment Corporation (DEC), Data General, Wang Laboratories, Honeywell, Prime, and Computervision • Minicomputers started out being Good Enough Simpler More Affordable
What Happened? Disruptive Innovation • Almost all of the Minicomputer manufacturing companies collapsed in unison • Digital Equipment Corporation was sold to Compaq in 1998
Let’s Look at some Examples Toyota dominating the “Big 3” American Auto Makers • Toyota Motor Sales, U. S. A. , Inc. , was formed Oct. 31, 1957 • Sold 287 Toyopet Crown sedans • Very underpowered and overpriced for the US market 1957 – Toyota Introduced the Toyopet It was a bust • 4 -cylinder, 88. 7 cubic-inch engine • Capable of attaining 78 mph • Fuel rating of 23. 5 mpg • Discontinued in 1961
Let’s Look at some other examples… Next – They tried something different Unit-body Construction (unibody) Using a unibody chassis, Toyota could produce a vehicle under 1, 000 kg (2, 200 lb) 1966 – Toyota Introduces the Corolla
Disruptive Innovation? Some Corolla quotes at that time: “Extreme simplicity was at the core of the first Corolla's engineering” “There was nothing sophisticated about the first Corolla and it wasn't pretty, but it was so simple that there were almost no parts to break” • Good Enough? • Simpler? • More Affordable?
Were the Big 3 Automakers Worried? • Not really • They were happy to keep their higher profits on the more luxury lines of cars • They were OK letting Toyota have a share of the inexpensive, low margin cars • Remember: These innovators inevitably improve, march up-market and "disrupt" incumbents by gradually pushing them out of ever more complex and margin-rich product segments
Other Examples of Disruptive Innovations Netflix vs. Blockbuster Netflix drove Blockbuster into bankruptcy What was the business model that allowed Netflix to compete? • The US Postal Service – delivering to your door • And then – streaming video over the internet Good Enough? Simpler? More Affordable?
Another Disrupted Businesses • 259 Borders Superstores • 114 Borders Express and Waldenbooks • 26 Borders Airport Stores CEO Mike Edwards bids farewell to the book retailer’s fans and customers as the company announced it was going out of business after 40 years July 2011
Who Drove Borders Out of Business? Amazon. com They drove a 40 year old company out of business What was the business model that first allowed Netflix to compete? • Internet sales • Delivered to your door Good Enough Simpler More Affordable
One you Might Not Know About Walmart vs. Department Stores When Walmart began there were 316 Department Store companies The first Walmart store ─ July 2, 1962 in Rogers, Ark
One you Might Not Know About Walmart vs. Department Stores A Retail Revolution Sam Walton's strategy was built on an unshakeable foundation: The Lowest Prices Anytime, Anywhere Their business model is low price and convenience How many Department Store Companies are there now? There are now 8 – of which Macy’s is the largest Good Enough? Simpler? More Affordable?
One Department Store company Escaped The Dayton Hudson Corporation • John Geisse developed the concept of upscale discount retailing and approached the company leaders • They started a separate division and allowed it to compete with the parent company • They opened their first upscale discount store on May 1, 1962 What’s the company’s name? In 2000, Target was the largest division and the fastest-growing arm of Dayton Hudson (75 percent of the company's revenue and profits)
Kodak and the Digital Camera Steven Sasson invented and built the first digital camera using a charge-coupled device image sensor in 1975 Who did he work for? Eastman Kodak Company Why didn’t Kodak pursue the digital camera? • They did not recognize its mass-market potential • Focused instead on high-end cameras for niche markets • Executives also feared cannibalizing their core film sales
Change is Inevitable Change is inevitable – and is one of the most stressful things in life People and companies are reluctant to change - largely because they have been successful doing things a particular way In times of change - companies that change their products and business models thrive and prosper
Biggest Disruptors of the Decade By - Transforming what exists or By - Creating what doesn’t through simplicity convenience affordability accessibility Apple Amazon Google Facebook Wal-Mart Verizon Cisco Systems Uber Netflix Pandora Skype Tato Nano ($1, 580 car) Airbnb Alibaba Snapchat Cloud Storage Mobile Internet Oil & Gas Recovery Advanced Robotics Internet of Things Near-Autonomous Vehicles 3 -D Printing Advanced Materials Renewable Electricity
Why Don’t Companies Innovate? • Good firms are usually aware of the innovations • Their business environment does not allow them to pursue the innovation when it first arises – they may not be profitable enough at first – their development can take scarce resources away from that of sustaining innovations • The company doesn’t place sufficient value on the innovation to pursue it 31
Innovation Pyramid
Methodology The approaches to the various forms of Innovation are very similar
The Process – The D 4 Road Map Define Discover • Create Innovation Opportunity • Refine the Opportunity • Scope the Opportunity • Leverage Team Brain Power • Manage People and Projects • Search Knowledge Bases • Prioritize & Select Ideas Develop • Formulate Design • Select Design • Optimize Design Demonstrate • Build a working model • Map Processes • Optimize Processes • Improve and Transition From: The Innovator’s Toolkit by David Silverstein, Philip Samuel and Neil Ce. Carlo, 2009
Define the Innovation • Identify actionable innovation gaps, or highpotential innovation projects based on the identification of unmet customer needs and new market territory • Observe how customers struggle with existing solutions so you can understand their unarticulated needs
Approach in the Define Phase 1. Identify a Focus Market 2. Identify Jobs Customers are Trying to Get Done 3. Categorize the Jobs to Be Done (JTBD) 4. Create a Jobs Statement 5. Prioritize the JTBD Opportunities 6. Identify Outcome Expectations Regarding the Job
Identify Jobs-to-be-Done • Customers don’t buy products and services • They hire various solutions at various times to get a wide variety of jobs done • It is the higher purpose for which customers buy products, services, and solutions
Types of Jobs-to-be-Done 1. Functional Job – describes the task that customers want to achieve 2. Emotional Job – related to feelings and perception 3. Ancillary Job – other jobs that customers want to get done before, during, or after they get the main job done Restaurant Experience
Customer Loyalty • It costs FIVE TIMES more to acquire new customers than it does to keep current ones • Reducing your customer defection rate by 5% can increase your profitability by 25% to 125% • The probability of selling to an existing customer is 60– 70%. The probability of selling to a new prospect is 5 -20%; (that’s up to 14 times more, or 5 on average)
Why is customer experience important? q 79% of consumers will commit to a deeper brand relationship – through product or service adoption – after a satisfying online experience q 59% of customers will stop doing business with the brand after just one bad experience in any channel From an IBM customer study
Types of Jobs-to-be-Done Main Job to be Done Functional Aspects Personal Dimension Emotional Aspects Social Dimension Related Jobs to be Done Functional Aspects Personal Dimension Emotional Aspects Social Dimension
Pokémon Go A Sensation - $16 million of revenue per day in July By mid September – that fell to $2 million per day It launched with relatively little actual "game“ Featured shallower gameplay than its siblings on Nintendo's gaming platforms Mechanisms for battling Pokemon were relatively simplistic There was no way for people to interact in real time in the game
They Missed on Some Areas Main Job to be Done Functional Aspects Personal Dimension Emotional Aspects Social Dimension Related Jobs to be Done Functional Aspects Personal Dimension Emotional Aspects Social Dimension
What are the jobs to be done?
Create a Job Statement Structure of a Job Statement Manage personal finances at home Action verb Object of action Contextual clarifier Clean clothes at home
Prioritize the JTBD Opportunities • There are hundreds of jobs that customers are trying to get done • Prioritizing is a function of: 1. How important they are 2. How satisfied customers are with existing solutions • Tools to use Likert Scale from customer input Multiple Criteria Decision Analysis Simple Decision Matrix Weighted Pugh Analysis
Create an Experience Map
The Top Portion - Experience Map Enriched Experience: • Aroma Neutral Experience: • Ambience Negative Experiences: • Audible Sensations – Loud • Cold • Drafty • Slightly Crowded
2. a. Notice that there a couple of people in line 2. b. Notice the narrow confined layout 2. c. Enjoy the aroma of roasted coffee and mixed sweet, robust smells 2. d. The lighting is pleasant, not overly bright and not too dim 2. e. The music seems ethnic, extended vocals, soft in style, volume too load and but my taste 2. f. The room climate seems intentionally cold
Discover the Innovation • Capitalizing on an opportunity to fulfill unmet customer expectations in a superior way • Your goal is to generate substantive ideas for closing outcome expectation gaps (or innovation opportunities) • Refine the opportunities
Identify Outcome Expectations There are 4 Types of Outcome Expectations 1. Desired outcomes customers want to achieve 2. Undesired outcomes customers want to avoid 3. Desired outcomes providers want to achieve 4. Desired outcomes providers want to avoid
Outcome Expectations Undesired • • • Undesired smell Damaged clothes Wrinkled clothes Allergens or harmful chemicals Foreign particles on clothes Excessive cost • • Product liability / lawsuits Imitation products Environmental complaints Supply shortages Desired For cleaning clothes at home • • • Stain removal Easy cleaning Fast cleaning Clothes smell fresh Clothes look fresh • • • Revenue growth Steady profit Customer loyalty Steady demand New derived products Low cost to make Customer Provider
Steps After the Outcome Matrix 1. Identify the Jobs to Be Done 2. List the JTBD Related Outcome Expectations 3. Create Outcome Statements – – The direction of action The unit of measure – like time, cost, defects, etc. The object of control (what you are influencing) The context (where or under what circumstances) Example: Minimize the time it takes to clean clothes 4. Determine Priority Outcome Expectations
Establish the Value Quotient 1. 2. 3. 4. Agree on and document the Job to Be Done Identify the desired and undesired outcomes Plot the ideal innovation Identify Opportunity Value Gaps • Complexity • Time to Clean • Resource usage (water, energy, etc. )
Establish the Value Quotient Your innovations should address the identified gaps in value: • Complexity • Time to Clean • Resource usage (water, energy, etc. )
Additional Focus Areas Heuristic Redefinition – A Visual approach for focusing and scoping an innovation project at the right level in a system Ethnography – A science that describes human social phenomena based on fieldwork and observation
Heuristic Redefinition Heuristic Ideation Technique (HIT) Matrix • Compare existing solutions to spark new breakthroughs – Likelihood of solving the problem – Ease of implementation – Expected impact on JTBD • Used to compare the characteristics of two seemingly unrelated products or services to develop new ideas
Ethnography and Human Centered Design (HCD) Human-Centered Design (HCD) is a methodology that helps us Hear the needs of our constituents in new ways, Create innovative solutions to meet these needs, and Deliver solutions with financial sustainability in mind. Why is it called “Human-Centered”? • Starts with people we are designing for • Examine the needs, dreams, and behaviors of the people we want to affect with our solutions • We seek to listen to and understand what they want and expect. • This is known as the “Desirability” lens. Everything is viewed through this lens throughout the design process • Once we have identified a range of what is Desirable, we move to view our solutions through lens of Feasibility and Viability
Human Centered Design Process The process of Human-Centered Design starts with a specific Design Challenge and goes through three main phases: Hear, Create, and Deliver. The process will move: – Concrete observations about people – Abstract thinking as we uncover insights and themes – Back to concrete with tangible solutions
Hear - (the Desirability Lens) During the Hear phase, we will collect stories and inspiration from people. Then prepare for and conduct field research. Step 1 Identify a Design Challenge Step 2 Recognize Existing Knowledge and Data Step 3 Identify People to Speak With Step 4 Choose Appropriate Research Method(s) Individual Interview Group Interview In-Context Immersion Self-Documentation Community-Driven Discovery Expert Interviews Seek Inspiration in New Places Step 5 Develop an Interview Approach (as appropriate) Interview Guide Sacrificial Concepts Interview Techniques Step 6 Develop the Mindset Beginner’s Mind Observe vs. Interpret
Create – (The Feasibility Lens) In the Create phase, we will work in a workshop format to translate what we heard from people into frameworks, opportunities, solutions, and prototypes. During this phase we move from concrete to more abstract thinking in identifying themes and opportunities, and then back to the concrete with solutions and prototypes. Step 1 Develop Design Approach Participatory Co-Design Empathic Design Step 2 Share Stories Step 3 Identify Patterns Extract Key Insights Find Themes Create Frameworks Step 4 Create Opportunity Areas Step 5 Brainstorm New Solutions Step 6 Make Ideas Real Step 7 Gather Feedback
Deliver – (The Viability Lens) The Deliver phase we begin to realize solutions through rapid revenue and cost modeling, capability assessment, and implementation planning. This will help launch the new solutions. Step 1 Develop a Sustainable Revenue Model Step 2 Identify Capabilities for Delivering Solutions Step 3 Plan a Pipeline of Solutions Step 4 Create an Implementation Timeline Step 5 Plan Mini-Pilots and Iterate Step 6 Create a Learning Plan Track Indicators Evaluate Outcomes
IDEO – a Great Resource in Design “Innovators aren't exceptional as much as they are confident” David Kelley, founder of the Palo Alto, Calif. , design firm IDEO David Kelley says most of us stop thinking of ourselves as creative somewhere around the fourth grade
IDEO – Design Workshops Stanford Design Thinking Virtual Crash Course https: //www. youtube. com/watch? v=-Fz. Fk 3 E 5 nx. M “A 90 -minute video-led cruise through our methodology”
Develop the Innovation • This phase of innovation transforms your great ideas from the white board into workable models • The questions become: – What functions will it perform and how do I design it? – How will I assess how good it is? – What alternatives do I have? – Can I make my solution invincible, and manage the risk of trying?
Utilize Process Improvement Tools • Scoping the Project • Stakeholder management • Project charter • Problem and Goal statements • Analyze potential income and operating expense impact • Gather your team resources
Functional Requirements • Gather information and define the problem • Develop functional models • Use various tools to help focus the work Nine Windows Helps you examine the innovation opportunity across the dimensions of • Time (past, current, future) and • Scale (super-system, subsystem)
A Side Note – Zune Pizza Zune is known for using a fleet of robots in the kitchen to speed up the pizza making process. But now, the company is outfitting its pizza delivery truck with 56 ovens programmed to make pies in-route to customers. Each pizza is partially baked for 90 seconds in an 800 degree oven. Bruno the robot is in charge of putting the pies into oven When the truck is four minutes away from its destination, an oven containing the order will turn on to fully bake the pie. It takes 3 minutes and 30 seconds to cook, and 30 seconds to cool down.
Some Additional Tools Heuristic Ideation Technique (HIT) Matrix • Compare existing solutions to spark new breakthroughs • Used to compare the characteristics of two seemingly unrelated products or services to develop new ideas
SCAMPER Worksheet 8 questions to develop more potential ideas for your opportunity: Substitute Combine Adapt Modify Put to other purposes Eliminate Reverse
SCAMPER Worksheet
Six Thinking Modes • leverages different points of view to help your team evaluate its best ideas • works especially well with controversial ideas
Separation Principals • Separation principles help when some physical contradiction stands between you and an innovation • TRIZ (“theory of inventive problem solving”) is very helpful with these issues • A very helpful resource
What are Contradictions in Problem Solving? A narrow hulled ship is fast but it becomes unstable with a heavy load Good Contradiction The ship needs a wide hull for stability and a narrow hull for speed Bad Narrow (to the water) Wide (to the ship)
Another Contradiction I need a wide assortment of fountain drinks to make my customers happy……but I need a small assortment of fountain drinks to keep inventory and space to a minimum
Demonstrate the Innovation • This final phase of innovation's front edge is when you create, test, and prove the feasibility of your new solution • Build a working model of your new solution using Prototyping or Piloting techniques.
Rapid Prototyping • Fail Fast and Fail Cheap – before what you are doing becomes a financial disaster • You will need the right – Culture – People – Mind-Set – Tools • The team marches to a different beat
Prototype Example A company wanted to test being able to project an image onto a sidewalk to advertise local businesses For a Prototype they • attached a projector to a pole over the sidewalk • ran an extension cord up to the projector • projected the image onto the sidewalk
Rapid Prototyping 1. Design Prototype Evaluation – It is an iterative process – You will likely build more than one full scale, working model 2. 3. 4. 5. 6. 7. Build the Prototype Determine how you will measure the results Evaluate using a Function Audit Evaluate for robustness Consider Additional Evaluations Repeat the Prototype Process
Piloting This is when you actually put the prototype into use with actual users 1. Plan the Pilot – What are the objectives? – How will you measure the results? – Who will be the customers? 2. 3. 4. 5. Design the Pilot Designate Resources Run the Pilot Analyze the Results
Back to Process Improvement Tools • Build your SIPOC Map – Create a High-Level Map of the Process – Identify the Outputs of the Process – Identify the Customers of the Outputs – Identify the Inputs Required by the Process – Identify the Suppliers of the Inputs to the Process
• • • Back to Process Improvement Tools Build a Process Map Build a Future State Value Stream Map Develop a Future State Process Map Measurement Systems Analysis Design of Experiments Conjoint Analysis – a simplified experimental technique for determining the best combination of attributes to include in a product or service design
Back to Process Improvement Tools • Evaluate under performance or poor performance from experiments • Make incremental Improvements • Develop a Control Plan
Things to Come Strati - the first 3 D -printed electric car that could be built in 24 hours cost between $18, 000 and $30, 000, but says the price will drop The key is simplification. On average, a car contains thousands of parts - the Strati contains just 49
Artificial Intelligence Diagnosing sepsis – Sepsis is a complication that is treatable if caught early, but patients can experience organ failure, or even death Artificial Intelligence algorithms that scour data on electronic medical records can help doctors diagnose sepsis a full 24 hours earlier, on average Search and Rescue – Artificial Intelligence permits computer programmers to write basic algorithms that can examine extensive footage and find missing people in less than 2 hours In addition, AI algorithms can sift through social media sites, such as Twitter, to learn about missing people and disasters
Artificial Intelligence Cybersecurity – Finding flaws and attacks on computer code is a manual process, and it's typically a difficult one During a DARPA Challenge - Artificial Intelligence entry Xandra discovered a new attack in binary code, figured out how it worked, reached out over a network and breached the defenses of one of its opponents, a system named Jima. And Jima detected that breach, offered a patch, decided to field it and ended the breach. The entire episode took 15 minutes. "It all happened before any human being knew that flaw existed, "
New Materials Graphene is basically a substance which is 300 times stronger than steel and made of only a thin layer of pure carbon, making it literally as light as a feather Each sheet of graphene is only one atom thick, and one square meter weighs just 0. 77 milligrams. The uses of this technology could be revolutionary: Space exploration and the aviation industry would benefit from the extremely light and strong material that could be used in aircraft construction. Graphene could revolutionize electronic devices by enabling lightweight, thin, flexible, yet durable display screens, cellphones, and much more.
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