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6 minutes | Apr 7, 2014
Why Some Companies Just Innovate More Effectively
What if Steve Jobs’s creative genius wasn't the key to Apple’s success? But most importantly, what if his secret sauce was something we mere mortals could apply in our business? Let’s jump in the wayback machine and look at Apple just a few years before the start of the new millennium. The creative folks there offered a broad range of products considered to be the high-end in their markets. If you had anything to do with education, the arts, design, or science there was a pretty good chance you were using a Mac or trying to convince your IT department to let you. Sounds like a wonderful position to be in. But think again. Under the surface, Apple was in complete disarray and within months of bankruptcy. Most have conveniently forgotten that shortly after Steve Jobs returned to Apple he had to ask Microsoft for a $150 million dollar investment just to keep the lights on. So what did Jobs do to put Apple back on the right track? The pundits expected him to do a big deal or ramp up the new product effort. What he did was just the opposite. Jobs simplified everything targeting the critical few important things and jettisoning the rest. He refocused almost every aspect of Apple on making just a handful of what he would later refer to as insanely great products. Apple went from offering 15 desktop models to just one. Same with laptops. They ditched the printer and peripheral business – even though HP was making buckets of money there. They also got rid of manufacturing in favor of outsourcing and stopped selling through all but one traditional retailer in favor of the web. Jobs seemed to have an innate understanding of something Goldratt later referred to as the “Constraint of Management Attention.” For Apple, that meant people were too distracted keeping all the plates spinning to be able to seize upon the opportunities that Jobs saw coming. But Jobs knew that without a clear, laserlike focus, all of the creative talent would be wasted. In just a few short years, Apple seized the digital media revolution and transformed the market. It started with iMovie and the desktop as a digital hub and then moved on to the iPod with iTunes as a new media hub and eventually onto iPhone and finally iPad. Jobs didn’t have the complete vision in 1998. He simply knew that if they were going to ride the n
12 minutes | Mar 18, 2014
How to Nail Your New Product Sales Goals Every Time
How many times have you seen performance against new product sales goals or any of your important KPI’s come up short? And what do you do when that happens? All too often, the answer is to just push the target out further or readjust the goal to reflect reality. But what if there were a way you could proactively focus your organization on actually hitting those top goals? Well, there is a way, and it’s an approach out of the Theory of Constraints/ Critical Chain toolbox called the project buffer. While initially developed for projects, it works for long-term goal achievement of any sort. In order to track and achieve that KPI, the project buffer is visualized using a fever chart - a very powerful visual method for assuring your successful goal achievement. What you end up with is a dashboard as shown below that gives you an early warning of sorts so you can take action early while you still have time left. The chart plots your progress and anytime you stray above the 45o line, you are falling behind and need to focus more attention on this KPI. In the chart shown above, the green, yellow, and red signify how much buffer we burned with green being the first 3rd, yellow being the 2nd, and red being the last. Another variation shown below uses green, yellow, and red on a bias indicating " tracking as required", "remedial planning required", and "remedial action required." How about an example to show how all of this works in the real world? Let’s say that our strategic planning identified that one of our top 3 critical success factors for the next 5 years is new product sales into a particular new market or region. Further, we’ve just launched a new product for that market. So our next step is to set an intermediate objective to sell $10 million dollars of that new product over the next 3 years. This is all very easy to set up and track using something as simple as an Excel spreadsheet (just right-click to save our free version) although you might want to consider Exepron’s Critical Chain Software. It's capable of far more, but gives you a great cloud-
9 minutes | Jan 28, 2014
Balancing Sustaining & Breakthrough Innovation
I recently received a question from a reader, named Eric, asking about the right balance between so-called incremental product development and breakthrough projects. That’s also a question I get all the time in my coaching work. Since striking the right balance is critical to speed-to-market in execution, I thought it was time for an article on the subject. Obviously the answer to Eric's question depends on a lot of different factors. But it is primarily a question of strategy and secondarily one of execution. The role of strategy is to guide how you focus your resources in order to achieve your top-level growth goals. So to get the right balance, you first have to look at your business and ask where your leverage is in terms of new product development. New product resource usage can be classified lots of different ways, so it’s useful to go just a little deeper than incremental vs. breakthrough. Here’s one way I find helpful: Platform Development – New product lines offering significantly different benefits and maybe even using different technology than you already offer. Line Extension – New products extending your existing platform into new market segments or adding features and benefits for the existing segments. Line extensions can be critical to realizing all the value created by your platform developments. Cost Reduction – Projects to lower the cost to produce your product through some combination of design, material, and process work. Some cost reduction projects will be invisible to the end user. Others are borderline line extension projects and may actually be marketed as lower cost versions of your main products. Tactical Customization – Tweaking existing products for specific customers or market segments. Line maintenance – support required in manufacturing to maintain quality and supply. Each type will be required at a different level depending on your company’s specific situation and the strategy you have chosen to address it. For example, if your main product line is in a dying market, you will probably be focusing heavily on cost reduction and capacity rationalization to maintain margins against eroding volumes. At the same time, some portion of your resources should also be directed towards new platforms for adjacent markets where there is still growth potential. However, after successfully launching a new platform, your efforts may be more focused on-line extension and tactical customization work requi
4 minutes | May 10, 2010
Can your innovation be too flexible?
A frustrated business executive recently asked me to help diagnose his company's new product development processes. They had taken several new products most of the way through design only to have to go back and revise the design, and he felt like they were starting to go in circles. When I asked what had caused the change, he said that a competitor had brought out an improved product while they were still in the product development phase. With the competitors announcement, adding similar features had forced them to go back and make major changes to the designs. They had done this more than once resulting in a significant delays for what should have been relatively straightforward new products. But why were relatively straightforward projects taking so long that competitors were beating them to market in the first place? As we continued to dig for the root of his problem, I asked how early in the development of new products they were gathering customer requirements and freezing the design requirements. Talk about an "aha" moment as he realized he was allowing the entrepreneurial head of new products to operate without ever solidifying these requirements. He had never seen the harm of allowing the product development team "some flexibility." But as we discussed the situation, it became clear that this issue went beyond mere flexibility. Instead of identifying critical new product requirements, the team was allowing the design requirements to emerge as new products were being developed. This was creating multiple loops to go back and "fix" the work that had already been done. These loops were delaying projects so badly that competitors were launching new features and again sending them back to the drawing board. If you face a similar situation, here are several changes you can make to get out of the flexibility loop that's slowing your new product throughput: Freeze Requirements - Specify critical new product requirements in the project plan before your constrained design and development resources begin work. Stay Frozen - Only allow changes to critical requirements if the market changes dramatically. This would include game changing prices or features added by competitors are so compelling that they would obsolete your product before it launches. View new product launches as a continuum - Minor impro
6 minutes | Mar 2, 2010
Six questions when no one wants to change
Why is change so hard - in innovation or otherwise? Most people will tell you that it’s because people naturally resist change. But I really like Eli Goldratt’s response to this argument: If a very wealthy person that you knew and trusted offered you a huge sum of money, say $100 million, with no strings attached, would you accept it? Before you answer, consider how much that much money would change your life. If you have any doubts, just look at the reports on how lotto winners have messed up their lives. Even knowing this, I’d wager the vast majority of us would still accept the money. The real reason change is difficult is because it’s human nature to avoid threats. That’s right, it’s not change we avoid, it’s the threat to our security that we perceive the changes could create. So to effectively implement change, we must work with the defenses that are naturally there to protect us.(1,2) This requires working with the all stakeholders to answer these simple questions about the change:(3) 1. Has the right problem been identified? (What must we change?) 2. Is this solution leading us in the right direction? (What to change to?) 3. Will the solution really solve the problem? 4. What are the unintended consequences or negative side-effects, and how can we avoid them? 5. What are the obstacles to implementation and how can we overcome them? 6. Are we all really up to this? Is management committed to ongoing innovation improvement or is this just another program that will come and go? Question 1 is the high leverage question. Have we found the bottleneck that is preventing our new product development from producing more and doing so in less time? There are usually three places we need to look for that bottleneck: • The process for finding unmet needs and new product opportunities • The process for developing simple cost effective solutions • The process for communicating and marketing valuable new product benefits Once we understand where the bottleneck is, Question 2 asks what is constraining it and how can we change that? For example, if we are struggling to find new product ideas, are we getting development people out into the marketplace eno
6 minutes | Feb 17, 2010
Innovate like a three year old:Why you should always ask why
In a previous post about Innovation Lessons from Childhood, I wrote about some of the new product innovation lessons we learned while we were in kindergarten. That included focusing on one task at a time and eliminating multi-tasking. But there's more childhood can teach us about innovation. One little question, a favorite of children the world over, can increase the number of new product opportunities you uncover. Who hasn't watched a frustrated parent in the grocery store trying to explain why they can't have something to their three year old. Every response is met with the question why? Of course, most three year olds can play this game all day so it usually ends up with Mom or Dad finally resorting to the ubiquitous "Because I said so." While that one little question can bring a parent to their knees, it can also be just what you need to find new opportunities. Sakichi Toyoda, the founder of Toyota developed the concept of five whys. In what eventually became part of Toyota's Lean Production System, the question "Why?" is asked five times to highlight both the root cause of the problem and its solution. The Wikipedia entry for the 5 Whys Concept gives the following example: My car will not start. (the problem) 1. Why? - The battery is dead. 2. Why? - The alternator is not functioning. 3. Why? - The alternator belt has broken. 4. Why? - The alternator belt was well beyond its useful service life and has never been replaced. 5. Why? - I have not been maintaining my car according to the recommended service schedule. The fifth why shows the root cause which is that the car was not maintained according to the schedule. The obvious solution is to maintain the car correctly. But as a company looking for new product opportunities what can you learn from this example? You may learn that asking why five times is not enough. At Guided Innovation, our working definition for innovation is: The organization-wide passion and process for finding and profitably serving unmet customer needs. By stopping at the fifth why, we've left important information out of the picture. Information that might help to uncov
6 minutes | Feb 8, 2010
5 rules for growth – Is a disruptive innovation strategy right for your business?
MP3 Audio Version Available Disruptive Innovation is one of the most over-used terms in business today—and it’s rarely used correctly. But how the term is used is not what’s important. Instead, we’ll focus on whether disruption is the right innovation strategy for your company or whether a sustaining approach is more appropriate. Disruptive Innovation, a term coined by Clayton Christensen in the Innovator’s Dilemma, simply means creating a new basis for competition that competitors in mature or over-served markets can’t or won’t follow—at least for some period of time. That’s because the performance is usually poor along traditional lines of competition, making them easy for established competitors to ignore. Here’s a simple example: Ten years ago, if you had asked customers what they wanted in a home floor cleaner, they would likely have said, lower pricing or faster drying (view my previous article for more on why customers don’t always know what they want). P&G challenged that idea by competing on convenience with Swiffer—a disposable non-woven pad, under license from Kao. Swiffer cost more and wasn’t effective as wet mopping. But with no bucket and no wet floor—well, it doesn’t get much easier than that. P&G had a huge success that dramatically expanded the floor cleaning market. Kao first attempted to license this technology to the leaders in wet floor cleaning, but they viewed it as ineffective along the traditional lines of performance. Plus the leaders failed to recognize the potential for creating a new market—overserved customers too busy to wet mop. Now, iRobot is addressing a new group of overserved customers with Scooba, its floor cleaning robot. Here’s a video if you haven’t seen one before. Turn this little device on when you leave or turn in for the evening and it goes to work cleaning your floor so you don’t have to. Again, it certainly cost more than Swiffer but for working families that will trade money for time, it takes ease of use to an entirely new level—completely unattended cleaning.
5 minutes | Jan 21, 2010
Want more from your new product launches- Three mistakes to avoid.
It’s amazing really. The average company spends 3.6% of net sales (which can exceed 40% or more of their EBIT) on R&D, but only 50% are satisfied with what they get in return. For many industrial or B2B companies, the new product bottleneck occurs at market launch. When this happens, they spend significantly on new products and then fail to get the value they could with more effective marketing. Here are three key mistakes companies make and how you can avoid them. 1) Marketing features instead of benefits is especially common in technology driven companies. While recently evaluating a reasonably sophisticated company’s new product literature, I was shocked by what I found – or failed to find. I couldn’t find a single clearly stated benefit. There was a section called features and benefits, but it was loaded with materials of construction, UL rating information, and other design features. Unfortunately, they had buried the product’s single biggest benefit, which was that it offered the highest energy efficiency of any product in its class. With today’s energy prices and focus on the environment, that’s a huge benefit. It should have been the centerpiece of their marketing. Sometimes this focus on features results when Engineering provides the benefit information and copywriters just clean it up. Your marketing copywriters must understand the difference between features and benefits and push engineering and product management to create a clear benefit statement. If you use internal copyrighting resources, it is critical that they do too. If your product has multiple benefits, identify the one that would drive customers to purchase your product even if the others weren’t included. That key benefit is where you should focus. 2) Failing to understand and prove the value their solution brings often goes back to the initial work done to find customers problems and unmet needs. With customers demanding shorter and shorter payback periods, innovators must be able to demonstrate how their solution helps customers sell more, frees up working capital, or reduces operating costs. One fatal shortcut at this stage is to skip quantifying the impact on the customer in detail. If you can’t quantify and demonstrate proven value along at least one of th
7 minutes | Nov 13, 2009
Are you ready for open innovation?
Are you ready for open innovation? In this issue of the More Impact innovation eZine, we discuss open innovation and whether it should play a role in your strategy.
5 minutes | May 22, 2009
Want a better environment fornew product innovation?
Want to create a better environment for new product development: Get out of yours and into theirs. If you want the most impact from your research and development, environment can play a role in innovation and creativity. However, most companies would do better to focus externally on the customers work environment. That's where the problems are. If you can connect your development with those problems, that's also where you'll see the most new product impact.
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