IMPERATIVES OF A BREAKTHROUGH INNOVATION

IMPERATIVES OF A BREAKTHROUGH INNOVATION CEOs from companies both established and aspiring have realized the Returns on Innovation that they can seek with a proper charter in place. No two views of innovation topping the investment avenues of corporates globally. But only a few of these aspiring companies have been able to successfully crack the DNA of Innovation. Innovation’s definition would perceptibly vary from firm to firm, albeit most of them is able to differentiate Breakthrough Innovation from Incremental Innovations. The paper is all about Breakthrough Innovation. As defined, Breakthrough Innovation has the disruptive potential of being a game changer. It can help a firm open new market, boom customer base, create unprecedented brand equity or at best change the business fundamentals. Examples are numerous, such as iPod from legendary Apple, PlayStation by Sony, Post-it notes from 3M, FedEx’ First Overnight, and a few more. There needs to a well laid out process in place for fostering innovation in the organization and seeing ideas morphing into solutions. Though best practice case studies the paper demonstrated the imperatives of a Breakthrough Innovation.

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WHITE PAPER

PAVAN SONI

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TABLE OF CONTENTS INTRODUCTION ..........................................................................................................................................................3 INNOVATION DEFINED .................................................................................................................................................3 INCREMENTAL INNOVATION..........................................................................................................................3 BREAKTHROUGH INNOVATION......................................................................................................................3 THE PROCESS OF INNOVATION ....................................................................................................................................6 CUSTOMER INTELLIGENCE ............................................................................................................................7 COMPETITION INTELLIGENCE .......................................................................................................................7 TECHNOLOGY FORESIGHT.............................................................................................................................8 CONCEPT ROADMAP......................................................................................................................................8 STRATEGIC SCREENING .................................................................................................................................8 PRODUCT PLATFORM DEVELOPMENT ...........................................................................................................9 PROGRAM STEERING.....................................................................................................................................9 BUSINESS SCREENING....................................................................................................................................9 HANDING-OVER...........................................................................................................................................10 NEW PRODUCT INTRODUCTION ..................................................................................................................10 CONCLUSION..............................................................................................................................................................10 REFERANCES ..............................................................................................................................................................11 ABOUT THE AUTIOR...................................................................................................................................................12 ABOUT WIPRO TECHNOLOGIES..................................................................................................................................12

Table of Contents Wipro Technologies

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INTRODUCTION Innovation is a journey, not a state of being; both for an individual as well the firm. Some of the first FEW names that come up while thinking of innovation are: Apple, Toyota, Sony, 3M, Xerox, FedEx, and IBM including a few others. What set these companies apart is not their early moves or their sheer sizes, but a commitment to innovate, not only at difficult times but also during successful phases of existence. The firms named earlier are all leaders in their respective territories and have retained their contemporary identity since time immemorial. It’s not true that these firms never had a bad time. But what savored them were the seeds of innovation that they sowed at the times they were doing well. This white paper is essentially an endeavor to crack the DNA of how innovation takes place at firms, which are both successful and aspiring. Also take a closer look at the way innovation is defined (preached) and practiced in these organizations. Through out the papers some of the industry’s best practices from innovation are shared.

INNOVATION DEFINED “We are not in the business of inventing technology but of innovating with technology. We want to partner with [external] service providers to develop products that serve global customers’ needs.” - Hector Ruiz, Chairman, President, and CEO, AMD Time and again, corporate big and small have been perplexed by the very definition of innovation. And there is no dearth of business gurus, corporate honchos and scholars speaking on this subject of importance. A simple classification of innovation would help understand it better. At the extremities of the continuum of innovation are: •

Incremental Innovations and

•

Breakthrough Innovations,

While there are various hues and shades of innovation in between. As name suggests, Breakthrough innovations, unlike incremental ones have the strength of opening up, at its least, a new market for the company, satiating an absolutely unheard-of customers’ desire, ushering an entirely new value stream, or at its best, create a new business. At this, the conventional wisdom would vouch for Breakthrough Innovation and nothing less than that. But here lies a catch, breakthrough innovation might sound fancy and rewarding but is very difficult or almost impossible in some environments to attain that. Statistically, more than 80% of the growth to a company comes from incremental innovation and breakthrough innovations are rare and taxing. A firm needs to engage in incremental innovations as an ongoing process to keep itself ahead of the competition and enduring stakeholders’ expectations. Companies can’t park efforts towards incremental innovations in chase of something breakthrough, but again, it would be imprudent to expect breakthroughs to come by all themselves. It is earnest to have a regimented approach and at best an

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innovation charter to see innovative products, along with incremental ones coming through company’s product pipeline. Exhibit 1-A, depicts how incremental and breakthrough innovation are placed and how best company’s can benefit from these.

Innovation Spectrum

Incremental Addresses stated need of customers’ in some different form using existing technologies.

Breakthrough

Breakthrough Incremental

Addresses latent desire of customers’ adopting future technologies.

Company’s Growth Exhibit 1-A: Innovation Continuum and Company’s Growth

There are three elements of breakthrough innovation: •

Addressing unstated/ latent customers’ need;

•

Using a breakthrough technology or set of technologies; and

•

Giving a competitive edge to the company, difficult for others to imitate.

An absence of any one of these three factors would render an innovation incremental in nature. Since time immemorial, firms have not been able to fully address stated customer needs, and hence newer businesses emerge constantly. For the very survival of a firm the imperative is to provide solutions to customer needs and better than competitors do. But many a times the customer himself is unable to articulate his needs or desires, and it is best left upto the firm to gauge and address such needs. This is the breeding ground for breakthrough innovations and companies which can successfully identify and articulate these desires strike a fortune. Apple stands out in deciphering customer’s latent desires and satiating with excellent concepts. Think of iPod which has revolutionized the whole experience of listening to music. Perhaps the second largest innovation in this space, post Sony’s legendry Walkman.

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Another element of breakthrough innovation, taking precedence in the new age is breakthrough technology. The technology referred to here could be a new to the world concept/ technology or a combination of existing and new. All that makes the technology breakthrough is its application in an altogether new parlance. One of classic cases is Microsoft, the firm which has imitated and borrowed innovations from elsewhere and inherit in its products. Exhibit 1-B, depicts how an existing technology introduced into a new market can be breakthrough and similarly how an existing market with a newer technology can also be breakthrough. The moment of truth is when breakthrough innovation actually takes place.

Moment of Breakthrough

Technology Life Cycle

Extent of Maturity Market Life Cycle

Time Exhibit 1-B: Moment of Breakthrough

International Business Machine is one of the few leaders who have grown with the industry and have reinvented itself with time. ‘On Demand’, the term coined by Sam Palmisano has helped the elephant innovate its business model and is recognized as one of the biggest innovation of the new century. ‘On Demand’ clearly qualifies as a breakthrough innovation and is been religiously backed up huge commitments. Several companies have adopted the word do a varied degree of success, but no one has challenged IBM’s dominance in the domain.

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THE PROCESS OF BREAKTHROUGH INNOVATION “Fight Innovation with Innovation” - CIO Communications, Gartner The name of the game is to convert concept to reality. It is not creativity, nor it is invention. It is the rare ability to make a concept see the light of the day and eventually churn business out of it. Depicting a process that could be applicable across industries would be falsification of the whole concept of innovation. The process discussed is a generic one; exact steps may vary from company to company depending upon the product life-cycle, market trends, skill-sets availability, the degree of novelty, amongst others.

Business Screening

Strategic Screening Programme Steering

Customer Intelligence

Product

Competition Intelligence

NPD

Platform Roadmap

Technology Foresight

Development

Handover

Exhibit 1-C: The Process of Innovation

Most of the firms have a fairly regimented process for New Product Introduction and development. But these activities can at best lead to incremental innovations, helping the firm sustain growth. What is discussed here is the process that precedes NPD/ NPI which, if adhered to, sets the tone for breakthrough innovation. Exhibit 1-C depicts the various stages through which an idea/ concept morphs into reality.

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The elements constituting the process are hereunder: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Customer Intelligence; Competition intelligence; Technology Foresight; Concept Roadmap; Strategic Screening; Product Platform Development; Program steering; Business Screening; Handing-over; and New Product Development.

The process that a potential innovation goes through is discusses along with the elements which will fall into place, as follows.

CUSTOMER INTELLIGENCE Having stated that an innovation has a meaning only from a customers’ perspective, it is imperative to understand customers’ stated as well unstated needs. Nokia has pioneered the technique of Usability Research, which holds the secret of making Nokia’s products user-friendly and appealing. 3M, yet another innovation powerhouse, has pioneered the concept of Lead User Research, meant to capture the challenges as well their solutions from the leading edge (lead users) of the market. This gives the company enough lead to develop products which the mass market will look for in near future and satisfy need which they are not surfaced today. The ideas getting generated as a result of customer insight undergoes layers of filtration before getting incorporated into roadmap. There remains a lot for Indian companies to learn from customers, as today Indian customers have become global citizens exhibiting global taste, global outlook ;in-turn offering a unique challenge of satiating their demands.

“Our senior management spends 40% of their time with customers whose feedback becomes the input for our innovation process.” - Kevin B. Rollins, President and CEO, Dell

COMPETITION INTELLIGENCE This is an era of co-opetition- a balancing act between competition and cooperation. A firm might not develop all the elements of innovation in-house, and even need not do so. It must consistently scan the landscape in which it exists, as well the potential opportunities for collaboration. A competitor in one market may be a partner in another, and the firm may set alliances for co-innovation. One such success story is Sony-Ericsson, where the two competing firm joined hands to come-up with cutting-edge mobile handsets, leveraging what each is best at.

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The very concerns that unanimously come up while collaborating is safeguard of ‘Intellectual Properties’. The partying firm must ensure that their rights are being respected and any cross- leverage is on mutual consent. Another emerging school of thought is ‘Open Innovation’, where companies would behave like partners sharing their learnings in respective domains and collaborating beyond their businesses in coming up with innovations which were not possible otherwise.

TECHNOLOGY FORESIGHT Today a technology or for that matter an industry no longer remains isolated from rest of world. To a customer what matters is fulfillment of a need, whether it comes from one technology or many, from one company or several and from innovations or imitations. Its has become crucial that a company aspiring to be regarded as innovative, continuously scans technology landscape and develop prowess of harnessing or mitigating technological progress. The need here is that of technology foresight not contemporary technology forecast. And to develop processes of encashing such opportunities to ones benefits, understanding the short life-cycle of any such technology. The best example in this parlance is Microsoft, as to how it has seamlessly interwoven disparate technologies into users’ lives, defying the “Not-Invented-Here” syndrome. Like Customer Insight, Technology Foresight too goes through successive filters in coming up with feasible, affordable and rational technologies, having the potential of seeing light of the day. Indian Inc can very well set European or at best American markets and technologies as foresight, as what is there today will be in Indian tomorrow and the chasm is fast shrinking. The best example being the adoption of mobile handset.

CONCEPT ROADMAP Roadmap, as the name suggests is the game plan of a company, for how it traverse the journey of innovation. The technology roadmap pioneered by Motorola Inc. is a very powerful tool, once corporate has the necessary customer insight and technology foresight in place. A roadmap depicts, which platforms to be launched at what point in time and serving which market. It brings forth a plan depicting how a company can explore disperse technologies for addressing customers’ needs, to its competitive advantage by harnessing diverse skill sets. A classic case would be Nokia, the company which is know for introducing a new model every 3 months, with improved functionality, unprecedented features and affordable price. This is the outcome of a well drafted roadmap, ensuring that the firm is ahead of competition and cannibalization is kept to a minimum. This roadmap is a joint outcome of Technology foresight and Customer insight and is presented to the screening committee for further approval of concepts.

STRATEGIC SCREENING Not every concept that looks promising both from market and technology standpoint, necessarily clicks. There are boarder business issues taken into cognizance while committing hard investments into these plans. The Strategic Screening layer does the same. The platform roadmaps developed are scrutinized by a team composed of corporate captains, investors and possibly industry representatives. The team handpicks a few concepts purely from strategic perspective (hence the name), for go ahead and with commitment investments.

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The parameters of signing-off any such concept could be its revenue potential, the fillip it can give to the brand and the competitive advantage it can offer, among others. It is advisable to incorporate industry experts, subject matter experts and external consultant while taking decision on signing-off these concepts.

PRODUCT PLATFORM DEVELOPMENT The lucky few concepts, being signed off by Strategic Screening, get into the channel of development as platforms. The term used here is platform development, not product development, owing to the fact that platform gives birth to many products, in turn giving a competitive advantage to the company. Time, resource and intellect that goes into a platform development offers higher dividends than a mere product development. During this phase, which lasts for months together, various teams work over platforms, few supported completely from within the company while others involving a rich collaboration with the outside world. This collaboration could take the shape of co-creation, minority acquisition, merger, joint venture, etc, harnessing intellect present outside the company. The progress and health-check of these platform developments are being closely examined and corrective actions are taken based on internal/external information.

PROGRAMME STEERING COMMITTEE The steering committee, as opposed to screening committee composes of platform and project owners who monitor the program progress, having end-results in mind. Steering committee observes the project progress, alters resources and investments and can even kill projects under unattractive circumstances. This knowledge to kill the project or accelerate it pace is provided by the two aforementioned functions. It might appear that technology foresight and customer insight dozed-off post presenting the roadmap. To the contrary, these functions enrich the steering of ongoing platform development projects. The inputs from these team assume greater significance in the light of rapidly changing customer taste and technology advancements. Incidentally, of all processes the market feedback is been most loosely adhered to and most of the times is absent.

BUSINESS SCREENING After a gestation period, the platforms take the shape of prototypes and pilots. It’s the time for business to get and take the charge in churning out successful products. The committee is composed of BU heads, sales and marketing heads and those responsible for giving this prototype the final shape of a product. There takes place signoff over the prototypes and now the ownership passes on to the execution team, viz. New Product Team, in most companies. The Strategic Screening committee, Steering Committee and a constantly infused market and technology intelligence, ensures that the platforms that finally come up do not significantly deviate from investment objectives.

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HANDOVER One of the issues that most of the innovative product development managers confront is that of clean handing over. This involves clear demarcation of ownership, time lines for handing over and the shared resources involved. If the innovation team gets too much into the execution phase, the whole objective of having a separate team fails. Whereas too early involvement of execution team into the innovation process (i.e. Platform Development) may jeopardizes the process. There need to be well defined boundaries and timelines for the process to happen and a regimented transition of ownership, orchestrated by the innovation group head.

NEW PRODUCT DEVELOPMENT Under the premise that most of the big companies hold separate groups responsible for innovation and execution, here in my lexicon I would call it New Product Development Group. NPD group is one which holds the ownership of carving products out of developed platforms, which are prior signed off at the Business Screening Committee. The aforementioned process of Breakthrough Innovation, deciphers one of the many processes adopted by innovative companies. The endeavor here is to give a flavor of the undertaking and the best practices adopted.

CONCLUSION Concluding with a excerpt from the speech of Sam Palmisano, Chairman and CEO, IBM“In an era when commoditization happens at unprecedented speed, innovation has become an economic and societal imperative. And it is a collective responsibility -- business cannot do it alone. Neither can universities. Neither can governments.” India Inc largely (baring some exceptions) has been struggling with her NPD processes. A regimented process upstream i.e. a well laid process of innovation would be a far cry. What we need to start off is to imbibe best practices and build over them. It is not at all the mandate that what ever we do must be original or invented in Indian Inc. Some of the most successful innovators of the might of Edison, Ford; and corporate behemoths like Microsoft have time and again proven that- Innovation needn’t be invention. Successful imitation is no less an art. Given that every business is unique in its totality, imitating somebody else’s success in ones own undertaking requires courage and a whole new mindset. So rather than creating something out of the world, India Inc need to act like a radar and tap any such opportunity that comes its way. By this I don’t refer to Indian Inc not innovating at all, but this will set the tone, the pace and the sheer courage requisite for innovation to happen.

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REFERENCES BOOKS AND RESEARCH PAPERS •

Richey, J.M. and Grinnell, M. (2004), Evolution of roadmapping at Motorola, Research Technology Management

•

Jeffrey L. Cruikshank (2005), The Apple Way, McGraw Hill

•

Eric von Hippel (1999), Breakthroughs to the order of 3M, MIT Sloan School of Management

•

Panu Korhonen (2000), Usability research in Nokia: evolution, motivation and trust, Nokia Research Centre

•

John Kao (1997), Innovation : Breakthrough Thinking at 3M, DuPont, GE, Pfizer, and Rubbermaid, Collins

•

W. James McNerney Jr., A Century of Innovation The 3M Story, 3M Company

WEBSITES www.ideo.com www.parc.xerox.com www.ideanresearch.com www.leaduser.com www.mckinseyquarterly.com

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ABOUT THE AUTHOR Pavan Soni is a Sr. Executive at Enterprise Applications Services division of Wipro Technologies. In his current role he is driving Market Intelligence and Account Mining within EAS and is greatly enjoying his role. He has a passion for writing, reading and teaching and being in nick with the world of innovation and marketing. He has done his post graduation from NITIE, Mumbai and is BE in Electronics & Communications Engineering. He can be written to at [email protected]

ABOUT WIPRO TECHNOLOGIES Wipro is the first PCMM Level 5 and SEI CMMi Level 5 certified IT Services Company globally. Wipro provides comprehensive IT solutions and services (including systems integration, IS outsourcing, package implementation, software application development and maintenance) and Research & Development services (hardware and software design, development and implementation) to corporations globally. Wipro's unique value proposition is further delivered through our pioneering Offshore Outsourcing Model and stringent Quality Processes of SEI and Six Sigma.

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