INNOVATION EFFECTIVENESS
TOOLKIT
V4
By Daniel Pandza, OCT. 2014
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5S Innovation Effectiveness Assessment 2014 V4 ENGLISH - 24 October, 2014
HOW TO DESIGN COMPETITIVE BUSINESS MODELS? We live in an age of short-lived competitive advantages. Managers all over the world are exploring the discipline of innovation in order to learn how to successfully create competitive solutions that differentiate their company from the competition. Nevertheless, the competitive advantage period of innovative products is relatively short and will not provide the competitive edge that is expected by the top management. !
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Over the recent years, the area of business model innovation has provided new insights to overcome a company´s innovation challenge. Thought leaders such as Alex Osterwalder (2004), Gary Hamel (2005), the team at IDEO (2009), Mark Johnson (2010) and Eric Ries (2011) and Ash Maurya (2012) have all provided useful frameworks for understanding the key elements of business models. Nevertheless, the tools lack a systematic approach to successfully and effectively design profitable business models that create, communicate, deliver and capture significant value for customers, stakeholders and shareholders, because they fail to explicitly link their key elements to the life cycle stages of successful innovations (see image below).!
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In this short toolkit we will present a model that is guided by the life cycle stages of successful innovations and can be used to effectively design competitive business models. In addition, we will provide a tool for systematically evaluating the 5 key elements of successful innovations. The assessment will provide guidance for further research of the environment and re-design of the business model.
THE 9 STAGES OF SUCCESSFUL INNOVATIONS CHANGE
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5S Innovation Effectiveness Assessment 2014 V4 ENGLISH - 24 October, 2014
THE 9 STAGES OF SUCCESSFUL INNOVATIONS CHANGE
What are the key capabilities that your team will need to develop in order to create significant innovations? Consequently, how to structure the innovation process? Can the model help us to identify the best innovation types, etc. according to the project stage? Could we use this model in order you monitor your innovation project portfolio and innovation effectiveness? How can an understanding of the complete innovation cycle improve the significance of your innovations?
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5S Innovation Effectiveness Assessment 2014 V4 ENGLISH - 24 October, 2014
INTRODUCTION TO THE BUSINESS DESIGN MATRIX The following tool can be used to guide the innovation team through the 9-stage innovation process and document the key assumptions, hypotheses, and insights in a systematic framework. ! ! First, you start with the problems, innovation challenges or opportunities that you are facing (1). ! From there you identify the key stakeholders and try to discover the key value drivers (2). ! Based on your insights, you can start designing the value proposition (3) ! and figure out how you will build the relationships (5) ! which channels you have to use (5) ! and how you will generate revenues (5). ! ! Once your have defined your go to market strategy and validated the key assumptions, you have to translate the strategy into concrete activities, resources and partners in order to identify the investment size and operating expenses (6). ! ! Finally, you must explore opportunities for increasing the scale (7) and efficiency (8) of BusinessDesign.
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5S Innovation Effectiveness Assessment 2014 V4 ENGLISH - 24 October, 2014
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5S Innovation Effectiveness Assessment 2014 V4 ENGLISH - 24 October, 2014
THE DESIGN PART IS RELATIVELY EASY, BUT…
IS YOUR INNOVATION
SIGNIFICANT?
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5S Innovation Effectiveness Assessment 2014 V4 ENGLISH - 24 October, 2014
5S
INNOVATION
EFFECTIVENESS
ASSESSMENT
SEXyNESS
PROJECT: IDEA: EVALUATOR:
SIMPLICITY
VERSION: SCORE: DATE:
SYNERGY
SCALABILITY
/125
SUSTAINABILITY
LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH
CLIENT
LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH
SUPPLY CHAIN
LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH
DISTRIBUT. LOW CHANNELS
HIGH LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH
OUR LOW COMPANY
HIGH LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH
SOCIETY
5S INNOVATION EFFECTIVENESS Assessment Scoreboard v1 - by Daniel Pandza (daniel@danielpandza.com) 7
5S Innovation Effectiveness Assessment 2014 V4 ENGLISH - 24 October, 2014
LET´S ZOOM INTO EACH DIMENSION! AND SEE WHY THEY MATTER ! AND HOW WE COULD EVALUATE EACH ONE.
5S INNOVATION EFFECTIVENESS Assessment Scoreboard v1 - by Daniel Pandza (daniel@danielpandza.com) 8
5S Innovation Effectiveness Assessment 2014 V4 ENGLISH - 24 October, 2014
5S
INNOVATION
EFFECTIVENESS
ASSESSMENT
PROJECT: IDEA: EVALUATOR:
VERSION: SCORE: DATE:
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1. SEXYNESS With this concept we invite you to reflect about the levels of attractiveness of… a). your current product, service or current business model on the one hand, b). and the innovation´s capacity to satisfy the needs of our customers and investors. ! If the current design of our BusinessDesign scores low on the “sexyness” scale, we should ask ourselves: For which customer segment, channel partner, etc. might it be more sexy? How can we increase the “sexyness” of our innovation? When / where might it be perceived as more “sexy”? 5S INNOVATION EFFECTIVENESS Assessment Scoreboard v1 - by Daniel Pandza (daniel@danielpandza.com) 9
5S Innovation Effectiveness Assessment 2014 V4 ENGLISH - 24 October, 2014
5S
INNOVATION
EFFECTIVENESS
ASSESSMENT
PROJECT: IDEA: EVALUATOR:
VERSION: SCORE: DATE:
/25
1. SEXYNESS SOCIETY
TARGET CUSTOMER
DISTRIBUTION CHANNEL PARTNERS
SUPPLY CHAIN PARTNERS
OUR COMPANY
LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH
LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH
LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH
LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH
LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH
5S INNOVATION EFFECTIVENESS Assessment Scoreboard v1 - by Daniel Pandza (daniel@danielpandza.com) 10 5S Innovation Effectiveness Assessment 2014 V4 ENGLISH - 24 October, 2014
5S
INNOVATION
EFFECTIVENESS
ASSESSMENT
PROJECT: IDEA: EVALUATOR:
VERSION: SCORE: DATE:
/25
1. SEXYNESS SOCIETY LOW LOW LOW LOW LOW
ECOLOGICAL ECONOMIC SOCIAL POLITICAL TECHNOLOGICAL
TARGET CUSTOMER
DISTRIBUTION CHANNEL PARTNERS
SUPPLY CHAIN PARTNERS
OUR COMPANY
HIGH LOW HIGH LOW HIGH LOW HIGH LOW HIGH INCREASE VOLUME INCREASE VOLUME RELATIVE ADVANTAGE ATTRACT NEW CUSTOMERS HIGH LOW
USABILITY
HIGH LOW
HIGH LOW HIGH LOW EMOTIONAL / SOCIAL HIGH LOW HIGH LOW
REDUCE RISK REDUCE COSTS
HIGH LOW HIGH LOW
REDUCE COSTS REDUCE RISK POSITION BRAND XXXX
HIGH LOW HIGH LOW HIGH LOW HIGH LOW
REDUCE COST REDUCE RISK POSITION BRAND XXXX
HIGH LOW HIGH DRIVE NEW REVENUES HIGH LOW
REDUCE COSTS
HIGH
HIGH LOW HIGH STRENGTHEN PORTFOLIO HIGH LOW
INCREASE BONDING
HIGH
5S INNOVATION EFFECTIVENESS Assessment Scoreboard v1 - by Daniel Pandza (daniel@danielpandza.com) 11 5S Innovation Effectiveness Assessment 2014 V4 ENGLISH - 24 October, 2014
5S
INNOVATION
EFFECTIVENESS
ASSESSMENT
PROJECT: IDEA: EVALUATOR:
VERSION: SCORE: DATE:
/125
2. SIMPLICITY The concept of “Simplicity” invites us to reflect about the level of complexity that our innovation contains and the implications this has for our clients, allies and company. For example, it could be that you have designed a “sexy” product, but the client does not perceive it, doesn´t understand it, is not capable of taking advantage of it, or does not possess the competencies to leverage the innovation. ! In case we identify the activities that are highly complex and therefor require lots of effort, time or money we can as ourselves: Are there other customer segments that do not find it complex? · Who can help us to decrease the complexity for our clients? · How could we re-design the innovation, service or business model in order to eliminate the complexity barriers? 5S INNOVATION EFFECTIVENESS Assessment Scoreboard v1 - by Daniel Pandza (daniel@danielpandza.com) 12 5S Innovation Effectiveness Assessment 2014 V4 ENGLISH - 24 October, 2014
5S
INNOVATION
EFFECTIVENESS
ASSESSMENT
PROJECT: IDEA: EVALUATOR:
VERSION: SCORE: DATE:
/25
2. SIMPLICITY SOCIETY
TARGET CUSTOMER
DISTRIBUTION CHANNEL PARTNERS
SUPPLY CHAIN PARTNERS
OUR COMPANY
LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH
LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH
LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH
LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH
LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH
5S INNOVATION EFFECTIVENESS Assessment Scoreboard v1 - by Daniel Pandza (daniel@danielpandza.com) 13 5S Innovation Effectiveness Assessment 2014 V4 ENGLISH - 24 October, 2014
5S
INNOVATION
EFFECTIVENESS
ASSESSMENT
PROJECT: IDEA: EVALUATOR:
VERSION: SCORE: DATE:
/125
3. SYNERGY With the concept of synergy we invite you to reflect about the level of synergy that our innovation has with the market trends, distribution channels, consumer behaviour and customs and motivations of our own sales force, etc. In case you come to the conclusion that the level of synergy is low, you can be sure that adoption will require more resources or time for educating the stakeholders. Educating a market segments will postpone the successful diffusion & adoption even more. Therefore, you must take this into consideration at the time of defining the key performance metrics and measuring project progress. If synergy is low you might explore opportunities for increasing more synergies (align with market trends, find key partners, hire your own sales force, create own distribution channel. etc. 5S INNOVATION EFFECTIVENESS Assessment Scoreboard v1 - by Daniel Pandza (daniel@danielpandza.com) 14 5S Innovation Effectiveness Assessment 2014 V4 ENGLISH - 24 October, 2014
5S
INNOVATION
EFFECTIVENESS
ASSESSMENT
PROJECT: IDEA: EVALUATOR:
VERSION: SCORE: DATE:
/25
3. SYNERGY SOCIETY
TARGET CUSTOMER
DISTRIBUTION CHANNEL PARTNERS
SUPPLY CHAIN PARTNERS
OUR COMPANY
LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH
LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH
LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH
LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH
LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH
5S INNOVATION EFFECTIVENESS Assessment Scoreboard v1 - by Daniel Pandza (daniel@danielpandza.com) 15 5S Innovation Effectiveness Assessment 2014 V4 ENGLISH - 24 October, 2014
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INNOVATION
EFFECTIVENESS
ASSESSMENT
PROJECT: IDEA: EVALUATOR:
VERSION: SCORE: DATE:
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4. SCALABiLITY With this concept we invite you to reflect about the growth potential and growth speed of our business design. The growth will depend on 1st market size, 2nd the scalability of the product, 3rd the scalability of the service (whole product), 4th the scalability of the business model, 5th the stage of the category maturity life cycle, and 6th the power and resources our company possesses to gain market share from our competitors.
! If we discover that the scalability of our business design is limited and the profit potential doesn´t compensate for the lack of volume we have to ask ourselves: How can we modify the design of our product, service or business model (incl. decisions about distribution channels, market segments, key partners, etc.) in order to maximise the profitability and growth? In which of the different innovation projects should I invest my resources? etc. 5S INNOVATION EFFECTIVENESS Assessment Scoreboard v1 - by Daniel Pandza (daniel@danielpandza.com) 16 5S Innovation Effectiveness Assessment 2014 V4 ENGLISH - 24 October, 2014
5S
INNOVATION
EFFECTIVENESS
ASSESSMENT
PROJECT: IDEA: EVALUATOR:
VERSION: SCORE: DATE:
/25
4. SCALABILITY SOCIETY
TARGET CUSTOMER
DISTRIBUTION CHANNEL PARTNERS
SUPPLY CHAIN PARTNERS
OUR COMPANY
LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH
LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH
LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH
LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH
LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH
5S INNOVATION EFFECTIVENESS Assessment Scoreboard v1 - by Daniel Pandza (daniel@danielpandza.com) 17 5S Innovation Effectiveness Assessment 2014 V4 ENGLISH - 24 October, 2014
5S
INNOVATION
EFFECTIVENESS
ASSESSMENT
PROJECT: IDEA: EVALUATOR:
VERSION: SCORE: DATE:
/125
5. SUSTAINABILITY Finally, the concept of sustainability invites us to reflect about the relevance of the innovation project in the long term. ! If we pursue this project, will we have the opportunity to leverage the new experiences, resources, channels, credibility, image, etc. in order to create the next-generation of our business that will assure our growth target in the long run? 路 Is is a project with short term potential that will have limited potential to create future business opportunities? ! If you have not considered the long-term implications of your innovation efforts, this evaluation criteria should inspire you to imagine the long term potential of your innovation efforts. 5S INNOVATION EFFECTIVENESS Assessment Scoreboard v1 - by Daniel Pandza (daniel@danielpandza.com) 18 5S Innovation Effectiveness Assessment 2014 V4 ENGLISH - 24 October, 2014
5S
INNOVATION
EFFECTIVENESS
ASSESSMENT
PROJECT: IDEA: EVALUATOR:
VERSION: SCORE: DATE:
/25
5. SUSTAINABILITY SOCIETY
TARGET CUSTOMER
DISTRIBUTION CHANNEL PARTNERS
SUPPLY CHAIN PARTNERS
OUR COMPANY
LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH
LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH
LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH
LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH
LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH LOW
HIGH
5S INNOVATION EFFECTIVENESS Assessment Scoreboard v1 - by Daniel Pandza (daniel@danielpandza.com) 19 5S Innovation Effectiveness Assessment 2014 V4 ENGLISH - 24 October, 2014
DANIEL PANDZA
daniel@danielpandza.com +521-33-12655131
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