Unlocking Success in New Product Development Process

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If we get the right people in the right jobs, we ve won the game. If we get the right people in the right jobs, we ve won the game. - Jack Welsh , GE - Jack Welsh , GE ______________Smart Moves, LLC

Staged processes, management reviews for NPD have been in existence for 50+ years Benchmarking studies for 50+ years focused on success factors associated with industrial NPD Top success factors are high quality NPD process But in spite of all the changes and improvements in NPD systems, commercial launch remains unchanged. 60% of NP launches succeed Staged processes, management reviews for NPD have been in existence for 50+ years Benchmarking studies for 50+ years focused on success factors associated with industrial NPD Top success factors are product advantage high quality NPD process But in spite of all the changes and improvements in NPD systems, commercial launch remains unchanged. 60% of NP launches succeed - - true globally stat! product advantage and and true globally stat! ______________Smart Moves, LLC

Studies: successful and unsuccessful products lie in the quality of execution of the first few stages of NPD, aka Fuzzy Front End Studies: - - Most significant difference between successful and unsuccessful products lie in the quality of execution of the first few stages of NPD, aka Fuzzy Front End Most significant difference between The First Few Plays in the Game determines the Outcome The First Few Plays in the Game determines the Outcome ______________Smart Moves, LLC

- - NPD and Market Research in the requires high risk tolerance, creativity, openness to the irrational process of NPD, however, studies find that industry fills these positions with people that are risk adverse, patient and persistent. NPD and Market Research in the early stages requires high risk tolerance, creativity, openness to the irrational process of NPD, however, studies find that industry fills these positions with people that are risk adverse, patient and persistent. early stages ______________Smart Moves, LLC

Despite the improvements in NPD systems, some underlying factor remains unchanged .? Despite the improvements in NPD systems, some underlying factor remains unchanged .? Despite the improvements in NPD systems, some underlying factor remains unchanged .? Despite the improvements in NPD systems, some underlying factor remains unchanged .? ______________Smart Moves, LLC

Rainmaker uses several Orientation instruments in determining an Index score: Myers-Briggs Myers-Briggs Creativity Index, Keirsey s Four Temperaments KAI ______________Smart Moves, LLC

Myers-Briggs Keirsey s Four Temperaments Rational NT 12% of Population Guardians SJ 38% of Population Extroversion Introversion Idealists NF 12% of Population Artisans SP 38% of Population Sensory Intuitive Thinking Feeling Judging Perceiving Kirton Adaptor-Innovator (KAI) 30-160 Myers-Briggs Creativity Index = 3SN+JP-EI-0.5TF Perfect the system Finishers Change the System Starters ______________Smart Moves, LLC

Myers-Briggs Keirsey s Four Temperaments Rational NT 12% of Population Guardians SJ 38% of Population Extroversion Introversion Idealists NF 12% of Population Artisans SP 38% of Population Sensory Intuitive Thinking Feeling Judging Perceiving Kirton Adaptor-Innovator (KAI) 30-160 Myers-Briggs Creativity Index = 3SN+JP-EI-0.5TF Perfect the system Finishers Change the System Starters ______________Smart Moves, LLC

Did more projects Branched the projects more frequently significantly morphed them Identified concepts that, when later commercialized, made far greater profits: $197.5MM vs. $15.2 MM People selected to operate the NPD are as important as the process itself. Success rates improved from 11% to 97% when compared on the Universal Success Curve. Scores in the top third of the Rainmaker Index earned 95 times (9,500 percent!) more profit than those in the bottom third. Top 20% RI produced 80% of the profits ( 80 Did more projects Branched the projects more frequently redirected or significantly morphed them Key to high success rate Identified concepts that, when later commercialized, made far greater profits: $197.5MM vs. $15.2 MM People selected to operate the NPD are as important as the process itself. Success rates improved from 11% to 97% when compared on the Universal Success Curve. Scores in the top third of the Rainmaker Index earned 95 times (9,500 percent!) more profit than those in the bottom third. Top 20% RI produced 80% of the profits ( 80- -20 rule ) redirected or Key to high success rate 20 rule ) ______________Smart Moves, LLC

Rainmakers are typically difficult to manage and undisciplined in their thinking. The top performing Rainmakers in the organization were actually the least well thought When staff reductions occurred (in the companies undergoing study), the results showed a loss of over half of the top third of the RI employees (the profit makers in the company) and none in the lowest third Rainmakers are typically difficult to manage and undisciplined in their thinking. The top performing Rainmakers in the organization were actually the least well- - thought- -of employees When staff reductions occurred (in the companies undergoing study), the results showed a loss of over half of the top third of the RI employees (the profit makers in the company) and none in the lowest third of employees ______________Smart Moves, LLC

First time an orientation instrument fixed an economic value to style First time an orientation instrument fixed an economic value to style ______________Smart Moves, LLC

Center of Creative Leadership sponsored study CCL established group in 1981, grew to 70 members by 1998 By 1998, saw that about 1/3 of members were gone consulting, downsized or early retirements. Decided to study phenomenon Questionnaire program ended Findings: Center of Creative Leadership sponsored study CCL established group in 1981, grew to 70 members by 1998 - - AMI, leaders of innovation within corporations By 1998, saw that about 1/3 of members were gone - - consulting, downsized or early retirements. Decided to study phenomenon Questionnaire- - individual, programs, budgeting, why program ended Findings: AMI, leaders of innovation within corporations individual, programs, budgeting, why ______________Smart Moves, LLC

All programs generated new ideas and significant new business ($50-100MM) Higher level of interaction between Marketing, R&D, and customers Stimulated the integration of other departments: Emerging Technology, CI/BI efforts, Venture, etc in other words, the company adopted an outside-in perspective, became more comfortable with being in the lead and risk, and growth occurred .so why were these programs terminated????? ______________Smart Moves, LLC

Dimension R&D Marketing Principal Mission Technology Development Years Customer Satisfaction Months Time Horizon Pacing Metric Project Milestones Product Launches Source of Esteem Peer Recognition Promotion/many Employers BA, MBA Educational Background Tenure BS, PhD Medium to Long Short ______________Smart Moves, LLC

Continuously questioned the level of and number of successes vs. expectations but expectations were never defined, just the need to innovate , do something different Didn t recognize that the culture needed to change in whole or at least in part Exclusive focus on the R&D function with some Marketing assistance Funded at the expense of existing Technology budgets or spreading innovation funding amongst SBU and almost no involvement with the Commercial or Marketing functions except as a service to them. Subtle forms of sabotaging if SBU believed Innovation funding and time is inhibiting their ability to accomplish short Financial and staffing requirements were significantly underestimated Sponsorship was too narrow. Leadership base of only one of two senior executives who frequently were near retirement age. Too shallow to have staying power Continuously questioned the level of and number of successes vs. expectations but expectations were never defined, just the need to innovate , do something different Didn t recognize that the culture needed to change in whole or at least in part Exclusive focus on the R&D function with some Marketing assistance Funded at the expense of existing Technology budgets or spreading innovation funding amongst SBU and almost no involvement with the Commercial or Marketing functions except as a service to them. Subtle forms of sabotaging if SBU believed Innovation funding and time is inhibiting their ability to accomplish short- -term objectives Financial and staffing requirements were significantly underestimated Sponsorship was too narrow. Leadership base of only one of two senior executives who frequently were near retirement age. Too shallow to have staying power term objectives ______________Smart Moves, LLC

Time projections for bottom underestimated. For innovation didn t have a chance and shut down prematurely. The 3000 to 1 universal rule was not understood. The thinking that R&D, R&D management significantly affect organization s long term bottom line development Managers didn t know what to expect. Low KAI profile of Innovation champion and leadership High KAI profile of innovation (champion) verses mid KAI profile of managers: ...when asked to change or improve something an innovator profile will prefer to replace existing with new and different, whereas managers profile more likely to focus on improving existing Innovation champions more likely to see threats and opportunities outside the organization, managers more likely to focus on threats and opportunities inside the organization.. Do the right thing vs. do things right Time projections for bottom- -line impact were seriously underestimated. For shorter innovation didn t have a chance and shut down prematurely. The 3000 to 1 universal rule was not understood. The thinking that R&D, R&D management - - acting alone, can significantly affect organization s long term bottom line development Managers didn t know what to expect. Low KAI profile of Innovation champion and leadership High KAI profile of innovation (champion) verses mid- -lower range KAI profile of managers: ...when asked to change or improve something an innovator profile will prefer to replace existing with new and different, whereas managers profile more likely to focus on improving existing Innovation champions more likely to see threats and opportunities outside the organization, managers more likely to focus on threats and opportunities inside the organization.. Do the right thing vs. do things right line impact were seriously shorter development time companies, development time companies, acting alone, can lower range ______________Smart Moves, LLC

Look at former Innovation champions: of the number that had not return to AMI, over 60% became consultants, retained by Fortune 500 companies and in many cases their former employers Traditional physical innovation center format is no longer sufficient to sustain effort Everyone involved Divided into Hunting (developing and assessing the New) and Gathering functions (design, manufacturing and marketing) Intellectual property emphasis with Innovation Independent funding program, Zenith s Bull Market KAI/ Rainmaker placement of project, gifted low more speed, effectiveness in commercialization rates) Look at former Innovation champions: of the number that had not return to AMI, over 60% became consultants, retained by Fortune 500 companies and in many cases their former employers Traditional physical innovation center format is no longer sufficient to sustain effort Everyone involved Divided into Hunting (developing and assessing the New) and Gathering functions (design, manufacturing and marketing) Intellectual property emphasis with Innovation Independent funding - - TI s IDEA program, HP Grassroots program, Zenith s Bull Market KAI/ Rainmaker placement - - Gifted high of project, gifted low KAIer s more speed, effectiveness in commercialization rates) TI s IDEA program, HP Grassroots Gifted high KAIer s KAIer s in back KAIer s in front end of project. ( 900% in front- -end end in back- -end of project. ( 900% ______________Smart Moves, LLC

Fast approvals through few, if any, layers Empower leaders Don t expect the perfect plan or traditional ways of execution with no deviations. Get your hands dirty and learn Stay the course turn passive Understand the 3,000 to 1 ratio* Incentives for innovation will not fit standard compensation methods *The universal industrial success curve , Research and Technology Management, March-April 2003 Fast approvals through few, if any, layers Empower leaders Don t expect the perfect plan or traditional ways of execution with no deviations. Get your hands dirty and learn Stay the course - - abrupt changes makes people turn passive Understand the 3,000 to 1 ratio* Incentives for innovation will not fit standard compensation methods abrupt changes makes people ______________Smart Moves, LLC

Organization structure that separates the innovative initiative from the main business and protects the new Leadership that buries the corpse of failed ideas and learn from mistakes Leadership that understands the psychology of innovation in corporations and remains alert/recognizes to unconscious bandit actions Leadership that strokes the protocol of Innovation: a culture, a way of leading, doing, an awareness . not an event or training session. Organization structure that separates the innovative initiative from the main business and protects the new Leadership that buries the corpse of failed ideas and learn from mistakes Leadership that understands the psychology of innovation in corporations and remains alert/recognizes to unconscious bandit actions Leadership that strokes the protocol of Innovation: a culture, a way of leading, doing, an awareness . not an event or training session. ______________Smart Moves, LLC

Invention/ Innovation (160 KAI) Innovator ManagedRisk Platforms + INNOVATION PROCESS Entrepreneurial IDEA BANK PHASE/GATE - INNOVATION PROCESS PORTFOLIO Incremental Products Horizon #2 MANAGEMENT PROJECT MANAGEMENT & STAGE/GATE PORTFOLIO MANAGEMENT Horizon #1 Adapter (32 KAI) ______________Smart Moves, LLC

Invention/Innovation Tech Center Marketing & Sales (Anthropolgy) Acquisition / Affiliation (160 KAI) Innovator Managed Risk Sales & Marketing (Expediting) Platforms + IDEA BANK PHASE/GATE - Horizon #2 Incremental Products PORTFOLIO MANAGEMENT PROJECT MANAGEMENT & STAGE/GATE Manufacturing Horizon #1 PORTFOLIO MANAGEMENT Adapter (32 KAI) ______________Smart Moves, LLC

The 7 Levels of Change Level 1: Doing the right things Level 2: Doing things right Level 3: Doing things better Level 4: Stopping doing things Level 5: Doing things others are doing Level 6: Doing things no one else is doing Level 7: Doing things that can t be done ______________Smart Moves, LLC

Growth Chart for Corporate New Business Development Tech Center Marketing & Sales (Anthropolgy) Acquisition / Affiliation Managed Risk (160 KAI) Innovator Emerging Sales & Marketing (Expediting) Platforms Degree of Difficulty Horizon #2 Horizon #3 Pacing Technology + Culture IDEA BANK PHASE/GATE Key - Incremental Products PORTFOLIO MANAGEMENT CI PROJECT MANAGEMENT & STAGE/GATE Horizon #1 Base Manufacturing PORTFOLIO MANAGEMENT Adapter #7 #6 #5 #4 #3 #2 #1 (32 KAI) Seven Levels of Change Do The Right Things (Programs) Doing Things Right (Management) Doing Things That Can t Be Done (Innovation) Doing Things Better (CI Effort) Stopping Doing Things (Portfolio) Doing Things No One Else Is Doing (Market Driven) Doing Things Other People Are Doing (Benchmarking) ______________Smart Moves, LLC

UPSHOT TO ALL OF THIS.. People have KAI Job titles have KAI Cultures have KAI Innovation Process have KAI .Match the people to the job to the culture to the process. ______________Smart Moves, LLC