2013 12-05 data-driven innovation - fitzgerald analytics workshop at gilbane 2013

Architects of Fact-Based Decisions™

Great Ideas Need the Right Metrics to Flourish

Building the Analytics you Need to Monetize your Innovation

Gilbane Conference 2013

December 5th, 2013

2Great Ideas Need the Right Metrics to Flourish |© 2013 Fitzgerald Analytics, Inc. All Rights Reserved

Table of Contents

1. Introduction

2. The Challenge of Monetizing Innovation

3. The Data to Dollars™ Approach

4. Examples + live cases (will be presented live)


Introduction: Jaime Fitzgerald

17+ years advising clients in Financial

Services, Retail, and Public Sector.

Created the Data to Dollars Value Chain™

framework & methodology, used by my team

at Fitzgerald Analytics to serve our clients.

Now “open-sourcing” the methodology via:

• The Book

• Online learning resources

• Training seminars on data-monetization

• Customized training + consulting

Specialist in the process of turning Data into Results.


Our Mission

Make the invisible visible.


Introduction: Fitzgerald Analytics

Improve Analytic Processes

Build Analytic Teams

Measure Intangibles

Turn Data into Dollars™

3

4

2

5

Build New Analytic Capabilities

1 Hundreds of Millions of New Profits for Clients (Concrete +

Documented)

100% Client Loyalty

Staff Loyalty: Named a Best Firm to Work for 4 Years in a Row

What we do: Why we do it:


Table of Contents

1. Introduction





Innovation Fantasy: The Best Ideas Will Win

=


Innovation Reality: Execution Matters a Lot

*Other Examples:Tesla vs other Electric Car companiesJetBlue vs Delta Express Segway vs Bicycle

VS

VS

VS

VSEarly CarCompanies


Why do innovative ideals fail to blossom?

Never Tried

Tried and Failed

Didn’t Resonate with Clients

Didn’t Capitalize on Opportunities

Too Complex of an Idea

Uncharted Territory

Wrong Team

Product Never Workedas Intended

Unfortunate Timing Unexpected Changes


What types of changes can Innovation Prompt?

Upgrade Existing Product Create New Product

Adjust Target Market Operational Efficiency

Product Design Create New Market

Remove Barrier to Entry Revive Old Product


Table of Contents

1. Introduction





Application of The Data to Dollars™ Approach to Innovation

Using Analytics to enable Innovation.

What do these mean?


What is Innovation?

Google’s Definition: The action or process of Innovating.

Innovating: Making changes in something established, especially by introducing new methods ideas or products.

Ok, but how do we succeed?


Lets look at some examples

Elon Musk on Innovation

Takeaways:1. Break concepts down

into their parts

2. Solicit Negative Feedback (or iterate)


“Google Reveals its 9 Principles of Innovation” – Fast Company

1. Innovation Comes from Anywhere

2. Focus on the User

3. Aim to Be 10 Times Better

4. Bet on Technical Insights

5. Ship and Iterate

6. Give Employees 20% Time

7. Default to Open Processes

8. Fail Well

9. Have a Mission that Matters

Breaking Down Ideas

Get Negative FeedbackMeasure Impact

ID Success .. ID Failure


“A Simple Tool You Need to Manage Innovation” – Harvard Business Review

Takeaways:1. Innovation is a PROCESS you

CAN and SHOULD manage. 2. Keys to managing innovation

1. Awareness of how “ambitious” each innovation initiative is

2. Allocate Resources intentionally and optimally across the portfolio of initiatives

Have a Mission that Matters

Profile each Innovation:- Source of impact?- -- KPIs?- -- Definition of Success?


“The Discipline of Innovation” – Peter Drucker

Innovation comes from the systematic analysis of 7 types of opportunities:

1. Unexpected Occurrences

2. Incongruities

3. Process Needs

4. Industry and Market Changes

5. Demographic Changes

6. Changes in Perception

7. New Knowledge

Analysis Drives Recognition of + Exploitation of

Opportunities to Innovate


What does it take to innovate more successfully?

A few sources of perspective from the recommended reading…

Peter Drucker:

Observation Analysis Awareness of Opportunity Response

Nagyi and Tuff in HBR:

Understand your Business Model Tailor Innovation Approach to your Business Model & Strategy

Google in Fast Company:Various “rules”. Theme of Ambition and Breadth of Approach.


Key Themes on Innovation

1. Manage the Process of Innovation

2. Set Goals

3. Seek Causal Clarity (ie. Pay attention to the technical)

4. Iterate


What is Analytics?

Google Definition: the systematic computational analysis of data or statistics.

Ok, but what do we do?


What is Analytics?

Analytics is a Process


The Data to Dollars™ Stack

Insights

Analysis

Data

Tools, Platforms, Technology, People, and Processes

Decisions, Actions, and Results

Made better by the right

Created by the right

Which depends on access to the right

And selection of the right

Plan:

Act:


The Stack is Also a Value Chain…

Insights

Analysis

Data

Tools, Platforms, Technology, People, and Processes

Decisions, Actions, and ResultsPlan:

Act:

Dollars

To

Data

Made better by the right

Created by the right

Which depends on access to the right

And selection of the right


New Data Source Acquisition

Data Discovery

Data Quality

Data Governance

Analysis Insight

Decisions

Actions

Financial Impact

New Data

New Opportunities

The Data to Dollars Value Chain™

3. Dollars2. Analysis1. Data Navigation Tips:

1. Set Clear Goals and translate into concrete plans

2. Stay Agile (loop back often)

3. Keep Oriented (“line of sight” / “why am I doing this?)


From new idea to results: 5 key steps

Idea Business Model / Business Case

ImplementationMarket

ResponseResults

55321


Monetizing New Ideas Is Iterative…

Idea v1.0Business Model /

Business CaseImplementation

Market Response

Results

55321



Market Response

Results

55321



Market Response

Results

55321

ReflectObserveIncubateEtc..

The Lab

Retire Idea


The Role of Metrics



ResponseResults

55321

The market response is where value is unlocked from the implementation of great ideas….

1

So that we can implement in a way that generates the optimal response

2

To monetize optimally, we need to be clear about the drivers of results in the marketplace

3


Applying Data to Dollars™ Techniques and Methods

Answering the question: how do I get from each step to the next?

There are multiple techniques in each of the categories above. In the rest of the workshop we will be looking at each of them and how they relate to monetizing your innovative ideas.



ResponseResults

55321

1. Causal Modeling2. System Modeling3. KPI Definition4. Measurement

+ Analysis Plan

From Idea to Business Model

1. People2. Processes3. Tools4. Measurement5. Decisions

From Business Model to Implementation

1. Response measurement 2. Root cause analysis3. Improvement

Opportunities4. Emergent Questions

From Implementation to Market Response


Key concepts in the D2D™ Goal Setting Methodology

3. Point of opportunity

1. Causal clarity

2. Causal model

Concept:

An opportunity for improvement (decision, business process) Impacts drivers of results

Precise definition of cause + effectEasy to explain

“What drives results?”

Based on causal clarity

Meaning:

Cause Effect

PriceRevenue

Txns


Table of Contents

1. Introduction





Delos Living: The Idea



ResponseResults

55321

Delos’ central aim is to create and transform buildings to meet the highest standards of healthy living, marshaling the most promising medical research and advancements in architecture, technology, and design.


Delos Living: Business Model / Causal Model (from a building owners perspective)



ResponseResults

55321

Additional Revenue from

WELL™

Marketing

Revenue

Other Expenses

Profit

Additional $’s per SQFT in

Rent

Cost of Well™ installation in

$/SQFTBase $/ SQFT (Rent or Sale)

Overhead

Your opportunity

Analysis Drives Recognition of + Exploitation of

Opportunities to Innovate


Delos Living: From the perspective of the occupant



ResponseResults

55321

Comfort

Security

Happiness

Challenge / Opportunity

Potential Solution

Health

Cost

Space

Fixed

REcurring

Standard Buy Cost

WELL™ Premium

Air Quality


Delos Living: Implementation - Key Drivers of Purchase Decisions



ResponseResults

55321

Additional Revenue from

WELL™

Marketing

Revenue

Other Expenses

Profit

Additional $’s per SQFT in

Rent

Cost of Well™ installation in

$/SQFTBase $/ SQFT (Rent or Sale)

Overhead


Potential Solution

1

A

Prove that WELL™ makes a

difference.

Celebrity endorsements + Share of Mind

Arbitrage opportunity


Delos Living: Market Response



ResponseResults

55321

Delos Living News Reel


Delos Living: Results



ResponseResults

55321


Tesla Motors: The Idea



ResponseResults

55321

Create the best Car: an Electric Car that is not just a viable alternative to existing vehicles but is actually in all ways better.


Tesla Motors: Business Model / Causal Model



ResponseResults

55321

Revenue

Marketing

New Technology Development

Gross Profit

Other Expenses

Profit

# of Cars Sold

Price of Car

COGS

Overhead

Battery Technology


Tesla Motors: Challenges & Opportunities



ResponseResults

54321

Revenue

Marketing

New Technology Development

Gross Profit

Other Expenses

Profit

# of Cars Sold

Price of Car

COGS

Overhead

Battery Technology


Potential Solution

Legend:

Marketingthe Value Prop

Design


Tesla Motors: Implementation - Key Drivers of Purchase Decisions



ResponseResults

55321

Cost

Range

Customer Decision Criteria

Design

Handling

Design

Price Point Matters to be profitable and to ensure salesChallenge / Opportunity

Potential Solution

1

AExcellence in Operational Efficiency

Batteries are notoriously bad stores of energy and charging stations are rare and slow.2

B

Brand new electric power train + a vast network of “Supercharging

Stations” that can charge in an hour


Tesla Motors: Market Response



ResponseResults

55321

“TESLA Model S Takes The Tops Spot In Consumer Reports Car Owner-Satisfaction Survey”


Tesla Motors: Results



ResponseResults

55321

Tesla’s Model S “outsold all models from other luxury brands Porsche, Volvo, Lincoln, Land Rover and Jaguar during the first half

of the year in” California – USA Today