a century of systematic innovation from edison to lafley

© 2010 Catalign Innovation Consulting www.catalign.com

A century of systematic innovation: From Edison to Lafley

1947 -1847 - 1931

Vinay Dabholkar, Ph.D.

Catalign Innovation Consulting

[email protected]

04-Mar-2010


Let’s get on the same page• What is innovation?• Why innovate?


A working definition of innovation


Idea Implementation

Definition-1: I2P (I-squared-P)

Profit


Definition-2: I2P (I-squared-P)

IdeaImplementation in a System

Performance improvement

System can be organization, village, society, college

Performance can be revenue, wealth, health, education, harmony


Why innovate?


Future-proofing Make work interesting


Innovate

Produce &Sell

Our Focus


Can we become more innovative systematically?

Without any assumptions regarding:

• Size – 1 to 1 Lakh

• Sector – Low tech to high-tech

• Culture – Google to Government

• Leadership – With/without Steve Jobs/Ratan Tata


Has anything of this sort happened before?

Dr. Joseph Juran, Architect of Quality 1904 - 2008


Can we do to innovation, what TQM did to Quality?

- Gary Hamel, Innovation to the Core, 2007


We are all set on our “systematic innovation” journey


1847 - 1931

Let’s start with Thomas Edison


What did Edison nickname his first 2 kids?

“Dot” and “Dash”


What would he nickname them today?

“Dot-com” and “Dash-board”


Edison’s dashboard

Hit a maiden century in 1882

A bad patch

Second inning

No of patents

Total score: 1093 over 61 years Batting avg: 1 patent / 20 days


Light bulb

Phonograph

Movie camera


Where is innovation here? I2P


Anything that won't sell, I don't want to invent.

Edison was an innovator


Edison’s business empire

Automobile Edison General Electric Cement

Film studio Storage battery Phonograph


Edison’s business legacy

Edison General Electric National Phonograph

Thomas A Edison Inc

18921985

1896

1911

McGraw-Edison1957


What was Edison’s greatest innovation?


Method of innovation


“Invention Factory” at Menlo Park (1876)


Method of innovation: Electricity story


1878

• Edison watched miners drilling for ore manually

• Prof. Barker said – sub-divide light like gas system

• Saw a generator system – with 8 lamps in series

• Stops phonograph work, re-starts electricity work


1878

• Edison & co study established coal gas system

• Establish price goals to match the gas system

• Report injuries and deaths due to gas


Arch lamps of 1870sIllumination: 2000 candle power


1878

Top 2 goals (Totally 8 goals)

1. The lamp must give moderate illumination

2. Each lamp can be lighted separately


1878 1879

• Assigns filament experiments to Upton & Batchelor

• Upton & Batchelor perform several thousand experiments

• Successful filament experiment with carbon (Oct 1879)

• Upton & Batchelor get stocks and portion of royalty

“gang” members


1878 1879

Demo at Menlo ParkDec 31, 1879

We will make electricity so cheap that

only rich will burn candle


1878 1879

• Commercial production begins

• Cost of each bulb: $1.10 and price $0.40

• Sale: Approx 20K to 30K bulbs

1880


1878 1879 1880 1882

• More experiments

• Cost down to: $0.50 and price $0.40

• Loses more money than all previous years


1878 1879 1880 1882

• More experiments


• Starts making profit

1883


1878 1879 1880 1882

• Introduces automation in production


• Makes tons of money

• Sells his business (GE formed)

1883 1892


What is Edison’s method of innovation?


Commercialization MarketOpportunity Identification

SystematicExperimentation

CEO model




Idea FunnelManagement

Idea Funnel: CEO model





CEO model: Edison Method

Need (miners)1

Risk (8 lamps)2

Know the known (gas system study)4

Establish goals & use-cases (8 goals)5

6 Experiment 7 Demo

3

Manage portfolio(drops phonograph)

8 Sell


Edison’s method: 3 principles (UPX)


Establish use-cases

Edison Principle #1

1. Letter writing, dictation

2. Books – speaking to blind

3. Teaching of elocution

4. Reproduction of music

5. Family record – last words

6. Music boxes and toys

7. Clocks announcing time

8. Language preservation

9. Explanations by teachers

10. Connect with telephone

- Phonograph use-cases written in 1878 before suspending work


Manage a portfolio

Magnetic ore separation Electric railway

Secondary batteries Telegraph & telephones

Edison patents during 1880-1885

To have a great idea, have a lot of them.

As soon as I find that something I am investigating

does not lead to practical results, I drop it.

Edison Principle #2


Experiment systematically: Fail early, fail often

I have not failed. I've just found 10,000 ways that won't work.

Edison Principle #3

Great ideas originate in the muscles


Organize for rapid experimentation

To invent, you need a good imagination and a pile of junk.

eight thousand kinds of chemicals, every kind of screw made, every size of needle, every kind of cord or wire, hair of humans, horses, hogs, cows, rabbits, goats, minx, camels ...silk in every texture, cocoons, various kinds of hoofs, shark's teeth, deer horns, tortoise shell ...cork, resin, varnish and oil, ostrich feathers, a peacock's tail, jet, amber, rubber, all ores ...

-“a pile of junk” in Edison’s laboratory





Edison Method

Need1

Risk2

Know the known4

Establish goals & use-cases5

6 Experiment 7 Demo

3 Manage portfolio

8 Sell


StopStart Demo

Innovation is more like a marathonwith two experimentation loops

Idea-to-demo loop Demo-to-cash loop


1947 -

Let’s fast forward to 21st century

A. G. Lafley, ex-CEO of P&G


Why is AG interesting?


We started from the premise that it is possible to

run an innovation program much the same way we

run a factory.

- AG, Game-Changer, 2008


AG’s Dashboard

Revenue

2000 2009

$40 B $80 B

$B brands 10 23

$0.5B-1 brands 4 18

R&D as %Rev 4.5% 2.7%

Success rate 15% 50%


Pringles Prints


Why was the tech spec sent out ?


For every 2 ideas that reach market,

1 should have a partner outside P&G

Innovation Goal


How does P&G find these needs?


P&G’s baby discovery center

Immersive research


So, what has changed?


1. Scope of innovation


Types of

innovationsProcess

Product /Offering

Business

Model

Innovation is broader than patents & products

Customer

Experience


2. Capacity of innovation


Collaboration increases innovation capacity


3. Efficiency of innovation


Do the last experiment first

Lower your batting average

Finding killer issues early


President’s fail-forward award





Idea Funnel





Idea Funnel

Scope 1

Capacity2

Efficiency3


Innovation Factory Metric


apacityC

E

O


Do we have a “challenge book”?


Toyota: 40 years, 20 million ideas

Year No of Suggestions Participation Adoption

suggestions per person Rate(%) Rate(%)

1951 789 0.1 8 23

1971 88,607 2.2 67 72

1986 2.6million 48 95 96


Idea/person 5 6 4 4 4


Invention Disclosures / Patents per person

Experiments / Prototypes per person

No of idea points per person

Additional capacity metric


C

fficiencyE

O


How fast do the ideas move?

Daily, weekly, monthly, yearly?

Rigor and rhythm of innovation review

Efficiency metric


C

E

utputO


Savings / idea 35K 24K

Output metric


No of ideas implemented (yr)

% Revenue from new products / brands

Batting average (success rate)

Output metric


Recap


Innovation Engine

Opportunity

Identification

Experimentatio

n

Commercializatio

n

Use-cases

Portfolio

Experimentation

Invention Factory

Innovation scope

Immersion

Open idea funnel

100 year journey

Innovation Factory


apacityC

fficiencyE

utputO

Innovation Factory Metric


Innovation books

Blog: www.catalign.com


Additional innovation books


1875 1900 1925 1950 1975

Suggestion box

Edison’s Invention Laboratory

Brand innovation

LafleyInnovationFactoryDrucker

Reality show

VC industry

Kaizen

Ev RogersDiffusion of innovations

Gabriel TardeS-curve & ideaadoption

Ford Model-Tcontinuousimprovement

CorporateResearch Lab

Future Demands Dept

Margin of safety

15% Rule

SchumpeterCreative Destruction

Scheinculture change

A brief history of systematic innovation

TalebBlackSwanHeathMade

to stick

[email protected]

2000

ThomkeExperi-mentationMatters


Thank You

a century of systematic innovation from edison to lafley

Documents

catalign innovation

method of innovation

edisons greatest innovation

systematic innovation

thomas edison

price goals

coal gas system

system improvementsystem