in 03 tilt 2015 niraj dawar

01/03/15

Unleash the Spark of Innovation with

Jugaad!A One-Day Workshop

Session 3: Tilt – Innovation Goes Downstream in the Value Chain

01/03/15

Framework for the Workshop

Post-Lunch

MindspaceIDEO, 7 Rules

Manpower10 Faces

Pre-Lunch

MethodsNABC ExerciseSCAMPERMarketspaceTilt

4Ms: Methods, Marketspace, Mindspace, Manpower

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Creative Exercise 3

Join all the dots, using only four straight lines,

without lifting the pen from the paper.

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Creative Exercise 3

A solution is not always possible at the same level on

which the problem exists. You need to go beyond the

current boundaries.

Connecting the dots.

Intro to Tilt – Niraj Dawar

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Tilt – Repositioning Innovation

Product focused and production oriented companies think their competitive advantages lies in

sourcing, production, logistics and product feature innovation.

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However, these activities are more and more often being commoditized or outsourced.

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These activities are

driven by economies of scale.

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These activities are driven by economies of scope.

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Upstream

Internal – within the company

Access to low-cost suppliers; patents; efficiency in production

Cost leadership or differentiation

New products, technologies, R&D

Erodes as competitors catch up, imitate or leapfrog

Downstream

External – in the marketplace

Market information; customer relationships

Cost and risk reduction

New ways of interacting with customers

Accumulative – can grow with time, experience, networks

Locus of competitive advantage

Types of competitive advantage

Basis of customer value

Innovation

Sustainability of competitive advantage

Source: Tilt – Shifting your strategy from Products to Customers (Niraj Dawar) P70


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"Innovation in a downstream facing company is no longer about manufacturing better products.

It is about better ways of interacting with customers, better ways of delivering information to customers,

and better ways of reducing customers' costs and their risks”



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In a retail outlet, a

consumer buys a can of

Coke as part of a 6-pack.

The price is about

Rs.15 per can.


These activities are driven by economies of scale.

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The same consumer,

on a hot summer day,

gladly pays Rs.90

for a chilled can of Coke

sold at the point-of-thirst

through a vending machine.


These activities are driven by economies of scope.

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The focus of innovation has

shifted downstream to

customer satisfaction,

customer acquisition and

customer retention.


Rs. 15

Rs. 90

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http://www.exgroup.com/index.php?section=our_approach&page=cust_exp_mgmt

DesigningThe ProductExperience

Data on the Experiential World of the Customer

StructuringThe Customer

Experience

Engaging inDownstreamInnovation

Building the Experiential Platform

1

2

3 4 5

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Customer Value Creation

• A customer is ready to pay a 500 per cent price premium for a can of Coke delivered to her from a tailor-made machine in whatever the circumstances she wants it.

1

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• It is chilled, it is single serve and it is at the point of thirst, thus moving the concentration away from upstream activities

1

Innovation Space

2

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Video of Tilt – Where is Your Center of Gravity?

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In the last 10 years there have been two major innovations

in the automobile industry.


http://www.dgermancar.com/volkswagen/volkswagen-golf-blue-motion-races-2011-rac-future-car-challenge.html

An Upstream Strategy(on the product side)

Electric engines

are replacing IC engines

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What is downstream strategy?

Different customers have different needs.


http://www.responsys.com/blogs/nsm/cross-channel-marketing/secret-customer-centric-innovation-qa-niraj-dawar/

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A downstream strategy means …

Noticing how customers have very different needs than what the automobile industry typically provides.



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What is downstream strategy?

Instead of selling a customer one car, what if you sold a temporary ownership which would allow them

to specify the type of car that they would need for a few hoursor a few days?



01/03/15

In the last 10 years there have been two major innovations

in the automobile industry.


http://www.dgermancar.com/volkswagen/volkswagen-golf-blue-motion-races-2011-rac-future-car-challenge.html

DownstreamOn the customer side

temporary ownership.

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Why would customers prefer temporary ownership?

Brands such as Zipcar have created a rental model similar to the hourly bicycle rental. This innovation is huge and will growto be even bigger as consumers realize that the cars we buy are

kept parked for 90 % of the time and are only used for 10 % of the time, so why pay for the other 90 %?



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Customer Value Creation

A customer is ready to pay a price premium for a car that can be a SUV for one weekend and a family car for the next.

1

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Think of one customer who needs a variety of different vehicles for different activities who’s only interest is temporary purchase.

1

Innovation Space

2

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Experience



1

2

3 4 5

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http://bit.ly/1k8a0Tq A T Kearney – Reducing Complexity in Retail Banking

http://bit.ly/1k8a0Tq

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Accenture - New Banking Distribu1on Modelshttp://www.accenture.com/SiteCollectionDocuments/PDF/FinancialServices/Accenture-Banking-2016.pdf

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“To compete effectively, companies must shift from upstream to downstream activities,

emphasizing how they define their competitive set, influence customers’ purchase criteria, innovate to solve customer problems,

and build advantage by accumulating customer data and harnessing the network effect.”

Innovation is hugely successful on more “downstream activities” close to the customer.


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Innovating in the customer experience.

The sign-on to Fidor Bank is through Facebook Connect which,

at this time, is one of the only bank that would work this way.


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For every 2,000 Facebook likes that Fidor receives, it raises the interest rate on FidorPay checking accounts by

10 basis points per year (with a cap of 15% per year).


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Fidor Bank is changing the banking service market

by understanding the

convenience of social mediaand

engaging customers toco-design products

and engaging community

to give peer-to-peer supportand

rewarding customers forspecific social interactions



Video of Fidor Bank Innovation

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Experience



1

2

3 4 5

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Tilt Matrix - Touchpoints, Customer Costs, Customer Risks

Prepurchase Purchase delivery,installation

Usage Maintenance Disposal, renewal

Costs incurred bycustomers

Risksincurred bycustomers



Fidor Bank – Downstream Advantage

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Accenture - New Banking Distribu1on Modelshttp://www.accenture.com/SiteCollectionDocuments/PDF/FinancialServices/Accenture-Banking-2016.pdf

01/03/15

• Customer interaction, rather than the factory, becomes the core of business innovation.

• The central strategic question changes from "How much more can we sell?" to

"Why do customers buy from us?" and "What else does the customer need?”

• Innovation to focus on how to reduce customers' costs and risks.

• Competitive advantage can be gained by innovatively managing the flow of information

in marketplace networks.



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Mini-size Cooler

ChotuKool

Tilt – Products to Customers

01/03/15

Touchpoints, Customer Costs, Customer Risks

Prepurchase Purchase delivery,installation

Usage Maintenance Disposal, renewal

Costs incurred bycustomers

Risksincurred bycustomers

Tilt – Products to Customers


Apply the Tilt Matrix to ChotuKool

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Making Innovation Work

References Tilt Shifting Your Strategy From

Products to Consumers

By Niraj Dawar Harvard Business

Review Press

01/03/15


Post-Lunch

MindspaceIDEO, 7 Rules

Manpower10 Faces

Pre-Lunch

MethodsNABC ExerciseSCAMPERMarketspaceTilt

4Ms: Methods, Marketspace, Mindspace, Manpower

01/03/15

ReadFrooti Case Tomorrow’s Exercise

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Post-Lunch

Manpower10 Faces

Make It WorkKey Learnings

Pre-Lunch

MindspaceMental Models7 Rules/ Frooti

3Ms: Mindspace, Manpower, Make It Work

in 03 tilt 2015 niraj dawar

Education

tilt innovation

spark of innovation

focus of innovation

better products

better ways

product feature innovation

customer retention

customer acquisition