INNOVATION EVERYWHERETogether We’re Brilliant

Premier Mfg Support Services – Oct 07

WHO WE ARE

• Tom Morgan – General Manager/Innovation –

Premier Manufacturing Support Services• David Wallace – Innovation/Communications consultant –

Gamechange LLC

ProgramWhat Is Innovation?

Both companies and countries can be innovators

Services – The new frontier of innovation

Innovation and Premier Mfg. Support Services

INNOVATION

WHAT IS INNOVATION?

• INNOVATION – Implementing an idea or improving upon products and services of today; and discovering new clients, delivering unique and benefits.

• To customers, this can mean a prouduct, services, process or a tool that makes their tasks easier, faster, more comfortable, less expensive, safer – above all, delivering greater value or improving their lives.

TYPES OF INNOVATION

• Inventing an interesting new “thing” isn’t necessarily “Innovation.” The light bulb was an invention, but the larger innovation was the system of wires, services, distribution, companies that sold light and electric power to consumers.

• New services, new business models or formats, technologies, pricing or business methods – or combinations – all represent opportunities for innovation.

Other MP3 players came before the iPod – this one from 2001 cost USD$500, made by Sony, well-known for innovations in music players and electronics.

Above all, innovation is NOT invention. It’s a word from economics not technology.

Peter Drucker

INVENTION vs. INNOVATIONDon’t confuse them, they are NOT the same.

INVENTION • A new concept originating from study or

experiment.

INNOVATION• Trrying to do something better than ever• Frequently, is part of a program that is

broader or more complete• Find new applications or combinations of

existing resources

INVENTION vs. INNOVATION• Although Thomas Edison receives the credit for

inventing the lightbulb, in reality. . .

• The innovations include the sale of electricity, wiring, lights and appliances, repairs for devices and networks that continue today.

Invention InnovationTelephone The Network (Ma Bell)MP3 player iPod and iTunes(innovations can be the result of inventions)

INVENTION or INNOVATION?

GasStations Auto Club OnStar™Autos

WHAT NEXT?(innovations improve over time and can get more complex with additional services, features, clients or new technologies)

TYPES OF INNOVATIONS

TYPE EXAMPLE

Breakthrough VCR

Apple II and IBM PC (products)

Models Dell (sells directly without stores)

Grupo Elektra (flexible financing)

Technology impact Southwest Airlines (efficiency)

Process Toyota (continuous improvement )

THE POWER OF DIFFERENT TYPES OF INNOVATION• An idea implemented in isolation is less likely to support

substantial value or promote a major change – for companies or customers. . . .

• But combining various ideas and types of innovation result in a more powerful combination, that can achieve more and be harder to duplicate – remember the iPod – and has greater value (and a higher price) for your company.

DEPENDS ON YOUR PERSPECTIVE

Mount Everest in Nepal/Tibet is the highest with 9678 meters altitude.

But Mauna Kea in Hawaii measures 10,314 meters – with only 4205m visible above sea level. It is taller but also known as a volcano or island.

What is the tallest mountain on Earth?

GLOBAL INNOVATION

Economist Intelligence Unit in 2007 identified the most innovative countries based on the number of patents filed per-capita. Top 10 Japan GermanySwitzerland DenmarkU.S. TaiwanSweden NetherlandsFinland Israel

GLOBAL INNOVATION

Forrester Research 2007 – identified nations with the top-ranked innovation

networks (government, educational, corporate and university participants)

Countries with the highest ranked networks were:

FinlandIreland

SwedenSwitzerland

U.S.

GLOBAL INNOVATION

• Yet economic giants such as Russia, China, India, Brazil and Mexico NOT included among the top nations for innovation.

WHY?

• The Economist survey predicts that Mexico increases its ranking six places in the next five years (2012) yet the top four ranked nations show no significant change. And the return-on-innovation in Mexico will be greater than in Japan, U.S. or other countries considered innovation leaders.

GLOBAL INNOVATION

In 2003, the Mexican economy ranked 10th-largest in the world.

In 2004, it was the 11th largest

By 2005 it had declined to 12th

The future depends on the use of knowledge, networks, technology and science. Lowering prices is a strategy any person, company or country can employ – and is not a sustainable advantage. .

source: CSIS

WHERE DOES INNOVATION LIVE?

2006 Business Week/Boston Consulting Group surveyed where research/devt spending goes

GLOBAL INNOVATION

This list of companies described as most innovative shows that results often depend on location, as people recognize companies from their own region.

Source:Business Week/

Boston Consulting

GLOBAL INNOVATION

Some of the companies recognized as the Most Innovative Corporations in the World -- Business Week/Boston Consulting Group.

GLOBAL INNOVATION

Companies recognized as The Most Innovative Corporations in the World -- Business Week/Boston Consulting Group.

Recognized by Accenture as a 100-year-old company, and a commodity product. Adding new services, time-specific deliveries and other innovations changed everything. Today, Cemex is growing its business, selling more than cement.

No company or country has a monopoly on innovation

Tipping Point 1987 Source: Tim Ogilvie/Peer Insight

SERVICES AND INNOVATIONSNow is the prime time for service innovationSince 1987, the majority of the U.S. economy has been in service delivrey not sale of products. In 2006, 85% of payrolls were service workers. By 2006, 84% of all companies in the U.S were service providers

1980s 1990s 2000s

USEconomic

Output

A HISTORY OF SERVICE INNOVATIONS• The ‘Avon Lady’ was created in 1886 to sell cosmetics products

door to door in the U.S.

• In 1950, Diner’s Club created the charge card – initially to meet the needs of traveling salesmen.

• After the ‘Tipping Point’ (1987)Dell, Capital One, Amazon, Bital, eBay and other companies changed the rules of various industries by use of technology or created entirely new categories by using service innovations.

Source: Tim Ogilvie/Peer Insight

SERVICES ARE PROFITABLE

• Hewlett-Packard reported that 20% of income in 2005 came from services – representing 46% of profits!

• NCR service income surpassed income from sale of products in 2004.

• Xerox said its service business is growing at 2X the rate of its sale of products.

And many auto makers earn more from the sale of services – repairs, financing, logistics and parts than from the sale of their products.

SERVICES ARE CREATIVE• Instead of “things” companies offer solutions to the problems of

their clients. In a study of work activities in 2005, consultants McKinsey & Co. found that 40% were “interactiions” – collaboration, design and development of solutions.

• Creativity is difficult to study and manage because it is different everywhere – and has no basic materials like oil or cement.

• Service providers need the power and knowledge to make decisions that assist their clients.

21st CENTURY SERVICES

New clients, complex services / solutions and entirely new systems have developed from service innovation.

MinuteClinic now offers limited medical services to people in stores of retailers Target and CVS.

Bital opened its branches until 7pm to serve its clients with more convenient banking hours.

THE FUTURE OF SERVICE INNOVATION

THE GOOD NEWS

Every company can see the opportunities presented by services and deliver them worldwide. The ease of creating services, the return-on-investment, global presence and other benefits make it easier than ever to be a service company.

THE BAD NEWS . . . All the competition and new features that can come from any industry or country. The rate of change will only get faster and require you to stay ahead!

• Innovation is a process and we’re just starting our journey. . . . Like students of karate, there are various skills and levels, with increasing levels that indicate mastery and expertise.

The best way to get a good idea – is to get lots of ideas.

Linus Pauling

SERVICE INNOVATION AT PREMIER

PREMIER’S INNOVATION JOURNEY

Innovation requires change and adapting knowledge or skills while learning new abilities

Belts Actions LevelWhite DecideYellow DefineOrange CommunicateGreen PlanPurple ExecuteBlue Examine errorsRed LearnPardo Repeat processesBlack Innovation culture

There is a better way – find it.

Thomas Edison

INNOVATION ISN’T EASY OR QUICKINNOVATION PROGRAMS OFTEN FAIL• 80 to 95% of innovation activities commit errors or

fail – Clayton Christensen, Innosight

SUCCESS• Only about 8 % of innovation projects exceed their

goal for return on investment and about 12% exceed their R&D cost of capital – Peer Insight

THEN WHY DO IT?

Experts say that innovation today – as a practice – is similar to the ‘Quality’ movement in the 1980s. Processes are moving from randomness toward repeatable, measured systems. It’s described as a long train with service innovation as the caboose. Very shortly, innovation will be a critical, standard business tool.

If you are not reinventing your company, I guarantee you are falling backwards.

Fujio Cho, Toyota

THE RISKS OF NOT INNOVATING

Some rules for winning the game of innovation

Ask questions. Look for ways to improve.

Talk with other people. Make suggestions.

Celebrate small wins. Be persistent.

Have a positive attitude. Take small steps.

Release control. Invest quality time, not just quantity.

Don’t punish failure. Learn from every experience.

THE ROUTE TO SUCCESS

EVERYONE MAKES A DIFFERENCEAnyone can be an innovator by

Sharing experiences, knowledge and suggestions. Taking initiatives to pursue improvements. Looking for opportunities – some are simple but others

have huge potential. Participating when your knowledge is requested or valued. Working together – ideas get stronger when they’re combined

and good ideas are moved to action.

Innovation is a voyage and you’re all invited along

Innovation means change but the choice is yours

RESISTING CHANGE • Same as it ever was • Maintaining traditions • Giving clients familiar results

PURSUING CHANGE • Uncertainty and flexibility• Always asking “What’s next?” • Unexpected but better

A BALANCING ACT/ PLANNING THE FUTURE

Thank you