Value Creation


Value Creation Ultimately Robert’s Rules of Innovation is all about VALUE CREATION. The key to optimizing sustainable Innovation programs is value creation. The customer/consumer value proposition is the goal to ultimately gain a financial payback. Customer value can be created through the actual value-added of the new product, once you find that delicate balance between cost, price and return. Pick up Robert’s Rules of Innovation to discover more about value creation in the Innovation process.

Happy Labor Day: Ownership is Risk Taking

goldfish jumping out of the water

 

Labor Day, the first Monday in September, is a creation of the labor movement and is dedicated to the social and economic achievements of American workers.

 

For some, Labor Day signifies the end to sunny summer days. For others, it constitutes a yearly national tribute to the contributions workers have made to the strength, prosperity, and well-being of our country.

 

As Development Dimensions International points out in their trend research: “Our most talked-about and revered citizens and organizations are known for their ability to create new solutions that are valuable to the marketplace and elevate their standings in the business world. Across all industries and disciplines, the ability to innovate is universally admired.”

How do people acquire and foster high levels of innovation in science, business, and sports?

While everyone is looking for the means to create the “next big thing”, the latest discussions focus on creating the “next big thing” on an ongoing basis. Put another way, making innovation a repeatable and sustainable process.

According to a piece by the New York Times, raw talent and intelligence are a requirement for aspiring super achievers. On the other side of the coin, Malcolm Gladwell’s bestselling book Outliers, champion’s circumstance and hard work over raw ability. The debate of nature vs. nurture rages on with the single driving idea that Innovation rarely occurs by accident, but instead with work, and calculated risk-taking. Organizations need innovation to not only survive, but to thrive. Sustainable Innovation cannot be created with processes and systems alone. 

One of the key imperatives of Roberts Rules of Innovation is No Risk… No Innovation. To increase initiative and innovation, you have to encourage and even embrace failure. Another key imperative is Ownership. Most would agree that innovation is everyone’s responsibility, but employees can’t innovate unless their leaders empower them to do so. Innovation needs ownership – a champion within the organization. The champion must convince others to take calculated risks and at times work outside of one’s comfort zone. By combining both imperatives it does not take long to see that ownership and risk taking go hand in hand.

 

Ownership is risk taking.

 

In a recent interview by Adam Bryant of the New York Times, Francisco D’Souza, C.E.O. of the information technology company Cognizant has the following to say about risk taking and comfort zones:

“We started Cognizant in 1994, and there was a period early on when I personally knew everyone in the company. Now we have 160,000 employees, and there were several personal and rapid transitions over that time.

The lesson I learned is that when you have to evolve that quickly as a person, you need to be aware of two things. One is personal blind spots and the other is personal comfort zones. Those two things can be real gotchas.

It’s very hard to see your blind spots, by definition, and it’s very easy to fall into comfort zones, because people like patterns and a sense of familiarity. I’ve tried consciously to say, “What are the tools I can use to identify these blind spots and push through comfort zones?” And I always tell myself that if I wake up in the morning and feel comfortable, I’m probably not pushing myself hard enough.”

Companies that remain in their comfort zones for too long sometimes discover that they’ve made a significant mistake. According to the Boston Consulting Group, a culture of risk aversion is the number one barrier to innovation. To avoid swinging between excessive caution and over-exuberance, set a disciplined target for your desired investment outcomes.

 

Robert’s Rules of Innovation gives five simple steps for encouraging initiative and Innovation. To get you started here are some tips:

1.   Profiles in Risk: Clearly communicate the risk profile you are asking your people to adopt and state why it is important to the organization’s success.

2.   Failure Management: Never allow an unsuccessful risk to hamper a team member’s opportunities and advancement.

3.   Key Learning Process: Establish a formalized, non-accusatory process for harvesting key learning’s from unsuccessful risks.  Distribute these lessons-learned.

 

You can learn more about the above points, by reading Robert’s Rules of Innovation. Robert Brands is the founder of InnovationCoach.com and the author of “Robert’s Rules of Innovation”: A 10-Step Program for Corporate Survival, with Martin Kleinman, published by Wiley.

 

Value Creation – Optimize Your Sustainable Innovation Programs

Following Robert’s Rules of Innovation, Value Creation is the key to optimizing sustainable innovation programs within your organization.  Successful innovation is the process of using intellectual capital to create a financial return by creating a new product or service.  While the value of the idea is important, adding the perceived value of your customers will drive ROI (Return on Investment).  Develop an innovation with high perceived value to your customer and strong sales will follow.

The Risk of Reward

Innovation is critical for value creation but you must anticipate or even embrace the possibility of failure.  Your company may struggle with NPD (New Product Development) and innovation in anticipation of an uncertain economic recovery, all the while working to keep costs down for your organization’s existing products and services.  You must have a willingness to invest without ROI assurance.

With an investment in time and money for innovation, do not let your intellectual property stagnate.   Valued intellectual property should convert into patents and other IP into revenue opportunities.

  • Return on Investment – Think of innovation as a process that uses intellectual capital to generate positive business results, new findings and as a result, even more innovation.
  • Observe and Measure – Remember to monitor start-up costs, speed to market, scale to volume and other metrics.
  • Customer Value – develop an innovation with high perceived value and strong sales will follow.
  • Intellectual Property Protection – IP and Patent protection lock in your competitive advantage and support sales results and market share.

It is imperative to build and protect IP through the use of patents. Patents protect and define the innovation so they are the key step to commercialization and enhancing value.

The Reward of Risk

American Chemical giant, DuPont shared their strategy for a “Robust Pipeline of New Innovations and Investment in High-Return Businesses Drive Company’s Future Growth” at their 2013 Investor Day as reported by Wall Street Journal.  DuPont Chair and CEO Ellen Kullman stated:

“We stand on a strong foundation of scientific capability and market knowledge.  We leverage these strengths across our portfolio of businesses to find new growth opportunities. At the same time, we continually evaluate the ability of each business to contribute to our overall value creation goals for our shareholders and we determine the right path forward.”

DuPont has been in business since 1802 and has appeared on every year’s Fortune 500. The list was created in 1955 and lists the top 500 American Companies with the highest gross revenues of the previous fiscal year.

Intellectual property will drive the future.  The future business era will focus on the processes that drive IP and the real value it delivers.  Progressive companies invest countless man-hours, dollars and other resources in investigating and pursuing innovation.  Your company’s investment in time and money for value creation combined with perceived value from your customers will generate positive business results, even more innovation and the ultimate goal of Return on Investment.

Innovation Balancing Act

 

On June 15th of this year, Nik Wallenda became the first person ever to walk across the roaring Niagra Falls on a 2-inch wire.

After battling wind swells, and thick mist, Wallenda completed his walk crossing from the United States into Canada.

 

 

He was greeted by a Canadian customs agent who asked, “What is the purpose of your trip sir?”  Wallenda’s response: “To inspire people around the world to follow their dreams and never give up”.

There are many possible roads to innovation. Successful innovation means defining your own road. Much like Nik Wallenda’s walk across Niagra Falls, some of the best innovations come from stepping outside your own comfort zone and balancing the many different facets of innovation.

The formula for success in innovation is about finding the middle ground, walking the tightrope between risk and innovation; between ideation and value creation. The Innovation Balancing Act.

Successfully managing the process of innovation ensures the outcome results in a superior return on investment (ROI).

Risk/Innovation

It’s safe to say that companies are not naturally inclined to try new approaches without clear evidence that those approaches are likely to work. Like many innovators, you may find yourself struggling to innovate in advance of an anticipated economic recovery, while still working to keep costs down in a decidedly uncertain business arena. To increase initiative and innovation, you have to encourage and even embrace failure. You must have a willingness to invest without ROI assurance (see Innovation is Creativity X Risk Taking).

Keep in mind:

  • Milton Hershey started three unsuccessful companies before Hershey’s Chocolate.
  • Michael Jordan was told he was too short to play on his high school varsity basketball team.
  • The Beatles were originally rejected by Decca Recording studios, who said “we don’t like their sound” and “they have no future in show business”.
  • At age 30, Apple’s Board of Directors decided to take the business in a different direction, and Steve Jobs was fired from the company he created. Not only did Jobs go back to his former company, but he changed the market in an astounding way. Jobs claims that his career success and his strong relationship with his family are both results of his termination from Apple.

Are you creating the next Hershey’s or Apple?

 Ideation/Value Creation

The key to optimizing sustainable Innovation programs is value creation. While the creation of the idea is important, the creation of value for the customer is equally paramount. Adding perceived value to a new product or service will drive ROI. The value proposition is the key to successful innovation.
Customer value can be created through the actual value-added of the new product, once you find that delicate balance between cost, price and return. Balance is found, in part, by seeking stakeholder input and customer feedback during development of any innovation process (see Value Creation).Remember:

  • A means to an end – Think of innovation as a process that uses intellectual capital to generate positive business results, new findings and as a result, even more innovation.
  • Key Considerations – Remember to monitor start-up costs, speed to market, scale to volume and other metrics.
  • Customer is king – develop an innovation with high perceived value and strong sales will follow.
  • IP Protection – IP and Patent protection lock in your competitive advantage and support sales results and market share.

You can learn more about the above points, including how to protect your ideas, by reading  Robert’s Rules of Innovation. Robert Brands is the founder of InnovationCoach.com and the author of “Robert’s Rules of Innovation”: A 10-Step Program for Corporate Survival, with Martin Kleinman, published by Wiley.

 

Value Proposition: The Key to Successful Innovation

What defines successful Innovation? Innovation is the process of using intellectual capital to create new products or services that generate positive business results in the form of financial returns. Discovering new findings then spurs more innovation which leads to further financial returns, and so on.

Innovation is successful when positive outcomes result in return on investment (ROI). That is why Value Creation is so important. Adding perceived value to a new product or service will drive ROI. The value proposition is the key to successful innovation. Develop an innovation with high perceived value to your customer, and strong sales will follow.

It’s all about understanding your customer and giving them what they want. Customer input and feedback is key. Look at Ford for example. The car manufacturer observed and listened to their large customer base on what they wanted in a car. They launched the “Your Ideas” initiative that invited people to make suggestions for improvement in all areas of comfort, convenience, connectivity, performance and safety. The result? Ford added iPod, MP3 player and USB connections, touch screens, voice activated communication systems, intelligent push-start buttons and more. Sales are soaring – not because of the traditional four wheels and performance but because of perceived value added features. Ford Motor Company now has the highest customer satisfaction rating among all major automakers.

When was the last time you tried or experienced your product or customer experience? Create value and not just onerous processes. Consumer input should be considered at multiple stages of your new product development process in order to increase perceived value. Enhanced product value means higher margins, greater returns, improved loyalty and increased stakeholder value.

Finally, when you find that delicate balance between cost, manufacturability and consumer perceived value, be sure to protect your intellectual property (IP) portfolio through patents. Invest the time and money into constantly updating patents and managing your product or service portfolio because it will lock in the value of your Innovation IP.

For more tips on Innovation and Value Creation, look for Robert’s Rules of Innovation. Robert Brands is the founder of InnovationCoach.com and the author of “Robert’s Rules of Innovation”: A 10-Step Program for Corporate Survival, with Martin Kleinman, published by Wiley.

Cashing In On Intellectual Property

Maximizing Innovation by Translating Intellectual Property into Revenue

What’s in your IP cupboard?

Progressive companies create innovation teams. They invest countless man-hours, dollars and other resources in investigating and pursuing innovation. Yet they often leave their intellectual property untouched, thereby failing to translate patents and other IP into revenue opportunities.

American industry and academia hold some two million current patents granted by the U.S. Patent and Trademark Office. Yet, the vast majority remain idle. In a tight economy – and even in the best of times, failure to exploit existing patents for profit means more than money’s being left on the table. New opportunities – and the possibilities they spawn in kind – are lost.

Read the rest of this page »

Redefining Innovation’s True Reward: Amassing Intellectual Property and Value Creation

What is the ultimate goal of process-driven innovation? Open a bottle of Coca-Cola – and read its performance reports – to get a true taste of the answer.

In 1980, the Coca-Cola Company was struggling, and its market share was underperforming compared to its competitors. So at a worldwide management conference in 1981, CEO Roberto Críspulo Goizueta decided to refocus the entire organization on putting value creation first.

Read the rest of this page »

Value Creation: The Ultimate Goal of Innovation

Why innovate?

Some would argue that companies innovate to achieve a heightened competitive advantage, streamline the organization, or create intellectual property – including patents, trademarks and other protected property – that create value in the portfolio.

Read the rest of this page »