Innovation

Tim Schindele
Lean Six Sigma Black Belt
[email protected]
Combine Methods and Approaches
• Innovation
• Design
• TRIZ (“theory of inventive problem solving”)
• Lean Six Sigma
• Human Factors
• Theory of Constraints
• PDSA Continuous Improvement
 Categories of Innovations

• Breakthrough Innovations

• Sustaining Innovations

• Disruptive Innovations
 Breakthrough Innovation
Revolutionary Science
Typically involves a paradigm shift
• Transistors
• Structure of DNA
• Quartz Watch Movement
1. Non-consumers or
2. Consumers who would not typically used
the products - are now able to consume
 Sustaining Innovation
• Occurs naturally in an industry
• Almost always an improvement to the bottom
line
• If the innovation is not recognized or is
ignored – the company could suffer
• Generally, the innovation is handled well and
there is a natural transition in the industry
• Changes the “rules of the game”
 Disruptive Innovation
• Typically originates from outside of an
organization and frequently outside of the
industry
• It is like a wrecking ball in the way it changes
the industry
• Disruption changes the “the game itself”
• Industry leaders typically try to stop or negate
its impact – a losing proposition
 Innovation Matrix
Well Defined Breakthrough Sustaining
Innovation Innovation
Problem Definition

Skunk Works
R & D Labs
Mavericks
Outsourcing
Open Innovation Prizes
Not Well Defined

Basic Disruptive
Research Innovation
Research Grants Venture Capital
Academic Affiliations Innovation Labs

Not Well Defined Well Defined

Domain Definition
 Disruptive Innovation
• The leading companies were destroyed because
it brought to market a product that was:

– Good Enough
– Simpler
– More Affordable
• These innovations inevitably improve, march
up-market and "disrupt" incumbents by
gradually pushing them out of ever more
complex and margin-rich product segments
 Disruptive Innovation
The term “Disruptive Innovation” is broadly
misunderstood
Many people think it’s just new and different, or
radical improvements
Instead, disruptive innovation changes
industries because:
1. It makes complicated and expensive
processes simple and
2. Opens them up to a wider audience
 Disruptive Innovation
Sustaining Innovations
Brings increasingly better products into an
established market
Performance

Technological Improvements can

progress faster than customer demand
Time
 Smart Phone Disruption?
One of the most popular smartphone
manufacturers in the world is Xiaomi

A Chinese company whose devices draw

frequent comparisons to the iPhone

Models include:
• Redmi 2
• Mi 3 and
• Mi 4i
• The most expensive model
(Mi 4i) costs $219 off-contract

Its current focus is on developing countries,

regions of the world that haven’t already pledged
allegiance to the iPhone or mass-market Android
 Some Examples of Disruptive
Innovations…
Minicomputers in the 1980s…

• Digital Equipment Corporation (DEC)

was once the leading minicomputer
manufacturer (second-largest computer
company after IBM)

• Other manufacturers were:

IBM Wang Laboratories

Data General Honeywell
Prime Computervision
 Some Facts on Minicomputers…
• Minicomputers were sold
directly to the customers

• Price Range $50,000 - $500,000

• High cost of Training, Support

and Service

• Gross Profit Margin of about 45%

for a $250,000 sale

• Gross Profit Margin of about 60%

for a $500,000 sale
 Microcomputers - The
Disruptive Competition…
• Sold through distribution networks
• Price Range $2,000
• Low cost of Training, Support and Service
• Gross Profit Margin of about 20%
• Why Bother Worrying, Right? !!

1. None of the existing Minicomputer

customers could even use these
microcomputers to take care of their
needs!
2. Why give up 45 – 60% gross margins
for smaller sales and 20% margins?
Examples of Disruptive Innovations
Minicomputers in the 1980s got disrupted
• The microprocessor was the Breakthrough
Innovation
• It destroyed Digital Equipment Corporation (DEC),
Data General, Wang Laboratories, Honeywell,
Prime, and Computervision
• Minicomputers started out being

Good Enough Simpler More Affordable

 What Happened? Disruptive Innovation
• Almost all of the Minicomputer manufacturing companies collapsed in
unison
• Digital Equipment Corporation was sold to Compaq in 1998
 Let’s Look at some Examples
Toyota dominating the “Big 3” American Auto Makers
• Toyota Motor Sales, U.S.A., Inc.,
was formed Oct. 31, 1957
• Sold 287 Toyopet Crown sedans
• Very underpowered and
overpriced for the US market
• 4-cylinder, 88.7 cubic-inch engine
1957 – Toyota
Introduced the • Capable of attaining 78 mph
Toyopet • Fuel rating of 23.5 mpg
• Discontinued in 1961
It was a bust
Let’s Look at some other examples…
Next – They tried something different

Unit-body Construction (unibody)

Using a unibody chassis, Toyota

could produce a vehicle under
1,000 kg (2,200 lb)

1966 – Toyota
Introduces the Corolla
 Disruptive Innovation?
Some Corolla quotes at that time:
“Extreme simplicity was at the core of the first Corolla's
engineering”
“There was nothing sophisticated about the first Corolla and it
wasn't pretty, but it was so simple that there were almost
no parts to break”

• Good Enough?
• Simpler?
• More Affordable?
 Were the Big 3 Automakers Worried?
• Not really
• They were happy to keep their higher profits on
the more luxury lines of cars
• They were OK letting Toyota have a share of the
inexpensive, low margin cars
• Remember:
These innovators inevitably improve, march
up-market and "disrupt" incumbents by
gradually pushing them out of ever more
complex and margin-rich product segments
 Other Examples of Disruptive
Innovations
Netflix vs. Blockbuster
Netflix drove Blockbuster into bankruptcy
What was the business model that allowed Netflix to
compete?
• The US Postal Service – delivering to your door
• And then – streaming video over the internet

Good Enough?
Simpler?
More Affordable?
 Another Disrupted Businesses
• 259 Borders
Superstores

• 114 Borders
Express and
Waldenbooks

• 26 Borders
Airport Stores

CEO Mike Edwards bids farewell to the book retailer’s fans

and customers as the company announced it was going out
of business after 40 years
July 2011
Who Drove Borders Out of Business?
Amazon.com
They drove a 40 year old company out of business
What was the business model that first allowed Netflix to
compete?
• Internet sales
• Delivered to your door

Good Enough
Simpler
More Affordable
 One you Might Not Know About
Walmart vs. Department Stores
When Walmart began there were
316 Department Store companies

The first Walmart store ─ July 2, 1962 in Rogers, Ark

 One you Might Not Know About
Walmart vs. Department Stores
A Retail Revolution
Sam Walton's strategy was built on an unshakeable
foundation:
The Lowest Prices Anytime, Anywhere
Their business model is low price and convenience

How many Department Store Companies are there now?

There are now 8 – of which Macy’s is the largest

Good Enough? Simpler? More Affordable?
 One Department Store company Escaped
The Dayton Hudson Corporation
• John Geisse developed the concept of upscale discount
retailing and approached the company leaders
• They started a separate division and allowed it to compete
with the parent company
• They opened their first upscale discount store on May 1, 1962

What’s the company’s name?

In 2000, Target was the largest
division and the fastest-growing arm
of Dayton Hudson
(75 percent of the company's revenue and profits)
 Kodak and the Digital Camera
Steven Sasson invented and built the first
digital camera using a charge-coupled
device image sensor in 1975

Who did he work for?

Eastman Kodak Company

Why didn’t Kodak pursue the digital camera?

• They did not recognize its mass-market potential
• Focused instead on high-end cameras for niche markets
• Executives also feared cannibalizing their core film sales
 Change is Inevitable
Change is inevitable – and is one of
the most stressful things in life
People and companies are reluctant
to change
- largely because they have
been successful doing things
a particular way

In times of change - companies that change their

products and business models thrive and prosper
 Biggest Disruptors of the Decade
By - Transforming what exists or
By - Creating what doesn’t through
simplicity convenience affordability accessibility
Apple Amazon Google
Facebook Wal-Mart Verizon
Cisco Systems Uber Netflix
Pandora Skype Tato Nano ($1,580 car)
Airbnb Alibaba Snapchat

Cloud Storage Mobile Internet Oil & Gas Recovery

Advanced Robotics Internet of Things Near-Autonomous Vehicles
3-D Printing Advanced Materials Renewable Electricity
 Why Don’t Companies Innovate?
• Good firms are usually aware of the innovations
• Their business environment does not allow them
to pursue the innovation when it first arises
– they may not be profitable enough at first

– their development can take scarce resources away

from that of sustaining innovations

• The company doesn’t place sufficient value on the

innovation to pursue it
31
Innovation Pyramid
 Methodology

The approaches to the various forms

of Innovation are very similar
 The Process – The D4 Road Map

Define Discover Develop Demonstrate

• Create Innovation • Refine the • Formulate Design • Build a working

Opportunity Opportunity model
• Select Design
• Scope the Opportunity • Leverage Team • Map Processes
Brain Power • Optimize Design
• Manage People and • Optimize Processes
Projects • Search
Knowledge Bases • Improve and
Transition
• Prioritize & Select
Ideas
From: The Innovator’s Toolkit by David Silverstein,
Philip Samuel and Neil CeCarlo, 2009
 Define the
Innovation

• Identify actionable innovation gaps, or high-

potential innovation projects based on the
identification of unmet customer needs and
new market territory
• Observe how customers struggle with existing
solutions so you can understand their
unarticulated needs
 Approach in the Define Phase
1. Identify a Focus Market
2. Identify Jobs Customers are Trying to Get
Done
3. Categorize the Jobs to Be Done (JTBD)
4. Create a Jobs Statement
5. Prioritize the JTBD Opportunities
6. Identify Outcome Expectations Regarding the
Job
 Identify Jobs-to-be-Done
• Customers don’t buy products and
services
• They hire various solutions at various
times to get a wide variety of jobs done
• It is the higher purpose for which
customers buy products, services, and
solutions
 Types of Jobs-to-be-Done
1. Functional Job – describes the task
that customers want to achieve
2. Emotional Job – related to feelings and
perception
3. Ancillary Job – other jobs that
customers want to get done before,
during, or after they get the main
job done
Restaurant Experience
 Customer Loyalty
• It costs FIVE TIMES more to acquire new
customers than it does to keep current ones
• Reducing your customer defection rate by 5%
can increase your profitability by 25% to 125%
• The probability of selling to an existing
customer is 60–70%. The probability of selling
to a new prospect is 5-20%; (that’s up to 14
times more, or 5 on average)
 Why is customer experience
important?
 79% of consumers will commit to a deeper brand
relationship – through product or service adoption –
after a satisfying online experience

 59% of customers will stop doing business with the

brand after just one bad experience in any channel

From an IBM customer study

 Types of Jobs-to-be-Done
Main Job Related Jobs
to be Done to be Done

Functional Emotional Functional Emotional

Aspects Aspects Aspects Aspects

Personal Social Personal Social

Dimension Dimension Dimension Dimension
 Pokémon Go

A Sensation - $16 million of revenue per day in July

By mid September – that fell to $2 million per day

It launched with relatively little actual "game“

Featured shallower gameplay than its siblings on Nintendo's gaming platforms
Mechanisms for battling Pokemon were relatively simplistic
There was no way for people to interact in real time in the game
 They Missed on Some Areas
Main Job Related Jobs
to be Done to be Done

Functional Emotional Functional Emotional

Aspects Aspects Aspects Aspects

Personal Social Personal Social

Dimension Dimension Dimension Dimension
What are the jobs to be done?
 Create a Job Statement
Structure of a Job Statement

Manage personal finances at home

Action verb Object of action Contextual clarifier

Clean clothes at home

 Prioritize the JTBD Opportunities
• There are hundreds of jobs that customers are
trying to get done
• Prioritizing is a function of:
1. How important they are
2. How satisfied customers are with
existing solutions
• Tools to use Likert Scale from Multiple Criteria
customer input Decision Analysis

Simple Decision Weighted Pugh

Matrix Analysis
Create an Experience Map
The Top Portion - Experience Map

Enriched Experience:
• Aroma

Neutral Experience:
• Ambience

Negative Experiences:
• Audible Sensations – Loud
• Cold
• Drafty
• Slightly Crowded
2.a. Notice that there are a couple of
people in line
2.b. Notice the narrow confined
layout
2.c. Enjoy the aroma of roasted coffee
and mixed sweet, robust smells
2.d. The lighting is pleasant, not overly
bright and not too dim
2.e. The music seems ethnic,
extended vocals, soft in style,
volume too load and but my taste
2.f. The room climate seems
intentionally cold
 Discover the
Innovation

• Capitalizing on an opportunity to fulfill unmet

customer expectations in a superior way

• Your goal is to generate substantive ideas for

closing outcome expectation gaps (or innovation
opportunities)

• Refine the opportunities

 Identify Outcome Expectations
There are 4 Types of Outcome Expectations
1. Desired outcomes customers want to
achieve
2. Undesired outcomes customers want to
avoid
3. Desired outcomes providers want to
achieve
4. Desired outcomes providers want to avoid
 Outcome Expectations
For cleaning clothes at home
• Undesired smell
Undesired

• Damaged clothes • Product liability / lawsuits

• Wrinkled clothes • Imitation products
• Allergens or harmful chemicals • Environmental complaints
• Foreign particles on clothes • Supply shortages
• Excessive cost

• Revenue growth
• Stain removal
• Steady profit
Desired

• Easy cleaning
• Customer loyalty
• Fast cleaning
• Steady demand
• Clothes smell fresh
• New derived products
• Clothes look fresh
• Low cost to make

Customer Provider
 Steps After the Outcome Matrix
1. Identify the Jobs to Be Done
2. List the JTBD Related Outcome Expectations
3. Create Outcome Statements
– The direction of action
– The unit of measure – like time, cost, defects, etc.
– The object of control (what you are influencing)
– The context (where or under what circumstances)
Example: Minimize the time it takes to clean clothes
4. Determine Priority Outcome Expectations
 Establish the Value Quotient
1. Agree on and document the Job to Be Done
2. Identify the desired and undesired outcomes
3. Plot the ideal innovation
4. Identify Opportunity Value Gaps
• Complexity
• Time to Clean
• Resource usage
(water, energy, etc.)
 Establish the Value Quotient
Your innovations should address the identified
gaps in value: • Complexity
• Time to Clean
• Resource usage (water,
energy, etc.)
 Additional Focus Areas
Heuristic Redefinition
– A Visual approach for focusing and scoping an
innovation project at the right level in a system

Ethnography
– A science that describes human social
phenomena based on fieldwork and observation
 Heuristic Redefinition
Heuristic Ideation Technique (HIT) Matrix
• Compare existing solutions
to spark new breakthroughs
– Likelihood of solving the
problem
– Ease of implementation
– Expected impact on JTBD

• Used to compare the

characteristics of two
seemingly unrelated
products or services to
develop new ideas
 Ethnography and
Human Centered Design (HCD)
Human-Centered Design (HCD) is a methodology that helps us
Hear the needs of our constituents in new ways,
Create innovative solutions to meet these needs, and
Deliver solutions with financial sustainability in mind.

Why is it called “Human-Centered”?

• Starts with people we are designing for
• Examine the needs, dreams, and behaviors of the people we want to affect with
our solutions
• We seek to listen to and understand what they want and expect.
• This is known as the “Desirability” lens. Everything is viewed through this lens
throughout the design process
• Once we have identified a range of what is Desirable, we move to view our
solutions through lens of Feasibility and Viability
 Human Centered Design Process
The process of Human-Centered Design starts with a
specific Design Challenge and goes through three
main phases: Hear, Create, and Deliver.

The process will move:

– Concrete observations about people

– Abstract thinking as we uncover insights and themes

– Back to concrete with tangible solutions

 Hear - (the Desirability Lens)
During the Hear phase, we will collect stories and inspiration from
people. Then prepare for and conduct field research.
Step 1 Identify a Design Challenge
Step 2 Recognize Existing Knowledge and Data
Step 3 Identify People to Speak With
Choose Appropriate Research Method(s)
 Individual Interview
 Group Interview
Step 4  In-Context Immersion
 Self-Documentation
 Community-Driven Discovery
 Expert Interviews
 Seek Inspiration in New Places
Develop an Interview Approach (as appropriate)
Step 5  Interview Guide
 Sacrificial Concepts
 Interview Techniques
Develop the Mindset
Step 6  Beginner’s Mind
 Observe vs. Interpret
 Create – (The Feasibility Lens)
In the Create phase, we will work in a workshop format to translate
what we heard from people into frameworks, opportunities, solutions,
and prototypes. During this phase we move from concrete to more
abstract thinking in identifying themes and opportunities, and then
back to the concrete with solutions and prototypes.
Develop Design Approach
Step 1  Participatory Co-Design
 Empathic Design
Step 2 Share Stories
Identify Patterns
 Extract Key Insights
Step 3
 Find Themes
 Create Frameworks
Step 4 Create Opportunity Areas
Step 5 Brainstorm New Solutions
Step 6 Make Ideas Real
Step 7 Gather Feedback
 Deliver – (The Viability Lens)
The Deliver phase we begin to realize solutions through
rapid revenue and cost modeling, capability assessment,
and implementation planning. This will help launch the
new solutions.

Step 1 Develop a Sustainable Revenue Model

Step 2 Identify Capabilities for Delivering Solutions

Step 3 Plan a Pipeline of Solutions

Step 4 Create an Implementation Timeline

Step 5 Plan Mini-Pilots and Iterate

Create a Learning Plan

Step 6  Track Indicators
 Evaluate Outcomes
 IDEO – a Great Resource in Design
“Innovators aren't exceptional
as much as they are confident”
David Kelley, founder of the Palo Alto, Calif., design firm IDEO

David Kelley says

most of us stop
thinking of
ourselves as creative
somewhere around
the fourth grade
 IDEO – Design Workshops
Stanford Design Thinking Virtual Crash Course
https://www.youtube.com/watch?v=-FzFk3E5nxM

“A 90-minute video-led cruise through

our methodology”
 Develop the
Innovation
• This phase of innovation transforms your great ideas from
the white board into workable models

• The questions become:

– What functions will it perform and how do I design it?
– How will I assess how good it is?
– What alternatives do I have?
– Can I make my solution invincible, and manage the risk
of trying?
Utilize Process Improvement Tools
• Scoping the Project
• Stakeholder management
• Project charter
• Problem and Goal statements
• Analyze potential income and operating
expense impact
• Gather your team resources
 Functional Requirements
• Gather information and define the problem
• Develop functional models
• Use various tools to help focus the work

Nine Windows
Helps you examine the
innovation opportunity
across the dimensions of
• Time (past, current, future)
and
• Scale (super-system,
system, subsystem)
 A Side Note – Zune Pizza
Zune is known for using a fleet of
robots in the kitchen to speed up
the pizza making process.

But now, the company is

outfitting its pizza delivery truck
with 56 ovens programmed to
make pies in-route to
customers.
When the truck is four minutes away
from its destination, an oven
Each pizza is partially baked
for 90 seconds in an 800-
containing the order will turn on to
degree oven. Bruno the fully bake the pie.
robot is in charge of putting
It takes 3 minutes and 30 seconds to
the pies into oven
cook, and 30 seconds to cool down.
 Some Additional Tools
Heuristic Ideation Technique (HIT) Matrix
• Compare existing solutions to spark new
breakthroughs
• Used to compare the characteristics of two seemingly
unrelated products or services to develop new ideas
 SCAMPER
Worksheet
8 questions to develop
more potential ideas
for your opportunity:
Substitute
Combine
Adapt
Modify
Put to other purposes
Eliminate
Reverse
SCAMPER Worksheet
 Six Thinking
Modes
• leverages
different points of
view to help your
team evaluate its
best ideas
• works especially
well with
controversial
ideas
 Separation Principals
• Separation principles help
when some physical
contradiction stands
between you and an
innovation
• TRIZ (“theory of inventive
problem solving”) is very
helpful with these issues
• A very helpful resource
What are Contradictions in Problem Solving?

A narrow hulled
ship is fast but it
becomes unstable
with a heavy load

Good Narrow
(to the water)
Contradiction Wide
(to the ship)
The ship needs a wide
hull for stability and a
narrow hull for speed

Bad
Another Contradiction

I need a wide assortment of

fountain drinks to make my
customers happy……but
I need a small assortment of
fountain drinks to keep
inventory and space to a
minimum
 Demonstrate
the Innovation
• This final phase of innovation's front edge is
when you create, test, and prove the feasibility
of your new solution
• Build a working model of your new solution
using Prototyping or Piloting techniques.
 Rapid Prototyping
• Fail Fast and Fail Cheap – before what you are
doing becomes a financial disaster
• You will need the right
– Culture
– People
– Mind-Set
– Tools
• The team marches to a different beat
 Prototype Example
A company wanted to test being able to project
an image onto a sidewalk to advertise local
businesses
For a Prototype they
• attached a projector to a
pole over the sidewalk
• ran an extension cord up
to the projector
• projected the image
onto the sidewalk
 Rapid Prototyping
1. Design Prototype Evaluation
– It is an iterative process
– You will likely build more than one full scale,
working model
2. Build the Prototype
3. Determine how you will measure the results
4. Evaluate using a Function Audit
5. Evaluate for robustness
6. Consider Additional Evaluations
7. Repeat the Prototype Process
 Piloting
This is when you actually put the prototype into
use with actual users
1. Plan the Pilot
– What are the objectives?
– How will you measure the results?
– Who will be the customers?
2. Design the Pilot
3. Designate Resources
4. Run the Pilot
5. Analyze the Results
Back to Process Improvement Tools
• Build your SIPOC Map
– Create a High-Level Map of the Process
– Identify the Outputs of the Process
– Identify the Customers of the Outputs
– Identify the Inputs Required by the Process
– Identify the Suppliers of the Inputs to the
Process
Back to Process Improvement Tools
• Build a Process Map
• Build a Future State Value Stream Map
• Develop a Future State Process Map
• Measurement Systems Analysis
• Design of Experiments
• Conjoint Analysis
– a simplified experimental technique for
determining the best combination of attributes to
include in a product or service design
Back to Process Improvement Tools
• Evaluate under performance or poor
performance from experiments
• Make incremental Improvements
• Develop a Control Plan
 Things to Come
Strati - the first
3D-printed electric
car that could be
built in 24 hours

cost between
$18,000 and
$30,000, but says
the price will drop

The key is simplification. On average, a car contains

thousands of parts - the Strati contains just 49
 Artificial Intelligence
Diagnosing sepsis –
Sepsis is a complication that is treatable if caught early, but
patients can experience organ failure, or even death
Artificial Intelligence algorithms that scour data on electronic
medical records can help doctors diagnose sepsis a full 24
hours earlier, on average

Search and Rescue –

Artificial Intelligence permits computer programmers to write
basic algorithms that can examine extensive footage and
find missing people in less than 2 hours
In addition, AI algorithms can sift through social media sites,
such as Twitter, to learn about missing people and
disasters
 Artificial Intelligence
Cybersecurity –
Finding flaws and attacks on computer code is a manual
process, and it's typically a difficult one
During a DARPA Challenge - Artificial Intelligence entry Xandra
discovered a new attack in binary code, figured out how it
worked, reached out over a network and breached the
defenses of one of its opponents, a system named Jima.
And Jima detected that breach, offered a patch, decided to
field it and ended the breach.
The entire episode took 15 minutes. "It all happened before
any human being knew that flaw existed,"
 New Materials
Graphene -
Graphene is basically a substance which is 300 times stronger
than steel and made of only a thin layer of pure carbon,
making it literally as light as a feather
Each sheet of graphene is only one atom thick, and one
square meter weighs just 0.77 milligrams.
The uses of this technology could be revolutionary: Space
exploration and the aviation industry would benefit from
the extremely light and strong material that could be used
in aircraft construction. Graphene could revolutionize
electronic devices by enabling lightweight, thin, flexible,
yet durable display screens, cellphones, and much more.