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Apple Inc.
Formerly known as Apple Computer Inc.
iPod Since November 2001 over 100 million units sold Sales Qu I, 2007: $ 3.4 billion iTunes Store over 2.5 billion songs, 50 million TV shows , 1.3 million movies sold Worlds largest catalog: over five million songs Sales Qu I, 2007: $ 634 Mill.
EPDA Keynote Strategic Innovation michael.moeller@neuwaldegg.at May 18th, 2007 Page 2
Tchibo
Every week a new world
Since 1949 in the coffee business 1958 first time No. 1 in German market with Gold Mocca
Besides coffee, Tchibo nowadays sells clothing, technology, travel, financial services and mobile phone services
Brass plate and closed doors Necessary to make an appointment Pricing not transparent Often highly specialised
Founded in 2003 Nationwide 30 shops and more than 100 attorneys, esp. in the city centres No appointment needed Online advice Pricing list displayed in shop window
Organic growth
Strategic Innovation
(new business concept)
Research on longterm corporate success shows: Survival becomes more and more difficult
Continuance in S&P 500 in years1)
90
More than half of todays S&P-500 companies will disappear by 2020 The speed of change will further increase
45 30 22 15
1935
1955
1975
1995
2005
Turbulent development of markets, technologies and other environments will generate growth opportunities but also threaten established businesses
Source: Salomo et al.: Autonomie 2003, Foster/Kaplan: Schpfen und Zerstren, 2002
New, digital technologies transform the service sector Nanotechnologies and genetic engineering revolutionize pharmaceuticals and semiconductor industry Media, telecommunications and IT converge Globalisation of trade networks and infrastructures transform emerging economies like India and China into economic powerhouses Empowerment of the consumer
Source: 2006 Business Week / BCG 2006 Senior Executive Innovation Survey
Forms of innovation
Product innovation
New products and services, line extensions
Market innovation
New target groups: new Market segments, new regions
Process innovation
Redesign of business processes
Technological innovation
New technologies in service delivery
Forms of innovation
Product innovation
New products and services, line extensions
Market innovation
New target groups: new Market segments, new regions
Process innovation
Redesign of business processes
Technological innovation
New technologies in service delivery
Strategic Innovation
= new, untested business concepts
Radical new conceptualization of business models Exploration, experimental strategies
EPDA Keynote Strategic Innovation michael.moeller@neuwaldegg.at May 18th, 2007 Page 10
What need?
Which problem is solved? Function for the client
Who?
For whom is it solved? Markets, target groups
How?
How is it solved? Value architecture, Business Model
Strategic Innovation means testing unproven, and significantly different answers to at least one of the three fundamental questions of strategy: Who is your customer? What is the value you offer to the customer? How do you deliver that value?
EPDA Keynote Strategic Innovation michael.moeller@neuwaldegg.at May 18th, 2007 Page 11
Coffee system developed by Swiss food giant Nestl Coffee portioned in aluminum capsules prepared in specialized coffee machines Simplified handling, short preparation time
Strategic Innovation Part 1 1970 86 1970 invention by Nestl R&D 1976 patented 1986 Market launch in French-speaking part of Switzerland and Italy as a complete system/solution, consisting of capsules and coffee machines for offices Nespresso flopped !
EPDA Keynote Strategic Innovation michael.moeller@neuwaldegg.at May 18th, 2007 Page 12
Strategic Innovation Part 2 1988/89 NEW WHAT: Selling coffee (capsules) NEW WHO: Households instead of offices NEW HOW: OEM-Partners that manufacture, market and service the coffee machines Machines sold via premium retailers Focus on the production of the coffee capsules Direct sales of capsules via Nespresso Club (Mail order, boutique shops)
Outcome: Turnover CHF 580 millions 2 billion capsules per year 2,2 million club members 25% CAGR since 1988 Market presence in 48 countries 9 OEM partners
May 18th, 2007 Page 13
What
New needs
Through shift of customer preferences or demographic changes Create through marketing tactics
Who
How
Who
How
Source: Markides 1997
New forms of manufacturing, distribution, sales or service delivery (often enabled by new technologies)
EPDA Keynote Strategic Innovation michael.moeller@neuwaldegg.at May 18th, 2007 Page 14
Complacency
Rejection of new findings that could question the current assessment of reality Blind trust in recipes of the past
Strategic exploration
What need?
What
Who
Emerging segments: Discover emerging customer segments, e.g. Green Energy, Green Investing Underserved segments: Explore existing customer segments, neglected by competitors or exploding all of a sudden, e.g. Nespresso
How
Customer Experience: Redesign customer interactions, e.g. Dell, convenience shopping Value Capture: Create new revenue streams and models, Online Advertising, Pay-per-view Processes: Reengineer business processes, e.g. Toyota Production System, GE Six Sigma Organization: Change function or activity scope of the firm, e.g. Adidas, Cisco networked virtual organization Supply Chain: Redesign sourcing and fulfillment, e.g. Covisint, Cisco Distribution: Create new channels or points of presence, e.g. music CD sales in Starbucks coffee stores Networking: Create network-centric intelligent and integrated offerings, e.g. Otis Remote Elevator Monitoring service
EPDA Keynote Strategic Innovation michael.moeller@neuwaldegg.at May 18th, 2007 Page 17
Source (apated): Sawhney/Wolcott/Arroniz: The 12 different ways for companies to innovate, in: MIT Sloan Management Review, Spring 2006, p. 75 - 81
Average airlines
Car Transport
Low Price Meals Lounges Seating class choices Hub connectivity Friendly service Speed
Idea
Concept
Launch
Growth
Profit
Creativity
Think outside the box! Explore the new and unknown Anticipate future client needs Allow and support emergence Give freedom and enable flexibility Allow unstructured communication
Efficiency Innovation
Incubation Concept Testing Selection and launch Quick learning cycles and adaptation Implementation
EPDA Keynote Strategic Innovation michael.moeller@neuwaldegg.at
Stick to core competencies! Use what you know Satisfy current customer needs Planning Ask for commitment Compulsory processes and structures
Search for
Strategic Innovation
Selection, launch
Market experiments Steering increasingly more pushy
Opening interventions
Closing interventions
Lever 3: Change the modus operandi Approaches Direct attention Cross-link differently
Go beyond boundaries
May 18th, 2007 Page 23
Lever 3: Change the modus operandi Direct attention to new combinations of Who/What/How
Agenda setting: put SI/growth first Increase strategic alertness and ambition
Develop scenarios
Futurelabs, marketplaces of the future
alternative combinations of who/what/how
Lever 3: Change the modus operandi Cross-link differently: people, stakeholders, units
Informal, inspiring conversations Client Parliaments Newsletter with competitive outlooks
Modular structures
Use internal training programs Mentoring Fast Lane: direct access to topmanagement for top ideas
EPDA Keynote Strategic Innovation michael.moeller@neuwaldegg.at May 18th, 2007 Page 25
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michael.moeller@neuwaldegg.at
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