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6 Mar 2018 ixl

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Crowdsourcing Part 2

Keys to Crowdsourcing Innovation Initiatives

In our previous article, we have provided examples on how different companies have leveraged crowdsourcing in solving various challenges. The concept has become increasingly important in recent years and hundreds of companies have sprouted up all over the world offering crowdsourcing services.

There are substantial benefits to crowd sourcing: a lot of new ideas are generated in a way that is cheaper, better and faster which can make it easier to get to breakthroughs. There are disadvantages, though, to crowdsourcing: a lot of ideas generated are irrelevant, not developed to a sufficient level of detail or difficult to prioritize.

IXL Center has been crowdsourcing for a long time, has made a lot of mistakes and has learned a lot of lessons which we will share with you in this article.

What we have learned is that crowdsourcing can be a very effective way to generate breakthrough innovations, but it has to be done in a particular way to guarantee great results. We propose the following seven steps as critical components of successful innovation crowdsourcing:

1. You need a great challenge

A big challenge forces people to step up to the plate and give their best. They feel like they are part of something big, which inspires them to give their all. They do everything they can to impress leadership. In the Hult Global Case Challenge (HGCC), the students give their best because they know they can potentially change the world. This is enforced by the fact that they all have to present their ideas in person to C-level executives–and in the Case Challenge, finalists present to former US President Clinton himself. If you want the best people to give their best efforts, which will lead to the best results, you need to give people a great challenge that is worth their while.

2. You need a well-defined question

You need a well-defined question because that focuses people’s efforts and leads to results that are actionable and tangible. In the HGCC, there’s a difference between asking someone how to solve the world’s water problem and asking them “How can Water.org sustainably provide access to clean water to 100 million people in the next five years?” The image we like to use is that of an airplane–you want people to come up with the next generation airplane that can carry more passengers and be more fuel efficient, but at the same time, these airplanes must be able to land on the airstrips you’ve built, otherwise, it’s useless. A well-defined question generates actionable answers.

3. You need to make it a competition

You need to make it a competition for people to give their best. Students will go the extra mile to get to the top of the class or to get better grades. Employees will go the extra mile to be seen as future leaders in their company. The HGCC contestants will go the extra mile, dreaming of the possibility to presenting their ideas to President Clinton and have their ideas implemented. Most of the time, the difference between good results and extraordinary results is simply going the extra mile–and a competition catalyzes that behavior.

4. You need to use teams to get diversity and speed

As Steven Johnson points out in his book “Where good ideas come from”, innovation is not the product of a lone genius. It happens when people share their hunches with other people and the collision of hunches ends up producing breakthrough innovations. Always use teams to create an environment for ideas to be shared and improved upon. It is important to note that the composition of teams matters: you don’t want a crew team, where everyone is the same height and weight, and rows in the exact same rhythm. You want a rugby team, a diverse team with some people who are tall and others who are short, some people who are big and some who are small, a team that appears to be messy and disagree a lot–but that in the end produces more interesting and polished results. IXL Center uses multi-cultural, cross-functional teams in all of our innovation initiatives whether it is the Hult Innovation Olympics, the Hult Prize or any other workshop or program. Finally, teams give you speed. You don’t have to process individual opinion only the team’s consolidated ideas. This means that as a crowdsourcing organization you can cut down your processing time by 75% to 90% by using teams.

5. You need to provide an innovation process

The best ideas often come from looking at things from a fresh perspective. Involving people who are new to the industry or new to the problem will generate fresh ideas and points of view. However, without a methodology to channel their contributions, it will be a frustrating experience for everyone–frustrating for the newcomers because they feel lost and don’t really know how to add value, and frustrating to the old-timers because they feel like they waste a lot of time taking in irrelevant input from the newcomers. An innovation process guides people’s contributions toward a good result. Providing an innovation process to participants makes a big difference in the final outcome. Every student, mentor and client knows where they currently are in the five steps of the Hult Innovation Olympics program – what inputs are needed, what steps to take and what the output should look like.

6. You need to provide coaches and mentors

Coaches and mentors provide something that teams in a crowdsourcing environment often lack: good judgment. Coaches know when an idea has been developed to a sufficient level of detail, when a team has gone too far down a particular path, or not far enough. Coaches bring experience to the table which is essential to optimizing results making it worthy of consideration by senior audiences. In the Hult Innovation Olympics, mentors are management consultants, who ensure that the students are on the right track, ask the right questions, and gain and express the right insights their clients need.

7. You need to have a threshold for what a good answer is

Ideas must be complete in order to be useful and comparable. It is difficult to compare an idea to build an iPad app and an idea around spending money on Google AdWords to increase brand awareness. There isn’t enough information to get a sense of the business impact those ideas can have. It is like comparing apples to oranges. Yet, most innovation crowdsourcing platforms today do exactly that: people’s suggestions are collected, voted on and prioritized for implementation similar to a popularity contest. IXL Center defines the business concept as the minimum threshold for a good answer. A business concept has elements describing the market, delivery channel, offering, production requirements and a business model. For example, the iPad app idea fragment is combined to build a concept when you say: “We can target product managers by offering them a crowdsourcing iPad app to get new product feature ideas, delivered through the iTunes store, differentiated by our existing user base, and sold as a monthly subscription.” As concepts have the same elements, it is now easier to compare concepts using objective tools that determine the concept’s business impact and likelihood to succeed in relation to other concepts. Establish a minimum threshold for a good answer to be able to meaningfully compare the ideas generated from crowdsourcing.

In conclusion, innovation can benefit significantly from crowdsourcing, but it has to be done within certain structures and frameworks in order to guarantee success. First, you must go beyond the topic, providing an important and specific challenge with a well-defined question and important people expecting results. Second, you must go beyond the mob, and use teams that compete against each other with the help of an innovation process. Third, you must go beyond the fragment, providing coaches and mentors, and setting a standard for acceptable answers, ensuring that answers are developed enough to be useful and comparable. Following these guidelines, innovation crowdsourcing can lead to breakthrough results every time.

6 Mar 2018 ixl

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Rapid, iterative experimentation process – A ‘Lean Startup-style’ approach to innovation

The emergence of disruptive digital technologies and changing customer expectations has made innovation an imperative for companies to remain sustainably competitive and stimulate growth. Realizing the benefits of innovation requires a systematic approach to not only generating novel ideas but converting them to meaningful business value. Rapid, iterative experimentation is critical to effective conversion in that it helps organizations ‘test the goodness’ of their ideas by turning hypotheses into facts and assumptions into validated conditions, thereby weeding out the bad ideas from the good and turning the good ideas into better, high-impact innovations.While many organizations are able to generate ideas, most are not equipped to conduct ‘Lean Startup-style’ experimentation, that is, they are unable to rapidly create solution prototypes and simulate and test outcomes from a customer, competitor, and partner perspective. We recommend organizations establish a ‘Rapid, Iterative Experimentation Process’ to allow them to quickly improve an innovative idea’s probability of achieving its expected outcomes by generating the information needed to iteratively pivot or remain confident in persevering.

The majority of innovation efforts are unsuccessful

Innovation has become the Holy Grail for executives in the 21st century. The advent of technological changes, such as the digital five forces (mobility and pervasive computing, big data and analytics, social media, cloud, and artificial intelligence and robotics), means that companies need to innovate continuously with agility and efficiency if they are to sustain themselves competitively. However, our numerous client interactions, as well as research from a broad array of sources, indicate that a majority of innovation efforts are unsuccessful. The challenge, more often, is not the generation of creative ideas but their conversion into meaningful innovations that stimulate growth in revenue and profitability. Primary reasons for failure include an inability to rapidly and iteratively experiment, by prototyping new solutions and determining business outcomes through simulation and testing of novel concepts.

Innovation is vital to growth

The emergence of digital technologies has made the current business environment one of the most dynamic in history. Figure 1 depicts the changes due to which most executives around the world have made innovation one of their strategic priorities.

Companies seeking to expand their market share, enter new product or customer segments, or use emerging technologies to create more compelling customer experiences need to generate and launch innovative solutions faster than their competitors. These solutions may include differentiating services, breakthrough business models, or re-imagined business processes. To do this successfully they need to build the capability to continuously ideate, experiment, and monetize their inventive solutions. Innovation, therefore, requires a systematic yet flexible process to handle its associated ambiguity and uncertainty.

Conventional approaches to innovation fail

Many organizations have increased funding and are putting ‘people, processes, and technology’ in place to create their own engines of innovation. However, they struggle with generating enough of the right kind of ideas, and, perhaps more importantly, quickly and effectively converting them into bigger, bolder, faster, and cheaper innovations that drive significant value creation.

A key reason for this failure is the application of traditional product and technology development, as well as large program management methods, to innovation. These methods involve lengthy sequential processes designed to guarantee results. As such, they are too slow for today’s dynamic marketplace and often reject outright and/or strip from the inspired ideas the very essence that could change the game and contribute most to the top and bottom lines, that is, their ‘innovativeness.’ As a result, companies often fail to swiftly monetize their innovations and maximize overall innovation-driven returns.

The need for rapid experimentation

Generating new ideas and converting them into meaningful business value to support competitive sustainability requires a scalable Lean Startup-style approach. One that quickly and cost-effectively identifies the better ideas in the enterprise’s pipeline and evolves them into great innovations that significantly improve business performance. This approach or ‘Rapid Iterative Experimentation Process’ (RIEP – pronounced ‘reap’) involves the use of solution prototyping, concept simulation, and testing (for example, piloting) to assess and improve the potential of the proposed innovations. RIEP can be used to analyze and convert novel concepts along multiple dimensions such as customer attractiveness, market viability, and technical feasibility. By adopting this Lean/Agile and design thinking-based approach to assessing the value expected to be generated by their new ideas, enterprises can ‘learn fast and cheap’ and thereby optimize their overall investment in innovation.

The RIEP solution

RIEP deploys a combination of people, processes, and technology to practice Lean Startup-style experimentation to improve innovation driven business performance. It features a series of activities to generate the insights and information needed by the investors in innovation (for example, the CEO and Business Unit Heads) to make better decisions about whether to ‘pivot, halt, or persevere.’

1) The process begins with identifying the critical value and growth assumptions and risks of the early stage idea or novel concept. These become the hypotheses to prove or disprove using some combination of solution prototyping, concept simulation, and testing. These hypotheses, for example, may relate to the customers’ perceived need for the innovation, the company’s ability to build and monetize the innovation at a reasonable cost, and the competitive response to the innovation’s launch/implementation which affects its sustainability. A major grocery and pharmacy retailer seeking to expand its market into a new community is a case in point. Key hypotheses related to the community’s purchase and use behavior as well as methods to source ‘ambassadors,’ that is members of the local community willing to conduct personal demonstrations relevant to the nutrition, pharmacy, and personal care programs organized by the retailer.

2) After identifying the ‘20 percent of the hypotheses that drive 80 percent of the uncertainty,’ these are broken down into smaller elements (akin to ‘user stories’ in Agile development) around which a detailed experimentation approach and resource plan is drawn up. This experimentation plan typically includes one ‘sprint’ for every element to determine whether that component of the innovative idea as currently envisioned will deliver the expected value. Each sprint lasts one to four weeks and involves a series of ‘value tests’, each taking one to five days. The value tests are designed to deliver the maximum possible data, or insight and information, with the least amount of effort.

3) Some of the sprints may involve solution prototyping to prove technical feasibility and/or to provide the ‘object’ needed to conduct the simulations and tests of the concept’s customer attractiveness and market viability. When IT-driven solution prototyping is used, outputs range from visual mock-ups (for example, PowerPoint presentations) to illustrative software (such as clickable apps to demonstrate the look and feel of a solution) to working software (including functional programs). IT-driven solution prototyping can incorporate any of the following technologies: UX and mobility extensions, workflow and data flow enhancements, heavy analytics, and enterprise software and hardware integration.

4) Most of the sprints involve simulation and testing focused on one or more of the four general areas related to the innovative concept using different techniques and tools:

For example, when considering a new healthier product segment, a major beverage company used concept simulation to better understand customer purchasing behavior, determine distribution channel response, and assess the likelihood of collaboration and preferred relationships with other key players in the ecosystem.

5) The construct of an innovative concept’s unique experimentation plan determines the composition of the RIEP team required. This may include not only internal but external resources such as customers, value chain partners, innovation providers (for example, emerging technology startups), and other ecosystem players such as competitors. Ideally, all RIEP teams execute their specific experimentation plans using a shared technical platform and process playbook designed for distributed and iterative collaboration. While the composition of every RIEP team varies, common internal roles include those of an ideator, idea sponsor/investor, innovation coach (interface between idea sponsor/investor and RIEP team), rapid prototyping specialists (architects, designers, and developers), concept simulation and testing specialists, and other domain and functional experts.

Keys to success

An efficient and effective RIEP implementation requires individuals with an entrepreneurial mindset and competency in solution prototyping and concept simulation and testing, as well as the technologies and tools to conduct this type of experimentation rapidly and iteratively. Therefore, securing the intellectual support and financial commitment from senior leadership is vital for creating and maintaining the capability to maximize innovation-driven business performance while optimizing investment.

Skills and experience valuable to building competence in RIEP generally include having worked for a startup, incubator, or accelerator. For rapid prototyping of IT-driven solutions, competence in Agile development, digital and emerging technology, design thinking, and UX/UI design would be instrumental. For concept simulation and testing, a background in new venture development, business strategy formulation, innovation marketing, market analysis, Lean/Six Sigma, critical thinking, business case development, implementation planning, creativity facilitation and gamification, and role-playing would be very useful.

For the technical platform, solutions to enable rapid prototyping of the ‘touch, feel, and works like’ of the innovative concept are many. The goal is to know which solution to apply when. In addition, using free (for example, Open Source) solutions and provisioning on demand as much as possible, particularly in the early days of establishing an RIEP capability, as the patterns of the enterprise’s innovative idea prototyping needs emerge, is an important consideration.

Realizing value through effective innovation

Whether an organization employs their own RIEP capability or engages a trusted provider with the required competencies and infrastructure, it can expect significant increases in the quality and speed of input for decision making on innovation investments. This in turn will lead to higher returns from their new and novel ideas and business concepts. In particular, enterprises can expect higher innovation performance in the form of revenue growth, increased customer satisfaction, profitability enhancement, shareholder value creation, and ultimately optimized innovation investment.

About the Authors

Courtney Wood
Director, TCS Innovation Management Services

Courtney Wood leads the Innovation Management Services capability at Tata Consultancy Services (TCS). Courtney has spent 25 years in management consulting, supporting both large and early stage enterprises in establishing high-performing growth and profitability engines by developing the right business strategies as well as designing the right business capabilities and executional roadmaps to remain market relevant and fiscally viable in an ever more dynamic and complex world. During the ‘dot com days,’ Courtney was co-founder and chief strategist of a technology-based business incubator that brought promising start-ups into its nest, exchanging new venture development capability for equity.

Ron Jonash
Director and Senior Partner, IXL Center

Ron is a senior partner at the Center for Innovation, Excellence, and Leadership (IXL Center) and leads its innovation management practice. He is on the faculty of the Hult International Business School and the Tufts University School of Engineering, and is a partner at a venture capital firm. He is also chairman of the Board of the Global Innovation Management Institute, which establishes standards and provides professional certification for both innovation practitioners and managers. He was previously the founder and managing director of the Innovation Practice at the Monitor Group, and before that was head of Arthur D. Little’s Technology and Innovation Management Practice for over 20 years. Ron is author of the award winning book, The Innovation Premium, as well as numerous other innovation books and articles.

Mick Simonelli
Innovation Consultant

Mick is a thought leader on innovation in financial services. He is the former lead innovation executive for USAA, a Fortune 50 Insurance and Banking company, where he built and led their program to best-in-class status. Prior to USAA, he was an innovation and transformation officer for the U.S. Department of Defense.

16 Feb 2018 ixl

Uncategorized

Yes! Innovation Can be learned. Lessons from IXL-Center

Why, “Disruptive innovation is to create value where nobody else dares”?

Organizations are not stupid. They can see the changes that are coming but are stuck in the current situation. They are like the Titanic, they can see the iceberg, but are not able to change directions quickly because of momentum, physical structure and governance. To tell an existing organization to change when it is currently successful is considered unnecessary or risky. Individuals in the organization will ask why should we serve existing customers in new and different ways when the current ways are working. The courage and the wisdom is to be able to manage the present while preparing for the change. Many leaders prefer to harvest the present versus investing in the future. They rationalize that the short term benefits will accrue to them and any long-term benefits will probably to the next CEO. So it is only a few are brave and bold who are willing to drive the change while protecting the present.

Innovation also requires individuals to learn what to do next through experimentation. Unfortunately, most organizations have created systems and processes to eliminate any experimentation except in R&D. Individuals who propose new business models, new channels, new offerings, new processes, new suppliers, new partners and the list goes on are seen as disruptive to the organization. It is these change agents who stand against the wind, the conventional wisdom, the existing system that are critical for driving change. Unfortunately, they are either chased away or shut down by the organization culture. However, there are few will not be shut down. They are the brave ones, the irreverent ones, the ones who cannot be ignored and the ones who change the world (Apple). Unfortunately, there are not many.

And you? What do you think?

By Hitendra Patel

16 Feb 2018 ixl

Uncategorized

Top 10 Companies The Market Is Rewarding For Their Unique Innovations

Market pressures can drive companies to innovate, but corporate innovation can also drive market value. One of the biggest drivers in how the market rewards companies and drives their stock prices higher is how well they can sustain innovation and invest in that innovation. Across industries, as companies successfully innovate, valuations tend to move higher. By identifying the companies the market is rewarding for continued success in innovation, we might be able to understand what kind of companies the market will reward in the future.

The GIM Institute (GIMI) and Valens Research worked together on this piece, leveraging GIMI’s deep insights in innovation and Valens knowledge of the UAFRS framework and corporate performance and valuation to identify great innovators who the market is rewarding for their innovation. We’ve found 10 unique companies across the global corporate universe that are worthy of highlight.

We identified these companies using a multi-step process:

Identified firms with an excellent history of innovation, in products, processes, creating new markets and other areas.
Reviewed that universe of companies to see which companies have been able to generate value in terms of innovation based on their UAFRS-adjusted Return on Assets (ROA) being well above their required rate of returns for a multi-year period of time.
Verified those companies continued to invest in innovation and to grow, as identified by rapid investment in UAFRS-adjusted Asset growth into high ROA businesses.
Identified which of those companies the market was rewarding for their innovation with premium valuations.

To read more about GIMI and Valens and the processes we use to analyze companies, read at the bottom of the article.

Below are the 10 unique companies:

Industria de Diseño Textil, S.A. (INDITEX)

Inditex has been innovating for over 30 years in terms of both the brands they are creating and more importantly the processes they’ve created to manage their supply chain. Inditex is one of the originators of “Fast Fashion,” an effort to solve the issues of inventory glut and design risk that so many fashion houses and retail stores face. Inditex designs clothes not on a seasonal schedule but with much shorter windows, letting customer demand at stores dictate which products they increased volumes of. Inditex has been able to operate with substantially better asset turnover and higher ROA’ than peers, giving it a competitive advantage thanks to this supply chain and manufacturing innovation. Inditex has not just been a process innovator. Over time they have created a multitude of unique and brands which they have applied their process to, starting with Zara, but expanding with Tempe, Pull and Bear, Lefties, Bershka, Zara Home, Oysho and Uterque, and acquiring brands like Massimo Dutti. Thanks to this success, the company has consistently posted strong performance, trades at 4.57x its book UAFRS-adjusted asset values and the company’s stock is up 145% in the past 5 years.

The Priceline Group Inc.

You may ask how a company in an industry as fragmented as the online travel industry, with names like Booking.com, Priceline.com, Agoda.com, Kayak.com, Cheapflights, Rentalcars.com, Expedia.com, CheapTickets.com, Hotels.com, Hotwire.com, Orbitz.com, Travelocity.com and trivago.com, could truly have differentiated itself enough and innovated enough to beat its peers. However the space is truly a duopoly, led by Priceline and Expedia. They have tricked consumers in to thinking they have choice, but all of those websites listed above are controlled by Priceline and Expedia. Priceline has innovated in two ways. First, they have identified specific customer types and tailored an offering specifically for that kind of customer. Also, they have designed a back-end of their platform to be able to power each of those offerings, limiting their necessary invested capital for their strategy. By pursuing this strategy, and acquiring other companies to then have powered by their back end, they have been able to produce phenomenal returns, producing a UAFRS-adjusted ROA that was 500% last year, when the corporate average return in the US is close to 10%. The market has rewarded them, leading to the company trading at a multiple that is 103x their book UAFRS-adjusted asset values, and causing the stock to rise 145% in the past 5 years.

Fevertree Drinks Plc

Fevertree Drinks has not been around for long, but they’ve made the most of their time in the beverages industry to make a big impact. Growing revenues by over 40% for 4 years in a row in the stodgy fizzy beverage industry can make the competition look rather flat. After helping move the Plymouth Gin brand into the premium market, Fevertree co-founder Charles Rolls realized there was no real offering in the premium mixer space to pair with. Tapping into the consumer demand for a premium cocktail, and the move towards natural ingredients, Fevertree started innovating beverages to be used for mixers and consumption at a premium price point. Since creating their first product, Fevertree has continued innovating new products to take new markets in the premium beverage space, now offering 8 different products to pair perfectly in a premium liquor in a mixed beverage. Their success in innovating a new niche market and owning it has led to UAFRS-adjusted ROA that is impressive even for the high Adjusted ROA beverage industry, with a 92% Adjusted ROA. The market has rewarded this impressive performance, with the company trading at a 62x multiple of their UAFRS-adjusted book assets, and with the company’s stock up 800% since they IPO’d in late 2014.

Veeva Systems Inc.

The healthcare industry is a heavily regulated space, and the pharmaceuticals industry sales process is one particularly heavily regulated area. As this industry grew more regulated over the years, the risk/reward of pharmaceutical sales continued to skew more toward the risk side. Each time a sales person went out to contact customers, if there was any view of impropriety, the risk for the drug manufacturer was sizable. Also, with the proliferation of offerings and business models, the ability to properly target in a field of healthcare professionals that was growing more diverse in specialties and business situations was essential. Within such a challenging environment, Veeva saw an opportunity, an opportunity that has helped them drive annual revenue growth of over 30% over the past 6 years. If they could provide a customized customer relationship management offering tailored to this space, and all the regulatory requirements that are needed, they could reduce the risk and improve the returns for pharmaceutical and biotechnology companies. Identifying and profiting from this niche has helped them generate sustained +35% Adjusted ROA over the last 6 years. However, the company has continued to innovate. They’ve used their position inside these companies to expand to other industry specific pain-points, including their Veeva Network solution for drug master data management to track which customers are using their products. They also expanded to custom offerings such as Veeva Vault, to help management track their clinical data. This successful innovation of new products to solve their customers pain points has also led to the company continuing to grow UAFRS-adjusted Assets by +30% a year over the past several years. The market has rewarded this impressive performance, with the company trading at a 48x multiple of their UAFRS-adjusted book earnings, and with the company’s stock up almost 200% from trough levels in 2014.

Illumina, Inc.

The Human Genome Project was declared complete in 2003, but the market leader in genome sequencing didn’t wait for a whole new market to arrive before they started developing the tools needed. Illumina, the market leader in genome sequencing products, has seen revenue grow by 100x since the Human Genome Project wrapped. They’ve achieved this through consistently innovating on new solutions, investing more than 15% of their revenue in R&D each year over the past 19 years. This includes strategically partnering with academic institutions, and industry thought leaders to understand what customer needs were, and creating new product lines over and over to star at the front of innovation in their market. Thanks to this commitment to innovation and success in execution, the company has able to sustain a +20% UAFRS-adjusted ROA each year over the past 10 years, while consistently investing and growing by more than 15% a year. The market has recognized this innovation and continues to pay a premium for the company, with the company trading at a 29x multiple on their UAFRS-adjusted earnings, highlighting market expectations for continued expansion. The company’s strong innovation track record is also why the company’s stock is up from $1.20 in April 2003 when the Human Genome Project finished, to $177.31 today.

Douglas Dynamics, Inc.

Douglas Dynamics has successfully buried its competition in the snow they’ve helped clients remove from streets, parking lots, driveways, walkways and anywhere else. It’s hard to sustainably own 50% market share in your niche without understanding client needs and meeting them. Douglas has used several avenues of innovation to help them sustain a UAFRS-adjusted ROA of over 20% each year for the past 9 years. First, they have identified overlapping niches for their products, to be able to innovate around things like new products that meet two different customer goals, such as snow removal and ice removal, to meet customer needs and take market share. They’ve also been able to take new innovations they’ve had in one market, such as the commercial market, and expand them into different customer bases to drive growth and market share. Thanks to the company’s strategic innovation and acquisition strategy, the market has paid a premium for the company, with the company trading at 4.1x their UAFRS-adjusted asset base. The company has also been rewarded with 158% stock price appreciation since the company went public in 2010 thanks to their strong innovation strategy.

Mobileye N.V.

Self-driving vehicles are quickly becoming a reality of the present, as opposed to a hope for the future, and Mobileye is a major reason for this. Mobileye’s initial innovation centered around taking a complex system, where most innovators in the accident detection business had focused on complex multiple lense and radar solutions in their offerings, and identifying a way to provide better quality with a more simple (single lense) solution. Then Mobileye kept on innovating, expanding the functionality of their technology to facilitate features such as adaptive cruise control, lane detection, and other functionalities, continuing to innovate around their core offering. They continued to expand their innovation, as they partnered with Tesla to develop Tesla’s self-driving solution. Mobileye’s commitment to, and success in, investing has not just been clear in their products, but in their performance too. The company has consistently generated a UAFRS-adjusted ROA better than 25%, which has been better than 50% in the last 2 years, and has never seen UAFRS-adjusted Asset growth drop below 25%. The market has rewarded the company’s success in investing in innovation, as the company currently trades at a 55x UAFRS-based multiple to earnings, and Intel clearly has recognized the company’s innovation, as they have announced they plan to acquire the company for a 34.4% premium to the company’s stock price the day before the acquisition was announced.

Palo Alto Networks, Inc.

Palo Alto has been at the forefront of firewall protection innovation since the company was founded in 2005. Since then, they have consistently layered new innovation to solve incremental problems as security risks on the internet grow. The company has steadily expanded their suite of offerings from the next generation firewall they started with to the Mobile Security Manager to be able to apply firewall-level protection to mobile devices, down to TRAPS, a client end-point protection system. By taking a similar need, and finding new niches and thereby new needed solutions for that pain-point across different markets, Palo Alto has consistently been able to grow their business, with annual UAFRS-adjusted Asset growth of over 35% over the past 6 years. Their successful innovation has enabled them to produce growth and have stable UAFRS-adjusted ROA of better than 25%, even as many competitors, like Checkpoint, have steadily seen their returns compress due to competitive pressures.

IPG Photonics Corporation

IPG has successfully parlayed an expertise in lasers into global leadership in innovation for uses of lasers across end markets as broad as materials processing (cutting), entertainment, biotechnology and communications. IPG has taken their core expertise in lasers, and by working with their customers, they’ve identified new areas of need and new solutions they can offer. IPG’s success in innovating has enabled them to consistently generate a +20% UAFRS-adjusted ROA over the past 7 years, and to triple sales over that same time period. The market has recognized IPG’s excellent innovation and growth, and rewarded them with 739% stock appreciation since 2010.

Broadcom Limited

Broadcom Limited (a combination of Avago Technologies and Broadcom Corporation post-merger in 2016) has successfully sustained robust +15% Adjusted-ROA and +10% Adjusted Asset growth over the past 10 years in the hyper-cyclical and competitive semiconductors industry by being committed to continuously innovating and recreating their business. The legacy Avago business has repeatedly sold mature businesses that could begin to fade to competitors over the past eight years, while continuously seeing revenues grow, because they have successfully identified businesses and products to grow into to fuel their growth. The company sold their I/O solutions business in 2005, to invest in optical and acoustic businesses and then identified the opportunity to move towards storage and data center solutions, and made more investments in that area through 2013. They subsequently sold their SSD business and began investing in integrated circuits before combining with Broadcom, who had a strength in mobile and Internet of Things. Legacy Broadcom had followed a similar path, steadily staying ahead of trends in the semi space through their investments to position themselves consistently for growth and strong profitability. Absent the company’s successful vision on innovation, they would have suffered the cyclicality the rest of the semiconductor space has faced. But thanks to their strong strategic vision and innovation, the company has seen their stock price appreciate by 1,351% since the company IPO’d in 2009.

Successful innovation is rewarded by the market

As this small subset of great innovators highlights, smart investment in innovation can drive growth, extend periods of superior profitability, and is rewarded by the market. Going forward, GIMI and Valens will continue to highlight successful innovators, focused across the market sectors, to highlight why innovation is so important to creating value for a company.

List of Top 10 Corporate Innovators The Market is Rewarding:

16 Feb 2018 ixl

Uncategorized

Behind the scenes: The Global Challenge of Recruiting Innovators

With more than 300 top MBA programs spanning 6 continents, and nearly 1,000 related graduate programs in engineering, healthcare, or the sciences, it takes a full-time effort for the Innovation Olympics deliver five global, talented, appropriate, and interdisciplinary teams of five students for each sponsor’s challenge every academic quarter.

“It is a large challenge. It helps that we’re the largest, most experienced innovation competition in the world,” says Arnaldo Arnal, manager of the Innovation Olympics student-recruiting efforts. “Fortunately, people know our name, and we’ve developed local knowledge and continuing relationships with clubs and university administrators.”

It also takes a team of 5 people, available each quarter of the year, to renew campus relationships, work the Innovation Olympic’s alumni network, and to track the likely challenges.

“We have relationships with about 300 schools out of more than 800 MBA programs in the world,” continues Arnal, “We focus on top schools, but that definition varies. It is not just about being a top 10 MBA program or even a fixed definition of top 10%.”

Arnal explains that clients need a mix of broad diversity and, sometimes, narrow disciplinary or geographic focus. “For one client, it will be about finding top schools in Latin America or a region within Asia. Other clients are looking for top industry connections. For others, it means finding schools that offer not only MBAs, but also masters or PhD candidates for particular hard science, engineering, or medical field. With overlapping and alternative definitions of what’s best, we find there are about 300 schools that are tops on somebody’s list.”

IXL Innovation Olympics: Key Account Management for student teams’ recruitment

“Mixing things up is also important: Innovation requires fresh perspectives, and clients are not going to get the freshest viewpoints if they keep going back to the same university partners they always turn to.” says Ronald Jonash, who pioneered the Innovation Olympics with early partner Hult International Business School. “We try to give clients a mix of what they asked for, along with teams that they’d have never have thought to try.”

The same goes for the student teams, Arnal notes, “The students, too, need to stretch themselves. We’re proud to have Global 50 clients like P&G and IBM presenting challenges, but almost by definition, disruptive change can come from companies of almost any size, industry, or heritage, and any organization looking for growth can be a great setting for defining a breakthrough new business.”

In the Summer 2017 cycle of the IXL Innovation Olympics, 7 corporate clients and governmental institutions from the U.S.A., Brasil and Colombia are seeking for innovative solutions and new growth opportunities.

They are working together with almost most 200 talented students from best universities worldwide: Boston University (U.S.A.), University of Chicago (U.S.A.), University of California Berkeley (U.S.A.), Federal University of Minas Gerais (Brasil), CESA (Colombia), London School of Economics and Social Sciences (U.K.), China Europe International Business School (China) and many other distinguished universities.

During the course of the Summer 2017 IXL Innovation Olympics, almost 150 students obtained Innovation Management Certification from Global Innovation Management Institute (GIMI).

16 Feb 2018 ixl

Uncategorized

New Year’s Message: Is 2018 the Year for 10x Growth for You?

Last year was great time for IXL Center and the companies we partnered with. In 2017, we helped hundreds of organizations, large and small, to find their own paths towards 10x growth through innovation. And because this success was based on the work of people collaborating in teams large and small, I sometimes pondered how the innovation lessons we teach to companies might also be applied to the personal growth of individuals. Last year, our tools helped to generate millions of dollars in new purchase orders and hundreds of unexpected partnerships and new paths. Perhaps, they can also help you look at things differently and capture more value from your life in 2018?

To answer this line of inquiry, I have compiled five IXL Center innovation techniques and tools that could be useful in your own pursuit of personal 10x growth:

1. Get more and better dots: Those who have more and better dots are able to see the bigger picture and connect those dots better. For companies, this means diverging and looking beyond their own sandbox to collect those dots. For you, this means taking the time – during the holidays as well as throughout the whole year – to listen more to those around you, allowing yourself to read and observe more outside of your usual social and news feeds. Before diving into your 2018 resolutions, talk to your family and friends and get unstuck from the biases you picked up in 2017.

2. Connect, disconnect, and reconnect the dots: The beginning of a new year is a time reflection, which is an often undervalued skill. Based on our observations across hundreds of organizations, we’ve learned that people often opt for the quickest and most obvious solutions to the problems they face. In contrast, successful innovation results from having the time and discipline to question those first choices, which allows you to search for ways to connect the dots differently. For instance, if you are thinking about making a big change in your career in the new year, make sure you don’t simply consider the obvious industries, functions and rewards. Take the time to think about the fundamental pieces of what you do and what you are passionate about. In short, what are your needs beyond the usual suspects of prestige and comp?

3. Price iteration and the unexpected into your plans: Innovation, like personal growth, isn’t a straight line. When we ask executives to draw the path from A to B in an innovation process, we get straight lines, steps, or logarithmic functions. In reality, the path of innovation often looks like squiggly lines drawn by a toddler. The path to growth, like innovation, is full of unexpected turns and setbacks, which requires you to be flexible and be ready to iterate on your initial plan to achieve the goal. Many times, the planned goal isn’t what you expected and you discover that there is something even more exciting and interesting than you had planned. Remain open to the unexpected and you will do much better. Companies in our program that iterate on their plans more than 5 times are 82% more likely to get a purchase order by the end. Let me know how many times you iterate on your plans in 2018 and how well you do. Maybe this time next year we can do a nice study around this!

4. Make your ideas bigger: In organizations, we always urge teams to make their innovation concepts bigger. For instance, when a company proposes to sell their new product to a local client in Colombia, we ask them how they can sell it to the entire United States. When a client claims that they can charge a one-time fee of $200, we ask them how they can charge $200 every year from those same clients through other means and business models. You get the idea. We do this for 2 main reasons. 1) It is much easier to get teams and organizations excited and willing to invest around big ideas, and 2) organizations and partners tend to chip away at ideas to “de-risk” them along the way, making them tiny fractions of what they were in their initial glory by the time they get to market. This is the organizational equivalent of the famous quote: “Shoot for the moon. Even if you miss, you’ll land among the stars.” I can’t emphasize how important this is for organizations to build momentum and impact. For you, make sure your plans or goals are big and exciting! Otherwise, how can you expect to gather up the energy and resources to see it through?

5. Use partners to go fast and reduce risk: Companies that focus on generating alliances are 70% more likely to generate purchase orders by the end of our 10x SME program. As you make your plans for 2018, think about the friends or organizations that could help you and share the burden and, of course, the rewards. In 2016, I made a resolution to lose weight, but it’s tough going at it alone. I created a WhatsApp group called WhatsFat with some friends where we reported our weights biweekly in a competition to achieve our own weight loss goals. It was a resounding success and very entertaining.

Finally, I would like to wish everyone at IXL Center, Global Innovation Management Institute and its members, and all the organizations, and students I have had the honor to work with this year, a happy and prosperous 2018. May all your aspirations (personal and professional) come true 10 times over.