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2. Why you need Predictive Innovation

2.Why you need Predictive Innovation®

WikiSpeed

  • 100 miles-per-gallon
  • 5-star crash test equivalency
  • $25,000 sales price
  • 0 – 60 in less than 5 seconds
  • 149 miles-per-hour top speed
  • Cargo room fits 20 bags of groceries

Designed and built by
an international team
of volunteers
in just 3 months

Your competition is global, constantly improving, and can always undercut your price. You must innovate to survive.

Cheap foreign labor is not your biggest threat. Automation and user collaboration are dropping prices below cheap all the way to free. Can you compete with free?

If you use old methods you will fail. Even if you copy their methods you will never catch up. The only way to get ahead and stay ahead is to think and act predictively.

Thomas Edison's trial and error approach died 100 years ago with the horse drawn wagon. Fail-fast, fail often only leads to failure. You have limited time and budget but infinite competition. You need to know what customers will want before they start demanding it. You also need to know the most profitable way to deliver it before you start. Plus, you need to see future challenges and have solutions ready when challenges pop up.

Return on investment is the point of innovation. Regardless of how creative or fashionable a product is, if everyone involved doesn't receive a significant benefit it will fail. That means investors, workers, and customers all must receive enough benefit to get them to be happy with their investment of time and money.

Maximize profits and minimize investment. That means providing the most benefit to the most people while using the least time and materials to do it. You need to know both what to make and how to make it. You also must see the entire market so you don't miss valuable opportunities. Random approaches can't guarantee you collect all the value in the most efficient order. Only a structured system like Predictive Innovation can minimize investment, reduce risk, and maximize reward.

Old Way

Staged Gate has 40% Failure Rate at Launch

Staged Gate has 40% Failure Rate at Launch

The most common approach to innovation is:

  1. Brainstorm a lot of creative ideas
  2. Filter out bad ideas
  3. Launch the product
  4. Pray

That process is called Staged Gate. It's used by companies worldwide. Despite over 50 years of improvement, 40% of products launched, fail. Nearly random!

The average Staged Gate process requires 300 ideas to get 1 success. (Stevens & Burley 1997)  All of that filtering costs a lot of time and money. It costs 9 times more than just launching a single project. That extra expense means that only ideas expected to have huge profits are even considered. The smaller less risky projects are ignored because they won't make up for all of that time and money wasted on filtering.

It also means you need a huge up front investment to start. For small companies that just isn't possible. The smaller company can't risk the failure of trying to innovate so it is guaranteed the failure of competition.

Before you blame Staged Gate, that 40% rate doesn't happen to everyone who uses it.

Study at Fortune 500 Companies shows Predictive Innovation approach 95 Times More Profitable

Study at Fortune 500 Companies shows Predictive Innovation approach 95 Times More Profitable

A study of 576 projects at 360 Fortune 500 companies revealed a dramatic difference in results. (Stevens & Burley 2003) 2

All of the projects use similar Staged Gate processes but the Top 1/3 had a 96% success rate and were 95 times as profitable.

What did the top performers do differently?

There are two types of innovation systems: Thinking Systems and Doing Systems. Staged Gate is a Doing System. It manages risk.

Common Innovation SystemsCreativity is:

  • Unpredictable
  • Unreliable
  • Unfocused
  • Inefficient
  • Emotional
  • Person Specific

The creativity brainstorming approach to generating ideas causes all of the risk that Staged Gate tries to manage. Replace the Thinking System and all that risk goes away. You can get 96% success and 95 times more profits.

New Approach: Predictive Innovation®

Using Predictive Innovation for your Thinking System turns everything upside down. Instead of starting with a bunch of random ideas, it starts with objective criteria organized into a structure so nothing is overlooked.

Build Up a Family of Products & ServicesInstead of filtering down, you build up. You start with a stable foundation that supports growth of a family of interrelated products.

You multiply profits while reducing risk. All of your work and investment supports future innovation. Profit margins increase over time instead of decrease. And instead of struggling for new ideas it gets easier and easier as you build on your strategy.

Seeing the entire idea space makes the difference.

Studying patents and product literature of thousands of products shows that most products cover less than 1% of their innovation potential and most industries only cover 13%. That leaves over 80% of the idea space unexplored.

Risk Caused by Unexplored Ideas Space

That unexplored idea space is missed opportunity. It's also increased risk from competition or that the easier higher profit idea was never tried. Notice that the ratios of the idea space are nearly identical to the profits of the projects in the Staged Gate study. The Top performers explored more of the idea space resulting in 96% success and 95 times more profits.

Benefits

Increase profits

  • See all the ideas customers will want, and ideas they won't
  • Start development and launch at the right time
  • Make a family of products & services to multiply value
  • Build on a core you control

Reduces Risk

  • Start earlier while avoiding rushing
  • Reduce time to market
  • See all the alternatives so you choose the best for you
  • Quickly find solutions to technical challenges

Maximizes ROI

  • Higher profit margins with the right product at the right time
  • Higher success rate
  • Find hidden value
  • Lower costs by avoiding building costly infrastructure
  • Quicker break-even
  • More projects by seeing connections between projects

Secures Long Term Value

  • Stay ahead of competition
  • Use competitors to your advantage
  • Block threats with advanced knowledge and having strategies in place to deal with change
  • Develop markets you can own
  • Quickly respond to events

Ways to use Predictive Innovation

New product development

Finding and developing new products and services is one way to use Predictive Innovation.

Traditional new product development (NPD) and even Agile/Lean approaches tend to require:

  • Different design for each product generation.
  • Different manufacturing processes for each product generation.
  • Expensive and time-consuming launches for each new product generation.
  • Difficulty standardizing components & supplies.

Using Predictive Innovation for new product development (NPD) turns all of that around, it enables:

  • one design for multiple products & multiple generations of a product thus multiplying return on investment
  • one manufacturing process for multiple products and generations, with easy switching from one to another thus multiplying productivity
  • efficient standardization of components and supplies thus simplifying processes and reducing overhead & startup costs.

Process improvement

Improving your processes helps you gain an advantage even if you are selling a commodity product. Internal innovations are one of the most valuable ways to use Predictive Innovation.

Business strategy

Strategy turns a good idea into a successful business. The full spectrum view only available with Predictive Innovation gives you the advantage of the most successful strategies.

Marketing

Knowing how to communicate with customers is just as important as having what they want. Predictive Innovation gives you a structured approach to understand and translate fuzzy desires into objective results you can measure.

Intellectual Property

Smart people recognize that intangible assets have become more valuable than tangible assets. Protecting their intellectual property is often a major concern to inventors & business people. However, that isn't your goal. Your real goal is to maximize the value you receive from all available intellectual property. Only Predictive Innovation can do that.

Patents & copyrights are frequently associated with innovation but that is a very incomplete view of the total value. Only a portion of all intellectual property can be patented or copyrighted.

Patented

Not Patented

Patentable

Your patents

Unclaimed idea space

Non-patentable

Other people's patents

Public domain

As much as 75% of the idea space can't be patented or copyrighted but you still can profit if you know how.

Predictive Innovation increases the value of intellectual property more in ways traditional approaches can't because Predictive Innovation can efficiently describe the entire idea space. Seeing the entire idea space helps you maximize the value of intellectual property, minimize the risk, and neutralize threats.

When you describe the entire idea space you can:

  • Build Patent Fences to protect the entire idea space
  • Find alternatives to litigation
  • Increase the overall value
  • Limit damage from infringement
  • Discourage litigation from patent trolls
  • Avoid conflicts in the market place

This is just a sampling of the ways Predictive Innovation helps with intellectual property.

Investment decision making

Predictive Innovation is the only way to measure the true value of ideas before spending time or money on development.

Calculate the full value and the real risk. See the amount of the entire idea space your investment will buy, not just a share of a market.

Core Skills

Core Skills: Who, What, How, When, Where, Why

The goal of this book is to provide you with the core skills needed to start using Predictive Innovation. You will learn the basics that apply to everything else you will do with Predictive Innovation.

There are six key pieces of knowledge provided by Predictive Innovation: What customers want; How to make it; When to make and release it; Why customers want it; Who uses, buys and makes it; and Where to focus on.

What

The most important part of innovation is knowing what customers want. Predictive Innovation shows you in advance what customers will want so that you are always two steps ahead. What isn't just the basic idea but the precise requirements needed to satisfy both customers and providers of innovations. Knowing what to make in advance also makes it possible to create business strategies that neutralize competition. You are in control.

How

A good idea isn't good if you can't profitably deliver it. Predictive Innovation shows you how to solve technical challenges. You eliminate barriers to develop and deliver products, services and strategies.

You are prepared with inexpensive easy-to-do responses to even unexpected changes. That keeps you focused on profitably satisfying customers' unmet desires.

When

Predicting the right time to start developing and the right time to release a new product is a key value of Predictive Innovation®. Starting too soon will lead to wasted effort and money and starting too late increases risk of competition and reduced profit margins. Predictive Innovation will help you create a step-by-step strategy to deliver exactly the right product at exactly the right time to maximize profits and minimize risk.

Where

Where is more than a geographic location. Where is about relationships. Where in your organization or process to focus efforts to improve? Where are your products in the progression of innovation towards the ideal? Where helps you measure your success, how far yet to achieve, and pinpoint the best use of your resources.

Who

Who are your potential customers? Who will make it? Who will invest? Innovations satisfy desires of people. Understanding Who is crucial to successful innovation.

Finding new customers for existing products is the highest profit, lowest risk way of innovating. Predictive Innovation® will guide you in finding all the potential markets for your existing and new products. This helps you achieve your goals faster and easier.

Who will make the product or deliver the service? Doing everything under one roof is not the only way to deliver a product. Finding the best combination of in-house, outsourced, open-sourced, and un-sourced can be the difference between success and failure. Predictive Innovation® shows you all of the options and how to quickly identify the best combination for you.

Investors want assurance of low risk and large profits. Again there are more investors than the traditional sources. Seeing all sources of investment gets your idea off the drawing board and into customers' hands.

Why

Understanding Why customers want a product is essential for creating the most effective communication. Also you need to know Why you are making it, Why investors will support it. To communicate most effectively you need to speak using the words and feelings they associate with getting What they want.

Get Started

Learn the core skills and start thinking predictively.

Acknowledgments Chapter 3