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Semelhante a Innovation: Learning from Success and Failure (20)
Innovation: Learning from Success and Failure
- 4. Outline
1. Innovation Imperative
2. Learning from Failure
3. Innovation Process
© 2008 Chunka Mui | http://www.BillionDollarLessons.com
- 5. We tend to overestimate technology in the
short term and underestimate it in the long
term.
– Roy Amara
© 2008 Chunka Mui | http://www.BillionDollarLessons.com
- 6. Change
Technology improves
exponentially
Killer App
opportunities
Organizations change
incrementally
Time
See “Unleashing the Killer App”
(Harvard Business School Press, 1998)
© 2008 Chunka Mui | http://www.BillionDollarLessons.com
- 7. The future is here,
it’s just not evenly distributed.
– William Gibson
© 2008 Chunka Mui | http://www.BillionDollarLessons.com
- 9. Economics
Search costs – buyers and
Transaction Costs sellers finding each other
Price Information costs –
Understanding capabilities and
needs
Bargaining costs – Setting
terms of a sale or contract
Decision costs – Evaluating
terms, quality, worthiness
Policing costs – Ensuring terms
of sale are met
Enforcement costs – Ensuring
unsatisfactory terms are remedied,
including litigation
Total Cost
See “Unleashing the Killer App”
(Harvard Business School Press, 1998)
© 2008 Chunka Mui | http://www.BillionDollarLessons.com
- 10. A Killer App that feeds on Transaction Costs
Text
© 2008 Chunka Mui | http://www.BillionDollarLessons.com
- 11. Traditional Online
300 News NY
Google
Corp Times
225 2007 Revenue $16.6 B $ 28.7 B $3.2 B
EBITD margin 36.5% 19.0% 13.7%
150
P/E
41.2 10.6 13.6
Multiple
75
Market Value $184 B $46.7 B $2.5 B
0
Advertising Dollars
Sources: Advertising Age, Google Finance
© 2008 Chunka Mui | http://www.BillionDollarLessons.com
- 12. Raising the Benchmarks
for the Offline World
AMZN
Lessons
1. Use “search” as the
2007 Revenue $14.8 B
springboard
2. Personalize and target with
EBITD margin
recommendations 6.2%
3. Enhance confidence with
customer reviews P/E
68.8
4. Cement satisfaction with Multiple
flawless fulfillment
5. Build buzz by sharing the love
Market Value $34.1 B
6. Enlist customers as sales force
7. Expand selection through
partnerships
See “Amazon Raises the Benchmarks for the Off-
line World.” Amazon e-Doc. March 2005.
© 2008 Chunka Mui | http://www.BillionDollarLessons.com
- 13. Smart Products, Connected Customers and
a Closed Information Loop
© 2008 Chunka Mui | http://www.BillionDollarLessons.com
- 14. Social Networks
MySpace Facebook
February 2008
68 32.4
Unique Visitors (M)
Ave. Daily Visitors (M) 17.7 8.6
Minutes per Visitor 242 161
Sources: Comscore Networks
© 2008 Chunka Mui | http://www.BillionDollarLessons.com
- 15. Mass Collaboration
• 75K active
contributors
• 2.4M+ articles in
English
• 10.7M+ articles in
250+ languages
• 50M+ unique
visitors per
month
• Top 10 web site
© 2008 Chunka Mui | http://www.BillionDollarLessons.com
- 17. Communities of Patients:
PatientsLikeMe.com
“an incendiary
force in the
health-care
industry.”
--The New York Times
© 2008 Chunka Mui | http://www.BillionDollarLessons.com
- 20. Questions
• Under what scenarios might the nature of
competition change dramatically? For the better?
For the worse?
• How might you radically redesign your core product?
• How might you “close the loop” with partners and
patients to enhance satisfaction and build a lasting,
valuable relationship?
• How might you leverage mass collaboration and user
generated content to strengthen your brand,
enhance customer experience, and build market
share?
© 2008 Chunka Mui | http://www.BillionDollarLessons.com
- 21. Outline
1. Innovation Imperative
2. Learning from Failure
3. Innovation Process
© 2008 Chunka Mui | http://www.BillionDollarLessons.com
- 22. An Exercise in Focus
© 2008 Chunka Mui | http://www.BillionDollarLessons.com
- 23. An Exercise in Change Perception
© 2008 Chunka Mui | http://www.BillionDollarLessons.com
- 24. THE FINDINGS:
46% of failures could have been avoided
Most were caused by flawed strategies,
not inept execution or exogenous factors
THE DATA: STUDY OF 750 MAJOR U.S. BUSINESS FAILURES, INVOLVING
BILLIONS IN LOSSES FROM WRITE-OFFS, DISCONTINUED OPERATIONS, AND
BANKRUPTCIES, 1981-2005
© 2008 Chunka Mui | http://www.BillionDollarLessons.com
- 25. Expanding into adjacent markets is the
easiest way to grow.*
– Jack Welch
* For example, by selling new products to existing
customers or existing products to new
customers, or via new channels.
© 2008 Chunka Mui | http://www.BillionDollarLessons.com
- 26. Misjudged Adjacencies
Example Strategy
Laidlaw’s move into Apply logistics expertise
ambulance services from school-bus operations
to health care transport
Stumbling points
Lacked expertise in
regulation and negotiating
health-care payments
Result
$1.8B writeoff
© 2008 Chunka Mui | http://www.BillionDollarLessons.com
- 27. “Laidlaw realized too late that ambulances
are a health-care business, with complex
regulatory issues, not a transport business.”
– John Grainger,
Laidlaw CEO
© 2008 Chunka Mui | http://www.BillionDollarLessons.com
- 28. Adjacencies: Red Flags
1. Fleeing from the core
2. Lack of expertise
3. Overestimating the core’s strengths
4. The fickle customer
© 2008 Chunka Mui | http://www.BillionDollarLessons.com
- 29. Seven Failure Patterns
1. Illusions of Synergy
2. Faulty Financial Engineering: Taking a shortcut through the
numbers
3. Deflated Rollups: Buying a string of rock bands to form an
orchestra
4. Staying the misguided course: Threat? What threat?
5. Misjudged Adjacencies: The grass isn’t always greater.
6. Fumbling technology: Riding the wrong technology curve
7. Consolidation blues: Doubling down on a bad hand
© 2008 Chunka Mui | http://www.BillionDollarLessons.com
- 30. Synergy Mirage
Example Strategy
Unum’s merger with Combine two disability
Provident insurers and cross-sell to
each other’s customers
Stumbling points
Incompatible customers,
sales models, and
information systems
Result
50%+ drop in market value
© 2008 Chunka Mui | http://www.BillionDollarLessons.com
- 31. Faulty Financial Engineering
Example Strategy
Green Tree Financial Grow by aggressively selling long-term
mortgages on trailer homes
Stumbling points
No incentive to qualify buyers because
profits came from origination and
securitization; accounting used
unrealistic assumptions about defaults
Result
$3B in write-offs and bankruptcy for
parent company (Conseco Financial)
© 2008 Chunka Mui | http://www.BillionDollarLessons.com
- 32. Deflated Rollups
Example Strategy
Medpartners’ massive Take administrative load off
rollup of small physician doctors, gain efficiency through
practices in 1990s scale and better processes
Stumbling points
Disparate IT systems; physician
resistance to common practices
Result
$2B+ in losses in 1997-98;
exited practice management
business
© 2008 Chunka Mui | http://www.BillionDollarLessons.com
- 33. Stubbornly Staying the Course
Example Strategy
Eastman Kodak Stick with high-margin traditional
photo film and processes
Stumbling points
Low-margin digital technology
replaced film and prints
Result
75% drop in market value and
two-thirds reduction in company
workforce
© 2008 Chunka Mui | http://www.BillionDollarLessons.com
- 34. “But it was filmless
photography, so
management’s
reaction was, ‘that’s
cute — but don’t tell
anyone about it.’ ”
Steve Sasson, Kodak Engineer
Inventor of the Digital Camera
Source: New York Times, 5/2/2008
© 2008 Chunka Mui | http://www.BillionDollarLessons.com
- 35. Outline
1. Innovation Imperative
2. Learning from Failure
3. Innovation Process
© 2008 Chunka Mui | http://www.BillionDollarLessons.com
- 36. Innovation Process
Contrary to popular belief, “flashes of
genius” are uncommonly rare. Innovation
begins with the analysis of opportunities. The
search must be organized, and must be done
on a regular, systematic basis.
– Peter Drucker
© 2008 Chunka Mui | http://www.BillionDollarLessons.com
- 37. The Challenge of Too Many Ideas
Options
Enabling
Advantage
Competitive Impact
ROI
Required
Parity
Disadvantage
Stay In Business Return on Investment Option Creating
Investment Categories
© 2008 Chunka Mui | http://www.BillionDollarLessons.com
- 38. Underperformer
Advantage
Competitive Impact
Parity
Disadvantage
Note: Size of circle is
proportional to amount Stay In Business Return on Investment Option Creating
of investment
Investment Categories
© 2008 Chunka Mui | http://www.BillionDollarLessons.com
- 39. Commodity
Advantage
Competitive Impact
Parity
Disadvantage
Note: Size of circle is
proportional to amount Stay In Business Return on Investment Option Creating
of investment
Investment Categories
© 2008 Chunka Mui | http://www.BillionDollarLessons.com
- 40. Retooling
Advantage
Competitive Impact
Parity
Disadvantage
Note: Size of circle is
proportional to amount Stay In Business Return on Investment Option Creating
of investment
Investment Categories
© 2008 Chunka Mui | http://www.BillionDollarLessons.com
- 41. Frenzy
Advantage
Competitive Impact
Parity
Disadvantage
Note: Size of circle is
proportional to amount Stay In Business Return on Investment Option Creating
of investment
Investment Categories
© 2008 Chunka Mui | http://www.BillionDollarLessons.com
- 42. Market Leader
Advantage
Competitive Impact
Parity
Disadvantage
Note: Size of circle is
proportional to amount Stay In Business Return on Investment Option Creating
of investment
Investment Categories
© 2008 Chunka Mui | http://www.BillionDollarLessons.com
- 43. Decisions of the kind the executive has to
make ... are made well only if based on
conflicting views, the dialogue between
different points of view, the choice between
different judgements.
– Peter Drucker
© 2008 Chunka Mui | http://www.BillionDollarLessons.com
- 44. © The New Yorker Collection 1979 Henry Martin from cartoonbank.com. All Rights Reserved.
- 47. Three Models
Alfred P. Sloan Ancient Persians Catholic Church
© 2008 Chunka Mui | http://www.BillionDollarLessons.com
- 48. Avoiding the Same Mistakes
Empower Internal Devil’s Advocates to Ask
the Tough Questions
• Is it a realistic strategy for long term success?
• What can we learn from history?
• Have vital information and divergent viewpoints
reached decision makers?
• Have we assessed the true advantages--and
liabilities--that come with scale?
• Have we considered all our options?
• Would you personally bet on it?
© 2008 Chunka Mui | http://www.BillionDollarLessons.com
- 49. The Best Defense
• Transparent, even to
An independent devil’s
the Board
advocate review
• Led by a trusted
outsider
• Offers fresh
perspectives
• Focuses on facts, not
emotion or intuition
• Delivers questions,
not answers
© 2008 Chunka Mui | http://www.BillionDollarLessons.com
- 50. Epilogue
• Looking for the best option, not perfection
• There is no win to guarantee success
• Business is a contact sport
• Ask the tough questions
• Make the strategy stronger or identify fatal
flaws, whichever needs to be the case
© 2008 Chunka Mui | http://www.BillionDollarLessons.com
- 51. The Future
The best way to predict the future
is to invent it.
– Alan Kay
© 2008 Chunka Mui | http://www.BillionDollarLessons.com
- 52. Biography
Chunka Mui’s perspectives have been shaped by
more than 25 years of research, consulting,
management and entrepreneurship. He is the co-
author of the best-selling Unleashing the Killer
App, Digital Strategies for Market Dominance
(Harvard Business School Press, 1998). The Wall
Street Journal recently named the book one of
the five best books on business and the
Internet. His new book, Billion-Dollar Lessons,
What You Can Learn from the Most Inexcusable
Business Failures of the Last 25 Years will be
released in September 2008 by Portfolio, an
imprint of Penguin USA. A companion article,
Seven Ways to Fail Big, will be published in the
September 2008 issue of the Harvard Business
Review.
Chunka is an independent business advisor. He
is also a fellow with Diamond Management and
Technology Consultants, a global consulting firm
headquartered in Chicago. He holds a B.S. in
electrical engineering and computer science
from MIT.
© 2008 Chunka Mui | http://www.BillionDollarLessons.com