1. The Upper Hand of Disruptive Innovation: Driving New Product Development Success Arik R. Johnson UWEC Entrepreneur Program Development & Leadership Institute Eau Claire, Wisconsin, USA CEO & Managing Director, Aurora WDC Two-Hour Workshop [email_address] Thursday 05 April 2007

6. Analysis is Key The Difference Between Data and Intelligence “ The competitor would make a good acquisition candidate. Its lean & mean structure would fit well with our current operations.” Intelligence: The insight that will allow you to make an informed decision “ After gathering more operational information and running a side-by-side profit & loss analysis, it appears the competitor has become highly efficient. It exceeds industry standards and has become a best-in-class facility.” Analysis: Distilled information “ Based on the D&B and the salesperson’s report, it appears the competitor has lost business.” Information: A pooling of these bits of facts, observations and rumors 2001: “The D&B report told us that the competitors plant had 100 employees.” 2004: “One of our salespeople just passed by the competitor’s plant and spotted only 30 cars in the lot.” Data: Scattered bits and pieces of facts, observations and rumors

7. Porter’s Five Forces Model

8. Two Fundamental Competitive Analysis Examples SWOT Analysis Core Competence

11. Traditional CI Follows a Disciplined Process for Information Collection and Analysis Deliver, Inform & Recommend Planning & Direction Secondary Research Analysis & Production Primary Research Tactical Users & Strategic Decision Makers Needs The Traditional CI Cycle

13. Tactical CI Project Example: Cost Analysis

14. Level of CI Involvement in M&A Stage ID Evaluate Due Consum- Criteria Targets Analyze Diligence Recommend Negotiation mation Integration Level of CI Involvement High Low Intelligence Research Business Units Finance Technical Assessment Legal Executives M&A Specialists Transition Team Logistics HR

16. Competitors, Customers & Technologies Are Complex Interdependencies CI is About Learning to See Clearly through Market Illusions

17. The Duality Continuum of Intelligence Both Decisive & Incisive Sensing Incisive Scanning for Trends, there is no “Decision” to be made Recognize “Pattern Vector” History Framework for Interpretation Implications for the Reader Bottom-Up Exposition Driven by Trends Outcome is Observation Emergent & Theoretical Decisive Frame of Reference is the Decision, Less Trend-Dependent Framework for Current Analysis Compares Options & Outcomes Recommendations and Trust Top-Down Imposition Driven by Issues Decision & Action vs. ‘Nariyuki’ Factual & Hypothetical

18. Different Missions, Different Approaches Specialist Slower Production Less Output, More Analytical Agenda Driven by Contact Network Lots of Subject Matter Knowledge Seeks Explanation of the Subject Investigative Very Slow, Curious, Historical Little Output, Highly Analytical Questions Official Positions, Listens to Nonspokesmen Operates Outside Routine Agenda of the Publisher Generalist In a Hurry Lots of Output, Less Analytical Agenda Driven by the Publisher Little Knowledge of Subject Matter Seeks Volume of Public Interest

22. Consumers “Hire” Products to Do “Jobs” for Them Concentrate Less on What Customers “Want” and More on What Customers “Need”

23. Disruptive Innovation Theory Sustaining Innovations Better Products Brought to Established Markets Low-End Disruptions Target Overshot Customers with a Lower Cost Business Model New-Market Disruption Compete Against Nonconsumption Difference Performance Measure Time Nonconsumers or Nonconsuming Contexts Performance

24. Disruptive Technology

26. RPV Theory: Building Capabilities Processes Ways to Turn Resources into Products/Services Hiring/Training Product Dev. Manufacturing Budgeting Research Values Prioritization Criteria for Decision-Making Cost Structure Income Statement Customer Demand Opp. Size Ethics Resources Assets the Firm can Buy or Sell, Build or Destroy People Technology Products Equipment Cash/Brand/Distr.

28. Process of Predicting Industry Change Signals of Change Strategic Choices Influencing Success Likely Outcome of Competitive Battles

29. Process of Predicting Industry Change Breakout Discussions Customer Needs Operational Asset Posture & Alignment Technology & R&D Innovation

46. The CI Think Tank Model TASKING > SENSING > INTERPRETATION