Monday, October 13, 2014

Aligning Your Innovation Portfolio Strategy with Customer Value

Strategy is the essential framework for creating a marketable product or service. But how do you base your strategy on the reality of what customers will value rather than on guesswork? The Sequencing Division of Roche Molecular Systems faced the possibility of falling behind in a newly emerging technology area, even after making several technology acquisitions. In this fireside chat during GIL 2014: Silicon Valley, Roche Molecular Systems' Beth Button discussed with Product Development Consulting's Sheila Mello the need that drove the customer value assessment process at Roche, as well as the lessons learned and outcomes achieved.


Shelia: First, can you briefly introduce yourself?

Beth: I’m with Roche, housed in the Roche Molecular Systems building but Sequencing is not really a part of this business. We’re part of the diagnostics arm but we’re more research oriented. We work on high-tech DNA sequencing for research applications.

When I started about three years ago my business was under the life sciences umbrella. About 18 months ago, it became obvious this wasn’t working, so we reorganized and put research PCR under the molecular diagnostics and sequencing as an independent business.

Sheila: What drove the change?

Beth: Being a research component of a very large IVD company with a strong culture of quality and robustness was a challenge. Research requires you to be quick and nimble. Roche acquired the next-generation sequencing technology about seven years ago and it was disruptive. But Roche is not known to move quickly and underestimated how fast the market was moving. It’s like the Blackberry, which started as a leader but didn’t keep up with the technology. Roche can’t let that happen because sequencing is the future of molecular diagnostics.

Audience member: Who is your customer?

Beth: Our customers are researchers in the clinical space. In the future, we’ll be going to routine diagnostics like community hospital diagnostics labs. Currently our products require really experienced users. There’s a complex, laborious workflow. We’re looking at bringing in more automation to meet the clinical lab’s needs.

Sheila: Has anyone in the audience had an experience similar to this?

Audience member: I work for a robotics company in healthcare. Our situation is a bit of the opposite. We started in research and now we’re trying to commercialize. We’re dripping in technology, but have to decide: Which do we use to move forward? What is going to be commercially viable? We’re trying to determine what will work.

Beth: We had failures that brought us to this point. We weren’t investing as much in R&D as we should have. In the meantime, we were forming partnerships with other companies. The product Roche was rolling out as a result of that was a “me-too” product. When I came on board, I knew the landscape and the competition and understood the product was me-too and too late to market.


Sheila: What was the challenge in terms of getting people to change? You’re basically saying, “You didn’t do a good job.”

Beth: I’ve been in this position so many times. Even new leadership has a hard time pulling the plug. It’s often hard to pull back, and sometimes people didn’t have the courage or experience to stop a project. I’m a very outspoken person. When I went to the manager in charge of the me-too product, his first reaction was: “Roche has always been successful with me-too.” But that was like comparing a washing machine to an iPad. To convince him I had to collect facts and figures and go to the market, to get data to support what I was saying.

We brought in consultants for primary and secondary research. We prefer to stay in-house for product development. And for interviews we used cross-functional teams — regulatory, bench scientists, etc. — we want everyone to go in front of customers. You have to try to pick the right number of customers to allow you to do face- to-face interviews and observe their daily routine. We distill all that research and come up with the key features. Then we do broad surveys to validate what we think are priorities. We might get 300 specs out of the interviews but we have to pull out the top ten.

Audience member: One problem is that the customer doesn’t know what they don’t know. Can’t this be tricky?

Sheila: That’s where it really matters what you are surveying on. If the survey does not contain your solution, but rather the problems they have, you’ll get more valuable data.

Beth: When I walk into a lab to talk with the customer about sequencing, I’m not interested only in sequencing. I’m interested in when does a sample come in and the result goes out, and how can we make that whole process easier? We are an automation company also, so we look at the whole process.

Sheila: You’re looking for customers to tell stories about what got in the way of them doing their jobs and what were the consequences.

Audience member: Are all the surveys a snapshot in time or are they ongoing?

Beth: We do snapshots initially, but our projects have gates and we do go back and survey at various key points. The culture and market is changing so quickly we have to go back and reevaluate.


Sheila: The healthcare market is changing so fast. How do you stay abreast of what’s happening, especially with competitors?

Beth: We’re just deciding how to deal with that. It’s going to be a new concept for Roche. IVD doesn’t change quickly, so we haven’t had the need to keep up with fast market changes before now.

Sheila: Does anyone in the audience have ideas about dealing with change?

Audience member: You have to have continuous validation. When you develop a product, you always need to validate, talk to the customer and incorporate changes as you are going to market. Seventy percent of startups fail because people are building products nobody wants.

Audience member: In the entertainment business, we look at rapid experimentation. You put it out fast and evaluate; if it’s not working, you change. We have the ability to experiment so we don’t spend a lot of money on things that are not needed.

Audience member: Is it the product management unit responsible for doing that experimentation, or is it a special group that’s not distracted doing the everyday work for that product?

Beth: Our product marketers are the ones keeping up with the market. We have product managers looking at products. And we don’t ever launch something customers haven’t seen. We use customers as collaborators, evaluators and beta testers.

Audience member: We do have different groups who are not distracted, which works well from an innovation standpoint. But you have to bring in people from all the groups so you don’t form an elitist group that nobody in product management is going to respect or pay attention to.


Audience member: I’m from a small company with limited resources and funding. I have to pick the most important customer value activities. What would be the minimum in this process I should be doing?

Beth: At a minimum, kick it off right. Get a cross-functional core team and get everybody out there doing interviews in front of customers. You could forego surveys if you’ve gotten the VOC with your cross-functional team. And as you’re developing, don’t skip early evaluation. Maybe you don’t have a full design review board but you do want to have different gate checks.

Sheila: One thing that helps is to set up a “war room” that everyone can access. That way you can collect what’s going on in the marketplace. It could be from the sales force, people attending conferences, people coming from other companies, people reading or following on social media.

Audience member: I had the benefit of being trained by PDC and doing all of this at a large company. Then I left for a small startup. I took the core pieces of customer interviews with me. I did most of them by phone—that’s not the best, but you do what you have to do. The process of extracting the customer voices was key.

Audience member: There’s a great power to being face-to-face with the customer. Bring your iPhone, record it. Let the team see the expressions on faces and the environment. That’s a thousand times more powerful than seeing a transcript and it helps you stay true to the customer.

Audience member: We’ve had a lot of luck with video. That’s been so inspiring to people. If you present a bunch of survey data they don’t care. But if you show a customer saying this is my experience, this is what matters, it’s so powerful.

Audience member: You have to consider the cost of getting it wrong. For the medical industry, the cost can be very high. You have substantial up- front costs to make sure you get it right. For Coca-Cola, depending what we’re doing, the cost of getting it wrong is not that high. If the market doesn’t like something, it’s easier for us to pull out and put back. Sometimes the best test is the market.

Audience member: There’s some good research done at Dartmouth about the concept of affordable loss. That is, if we put out a product and fail, it’s OK because the reason we put the product out was to answer this question, and we did get an answer.

Beth: There’s a survey section that helps prioritize what problems we need to address. We look at the biggest segments of the market and come up with the top five. We also have technical limitations—we may not be able to achieve all five. Or maybe we can do one and three but not two and three. It’s a give and take.

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Spotlight on Healthcare: The Doctor Is Always In

By Denise Fletcher
Chief Innovation Officer
Healthcare Payer and Pharma Group

Within five years, accessing medicine is going to be very similar to the online shopping experience, which is both convenient and personal. There was a time when doctors would make house calls, showing up with a little black bag to check your vital signs. Today, we‘re headed back to that model – but the doctor will appear on your computer instead of knocking at the door.

Just as Amazon changed the way we access goods, telemedicine is revolutionizing the way we access healthcare. Today, for example, you can use a smart phone to take a picture of a mole and have it analyzed for signs of skin melanoma. Below are some scenarios that I see coming within the next five years:

Goodbye stuffy waiting rooms

Often for the elderly, the sick or the parents of newborns, life feels like a string of doctor appointments. These visits typically involve monitoring vital signs, taking measurements and ensuring the course of treatment is working. But very soon, the idea of trudging through a snowy parking lot or carrying a newborn into a stuffy waiting room to see the doctor will be a distant memory. Patients will be able to communicate face to face with doctors via their smartphone, television or computer screen.

Sayonara to the mammogram

“Smart” homes will not only monitor room temperature and electricity, your “smart” home will also track your health. Sensors embedded in homes (and perhaps in the buttons and fabric of shirts) will keep an eye on us 24/7 without the need for wires or pin pricks. Wouldn’t it be great if a camera could conduct a simple test, and tell you every day that you are cancer free? Or alert your doctor if irregular heartbeats are detected or that you are at high risk for stroke? Today, Xerox researchers are working on ways to use video cameras for contactless health monitoring that would make some of these automated systems possible and eventually used in a “smart” home.

The doctor is (always) in

Some doctors will work primarily in the physical world, others will concentrate on telemedicine and some will work as hybrids – seeing patients in their offices but also visiting them using telemedicine technology. Doctors might pull up test results on a screen and set up a video chat to walk a patient through a prognosis. Geography will no longer restrict access to specialists. The world’s leading neurosurgeon could oversee an operation in Morelia, Mexico — in real time — while sitting in a Paris office. Think of how this could help patients in rural areas or emerging countries.
While there are aspects of medicine that online visits and sensors can’t replace, many medical experts believe doctors have the skills to know when in-person visits are needed. Meanwhile, telemedicine can help reduce the costs of services and make it easier to get help when you need it the most.

This post was first published on the Xerox blog, Simplify Work.

About the Author

Denise Fletcher is responsible for leading healthcare innovation through Xerox’s research and development pipeline in order to serve customer and industry needs. As Chief Innovation Officer for the Xerox Healthcare Payer and Pharma group, Denise spends a lot of time engaging with customers and connecting research and emerging technology to their business processes. She has six pending U.S. patents in healthcare, and recently was recognized by Front End Innovation as one of the top 40 women in Innovation.

Collaboration: Many Firms Are Playing Catch-Up

By David Brousell
Global Vice President, Research, and Editorial Director
Manufacturing Leadership Community | Frost & Sullivan

For a number of years now, manufacturing companies have been trying to act more collaboratively with their employees, customers, and partners. The theory is that by unleashing the creativity of every individual and better ensuring their full participation in the business, innovation will increase, productivity will rise, and the enterprise will become more efficient.

As theories go, few have questioned the soundness of the collaborative idea, or at least the value of a properly-balanced collaborative model. More brains concentrated on generating new ideas or on solving problems would seem to offer a greater likelihood of success in either case, as long as decision-making along the way isn’t compromised.

But theories sometimes don’t match reality. And the reality today in manufacturing companies is that, while collaborative intention is strong and much informal collaborative activity is underway, many companies’ organizational structures haven’t yet caught up with a way of working that is becoming increasing preferred by all of the constituents in today’s manufacturing business eco-system.

Survey: Few Organizations Are Truly Collaborative

This is one of the key findings of a new Manufacturing Leadership survey on Next Generation Leadership in the manufacturing industry.

The survey reveals the broad outlines of a profound change in how manufacturing companies will be organized in the future and how they have to be led differently as a result. Although most respondent companies continue to be organized today in a centralized fashion to one degree or another, a seismic shift to flatter structures in which collaboration is the main operating principle is underway.

This year, about 63% of manufacturing leaders report that their companies have some degree of centralization, with nearly 20% saying they are highly centralized, up several points from last year. Only 18% say their companies have in place today a truly collaborative organizational structure in which traditional hierarchies, such as command and control management forms, have been eschewed in favor of flatter ways of working. Within five years, though, 62% of respondents say they want the collaborative model, up slightly more than six points from the number saying so last year.

But what’s happening on the ground right now in many companies is that collaboration is becoming a prevalent day-to-day method of operating regardless of the current status of manufacturing companies’ organizational structures. When asked to describe their companies’ relationship to its employees today, for example, 86% of respondents report some degree of collaboration already under way, with just over one-third of that number, 34.8%, saying that the relationship is “highly collaborative and respectful” and that employees are strongly engaged in the day-to-day affairs of their companies.

The big task now before many manufacturing companies is to re-think their organizational structures to align them better with the collaboration already happening on the ground and reduce or eliminate friction that may be occurring between their current organizational model and the growing collaborative model. If they can do so, they may be able to harness the collaborative movement far better than they are today and enable their companies to close the gap between one of today’s most popular theories and reality.

This article was originally posted on Manufacturing Leadership

Why Apple Probably Won't Exist in 50 Years

By Pramod Dibble 
Analyst, Visionary Innovation
Frost & Sullivan

I tried to care about this new iPhone and Apple Watch. I really did. When the first iPod came out, I bought one. When the first all-in-one iMac came out, I bought one. When the first iPhone came out, I went out and, positively dizzy with excitement, I bought one. Now I’m looking at this iPhone 6, and... meh.

Apple did amazing things. Company value increased more than 10-fold over the last decade. They have built what is arguably the best brand presence of any company in any industry, with a rabidly loyal customer base. They purposefully killed off the iPod, a cash cow, because they saw that smartphones were the way of the future. These accomplishments can only be the result of brilliant leadership and exceptional scientists.

The Apple of 2014 is not capable of surpassing these accomplishments. Their earlier behavior was that of a technological pioneer, creating brand new markets and generating value all over the place. But somewhere along the line, they fell behind. Objectively, nothing they have done in this last product launch is disruptive. If you throw out all the clever marketing lingo, they’ve made bigger phones that pair with smart watches. This sounds like a press release from 2012. And sure, the processors are faster and the camera is better, but that is true of every new phone launch; it’s more a function of Moore’s Law than it is an Apple thing.

The nice thing for Apple is that it doesn’t seem to matter. They sold a record breaking 10+ million iPhone 6s this past weekend, and remain fantastically profitable. They have cultivated a customer base so embedded in their exclusive ecosystem that they seem willing to buy the newest iPhone regardless of the side-by-side comparisons. And for the fashion conscious, apparently no statement is complete without the latest and greatest iPhone.

Once upon a time, Apple products were better, especially if you wanted to do some video or audio editing. Their user interface was once the most intuitive and user-friendly that existed. The interoperability of their devices was unmatched. None of this has been true for quite a long time.

But Apple seems content to milk this iPhone cow well into senility, and follow in the footsteps of the tech pioneers of this decade. And who can blame them; Apple has made lots of people very rich, and will continue to do so in the short-term.

But I can’t see it lasting. As is well established, if you’re not actively working to disrupt the landscape, then you’re a sitting duck for someone who is.

How Open Innovation Can Help a Big Firm Act Like a Start-Up

An interview with
Steve Paljieg
Senior Director, Corporate Growth & Innovation

Interviewed by Sam Narisi

As a Senior Director of Corporate Growth and Innovation for Kimberly-Clark, Steve Paljieg is responsible for taking the company into new areas of business and, as he says, “innovating the way we innovate.” One of those innovations is the Huggies MomInspired program, in which the company fields product and business model ideas from consumers and offers grants and other support to help those entrepreneurs move their businesses forward.

Frost & Sullivan recently spoke with Steve about the impact the program has had on the Huggies brand and the organization’s internal product development, as well as how companies can move past old ways of thinking and bring new ideas into the fold. Steve will also join us to discuss these topics in greater depth at the 9th Annual New Product Development & Marketing: A Frost & Sullivan Executive MindXchange, January 12-14, 2015, in San Diego, CA.

Tell us about the MomInspired program.

The big a-ha moment for me was looking at the target audience for Huggies – moms with young children or expecting mothers – and realizing that they had the capacity to be more than just people who give us money for the stuff we sell. The MomInspired program is an example of how consumers are looking for more out of brands, and brands ought to be looking for more out of their consumers. What it says is that our moms are just as good at innovating as we are. By recognizing that, we can fulfil even more of our brand promise by engaging customers in the innovation process, helping them succeed in their own enterprises, and getting more problems solved for more moms.

We have a grant period that opens up every year, and entrepreneurial moms put in an application to be part of the program. There are other programs out there that ask customers for ideas, but for us, just coming up with an idea isn’t enough. It’s not close enough to a business proposition for us to appropriately value it. So we ask questions around business models to look for evidence that they’ve thought of this as more than just an idea. As we read through the proposals, we also get great market research information. These are moms who have identified points of pain and are working on solutions.

The moms we choose get a $15,000 grant to spend in a way that moves the business forward, whether it’s to file a patent, get some design work done, or buy some inventory. We don’t claim to know what their business needs better than they do. We also give them access to the Huggies brand name, which is a big door opener. They can get additional distribution because trade partners may be more willing to give them a shot since they recognize our brand. We have 42 businesses right now that are part of the program. About 30 of them are going enterprises that have some sales and supply chain capability.

What are some of the effects you’ve seen since the program started?

It’s a win-win, and there are several things the moms provide for the brand. If we just calculate the brand-building value of the program, to date we’ve gotten about 100 million impressions. And I can rarely ever say this about marketing, but they’ve all been positive. The basic message is: Here’s a big brand that’s investing in moms to help solve problems for other moms. It’s a really good PR story and those impressions are really efficient compared to what we get from traditional marketing.

The second benefit is innovation sourcing. We’ve just acquired one of those seeds of a business and within the next year we’ll be launching it nationally under one of our brand names. That’s going to be a big deal. We spent $15,000 dollars on it for the grant in 2011 and the top line sales it’s going to generate will be in the millions of dollars. That’s a pretty cool ROI. The mom’s going to win as she licenses her product to us, and we’re going to win because we have an innovation that we didn’t have a line of sight to internally. Overall it’s been a really equitable program in terms of what we get and what the moms in the program get.

That’s one instance where the program led to a new product in your portfolio. What have been some of the other effects on your product development process overall?

Another thing we do with the moms is we give them some mentoring by putting them in touch with K-C employees. For example, if they don’t have much design knowledge we’ll pair them with one of our design managers. When that process ends, more often than not, our employee comes back and talks about what a great experience it was because it reminds them what it’s like to be an innovator and entrepreneur, and it reinvigorates them. Sometimes in big corporate environments we get a little weighed down with our processes and ways of doing business and we forget that there’s a whole other way to innovate. We see a lot of value in exposing our people to that start-up mindset so they can bring that passion back to their everyday work.

There’s also the simple value proposition. Many companies struggle with growth beyond their existing value proposition. If you try to do it completely within the enterprise, it takes big investments and big bets. This program has taught us there are other ways to do that. Why not plant some seeds, as we’ve with 42 companies at about a $600,000 investment, and see how they germinate?  There will be winners and losers, but the risk is much lower and the value of the winners is so much more.

You launched MomInspired five years ago. What are some of the things you’ve learned along the way?

The first thing was how to deal with the legal challenge. Companies always worry about how to bring in ideas from outside and protect the company and the inventor. We have the moms sign a legal agreement that protects us and their intellectual property.  I thought this would be a barrier to getting people to submit ideas, but we had a great legal team work on this and the moms really liked it. It’s not too complicated and it shows that we treat them like real business people and respect what they have and want to take care of them.

Another evolution was figuring out the best way to interact with this ecosystem of innovators. When we get involved too early, particularly with a start-up, we stand a pretty good chance of screwing it up. Not because we’re dumb, but as a big company we just lack some of those entrepreneurial skills. We try to have a relationship that’s hands-off but allows us to continue to talk to the moms about commercial opportunities. If we start layering all these processes on the innovators, they’re going to lose steam and lose their ability to move their businesses forward. Over time, we’ve also gotten better at selecting recipients, and we’re figuring out how to create commercial value in different ways.

You’ve touched on how the program has helped Kimberly-Clark incorporate sort of a start-up mindset into its innovation practice. What are some other ways, larger, more established firms can tap into those entrepreneurial skills and strategies?

As a 30-year innovator in the consumer goods space, I’m amazed about what individuals are now capable of in the marketplace. Big companies need to figure out how to take advantage of the innovation coming from those individuals. And it’s not just companies, but government institutions are figuring this out as well. I’ve talked with folks from NASA about their processes for connecting with the outside world. They needed a new prediction algorithm for solar flare activity. They struggled for years and put more astrophysicists on it, and they were still stuck. So they went outside, posted a problem and asked people to look at it. The person that solved it, was it a person at NASA? No. Was it another astrophysicist? No. It was a retired cell phone engineer who had been looking at reception patterns and how they were affected by solar flares. That teaches you that using more people who think the same way is less likely to solve the problem than opening up to a more diverse set of thinking and skills.

You just have to try experimenting and see how these things fit. Some will replace existing processes and some will compliment them. It’s a journey of learning and understanding. As an innovator, you need to come up with new stuff so you have to always be experimenting with new processes.