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Product: not the innovation be-all end-all Adrian Mak, Gen Re Australia Presented to New Zealand Society of Actuaries Conference 2014
Proprietary Notice
The material contained in this presentation has been prepared solely for informational purposes by Gen Re. The material is based on sources believed to be reliable and/or from proprietary data developed by Gen Re, but we do not represent as to its accuracy or its completeness. The content of this presentation is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Product: Not the Innovation Be-All End-All | Adrian Mak | NOV 2014 Proprietary and Confidential | © General Reinsurance Corporation 2
Contents
Defining Innovation The Ten Types of Innovation Industry innovation analysis
Innovation tactics Innovation mindset
Proprietary and Confidential | © General Reinsurance Corporation 3 Product: Not the Innovation Be-All End-All | Adrian Mak | NOV 2014
• “Innovation is the creation of a viable new offering” – Larry Keeley • Disruptive innovations*
- Transform complicated, costly products that previously had been available to the few, into simpler, cheaper products available to the many.
- The disruptive product may not be as good as existing products in the marketplace but it usually isn’t intended to be sold to mainstream customers. Low-end disruptive innovation offers a “good enough” solution for low-end customers who cannot afford, or do not need, the high end solutions currently available.
- Eventually, low-end disruptions move up-market and disrupt the business models of the companies that provide those solutions.
- New-market disruptions convert non-customers into new customers and create new markets through delivery of new technologies.
• Sustaining innovations - Target high end, demanding customers with expensive and/or high margin solutions that offer
improved performance and features in markets where product attributes are already well defined (i.e. incremental innovation).
- Most common in economies. Found in mature markets. *based on the work of Professor Clayton Christensen
Defining innovation
“The most certain way to fail is to focus only on products. Successful innovators use many types of innovation.” – Larry Keeley
Product: Not the Innovation Be-All End-All | Adrian Mak | NOV 2014 Proprietary and Confidential | © General Reinsurance Corporation 4
Doblin Ten Types of Innovation*
Source: Keeley, Pikkel, Quinn & Walters 2013
Product: Not the Innovation Be-All End-All | Adrian Mak | NOV 2014 Proprietary and Confidential | © General Reinsurance Corporation 5
Profit Model
Network
Structure
Process
Service
Channel
Brand
Customer Engagement
Product Performance
Product System
Offering Experience Configuration
Profit Model
• How the company makes money
Network
• How the company connects with others to create value
Structure
• How the company organises and aligns its talent and assets
Process
• How the company uses signature or superior methods to deliver their offerings
Configuration Innovation Type Category
Source: Keeley, Pikkel, Quinn & Walters 2013
Product: Not the Innovation Be-All End-All | Adrian Mak | NOV 2014 Proprietary and Confidential | © General Reinsurance Corporation 6
Product Performance
• How the company differentiates features and functionality to delight customers
Product System
• How the company creates complementary products and services
Offering Innovation Type Category
Source: Keeley, Pikkel, Quinn & Walters 2013
Product: Not the Innovation Be-All End-All | Adrian Mak | NOV 2014 Proprietary and Confidential | © General Reinsurance Corporation 7
Service
• How the company supports and reinforces the value of its offerings
Channel
• How the company delivers its offerings to customers and users
Brand
• How the company represents its name and offerings
Customer Engagement
• How the company develops meaningful customer interactions
Experience Innovation Type Category
Source: Keeley, Pikkel, Quinn & Walters 2013
Product: Not the Innovation Be-All End-All | Adrian Mak | NOV 2014 Proprietary and Confidential | © General Reinsurance Corporation 8
Product warfare
Product: Not the Innovation Be-All End-All | Adrian Mak | NOV 2014 Proprietary and Confidential | © General Reinsurance Corporation 9
Industry innovation analysis
Product: Not the Innovation Be-All End-All | Adrian Mak | NOV 2014 Proprietary and Confidential | © General Reinsurance Corporation 10
Industry innovation analysis
Industry: Life insurance Oceania, 2014
Product: Not the Innovation Be-All End-All | Adrian Mak | NOV 2014 Proprietary and Confidential | © General Reinsurance Corporation 11
Service Channel Brand Customer Engagement
Product Performance
Product System
Offering Experience Configuration
Profit Model Network Structure Process
Profit Model
Bundled pricing
Float (level premium)
Freemium
Marginal pricing
Unit rating
Network Alliances
Merger & Acquisition
Structure IT integration
Merger & Acquisition
Process Predictive analytics
Process automation
Process standardisation
Product Performance
Added features
Customisation
? Focus
Plain English guide
Product System
Complements
Modular
Product Bundling
Platforms
Service Added value
Free look
Loyalty program
Product upgrade guarantee
Premium rate guarantee
Self-service
Supplementary service
Channel Cross-selling
Diversification
Pop-up presence
Sell direct
Brand Cobranding
Customer Engagement
Gaming
Newsletter
Status and recognition
• What do your customers expect and what do they hate about the status quo?
• Do an honest analysis – look within and look around you
• Look to other industries for inspiration • Which T.I.T. do you use most? • Which T.I.T. do you want to deliver first? • Which others do you want to add later? • Technology is just one enabler • Don’t just reach for the low hanging fruit • Innovate through simplicity, not complexity
Company innovation playbook
Play offense not defense
Product: Not the Innovation Be-All End-All | Adrian Mak | NOV 2014 Proprietary and Confidential | © General Reinsurance Corporation 12
• Apple’s products, services and extensions operate and connect together seamlessly to provide consistently elegant customer experience
Combine the basic 10 Types into innovation tactics
Case study: Apple iTunes
Product: Not the Innovation Be-All End-All | Adrian Mak | NOV 2014 Proprietary and Confidential | © General Reinsurance Corporation 13
Service Channel
•Go Direct •Flagship store
Brand Customer Engagement
Product Performance
•Performance Simplification
Product System
•Platforms
Offering Experience Configuration
Profit Model
•Licensing
Network
•Alliances
Structure Process
•Strategic Design
Give others permission
to place songs, videos,
media, apps while taking a cut of each
Get major record
labels, film and TV show producers to
sell their music and videos in
iTunes
A core team of designers
carefully lead and
execute the design of all
Apple products
A touch screen
instead of superfluous
details, features, buttons
make the products simple to
use
All devices in Apple’s
ecosystem interact
seamlessly e.g. synch
with iTunes iCloud
Terms of distribution to ensure
Apple controls the
quality of customer
interactions ***
Showrooms to showcase brand and products
Begin with a focal point for innovation
Three innovation shifts - each industry has a centre of gravity – decide to stay or go in a total different direction
Product: Not the Innovation Be-All End-All | Adrian Mak | NOV 2014 Proprietary and Confidential | © General Reinsurance Corporation 14
Service Channel Brand Customer Engagement
Product Performance
Product System
Offering Experience Configuration
Profit Model Network Structure Process
Platform innovation
Business model
innovation
Customer experience innovation
• Creativity – being creative is not sufficient to innovate • Discipline – use these tools to diagnose, plan and solve innovation problems • Analysis – define the problem to solve by breaking down into its parts • Synthesis – solve the problem by creating new solutions from building blocks • Ambition – dare to be different • Sponsor – support (time and funding) for innovation from the top • Accountability – trust teams to execute and be accountable for delivering results • Measure results – both qualitative and quantitative (stage dependent) • Incentivise – monetary and non-monetary rewards to innovate • Discovery skills of individuals – refer The Innovator’s DNA
Cultivating an innovation mindset
Product: Not the Innovation Be-All End-All | Adrian Mak | NOV 2014 Proprietary and Confidential | © General Reinsurance Corporation 15
The Innovator’s DNA Five Discovery Skills
1. Associating
2. Questioning
3. Observing
4. Networking
5. Experimenting
Source: Dyer, Gregersen and Christensen. The Innovator’s DNA. HBR 2009;87(12):60-67
Product: Not the Innovation Be-All End-All | Adrian Mak | NOV 2014 Proprietary and Confidential | © General Reinsurance Corporation 16
• Training • Travel • Gain diverse exposure • Force associations
- Link objects that don’t logically fit
• Assemble curiosity box - Relate random items
Associating
Product: Not the Innovation Be-All End-All | Adrian Mak | NOV 2014 Proprietary and Confidential | © General Reinsurance Corporation 17
• Make connections across the seemingly unrelated ideas and practices
• The most important discovery skill
• Be curious and detached • Have the courage to challenge • Pay deep attention • Why? • Why not? • What if?
Questioning
Product: Not the Innovation Be-All End-All | Adrian Mak | NOV 2014 Proprietary and Confidential | © General Reinsurance Corporation 18
• Ask provocative questions • Challenge the status quo • Challenge assumptions
• Watch workers looking for their workarounds to resolve specific frustrations
• Watch customers use your offering
Observing
Product: Not the Innovation Be-All End-All | Adrian Mak | NOV 2014 Proprietary and Confidential | © General Reinsurance Corporation 19
• See the world like an anthropologist • Zoom in to the detail • Zoom out to the whole system
• Invite outsiders • Engage experts • TED conferences • People dimensions
- Age - Gender - Education - Religion - Geography - Function - Rank - Industry
Networking
Product: Not the Innovation Be-All End-All | Adrian Mak | NOV 2014 Proprietary and Confidential | © General Reinsurance Corporation 20
• Idea networking • Seek out different life experiences
and perspectives • Not resource networking
• Build prototypes to test new ideas • Try out new experiences
- Travel - Learn new/different disciplines - Trend spotting
• Take things apart
Experimenting
Product: Not the Innovation Be-All End-All | Adrian Mak | NOV 2014 Proprietary and Confidential | © General Reinsurance Corporation 21
• Test, develop and rework ideas • Iterative process • Learn from results • Accept failure • Be persistent
Visit genre.com for more info.
Contact for more information Adrian Mak Senior Reserving Actuary
adrian.mak@genre.com
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