INTRODUCTION

INTRODUCTION TO THIS NEW EDITION

This edition is based on the 1st edition written with William W. Wilmot while I was CEO of SRI International in 2006. "Innovation: The Five Disciplines for Creating What Customers Want," was published by The Crown Publishing Group, and was selected as a Business Week Top-10 business book.??

In 2014 I retired from SRI after 16 years and became a Professor of Practice at Northeastern University (NU) and Worcester Polytechnic Institute (WPI). My company is Practice of Innovation, LLC. Since retiring, my teammates and I have continued to use and improve the methodology working with leading partners, companies, and universities.

Upon reviewing this material, I discovered that little needed to be changed. That is not surprising since it was previously tested for decades with thousands of brilliant researchers, innovators, and managers from the world's leading enterprises.?

Indeed, from subsequent work, we have discovered that the concepts presented are effective because they follow the fundamental principles of active learning (the education science principles for how we learn the best) and systems thinking (the science for how to best address complex problems, like during value creation). My purpose with this edition is to add new insights and examples to make it more relevant to this age.???

We now call our methodology Innovation for Impact (i4i), and the Five Disciplines of Innovation (5DoI) are part of the i4i methodology.

Many people have contributed ideas to the methodology, starting with my excellent colleagues at the Sarnoff Corporation and SRI International, plus others listed in the Acknowledgements. But I especially want to acknowledge these individuals:

Norman Winarsky, William Wilmot, and Len Polizzotto

Norman Winarsky was my partner when we first developed the NABC and Value Creation Forum concepts, which form the basis for the i4i methodology. He provided the critical insight that has always distinguished our approach – value creation is a branch of learning, improving, and creating sciences. Over the years, Norman contributed other critical concepts, such as how the methodology applies to all aspects of an enterprise, including venture formation.?

William Wilmot was essential for developing the human aspects of the methodology, without which it could not be implemented in an enterprise. Given how dysfunctional SRI was when I arrived, I doubt the company's turnaround would have been possible without Bill as my partner. He was a master at understanding how to help people and teams work together productively.

Len Polizzotto worked with me at SRI and added fundamental concepts like Value Factor Analysis. We now both work as Professors of Practice at Northeastern University and Worcester Polytechnic Institute (WPI), using the methodology with student project and faculty research and innovation teams. With Northeastern University, we have also developed an online version of the i4i methodology used by companies, governments, and universities wanting to master value creation and innovation cost-effectively and scalably.?

CONTENTS

Introduction to the New Edition

Why Read This Book, Why Listen to Us, and What's in It for You??

1) The Essence of Innovation: How Frank Hit a Home Run?

2) Innovate or Die: The Exponential Economy

Discipline 1: Important Needs

3) Work on Important Customer and Market Needs: The RFID Tag

4) Creating Customer Value: Your Only Job

Discipline 2: Value Creation

5) It's As Simple As NABC: How Liz Got Her Big Job

6) Value Creation Forums: The Day the BBC Walked In?

7) More Ideas for Faster Value Creation: Origins of Linux?

8) Your Elevator Pitch: How HDTV Began

9) Your Innovation Plan: From the Ski Slope to the Firehouse

Discipline 3: Innovation Champions

10) A Champion: The Mayor of Kellyville

Discipline 4: Innovation Teams

11) Genius Of Teams: Engelbart and The Birth of The Personal Computer

12) Forming The Innovation Team: How We Won an Emmy for HDTV?

13) Overcoming Blockages to Innovation: Jim Torpedoes a Splendid Idea?

14) Innovation Motivators: Saving Larry's Life

Discipline 5: Organizational Alignment

15) Your Innovation Team: You Can Start Now

16) The Innovation Enterprise: Continuous Value Creation (CVC)

17) Innovation's Five Disciplines: A Foundation for National Competitiveness

Appendix: Value Factor Analysis

Notes, Glossary, and Acknowledgments

About The Authors

Copyright: 2023 Curtis R. Carlson, Practice of Innovation, LLC

WHY READ THIS BOOK?

An Imperative: Hardly a day passes without someone noting that the ability to innovate has become a survival issue for you as an individual, the enterprise you work for, the country you live in, and the world. And now, with artificial intelligence (AI) making impressive inroads with all its pluses and minuses, the future for work is increasingly uncertain.

There's no arguing the critical importance of innovation, and there's no more urgent issue today. All the grand challenges society faces can only be solved through innovation, whether climate, health, poverty, or education.?

Poor Performance: Our innovative results today must be improved. We typically find that less than 25% of the innovation efforts in a company would provide any value if completed. We don't decide that; the teams do after we provide a framework for evaluation. In one top-ten company in one of the most exciting times in its almost 90-year history, we discovered nothing they were working on had any value. The company had endless opportunities, brilliant staff, and world-level facilities but lacked a way to use them productively.??

University R&D and commercialization results are worse. Consider that most university "tech transfer" organizations lose money unless they license a drug. Like with companies, these terrible results are not due to the lack of opportunities, brilliant people, and resources. They fail for the reasons discussed in this book. They lack even elementary value-creation methods.??

These results are depressing. The waste of company resources is the least of it. What is tragic is the loss of the genius of the remarkable people in these companies.?

Of course, some people in companies and universities do know what to do. These people perform world-leading R&D and sometimes world-changing innovations. But after working with hundreds of teams from world-leading institutions, they are the exceptions.

Confusion:?We usually find confusion about what innovation is and how it is accomplished. Instead of focusing on creating new customer value, we often find leadership in organizations trying to encourage "creativity" with the hope of achieving greater success. They have teams building LEGO bloc bridges to learn teamwork. Learning this way is profoundly misdirected, but all too common. I was also part of these kinds of activities when I worked for RCA, and it infuriated me. I wanted to be working, not playing games. Teams can only master value creation when working on their actual initiatives.??

A critical question is, "creativity for what?" Focusing just on creativity can lead to misplaced resources and methods. For example, people often claim that creative organizations cannot be disciplined in their processes. We profoundly disagree. The most creative individuals, teams, and organizations are highly disciplined. But it is a special kind of discipline—one that unleashes creativity in the service of developing meaningful solutions for others—the purpose of the enterprise.

Innovation is not just the invention of some clever new gadget. It is much more than that. Innovation is the successful creation and delivery of a new or improved product or service with a viable business model in the marketplace.?

Or alternatively, innovation is the process that turns an idea into value for the customer and results in sustainable profit for the enterprise. Innovations can be incremental, such as a child's new toy, or transformational, such as the development of instant photography. In all cases, innovations deliver new customer value in the marketplace.

Figure 1:?Enterprises that: 1) focus on their customers, 2) have shared concepts and tools for understanding customer value, and 3) have a recurring value-creation process do the best at creating new customer value. The three factors are multiplicative. If one is missing, innovations will only be episodic.

The ability to innovate can be significantly, if not profoundly, improved in most enterprises. Figure 1 suggests the advances possible using core value creation practices. The negatively curved red line at the bottom of the figure indicates that 80 to 90 percent of new products and services fail after a year or so. They fail not because of technology, resources, or other reasons. They fail because customers don't want them: the enterprises don't understand their customers' needs.?

As indicated, an enterprise focusing on the customer is better at creating customer value. An enterprise that focuses on the customer and has shared concepts, language, and tools for understanding customer value does better still. Finally, an enterprise that focuses on the customer, has shared concepts and tools for understanding customer value and has a systematic value-creation process does the best.

That these three factors are missing in most companies and essentially all universities, explains why most proposed innovtions fail. This book describes how you can achieve this more productive state in your team and enterprise.

Abundance: Unlike the industrial age, knowledge-based product and service improvements have no upper limits. The opportunities are effectively limitless if you can innovate. Innovation leads to prosperity and a higher quality of life. It is the basis for increased productivity, competitiveness, and national wealth. And ultimately, the significant problems of our age—poverty, health, economic growth, and the environment—will only be addressed through our collective ability to innovate.

All of the failures I mentioned point to an exciting imperative: even a slight improvement in our innovative ability would have a profoundly positive societal impact. And unlike the exploitation of natural resources, there are no limits to growth regarding innovation.

WHY LISTEN TO US?

Given the current state of innovation, why should you read this book? What do we bring to the party? Our answer is twofold: first, the world-changing innovations we created at SRI International when I was the CEO. And second, a process and way of thinking about innovation intimately connected to how enterprises function in both the short and the long term.

Day in and day out, you're using an SRI innovation. Here are a few examples:

? The computer mouse and the personal computer interface you use at work and home.?

? Mobile communication, where SRI received the first Arpanet log-on, the precursor to the Internet and the Internet designations .com, .org, and .gov, developed to organize domain names.

? The squarish numbers on the bottom of your checks enable your bank to maintain your account balance correctly.

We have created dozens of new companies and pioneered revolutionary new business opportunities. Nuance Communications, for example, became the industry leader in computer speech recognition, or the high-definition television in your living room, for which we received an Emmy Award. We won a second for satelite digitial video. We've also won an Academy Award for our contributions to motion picture production.

Consider also Intuitive Surgical, the leading minimally invasive surgical company, which uses technology pioneered at SRI. Or Siri, which Steve Jobs bought from us for the iPhone.?

?Figure 2: Several major accomplishments from SRI International and our partners.

At SRI International, we completed thousands of projects and helped create billions of dollars of marketplace value. We served customers in more than half the countries in the world and worked in all key technical areas—infotech, biotech, and nanotech.?

As we will make clear, these significant innovations were all achieved with superb customers and partners who helped bring these innovations into the marketplace. We cannot thank them enough for their contributions.

Below are reflections from industry and academia leaders who have taken the i4i workshop:

? Michael Idelchik, VP of GE Global Research, "The i4i workshop is the most effective methodology I have

ever seen being taught for the systematic creation of new, high-value innovations.

? Young Sohn, President, Samsung, "We use the i4i NABC value creation concepts for everything we do."

? Mark Gersh, Sr. Manager, Lockheed Martin Advanced Technology Center: "It is hard to describe the impact of i4i. Over the course of two days, the improvement seen in projects people are working on is remarkable. You must experience the workshop to realize the full impact of what they achieve in just two days."

? Dr. Paul Westerhoff, ASU Regents Professor, Fulton Chair of Environmental Engineering. "I would safely say it (i.e., adding value creation) would be a 10 times improvement over where we are today. If you were to ask me what a greater value would be, the startup companies that come out of a large center or the talent, those few faculty, even if it is only 10%, who pick up this idea, those people will drive innovation. They (and their students) will be the creators of new industries."

? Dr. Mala Htun, UNM Professor of Political Science, "I would recommend it, I would recommend it highly, even to the most entrenched academics doing fundamental research. The workshop was a game-changer for me. I learned skills and techniques that I am now applying across the board, including NSF-funded programs. I learned that we need to orient our pitch, or value proposition, to the need of an end user. If we start with the need, you're grounding the project in the self-interest of the stakeholders. Whereas a problem doesn't motivate anyone except academics."

? Dr. Dawn Tilbury, UoM Professor of Mechanical Engineering and Herrick Professor, "I would recommend this to other universities. We will continue to use the NABC framework in the research accelerator at the University of Michigan." "Some of the people who participated from other centers and institutes across the University of Michigan campus were so impressed with the method that they said next time they ask for a call for proposals, they will ask them for their NABC because that is what they need to know."??

? Dr. Barbaros Oezyilmaz, National University of Singapore: Professor of Physics, "It is clear that the NABC approach we learned from you has changed fundamentally how we run our labs. This goes well beyond the question of how to best pursue technology emerging from research activities from an entrepreneurial point of view." It had an even bigger impact on our basic research culture. Many of us have adopted your "need" and "critical insight" centric approach in deciding which research areas to engage in the first place. It has significantly improved the quality of our research, the impact of our scientific publications, and of course, the quality of our grant applications.?

WHAT'S IN IT FOR YOU?

A primary responsibility of all professionals is to know how to identify and address the needs of others. That is, mastering the disciplines of value creation and innovation. Few have these skills today, but those that have them make an impact and are sought out by others. It is the one skill that only becomes more valuable over a long career.

In the Age of AI, these value creation and innovation skills will become even more valuable. They are a skill that an AI system cannot easily replace.

This period is one of the most exciting, opportunity-rich times in history. It is also fraught with disruption and change. This book will help you, your teams, your enterprise, and ultimately your nation thrive in this remarkable period. It will give you a strategy and plan to master innovation and move forward positively in our world of abundance.

The ideas in this book have proven to work in hundreds of enterprises. Even the most basic concepts described here can profoundly impact your career. We hope you will join us by mastering and sharing these core professional capabilities with your teams and colleagues.?

Go here for Linkedin:??https://www.dhirubhai.net/groups/1232507

Go here for Coursera:?https://www.coursera.org/learn/valuecreation

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