Agenda

1. New Product & Service Development Process – A Tool for Successful Portfolio ManagementMarch 25, 2010 AR

2. Agenda • Discussion TopicsPage • Overview 2 • NPSD Tool 4 • Adapting it for our business 7 • Appendix 14 1

3. New Product & Service Development Overview • Mastering innovation is a discipline that can be achieved with the use of the NPSD tool • Research shows that the best firms at developing new products expect 45% of their sales to come from new products (PDMA) • Having an idea bank is the most critical step to the process • A study shows that the best firms at launching new products, start with 3.5 ideas to achieve one winner (Robert Cooper) • Winning requires that the right projects are worked on, and that the projects are worked the right way • The NPSD process filters out the best idea based on criteria • The best result is achieved through a Cross- Functional approach to Development • Give time to other departments to go through their own NPSD process The single strongest predictor of investment value is degree of innovativeness of the company – Robert Cooper 2

4. Agenda • Discussion TopicsPage • Overview 2 • NPSD Tool 4 • Adapting it for our business 7 • Appendix 14 3

5. NPSD – A logical approach to innovation This is where it all begins… “Expanding the mouth of the funnel to consider a broader number of ideas…you achieve two major benefits…save money, effort and time…improved your chances of bringing a winning idea to the marketplace.” – David Goldsmith 4

6. A lack of market orientation Poor quality of execution Moving too quickly Not enough up-front homework A lack of product value for the customer No focus, too many projects, and a lack of resources The lack of a systemic new product process with discipline Use the NPSD Process To avoid pitfalls! • Use an organized approach to come up with ideas, prioritize what we want to work on and do it right! Doing too many projects for the limited resources available results in poor quality of execution – Robert G. Cooper 5

7. Agenda • Discussion TopicsPage • Overview 2 • NPSD Tool 4 • Adapting it for our business 7 • Appendix 14 6

8. Activity I: Ideation Set up a share point site to capture ideas from all departments – Marketing, Operations, Risk, Decision Management, NPSD, Finance, Production, Vendors, ect. Sales Growth Retention Customer Experience Acquisitions Card Activation Customer Service Distribution Technology Ideation Screen Examine ideas during business review sessions see that they align with organizational and business goals Get started with idea generation Be wary of “me too” products – on average those only have 11.6% market share “Everyone who has ever taken a shower has had an idea. It’s the person who gets out of the shower, dries off, and does something about it that makes a difference.” Nola Bushnell 7

9. Activity II: Elimination Surface Evaluation Evaluate results – have we done this before? Evaluate competitive landscape Do the offers meet the needs of our customers? Is this an idea that would give us a competitive edge? Can it be expanded to other portfolios? Detailed Evaluation Develop concepts and conduct research Prepare a financial forecast Develop product positioning Secure funding and approval from all relevant parties Find the BIG Sales Growth Idea 100’s of Ideas • Offer a companion travel program • Reward good credit behavior • Reward loyalty • Offer lower interest rates • Give double points during the holidays • Allow customers to skip a payment • Offer discounts on other products • .............. “…your new tool enables you to select and develop your ‘diamond’ idea.” David Goldsmith 8

10. Surface Evaluation Screen Criteria for Sales Growth Initiative: Encourages customers to make purchases on their Citi card Leverages Citi core competencies Concept can be used to drive growth across other portfolios The idea is not yet in market The importance of the screens Don’t fall in love with your own idea! Referees will make the go/kill calls… • Detailed Evaluation Screen • Criteria for Sales Growth Idea Initiative: • Forecasted to deliver a 30% sales lift • Pay back in 12 months • Total Revenue > $2.5MM • Can be in market within 3 months • Delivers a positive customer experience 100 > 7 > 3 > 1 Benchmarking studies show that tough go/kill decision points are the weakest ingredient of all process factors – Robert Cooper 9

11. Develop Citi Forward Activity III: Development • Allocate dedicated resources to work all aspects of the project in parallel path • Kick off the project with all areas impacted at once: Marketing, Production, Operations, Finance, Risk, Database Marketing, Decision Management, Research and Creative Agency • Deliver quality in execution – meet all the requirements all the time • Cross-functional development • Cross-functional Development Gate • Testing • Testing Gate • Deployment • Deployment Gate • Launch • Post Launch Review “rewarding good credit behavior” Sharply defined products have over 3X the success of less-defined products – Robert Cooper 10

12. Dot the I’s and cross the T’s Activity III: Development • Check your work at every gate • Invite colleges outside of the working team to evaluate the work that has been done in each phase against the checklist and perform necessary quality control measures • One last step before the Launch; Deployment • Are we all set? Consider the time and energy needed to overcome a mistake – David Goldsmith 11

13. Good Credit Is a Beautiful Thing Activity III: Development • Launch • Don’t forget about the Post-Launch Review • Did we accomplish what we set out to accomplish? • Did we do the right thing by our customers? • What else can we improve? New products account for 33% of sales in average – Robert Cooper 12

14. Questions • ? 13

15. Appendix 14

16. References • Winning at New Products: Accelerating the Process from Idea To Launch - Robert G. Cooper • Mastering Innovation: Through New Product and Service Developments - David Goldsmith 15

17. Useful techniques to generate thinking 1. 5 Why’s: This technique was created long ago in the Asian culture to discover problems that one might be missing.  2. Mind Mapping. Mind mapping creates offshoots or spontaneous recognition through the use of a type creative “sun or tree diagramming”. Starting from a written idea, place ideas that relate to that one idea around the central theme. Off of the new ideas create of others that will develop even more creative juices flowing. (Buzon) 3. Down Time: Ever heard that you need to take some time off to clear your head. Allowing your brain to focus on other situations for a period of time allows the forced creativity to relax and new ideas to be born. 4. “Sensanation” (Created by Mike Vance): Ask yourself how the problem would feel, taste, smell, sound,  5. Play Time Session. Convert your idea to a game. Crossword puzzles or general puzzles help to stimulate a different approach to the problem. 6. Storyboarding: Walt Disney created story boarding to help animators and production staff work through the development of a concept. The quick illustrations showed the main theme of the story and hence everyone would get a feel for the direction and needs of the films he was to produce.  7. The Eight-step Basadur Simplex Problem Solving Process: 1: Find the problem, 2: Find the facts about the problem. 3: Define the Problem, 4: Find Ideas, 5: Evaluate and select solutions from the ideas, 6: Plan Actions upon the selections. 7: Gain acceptance for the solution, 8: Take action on the solutions. 8. The Filter Creative Cycle: Start by defining the issue or topic. Make a statement about the topic as a starting point. Conduct research, converse, and challenge the subject. Then sort, reconfigure or modify the statements. Finalize your selected ideas. Create action plan 9. Bucky Fuller Linking Approach: “All things, regardless of their dissimilarity, can be linked together whether symbolically, physically, or psychologically,”  16 Source: MetaMatrix Consulting (David Goldsmith)

18. Useful techniques to generate thinking 10. The William Gordon Synectics Theory: Creative output increases with awareness of psychological process that control behavior. The emotional component of creative behavior is more important than the intellectual component: irrational components are more important than the intellectual. The emotional, irrational components need to be understood and used as precision tools to increase creative output. 11. Fuzzy Thinking (Lotfi Zadeh): Ask true or false questions, then look for answers. 12. TRIZ Method (Savransky and Altschuller): Consider (1) that systems evolve uniformly and (2) inventive problem represents conflict between new requirements and old systems. The solution may come from investigating the evolution of the system 13. Change Your Environment: Ideas tend to be created by links within and throughout our environment. Some ideas that would stimulate brain power would be to move your desk, sit on the floor, rearrange your garage, travel home in a Different direction, go to a movie…anything that forces one to see the world from a different angle. 14. Futurism: Ever try to describe what the future would be like 10 years from now. Draw, paint, sculpt the future based on the problem you are addressing today.  15. Look to Opposites: What is the problem not? 16. Time Crunch: Ever notice that when the clock is ticking one is able to find a solution to a problem in order to meet a deadline. Create a deadline, make it short and spontaneous. Your mind will race to come up with answers. 17. Journalling: Every morning write 3 pages about anything. Ramble if you may but fill the pages up with ideas, problems, dreams, wishes. 17 Source: MetaMatrix Consulting (David Goldsmith)

19. Idea submission form • Welcome to the Citi Rewards Innovation Site • Please complete the following: In progress 18