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  1. Why Innovation Always Trumps Invention Thomas Kuczmarski President, Kuczmarski & Associates

  2. For over 28 years, Kuczmarski & Associates has helped organizations drive growth through innovation Innovation Expertise Diverse Client Base Executive Education Co-Founders of the Chicago Innovation Awards Creating and Leading a Culture of Innovation Managing New Products and Services for Strategic Competitive Advantage 2

  3. Invention Versus Innovation Innovation As A Growth Strategy Member-Centric Innovation Leading Innovation 3

  4. Innovation is a lot more than just new products New Business Models New Services 17 languages Live Intellectual Property Auctions Multi-Language Prescription Labels Crowd Sourced Retail CTA Bus Tracker 4

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  6. Ginger Tata Nano New Acquisition Tata Swach Tata Housing 6

  7. Innovation Myths and Realities MYTH: “Innovation is a fad and too high-risk for our organization” REALITY: Innovation provides relevancy and increases the value proposition MYTH: “Innovation equals brainstorming” REALITY: Innovation solves member problems, issues, and needs MYTH: “Innovation is purely a creative process” REALITY: Innovation requires a systematic and disciplined process MYTH: “Individuals drive innovation” REALITY: Innovation is a team sport 7

  8. Often, organizations face a unique set of innovation challenges Lack of Systematic Development Process Fear of Focus 6 Common Innovation Hurdles Short Term Financial Needs Member Needs Not Understood Leader and Volunteer Turnover Limited People Resources 8

  9. Innovation always trumps invention Invention Innovation Inventors create a product with the dream of success Innovators bring a product or service that solves real needs Innovation transforms inventions into commercial products, services, and businesses Invention generates new ideas, patents, and designs Innovations, which solve customer wants and needs, will attract customers creating new revenue and growth An invention, no matter how inspired, will not be valued if nobody wants to buy it 9

  10. Invention Versus Innovation Innovation As A Growth Strategy Member-Centric Innovation Leading Innovation 10

  11. Successful innovation provides a path to growth and creates new value Successful innovations are… New Products New Business Models New Services New Programs New Processes Creating something new that… Offers New Benefits Is Differentiated from Other Offerings Is Valued by Members Yields Relevancy and Value Allowing you to… Grow your association Bring your strategic plan to life 11

  12. Best Practice innovation companies take a “disciplined-freedom” approach to innovation Innovation Mindset Innovation Strategy Vision Strategic Roles Financial Growth Goals Screening Criteria Member - Centric Innovation Process 1 2 3 4 5 6 7 Define Explore Solve Analyze Develop Prepare Execute Governance Process and Training Culture OrganizationalStructure Resources Rewards Metrics 12

  13. The Innovation Strategy is comprised of Vision, Strategic Roles, Financial Growth Gap, and Screening Criteria An Innovation Vision and Strategic Roles specifically address how innovation will be used to drive growth over time The Innovation Strategy Vision Who do we want to be? Strategic Roles How will innovation support our vision? Growth Gap What are our financial expectations? Screening Criteria How will we measure success? 13

  14. Vision: Building Customer Service Empire Beyond Shoes Customer Service: Free Shipping/Returns/24 hour Call Center Tony Hsieh, CEO Culture: Zapponians and Culture of “Happiness” 14

  15. Pablo Picasso: Released ~13,000 paintingsCreated over 250,000 original paintings Babe Ruth: 714 Home Runs1330 Strikeouts 15

  16. Innovation is sustained through Culture and Mindset Visible and Vocal Top Management Commitment Timely Research Conducted with Members Dedicated Resources Innovation Strategy and Metrics Motivating Rewards and Recognition Language and Reinforcement of Values 16

  17. Invention Versus Innovation Innovation As A Growth Strategy Member-Centric Innovation Leading Innovation 17

  18. Create an innovation portfolio 39% “New Products and Services” 23% “New Products and Services” Cost Reductions Cost Reductions Repositionings Repositionings 8% New to the World NTW Improvements 15% 17% 18% 42% New to the Company Improvements New to the Company Line Extensions 31% 22% 30% Line Extensions The Best The Rest Source: Kuczmarski & Associates Winning New Products Survey 18

  19. An member-centric process enables organizations to deliver product, service, and value propositions that are continually relevant to end users Expand Ideas 3 4 Focus Concepts 5 2 Analyze Solve 1 6 Develop Explore 7 Define Prepare Launch Shape and Test Prototypes and Develop Business Cases Create the Project Strategic Plan Identify Problem/ Opportunity Areas Develop, Shape, and Test Concepts Launch Product/ Service into Market Generate and Screen Solutions Build Market Implementation Strategy Member touch point 19

  20. Play in cross-functional teams The Result FasterSuccessful Commercialization What It Does Shortens communication Gains critical inputs early in the process Creates buy-in Effective Team Dynamics Consistent Team Members “The most successful launches (in terms of overall profitability and/or competitive measures) were related to having cross-functional teams make decisions.” Journal of Product Innovation Management 20

  21. Invention Versus Innovation Innovation As A Growth Strategy Member-Centric Innovation Leading Innovation 21

  22. Kuczmarski’s Top 10 List of Innovation Best Practices 1. Set Expectations Strategy • Create a Portfolio • Uncover Customer Problems and Needs Process 4. Use a Systematic and Disciplined Process • Provide Adequate Funding • Play in Cross-Functional Teams • Keep Score Culture • Reward and Celebrate Success • Accept Failure • Create an Innovative Culture 22

  23. Innovative and progressive organizations will require a new kind of leader in the future Peopleship model and 6 values Humility Compassion Collaboration Peopleship Inclusiveness Transparency Values- Based Decisiveness “Importantly, managing and motivating people with compassionate, collaborative, transparent and inclusive leadership not only positively affects the traditional bottom line, it also gives a boost to hard measures including ROI, stock price and operating earnings.” 23