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August 16‐18, 2016 Johannesburg, South Africa
TOC for Innovation
Henning du Preez, TMARA Pty (Ltd), South Africa 17th – 18th August, 2016
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Henning du Preez Born in South Africa, I have followed a journey of game changing in my life. Never satisfied with the status quo and always trying to find the breakthrough, this journey has brought the birth of potentially the single biggest disruption in the innovation space. Standing on the shoulders of giants like Dr Eli Goldratt (Theory of Constraints), Elon Musk (Probable Entrepreneur of the century) and Everett Rogers & Geoffrey Moore (Innovation Adoption Lifecycle), I have recognized that the odds of success in the innovation eco-space has never really improved, and have made it my single biggest challenge to ultimately over-turn the odds. I have discovered a way to leverage the first principles that governs a disruptive innovation (a game-changer), by
[email protected] changing from pushing the innovation towards the market,
[email protected] to getting the market to pull the innovation.
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From Start Up to Lift Off
Enable the future
Enable your business’s future
Enable your customer’s future TMARA aspire and honor innovators and innovations that enabled our future
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INNOVATION The Problem The Solution The Process
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Perception of Value (Product market fit)
R20
High
High
Value?
Inventor’s perception of value Market’s perception of value Low
Value
Low Match
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IDEAS never fail only START Ups 27th International Conference of the TOC Practitioners Alliance ‐ TOCPA
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Market Adoption Constraint High
High
Inventor’s perception of value
Market’s perception of value Low
Low
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Market Adoption Constraint “Natural process of matching”
100
50
Market Adoption %
75
25
0 Visionary
Early Adopter
Early Majority
Late Majority
Laggards
TIME Innovation Market Adoption Lifecycle 27th International Conference of the TOC Practitioners Alliance ‐ TOCPA
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How can we assess and affect the adoptability (level of match) of an invention faster and early in the game?
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INNOVATION The Problem The Solution The Process
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First Principles
1. Innovation can bring benefits, if and only if, it diminishes a limitation (Intrinsic Value) 2. Innovation is necessary but not sufficient, the market must adopt new rules to realize the full benefits (Realizable value) 3. Putting your money where your mouth is, is convincing (Guaranteed Value)
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Removing Limitations = Intrinsic Value “What was impossible in the life of the market, that is now possible with the new invention?”
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Example The water bucket (container) innovation broke a major limitation for the human. Before the water bucket it was impossible to live far from a natural water source.
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Example Before SodaStream people could only satisfy their craving for sparkling soda drinks by buying ready made sodas!
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Example Before Uber, people and taxis did not know about one another in real time. You had to use other ways to find one another.
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First Principles 1. Innovation can bring benefits, if and only if, it diminishes a limitation (Intrinsic Value) 2. Innovation is necessary but not sufficient, the market must adopt new rules to realize the full benefits (Realizable value) 3. Putting your money where your mouth is, is convincing (Guaranteed value)
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People and markets adapt to their environments. If they experience a limitation in their environment then they will adopt specific traits or rules to exploit the maximum value given the limitation.
Limitation with Rules
Limitation with no Rules Human Nature
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As long as the old rules / traits that helped us to accommodate for the limitation are obeyed the end result is the same as if the limitation still exists. In other words, we cannot expect to see any significant benefits.
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The OLD rules We have a lifespan limitation of around 100 years. We have adopted rules to optimize this time. What happens around 20 years, around 30 years, around 65 years, around 80 years?
We have now found a new chemical that extends life by another 100 years – GREAT- but if we continue to follow the old rules, what value will we get from the expansion? What rules should we change? 27thCopyright International Conference of the TOC Practitioners Alliance ‐ © 2015 TMARA TOCPA Copyright © 2015 TMARA
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Example
Before UBER, what were the rules / traits to help when the Taxi and the client did not know about one another in real time.
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New Rules to Realize New Value
• Before MRP, people had to manually calculate the net requirements for any manufacturing business. It took a lot of people and a lot of time to get it done. As a result the old rule was – calculate it ones a month. MRP broke the limitation and you could do it overnight. • If we implement MRP and keep the old rule what benefits will we see? • What is the new rule that will unlock the new value? • What enabled the new Rule that unlocked the New Value? 27th International Conference of the TOC Practitioners Alliance ‐ TOCPA
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First Principles 1. Innovation can bring benefits, if and only if, it diminishes a limitation (Intrinsic Value) 2. Innovation is necessary but not sufficient, the market must adopt new rules to realize the full benefits (Realizable value) 3. Putting your money where your mouth is, is convincing (Guaranteed value)
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Product Guarantee to Value Guarantee
MRP offer (Value Guaranteed): If you are prepared to change your monthly net calculations to weekly, then MRP will guarantee (money back) a reduction in inventory, lead time and improved customer service on the basis that you install the MRP system to enable the new weekly rule. 27th International Conference of the TOC Practitioners Alliance ‐ TOCPA
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CHANGER
A U M L E E
Estimates are that 9 out of 10 GAME CHANGING Start Up’s do not clearly consider the new rules required by the market to extract the full value!
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INNOVATION Limitation: Market Adoption Constraint (Uncertainty) Old Rule / Strategy: Promote the benefits and features of the new invention to induce market adoption.
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Pushing your innovation
STOP
Market Adoption Constraint
Pulling your innovation
START
Benefits
Intrinsic Value
Features
Realizable Value
Product Guarantees
Guaranteed Value 27th International Conference of the TOC Practitioners Alliance ‐ TOCPA
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INNOVATION The Problem The Solution The Process
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Push System “Trial and Error”
Start up
Market 1st Attempt
Testing your offering to see if it will hit the market’s sweet spot or tipping point
X
2nd Attempt
X
3rd Attempt 4th Attempt
Hope it is going to work this time
Elusive Sweet Spot
X X
You need determination, because it is going to be a case of hit and miss! You will need to fail fast and learn fast!
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Value Matching Process Value
Match
Risk Mapping
Gate 1 Risk of mismatch
Risk of a mismatch
Gate 2
Gate 3
Risk of mismatch
Risk of
POV(i) >> POV(m) Market Adoption Constraint
T
Possible Match (Intrinsic Value) Principle: Intrinsic Value for the customer (Removing a significant limitation)
T
Probable Match (Ease of Realization)
Principles: Ease with which the customer can realize the full value (New Value Rules)
Proven Match T
POV(i) << POV
(Value Guarantee)
Principles: Putting your money where your mouth is, is convincing
TMARA Founding Principles 27th International Conference of the TOC Practitioners Alliance ‐ TOCPA
(m)
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TMARA MAPPING Target Market Adoption Risk Assessment
TMARA – Start Up Phase Questionnaire
2. How sensitive are your customers’ to your price?
U n d e r H i g h
3. How well do potential customers cope without your product or service?
W e l l
4. Are you considered by the customers as a strong competitor for this type of product / service?
S t r o n gW e a k
5. How strong is “word of mouth” regarding your product or service in the market? 6. Are customers finding additional ways to get even more value from your product or service? 7. Are customers showing a consistent use and /or returning for more?
L o w
L o w
high O v e r L o w
N o t W e l W el a k S t r o n g H i g h H i g h
Level of potential value
1. Are customers in general under‐ or over‐valuing your product / service?
A v e r a g e
0
‐35 High Potential Low Realization Medium Risk
+35 High Potential High Realization Low Risk
+35
B
0
A Low Potential Low Realization High Risk
Low Potential High Realization Medium Risk ‐35
low low
Level of ease of realization
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high
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Market Pull System “Define and Align” Market Sweet Spot Characterization 1. Limitation 2. Coping Rules 3. Associated Penalties
Start up De‐Risking
Align your offering with the market’s sweet spot or tipping point through the 3 gates
Market
3
Elusive Sweet Spot
Gate 1 Gate 2
Intrinsic Realizable Value Value
2
Gate 3
X XX
Guaranteed Value
1
Identification of Target Markets through the Intrinsic power of the new innovation
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THE GOAL High
High
Inventor’s perception of value
Market’s perception of value Low
Value
Low Match
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Thank You
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