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MarkAtkinsChairman CEOInventionMachine TheNewInnovationEconomy 10InnovationTrendsin2010 PowertoInnovate October2008 2010willbetheInnovationDecadeProductobsolescenceof50 70 willoccurby2012TheimpactoftheBabyBoomersexodusTheemergenceofBIC Brazil India China intheGlobalInnovationEconomyIPmonetizationvs IPquantificationTimetomarket inhalfthetimeDevelop connect globalcollaborationPmoditizationRadicalengineeringvs incrementalengineeringTheevolutionoftheInnovationIntelligenceEcosystem TheNewInnovationEconomyLandscape TheNewInnovationEconomyLandscape SurvivingintheNewEconomy Tostayafloat companieshave Right sizedtheorganizationReducedspendConservedcashTheresult Growthismarginal atbestInnovationinvestmenthasbeenminimalInnovationhasnotbeenapriority TheNewInnovationEconomyLandscape Innovation UnderPressure ProductportfoliosarefastbecomingobsoleteIntellectualpropertyisexpiringThegreyingworkforceisfacingretirementNewinnovationworkersneedtotapintotheinstitutionalmemoryandtransitioninanacceleratedwayCompaniesstruggletocollaboratearoundproductdevelopmentOrganizationslackaprocessaroundinnovationInnovationisad hoc informal unsustainable INNOVATION TheNewInnovationEconomyLandscape Now InnovationMoreCriticalThanEver CEO sviewinnovationascriticaltofuturesuccess 2006 2007 200820092010 Percentageofrespondents 0 20 100 ofrespondentswhoconsiderinnovationatop 3priority 80 60 40 Source BCG 2010 TheNewInnovationEconomyLandscape Now InnovationMoreCriticalThanEver IncreaseSignificantly 10 Percentageofrespondents 0 10 Howwillyourcompany sinvestmentininnovationComparewithitsinvestmentlastyear 40 30 20 Source BCG 2010 StayroughlyThesame DecreaseSlightly 1 10 DecreaseSignificantly 10 Increaseslightly 10 26 26 32 35 28 31 9 5 5 3 20092010 TheNewInnovationEconomyLandscape TheInnovationMandate InnovationROI InnovationmustbealignedwithbusinessgoalsNotinnovationforinnovation ssakeDriverevenuegrowththrough NewmarketsDifferentiatedproducts Customersatisfaction Percentageofrespondents 0 10 50 Howdoesyourcompanymeasureitssuccessatinnovation 40 30 20 OverallRevenueGrowth Salesfromnewproducts svcs HigherMargins NewProductSuccessratios Returnoninnov spending newProducts svcs Timetomarket Patents 45 40 35 29 27 26 25 20 15 Source BCG 2010 TheNewInnovationEconomyLandscape TheInnovationChallenge Innovationremainsanad hocprocessForrester CEO sareclamoringforcontinuousvs ad hocinnovationtostayaheadofcompetitionKnowledgeishiddeninplainsightIDC KnowledgeworkersarefailingintheirquesttoobtaintheinformationtheyneedInnovatorsworkinisolationHarvardBusinessSchool Traditionalinnovationapproachesareoutdated firmsmustdeveloptheabilitytocollaborateLackofinnovationcultureTimetomarketneedstobeacceleratedNouniforminnovationmetrics Yes No NotSure 43 52 55 Percentageofrespondents 0 20 40 AreyousatisfiedwiththefinancialReturnonyourinnovationinvestment 60 57 48 45 200820092010 Source BCG 2010 OurWorldisChanging OurWorldisChanging ANewWorldOrderinInnovation TheimpactofBrazil India China BIC andotherRapidDevelopingEconomies RDE BIC RDEseeinnovationasmorecriticalthanUSA Europe matureeconomies 52 ofBIC RDEconsiderinnovationcriticalvs 31 ofUSA Europe85 ofBIC RDEsurveyedareincreasinginnovationinvestmentvs 53 ofUSA Europe84 ofBIC RDEwantnewproduct newmarketingproductinnovationinitiativesvs 63 ofUSA Europe49 sayUSAwillnotbe 1ininnovationeconomyin2015 It snotthestrongestnormostintelligentofthespeciesthatsurvive itistheonemostadaptabletochange CharlesDarwin OurWorldisChanging TheChallengesofEmergingMarkets Understanding VoiceoftheCustomer LocalizedproductizationMultipledifferentiatedmarketsegmentsandnewproductsinitiativesVaryingeconomicconsumeraffordabilitiesrequirelocalizedproductinitiatives OurWorldisChanging TheNewEconomyCompetitiveLandscape DiscoveringyournewglobalcompetitorRapidlyevolvingnewproducts technologiesfromemergingcountriesRDElowcost pricechallengesBIC RDEinvestinginpeoplevs USA EuropeinvestinginnewideasBIC RDE3yearprojectGDPgrowth 2011 2013 5 8XUSA EuropeBIC RDEtripartinnovationvs individualentityinnovation USA Europe TheNewInnovationEconomyStrategy TheNewInnovationEconomyStrategy InnovationRequiresaParadigmShift TheNewInnovationEconomyStrategy FourPillarInnovationStrategy LeadershipstrategyGlobalcollaborationstrategyInnovationIntelligencestrategyProductdevelopmentstrategy DominationThroughInnovation TheNewInnovationEconomyStrategy Leadership TheCEOCharter Establisha Global2010DecadeVision inclusiveofemergingmarketsEstablishneweconomyinnovationmetricsTimetomarket productsfornewmarkets newproductsforexistingmarkets globalcollaborationObjectivelyassessyourcorporateculture riskadverse Mandateaninnovationparadigmshift toobusytoinnovate top downapproach PeopleandideasarecoretowinningInvestininnovation people solutionsandinfrastructureLeadfromthefront TheCEOmustalsobeChiefInnovationOfficer A G Lafley formerChairmanoftheBoard PresidentandChiefExecutiveOfficerofProcter Gamble TheNewInnovationEconomyStrategy GlobalCollaboration InternalcollaborationstrategiesDestroythe silosyndrome DevelopglobalsustainableinnovationpracticesEstablishaglobalinnovationcorecompetencyteamIdentifyglobaldomainexpertsCollaboratearoundboth BigI and SmallI initiativesExternalcollaborationstrategiesAccelerateopeninnovationinitiativesEliminatethecostsavingsoutsourcemindsetInvestinfullinnovationproductdevelopmentinBIC RDE Ideagenerationanddevelopment TheNewInnovationEconomyStrategy InnovationIntelligence KnowledgeEnablingYourPeopleImplementanInnovationIntelligencePlatform Goldfire IntensifynewmarketresearchAccessinternalandexternalcontentforallproductdevelopmentinitiativesMonitorinnovationtrends dailyUnderstandderivativeIPimpactDissolvebarrierstocontent i e languagebarriers DevelopanInnovationIntelligenceEcosystem integratingcontent communitiesandinitiatives GetPluggedIn TheNewInnovationEconomyStrategy TheProductInnovationRoadmap ShorttermoptionsFast pathinitiativestomitigateobsolescenceIncrementalengineeringoptionRepurposingBuyvs make technologypartneringLongtermroadmapDevelopacompetitive leapfrogroadmap radicalengineeringInnovatefornewmarketsandnewcustomersFocusoncustomeraffordabilityandenvironmentalsustainabilityIncorporatenewdomainexpertsAcceleratetimetomarket buildhighbarrierstoentry Differentiate Differentiate Differentiate InventionMachine YourPartnerIntheNewInnovationEconomy InventionMachine YourInnovationPartner Goldfire theProductfortheNewInnovationEconomy FastertimetomarketwithdifferentiatedproductsGlobaltechnologytrends evolvingcompetitorsNewmarketsandrepurposingGreaterglobalcollaborationofpeopleandcontentOndemandsolutionsviainternalcontentaccess LegacyproductdevelopmentBestpracticesVoiceoftheCustomerOndemandsolutionsviaexternalcontentaccess 1 100pre indexeddeepwebsitesSpecializedtechnicalcontent InventionMachine YourInnovationPartner Goldfire theProductfortheNewInnovationEconomy Solutionsfor Fasterdiagnostics causefinder PreventativemaintenanceSustainableinnovationintegratedwithyourbusinessprocessesOptimalconceptgeneration Goldfire TheInnovationIntelligencePlatform InventionMachine YourInnovationPartner GoldfireConsultingfortheNewInnovationEconomy Amorealignedconsultingmodelforour

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