Michael Schrage

The goal of this two-day workshop is to give attendees the tools, ideas and insights essential to promoting sustainable and cost-effective innovation throughout their organization. Attendees will come away with a new awareness of how they can productively define, design and invest in innovation. The workshop achieves this goal by focusing on the ’economics of innovation’ — that is, the essential ingredients of cost, benefit, supply, demand and risks that shape a firm’s ’innovation marketplace.’ The key to understanding a firm’s ’innovation economics’ is to understand how firms use—or abuse and misuse—models, prototypes and simulations to manage innovation and risk. How firms ’invest and test’ their models, proto- types and simulations overwhelmingly determines the value they and their customers get from innovation. Drawing on examples, case studies and vignettes from a wide range of organizations, participants will be able to pragmatically assess real-world implementation challenges associated with cost-effective modeling, prototyping and virtual experimentation. The selected examples are based on research from Michael Schrage’s best-selling Harvard Business School Press book Serious Play, his ongoing MIT research and his advisory work. The core ’innovation economics’ principles they articulate apply across industries, across cultures (both corporate and national) and across enterprises regardless of size and scope.

There is a widespread theory that all dazzling innovations end their days as commodities, products that anyone can make and that are bought only according to their price. Columbia Business School’s Bruce Greenwald once expressed this view with the quip, “In the long run, everything is a toaster.” MIT Media Lab researcher Michael Schrage finds that innovation has a continued role, even in such staid objects as toasters and vacuum cleaners. High-tech companies who panic about the day when everyone can make their latest futuristic doodad at a low price should take note: Ignoring innovation and focusing on cutting prices can be fatal. The evolution of the toaster shows that the appliance is in fact “an unlikely symbol of sustainable innovation,” Mr. Schrage explains. Since the first commercially successful toaster was made by General Electric Co. in 1909, improvements have arrived regularly: bread grilled on both sides (1919); automated toasters (1940s); toaster ovens (1950s); and digital toasters (1990s). He criticizes Hoover Co. for focusing on making its vacuum cleaners cheaper, when there were innovations still to be had — observe the success of Dyson’s expensive and pleasingly bagless vacuums. Price wars for products don’t necessarily mean that innovation has reached its limit; but the low prices could be a signal that more advances are needed. Even actual commodities, Mr. Schrage notes, are subject to developments: Look what Starbucks Corp. managed to do with coffee.

The omnichannel challenge, the rise of Big Data and a 'new normal' of tepid economic growth are forcing serious retailers to revisit and revise their most fundamental assumptions around their business models. Managing opportunity amidst uncertainty has become as much a cultural issue as a technical and organizational challenge. Deciding how best to align brand value with a novel but sustainable shopper experience has assumed a renewed strategic urgency. This keynote talk will explore the role of segmentation, experimentation, socialization and skill-ification as key (re) design principles for retailers seeking lower-cost, higher impact approaches to creating better experiences for shoppers and associates alike. The talk's goal is to push retail marketers and their colleagues to take better, smarter and faster 'innovation risks' for new value creation.