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Innovation: Finding New Markets for New and Disruptive Technologies

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PLATFORM PLANNING (CONVENTIONAL) NOT APPROPRIATE EURO DISNEY FOR EXAMPLE ... PRO FORMA OPERATIONS SPECS LAYS OUT THE OPERATIONS NEEDED TO RUN BUSINESS ... – PowerPoint PPT presentation

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Title: Innovation: Finding New Markets for New and Disruptive Technologies


1
InnovationFinding New Markets for
NewandDisruptive Technologies
2
OVERVIEW
  • FOCUS ON CREATIVITY ININNOVATION-HOW TO FIND
    UNIQUE PRODUCTS AND SERVICES VALUED IN THE MARKET
  • TOOL KITS DEVELOPED
  • SHIFTING BASES OF COMPETITION
  • DISCOVERING WHAT HAS BEEN DISCOVERED
  • DISCOVERY-DRIVEN PLANNING
  • TOOLS ARE BUILT ON A SET OF PRINCIPLES
  • A STRUCTURED WAY OF THINKING, PLANNING, AND
    WORKING
  • TO COPE WITH AN UNCERTAIN FUTURE
  • INVREASE PROBABILITY THAT INNOVATIVE PRODUCTS AND
    SERVICES WILL BE COMMERCIALLY SUCCESSFUL
  • HELP GEN MGR STRUCTURE THE WORK OF OTHERS IN
    MARKETING, RD, FINANCE AND PLANNING TO INCREASE
    THE PROBABLILITY THAT THEY WILL INNOVATE
    SUCCESSFULLY

3
SHIFTING BASIS OF COMPETITION
  • BASIS OF COMPETITION IN ANY MARKET TIER IS THE
    PRODUCT ATTRIBUTES FOR WHICH CUSTOMERS WILL MOST
    READILY PAY A PREMIUM.
  • THIS ATTRIBUTE DEFINES THE TRAJECTORY OF
    PERFORMANCE IMPROVEMENT FOR INNOVATORS
  • FUNDAMENTAL PREMISES ARE
  • IN EACH TIER OF A MARKET AT A GIVEN POINT IN
    TIME, THERE IS A DIMENSION OF THE PRODUCT, CALLED
    THE BASIS OF COMPETITION, THAT IS, THE DOMINANT
    CRITERION FOR CHOOSING ONE PRODUCT OVER ANOTHER.
  • MARKET SEGMENTS ARE ALSO DEFINED BY THIS
    DIMENSION-BASIS OF COMPETITION
  • WHEN THE PERFORMANCE OF PRODUCTS IMPROVES ALONG
    THIS DIMENSION BEYOND THE LEVEL THAT A MARKET CAN
    ABSORB, THEN THE BASIS OF COMPETITION WILL SHIFT
    TO A NEW DIMENSION OR ATTRIBUTE

4
BASIS FOR COMPETITION
  • IN EARLY STAGES OF MOST MARKETS, FUCTIONALITY
    DRIVES CUSTOMER CHOICES
  • See Next Page
  • REGION A PRODUCTS IMPERFECTLY MEET WHAT
    CUSTOMERS WANT
  • PAY A PREMIUM FOR HIGHEST PERFORMERS
  • A TEMPORARY CONDITION
  • REGION B (FIG 3) ACCEPTABLE FUNCTIONALITY OF
    MULTIPLE PRODUCTS IN A GIVEN TIER INCREASES PRICE
    COMPETITION UNTIL AN INNOVATOR INTRODUCES A
    PRODUCT THAT IS A SUBSTANTIAL IMPROVEMENT ALONG A
    DIMENSION NOT YET SATISFIED-USUALLY RELIABILITY

5
Functional Organization Structure-Fig 1a
General manager
Finance
Human resources
Research and development
Operations
Product marketing
6
Hybrid Beatrice International One Functional
Automobile Products Business Fig-1b
7
Product Structure-Fig 2a
CEO
Finance
Human resources
Electronic instruments
Medical instruments
Computers
RD
Operations
Marketing
8
H. J. Heinz Product Division ( S.B.U.)
Structure - Fig 2b
9
Intersecting Trajectories of Improvement
Performance Improvement by Industry
Technologists, vs. Performance Improvement that
the Market Can Absorb Fig 3
Trajectory of Improvement that technologist are
able to provide the market.
Region B
High-end markets
Trajectories of performance improvement that
customers need or are able to absorb
Product Performance
Low-end markets
Region A
Disruptive Technology
Time
10
  • WHEN MULTIPLE PRODUCTS OFFER ENOUGH FUNCTIONALITY
    AND RELIABILITY, CUSTOMERS ARE RELUCTANT TO PAY
    PRICE PREMIUM FOR IMPROVEMENTS IN EITHER OF THESE
  • INSTEAD THEY WILL CHOOSE EASIER TO USE PRODUCTS
    FROM SUPPLIERS WITH WHICH IT IS CONVENIENT TO DO
    BUSINESS
  • AND THEY ARE WILLING TO PAY A PREMIUM FOR THIS
    CONVENIENCE

11
PERSPECTIVE
  • TYPICALLY, FIRMS SEEK INNOVATIONS THAT PROVIDE
    MORE AND BETTER ATTRIBUTES THEIR CUSTOMERS VALUE
  • INNOVATION THAT TRANSFORM INDUSTRIES AND CREATE A
    NEW WAVE OF GROWTH OCCUR WHEN INNOVATORS
    CORRECTLY REDEFINE A NEW TRAJECTORY

12
CHOOSING LEAD CUSTOMERS
  • CHOOSING WHICH CUSTOMERS TO SERVE IS ONE OF THE
    MOST IMPORTANT STRATEGIC DECISION IN MANAGING
    INNOVATION
  • SELECTING CUSTOMERS DEFINES THE SORT OF PROBLEMS
    A COMPANT CONFRONTS, AND SOLVING THEM DETERMINES
    ITS CAPABILITIES AND HOW SUCCESSFULLY IT CAN
    COMPETE
  • LEAD CUSTOMERS MOST SOPHISTICATED AND PURCHASE
    PRODUCTS AT THE UPPER END OF THE PRODUCT RANGE
  • THEIR GUIDANCE IS VALUABLE WHEN A LARGE PORTION
    OF THE MARKET IS DISSATISFIED WITH THE CURRENT
    FUNCTIONALITY
  • THOSE CUSTOMERS WHO WILL HELP FIRMS DEFINE A NEW
    TRAJECTORY ARE AT THE BOTTOM RATHER THAN TOP OF
    THE MARKET

13
TWO BASIC FORCES INFLUENCING INT ORGANIZATION
DESIGNS
  • FORCES FOR CROSS MARKET COORDINATION/INTEGRATION
  • SCALE ADVANTAGES AND COMPETITIVE STRATEGY
  • FORCES FOR NATIONAL RESPONSIVENESS/DIFFERENTIATION
  • CONSUMER PREFERENCES, MARKET DIFFERENCES, GOVT
    POLICY

14
STOPFORD AND WELLSS INTEGRATED STAGES MODEL
  • (Next Page)

15
The Typical Structure Path for a Multi-National
Corporations
High
Worldwide S.B.U./GBU 2b
Global Matrix 3a
(Differentiated Network)
Alternative Path 3
Foreign Product Diversity
Alternative Path 2
Regional S.B.U. 29
International Division 1
Low
Foreign Revenue as a Percentage of Total Revenue
Low
High
Source Stepford Wells, 1972
16
DISCOVERING WHAT HAS BEEN DISCOVERED
  • CONTEXT AFFECTS INNOVATIVE FLEXIBILITY
  • INNOVATORS ABILITIES TO SEE NEW OPPORTUNITIES
    ENHANCED BY ASSUMING DIFFERENT PERSPECTIVES
  • HOW WOULD SMALL START UP FIRMS IMPLEMENT THE
    IDEA?
  • HOW DOES IT LOOK TO OPINION LEADERS AT LEADING
    EDGE OF MARKET, TO UNSOPHISTICATED CUSTOMERS AT
    THE BOTTOM?
  • DISCOVERY DRIVEN PLANNING
  • INVOLVES BUILDING PLANS TO LEARN FOR UNKNOWABLE
    ENVIRONMENTS

17
Discovery-Driven PlanningA new way of thinking
for new Ventures
18
OVERVIEW
  • NEW STRATEGIC VENTURES ARE RISKY
  • NEW VENTURES HAVE A HIGH RATIO OF ASSUPTIONS TO
    KNOWLEDGE
  • PLATFORM PLANNING (CONVENTIONAL) NOT APPROPRIATE
    EURO DISNEY FOR EXAMPLE
  • BY INCORPORATING NEW INFOR, DDP CONVERTS
    ASSUMPTIONS INTO KNOWLEDGE
  • REAL POTENTIAL OF THE VENTURE IS DISCOVERED AS IS
    EVOLVES
  • DDP IMPOSES DISCIPLINE ON NEW VENTURE PLANNING

19
COMMON PLANNING ERRORS
  • AFTER A FEW DEISIONS ARE MADE, MGT PROCEEDS AS
    THOUGH ASSUMPTIONS ARE FACTS
  • FAIL TO USE HARD FACTS AVAILABLE TO CHECK
    ASSUMPTIONS
  • HAVE DATA TO KNOW REAL OPPORTUNITY EXIST BUT MAKE
    IMPLICIT AND INAPPROPRIATE ASSUMPTIONS ABOUT
    IMPLEMENTATION
  • START WITH GOOD DATA BUT ASSUME STATIC
    ENVIRONMENT AND FAIL TO NOTICE CHANGES IN KEY
    VARIABLE
  • DANGEROUS IMPLICIT ASSUMPTIONS (P194)

20
OVERVIEW OF DDP PROCESS
  • A SYSTEMATIC WAT TO UNCOVER AND CHALLENGE
    IMPLICIT ASSUMPTIONS WHICH MIGHT BE INCORPORATED
    INTO A PLAN
  • A MEANS FOR IMPOSING DISCIPLINE AND INCORPORATE
    NEW INFORMATION
  • INVOLVES CREATING FOUR MAJOR DOCUMENTS
  • A REVERSE INCOME STATEMENT MODELS THE BASIC
    ECONOMICS OF BUSINESS
  • PRO FORMA OPERATIONS SPECS LAYS OUT THE
    OPERATIONS NEEDED TO RUN BUSINESS
  • KEY ASSUMPTIONS CHECK LIST
  • MILESTONE PLANNING CHART SPECIFIES THE
    ASSUMPTIONS TO BE TESTED AT EACH MILESTONE
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