Redifferentiating Products: New Technology or New Uses Week

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Redifferentiating Products New Technology or New
UsesWeek 4

• Recognizing the Potential of an Innovation
• Think Bubbles (Quizzing to understand the
  customers experiential context pp. 50-56)
• Instructor J. Christopher Westland, Professor,
  ISMT
• Time
• Tue Thu 130pm-250pmVenue Rm. 4333Duration 5
  Sep 7 Dec
• Text.
• McGrath MacMillan, The Entrepreneurial Mindset,
  HBS Press 2000
• Contact
• Office 852 2358 7643 Fax [phone]
• Email westland_at_ust.hk URL
  http//teaching.ust.hk/ismt302/

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Innovation Invention Commercialization
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Redifferentiating ProductsNew Technology or New
Uses

• Redifferentiating
• Quizzing
• Consumption Chain Analysis
• Practicum Think Bubbles

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The Dialectic

• Innovation involves a dialectic
• On the one-side are arguments about what the
  customer wants (demand-side)
• Remember that the customer doesnt care about us
  or our products
• We have to make them care
• On the other-side are arguments about what we can
  do (supply-side)
• These are determined by our core competences
• Which are to some extent determined by Mission
  and Vision statements, and our Business Models
• We are on the 2nd chapter on the demand side

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Redifferentiating

• Lay your biases on the table
• There is no market that is so mature that you
  cannot further differentiate your offerings
• Show me a manger who claims hes in a mature
  business..
• and Ill show you a manger whos asleep at the
  wheel
• --Shelly Weinig
• Redifferentiating is a skill that can be learned
• Quizzing
• Consumption Chain Analysis

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Function of Quizzing

• Detailed look at customer usage and decision
  making regarding your product
• Looks at the customers stream of consciousness
• Through a series of questions
• Looks for ideas to Change the Customers
  Experience (i.e., redifferentiate your product)
• Remember Experience is dynamic
• So are the questions in quizzing
• Over a time period prior to the first time
  customer is exposed to the product
• To a time well after the customer has stopped
  using it

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Preliminaries The Basis for Quizzing

• Rudyard Kiplings six honest serving men
• What, who, when, where, how why?
• What is the problem?
• Who (which individual in the case) is responsible
  for solving the problem and making a decision?
• Where is the money? (The value generated by the
  solution)
• When does the problem need to be solved?
• How will you measure success?
• Why did you have this problem, and what will you
  do to prevent it in the future?
• This establishes the context for the customers
  problem
• And where you might find new business
• by Redifferentiating your products

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Quizzing

• Who?
• is with customers while hey use the product
• How much influence do they have
• If we could arrange it, who would we want the
  customer to be with
• What?
• Do our customers experience when the use the
  product
• needs provoked our offering
• What else? might customers have on their minds
  
• When? do our customers use this ..
• Where? are our customers when they use this
• How? do customers learn to use the product ..

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Stream of Consciousness

• Quizzing should be a Stream of Consciousness
• Psychology and philosophy
• the set of constantly changing inner thoughts and
  sensations which an individual has while
  conscious
• Literary criticism
• technique which seeks to describe an individual's
  point of view by giving the written equivalent of
  the character's thought processes.
• Stream-of-consciousness writing is strongly
  associated with the modernist movement.
• May Sinclair transferred it from psychology to
  the literary context.

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Mistakes to Avoid
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Think Bubbles (Part 1)

• Quizzing
• Mind Maps to Recognize the Potential of an
  Innovation

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Function of Consumption Chain Analysis

• A complement to quizzing
• And (perhaps) quizzing done from a different
  (more graphical) perspective
• Consumption Chain Analysis
• Works from the premise that
• opportunities for redifferentiation
• lurk at every step and decision that your
  customers take
• From the time they first become aware of their
  need for your product or service
• To the time thy finally dispose of the remnants
  of the used up product
• Rather than stream of consciousness
• It is time-sequential

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Consumption Chain Analysis

• A complement to quizzing
• And (perhaps) quizzing done from a different
  (more graphical) perspective
• Consumption Chain Analysis
• Works from the premise that
• opportunities for redifferentiation
• lurk at every step and decision that your
  customers take
• From the time they first become aware of their
  need for your product or service
• To the time thy finally dispose of the remnants
  of the used up product
• Rather than stream of consciousness
• It is time-sequential

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Consumption Chain Analysis
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Think Bubbles (Part 2)

• Consumption Chain Analysis
• How can you improve on the existing steps in the
  Customers Consumption Chain?

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Every Link in the Consumption Chain has its Own
Attribute Map

• The Attribute Map compares your product to those
  of others

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At each step, remember to KISS (Keep It Simple,
S)

• The simplest way to change a business model
• Is to redesign your offerings i.e., products
  and services
• Aim for blockbuster design
• One that so appeals to your target customers
• That they feel almost compelled to buy from you

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The Purpose of a Business is to Create a
Customer-- Peter Drucker

• Even if you create marvelous inventions
• Your customers wont care
• Unless that is exactly what they need
• Business customers are especially impatient
• With any product that doesnt help them gain
  competitive advantage
• Yet your firm wants to build products that take
  advantage
• Of their Core Competences

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Creative Tension

• Core Competences are the things that the firm
  does
• That they do better than other firms
• That are the source of their competitive
  advantage
• They are not necessarily what the customer wants
  (!!)
• Firms establish their core competences by
• Investing in people
• Investing in assets, plant and land
• Identifying and focusing their mission
• The Firms core competences are often those of
  its CEO and management

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Core Competences Consume your ResourcesKeep a
Resource View of Firm Strategy
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Recap Steps for Redifferentiating

• For each customer segment sketch the consumption
  chain
• Identify the trigger events that precipitate
  customer movement from link to link
• Put in place procedures to alert you when the
  trigger is pulled (and plan your response)
• Quiz to assess needs that may not be met
  currently
• Create an attribute map for each significant link
  in the Consumption Chain
• Use your knowledge of Customer Experience to
  create Blockbuster Products
• Put the ideas you generate into your opportunity
  register
• Repeat this process for each class of stakeholders

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Redifferentiating in Industry

• Who does it well?
• Who Doesnt?
• A look at some recent industrial success stories

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Jeffrey Immelt General Electric

• Repositioned GE's portfolio with major
  acquisitions in health care, entertainment, and
  commercial finance.
• Created a more diverse, global, and
  customer-driven culture

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Steven Reinemund PepsiCo

• Developed a strong and diverse leadership bench
  that has helped PepsiCo tap new markets.
• Attained consistent double-digit earnings growth
  through product innovation and smart marketing.

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Hector Ruiz Advanced Micro Devices

• Demonstrated the first mainstream dual-core chip,
  offering superefficient processing with low power
  consumption and heat dissipation.
• Launched an initiative to sell low-cost PCs in
  developing countries in a bid to bridge the
  widening digital divide.

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Steven Spielberg, Jeffrey Katzenberg, and David
Geffen DreamWorks SKG

• In the spring, the computer-animated Shrek 2 set
  a record with a gross of 436.7 million.
• Had one of the year's hottest IPO's, pulling in
  812 million. Stock zoomed by 45 the following
  month.

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Robert Nardelli Home Depot

• Turned a 46 billion business dominated by
  big-box stores into a 70 billion chain with
  urban, suburban, and international outlets.
• A ruthless drive for efficiency, such as
  centralizing purchasing and investing in
  technology, pushed margins above 30.

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Joseph Tucci EMC

• Revived growth by pushing sales of new,
  easier-to-use, less expensive storage gear.
• Made 3.6 billion worth of software deals,
  boosting margins and broadening EMC's appeal to
  customers.

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Linus Torvalds Open Source Development Labs

• Created the core piece of the Linux operating
  system, which launched a software revolution.
• Turned Linux into the No. 2 server operating
  system in the world, after Windows.

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Edward Breen Tyco

• Brought Tyco back after executive scandals and a
  liquidity crunch nearly killed it.
• Tripled net earnings and regained an
  investment-grade rating on Tycos bonds.

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Phil Knight Nike

• Transformed a volatile, fad-driven marketing and
  design icon into a more shareholder-friendly
  company.
• Hired outsider William Perez, ceo of household
  products company S.C. Johnson, to succeed him as
  ceo.

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Chung Mong Koo Hyundai

• Turned the company from the butt of talk-show
  jokes into a leader in customer-satisfaction
  surveys.
• Boosted Hyundai's presence in the U.S., Europe,
  China, and India, resulting in record sales and
  profits.

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Henning Kagermann SAP

• Kept a tight lid on costs, which helped boost
  profits 20, to 1.7 billion.
• Tied SAP'S software to other companies' products,
  helping to win over a slew of new customers.