3 Innovation

7/26/2019 3 Innovation

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1New Product Management

Innovation Management and New

Product Development


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Innovation, Technology and Strategy


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Contents

1.Technology and Strategy (Part I - Intro)

2.Technology and Corporate Planning (Reading I-2)

3. Management Criteria for ffecti!e Inno!ation(Reading I-")

". Core Competence (Reading I-3)


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Technology and Strategy

Porter! "#$orce! model


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"New Product Management


Porter! %generic !trategie!& concept i! awidely u!ed $ramewor' $or cla!!i$yingcompetitive !trategie!( The generic !trategie!are)

Ind#$try%ide differentiation

&oc#$ed differentiation

Ind#$try%ide co$t leader$hip

&oc#$ed co$t leader$hip


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*New Product Management

Technology and StrategyGeneric strategy

Overall costleadership

Overall differentiation Focus-segment costleadership

Focus-segmentdifferentiation

Technological policies

Product technologicalchange

Product development toreduce product cost

by loweringmaterials content,facilitating ease ofmanufacture,simplifyinglogisticalrequirements, etc.

Product development toenhance productquality, features,deliverability, orswitching costs

Product development todesign only enough

performance for thesegment's needs

Product design to meetexactly the needsof the particular

business segmentapplication

Process technologicalchange

Learning curve processimprovementProcess

development toenhance economiesof scale

Process development tosupport hightolerances, greater

quality control,more reliablescheduling, fasterresponse time toorders, and other

dimensions that improvethe ability to perform

Process development totune productionand delivery

system to segmentneeds in order tolower cost

Process development totune the productionand delivery

system to segmentneed in order toimprove

performance


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+New Product Management


Technology and Product#Mar'et Strategy

' firm$ $trategy i$ epre$$ed in the prod#ct$ and$er!ice$ it *ring$ to mar+et. ,ne %ay to get at theintegration of a firm$ technology and prod#ct-

mar+et $trategy i$

ecompo$e each prod#ct or $er!ice into it$con$tit#ting technologie$ and a$$e$$ the relati!e$trength/the degree of di$tincti!e competence/

the firm ha$ %ith re$pect to that technology


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New Product Management


Technology Port$olio

0arri$ Sha% and Somer$ $#gge$t

,nce !ario#$ technologie$ ha!e *een identifiedthey can *e cla$$ified in term$ of their importancefor competiti!e ad!antage

et the firm$ po$ition relati!e to it$ competitor$can *e a$$e$$ed


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-New Product Management


Bet Draw

Cash in Fold

High

Low

Techn

ol

ogyimpo

rtance

Relative technology position

High Low


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1.New Product Management


Technology / 0u!ine!! Port$olio

Co#ple$ Technology portfolio %ith Mcin$ey (4C5)frame%or+ for *#$ine$$ portfolio *a$ed oncompetiti!e po$ition and attracti!ene$$...


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High

Low

ttrativeness

!ompetitive position

High Low

High

Low

Techn

ologyimportance

Relative technology position

High Low

"

"


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Technology oreca!ting

It i$ the capacity to perform $y$tematictechnological foreca$ting. Some #$ef#l techni6#e$for foreca$ting are

Technological progre$$ f#nction$ (S-c#r!e$)

Trend etrapolation

The elphi method

Scenario de!elopment


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Technology and Corporate Planning

ec#ti!e$ generally ha!e lo% technologyeperience

4lac+-*o !ie% on R7

elay$ $#cce$$ rate$...8

Time hori9on difference in planning

Elements in planning Industry, competition, organizational resources...

Technology can result from inside or outside

Questions: How are technological issues recognized bymanagement? How has technology been used toimplement strategic obecti!es? How has technology

been monitored? How are technology"related acti!itiesrecognized and organized?


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:nit of analy$i$ ,ften prod#ct or $pecific techni6#e$

Sho#ld *e generic technologie$

#in$ to elements of product success %unctional performance

&c'uisition cost

Ease"of"use

(perating cost

)eliability *er!iceability

+ompatibility

Importance can differ for mar$ets segments


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1"New Product Management


emand ela$ticity 0o% doe$ demand change *a$ed on the$e

characteri$tic$ (that are infl#enced *y technology)8

Importance can differ for mar$ets segments

-ased on this analysis, compare your technologyto competitors +ompetiti!e technological profile

/rofile of technologies to products 0E1hibit 23

+ommon technologies? Emphasizing product and all its technologies?

Technology"dri!en or dri!ing technology?


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1*New Product Management


Strategic con$ideration$Technological $trength$ for #$e in $e!eral prod#ct$8

Matche$ $trength$ in prod#ction and mar+eting8

Merger$ etc.

'naly$e mar+et need$ at the $ame time...


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1+New Product Management

Management Criteria for EffectiveInnovation

'$$e$$ing and directing technological inno!ation Management criteria to di$criminate profita*le and

#nprofita*le ne% technologie$

T%o $ide$

technological (ne% and good) and *#$ine$$(em*odiment operational con$e6#ence$ and mar+etdynamic$)

Technical potential ;hat f#ndamental technical con$traint$ limiting prior art

are lifted8

;hat ne% technical con$traint$ are inherent8

0o% fa!o#ra*le i$ the trade-off8


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m*odiment I$ the end prod#ct enhanced *y additional technology

and component$ re6#ired to #$e inno!ation8

I$ the inno!ation enhand or dil#ted *y em*odiment8

oe$ the em*odiment offer potential for f#rtherin!enti!e enhancement8

,peration$ ;hat operation$ are di$placed or %ea+ened8

;hat ne% operation$ are needed8

;hat i$ the tradeoff8


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1-New Product Management


Mar+et oe$ the prod#ct pro!ide enhanced effecti!ene$$

$er!ing the final #$er8

oe$ the operation red#ce co$t of deli!ery8

oe$ latent demand epan$ion or price ela$ticityepan$ion determine characteri$tic$ of ne% mar+et$8

ample analy$e$Tran$i$tor$ (hi*it 1)


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Core Competence of the Corporation

Rethin+ing the company *a$ed on it$ corecompetencie$

ample C Recogni9ed con!ergence of comp#ting and

comm#nication$ a $ $trategic intent S#cce$$ %o#ld hinge on competencie$ partic#lary

$emicond#ctor$

e% $trategic architect#re coordination gro#p$ etc.

Three technological=mar+et $tream$ mainframe to

di$tri*#ted IC to >?SI comm#nication$ from mechanicalto digital

Semicond#ctor$ a$ core prod#ct

Myriad $trategic alliance$


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?ong r#n %inner *a$ed on to *#ild 6#ic+ly and atlo% co$t the competencie$ that $pa%n ne%prod#ct$

Mo!e from portfolio of *#$ine$$ to portfolio of

competencie$Tree analogy tr#n+ are core prod#ct$ *ranche$ are

*#$ine$$ #nit$ lea!e$ are end prod#ct$ competencie$are root$ (hi*it 1)

Core competence

Collecti!e learning coordinate prod#ction $+ill$ *ringtogether technologie$ organi9ation of %or+ deli!ery of!al#e

Sony miniat#ri9ation Philip$ optical-media 3M $tic+ytape


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M#$t *e n#rt#red and #$ed maintained

ot nece$$arily o#t$pending

Shared co$t$ *et%een *#$ine$$ #nit$ (component$factorie$ etc.) mo$t often po$t-hoc effort

Identifying core competencie$ Pro!ide$ acce$$ to a !ariety of mar+et$

Ma+e$ $ignificant contri*#tion to percei!ed c#$tomer*enefit of end prod#ct

iffic#lt to imitate


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?oo$ing core competencie$ ?oo+ing at co$t$ only ri$+y - might lead to o#t$o#rcing of

core competence$ (Chry$ler !$. 0onda)

?ea!ing *#$ine$$e$ (:S companie$ - T>)

Core prod#ct$ @ lin+ *et%een competencie$ andend prod#ct$

e.g. engine$ for 0onda

Component$ contri*#ting to !al#e

ifferentiate *rand and man#fact#ring $hare (Canon)


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Concept of organi9ation @ 4#$ine$$ :nit !$.Competencie$

hi*it 2

,%ner$hip of re$o#rce$

4o#nded inno!ation i$integrated IS career path$ comm#nication

Strategic architect#re $ta*li$h o*Aecti!e$ for competence *#ilding

0o% long co#ld %e $tay in thi$ *#$ine$$ if %e lo$e it80o% central to c#$tomer !al#e8 t#re opport#nitie$foreclo$ed8

'rchitect#re pro!ide$ logic for prod#ct and mar+etdi!er$ification (oe$ it add to o!erall goal8 oe$ iteploit=add to core competencie$8)


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4#$ine$$ #nit$ and core competencie$They *elong to company

4: *id for them @ goe$ to one %ith highe$t payoff

Tran$fer of people etc.

Cooperation re%arded


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Technology and Innovation Strategy


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Contents

1.Technology Strategy (Part II - Intro)

2.Technological Inno!ation and the S-C#r!e (ReadingII-1 II-2 and II-3)

3. i$r#pti!e and S#$taining Inno!ation$ (Reading II-"and II-B)

". ,rgani9ational 'daptation (Reading II-13)

B. Strategic ynamic$ (Reading II-1) Ca$e Info$y$ Con$#lting (Ca$e II-11) Ca$e TT oCoMo (04S) Ca$e indle (04S) Ca$e 'ma9on ;e* Ser!ice$ (04S) Ca$e 5eo (04S)


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Introduction Technology Strategy

Technology i$ a re$o#rce (li+e h#man financialand information re$o#rce$) and a potential$o#rce of di$tincti!e (DcoreE) competence

To manage technology a$ a re$o#rce and di$tincti!e

competence a technology $trategy m#$t *e de!eloped.The technology $trategy m#$t $#pport the *#$ine$$

$trategy in de!eloping a competiti!e ad!antage

5oe$ *eyond R7 $trategy


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Strategy ma+ing a$ e!ol#tionary organi9ationallearning proce$$

Technological

capailities

Technology

strategy!"perience


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#trategic

action

$ndustry

conte"tTechnologyevolution

Organi%ational

conte"t

#nternal $nvironment

$xternal $nvironment

%enera tiv

e&echa

nisms

#ntegr ativ

e&ech

a nisms

Technology

strategy

eterminant$of Technology

Strategy


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TN56578 956:TI5N)Company affected *yendogeno#$ e!ol#tion

S-c#r!e traAectorie$

Prod#ct-proce$$ interplay$

e% technologie$ and traAectorie$

Technological change Competence enhancing

Competence de$troying

e-mat#rity (rene%ed inno!ation in %ell-e$ta*li$hed mar+et$)

,rgani9ational determinant$


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IND:ST;8 5NT


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ST;=T7I =TI5N)capt#re$ organi9ationallearning

Ind#ced *y pre!ailing concept of $trategy canmean inertia loc+-in

'#tonomo#$ $trategic action aimed at ne%*#$ine$$ mean$ rene%al often rooted intechnology de!elopment effort$ eplore$*o#ndarie$$ of firm


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5;7=NI>=TI5N=6 5NT


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Technological Innovation and S-Curve

Prod#cti!e #nitF$ capacity for and method$ ofinno!ation depend on $tage of e!ol#tion from$mall technology *a$ed to maAor high-!ol#meprod#cer

MaAor inno!ation$ follo%ed *y many $maller one$ ,ften accco#nt for more than half of economic gain

Typically re$#lt in $peciali9ed $y$tem$ %ith economie$ of$cale

5enerally red#ce flei*ility

MaAor inno!ation$ often *a$ed on emerging needor ne% %ay to meet demand ntreprene#rial act often *a$ed on $#perior

performance


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T%o type$ of inno!ation (incremental change toefficient prod#ction $y$tem !$. radicalinno!ation)

,ften e!ol#tion o!er time

Prod#ct !$. proce$$ inno!ation$ e.g. microelectronic$ or &ord (B model$ in " year$ *a$ed

on flei*le factory then after Model T 1B year$ proce$$inno!ation$)

Implication$ for management of technology 3 $tage$ fl#id tran$itional and $pecific

hi*it 1


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S-c#r!e - ,!er!ie%Theory of the potential for technological impro!ement

&rame%or+ for de$cri*ing $#*$tit#tion of ne% for oldtechnologie$ at ind#$try le!el

Progre$$ $lo% at *eginning then increa$e$ #ntil mat#rity(approache$ nat#ral or phy$ical limit$)

Plot$ time (or engineering effort) !er$#$ main prod#ctperformance feat#re

?eading firm$ often foc#$ on mat#re technologiie$ ne%

entrant$ *a$ed on ne% technologie$ Component !er$#$ architect#ral technologie$ S-c#r!e$

(all impact prod#ct performance)

Ind#$try-le!el !er$#$ indi!id#al firm


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S-c#r!e$ for indi!id#al firm$ 'id in planning $e6#ence of component and architect#re

proAect$ to gain performance

iffic#lt for prediction$ on %hen to change (mi$A#dge

platea# often riding S-c#r!e *etter than *eing fir$t to$%itch to ne% technology)

'rchitect#ral inno!ation$ !ery important often notrecogni9ed and often high mar+et inno!ation a$ %ell

Ca$e di$+ dri!e ind#$try @ component S-c#r!e

Ind#$try le!el hi*it 2 Re$#lt of a $erie$ of component and architect#ral

impro!ement$ (hi*it 3)


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Platea# often *a$ed on perception of mat#rity andre$earch $cale-*ac+ (hi*it ")

&irm timing for introd#cing ne% technology and gain(hi*it B) mo$t innno!ator$ had *een leader$ *#t didnot recei!e partic#lar *enefit$ mo$t did not A#mp o#t of

reach of old technology Strategie$ either fre6#ent change$ to ne% technologie$

(I4M) or longer incremental impro!ement$ (0P) $tay$6#ite con$i$tent

Ca$e di$+ dri!e ind#$try @ architect#ral S-c#r!e Prono#nced fir$t-mo!er ad!antage ei$t$

&ir$t #$ed in emerging mar+et$

e% firm$ $#cceeded *eca#$e they %ere *etter there(leading firm$ technologie$ compara*le)


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'rchitect#ral inno!ation$ often are %or$e %ith regard tomea$#re$ *#t change mea$#re$

ample B.2B-inch changed from capacity and $peed tocapacity per inch and co$t per #nit i.e. mainframe tode$+top

#e to impro!ement$ often in!ade$ (!ery rapidly) homemar+et and leader i$ dethroned (hi*it 2)

?e$$on$ ifference component = architect#re c#r!e$

'rchitect#re often clo$ely co#pled %ith mar+et ne%entrant$ often $#cce$$f#l


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Disruptive and Sustaining Innovations

?in+ of $it#ation to competition %inner ?arge !$. $mall companie$ or incremental !er$#$

*rea+thro#gh not $#fficient

S#$taining $it#ation$ race entail$ ma+ing *etter

prod#ct$ to *e $old for more money to attracti!ec#$tomer$ @ inc#m*ent$ often %in

i$r#pti!e $it#ation$ commerciali9e a $impler or morecon!enient prod#ct to *e $old to at le$$ money to ne% or#nattracti!e c#$tomer$ @ ne%comer$ often %in


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i$r#pti!e inno!ation$ Rate of impro!ement that c#$tomer$ can a*$or* (e.g.

traffic reg#lation$ or Aam$)

TraAectory of impro!ement of inno!ating companie$($teeper) %ill o#tgro% $tandard need to meet not$ati$fied c#$tomer$

S#$taining inno!ation target$ demand high-endc#$tomer$ di$r#pti!e inno!ation redefine traAectory atle$$ performance *#t other !al#e$ (con!enience price)that appeal to ne% or le$$ demanding c#$tomer$

hi*it 1


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Inno!ator$ dilemma Inc#m*ent$ Sho#ld %e fight %hen attac+ed from *elo%8

Sho#ld %e in!e$t to protect the lea$t attracti!e end of*#$ine$$ to retain lea$t loyal mo$t price-$en$iti!ec#$tomer$8 ,r $trengthen po$ition %ith profita*lec#$tomer %ho pay top price$ for good prod#ct$8

oe$ not mean $#$taining inno!ation i$ #nimportant (getto top of pac+)

!en for $tart-#p *#t then pro*a*ly $ell o#t to a leader

Contin#e to mo!e #p to higher-priced prod#ct$ (highprofit$) *#t $eed$ $o% for o%n di$r#ption (dilemma)

i$r#pti!e i$ relati!e can *e $#$taining for other$ Internet $#$taining for ell (had #$ed telephone *efore)

di$r#pti!e for other$


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Type$ of di$r#ption ?o% end or ne% mar+et

hi*it 3

e% mar+et compete$ %ith non-con$#mption mar+et

leader doe$ not feel anything at fir$t then people $%itch(*eca#$e of price or con!enience) e.g. PC 4lac+4erry-4ay ;irele$$ telephony...

?o% end e.g. 0y#ndai ama9on.com $#permar+et$(department $tore$ mo!ed to high price fa$hion)

Internet *an+ing8

Ta*le 1.1


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i$r#pti!e idea$ @ condition$ e% mar+et ?arge pop#lation %itho#t money or $+ill $o

did %itho#t or hired $ome*ody8 o #$er$ ha!e to go toincon!enient or centrali9ed location8

?o% end C#$tomer$ happy to p#rcha$e prod#ct %ithle$$ performance at le$$ co$t8 Can %e create a *#$ine$$model to %in the *#$ine$$ of the$e o!er$er!edc#$tomer$8

I$ the inno!ation di$r#pti!e to all inc#m*ent$8


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>ie%point of inc#m*ent @ ;hy do they fail8 ;ell-managed firm$ ha!e lo$t o!er the age$ to

ne%comer$ %ith regard to ne% technology and mar+et$

?i$ten too %ell to c#$tomer$GGG Thi$ place$ $tringentlimit$ on $trategie$...

Pattern$ of re$o#rce allocation in organi9ation$f#ndamental in $#cce$$ (idea$ get f#nded or not)

Re$o#rce allocation often dri!en *y mar+et demandmight lead to not f#nding proAect$ *a$ed on emergingneed$

Re$o#rce dependence theory $ay$ that deci$ion$ dependon intere$t$ of eternal entitie$ important c#$tomer$(and mar+eting) %ill arg#e for $#$taining %hichinfl#ence$ re$o#rce allocation


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Organiational !daptation

!ol#tionary foc#$ on $trategy 0o% doe$ it come a*o#t and e!ol!e8

&rom o#t$ide (en!ironmental determini$m) or in$ide($trategic choice)8

Intraorgani9ational per$pecti!e initiati!e$ emerge andcompete

>ariation @ $election - retention

Internal and eternal $election

Ind#ced $trategic proce$$

Retention after $#cce$$f#l fo#nding top management%ill *a$e $trategy on learning a*o#t *a$i$ for $#cce$$em*odied in manager$ $tatement$ a*o#ttechnical=economic=c#lt#ral factor$


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Selection +no%ledge a*o#t $trategy often located attop a$ firm *ecome$ larger comm#nication diffic#lt $oparticipant$ might percei!e different $trategie$ a$ *e$tfor them and firm (rea$on for !ariation) topmanagement need$ to e$ta*li$h internal $election

mechani$m$ to maintain coherence (admini$trati!e @r#le$ control $y$tem$ re%ard$ c#lt#ral @ rit#al$norm$) $ho#ld *e in line %ith eternal (mar+et)$election pre$$#re$

>ariation ind#ced proce$$ targeted at pre$er!ing

co#pling of initiati!e$ at operational le!el %ith $trategymight lead to red#ction of !ariation depend$ on gro%thopport#nitie$ in c#rrent domain


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'#tonomo#$ $trategic proce$$ >ariation $ome people %illl try to get firm to engage in

acti!itie$ o#t$ide c#rrent $trategy deri!e from ne%com*ination$ of $+ill$ capa*ilitie$ competence$ moreoften from lo%er le!el rea$on$ $elf-image that ri$+ i$

not greater career pro$pect$ $tart-#p

Selection clear #p importance in contet of c#rrent$trategy #$#ally o#t$ide normal $election proce$$thro#gh champion$ and top management may lead tochange in $trategy diffic#lt proce$$e$ often $ome

alternate f#nding re$er!ed for demon$trating !ia*ility Retention a#tonomo#$ $trategic proce$$ allo%$ firm to

*ecome a%are of en!ironmental !ariation$ a#tonomo#$initiati!e$ can lead to ne% companie$ or $tretchre$o#rce$ too thin *#t open #p $trategic option$


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".New Product Management


,rgani9ational adaptation Relati!e inertia adaptation nece$$ary (relia*ility

legitimation) *#t red#ce$ apata*ility to change$con$i$tent %ith ind#ced $trategic proce$$ $trategye!ol#tion $lo% internal $election need$ to *e open free

champion$hip and challenging of idea$ role of fo#nder$and r#le of +no%ledge and fact$ o!er po$ition

'dA#$tment lea!e o!erall $trategy in place and change$peripheral feat#re$ deli*erate non-random generallyincrea$e$ life chance of firm con$i$tent %ith ind#ced

proce$$ Reorientation maAor change$ #p$et$ ind#ced proce$$

generally *y en!ironmental $election (%o#ld red#cechance for $#r!i!al)


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"1New Product Management


Strategic rene%al maAor change$ thro#gh a#tonomo#$proce$$ if internal $election ($trategic contetdetermination) %or+$ %ell

hi*it 2

S#cce$$ factor$Top management *#ild$ 6#ality of ind#ced and

a#tonomo#$ proce$$

Maintain top-dri!en $trategic intent and *ottom-#pinternal eperimentation and $election proce$$e$

S#cce$$f#l reorientation preceded *y internaleperimentation and $election proce$$e$


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Strategic Dynamics

eci$ion ma+ing and game theory 5ame theory i$ concerned %ith other partie$ that ha!e

o%n $trategie$ and goal$ deci$ion ma+ing generallyonly %ith the en!ironment

5ame defined *y player$ a!aila*le $trategie$ payoff$and r#le$ (repeated game$ memory information)

Pri$oner$F dilemma pro*a*ly mo$t famo#$ eample...

Propo$al Corporate longe!ity depend$ on matching cycle$ of

a#tonomo#$ and ind#ced $trategy %ith $trategicdynamic$

Strategic leader$hip mean$ *alancing tho$e cycle$


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Strategic Dynamics

Corporate longe!ity &ort#ne 1HH from 1B 1 remain in 2HHB

Mo$t of the time companie$ operate in $ta*leen!ironment and $trategy ma+ing proce$$ i$ gearedto%ard$ linear $trategic dynamic$

Sometime$ (6#ite often ne%comer$) nonlinear dynamic$@ change r#le$ of game (normati!e r#le$ @ la%$ c#$tom$etc. economic r#le$ technological r#le$ cogniti!e r#le$@ ind#$try recipe) o#tcome$ diffic#lt to predict

Strategic dynamic$ 'ction$ of company and en!ironment (other player$

$#pplier$ technological change go!ernment...)con$idered can *e r#le-a*iding or -changing


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Strategic Dynamics

R#le-a*iding mean$ additi!e linear fairly predicta*lechange

R#le-changing materially change $trategic contet forother$ nonlinear diffic#lt to predict

hi*it 1

Strategic recognition important $eeing r#le-changingimplication$ 6#ic+ly reaction time con$tant alertne$$

Player-independent change pro*lematic e.g. re*ate$again$t ne% man#fact#ring


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""New Product Management

Strategic Dynamics

?in+ to ind#ced and a#tonomo#$ $trategy proce$$ ample Intel Independent ind#$try change (R'M

came Intel $lo% to %ithdra% *#t a#tonomo#$ $trategyhad pro!ided microproce$$or option) controlled change(Centrino *a$ed on a#tonomo#$ $trategy) r#na%ay

ind#$try (RISC !$. CISC internal ci!il %ar) Re$o#rce acc#m#lation firm$ engage in 6#ite a lot

a#tonomo#$ proce$$e$ (eploration mode) often f#nded*y middle management faced *y pro*lem$ #$ingre$o#rce$ from mat#re *#$ine$$ not a*$or*ed *y

ind#ced proce$$ Scaling #p eperimentation and $election of

a#tonomo#$ proce$$e$ middle management trie$ roleof ca$h re$er!e$ (hi*it 2)


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"*New Product Management

Strategic Dynamics

4alance ?imited change contin#e ind#ced *#t manage

a#tonomo#$ ($light re*alancing)

Independent change a#tonomo#$ proce$$ +ey

Controlled change ind#ced proce$$ +ey

R#na%ay ind#$try change management decide$ *a$edon %hether *et a!aila*le

hi*it 3


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"+New Product Management

Case" Infosys Consulting

;hat i$ the $trategic po$ition %hat are thedi$tincti!e competencie$8 0o% a*o#t c#lt#re8

;hy and ho% did Info$y$ mo!e to con$#lting8e$cri*e thi$ $egment.

;hat %ere the r#le$ of the game and ho% i$Inof$y$ trying to change them8

0o% a*o#t client relation$ and in$tit#tional+no%ledge in the ind#$try and at Info$y$8

0o% are I4M and 'ccent#re going to $ee thi$ andre$pond8

;hat are the challenge$ %ith managing gro%thand ho% can Info$y$ $tay ahead of the game8


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Case" #TT DoCoMo

DTT oCoMo (TM) >al#e Inno!ation at oCoMoE(04S)


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"-New Product Management

Case" $indle

DeReading 'ma9onF$ indleE (04S)


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*.New Product Management

Case" !maon %e& Services

D'ma9on ;e* Ser!ice$E (04S)


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*1New Product Management

Case" 'eo(

D5eo 4reathing Inno!ation into Shoe$E (04S)


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)*D and #e+ Product Development


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Contents

1. e!eloping Inno!ati!e Capa*ilitie$ (Part III - Intro)

2. Corporate R7 (Reading III-2 7 III-3)3. In!ention to Inno!ation and Re$earch to

e!elopment (Reading II-" 7 II-B)

". '*$orpti!e Capacity (Reading III-) Ca$e C (Ca$e III-1)

B. Corporate >ent#re Capital (Reading III-J)

. !al#ating Inno!ation In!e$tment (Reading III-1H)

J. e% Prod#ct e!elopment

K. Comm#nication in P (Reading I>-1)

. ProAect Plan$ 7 Prod#ct e!elopment Map$ (ReadingI>-B 7 I>-) Ca$e 'pple (04S)


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Developing Innovative Capa&ilities

orporate re!earchRole i$ to generate ne% technologie$

?ong-range high ri$+ eploratory

B-1HL of $ale$ for e$ta*li$hed high-technology

companie$ for R7 mo$t for R7 for main$tream*#$ine$$e$ 1H-1BL for corporate re$earch

Strategic i$$#e$ ;hether in!e$ted in area$ %ith highe$t ret#rn$

0o% tightly lin+ed to *#$ine$$ o*Aecti!e$ in tho$e area$


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*"New Product Management


unction! o$ corporate re!earch&ew strategic directions #upport of e"isting usinesses

#nnovations by #mproving and strengtheningunderstanding of technologies

in use(iscoveries and developingnew technologies

(iversifying to newapplications and mar)ets

(iversifying to entirely newbusinesses

#dentifying product and processimprovements

(eveloping new processes forestablished products

!orporate service by #ntelligence

*uman resources

Technology transfer

+pening windows on new

science and technologyRecruiting new )inds of s)ills

#dentifying acquisitioncandidates with neededtechnological expertise

ssessing threats and

opportunitiesRecruiting talented people withhigh potentialRecruiting for all divisions, fromcorporate research to operations


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**New Product Management


ey interface$

Ind#ced proce$$ Corporate re$earch/i!i$ional R7 interface differing

orientation$ and epectation$ di!i$ional la*$ or prod#ct

de!elopment $ee corporate re$earch a$ a $er!ice @ lin+$are important

'#tonomo#$ proce$$ Corporate re$earch/4#$ine$$ re$earch interface

entreprene#rial ta$+ need$ mar+et lin+ *#$ine$$

re$earcher$ generally more ad-hoc le$$ $tr#ct#redmore eternal time pre$$#re


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*+New Product Management


?in+$ *et%een R7 #nit$%eographical

!losed +pen

Personal Personal

!losed +pen !losed +pen

!losed Tight

coupling

+pen o

couplingdministr

at i

ve


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?in+ing corporate re$earch to corporate $trategy Clear charter (common #nder$tanding of %hat corporate

re$earch $ho#ld do) defined

Proce$$ for deciding %hat to de!elop

'l$o ma+e$ a$$e$$ment ea$ier

'$$e$$ing opport#nitie$ 0igh #ncertainty (#$ef#lne$$ #nclear depend$ on

complementarie$ or total $y$tem often ne% #$e$ a*ility

to lin+ to need) #e$tion$ (I) 're fir$t-cla$$ re$earcher$ a!aila*le8 I$

maAor in!e$tment going to ret#rn maAor re$#lt8 0o%many year$ to #$ef#l re$#lt$8 0o% manyfail#re$=$#cce$$e$ did other$ ha!e in that area8


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*-New Product Management


#e$tion$ (II) Can *e o*tained from !endor$ orac6#i$ition$8 Co$t for di$placing an ei$ting program toimplement ne% one8 no#gh hope to tran$ferdo%n$tream8 ece$$ary capital a!aila*le8

ifferent le!el$ in corporate re$earchTechnician = 4ench $cienti$t = 5ro#p leader = R7

manager = irector of corporate R7

Chief $cienti$t or ad!i$ory *oard for top management

Parallel ladder of career ad!ancement

Middle management important

'llocating re$o#rce$ to corporate R7 Inertia might depart from $trategy long-term


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+.New Product Management

Corporate )*D

Ca$e $t#dy Nero Palo 'lto Re$earch Center(P'RC) ?ocated in Silicon >alley near Stanford :ni!er$ity

Nero $pent h#ndred$ of million$ *#t many idea$ %ere

t#rned into prod#ct$ *y $tart-#p$ Still $#cce$$f#l (copier$ C' la$er printer$)

$pecially comp#teri9ed office $y$tem$ (original rea$on)not ca$hed in on (*#$ine$$ at Nero ma+e$ lo$$)

Pro*lem$ $lo% deci$ion ma+ing d#e to $i9e and *eing a

one-prod#ct company organi9ational fla%$ (%ea+ tie$ tore$t of company generally no mar+eting channel$ for$#ch prod#ct$)

Pro*lem$ ha!e al$o led to people lea!ing fr#$trated


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+1New Product Management

Corporate )*D

&o#nded in 1 for Nero to *ecome Darchitect ofinformation in the officeE

Top people attracted (*lan+ chec+ and 1H year$ nocorporate interference)

BHL comp#ter $cience BHL phy$ical $cience$

Image of $cienti$t$ = hac+er$ *a$ically from there(*eard$ T-$hirt$...)

P'RC *ecame leader in h#man-comp#ter interaction

Pioneered %indo%$ and mo#$e for interaction$

0and$-off management led to o!er$tepping (de!eloped'lto @ open - a$ PC prod#ct other di!i$on de!eloped Star- clo$ed)

Tet editor 4ra!o de!eloped (o#t$ide charter) no*ody$a% mar+et potential O *ecame MS ;ord


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Corporate )*D

>i$itor Ste!e


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Corporate )*D

Cro$$-pollination Idea of miing thing$ #p to get creati!e re$#lt$

Cro$$- or interdi$ciplinary team$

>al#e on a!erage lo%er *#t *rea+thro#gh$ of #n#$#allyhigh !al#e

epending on alignment of di$cipline$ (e.g. economic$and phy$ic$ 6#ite near economic$ and p$ychologyfarther apart)

hi*it 1

R#le$ pairing$ of %ell-e$ta*li$hed field$ deep eperti$epeople


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Invention to Innovation

Inno!ation mean$ %elding mar+etplaceopport#nitie$ %ith in!enti!e technology and ne%technical +no%ledge Comple deci$ion ma+ing @ ho% to ma+e a prod#ct o#t

of *rea+-thro#gh8

'l$o in!ol!e$ con$i$tency %ith firm corporate intere$t(Dfa*ricE)

lement$ to *e *ro#ght together technical competencymar+et need and corporate intere$t

0o% i$ thi$ proce$$ of lin+ing done8 4y %hom8


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+"New Product Management


!ol#tion and pattern$ Corporate R7 e$ta*li$hed ($cienti$t$) mar+et

$peciali$t$ $een a$ ad!i$or to *e *ro#ght in then*ecame a $eparate f#nction in R7 Sho#ld they ta+elead or %or+ together8

Technology p#$h ($cienti$t$ *a$ed on technology) needp#ll (mar+eting *a$ed on demand and mar+et$) orcooperation

Technology p#$h Mo$tly *a$ed on $cienti$t$ a%are of corporate intere$t$

hi*it 1

Pro*lem$ tend$ to foc#$ on ea$y application$ loc+ed into one technology *ia$ed #$er $election getting f#nding(*ootleg re$earch)


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+*New Product Management


eed p#llTargeted re$earch *y $pecific mar+et goal$ (not too

*road and not too narro% - foc#$ing)

hi*it 2

Pro*lem$ a*$ence of tr#e *elie!er or championcontin#e$ to change target (mi$$ opport#nity)

4oth type$ of lin+ing nece$$ary technical(pro*lem %ith +no%ledge) and need(*rea+thro#gh to demand)

'l$o corporate intere$t$ need$ to *e acco#nted for #ite often gro#p leader$ a$ dri!ing force (contact to

technology *#$ine$$ and organi9aitonal +no%ledge)


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++New Product Management


S#cce$$f#l concept#ali9ation Synthe$i9er$ almo$t $im#ltaneo#$ lin+ing of all three

dimen$ion$

Ste!e


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S#cce$$f#l tran$fer mo!ed from re$earch tode!elopment and re$#lted in prod#ct

:n$#cce$$f#l tran$fer left re$earch *#t no prod#ct

ontran$fer intended for tran$fer *#t not accepted inde!elopment

Primary $#cce$$ factor$

4Technical #nder$tanding main technical i$$#e$ needto *e #nder$tood *efore pa$$ing on

4 &ea$i*ility demon$tration nece$$ary (agreement%hat that mean$) might imply #$er acceptance and

therefore real #$er$

4 'd!anced de!elopment o!erlap re$earch m#$tdeterime %hether to maitain acti!ity ($#pport ordefend) or to eplore related and ad!ancedtechnologie$

i i


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+-New Product Management


4 5ro%th potential too narro% aim %itho#t technical ormar+et gro%th potential ne% technology might*ecome o*$olete *y old one$ $tretching incompetition

4 i$tence of an ad!ocate $omeone in re$earch

$elling it loo+ing after it4 'd!anced technology acti!itie$ at de!elopment la*

helpf#l and often nece$$ary $ometime$ pro!ide$h#rdle (competiti!e $+eptical) *#t in the end*eneficial a$ lead$ to thoro#gh %or+ and in!ol!ement

4 ternal pre$$#re$ $ame technology at competitorla* or anno#ncement

4


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.New Product Management


Secondary $#cce$$ factor$4Timeline$$

4 Internal #$er$ create$ pre$$#re and demand

4 5o!ernment contract$

4 0igh-le!el in!ol!ement re$earch $ometime$ t#rn$ totop management

4 Indi!id#al corporate re$pon$i*ility corporate%atchdog

4 Proimity no maAor factor generally might *econ!enient and $a!e$ money *#t tran$fer doe$ notdepend

!& ti C it


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!&sorptive Capacity

,#t$ide $o#rce$ often critical to inno!ationproce$$ '*ility to e!al#ate recogni9e !al#e a$$$imilate and

#tili9e o#t$ide +no%ledge important

&actor of prior related +no%ledge (*a$ic $+ill$ $haredlang#age etc.) *a$ed on cogniti!e learning (a$$ociatelearning *y lin+ing learning i$ c#m#lati!e and *a$ed onrichne$$ of +no%ledge $tr#ct#re)

'*$orpti!e capacity

4yprod#ct of doing re$earch ($ometime$ man#fact#ring@ prod#ction eperience)

Can al$o *e directly generated @ training$ etc.

!& ti C it


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!&sorptive Capacity

,rgani9ational a*$orpti!e capacity 4a$ed on mem*er$F a*$orpti!e capacitie$

ot $imply the $#m *#t al$o *a$ed on tran$fer$ on+no%ledge %ithin

ot only direct interface to o#t$ide *#t al$o $tr#ct#re ofcomm#nication %ithin and di$tri*#tion of eperti$e

Interface can *e diff#$ed or centrali9ed (people may acta$ gate+eeper$ or *o#ndary $panner$) @ depend$ on$peed and #ncertainty of change

Internal comm#nication *a$ed on lang#age$ code$ etc.- de!eloping them can ma+e thi$ comm#nication moreefficient *#t ma+e o#t$ide-in more diffic#lt (not-in!ented-here $yndrom tend$ to increa$e %ith gro#pten#re)

!& ti C it


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!&sorptive Capacity

no%ledge $tr#ct#re $ome o!erlap *et%een indi!id#al$nece$$ary for comm#nication di!er$ity al$o important(tradeoff of $peciali9ation)

Cro$$-f#nction interface$ Ao* rotation$ etc.

ternal ac6#i$ition of a*$orpti!e capacity 0iring people con$#ltant$ ac6#i$ition$...

,ften not that efficient a$ $ome element$ are firm-$pecific and %hen integration %ith other acti!itie$nece$$ary

Time lag

!& ti C it


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!&sorptive Capacity

Path dependence Set of deci$ion$ one face$ for any gi!en circ#m$tance i$

limited *y the deci$ion$ one ha$ made in the pa$t @hi$tory matter$

'cc#m#lating in one period %ill increa$e acc#m#lation in

the net '*$orpti!e capacity allo%$ to $ee trend$ %hich %ill lead

to *#ild a*$orpti!e capacity (epectation form#lation)

Cea$ing to in!e$t in a*$orpti!e capacity can lead toloc+o#t (I0-$yndrom @ too far a%ay) confine$ firm to

%or+ in a partic#lar domain *a$ed on early deci$ion$ Self-reinforcing cycle %ith high a*$orpti!e capacity $ee$

opport#nitie$ a$pire$ to them (proacti!e in$tead ofreacti!e)

!& ti C it


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!&sorptive Capacity

Competence de$troying technical change Radical change can de$troy competence *#ilding ne%

one$ can *e diffic#lt d#e to acc#m#lation effect$ or may*e *lind to de!elopment$

'*$orpti!e capacity and R7 $pending '*$orpti!e capacity *yprod#ct of R7 $pending *#t al$o

infl#ence$ it

Ma+e$ po$$i*ilitie$ +no%n

Increa$ed or decrea$e$ co$t$

4a$ic re$earch !al#a*le e!en in ca$e of $pillo#t$

C #EC


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Case" #EC

;hat i$ yo#r a$$e$$ment of ne% technology$trategy8 ;hat %ill it ta+e to $#cceed8

0o% can the ne% $ite *e$t contri*#te8

;hat i$ yo#r a$$e$$ment of performance to date8

0o% $ho#ld management en$#re long-term$#r!i!ial and gro%th of the center8

;hat $ho#ld Mr. Shinoda do net8

Corporate ,enture Capital


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In!e$t in eternal $tart-#p$ In 2HHH red#ced *y 3HL and KHL in !ol#me ($tronger

than pri!ate >C)

;hether to in!e$t in certain $tart-#p and %hen

In!e$tment of corporate f#nd$ directly in eternal $tart-#p companie$

T%o characteri$tic$ o*Aecti!e and degree of operation$lin+ing

,*Aecti!e either $trategic (increa$e profit$ of o%n*#$ine$$ and eploit $ynergie$ @ e.g. $ell o%n prod#ct$along$ide) or financial (economic ret#rn on in!e$tmentco#ld *e helped *y o%n *rand)

?in+ing loo$e or tight (loo$e co#ld al$o in$#late frominterference) #$e of proce$$e$ a$$et$ etc.



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New Product Management


Type$ of in!e$tment$ *a$ed on the$e dimen$ion$ ri!ing ($trategic=tight) ad!ance$ $trategy of c#rrent

*#$ine$$ (e.g. MS in .net $tart-#p$ %hich %ill helpadoption promoting a $tandard)

na*ling ($trategic=loo$e) complement$ $trategy

primarily $trategic *#t tight co#pling not nece$$ary e.g.increa$e demand for prod#ct$ or %or+ on $treamlining

mergent (financial=tight) eploration of ne%*#$ine$$e$ option for %hen they *ecome $trategic(le!eraging #nder#tili9ed technologie$ eperimenting

%ith ne% capa*ilitie$ de!eloping *ac+#p technologyeploring %hite$pace)

Pa$$i!e (financial=loo$e) financial ret#rn$ only



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conomic climate 4ad economy companie$ %ill pro*a*ly lea!e pa$$i!e

and emergent in!e$tment$

na*ling and dri!ing ha!e more $taying po%er might *ele$$ for ena*ling d#e to generally higher co$t$

!al#ation not *a$ed on financial ret#rn$ alone

Evaluating Innovation Investment


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-.New Product Management


&ail#re in $#cce$$f#l innno!ation often d#e to(%rong) #$e of financial in!e$tment analy$i$ tool$ et pre$ent !al#e and di$co#nted ca$h flo% di$co#nt$

f#t#re ca$h flo%$ to c#rrent !al#e a$$#mption i$ thatnot in!e$ting doe$ not change health of company in the

f#t#re (might not *e tr#e diffic#lt to predict) error$ ofe$timation

&ied and $#n+ co$t$ arg#ment i$ that pa$t in!e$tment$$ho#ld not *e con$idered only f#t#re marginal ca$ho#tlay$ a$$#me$ nece$$ary capa*ilitie$ $tay the $ame

*ia$e$ to%ard$ thing$ that eploit c#rrent a$$et$ andcapa*ilitie$ (for ne%comer there i$ al%ay$ f#ll-co$t)al$o #$e of #$a*le lifeta*le for depreciation in$tead ofcompetiti!e lifetime add$ to thi$



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-1New Product Management


mpha$i$ on earning$ per $hare foc#$ on $hort-term$toc+ performance a$ principal-agent led to incenti!e$rep#tation depend$ on it al$o *#yo#t $ignal (today mo$tprincipal$ al$o in!e$t $hort-term or are agent$them$el!e$)

Proce$$ to $#pport or $a*otage inno!ation Stage gate model idea$ pa$$ thro#gh $tep$=pha$e$

after each an e!al#ation=re!ie% ta+e$ place (financial)a$$#mption$ might *e t%ea+ed to en$#re f#nding ill-$#ited to ne% gro%th *#$ine$$e$

i$co!ery-dri!en planning *a$ed on minimallyaccepta*le fig#re$ li$t of a$$#mption$ to f#lfill tho$e i$generated ordered *y importance (deal +illler$) andco$t$ to te$t in net $tage i$ #$ed not a$ a plan toeec#te *#t to learn

#e+ Product Development


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e!elopment proAect$ can pro!ide *enefit$ Mar+et $#cce$$ thro#gh ne% prod#ct$ or proce$$e$

le!erage and enhance ei$ting a$$et$ pro!ideorgani9ational rene%al and change *#ild confidence andmoment#m

Proce$$ of *ringing a ne% prod#ct or $er!ice to mar+etfir$t $tage in prod#ct life cycle ne% to mar+et or company

Step$ idea generation idea $creening conceptde!elopment and te$ting *#$ine$$ analy$i$ *eta andmar+et te$ting technical implementation

(commerciali9ation)



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Many proAect$ delayed or failed &irm$ m#$t de!elop a ho$t of $+ill$ and concept$ that

can differ $ignificantly from the nat#ral inclination$common in organi9ation$

Senior managementF$ in!ol!ement in the de!elopment

proce$$ i$ far more li+ely to *e part of the pro*lem thanpart of the $ol#tion

&ailed prod#ct$ $ometime$ nece$$ary for learning andprere6#i$ite for later $#cce$$ @ learning effect (learning*y #$ing @ mar+et *y failing @ management and *y

doing @ man#fact#ring) on technology mar+et andorgani9ation



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-"New Product Management


Three area$ of management acti!ity thatcon$tit#te$ de!elopment $trategy for a *#$ine$$ Pre-proAect planning

ProAect eec#tion

Po$t-proAect learning (e.g. proAect a#dit$)



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-*New Product Management


Pre-proAect planningTraditional role $elect $creen and e!al#ate proAect

idea$ decide %hich to p#r$#e (a$$#me$ ade6#ateco!erage eno#gh information...)

e!elopment $trategy leader$hip approach moti!ate

and g#ide$ the organi9ation to create the *e$t $et ofproAect$ *y artic#lating the criteria for the Dcorrect $etEof proAect$



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-+New Product Management


Creating the aggregate $et of proAect$ @'ggregate proAect matri efine$ indi!id#al proAect$ according to the degree of

change in the prod#ct and man#fact#ring proce$$ theyentail

The greater degree of change along either dimen$ionthe more re$o#rce$ that are li+ely to *e needed incompleting the proAect

Sometime$ *a$ed on mar+et change = technology ri$+

'ppropriate mi nece$$ary (depend$ on $trategy)



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'rocess Changes

ew core

process

ext

generation

process

-ingle

dept.

upgrade

ew core

product

ext generation

of core product

ddition to

Product family

ddons and

enhancements

/niqueradical

Platformornext generation

$nhancements,hybrids, andderivatives

Research

andadvanced

development

Tuning

and

incremental

-ustaining

'roductChan

ges



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--New Product Management


Chartering and *o#nding indi!id#al proAect$ nece$$ary(goal$ *o#ndarie$...)

Pro!iding and allocating re$o#rce$ to proAect$ (hardchoice$ often nece$$ary to a!oid o!ercommitment$im#ltaneo#$ a$$$ignment$ of people often pro*lematic)



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1..New Product Management


ProAect organi9ation and management Integration nece$$ary @ team$

nctional team $tr#ct#re (pa$$ing of re$#lt$dependencie$ pro*lematic aligned %ith career path$and $peciali9ation *#t o!erall $#cce$$ not trac+ed)

?ight%eight team $tr#ct#re (mo$tly A#nior proAectmanager$ little infl#ence *#t coordination impro!ed)

0ea!y%eight team $tr#ct#re (primary infl#ence %ithproAect manager moti!ation increa$ed lo$$ of foc#$pro*a*le conflict$ %ith re$t more generali$t)

'#tonomo#$ team $tr#ct#re (Dtiger teamE f#ll proAecta$$ignment fa$t foc#$ and integration lo$$ pro*lem)

Selection *a$ed on type of proAect mat#rity ind#$trycondition$...



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1.1New Product Management


Communication in #PD


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ten$i!e comm#nication *et%een engineeringand prod#ction critical

Informal comm#nication *eer *#$t$ technical$ympo$ia off$ite m#ltiday di$c#$$ion meeting$ etc.

&ormal comm#nication al$o e$$ential

Ta$+$ introd#cing ne% prod#ct$ to man#fact#ringpro!iding optim#m le!el of doc#mentation on prod#ct$facilitating orderly and effecti!e change$ to prod#ct$ inprod#ction

Introd#ction of ne% prod#ct$ Mo$t taing comm#nication ta$+

e$ign engineer$ %ill maimie performanceman#fact#ring engineer$ %ill minimi9e co$t$ ($ho#ld *etogether @ !al#e engineering)



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Prototyping fir$t in engineering for te$ting (la* 7 field)#$ing different material$ etc. then pilot prod#ction %ithnormal de$ign @ Aoint re$pon$i*ility

e$ign free9e done *efore f#ll-$cale prod#ction (inagreement) later change$ only thro#gh notice$ and

formally can *e $e6#ential for part$ S+#n+ %or+$ m#ltidi$ciplinary team$ %ith o%n facilitie$

(high pre$tige re$o#rce$ fa$t *#t might *e di$r#pti!e)

&ollo%ing engineer$ $ome de$ign engineer$ mo!e toprod#ction for $ome time (Ao* rotation)

M#ltiple prod#ct$ more diffic#lt *alance of maintenanceengineering and de!elopment $tandardi9ation ofcomponent$ *ecome$ i$$#e



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ngineering doc#mentation Prod#ct and proce$$ doc#mentation (de$ign$ li$t$...)

?e!el of detail co$tly to prod#ce *#t important moredoc#mentation nece$$ary %ith high-!ol#me$ #n$+illedla*o#r m#ch a#tomation

ngineering change$ on ei$ting prod#ct$ Re6#e$t$ for change$ on doc#mentation (form

engineering $er!ice mar+eting etc.)

Can affect many part$ of organi9ation

Proced#re for handling change re6#e$t$ nece$$ary

Co$t-*enefit trade off (o*$olence !$. efficiency gain)

4atching change$ or e!en ne% prod#ct (mar+eting*on#$)8

Proect Plans * Product DevelopmentM


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1."New Product Management

Maps

Rea$on$ for pro*lem$ in de!elopment proAect$ ,!erload 7 mi$$ing foc#$ on critical proAect$

Planning need$ to *e impro!ed and aggregated @ProAect mapping

4a$ed on proce$$ = prod#ct change R7 proAect$ (o#t$ide) *rea+thro#gh platform and

deri!ati!e proAect$ (all important)

Separate map$ for alliance and partner$hip proAect$

ach proAect mapped according to re$o#rce$ and

prod#ct line (hi*it 3) reeamine and refoc#$ (hi*it")



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1.*New Product Management

Maps

Se6#encing of proAect$ Se6#ence o!er time (hi*it B)

Steady $tream approach e!ery $econd year ne%platform follo%ed *y deri!ati!e$ in inter!al$ (team$mied and people tran$ferred)

Secondary %a!e approach longer platform lifetimederi!ati!e$ come later

Prod#ct de!elopment ,ften fail$ *eca#$e of mi$#nder$tanding of mar+et$ (lac+

of di$tincti!ene$$) or o%n technology mi$matche$*et%een f#nction$

Planning and mapping nece$$ary



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1.+New Product Management

Maps

Prod#ct de!elopment map Sho%$ e!ol#tion of prod#ct line$ o!er time (!er$#$

f#nctionality=!al#e=price)

Categorie$ are core and le!eraged (enhancedc#$tomi9ed co$t red#ced hy*rid) prod#ct$

hi*it 1

Ca$e $t#dy Coolidge cleaner$ (hi*it B)

S#*map$ po$$i*le for di$tri*#tion channel$ c#$tomerde$ign engineering man#fact#ring...

i$c#$$ion$ on %hat to p#t on map$ *eneficial

Case" !pple


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Case" !pple

De$ign Thin+ing and Inno!ation at 'ppleE (04S)


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1.-New Product Management

ntrepreneur!hip and New 9enture!

Contents


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1. Profiting from Technological Inno!ation (Reading I-1) Ca$e lio ngineering Inc. (Ca$e I-1) Ca$e Matri Semicond#ctor Inc. (Ca$e I-")

2. Minim#m ;inning 5ame (Reading I-B)

Ca$e St#*0#* (Ca$e I-B) Ca$e ?#mni (04S)

3. 0igh Technology Management (Reading I-J) Ca$e ' in 1B = 2HH2 = 2HHB (Ca$e I- = I-J = I-K)

". Internal Corporate >ent#ring (Reading III-13 7 III-1") Ca$e Pitney 4o%e$ (Ca$e III-B) Ca$e onnelley 7 Son$ (Ca$e III-J) Ca$e Intel 0ood Ri!er (Ca$e III-K pl#$ add-on) Ca$e 0P (04S)

Profiting from Technological Innovation


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g g

Inno!ating firm $often fail to o*tain $ignificanteconomic ret#rn$

Imitator$ follo%er$ c#$tomer$ *enefit

Strategy and imitation co$t$ important

Control of complementary a$$et$ often nece$$ary

ample MI (leader in record$ mo!ie$...) pioneeredradar etc. - fir$t de!eloped C'T $canner *#t lo$t mar+etafter -K year$

ample RC Cola

ample Nero @ de$+top comp#ter$ ('pple)

ample I4M PC (not inno!ati!e)



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g g

4a$ic *#ilding *loc+$ for profiting eed to *e p#t in place to profit

Regime for appropria*ilityT%o dimen$ion$ at#re of technology and efficacy of

legal mechani$m$ of protection

Patent$ = trade $ecret$

Prod#ct = proce$$ inno!ation

Tacit = eplicit +no%ledge

Re$#lt$ in tight or %ea+ appropria*ility



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g g

ominant de$ign paradigmT%o $tage$ of *ranch of $cience preparadigmatic

(%itho#t general accepted concept#al treatment) andparadigmatic ($cientific mat#rity and $tandard$)

Paradigm$ can *e o!ert#rned

&ir$t de$ign competition then price=proce$$ inno!ation$after dominant de$ign (more capital in!e$tment)

;hen imitation i$ ea$y imitator might *ecome dominantde$ign



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g g

Complementary a$$et$ Commerciali9ation need$ +no%-ho% pl#$ capa*ilitie$ =

a$$et$

Ser!ice$ other part$ of a $y$tem... (hi*it B)

Can *e generic co-$peciali9ed (*ilateral dependence) or

$peciali9ed (#nilateral dependence)

Profita*ility #nder tight appropria*ility If po$$i*le ea$y for $ome time

Time to acce$$ complementary a$$et$ or come #p %ith

dominant de$ign Speciali$ed R7 firm$ po$$i*le (e.g. petrochemical$)



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g g

Profita*ility #nder %ea+ appropria*ility In preparadigmatic pha$e let de$ign float not choo$e to

early need to *e intimately co#pled to mar+et and let#$er$ impact de$ign may*e parallel and $e6#entialprototyping (*#t might *e co$tly)

In paradigmatic pha$e complementary a$$et$ *ecomemore important firm$ %ith control o!er the$e might getprofit$

'cce$$ to complementary a$$et$ (control$tr#ct#re$) Contract#al mode$ contract$ %ith $#pplier$ di$tri*#tor$

man#fact#rer$ etc. red#ce$ ri$+$ and capitalre6#irement$ good in tight appropria*ility and competit!e$#pply can *ring added credi*ility ha9ard$ in gettingcommittment imitation ri$+



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g g

Integration mode$ o%ner$hip can capt#re *enefit$ oncomplementary a$$et$ more control timing and ca$hcon$traint$ important (hi*it 1H 11)

Mied mode$ 6#ite common or d#ring tran$ition$

Ca$e analy$e$

MI C'T $canner needed a$$et$ li+e training $er!icing$ho#ld ha!e fo#nd a partner li+e Siemen$

I4M PC needed co$peciali9ed a$$et$ li+e $oft%are cho$eopen $y$tem approach ind#ced e!en %itho#t contract$help of name to red#ce ri$+$ for other$

#tra$%eet tight appropria*ility *#t patent$ %ill r#n o#tcreated *rand and man#fact#ring in-ho#$e let $#ppliercontract$ epire



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g g

Implication$ irect R7 to%ard$ tight appropria*ility or a$$et$ #nder

control

Small-large firm compari$on

Ind#$try $tr#ct#re and appropria*ility %ea+

appropria*ility $ho#ld direct to%ard$ integration e% entry more diffic#lt in mat#re ind#$trie$ a$ a$$et$

#nder control of inc#m*ent$ (*#t technological changecan change thi$)

Importance of man#fact#ring

Trade and in!e$tment *arrier$ can mean denying acce$$to a$$et$ nece$$ary and lead to local=go!ernmentcapt#ring maAority of profit$

Case" Elio Engineering Inc.


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g g

e$cri*e lio ngineering and it$ po$ition in theind#$try.

;hat i$ their !i$ion8

e$cri*e the $trategic option$. ;hat i$$#e$

$ho#ld *e con$idered in e!al#ating them8'naly$e *a$ed on the *#ilding *loc+$ forprofiting from inno!ation.

Case" Matri( Semiconductors Inc.


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;hat %a$ MatriF$ $trategy8 ;hat %a$ their corecompetence and competiti!e ad!antage8 ;a$it $#$taina*le8

;hat %o#ld yo# recommend8

Minimum %inning 'ame


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e% high-tech !ent#re$ 5enerally no formali9ed $trategy proce$$

Pro*lem of +no%ing #$er need$ %ith regard to ne%technology

,ften originate from technical competence of an

entreprene#r *#$ine$$ $trategy follo%$ (MatriSemicond#ctor ca$e)

Sometime$ *a$ed on in$ight into mar+et need (St#*0#*ca$e)

Concept#ali$ing *#$ine$$ opport#nity al%ay$need$ lin+ing *et%een technical and need Minim#m %inning game



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Minim#m %inning game &ir$t maAor mar+et opport#nity that i$ limited eno#gh for

clear target for technology and prod#ct de!elopment$hort-mid term and $#fficiently large to pro!idefo#ndation for long-term de!elopment

#ite often maim#m %inning game defined (al$o for!ent#re capital) %hich lead$ to ha!ing no clear goal$and mo!ing from one !ag#e !i$ion to another

M;5 i$ prod#ct=mar+et po$ition achie!a*le in 12-1Kmonth$ depend$ on mar+et (net%or+ eternalitie$)

competition competencie$ $hape$ identity ;ill pro!ide fo#ndation for net M;5 and 2-3 year$

Then define net le!el M;5



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P#r$#ing M;5 @ dri!er$ of $trategic actionTechnology de!elopment prod#ct de!elopment and

*#$ine$$ $trategy

Technology de!elopment a$ main dri!er might *e a*leto reach mar+et fir$t attract top talent maintain

moti!ating atmo$phere *#t might mo!e frome leadingto *leeding edge (too $lo% co$tly diffic#lt to mea$#re)

Prod#ct de!elopment a$ main dri!er more c#$tomer-foc#$ed learning from prod#ct$ *#t may*e $hort-termoriented too niche-foc#$ed or can re$#lt in prod#ction

pro*lem$ d#e to technology



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4#$ine$$ $trategy a$ main dri!er pro!ide$ cleardirection$ longer-term oriented *#t diffic#lt %ith#nclear ind#$try $tr#ct#re (c#$tomer$ competitor$partner$ etc.)

Maintaining *alance important change of foc#$ o!er

time Strategic planning proce$$

eplicitly adre$$ing M;5 and dri!er$

e.g. Intel ha$ planning proce$$ e!ery year for 3 year$*a$ed on that prod#ct line planning %ith mar+et and

prod#ct re6#irement$ doc#ment$ arly circ#lation of draft$ to +ey $ta+eholder$ p#*lic

commitment at end

Case" Stu&/u&


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e$cri*e the initial minim#m %inning game ofSt#*0#* and the $trategic en!ironment.

i$c#$$ the change$ nece$$ary to mo!e to thenet $tep.

Case" 0umni


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D&elipe >ergara and ?#mni ?a#nching anInno!ation in a e!eloping conomyE (04S)

/igh Technology Management


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Contin#ed management of high-technologycompanie$

St#dy of large and $mall high-technology companie$

Parado pattern$ that promote di$order and informalityat the $ame time order con$i$tency and contin#ity

Contin#ed $#cce$$ need$ con$tant $hift *et%eencontin#ity and chao$

Theme$ of $#cce$$ 4#$ine$$ foc#$ tight foc#$ on one field (Nero oda+

I4M...) clo$ely related prod#ct$ = prod#ct line$ foc#$edR7 (high amo#nt dd#e to $i9e or proportion @ K-1BL of$ale$) con$i$tent prioritie$ and *eha!io#r al$o help$ inclo$e interaction %ith c#$tomer$



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'dapta*ility *alance of *#$ine$$ foc#$ %ith %illingne$$to #nderta+e maAor and rapid change if technology ormar+et$ change re6#ire$ organi9ational flei*ility(realignment of people and re$pon$i*ilitie$ and po%erf#ltop management)

,rgani9ational cohe$ion organi9ational cooperationnece$$ary (yo#ng=old different area$) mo$t often le$$hierarchy and top management per+$ that $ignaldi$tance good comm#nicaiton and acce$$ to eec#ti!e$(open door policy) d#al career ladder Ao* rotationintegration !ia placement (R7 net to man#fact#ring)

or m#lti-di$ciplinary team$ long-term employment



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ntreprene#rial c#lt#re $mall di!i$ion$ to recreate $mallcompanie$ comm#nication$ and no di!i$ion$ differentf#nding channel$ (o%n di$ion corporate R7 ne%!ent#re$ di!i$ion or grant$ admini$tered *y $ome$elected people) tolerance of fail#re free time (e.g.2HL #nprogrammed time to p#r$#e intere$t$ orfello%$hip$)

Sen$e of integrity committed to indi!id#ali$m andentreprene#r$hip at the $ame time to long-termrelation$hip$ $ee them$el!e$ a$ comm#nity integrity i$not to *e $acrificed for $hort-term gain tr#$t e$pecially

important in area$ of rapidd change and #ncertainty$elf-#nder$tanding of competence and limitation$



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0and$-on top management acti!e in!ol!ement and#nder$tanding of *a$ic$ of technology a*ility to a$+6#e$tion$ and patience to #nder$tand

,!erall paradoon $ta*ility !er$#$ change 'm*i!alent management (getting rid of old prod#ct$

again$t re$i$tance and de!eloping ne% one$ *#t al$oincremental impro!ement$)

'lternating period$ of relaation and control (ten$ionaction and ecitment follo%ed *y reflection ande!al#ation)

ifferent *y #nit or o!er time (


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;hat are +ey characteri$tic$ of the !ideo gameind#$try (al$o compare to mo!ie ind#$try)8

;hat are tradeoff$ of de!eloping hard- and$oft%are to $oft%are only8

;hat are potential$ and ri$+$ a$$ociated %ith co-*randing8

;hat %ere $trategie$ and competiti!ead!antage$ in the different period$8

;hat a*o#t platform de!elopment deci$ion$8

0o% ha$ the Internet affected the ind#$try8

0o% $ho#ld ' deal %ith con!ergence %ith T> =&ilm = mo*ile = online8

Internal Corporate ,enturing


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Managing a#tonomo#$ $trategic initiati!e$ -corporate entreprene#r$hip

Creating ne% !ent#re di!i$ion$ Internal entreprene#r$ allo%ed to p#r$#e !ent#re$

#nenc#m*ered *y the con$traint$ of the firm$main$tream *#$ine$$ management

Pro*lem$

4 >@,perating di!i$ion interface

4 >@Corporate management interface



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0(1operating divisions

interfaces

0(1corporate management

interfaces

#trategic interferences Domain protection issues

#ynergy considerations

Lac( of diversification strategy

Limits to rate of strategic change that can easored

) !ffects on corporate image

*dministrative+culturalfrictions

,igidities resulting frommanagement system

'ersonnel transfer issues

Circumvention of corporate rules andregulations

$nadeuate measurement and reward systems

,esistance to institutionali%ation



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'$$e$$ing internal entreprene#rial initiati!e$ &oc#$e$ on t%o +ey dimen$ion$ of $trategic deci$ion

ma+ing concerning internal entreprene#rial propo$al$

4The $trategic importance for corporate de!elopment(0o% doe$ it help company8 ;hat i$ ri$+8 0o% to get

o#t8)4The operational relatedne$$ of propo$al$ (;hat i$

re6#ired8 0o% to get that8 0o% %ill thi$ affectc#rrent capa*ilitie$8 ,ther area$ re6#iringinno!ation8)



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Dimensions. $mplications.

-trategic

importance

+perational

relatedness

dministrative

lin)ages

2authority3

+perational

lin)ages

2networ)ing3

(egree of

control

$fficiency

considerations

+rgani4ational

design

alternatives



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e$ign alternati!e$ for corporateentreprene#r$hip

etermining admini$trati!e lin+age$

4 0igh $trategic importance O Strong admini$trati!elin+age$

4 ?o% $trategic importance O amine ho% the ne%*#$ine$$ can *e$t *e $p#n off

4 :nclear $trategic importance O Rela the $tr#ct#ralcontet

etermining operational ?in+age$

4 0igh operational relatedne$$ O Tight co#pling

4 ?o% operational relatedne$$ O Complete deco#pling

4 :nclear operational relatedne$$ O ?oo$e co#pling



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5

-pecial

business

units

6

#ndependent

business

units

7

!omplete

spinoff

8

ew product

department

9

ew

venture

division

:

!ontracting

;

(irect

integration

dri!e(*ad=good) IC> irrele!ance (good=*ad) e$perately$ee+ing IC> (*ad=*ad)

Rea$on$ economy o!erall planning cycle$ that p#t toom#ch load on IC> too m#ch $#cce$$ that %o#ld ma+e

internal #nit$ loo+ *ad or *ecome competitionreorgani9ation$ $trategy ma+ing a$ top managementprerogati!e



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?ong-term commitment nece$$ary @ $trategic leader$hipand *alance nece$$ary (too m#ch top dri!en IC> *ad a$%ell) integrated and contino#$ part of $trategy ma+ingIC> a$ a $o#rce of in$ight$ for $trategic direction$$hared re$pon$i*ility of $enior eec#ti!e$


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Case" Donnelley * Sons


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;hat are difference$ in critical $#cce$$ factor$ intraditional printing !$. on-demand8

;hat %ere critical challenge$ faced *y the igitali!i$ion8

Compare old to ne% Technology e!elopmentProce$$.

amine the role$ and interplay$ *et%eenSchetter and Clar+e.

0o% can and $ho#ld the 4oo+$ 5ro#p *e dealt%ith8

Case" Intel" /ood )iver


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;hat i$ the $trategic $it#ation8 0o% do yo# thin+ Siegel %o#ld e!al#ate the other

manager$ and they him8

0o% $ho#ld Siegel decide8

Case" /P


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DInno!ation at 0P The Role of the Inno!ationProgram ,ffice (IP,)E (04S)

3 Innovation

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