innovation and new product strategy. innovation and new product strategy innovation as a customer...
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Innovation and New Product Strategy
INNOVATION AND NEW PRODUCT INNOVATION AND NEW PRODUCT STRATEGYSTRATEGY
Innovation as a Customer Driven ProcessNew Product PlanningIdea GenerationScreening, Evaluating, and Business
AnalysisProduct and Process DevelopmentMarketing Strategy and Market TestingCommercializationVariation in the Generic New Product
Planning Process
INNOVATION FEATUREINNOVATION FEATUREManaging Google’s Idea FactoryManaging Google’s Idea Factory
As director of consumer Web products Marissa Mayer is a champion of innovation. She favors new product launches that are early and often.
She joined Google in early 1999 as a programmer when the workforce totaled 20. By 2007 Google had 5,700 employees with expected sales of $16 billion.
How Google Innovates
The search leader has earned a reputation as one of the most innovative companies in the world of technology. A few of the ways Google hatches new ideas:
THE IDEAS LIST
Anyone at Google can post thoughts for new technologies of businesses on an ideas mailing list, available companywide for input and vetting. But beware: Newbies who suggest familiar or poorly thought-out ideas can face an intellectual pummeling.
OPEN OFFICE HOURS
Think back to your professors’ office hours in college. That’s pretty much what key managers, including Mayer, do two or three times a week, to discuss new ideas. One success born of this approach was Google’s personalized home page.
BIG BRAINSTORMS
As it has grown, Google has cut back on brainstorming sessions. Mayer still has them eight times a year, but limits hers to 100 engineers. Six concepts are pitched and discussed for 10 minutes each. The goal: to build on the initial idea with at least one complementary idea per minute.
ACQUIRE GOOD IDEAS
Although Google strongly prefers to develop technology in-house, it has also been willing to snap up small companies with interesting initiatives. In 2004 it bought Keyhole, including the technology that let Google offer sophisticated maps with satellite imagery.
FINDING CUSTOMER VALUE OPPORTUNITIESFINDING CUSTOMER VALUE OPPORTUNITIES
Customer value analysis
Objective is to identify needs for:
1. New products
2. Improvements to existing products
3. Improvements in production processes
4. Improvements in supporting services
CustomerExpectations
CustomerSatisfaction Gap
ActualProductPerformance
OPPORTUNITIES
(1) New Products(2) Improvements(3) New and Improved Processes
TRANSFORMATIONAL Break-through innovation Digital photographyNEW PRODUCT CATEGORY
Dell Printers Nike Apparel Golf clubsLINE EXTENSION New color/package/styleINCREMENTAL IMPROVEMENTS Software updates
The Evolution of the Creative CompanyThe Evolution of the Creative Company
STEP 1Technology and information become commoditized and globalized. Suddenly, the advantage of making things “faster, cheaper, better” diminishes, and profit margins decline.
STEP 2With commoditization, core advantages can be shipped abroad. Outsourcing to India, China, and Eastern Europe sends a growing share of manufacturing and even the Knowledge Economy overseas.
STEP 3Design Strategy begins to replace Six Sigma as a key organizing principle. Design plays a key role in product differentiation, decision-making, and understanding the consumer experience.
STEP 4Creative innovation becomes the key driver of growth. Companies master new design thinking and metrics and create products that address consumers’ unmet, and often unarticulated, desires.
STEP 5The successful Creative Corporation emerges, with new Innovation DNA. Winners build a fast-moving culture that routinely beats competitors because of a high success rate for innovation.
Characteristics of Successful InnovatorsCharacteristics of Successful Innovators
STRATEGIC INITIATIVES
Creating an Innovative Culture
Leveraging Capabilitie
s
Selecting the Right
Innovation Strategy
Developing and Implementing Effective New
Product Processes
Making Resource Commitments
Creating an Innovation Culture
Innovation Workshop for top executives to develop an innovation plan. Innovation Statement highlighting objectives and senior management’s role and responsibilities. Training programs for employees and managers. Communicate the priority of innovation. Speakers to expose employees to innovation authorities.
Source: Thomas D. Kuczmarski et al., “The Breakthrough Mindset,” Marketing Management, March/April 2003, 43.
The Innovation Strategy Spells Out Management’s Priorities for New Product Opportunities
1. Set specific New Product Objectives.2. Communicate the role of New Products throughout
the organization.3. Define the areas of strategic focus:
Product ScopeMarketsTechnologies
4. Include longer term discontinuous projects in the portfolio along with incremental projects.
CustomerNeeds
Analysis
CustomerNeeds
Analysis
BusinessAnalysisBusinessAnalysis
Screeningand
Evaluation
Screeningand
EvaluationIdeaGeneration
IdeaGeneration
MarketingStrategy
Development
MarketingStrategy
Development
ProductDevelopment
ProductDevelopment
TestingTesting
CommercializationCommercialization
NEW PRODUCT PLANNING PROCESS
Achieving Cross-Functional Interaction and Coordination
R & D
Operations Marketing
Finance
Coordination of new product activities by a high-level general manager
Inter-functional coordination by a team of new product planning representatives
Creation of a project task force responsible for new product planning
Designation of a new products manager to coordinate planning between departments
Formation of matrix structure for integration new product planning with business functions
Creation of a permanent design center
Responsibility for New Product Planning
Idea search: targeted or open-ended? How extensive and aggressive? What specific sources are best for generating a
regular flow of new product ideas? How can new ideas be obtained from customers? Where will responsibility for the new product
ideas search be placed? What are potential threats from alternative (or
disruptive) technologies?
IDEA GENERATION
METHODSOF
GENERATINGIDEAS
DirectSearch
LinkingMarketing
and Technology
FacilitatingLead UserAnalysis
CreativeMethods
National Policy
ExploratoryCustomerStudies
Alliances/Acquisition/Licensing
TechnologicalInnovation
An Innovation Champion in Action at GE
Beth Comstock calls herself “a little bit of the crazy, wacky one” at corporate
headquarters. And it’s an apt description when you realize she works at
General Electric Co. Comstock, 44, is charged with transforming GE’s culture,
famously devoted to process, engineering, and financial controls, to one that’s
more agile and creative. Chairman and CEO Jeffrey R. Immelt tapped the
former communications chief to become GE’s first-ever chief marketing officer
almost three years ago. The job came with a critical twist: the goal of driving
innovation through the company’s 300,000 plus ranks.
“Creativity is still a word we’re wrestling with,” Comstock concedes. “It seems
a bit undisciplined, a bit chaotic for a place like GE.” More comfortable
territory is the term “imaginative problem-solving” – encouraging people to
think “what if” – yet always with the aim of driving growth. One of Comstock’s
first moves was to bring in anthropologists to audit GE’s culture. They came
back with praise for GE’s famous work ethic but noted that employees wanted
more “wow” – more discoveries from the company founded by Thomas Edison.
Comstock has a role whose importance is spreading
throughout Big Business – that of innovation champion.
She began by studying the best practices at companies
such as Procter & Gamble, FedEx, and 3M. She brought in
a raft of creativity consultants, futurists, and design gurus
to lead sessions with different operations. Their names
were jolting for GE types: Play, a Richmond (VA.) group
that helps execs think differently, and Jump, based in San
Mateo, CA., which researches how people use things. GE
is expanding its army of designers to bring businesses
closer to customers. And Comstock is staging “dreaming
sessions” where Immelt, senior execs, and customers
debate future market trends. Comstock concedes some
managers view the workshops as a waste of time. “We
have a long way to go,” she says. But for GE, there’s no
turning back.
IDEA GENERATION
SCREENING(fit/feasibility)
CONCEPT EVALUATION
BUSINESS ANALYSIS
SCREENING, EVALUATING, AND BUSINESS ANALYSIS
Business AnalysisBusiness Analysis
Revenue Forecasts
Preliminary Marketing Plan
Cost Estimation
Profit Projections
Other Considerations
NEWPRODUCTCONCEPT
PRODUCTDEVELOPMENT
AND USETESTING
MARKETINGSTRATEGY
DEVELOPMENT
MARKETTESTING
LAUNCH
PRODUCT AND PROCESS DEVELOPMENT
Development of the new product includes:◦Product design◦Packaging design◦Decisions to make or purchase product
componentsProduct Development Process:◦Product Specifications◦Industrial Design◦Prototype◦Use Tests◦Process Development
Collaborative Development
Product and Process DevelopmentProduct and Process Development
PURPOSE OFUSE TESTS
Does it have therequired attributes?
Verifyclaims
Ideas forimprovements
Identify usesituations
MARKETING STRATEGY AND MARKET TESTINGMARKETING STRATEGY AND MARKET TESTING
Marketing Strategy Decisions
◦Market Targeting
◦Positioning Strategy Market Testing Options
◦Simulated Test Marketing
◦Scanner – Based Test Marketing
◦Conventional Test Marketing
◦Testing Industrial Products
◦Selecting Test Sites
◦Length of the Test
◦External Influences
Less artificial than simulated testing
Costs less than full-scale market test
Test is controlled by using IRI’s 2300 panel members in each test city
Cable TV enables use of controlled ad testing
Tests take about 12 months
Scanner-based Test Marketing
COMMERCIALIZATIONCOMMERCIALIZATION
The Marketing Plan
◦Complete marketing strategy
◦Responsibilities for execution
◦Cross – functional approach
Monitoring and Control
◦Real – time tracking
◦Role of the Internet
◦ Include product performance metrics with performance targets
Market Target(s)
Marketing Program(s)
Objectives
Marketing Strategy
Technology Push Processes
Platform Products
Process – Intensive Products
Customized Products
VARIATIONS IN THE GENERIC NEW PRODUCT PLANNING