Managing Innovation & Managing Innovation & New Industrial Product New Industrial Product

DevelopmentDevelopment

Chapter 10Chapter 10

Managing InnovationManaging Innovation Two approaches:Two approaches:

• Induced strategic behaviorInduced strategic behavior TraditionalTraditional Administrative mechanismsAdministrative mechanisms

• Autonomous strategic behavior Autonomous strategic behavior EntrepreneurialEntrepreneurial Product championProduct champion

• ““An organization member who creates, defines, or An organization member who creates, defines, or adopts an idea for an innovation and is willing to adopts an idea for an innovation and is willing to assume risk.”assume risk.”

• 3M3M

Managing InnovationManaging Innovation Why is the Silicon Valley widely Why is the Silicon Valley widely

recognized for innovation?recognized for innovation?• Market for ideasMarket for ideas

AllocationAllocation AttractionAttraction

• Market for capitalMarket for capital Investors v. corporationsInvestors v. corporations

• Market for talentMarket for talent Employee movementEmployee movement

Managing TechnologyManaging Technology Classifying Development projectsClassifying Development projects

• Derivative projectsDerivative projects

• Platform projectsPlatform projects

• Breakthrough projectsBreakthrough projects

• Research and developmentResearch and development

Managing TechnologyManaging Technology Product-Family FocusProduct-Family Focus

• ““Products that share a common platform Products that share a common platform but have different specific features and but have different specific features and enhancements required for different enhancements required for different sets of consumers.”sets of consumers.”

Disruptive InnovationDisruptive Innovation Overshooting Customer DemandsOvershooting Customer Demands Sustaining v. DisruptiveSustaining v. Disruptive

• SustainingSustaining• DisruptiveDisruptive

Low-end strategy testLow-end strategy test• For whom?For whom?• Customers at low-end wanting ______________ Customers at low-end wanting ______________

______________________________________________________________________________• Create model that can be profitable at discount price to Create model that can be profitable at discount price to

attract customers.attract customers. New-market strategy testNew-market strategy test

• For whom?For whom?• People who lack __________________________People who lack ____________________________________________________________________________________________________________• Present customers who need to go to an inconvenient Present customers who need to go to an inconvenient

locationlocation

What makes some companies What makes some companies better innovators?better innovators?

1.1. Limited structureLimited structure Strict priorities for new productsStrict priorities for new products Tied to resource allocationTied to resource allocation

2.2. Real-Time Communication and Real-Time Communication and ImprovisationImprovisation

Better communicationBetter communication ImprovisationImprovisation

• ““Design and execution of actions that approach Design and execution of actions that approach convergence with each other in time.”convergence with each other in time.”

What makes some companies What makes some companies better innovators?better innovators?

3.3. ExperimentationExperimentation Creating options for the futureCreating options for the future

4.4. Time PacingTime Pacing ““A strategy for competing in fast-changing A strategy for competing in fast-changing

markets by creating new products at markets by creating new products at predictable time intervals.”predictable time intervals.”

What Drives a Firm’s New Product What Drives a Firm’s New Product Performance?Performance?

Quality of a Firm’s New Product Development Quality of a Firm’s New Product Development ProcessProcess• ProcessProcess

Emphasize market and technical assessmentEmphasize market and technical assessment Complete description of productComplete description of product Go/kill set-up pointsGo/kill set-up points FlexibleFlexible

• Resource commitmentsResource commitments Resources committed to meet firm’s objectivesResources committed to meet firm’s objectives R&D budgets were adequate and aligned with objectivesR&D budgets were adequate and aligned with objectives Necessary personnel are availableNecessary personnel are available

• New product strategyNew product strategy 3M3M

What Drives a Firm’s New Product What Drives a Firm’s New Product Performance?Performance?

Anticipating Competitive ReactionsAnticipating Competitive Reactions• Developing scenariosDeveloping scenarios• When will a competitor react?When will a competitor react?

If _____________________________ and If _____________________________ and ____________________________________________

What Drives a Firm’s New Product What Drives a Firm’s New Product Performance?Performance?

Sources of New Product IdeasSources of New Product Ideas• Internal/ExternalInternal/External• Lead usersLead users

““A small number of highly influential buying A small number of highly influential buying organizations that are consistent early organizations that are consistent early adopters of new technologies.”adopters of new technologies.”

• Lead user methodLead user method• Staying ahead of customersStaying ahead of customers

Quality Function DeploymentQuality Function Deployment ““Identifies critical customer Identifies critical customer

attributes and establishes a specific attributes and establishes a specific link between customer attributes and link between customer attributes and product design attributes.”product design attributes.”

Quality Function DeploymentQuality Function Deployment QFDQFD

• Voice of CustomerVoice of Customer Identify customers needs and wantsIdentify customers needs and wants

• InterviewsInterviews Assign weightsAssign weights

• Voice of EngineersVoice of Engineers Translate customer needs into product design Translate customer needs into product design

attributesattributes Examine relationship between design parameters Examine relationship between design parameters

and customer needsand customer needs• Benefits of QFDBenefits of QFD

Determinants of New Product Determinants of New Product Performance and TimelinessPerformance and Timeliness

Determinants of SuccessDeterminants of Success• Strategic FactorsStrategic Factors

Product Advantage Product Advantage Marketing knowledgeMarketing knowledge

• ““Fit between _____________________ and Fit between _____________________ and ____________________________.”____________________________.”

Technical synergyTechnical synergy• ““Fit between _____________________ and Fit between _____________________ and

____________________________.”____________________________.” International orientationInternational orientation

Determinants of New Product Determinants of New Product Performance and TimelinessPerformance and Timeliness

Determinants of SuccessDeterminants of Success• Development Process FactorsDevelopment Process Factors

Predevelopment proficiencyPredevelopment proficiency Market knowledge and marketing Market knowledge and marketing

proficiencyproficiency Technical knowledge and technical Technical knowledge and technical

proficiencyproficiency

Determinants of New Product Determinants of New Product Performance and TimelinessPerformance and Timeliness

Determinants of SuccessDeterminants of Success• Fast-paced Product DevelopmentFast-paced Product Development

Matching process to development taskMatching process to development task Compressed strategy for predictable Compressed strategy for predictable

projectsprojects• Compressed strategyCompressed strategy

Experiential strategy for unpredictable Experiential strategy for unpredictable projectsprojects