Cooper, R., & Edgett, S. (2010). Developing a product innovation and technology strategy for your business Envision that you are a member of a senior management of a large corporation and that you are tasked to develop a product innovation and technology strategy for the company. Follow the advice given in the article. What pieces of advice would you follow and what not? Group 8: Aleksi Jokela, Emmi Peltonen, Maria Sundin, Saara Sulonen TU-E1120 Strategic Management of Technology and Innovation

For starters Have a realistic understanding of the current situation Is the company in trouble or is the market changing? Do we need to change our strategy? Identify capabilities to past success Acknowledge what is happening in the world and prospective markets Find matches to current capabilities → Create technology strategy around these matches Identify needs to build additional new capabilities to succeed Intro

5 steps of creating a technology strategy Define objectives and goals Choose arenas of focus for R&D Develop attack and entry strategies Make market deployment decisions Design strategic product road map 5 Steps

Define objectives and goals Keep in mind while setting goals and objectives: How do new products & product innovation fit into the business’s overall plan? Clear communication should convey to all why new products are being developed (goals) and what the products are meant to accomplish (objectives). Goals are broad and general. Objectives are concrete ways to achieve a goal. Most common measurement is percentage of sales made by new products. S.M.A.R.T - common method used for setting objectives 1

1 S.M.A.R.T. objectives Doran, G. T. (1981) “There’s a S.M.A.R.T. way to write management’s goals and objectives”, Management Review, Vol. 70, Issue 11, p35-36. Couldn’t find the article though.

Choose arenas of focus for R&D Industry analysis Identify e.g. markets, industries, applications, technologies for new product innovations Specify strategic arenas where there is enough thrust for new product development Identify new profitable opportunities within these markets in terms of products and markets Company analysis Rate strategic arenas based on arena attractiveness and business strength Arena attractiveness: size, growth, technological maturity of the market… Business strength: technology and marketing leverage, competitive advantage… Select battlefields based on core competencies and strengths Marry market opportunities with core competencies in order to gain competitive advantage 2

Strategic map 2 Criteria used to rate strategic arenas Business strength Excellent Criteria used to rate strategic arenas Arena attractiveness The market Technological opportunities Business strength Technology leverage Marketing leverage Competitive advantage High-risk bets Good bets Arena attractiveness Conservative bets No bets Poor High Low Usually 6 to 8 questions is developed for each dimension (the market, technological opportunities etc.) for senior management to rate the attractiveness of each strategic arena. Then the prospective arenas are placed on a strategic map where the top left corner represents attractive arenas.

Develop attack and entry strategies An appropriate strategy for how to handle the markets should be chosen for each strategic arena. Understanding the company’s core competencies and knowledge of industry success drivers are important when deciding which strategies to use The strategies should contain attack and entry aspects, as well as specifying the globality Attack strategies define the role of the product on the market. First mover, fast follower, low-cost provider? Entry strategies handles the question of doing the product development alone or through alliances Should the innovation be local, global or a combination? 3

3 Strategic arena 1 Strategic arena 2

Market deployment decisions Answer important questions: How much do we spend on product innovation? What is the relative emphasis of each arena of strategic focus? Commit and allocate resources Check that resource commitment and allocation is in line with product development and general business goals Earmark to ensure that strategically significant projects aren’t neglected because of short-sighted preferences for simple and inexpensive projects Effective portfolio management leads to: Development projects being in line with business strategy Strong portfolio with high-value projects and few low-value projects Balance between available resources and number of projects 4 “Strategy becomes real when you start spending money”

Strategic buckets 4 D 1 E 2 F 3 A 1 B 2 C 3 New products = 1.75M Project Rank D 1 E 2 F 3 4 Project Rank A 1 B 2 C 3 Strategic buckets are firewalled to ensure a balanced project portfolio How to use the method: Step 1: Define buckets based on project type, market, geography or product area Step 2: Allocate resources between the different buckets Step 3: Prioritize projects within each bucket Step 4: Allocate resources within each bucket New products = 1.75M Cost reductions = 2M Improvements & modifications = 2.25M Sales force requests = 2M Project Rank J 1 K 2 L 3 Project Rank G 1 H 2 I 3

Strategic product road map A good road map should cover the next 5 to 8 years of operations This allows planning both improvements in current products as well as possible new markets The roadmap crystallizes the strategic visions of the management group All new product initiatives in the coming years have to be planned in order to create a roadmap Initiatives are then laid out to show a timeline of rolling out the new products Required platform developments can listed, to show which projects need resources A roadmap helps to translate previous resource and market decisions to actions The company’s previous planning now has more tangible results 5

Strategic product roadmap Plan which new products are developed and allocate resources to these projects 5 Place these projects on a timeline so that they are in line with the company’s resources The timeline shows which projects are current and what areas need development before next projects can be started 0 12 24 36 48 Months

As managers of a large corporation We found the suggestions in the article relevant in general However, we did not find all of the frameworks useful For instance, defining strategic arenas is important but using the product-market matrix in itself isn’t necessary as there are multiple ways to achieve the same goal A company should concentrate on building competitive advantage in addition to matching core competencies with market opportunities Many tools were shown to be more often present in successful companies However, the causality is still not verified, so some practises should be taken with a grain of salt Critique

Summary A company has multiple options of different tools to create new product ideas These ideas should be based both on the company’s core competencies as well as the profitability of the possible new markets The projects should be allocated to different strategic buckets, to ensure proper funding for different kinds of projects The company should decide not only which products are pursued but also create an entry strategy to new markets Lastly these projects should be mapped on a roadmap to ensure that the company is constantly moving forward in a timely and consistent manner Summary