Global Innovation Management Toolbox Workout #4

Design a video game console using morphological boxes GOAL Design a video game console using morphological boxes METHOD Write its business model and estimate the value from commercializing your innovation

Quick revision session: Mismatch between capabilities and markets In the Mad Catz case (chapter 4) we saw that consumer value (what consumers are willing to pay us) and production cost are often only loosely correlated Therefore intelligent design requires that we give more weight to expenditures in some of the product components than others

Your product: feature choices The table below shows the features (in rows) and components (in columns) of your potential video games console Each feature adds some market value and some production cost Components Package Console Casing Electronics Screen Connectivity Recycled Paper Cheap Plastic Basic NTSC TV Wired Colored plastic Hard Plastic +Vibration PAL/multi Infrared Cloth case Lexan +Motion Sensor 1024x768 Wi-Fi Hard Shell Brushed Metal +Television 1280x1024 +Internet Metal with Velvet cushion Two-tone Clamshell +Body Suit 1080i (i.e., 1920 × 1080 / 2 interlaced) +Other Consoles Features

Your task: the first two factors Choose the combination of features that will yield the greatest profit You should base your choice on three key factors: Your marketing department’s assessment of your customers’ valuation of the product features (their willingness to pay or W-to-P) Your production department’s assessment of the cost of these features Data on each of these features is represented in the morphological boxes beginning at slide 7. But first, the third factor …

Your task: the third factor 3. Your accounting department has determined how overall price influences (reduces) sales volume: Volume (units) = ($700 – Sales Price)*10,000 Therefore, the most profitable solution depends not just on unit profit, but volume of sales The more expensive the entire product, the lower the sales volume

Morphological box 1: Packaging For each feature, the morphological boxes on the next five slides show the cost of feature, and customers’ willingness-to-pay (i.e., maximum price) Mix and match features for the most profitable console – not forgetting to take factor three (overall price vs. sales volume) into account Package Type W-to-P Cost 1 Recycled paper 3 2 Coloured plastic 12 1.5 Cloth case 24 4 Hard shell 45 15 5 Metal with velvet cushion 50 34

Morphological box 2: Console casing Material W-to-P Cost 1 Cheap plastic 3 2 Hard plastic 7 Lexan 12 6 4 Brushed metal 35 5 Two-tone clamshell 120 24

Morphological box 3: Electronics Features W-to-P Cost 1 Basic 15 2 + vibration 3 25 + motion sensor 16 40 4 + television 35 160 5 + body suit 120 600

Morphological box 4: Packaging Screen Resolution W-to-P Cost 1 NTSC TV 30 10 2 PAL/multi 40 3 1024x768 4 1280x1024 60 5 1080i (ie 1920x1080 / 2 interlaced) 45 100

Morphological box 5: Connectivity TV and internet W-to-P Cost 1 Wired 10 2 Infrared 25 5 3 Wi-Fi 30 4 + internet 45 + other consoles 60

Presentation Prepare a presentation detailing the following: The feature set of your most profitable product The name of the product Whether the product is high end, low end, or intermediate Who your competitors are Your product’s substitute products.