Global Innovation Management Toolbox Workout #6

GOAL Define an entry strategy METHOD Building up a vision, business plan, milestones and identifying your customers and combatants

Setup for your task Pick a specific consumer product: Choose a product where you have a thorough knowledge of the market and competitors This is likely to be something that would be involved in a sport, hobby, job or other personal interest Quickly think through: Why customers buy this product (be honest) How customers buy this product (i.e., the consumption chain) Complementary products required to market this product Competences your firm needs to compete

Setup for your task (2) Assume your company is going to produce its own brand of the product you have chosen Formulate an entrance strategy which … Anticipates competitive behavior and response Plans to learn when uncertainty is high Make sure your strategy assesses your project as it unfolds rather than meeting objectives set in advance

Don’t forget… You can’t be sure that your competitors will react as you expect You can’t be sure that technology, markets, etc. will pan out as you hope (or promise) You don’t want to be responsible for meeting ‘the numbers’ where you have extreme uncertainty

Your 1st task: State your vision The first step in creating an entrance strategy is stating your vision Your vision is your assessment of what the competitive future will look like – ie: What will this market look like in 6 months, 1 year, 5 years, 10 years? What will this product look like in 6 months, 1 year, 5 years, 10 years?

Your 2nd task: Describe the business model Your business model should Tell the story of how this product becomes a profitable business Set target revenue and cost numbers for 6 months, 1 year, 5 years and 10 years State how your business / product is different from everyone else’s

Your 3rd task List your major assumptions In any highly uncertain venture, you make considerable numbers of assumptions: List what assumptions you will make about your market Explain how you will test your assumptions Your business plan should be organized around converting the maximum number of assumptions to knowledge at minimum cost

Your 4th task: Specify your major milestones Definition of a milestone Milestones are points in time at which products are delivered and key assumptions are tested Usually these are events, e.g. complete design They should be sequenced to minimize cash burn and corporate expectations while you are learning No milestone should occur without triggering a test of assumptions Task Specify your milestones (ie deliverables) in 6 months, 1 year, 5 years and 10 years

Hint Remember that sustainability is industry-specific: different industries display different rates of change in the market Past is indicator of Future Future is Volatile

Your 5th task: Choose your first three customers Specify your first three customers – your lead-steer customers. They should be: Opinion leaders in their industries Highly regarded by peers Customers with blogs, reviews or other interactive site feedback These will help you to test your assumptions about attribute maps and consumption chains Risk low Risk high Benefit low 2nd priority (make risk of not buying higher than of buying) Forget it! (postpone until value or risk Benefit high 1st priority (easy sell) 3rd priority (‘if it doesn’t work, send me the bill’)

Your 6th task: Identify your combatants Identify your combatants (or sleeping dogs, bystanders and skirmishers) by name State why you categorize them as such (Usually this will be because of their market power, the coreness of the product to their capabilities, and their interest in this market) Capacity to produce is high Capacity to produce is low Commitment to enter market is low Sleeping dogs (track them) Bystanders (monitor) Commitment to enter market is high Combatants (Your main focus) Skirmishers (selective in their responses due to resource limits; monitor)

Your 7th task Choose your entry tactics Choose one (only) of the tactics from the following list (more detailed information on each is given on the next slide): Offensive Defensive Deception Explain why this is the best tactic for you and your product to enter the market

Quick revision session: Entry tactics Offensive tactics Rapid dominance Planned attack / frontal assault Flanking maneuver Pincer movement Double envelopment Attrition warfare Interdiction / control of lines of communication and supply Preemptive attack Raiding Divide and conquer Guerrilla warfare Defensive tactics Mutual support Scorched earth policy Booby traps Center peel Trench warfare Hedgehog defense Deception tactics Stealth and camouflage Disinformation Feint Force multiplication

Hints Avoid debilitating competitive interaction by using speed, skill and surprise Use your imagination, innovation and creativity to outmaneuver your competitors, rather than your scarce resources Assets should be bought only as a last resort Fixed commitments should be kept variable by paying per use, or by subcontracting

Presentation Prepare a 5- to 10-minute presentation of your conclusions on tasks 1 to 7. Describe your product, its current competitors, its history and its future on 1 slide Present a maximum of 1-2 handwritten slides per task For the sake of time, do not include anything else