1. Innovation Workout Design a video Game Console using Morphological boxes Write its Business Model and estimate the value from commercializing your innovation

2. Mismatch of Capabilities and Markets In the Mad Catz case we saw that Consumer Value (what consumers are willing to pay us) and Production Cost are often only loosely correlated In the Mad Catz case we saw that Consumer Value (what consumers are willing to pay us) and Production Cost are often only loosely correlated Intelligent Design, then, requires that we give more weight to expenditures in some of the product Components than others Intelligent Design, then, requires that we give more weight to expenditures in some of the product Components than others

3. Your Task Design a game console using Morphological Boxes Design a game console using Morphological Boxes The next slide gives the features that your capabilities allow you to produce The next slide gives the features that your capabilities allow you to produce particular components (chosen from columns)particular components (chosen from columns) with a given feature set (chosen from rows)with a given feature set (chosen from rows) Each adds some market value, and some production cost Each adds some market value, and some production cost

4. Feature Choices Components Package Console CasingElectronicsScreenConnectivity Features Recycled PaperCheap PlasticBasicNTSC TVWired Colored plasticHard Plastic+VibrationPAL/multiInfrared Cloth caseLexan +Motion Sensor1024x768Wi-Fi Hard ShellBrushed Metal+Television1280x1024+Internet Metal with Velvet cushion Two-tone Clamshell+Body Suit 1080i (i.e., 1920 × 1080 / 2 interlaced) + Other Consoles

5. Unit Profit Your marketing department has determined your customers’ valuation of features (their Willingness to Pay or W-to-P) Your marketing department has determined your customers’ valuation of features (their Willingness to Pay or W-to-P) Your production department knows the cost of these features Your production department knows the cost of these features You need to choose the combination of features that will yield the greatest profit You need to choose the combination of features that will yield the greatest profit

6. Volume In addition, your accounting department has determined how overall price influences (reduces) sales volume In addition, your accounting department has determined how overall price influences (reduces) sales volume Volume (units) = ($700 – Sales Price)*10,000 Volume (units) = ($700 – Sales Price)*10,000

7. Feature Costs and Potential Revenue The attached sheet breaks a game console into its feature costs and potential revenue The attached sheet breaks a game console into its feature costs and potential revenue Profit depends not just on unit profit, but volume of sales Profit depends not just on unit profit, but volume of sales The more expensive the entire product, the lower the sales volume The more expensive the entire product, the lower the sales volume

8. To Present What is the feature set of your most profitable product? What is the feature set of your most profitable product? What would you call this product? What would you call this product? Is it high end, low end, or intermediate? Is it high end, low end, or intermediate? Who are your competitors? Who are your competitors? What are substitute products for this one? What are substitute products for this one?

9. To Present How can you increase the volume of sales? (think of complements) How can you increase the volume of sales? (think of complements) Draw your Business Model with bubbles, arrows and boxes Draw your Business Model with bubbles, arrows and boxes