1. Managing Innovation & New Industrial Product Development Chapter 10

2. Managing Innovation Two approaches: Two approaches: Induced strategic behaviorInduced strategic behavior Traditional Traditional Administrative mechanisms Administrative mechanisms Autonomous strategic behaviorAutonomous strategic behavior Entrepreneurial Entrepreneurial Product champion Product champion “An organization member who creates, defines, or adopts an idea for an innovation and is willing to assume risk.”“An organization member who creates, defines, or adopts an idea for an innovation and is willing to assume risk.” 3M3M

3. Managing Innovation Why is the Silicon Valley widely recognized for innovation? Why is the Silicon Valley widely recognized for innovation? Market for ideasMarket for ideas Allocation Allocation Attraction Attraction Market for capitalMarket for capital Investors v. corporations Investors v. corporations Market for talentMarket for talent Employee movement Employee movement

4. Managing Technology Classifying Development projects Classifying Development projects Derivative projectsDerivative projects Platform projectsPlatform projects Breakthrough projectsBreakthrough projects Research and developmentResearch and development

5. Managing Technology Product-Family Focus Product-Family Focus “Products that share a common platform but have different specific features and enhancements required for different sets of consumers.”“Products that share a common platform but have different specific features and enhancements required for different sets of consumers.”

6. Disruptive Innovation Overshooting Customer Demands Overshooting Customer Demands Sustaining v. Disruptive Sustaining v. Disruptive SustainingSustaining DisruptiveDisruptive Low-end strategy test Low-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 attract customers.Create model that can be profitable at discount price to attract customers. New-market strategy test New-market strategy test For whom?For whom? People who lack __________________________People who lack ___________________________________________________________________ Present customers who need to go to an inconvenient locationPresent customers who need to go to an inconvenient location

7. What makes some companies better innovators? 1. Limited structure Strict priorities for new products Strict priorities for new products Tied to resource allocation Tied to resource allocation 2. Real-Time Communication and Improvisation Better communication Better communication Improvisation Improvisation “Design and execution of actions that approach convergence with each other in time.”“Design and execution of actions that approach convergence with each other in time.”

8. What makes some companies better innovators? 3. Experimentation Creating options for the future Creating options for the future 4. Time Pacing “A strategy for competing in fast-changing markets by creating new products at predictable time intervals.” “A strategy for competing in fast-changing markets by creating new products at predictable time intervals.”

9. What Drives a Firm’s New Product Performance? Quality of a Firm’s New Product Development Process Quality of a Firm’s New Product Development Process ProcessProcess Emphasize market and technical assessment Emphasize market and technical assessment Complete description of product Complete description of product Go/kill set-up points Go/kill set-up points Flexible Flexible Resource commitmentsResource commitments Resources committed to meet firm’s objectives Resources committed to meet firm’s objectives R&D budgets were adequate and aligned with objectives R&D budgets were adequate and aligned with objectives Necessary personnel are available Necessary personnel are available New product strategyNew product strategy 3M 3M

10. What Drives a Firm’s New Product Performance? Anticipating Competitive Reactions Anticipating Competitive Reactions Developing scenariosDeveloping scenarios When will a competitor react?When will a competitor react? If _____________________________ and If _____________________________ and______________________

11. What Drives a Firm’s New Product Performance? Sources of New Product Ideas Sources of New Product Ideas Internal/ExternalInternal/External Lead usersLead users “A small number of highly influential buying organizations that are consistent early adopters of new technologies.” “A small number of highly influential buying organizations that are consistent early adopters of new technologies.” Lead user methodLead user method Staying ahead of customersStaying ahead of customers

13. Quality Function Deployment “Identifies critical customer attributes and establishes a specific link between customer attributes and product design attributes.” “Identifies critical customer attributes and establishes a specific link between customer attributes and product design attributes.”

14. Quality Function Deployment QFD QFD Voice of CustomerVoice of Customer Identify customers needs and wants Identify customers needs and wants InterviewsInterviews Assign weights Assign weights Voice of EngineersVoice of Engineers Translate customer needs into product design attributes Translate customer needs into product design attributes Examine relationship between design parameters and customer needs Examine relationship between design parameters and customer needs Benefits of QFDBenefits of QFD

15. Determinants of New Product Performance and Timeliness Determinants of Success Determinants of Success Strategic FactorsStrategic Factors Product Advantage Product Advantage Marketing knowledge Marketing knowledge “Fit between _____________________ and ____________________________.”“Fit between _____________________ and ____________________________.” Technical synergy Technical synergy “Fit between _____________________ and ____________________________.”“Fit between _____________________ and ____________________________.” International orientation International orientation

16. Determinants of New Product Performance and Timeliness Determinants of Success Determinants of Success Development Process FactorsDevelopment Process Factors Predevelopment proficiency Predevelopment proficiency Market knowledge and marketing proficiency Market knowledge and marketing proficiency Technical knowledge and technical proficiency Technical knowledge and technical proficiency

17. Determinants of New Product Performance and Timeliness Determinants of Success Determinants of Success Fast-paced Product DevelopmentFast-paced Product Development Matching process to development task Matching process to development task Compressed strategy for predictable projects Compressed strategy for predictable projects Compressed strategyCompressed strategy Experiential strategy for unpredictable projects Experiential strategy for unpredictable projects