1. Innovation and New Product Strategy

2. INNOVATION AND NEW PRODUCT STRATEGY
Innovation as a Customer Driven Process
New Product Planning
Idea Generation
Screening, Evaluating, and Business Analysis
Product and Process Development
Marketing Strategy and Market Testing
Commercialization
Variation in the Generic New Product Planning Process

3. INNOVATION FEATURE Managing Google’s Idea Factory
As director of consumer Web products Marissa Mayer is a champion of innovation. She favors new product launches that are early and often.
She joined Google in early 1999 as a programmer when the workforce totaled 20. By 2007 Google had 5,700 employees with expected sales of $16 billion.
How Google Innovates
The search leader has earned a reputation as one of the most innovative companies in the world of technology. A few of the ways Google hatches new ideas:

4. THE IDEAS LIST
Anyone at Google can post thoughts for new technologies of businesses on an ideas mailing list, available companywide for input and vetting. But beware: Newbies who suggest familiar or poorly thought-out ideas can face an intellectual pummeling.
OPEN OFFICE HOURS
Think back to your professors’ office hours in college. That’s pretty much what key managers, including Mayer, do two or three times a week, to discuss new ideas. One success born of this approach was Google’s personalized home page.
BIG BRAINSTORMS
As it has grown, Google has cut back on brainstorming sessions. Mayer still has them eight times a year, but limits hers to 100 engineers. Six concepts are pitched and discussed for 10 minutes each. The goal: to build on the initial idea with at least one complementary idea per minute.
ACQUIRE GOOD IDEAS
Although Google strongly prefers to develop technology in-house, it has also been willing to snap up small companies with interesting initiatives. In 2004 it bought Keyhole, including the technology that let Google offer sophisticated maps with satellite imagery.

5. FINDING CUSTOMER VALUE OPPORTUNITIES
Customer value analysis
Objective is to identify needs for:
New products
Improvements to existing products
Improvements in production processes
Improvements in supporting services

6. Customer
Expectations
Customer
Satisfaction Gap
OPPORTUNITIES
(1) New Products
(2) Improvements
(3) New and Improved
Processes
Actual
Product
Performance

7. TRANSFORMATIONAL
Break-through innovation
Digital photography
NEW PRODUCT CATEGORY
Dell Printers
Nike Apparel
Golf clubs
LINE EXTENSION
New color/package/style
INCREMENTAL IMPROVEMENTS
Software updates

8. The Evolution of the Creative Company
STEP 1
Technology and information become commoditized and globalized. Suddenly, the advantage of making things “faster, cheaper, better” diminishes, and profit margins decline.
STEP 2
With commoditization, core advantages can be shipped abroad. Outsourcing to India, China, and Eastern Europe sends a growing share of manufacturing and even the Knowledge Economy overseas.
STEP 3
Design Strategy begins to replace Six Sigma as a key organizing principle. Design plays a key role in product differentiation, decision-making, and understanding the consumer experience.

9. STEP 4
Creative innovation becomes the key driver of growth. Companies master new design thinking and metrics and create products that address consumers’ unmet, and often unarticulated, desires.
STEP 5
The successful Creative Corporation emerges, with new Innovation DNA. Winners build a fast-moving culture that routinely beats competitors because of a high success rate for innovation.

10. Characteristics of Successful Innovators
Creating an Innovative Culture
Leveraging Capabilities
Selecting the Right Innovation Strategy
STRATEGIC INITIATIVES
Making Resource Commitments
Developing and Implementing Effective New Product Processes

11. Creating an Innovation Culture
Innovation Workshop for top executives to develop an innovation plan.
Innovation Statement highlighting objectives and senior management’s role and responsibilities.
Training programs for employees and managers.
Communicate the priority of innovation.
Speakers to expose employees to innovation authorities.
Source: Thomas D. Kuczmarski et al., “The Breakthrough Mindset,” Marketing Management, March/April 2003, 43.

12. Set specific New Product Objectives.
The Innovation Strategy Spells Out Management’s Priorities for New Product Opportunities
Set specific New Product Objectives.
Communicate the role of New Products throughout the organization.
Define the areas of strategic focus:
Product Scope
Markets
Technologies
Include longer term discontinuous projects in the portfolio along with incremental projects.

13. NEW PRODUCT PLANNING PROCESS
Customer
Needs
Analysis
Screening
and
Evaluation
Business
Analysis
Idea
Generation
Marketing
Strategy
Development
Product
Development
Testing
Commercialization

14. Achieving Cross-Functional Interaction and Coordination
Operations
Marketing
Finance

15. Responsibility for New Product Planning
Coordination of new product activities by a high-level general manager
Inter-functional coordination by a team of new product planning representatives
Creation of a project task force responsible for new product planning
Designation of a new products manager to coordinate planning between departments
Formation of matrix structure for integration new product planning with business functions
Creation of a permanent design center

16. IDEA GENERATION Idea search: targeted or open-ended?
How extensive and aggressive?
What specific sources are best for generating a regular flow of new product ideas?
How can new ideas be obtained from customers?
Where will responsibility for the new product ideas search be placed?
What are potential threats from alternative (or disruptive) technologies?

17. Direct
Search
Alliances/
Acquisition/
Licensing
Technological
Innovation
METHODS OF
GENERATING
IDEAS
National
Policy
Exploratory
Customer
Studies
Creative
Methods
Facilitating
Lead User
Analysis
Linking
Marketing
and Technology

18. An Innovation Champion in Action at GE
Beth Comstock calls herself “a little bit of the crazy, wacky one” at corporate headquarters. And it’s an apt description when you realize she works at General Electric Co. Comstock, 44, is charged with transforming GE’s culture, famously devoted to process, engineering, and financial controls, to one that’s more agile and creative. Chairman and CEO Jeffrey R. Immelt tapped the former communications chief to become GE’s first-ever chief marketing officer almost three years ago. The job came with a critical twist: the goal of driving innovation through the company’s 300,000 plus ranks.
“Creativity is still a word we’re wrestling with,” Comstock concedes. “It seems a bit undisciplined, a bit chaotic for a place like GE.” More comfortable territory is the term “imaginative problem-solving” – encouraging people to think “what if” – yet always with the aim of driving growth. One of Comstock’s first moves was to bring in anthropologists to audit GE’s culture. They came back with praise for GE’s famous work ethic but noted that employees wanted more “wow” – more discoveries from the company founded by Thomas Edison.

19. Comstock has a role whose importance is spreading throughout Big Business – that of innovation champion. She began by studying the best practices at companies such as Procter & Gamble, FedEx, and 3M. She brought in a raft of creativity consultants, futurists, and design gurus to lead sessions with different operations. Their names were jolting for GE types: Play, a Richmond (VA.) group that helps execs think differently, and Jump, based in San Mateo, CA., which researches how people use things. GE is expanding its army of designers to bring businesses closer to customers. And Comstock is staging “dreaming sessions” where Immelt, senior execs, and customers debate future market trends. Comstock concedes some managers view the workshops as a waste of time. “We have a long way to go,” she says. But for GE, there’s no turning back.

20. SCREENING, EVALUATING, AND BUSINESS ANALYSIS
IDEA GENERATION
SCREENING
(fit/feasibility)
CONCEPT EVALUATION
BUSINESS ANALYSIS

21. Business Analysis
Revenue Forecasts
Preliminary Marketing Plan
Cost Estimation
Profit Projections
Other Considerations

22. PRODUCT AND PROCESS DEVELOPMENT
NEW
PRODUCT
CONCEPT
PRODUCT
DEVELOPMENT
AND USE
TESTING
MARKETING
STRATEGY
DEVELOPMENT
MARKET
TESTING
LAUNCH

23. Product and Process Development
Development of the new product includes:
Product design
Packaging design
Decisions to make or purchase product components
Product Development Process:
Product Specifications
Industrial Design
Prototype
Use Tests
Process Development
Collaborative Development

24. Does it have the
required attributes?
Ideas for
improvements
Verify
claims
PURPOSE OF
USE TESTS
Identify use
situations

25. MARKETING STRATEGY AND MARKET TESTING
Marketing Strategy Decisions
Market Targeting
Positioning Strategy
Market Testing Options
Simulated Test Marketing
Scanner – Based Test Marketing
Conventional Test Marketing
Testing Industrial Products
Selecting Test Sites
Length of the Test
External Influences

26. Scanner-based Test Marketing
Less artificial than simulated testing
Costs less than full-scale market test
Test is controlled by using IRI’s 2300 panel members in each test city
Cable TV enables use of controlled ad testing
Tests take about 12 months

27. COMMERCIALIZATION
The Marketing Plan
Complete marketing strategy
Responsibilities for execution
Cross – functional approach
Monitoring and Control
Real – time tracking
Role of the Internet
Include product performance metrics with performance targets

28. Marketing Strategy
Market Target(s)
Objectives
Marketing Program(s)

29. VARIATIONS IN THE GENERIC NEW PRODUCT PLANNING
Technology Push Processes
Platform Products
Process – Intensive Products
Customized Products