1. Carnegie Mellon Qatar ©2006 - 2011 Robert T. Monroe Course 70-446 Updated Class Schedule (Also Posted On Wiki Tuesday 3/22: Gate 3 - Making Go/No-Go Decisions Thursday 3/24: Product Development Process Case Study Tuesday 3/29: Final project workshop Thursday 3/31: Mechanics of a product launch: go-to-market Tuesday 4/5: Timing market entry and product portfolios Thursday 4/7: Building an innovative product organization Tuesday 4/12: Final projet workshop Thursday 4/14: Innovation for social good I Tuesday 4/19: Innovation for social good II Thursday 4/21: Final project presentations

2. Carnegie Mellon Qatar ©2006 - 2011 Robert T. Monroe Course 70-446 Timing Market Entry and Product Innovation Portfolios Robert Monroe Innovative Product Development April 5, 2011

3. Carnegie Mellon Qatar ©2006 - 2011 Robert T. Monroe Course 70-446 By The End Of Class Today, You Should: Understand common constraints and drivers that inform decisions on when to enter a new market (also known as timing market entry) Be able to explain the concept of a product innovation portfolio Understand why thinking of an organization's innovation efforts as a portfolio can be an effective way to: –Coordinate multiple initiatives –Manage the firm's overall risk exposure

4. Carnegie Mellon Qatar ©2006 - 2011 Robert T. Monroe Course 70-446 Timing Market Entry

5. Carnegie Mellon Qatar ©2006 - 2011 Robert T. Monroe Course 70-446 Timing Market Entry: Framing The Issue The challenge: bring your innovative product to market at just the right time, not too early, not too late Questions: –How could you possibly be too early to market? –What are the problems of entering the market too late? –How do you know, a priori, what the right time is to enter? Time of Market Entry Too EarlyToo LateJust Right

6. Carnegie Mellon Qatar ©2006 - 2011 Robert T. Monroe Course 70-446 Market Entry Examples: Digital Music Players Diamond Rio MP3 Player 1998 Microsoft Zune 2006 Apple iPod 2001

7. Carnegie Mellon Qatar ©2006 - 2011 Robert T. Monroe Course 70-446 Technology Improvement Cycles Performance Effort (or Time) Source: [Sch10] Page 54 Limit of Technology

8. Carnegie Mellon Qatar ©2006 - 2011 Robert T. Monroe Course 70-446 Technology / Innovative Product Adoption Cycles There are common, recurring patterns of technology and innovative product adoption –Understanding these cycles, and where your target market is in that adoption process, should play an important part in your decision on when to enter a market The following three patterns look at technology/product adoption from different lenses – all are useful, provided that you understand what they tell you –S-Curves –The Gartner Group’s Hype Cycle™ –Geoffrey Moore’s ‘Crossing the Chasm’ lifecycle

9. Carnegie Mellon Qatar ©2006 - 2011 Robert T. Monroe Course 70-446 Classic S-Curve Technology Adoption Cycles Source: Original concept from Everett Rogers in “Diffusion of Innovations” book, 1962. Image courtesy Wikipedia

10. Carnegie Mellon Qatar ©2006 - 2011 Robert T. Monroe Course 70-446 Classic S-Curve Technology Adoption Cycles Source: Stuart Staniford’s blog, http://earlywarn.blogspot.com/2010/06/technology-adoption-in-hard-times.html

11. Carnegie Mellon Qatar ©2006 - 2011 Robert T. Monroe Course 70-446 Source: WSJ Classroom Edition, publication date unknown

12. Carnegie Mellon Qatar ©2006 - 2011 Robert T. Monroe Course 70-446 Gartner Group’s “Hype Cycle” Curve Source: Gartner Group via Wikipedia

13. Carnegie Mellon Qatar ©2006 - 2011 Robert T. Monroe Course 70-446 Geoffrey Moore’s Technology Adoption Lifecycle Source: Geoffrey Moore, Crossing the Chasm, Harper Collins, 1991. Image courtesy Wikipedia

14. Carnegie Mellon Qatar ©2006 - 2011 Robert T. Monroe Course 70-446 Common Market-Entry Strategies For New Products First-Mover –Be first to market, build up a large lead that nobody can catch up to Fast Follower –Let somebody else lead, learn what works, then catch up quickly Foot-Dragger –Do everything you can to delay the growth of the market, adoption of the technology/product or the entry of market participants Late Entry –Wait for others to clearly define the market, then improve what they have done (or buy the company/product/technology)

15. Carnegie Mellon Qatar ©2006 - 2011 Robert T. Monroe Course 70-446 Market Entry Examples Redux: Digital Music Players Which strategy did each of these companies take? Who won? Diamond Rio MP3 Player 1998 Microsoft Zune 2006 Apple iPod 2001

16. Carnegie Mellon Qatar ©2006 - 2011 Robert T. Monroe Course 70-446 Market Entry Case Study: FreeMarkets, Inc.

17. Carnegie Mellon Qatar ©2006 - 2011 Robert T. Monroe Course 70-446 Disruptive vs. Sustaining Technological Innovation Sustaining innovations: –Revolutionary or discontinuous: an innovation that creates a new market by allowing customers to solve a problem in a radically new way –Evolutionary: an innovation that improves a product in an existing market in ways that customers are expecting Disruptive innovations are innovations that create a new (and unexpected) market by applying a different set of values Source: [Chr97] – Concept of Disruptive vs. Sustaining Technologies, examples from Wikipedia

18. Carnegie Mellon Qatar ©2006 - 2011 Robert T. Monroe Course 70-446 Discussion: What Kinds Of Companies Should Be First-Movers? Fast Followers? Foot-Draggers? Late Entrants?

19. Carnegie Mellon Qatar ©2006 - 2011 Robert T. Monroe Course 70-446 Product Innovation Portfolios

20. Carnegie Mellon Qatar ©2006 - 2011 Robert T. Monroe Course 70-446 Remember: Innovation Resources Are Limited Organizational Resources NPD Resources Available for Innovative New Product Development

21. Carnegie Mellon Qatar ©2006 - 2011 Robert T. Monroe Course 70-446 Key Idea: Don’t Consider Innovation Projects In Isolation Companies should deliberately manage their mix of innovation products to reflect the organizations: –Overall business strategy –Resource constraints –Core competencies –Desired risk profile (along several dimensions) A product innovation portfolio allows an organziation to: –Identify and track all of the innovation projects it is working on –Understand relative investments across areas and innovation types –Manage organizational risks –Allocate resources effectively

22. Carnegie Mellon Qatar ©2006 - 2011 Robert T. Monroe Course 70-446 Visualizing Innovation Portfolios: The 2x2 Matrix Dimension 1 High Low HighLow Dimension 2

23. Carnegie Mellon Qatar ©2006 - 2011 Robert T. Monroe Course 70-446 Visualizing Innovation Portfolios: Aligned Spectra Product Process Radical Incremental Competence-Enhancing Competence-Destroying Architectural Component Disruptive Evolutionary

24. Carnegie Mellon Qatar ©2006 - 2011 Robert T. Monroe Course 70-446 Discussion: What should the 2x2 matrices for visualizing the product portfolios look like for companies following these strategies? –First-Movers? –Fast Followers? –Foot-Draggers? –Late Entrants? How about with the aligned spectra visualization model?

25. Carnegie Mellon Qatar ©2006 - 2011 Robert T. Monroe Course 70-446 Wrap Up

26. Carnegie Mellon Qatar ©2006 - 2011 Robert T. Monroe Course 70-446 For Thursday On Thursday we will explore ways to build an innovation-driven product development organization Primary reading: –[Sch10] Chapter 10 – Organizing For Innovation –Small case studies on Apple, Google, and 3M Links to articles will be posted to wiki by this evening Supplementary reading: –[Sch10] Chapter 12 – Managing New Product Development Teams

27. Carnegie Mellon Qatar ©2006 - 2011 Robert T. Monroe Course 70-446 References [CE09] Robert G. Cooper and Scott Edgett, Successful Product Innovation, Product Development Institute, 2009, ISBN: 978-1-4392-4918-5. [Chr97] Christensen, Clayton M., The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail. Harvard Business Press, 1997, ISBN 9780875845852 [Sch10]Melissa A. Schilling, Strategic Management of Technological Innovation, 3 rd Edition, McGraw Hill, 2010, ISBN: 978-0-07-338156-5 Chapter 13 [SSD09] David Silverstein, Philip Samuel, Neil DeCarlo, The Innovator’s Toolkit, John Wiley and Sons, 2009, ISBN: 978-0-470-34535-1.

28. Carnegie Mellon Qatar ©2006 - 2011 Robert T. Monroe Course 70-446 Appendix: Final Project Use the process, tools, and techniques we cover in this course to develop an innovative new product or service concept to bring to market. –Phases 1-3 in detail, ‘lightweight’ phase 4 Written proposal due at noon on April 28 –Written proposal counts for 2/3 of final project grade –8-12 pages, single spaced, plus appendices Proposal presentation on last day of class –Presentation counts for 1/3 of final project grade –~20 minutes per group for your presentation Choose your own topic/area from: –Any of the challenge problem scenarios –The vacation image capture scenario (or a variation thereof) –A company and market of your groups choosing This option requires professor’s review and approval

29. Carnegie Mellon Qatar ©2006 - 2011 Robert T. Monroe Course 70-446 Appendix: SecuriKey Device Class Exercise How would you assess SecuriKey’s market timing for their WWW password management device? –Are they too early, too late, or just right? Which technology adoption curves are relevant for the device? If they went to market with the device today, would they be first movers, fast followers, foot draggers, or late entrants? –Would this likely be an effective strategy for them?

30. Carnegie Mellon Qatar ©2006 - 2011 Robert T. Monroe Course 70-446 Appendix: SecuriKey Product Opportunity Gap Over the past decade consumers have become more dependent on web-based retailers and mobile service providers. To prevent fraud, web retailers and mobile service providers need to authenticate that the customer making a purchase is who he or she claims to be. The standard way that web providers authenticate customers is requiring a userid and password to login. Consumers now need to manage many different passwords for many different websites, creating a hassle for consumers and a security problem for both consumers and web-based businesses.

31. Carnegie Mellon Qatar ©2006 - 2011 Robert T. Monroe Course 70-446 Appendix: SecuriKey Early Conceptualization Example Provide a small keychain-sized device that stores userid and passwords for user-selected websites. –Device stores userid/password combos that it provides to the browser on the computer to which it is connected. –Device can connect to computer using bluetooth, IR, or USB. –Userid/Passwords stored in an encrypted format on the device –Fingerprint is required to decrypt device contents or send userid/password combo to browser Note: this product concept only works with computer browsers. For our purposes, it does not need to work with mobile devices.

32. Carnegie Mellon Qatar ©2006 - 2011 Robert T. Monroe Course 70-446 Appendix: SecuriKey Mid-Fidelity Conceptualization Example user scenario: Mary uses three different online financial services – credit card, checking, and brokerage. She uses different password/id combos at each one to improve security but she has a hard time remembering them. When she sits down to pay her bills and reconcile her accounts each month she sets her key-chain id next to her computer and presses her thumb on the thumbprint pad. Her thumbpress turns the device on, which sends a bluetooth signal to her pc. The software on her pc recognizes the signal and alerts her browser to query the device whenever a login screen pops-up. The device provides the userid/password for each of her online financial sites After 15 minutes without a query from the pc, the device turns itself off Example flowchart: Fingerprint unlocks device Login screen recognized Userid/pwd sent to browser Banking application accepts userid/pwd, access granted