2 Plan for this Session (1) Managing InnovationManagement of InnovationInnovation & TechnologyInnovation & the Development of New ProductsNot from the view point of the economist!
3 Managing InnovationIn the session on “Strategies for Going Global” the need for “innovation” (Product, Production, Marketing, People) to gain a competitive advantage was emphasized. This is more evident when you look at competitiveness over a longer period; much easier to see. Lack of innovation has sounded the death knell for Hind Motors, Premier Motors, textile mills etc. It’s even evident in games – test cricket giving way to instant cricket etc.Innovation – absolute necessity when:1. Competition is vibrant, catalyzing changes in technology and product2. Product life cycles are becoming shorterInnovation is looked at in these sessions from the perspective of:1. Managing innovation itself2. Innovation’s relationship with strategy adopted for technological change3. Innovation and new product development
4 Management of Innovation … (1) Innovation is either”Planned or strategic DeliberateA lucky break, chaotic Emergent (Euphemism!)Botox, Viagra, Equal (aspartame), Vulcanization, Penicillin, Dynamite
5 Management of Innovation … (2) Strategic innovation falls into 2 categoriesInducedDeliberately brought about (manipulated) through inducement etcInnovation occurs along a projected pathAutonomousDriven by the individual himself / herselfOften the outcome of a ‘questioning’ mindInduced – thro reward system. Example: Market effort on certain productsAutonomous – Individual champions the effort. Organization approves only when someone takes responsibility.
6 Management of Innovation … (3) Characteristics – Strategic InnovationInducedAutonomousInitiativeBy the individual, but In line with organization’s .By the individual, and could differ from orgn.’sScreeningFormal, as per the organization’s waysInformal networkTypeUsually incrementalCould be radicalCommunicationIn line with organization’sIs different, especially in the early stagesMajor PlayersPrescribed by the organizationDecisionsAuthority clearly definedPoorly definedStrategy FormulationAlternatives considered before commitmentIn the early stages, the proposer ‘s call
7 Management of Innovation … (4) Guidelines for Autonomous Strategic InnovationNurture, encourageAvoid shackling the initiative through budgets, rationing resourcesEncourage information exchange
8 Technology & Innovation … (1) Technology and innovation are closely interconnected!HMTCaustic soda – mercury cellsCellular telephonyTechnological innovation can be:Product orientedProcess orientedBothR&D - a necessity for all !
9 Technology & Innovation … (2) Technology development projects fall into 4 categoriesDerivative projectsPlatform projectsBreakthrough projectsR & D ProjectsDerivativeIncremental product improvements.Incremental cost reduction – could also be through changes in RM, wastage reduction, etcPlatformChanges in product / process technology that would apply across a set of products (Product family)Examples: 1) Changing the type of fuel injection – from a carburetor to electronic fuel injection.2) Catalytic convertor for lower CO emissionBreakthroughRadical changesExamples: 1) Mechanical movement to electronic watches2) TiO2 – From to technology3) Valves to Solid State DevicesR & DBasic, AppliedExample: Stem cell research
10 Technology & Innovation … (3) Relating Technology to ProductsTechnology developed for one product could provide the platform for anotherHonda: Engines from 2/4 wheelers to generatorsCanon: From copiers/fax machines to printersYields “Product Families” – share a common platform but are targeted for different markets / uses.Important for an organization to focus on developing product families – it will distribute risk.
11 Technology & Innovation … (4) Commercializing TechnologyAbility to commercialize / take advantage of technological innovations characterizes a “winner”Has 4 dimensions:Time to MarketMarket SpreadNumber of ProductsBreadth of Technologies
12 Technology & Innovation … (5) Commercializing Technology – Time to MarketImpact of shorter product life cycles :Minimize time from development of product to market exploitationMarket forecasts are more accurate
13 Technology & Innovation … (6) Commercializing Technology – Market SpreadMake the product available to diverse market segments – in geographic and user termsUse JVs, licensing if necessary
14 Technology & Innovation … (7) Commercializing Technology – Number of ProductsDevelop ‘variants’ of products – to cater to niche marketsHigher customer satisfaction – better ‘fit’ of product with his needs
15 Technology & Innovation … (8) Commercializing Technology – Breadth of TechnologiesIntegrate technologies – should not have too many. Increases costs and the risk of losing out in any one of them
16 Innovation & New Products … (1) To sustain a competitive advantageTop management backing necessaryPerseverance necessary as product failure rates are high16
17 Innovation & New Products … (2) Sources of New IdeasInternalThose close to the customer (sales people, distribution channel members)Those close to technology development (R & D)Top management (organization’s SWOT)ExternalCustomers17
18 Innovation & New Products … (3) Forming TeamsMultidisciplinaryConcurrent engineeringTeam structure – 4 typesFunctionalLightweightHeavyweightAutonomousTeam: (1) Complementary skills (2) Commitment to a common purpose (3)18
19 Functional TeamsFunctional areas work on clear, pre-defined goals that have been agreed to.Could be difficult to compartmentalize work in this fashionFunctional areas could work sequentially, and pass on work when completed to next functional area. Could result in delays.
20 Lightweight Teams Similar to Functional Teams Formation of a project coordination committeeEach functional area is represented by a “liaison manager” on this committee.Committee headed by a “project manager” who coordinates the workDrawbacksProject manager does not control the resources
21 Heavyweight Teams Similar to Lightweight Teams “Project manager” takes control and responsibility.Functional area members are under his control.However, functional members revert back to functional area when project is over.Work is formalized – plans, time schedules etc.
22 Autonomous Teams Works better for “Breakthrough” projects. Project manager is in control of all the resources.Can draw his team members from the functional areasLatitude for:Team structureReward structureAccountable for result.
23 Choice of Team Structure SituationFunctionalIncremental changes, stable competitive & tech. environmentLightweightRapid changes in customer requirements, tech., competitionHeavyweightWhen speed is requiredAutonomousSignificant competitive challenges
24 Quality Function Deployment (QFD) QFD – for identifying:The attributes the customer wants in the productEstablish link between these attributes and the product designProcess involves understanding, and then marrying:The Voice of the CustomerThe Voice of the EngineerPlanning approach for QFD termed House of Quality!
25 Voice of the Customer Identify customer needs The benefits the product should deliverNecessary to identify, and focus, on the main onesRelatively easy to do if the market is homogenousWeight each attribute: enables QFD to balance it with cost
26 Voice of the Engineer Translate customer needs into product design Put onto a matrix against what the customer wants, and compared with competition
28 New Product Success / Failure - Factors Product Uniqueness / SuperiorityMarket KnowledgeMarketing ProficiencyTechnical & Production ProficiencyFailurePrice, with no economic benefitObsolete in terms of what’s availableCustomers satisfied with existing product
29 Can’t forget the law! Woods’s First Law Of Procrastination NOW is the time to do things later!Woods’s Second Law Of ProcrastinationProcrastinate today! (Tomorrow may be too late.)Woods’s Third Law Of ProcrastinationNever put off till tomorrow what you can do the day after tomorrow!
30 Moving Forward Next Session: PGDM-RS-13 Date: Tuesday, Mar 02, 2010 Subject: Managing Services- Role & Importance- Buying Services- Marketing Mix- New Services