1. Page 1 Strategic Innovation

2. Page 2 Egg Drop Build device that will protect egg from breaking after falling from a reasonable height Materials: – Masking tape (rationed to 2 yards) – Plastic straws (rationed to a hand-full) The egg must be visible inside your device

3. Page 3 Egg Drop Egg that falls from highest release point without breaking wins Timeline: – 30 minutes for Design and Construction – Drop Eggs…Competition – Discussion

4. Egg Drop What happened? What are important processes and dimensions of strategic innovation? – Goals – Planning – Design – Imitation – Resources and capabilities – Construction process – Competition – Risk –Time Page 4

5. Page 5 High Jump Innovation: Scissor Kick 1929: 6’8”

6. Page 6 High Jump Innovation: Forward Roll 1960: 7’1”

7. Page 7 High Jump Innovation: Fosbury Flop 1968-present: 7’7” to 8’ ½”

8. Page 8 High Jump Innovation 1925 1950 1975 2000 2025 2.75m 2.50m 2.25m 2.00m Scissor Roll Fosbury

9. Page 9 High Jump Innovation ? 1925 1950 1975 2000 2025 2.75m 2.50m 2.25m 2.00m Scissor Roll Fosbury The Ferrier Flight

10. Page 10 Product 1 New Product Introduction Profit Plateau Competition Erodes Profits Product 2 Profit Product 3 Product 4 time Value-creating vs. Value-enhancing Strategy

11. Page 11 Apple iPod

12. Page 12 Product 1 New Product Introduction Profit Plateau Competition Erodes Profits Product 2 Profit Introduce iPod Mini iPod Photo BMW iPod Adaptor iPod Wireless Remote WiFi iPod Video iPod + Timex Watch iPod + Nike Shoe Value-enhancing Innovation Product 1 Product 2 Product 3 Product 4 time Windows compatible Value-creating vs. Value-enhancing Strategy Price Cut Value-creating Innovation time

13. Page 13 Apple’s iPod Innovation Network 10 parts create 85% of the iPod’s cost GM Ford Apple Unknown Battery Pack Renesas (Japan) Display Driver Inventec (Taiwan)- Assembly, Testing Toshiba (China) – Hard Drive Broadcom (Singapore)- Multimedia Processor Toshiba-Matsushita (Japan)- Display Module iPod PortalPlayer (US) Portal Player CPU Unknown Back Enclosure Unknown Mainboard PCB DisneyTimex Digital Music Group Delta Airlines Nike Samsung (Korea) – Mobile SDRAM memory 400 additional inputs with values from $2 to fractions of a penny, with an average value of $.05 Source: Portelligent, Inc. and Linden, Kraemer & Dedrick, 2007. Alliance Network and Innovation

14. Page 14 Apple – alliance network in 1995Apple – alliance network from 1995-1997 Apple Computuer High Level of VC + VE Alliance Network and Innovation

15. Page 15 Introducing the iPod Commode-dore…

16. Page 16 Innovation (good intentions)……………..……………….flop

17. Sun Chips Compostable Bag Page 17

18. Sun Chips Compostable Bag Page 18

19. Sun Chips Compostable Bag Page 19 Wall Street Journal notes… 95 decibels (~ fighter jet cockpit) Couch potatoes can't hear their TVs over the sound of the SunChips bag “I came home a little stoned at 2:00 a.m. and woke up my parents with the SunChips bag.”

20. Page 20 Unique Perspective

21. Page 21 How do you define the coffee industry? Leisure, Enjoyment, Social Interaction Food & Beverage Item Coffee Packaged Convenience coffee Café/restaurant drinking Fashion Caffeine Source

22. Page 22 How does Starbuck’s define coffee industry?

23. Page 23 Red vs. Blue Oceans Red Ocean StrategyBlue Ocean Strategy Compete in existing market spaceCreate uncontested market space Beat the competitionMake the competition irrelevant Exploit existing demandCreate and capture new demand Align organization towards strategic choice between low cost or differentiation Align organization towards pursuit of low cost and differentiation

24. Coffee’s Next Blue Ocean? Strategic Dimension 1 ? Strategic Dimension 2

25. Page 25 Early U.S. Auto Industry

26. Strategic Map: PC Industry (Pre-MacIntosh) Fast/ High Capacity Low PriceHigh Price Apple II Wang IBM Slow/ Low Capacity

27. Strategic Map: PC Industry (Post-McIntosh; Pre-Dell) User Friendliness GUI Drop & Drag Mouse WYSIWYG Low MarginHigh Margin Wang IBM DOS-based Operating System >copy *.doc A:\ Apple MacIntosh

28. Strategic Map: PC Industry (After Dell Enters) High Quality & Dependability “Regular” Supply Chain Management Lenovo Adequate Quality Apple “Efficient” Supply Chain Management High Price Dell Low Price H-P

29. What ’ s the next big thing? Strategic Dimension 1 ? Strategic Dimension 2

30. Personal Computers …what’s the next big thing? Strategic Dimension 1 ? Strategic Dimension 2

31. Page 31 IBM Mainframe Apple II IBM PC Apple MacIntosh Compaq Portable Tablet PC Compaq Laptop Apple iPad IBM Wearable PC

32. Old-is-New Innovations Page 32 Slow Drip Filter Coffee Maker

33. Old-is-New Innovations Page 33 VW Beetle

34. Old-is-New Innovations Page 34 Fiat 500

35. Page 35 LG Internet Refrigerator

36. Page 36 Airbus A380

37. Page 37 Segway Personal Transporter

38. Page 38 Tooth Tunes