1. B2B Marketing Managing Innovation PGDM–B2B–RS–12
Amarnath Krishnaswamy

2. Plan for this Session (1)
Managing Innovation
Management of Innovation
Innovation & Technology
Innovation & the Development of New Products
Not from the view point of the economist!

3. Managing Innovation
In 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 product
2. Product life cycles are becoming shorter
Innovation is looked at in these sessions from the perspective of:
1. Managing innovation itself
2. Innovation’s relationship with strategy adopted for technological change
3. Innovation and new product development

4. Management of Innovation … (1)
Innovation is either”
Planned or strategic Deliberate
A lucky break, chaotic Emergent (Euphemism!)
Botox, Viagra, Equal (aspartame), Vulcanization, Penicillin, Dynamite

5. Management of Innovation … (2)
Strategic innovation falls into 2 categories
Induced
Deliberately brought about (manipulated) through inducement etc
Innovation occurs along a projected path
Autonomous
Driven by the individual himself / herself
Often the outcome of a ‘questioning’ mind
Induced – thro reward system. Example: Market effort on certain products
Autonomous – Individual champions the effort. Organization approves only when someone takes responsibility.

6. Management of Innovation … (3)
Characteristics – Strategic Innovation
Induced
Autonomous
Initiative
By the individual, but In line with organization’s .
By the individual, and could differ from orgn.’s
Screening
Formal, as per the organization’s ways
Informal network
Type
Usually incremental
Could be radical
Communication
In line with organization’s
Is different, especially in the early stages
Major Players
Prescribed by the organization
Decisions
Authority clearly defined
Poorly defined
Strategy Formulation
Alternatives considered before commitment
In the early stages, the proposer ‘s call

7. Management of Innovation … (4)
Guidelines for Autonomous Strategic Innovation
Nurture, encourage
Avoid shackling the initiative through budgets, rationing resources
Encourage information exchange

8. Technology & Innovation … (1)
Technology and innovation are closely interconnected!
HMT
Caustic soda – mercury cells
Cellular telephony
Technological innovation can be:
Product oriented
Process oriented
Both
R&D - a necessity for all !

9. Technology & Innovation … (2)
Technology development projects fall into 4 categories
Derivative projects
Platform projects
Breakthrough projects
R & D Projects
Derivative
Incremental product improvements.
Incremental cost reduction – could also be through changes in RM, wastage reduction, etc
Platform
Changes 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 emission
Breakthrough
Radical changes
Examples: 1) Mechanical movement to electronic watches
2) TiO2 – From to technology
3) Valves to Solid State Devices
R & D
Basic, Applied
Example: Stem cell research

10. Technology & Innovation … (3)
Relating Technology to Products
Technology developed for one product could provide the platform for another
Honda: Engines from 2/4 wheelers to generators
Canon: From copiers/fax machines to printers
Yields “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 Technology
Ability to commercialize / take advantage of technological innovations characterizes a “winner”
Has 4 dimensions:
Time to Market
Market Spread
Number of Products
Breadth of Technologies

12. Technology & Innovation … (5)
Commercializing Technology – Time to Market
Impact of shorter product life cycles :
Minimize time from development of product to market exploitation
Market forecasts are more accurate

13. Technology & Innovation … (6)
Commercializing Technology – Market Spread
Make the product available to diverse market segments – in geographic and user terms
Use JVs, licensing if necessary

14. Technology & Innovation … (7)
Commercializing Technology – Number of Products
Develop ‘variants’ of products – to cater to niche markets
Higher customer satisfaction – better ‘fit’ of product with his needs

15. Technology & Innovation … (8)
Commercializing Technology – Breadth of Technologies
Integrate 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 advantage
Top management backing necessary
Perseverance necessary as product failure rates are high 16

17. Innovation & New Products … (2)
Sources of New Ideas
Internal
Those close to the customer (sales people, distribution channel members)
Those close to technology development (R & D)
Top management (organization’s SWOT)
External
Customers 17

18. Innovation & New Products … (3)
Forming Teams
Multidisciplinary
Concurrent engineering
Team structure – 4 types
Functional
Lightweight
Heavyweight
Autonomous
Team: (1) Complementary skills (2) Commitment to a common purpose (3) 18

19. Functional Teams
Functional areas work on clear, pre-defined goals that have been agreed to.
Could be difficult to compartmentalize work in this fashion
Functional 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 committee
Each functional area is represented by a “liaison manager” on this committee.
Committee headed by a “project manager” who coordinates the work
Drawbacks
Project 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 areas
Latitude for:
Team structure
Reward structure
Accountable for result.

23. Choice of Team Structure
Situation
Functional
Incremental changes, stable competitive & tech. environment
Lightweight
Rapid changes in customer requirements, tech., competition
Heavyweight
When speed is required
Autonomous
Significant competitive challenges

24. Quality Function Deployment (QFD)
QFD – for identifying:
The attributes the customer wants in the product
Establish link between these attributes and the product design
Process involves understanding, and then marrying:
The Voice of the Customer
The Voice of the Engineer
Planning approach for QFD termed House of Quality!

25. Voice of the Customer Identify customer needs
The benefits the product should deliver
Necessary to identify, and focus, on the main ones
Relatively easy to do if the market is homogenous
Weight 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

27. QFD Matrix Weight Prod. Attr. 1 2 Rating 3 4 5 Cust. Attr. 1

28. New Product Success / Failure - Factors
Product Uniqueness / Superiority
Market Knowledge
Marketing Proficiency
Technical & Production Proficiency
Failure
Price, with no economic benefit
Obsolete in terms of what’s available
Customers 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 Procrastination
Procrastinate today! (Tomorrow may be too late.)
Woods’s Third Law Of Procrastination
Never 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

31. Thank you !