1. Global Innovation Management Electronic Marketing Components: Customers and the Business Model

2. Global Innovation Management Blue-Ocean Strategy create uncontested market space by reconstructing market boundaries

3. Global Innovation Management Blue-Ocean Strategy –Value Innovation »simultaneous pursuit of differentiation and low cost –Strategy canvas, –Four actions framework »reconstructing market boundaries, »focusing on the big picture, »reaching beyond existing demand »getting the strategic sequence right –Eliminate-reduce-raise-create grid »visualizing strategy, noncustomers »launch idea »target costing »overcoming adoption hurdles.

4. Global Innovation Management Innovating to Differentiate and Create a Market Niche An ‘Innovation’ is: –Invention + Commercialization Freeman, The Economics of Industrial Innovation –A new way of doing things that is commercialized Porter The new knowledge in an innovation can be either –Technological, or –Market related

5. Global Innovation Management Fundamental Equations Innovation = Invention + Commercialization Capabilities = Assets + Competences In the present economy –Demand is driven by innovation –Supply is constrained by capabilities

6. Global Innovation Management Understanding Innovation Innovation occurs on; –Technology –Market channels and packaging of technology –Architectural rearrangement of existing components –Integration of new component technologies Theories and frameworks precede and motivate commercialization of technology Business models and figures of merit precede innovation

7. Global Innovation Management Innovation = Change Change management is an essential part of innovation management –Change destroys old competitive advantages, And introduces new ones Success requires: –Ability to collect and use information about the competitive environment –The nature of information that can be scanned from the environment

8. Global Innovation Management What the Consumer Sees Overall desirability of features is measured by a figure of merit –A quantity used to characterize the performance of an item relative to other products –often used as a marketing tool to convince consumers to choose a particular brand Unfortunately, each feature carries with it both desirable and undesirable characteristics

9. Global Innovation Management Toolsets Quiz & Organize with a Mind Map Ask Questions: Customer Experience is dynamic Who? … is with customers while hey use the product –How much influence do they have If we could arrange it, who would we want the customer to be with … What? –… Do our customers experience when the use the product –… needs provoked our offering What else? … might customers have on their minds When? … do our customers use this.. Where? … are our customers when they use this How? … do customers learn to use the product.

10. Global Innovation Management Toolsets Overview of Feature Set Prioritize and choose the major features of Beats’ innovation Review the main innovation features with a feature- attribute map for the entire innovation BasicDiscriminatorEnergizer PositiveNonnegotiableDifferentiatorExciter NegativeTolerableDissatisfierEnrager Neutral So What? Parallel

11. Global Innovation Management Toolsets Consumption Chain Analysis Determine the main steps in consumption You should only list the 3 or 4 most important steps These will determine whether the potential customer proceeds to the next step (good) –Or leaves the consumption process (not good)

12. Global Innovation Management Toolsets Feature-Attribute Map the 3-4 Key Steps in the Consumption and Manage those 3-4 Steps Identify Discriminators and Energizers Describe how you will manage each of these features of the consumption process BasicDiscriminatorEnergizer PositiveNonnegotiableDifferentiatorExciter NegativeTolerableDissatisfierEnrager Neutral So What? Parallel

13. Global Innovation Management Recipes, Not more Cooking Big advances in our standard of living have always come from ‘better recipes, not just more cooking’ Economist Paul Romer Innovation is not necessarily about ‘new’ technology, design or marketing. It is about new combinations and configurations of features, limited only by the constraints imposed by existing technology.

14. Global Innovation Management Three Challenges Framing Venture Capital Communication

15. Global Innovation Management The Framing Challenge What Is the Real Business Problem? –Accurately define your customers and what motives them Properly framing a problem in terms of the reality of the situation and the objectives of the organization –is an important step in the decision-making process. –Mental frames act to channel our thinking and are important tools to help navigate complex decisions

16. Global Innovation Management The Venture Capital Challenge What is your business worth, and why? Your new venture competes in two markets: Product Financial How will you tie this to your business model –tying narrative to numbers What are the activities, operations and products? What are the significant environmental influences? –major competitive forces outside management control How does value flow through your business model? What is the Net Present Value of future activities

17. Global Innovation Management The Communication Challenge Provide a ‘lead in’ which will ‘hook’ your listener (the elevator pitch) Provide a brief ‘sales pitch’ presenting the major components of your innovation and business Consider what parts you most want to emphasize about the business model Describe your business in one paragraph (equivalent to the 25 second pitch) –Numbers –Behavioral model and capabilities required –Strategy model –Investment Risk –A summary financial analysis to show risk and ROI for the project Answer your investors question: –Why should I give you My money?"

18. Global Innovation Management Activity #1: Identify your Customer Commercialization is about creating a customer ‘Quiz’ to identify your customer: Who? –… is with customers while hey use the product & How much influence do they have –If we could arrange it, who would we want the customer to be with … What? –… Do our customers experience when the use the product –… needs provoked our offering What else? … might customers have on their minds When? … do our customers use this.. Where? … are our customers when they use this How? … do customers learn to use the product..

19. Global Innovation Management Toolsets Organize Answers with a Mind Map

20. Global Innovation Management Activity #2: Select a Product or Service Select a Product or Service that you are interested in marketing via Internet business models –This is mainly about determining your Core Capabilities Capabilities =Assets + Competences Money is important –Innovation  Utility  Commercial value Talk about your opportunity register (OR) –Your repository of alternative ideas that can be pulled up at any time If a particular idea isn ’ t working

21. Global Innovation Management Identify the 3 most important features Specify the particular customer choices you are offering in your product or service (no more than three) as –Identify the discriminators and energizers What differentiates your product from competitors’ in the customer’s minds? List the three features that are important to the target customer, and rank them from most to least important. BasicDiscriminatorEnergizer PositiveNonnegotiableDifferentiatorExciter NegativeTolerableDissatisfierEnrager NeutralSo What?Parallel

22. Global Innovation Management Activity #3: Make a Profitable e-Marketing Business Define how you will measure the usefulness or attractiveness of each of these features to the target customer. This performance metric should be a numerical measure Draw a value map describing your companies proposed business model, and –provide some indication of the costs and revenues that will flow into and out of the business. Define your product’s top competitor in each of these 3 features Are these companies profitable? How big (approximately) is their business? Why is your product better? Think: Low-cost or Differentiated Products?

23. Global Innovation Management Activity #4: Define your Marketing Channels Consumption Chain Analysis –Works from the premise that opportunities for differentiating your product from others –lurk at every step and decision that your customers take –From the time they first become aware of their need for your product or service –To the time thy finally dispose of the remnants of the used up product Product differentiation is the secret to high revenue

24. Global Innovation Management

25. Activity #5: Describe the Business Model and Entrance Strategy Start with a compelling story –Part of selling your strategy / investment –Tying Narrative to Financial Numbers Strategy becomes less philosophy More performance and outcome –What activities, operations and products are within the ‘scope’ of the valuation analysis? (Bubbles: depends on audience) –What are the significant environmental influences? (Boxes: major competitive forces outside management control) –How does value flow through the relevant scope of the analysis? (Arrows: value metric)

26. Global Innovation Management Market Entrance Strategy What are the major competitive forces molding managerial strategy which add to, or take away from ‘Value’? What ‘levers’ (strategy drivers) can management pull to influence value added? What is the functional relationship between value and the strategy drivers? (Define the ‘Strategy Model’) What are the major technologies relevant to managerial strategy which add to, or take away from ‘Value’?

27. Global Innovation Management Business Model and Strategy Need to do Two Things (1) Must produces revenue by satisfying customer demand –i.e., that meets the ‘Framing’ challenge; and (2) Must controls costs and generates a high return on investment, –where expected revenues significantly exceed expected costs, –and thus can be argued to meet the ‘Venture Capital’ challenge.

28. Global Innovation Management Activity #6: Internet Marketing Keywords, keywords, keywords –Which will you buy? –What are the trends? –How much will it cost? –How much traffic? –How much revenue Will that traffic generate?

29. Global Innovation Management Conversions Conversion = Money Generating Web Action Point users to the right landing page. When users click on your ad, they should arrive at a landing page clearly displaying the information or product offered Keep the user experience in mind. Place important information and images on the top left, where the eye naturally goes first. Help people get what they want in three clicks or fewer. Create a simple process for users to complete transactions

30. Global Innovation Management Meet the Challenges Framing –What Is the Real Business Problem? –the reality of the situation and –the objectives of the organization Venture Capital –Your new venture competes in two markets: (1) Product; (2) Financial –What are its activities, environmental influences, operations and products? –How does value flow through your business model? What is the NPV of future activities Communication –Provide a ‘lead in’ which will ‘hook’ your listener (the elevator pitch) –Provide a brief ‘sales pitch’ presenting the major components of your innovation and business –Consider what parts you most want to emphasize about the business model –Answer your investors question: Why should I give you My money?"

31. Global Innovation Management The Long Tail In a typical graph of demand –rank ordered over all products (say MP3 files) –Inventory storage limits you to best sellers Whereas the majority of the market will be ‘niche’ –i.e., in the long tail –Internet technologies give you access to the long tail Market without limits Limits of Shelf Space

32. Global Innovation Management When do you have an Innovation? You start by asking what you do better than anyone else in: –Technology –Market channels and packaging of technology –Architectural arrangement of components –Integration of new component technologies

33. Global Innovation Management Where to find New Business

34. Global Innovation Management The Nature of Innovations New ideas arise in either: –technology behind the invention, or –marketing, logistics, networking and design strategy To succeed requires a holistic perspective on management of the innovation process: –Innovations will not come about by R&D staff inventing whatever they want –then throwing it over the fence for Production to make, and Marketing to sell All the resources in the firm need to be considered at all phases of the innovation’s life-cycle if it is to be a success

35. Global Innovation Management Establish Your Identity Make it memorable "Amazon.com" is more unique and less limiting than "booksonline.com." Describe your business Avoid confusion by simply and logically describing your business "Flowers.com" obviously leads one to believe they can buy flowers on the site. If you are setting up an online presence for an established business, keep the name of your site the same as the name of your business

36. Global Innovation Management Build a User-Friendly Site Plan Your Site identify clear marketing goals such as generating leads, building a database of potential customers' names and e-mail addresses, putting a product catalog online to save the time and expense of printing and mailing –Quantify your objectives - such as increasing sales by 15% - so you know whether or not your site is successful.

37. Global Innovation Management Build a User Friendly Site Figure out what your potential customers need to know before buying your products and services An overview of your company, its products and services, and their applications Complete product or service descriptions, including features, key benefits, pricing, product specifications, and other information, for each product or service Testimonials, or success stories so customers can see how similar individuals or organizations have worked with you FAQ section that anticipates and answers customers' common issues

38. Global Innovation Management User-friendly sites Plan the structure of your site Make it easy for customers to learn what they need to know, make a purchase decision, and then buy quickly. Create a site map that outlines every page on your site starting with the home page and mapping how customers get from one page to the next Use tools that quantitatively measure site activity - where customers are clicking, how often, and whether they end up purchasing - then compare the results with your goals.

39. Global Innovation Management Site-Building Tools Site building is not extremely difficult –But the number and breadth of tools is confusing The following is a brief survey Often your choice will be dictated by: –Company standards –Templates –Platform (e.g., iPhone) –Personal experience (e.g. Dreamweaver)

40. Global Innovation Management E-Commerce Site Design Carefully research your own favorite e-commerce sites Creatively adapt the most compelling marketing and design techniques to enhance your site's effectiveness. Your home page is your business’ online front door make a good first impression on visitors Make sure it clearly presents Your company name, logo, and tagline prominently …showcase your brand identity. Contact information Don't make it difficult for visitors to find your phone number, e- mail address, mailing address, and fax number

41. Global Innovation Management Site Design Provide a link to –an "About the Company" page for customers to quickly learn who you are and what your business offers. –A menu listing the basic subsections of your site Keep this menu in the same place on every page throughout your site to make it easy to navigate. –A "What's New" section for news, announcements, and product promotions. –Your privacy statement

42. Global Innovation Management Site Building Make it easy for customers to navigate your site. As you build your site minimize the number of clicks it takes the customer to go from your home page to actually being able to make a purchase –Four to six clicks is a useful rule of thumb Make sure links make sense, so customers know what to click to find what they're looking for. Quantify your goals for sales, clicks, or inquiries so you can objectively measure the success of your e- commerce Web site

43. Global Innovation Management Site Building Keep things simple –Stick to the same basic color palette and fonts your company uses in other communications, like your logo, brochures, and signage –Ensure that images and graphics serve to enhance, not distract from, your marketing goals. Make sure the text is easy to Keep download times short –Test pages to make sure they're not too heavy with graphics that will slow load –Most Web pages take anywhere from three to eleven seconds to load i.e., waaayyy too long

44. Global Innovation Management Web Hosting: what to look for Shared hosting or dedicated server Hard-disk storage space –Smaller sites may need only 300-500 MB (megabytes) of Web site storage space, while busier e-commerce sites may need at least 9 GB (gigabytes) of space - or their own dedicated Web server Availability –If you run an e-commerce business, your site must be accessible to customers 24 hours a day. ISPs and Web hosts maximize the availability of the sites they host using techniques like load balancing and clustering. Can your ISP promise near 100% availability? E-mail accounts –E-mail accounts that match your domain name are often available from your ISP.Are they included with your monthly access and hosting fee? SSL Encryption –The security of the credit card numbers and other personal information customers send you should be a top concern. Does your ISP or Web host protect your site with an SSL server ID? See Step Four below to learn more about Web site security. Support –A big part of the value of turning to an ISP or Web host is that you don't have to worry about keeping the Web server running. Does your host offer 24x7 customer service?

45. Global Innovation Management The Innovation Workout Reversing Assumptions Forcing yourself to “think outside the box” This exercise is about reexamining what you think are the –underlying requirements, –objectives and –constraints –of a problem Example: the 9-dot problem –What do you assume are the underlying requirements, objectives and constraints?

46. Global Innovation Management The Innovation Workout Reversing Assumptions

47. Global Innovation Management Case study {iPod + iTunes} 1.Describe Apple’s iPod business model. Where does Apple make money? What are its costs? 2.Many once innovative companies suffer from the ‘Not Invented Here Syndrome’ (NIHS). How do you think Apple has managed to avoid the NIHS problem?

48. Global Innovation Management Case study {iPod + iTunes} 3.How did Apple use adaptive execution to develop the (iPod + iTunes) business? What firm capabilities does Apple possess that made it a successful competitor in the MP3 player market? 4.What was innovative about the iPod versus other MP3 players? How did this help its commercialization? 5.What role does the industrial design of the iPod play in its success?

49. Global Innovation Management Case study {iPod + iTunes} 6.What role does software play in the success of the iPod business? 6.Describe how Apple reused and repurposed software designed for another function in order to make the iPod a success. 7.What role does the WWW play in the success of the iPod business? 8.Challenge one of the fundamental assumptions of iPod’s business model by reversing it. Define an ‘anti-iPod’ product and business model that satisfies your reversed assumptions

50. Global Innovation Management Case study {iPod + iTunes} 9.What are the commercially important attributes that make iPod’s business model successful and sustainable? 10.Split just one of the attributes in question 8 into three sub-attributes. How could you alter each of these sub-attributes to create a new product? 11.Describe customer activity at each step of iPod purchase and usage. Do you see any opportunities for new businesses?