COMPUTING THROUGH INNOVATION Search
CHAPTER 12
Group 6
COMPUTING Self driving car... 3D printing...
The internet of things... The
apple watch...legal marijuana...
THROUGH printable make-up...the world
is full of novelties and new
INNOVATION products.
Chapter 12
Introduction
Computing through innovation
Introduction
A recent report by McKinsey predicts that after decades of expansion, global
economic growth will slow dramatically as the world's population ages.
Their data suggest that the rate of gross domestic product will decline by 40
per cent over the next 50 years. They fear that today's feedle growth rates,
collapsed oil prices and low interest rates may mark the start of a new era of
austerity and low growth.
12.1 Innovation Strategy
12.1.1 INNOVATION PREDICTING
INDUSTRY CHANGE
12.1.2 DEVELOPING NEW BUSINESS
MODELS
12.1.3 THE INNOVATION COMPANY
12.1.4 RADICAL INNOVATION
12.1.5 DISRUPTIVE INNOVATION
12.1.6 PROACTIVE CANNIBALISATION
12.1.7 VALUE INNOVATION
12.1.8 THE PERVERSE CUSTOMER
12.1.9 BIG IDEAS
12.1.10 INNOVATION NETWORK
12.1.11 GLOBALISATION AND
INNOVATION
12.1
Innovation
Strategy
12.1 INNOVATION STRATEGY
One of the most critical issues In many practical situations while true
facing executives is the need for innovation addresses superior customer
radical innovation in the value they value, many of existing bureaucratic
processes in corporate marketing are geared
provide to their customer. towards making only marginal changes in
products and brands and in avoiding
mistakes rather than taking risks.
A powerful argument developed by Clayton
They suggest taht major recurring
Christensen and his colleagues is that questions for managers include issues
understanding innovation patterns and such as whether a new start up will
emergent events is key to predicting the succeed or fail which emerging
direction and extent of change in an industr. technologies will be accepted by
consumers whether a new entrantis a
serious threat to existing competitors.
12.1.1 INNOVATION PREDICTING INDUSTRY CHANGE
12.1.2 DEVELOPING NEW BUSINESS MODELS
The business model, or business
design, describea how a company One of the hardest decision for
makes money -how it generates executive to confront is when the
revenue and profit by delivering value established business model has
to customer -including the become obsolete, and how to
infrastructure and processes needed to change.
achieve this goal.
Important ways REVOLUTION, REINVENTION AND RENEWAL
Increasingly, and in most Companies like Apple, Google,
industrial sectors, one key Toyota and General Electric are
survival factor is the ability regularly rated as the most
innovative in the world ahead
to build creative, innovative of their competitors.
companies.
12.1.3 THE INNOVATIVE COMPANY
12.1.4 RADICAL INNOVATION
Importantly, the strategic imperative for By contrast, it should be noted that it is
effective innovation is not incremental estimated that minor innovations make up 85-
change to products and services, but deep- 90 per cent of most companies development
seated change in the way we approach the portfolios, but rarely generate the growth that
marker, and a deep focus on customer value companies seek in effect, at a time when
-everything else is kust variation on atheme companies should be taking bigger, but
smarter, risks, their bias is in the other
direction.
The failure of many major
organization to innovate and change Clayton Christensen has described
is in some important ways explained what he calls the innovator's
not because managers are dilemma. His research question
complacent but because they follow concerned why major companies
conventional wisdom in their get left behind.
industries.
12.1.5 DISRUPTIVE INNOVATION
12.1.6 PROACTIVE CANNIBALISATION
One of the strongest conventional Executive often believe that it is
arguments against radical, innovation unproductive for a company to
is that we end up simply competing compete with its own products
with ourselves we cannibalise our own and services, rather than targeting
sales to our existing customer base. those of competitors.
The reality is that as products tend to
The growing challenge for converge and become more similar, it is no
longer possible to beat the competition by
companies is to focus making incremental improvements and
innovation thinking on changes, because they will be instantly
copied, and in modern markets you quickly
customer value. reach the point of diminishing returns.
12.1.7 VALUE INNOVATION
12.1.8 THE PERVERSE CUSTOMER
It is not so muchthat we have to deal
with the sophisticated customer who
One further driver of value is more demanding in relatively
conventional ways, but a customer
innovation is the truculent or who is actually perverse andmaven-
perverse post-recessionary like in their dealings with business
customer. and with authority in general.
The heart of radical innovation is
the search 'big ideas' rather than Generally, growing emphasis
settling for'small ideas'. To stay is being placed on
relevant and to succeed, developing an ideas culture
companies need bold, innovative in companies .
strategies.
12.1.9 BIG IDEAS
12.1.10 INNOVATION NETWORKS
The growing emphasis on For hot spots to emerge, they need a
collaboration and cooperation in cooperative mind-set, an ability to
radical innovation strategies is span boundaries, and a successful
underlined by Lynda Gratton's igniting of purpose following by
research into 'hot spots' of energy making productive capacity available
and innovation in companies. to create real value.
12.1.11 GLOBALISATION AND INNOVATION
The example above emphasis the global
perspective needed to understand how In anothe example, consumer goods
innovation is changing. For example, company Nestle is bringing sales and
Indian company Mahindra & Mahindra, packaging techniques pioneered in
has opted to design and manufacture its emerging markets to improve its
latest motor scooter in the United States, position in problematic markets in
turning conventional wisdom on its head. Europe.
12.2
NEW PRODUCTS
12.2 NEW PRODUCTS
Studies that compare new product
successes with failures are Getting to grips with these
consistent in their observations of
the key factors that influence a new helps executive to understand
product success in the marketplace. successful product
innovation.
Successful new product provide In fact most failures offer
better performance than existing price parity of inferior
products and often they succeed value. Successful products
despite being offered at higher offer advantage that matter
prices than competitors. to customers.
12.2.1 SUCCESSFUL NEW PRODUCTS
12.2.2 THE CASE OF BUSINESS PRODUCTS
Successful innovators acquire as
Studies of new business product
much of the required information
successes and failures make the
as possible to enable them to
following distinctions between
forecast matket size and
successes and failures.
determine potential demand for
their new product.
One question central to
manager interest in Answering this question helps
us appreciate what actions the
innovation strategy is, in
firm should take to avoid
what ways do new different types of product
product fail? failure.
12.2.3 NEW PRODUCT FAILURES
The better mousetrap no one wanted
The me-too meeting a competitive brick wall
Competitors
Environmental or market ignorance
The technical dog
The price crunch
12.3
PLANNING FOR NEW
PRODUCTS
12.3.1 The new product planning process
Nonetheless, many successful
Firms also have to decide on the
innovating companies develop a types of new product that are to br
new product process, such as that develop. Six categories of new
shown in Figure 12.5, which is products emerge, each one taking the
linked to their company's overall company further and further away
longest-term planning process. from its current activities and
therefore being more risky.
COST REDUCTIONS
REPOSITIONINGS
MODIFICATION
EXTENSIONS
NEW PRODUCT LINES
NEW TO THE WORLD PRODUCT
12.4
THE NEW PRODUCT
DEVELOPMENT PROCESS
12.4.1 IDEA GENERATION
Creativity and productive ideation- really
For new products, a firm has to find
innovation ideas come out of inspiration and
novel ideas, do new things and do use appropriate techniques.
things differently. This is the essense Defining creativity- creativity is the
of product innovation. New ideas combining of previously unrelated parts into
trigger the innovation process and the a useful whole so that one can get more out
development of nee product. of the emergent whole than one has in
( Miller, 1996).
Systematic screening- if resources are committed to
If tou take ten new product ideas, the the development of a new product idea,
chances are the two will pay, seven will management should assess the commercial potential
and technical feasibility of the idea.
fail, and only one will be a big winner. Initial screen- Screening can be conducted at
New product idea screening and selection different levels of details.
is not about dropping had ideas but Formalised screening system - potentially viable
should be evaluated more thorough for selection
identifying the winner. purposes.
12.4.2 SCREENING
12.4.3 BUSINESS ANALYSIS
Management has to decide which criteria
Business analysis consider the are the most critical and what level of
attractiveness of the market for the
accuracy in the data is needed for
proposed new product idea and the
company's capabilities and whether it has
decision making. Sales, cost and profit
business skills required to cater to the prejections for a new product show
needs of the market in a way that gives it a whether they satisfy the company's
distinct edge over the competition. objectives.
At this stage R&D or When designing products the company
engineering convert the concept needs to look beyond simply creating
into a physical product. So far products that satisfy consumer needs
and wants.the design are then passed
the new product development
along to manufacturing, where
process has been relatively engineers must try to find the best ways
inexpensive. to produce the product.
12.4.4 PRODUCT DEVELOPMENT
12.4.5 MARKET TESTING
By this point in the product innovation
process there is a physical product or Up to this stage in the overall new
complete specifications for a new service. product development process testing
The product has passed a use test which has not been conducted under realistic
has suggested taht the product works and market condition. It is dangerous to
fulfils the need as originally expreessed on trust any customer judgement
the concept. completely until it is made under
typical market condition.
12.4.6 COMMERCIALISATION
The launch managers should work
Commercialisation is often the
closely with sales and other operating
graveyard of product innovation,
staff to achieve good coordination of
not because new product die
the timing and scheduling of all these
here but because real innovation
activities. Every effort
often stumbles at this point of
the process.
12.5
SPEEDING NEED
PRODUCT
DEVELOPMENT
12.5 SPEEDING NEW PRODUCT
DEVELOPMENT
Managers must appreciate the value
of being fast at innovation. A The cost of new product
company that takes less time to development could be reduced by
develop and commercialise a new undertaking innovation of an
product can be expected to be more incremental, as opposed to radical,
competitive than a slower nature,with substantial reduction in
competitor. thr risks of innovation.
12.6
ORGANISING FOR NEW
PRODUCT DEVELOPMENT
Persceptual blocks prevent Perceptual blocks
the person from perceiving Cultural blocks. Environmental
blocks.
clearly either the problem
Emotional blocks. Intellectual and
otself or the information expressive blocks.
needed to solve the problem.
12.6.1 BLOCKS AND BUGS
12.6.2 ORGANISATIONAL SUPPORT FOR INNOVATION
Three conditions are required for
It is people, not plans for a firm to innovate successfully.
committees, who create ideas and 1. Closeness to customer
achieve innovation.it is their efforts 2. Cross- function communication
that truly determine whether 3. Multi functional tramwork.
businesses succeed or fail.
Although marginal product 1. The functional approach.
changes can be managed within 2. A taskforce.
3. A project team functionan matrix.
conventional organization, radical 4. Venture teams
innovation need suitably radical 5.Spin- outs.
organization. 6. Inside -oitside venture.
12.6.3 ORGANIZATIONAL ALTERNATIVE
SUMMARY Search
In this chapter we approach innovation at two levels
strategic innovation issues and the mechanics of new
product development processes.
Innovation Strategy is driven by the goal of creating the
innovative company and achievingreal value innovation
that driven effective strategy and positioning in a market.
Save
There are many factors that affect new product
performance. Cancel
Thank you!
From: Group 6 Laristan, Rebadulla, Carba
and Umali
