Managing Innovation &
New Industrial Product
Development
Chapter 10
Managing Innovation

Two approaches:
• Induced strategic behavior


Traditional
Administrative mechanisms
• Autonomous strategic behavior


Entrepreneurial
Product champion
• “An organization member who creates, defines, or
adopts an idea for an innovation and is willing to
assume risk.”
• 3M
Managing Innovation

Why is the Silicon Valley widely
recognized for innovation?
• Market for ideas


Allocation
Attraction
• Market for capital

Investors v. corporations
• Market for talent

Employee movement
Managing Technology

Classifying Development projects
• Derivative projects
• Platform projects
• Breakthrough projects
• Research and development
Managing Technology

Product-Family Focus
• “Products that share a common platform
but have different specific features and
enhancements required for different
sets of consumers.”
Disruptive Innovation


Overshooting Customer Demands
Sustaining v. Disruptive
• Sustaining
• Disruptive

Low-end strategy test
• For whom?
• Customers at low-end wanting ______________
_______________________________________
• Create model that can be profitable at discount price to
attract customers.

New-market strategy test
• For whom?
• People who lack __________________________
_________________________________________
• Present customers who need to go to an inconvenient
location
What makes some companies
better innovators?
1.
Limited structure


2.
Strict priorities for new products
Tied to resource allocation
Real-Time Communication and
Improvisation


Better communication
Improvisation
• “Design and execution of actions that approach
convergence with each other in time.”
What makes some companies
better innovators?
3.
Experimentation

4.
Creating options for the future
Time Pacing

“A strategy for competing in fast-changing
markets by creating new products at
predictable time intervals.”
What Drives a Firm’s New Product
Performance?

Quality of a Firm’s New Product Development
Process
• Process




Emphasize market and technical assessment
Complete description of product
Go/kill set-up points
Flexible
• Resource commitments



Resources committed to meet firm’s objectives
R&D budgets were adequate and aligned with objectives
Necessary personnel are available
• New product strategy

3M
What Drives a Firm’s New Product
Performance?

Anticipating Competitive Reactions
• Developing scenarios
• When will a competitor react?
If _____________________________ and
______________________

What Drives a Firm’s New Product
Performance?

Sources of New Product Ideas
• Internal/External
• Lead users

“A small number of highly influential buying
organizations that are consistent early
adopters of new technologies.”
• Lead user method
• Staying ahead of customers
Quality Function Deployment

“Identifies critical customer
attributes and establishes a specific
link between customer attributes and
product design attributes.”
Quality Function Deployment

QFD
• Voice of Customer

Identify customers needs and wants
• Interviews

Assign weights
• Voice of Engineers


Translate customer needs into product design
attributes
Examine relationship between design parameters and
customer needs
• Benefits of QFD
Determinants of New Product
Performance and Timeliness

Determinants of Success
• Strategic Factors


Product Advantage
Marketing knowledge
• “Fit between _____________________ and
____________________________.”

Technical synergy
• “Fit between _____________________ and
____________________________.”

International orientation
Determinants of New Product
Performance and Timeliness

Determinants of Success
• Development Process Factors



Predevelopment proficiency
Market knowledge and marketing proficiency
Technical knowledge and technical
proficiency
Determinants of New Product
Performance and Timeliness

Determinants of Success
• Fast-paced Product Development


Matching process to development task
Compressed strategy for predictable
projects
• Compressed strategy

Experiential strategy for unpredictable
projects