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XIME / PGDM-B2B –RS–2525-February-2010
B2B Marketing
Managing Innovation
PGDM–B2B–RS–12
Amarnath Krishnaswamy
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XIME / PGDM-B2B –RS–2525-February-2010
Plan for this Session (1)
• Managing Innovation– Management of Innovation– Innovation & Technology– Innovation & the Development of New Products
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XIME / PGDM-B2B –RS–2525-February-2010
Managing Innovation
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XIME / PGDM-B2B –RS–2525-February-2010
Management of Innovation … (1)
• Innovation is either”
– Planned or strategic Deliberate
– A lucky break, chaotic Emergent (Euphemism!)
Botox, Viagra, Equal (aspartame), Vulcanization, Penicillin, Dynamite
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XIME / PGDM-B2B –RS–2525-February-2010
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
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XIME / PGDM-B2B –RS–2525-February-2010
Management of Innovation … (3)
Induced Autonomous
InitiativeBy the individual, but In line with organization’s .
By the individual, and could differ from orgn.’s
ScreeningFormal, as per the organization’s ways
Informal network
Type Usually incremental Could be radical
Communication In line with organization’sIs different, especially in the early stages
Major PlayersPrescribed by the organization
Informal network
Decisions Authority clearly defined Poorly defined
Strategy Formulation
Alternatives considered before commitment
In the early stages, the proposer ‘s call
Characteristics – Strategic Innovation
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XIME / PGDM-B2B –RS–2525-February-2010
Management of Innovation … (4)
Guidelines for Autonomous Strategic Innovation
• Nurture, encourage
• Avoid shackling the initiative through budgets, rationing resources
• Encourage information exchange
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XIME / PGDM-B2B –RS–2525-February-2010
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 !
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XIME / PGDM-B2B –RS–2525-February-2010
Technology & Innovation … (2)
• Technology development projects fall into 4 categories
– Derivative projects
– Platform projects
– Breakthrough projects
– R & D Projects
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XIME / PGDM-B2B –RS–2525-February-2010
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.
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XIME / PGDM-B2B –RS–2525-February-2010
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
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XIME / PGDM-B2B –RS–2525-February-2010
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
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XIME / PGDM-B2B –RS–2525-February-2010
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
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XIME / PGDM-B2B –RS–2525-February-2010
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
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XIME / PGDM-B2B –RS–2525-February-2010
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
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XIME / PGDM-B2B –RS–2525-February-2010
Innovation & New Products … (1)
• To sustain a competitive advantage
• Top management backing necessary
• Perseverance necessary as product failure rates are high
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XIME / PGDM-B2B –RS–2525-February-2010
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
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XIME / PGDM-B2B –RS–2525-February-2010
Innovation & New Products … (3)
Forming Teams
• Multidisciplinary
• Concurrent engineering
• Team structure – 4 types
– Functional
– Lightweight
– Heavyweight
– Autonomous
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XIME / PGDM-B2B –RS–2525-February-2010
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.
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XIME / PGDM-B2B –RS–2525-February-2010
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
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XIME / PGDM-B2B –RS–2525-February-2010
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.
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XIME / PGDM-B2B –RS–2525-February-2010
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.
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XIME / PGDM-B2B –RS–2525-February-2010
Choice of Team Structure
Incremental changes, stable competitive & tech. environment
Structure Situation
Functional
Lightweight Rapid changes in customer requirements, tech., competition
Heavyweight
Autonomous
When speed is required
Significant competitive challenges
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XIME / PGDM-B2B –RS–2525-February-2010
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
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XIME / PGDM-B2B –RS–2525-February-2010
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
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XIME / PGDM-B2B –RS–2525-February-2010
Voice of the Engineer
• Translate customer needs into product design
• Put onto a matrix against what the customer wants, and compared with competition
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XIME / PGDM-B2B –RS–2525-February-2010
QFD Matrix
WeightProd. Attr.
1
Prod. Attr.
2
Rating
1 2 3 4 5
Cust. Attr. 1
Cust. Attr. 2
Cust. Attr. 3
Cust. Attr. 4
Cust. Attr. 5
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XIME / PGDM-B2B –RS–2525-February-2010
New Product Success / Failure - Factors
Success• 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
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XIME / PGDM-B2B –RS–2525-February-2010
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 ProcrastinationNever put off till tomorrow what you can do the day after tomorrow!
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XIME / PGDM-B2B –RS–2525-February-2010
Moving Forward
Next Session: PGDM-RS-13
Date: Tuesday, Mar 02, 2010
Subject: Managing Services
- Role & Importance
- Buying Services
- Marketing Mix
- New Services
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XIME / PGDM-B2B –RS–2525-February-2010