Innovation Exam Study Progress (1) PDF

What is the Market S- Curve and Why Does it Exist - When a product first comes to market, very few people buy it - Years of slow growth, ideation and brainstorming - At some point it will reach faster adoption until it starts to approach saturation While established firms are able to...

What is the Market S- Curve and Why Does it Exist - When a product first comes to market, very few people buy it - Years of slow growth, ideation and brainstorming - At some point it will reach faster adoption until it starts to approach saturation While established firms are able to manage along the s-curve, many established players have trouble “switching” S-curves? - Emergent Technology allows for switching S-curves - Hard to abandon existing business models and technologies - Bring lots of risk - Shareholders NOT happy Disruptive vs Sustaining Innovations - Disruptive Innovations - Introduce a very different set of attributes from the one mainstream customers historically value - Perform worse along one or two dimensions that are important to mainstream customers - Appeal to Niche Customers - Example: Ride Sharing Apps disrupting taxi industry - Sustaining Innovations - Innovations that improve the performance of a product along attributes valued by its core customers - Example: Apple continues to making iPhone improvements Innovator's Dilemma - The issue that established companies face when trying to adopt or respond to disruptive innovations - Possibly due to: Over Focus on current customers, Profitability vs uncertainty, Short term thinking - At early stages, disruptive technologies don’t seem like attractive opportunities - Innovator’s Dilemma: S-curve logic dictates that some (not all) technologies originally focused on this low-end market will ultimately provide performance that competes directly with main customer segment - “Switching S-curves” takes time and lots of investment Potential Answer to Question: The Innovator's Dilemma describes the challenge faced by established companies when responding to disruptive innovations. At the core of this dilemma is the concept of the Market S-Curve, which explains how new products initially experience slow growth as they enter the market. This early phase involves ideation and brainstorming, followed by gradual adoption. Over time, however, the product gains traction, and its adoption accelerates until it reaches market saturation. Established firms typically manage this S-curve well, but they struggle when a disruptive technology emerges, potentially requiring them to "switch" S-curves. This switch is difficult because it often involves abandoning existing, profitable business models and technologies, which is risky and unpopular with shareholders. Disruptive innovations, which initially perform worse on key attributes valued by mainstream customers, tend to target niche markets. However, as these technologies improve over time, they begin to compete directly with established products, even challenging the main customer segment. The dilemma arises because at the early stages, disruptive technologies don’t appear to offer attractive opportunities for growth, leading firms to focus too heavily on their current customer base and short-term profits. Transitioning to a new technology curve, therefore, takes time, investment, and a willingness to embrace risk—factors that many established companies struggle with. Typical ways to Segment a market - Geographic (Country, region, city, urban/rural, climate) - Demographics (Age, income, gender, generation, marital status, occupation, etc) - Psychographics (Lifestyle, personality, activities, interests, opinions) - Behavioral (Usage rate, loyalty, product knowledge, involvement, purchase occasion, buying stage) - Benefits Sought (Convenience, Value, Safety, Status) After Segmentation- How do you Assess a market is attractive? - Customer Acquisition - Ability to reach customers in the segment and the cost of doing so - Intensity of existing competition in the segment - Level of customer satisfaction with the competitor’s current offerings - Forecasted Growth - Potential profitability - Barriers to entry How do you drive Early Growth? ATAR - Awareness- Customers must first know the product exists. This involves identifying the target market and implementing strategies (e.g., advertising) to increase visibility within that audience. - Trial- Once aware, customers need to try the product. Understanding customer behavior, pricing, and user experience plays a critical role in converting interest into a first-time purchase. - Availability- The product must be easily accessible through appropriate channels (online, retail, etc.), ensuring that customers can purchase it without barriers. - Repeat- After the trial, ensuring a positive experience encourages repeat purchases. Testing and refining the product's usability and customer experience increases retention and long-term success. What are two issues an innovator should think of? - Do the incumbent’s complementary assets contribute to the value proposition? (Can I do it alone?) - Can the inventor stop development by the incumbent? (Protecting yourself, patenting) The Four Elements of a good idea - What problem are you trying to solve? OR what need are you trying to satisfy? (customer insights) - How big is this problem? (Trends) - What are the current ways in which the intended customer manages this problem today? (Conventions) - What is your big idea? (Solution) - Why is it a superior solution over existing options? What is Design Thinking? - The Principle - - User-Centric process to solving problems - Focuses on understanding and addressing the needs and experiences of users. - Based on iteration - Involves testing ideas, gathering feedback, and making improvements continuously to find the best solution. Steps in Design Thinking - Empathize and Define- Interviews, observation, focus groups - Ideate- Extremes, High quantity, variation - Prototype- Costs, small rapid changes - Test, [Implement] Advantages of Design Thinking - Allows early testing of assumptions - Insights from primary research that are unavailable from third parties - Gets buy-in from senior management - Puts subject at ease allowing for real feedback Disadvantages of Design Thinking - Resources- Time Constraints - Overconfidence - Organizational Inertia Techniques and Goals for Empathize - Interview in Person or Phone - Survey - Observation (Ethnography What are ‘extreme’ users? Why ‘extreme’ users? - Extreme users are those who exhibit unconventional behaviors engaging (or not engaging) with the service or product - People who go to the cinema everyday, people who never go to the cinema and read books - Problems experienced by extreme users are often similar to smaller problems faced by average consumers, but they are magnified Experiments - Why helpful for sparking new ideas? - Try new experiences - Take things apart - Testing through prototyping Type of Experiments - Analogues - Virtual Prototypes - Limited Test Markets - Limited product scope - Scope meaning detailed features of a product, functions etc. Limited scope basically smaller version - Experimental “Brand” - Can a radical new concept be tested under a non-dominant brand - Shared testing with potential partners? - Simulations Designing Experiments - Consider Scope and Scale - How long will it take? - What constraints on events and resources are there? - Are there particular risks associated with the experiment itself? - Consider the upside - Does the experiment and learning maximize the business opportunity Potential Elements to Test - Value Proposition - Product or Service - Economic Engine - Suppliers and Partnerships - Delivery and Support - Brand Concepting Phase - Once need of customers have been identified and design requirements well-defined, we now identify the solutions to these problems - What are factors that underlie the performance of ideation (When you know ideation is done well) - The 4 Factors that underlie the performance of ideation - The number of ideas generated - The average quality of the ideas generated - The variance of the quality of ideas generation - The ability of the selection process to pick the best ideas Why is Diversity Important - Greater creativity and innovation from different perspectives  - Increased productivity - Reduced employee turnover - Connect to a wider range of customers - Increase Revenue Prototyping Phase - Do these solutions work? (How) Do they need to be modified? - Make ideas tangible through prototypes - Underdeveloped prototypes vs Overdeveloped Prototypes - Balance clarity & accuracy vs affordability and flexibility - Prototype should be ‘good enough’ to get useful feedback, but not perfect- perfection wastes time and resources - Refine or make changes to prototypes in real time during testing to gather more feedback - Be prepared to iterate multiple times - If done during customer validation part of design thinking, it makes the interviewee more comfortable being critical, but all the above apple as well: Cheap, share vision, quick When should you talk to customers, aka interview? Why? - Before ideation - After ideation - After prototyping Limitations of Evaluative Research - Need to determine who you want to talk to/ engage with. Focusing on a specific addressable market is the first problem - Need to determine what questions to ask - Does the customer understand the questions? - Have to get the customer to respond. Non-response rates are high. - If you get an answer, is it an “honest" answer? Limitations of Observation - You find what a person is doing or wants NOW. You don’t know their wishes or desires in the future. Jobs to be done - The value proposition of a product How can corporations innovate? - Open innovation- involving the external ecosystem in the innovation process - Internal corporate venturing- setting up internal venture units to invest in startups and external innovation - Venture Capital as a Service (VCaaS): Partnering with an external venture capital firm to drive start up investments in areas of strategic interest to the corporation - Partnerships and collaborations- Partnering with other organizations to co-create and co-innovate - Intrapreneurship- Fostering a culture of innovation and encouraging employees to act like entrepreneurs within the organization - Corporate Accelerators and Incubators- Providing resources and support to startups and internal innovation projects - Innovation Labs- Dedicated internal units focused on exploring and experimenting with new ideas and tech - Crowdsourcing- Sourcing ideas and solutions fro a large group of external stakeholders - Counter-Driven Innovation- Incorporating customer feedback and needs into the innovation process Why would companies launch corporate accelerators? - Close Innovation Gap- Existing business units are not likely to pursue disruptive concepts and often face strong near-term pressures that discourage investments in new growth initiatives - Build Community of Complementors- A major motive for corporate accelerators is to stimulate startup activity around a product platform and convince the next generation of startups to build their products on top of a company’s platform - Expand to new markets- Working with startups that have the capabilities and agility to compete in newly emerging sectors can provide new opportunities for corporations - Rejuvenate Corporate culture- Can support efforts to enhance a company’s culture. Connecting the corporate workforce with fresh talent and ideas inspirate innovative thinking and can result in employees becoming effective change agents - Attract and Retain talent- Many firms employ corporate accelerators to tap into the pool of entrepreneurial innovation and talent. In addition to attracting external talent, it can also be helpful in retaining existing entrepreneurial talent within the organization - Why would startups join corporate accelerators? Access to resources- A startup’s growth can be positively affected by access to corporate resources, assets, and capabilities. - Increase credibility- Startups believe that corporate backing will boost their visibility and credibility. This can benefit many startup priorities - Access to markets- Business to business startups often aim to get the sponsor of the corporate accelerator as a customer, this speeds up the process of securing product- market fit - Getting funding- The funding that comes with being accepted to a corporate accelerator clearly motivates startups’ interest in corporate accelerators What are the six key attributes of successful BEANs - Simple- Interventions that are easy to adopt and remember gain - Fun- An activity that is engaging and social, and intrinsically rewarding, which makes people more likely to do it - Trackable- The ability to monitor performance and compare it against that of others is a powerful motivator  - Practical- The best BEANs are smoothly integrated into existing meetings/ processes and don’t require major changes or entirely new routines - Reinforced- People often need physical and digital reminders to keep using the new habits - Organizationally Consistent- Effective BEANs don’t encourage people to do one thing if the company punishes them for that behavior or rewards them for something else Initiative Risks: How does your project measure up? - Accessing initiative risks requires evaluating: - The feasibility of the product - The likely benefit to customers - The relevant competition - The appropriateness of the supply chain - Quality of the project team - The first must decide which initiative risks to take on internally and which are better shouldered by a partner Interdependence Risks: Whose projects must succeed before yours can? - If an innovation is a component of a larger solution that is itself under development - The innovation’s success depends on the successful development and deployment of all other components of the system - Interdependence risk speaks to the joint probability that different partners will be able to satisfy their commitments within a specific time frame - The more dependent an innovation is on other developments, the less control it has over its own success Integration Risks: Who has to adopt the solution before the customer can? - In many ecosystems, intermediaries are positioned between the innovation and the final customer - As the number of intermediaries increases, so does the uncertainty surrounding market adoption and success - Integration is assessed by adding adoption cycles to estimate delays caused by the adoption by intermediaries What makes design thinking a social technology? - Provides immersion => better understanding of those being designed for - Makes sense of data => new insights - Builds alignment around what matters to users - Encourages emergence of fresh ideas - Provides clarity on make-or-break assumptions for meaningful experiments - Offers pre-experiences to users through rough prototypes - Helps build shared commitment and confidence in new product or strategy