Innovation 2024 Class 6 PDF

Prototype & Test: Fast Failure Act more, talk less Fail faster, succeed sooner “Yes AND…” First should not be last!...

Prototype & Test: Fast Failure Act more, talk less Fail faster, succeed sooner “Yes AND…” First should not be last! Rich stories, joys & pains User needs User constraints Valuation Stanford’s Design-Thinking Process Competition When does Fast Failure succeed? Have the nerve to find out if customers want your product Have available users for testing prototypes Have ability to create reasonably “life-like” prototypes MVP Have true interest in seeing the results Innovation Theater “We’ve got something promising” From here to launch 1. Technology mapping 2. Versioning 3. Value Proposition  Technology Mapping A technology map captures the four basic steps in managing technology resources… 2. Decide on 1. Technology Needed Identification Technology Additions 4. Ongoing 3. Decide on Product What-to-Sell Management Strategy  Technology Mapping A technology map captures the four basic steps in managing technology resources… 2. Decide on Issues: Needed Internal 1. Technology development (Make) Identification Technology Additions External acquisition (Buy) Partner to Co-develop 4. Ongoing 3. Decide on Product What-to-Sell Management Strategy Step 2: Make, buy, partner Development risk refers to the risk associated with adding new technologies to a project Checklist criteria for “When is it optimal to… Make? ✓ The R&D area is close to current corporate skills ✓ The firm wants to keep position secret ✓ The firm’s culture promotes R&D efforts ✓ The NIH syndrome is not the primary driver of decision Older: “Make-or-Buy” decision Step 2: Make, buy, partner Checklist criteria for “When is it optimal to… Buy? ✓ Technology already developed & time savings is important (i.e., highly competitive arena, limited window for demand/supply) ✓ The R&D area is NOT close to current skills ✓ Technology development is high risk & firm is risk averse ✓ There is a potential for ‘branded components’ synergy Partner? ✓ Partner could provide more than one needed component ✓ Partner has other marketing or production resources ✓ Long-term relationship is desirable ✓ Partner’s fit has been positively assessed (management theories)  Technology Mapping A technology map captures the four basic steps in managing technology resources… 2. Decide on 1. Technology Needed Identification Technology Additions Issues: License? Commercialize? 4. Ongoing 3. Decide on Product What-to-Sell Management Strategy Step 3: Decide What-to-sell Strategy Marketing risk refers to the risk associated with bringing a product to market How to transform know-how into revenue? Commercialize? License? Both? Step 3: Decide What-to-sell Strategy Five possible options: 1. Sell or license know-how only 2. Sell “proof of concept” 3. Sell commercial-grade components to OEMs 4. Sell final products (“out of the box”) 5. Sell complete end-to-end solution Decision Matrix for WTS Strategy Tech doesn’t fit mission Market Components Offering technology For Insufficient funds characterized by incompatible with will make it industry demand-side current industry standard These Tight window of increasing returns standards Firms has market opportunity Conditions Market potential smaller (direct network skills only for some externalities) markets than planned Low likelihood of Major corporate profitability with firm buyers require a second source. Diverse range of technologies Know-how Sell License License Proof of Concept Sell and Components Sell Full Product Commercialize Commercialize Commercialize Complete Solution solution  Technology Mapping A technology map captures the four basic steps in managing technology resources… 2. Decide on 1. Technology Needed Issues: Identification Technology Additions Modularity Platforms & derivatives Customization Killing projects 4. Ongoing 3. Decide on Product What-to-Sell Management Strategy Framework: Capon & Glazer (1998) Mohr et al (2008) Step 4: Ongoing Product Management Modularity Build a complex product from smaller subsystems that are created independently Platforms & derivatives Common architecture that creates potential for spin-offs Customization Woo large or niche segments with specialized features Killing projects Sunk cost bias, Confirmatory bias, & Groupthink Base stop rules on outside pre-ordained data-points Sunk Cost Effect The reluctance to reverse decisions that have led to negative outcomes when resources have already been “sunk” on that decision. It is more difficult than it should be to end a project that isn’t going well. 14 Sunk Cost Effect The reluctance to reverse decisions that have led to negative outcomes when resources have already been “sunk” on that decision. 15 Sunk Cost Effect The reluctance to reverse decisions that have led to negative outcomes when resources have already been “sunk” on that decision. Responsible joint venture contracts should Escalation state a clear “maximum sunk cost” that the venture can incur before a decision to effect terminate. Then partners can move forward “unemotionally”. 16 Sunk Cost Effect The reluctance to reverse decisions that have led to negative outcomes when resources have already been “sunk” on that decision. Accountability exacerbates the effect 17 Confirmatory Bias The tendency to “see what you expect to see.” People will interpret information in a way that supports (or confirms) their prior expectations. Harrod’s V-Neck Sweater L 89.95 A classic men's v-neck in superfine merino wool. Every man should have one. Colours: Black, Navy, Camel. Sizes: M, L, XL. 18 Experience is ambiguous Expectations can be set by... Advertising (Deighton’s paper towel study) Brand (Hoyer and Brown’s peanut butter study) Cognitive Associations (Montague’s fMRI study of Coke vs. Pepsi) Initial anchors (Hoeffler and Ariely’s gift4thirst lemonade study) lemonade%2520glass 19 Versioning The practice of offering a range of products built on a common core Offers the ability to address distinct consumer segments Product Differentiation (PD) Curve From Development of New Products & Services Versioning The practice of offering a range of products built on a common core Offers the ability to address distinct consumer segments Product Differentiation (PD) Curve From Development of New Products & Services Versioning The practice of offering a range of products built on a common core Offers the ability to address distinct consumer segments Product Differentiation (PD) Curve From Development of New Products & Services The Value Proposition One sentence statement that captures the essence of why a customer chooses your product Formulated on Who are our 3 key questions: customers? How do we What value deliver that do we offer value? our customers? Three Types of VPs transolid_kitchen_sink_ts33223 “All Benefits” “Favorable Points of Difference” “Resonating Focus” Building the Value Proposition Increasingly firms are realizing that value propositions must be developed for each product and, often, a product might have different VPs for different market segments Pharmaceutical example Xcenda | Managed Markets Insights & Tools Building the Value Proposition Increasingly firms are realizing that value propositions must be developed for each product and, often, a product might have different VPs for different market segments Pharmaceutical example Xcenda | Managed Markets Insights & Tools Building the Value Proposition Patient: 85% experience mild daily nausea → 15% “Days without nausea are days I forget I have ___ and I’m not defined by it.” Doctor: 30% compliance → 65% compliance “One less patient to worry about and not have to beg for cooperation.” Insurer: 25% decrease in post-event care “In 2014, net savings (care cost – new drug premium) would have equaled $2.8 M” Five critical mistakes firms make with Value Propositions 1. Don’t focus 2. Don’t listen 3. Don’t quantify 4. Don’t research 5. Don’t remember behavioral