Innovation and Strategy Formulation (ACCTG 705) - PRELIM PDF

SCHOOL OF BUSINESS AND MANAGEMENT Accountancy and Finance Department COURSE NUMBER ACCTG 705 COURSE TITLE INNOVATION AND STRATEGY FORMULATION...

SCHOOL OF BUSINESS AND MANAGEMENT Accountancy and Finance Department COURSE NUMBER ACCTG 705 COURSE TITLE INNOVATION AND STRATEGY FORMULATION PRELIM MATERIALS PART 1 INNOVATION MANAGEMENT Introduction to Innovation Management: What is Innovation? Taking something existing and transforming it to something that create new wealth or improve the well-being of the society or both Innovation can be a key strategy to stay ahead of the competition the process of translating an idea into an original product or service which satisfies a specific consumer need. art, science or process of developing better solution from existing inventions and ideas an advancement of our tomorrow 3 steps of innovation 1. Idea 2. Create 3. Validate Innovation Cycle Think Make Try Refine Sources of Technology and Innovation: Types of Innovation 1. Disruptive Innovation creates new markets and new categories of customers. occurs when a new product or service engages the existing market with a new technology. + occur when firms introduce offerings that are so unique and superior that they threaten to replace traditional approaches. + Existing markets are disrupted by new technology.  utilize old technology in new ways harness the power of modern technology create new business models Example: - Excellent cameras on cell phones have since disrupted the digital camera industry. 2. Breakthrough Innovation "Out of the blue" solution that creates a global paradigm shift employs new technology customers don't realize they need it until they experience first hand forever changes life we know it Breakthrough products also pioneers - products that are technologically advanced and creatively superior to existing products in the market. 3. Radical Innovation reshapes an existing industry convention to create something new brings new benefits to the consumer meets the demands of the current generations +when new products or services are developed using new technology that open up new markets. Example: o Apple Air pods – an earpiece that could use wireless technology to receive Bluetooth signals, unlike before it’s not wireless. 4. Incremental Innovation improves product over time through small changes add new features tweak and improve overall design driven by how consumers desire to use the product can be describes as making improvements on an existing product or services. occurs when the innovation uses existing technology to improve a product or service that addresses the existing market. Example: o New version of Apple iPhone - the features such as the camera and processor are tweaked to make an improvement over the previous model.  5. Sustaining Innovation improvements made to an existing product by predicting consumer needs does not shift company's goals expands company product line, giving the consumer more choices keeps the business alive by retaining loyal customers Example: o Copiers - used to be large ad expensive machines purchased only for large offices. Canon and others reconfigured these to be small and usable on desktops, creating a whole new market of people buying personal copiers/printers. Peter Drucker’s Seven Sources of Innovation 1. Unexpected 2. Incongruity 3. Process Need 4. Industry or Market Structure 5. Demographic 6. Mood or meaning 7. New Knowledge Developing new products and services New Product Development (NPD) Process covers the complete process of bringing new product to the market a transportation of market opportunity and product available for sale. 1. New product strategy 2. Idea generation 3. Screening 4. Concept testing 5. Business analysis 6. Product development 7. Market testing 8. Product launch Product Life Cycle a. Introduction stage Low sales High cost per customer  Financial losses Innovative customers Few (if any) competitors b. Growth stage Increasing sales Cost per customer falls Profits rise Increasing number of customers More competitors c. Maturity stage Peak sales Cost per customer lowest Profits high Mass market Stable number of competitors d. Decline stage Falling sales Cost per customer low Profits fall Customer base contracts Number of competitors fall Additional Note: ▪ To prevent the decline of their product after the maturity stage, firms will often “relaunch” their product with a new and improved model. ▪ Losses continue during the introduction phase, when sales are low and marketing expenses are high.