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Marketing and Innovation: Coping with the · PDF file Google’s 9 Rules of Innovation: Hiring is at the heart of all we do Ideas come from everywhere Share all information Morph ideas,

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  • Marketing and Innovation: Coping with the Challenges

    Jakki J. Mohr, Ph.D. Regents Professor of Marketing and

    Hamilton Distinguished Faculty Fellow University of Montana-Missoula

    Presentation to ORT University students & alumni Montevideo, Uruguay November 23, 2010

  • Peter Drucker (1954)

    ―There is only one valid definition of business purpose: to create a customer.

    …. Therefore, any business enterprise has two—and only two—basic functions:

    marketing and innovation.‖

    The Practice of Management, pp. 39-40

  • The role of innovation in business

     MP3 Players:

     Sony vs. Apple

     Digital Cameras:

     Kodak vs. Nikon

     Printers:

     HP vs. Memjet

     TVs, cars, retailers,

    History is littered with the skeletons

    of companies who failed to remain innovative.

  • Forces that Compel Change

     New sources of competition  Customers’ changing needs  Internationalization  Regulation  Changing norms in society  And on and on and on and on…

    Stagnant Businesses Die

  • The Two Sides of Marketing & Innovation

    Companies must

     Remain creative internally  Avoid complacency, the status quo

     Know factors that affect innovation in the marketplace  Where innovations arise

     How customers make decisions to adopt new innovations

  • Obstacles to Innovativeness Within Companies

     Core competencies  Core rigidities

     What a company does best becomes a ―sacred cow‖

     A strait-jacket that makes it hard to change

     Pressure to protect existing business model

    Think: Sony in MP3 players;

    Kodak in cameras/film

  • ―Innovator’s Dilemma‖

    Pressure to protect existing revenue sources (best customers/best products)

     Means companies are not open to new customers/new products

     Requires willingness to cannibalize their existing business success.

     Not innovating means that the company may miss out on new opportunities to new competitors.

  • “You’ve been Amazoned!”

  • P er

    fo rm

    a n

    ce

    Time

    Limit of Particular Technology

    Models of Disruptive Innovation

  • Think: Netbooks: ASUS eePC; MSI; etc.

  • Fear of Change Results in Shocking Business Decisions

     Music industry: sue its customers

     Retailers: tell vendors ―You are either our supplier or our customer, but not both.‖  (if vendors use their own .com website, the

    retailer will discontinue carrying its products)

     Textbook publishers: don’t make all texts available on Kindle so as not to cannibalize their business model

     Barnes & Noble unwilling to open the first .com book ―e-tailer‖ (lost to Amazon)

  • Causes of Lack of Innovativeness

     Organizational size (?)

     Sunk costs in existing facilities

     Preference for the familiar/Discomfort with the unfamiliar

     Thinking of markets in terms of products

    rather than in terms of the customer need being met.

    EX: phones (vs. communication)

    Ex: Interface carpets

  • Success= Culture of Innovativeness

     Break-through thinking

     Risk taking

     Enlightened experimentation

     Creative destruction (willing to cannibalize)

     Assess by percent of revenue derived from recently-released products and new innovations

  • Start at the Top!

     Top managers:

    Willingness to cannibalize

     Use fear of obsolescence as motivation

     ―Only the paranoid survive!‖

     Reward mavericks (―champions‖)

  •  Process of developing/commercializing breakthrough product, service, or model that obsolete or cannibalize existing products

     Current technology made obsolete by proactively developing next- generation technology

     May be the antidote to the Innovator’s Dilemma if it overcomes internal rigidity

  • Abandon conventional wisdom

     ―Unlearn‖ traditional but detrimental practices

  • ―Blue Ocean‖  Create a vision of the future based on ―markets that do not

    yet exist‖ and unconfined by existing industry boundaries

     Challenge the status quo  Overturn price/performance assumptions

     ―Extreme design‖ – Nokia

     Escape the ―tyranny of the served market‖– Nokia

     Use new sources of ideas for innovation – Nokia

     Get out in front of customers

     Bifocal vision  Engage in creativity exercises

  • Risk Tolerance

     Tolerate ―mistakes‖

     Learn from mistakes  Nokia

     ―Mistake‖ may prove to be next success

     Reward risk taking  C. Barrett: You’re not qualified to run a start-up until

    you’ve failed—at least twice!

  • Master of Culture of Innovation: Google

     Google Innovation Strategy

     9 rules of innovation http://www.youtube.com/watch?v=b59Jc3n0xHQ

     Innovation at Google http://www.youtube.com/watch?v=2GtgSkmDnbQ&feature=related

     An Inside Look at Google http://www.youtube.com/watch?v=aOZhbOhEunY&feature=channel

     Life at the googleplex: http://www.youtube.com/watch?v=eFeLKXbnxxg&feature=channel

    http://www.youtube.com/watch?v=b59Jc3n0xHQ http://www.youtube.com/watch?v=2GtgSkmDnbQ&feature=related http://www.youtube.com/watch?v=aOZhbOhEunY&feature=channel http://www.youtube.com/watch?v=eFeLKXbnxxg&feature=channel

  • Google’s 9 Rules of Innovation:

     Hiring is at the heart of all we do

     Ideas come from everywhere

     Share all information

     Morph ideas, don’t just kill them

     Users come first, not money

     Data drives all decisions

     Speed matters – iterate products

     Vision must be shared with the team

     20% time is at our core

    Initially, ignore:

    • CPU power

    • Storage

    • Bandwidth

    • Money

    Philosophy:

    No Constraints

  • Open to New Sources of Innovation

     ―Open Innovation‖

     Networks of Innovation

     NIH vs. PFE

     Not invented here versus proudly found elsewhere

     Examples:

     Management Innovation Exchange

     OpenIdeo

  • Sources of Innovative Ideas

    Biomimicry:

     Nature-inspired design

     Examples:

     IBM

     IDEO

     HOK

     SAP http://www.sapdesignguild.org/community/book_p eople/review_biomimicry.asp

    http://www.sapdesignguild.org/community/book_people/review_biomimicry.asp http://www.sapdesignguild.org/community/book_people/review_biomimicry.asp

  • Innovation in Business Models

     A Better Place:

    http://www.youtube.com/user/btrplc#p/u/5 /kcjNd5Dn2ns

    http://www.youtube.com/user/btrplc http://www.youtube.com/user/btrplc

  • Metrics for Innovation Performance

     Innovation’s usefulness, quality, speed to market, sales/sales takeoff

     Compare attained innovation performance to the possibilities

     What is the record of innovation in the industry?

     How does company compare?

     Did it miss important opportunities? Why?

     Does it successfully convert R&D spending into commercial product?

  • A Brief Digression

     National innovativeness

     Finland & Japan vs. Uruguay?

  • Factors That Affect Innovation in the Marketplace-

    The Demand/Customer Side

     Innovation should be designed to solve problems people (customers) have

     Problems they can articulate (express)

     Problems they have but they can’t (don’t) articulate

  • Adoption & Diffusion of Innovation: Categories of Adopters

    Innovators

    Technology

    Enthusiasts

    Early

    Adopters

    Visionaries

    Late

    Majority

    Conservatives

    Early

    Majority

    Pragmatists

    Laggards

    Skeptics

    { { { { {

    The

    Chasm

  • Mohr, Sengupta, Slater © 2009

    Factors Affecting Customer Purchase Decision

    Relative advantage

    The benefits of adopting the new technology

    compared to the costs and in relation to other

    alternatives

    Compatibility

    The extent to which adopting and using the

    innovation is based on existing ways of doing

    things and standard cultural norms

    Complexity* The difficulty involved in using the new product

    Trialability The extent to which a new product can be tried on

    a limited basis

    Ability to Communicate

    Product Benefits

    The ease and clarity with which the benefits of

    owning and using the new product can be

    communicated to prospective customers

    Observability The ex

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