Product innovation

What is it?

…concerned with the new or the novel.

Is innovation technology based? Many of the more

significant innovations of the 20th century are

organizational rather than technology based.

Time

Pro

fita

bili

ty

Disruptive

Innovation

Application

Innovation

Product

Innovation

Process

Innovation

Marketing

Innovation Business

Model

Innovation Structural

Innovation

Different types of Innovation give greater

profitability at different points in the life cycle of

a product family

New product

invention, tailoring,

and development

The anatomy of a product

Product quality dimensions

1.Product Line Based:

A)New-to-the –world Products

B)Line Extensions

C)Me-too products

D)Products Modifications

Continuous Innovation

Dynamically

Continuous Innovation

Discontinuous

Innovation

Genuine uncertainty

› It’s not going to happen – certainly not now

Cannibalization

› It will compete with our current products

Shifts in the customer base

› Our current customers don’t want it

Margin erosion

› It will make less money

Time horizons & Incentives

Fear of (individual) cannibalization

Overload

Competency Traps

Performance

Time

Who buys a technology

when it is first

introduced?

New technologies sell to:

- New customers

- With new needs

- Often at lower margins

Ferment

Takeoff

Maturity

UniquenessComplementary

Assets

eefficiencyeffectiven

esscutting

enhancin

gcopyingdifferent

impossibl

e

Dynamically continuous innovation:A pronounced modification to an existing product› Requires a *moderate* amount of learning or

behavior change

› Convergence:The coming together of two or more technologies to create a new system with greater benefits than its parts

“ Disruptive innovation theory points to situations

in which new organizations can use relatively

simple, convenient, low-cost innovations to

create growth and triumph over powerful

incumbents.”

Sustaining versus Disruptive Innovation

Markets that don’t exist can’t be analyzed

The experts, including you, will be wrong

Don’t invest all your resources on the first effort — beta release

Discovery, not implementation, based planning

Markets that don’t exist can’t be analyzed

The experts, including you, will be wrong

Don’t invest all your resources on the first effort — beta release

Discovery, not implementation, based planning

Bring a difference value proposition to the

market

Initially under perform established products in

mainstream market

But, the products improve at a rapid rate

Superior in ways that are not valued by the

established market — more reliable, easier to

use, or cheaper

Time

Pe

rfo

rma

nc

e

Time

Pe

rfo

rma

nc

e

Overshot

Customers

Undershot

Customers

Paper LibraryCollections Paper

Bib Control Paper

Automated

LibraryCollections Paper

Bib Control Electronic

Electronic

LibraryCollections Digital

Bib Control Digital

1965-1995 1995-date

Paper LibraryCollections Paper

Bib Control Paper

Automated

LibraryCollections Paper

Bib Control Electronic

Electronic

LibraryCollections Digital

Bib Control Digital

1965-1995 1995-date

Sustaining

Innovations

Many

Disruptive

Innovations

Browsing versus Search

Britannica versus Wikipedia

Journals versus Repositories

Browsing — requires prior arrangement, you

are putting things (usually books) in order on a

shelf

Problems

› Mind reading — guess what the user is thinking

› Fortune telling — make predictions about the future

Searching —

› “the only group that can categorize everything is

everybody”

› “One reason Google was adopted so quickly when it

came along is that Google understood there is no

shelf… Google can decide what goes with what after

hearing form the user.”

“The Web has an editor, it’s everybody. In a

world where publishing is expensive, the act of

publishing is also a statement of quality — the

filter comes before publication. In a world

where publishing is cheap, putting something

out there says nothing about quality. It’s what

happens after it gets published that matters. If

people don’t point to it, other people won’t read

it.”

Google versus traditional bibliographic control

Open Archives/Repositories versus journals

(and soon monographs?)

Google Book Project, Open Content Alliance

versus library collections

Reference librarians versus Yahoo/Google

Answers

Product variation

Customization

Modular Designs

New Technology

Hybrid Technology

33

New Product Development Process

Opportunity Identification

Design

Testing

Introduction

Life-cycle Management

Evaluate at each

stage to determine

whether to proceed.

Key is to manage

risk of introducing a

failure or not

introducing a

success.

Proactive vs. Reactive

Go/No Go

Go/No Go

Go/No Go

Go/No Go

Success Rate Entirely New Products

3000 raw

ideas

.03%

300 submitted

ideas

.3%

125 beginning

projects

.8%

9 large

developments

11%

4 major

developments

25%

1.7 launches

60%

1 commercial

success

It’s a great little product,

but we’re still working on

packaging and handling

Decreasing knowledge of the technology

Decre

asin

g k

no

wle

dg

e o

f th

e m

ark

et

Familiar New , familiar New , unfamiliarFam

ilia

r

N

ew

, fa

milia

r N

ew

, u

nfa

milia

r

Decreasing knowledge of the technologyDe

cre

as

ing

kn

ow

led

ge

of

the

ma

rke

t

Market

Penetration

Market

Extension

Market

Expansion

Product

Extension

Business

Extension

Business

ExpansionNew Business

Model

Business

Expansion

Product

Expansion

Market

Penetration

Market

Extension

Market

Expansion

Product

Extension

Business

Extension

Business

Expansion

New Business

Model

Business

Expansion

Product

Expansion

Probability of

Success

New Product with

unrelated technology in

existing market: 50%

Market

Penetration

Market

Extension

Market

Expansion

Product

Extension

Business

Extension

Business

Expansion

New Business

Model

Business

Expansion

Product

Expansion

Probability of

Success

Existing product in a new

market: 15%

Market

Penetration

Market

Extension

Market

Expansion

Product

Extension

Business

Extension

Business

Expansion

New Business

Model

Business

Expansion

Product

Expansion

Improved product in

existing market: 75%

Market

Penetration

Market

Extension

Market

Expansion

Product

Extension

Business

Extension

Business

Expansion

New Business

Model

Business

Expansion

Product

Expansion

Probability of

Success

New Product in a New

Market: 5%

A company cannot rest on its laurels; many

product class winners have fallen victim to

their success

US Steel (steel)

ICI (chemicals)

Kodak (photography)

Goodyear (tires)

Polaroid (instant photography)

Zenith (TVs)

IBM (PCs)

Smith-Corona (typewriters)

The right product is one that becomes available at

the right time (i.e., when the market needs it), and

is better and/or less expensive that its competition.

To have the right product, therefore, one must:

Predict a market need

Envisage a product whose performance and

capability will meet that need

Develop the product to the appropriate time

scale and produce it.

Sell the product at the right price

There are, unfortunately, many examples of potentially innovative space products being developed at the wrong time, at the wrong price point, or due to poor market predictions: TV-SAT and TDF-SAT: Performance wrong (few high power

transponders when many medium/low power were needed)

OLYMPUS: Too soon (large busses only started to become needed some years later)

IRIDIUM and GLOBALSTAR: Wrong market and/or too late (development of GSM took away most of the market)

AIRPHONE: Too expensive

CONCLUSION? Introduce only Productive Innovation

OTHER POSSIBILITIES???

Battery Powered Battery Charger?

Braille TV Guide?

Fireproof Matches?

Solar Powered Flashlight?

Sugar coated Insulin btablet?

.....

› Innovation can be productive or wasteful. The

secret to success is being able to spot the

difference in advance and encourage the former.

This should be your goal!!