xime / pgdm-b2b –rs–2525-february-2010 b2b marketing managing innovation pgdm–b2b–rs–12...

XIME / PGDM-B2B –RS–2525-February-2010

B2B Marketing

Managing Innovation

PGDM–B2B–RS–12

Amarnath Krishnaswamy

XIME / PGDM-B2B –RS–2525-February-2010

Plan for this Session (1)

• Managing Innovation– Management of Innovation– Innovation & Technology– Innovation & the Development of New Products

XIME / PGDM-B2B –RS–2525-February-2010

Managing Innovation

XIME / PGDM-B2B –RS–2525-February-2010

Management of Innovation … (1)

• Innovation is either”

– Planned or strategic Deliberate

– A lucky break, chaotic Emergent (Euphemism!)

Botox, Viagra, Equal (aspartame), Vulcanization, Penicillin, Dynamite

XIME / PGDM-B2B –RS–2525-February-2010

Management of Innovation … (2)

• Strategic innovation falls into 2 categories

– Induced

• Deliberately brought about (manipulated) through inducement etc

• Innovation occurs along a projected path

– Autonomous

• Driven by the individual himself / herself

• Often the outcome of a ‘questioning’ mind

XIME / PGDM-B2B –RS–2525-February-2010

Management of Innovation … (3)

Induced Autonomous

InitiativeBy the individual, but In line with organization’s .

By the individual, and could differ from orgn.’s

ScreeningFormal, as per the organization’s ways

Informal network

Type Usually incremental Could be radical

Communication In line with organization’sIs different, especially in the early stages

Major PlayersPrescribed by the organization

Informal network

Decisions Authority clearly defined Poorly defined

Strategy Formulation

Alternatives considered before commitment

In the early stages, the proposer ‘s call

Characteristics – Strategic Innovation

XIME / PGDM-B2B –RS–2525-February-2010

Management of Innovation … (4)

Guidelines for Autonomous Strategic Innovation

• Nurture, encourage

• Avoid shackling the initiative through budgets, rationing resources

• Encourage information exchange

XIME / PGDM-B2B –RS–2525-February-2010

Technology & Innovation … (1)

• Technology and innovation are closely interconnected!– HMT– Caustic soda – mercury cells– Cellular telephony

• Technological innovation can be:– Product oriented– Process oriented– Both

• R&D - a necessity for all !

XIME / PGDM-B2B –RS–2525-February-2010

Technology & Innovation … (2)

• Technology development projects fall into 4 categories

– Derivative projects

– Platform projects

– Breakthrough projects

– R & D Projects

XIME / PGDM-B2B –RS–2525-February-2010

Technology & Innovation … (3)

Relating Technology to Products

• Technology developed for one product could provide the platform for another

– Honda: Engines from 2/4 wheelers to generators

– Canon: From copiers/fax machines to printers

• Yields “Product Families” – share a common platform but are targeted for different markets / uses.

• Important for an organization to focus on developing product families – it will distribute risk.

XIME / PGDM-B2B –RS–2525-February-2010

Technology & Innovation … (4)

Commercializing Technology

• Ability to commercialize / take advantage of technological innovations characterizes a “winner”

• Has 4 dimensions:

– Time to Market– Market Spread– Number of Products– Breadth of Technologies

XIME / PGDM-B2B –RS–2525-February-2010

Technology & Innovation … (5)

Commercializing Technology – Time to Market

• Impact of shorter product life cycles :

– Minimize time from development of product to market exploitation

– Market forecasts are more accurate

XIME / PGDM-B2B –RS–2525-February-2010

Technology & Innovation … (6)

Commercializing Technology – Market Spread

• Make the product available to diverse market segments – in geographic and user terms

• Use JVs, licensing if necessary

XIME / PGDM-B2B –RS–2525-February-2010

Technology & Innovation … (7)

Commercializing Technology – Number of Products

• Develop ‘variants’ of products – to cater to niche markets

• Higher customer satisfaction – better ‘fit’ of product with his needs

XIME / PGDM-B2B –RS–2525-February-2010

Technology & Innovation … (8)

Commercializing Technology – Breadth of Technologies

• Integrate technologies – should not have too many. Increases costs and the risk of losing out in any one of them

XIME / PGDM-B2B –RS–2525-February-2010

Innovation & New Products … (1)

• To sustain a competitive advantage

• Top management backing necessary

• Perseverance necessary as product failure rates are high

XIME / PGDM-B2B –RS–2525-February-2010

Innovation & New Products … (2)

Sources of New Ideas

• Internal– Those close to the customer (sales people,

distribution channel members)– Those close to technology development (R & D)– Top management (organization’s SWOT)

• External – Customers

XIME / PGDM-B2B –RS–2525-February-2010

Innovation & New Products … (3)

Forming Teams

• Multidisciplinary

• Concurrent engineering

• Team structure – 4 types

– Functional

– Lightweight

– Heavyweight

– Autonomous

XIME / PGDM-B2B –RS–2525-February-2010

Functional Teams

• Functional areas work on clear, pre-defined goals that have been agreed to.

• Could be difficult to compartmentalize work in this fashion

• Functional areas could work sequentially, and pass on work when completed to next functional area. Could result in delays.

XIME / PGDM-B2B –RS–2525-February-2010

Lightweight Teams

• Similar to Functional Teams

• Formation of a project coordination committee

• Each functional area is represented by a “liaison manager” on this committee.

• Committee headed by a “project manager” who coordinates the work

• Drawbacks

– Project manager does not control the resources

XIME / PGDM-B2B –RS–2525-February-2010

Heavyweight Teams

• Similar to Lightweight Teams

• “Project manager” takes control and responsibility.

• Functional area members are under his control.

• However, functional members revert back to functional area when project is over.

• Work is formalized – plans, time schedules etc.

XIME / PGDM-B2B –RS–2525-February-2010

Autonomous Teams

• Works better for “Breakthrough” projects.

• Project manager is in control of all the resources.

• Can draw his team members from the functional areas

• Latitude for:

– Team structure

– Reward structure

• Accountable for result.

XIME / PGDM-B2B –RS–2525-February-2010

Choice of Team Structure

Incremental changes, stable competitive & tech. environment

Structure Situation

Functional

Lightweight Rapid changes in customer requirements, tech., competition

Heavyweight

Autonomous

When speed is required

Significant competitive challenges

XIME / PGDM-B2B –RS–2525-February-2010

Quality Function Deployment (QFD)

• QFD – for identifying:• The attributes the customer wants in the product • Establish link between these attributes and the

product design

• Process involves understanding, and then marrying:• The Voice of the Customer• The Voice of the Engineer

XIME / PGDM-B2B –RS–2525-February-2010

Voice of the Customer

• Identify customer needs

– The benefits the product should deliver

– Necessary to identify, and focus, on the main ones

– Relatively easy to do if the market is homogenous

– Weight each attribute: enables QFD to balance it with cost

XIME / PGDM-B2B –RS–2525-February-2010

Voice of the Engineer

• Translate customer needs into product design

• Put onto a matrix against what the customer wants, and compared with competition

XIME / PGDM-B2B –RS–2525-February-2010

QFD Matrix

WeightProd. Attr.

1

Prod. Attr.

2

Rating

1 2 3 4 5

Cust. Attr. 1

Cust. Attr. 2

Cust. Attr. 3

Cust. Attr. 4

Cust. Attr. 5

XIME / PGDM-B2B –RS–2525-February-2010

New Product Success / Failure - Factors

Success• Product Uniqueness / Superiority• Market Knowledge• Marketing Proficiency• Technical & Production Proficiency

Failure• Price, with no economic benefit• Obsolete in terms of what’s available• Customers satisfied with existing product

XIME / PGDM-B2B –RS–2525-February-2010

Can’t forget the law!

Woods’s First Law Of Procrastination

NOW is the time to do things later!

Woods’s Second Law Of Procrastination

Procrastinate today! (Tomorrow may be too late.)

Woods’s Third Law Of ProcrastinationNever put off till tomorrow what you can do the day after tomorrow!

XIME / PGDM-B2B –RS–2525-February-2010

Moving Forward

Next Session: PGDM-RS-13

Date: Tuesday, Mar 02, 2010

Subject: Managing Services

- Role & Importance

- Buying Services

- Marketing Mix

- New Services

XIME / PGDM-B2B –RS–2525-February-2010