class 3: opportunity identification (stage 1) january 30, 2007
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Class 3:Opportunity Identification (Stage 1)
January 30, 2007
Lead User Research
General Principle of Lead User Research
Extreme versus Means
Identification of functionally novel products and service concepts should be done at the leading edge of markets and applications
Evaluation of commercial potential should be done at the “means” of markets and market segments
Important Innovations by Consumers
Category Health Products Personal Care Sports Food Office Computers Apparel
Example Gatorade Protein-based Shampoo Mountain Bike Chocolate Milk White-out Liquid E-mail, Desktop Publishing Sports Bra
Definitions of Innovation Sources
An innovation is a user innovation when the developer (firm or individual) expects to benefit by using it.
An innovation is a manufacturer innovation when the developer expects to benefit by manufacturing and selling it.
The Lead User research process targets directly user innovations and funnels them into a firm’s development process
Benefiting from Lead Users
Lead User innovations form the basis for new products and service of value to manufacturers.
Lead Users Have new product or service needs that will be
general to the marketplace, but they face them months or years before the bulk of the market
Expect to benefit significantly by finding a solution to those needs
Adopter Categorization on the Basis of Innovativeness Lead users are not the same as “early adopters”
Examples with Lead Users
Hearing Aids Woodworking Tools
Does the LU approach work?
Natural experiment conducted at 3M on the effect of the LU process compared to more traditional processes Funded LU ideas had forecast sales in Year 5 that were 8
times higher than other funded projects in the same time period ($146M vs. $18M)
Funded LU ideas had significantly higher novelty, addressed more original customer needs and had significantly higher forecasted market share in year 5 than those from more conventional methods
Scenario Planning
The trouble with the future is that there are so many of them.
-John R. Pierce (Bell Labs)
Scenario Planning
Scenario Planning
Scenario planning provides a platform to imagine variable futures resulting in a portfolio of actionable strategies. There is no excuse to be surprised. Only by anticipating the future can we hope to shape it.
In a nutshell, scenario planning is the projection of environments into the future to test current and proposed strategic and policy assumptions. It is a disciplined way of thinking about the future that uses a clear methodology to analyze the impact of social, economic, political and industry trends.
Scenarios
Scenario are structured accounts of possible futures
Scenario Planning at Royal Dutch Shell (early 1970s)
Pierre Wack, a planner in the London offices of Royal Dutch Shell worked in the newly developed Group Planning Division (Shell was 11th in the world) Looking for events that might change the price of oil:
The US was beginning to exhaust its oil reserves US demand for oil was growing steadily OPEC was showing signs of flexing its political muscles
(most members were Islamic and bitterly resented Western support of Israel after the 1967 six-day Arab/Israeli war)
Arabs could demand much higher prices for their oil
Scenario Planning at Royal Dutch Shell (early 1970s)
Pierre Wack came up with 2 basic scenarios:
The usual option at Shell
Oil prices would remain stable A miracle would have to occur (e.g. new oil fields in non-
Arab countries)
Oil price crisis sparked by OPEC
Oil prices would rise
Scenario Planning at Anglo American (a South African mining corporation)
Early 1990s (Pierre Wack left Shell to consult) came up with 4 scenarios that were widely publicized in South Africa: Ostrich
Negotiations to end apartheid fail; minority rule continues Lame Duck
Transition to majority rule is slow, complicated, indecisive Icarus
Transition is successful but new government enacts unsustainable, populist economic policies leading to an economic crisis
Flight of the Flamingos Transition is successful. Gradual improvement in the social and
economic status of South Africans occurs as diverse groups work together
Challenging Inertia
Do an assumption analysis List key uncertainties Opportunities appear
Embrace the uncertainties with Scenario Planning
The following conditions suggest the use of scenario planning:
Uncertainty is high relative to a managers’ ability to predict or adjust
The person/company does not perceive or generate new opportunities
Too many costly surprises have occurred in the past The industry has or will experience significant
change The company wants a common language and
framework without stifling diversity There are strong differences of opinion, with multiple
opinions having merit
Example: Global Uncertainties (mid-80’s)
Key Uncertainties Trade conflict between USA and Japan Arms negotiations between USA and USSR Spread of AIDS Impact of Europe 1992 Deterioration of ozone layer and hole Continuation of Apartheid
Combining 2 Key Uncertainties
USA / Japan
USA/USSR
ArmsRace
Detente
Accommodation Trade Conflict
ImperialTwilight
IndustrialRenaissance
ProtractedTransition
X
A Scenario Planning Exercise
Scenario Planning Stages
I) If you could consult the oracle at Delphi, what 3 questions would you ask?
II) Identify other key uncertainties III) Pick the 2 most important and dichotomize them (vote) IV) List the main stakeholders & their interests/positions V) List the main long-term trends and assess the impact
of each trend on this organization (+, 0, -, ?) VI) Fill in the matrix, pick one cell to examine in depth
Opportunity Identification
Scenario Development Have the group members take on the roles of the
different possible players in the scenario & discuss details of the situation (how specifically would your party be impacted)
What new opportunities or needs emerge in this new “world”?