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Technology Operations

The document discusses the importance of innovation management in sustaining growth and the high failure rates of new products and firms. It outlines different types of innovation, including disruptive innovations and their impact on market dynamics, as well as the critical management systems necessary for effective new product development. Additionally, it emphasizes the need for aligning creative capacity with market demands and the challenges faced in the product development process.

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Tamar Salant
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8 views4 pages

Technology Operations

The document discusses the importance of innovation management in sustaining growth and the high failure rates of new products and firms. It outlines different types of innovation, including disruptive innovations and their impact on market dynamics, as well as the critical management systems necessary for effective new product development. Additionally, it emphasizes the need for aligning creative capacity with market demands and the challenges faced in the product development process.

Uploaded by

Tamar Salant
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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1

Innovation Management #1→ [New Product Development]

-Why does innovation matter? Look at Long term success; product & services consume, attributes we expect;
features/services evolve/changes over time

The challenge: Creating & Sustaining Growth


-90% of all firms are unable to sustain an above-average growth rate for more than a few years
-80% of venture capital funded start-ups fail
-75% of new products launched by established firms fail

Corporate Mortality is very high


-Average life expectancy of all firms, regardless of size, in Japan and much of Europe =12.5 years
-The average lifespan of a multinational organization – Fortune 500 or equivalent – is around 45 years
-S&P index of 90 major U.S. firms created in the 1920s
-Original List Tenure: 65 years
-1958 – 61 years
-By 2019, Average tenure (S&P 500): 12 years

PREPARATION for next wave in industry; Corporate longevity


Innovation: The structure of mature industry
-Gorillas (big players/Dominant), Monkey (mid-size, smaller), Chimp
(smallest firm, unique niche segments/attributes)

-Linking Strategy & Innovation: Perceived value to customer and delivered


cost; cust. Intimacy, PPC curve→ innovate pushes FWD
-Innovate process, lower delivered cost (ie Amazon) OR innovate on product/service
& make more valuable

**A dominant design changes the nature of competition


within the industry →Product lifecycle (rate increases over
time) VS Product innovation (1st) (rate decreases over time),
Rate of process innovation increase (appeal 2nd;
manufacturing process, secure supply for components, drive
down costs=meet market demand) As product normalizes
day-to-day, SCALE processes=consistency, Last: Innovate
on service (3rd)[ie Apple]

**Product innovation (1st), Process innovation (2nd), Service


innovation (3rd- once reach mkt saturation/plateau; maintain
rev)
2

-Innovation Yields Dominant Design: Once unique features become commonplace (ie Iphone glass screen)

-Almost always, the pace of technological innovation outstrips the ability of customers to absorb it [At certain
point, other facts more important to the market than increased performance]
-Nature of Markets & Innovations (Disruptive Innovations–Reading)

-Disruptive Innovations:
What Happens:
● Incumbent technology keeps getting better
● Customers use technology, up to a point
● Overshooting customer needs enables disruption
● Disruptive innovations offer different values and product/service attributes

Disruptive Innovation Unfolds:


● Usually, lower performance than incumbents
● Targets current customers/segment who don’t need full performance & not being served-LEAST
demanding (Generally lower performance, but cheaper, colors, etc)
● Adopted by low-end market first; lower profit margins
● Performance attributes that customer do value improve at such a rapid rate that new technology can later
invade incumbent’s space

“Low End”- Disruptive Innovation


● Usually, lower performance than incumbents
● Targets current customers who don’t need full
performance
● Adopted by low-end market first; lower profit
margins
“New market” Disruptive Innovation
● Offers a product for a new or emerging market
● Targets customers not served by existing
incumbents
-Ex: Razor–Dominant design disrupted Circa 1900;
Harry’s Low cost, innovative on market

-Innovation Project Types (Spectrum): →

-What are Breakthroughs & How do you recognize them?:


● Characterized as disruptive change in product technology and the processes used to make it
[Breakthrough: ie Printing Press, Lightbulb]
3

● Significant different technology than anything that’s out in market currently


● Products come to life that customers didn’t know they even needed
● Development activities typically last several years
● High risk, high reward with no guarantees

-What are Platforms and How do you recognize them?: Next generation of a product line; represents integration
of new product functions and features, as well as development of new MFR process
● Platforms Leverage prior development & the assets accumulated from those activities, which are most
critical or most costly to replicate; EXTENSIBLE
○ Physical product architecture (BMW 3 S)
○ Operating system (Apple)
○ Component (Leica lens – Panasonic Lumix camera)
○ Process technology (microassembly – Gillette razors)
○ Brand positioning (John Deere – lawn equipment)
● Platforms must be extensible
[Platforms: ie iPhone IOS, Bluetooth, camera lens]

-What are Derivatives & Maintenance and How do you recognize them?: Derivatives: Incremental change to an
existing platform or manufacturing process (small changes, add feature); ADD Features to EXISTING
● Result is an added feature or reduced cost
● Example is a faster laptop with a faster version of the same microprocessor chip
● Less demanding in scope & require less resources
Maintenance: Refers to the simplest type of project and includes bug fixes/maintenance issues of existing
products/processes. [Fix issue/bug/defect OR doing something to keep feature functional (smallest & easiest)

-2 Major Links Between Innovation and Operations:


Every Competitive Advantage is Transitory
● Even the best (i.e., most targeted, most efficient, etc.) operations will – someday – become
outdated/unnecessary/etc.
● Innovation in its various forms (product, process, service, business model, etc.) creates new operations
Creating innovation is an Operation itself- New Product development is a Process
● Many organizations have units whose job is to develop innovations => new product/service development
● New Product Development is a Process!

Essential NPD Management Systems: 3 Critical Management Systems


1. Constructing the Right Project Portfolio
2. Managing the development process effectively [Apply
Little’s Law & WIP]
3. Launching the product, capturing & reapplying lessons
4

NPD is governed with “Matching” Dynamics– We try to match:


-Creative capacity with market demands
-Pace of innovation with Launch Rhythms
-Short term Operating Goals with Long term Strategic interests

-Matching Creative Capacity to Market Demand is initially TOUGH!-- Reduce Queue (arrival rate), Increase
service rate
ISSUE #1: How do we reduce funnel LENGTH?
● Reduce Queue (Arrival Rate)
● Reduce Processing Time (Service Rate)

NPD & Little’s Law→Reduce WIP=Reduce TPT


Issue #2– Management Attention & Influence in NPD

-The Product Development Funnel: 1) Concept Generation, 2)


Select concept– design/test, 3) Full production
Key challenges: How to reduce # options, how quickly
*Fewer ideas need to make it through [as time progresses]

NPD Performance (△ below)


1. Speed/time to mkt
2. Development cost
3. How well product/service meet customer desired
specification
*McKinsey Study– “Better Expensive Than Late”

Design for Manufacturability (DfM):


-Traditional Approach: “We design it, you build it” or “Over the
wall”
-Concurrent Engineering:“Let’s work together & simultaneously
ENGINEER & PRODUCE”
-Sprints, Swarms, Hacks: Design–Prototype–Launch–Repeat

Q’s:
*Who’s in charge & over WHO*

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