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Technologie- und Innovationsmanagement (Subject) / 5) Strategic innovation management (Lesson)
- Types of errors 3 by Tellis (2013) Type 1 error/go error:- failed innovation- innovation got a 'go' from the company but failed in the market- cost intensive error- overestimation- number of go errors is known- reasons: -> escalation of commitment -> sunk cost fallacy -> wrong timing of market introduction/entry -> market is hard to predict/uncertainty; wrong foresight(s) -> no market research -> synergy effects can be realised but shouldn't actually- example: Microsoft Courier Type 2 error/kill error:- missed innovation- innovation got a 'no go' from the company but would have been successful in the market (instead competitors introduced the innovation successfully)- lost possible gains- number of kill errors isn't known (companies don't want to share that info) Examples:- Kodak: Type 2 error/missed innovation/kill error; missed their entry into the digital photography market because they didn't think it important/relevant; developed it but didn't enter the market- Crystal Pepsi: failed in Germany but is still sold in America (only go error in Germany, success in USA)- Coca Cola C2 (Cola with half the calories and half the sugar): go error; wasn't successful because people rather bought normal Coca Cola or Coca Cola Zero idea --gate--> invention --gate--> innovation- gates/criteria: -> performance potential of new technologies (if technology push-driven) -> market opportunity available & can be exploited? (market opportunity: representative market feedback (how many want innovation?), financial aspect, feasability, competitors (have same product?), fits overall strategy/company (blurrs image? blurrs brand value?))- some companies are really strict about criteria, others have a criteria range (loose companies) -> higher kill error rate for strict companies -> higher failed innovation rate (go error) for loose companies 3, 4, 5
- failure rates of new product launches all following information are depending on the company - between 70 (40) to 99% of product launches fail- 100% ideas, 1/3 prototype developments, 13% market launches, 6% successful products- 66% of product launches fail in the first year, 17% are immediately successful 6
- failure rates of R&D projects 7 - 60 ideas (that are evaluated concerning technical/financial feasibility and suitability)- 12 ideas (technically evaluated and market research analysis)- 6 potential products (that are further developed and analysed)- 3 prototypes (for technical and market testing)- 2 products are launched- 1 successful product
- Changing context for innovation - quickening knowledge production (billions are spent each year in creation of new knowledge)- global distribution of knowledge production (a worldwide search for innovation opportunities is needed/necessary)- market expansion (world's population is increasing -> new needs and constraints of the new population)- market fragmentation (globalization has increased the size of markets and segments -> innovation search has to be improved (beyond traditional experiences))- market virtualization (social networks create challenges for market research approaches)- rise of active users (quickening in the ways of how users serve as a source of innovation) - prosumers: consumers that produce what they consume (zB YouTube, 3Dprinting) 8
- strategic key questions and associated typologies 10 On what should the innovation activity be focused?- Ansoff matrix (growth strategies)- "big bets" vs. "little bets" strategy (few big investments vs. many small investments) What extent of innovation orientation is pursued?- pioneer vs. follower strategy- miles and snow typology (?) How should the firm learn from the environment?- exploitation vs. exploration approach - McKinsey's strategic gameboard- Blue vs. red ocean strategies- Jaworski and Kohli's market-driving approach (being market-driven but also market-driving)
- WEITER Big bets vs. little bets strategy 11 idea:- answers question how innovation activities should be prioritized Big Bets/Blockbuster:- developed by Elberse (2013)- concept used by creative industry (publishers, film studios, TV stations)- focus on few very effort-intensive innovation projects- invested budget per project is determined by potential maximum revenues- few big projects; invest a lot -> more success Little Bets/Uniform spending:- developed by Sims (2011)- concept used by high-tech firms and internet start-ups- focus on small, evenly and widely spread innovation projects- a lot of small projects (equal investments because the company doesn't know about success of projects)- invested budget pre project is determined by "affordable losses"; the same budget for every project- zB: pixar (short movies)
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