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Class 2: Strategic Issues in NPD August 31, 2004. Part II: Strategic Issues for NPD. The Pioneering Advantage: Myth or Reality? The Innovator’s Dilemma Sustaining vs. Disruptive Technologies How closely should you listen to your customers? Implications for Organizational Strategy

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Class 2 strategic issues in npd august 31 2004
Class 2:Strategic Issues in NPDAugust 31, 2004


Part ii strategic issues for npd
Part II: Strategic Issues for NPD

  • The Pioneering Advantage: Myth or Reality?

  • The Innovator’s Dilemma

    • Sustaining vs. Disruptive Technologies

    • How closely should you listen to your customers?

  • Implications for Organizational Strategy

    • Coping with Change

      • Within existing structures (inside and outside corp. boundaries)

      • Acquisition


Part ii strategic issues for npd1
Part II: Strategic Issues for NPD

  • The Pioneering Advantage: Myth or Reality?


The pioneering advantage
The Pioneering Advantage

  • Reasons Why It Should Exist

    • Consumer-Based Reasons

    • Producer-Based Reasons


The pioneering advantage1
The Pioneering Advantage

  • Reasons Why It Should NOT Exist


The pioneering advantage2
The Pioneering Advantage

  • Myth or Reality?


Part ii strategic issues for npd2
Part II: Strategic Issues for NPD

  • The Pioneering Advantage - Myth or Reality

  • The Innovator’s Dilemma

    • Sustaining vs. Disruptive Technologies


The innovator s dilemma
The Innovator’s Dilemma

  • Sustaining Technologies

    • Those that foster improved product performance

  • Disruptive Technologies

    • Those that foster worse product performance, at least in the near-term


The invasion of disruptive steel minimill technology into progressively more sophisticated steel markets

Steel Quality

Sheet Steel

Structural Steel

Other Bars & Rods

Quality of Minimill Produced Steel

Rebar

1985

1990

1975

1980


Changes in market leadership hard drives

Product Generation progressively more sophisticated steel markets

14 in 1973

8 in 1978

5.25 in 1981

3.5 in 1986

2.5 in 1990

1.8 in 1994

Leading Firm

Control Data

Priam, Shugart

Seagate, Miniscribe

Conner, Quantum

Conner, Quantum

Integral

Changes in Market Leadership - Hard Drives


A Disruptive Technology Change: progressively more sophisticated steel markets

The 5.25-inch Winchester Disk Drive

Attribute

Capacity (megabytes)

Physical volume (cubic inches)

Weight (pounds)

Access time (milliseconds)

Cost per megabyte

Unit cost

8-Inch Drives (Minicomputer Market)

60

566

21

30

$50

$3000

5.25-Inch Drives (Desktop Computer Market)

10

150

6

160

$200

$2000


The innovator s dilemma1
The Innovator’s Dilemma progressively more sophisticated steel markets

What tends to happen

over time?


The Impact of Sustaining and Disruptive Technological Change progressively more sophisticated steel markets

Performance

demanded at the high

end of the market

Product Performance

Performance

demanded at the low

end of the market

Time


The Impact of Sustaining and Disruptive Technological Change progressively more sophisticated steel markets

Performance

demanded at the high

end of the market

Progress due to sustaining technologies

Product Performance

Performance

demanded at the low

end of the market

Time


The Impact of Sustaining and Disruptive Technological Change progressively more sophisticated steel markets

Performance

demanded at the high

end of the market

Progress due to sustaining technologies

Product Performance

Disruptive

technological

innovation

Progress due to sustaining technologies

Performance

demanded at the low

end of the market

Time


Barriers to downward mobility
Barriers to Downward Mobility progressively more sophisticated steel markets

  • The promise of up-market margins

  • The up-market movement of main customers

  • Difficulty in cutting costs to move downmarket profitably


Case study business schools
Case Study: Business Schools progressively more sophisticated steel markets

  • “Harvard Business School is the next likely victim of a disruptive technology… It has become a finishing school for consultants and investment bankers” - Clayton Christensen, HBS Tenured Professor


Case study electronic vehicles
Case Study: Electronic Vehicles progressively more sophisticated steel markets

  • How much should Ford, Toyota, GM, BMW, Daimler Chrysler, and the other major manufacturers worry about electronic cars?

  • Are electronic vehicles a disruptive technology?


Part ii strategic issues for npd3
Part II: Strategic Issues for NPD progressively more sophisticated steel markets

  • The Pioneering Advantage - Myth or Reality

  • The Innovator’s Dilemma

    • Sustaining vs. Disruptive Technologies

    • How closely should you listen to your consumers?


Part ii strategic issues for npd4
Part II: Strategic Issues for NPD progressively more sophisticated steel markets

  • The Pioneering Advantage - Myth or Reality

  • The Innovator’s Dilemma

    • Sustaining vs. Disruptive Technologies

    • How closely should you listen to your customers?

  • Implications for Organizational Strategy

    • Understand your firm’s capabilities

    • Cope with change

      • Within corporate boundaries

      • Outside corporate boundaries (spin-off)

      • Acquisition


Understand your firm s capabilities
Understand Your Firm’s Capabilities progressively more sophisticated steel markets

  • Resources

    • People, technology, equipment, cash, brands, supply chain relationships, product design

  • Processes

    • Patterns of interaction, communication, & decision-making

  • Values

    • Acceptable gross margins

    • Size of the hurdle for new business opportunities

Harder to Change


Cope with change
Cope with Change progressively more sophisticated steel markets

  • Within corporate boundaries:

    • Use “heavyweight” teams

  • Outside corporate boundaries:

    • Spin out an independent organization

  • Acquisition:

    • Decide whether assimilation is prudent


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