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Strategic Innovation
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  1. Strategic Innovation

  2. Google vs. Apple Apple • Launch iPhone • Improvement • Improvement • Improvement • Launch iPad Google • Android operating system • Improvement • Launch Nexus One • Pull back Nexus One

  3. Innovation and Organic Growth • Emphasis on: • Top-line revenue • Customer-centric, customer value • Internal and external social interactions • Cross-functional and cross-experiential teams • Empathetic, high EI people • Experimentation, learning • Entrepreneurial culture, boldness, audacity • Value-creating strategy vs. Value-enhancing strategy

  4. Value-creating vs. Value-enhancing Strategy Profit Plateau Competition Erodes Profits New Product Introduction Profit Product1 Product2 Product3 Product4 time

  5. Apple iPod

  6. Value-creating vs. Value-enhancing Strategy Profit Plateau Competition Erodes Profits New Product Introduction Profit Value-creating Innovation Product1 Product2 Product3 Product4 time Value-enhancing Innovation Profit Product1 Product2 Introduce iPod Windows compatible iPod Photo WiFi iPod Price Cut iPod Video iPod + Nike Shoe iPod Mini BMW iPod Adaptor iPod Wireless Remote iPod + Timex Watch

  7. Apple’s iPod Innovation Network Alliance Network and Innovation 10 parts create 85% of the iPod’s cost Samsung (Korea) – Mobile SDRAM memory Toshiba (China) – Hard Drive Toshiba-Matsushita (Japan)- Display Module Nike Disney Timex Broadcom (Singapore)-Multimedia Processor PortalPlayer (US) Portal Player CPU Apple iPod Inventec (Taiwan)-Assembly, Testing Renesas (Japan) Display Driver Digital Music Group Ford Delta Airlines GM Unknown Battery Pack Unknown Mainboard PCB Unknown Back Enclosure Source: Portelligent, Inc. and Linden, Kraemer & Dedrick, 2007. 400 additional inputs with values from $2 to fractions of a penny, with an average value of $.05

  8. Alliance Network and Innovation Apple Computuer High Level of VC + VE Apple – alliance network in 1995 Apple – alliance network from 1995-1997

  9. Unique Perspective

  10. How do you define the coffee industry? Leisure, Enjoyment, Social Interaction • Coffee • Packaged • Convenience coffee • Café/restaurant drinking Caffeine Source Food & Beverage Item Fashion

  11. How does Starbuck’s define coffee industry?

  12. Red vs. Blue Oceans

  13. Coffee’s Next Blue Ocean? ? Strategic Dimension 2 Strategic Dimension 1

  14. Early U.S. Auto Industry

  15. Blue Oceans and The Auto Industry

  16. Strategic Map: PC Industry(Pre-MacIntosh) Fast/ High Capacity IBM Apple II Wang Slow/ Low Capacity Low Price High Price

  17. Strategic Map: PC Industry(Post-McIntosh; Pre-Dell) • User Friendliness • GUI • Drop & Drag • Mouse • WYSIWYG AppleMacIntosh Wang IBM DOS-based Operating System >copy *.doc A:\ Low Margin High Margin

  18. Strategic Map: PC Industry (After Dell Enters) Dell High Quality & Dependability Apple H-P Lenovo Low Price Adequate Quality High Price “Regular” Supply Chain Management “Efficient” Supply Chain Management

  19. Tablet PC IBM Wearable PC IBM Mainframe Compaq Laptop Apple II Apple iPad Apple MacIntosh IBM PC Compaq Portable

  20. Personal Computers …what’s the next big thing? Strategic Dimension 2 ? Strategic Dimension 1

  21. What’s the next big thing? ? Strategic Dimension 2 Strategic Dimension 1

  22. Umbrellas…innovation? Strategic Dimension 2 ? Strategic Dimension 1

  23. LG Internet Refrigerator

  24. Airbus A380

  25. Segway Personal Transporter

  26. Tooth Tunes

  27. Converging Industry Advantage Entertainment Music, Movies, News, Sports Wireless Telephony Palmtop Computing Books GPS