Chapter 7

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CHAPTER 7 Producing Value via Innovation

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CHAPTER 7: PRODUCING VALUE VIA INNOVATION

A. IntroductionB. Product Innovation FrameworkC. Product Innovation: Idea GenerationD. Product Innovation: Preliminary AssessmentE. Product Innovation: Business Case PreparationF. Product Innovation: Product DevelopmentG. Product Innovation: Test Market & ValidationH. Product Innovation: Full Production & Follow-upI. Process Innovation

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A. INTRODUCTION3M CORPORATION

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A. INTRODUCTION 3M CORPORATION

Watching a movie on a mobile phone screen can be somewhat of an eyesore, and it is quite difficult to watch the movie with someone else. A new breed of projectors, however, is ushering in a new age for mobile phones, mp3 players, and other devices. For example, 3M’s MPro120 Pocket projector is a handheld device that can project high-quality images from 8 to 50 inches. A device that is approximately the size of a small TV remote control, this innovative product uses LED lamp technology that enables the device to run without any internal cooling system. Moreover, this technology enables the projectors to run for four hours while still keeping the total weight at 5.6 ounces1. Compatibility with personal computer formats, DVD players, iPods/iPhones, and other mobile phones ensures that this product will be enjoyed by many consumers

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A. INTRODUCTION 3M CORPORATION

1. MPro 120 Projector

2. Pollution Prevention Pays (3P)

a. Reduce emissions

b. Eco-design of its products responds to customer demand for environmentally lean products

c. Life cycle management reviews

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A. INTRODUCTION

2. Innovationa. Effort to create purposeful, focused change

in an enterprise’s economic, social, and ecological potential

b. Product innovation a. New goods and service that offer improvements in

technical abilities, functional characteristics, ease of use, and other dimensions

c. Process innovation a. Novel techniques for producing goods and services.

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B. PRODUCT INNOVATION FRAMEWORK

1. Stage-gate a. Firms engage in a number of activities

between idea conception and the market launch of a product.

b. Stage: 1. Multi-functional phase that requires

interaction among marketing, R&D, production, and other activities internal and external to the firm.

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B. PRODUCT INNOVATION FRAMEWORK

Idea Generation

Stage 1 Preliminary

Assessment

Stage 2 Business

Case

Stage 3 Product

Development

Stage 4 Testing & Validation

Stage 5Product LaunchGate points in the development process at which the firm

evaluates the potential for a product

Review8


C. PRODUCT INNOVATION: IDEA GENERATION

1. Idea Generationa. Sources:

1. Employees– Production blocking

2. Lead users

3. Vendors

4. Government

5. NGO’s9



1. Idea Generationb. Internal events

1. Unexpected occurrences2. Incongruities3. Process Needs4. Market changes

c. External events1. Demographic Changes2. Changes in Perception3. New Knowledge

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1. Idea Generationc. GO-Kill

1. Distinguish must meet from should meet criteria

2. Funnel – not tunnel approach3. Criteria– feasibility, – strategic alignment, – synergy, – market attractiveness, – synergy with company’s core resources and

business4. No financial criteria11


D. PRODUCT INNOVATION: PRELIMINARY ASSESSMENT

1. Project teams: marketing, procurement, logistics, manufacturing, and R&D

A. Possess the capabilities to achieve the project’s objectivesB. Supported by resources and psychological support

2. MarketingA. Determine market potential and sizeB. On-line search for related productsC. Focus groups and interaction with key users to assess the likelihood

of marketplace acceptance of the product

3. ManufacturingA. Development feasibility B. Quantify the time and costs associated with manufacturing

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D. PRODUCT INNOVATION: PRELIMINARY ASSESSMENT

4. GO-Killa. Not markedly different from earlierb. should meet criteria incorporate ideas from

sales and customersc. Financial criteria

1. Break even point

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E. PRODUCT INNOVATION: BUSINESS CASE PREPARATION

1. Product Competitive Advantagea. Ecological benefits

2. Strategic Fit3. Market Attractiveness4. Core Competencies Relatedness5. Technical Feasibility6. Financial Risks and Rewards

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E. PRODUCT INNOVATION: BUSINESS CASE PREPARATION

7. GO-Killa. Last stage before sizeable investmentb. Marketing

1. Assess consumer wants & needs2. Competitive analysis3. Patentability

c. Financial criteria1. Refined break even analysis

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F. PRODUCT INNOVATION: PRODUCT DEVELOPMENT

1. Marketing and manufacturing activities move in parallel

2. Marketing a. Track the potential for the product

b. Obtain customer feedback concerning the ecological, social, and economic value

c. determine the extent to which consumers1. Understand, recognize, and value the benefits derived from the

product

3. Manufacturinga. Develop product prototype

b. Assesses the technical feasibility of the new product

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G. PRODUCT INNOVATION: TEST MARKET & VALIDATION

1. triple bottom line criteria a. Must be observable in the test runs of the production

process

2. Manufacturinga. Observe by-products are provided by manufacturing

b. Examine the amount of greenhouse gases produced

c. Offset the cost of this operation by making carbon dioxide available to industry or via carbon offset trading

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3. Marketinga. Determining the level of interest and

acceptance among consumers

b. Test market: implement a complete market strategy in a single market over a short-term horizon

1. Provides new information about consumer responses to products

2. Provides an estimate of sales and profitability

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4. GO-Killa. Last stage before sizeable

investment

b. Financial criteria1. Estimate potential sales

2. Economic, social, & ecological product costs

3. Estimate profit potential19


H. PRODUCT INNOVATION: FULL PRODUCTION & FOLLOW-UP

1. Review product development process a. Reconcile marketplace and production realities

against the projectionsb. Data associated with

1. Expenditures, 2. Revenues, 3. Profits, 4. Timing 5. Compared to related projections 6. Identify opportunities to learn from the new product

development process c. Exercise should be performed regardless of the

degree of success with the project.20


I. PROCESS INNOVATION

1. Standardized processes a. enhance communications and information

systems across departments and firmsb. hand-off sub-components and products

efficiently between functional groupsc. outsource activities more easily

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2. Operational standards enable the firm to evaluate operations

a. standards emerge due to the simultaneity activity in multiple organizations and locations

1. Supply Chain Operations Reference (SCOR) model

– detailed visibility of how work is accomplished– promotes team building – process improvement by addressing the entire supply chain

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2. Operational standards enable the firm to evaluate operations

b. Process performance evaluation1. Compare results to external service

providers and competitors

c. Process management standards 1. assess how well processes are managed

2. evaluate the performance of alternative providers of a process

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3. Theory of inventive problem solving a. Action dedicated to solving one issue often has

negative outcomes for another aspect of the system

b. Contradiction 1. Anything that limits the performance of a system

relative to its goal

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•Illustrating how the present

process addresses a problem

•Identifies how a process works

•Identifies the materials,

information flows, and energy

associated with a process

•Specifies the input materials used

in a process

•Specify tools that transform the

process and the action undertaken

by the tool

Analyze Specific Problem in Detail

Match Specific Problem to an Abstract Problem

Search for an Abstract Solution

Transform the Abstract Solution into a Specific Solution

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1. Contradiction matrix

a. Thirty-nine factors represent the potentially favorable or harmful outcomes associated with a process

b. Matrix matches each factor against all other factors in the matrix

c. At 39 factors, the number of potential constraints is 1482 (392 – 39)

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Contradiction MatrixWorsening feature 1. Weight of

moving object… 22. Loss of energy … 39. Productivity

Improving feature

1. Weight of moving object + 6, 2, 34, 19* 35, 3, 24, 37*...22. Loss of energy 15, 6, 19, 28* , + 28, 10, 29, 35*

...39. Productivity 35, 26, 24,

37*28, 10, 29, 35* +

* The numbers represent 40 abstract principles previously used to address the 1,482 abstract problems in the matrix:

2. Taking outSeparate an interfering property or part from an object.3. Local qualityChange an object's structure from uniform to non-uniform, or make each part fulfill multiple functions.6. UniversalityMake a part or object perform multiple functions, or eliminate the need for other parts.

24. IntermediaryUse an intermediary process or an intermediary carrier article, or temporarily merge one object with another.26. CopyingReplace unavailable, expensive, fragile object with simpler and inexpensive copies28. Mechanics substitutionReplace a mechanical means with a sensory means, or use magnetic and electric fields to interact with the object. 29. Pneumatics and hydraulicsUse liquid or gas parts of an object instead of solid parts

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The auditing process in the auto industry requires personnel to count and report on location of inventory.Hand-held computers process information, but the amount of transmissions requires large, heavy capacitors (batteries). How can we lighten the load & still complete the audit?

How can we lighten the load & still complete the audit?Abstract: reduce the loss of energy without increasing product weight.

•illustrating how the present process addresses a problem•identifies how a process works•identifies the materials, information flows, and energy associated with a process •specifies the input materials used in a process •Specify tools that transform the process and the action undertaken by the tool

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Contradiction MatrixWorsening feature 1. Weight of

moving object… 22. Loss of energy … 39. Productivity

Improving feature

1. Weight of moving object + 6, 2, 34, 19* 35, 3, 24, 37*...22. Loss of energy 15, 6, 19, 28* , + 28, 10, 29, 35*

...39. Productivity 35, 26, 24,

37*28, 10, 29, 35* +

* The numbers represent 40 abstract principles previously used to address the 1,482 abstract problems in the matrix:

2. Taking outSeparate an interfering property or part from an object.3. Local qualityChange an object's structure from uniform to non-uniform, or make each part fulfill multiple functions.6. UniversalityMake a part or object perform multiple functions, or eliminate the need for other parts.

24. IntermediaryUse an intermediary process or an intermediary carrier article, or temporarily merge one object with another.26. CopyingReplace unavailable, expensive, fragile object with simpler and inexpensive copies28. Mechanics substitutionReplace a mechanical means with a sensory means, or use magnetic and electric fields to interact with the object. 29. Pneumatics and hydraulicsUse liquid or gas parts of an object instead of solid parts

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Search for an Abstract Solution

Transform the Abstract Solution into a Specific Solution

The auditing process in the auto industry requires personnel to count and report on location of inventory.Hand-held computers process information, but the amount of transmissions requires large, heavy capacitors (batteries).

How can we lighten the load & still complete the audit?Abstract: reduce the loss of energy without increasing product weight.

Via 28. Mechanics substitutionReplace a mechanical means with a sensory means, or use magnetic and electric fields to interact with the object.

Install photo-voltaic cells on hand-held devices.

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