Innovation and New Product Strategy

Innovation and New Product
Strategy
INNOVATION FEATURE
Managing Google’s Idea Factory
How Google Innovates

The search leader has earned a reputation as one of
the most innovative companies in the world of
technology. A few of the ways Google hatches new
ideas:
 FREE (THINKING) TIME

Google gives all engineers one day a week to develop their own pet
projects, no matter how far from the company’s central mission. If
work gets in the way of free days for a few weeks, they accumulate.
Google News came out of this process.
8-2
 THE IDEAS LIST
Anyone at Google can post thoughts for new technologies of
businesses on an ideas mailing list, available companywide for input
and vetting.
 OPEN OFFICE HOURS
 BIG BRAINSTORMS
 ACQUIRE GOOD IDEAS
Although Google strongly prefers to develop technology in-house, it has also

been willing to snap up small companies with interesting initiatives. In 2004
it bought Keyhole, including the technology that let Google offer sophisticated
maps with satellite imagery.
Source: “Managing Google’s Idea Factory,” BusinessWeek, October 3, 2005, 88-90. 8-3
FINDING CUSTOMER VALUE OPPORTUNITIES
Customer value analysis

Objective is to identify needs for:
1. New products
2. Improvements to existing
products
3. Improvements in production
processes
4. Improvements in supporting
services
8-4
Customer
Expectations
Customer
Satisfaction Gap
OPPORTUNITIES
Actual
(1) New Products
Product (2) Improvements
Performance (3) New and Improved
Processes
8-5
TRANSFORMATIONAL
Break-through innovation
Digital photography
NEW PRODUCT CATEGORY
Dell Printers
Nike Apparel
Golf clubs
LINE EXTENSION
New color/package/style
INCREMENTAL IMPROVEMENTS
Software updates
8-6
Characteristics of Successful Innovators
Creating an
Innovative Culture
Leveraging STRATEGIC Selecting the

Capabilities Right
INITIATIVES Innovation
Strategy
Making Resource Developing and

Commitments Implementing Effective
New Product Processes
8-7
Creating an Innovation Culture
 Innovation Workshop for top executives to

develop an innovation plan.
 Innovation Statement highlighting objectives
and senior management’s role and responsibilities.
 Training programs for employees and managers.
 Communicate the priority of innovation.
 Speakers to expose employees to innovation
authorities.
Source: Thomas D. Kuczmarski et al., “The Breakthrough Mindset,” Marketing Management, March/April 2003, 43.
8-8
The Innovation Strategy Spells Out Management’s Priorities for
New Product Opportunities
1. Set specific New Product Objectives.

2. Communicate the role of New Products
throughout the organization.
3. Define the areas of strategic focus:
Product Scope
Markets
Technologies
4. Include longer term discontinuous projects
in the portfolio along with incremental
projects.
Source: Robert Cooper, “Benchmarking New Product Performance,” European Management Journal, Feb. 1998, 1-7.
8-9
NEW PRODUCT PLANNING PROCESS
Customer
Needs
Analysis
Screening
Business
Idea and
Analysis
Generation Evaluation
Marketing Product
Strategy Development
Development
Testing
Commercialization
8-10
Achieving Cross-Functional
Interaction and Coordination
R&D
Operations Marketing
Finance
8-11
Responsibility for New Product
Planning
* Coordination of new product activities by a high-level

general manager
* Inter-functional coordination by a team of new
product planning representatives
* Creation of a project task force responsible for new
product planning
* Designation of a new products manager to
coordinate planning between departments
* Formation of matrix structure for integration new
product planning with business functions
* Creation of a permanent design center
8-12
IDEA GENERATION
* Idea search: targeted or open-ended?

* How extensive and aggressive?
* What specific sources are best for generating a
regular flow of new product ideas?
* How can new ideas be obtained from
customers?
* Where will responsibility for the new product
ideas search be placed?
* What are potential threats from alternative (or
disruptive) technologies? 8-13
Direct
Alliances/ Search
Technological
Acquisition/
Innovation
Licensing
METHODS
National OF Exploratory
Policy GENERATING Customer
IDEAS Studies
Creative Facilitating
Methods Lead User
Linking
Analysis
Marketing
and Technology
8-14
SCREENING, EVALUATING, AND
BUSINESS ANALYSIS
IDEA GENERATION
SCREENING
(fit/feasibility)
CONCEPT EVALUATION
BUSINESS ANALYSIS
8-15
Business Analysis
* Revenue Forecasts
* Preliminary Marketing Plan
* Cost Estimation
* Profit Projections
* Other Considerations
8-16
PRODUCT AND PROCESS
DEVELOPMENT
NEW
PRODUCT
CONCEPT
PRODUCT MARKETING
DEVELOPMENT STRATEGY
AND USE DEVELOPMENT
TESTING
MARKET
TESTING
LAUNCH
8-17
Product and Process Development
* Development of the new product includes:

* Product design
* Packaging design
* Decisions to make or purchase product components
* Product Development Process:
* Product Specifications
* Industrial Design
* Prototype
* Use Tests
* Process Development
* Collaborative Development
8-18
MARKETING STRATEGY AND MARKET TESTING
 Marketing Strategy Decisions

* Market Targeting
* Positioning Strategy
 Market Testing Options
* Simulated Test Marketing
* Scanner – Based Test Marketing
* Conventional Test Marketing
* Testing Industrial Products
* Selecting Test Sites
* Length of the Test
* External Influences
8-19
Scanner-based Test Marketing
Less artificial than simulated testing
Costs less than full-scale market test
Test is controlled by using IRI’s 2300 panel

members in each test city
Cable TV enables use of controlled ad testing
Tests take about 12 months
8-20
COMMERCIALIZATION
The Marketing Plan

* Complete marketing strategy
* Responsibilities for execution
* Cross – functional approach
Monitoring and Control
* Real – time tracking
* Role of the Internet
* Include product performance metrics with performance
targets
8-21
Marketing Strategy
Market Target(s)
Marketing
Objectives
Program(s)
8-22
NPD –Assignment (30 marks)
* You have to innovate / develop a new

product and explain all the processes
of NPD
* You may make assumptions wherever
required.
* Team size- 5-6 members
* Presentation- 15 minutes each group
8-23

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Innovation and New Product

How Google Innovates

 FREE (THINKING) TIME

 ACQUIRE GOOD IDEAS

Although Google strongly prefers to develop technology in-house, it has also

Customer value analysis

Leveraging STRATEGIC Selecting the

Making Resource Developing and

 Innovation Workshop for top executives to

1. Set specific New Product Objectives.

* Coordination of new product activities by a high-level

* Idea search: targeted or open-ended?

* Preliminary Marketing Plan

* Development of the new product includes:

 Marketing Strategy Decisions

Less artificial than simulated testing

Costs less than full-scale market test

Test is controlled by using IRI’s 2300 panel

Cable TV enables use of controlled ad testing

Tests take about 12 months

The Marketing Plan

* You have to innovate / develop a new

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