Managing Innovation

MBA 6103Unit 6Disruptive Innovation & Implementation

Implementing Innovation

Creating New Products and Services – Focusing on Disruption• A product/service in alignment with the organizations existing

strategy and core competencies

• Dedicated development team• Functional structure• Lightweight product manager structure• Heavyweight product manager structure• Project execution teams

• Concept generation• Project selection• Product development• Product commercialization and review

Creating New Products and Services – Focusing on Disruption

• A product/service outside of the organization’s existing strategy and core competencies.• Internal ventures (i.e. intrapreneurship)• External ventures, partnerships, and/or alliances• New ventures, spin-out/off projects

• Similarities/parallels to entrepreneurial ventures

Why pursue a new venture?

• Growth• Effective use of resources• Leverage supply chain/value chain relationships• Prepare for divestiture• Leverage the ambitions of personnel• Leverage economies of scale in product development• Smooth out cyclical products/markets• Diversification• Develop new competencies

• Example: GE

Structuring for a venture• Direct Integration• Integrated Business Teams• New Venture Department• New Venture Division• Special Business Unit• Independent Business Unit• Nurtured Divestment• Complete Spin-off

• Example PepsiCo and Yum! Brands

Value added as a tool for disruption

• Combats commoditization• Core product is homogenous• Price wars• Abundance of competing products• Dissolution of brand equity

• Strategies for Value Added:• Segmentation• Customization• Bundling

Value Added Strategies• Segmenting

• Based upon common buying/usage factors

• Customization• Product/Service tailoring at an individual level• Enhances differentiation at an individual level• Revives brand equity/loyalty• Increases dependency

• Bundling• Combining related (or nonrelated) products/services into a single offer• Enhancing differentiation• Add “perceived value”

• Examples:• Amazon – prime membership• Netflix – pricing options