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Innovation In High Technology (1/2)
1. This document may contain information which is confidential and can not be reproduced --- Guy Laliberté, 2009
Guy Laliberté, September 2009
Innovation in the High Technology Industry
Overview -- Session 1 of 2
2. Innovation in the High Technology Industry
This document may contain information which is confidential and can not be reproduced --- Guy Laliberté, 2009
What is “High Technology” ?
■ First, Technology is :
Most general definition The practical application of knowledge
a manner of accomplishing a task using technical processes, methods, or knowledge
the application of science to industrial or commercial objectives
■ High Technology
Any highly technical or specialized technological equipment or application.
Mostly used for technology involving complex electronics or software.
■ Examples of traditional “High-Tech” industries
Telecommunications
Computers / Electronic Devices
Robotics
Information Technology
Internet
3. Innovation in the High Technology Industry
This document may contain information which is confidential and can not be reproduced --- Guy Laliberté, 2009
Common High Technology Industry Characteristics
Technology
Uncertainty
Market
Uncertainty
Competitive
Volatility
4. Innovation in the High Technology Industry
This document may contain information which is confidential and can not be reproduced --- Guy Laliberté, 2009
Common High Technology Industry Characteristics
Market
Uncertainty
■ Market Uncertainty
Consumer fear, uncertainty and doubt (FUD)
Customer needs change rapidly and unpredictably
Customer anxiety over the lack of standards and dominant design
Uncertainty over the pace of adoption
Uncertainty over / inability to forecast market size
5. Innovation in the High Technology Industry
This document may contain information which is confidential and can not be reproduced --- Guy Laliberté, 2009
Common High Technology Industry Characteristics
Competitive
Volatility
■ Competitive Volatility
Uncertainty over who will be future competitors
Uncertainty over “the rules of the game” (i.e., competitive strategies and tactics)
Uncertainty over “product form” competition
competition between product classes vs. between different brands of the same product
Implication: Creative destruction
6. Innovation in the High Technology Industry
This document may contain information which is confidential and can not be reproduced --- Guy Laliberté, 2009
Common High Technology Industry Characteristics
Technology
Uncertainty
■ Technology Uncertainty
Uncertainty over whether the new innovation will function as promised
Uncertainty over timetable for new product development
Ambiguity over whether the supplier will be able to fix customer problems with the
technology
Concerns over unanticipated/unintended consequences
Concerns over obsolescence
7. Innovation in the High Technology Industry
This document may contain information which is confidential and can not be reproduced --- Guy Laliberté, 2009
Common High Technology Industry Characteristics
Competitive
Volatility
Market
Uncertainty
Technology
Uncertainty
Business
Development of
High Technology
Innovations
8. Innovation in the High Technology Industry
This document may contain information which is confidential and can not be reproduced --- Guy Laliberté, 2009
Common High Technology Industry Characteristics
■ Other Characteristics typical in High Technology
“Unit-one” costs
The cost of producing the first unit is most of the time extremely high relative to
the costs of high volume production.
Examples :
Development cost of a software VS selling CD-ROMs
Prototype of a new electronic device VS selling it in mass production
Tradeability Problems
Difficulty to value a new technology What should be the selling price ?
Examples :
How much to charge for a licensing right of a waste-eating microbe?
9. Innovation in the High Technology Industry
This document may contain information which is confidential and can not be reproduced --- Guy Laliberté, 2009
Common High Technology Industry Characteristics
■ Other Characteristics typical in High Technology
Bandwagon Effect
Often, the value of a product increases as more people adopt it.
Implications: At first, you may give away products for free …
Externalities
Knowledge Spillover
Technological developments in one domain spur new developments and innovations in other
areas.
■ Transfers from universities to the industry
Environment
Putting new technology on the market often have impact on the environment since
society and governments are rarely ready to support the full product life cycle from
manufacturing to use and recycling.
■ It took 20 years for governments to initiate the first actions to start recycling the millions of tons of
electronic equipments thrown in the garbage each year.
10. Innovation in the High Technology Industry
This document may contain information which is confidential and can not be reproduced --- Guy Laliberté, 2009
What is “Innovation” ?
■ Invention or Innovation ?
An invention is useful only to its inventor unless it is offered and used in a
market.
If the invention improves some product, process or service in a market,
then that invention transforms into an innovation.
An innovation is the extension of an invention.
Innovation is not only new technologies but also improvements in
processes, design or services.
■ Innovation in the High Technology Business
The future of most businesses depends upon their ability to innovate
Innovation is to sustain competitive advantage, maintain market share or generate
growth
Innovation is rarely part of a business strategies and often confused with R&D
Companies culture and leadership are the two prominent barriers to innovation
Tools & methods exists to “make innovation happens”
11. Innovation in the High Technology Industry
This document may contain information which is confidential and can not be reproduced --- Guy Laliberté, 2009
What is “Innovation” ?
■ Types of innovations (High Level)
Incremental (the need is known)
Market : Extension of an existing product for
the same market
Product : Its characteristics are well-defined
Initiator : Often developed in response to a
specific market need
R&D / Marketing : Marketing Leads “Customer Pull”
Interaction
Radical Breakthrough (the technical solution precedes the customer need)
Market : New technology creates new market
Product : Superior functional performance over
“old” technology
Initiator : Developed for a specific market opportunity
or to cover a secondary concern
R&D / Marketing : R&D Leads “Technology push”
Interaction Radical Breakthrough
Incremental
12. Innovation in the High Technology Industry
This document may contain information which is confidential and can not be reproduced --- Guy Laliberté, 2009
■ Types of innovations (Detailed Level)
1. Disruptive Innovation : Takes a cheaper, low-end disruptive or a new market
disruptive innovation to the market
2. Application Innovation : Takes existing technologies into new markets to serve
new purposes
3. Product Innovation : Takes established offers in established markets to the
next level (a type of sustaining innovation)
4. Process Innovation : makes processes for established offers in established
markets more efficient or effective (also a type of
sustaining innovation)
5. Experiential Innovation : makes cosmetic/surface modifications of established
products or processes that improve customers’
experience
6. Marketing Innovation : improves customer touching processes e.g. by
marketing communications or consumer transactions
7. Business Model Innovation : reframes an established value proposition to the
customer or a company’s established role in the value chain or both
8. Structural Innovation : Capitalizes on disruption to restructure industry
relationships
What is “Innovation” ?
13. Innovation in the High Technology Industry
This document may contain information which is confidential and can not be reproduced --- Guy Laliberté, 2009
Innovation in High-Tech Companies
■ Internal Considerations
Maintaining Innovation
Creative Destruction Corporate Imagination Expeditionary Marketing Culture of Innovation
Access to Resources
Funding Management Expertise
Being Market-Oriented
Acquire Disseminate Use Information
Relationship Marketing
Partnering with important stakeholders
Effective Cross-Functional
Marketing / R&D Collaboration
Enhanced Odds
of Success
14. Innovation in the High Technology Industry
This document may contain information which is confidential and can not be reproduced --- Guy Laliberté, 2009
Technology Adoption
■ Product Life Cycle (Based on G. Moore “Crossing the Chasm”)
Time
Revenue
Pragmatists Conservatives Sceptics
Early
Adopters
Early
Majority
Late
Majority
LaggardsInnovators
VisionairesLead Users
15. Innovation in the High Technology Industry
This document may contain information which is confidential and can not be reproduced --- Guy Laliberté, 2009
Technology Adoption
Pragmatists Conservatives ScepticsVisionairesLead Users
■ The Innovators / Lead User
Technology Enthusiasts
They are first to adopt any new technology
They want to try it to see if it works
They derive value from the technology itself
They will spend hours trying to get your products to work
They demand
The truth, without any tricks
Access to an expert immediately when a problem occur
They want to be the first to get the new stuff – that is their reward
They want your product (relatively) cheap – but they will pay for it.
The key
Look for the enthusiast that the big bosses listen to
Before the CHASM
16. Innovation in the High Technology Industry
This document may contain information which is confidential and can not be reproduced --- Guy Laliberté, 2009
Pragmatists Conservatives ScepticsVisionairesLead Users
■ The Early Adopters
Visionaries
They want to match an emerging technology to a strategic opportunity
They have the temperament to translate that insight to a high risk project
They have the charisma to get the rest of their organisation to buy into that project
They want
They are looking for a fundamental breakthrough and ROI
They derive value not from the technology itself (as the Lead Users do), but from the
strategic leap forward it enables
They like project orientation and exert dead-lines that are hard to meet
The key
They give you the first big break and may generate the first burst of revenue and
visibility.
Technology Adoption Before the CHASM
17. Innovation in the High Technology Industry
This document may contain information which is confidential and can not be reproduced --- Guy Laliberté, 2009
■ The Early Majority
Pragmatists
They are accepted as ”technology leaders” by the late majority
They feel that risk is a negative word but sometimes you have to take some – but
with good safety nets in place
They are reasonably price-sensitive
Hard to win, but loyal once won
They communicate with others if they are like themselves
The problem
Market leadership is crucial to winning pragmatist customers hence a Catch-22
occurs
They won’t buy from you until you are established, yet you can’t get established until
one of them buys from you…
The key
To be patient and put time to get a reputation for quality and service
Pragmatists Conservatives ScepticsVisionairesLead Users
Technology Adoption After the CHASM
18. Innovation in the High Technology Industry
This document may contain information which is confidential and can not be reproduced --- Guy Laliberté, 2009
■ The Late Majority
Conservatives
They are against discontinuous innovations
They believe far more in tradition than in progress
When something works good enough for them, they stick to that
They like to buy preassembled product packages, with everything bundled, at a heavily
discounted price
The keys to success
You must have thoroughly thought of the whole solution
You must have lined up a low-overhead distribution channel
The key
To understand that they are very important after the technology development phase
since they represent a large portion of the total market share.
Pragmatists Conservatives ScepticsVisionairesLead Users
Technology Adoption After the CHASM
19. Innovation in the High Technology Industry
This document may contain information which is confidential and can not be reproduced --- Guy Laliberté, 2009
Technology Adoption
■ The Laggards
Sceptics
They do not really want to buy the product but “have to” if they do purchase it.
They represent about 15 % of the market
The key
To learn from them since they can teach us what we are doing wrong in designing new
products
Pragmatists Conservatives ScepticsVisionairesLead Users
After the CHASM
20. Innovation in the High Technology Industry
This document may contain information which is confidential and can not be reproduced --- Guy Laliberté, 2009
Technology Adoption
■ Gaps in the Product Life Cycle
Moving from one type of adopters to the next one
Time
Revenue
Pragmatists Conservatives Sceptics
Early
Adopters
Early
Majority
Late
Majority
LaggardsInnovators
VisionairesLead Users
TheCHASM
Gap #1
Gap #2
Gap #3
21. Innovation in the High Technology Industry
This document may contain information which is confidential and can not be reproduced --- Guy Laliberté, 2009
Technology Adoption
■ Gap #1
The Early Adopters talk to the Innovators but hot new technology
cannot be readily translated into major new benefits. Business
process problems exist.
To pass Gap #1, you must enable a strategic leap forward
■ Gap #2
The Late Majority talks to the Early Majority
Whereas the Early Majority is willing and able to become
technically competent, the Late Majority is not
To pass Gap #2, you must ensure user-friendliness, and an
ease to adopt.
■ Gap #3
The Laggards listen to the Late Majority
The laggards are the last ones to adopt a new technology.
To pass Gap #3, there must be no other choices and a clear
economic advantage to compensate for a “very cumbersome
technology shift”.
Pragmatists Conservatives ScepticsVisionairesLead Users
Gap #1
Pragmatists Conservatives ScepticsVisionairesLead Users
Gap #2
Pragmatists Conservatives ScepticsVisionairesLead Users
Gap #3
22. Innovation in the High Technology Industry
This document may contain information which is confidential and can not be reproduced --- Guy Laliberté, 2009
Technology Adoption
■ The CHASM
The Early Majority does not talk to the Early Adopters
Early Adopters
The Early Adopters want a technical change agent
The Early Adopters expect a radical discontinuity between the old and the new
Early Majority
The Early Majority want a productivity improvement for existing operations
The Early Majority want to minimize the discontinuity with the old way
Technology is to enhance, not overthrow, the established business
They want a more or less bug free product, the real 1.0 version
Pragmatists Conservatives ScepticsVisionairesLead Users
TheCHASM
Creating
the CHASM
Very difficult and consumes
a lot of resource to cross
the CHASM
23. Innovation in the High Technology Industry
This document may contain information which is confidential and can not be reproduced --- Guy Laliberté, 2009
■ Culture of Innovation
■ To be resilient and target growth, a high-tech company must “deeply integrate”
innovation in its culture.
■ A culture of innovation must be present at all levels of the company.
■ Innovation “as a mean of reaching company objectives” must be understood and part
of the strategic and operational plan.
■ Innovation is more then “new technology = new product”. A product is more then only
technology (technology + commercial spin + price)
■ Innovation can be only “internal” and still impact results on the market (i.e. : implementing
new processes or equipment to reduce cost and thus price of a product on the market)
■ Key Factors
■ First step is to work on “integrating” innovation in the culture of a company. From the
executive to the middle management, all must obliged by it.
■ Key to innovation is the collaboration between marketing and engineering.
■ An invention badly launched on the market will never become an innovation.
■ You can have the best technology but without the adequate means to target the right
markets, you will not succeed.
■ Understanding the life cycle of a product is key in taking decisions for success.
■ More and more innovations are “completed with external means” such as partnership
and use of third party technologies.
Conclusions
24. Innovation in the High Technology Industry
This document may contain information which is confidential and can not be reproduced --- Guy Laliberté, 2009
1. Brief review of Session 1
2. How to cross the CHASM ?
3. Aligning R&D & Business Development / Marketing Efforts
4. Conclusions and Remarks
Session 2 -- Agenda
25. Innovation in the High Technology Industry
This document may contain information which is confidential and can not be reproduced --- Guy Laliberté, 2009
■ Marketing of High-Technology Products and Innovations
■ Author: Jakki J. Mohr, Sanjit Sengupta, Stanley Slater
■ Crossing the Chasm
■ Author: Geoffrey A. Moore
■ Articles by : Eric von Hippel, Geoffrey Moore, James Utterback and Clayton Christensen
■ Strategic Business Planning
■ Author: Geoff Linton
References