Managing the Innovation Process. Launch and Nurture stage: Methods and principles

Transcription

1 Managing the Innovation Process Launch and Nurture stage: Methods and principles

2 Strategic Orientation for the Launch Stage Input: Corporate and team decisions made earlier. Often found in the PIC Guidelines. A specified gross margin: affects funding. Speed-to-market: affects promotional outlays and schedules. Commitment to a given channel: affects distribution plan. Advertising policy: affects promotion decisions. Pricing policy: affects decision to use penetration or skimming pricing (slide down demand curve). Revision of PIC Goals Customer Acceptance Goals Use Satisfaction Sales Market Share Financial Performance Goals Cash-to-cash (Time to break even) Margins IRR, ROI Product Level Performance Goals Cost Time to Market Performance Quality Other Competitive Effect Image Change Morale Change

3 Launch activities Strategic launch activities Cross-functional teams take decisions concerning manufacturing, distribution/logistics, and marketing/sales Importance of integration of logistics in planning Tactical launch activities High quality in selling effort, advertising, service, technical support Launch timing Good management of launch activities itself and support programs Market Information-Gathering Activities Steps in market testing Studying feedback from customers Planning and testing advertising Iterative forecasting models of demand

4 Key Learnings: Planning and Executing the Launch Launching a new product should start by revisiting the PIC. A (related) core field of activities is innovation marketing and communications. Diffusion (or adoption) patterns of a new development influences launch activities: Diffusion is the description, explanation and forecast concerning the time period for a product or technology to spread within a market until a set demand frontier. Customers show different willingness to try new offerings different customer groups also value different performance attributes of a new product! However, also products have different characteristics which foster or hinder their diffusion an example being the ever shorter adoption rates of new social communication technologies.

5 Managing the Innovation Process Launch and Nurture stage: Ramp Up of Manufacturing

6 Ramp Up is the interface between New Product Development and Operations Management New Product Development Organization of development High speed innovation Management of product variety Product life cycles Ramp-Up Series Production and Manufacturing Systems Adaptable/ changeable manufacturing processes and technology Quality, volume, speed, Organization planning and scheduling Ramp Up of Manufacturing describes the transition phase from new product development to series production. Source: Graduiertenkolleg Anlaufmanagement an der RWTH Aachen It is the period of time between the finished product development and the point of reaching full capacity (Schuh 2008)

7 Ramp Up of Manufacturing: the period of time between the finished product development and the point of reaching full capacity (Schuh 2008) Why are Ramp-Up getting of larger relevance? Volume Volume Volume 1960 Today Vision t t Recent challenges like Increasing pace of technological development, global supply chains and customers demanding that companies exactly fulfill their needs. result in Increase of innovation speed Shorter product life cycles Rise of diversity of variants Growing product complexity Stages and number of ramp-up processes t Source: Graduiertenkolleg Anlaufmanagement an der RWTH Aachen

8 Ramp Up of Manufacturing: the period of time between the finished product development and the point of reaching full capacity (Schuh 2008) Why are Ramp-Up getting of larger relevance? Volume Volume 1960 Today t t Recent challenges like Increasing pace of technological development, global supply chains and customers demanding that companies exactly fulfill their needs. result in Increase of innovation speed Shorter product life cycles Rise of diversity of variants Growing product complexity Volume Vision Stages and number of ramp-up processes t This implies for ramp-up: More frequent and faster production ramp-up processes, More and more expert knowledge from different disciplines required, More interfaces and more complex processes have to be managed. Source:

9 Ramp Up of Manufacturing: the period of time between the finished product development and the point of reaching full capacity (Schuh 2008) Why are Ramp-Up getting of larger relevance? Volume Volume 1960 Today t t Recent challenges like Increasing pace of technological development, global supply chains and customers demanding that companies exactly fulfill their needs. result in Increase of innovation speed Shorter product life cycles Rise of diversity of variants Growing product complexity Volume Vision Stages and number of ramp-up processes t This implies for ramp-up: More frequent and faster production ramp-up processes, More and more expert knowledge from different disciplines required, More interfaces and more complex processes have to be managed. Source: Graduiertenkolleg Anlaufmanagement an der RWTH Aachen

10 Source: Graduiertenkolleg Anlaufmanagement an der RWTH Aachen The Aachener Ramp-Up Management Model: An integrated framework for the production start-up

11 Sources and further readings Bloch, P. H. (1995). Seeking the ideal form: Product design and consumer response. The Journal of Marketing, 59(3), pp Crawford, C. M., & Di Benedetto, C. A. (2011). New products management. McGraw-Hill Education. Moore, G. A. (1999). Crossing the chasm: Marketing and Selling High-Tech Products to Mainstream Customers. HarperBusiness. Wheelwright, S. C., & Clark, K. B. (1992). Revolutionizing product development: quantum leaps in speed, efficiency, and quality. Simon and Schuster. Further Readings: Di Benedetto (1999).

12 Managing the Innovation Process Project Review: Project controlling and KPIs for Innovation

13 Managing the Innovation Process The Big Picture Source: Lercher 2016, 2017

14 Source: Lercher 2016, 2017 The Frontend of Innovation (FEI)

15 Source: Lercher 2016, 2017 Implementation and Project Phase

16 Source: Lercher 2016, 2017 Project Review

17 The Innovation-Cash Curve (Andrew & Sirkin 2007) Idea generation Realization Nurture / Commercialization Source: Andrew / Sirkin: Payback: Reaping the Rewards of Innovation (2007)

18 Metrics to measure innovation success Companies believe that they measure innovation output effectively (68 percent) They are less confident in their ability to measure innovation inputs (59 percent) and innovation processes (55 percent) The most widely used outcome metrics (or KPIs = key performance indicators) profitability and customer satisfaction are not really innovation specific Which metrics does my company use to assess components of innovation or innovation return? Metrics Percentage 1. Profitability Customer satisfaction Incremental revenue Time to market Idea generation R&D efficiency Time to volume 44 A majority of respondents also measures incremental revenue, time to market, idea generation and R&D efficiency 8. Portfolio health Life-cycle performance 41 Source: The Boston Consulting Group, Measuring Innovation, 2009

19 Find the right balance between input, process, and output related innovation metrics Input related metrics Financial resources dedicated to innovation Human resources focused on innovation Separate, protected resources for noncore innovations Senior management time invested in new growth innovation Number of patents filed Process related metrics Output and outcome related metrics Process speed, time-to-market Breadth of idea-generation process Innovation portfolio balance Current growth gap Distinct processes, tools, and metrics for different types of opportunities Number of new products or services launched Percentage of revenues / profits from new products Percentage of profits from new customers (or occasions) Return on innovation investment Customer satisfaction Firm profitability Source: Servatius 2012 based on Anthony, S.C. / Johnson, M.W. / Sinfield J.V. / Altman, E.J., The Innovator s Guide to Growth, Boston 2008, p. 247ff

20 From single KPIs to R&D performance measurement systems Traditionally it was commonly believed that little could be done to improve the effectiveness and efficiency of research & development (R&D) But then success stories of R&D organizations came up which have implemented performance measurement systems like the Technology Value Pyramid (TVP) Performance measurement has to be linked to incentives, but should be careful not to miss opportunities out of too much focus on past successes Performance metrics for innovation management and strategic capabilities should be derived from strategic objectives In their book Strategy Maps, published in 2004, Robert Kaplan and David Norton present a large number of strategic objectives and performance metrics for innovation processes A Balanced Scorecard BSC for innovation

21 From single KPIs to R&D performance measurement systems