Integrated Modeling Framework

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• Making Breakthroughs Happen
• From Ideas to Market

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From Idea to Market

• How to Develop and Bring World Class Winning
  Products to Market

Multimedia Development CorporationTechnopreneur
Development Flagship
Presented by Saibal Chowdhury
December 01-03, 2004
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The Innovation Paradigm
Talent Hits a Target, No One Else Can Hit Genius
Hits a Target, No One Else Can See!
Schopenhauer
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Looking Beyond the Obvious
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The Ever Changing Environment
Constant Discontinuous Change
Globalization
The environment of the future that we are
expected to live in, work and excel is already
being shaped by three interdependent factors
A
Global
Business
Information Technology Revolution
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Its only a Matter of Time
Obsolete your own productsas fast as you can.
You will in your business ultimately go out of
business. You can do it yourself in organic ways
by shaping your business with new products. Or
somebody else will do it for you. It is only a
matter of time. Harvey Golub CEO of
American Express
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The Business of Innovation

• Inventions implemented and taken to market
• Can be a process of creative destruction by
  introducing new technology, material of process
  changing social practices eg. E-mail
• Can be a technology or a business model
  fulfilling an unmet need and may or may not be
  disruptive eg. Google, eBay
• Innovation is a networked process primarily
  composed of Ideas, People, Objects

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The Cycle of Innovation
Understand Market Needs

• Where are the opportunities
• Can someone capitalize?

• Segment plays
• Competitive battles
• Non industry factors
• Product life-cycles
• Strategic choices

• Value proposition
• Awareness
• Configuration
• Pricing

Get Industry Insights
Market Products

• Definition
• Strategic Choices (Build, Buy, partner, leverage)
• Time lines
• Costs
• Feature / Functionalities

Create Products
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How Technology Market Works

• Create new technologies and products
• Create new markets
• Raise industry standards
• Redefine customer needs

Leading the Change

• Change in raw material costs
• Demand change
• Emergence of new technology

Anticipating The Change

• Unexpected demand change
• Competitors moves
• Changes in regulations

Responding to the Change
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Finding What's next
1. Finding Signals of Change
Are there any signs in the market that may
trigger change and create opportunities
2. Understanding Competitive Battles
3. Making Strategic Choices
What strategic decisions firms may make to affect
their chances of success
What is the likely result of industry rivalry
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Idea to Market Process
Technology/Inventions Mapping
Find Whats (Needed) Next
Develop Whats Needed
Deliver Whats Needed

• Building insights in to the future
• Understanding what it takes to win
• Develop the business model

• Develop the technology model
• Understand detailed customer needs
• Develop the product architecture

• Understand Customer values
• Design processes
• Acquire resources
• Execute and monitor

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Ideas to Market Push Process
Invent it

• Identify a problem / new opportunity (product,
  ways of business)
• Develop a technology solution
• Improve continuously

Not mere research papers

• Research the market
• Identify customer segments
• Define product
• Develop Prototype

Market it
Build It

• Develop a benefit model / value proposition
• Create market awareness
• Acquire customers, investors and partners
• Execute Monitor

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Idea to Market Pull Process
Market it

• Sensing signals of change
• Identification of opportunity
• Identification of customers, segments , channels
  
• Understanding competitive battles
• Making strategic choices
• Build the revenue architecture

Invent it

• Develop detailed date about segments and
  customer needs
• Define the whole product
• Product definition, design,
• Improve continuously

Build/Outreach it

• Create market awareness
• Develop sales success model
• Acquire customers and partners
• Execute Monitor

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The Roots of Innovation
1. Disequilibrator (DQ) Schumpeter
Entrepreneur as force in creative
destruction of an equilibrium
Entrepreneurial New Combinations
Equilibrium State
2. Equilibrator (EQ) Austrian
School Entrepreneur as discoverer
of disequilibrium (niches not served)
DQ
EQ
Entrepreneurial Discovery (of niches)
Disequilibrium State
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Theories of Innovation

• The disruptive innovation theory
• Sustaining innovation vs disruptive innovation
• Low end disruption (discount retailing, mini
  mills)
• New market disruptions (e-mail, telephone, PCs)
• Values processes and resources theory
• What firms want to do, what processes they have
  to do it, what resources they have to do they
  need to do
• Value constellation theory
• How a firm is integrated internally and
  externally
• Physically and virtually
• Horizontally and vertically

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Why Understand Theories of Innovation ?

• To understand and sense the signals of change
• To predict where and when the next innovation
  will emerge from
• How to evaluate the competitive battles and
  influence and impact of non-market forces
• What strategic choices will influence the outcome
  of competitive battles

Why Theory? there is nothing more practical
than a theory that works --An old
saying from the UC
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Disruptive Innovation Theory
Sustained Innovation
Performance Demand
Low-end Disruption
Performance Demand
Time
New-market Disruption
Time
Customer Demand Trajectory Company Improvement
Trajectory
Non-Consuming Context
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Values Processes Resources
Values
Processes
Resources

• The criteria by which prioritization decisions
  are made.
• Examples
• Cost structure
• Income statement
• Customer demands
• Size of opportunity
• Ethics

• Established ways companies turn resources into
  products or services.
• Examples
• Hiring and training
• Product development
• Manufacturing
• Planning and budgeting
• Market research
• Resource allocation

• Things or assets that organization can buy or
  sell, build or destroy.
• Examples
• People
• Technology
• Products
• Equipment
• Information
• Cash
• Brand
• Distribution channels

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The Value Chain Theory
Create Products
Build Products
Manage Customers
Manage the Supply Chain
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Finding Signals of Change
Over Fulfilled Customers
Under fulfilled Customers
Signs that firms introducing Up market sustaining
innovations
Signs that firms introducing Lo-end disruptions,
displacements
1. Finding Signals of Change
Are there any signs in the market that may
trigger change and create opportunities
Signs that firms introducing new market
disruptive innovations
Signs that non-market players taking actions
introducing policy changes
Non Consumers
Non-market Players
2. Understanding Competitive Battles
3. Making Strategic Choices
What strategic decisions firms may make to affect
their chances of success
What is the likely result of industry rivalry
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Finding the Signals of Change
Signals
What Could Happen
Identifier
Customer Group

• Product/service that helps people do more
  conveniently what they are already trying
• Explosive rate of growth in new market

New-market disruptive innovation
People who lack the ability, or access to
conveniently and easily accomplish an important
job for themselves they typically hire someone
to do the job
Non-Consumers

• New, improved products and services introduced to
  existing customers
• Integrated companies thrive

Sustaining up-market innovation (radical and
incremental)
Consumers who consume a product but are
frustrated with its limitations they
willingness to pay more for enhancements along
dimensions most important to them
Under-Fulfilled Customers

• New business model emerges to serve
  least-demanding customers

Low-end disruptive innovations
Consumers who stop paying for further
improvements in performance that historically had
merited attractive price premiums
Over-Fulfilled Customers

• Emergence of specialist company targeting
  mainstream customers

Displacing innovation
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Analyzing Competitive Battles
1. Finding Signals of Change
Are there any signs in the market that may
trigger change and create opportunities
Identifying asymmetric motivations and skills of
the competing firms
Industry Players strengths and weaknesses (VPR
Analysis)
2. Understanding Competitive Battles
3. Making Strategic Choices
What strategic decisions firms may make to affect
their chances of success
What is the likely result of industry rivalry
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Evaluating Strengths and Weaknesses
Definition
What to Look For
Term

• Difficult problems we know the company has
  repeatedly solved over time
• Typically processes Hiring and training, product
  development, manufacturing, planning and
  budgeting, market research, resource allocation

Ways of doing business
Processes
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Making Strategic Choices
1. Finding Signals of Change
Are there any signs in the market that may
trigger change and create opportunities
An entrant will create initial conditions for a
right foot hold
Incumbents will cope with NM disruptions or move
to innovate
2. Understanding Competitive Battles
3. Making Strategic Choices
What strategic decisions firms may make to affect
their chances of success
What is the likely result of industry rivalry
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Incumbent Response Strategies
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Making Strategic Choices

• What is the type of real opportunity ?
• New market innovation
• Low-level disruption
• Value
• Life cycle
• Does it fit in to our capabilities ?
• Processes
• Resources
• Area of focus
• What are the value attributes?
• Feature / functionality
• Price
• Timing

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Making Strategic Choices
EXECUTE
DECIDE
PRIORITIZE
SCAN
Market Trends Customer Data Competitor Data Past
Performance
Assess customer requirements
Gather customer requirements
External Inputs
Business Strategy Product Line Strategy Channel
Strategy
Strategy
Proceed with Development?
Prioritize requirements
Define MVP stream
Align reqmts with capabilities and analyze gaps
Execute
Yes
No
Technology Strategy Technology Roadmap Technology
Capability Strengths Available Skill
Sets Finances Others Resources
Assess internal capabilities
Internal Capabilities
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Connecting Breakthroughs with Market
Opportunities
Technology Breakthroughs
(Un) Identified Opportunities
Strategic Decisions
Very Often, new market Opportunities can be
exploited quickly by previously achieved
breakthroughs

• Unmet needs
• Insurmountable problem
• New un discovered need

Business Models / Paths-to-Market
Product Architecture
System Architecture
Build-up Model
Fulfillment
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Product Streams
Segments
Not just one product definition, but a stream of
products that deliver value to target customer
segments over time.
Follow-on
Follow-on
Follow-on
Segment C
Follow-on
Follow-on
Follow-on
Segment B
Product Definition
Follow-on
Follow-on
Follow-on
Segment A
Follow-on
Follow-on
Follow-on
Segment C
Follow-on
Follow-on
Follow-on
Segment B
Product Definition
Segment A
Follow-on
Follow-on
Time
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Product stream Cash Flows
New Product Cash Flow
New Product Cash Flow


Definition
Cash Flow
Cash Flow
Freeze
Investigation
Release
Satisfied
BET
Obsolescence
Opportunity
Customers
Time
Perception
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Life Cycle Considerations
Early Adopters
The Chasm
Laggards
The Late Majority
The Early Majority Pragmatists
Innovators
Source - Crossing the Chasm, Moore
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The Whole Product Concept
Potential Product
Augmented Product
Expected Product
Core Product
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The Whole Product Concept
High Quality
Intangible Product
Documentation
Brand Image
GUI Interface
Training
Core Product
On-line Help
Upgrades
24 x 7 Service
Perception
Full Product Line
Tech Support
Software
Repair ability
Auxiliary Product
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What is MVP
How does MVP reconcile with delivering a whole
product or solution to our customers?
Wont my position in the market be jeopardized
by delivering a minimum product?

• A Minimum Viable Product is a stream of product
  definitions that includes the few key features
  that deliver superior value to customers over the
  life of a whole product.
• Focuses on the features and services necessary to
  launch a product, while distinguishing those
  features and services needed to preempt the
  competition for long-term market success
• Utilizes prioritization, decision-making, and
  communication tools and techniques
• Emphasizes need to define and evaluate product
  line or portfolio
• Exists within the context of an optimal product
  stream

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What is MVP?
Minimum
Viable
Product
The minimum set of features and services required
to deliver value to customers
The viable features and services to incorporate
based on most important customer needs at a point
in time as well as on the firms strategy
The products, platforms, and follow-ons need to
be defined simultaneously so that too much does
not get pushed into the first releases scope
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Product Definition

• Minimum Viable Product Summary
• Product Descriptions
• Financial Targets
• Production and Launch Targets
• External Analysis
• Customer Requirements
• Target Customers
• Segment Characteristics
• Competing Products
• Internal Analysis
• Technical Capabilities
• Core Competencies
• Financial Analysis
• Long-Term Cost/Benefit
• Return on Investment
• Capacity (Mfg, Service, Channel, Mktg, etc)
• Issues and Risks

The MVP Product Definition is a business case
for the product series and includes
Product Priority Document Product
Features/Services/Benefits
Required

Minimum Viable Product to Meet Target Market
Requirements
Desirable (In Priority Order)
Features Not included (Optional)
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Product Development
Know When the Front End Fuzziness Must End
or
Youll Never Make Schedule Here
Hold to Schedule Here
Investigate Customer Needs and Technical
Feasibility
Final Product Definition
Product Introduction
Product Development
Commitment Gate
Product Priority Document
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Developing Technology Commercialization Plan
Market it

• Analyze signals of change
• Understand competitive battles
• Make strategic choices (market, technology.
  Segments)

Invent it

• Solution development (path to market)
• Technology mapping choices (build, buy,
  leverage, partner)

• Plan the venture (license, spin-off, JV..)
• Build the business case
• Build the detailed plan
• Build products and services
• Acquire initial customers (If start-up)

Build it

• Raise funds
• Expand team
• Manage share holder expectations

Finance it

• Develop processes (product development, sales,
  finance, business orgn.)
• Set measures
• Set roadmap
• Acquire customers and partners
• Grow rapidly
• Execute Monitor

Run/Grow it
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Thank You
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