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What’s happening this week at the intersection of management and technology.
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Bringing high-tech inventions built on patented technologies to market can be complicated and risky. The threat of added costs from patent infringement lawsuits has led technology companies to pool their talents — and patents — in technology consortia. Joining a tech consortium requires managers to weigh intellectual property value against the value of future collaborations and assess the consortium’s pros and cons for innovation, competition, and market creation.
A better strategy for managing digital disruption; enhancing product development with micro-factories; the untapped potential of supply chain digitization.
The Spring 2016 issue of MIT Sloan Management features a Special Report on new product development. Articles include “Why Great New Products Fail,” “Finding the Right Role for Social Media in Innovation,” “Developing New Products in Emerging Markets,” “Why Learning is Central to Sustained Innovation,” and a look at the opportunities presented by the Internet of Things, in “Now That Your Products Can Talk, What Will They Tell You?”
Many innovative new products don’t succeed. One common reason: Companies don’t focus on understanding how customers make purchase decisions. But paying attention to how customers search for information about what to buy, and how they make guesses about details they can’t easily find, helps predict whether customers will embrace certain product innovations. Companies need to focus on innovations that customers will easily recognize or find ways to alert them to innovations they may not detect on their own.
Products connected to the Internet of Things are providing unprecedented levels of information that can be used to improve both products and customer experience. For instance, a company does not have to wait until a customer calls with a complaint to know that a product connected to the Internet of Things is not working correctly. Instead, the product could already communicate the information, giving the company the ability to provide proactive service. Result: more loyal customers.
How can multinational companies turn ideas from their emerging-market subsidiaries into global products? A successful innovation developed by Cisco’s R&D unit in India offers practical insights into how to make that process work effectively. Key enablers in the Cisco case included well-developed R&D capabilities at a company center in Bangalore, a large market opportunity, and the support of executive champions. The process also demanded clarity about what product to develop, and how — including working on a shoestring budget.
Many managers think they can create better products just by improving the development process or adding new tools. But it’s skilled people, not processes, that create great products. So-called “lean” organizations invest heavily and continuously in the skills of product developers, and rather than developing single products, they think in terms of streams of products. By making people the backbone of the product development system, companies can achieve a triple win: increased innovation, faster time to market, and lower costs.
Beijing-based smartphone maker Xiaomi Inc. has actively involved enthusiastic customers — known as “Mi Fans” — in both software and hardware development processes. Tech-savvy users test interfaces and products as volunteers, doing much of their communication on the Internet. Customer involvement in the product development life cycle has not only helped Xiaomi reduce R&D costs but also enabled the company to cultivate a sense of participation and pride among lead users.
At its roots, life-cycle assessment (LCA) is a method to quantify total sustainability impacts — like resource use and environmental damage — over the entire life of a product, from “cradle to grave.” While there is informational value in the basic exercise, the real utility of LCA is comparison — that is, comparing one product’s sustainability impacts with another’s. Given the effort and cost involved, what are the strategic benefits of LCA? And should you be employing such a process?
When is the best time to enter a new industry? As it turns out, understanding the product category dynamics in an emerging industry and when a dominant category label has been introduced are important to identifying the “window of opportunity” to enter. Dominant category labels typically are introduced right before the industry starts a phase of rapid growth and consolidation. Companies would do well to track category labels before introducing a product in a nascent industry.
Risk mitigation drove chemical giant BASF to adopt a sustainability focus, initiating a chain reaction that transformed not only the company’s product lines, but its corporate culture. The company’s vice president of sustainability strategy, Dirk Voeste, explains the step-by-step process that BASF undertook to produce a company-wide shift in this massive organization’s mindset.
Unconventional approaches to innovation are speeding up new product development, making R&D faster and cheaper. In China, companies are embracing an industrialized approach to research that allows them to complete projects as much as two to five times faster than they did before. “These developments have potentially huge implications for how companies should think about global competition and whether they need to rethink and reengineer their established innovation and product development processes,” the authors write.
Chinese companies are opening up a new front in global competition. It centers on what the authors call accelerated innovation — that is, reengineering research and development and innovation processes to make new product development dramatically faster and less costly. The new emphasis is unlikely to generate stunning technological breakthroughs, but it allows Chinese competitors to reduce the time it takes to bring innovative products and services to mainstream markets. It also represents a different way of deploying Chinese cost and volume advantages in global competition.
Should a new product or service launch at the high end of the market and move downward or at the low end and move up? In truth, there’s no one-size-fits-all approach for entering the market, but a new research-based framework helps identify the best strategy for a particular product or service. The two key questions to ask: Is the basic functionality of the new offering better or worse than that of existing competitive products? And how groundbreaking are the novel attributes of the new product?
Managers can’t afford to rely on haphazard, hit-or-miss approaches to idea generation. Ideas must fit with an organization’s strategy or take it in a new, purposeful direction, and they must solve real problems for stakeholders. A new seven-step process for idea generation is designed to help managers understand their problems deeply, generate tangible ideas for solutions and translate those ideas into action.
SAP runs a 10-years old, online community network that has more than a million unique visitors a month. Mark Yolton, senior vice president of SAP Communities & Social Media, tells how his company is using social media for “outside-in” market insight and as a mechanism to immediately tell the world about its new products.
University-business collaborations are an increasingly important source of research and development for many companies. Yet despite their importance, many companies take much less care managing these relationships than they do those with their vendors or customers. As a result, business-academic collaborations often fail to achieve as much as they might. By taking a more structured approach, companies can improve the performance of their academic research partnerships.
It’s not easy to develop a breakthrough innovation in an established company and bring it to market successfully — and even more challenging to do so more than once. In their new book, Serial Innovators: How Individuals Create and Deliver Breakthrough Innovations in Mature Firms, authors Abbie Griffin, Raymond L. Price and Bruce A. Vojak describe several years of research they have conducted about a type of employee who can do just that.
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