Winning is Everything
Chapter 1
Robert G. Cooper
Winning is Everything
WIN
YOU
COMPE
TITOR
COMPE
TITOR
COMPE
COMPE
TITOR
COMPE
TITOR
COMPE
TITOR
COMPE
TITOR
COMPE
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TITOR
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Survive
Sustain
INNOVATE OR DIE
SPEED & CHANGE
Innovation
Current
Products
INNOVATE
New
Products
Different innovativeness
category
Highly innovative
Focus of this chapter
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Background to innovate
Understanding success and failure rate of
innovation based on research findings
Understanding the term “new product”
Background - New Products Warfare
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Today’s marketplace is the battlefield for many corporations which struggle to
win the battle for reaching out a better position, better share or new territory on
marketplace.
WINNING IS EVERYTHING : it is vital to success, prosperity and survival of the
organization.
Players (combatants) are consist of many different company scales, from large
and well-known corporations to foreign and new firms.
The weapon to win the battle is new products superiority that is profitable and
successful, such as product differentiation and positioning.
Winners and losers are determined by the stream of new product successes
that are launched every year.
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Example of winners such as : Pfizer, 3M and Hewlett-Packard
Example of losers such as General Motor that failed to launch new product that
captured the consumer’s interest over the past few decades
The key to success laid on: advanced technology, superior intelligence and
rapid mobility.
40% of major corporations that existed in America in 1975 no longer exist
today!
Speed and Change
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Speed is pivotal competitive weapon to
overcome the rapid change of markets and
technologies:
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The ability to accelerate product innovation
To get new products to market ahead of
competition within the windows of opportunity
Speed and Change
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Major payoffs to speeding product to market:
1.
2.
3.
Competitive advantage
We are able to respond customer’s needs and changing
markets faster than competition.
Higher profitability
Revenue from the sale of the product is realized earlier
(acquired sooner) and the revenue over the life of the
product are higher, given fixed opportunity and limited
product life
Fewer surprises
The ability to move quickly to market treats change as an
opportunity rather than a threat. Market requirements,
market conditions and competitive situations are change
considerably during the project.
Strategy and Tactics – a military
concept
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Strategy:
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Define the areas of strategic focus for product innovation
 determine markets, products and technologies to invest
in and the best attack plan
Tactics  focus of this book
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Tools to implement the strategy  a set of moves or
manuevers designed to move a new product project from
discovery or idea stage to a successful launch – quickly
and effectively
Tactical issues as tactical or implementation at the project
level become most problem and tactics are more concrete,
easier to visualize and more “actionable”
New Products: The Key to Corporate
Prosperity
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On average, new products account for 33%
of company sales that comes from products
that did not sell five years ago
In dynamic industries, new products
contribute 100% of the revenue that comes
from products that has been on the market
for five years or less, includes extensions
and significant improvements
New Products: The Key to Corporate
Prosperity
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New products are profitable :
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50% of successful new products achieve 33%
ROI or better
Half of successful new products have a payback
period of two years or less
Half of successful new products achieve a
market share in excess of 35%
New products require spending on R&D
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Industries that spend heavily on R&D achieve
higher profit
New Products: The Key to Corporate
Prosperity
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New products has significant impact on
Investment Value
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Product innovations determine the worth of
value of the company as long-term investment
Drivers of Innovation
Technology Advances
Increased World
Competition
INNOVATION
Shortening Product
Life Cycles
Changing Customer
Needs
High Odds of Failure
Based from various studies:
 The failure rates vary from 25% to 90%
 The success rates vary from 0% to 100%
 Ratio from product development to
commercialization (according to PDMA
survey) = 7:1
 Only minority (30%) of firms achieve 80%
success rate
Beating the Odds
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Analytical capabilities
Incremental process
Effective decision making by selecting the
information and following criteria
Definitions of New Product
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New to the company  the firm has never
made or sold the type of product before, but
other firms might have
New to the market or “innovative”  the
product is the first of its kind on the market
Categories of New Products
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New-to-the-world products
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10% of all new products
First to the market Truly innovation
Eq: Sony Walkman, 3M with post-it notes, Smartphone
New product lines
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20% of all new products
Firm enters the established market by simply produce the
same kind of product
Eq: Canon with its laserjet that follows the Hewlett-Packard
Categories of New Products
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Additions to existing product lines
– 26% of all new products
– A modified (new) item from the existing product line
– Eq: Hewlett-Packard LaserJet 7P, a smaller and less
expensive version of its laser printers
Improvements and revisions to existing products
– 26% of all new products
– Replacements of existing products with improvement or
greater perceived value over the “old” product
– Eq: Nokia with numbers of serial cell-phone type
Categories of New Products
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Repositionings
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7% of all new products
New applications for existing products
Eq: Kratingdaeng from supplement drink to health drink
Cost reductions
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11% of all new products
Replacement of existing product in the line with new in
design and production viewpoint
Eq: Shampoo or detergent in smaller packaging (sachet)
Performance and Innovativeness
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Classification of innovative products and result on
performance according to research:
1.
Highly Innovative
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2.
Moderately Innovative
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3.
New-to-the-world and new product line to the company
Highest success rate, high ROI and highest market share
New lines to the firm; new items in existing product lines
Lowest success rate, lowest ROI and lowest market share
Low Innovative
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Modifications, redesigned and repositionings
High success rate, highest ROI, high market share
Performance and Innovativeness
Conclusions:
 Success rates and new product
performance depend on product type or
newness of the product.
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Be sure to develop different innovativeness
categories to new products.
Carefully select types of projects and rethink of
the short-term strategy that focus to produce
highly innovative products.
Ray Kroc – The Innovator
Situasi:
 Keadaan pasca peperangan menyebabkan ekonomi
sedang turun dan rendahnya upah pekerja
 Mobilisasi penduduk dari pusat kota ke daerah
pinggiran meningkat dan budaya hidup nomaden
menjadi pilihan
 Perlu sesuatu yang dapat diperoleh dengan cepat,
murah dan pas dengan selera untuk mengantisipasi
kebutuhan pelanggan potensial
Ray Kroc – The Innovator
Product
 The price did not rise from 1948 until 1967 to make customers
afford to buy a simple menu of french fries, soft drinks, milk
shakes and a 15-cents hamburger
Process
 Quick-serve standard
 Initiate the drive-ins model in response to the emergence of car
culture on postwar period
 Apply the standardization and spic-and-span stores
People
 Simplify the jobs to overcome the constant turnover of teenage
crew