Modul 8: Insights

Question 1

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Answer 1

• The timing of an innovation is a success factor of paramount importance. The time for an innovation to enter the market is optimal if the innovation does not come too early, but also not too late. Before an innovation is launched on the market, check carefully whether the market is ready for the innovation (check for product-market fit).
• Innovation ideas that do not work at the moment such as Meica´s CurryKing should not be thrown away, but saved in a file. The failure is often due to the environment that is not yet ripe for innovation, and that can change in ten years or even sooner, if the new market grows exponentially.
• An innovation idea that is judged to be promising should be dealt with as early as possible; because this way you learn to understand the market and the technologies earlier, thus reducing the risk of wrong decisions and maintaining maximum flexibility of action, i.e. the option of a rapid market launch.

Question 2

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Answer 2

• The strategy of optimal market-entry position is about the company’s intent, like the Ariel Color vs. Persil Color case clarifies, and not the empirically measured actual market entry ranking.
• The pioneer (or first mover) who wants to be the first in the market with his innovation has a higher chance of success and higher profitability than the follower. The main reasons for the superior profitability are longer product life of the innovation, higher market share, higher sales price and lower product costs.
• The pioneer can set up actual or virtual entry barriers that make it difficult for the pursuers to enter the market or even block it completely. Main market entry barriers result from market standards, direct network effects, indirect network effects, distribution hurdles and mental image barriers.
• The pioneer (see Gilead or Biontech/Moderna) reduces the risk that he might completely lose his investment in an innovation (see Boehringer Ingelheim/Roche or Sanofi) because competitors are ahead of him.

Question 3

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Answer 3

• There are three defensive reasons in favor of the follower strategy of conscious waiting: To learn from the mistakes and experiences of the pioneer, to reduce the risk of a misjudgment of the market potential and to leave the costs of market development to the pioneer.
• Small businesses may be forced to adopt a follower strategy because they lack the resources, and most importantly, the financial means.
• If at all, a follow-up strategy is only a voluntary strategic alternative for large companies, and only if they are sure that they are only competing with a small company or start-up with limited resources (see Fuchs); or if they have clear competency advantages; or if they dominate the market and hold a quasi-monopoly position; or if they have resource advantages because they e.g. dominate a stage in the value chain, as especially retail companies do; or if they have structural cost advantages that enable greatly reduced sales prices.
• A company and its innovation have not yet entered the market when the first product has been delivered. The relevant point in time is only reached when the innovation has already penetrated the global mass market to a certain extent. The innovation goal “time-to-market” must be interpreted as “time-to-global-volume market”. Kao with its Quickle Wiper missed this goal.

Question 4

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Answer 4

• Speed of innovation spending: the smart mover avoids a financial over-investment in radical innovations. Initially he focuses on learning, at low cost. With incremental innovations, however, he is willing to spend heavily from the very beginning.
• Speed of innovation process: accelerating innovation is crucial in order to be able to exploit the window of opportunity as soon as it opens, to be first-to-market and to prevent being pre-empted by competition („time-to-global-volume-market“).
• There are levers for accelerating innovation in all components of the innovation management system.