Modul 9: Insights

Question 1

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Answer 1

• The dominant design may not represent the best available product or technology on the market. The IBM PC in combination with Microsoft’s MS-DOS operating system are an example of this.
• To become the dominant design, the technological value of the product is only one factor. Other important factors are a superior installed base, usually achieved through early partnership with other companies, the availability of a large number of complementary products, and the management of the customers’ subjective perceptions and expectations.
• If companies play the last-mentioned factors astutely, they can overcome a technical inferiority of their product and establish their design as the market standard (dominant design) as the IBM PC case shows.
• In addition to the direct route, which consists of implementing a technology in the market as a standard through better fulfillment of customer requirements, a larger installed base and a larger selection of complementary products, the indirect route is available through agreements with the industrial association or governments to achieve the same goal.

Question 2

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Answer 2

• The objectives of an innovation process are to introduce discipline in the innovation activities (see the Starbucks case), repeat best practices, increase efficiency/ reduce resource consumption, mitigaterisk/raise probability of success, coordinate with the rest of the organisation, monitorthe project status, leave sufficient freedom to the innovation team and continuously improvethe innovation process.
• The innovation process functions like an innovation funnel which screens out the majority of the projects as not being good enough.
• The waterfall-like stage gate process has proven itself many times in business practice for incremental innovations, and it is also used in the final stages of validated radical innovations

Question 3

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Answer 3

• Learning from failures and mistakes is an important but often forgotten task in the innovation process.
• The error analysis provides important insights from which later innovation projects often benefit greatly.

Question 4

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Answer 4

• Amendments to the stage-gate-process address three issues
  1. earlier identification of bad innovation ideas
  2. Minimizing the risk of expensive corrections later
  3. Integration of relevant information arriving late.
• Recommended solutions to address these issues are:
• 1. Accelerated stage-gate-process with rapid prototyping (see Dyson) and a quick market and product test
• 2. A. “Frontloading” of resources in the innovation process and/or B. the early use of technologies such as Computer-Aided Design (CAD) and Computer-Aided Engineering (CAE), which enable virtual prototyping and high-performance simulations in fast iterations on the computer and C. learning from previous innovation projects. All these three methods are being used by Toyota.
• 3. A. The use of a so-called set-based concurrent engineering (see Toyota) or B. the installation of a so-called flexible innovation process or C. the establishment of an agile stage-gate process or D. the more or less complete defusing of the problem by software-izing the analogous hardware product and a “feature-based design“ (see Tesla).

Question 5

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Answer 5

• For radical innovations, the milestone process is (at the beginning) the right process.
• The iterative lean-startup-process, which drives learning with the help of MVPs, is a very useful addition.
• The focus of the milestone process is on learning and the explicitly formulated assumptions that are tracked and checked from milestone meeting to milestone meeting.
• The result of milestone meetings is more diverse than that of gate meetings in the stage-gate process. Revisions or complete realignments (pivots) of the innovation projects based on new learnings (see Nespresso or Slack) are common in the milestone process.
• Both the stage gate process and the milestone process
  o reduce the risk by only releasing additional funds if the project criteria or learning milestones are met
  o manage the uncertainty by generating additional knowledge
• However, the structure of knowledge is very different for the two types of innovation and their innovation processes. In incremental innovations, the assumptions are mostly implicit and not formulated, and if they turn out to be wrong, they will deviate little from the truth. The learning in stage-gate processes will therefore be rather low. With radical innovations, however, the initial assumptions will in many cases turn out to be far removed from reality, and the learning and knowledge accumulated in a milestone process will therefore be fundamental in nature