CIS8011 Digital Innovation

Module 2 – Product Lifecycle

Objectives

 Understanding the product lifecycle

 Understanding digital innovation
 Types of innovation and ways to innovate
 Identify the different corporate innovation at the different
product lifecycle stages
 Understanding the adoption of digital innovation
 Course Overview
Digital Innovation Tools & Frameworks Issues & Risk Implementation
• Module 1 – Managing Innovation • Module 4 – Digital Innovation: • Module 7 – Digital Innovation: • Module 10 - Implementation
• Digital Innovation Feasibility & Viability Organisational, Trust, Sharing & • Minimal Viable Product
• Skills • Business Model Canvas Ethics • Cost Benefit Analysis
• Strategy • Value Proposition Canvas • Organisational • Value Chain, Value System
• Management Innovation • Lean Canvas • Digital Trust and Value Streams
• Innovation Portfolio • Mission Model Canvas • Sharing Economy • Horizontal and Vertical
• Module 2 – Product Lifecycle • Innovation Portfolio • Digital Ethics Integration
• Digital Revolution • Module 5 – Design Thinking • Technology Issues • Implementation
• Managerial Decision Making • Design Thinking • Module 8 – Digital Innovation:
• Diffusion of Innovation • Mindsets Technology Issues
• Hype Cycle • Modes and Methods • Technology Issues
• Disruptive Innovation vs • Business and Design • Integration
Digital Innovation • Module 6 – Digital Innovation: • Management
• Competitive Advantage Assessment • Module 9 – Risk
• Module 3 – Organisational Growth • Digital Enterprise • Risk
• How companies grow Transformation • Technology Risk
• Five phases of growth • Business Readiness
• Typology of Innovation Assessment
• Digital Innovation
Management Framework
Digital Revolution

 With the advances in technology and the availability of online services the way organisations compete
in the world has forever changed from traditional brick and mortar to digital.
 technology continuously emerges and advances
 In recent years, they identify the following developments:
 Mobility
 Cloud computing
 Social Media
 Crowdsourcing
 Internet of Things
 Industry 4.0
 Big Data
 Printing and 3D Scanners
 advances result in new business models, customer relationships and increased competition.
Managerial Decision Making

 Snowden, D & Boone, M, (2007) outlines a

framework which sorts issues into five
contexts:
 Simple
 Complicated
 Complex
 Chaotic
 The fifth context is Disorder. Signified by the
centre of the figure above and occurs when
none of the other contexts are dominant. Figure 1 : Cynfin Framework
Source: Snowden, D (2007)

 Different contexts require different actions

Diffusion of Innovation
 Diffusion of innovations, which seeks to
explain how, why, and at what rate new ideas
and technology are adopted.
 Rogers, E (2002) argues that diffusion is the
process by which an innovation is
communicated over time among the
participants in a social system.
 The theory outlines four main elements which
influence its spread being:
 the innovation
 communication channels
 time
 social system

 For innovation to succeed you need to acquire

the early majority customer which is greater
than 16% of the market and less than 50% Figure 2 : Diffusion of Innovation
Adapted: Rogers, E (2003)
 Without the Early majority the innovation may
not be commercially viable or self sustaining.
Diffusion of Innovations – User Segments
 Innovators
 Track them down and become their “first followers”7, providing support
and publicity for their ideas.
 Invite keen innovators to be partners in designing your project.

 Early Adopters
 Early adopters are vital for another reason. They become an
independent test bed, ironing out the chinks and reinventing the
innovation to suit mainstream needs.

 Early Majority
 Early majorities are pragmatists, comfortable with moderately
progressive ideas, but won’t act without solid proof of benefits. They are
followers who are influenced by mainstream fashions and wary of fads.

 Late Majority
 They are conservative pragmatists who hate risk and are uncomfortable
your new idea. Practically their only driver is the fear of not fitting in,
hence they will follow mainstream fashions and established standards.

 Laggards
 They are people who see a high risk in adopting a particular product or
behaviour. Some of them are so worried they stay awake all night,
tossing and turning, thinking up arguments against it.
Diffusion of Innovations - Adoption

 Five qualities that determine the success of an

innovation.
 Relative Advantage
 Compatibility with existing values and practices

 Simplicity and ease of use

 Trialability

 Observable results
Diffusion of Innovations - Media

 Importance of Peer to Peer

networks
 Adoption of new products or
behaviours involves the
management of risk and
uncertainty. Knowledge and trust,
can give us credible reassurances
and builds confidence in the
innovation.
 Innovation adoption lifecycle grows
as trust and confidence builds.
Hype Cycle
 Hype Cycle to graphically display the maturity and adoption of
technologies and applications.
 Technology Trigger: Technology breakthrough kicks things
off. Proof-of-concept stories and media interest trigger
significant publicity. No usable products exist and commercial
viability is unproven.
 Peak of Inflated Expectations: Early publicity produces a
number of success stories — often accompanied by scores of
failures. Some companies take action; many do not.
 Trough of Disillusionment: Interest wanes as experiments
and implementations fail to deliver. Producers of the technology
shake out or fail. Investments continue only if the surviving
providers improve their products to the satisfaction of early
adopters.
 Slope of Enlightenment: More instances of how the
technology can benefit the enterprise start to crystallize and
become more widely understood. Second- and third-generation
products appear from technology providers. More enterprises
fund pilots; conservative companies remain cautious.
 Plateau of Productivity: Mainstream adoption starts to take
off. Criteria for assessing provider viability are more clearly
defined. The technology's broad market applicability and
relevance are clearly paying off.’ Figure 4 : Gartner Hype Cycle Methodology
Source: Gartner (2016)
 Slope of Enlightenment is aligned with the Early Majority
Predictions

 Nicholas Carr – if computing follows the path of

electricity then it is a matter of time until all companies
use cloud services.
 Paul Saffo – Most ideas take 20 years to become an
overnight success
 WiFi – 1991 – 2006 (100 million)
 Bluetooth Smart (LE – Smart) 1994 – 2014 (400 + devices)

 BlockChain - 2008
 Disruptive Innovation vs Digital Innovation
 Digital innovation is innovation borne from a
digital nature which is commercially viable
 Disruptive innovation focusses on providing low
cost alternatives in existing markets which are
not serviced or over serviced by existing
businesses
 By having products and services which over
deliver, customer look for alternatives, this
creates opportunities for businesses.
 Can disruptive innovation be digital innovation ?
 Solutions with many different capabilities and
features vs solutions with minimal viable
capabilities and features. Figure 5 : Disruptive Innovation
Source: Christensen, C, Raynor, M & McDonald, R (2015)
Competitive Advantage

 Moore, G (2006) states in order

for companies to survive and
prosper they need to continue to
innovative.
 continues to recommend
companies identify an innovation
strategy which works and creates
differentiation.
 15 different innovation strategies
across the different stages of the Figure 6 : 15 Innovation Strategies
Source: Moore, G (2006)

product lifecycle.
Value Proposition

 Treacy, M & Wiersema,F

(1993) have identified three
value propositions for
companies to provide value to
their customers.
 Operational Excellence
 Customer Intimacy

 Product Leadership
Figure 3 : Value Propositions
Source: Treacy,M & Wiersema, F (1993)
Value Proposition – Operational Excellence
 An operational excellence strategy aims to accomplish cost leadership. Here the
main focus centres on automating manufacturing processes and work procedures
in order to streamline operations and reduce cost. The strategy lends itself to
high-volume, transaction-oriented and standardized production that has little need
for much differentiation.
 Ideal for markets where
 customers value cost over choice,

 Mature, commoditised markets where cost leadership provides a vehicle for

continued growth.
 Leaders in the area of operational excellence are strongly centralized, with strong
organisational discipline and a standardised, rule-based operation.
 Wal-Mart, IKEA, Southwest Airlines, McDonald’s and FedEx.
Value Proposition – Customer Intimacy

 The customer intimacy strategy focuses on offering a unique range of customer services that allows
for the personalization of service and the customization of products to meet differing customer
needs. Often companies who pursue this strategy bundle services and products into a “solution”
designed specifically for the individual customer.
 Focus on customer needs - true customer intimacy can only arrive through aligning the product
development, manufacturing, administrative functions and executive focus around the needs of the
individual customer.
 decentralized organization which allows them to learn and change quickly according to customers’
needs.
 ecosystem of partners for the actual production and delivery of products and services to their
customers.
 IBM, Lexus, Virgin Atlantic and Amazon.com.
Value Proposition – Product Leadership

 Product leadership as a competitive strategy aims to build a culture that

continuously brings superior products to market. Here product leaders achieve
premium market prices thanks to the experience they create for their customers.
 Product leaders recognize that excellence in creativity, problem solving and
teamwork is critical to their success.
 This reliance on expensive talent means that product leaders seek to leverage
their expertise across geographical and organizational boundaries by mastering
such disciplines as collaboration and knowledge management.
 Tesla, Apple, Pfizer, Fidelity Investments
Competitive Advantage

 To maintain competitive advantage

organisations need to develop a cycle
of innovation which develops
innovation in a non-mission critical
area and then migrates the innovation
to a mission critical area to create a
competitive advantage.
 Once the competitive advantage is
realised and matures it is moved to a
Figure 8 : Core and Context Innovation cycle

supporting area and eventually Source : Moore, G (2006)

offloaded.
Module Summary

 Significant number of different concepts which are all interrelated.

 Cynefin Framework provides a way for managers to incorporate
complexity into their decision making.
 Reviewing the hype curve, technology adoption curve, diffusion of
innovation and product lifecycle provides organisations a way to
understand where innovation is in its lifecycle and the long term
viability of such innovation
 This provides an organisation with understanding the value
proposition and ultimately a potential competitive advantage.
 Aligning to two value propositions is essential to gain advantage.
References
Christensen, C, Raynor, M & McDonald, R 2015, 'What Is Disruptive Innovation?', Harvard Business Review, vol. December 2015.

Ford, 2016, 'FORD TARGETS FULLY AUTONOMOUS VEHICLE FOR RIDE SHARING IN 2021; INVESTS IN NEW TECH COMPANIES, DOUBLES SILICON VALLEY
TEAM', <https://media.ford.com/content/fordmedia/fna/us/en/news/2016/08/16/ford-targets-fully-autonomous-vehicle-for-ride-sharing-in-2021.html>.

Gartner, 2016, 'Gartner's 2016 Hype Cycle for Emerging Technologies Identifies Three Key Trends That Organizations Must Track to Gain Competitive Advantage',
<http://www.gartner.com/newsroom/id/3412017>.

Gollenia, LA & Uhl, A 2014, Digital enterprise transformation: a business-driven approach to leveraging innovative IT, Gower Publishing Company, Farnham, Surrey,
England.

Graves, T, 2016, 'Technology-adoption, Wardley-maps and Bimodal-IT', <http://weblog.tetradian.com/2016/07/18/technology-adoption-wardley-maps-and-bimodal-it/>.

Graves, T, 2016, 'Technology-adoption, technology-evolution and lifecycle-management', <http://weblog.tetradian.com/2016/08/09/tech-adoption-tech-evolution-lifecycle-

mgmt/>.

Moore, G 2006, 'DEALING WITH DARWIN How Great Companies Innovate at Every Phase of Their Evolution', in summaries.com (ed.).

Rogers, EM 2003, Diffusion of innovations, vol. 5th, Free Press, New York.

Snowden, D & Boone, M 2007, 'A Leader’s Framework for Decision Making', Harvard Business Review, vol. November 2007.

Treacy, M & Wiersema, F 1993, 'Customer Intimacy and Other Value Disciplines', Harvard Business Review, vol. January-February 1993.