06 New Product Innocation

Question 1

3 Challenges in Innovation Management

Answer 1

1. Understanding importance of innovation
2. Encouraging innovation
3. Capitalizing on innovation

Question 2

Innovation Management:
What market conditions do they face?

Answer 2

Market is forcing firms to seek new profit opportunities

-> Innovation is only way to escape this pressure

Question 3

Is innovation an easy or problematic topic?

Answer 3

It is fairly hard - about 95% of product innovations fail

Question 4

What do companies measure for product innovation?

(2-3 Examples)

Answer 4

(Wichtigkeit ist absteigend)

• Customer satisfaction
• Higher margins
• Percentage of sales from new products
• Overall revenue growth
• Innovation ROI
• …

Question 5

Give up to 6 possible threats of innovation

Answer 5

• High costs
• Risk of failure
• Long time span between R&D and introduction of new products
• Spill-over effects to other firms so they imitate innovations
• Difficulty of measuring returns on innovation
• Difficulty of financing innovation (intangible & uncertain nature -> hard to justify)

Question 6

What does Schumpeter’s Theory of Profit Extraction suggest?

Answer 6

• Innovation enables firms to have a temporary monopolistic position
• This monopoly ends when competitors mimic the firm’s innovation

Question 7

Name moderators of firm innovativeness

Answer 7

1. Factors on level of firm, industry and country (size, ads intensity, low-/high-tech, ..)
2. Conceptualization of innovativeness (incremental vs. radical, inputs vs. outputs, ..)

Question 8

What does advertising support do for product innovations?

Answer 8

• Builds awareness
• Leads to more differentiated products
• Reduces perceived consumer risk

Question 9

New-to-company innovations

Answer 9

Enhance cash flows by new sales, cross-selling opportunity, leverage platform for follow-up innovations, reduced selling costs (billboard effect)

Question 10

New-to-market innovations

(pioneering, breakthrough innovation)

Answer 10

Enhance cash flows by greater potential to sustainably unlock unmet demand, but development and adoption are risky

Question 11

What is the RWW assesment for innovation?

Answer 11

RWW = Real-Win-Worth

• Is it real? (Market, product)
• Can we win? (Competitive production, competitive company)
• Is it worth doing? (Profitable product under acceptable risk, does it strategically make sense)

Question 12

What is the connect & develop method / approach?

Answer 12

Method which uses external innovation power (university, government, markets, suppliers, …) to generate new ideas and bring them to market