Example paper 1 Flashcards
List different ways inventions arise from technology “push”
accident - The post-it note / light emitting polymer
analogy - taking a working solution to a different problem and applying it for the first time in a new context. A good example is the Dyson carpet cleane
structured search - where inventors have particularly looked to identify new opportunities to ‘insert’ technology into an area. The domestic breadmaking machine is an example
categorisation or mapping - seeing a pattern in existing solutions to the same problem, and spotting a ‘gap’ or new opportunity. Professor Smith’s “inerter” arose from a missing link in the mapping from basic electrical circuit components and the elements of a mass-spring-damper system.
application of novel materials - where new material properties either allow significant improvements in performance, or drastically reduce the cost of what were luxury products to standard ones. An example of the first type is in the use of titanium based aluminium alloys in airframes.
List different way inventions arise from market “pull”
experience in use – many inventions arise from frustrated experienced users of existing products who spot an opportunity to ‘do it better.’ The ‘aural’ baby thermometer.
observation of lead users - the chopper bicycle arose from modifications to existing bikes by enthusiastic users.
changes in fashion, or through ‘utility’ products being sold as style items. In the lecture, we mentioned fridges and domestic appliances becoming ‘fashion’ items
In response to legislation – where new laws change existing cost structures and drive new inventions – for instance the requirement for labelling of food products with an end of life date has driven the development of ink jet printing.
moving a product from luxury to common sectors of a market – many clothing and accessories brands work in this way – trying to increase the number of people available to buy their ‘elite’ goods; Henry Ford was able to sell more cars by producing cheaper models so that a previously luxury item became common, so a larger market was created.
Describe the main element of the design mix.
Core benefits: value proposition or primary benefits – such as novel technology or simple to use
Actual product attributes: tangible attributes such as performance or reliability. Intangible attributes such as aesthetics
tangible attributes - Quantifiable and often measurable. The kind of attributes which it is easy to put on the product specification. It is easy to compare different products against their tangible qualities
Intangible attributes - More difficult & subjective to judge. Aspects such as aesthetics will be perceived differently by different people.
Augmented product attributes: On top of the core product, the augemented product gives the service, support, financial warranty and generally what else you can get on top of the actual product.
Meta-product: success of a product is highly tied into the overall business model and product economics. Increasingly, car companies are selling cars under an extended lease programme. Rolls Royce sell ‘power by the hour’, mobile phones are sold as loss leaders and the real money is to be made through the customer contract.
The ipod is a great example of a business model supported product.
What are 5 approaches to market segmentation?
Product attributes – is often the least useful, but most common – try and avoid using price directly in segmenting the market. Price can normally be assumed to be related to some other characteristic.
Product usage – rate, frequency, volume of use, loyalty. Can be good for industrial goods
Demographic / geographic – age, sex, income, occupation, family type, home location
Psychographic – lifestyle, personality, attitudes of the customer (maybe hates gardening or perhaps environmentally friendly).
Benefits – most useful – what benefits are derived from buying and using – reliable, practicality, prestige, speed, efficiency, compactness. Benefits can often be related to product features and is thus useful in design. Compare ‘aimed at white, middle income women aged 20-30’ with ‘aimed at women seeking minimum effort mowing of their small garden and convenient storage’.
Any combination of these could be used to segment the market. A good answer will also note that it is first necessary to carefully define the lawnmower market
Identifity the consumer research process
Focus: Is it research that is aiming to unearth new and previously unseen requirements, or is it research that is aiming to validate and qualify current perceptions.
Stakeholders: Any party (both internal and external to the company) that has a significant influence over the design, development, manufacturing and distribution of a product.
Internal stakeholders:
Marketing,Engineering,Services,Sales,Finance,Assembly,Production,Purchasing
External stakeholders:
Initiator(s) - Begins the buying process & gathers information
Influencer(s) - Persuades or guides, has some role in influencing the decision, but is not the primary decision maker
Decider(s) - Holds the power / purse strings. May not however be the ultimate user.
Buyer - Conducts the transaction
User - The actual end user, who interacts with the product.
Research - Who will do the research? Ideally, this should be a range of people in the design team.
establish team, identify stakeholders, plan data collection & gather data (document), structure & interpret, organise & rank needs, communicate, reflect]. Multifunctional team essential. Different perspectives see different things. It is not just the role of Marketing to gather requirements.
Data collection: two approaches – ethnographic and traditional. Example of ethnographic is user observation. Example of traditional is user interviews. Data can be captured in multiple forms (e.g video of people in this segment using the product, photographs, notes and sound recording).
Describe what personnas are
Personas are descriptions of the hypothetical ‘archetype’ user. The more detailed and more specific the persona the better. What are their lives like, what are their capabilities, what are their interests and desires. A good persona helps remove the subjectivity of design choices. The design team can ask ‘what would Doris think?’
Draw/Explain the kano model
Exciters/delighters - customers get great satisfaction, they pay premium.
Performance/linear - characteristics directly linked to customer satisfaction, increased functionality results in increased customer satisfaction.
Expected attributes(threshold/basic) - have to be present in the product in order to make it succesful, customer remains neutral regardless of how this feature is executed.
What is a good product specification?
Qualified & quantified
Deal with the whole design mix
Deal with what and not how
Use visual as well as written
Avoid trivia
Put you in the position of the user
Shared vision - are generated collaboratively
Constrain only the critical attributes Indicate relative importance
What is a poor product specification?
No qualification or quantification
Separate marketing and engineering specs – results in:
Disagreement
Late design changes
Used to “prove my innocence” Too ambitious
Not traceable to user requirements Lack of realism
No prioritisation
Give the points covered in the “elevator pitch”
For(target customer)
Who(statement of need or opportunity)
The(product name) is a (product category)
That(key benefit, compelling reason to buy)
Unlike(primary competitive alternative)
Our product (statement of primary differentiation)
What does a product specification need to cover?
Give the range of different prototypes that can be used to test concepts.
Simple sketch - The simplest, cheapest and quickest way of evaluating lots of ideas for form, technical arrangement and usability. Often highly under-utilised.
Block model - Primarily for early testing of usability, ergonomics and form. Also useful to quickly evaluate a product’s physical arrangement. Mainly use easy to work and cheap materials.
Visual (physical) model - Enables evaluation of visual and form aspects. Produced to look as realistic as possible. Good for testing product feel and form.
3D CAD model - Evaluation of overall form, assembly sequence, component fit and production issues. Can also plug into a range of complex analytical models.
Functional (technical) model - To test specific performance aspects. Not necessarily representative of production processes. Good for evaluating reliability, durability, performance, failure etc.
Production prototype - To evaluate all elements of performance, function, form, use and producibility. Made with processes representative of the final production method. Fully functional.
Analytical / virtual models - Mathematical models to support component and assembly optimisation. Often used for safety critical elements. Can be costly and answers are always approximations.
In designing the production system – often called the ‘operations’ of the business – four main areas of choice are involved, what are they?
• How can the business balance supply and demand? Supply is the rate at which the business can make products, and demand is the rate at which customers buy them. For a new product, the demand will be uncertain, and we hope it will grow – so the business must be designed to have a flexible capacity for supply.
• Process technology - Should production be manual or automated – and what are the effects of different choices of production technology?
• Job design - What types of jobs will be created by the production system? Are these appropriate for the types of people available to work in it?
• Supply chain - To which other companies must the business connect in order to complete its products and deliver them to customers, and how should the relationships with these companies be nurtured?
Explain what is meant by ‘intellectual property’ (IP), and list five different forms of IP which are recognised in the UK.
Intellectual property (IP) allows people to own the results of their creativity and innovation in the same way as physical property.
Six types of IP recognised in the UK are: patents, copyright, trademarks, registered designs, unregistered design right, trade secrets or know-how (any five acceptable for the answer.
What are trade marks
What are the rules about trademarks
These are distinctive signs indicating the source of a product or service.
Rules about trademarks:
They can be registered or unregistered
Can register trademarks for UK and for EU
Note that trade marks are completely different from internet domain names, the fact that you may have registered a trade mark does not entitle you to use the words in a domain name.
What is copyright
Copyrights are for written and artistic works, musical sound recording, films, broadcasts, computer programs. The copyright lasts for 70 years after the death of the author, published editions for 25 years.
Copyright is not registered, but emerges as soon as the work is created.
Copyright of work created during employment is commonly owned by the employer, unless there is an agreement otherwise
If the work is commissioned eg photographer taking pictures, you cannot assume you own the copyright
What are design rights
Protecting the design:
Prevents copying of your product, and rival companies making identical products
Protects a brand image eg shape of Coca Cola bottle
Rules for registered designs:
A monopoly rights which protects the appearance of all or part of a product
Appearance must be novel and viewed as a fresh design
There is a 12 month grace period after public disclosures when registration is still possible – perhaps providing an opportunity for test marketing – unlike patents
Unregistered design rights:
An automatic right and does not need to be registered
Applies to original design
Only gives protection against another article copied from the design. Registered is not just copying
What are patents?
A patent is a legal title which grants the holder:
– the exclusive right to prevent others from making, using or offering for sale, selling or importing a product that infringes his patent without his authorisation in countries for which the patent was granted for a limited time (up to 20 years).
- In return for this protection, the holder has to disclose the invention to the public
- Having a patent is not a right to commercialize
Classical product patents include: filament light bulb, airbags, ring top opener on cans, post-it.
Process Patent example is manufacturing one of the best selling drugs against heartburn called Nexium.
What is a utility model grant
A utility model grants the holder the exclusive right to prevent third parties from exploiting an invention without authorisation in the country where the utility model was registered for a short period of 3-10 years. The holder has to disclose the invention to the public.
Requirements for utility model applications:
Substantive requirements – ie the novelty, inventiveness or industrial application
Further requirements – sufficiency of disclosure, claims must be clear and concise.
What are trade secrets?
Companies often have know-how or other business information which they want to keep secret from their competitors, yet they may have to reveal some of it, in confidence, to other parties (deliberately or accidentally – for example during a factory or laboratory visit.
They will therefore often want a confidentiality agreement (confidential disclosure agreement: CDA) or non-disclosure agreement (NDA) to be signed before they will start discussions or allow a visitor on site
List the main types of business model in terms of products and services, and the main
types in terms of organising resources to exploit the idea. Give an example as well as pros and cons.
Sell a product - Pro: Increase revenue with higher volumes - Con: Need to develop, make, distribute, support, etc.
Sell a service - Pro: No manufacturing costs - Con: Can be hard to scale up the business (in many cases can only grow through recruiting and training lots of people).
Sell a product plus a service - Pro: Long-term revenues on the back of the sale of each product - Con: Need infrastructure to provide services.
Sell a product plus consumables - Pro: Long-term revenues on the back of the sale of each product - Con: Need infrastructure to deliver consumables.
Sell the idea - Pro: A quick route to cash, no responsibility for building the business / achieving success, no further funding needed/capital investment. - Con: Only get a small % of potential value, need to find someone to buy it.
License the idea to somebody else - Pro: Get the cash quite fast, little responsibility for building the business/achieving success, little further funding /capital investment needed. - Con: Get relatively small % of value, need to find and manage licensees.
Form a partnership with somebody else - Pro: Use experience and resources of another business, increased speed to market, shared responsibility for building the business/achieving success, shared risk, reduced level of investment. - Con: Share the value with other people / organisations, need to work with (and ‘get-on with’) other people / organisations.
Describe the main differences between the process of selling in ‘B2C’ (business to consumer) and ‘B2B’ (business to business) markets. Use examples to illustrate both cases.
B2C = Selling that takes place between businesses and individual consumers (e.g., Microsoft selling you a copy of Windows XP – you are the purchaser and the end user). Purchaser is often also the end-user.
B2B = Selling which takes place when business sell to other businesses (e.g., Microsoft selling thousands of licences for Windows XP to IBM – purchaser is not the end user. Someone else will buy the IBM PC and use Windows XP). Purchaser and the end user are different people.
What are the four basic types of funding?
GRANT - a ‘gift’ from an organisation such as Innovate UK or NESTA (National Endowment for Science, Technology and the Arts). The type of projects that are eligible for funding through this route may be very restricted.
DEBT - borrowing money from a bank or specialist finance organisation. You can only borrow money if you can convince the bank that you can repay the money, plus interest, exactly when they want it. Banks hardly ever lend money to early stage ventures as they regard them as too risky. They are not able to assess their performance based on past record and so cannot deem them an acceptable risk.
EQUITY - selling part of the ownership (shares) of your business in return for cash. The assumption is that whoever buys part of your business will wish to sell this part of the business to someone else in the future at a higher price. The only reason for doing this is if the investor can be convinced that: (a) the business is really going to grow (and quite fast) and that (b) there will be someone else willing and able to buy their share in the company at a later date.
SALES - money from selling something. If a company hasn’t yet got a product to sell, there still may be ways of getting revenue. For example, selling expertise (consultancy) in your specialist area may be one way of bringing money in to fund the development of a product
Describe the main elements of a business plan aimed at raising funding from a venture capitalist.
The market - Who has the problem that you are attempting to fix?
Product or service - What solutions are going to be used to address the problem?
Management team - Who is going to do it? What is their track record?
Business operations - How are you going to do it?
Financial projections - How and when will money be made?
Marketing strategy - How will get people to buy your product / service
Resources required - What do you need to start your business?
Exit opportunities - How will your investors get their returns?
Which elements of a plan do you think a venture capitalist would pay closest attention to, and explain why.
- Management (especially where the team has not worked together before. VCs will look for some reassurance that the team can access all the technical and commercial skills they need).
- Technology (does the innovation really work? how well?).
- Market (will the dogs eat the dog food?).
- Access to markets (market size is not the only issue: can you access a specific market such as the National Health Service, with set procurement processes?).
- Regulation (does the innovation exploit a rule change? will it be caught by new regulations, even if the activity is currently unregulated?).
- Funding (can my fund afford to follow-on in a second or third round? if not, how badly do I get diluted?) – dilution (or reduction in percentage ownership) is one of the most enduring headaches for both seed funds and angel investors; and
- Exit (what control, if any, do I have over a trade sale or a stock market listing?).
In terms of investment required and time to break-even, discuss and compare:
(i) a ‘soft’ business start-up (i.e. one focusing on income from sales from the outset);
(ii) a ‘hard’ business start-up (i.e. one that requires investment before sales can be
made) .
A ‘hard’ company cannot generate any sales from customers until it has spent a significant amount of money developing the product … which may then fail to take off in the market. The ‘hard’ model is therefore high risk, especially if the product is based around a novel technology, or which is new to the market. Investors in such a business want to ensure that the risks are minimised but will not want to spend too much money on development of something for which there is unclear demand or which may not work. To lower the risk, the investors may ‘drip feed’ the financing, only releasing small amounts of money in response to the entrepreneur delivering to specific development targets.
The alternative is the ‘soft’ company which focuses initially on doing consultancy or contract R&D work to generate income and learn about the market. Profit earned from this work can then be used to develop products which may have a greater chance of success as there has been closer contact with potential customers. The soft company may generate lower returns, but is likely to be reach profitability (‘break even’) before the typical hard company. However, a successful hard company can generate huge returns (think Intel, ARM, etc.)
four motives for start-ups to establish partnerships with larger firms.
To access resources, to build credibility, to access skills, to gain routes to market.
Describe what is meant by:
Outsourcing
Joint ventures
Mergers and acquisitions
Outsourcing - getting an external company/organisation to deliver some aspect of your business (e.g. outsourcing of customer services; contracting someone to design something for you).
Joint ventures – a new organisation formed by two or more companies to achieve some specific goal. If this joint venture fails, there is less risk to the parent organisations.
Mergers and acquisitions – the purchase of the majority of shares in another business so that you become the owner. Merger implies organisations of roughly equal size; acquisition is a more general term but implies that one partner is stronger than the other.
sketch a chart that illustrates the different forms of partnership that could be formed between two organisations.
Explain what is meant by the ‘4 Ps of innovation’. Give examples for each one.
Product / service: What is offered to the customer
Process: How the operations of the business are managed
Placement: How the product / service is positioned in the market
Paradigm: A radical change in the way the business makes money
Firms need to have an integrated approach to managing innovation. Give the ‘Pentathlon Framework’:
Innovation strategy: Developing and achieving the goals of the innovation strategy is the responsibility of top management and this requires a focus on a number of issues including (1) assessing market trends and how these drive the need for innovation in the company (2) the role of technology, the opportunities it can provide, and what expertise needs to be acquired, and (3) communicating the role of innovation within the company. There needs to be recognition that there are limited budgets – you can’t do everything!
Ideas: This is the raw material for innovation. Idea generation needs to be supported at the individual and team level, and from within and outside the company. These ideas should draw upon both technical possibilities and market opportunities. This is the time for experimenting with risky ideas – the cost of failure at this early stage is very low.
Selection and prioritization: There must be an efficient process for ensuring that the best ideas are selected and pushed forward for development. Tools are used to consider the relevant merits of different projects, and for individual ideas to be considered as part of the portfolio of projects within the company. Often the hardest part is deciding what not to do.
Implementation: The focus here is on developing new products and services as quickly and efficiently as possible. Here the focus must be on discipline and quality, not on creativity and change. As projects move closer to market, the cost of changes becomes higher.
People and organization: Successful innovation is the result of having the right company culture, recruiting, training and motivating the best people, and providing organizational structures that enable rather than hinder innovation and collaboration.
How does the management style between start-ups and large firms vary?
Management style: In a start-up management style will be hands-on, informal; decisions often taken on incomplete information. Because organisational structures are simple (and the number of people is very small) high dependence on verbal communication and memory; ‘everyone knows everything’. In a larger, mature firm there will be clearly defined roles and, due to the scale of activities, specific tasks will be delegated to these defined roles. Communication will be typically much more commonly done in written format, and this flow of information will be often quite controlled to ensure that the correct information goes to the right people at the right time to allow them to fulfil their delegated duties.
How does systems and processes vary between a start-up and large firm?
Systems and processes: Due to the relative simplicity of operations, things tend to kept informal in a start-up, with few things written down, and people just getting on with the tasks that need addressing most urgently. In a large firm, there will be processes and systems for everything, to allow consistency across a potentially widely spread and diverse organisation. Things may move more slowly in a larger firm, but decisions will be made more robustly on a basis of evidence, and using tried and tested systems.
How do organisational structures vary between start ups and large-firms?
Organisational structures: Start-ups are typically (certainly at the outset) very simple, comprising just one or two people. As the firm grows, roles / activities become clearer, and the relationship between these roles / activities needs to be clarified. By the time the firm has grown to tens, hundreds or thousands of people, there needs to be a very clearly defined structure for the organisation so that all those inside know who does what, and how things fit together.
Explain, illustrating your answer with examples, what is meant by ‘crossing the chasm’ in terms of market development.
There is life cycle for the adoption of a new technology. For technology firms, selling to different types of customers presents many challenges. There are numerous examples of firms with a new technology that have managed to sell successfully to the ‘early adopters’ (i.e., those who are either obsessed by anything technological, or who want to be the ‘visionary’ leaders in a new market) but who have failed to sell the pragmatists (i.e., those who will only buy when the
product has been tried and tested by others, and has been demonstrated to deliver cost effective benefit). Successful technology firms are the ones that are able to ‘cross the chasm’ and move from selling to early adopters (who may be enthusiastic, tolerant of some bugs, but relatively few in number) to addressing the needs of the more numerous pragmatists (where the sales volumes are much higher, but who demand a much more robust product).
