Marketing of High-Technology Products and Innovations Product Development and Management in...
-
date post
20-Dec-2015 -
Category
Documents
-
view
221 -
download
3
Transcript of Marketing of High-Technology Products and Innovations Product Development and Management in...
Marketing of High-Technology Products and Innovations
Product Development and Management in High-Tech Firms
Chapter Overview
• Technology Maps
• “What to Sell”
• Product Platforms and Derivatives
• “Stopping” rules in new product projects
• Intellectual Property
Review of other Product Management Concepts
(covered earlier in the text)
• Classification for high-tech products– Incremental versus Breakthrough
(Chapter 1)
• Technology Life Cycles(Chapter 2)
• Adoption and Diffusion of Innovation (Chapter 6)
Technology Maps
• Define a stream of new products (breakthroughs + derivatives) company plans to develop over time.
• Used for: – Commitment to new product development– Allocation of resources
• A flexible blueprint that must be updated regularly
Technology Map: 4-Step Process
1
Technology Identification
4
On-going Management - Platforms and derivatives - Killing projects - Intellectual property issues
2
Decide on needed technology additions - Internal development (Make) - External acquisition (Buy) - Partner to co-develop
3
Decide on "What to Sell" strategy - License vs. full commercialization
1. Technology Identification
• Inventory of firm’s valuable know-how that may be sources of revenue generation– Products – Processes
• Such as superior manufacturing skills– Management practices
• Such as knowledge management
2. Decide on needed additions
• Where does firm need new skills/products to round out its offering? – “Make vs. buy” decision
• Internal development
• External acquisition
– Partnering
Adding New Technology: Focus on Development Risk
• Internal Development– New development close to
existing skills– Confidentiality reasons– “NIH” (not invented here):
Only good technology is developed internally.
• External Acquisition– Someone else has already
developed– Save time and effort– Let others take risks first– Keep up with competitors– Obtain technology for
existing brand name/marketing resources
3. Commercialization Decision: “What to sell?”
Focus on Marketing Risk
• Continuum of options, based on the additional expenditures customers must incur beyond the cost of the purchase to derive the intended benefits of the technology– Know-how only
– “Proof of concept”
– Components to OEM
– Final products to end-user
– Service bureau
Lean Towards Selling Know-How When:
• Technology lacks fit with corporate mission• Lack of financial resources to exploit technology• Tight window of opportunity and lack of speed• Market smaller than expected/business unlikely to be
profitable• When allowing firms access to technology is most
appropriate (next slide) • When range of technologies in market is diverse
Allow other firms access to technology (license) when:
• Network externalities: more value as more customers use a product– Tends to favor position close to know-how
• But, know-how hard to price, which pushes away from selling know-how.
– Seek standardization of technology via licensing, etc.
Lean Toward Selling End-Product When:
• Firm’s components are incompatible with general industry standards. – What if firm competes at end-product with
iconoclastic (radically new) product? • Hard to get third-party developers
Sell at Multiple Points on the “What to Sell” continuum when
• Offering technology to competitors may encourage industry standardization– License know-how or sell components on an OEM basis
• Firm may have skills in some segments but not others • Major buyers require second source• To maximize rate of return on technology investment
4. On-going product management
• Managing platforms and derivatives
• “Killing” products – Destructive Creation
• Protecting intellectual property
Product Platforms and Derivatives
• Develop a set of subsystems and interfaces around a common underlying technology “platform” – Common structure for development/production
of a stream of derivative products
– Single design and components shared across set of products, using same underlying technology
Platform Strategy is Attractive in High-Tech Markets
• Unit-one cost structures• Allows for rapid development of market
share/revenues• Speed and flexibility in going after niches
– “gap filling”
• Modularity for customers to “plug-and-play” different firm’s products. – Industry standards
Defining appropriate platform
• Design for high-end of the market– Incorporate as many features as needed for this
segment– To recover high fixed costs – Makes it easier to sell lower priced versions at only
modest incremental cost (vs. vice versa)• Subtraction of features!
– Consistent with both lead user and chasm concepts
When to “Kill” New Products?
• Escalation of commitment– Product champions and technology enthusiasts
are perennial optimists – Personal stake in project – Biases in interpreting information
• Recall info that confirms beliefs• Ignore info that disconfirms beliefs• Re-interpret neutral info as positive, and even
negative info as positive!
More information is not the answer!
• Foster internal culture that fosters open questioning.
• Remove project from core of the firm• “De-couple” withdrawal decision from prior
investments– Different manager make the decision
• Rely on benchmarks established at outset
Protection of Intellectual Property
• “Original works that are creations of the mind” and to which the inventor has rights to protect.
• How to protect it? – Patents– Copyright– Trademark– Trade Secret
Patents
• Confer owner the right to exclude others from making, using, or selling product or process for specific time period – In U.S., 20 years from date of filing
• Three criteria applicant must meet: – Useful: performs some function that benefits humanity– Novel: no prior evidence of invention exists– Nonobvious: no suggestion of invention exists, even when
multiple writings are combined
Two Types of Patent Applications in U.S.
• Provisional: – $150, 1 year time frame to “hold”– Allows inventor to do further research – Establishes a “priority date” of invention
• Utility: – $790 for examiner to render a decision – Granted or denied; applicant can appeal or re-file
(another $790)
Disadvantages in Using Patents
• Patents are public information – From time of filing in countries outside US– From time of grant of patent within US– Competitors may “invent around”
• Patent owner must enforce rights
• Costly!
New Issues with Patent Protection
• Can now patent “business methods” – Effective July 1998– Implications:
• Patents on E-commerce business models/methods
• Patents on medical treatment methods
Tension in Granting Intellectual Property Rights
• Foster creativity and “common good”– Give inventors incentives (exclusive rights to
revenue from their inventions)
• Inhibit spread of creativity and consumer welfare – Slow spread of valuable commercial innovations– Lack of competition and access
Steps in Granting Patents
• Hire patent agent– Provide thorough, accurate understanding of
invention
• Assess state of prior art: – Is the idea truly novel?
• Draft the claims to define the boundaries of the invention
• Draft drawings and application in easy-to-understand terms
Trouble Spots in Patent Protection
• Inventor has previously disclosed idea prior to filing application – At a conference, with investors, etc. – Fatal in foreign protection– US grants one year “grace period” from
disclosure
• Conflict patent rights that infringe on others
Patent Process (Cont).
• File patent application ($790)
• If patent granted: – Pay “issue fee” ($1320)– Pay “maintenance” fees
• 3 ½ years: $1050
• 7 ½ years: $2100
• 11 ½ years: $3160
International Filing Under PCT
• File within 1 year of national application to claim priority back to original filing date
• PCT enables filing one application in home language• Determine individual countries • PCT application published 18 months after priority
date • At applicant’s option, examiner will issue “search”
report and/or preliminary judgment of patentability
International Filing Under PCT
• PCT application enters designated countries and goes before examiners in each
• Translation is required, with fees
• Rights must be enforced in each country
Patenting Costs
U.S. PATENT COSTS FOREIGN PATENT COSTS
Application preparation $8,000-15,000
Searching/patentability $1,000-2,000 PCT filing fee $4,000-5,000
Drafting application $3,000-8,000 Attorney’s time to prepare application
$300-$1200
Filing fees $790 Prosecution
Examination/prosecution Attorney’s time $1,000-2,000
Attorney’s time (per response) $1500-3000 Foreign associate’s time $600-$1,000
PTO fees for “late” responses $110-950 Entry into national countries $1700-5500
Issue fee $1320 Examination in country
TOTAL $18,000-25,000 Translation
Attorney’s time
Foreign associate’s time
TOTAL $80,000
Copyrights• Protect tangible form or manner in which idea is
expressed, not the idea itself. – Example: software code
• Grants inventor right to reproduce and distribute copyrighted works
• Term is: – Life of author + 50 years -or-– Shorter of 75 years from publication or 100 years from
creation of work
• Easy to obtain ©– Register with US Copyright office in case lawsuit is filed
Trademarks
• Names, symbols, devices to distinguish/ identify goods
• Protects firm against unscrupulous competitors who try to deceive/mislead customers
Trade Secrets
• Any concrete information that: – Has commercial value
• useful to company
– Secret• generally unknown
– Not easily ascertainable • Developed at some expense
– Provides competitive advantage
Trade Secrets (Cont.)
• Financial, business, scientific, technical, information including patterns, plans, compilations, formulas, designs, methods, programs, etc.
• To be granted “trade secret” protection, firm must take reasonable steps to protect information
Premised on the notion of confidential relationships
• Nondisclosure Agreements (NDAs)– Signer will not disclose information
• Noncompete Agreements– Signer will not establish/join a competitor’s firm
within a given time frame/territory
• Invention assignment clauses– Grant firm rights to employees’ inventions
Patents or Trade Secret Protection?
• Patents When: – Product will have long
market life
– Product can be reverse-engineered
– Protection can/will be enforced
– Corporate policy
• Trade Secrets When:– Secret not eligible for patent
protection
– Product life cycle is short
– Patent would be hard to enforce
– Secret is not detectable in the product
• (via reverse engineering for example)
Effective Proprietary Information Programs
• Focus on employees• Morale
• Look to senior managers’ behavior– Stand behind security programs
• Share information on a need-to-know basis only
Effective Proprietary Information Programs
• Have a stated policy that is enforced via monitoring• Use caution in sharing information in partnering
relationships (including nondisclosures)• Have awareness of competitive intelligence tactics of
other firms