MTI Advent Corporation

Advent Corporation

| Group 1 |

Management of Technology and Innovation

Shalina Bhatia 119Arun Ravindran 138Suman Kumar Saha 245

Anto Abraham 073Arpit Rastogi 077Ritesh Jain 112Sandeep Tripathy 114

Shikha Gupta 300Suja Barua 306Suseendran 308Vishal Gagrai 316

Group 1 Management of Technology and Innovation IIM Kozhikode

Advent Corp

Founded by Henry Kloss in 1967 for manufacturing specialized electronic products

Motto was to make the most efficient piece of equipment at the lowest price to the customer

Initial objective was to create and market a large screen TV system

Suspended development of the TV system and switched to hi-fidelity audio products due to shortage of capital


Advent Corp

• By 1970, Advent sold five products for home entertainment use

– Advent Loudspeaker

– Advent Frequency Balance Control

– Advent Noise Reduction Unit

– Advent Tape Deck Model

– Advocate Crolyn Tape

• Licensed technology from Dolby Systems and Du Pont


Henry Kloss

• Respected figure in consumer electronic product design

• Keen on strong financial control and micromanagement of processes

• President of KLH for 10 years and the driving force behind their high quality products

• Constantly worked on and refined the design of the TV system


Broad Narrow HighContinuous

OptimizationN.A.

HighPotential to

expandHigh High Moderate

Strong, Centralized Strong Innovative Optimization

Leader Leader Strong Strong N.A.

Value Chain Stance

Resource Commitment

Stance

Management Stance

Competitive Stance

External Technology

Sourcing

Internal Technology

Sourcing

Product Development

Process Development

Technical Support

Substance

Enactment (Modes of Experience)


WHAT ARE THE KEY ELEMENTS IN ADVENT'S STRATEGY? HOW SUCCESSFUL HAS ADVENT BEEN?

WHY?


What are the key elements in Advent's strategy?

Cost Leadership Differentiation

Differentiation FocusCost Focus

Cost Differentiation

Nar

row

Bro

ad

Sco

pe

Source of Competitive Advantage


What are the key elements in Advent's strategy?

• Advent focused on specialized area of audio market

• Targeted the low competitive sector

Blue Ocean Strategy

• Use existing inventions, usually off-the-shelf

Indulge in research directed at invention

• Identified latent needs and opportunities for innovation

• No market research

Need seekers

• Didn’t believe in patent protection

• Gain market share through brand equity

Brand Equity


How successful has Advent been? Why?

• Recorded a net profit of $30,000 in the month of September,1970 which was mainly contributed due to the launch ofM200– M200 was first of its kind and there weren’t any competitors

• Audio Loudspeaker was one of the industry’s best sellers– Best quality in medium price category

• Response from nation-wide distribution and exposurethrough trade press had been overwhelmingly favorable– Carefully chosen 150 dealers handled distribution of Advent products

across the country

• Not many products in the pipeline– Absence of idea generation team


What are Advent's distinct technological competencies? Please construct a matrix showing the technological competencies embodied in the

different segments of the audio business.


Advent’s Technological Competencies

• Ability to aggregate existing components in response to aperceived customer need/product trend – ArchitecturalInnovation

• Ability to leverage knowledge and sensitivity to– Market trends, customer preferences

– Technological progress, off-the-shelf products availability

• Ability to use knowledge across complementary products– e.g audio players and noise cancelling devices

• Simplification of design and production


Technological competencies embodied in the different segments of the audio business

• End product – loudspeaker, Tape deck (M 200)

– Product differentiation through innovation

– Identification of latent customer needs

• Intermediate product (noise reduction units, Crolyn tape)

– Identification of existing issues and needs

– Standardization of components

– Simplification of design and production


How is this different for the video business?

• Competencies for video business– More focus on end

customer in video as no intermediate products

– Scope for improvement in technical know-how –optics, CRTs and display technologies

– Better trained sales force

A means of finishing mirrors at a very low

cost to support image projection

Access to screen technology which was

owned by Kodak

Research to develop new ways of

prolonging the life of the cathode ray tube

Indirect resources such as building space,

raw materials, tools and investment capital


What are the key issues and problems facingAdvent? Please prepare a detailed action plan.


Issues/Challenges - External factors

• No significant economies of scale existed in the industry

• Success of large screen TVs depended on recorders’ capabilities to reproduce quality content

• Outsource manufacturing and sales to achieve economies of scope

• Complementary products– Hence, collaborate with

recorder developers– And involve them from

initial phase of product development i.e. idea generation


Issues/Challenges - Strategic decisions

Operational Strategy• Decision to make or buy receiver

units

Distribution and marketing strategy• Dependency on dealer network to

sell the products– Difficulty in selling products with

sophisticated innovations– Uncertainty about distribution of

video products through audio dealers

• Absence of advertising and promotional strategy

• Cost benefit analysis for make/buy decision

• Develop own sales force for new products and outsource sales for established products– Reduce uncertainty– Focus on core-competency i.e.

new product development

• In-store displays, demo by ownsales force


Issues/Challenges - Future outlook

• How to increase sales while maintaining specialized and protected market niche

• Institutionalization of innovation process

• Collaboration on profit sharing model– Relinquish control over

non-core competencies

• Form ideation team– Members with different

skills and backgrounds– Discuss ideas with

suppliers and partners to check feasibility and to make necessary modifications


Characterize Kloss's style as a general manager.Does he need to change? How?


Kloss's managerial style

• Equity control – 75% equity shares

• Active involvement with R&D team

• Reliance on experience and intuition about product sales

One-man army

• Idea generation centralized in just one individual

• Closely supervised production operations

– Determined even the assembly steps and production rate


Change

Change required• To make the organization self-sustainable, independent of his

association with the organization

How?• Delegate powers and responsibilities• Build a core executive team – better decision making

• Succession planning – identify and nurture future top management

• Form ideation team– Members with different skills and backgrounds– Discuss ideas with suppliers and partners to check feasibility and to

make necessary modifications

• Build capabilities in concept testing – To better estimate sales potential of a product – Build organizational capabilities, rather than depending on individual


Thank you

MTI Advent Corporation

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