Scenario
You work as a middle manager for one of the top U.S. producers of luxury and mass-market automobiles and trucks.
The chief technology officer (CTO) of the company from the course scenario has been monitoring new technology developments that the company could integrate into its vehicles to enhance the usefulness of and improve access to the data acquired by the many digital sensors integrated into vehicle subsystems over the past 20 to 30 years. The technology trend of particular interest is the internet of things (IoT)the interconnection of embedded devices, such as sensors and computers, over the internet. By taking advantage of this trend, the CTO believes the company can seize an opportunity to provide better service and predictive maintenance to its customers, improving customer satisfaction and adding additional revenue streams.
Based on briefings by the CTO and your Module One memo, senior management has decided to implement IoT into its product line. Your CTO has asked you to lead a cross-functional team to take this initiative forward. Your first task is to create a presentation that will include your recommendation for how the company should approach this business problem: should you use incremental or discontinuous innovation?
Specifically, should the company:
Design a completely new product line, based on the new technology (discontinuous innovation)
or
Add new technology features first into one model and then incrementally into the broader product line (incremental innovation)
Presentation on IoT Integration: Incremental vs. Discontinuous Innovation
Slide 1: Title Slide
Title: Integrating IoT Technology into Our Vehicle Line
Subtitle: A Strategic Approach to Enhance Customer Experience and Revenue
Presented by: [Your Name]
Date: [Presentation Date]
Slide 2: Introduction
- Context: As the automotive industry evolves, the integration of IoT technology offers significant opportunities for enhancing customer satisfaction and optimizing vehicle performance.
- Objective: To evaluate the best approach for implementing IoT technology—incremental innovation vs. discontinuous innovation—and make a recommendation that aligns with our strategic goals.
Slide 3: What is IoT?
- Definition: The Internet of Things (IoT) refers to the interconnection of embedded devices, such as sensors and computers, over the Internet, enabling data exchange and real-time monitoring.
- Relevance in Automotive:- Enhanced vehicle performance monitoring
- Predictive maintenance capabilities
- Improved customer engagement through data-driven insights
Slide 4: Innovation Approaches
Incremental Innovation
- Definition: Gradually enhancing existing products by adding new features or functionalities.
- Example: Integrating IoT features into one model first (e.g., predictive maintenance alerts) before rolling out across the entire product line.
Discontinuous Innovation
- Definition: Creating entirely new products or product lines based on emerging technologies.
- Example: Developing a new range of vehicles specifically designed with IoT technology from the ground up.
Slide 5: Benefits of Incremental Innovation
1. Lower Risk: Gradual integration allows for testing and refinement before full-scale implementation.
2. Faster Time-to-Market: Enhancements can be rolled out quickly, capturing early adopter interest.
3. Customer Feedback: Early models can provide valuable insights for further development based on customer experiences.
4. Cost Efficiency: Utilizing existing designs and manufacturing processes reduces initial investment.
Slide 6: Drawbacks of Incremental Innovation
- Limited Market Disruption: May not fully capitalize on the potential of IoT to transform the product line.
- Potential Customer Perception Limitations: Customers may view updates as minor rather than revolutionary.
Slide 7: Benefits of Discontinuous Innovation
1. Market Differentiation: A new product line can position the company as a leader in IoT-enabled vehicles.
2. Enhanced Brand Image: Innovative offerings can attract tech-savvy consumers and enhance brand reputation.
3. Potential for New Revenue Streams: New models can introduce subscription services for IoT features (e.g., telematics, real-time analytics).
Slide 8: Drawbacks of Discontinuous Innovation
- Higher Risk: Significant investment in R&D without guaranteed market acceptance.
- Longer Development Cycle: Creating new models from scratch requires more time and resources.
- Potential Distraction from Core Products: Focusing on new models could divert attention from current product lines.
Slide 9: Recommendation
Adopt an Incremental Innovation Strategy
- Rationale:- Leverage existing infrastructure and expertise while minimizing risk.
- Begin with a pilot program in one or two vehicle models to gather data and customer feedback.
- Gradually expand IoT features based on insights gained, ensuring that we meet customer needs effectively.
Slide 10: Implementation Plan
1. Phase 1: Pilot Program
- Select models for initial IoT integration (e.g., luxury SUVs).
- Define key IoT features (predictive maintenance, real-time diagnostics).
2. Phase 2: Customer Engagement
- Launch marketing campaign to inform customers about new features.
- Gather feedback and data on user experience.
3. Phase 3: Evaluate and Expand
- Analyze pilot results and adjust features as necessary.
- Plan for gradual rollout across additional models based on success metrics.
Slide 11: Conclusion
- Embracing IoT through an incremental innovation strategy allows us to innovate while mitigating risks.
- This approach positions us strategically in the market, enhancing customer satisfaction and opening up new revenue streams without overextending our resources.
Slide 12: Q&A
- Open the floor for questions and discussions regarding the proposed approach and implementation plan.
This presentation framework provides a clear structure for discussing the strategic decision regarding IoT implementation, weighing the pros and cons of both innovation strategies, and ultimately recommending an incremental approach that balances risk with opportunity.