58 Food product development Alarm Perception Society Reassurance) Satisfaction Innovation New products Business Fig. 2. 6 The business and societal decisions for innovations. important factors are related to the company, market, technology, society predicted outcomes, project needs and company resources. Some important evaluation factors for innovation possibilities(Kuczmarski, 1996)are shown in Table 2.3. Major factors are those that are important in evaluation while critical factors are those that are directly related to product success and must be Table 2.3 Evaluation factors for innovation possibilities Major factors Critical factors Fit with strategic object Exploits internal strengths Impact on existing busi Market Consumer need intensity Product/service uniqueness/differentiation Source of competitive advantage echnology Company competence in technology Relation to present technologies in company Society Impact on ethical constraints Agreement with religious rules Impact on political constraints Agreement with government regulations Predicted outcomes Sales and profits potentials Return on investments Degree of risk N and resources Financial resources ledge needs Knowledge resources Source: After Kuczmarski. 1996
important factors are related to the company, market, technology, society, predicted outcomes, project needs and company resources. Some important evaluation factors for innovation possibilities (Kuczmarski, 1996) are shown in Table 2.3. Major factors are those that are important in evaluation while critical factors are those that are directly related to product success and must be Fig. 2.6 The business and societal decisions for innovations. Table 2.3 Evaluation factors for innovation possibilities Major factors Critical factors Company Fit with strategic objectives Exploits internal strengths Impact on existing business Market Consumer need intensity Product/service uniqueness/differentiation Source of competitive advantage Technology Company competence in technology Relation to present technologies in company Society Impact on ethical constraints Agreement with religious rules Impact on political constraints Agreement with government regulations Predicted outcomes Sales and profits potentials Return on investments Degree of risk Needs and resources Financial needs Financial resources Knowledge needs Knowledge resources Source: After Kuczmarski, 1996. 58 Food product development
Developing an innovation strategy 59 evaluated. The remaining innovation possibilities after screening are incorp- rated into the building of the business strategy 2.2 Incorporating innovation into the business strategy The innovation strategy/strategies are formed within the business strategy, along with other strategies such as product, technology and marketing, as shown in Fig. 2. 1. The formulation of company goals and strategies is very much an iterative process, integrating the various strategies in the direction of the business goals, and using forecasts and analysis of possible outcomes, with an understanding of the company's capabilities Top management develops an innovation blueprint a vision that defines the future role that innovation plays in the long-term goals of the company (Kuczmarski, 1996). The basis of this is an understanding of how innovation affects the companys main stakeholders- consumers, staff and shareholders; how it is related to the value of their company -capital value, share price, and how it is related to the value of their brand(s). This blueprint is the standard for accepting an innovation possibility into the business strategy The top innovation possibilities are combined with the blueprint to develop n innovation summary, which is built up with the product, marketing and technology strategies into an innovation strategy 2.2.1 Combining strategies- product and innovation The product strategy develops a balanced and rolling programme for the product mix during at least the next five years, with an outline product mix for later years. The forward planning of the product mix depends on the culture and size of the company, volatility of the market and the rate of technological development. In a large company with a reasonably stable market and slow change of technology, planning can be ten or more years; in a small company with few resources it can be one or two years In the product mix planning, there is recognition of todays breadwinners and also of the future breadwinners, the place in the product life cycle of the product areas, the competitive status of the products now and in the future. This identifies the areas for product improvements, line extensions, repositioning, new innovations in the present product system and radical new products outside the oresent system. There needs to be a constant interplay between the innovation summary and the development of the product mix, so that out of it will come the product development strategy that will be the basis for the product development. It is also important at this time to predict the effect on products that other innovations will have- for example, a new processing line, or a restructuring of part of the company. Often these are analysed separately, especially the company organisation, with little thought of how this would affect the product strategy and therefore the financial outcomes of the company in the future. There can be
evaluated. The remaining innovation possibilities after screening are incorporated into the building of the business strategy. 2.2 Incorporating innovation into the business strategy The innovation strategy/strategies are formed within the business strategy, along with other strategies such as product, technology and marketing, as shown in Fig. 2.1. The formulation of company goals and strategies is very much an iterative process, integrating the various strategies in the direction of the business goals, and using forecasts and analysis of possible outcomes, with an understanding of the company’s capabilities. Top management develops an innovation blueprint – a vision that defines the future role that innovation plays in the long-term goals of the company (Kuczmarski, 1996). The basis of this is an understanding of how innovation affects the company’s main stakeholders – consumers, staff and shareholders; how it is related to the value of their company – capital value, share price; and how it is related to the value of their brand(s). This blueprint is the standard for accepting an innovation possibility into the business strategy. The top innovation possibilities are combined with the blueprint to develop an innovation summary, which is built up with the product, marketing and technology strategies into an innovation strategy. 2.2.1 Combining strategies – product and innovation The product strategy develops a balanced and rolling programme for the product mix during at least the next five years, with an outline product mix for later years. The forward planning of the product mix depends on the culture and size of the company, volatility of the market and the rate of technological development. In a large company with a reasonably stable market and slow change of technology, planning can be ten or more years; in a small company with few resources it can be one or two years. In the product mix planning, there is recognition of today’s breadwinners and also of the future breadwinners, the place in the product life cycle of the product areas, the competitive status of the products now and in the future. This identifies the areas for product improvements, line extensions, repositioning, new innovations in the present product system and radical new products outside the present system. There needs to be a constant interplay between the innovation summary and the development of the product mix, so that out of it will come the product development strategy that will be the basis for the product development. It is also important at this time to predict the effect on products that other innovations will have – for example, a new processing line, or a restructuring of part of the company. Often these are analysed separately, especially the company reorganisation, with little thought of how this would affect the product strategy and therefore the financial outcomes of the company in the future. There can be Developing an innovation strategy 59
60 Food product development very adverse outcomes. They may be cost saving at the time, but may have severe impacts on the new product planning and the future returns Think break 1. What are the basic product areas in your company,s product mix? In the product mix, identify todays breadwinners- the products providing the main part of the sales revenue, and tomorrows breadwinners. What is the place of the other products in the product mix? 2. From your study of the product mix, what types of product innovation do you predict for the next few years? 2.2.2 Combining strategies- technology and innovation The technology strategy for the company is also interwoven with the innovation strategy. In building the technology strategy it is essential first to identify the competence of the company with the present technologies and the ability to develop new technologies. A systematic method is used, comparing the technological competence of the company against other companies. This gives a truer indication of how technologically skilled the company is, rather than using subjective statements of company staff who may have vested interests in the present technology. It is difficult for outside consultants to assess the company's abilities for new technological areas. A combined project team with company staff and consultants using quantitative analysis is probably best for analysing technology competence throughout the company - raw materials, processing, distribution, marketing, and products. There is a need to study base technologies that are necessary for the chosen product-market mix key technologies which provide competitive advantage w technologies, which could become tomorrow's key technologies A technology mix needs to be developed for the future incorporating all of these The technology strategy is related to the innovation possibilities that have been selected in the innovation summary, the product mix and the technology mix as well as the companys technological capabilities as shown in Fig. 2.7. A technology strategy can identify ew base or core technology that may lead to a range of new product base or core technology that is needed for an original new product; key technology change that will be a unique competitive chance for the ed technology that will lead to higher product quality, more varieties In developing a technology strategy, it is important to relate it to the products, consumers and markets. Sometimes a new processing or production technology
very adverse outcomes. They may be cost saving at the time, but may have severe impacts on the new product planning and the future returns. 2.2.2 Combining strategies – technology and innovation The technology strategy for the company is also interwoven with the innovation strategy. In building the technology strategy it is essential first to identify the competence of the company with the present technologies and the ability to develop new technologies. A systematic method is used, comparing the technological competence of the company against other companies. This gives a truer indication of how technologically skilled the company is, rather than using subjective statements of company staff who may have vested interests in the present technology. It is difficult for outside consultants to assess the company’s abilities for new technological areas. A combined project team with company staff and consultants using quantitative analysis is probably best for analysing technology competence throughout the company – raw materials, processing, distribution, marketing, and products. There is a need to study: • base technologies that are necessary for the chosen product–market mix; • key technologies which provide competitive advantage; • new technologies, which could become tomorrow’s key technologies. A technology mix needs to be developed for the future incorporating all of these. The technology strategy is related to the innovation possibilities that have been selected in the innovation summary, the product mix and the technology mix as well as the company’s technological capabilities as shown in Fig. 2.7. A technology strategy can identify: • new base or core technology that may lead to a range of new products; • base or core technology that is needed for an original new product; • key technology change that will be a unique competitive chance for the company; • improved technology that will lead to higher product quality, more varieties of products or cost reductions. In developing a technology strategy, it is important to relate it to the products, consumers and markets. Sometimes a new processing or production technology Think break 1. What are the basic product areas in your company’s product mix? In the product mix, identify today’s breadwinners – the products providing the main part of the sales revenue, and tomorrow’s breadwinners. What is the place of the other products in the product mix? 2. From your study of the product mix, what types of product innovation do you predict for the next few years? 60 Food product development