PHASE #1 :

OPPORTUNITY
IDENTIFICATION
Business Opportunities-1

OPPORTUNITY IDENTIFICATION &

SELECTION:
A. Why have Strategic Planning?

To focus and integrate team effort

To permit delegation

It charts the groups direction where it must go, and where it must not
go.

It provides goals and objectives, and

Provides some rules of the road.

PRODUCT INNOVATION CHARTER (PIC) - a piece of document that establishe

for new product development. Its components allow the new product dev
explore ways in which a new product can be built.
a.k.a. NEW PRODUCT STRATEGY

B. NEW PRODUCT STRATEGY INPUTS:

Corporate leaders make strategy statements.

Top-level statements like these guide a whole firm and are parts of what are
called MISSION STATEMENTS.
Examples of Strategy Statements:
A. TECHNOLOGIES:
HERMAN MILLER utilize our fine furniture designers
BRAUN utilize innovative design in every product

B. MARKETS:
GERBER be for babies and only babies
NIKE be for all sports and not just shoes
IBM be for all people in computers, not just techie type

C. GUIDELINES:
RUBBERMAID prolifirate our lines
LEXUS offer genuine value
POLAROID be almost impossible to create
FORD TRACTOR not upset the regulators
COLGATE not threaten P & G
KODAK have high value to us and to the customer

To begin the New Product Process, we must look for an opportunity or strateg
basis for the entire process. The following are inputs to determine strategy:
1.
2.
3.
4.

Product Platform Planning

Opportunity Identification
Non Corporate Strategic Planning
Miscellaneous Sources

1. PRODUCT PLATFORM PLANNING

Product platforms are common in many industries like manufacture of aircra

electronics, computers, etc.

Many firms report promising results in using this strategy.

a)

Black & Decker redesigned its power tool groups intro product familie
more sharing of components.

b) IBM used a standard set of sub-components for all ThinkPad products,

number of parts needed and cut manufacturing cost in half.

Platforms are a possibility in service industries as well as for manufacturing

Ex: from a single platform for managed health care services, one provid
several derivatives insurance products, self insurance, group insuran
coverage insurance.

TYPES OF PLATFORM PLANNING:

a)

BRAND PLATFORM brand can serve as the launching pad for scores of p
having in common the brand and any strategies appl
brand.

Ex: KODAK built a new platform when it marketed the FUN Saver from
some call derivatives like:
> Weekender a flash format Fun Saver II
> Portrait
> Weekender II
Using a platform brand must conform to the strategy of that brand.
The key here is BRAND EQUITY the value of the established brand
b) CATEGORY PLATFORM using either product type or customer.
c) STRATEGIC BUSINESS UNIT an autonomous business unit / group with

2. OPPORTUNITY IDENTIFICATION

Many firms have persons working full time looking for opportunities.

Throughout the firm, people in the course of doing their jobs discover new o

A salesperson learns that a customer is moving into a new market;

A scientist finds unexpected activity in a compound;
A finance VP notes a fall in the prime rate;
A Director urges that we look more carefully at what the Environmental Pr
is doing;
A new regulation, for example, may restrict the use of petroleum-based s
CEO may want all divisions to seek out new products that actively capita
regulatory change.

Truly, there is no end to these opportunities, every one of which may reveal
opportunities for new products.

Unfortunately, each opportunity takes time and money to investigate, so w

exploit as many as we would like.

3. NON CORPORATE STRATEGIC PLANNING

Although the major thrust of strategic planning comes from the top-down, m
from the heads of the functions (a.k.a. silos or chimneys) in the firmmar
finance, customers, etc.

Such groups frequently have the power to affect new product work.

Ex: paper manufacturing is done on huge expensive machines; such firms

strategies with a statement: All new items, if paper-related, must be
on our current lines.

4. MISCELLANEOUS SOURCES

In contrast to the corporate platform downward pressure approach and the

functional pressure approach, some inputs can start at the lower level of a
influence upwards, as when a new product is so successful it drives corpor
to change.

Ex: An ethical pharmaceutical firm once unintentionally marketed a ve

successful new propriety food product with the result that a new div
created (to isolate the consumer advertising activity from the rest o
and new strategies created to optimize its opportunity.

D. THE PRODUCT INNOVATION CHARTER (PIC):

All of the inputs discussed are potentially used in the development of a comp
product strategy.

This strategy is clearly stated by the PIC. A Product Innovation Charter (PIC) is
gives the condition under which and organization will operate in developing a
product.
Importance of PIC:
1.It allows delegation;
2.Permits financing;
3.Calls for personnel assignments, and
4.Specifies an agreed-upon scope of activities.

CONTENTS OF A PIC:

BACKGROUND

Key ideas from the situation analysis

Special forces such as managerial dicta;

Reasons for preparing a new PIC at this time

FOCUS

At least one (1) clear technology dimension and one (1) clear
market dimension. They should match and have a good
potential.

GOALS-OBJECTIVES

What the project will accomplish, either short-term as objectives

or long-term as goals.

Evaluation measurements

GUIDELINES

Any rules of the road

Requirement imposed by the situation or by upper management

Innovativeness and order of market entry, time/quality/cost, etc.

A PIC FOR A CHEMICAL PRODUCT:

FOCUS: The XYZ Company is committed to a program of innovation in specialty
chemicals, as used in the automobile and other metal finishing businesses,
to the extent that we will become the market share leader in that market and
will achieve at least 35% ROI from that program on a 3-year pay-out basis.
We seek recognition as the most technically competent company in metal
finishing.
GOALS-OBJECTIVES: These goals will be achieved by building on our current R&D
skills and by embellishing them as necessary so as to produce new items that
are demonstrably superior technically, in-house, and have only emergency
reliance on outside sources. The company is willing to invest funds, as needed,
to achieve these technical breakthroughs.
GUIDELINES: Care will be taken to establish patent-protected positions in these new
developments and to increase the safety of customer and company personnel.

A PIC FOR A FIELD SERVICE:

FOCUS : A major growth opportunity for a new field service is the smaller office that
over the past several years has bought one of the new computer systems
designed for such offices. Because they are found in every conceivable
location and because they purchase computer equipment with the intention
that it lasts a long time, they offer a unique service problem. This opportunity
will be addressed using (1) our systems analysis skills and (2) our field service
capabilities.
GOALS-OBJECTIVES: The goals of this activity are (1) to overcome all reasonable
objectives about service levels by this group and (2) to increase out net
operating revenues from sale of these new services by at least $18 million
per year.
GUIDELINES : These goals will be achieved by creating unique service approaches
that are based on current field resources, hopefully protected from quick
competitive emulation, without extensive development expenditures either
inside the firm or outside, and with an absolute minimum of development
time.

Additional info. about the PIC sections:

A. BACKGROUND SECTION:
Answers the question Why did we develop this strategy anyway?
B. FOCUS SECTION:
Stating the firms CORE COMPETENCIES, this is the area of the which the
firms strengths lie.
Focus is generally achieved by the use of four (4) types of strengths or
leverage capabilities:
TECHNOLOGY - ex. Kimberly Clarks paper processing technology
PRODUCT EXPERIENCE - ex. Strohs chose to focus on the beer business
CUSTOMER FRANCHISE - ex. Stanley Tools hold on the wood workers
END-USE - ex. Chase Manhattans international division

C. GOALS-OBJECTIVES SECTION:
Anyone working on product innovation must know its purpose because work can
change in so many ways if the purpose changes.
PIC uses these standard definitions:
Goals longer range, general direction of movement
Objectives short-term, specific measures of accomplishments
Both have three (3) types:
1.Profit
2.Growth
3.Market status

D. SPECIAL GUIDELINES:

These may be managerially imposed or consensus thinking of team members.

Special guidelines may cover the following:

Degree of Innovativeness
o First-to-Market a.k.a. PIONEERING there are three (3) ways to get this:
State-of-the Art Breakthrough
Leveraged Technology
Application Engineering where technology may not be changed at all
but the use is totally new.
o Adaptive Product taking ones own or a competitive product and
improving it in some way.
Improving may be technical or non-technical.
It may be useful or trivial.
**This is especially popular when the firm needs cash fast.
Thee (3) criteria for this to succeed are:
The firm must be capable of delivering the adaptation;
It must be difficult for competition to copy; and
It must be good enough for customer to be willing to buy at a price.

Imitation or Emulation deliberately waiting to see winners emerge

from among the pioneers and early adopters then follow suit.

Timing this category of guidelines variations has four (4) options:

First pioneering
Quick Second tries to capture a good second share position,
making no significant improvement or just enough to
promote.
Slower the firm wait to know the outcome of the pioneers efforts and
has time to make a more meaningful adaptation.
Last is usually a price entry keyed to manufacturing skills.