MTI The Flight of Kittyhawk | Hewlett Packard | Disruptive Innovation

Hewlett Packard The Flight of Kittyhawk

GROUP 6

Ansa Ephraim

Shashikiran

Nikhil John Kurian

Sidharth Ramachandran

Supriya K

Kavitha Jayaram

Tony Sebastian

Alok K

Sudipta M

Veerender N

Manikandan V

9/23/2011

Management of Technological Innovations | Indian Institute of Management Kozhikode

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Agenda

Context of the case

Salient points of the Kittyhawk project

Major Players

Strengths and weaknesses of the team

Reasons for failure

What could have been done

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Management of Technological Innovations | Indian Institute of Management Kozhikode

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The Kittyhawk
Introduced in June 1992 by HP

The smallest hard disk drive in the world

1.3 inches in diameter

The Kittyhawk
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20 MB of storage! Ability to withstand 3-foot fall without data loss

Management of Technological Innovations | Indian Institute of Management Kozhikode

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The Divisional Story

President and CEO (Lew Platt)

Test and Measurement Organization

Computer Products Organization (Dick Hackborn)

Computer System Organization

Measurement Systems Organization

Personal Information Products

Printing Systems

Mass Storage Group (Ray Smelek)

Ink-Jet Products

Sales & Support

Disk Memory Division (Bruce Spenner)

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The Disk Memory Division
A niche player Established in the 5.25” and 3.5” markets Focus on higher capacities and faster access times

High end work station and network server markets

First to introduce many new high capacity drives

Revenues in 1992
DMD 3% HP

Market Segments
OEM 20% Internal HP

Disk Drive Revenue
4000 3000

519

97%
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80%

HP

IBM

Seagate
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Management of Technological Innovations | Indian Institute of Management Kozhikode

The Project Team

Executive support from top management

Limited support from functional management and R&D at DMD

The separation of Kittyhawk project from DMD

Team autonomy
• Develop product • Find markets • Cultivate customer base

Core project team
• • • • Manufacturing, Marketing and R&D Rick Seymour as leader ‘Can-do’ type of people Sign the creed “I am going to build a small, dumb, cheap disk drive” • Team dynamics and Group development research
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Management of Technological Innovations | Indian Institute of Management Kozhikode

The Kittyhawk Project Charter
• Introduce Kittyhawk in 12 months • Accomplish break-even time of less than 36 months • Achieve a $100 million revenue rate in 2 years after launch

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• To be the first 1.3” disk drive in market

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• Grow faster than disk drive market to help HP become industry leader (~35%)

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Management of Technological Innovations | Indian Institute of Management Kozhikode

The Original Kittyhawk Market

The Potential Markets

Narrow focus

The Original Kittyhawk Market
The strategy
• Lead industry in 1.3” form factor • Ride mobile computing explosion to get to low cost • “I’ll sell you a drive for $49.95”

• Mobile information technologies • Communication technologies • Consumer electronics • Automotive electronics • New opportunities in standard computer technology
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• Disk drive specifically focused at mobile computing market • Inexpensive drive for use in currently unviable applications

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The Competition and Customers
The Competition

Flash Storage

1.8” disk drive

Planned Customers

Actual Customers

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• PDA • Japanese word processors • Sub-notebooks • PDAs • Hard copy devices • Digital Cameras • Printers • Cash registers • Copiers • Telecom switching systems Management of Technological Innovations | Indian Institute of Management Kozhikode • Fax Machines

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The New Kittyhawk Market

The Way Out
• Continue pursuit of ruggedness based applications • Leverage ruggedness and electronics integration technologies to make a 2.5” drive • A $50 disk drive
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Discontinuation of Project on September 7, 1994

• No enthusiasm from DMD Management • No profit cushion for further redesign • Flattening of existing sales growth • Need for critical new products
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Question 1

Who were the key players in the emergence of the Kittyhawk project? What did each of them contribute?
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The key players

Bruce Spenner (General Manager, DMD)
•Part of the RISC implementing team •A visionary & risk taker •Questions sparked entrepreneurial spirit •Attack a new hill •Allocated priority •Empowered the team •Strategic staffing •Clear, specific, aggressive goals

Richard Hackborn (Exec VP, Computer Products)
•Known for building HP’s highly successful printer business •Provided the banner of approval •Believed in the project scope Allocated funds from the Computer Products Organization •Failed to communicate between the notebook and DMD division

Lew Platt (President and CEO)
•Provided exec support, frequent checks, champion to the outside world

Rick Seymour (Team Lead)
•Quick thinker •Recruiter for the rest of the team •Set the pace- the motivator •Bolstered HP’s commitment to Kittyhawk

Jack White
• Analysis and research, zoned in on a few product options
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George Drennan
• The first designer who gave shape to the product
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Management of Technological Innovations | Indian Institute of Management Kozhikode

Question 2

What are the strengths and weaknesses of the way HP structured and supported the Kittyhawk development team?
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Strengths
Autonomy in product development Team Formation Senior Management Movement out of the current set up

HP Culture
Technical expertise of employees

Leaders

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Management of Technological Innovations | Indian Institute of Management Kozhikode

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Weakness
Market Survey

Senior leaders were not technical experts

Indecisiveness

Wrongly defined objectives

Conflict with the parent division Failure to recognize the potential of the product and give a second chance

No support from internal clients

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Management of Technological Innovations | Indian Institute of Management Kozhikode

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The ‘Cheap, Dumb Disk drive’
Financial goals to break even in 36 months and a $100 MM Targeted specific customers with high requirements like sturdiness

Failed to challenge the industry cost floor of $130

A disruptive technology that pursued an industry that was in its infancy
• assumed an explosion in mobile computing to reach low cost

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Management of Technological Innovations | Indian Institute of Management Kozhikode

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Question 3

Why did HP pursue the Kittyhawk project this way? What should they do differently if they could do it over?
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Why did Hewlett-Packard pursue the Kittyhawk project this way?

Device market predictions

Market Research predictions
Market research technique was used to identify potential markets that could prove ineffective with disruptive technologies like Kittyhawk

Technology restrictions

Internal customer requirements

DMD functioned as an OEM and hence had to always follow the market and the major players

The MR firm did not have technology experts who could predict the future and therefore depended on the clients leading to a shared view Personal Digital Assistants were predicted to grow in usage and a lot of the major companies had invested in them

$130 was thought to be the cost floor for manufacturing any hard disk drive; introducing innovative design changes to bring this down was thought near impossible in the short time

Ready internal customer in the form of Corvallis division that was making a super sub-notebooks; serves as a reassurance and safety net

Greater emphasis on the shock-proof requirements expressed by few potential customers defining the entire product design and characteristics

9/23/2011

Management of Technological Innovations | Indian Institute of Management Kozhikode

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What should they do differently if they could do it over?

Improved processes for evaluating new product directions
Implement accepted innovation processes like the Stage Gate model that attempts to evaluate the market for a product before proceeding

Creating silos within an organization does not always work
Leads to a differentiation of values and ideas that can create out-of-the-box ideas but also lead to polarization within the organization

Better market understanding & company integration
As a manufacturer of OEM devices, DMD would need companies to innovate and create new categories in order to drive their innovation

Allows a company to move from intuition and gut-feel to strategic direction based on calculated risks and estimates

HP need not have created an entirely separate area for this team but incorporated within the organization. Eg. Newton project for Apple had similar individualistic tendencies that attracted too much attention and also failed

Using internal customers in the Computer division would be a much easier way to drive innovation and create new technologies

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Management of Technological Innovations | Indian Institute of Management Kozhikode

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Question 4

What key insights does the case offer related to innovator’s difficulty in executing on innovation?

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Management of Technological Innovations | Indian Institute of Management Kozhikode

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Inadequate top management support

Conflict of Sustaining and Disruptive Technologies

DMD’s functional management and most of the R&D managers wanted to focus on their existing product line

They didn’t want to venture into something whose market was unclear
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The Kittyhawk project had to be moved to a remote corner of the division site
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Management of Technological Innovations | Indian Institute of Management Kozhikode

The Five Forces of Disruptive Technology

Companies Depend on Customers and Investors for Resources

Small Markets Don’t Solve the Growth Needs of Large Companies

Markets that Don’t Exist Can’t Be Analyzed

An Organization’s Capabilities Define Its Disabilities

Technology Supply May Not Equal Market Demand

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Management of Technological Innovations | Indian Institute of Management Kozhikode

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Inadequacy of end product

Kittyhawk’s main targeted end product PDA wasn’t materialized as expected
• Apple’s Newton PDA was one of the major failure of its entire product line

Mobile computing market still required break-through technologies to fit Kittyhawk into their products

9/23/2011

Management of Technological Innovations | Indian Institute of Management Kozhikode

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THANK YOU

9/23/2011

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