Marketing of High-Technology

Products and Innovations

Chapter 3:
Culture and Climate Considerations
for High-Tech Companies
Questions to Consider
 What characterizes an innovative
culture in high-tech companies?
 How is creativity related to
innovativeness?
 What are the facilitators of a culture
of innovativeness?
 Whatare possible barriers to an
innovative culture?

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Culture and Climate in High-Tech Firms
 High-Tech companies can become
complacent
◦ Need to cultivate a climate/culture of
innovativeness
 Culture
◦ Set of organizational values and beliefs
that guide behavior
◦ Hard to change
 Climate
◦ Set of expected behaviors
◦ Observable manifestation of culture

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Culture and Climate in High-Tech Firms

 Success = Culture of Innovativeness

◦ Break-through thinking

◦ Risk taking

◦ Assess by percent of revenue derived

from recently-released products and
breakthrough innovations

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Culture and Climate in High-Tech Firms
 Obstacles to Innovativeness (see later slides)

◦ Core rigidities: Music industry sued individuals for

downloading songs illegally instead of changing
their business models

◦ Innovator’s dilemma: focus on current

technologies and customers do not allow them to
innovate further

◦ Organizational size? No

◦ Cyclic nature of business: funding for innovation

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Culture and Climate in High-Tech Firms
 Develop/Maintain Innovativeness

◦ Steady stream of innovations

◦ Entrepreneurial spirit

◦ Nonlinear process
 In contrast to stage-gate, step-by-step process,
intrapreneurial

◦ Forward-looking
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Creativity and a Culture of
Innovativeness
 Creativity
as a source of competitive
advantage
◦ Must be “disciplined creativity” – guided
and channeled with strategic planning
◦ Ideas must be novel AND useful. Apple
creativity with good business models.
Sony problems with laptop batteries,
PlayStation 3.

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Facilitators of Innovativeness

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Facilitators of Innovativeness:
Top Management Attention
 Top managers have a strong influence on
innovation
◦ Set example for values and beliefs
◦ Successful NPD efforts have CEO that is
intimately involved with every aspect of
the process
◦ Completely back the project
◦ Exhibit a future focus rather than past or
present
◦ Exhibit an external (market/customer/
competitor) focus

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Facilitators of Innovativeness:
Creative Destruction
 Process of developing/commercializing
breakthrough product, service, or model
that obsolete or cannibalize existing
products. If the company does not, a
competitor will.
Current technology made obsolete


by proactively developing next-

generation technology
 May be the antidote to the Innovator’s

Dilemma if it overcomes internal rigidity

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Facilitators of Innovativeness:
Manager’s Willingness to Cannibalize

 Use fear of obsolescence as motivation

to engage in creative destruction

 Drivers:

◦ SBUs compete internally for resources

◦ Product champions carry strong role
◦ Focus on future markets more than current
markets

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Facilitators of Innovativeness:
Product Champions
 People who assume significant risks to
see their innovative ideas succeed
◦ Tireless crusaders

 Product champions are characterized by:

◦ Rule-breaking and risk-taking
◦ Political astuteness
◦ Technical competency
◦ Aggressiveness

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 Product champions in more innovative firms
wield more influence than those in less
innovative firms
◦ They have power to make ideas happen
◦ Reward system and top management support them
 Product champions in less innovative firms
wield less influence
◦ Are frustrated and demoralized

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Facilitators of Innovativeness:
Skunk Works
 Isolate new venture groups outside the normal
organizational hierarchy. Lockheed Martin, IBM’s PC group
in Boca Raton, Florida away from corporate HQs at New York

Pros:
-More creativity, unfettered by existing corporate
protocols

Cons:
-Signals impediments to innovation in the corporation
-Isolates the creative process

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Facilitators of Innovativeness:
Learning Orientation
 Actively facilitating the development of new
knowledge and insights that influence the
company’s strategy
 Facilitated by:

◦ Top management support

◦ Decentralized/market-based approach to planning
◦ Market orientation – firm’s ability to actively
monitor customer/ competitor trends
 A competency-based source of competitive
advantage due to its rareness, customer value
and inimitability
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Facilitators of Innovativeness:
Learning Orientation (cont.)

“In an economy where the only certainty is uncertainty,

the one sure source of lasting competitive advantage is
knowledge” Ikujiro Nonaka,
The Knowledge Creating Company

“A unique characteristic of knowledge is that it is one of

the few assets that grows most – usually exponentially -
when shared” James Brian Quinn,
Intelligent Enterprise

“Learning may be the only source of sustainable

competitive advantage” Ray Stata, CEO
Analog Devices

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Facilitators of Innovativeness:
Unlearning

 Abandon conventional wisdom

◦ “Unlearn” traditional but
detrimental practices

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Facilitators of Innovativeness:
Corporate Imagination
 Create a vision of the future based on “markets
that do not yet exist” and unconfined by existing
industry boundaries
 Challenge the status quo

◦ Escape the “tyranny of the served market”. Focus

on both current and future customers

◦ Use new sources of ideas for innovation

◦ Get out in front of customers

 Engage in creativity exercises, 100 uses of a
product

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Facilitators of Innovativeness:
Expeditionary Marketing
 Frequent fast-paced market incursions (see next
slide)
◦ Based on “times at bat” rather than one home run
◦ Requires:
 Accurate learning of customer needs
 Recalibration of market offerings
 “Light and fast”
 Shorten time between market learning and product launch

◦ Implication: Accumulate market experience, and

quickly adapt market offerings
 Enlightened experimentation

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Facilitators of Innovativeness:
Expeditionary Marketing
Relationship between Entries in the Market and Quality

Delight the customer with amazing feature set Model 3

Model 2

Model 1
Development
Overall Revenue
Incr. Revenue

New Models

Minimum acceptable quality

Time

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 Facilitators of Innovativeness:
Risk Tolerance

 Tolerate “mistakes”

 Learn from mistakes

 “Mistake” may prove to be next success

 Reward risk taking

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Facilitators of Innovativeness:
Compensation for Innovation

 Appropriate reward system

 Long term perspective (stock options,

stock grants) than base pay, profit-
sharing or bonuses (short term)

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Other Facilitators of Innovativeness*
 Emphasize the importance of diversity

 Maintain close relationships with the

most innovative customers

 Frequently evaluate project progress

 Build innovation into performance review

process
*see table 3-1 for a complete listing

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Other Facilitators of Innovativeness* (Cont.)
 Provide considerable freedom of action

 Educate employees about emerging

technologies

 Use teams of employees

 Rapidly communicate new ideas across

the company.
*see table 3-1 for a complete listing

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Obstacles to Maintaining a Culture of Innovativeness:
Core Rigidities
 Well-established routines that prevent
a firm from taking a fresh perspective
◦ Bound by existing rules of the game

◦ Ingrained routines, knowledge, and skills

become strait-jackets

◦ Inhibit a firm’s ability to develop unfamiliar

skills, routines, and new knowledge

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 In high-tech firms, core rigidities might be
based on cultural norms that include:
◦ Status hierarchies that give preference to technical
personnel over marketing personnel
◦ Preferences for existing technologies and products
◦ Focus on technologies/products rather than
customers/markets

◦ Sony ATRAC music format when MP3 format was

there in the market.

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 Core rigidities can be overcome by:
◦ Unlearning
◦ Learning orientation

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Obstacles to Maintaining a Culture of Innovativeness:
The Innovator’s Dilemma
 Difficulty in innovating and responding to
disruptive innovations
◦ Due to need to divert resources from pursuing
incremental innovations that addressed known
customer needs in established markets
 To new markets and customers that may seem
“insignificant”
◦ Arises from sunk costs in old technology; bias in
managerial decision making, and reliance on
existing customers.
◦ Kodak could not change over from Photo film business model
and lost 50% of its market value from 2000 to 2007.

 To succeed: Engage in creative destruction

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Do We Know Anything for Sure?
Life is pretty simple: you do some stuff. Most fails. Some works. You do
more of what works. If it works big, others quickly copy it. Then you do
something else. The trick is in the doing something else. You must take pot
shots at today’s star before you are mimicked. Today’s radiantly blooming
flowers are tomorrow’s mulch. Don’t forget that for a moment. But don’t
think about it too long either.

Tom Peters
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Chapter Features
 Opening Vignette: Google
 Technology Expert: ESRI (GIS software)
 Technology Tidbit: Star Sight
 End-of-Book Case: ESRI

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