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AGENDA
READINGS Mapping Your Innovation Strategy Creating New Market Space Case: Evolution of the Circus Industry LEARNING OBJECTIVES: What is strategy? What is an innovation strategy? What is value innovation? How can this be applied to understanding the circus industry? What is a disruptive technology/innovation?
STRATEGY?
A strategy is the way in which an organization chooses to meet its goals and objectives. A strategy defines appropriate decisions and actions.
INNOVATION STRATEGY?
1. Innovation strategy determines to what degree and in what way a firm attempts to use innovation to execute its business strategy and improve its performance. 2. What does an innovation strategy include?
1. Target: What market? 2. Ideation: What innovations? 3. Conversion: How to plan, select and develop innovations? 4. Diffusion: How to commercialize?
VALUE INNOVATION
Kim & Mauborgne
Research showed that managers of highgrowth companies think in terms of value innovation while managers of less successful companies think in terms of conventional strategic choices. And
Represent % of launches.. Incremental Innovations 86% Radical Innovations 14%
% of revenue..
% of profits
62%
39%
38%
61%
VALUE INNOVATION
Creating products or services for which there are no direct competitors and use those offerings to stake out and dominate new market space. Examples:
Quicken Software from Intuit Starbucks Home Depot
Industry assumptions
Strategic focus
Conditions given
Shape conditions
Customers
Retain & expand, segment & Serve masses, focus on customize commonalities Leverage existing Create what is needed
Classic circus: 1. Equestrian acts 2. Clowns 3. Acrobats 4. Jugglers Created by Philip Astley in 1768
Tom Mix, Rodeo Rider Revenue based on ticket sales and concessions (80/20) Clyde Beatty, wild animal trainer
Challenges
Logistical requirements of tearing down and setting up Core workforce supplemented with local hires Itinerant nature makes estimating ticket sales difficult Marketing and publicity usually happens when the circus arrives in town
Current State
Ringling Brothers Modernizes But who is their target market? In 1984 a new option is born Who is the audience for the non Circus, Cirque du Soleil? What is different? Even a Clown can do it!
Questions
When you compare Cirque du Soleil with the conventional circus, which are the factors kept by Le Cirque? Which ones were downplayed and which ones were played up? Which factors were eliminated by Cirque du Soleil? What are the operational and financial implications? What factors were created by Cirque du Soleil? Where did the idea come from?
Cirque du Soleil
One ring Non-star Performers Yearly Multiple productions Adult audience No animals Story/theme Individualized Music/Dance High price Profits from tickets Emphasis on artistery Refined watching environment
Create uncontested market space. Make the competition irrelevant. Create and capture new demand. Break the value/cost trade-off. Align the whole system of a companys activities in pursuit of differentiation and low cost.
For example
5.25 inch floppy disk drive Automobiles CDs, DVDs Private jet
Minicomputers
Personal computers Desktop publishing Computer printers Digital photography High speed CMOS video sensors
Mainframes
Minicomputers, Workstations. Traditional publishing Offset printing Chemical photography Photographic film
Digital synthesizer
Mobile Telephony LCD Digital calculator Ultrasound Podcasting