Welcome to Week 7!
This week, we will finish up the course with a look at developing a deployment strategy.
A good deployment strategy helps to accelerate adoption of new products through the use of effective timing, licensing and compatibility, pricing, distribution, and marketing strategies.
We will look at how a new product launch may be timed to take advantage of business cycles or seasonal effects, and we will look at the important role that pricing strategies play in deploying a new product.
Finally, we will look at the important role that marketing plays in a deployment strategy by creating demand for the new product.
As we progress through the week, it is vital to consider ways that we can tie together the major themes and unifying threads running though the course by identifying the keys to building a successful strategic plan.
I’ll talk to you in the discussions!
Given an organizational and industry context, identify and suggest a deployment strategy that will facilitate the success of a technologically driven organization.
Determine the key elements of deployment, including timing, licensing, compatibility, pricing, distribution, and marketing.
Analyze the elements necessary to decide on a deployment strategy.
Crafting a Deployment Strategy
Introduction | Strategic Intent | Deployment Strategy
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This week’s TCO is “Given an organizational and industry context, identify and suggest deployment strategy that will facilitate the successes of a technologically driven organization.”
During this final week, we look specifically at the key elements of deployment, including timing, licensing and compatibility, pricing, distribution, and marketing. We will also develop an understanding of the analyses that should be conducted when deciding on a deployment strategy.
This TCO adds the final piece of learning in this class. With this last piece in place, you should now be able to put everything together in order to create an overall technology strategy for success.
The intent of this course is to assist managers in a continually changing and complex business atmosphere with an eye toward better understanding of sophisticated technology necessary to remain competitive. We examine technological competencies, the evolution of technology, the design and management of systems for technological innovation, the integration of technology and organizations, sourcing technology, and the management of the new product development process.
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Strategic intent is usually more difficult for companies to grasp than merely creating a strategic plan. Often, strategic plans show more about what problems we are dealing with today than the chances for success we may have tomorrow. To be successful, strategic plans must shift dramatically from year to year because problems change yearly.
The critical aspect of strategic intent is that while the intended results are obvious, it is open as to the method of implementation. In other words, it leaves room for improvisation.
Throughout this course, you will have noticed a central thread. Hopefully, you recognized that the thread that ran through all the readings was that successful companies know to expect changes from one year to the next. They also question how their tactics will be modified to continually edge closer to their strategic intent. To continually be successful, a company must not only have a clearly stated strategic intent, but this intent must be strictly followed.
John F. Kennedy said in one of his most famous quotes, “I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to the earth.”
This is a preeminent statement of strategic intent. The objective was to beat the Russians; one of the strategies was to get ahead in space technology. Kennedy did not try just to match the Russians; he wanted to exceed them. He went beyond the attempt to merely match his competitors.
Companies that reach global leadership positions are rarely headed up by overly cautious individuals. Often upper management lacks the sufficient bold leadership necessary to establish goals that reach beyond their current achievements and thus relegate their companies to mediocrity. Bold, even rash leadership is often a characteristic of corporate leaders that have highly successful companies.
Many managers today are too timid. Because of cost constraints, fear of failure, and lack of imagination, many managers today are content just to match their competitors. There may be nothing wrong with just matching your competitor if the market is large enough. Look at gas stations, for example; there is plenty of room for similar services. However, in many businesses today, only the leaders will be successful. Strategies that are not based on leadership are at a distinct disadvantage.
Consider Kennedy’s speech. Put a man on the moon within 10 years? Absurd! No one in his or her right mind would even consider it, yet, Kennedy not only considered it; he put in motion the right activities to achieve it.
It is important to remember that that way of thinking was indicative of Kennedy’s life. When his boat was sunk during WWII and his men were stranded on a remote island, Kennedy did not give up. He set in place the strategic intent to save himself and his men, and he did it.
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Deployment is a key component of the innovation process because a new product has little value in and of itself. It is only when people understand the innovation, can access it, and use it regularly that the product is of value. The best deployment strategies accelerate adoption by reducing uncertainty about the product and lowering resistance to switching from competing goods.
There are five key elements of deployment: timing, licensing and compatibility, pricing, distribution, and marketing.
A new product launch may be timed to take advantage of a business cycle or seasonal effects. The introduction needs to be well coordinated to ensure production capacity is sufficient to meet initial demand and that complementary goods will be available. The timing decision should also include an analysis of the possibility of continuing to generate cash from existing products versus the likelihood of cannibalizing those cash flows by introducing a new product. Cannibalization may be an appropriate trade-off to prevent competitors from attaining a competitive advantage.
Licensing and compatibility questions address the need to make a system open enough to encourage the production of complementary goods while at the same time preventing the firm’s installed base from serving as a source of leverage for competitors.
Pricing strategies can signal a product’s position in the market and may range between pricing at or below cost to gain market share and charging the highest price feasible to maximize short-term profits. The opportunity for significant earnings from complementary goods or services may justify penetration pricing to gain access to the market. The form and timing of payment for a product can also influence the customer’s perception of price.
Whether or not to use intermediaries, and the role they will play, can be an important part of the deployment strategy. Alliances with distributors, bundling goods with more established products, exposing the market to the new technology via contracts and sponsorships, and using guarantees and consignment programs with distributors or developers of complementary goods are all means of promoting a rapid deployment. Marketing plays an important role in a deployment strategy by creating demand for the new product.
Marketing methods will vary with the market segment targeted and the nature of the innovation. Marketing strategy must take into account the nature of the target market and the innovation in order to shape perceptions and expectations about the product’s installed base and availability of complementary goods. Consideration should be given to tailoring marketing to particular adopter categories. Major marketing methods include advertising, promotions, and publicity/public relations. Tailoring the marketing plan to intended adopters is crucial because each adopter group responds to different marketing content. For example, early adopters usually respond to marketing materials emphasizing technical content and the leading-edge nature of innovation. Later, adopters respond to marketing materials that communicate a product’s completeness, ease of use, lifestyle match, and legitimacy. The transition from marketing to early adopters to late adopters may have to overcome some difficulties when the early majority is not yet convinced of the technology’s utility.
Five Key Elements of Deployment:
Licensing and Compatibility
Finally, organizations deploying new technologies should try to develop an Information Epidemic. Certain individuals can have a disproportionate effect on the marketplace. They can, by the virtue of their natural proclivities and talents, create a need for information about new technology that can seem like a firestorm. Gladwell segregated these individuals into three categories: connectors, mavens, and salespersons.
Connectors have an exceptionally high number of diverse acquaintances, a high social drive, and are likely to bring together people who are otherwise unlikely to meet. Mavens are driven to obtain and share knowledge about items of interest to them (product prices, attributes, and so on). Salespersons are able to transmit verbal and nonverbal cues that enable them to influence other’s emotional responses and, for our purposes, purchasing decisions.
III. Discussion Grading and Follow-up Topics
Remind students about the Discussion Grading Policy for this class as an announcement or in an early discussion posting.
A. Pricing Strategy
What factors do you think enabled Sega to break Nintendo’s near monopoly of the U.S. video game console market in the late 1980s?
Why did Nintendo choose to not make its video game consoles backward compatible? What were the advantages and disadvantages of this strategy?
What strengths and weaknesses did Microsoft have when it entered the video game market in 2001?
B. Deployment Strategies
Comparing the deployment strategies used by the firms in each of the generations, can you identify any timing, licensing, pricing, marketing, or distribution strategies that appear to have influenced firms’ success and failure in the video game industry?
Pick a product you feel you know well. What intermediaries do you think are used in bringing this product to market? What valuable services do you think these intermediaries provide?
Can you identify one or more circumstances when a company might wish to delay introducing its product?