MBA 580 Project Guidelines and Rubric Competencies In this project, you will demonstrate your mastery of the following competency: Evaluate creative and innovative organizational structuresRecommend a
Milestone 1 Notes
Business Problem
Integrating IoT technology into vehicles to enhance data utilization and customer experience (Hoyer et al., 2020).
Need to remain competitive by leveraging IoT for predictive maintenance and improved services.
Option A: Discontinuous Innovation
Develop a completely new product line based on IoT technology.
High initial investment required for R&D, production, and marketing.
Potential for first-mover advantage and capturing new market segments.
Risk of market acceptance uncertainty and cannibalization of existing products.
Option B: Incremental Innovation
Add new IoT features gradually into existing models.
Lower initial investment compared to Option A.
Opportunity to test and refine technology incrementally.
Maintains customer loyalty through gradual enhancements.
Option A
Developing a completely new product line based on IoT technology entails significant upfront costs for research, development, production setup, and marketing.
There's a risk that consumers may not embrace the new product line as expected, leading to slower adoption rates and potentially lower returns on investment.
Introducing a new product line could cannibalize sales of existing models within the company's portfolio, potentially impacting overall revenue and profitability (Hajda & Nikolov, 2022).
Rapid advancements in IoT technology may render the new product line outdated sooner than anticipated, necessitating continuous updates and investments to remain competitive.
Integrating IoT technology into a completely new product line may pose technical challenges and require additional resources and expertise, potentially leading to delays or quality issues in product development.
Option B
Potential Risks for Option B
Incrementally adding IoT features to existing models may result in slower market penetration compared to introducing a completely new product line, potentially allowing competitors to gain an edge with more innovative offerings.
By adopting an incremental approach, there's a risk that competitors could leapfrog the company with disruptive IoT innovations, eroding its market position and relevance.
Potential Benefits for Option B
Incremental innovation requires less upfront investment compared to developing a completely new product line, making it a more financially feasible option for the company (Acemoglu et al., 2022).
Incrementally adding IoT features allows for ongoing testing, refinement, and customer feedback incorporation, leading to a more polished and consumer-centric end product.
By enhancing existing models with IoT features, the company can maintain customer loyalty and satisfaction by providing familiar products with added value, reducing the risk of customer attrition to competitors.
Incremental innovation reduces the risk associated with large-scale product launches by allowing the company to gauge market response and make adjustments as needed, minimizing potential losses and maximizing returns on investment.
Competitors' Current Products and Services
BMW offers a range of luxury vehicles equipped with advanced technology features, including IoT integration for connected services such as remote diagnostics, navigation, and vehicle tracking.
Toyota provides a diverse lineup of vehicles spanning various market segments, with a focus on reliability, fuel efficiency, and safety features. While Toyota has begun integrating IoT features into some models, its offerings generally prioritize traditional automotive strengths.
Volkswagen offers a mix of mass-market and premium vehicles, with an emphasis on performance, comfort, and affordability. While VW has introduced IoT features in select models, its focus remains on delivering value and innovation across its product range.
Expansion in the Current Market
BMW has been actively expanding its presence in the luxury automotive market through innovative technologies and premium offerings.
Its emphasis on IoT integration aligns with its strategy to cater to tech-savvy consumers and enhance the overall ownership experience, bolstering its market strength.
Toyota has been expanding its market presence by diversifying its product portfolio, including hybrid and electric vehicles, while also incorporating IoT features to improve connectivity and convenience for customers (Ziegler & Abdelkafi, 2022).
While not as aggressive in IoT integration as some competitors, Toyota's focus on reliability and reputation contributes to its market strength.
Volkswagen has been expanding its market share by investing in electric vehicle technology and digitalization initiatives, including IoT integration for enhanced connectivity and smart features.
Its broad product range and focus on affordability appeal to a wide customer base, contributing to its market strength.
Technology Ownership
The company currently does not own all the necessary IoT technology required for full integration into its products, indicating a potential need for acquisition or partnership.
While the company may possess some proprietary technology related to automotive systems, comprehensive IoT solutions may require additional expertise and resources beyond its current capabilities.
Current Technology Integration
IoT technology is already partially integrated into the company's products and services, primarily through the inclusion of sensors and computers for various functionalities such as engine diagnostics, infotainment systems, and driver assistance features.
However, the extent of IoT integration may be limited compared to what is envisioned for future innovations, indicating room for expansion and enhancement in existing offerings.
Available Technology Options
A variety of IoT technologies are available for purchase or partnership, ranging from sensor modules and data analytics platforms to connectivity solutions and cloud services.
The company can explore options such as licensing proprietary technologies, collaborating with IoT specialists, or acquiring startups with relevant expertise to bolster its capabilities in this domain.
Additionally, the company can leverage existing partnerships or engage in strategic alliances with technology vendors to access cutting-edge solutions and accelerate innovation.
Recommendation: Incremental Innovation
Reasoning
Lower Risk: Incremental innovation involves less financial risk and allows for gradual market introduction, reducing the potential for significant losses.
Resource Efficiency: This approach aligns with current capabilities and resources, avoiding the need for large-scale immediate investments in new technology and infrastructure.
Market Testing: Incremental improvements allow for real-time feedback and iterative enhancements, ensuring that customer needs and preferences are met effectively.
Stakeholder Alignment
R&D: Can focus on enhancing existing models with new IoT features, leveraging current expertise and gradually developing new competencies (Paiola et al., 2021).
Marketing: Easier to communicate incremental improvements and build on existing brand loyalty, creating a narrative of continuous improvement.
Finance: Lower initial investment and more predictable cash flow, allowing for more manageable budgeting and financial planning.
Innovation Recommendation
Description of Recommended Product and Sales Forecast
Incremental Product Description
Initial Model: Start with integrating advanced IoT features into a popular existing model. This includes enhanced connectivity, real-time diagnostics, and predictive maintenance alerts.
Expanded Integration: Gradually roll out these features to other models, enhancing each with additional IoT functionalities such as advanced driver assistance systems (ADAS) and personalized user experiences.
Sales Forecast
Year 1: Introduce IoT features in one flagship model, expecting a 5% increase in sales due to enhanced appeal and improved customer satisfaction.
Year 2-3: Expand IoT features across multiple models, aiming for a cumulative 10-15% increase in overall sales as more customers experience the benefits of connected vehicle technology.
Year 4-5: Achieve widespread adoption of IoT features across the entire product line, driving a 20-25% increase in sales and establishing the company as a leader in automotive innovation.
Marketing Strategy
Initial Rollout: Focus marketing efforts on highlighting the new IoT features and their benefits, using targeted campaigns to reach tech-savvy and early adopter segments (Nawaz, 2020).
Expansion Phase: Broaden marketing campaigns to emphasize reliability, enhanced user experience, and long-term cost savings from predictive maintenance, appealing to a wider audience.
Customer Engagement: Utilize customer feedback and success stories to refine and promote the IoT features, building trust and brand loyalty over time.
References
Acemoglu, D., Akcigit, U., & Celik, M. A. (2022). Radical and incremental innovation: The roles of firms, managers, and innovators. American Economic Journal: Macroeconomics, 14(3), 199-249.Hajda, J., & Nikolov, B. (2022). Product market strategy and corporate policies. Journal of Financial Economics, 146(3), 932-964.
Hoyer, W. D., Kroschke, M., Schmitt, B., Kraume, K., & Shankar, V. (2020). Transforming the customer experience through new technologies. Journal of interactive marketing, 51(1), 57-71.
Nawaz, I. Y. (2020). Characteristics of millennials and technology adoption in the digital age. In Handbook of research on innovations in technology and marketing for the connected consumer (pp. 241-262). IGI Global.
Paiola, M., Schiavone, F., Khvatova, T., & Grandinetti, R. (2021). Prior knowledge, industry 4.0 and digital servitization. An inductive framework. Technological Forecasting and Social Change, 171, 120963.
Ziegler, D., & Abdelkafi, N. (2022). Business models for electric vehicles: Literature review and key insights. Journal of Cleaner Production, 330, 129803.
