Discussion - Module 10

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Incremental or Discontinuous Innovation MBA 580

By: Johnathon Blake Davis

Option A and B

Business problem: Connected cars will become of greater demand in the future.

Option A: Incremental Innovation

Option B: Discontinuous Innovation

Option A

Two benefits of option A:

Increase product diversification

Protect the current business model

Two risks of option A:

Lack of coordination

Time risk/reward related to demand

Option B

Two benefits of option B:

- Securing the competitive advantage

Increased market share/profitability

Two risks of option B:

Unknown demand of the new product

Production cost that could potentially outweigh profit

Competitors

BMW: navigation, emergency services, smart house connectivity

Functionality emphasis: vehicle control/safety, IFTTT-customized applications and IoT connectivity, LTE

Toyota: navigation, emergency services, social media

Functionality emphasis: vehicle control, social media, safety, entertainment, navigation, 5G

Volkswagen: navigation, emergency services, consumer orders, maintenance status

Functionality emphasis: vehicle control, maintenance, in-car consumer experience

Competitors

BMW: Projection of fully autonomous vehicles in the next 12 years.

-5-10-year plan: fully integrated information system, semi-autonomous driving, connection to traffic information systems, introduction of fully autonomous driving early 2030s

Toyota: Social media in Japan and expectation of of implementing in US markets with 5G capability.

-5-10-year plan: fully integrated information system; semi-autonomous driving; connection to traffic information systems, expanded social media, and communications; consumer services; maintenance; fully autonomous vehicle early 2030s

Volkswagen: Same forecast as us. They have partnered with Microsoft to try and ease ahead of competition.

-5-10-year plan: fully integrated information system; semi-autonomous driving; connection to traffic information systems; connectivity with smart home; fully autonomous vehicle early 2030s

Partial Gap Analysis

We have some connectivity regarding the technology – driver apps, OnStar, detect accidents, and alert first responders. Most of the technology will need to be purchased to gain market share.

The 10 best automotive technologies of 2021: Advanced driver assistance, emergency braking, mobile app connection, teen driver, exit warnings, wireless charging, 360-degree camera, video rearview mirror, stole vehicle software, blind-spot monitor (https://www.kbb.com/awards/best-car-technologies/)

Partial Gap Analysis

Available for purchase:

Wireless charging

360-degree camera

Video rearview mirror

Navigation

Wireless Bluetooth connectivity

Parking sensors

Push to start button

Vehicle start from remote key

Apple Carplay

Innovation Approach

The Incremental Innovation approach would be the best option for the company moving forward.

Reason 1: Introducing a new product into the automotive industry isn’t a good idea.

Reason 2: The reward outweighs the risk.

Sales forecast/financial snapshot

Sales:

Gross Margin:

Option A - Sales

Sales Traditional 183.29999999999998 188.71249999999998 194.26526789999994 199.95984500569995 205.79753408935821 211.77936279123503 217.90604290767092 224.17792513444687 230.59494878970997 237.15658599184798 244.08999999999997 Sales Connected 3.8 4.1 875999999999998 5.2344999999999997 5.7684189999999997 7.2105237500000001 9.0131546875000002 11.266443359375 14.083054199218751 17.603817749023438 22.004772186279297 27.505965232849121

Option A - Gross Margin

Gross Margin Traditional 27.494999999999997 28.306874999999994 29.139790184999988 29.993976750854991 30.86963011340373 31.766904418685254 32.685906436150638 33.626688770167029 34.589242318456492 35.573487898777195 36.613499999999995 Gross Margin Connected 0.79799999999999993 0.87939599999999996 1.0992449999999998 1.2113679899999998 1.5142099874999999 1.892762484 3749999 2.3659531054687499 2.9574413818359373 3.6968017272949218 4.6210021591186523 5.7762526988983156