model discussion quesitions
ELEVEN NN
IlluminaCaseStudy2.0.pptxTheories of innovation power
A case study of Illumina – The master of genome sequencing
Professor Vipin Gupta
1. Learning Objectives
Understanding Illumina’s strategic profiting process
How Illumina activates major steps in the strategic profiting process
Trading innovation power
Servicing innovation power
Grow innovation power
Critical Reflection – What can we really learn from the case of Illumina?
2. Understanding the Strategic Profiting Process
Trading innovation Power
Working with technological champions (B2R) who are creating blue ocean
Network blue ocean technological inputs worth trading for innovation power
Servicing innovation power
Working with organizational champions (B2B) to create blue ocean technological inputs
Network white ocean technological outputs – what support B2B firms need for servicing emerging blue ocean?
Grow innovation power
Working with community champions (B2C) so that they can develop their blue oceans
Network yellow ocean growth opportunities – what alliances can help us grow through Community championing, empowering many blue oceans to grow?
3. Major Steps in the Strategic Profiting Process
Grow Technological nodes with an emerging blue ocean
Network tech champions who are creating an emerging blue ocean
Grow Organizational nodes for developing white oceans
Network org champions who wish to create their own white oceans by servicing the emerging blue ocean
Grow Community nodes using yellow ocean strategy
Network community champions who wish to create their own blue oceans, using the above white ocean services
4. Case Study: Illumina – The Master of Genome Sequencing
Illumina’s three steps to strategic profiting
a. Grow Technological nodes linked to a blue ocean
Network tech champions who are creating an emerging blue ocean
Illumina started in 1998 to build on the gene analysis technology from Tufts university, but had only $180 million revenue in 2006 – as its DNA array technology being replaced by macro genome sequencing technology.
In 2006, it acquired British start-up Solexa (revenue $2.5 million) for $600 million, who developed sequencing by synthesis technique, 100 times faster than the first technique
Full sequencing was costly and slow, accessible to only institutional users: In 2006, the cost of full genome sequencing $300,000 and required full day
Illumina partnered with centers of excellence (e.g. UCLA and UCSD research institutes) throughout the US for testing its Next Generation Technology (NGS) machines – seeking research, best practices, training and support
a. Grow Technological nodes linked to a blue ocean
Benefits
Super-rapid growth: opened access to well-funded federal and research customers, knowledgeable about complementary steps – library sample preparation, cluster generation, and data analysis.
Targeted London-based largest genome sequencing center as primary customer, on the basis of throughput advantage
Within a year, Illumina generated $100 mn revenue in genome sequencing market.
In 2009, Illumina created a federally certified lab on premises to test new hardware and demonstrate possibilities in next-generation sequencing.
b. Grow Organizational nodes for developing white oceans
Network org champions who wish to create their own white oceans by servicing the emerging blue ocean
Video tutorials, webinars, manuals, and partnership with The Broad Institute to launch Genome Analyzer bootcamp, to address varying customer knowledge of optimal library preparation protocols and cluster generation tools
By 2013, invested $250 million on acquiring startups with automation tools for library sample preparation kits and cluster generation for genome-based diagnostics on diverse cases- humans, animals, pests, and plants. These steps required rare knowledge and were prone to inefficiencies and biases – even with optimal protocol.
Designed machine cutting total steps in the sequencing process from 38 to 8, and equipped it with an RFID chip to notify the operator with proper or improper loading
Interpretation of genome sequencing is difficult to analyze and interpret for experts and almost impossible for individuals.
IBM partnership: Using cloud-based AI – BaseSpace – to automate data analysis and interpretation; develop professional guidelines & clinical trials reports that took scientists a week to process now done in just a matter of minutes
b. Grow Organizational nodes for developing white oceans
Benefits
Was able to subsidize cost of genome sequencing machinery, by making profits on consumables – sample preparation kits to simplify and accelerate tests, and patterned flow cells for efficient and unbiased cluster generation
Reduced the power of the knowledge club B2B customers, while adding a much larger B2B market
Why the knowledge club customers lose out? not as purposefully focused on automating their knowledge for more cost-effective use by a broader network of organizations; hoarding for own advantage, with co-specialized complementary resources
c. Grow Community nodes using yellow ocean strategy
Network community champions who wish to create their own blue oceans, using the above white ocean services
Illumina accelerator program – Invest in promising genomics start-ups
Grail - For early stage detection of any type of cancer via blood test; raising $100 million from the venture capital firm Arch Venture Partners, plus Microsoft co-founder, Bill Gates, and Jeffrey Bezos, Amazon founder.
Verinata - For intelligent answers to specific fetal health issues, instead of providing the entire genome sequence to those who have little knowledge of how to make sense of that sequence. In 2013, acquired Verinata for $350 million for a special purpose diagnostic application – a direct competitor to several customers in noninvasive prenatal testing
Helix - To create genetic tests offered through an app store
c. Grow Community nodes using yellow ocean strategy
Benefits and Costs
In 2014, $10 million value NextGen machines based genome sequencing cost $10,000; and in 2012, HiGen machines based sequencing cost $48,000 per genome.
Leveraging improving throughput, Ancestry.com offered $1000 genome sequencing using NextGen, inspiring other entrants
In 2016, $650,000 NovaSeq machines with potential to cut sequencing cost to $100 per genome
In 2017, 25% stock value decline, as existing knowledgeable B2R and B2B customers not replacing older machines, and the new customers not growing sufficiently fast
New Globalization in 2017
Opened customer training and commercial center in France
Strategic alliance with KingMed Diagnostics in China - “to develop novel oncology and hereditary disease testing application” approved by Chinese government, using Illumina’s sequencing technology
Summing up: Illumina as Proficient Strategic Profiter
Create supplementary value (DO SHEENY). Trading innovation power
Network Technological champions create blue ocean
Sustain complementary value (DO GUIDER). Servicing innovation power
Network Organizational champions create white ocean
Destroy competitive value (Even if it is yours!). Grow innovation power
Network Community champions for growth create yellow ocean
Summary – perpetually dynamic strategy
Strategic planning: compromise living designing joyful intent
Strategic programming: precarious living sustainable business strategy
Strategic learning: purposeless living purposeful competitive advantage
Strategic profiting: networking entropy proficient business model
Strategic development: exchange imbalance functional value addition
Critical Reflection
Technological Exchange (Unit Value) Assessment
What can we really learn from the case of Illumina?
What are the issues in effective innovation and technological strategy?
Servicing platform for global value
How to mitigate the formative monetary costs of developing the method?
How to service and capture the value of method through a machine platform?
Trading sequence for upgrading
How to trade manpower capability for upgrading the value of the marketing power?
How to mitigate the costs of making transformative investments by trading the value of GUIDER vendor power?
Growth championing
How to champion growth by customizing manufacturing power (operational value) of our technology across different domains?
How to mitigate the costs of personalizing our technology within each targeted domain, by exchanging the energy of the motivated domain leaders to work on ascending SHEENY benefits?
How to norm effective method and aggregate servicing value of that method into machine platform?
Some customers have great method power
There is an opportunity to form machinery to capture the value of that method power
form innovative linkages with the customers’ great method power
How to mitigate the cost of upgrading manpower capability, by trading vendor power?
Some vendors have great machinery power, others don’t
There is an opportunity to upgrade marketing power using the vendors’ great machinery power, without investing into your own manpower, to target larger, inclusive group of customers
form creative linkages with the vendors’ great machinery power
How to champion growth by exchanging the energy of motivated domain leaders?
Some domain leaders have great monetary power, others don’t
There is an opportunity for customizing manufacturing power by exchanging (with your formative servicing) the energy of the motivated domain leaders with monetary power to champion growth in SHEENY benefits
How does this approach differ from traditional innovation and technological strategy?
Traditional model is about becoming a motivated firm who wishes to create a desirable method, even if it does not have the desired capability
Therefore, it needs to first invest in creating that desired capability, in the form of its workforce, and to fill the gaps using its networking
By the time it exchanges the desired capability, some customers have already found an alternative solution, and some firms have already transformed this solution into a competing machinery.
