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L1: Introduction / Entrepreneurial Mindset (Cases (Google Glass (Other…
L1: Introduction / Entrepreneurial Mindset
Product Manager
PM is an entrepreneur, strategist, technical visionary, cross-functional team leader, customer and end user advocate (Bussgang /Eisenman / Go (2015).
Interacts with all departments, channels and general public
Sets priorities, plans activities, defines new product to be build, establishes support in organisation, manages development, launch, ongoing improvement
Product Investment decisions
Net Present Value (NPV)
Sum of discounted cash flows for each period
Difference between the present value of cash inflows and the present value of cash outflows over a period of time.
If NPV is positive, investment is sensible
Qualitative factors
Internal strategy evaluation, uncertainties, trends/risks in market, macro-environment (economy/politics)
VUCA world
Volatility
Uncertainty
Complexity
Ambiguity
Trends
Data Explosion
Hyper-and global competition
Gap between internal available resources and externally required resources
Cases
Google Glass
Massive failure
Too broad targeting
Inconvenient to wear
Socially not accepted
Not fashionable enough
Culture: Investments into high-risk/high-reward projects (10%, 1 billion earning potential. Does not constraint itself by short-term earning pressure.
Other fails
Jaiku
Zeitgeist
Google Lively
Google Page Creator
Google Answers
Amazon Go
Experimental 'seed'/real option investment 'Retailer Experiment'
AA vs JetBlue
P&G Japan: SK-II
Zara Fast Fashion
Apple
Risk
Uncertainty
Unpredictability of environmental or organisational variables that impact corporate performance
General environmental uncertainty
Politics
Government policy
Macroeconomics
Social
Natural
Industry
Product market
Input (quantity, quality, supply) market
Competition
Which ones are exogenous/endogenous?
Firm
Operation (lLabour/Production)
Liability
R&D
Behavioural
Risk
Unpredictability in coprorate outcome variables (return instability)
Mitigation of Risks
Financial
Forward or future contracts, insurance, hedging (not topic)
Strategic management
Avoidance
Divest, delay entry
Control
Lobbying, vertical integration, M&A, advertising
Cooperation
Flexibility
Diversification, operational flexibility
Different features into product to broaden customer segment
Imitation
Apple as fast follower with big phones
Exposure
Sensitivity of a firm or project's cash flow to changes in a any of a number of interrelated uncertain variables
Opportunities
Real Options (McGrath)
Creating the 'right but not the obligation to undertake further investmetn'
Initial investment, followed by either scale or divestment; more flexibility to acquire, divest and switch resources
Option Premium: 'Increased value through flexibility under uncertainty'
Types
Wait-to-invest option
Growth option
Initial investment which can lead to growth
Flexibility option
Diversification into different markets
Exit option
Abandonment or sale of options
Learning option
Staged investments e.g. movie launch into various cities
Lay seeds
Rules
Limit downside risks while maximising potential value on upside
Upside potential must be big
Small investments first to determine
Develop/invest into idea portfolio, use stages/sequences
Stop and abandon options if not feasable
Potential pitfalls
Escalation of commitment 'bias, emotional investment'
Overconfidence/ illusion of control
Disadvantages of internal social networks 'Relationship bias'
Career consequences after 'failure'
Disengagement
Review: knowledge transfer, sale
Stakeholder management: Deal with disappointment/disappointment
Future growth options
Positioning options
Invest into new technology / capability development
Scouting Options
Stepping Stone options
Series of small stage investment (Nanotechnology): Skills development, Consumer learning
Platform launches
Core enhancement launch
Brand extension
New platform, product line (e.g. P&G Swiffer)
Marketing Capabilities Gap
Problem: Capability Gap
Solution: Risk mitigation, Entrepreneurial mindset
Recommendation: Not only look on NPV (can be attractive when negative / Inverse risk return relationship)