Marketing Strategy and Competitive Positioning pdf ebook

Figure 12.1 
Innovation strategy 
and new products
Key innovation strategy issues
Predicting industry change
New business models
The innovative company
Radical innovation
Disruptive innovation
Proactive cannibalisation
Value innovation
The perverse customer
Big ideas
Innovation networks
Globalisation and innovation
Key new product issues
Success and failure
Planning for new products
New product development process
Speed of new product development
Organising for new products
Innovation
strategy
New products

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INNOVATION STRATEGY
marketing are geared towards making only marginal changes in products and brands, and in 
avoiding mistakes rather than taking risks (Vence, 2007). Real innovation means more than 
producing new products that are marginally different to their predecessors. It is about the 
quest for delivering superior value to customers. Accordingly, before turning to the tacti-
cal and operational aspects of managing new product development, as part of marketing 
strategy and enhanced competitive positioning it is worth considering some of the broader 
arguments supporting innovation as an essential key point of focus for executives.
12.1.1 Innovation predicting industry change
A powerful argument developed by Clayton Christensen and his colleagues is that under-
standing innovation patterns and emergent events is key to predicting the direction and 
extent of change in an industry – simply ‘seeing what’s next’ (Christensen et al., 2004). 
They suggest that major recurring questions for managers include issues such as: whether a 
new start-up will succeed or fail; which emerging technologies will be accepted by consum-
ers; whether a new entrant is a serious threat to existing competitors; whether government 
regulation will affect competition significantly; whether company managers are making 
good or short-sighted decisions; and which firms are likely to come out on top. Answering 
such questions correctly is fundamentally important to making effective strategic decisions. 
Christensen’s work suggests that theories of radical and disruptive innovation provide a 
basis for addressing these questions (see the following sections).
For example, in the IT sector, Google is reshaping the industry based on the strength of 
its search capabilities, but particularly through the impact of cloud computing. The ‘cloud’ 
refers to the idea of software and services running on remote computers, connected via the 
Internet, rather than on your personal computer. For most people, their first awareness of 
the cloud began with a file storage service, although today a huge amount of commercial 
and consumer-level services use the cloud. Google provides a cloud system, and was one of 
the first to do so. However, by 2019 many other providers had entered the market. Unlike its 
predecessor, the supercomputer, Google’s system never ages – as individual computers die, 
they are replaced individually with newer, faster boxes. This means the cloud regenerates as 
it grows, almost like a living thing. As the concept of computing clouds spreads, it expands 
Google’s footprint way beyond search, media and advertising, and Google could become, 
in effect, the world’s primary computer. IBM’s head of research operations notes that ‘com-
pared to this, the Web is tiny’. No individual corporate computing system can match the 
efficiency, speed and flexibility of resources like Google’s cloud. It is estimated that Google 
can carry out a computing task for one-tenth of what it costs a typical company. The move 
to cloud computing represents a fundamental change in how we handle information. It is 
almost the computing equivalent of the evolution in electricity supply from a hundred years 
ago, when farms and businesses closed down their own power generators and bought power 
instead from efficient industrial utilities (this illustration is based on ‘The clouds raining on 
the computer business’, in Piercy, 2009a, pp. 162–167). Of course, given this potential, cloud 
computing is an area of fierce competition between providers such as Google, Amazon.com, 
IBM and others to dominate cloud computing.
By contrast, in the pharmaceuticals sector, the new product pipelines of the major phar-
maceutical companies have largely run dry – there are few new blockbuster drugs in pros-
pect from conventional R&D, and current blockbusters are losing out to generic drugs as 
patents expire. Instead, the drug treatment innovation is being driven by small biotechnol-
ogy start-ups based on less conventional science and technology in which big pharma has 
been slow to invest. Small biotechnology firms are commanding massive premiums as they 
sell out to big pharma (who have belatedly recognised that this new technology will shape 
the future of their industry) (Cookson, 2006).
An interesting and growing area of speculation at present is whether Silicon Valley com-
panies (Google, Apple) will challenge Detroit (Ford, General Motors) for control of the 
automotive industry. As Google and Apple are pioneering self-driving cars, they are in 

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