The case study “Applied research technologies, Inc. Global innovation’s Challenges” is written by Christopher A. Bartlett and Heather Beckham. The case very effectively highlight’s a very critical issue being faced by one of the business units of the company. Furthermore, it discusses the company’s competitive edge, its culture and objectives. And finally leaves the issue open-ended as the decision regarding the issue is yet to be made. The idea is to critically analyse the issue at hand and scrutinize the situation to see what can be a possible stable strategic solution.
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The dilemma being faced by the Peter Vyas, the General Manager of Filtration Unit of Applied Research Technologies (ART) of whether to re-launch a mini water oxidation product after the two previously failed attempts posed a major challenge for the Unit. The stakes were high, the credibility of the manager and the of the unit could be tarnished and since the unit’s share of profit margins for the company were also decreasing every year, the possibility of harvesting the unit was also considered by the newly appointed vice president of ART’s water management Division.
The Company ART, a giant in the technology world, consisted of a portfolio of about 60 business units. Each of the business units of served as a profit centre for the company with the contribution of $560 million in the total revenue of $11 billion from the Water management Division sales. The part of sales by the Filtration Unit under this department only comprised $ 38 million. This was majorly because of the inability of the Filtration Unit to innovate and involve in the New Product Development as much as other units.
The prime reason behind the Unit’s incapacitywas its unaligned objectives with the company’s objectives as a whole; the objective of practicing a culture that would lead the ART individuals and work teams to go ahead and take risks of thinking out of the box. The manager of the Filtration Unit had a firm belief in the potential of the product itself but it failed the first two times it was launched. The critical point to observe here is this very situation lead the team to believe that the product was a failure whereas the other factors related to a launch of the mini water oxidation filter were dismissed. This scenario was the consequence of decentralized structure policy at ART which always worked out for the best for the company but with the Filtration Unit it did not go so well as the top managers were inefficient with the product planning as well managing the staff. The result was de motivated employees that had already faced the failure of same product twice. They were in need forforceful leadership that would enforce the credibility of the Unit back by coming up with a successful product.
This was brought about with the addition of the new business manager, Peter Vyas, and the newly appointed vice president, Cynthia Jackson, for the Filtration Unit. Janice Wagner recruited by the Business Manager was a key addition for the firm since her contribution of highlighting the opportunities, market analysis, and target markets insights turned out to be extremely useful for the product later one. It was the broad categories of target markets presented by her after thorough market analysis that helped in the phase one of the Jackson’s Three-Phase-Process which will be analysed later.
If we break down each of the previous two scenarios which lead to the failure of the mini water oxidation product we can see that the first time the product was taken as an ideal solution for the water scarcity issue in the third world countries. This was a big opportunity for the company to take advantage of and hopes were put into the addition of this product into the unit’s portfolio.But after the first generation product was field tested, detectable odour in the treated water was brought up as a flaw. The investors didn’t give any encouragement and funding couldn’t be made possible. Following the ART’s objective of continuous innovation, the unit decided to take a second attempt. The second generation product was redesigned with the help of the Indian technicians team (ITC) and the odour issues were fixed but the strategic task of the unit was to design it for an altogether different market this time. The NGO disaster relief activities that were detected by Wagner as a potential target market was the focus of second generation product this time. This brought about collaboration issues between the US and the Indian teams that were working of the same product. The second generation product once again proved impractical for its target market since it consumed too much energy that the company.
This draws attention to the fact that once again it was Filtration Unit’s poor product planning that caused the second time let-down. The Unit was unable to design the product in coherence with its business plan and the question of whether the business at all was formed alongsideproduct development or not?, Did the Unit do sufficient market analysis before investment big dollars into a product that required extensive R&D?, why only the factor of opportunity was considered while the threats were ignored?, and lastly, who was responsible for the new product development planning and to deal with the after failure situations?
These were the questions that were successfully answered by the initiatives that the new leadership took. A new 6 member team formed by the business manager and headed by the very innovative and hardworking Janice Wagner seemed to get it right this time when they took the initiative to re-launch the mini water-oxidation filtration for the third time, only this time an all-embracing Cynthia Jackson’s three phase process was also the part of the game.
This three phase process had inculcated the factors in each of its three stages that were previously ignored. The focus on the market research came first this time before the product design was put into process. The previous target markets were ignored this time due to the lack of ability of the product to meet the needs of those segments. This gives the insights on the reasons why the product failed the first two times. The target market was narrowed down in a much systematic way according to the market research as the product was designed to complement the target market and its needs. This was the reason why the unit dropped one of the product types: the Agricultural Irrigation Large Oxidation System (AILOS) and the focus were on the Residential Irrigation Mini Oxidation System (RIMOS). The pricing strategy was determined according to the competitive strengths the unit had. This phase was the most crucial one for the devolvement of the product for the third time since this was the very phase that was missing in the initial two launches and was the primary cause of the failures.
The determination and the declaration of technical specifications and prototypes of the product was the second stage that was in harmony with the first stage. Many efforts were put into the coordination of the U.S. and the ITC teams. This systematic way of developing the product all over again from scratch by learning from the mistakes made before and the new energetic leadership boosted the team’s morale and the future of the new product much more promising in terms of profit margins.
The analysis of these profit margins and how the product would do in the future was ascertained by the business plan that was constructed by the team in their third and the last stage of the three-phase-process. This brought forward a clear picture of the product’s performance and the company seemed much more in control of the situation as they even considered taking advantage of the synergies by using the HVAC Residential Market Division for the purpose of distribution.
Whether to go for the $2 million investment required for the beta batch production in this new product after the homework of the third attempt for launch was like asking the question of whether the unit should consider creative destruction or not? The unit was in jeopardy of being harvested if it doesn’t produce enough profit margins and the portfolio lacked innovative new products which was the sole competitive edge that ART had. Therefore, it would be wise to conclude that the very existence of the company lies in continuous innovation and creative destruction and the only option that the Filtration Unit had was to take the leap since this time the product had three key factors that it lacked before: 1: insights on the target market, 2: product planning aligned with the business plan and 3: Highly motivated product construction team and their leaders.The chances of the new product RIMOS, a productwith a whole new gene code and way more potential to connect with the carefully designed targetmarkets, were high to turn things around for the Filtration Unit which otherwise had to face demise.
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