Innovations of Leading Multi-National Corporations

Innovations of Leading Multi-National Corporations

Dupont World No. 1 Carbon Dioxide reduction in 2005. Reduced 75% of total emission in 15 years, saved $3 b energy expenses while Rev. increased 35%. Energy cost remained 3.3% of Rev. even when oil price doubled.

Transition into Green Product Dupont used to provide 25% of CFC in the world coolant market. Unfortunately, NASA reported that CFC damages ozone in the outer space. Crisis management: Announced plans to reduce CFC production. Devoted resources to research substitute of CFC. Succeeded in two years. In 1802, fire power; In 1902, chemicals; By 2015, $10 b Rev. shall come from energy efficient green products. Mass production of organic textile fiber Sorona from corn, 40% less energy consumption than petro- chemical fibers.

Procter & Gamble 360-Degree Innovation Not just coming up with new product features, but new look, new feel, new smell,..and new experience. Innovation ideas come not just from R&D, but marketing, customer services,.. and all organizations. Seeking innovative ideas from outside. Teeth whitening stickers helped Crest surpass Colgate to be the No. 1 US brand in mouth care.

Phillips R&D Strength Philips (Dutch) used to be an R&D and manufacturing oriented company led by engineers pursuing product excellence. Prefers to overcome technical challenges. 450 designers in 12 R&D centers around the world. Apply 3,000 patents per year. No. 1 in the world. Most innovations can not turn into profit because difficulty in commercialization.

Philips Innovation Drive Hired Italian, Andrea Ragnetti, for the newly created CMO position. New brand image: Abandon Let s s make things better. Promote Sense and Simplicity. Simplicity Advisory Board Professor, architect, clothes designer, doctor, and car designer The 48th most valuable global brand in 2006. Any innovation which can not be commercialized in three years will be terminated.

Simplicity Drive for User-Friendliness Engineers never paid much attention to Operations Manual and Installation Guide. Operations Manual must contain procedures of fewer than 8 to 10 steps. Installation must be done by consumers in 3 minutes.

Foster Communication between R&D and Sales 70% of annual R&D budget has to be approved and allocated by Business Units. 30% of R&D budget can be not closely tied to commercial products. 1% of Phillips total revenue will be spent on futuristic research.

Lessons to Taiwan NSC s s R&D Budget NSC assigns hundreds of millions of R&D grants to college professors annually through a peer review system. 70% of research grants should be allocated by government branches or corporations. Academic research will be more aligned with needs of government and industries.

Ink Jet Printer Market Market growth 04 30%, 05 30%, 06 19% Prices 04-8%, 05-13%, 06-7% Costs Even if the costs can be reduced 15% to 20% each year, the profit margin for printer hardware can hardly exceed 10%. The consumer ink jet printer market is in cut throat competition. However, the commercial market still has over 20% profit margin.

Seiko Epson s s Objective Now, 30% rev. comes from commercial market. After 4 to 5 years, over 50% of rev. shall come from commercial market. Canon holds the 2nd number of patents in Japan, while Epson is the 3rd. Canon rev. is 2.5 times more than that of Epson because over 50% of Canon s s rev. comes from commercial market. Will Epson succeed in repositioning in the commercial market?

Seiko Epson s s Strategy I Apply Epson s s Micro Piezo technology can be used beyond printer applications. A piezo can jet 40,000 ink drops in a second. Sharp s s 8th generation TFT-LCD plant uses the above technology on panel s s printed circuit board. Replacing etching with high resolution printing eliminates mask costs. Reducing silver cost from 50% to 95%. Reducing fabrication processes from 11 to 3 steps. Reducing fabrication time from 6 to 2 weeks.

Seiko Epson s s Strategy II Digital photo development shop has to invest $40,000 for equipment. Epson s s photo printing equipment costs only half of the above. The quality and cost of printed digital photos are getting close to those of developed photos.

Cisco s s New Thrust

Cisco s s Current Success Rev. in 2006 reached $28.4 b with gross margin at 65%. The total rev. of Cisco s s top 15 competitors is only half of Cisco s s rev. Cisco is now the world No.1 network equipment vendor. Routers and switches.

Opportunities in Video Consumers communications needs evolves from voice, data, into video. Positioned for the opportunity of videos delivered via Internet. Merged cable set-top top-box company Scientific Atlanta in Nov. 2005. Invested Internet television company Akimbo in June 2006. YouTube realized this concept.

What Future Does Cisco see? Web 2.0 will reshape business models of tomorrow. The DTV and HDTV technologies are maturing. Don t t consumers like to watch videos from YouTube in higher speed and better quality? Don t t consumers like to watch TV programs in better quality and more flexibility? Move box office seats from stadiums to bars and restaurants everywhere in the world. Large screen, high resolution, and user control of viewing angle and zooming effect.

Consumer Needs Cisco sells broadband network gears which can transport video on the Internet. It takes matching broadband end-user equipment to receive, process, and display digital video signals. It takes a video service provider to deliver video content selected by consumers. The three parties have to work collaboratively in order to make the video dream come true.

Cisco s s Vision Quad Play Phone network, Internet, Video, and Mobile phone are going to be integrated. Consumers care about watching video content anyplace at any time irrespective of technologies behind it. Video traffic in the Internet driven by consumers will be more than traffic driven by enterprises.

Cisco s s Strategy Convert from a network equipment company to a consumer-oriented oriented service company. Ex: Apple ipod and itunes. Cisco s s network gears connect not just to PCs but also to phones, cell phones and digital TV sets.

Cisco s s New Product Cisco s s new product: Hardware & software solutions. Consumer electronics. Cisco Routers will integrate enterprise management functions and intelligence. Building new products, new brand image, and new channels.

Questions Why would Cisco expand from high-margin enterprise market to low-margin consumer market? What advantages does Cisco have to compete in this market? Will Cisco succeed?