You work as a middle manager for one of the top U.S. producers of luxury and mass-market automobiles and trucks.
The chief technology officer (CTO) of the company from the course scenario has been watching new technology developments that the company could integrate into its vehicles to enhance the usefulness of and access to the data acquired by the many digital sensors that have been integrated into vehicle subsystems over the past 20–30 years. The technology trend of particular interest is the internet of things (IoT)—the interconnection of embedded devices, such as sensors and computers, over the internet. By taking advantage of this trend, the CTO believes the company can seize an opportunity to provide better service and predictive maintenance to its customers, improving customer satisfaction and adding additional revenue streams.
Based on briefings by the CTO, senior management has decided to implement IoT in its product line. Your CTO has asked you to lead a cross-functional team to take this initiative forward. Your first task is to make a recommendation for how the company should approach this business problem. Do you recommend using incremental or discontinuous (that is, slow or fast) innovation? Specifically:
Should the company…
or
The recommendation you and your team make is an important first step in pursuing this new technology.
In Milestone One, you and your team defined what that innovation looked like: would it be disruptive (new product line) or incremental (new features in one existing product)?
In Milestone Two, you developed a strategy plan and a high-level business model. You’ve shared these with various stakeholders, and they are in agreement with your assessment of how best to get to market with this IoT innovation, which will allow the company to be competitive.
Now, the CTO has asked you to come up with a proposed organizational structure that will support the innovation implementation. In this way, you will be assisting in making the innovation sustainable for the company from the course scenario. Companies that are innovative must make sure they have structured the organization in a way that supports innovation, and a key component of innovation is keeping track of what their customers want in terms of products and services.
Complete each of the three parts of this project. Use your slides from Milestone One, your document from Milestone Two, and feedback on Milestone One and Milestone Two to complete the first two parts of your presentation. You can use the resources in the
section (below) for any other information you will need to complete your project.
Part One: Innovation Approach
In this section, share your revised slides from Milestone One and make your recommendation for the innovation approach you think the company should pursue. Ensure this section includes the following information:
Overview (1 slide): Present the business problem and options A and B.
Option A (1–2 slides): Explain at least two potential risks and benefits for option A.
Option B (1–2 slides): Explain at least two potential risks and benefits for option B.
Competitors: (3–4 slides): Evaluate the competitors’ current products and services.
What are your competitors’ current products and services?
Are your competitors expanding in the current market? Explain how this impacts their market strength.
Complete a partial gap analysis (2 slides):
Does the company own the technology, or does it need to be purchased?
How is the technology currently being used in today’s products and services?
What type of technology is available to purchase?
Innovation Approach (2 slides): Explain which innovation approach you are recommending and why.
Consider the different stakeholders (research and development [R&D], marketing, finance) while communicating your recommendations.
Include a description of the incremental or discontinuous product that you are recommending for R&D.
Include the sales forecasts for marketing.
Include a financial snapshot for finance.
Part Two: Strategic Plan
In this section, share your revised paper from Milestone Two, which provides an overview of your competitors’ position in the marketplace, the available and future marketplace, and a plan for how to address a change in business conditions. Ensure this section includes the following information.
What is the growth rate of each competitor?
How much of the market does each competitor now own? Do you see a trend of gaining or losing market share?
Determine each competitor’s market strength by looking at the financials for each competitor.
Is your company gaining or losing market share?
What is your company’s growth potential in the industry?
How do your company’s financials look compared to your competitors’?
What is the TAM for cars and light trucks?
What is the TAM for IoT-connected cars and light trucks?
What is the projected compound annual growth rate (CAGR) for cars and light trucks?
What is the CAGR for IoT-connected cars and light trucks?
What can you do if your customers are slow to respond (buy) the innovation?
What can you do if one competitor is overtaking all the others, including you?
What is the size of development that will be required?
Will you require additional capital and personnel?
How would you approach determining the timeline from the beginning of development until initial product launch?
Part Three: Organizational Structure and Culture Report
Based on your analysis of the organization’s structure and culture, share recommendations for changing its structure and culture to be more conducive to innovation.
How does your company’s organizational structure support innovation?
How effective is the current structure in addressing changes in market demand?
How does the new structure support innovation?
How will your recommended changes make the enterprise more responsive to market demand?
In what ways does the current culture work against innovation?
How does the new structure support a culture of innovation?
To complete this project, you must submit the following three items:
Supporting Materials
The following resources support your work on the project: uploaded below
| Company | Number of Sensors and Computers by 2025 |
Functionality Emphasis | Current Connected Services | 5–10 Year Product Plans | Existing Partnerships | |
| Your Company | 65 sensors/30 computers | vehicle control, systems maintenance, entertainment, navigation, 5G | navigation, emergency services, service status | fully integrated information system, assisted driving, expanded service information, semi-autonomous vehicle within 10 years | Toyota | |
| BMW | 125 sensors/50 computers | vehicle control/safety, IFTTT-customized applications and IoT connectivity, LTE | navigation, emergency services, smart house connectivity | fully integrated information system, semi-autonomous driving, connection to traffic information systems, introduction of fully autonomous driving early 2030s | Daimler | |
| 100 sensors/40 computers | vehicle control, social media, safety, entertainment, navigation, 5G | navigation, emergency services, social media | fully integrated information system; semi-autonomous driving; connection to traffic information systems, expanded social media, and communications; consumer services; maintenance; fully autonomous vehicle early 2030s | Microsoft | ||
| VW | 90 sensors/35 computers | vehicle control, maintenance, in-car consumer experience | navigation, emergency services, consumer orders, maintenance status | fully integrated information system; semi-autonomous driving; connection to traffic information systems; connectivity with smart home; fully autonomous vehicle early 2030s | ||
| References: | ||||||
| https://medium.com/@water.street/autonomous-vehicle-partnerships-how-tech-companies-and-automakers-are-collaborating-to-innovate-cf44bc9e85a | ||||||
| https://techcrunch.com/2019/07/04/bmw-and-daimler-partner-on-autonomous-driving-first-results-of-team-up-in-market-by-2024/ |
MBA 580 Chief Technology Officer (CTO) Brief
Over the past three decades, sensors have been increasingly integrated into automobiles. Currently, a
typical car has 50–100 sensors (Tyler, 2016), and this is expected to grow to as many as 200 over the
next few years. These sensors measure everything from oil levels to the distance from the car in front.
These sensors currently connect (Computers in Your Car, 2018). These computer systems can warn of a
collision or an engine problem and communicate the condition to the driver (e.g., turn on the check
engine light).
Increasingly, these computers are connected wirelessly via the internet to other computers, like the
user’s phone for things like remote starting, and to the manufacturer to help generate predictive
maintenance recommendations. The commercial term currently used for this is connected cars.
Technically, this is part of the internet of things (IoT) concept—where devices from refrigerators to door
locks are connected via the internet for convenient access by the user from phones, computers, and
personal automobiles.
Currently, and in the immediate future, connected cars will help the driver navigate, find the cheapest
gas station, locate the nearest Starbucks or parking lot with open spaces, and allow friends on social
media to know when their friend will arrive. As more semi-autonomous driving features are added over
the next few years, these wireless computers will also talk to other cars to help predict their next move
and communicate to road sensors to monitor conditions (Gossett, 2019). Eventually, enough
information will be provided to and from the connected car that autonomous driving will become
commonplace.
It is estimated that the market for IoT-connected cars will grow from $54 billion in 2019 to over $510
billion by 2030 at a 25% compound annual growth rate (CAGR) (Meola, 2020). This compares with an
overall industry growth of 4.1% (The Global Automotive Motors Market Size Is Projected to Grow from
USD 20,321 Million in 2020 to USD 25,719 Million by 2025, at a CAGR of 4.8%, 2020).
Our company is marketing some connected car capability—but we are not the leader. We need to
innovate so that our products can be competitive in the rapidly growing market. Our cars have sensors
and computers, and our technology expertise is competitive. We have some connectivity—driver apps
for keyless start and OnStar (The Benefits of OnStar | Keeping You Safe and Secure, n.d.) connectivity to
detect accidents and alert first responders. Our growth and ultimate health as an enterprise depends on
us taking the leadership or, at least, keeping up with the leaders. Furthermore, there is significant
opportunity to improve our customer satisfaction and increase our repair and parts revenue streams by
alerting customers to needed maintenance before an expensive breakdown occurs on the road.
With our current technology implementation plan, however, we expect to grow at 3.1%, about 1% less
than the industry. Our growth projection for connected cars is 10.2%—less than the industry at large.
We must speed up our innovation or risk losing market share.
Here is what we estimate our competitors are doing and how fast they are adding technology. The
leader among existing auto manufacturers is BMW. BMW cars have significant connectivity to
information services now. Some driver-assist functions, such as auto-parking and lane-keeping, have
been in BMW models for several years. Market research suggests that BMW will have a full suite of
information connectivity in their cars within several years and that the company will begin producing
fully autonomous driving machines within 12 years. Toyota has fully integrated social media in Japan
and expects to implement it in European and U.S. markets, subject to 5G wireless availability.
Volkswagen is about where we are—but has partnered with Microsoft to jump ahead.
Competitors from outside the traditional automobile manufacturers are also indicating that they intend
to enter the connected car market with disruptive technologies. Apple, for example, is aiming for a fully
autonomous delivery vehicle by the mid-2020s and an autonomous passenger car within a decade.
Our goal is to launch an autonomous vehicle following quickly after BMW, our main luxury competitor.
However, we have a long way to go. We are considering two ways to get there: A) Introducing a radical
innovative design in several years or B) Introducing incremental improvements faster than we have in
the past and improving our current models each year. Option A does not prevent us from continuing to
introduce incremental improvements in the interim.
Our approach will depend on your analysis of our capabilities to innovate. How can we get the
technology being researched in our lab ready—how can we develop it, produce it, and take it to market?
What technology do we already have, and what will we need to acquire? What are our competitors
doing, and are there weaknesses we can exploit?
The two paths we can take are discontinuous or radical innovation, or incremental innovation.
What do I mean by this?
Discontinuous or radical innovation. This would be more expensive—a completely new model is
expensive—as much as $6 billion (Viswanathan, 2013). A major redesign and recent technology
integration are also riskier to develop—we might fail—and it would take longer to get to market.
We might require enough of our existing resources that we could fall behind with our current
models, but it also might provide insight in incremental changes to current models while we
developed a major new product line. It is a lot to think about. That said, we could take the
leadership position ourselves in the growing market and better protect ourselves from
competitors. If we took this path, we would first introduce a new high-end model and, as we
brought costs down, rapidly deploy it across our whole product line, using this innovation
process to accelerate our ability to innovate.
Incremental innovation. The automobile is a mature technology—the modern automobile is
over a century old and it has been changing and adapting over that time. Our company does
incremental innovation as well as our major competitors and the costs are built into our way of
doing business. Given how we build automobiles today, we can continue to add sensors,
computers, and IoT capabilities each model year just by upgrading modules. There are risks,
though: 1) Could changes in the market impact what customers demand? A faster competitor or
a new entrant could produce a breakthrough in automobiles that makes everything else
obsolete. It has happened in other mature industries—could it happen here? 2) Are we missing
significant new opportunities (e.g., market growth overall or opportunities in integrated
maintenance, service revenues and parts, or a high-margin business) that we do not control
now?
References:
Tyler, N. (2016, December 14). Demand for automotive sensors is booming. Newelectronics.Co.Uk.
https://www.newelectronics.co.uk/electronics-technology/automotive-sensors-market-is-
booming/149323/#:%7E:text=Currently%2C%20each%20vehicle%20has%20from,car%20based%
20on%20current%20trends
Computers in your car. (2018, January 24). AAMCO Colorado.
https://www.aamcocolorado.com/computers-in-your-
car/#:%7E:text=Your%20Car’s%20Computer,controls%20to%20meet%20emissions%20standard
s
Gossett, S. (2019, August 13). IoT in vehicles: A brief overview. Built In. https://builtin.com/internet-
things/iot-in-vehicles
Meola, A. (2020, March 10). How 5G & IoT technologies are driving the connected smart vehicle industry.
Business Insider. https://www.businessinsider.com/iot-connected-smart-
cars?international=true&r=US&IR=T
The global automotive motors market size is projected to grow from USD 20,321 million in 2020 to USD
25,719 million by 2025, at a CAGR of 4.8%. (2020, August 17). PR Newswire.
https://www.prnewswire.com/news-releases/the-global-automotive-motors-market-size-is-
projected-to-grow-from-usd-20-321-million-in-2020-to-usd-25-719-million-by-2025–at-a-cagr-
of-4-8-301113089.html#:%7E:text=%2F%3Futm_source%3DPRN-
,The%20global%20automotive%20motors%20market%20size%20is%20projected%20to%20gro
w,at%20a%20CAGR%20of%204.8%25.&text=The%20growing%20adoption%20of%20these,dem
and%20for%20safety%20and%20convenience
The benefits of OnStar | Keeping you safe and secure. (n.d.). OnStar.
https://www.onstar.com/us/en/why-onstar/
Viswanathan, B. (2013, May 7). Why are cars not getting cheap even with better economies of scale?
Forbes. https://www.forbes.com/sites/quora/2013/05/07/why-are-cars-not-getting-cheap-
even-with-better-economies-of-scale/?sh=3ad2b1045ad9
| Markets and Competitors | Annual Cars & Light Trucks Revenue in 2020 (billions) TAM | Market share percentage for cars and trucks now | Projected CAGR over the next 10 years | Projected revenues in 2030 (billions) | Market share percentage for cars and trucks in 2030 | Global | Market share percentage for connected cars and trucks now | CAGR over next 10 years | Projected Conencted Car Revenues (billions) in 2030 | Market share percentage for connected cars and trucks in 2030 | |
| $ 3,227.70 | 100% | 4.10% | $ 4,810.0 | 53.9 | 25.20% | $ 510.07 | |||||
| Your Company | $ 187.10 | 5.80% | 3.10% | $ 254.2 | 5.28% | 3.83 | 7.10% | 10.20% | $ 10.11 | 1.98% | |
| BMW | $ 126.10 | 3.91% | 3.70% | $ 181.5 | 3.77% | 1.62 | 3.00% | 25.50% | $ 15.67 | 3.07% | |
| Toyota | $ 275.40 | 8.53% | 3.90% | $ 404.5 | 8.41% | 4.80 | 8.90% | 24.80% | $ 43.97 | 8.62% | |
| VW | $ 282.90 | 8.76% | 4.30% | $ 433.1 | 9.00% | 8.36 | 15.50% | 23.20% | $ 67.30 | 13.19% | |
| Note for student: Projected Global revenue for in-car connected services by 2030: $81.1 Billion |
| in billions USD | ||||||
| Your Company | VW | BMW | Toyota | |||
| Revenue | 187.1 | 282. | 9 | 12 | 6.1 | 275.4 |
| Operating Income | 5.7 | 20.5 | 22.5 | |||
| Net Income | 0.9 | 16.1 | 19.7 | |||
| Assets | 310 | 590.6 | 275.9 | 484.7 | ||
| Liabilities | 270.2 | 443.2 | 203.4 | 293.9 | ||
| Equity | 39.9 | 147.4 | 72.5 | 190.8 | ||
| Number Employees | 190,000 | 304,174 | 133,778 | 359,542 | ||
| Notes: | ||||||
| 1 Euro = 1.21 USD | ||||||
| 1 Yen = 0.0094 USD | 0.0092 | |||||
| references: | ||||||
| Full Speed Ahead To The Future. 2019 Annual Report”. Volkswagen Group. 17 March 2020. Retrieved 17 March 2020. | ||||||
| converstion rages via Morningstar | ||||||
| Annual Report 2019″ (PDF). BMW Group. Retrieved 19 March 2020. | ||||||
| Toyota Annual Report 2020″ (PDF). Toyota Motor Corporation. May 12, 2020. | ||||||
| Ford Motor Company 2019 Annual Report (Form 10-K)”(PDF). sec.gov. U.S. Securities and Exchange Commission. January 2020. Note: numbers disguised by multiplying by 1.12 except for operating income multiplied by 10 and net income multiplied by20 |
MBA 580 Organization Overview
(Processes, Structure, Culture)
Your company manufactures and distributes automobiles across six continents. The structure is very
complex and it is difficult to accurately count the levels of hierarchy. The company operates under a tall
matrixed structure design.
Tall structures can be cumbersome, and decision makers are often those farthest from the customer.
Communication can be slow and difficult, also slowing down decision-making speed. The specialized
functions and organizations, often referred to as centers of excellence or centers of expertise (COE),
allow for deep knowledge and expertise. Your company has many functional COEs where increased
structure, governance, and control allow for resource and process efficiencies. Resources are
centralized, reducing duplication of effort across the organization. These efficiencies can, however,
result in rigid, inflexible processes. In addition, COEs can create functional silos or reduced cross-
functional coordination and lack of connectedness, where each function is striving toward its own
unique objectives.
Your company follows a centralized and standardized approach where enterprise-wide decisions are
often made centrally and at the top of the hierarchy. This centralization makes it easier to implement
common policies and practices, prevents parts of the organization from becoming too independent, and
capitalizes on specialization.
Matrixed organizations are often associated with this specialized COE structure. Rather than having
permanent cross-functional teams or organizations working on specific projects or product launches,
matrixed organizations pull teams together from the various functional departments. Specialists are
pulled from functional areas to work on a specific project or product design. In essence, they report to
two managers at the same time and may work
on multiple projects simultaneously.
Although the project
manager, who is on the same leadership level as the functional vice president (VP), supervises the
project, the true management authority still resides with the VP.
Specialists supporting specific product launches generally remain “seated” with their functional team
but meet regularly with their product team to advance the project. They may be fully dedicated to the
project or still work on other unrelated projects.
Finally, product teams are pulled together at the enterprise level and are not region-specific. Although
they may produce differentiated projects for unique regions, their primary focus is on enterprise-wide
initiatives.
Organization Structure Chart
Product A Product B Product C
Functional VPs: Project Manager Project Manager Project Manager
Design
Technology
Hardware
Electronic Systems
Safety
Engineering
Sustainability
Quality
Strategy
Finance
Procurement
Marketing
Specialists are pulled from functional area
to work on specific project or product
design. In essence, they report to two
managers at the same time and may work
on multiple projects simultaneously.
|
Criteria |
Proficient |
Needs Improvement |
vident |
Criterion Score |
|
|
Competitors’ Relative Strengths |
15 points Analyzes industry competitors and their strengths and weaknesses |
12 points Shows progress toward proficiency, but with errors or omissions; areas for improvement may include accurate interpretation of competitors’ strengths and weaknesses |
|||
|
Company’s Market Share |
2 0 points Identifies how to maintain or grow market share, given the recommendation from Milestone One |
16 points Shows progress toward proficiency, but with errors or omissions; areas for improvement may include identifying how to grow market share with the enterprise’s resources |
|||
|
Available and Potential Market |
15 points
Identifies future potential TAM and growth for chosen product/service and technology |
12 points Shows progress toward proficiency, but with errors or omissions; areas for improvement may include discussing projected compound annual growth rate |
pointsDoes not attempt criterion |
Score of Available and Potential Market, 12 / 15 |
|
|
Change in Business Conditions |
20 points
Identifies ways to deal with a change in business conditions |
16 points Shows progress toward proficiency, but with errors or omissions; areas for anticipating how to deal with uncertainty in the market |
0 pointsoes not attempt criterion |
Score of Change in Business Conditions, 16 / 20 |
|
|
Concept to Launch |
10 points Identifies the steps the company will take from concept to launch of the new product |
8 points Shows progress toward listing all the steps in the correct order |
|||
|
Articulation of Response |
10 points
Clearly conveys meaning with correct grammar, sentence structure, and spelling, demonstrating an understanding of audience and purpose |
8 points Shows progress toward proficiency, but with errors in grammar, sentence structure, and spelling negatively impacting readability |
0 points
Does not use citations for ideas requiring ttribution |
Score of Articulation of Response, 8 / 10 |
|
|
Citations and Attributions |
10 points
Uses citations for ideas requiring attribution, with consistent minor errors |
8 points
Uses citations for ideas requiring attribution, with major errors |
Score of Citations and Attributions, 8 / 10 |
Total
Score of MBA 580 Milestone Two Rubric,
80 / 100
IoT Technology Innovation: Incremental vs. Discontinuous Approach
Recommendation for Competitive Strategy
Business Problem and Options Overview
IoT is transforming industries, offering both challenges and opportunities.
The company faces a strategic decision: incremental or discontinuous innovation.
Option A: Enhancing existing IoT features for gradual improvement.
Option B: Pursuing revolutionary IoT applications for market disruption.
Decision impacts innovation strategy, competitiveness, and market share.
The adoption of IoT technologies is no longer optional in today’s competitive landscape. The company faces a critical decision: whether to focus on Option A, incremental innovation, or Option B, discontinuous innovation. Incremental innovation involves refining existing IoT features, such as improving predictive maintenance or refining vehicle diagnostics, which provides lower risk but moderate returns. In contrast, discontinuous innovation focuses on groundbreaking developments, such as autonomous driving systems, which could redefine the industry but carries substantial risks. The goal of this presentation is to evaluate the risks and benefits of each approach, analyze competitors’ activities, assess our company’s capabilities, and recommend the most suitable strategy for sustainable growth.
2
Option A – Incremental Innovation: Risks and Benefits
Benefits
Reduced financial and operational risk.
Faster implementation to meet customer demand.
Fits well with current resources and stakeholder expectations.
Risks
Limited ability to differentiate from competitors.
Risk of falling behind in disruptive markets.
Option A focuses on incremental innovation by leveraging existing IoT capabilities. This approach provides reduced financial risk, as it builds upon proven technology rather than investing heavily in untested systems. Additionally, the development cycle is shorter, enabling the company to respond swiftly to customer demands and trends (Matthyssens, 2019). However, there are risks associated with incremental innovation. The lack of significant differentiation from competitors may reduce our competitive advantage, and as the market evolves, relying solely on incremental updates might leave us lagging behind disruptive players. For example, minor improvements in predictive maintenance systems and real-time diagnostics are valuable but may not attract new customers. This approach aligns well with our existing resources and stakeholder expectations but must be balanced with long-term considerations.
3
Option B – Discontinuous Innovation: Risks and Benefits
Benefits
Potential to redefine the market and establish leadership.
Opportunity to introduce entirely new products and revenue streams.
Examples: Autonomous vehicles, blockchain-based IoT platforms.
Risks
High cost of development and implementation.
Uncertainty in market acceptance and regulatory approval.
Requires significant cross-departmental alignment.
Option B, discontinuous innovation, offers the potential to redefine the market by introducing revolutionary IoT solutions. This approach allows us to establish leadership and capture new revenue streams through groundbreaking products, such as autonomous vehicle systems or IoT-enabled blockchain platforms for secure data sharing. However, the risks are considerable, including high R&D and operational costs and long lead times (Ghosh et al., 2021). Additionally, market acceptance can be unpredictable, as customers may resist adopting unfamiliar technologies, and regulatory approvals could delay product launches. This strategy demands significant collaboration between R&D, marketing, and finance to align resources, budgets, and messaging. While the rewards could be substantial, the risks must be weighed carefully against the company’s current capabilities.
4
Competitors’ Current Products and Services
Competitors are advancing IoT diagnostics and smart infrastructure integration.
Competing companies are also using IoT-based consumer devices and smart energy solutions.
Highlighted IoT-driven features in their offerings.
Competitive advantage through customer-focused IoT applications.
Competitors have successfully integrated IoT into their product portfolio by offering advanced diagnostics and predictive maintenance systems, as well as expanding into smart infrastructure, such as urban traffic optimization. Competitors have also focused on consumer-oriented IoT devices like smart infotainment systems and energy-efficient solutions. The competition also leverage IoT to enhance customer experience and operational efficiency, giving them a strong edge in the market (Yeap et al., 2022). Their focus on customer-centric IoT applications aligns with industry trends, creating a competitive advantage that must be addreseds through our innovation strategy.
5
Competitor Expansion and Market Impact
Competing companies are investing heavily in smart city projects.
These companies are also expanding IoT-based customer engagement platforms.
Market impact: Increased pressure on pricing and differentiation.
Competitor expansions signal growing demand for IoT integration.
Competitors are not only innovating but also expanding their presence in key markets. Competing companies are aiming their focus on smart city projects positions them as a leader in urban mobility and infrastructure, while also building IoT-based platforms to engage directly with consumers. These expansions increase market pressure, forcing companies like ours to differentiate through either cost leadership or disruptive innovation. Their activities highlight the growing demand for IoT technologies, underscoring the urgency of making the right strategic choice.
6
Competitor Insights and Strategic Takeaways
Competitors’ strategies highlight the need for IoT innovation.
Incremental innovation may help maintain parity.
Discontinuous innovation could offer a competitive leap.
Strategic alignment with market trends is essential.
Analyzing the competitors reveals two key insights. First, incremental innovation is sufficient to maintain parity with competitors, as many focus on improving existing features. Second, discontinuous innovation presents an opportunity to leap ahead, particularly in untapped areas like blockchain IoT or autonomous systems. The company’s strategic focus must align with market trends while capitalizing on our unique strengths to secure long-term success.
7
Partial Gap Analysis – Current Technology Use
Current IoT capabilities: Predictive maintenance, real-time monitoring.
Key gaps: Lack of advanced analytics and autonomous systems.
Limited use of blockchain for data security.
Dependency on third-party vendors for IoT infrastructure.
The company currently utilizes IoT for predictive maintenance and real-time monitoring, which are valuable but limited applications. Significant gaps exist in areas like advanced analytics, which can provide deeper insights, and autonomous systems, which represent the future of IoT-driven industries. Additionally, the company is yet to leveraged blockchain technology to enhance data security, leaving it vulnerable to cybersecurity threats. Its reliance on third-party vendors for IoT infrastructure highlights a critical gap in technological ownership. Addressing these gaps will be vital to pursuing either incremental or discontinuous innovation effectively.
8
Partial Gap Analysis – Available Technology
IoT technologies available for licensing or purchase.
Cost analysis for acquiring advanced analytics tools.
Feasibility of developing proprietary IoT solutions.
Potential partnerships for technological advancement.
To close the gaps, several IoT technologies are available for licensing or purchase, including advanced analytics tools and blockchain platforms. While purchasing these technologies can accelerate innovation, it requires a substantial financial commitment. Alternatively, developing proprietary solutions in-house could provide long-term cost savings and a competitive edge, but this approach demands significant investment in R&D. Strategic partnerships with technology leaders could offer a middle ground, providing access to cutting-edge technologies while reducing costs and risks.
9
Recommended Innovation Approach
Hybrid approach: Incremental innovation with exploratory R&D.
Focus on improving IoT diagnostics and user experience.
Allocate resources for disruptive innovation projects.
Gradual transition to advanced IoT applications.
A hybrid approach that prioritizes incremental innovation while allocating resources for exploratory R&D into disruptive technologies is recommended (Daraiseh, 2023). This strategy ensures immediate improvements in IoT diagnostics and user experience, addressing customer needs and maintaining competitiveness. Simultaneously, exploratory R&D allows us to prepare for the future by developing advanced IoT applications, such as autonomous systems. This phased approach minimizes risk while positioning the company for long-term success.
10
Aligning IoT Innovation with Customer Needs
Understanding customer pain points through data-driven insights.
Prioritizing user-friendly interfaces for IoT applications.
Customization and scalability to address diverse customer segments.
Ensuring transparency in data usage and privacy policies.
Real-time customer support integration for IoT devices.
Aligning IoT innovation with customer needs is crucial to ensuring adoption and long-term satisfaction. By leveraging data-driven insights, the company can identify customer pain points and design solutions that directly address them (Adesina et al., 2024). A focus on user-friendly interfaces enhances usability and reduces resistance to adopting IoT applications. Offering customization and scalability ensures that the products cater to diverse customer segments, from individual users to enterprise clients. Transparency in data usage and privacy policies builds trust, a critical factor in today’s data-sensitive market. Additionally, integrating real-time customer support into IoT devices improves the user experience by addressing issues promptly (Tang et al., 2019). Finally, co-creating innovation through customer feedback loops ensures the products evolve in line with user expectations, creating a competitive advantage. Aligning with customer needs not only drives satisfaction but also enhances brand loyalty and positions our company as a market leader in IoT innovation.
11
Financial and Market Projections
Incremental innovation: Moderate revenue growth, lower costs.
Discontinuous innovation: High revenue potential, high risk.
Investment requirements for R&D and technology acquisition.
Forecasted ROI for both approaches.
Incremental innovation is expected to deliver moderate revenue growth at a lower cost, providing a steady ROI. Discontinuous innovation offers higher revenue potential but involves greater risks and higher upfront investment. A balanced allocation of resources between these two approaches ensures both short-term profitability and long-term growth. Financial projections suggest that investing in exploratory R&D now will yield significant returns in the future as disruptive IoT technologies gain market acceptance (Daraiseh, 2023).
12
Sales Forecasts and Financial Snapshot
Projected 15% revenue growth from IoT-integrated products over three years.
Anticipated market share increase of 5% due to IoT differentiation.
Initial R&D investment of $100 million for IoT development.
Marketing budget allocation of $30 million to drive awareness and adoption.
Expected ROI of 20% within the first five years of IoT implementation.
The financial projections and sales forecasts highlight the significant potential of IoT integration for the organization. Over three years, revenue is projected to grow by 15%, driven by enhanced product differentiation and value-added IoT features. Additionally, IoT innovation is anticipated to result in a 5% market share increase, further cementing our competitive edge. To achieve these targets, an initial R&D investment of $100 million is required to develop and implement IoT solutions. A marketing budget of $30 million will focus on creating awareness and encouraging adoption among customers. With these efforts, the expected return on investment (ROI) is approximately 20% within five years. These forecasts underscore the strategic importance of this initiative to both marketing and finance teams, as well as its alignment with our broader organizational goals.
13
Conclusion and Next Steps
IoT innovation is essential to remain competitive.
Adopt a hybrid strategy for balanced growth.
Address current technology gaps and invest in R&D.
Monitor competitor activities and market trends.
Next steps: Budget allocation, timeline, and stakeholder alignment.
In conclusion, embracing IoT innovation is critical for maintaining competitiveness and achieving sustainable growth. A hybrid strategy that combines incremental improvements with exploratory R&D ensures a balanced approach to innovation. Addressing existing technology gaps, such as blockchain integration and advanced analytics, will further strengthen our capabilities. Moving forward, we must allocate budgets, establish timelines, and align stakeholders to implement this strategy effectively while continuously monitoring market trends and competitor activities.
14
References
Adesina, A. A., Iyelolu, T. V., & Paul, P. O. (2024). Leveraging predictive analytics for strategic decision-making: Enhancing business performance through data-driven insights. World Journal of Advanced Research and Reviews, 22(3), 1927-1934.
Daraiseh, F. (2023). Exploratory Innovations and Exploitation of Knowledge after Large Scale Agile Transformation: A Case Study at an Energy Utility R&D Department.
Ghosh, S., Hughes, M., Hughes, P., & Hodgkinson, I. (2021). Corporate digital entrepreneurship: Leveraging industrial internet of things and emerging technologies. Digital Entrepreneurship, 183, 1-339.
Matthyssens, P. (2019). Reconceptualizing value innovation for Industry 4.0 and the Industrial Internet of Things. Journal of Business & Industrial Marketing, 34(6), 1203-1209.
Tang, S., Shelden, D. R., Eastman, C. M., Pishdad-Bozorgi, P., & Gao, X. (2019). A review of building information modeling (BIM) and the internet of things (IoT) devices integration: Present status and future trends. Automation in construction, 101, 127-139.
Yeap, J. A., Ooi, S. K., Ramayah, T., Md Kassim, N., & Kunchamboo, V. (2022). Retail Internet of Things: A Retailer-and Consumer-Oriented Literature Review. Global Business & Management Research, 14.
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FEEDBACK FOR MILESTONE ONE Great work with the presentation. It was done in very professional way. Good job explaining the potential risks and benefits for the innovation of your choice. Great job comparing competitor’s product and services and explaining how they impact the market strength. Also, nice job analyzing your company’s capability to pursue the innovation by partial gap analysis. This shows your advanced understanding of the course material. Good work making a recommendation on how the company should pursue the innovation to remain competitive in the market. Great job overall. I appreciate all your efforts. |
3
Strategic Plan for Implementing IoT in Vehicles: Incremental Innovation (Option A)
Our CTO has approved Option A—a discontinuous innovation strategy to design a brand-new, IoT-integrated product line. As connected vehicles drive revenue growth, our plan secures immediate competitive advantage and long-term expansion. It includes comprehensive market analysis, competitive strengths/weaknesses via operating statistics, and TAM/growth projections. A step-by-step roadmap from concept to launch is detailed, with contingency measures for evolving business conditions.
Market Analysis and Competitive Landscape
Competitors’ Relative Strengths
Our company’s competitors, Volkswagen and
Toyota
, boast a huge asset base, revenues of $
282.
9
billion and $
275.4
billion, and strong operating income of $
20.5
billion and $
22.5
billion, respectively. This strong performance in terms of revenues and operating income positions Volkswagen, followed by Toyota, as the dominating firm in both scale and market presence. In terms of market share,
VW
holds 8.7% of the car and truck market, both projected to reach 9% by 2030. Volkswagen’s growth in the connected vehicle segment is expected to reach 13.2%, taking advantage of the projected CAGR of 23.20%. Toyota, on the other hand, dominates the traditional market and is projected to reach 8.41% market share by 2030. Similar to VW, Toyota’s growth in the connected vehicles category is projected to hold an 8.62% market share, riding on a high CAGR of 24.8%
In contrast,
BMW
‘s revenue position and operating income are half that of VW and Toyota, but its connected vehicle segment is growing rapidly, evidenced by CARG’s 25.50%. This rapid growth points out BMW’s aggressive innovation as well as its shift toward integrating more advanced IoT features. Its traditional market shares remain relatively low compared to VW and Toyota at 3.91 %. Compared to our competitors, our company holds modest venues and an operating income of
5.7
%, commanding 5.8% in the traditional market category and a slightly higher market share of 7.1 % in the connected category. However, the connected vehicles sales category shows a conservative growth rate of 10.2% per year in the first two years, with ensuring years reporting a steep annual growth of 25%, if we implement option A innovation, as this option would accelerate growth significantly (See Appendix C).
Market Share Analysis
Figure 1: Cars and Trucks Current Market Share
VW dominates the global automotive market with 8.7%, followed by Toyota, while our company holds only 5.8%, as shown in Figure 1 above. Our market share highlights the urgency to differentiate so as to compete favorably and avert stagnation.
Figure2: Cars and Trucks – Projected Market Share (2030)
VW is projected to gain a significant market share, reaching 9%, while we will record a decline attributed to a 3.1% CARG that is lower than the industries. Closed rivals like Toyota will reach 8.41% while 73.5% will be held by other small participants in the industry. Figure 2 above visualizes this trend
Figure 3: Connected Cars and Trucks Current Market Share
VW also leads in the connected vehicle segment, holding 15.5% of the market share. This market share is attributed to its earlier adoption of IoT technologies. Our company trails behind both VW and Toyota, as shown in Figure 3 below. However, BMW’s market share in this segment lags behind the three competitors but has explosive growth plans, as evidenced by 25% CARG (See Appendix C)
Figure 4: Connected Cars and Trucks – Projected Market Share (2030)
VW is projected to retain its dominance by 2030; however, it will record a slight reduction in market share. Our company growth will decline significantly due to low adoption of IoT technologies as evidenced by a low CARG rate of 10.2% compared to that of BMW and Toyota, which are above 20%
Financial Strength and Operating Statistics
|
Metric |
Our Company |
VW | BMW | Toyota |
|
Revenue (Billion USD) |
187.1 |
282.9 |
12 6.1 |
275.4 |
|
Operating Income (Billion USD) |
5.7 | 20.5 | 9 | 22.5 |
|
Net Income (Billion USD) |
0.9 |
16.1 |
6.1 |
19.7 |
|
Assets (Billion USD) |
310 |
590.6 |
275.9 |
484.7 |
|
Equity (Billion USD) |
39.9 |
147.4 |
72.5 |
190.8 |
|
Number of Employees |
190,000 |
304,174 |
133,778 |
359,542 |
From Table 1 above, it can be observed that our key competitors, notably VW and Toyota, boast of large assets, revenue bases, and workforce. This means they have the resources and financial muscles to scale their operation and continue dominating in key markets. Our company, in contrast, has a lean workforce, which is equally an advantage as it offers it agility (Das et al., 2023). However, our lower revenues and operating income signal the urgency to improve margin by focusing on the higher-margin vehicle segment, which is the connected category.
Market Share and Growth Potential
Current Market Position
Our company’s traditional segment market share is modest but stable, while the connected segment share is small compared to competitors, and the projection further indicates a decline of 1.98% by 2030 if we maintain the status quo. However, when we integrate IOT, we can improve sales and profit margins and capture a significant market share of the connected segment. Furthermore, our growth potential in the connected segment is high if we invest in Option A innovation by leveraging the higher margins this option gives and tapping into the growing segment.
Total Available Market (TAM) and Growth Projections
|
Global TAM |
Industry Growth |
||
|
TAM for Cars and Light Trucks |
Approximately $3,227.70 billion. |
A projected CAGR of around 3.10% to 4.30% across major competitors |
|
|
TAM for IoT-Connected Cars and Light Trucks |
Approximately $53.9 billion. |
A projected CAGR of 25.20% globally, underscoring the explosive potential of connected vehicle revenues. |
Future Projections
Our company with strong market shares in traditional niche is projected to reach $254 billion in 2030, representing 0.52% decline in market share which is currently at 5.80%
In the connected segment competitors like BMW are growing at a rapid pace evidenced by a projected 25.50 % CARG followed by Total and VW whose CARG is 0.7% and 2.2% less than the leading BMW, respectively.
Contingency Measures and Business Flexibility
Adjustments if Customers are Slow to Adopt
Slower adoption by customers can be as a result of lack of awareness about IoT benefits. For this reason, education campaigns will be prioritized to help highlight IoT benefits when integrated in connectedness vehicle, such as enhanced safety and predictive maintenance (Abdelkader et al., 2021).
Another strategy is to incentivize customers by offering promotional financing and bundled service to lower barrier for early adopters. Dealer training may also be necessary to ensures customers in different region receive excellent customers and also understand and appreciate this new technology, thus pushing acceptance levels.
Adjustments if a Competitor Overtake
If competitors like BMW overtake, the following adjustments should be made
Firstly, accelerate investment in Research and Development to differentiate our product line with advanced IoT features that are hard to imitate and a faster innovation cycle.
Secondly, our company can leverage strategic partnerships with pacesetters in the industry and providers of IoT solutions to integrate technologies that differentiate our product from the rest. Another adjustment that should be undertaken is to implement an adaptive pricing strategy to improve competitiveness and bolster customer satisfaction (Zadeh & Safae, 2024). Agile production adjustment may also be necessary for our company to respond quickly to intensifying competitiveness.
Implementation Roadmap
|
Phase |
Timeline |
Key Activities |
Resource Requirements |
Milestones/Goals |
Justification |
|
1.Concept Design |
Year 0 |
Define IoT features (e.g., real-time diagnostics). |
Capital $4.1B (Year 0 R &D, per Sales Forecast). 50 engineers (0.026% of 190K workforce). |
Finalize IoT feature list. |
Figures derived from the Sales Forecast Option A “R &D and Capital Costs” for Year 0. |
|
2. Prototype Development |
Years 1–2 |
· Build IoT prototypes · Partner with technology firms for sensors and connectivity solutions. |
Capital $4.13B (Year 1 R & D, per Sales Forecast). |
· Develop and test a functional prototype. · Establish partnerships with at least 3 IoT suppliers. |
Year 1 R&D investment justifies the prototype build. Additional specialized personnel are required to accelerate IoT feature integration. |
|
3. Regulatory Compliance |
Year 2 |
Certify compliance with GDPR and cybersecurity standards. |
Capital $1.16B (Year 2 R&D, per Sales Forecast). 20 compliance specialists. |
Obtain required certifications for EU, North America, and Asia. |
R&D figures from Year 2 support the costs for rigorous testing and compliance Hiring compliance specialists ensures adherence to international regulations. |
|
4. Pilot Launch |
Year 3 |
-Launch the IoT model for commercial fleets (target: 10K units). |
Capital $5.6B (derived from Year 3 Gross Margin, per Sales Forecast). Train 500 staff members |
Achieve sales of 10K units. |
|
|
Full-Scale Production |
Years 4–10 |
Scale IoT integration to 80% of the product line. |
Capital $1.4B per year (Years 4–10 R&D, per Sales Forecast with 3% YoY growth). Add 300 engineers per year. |
Achieve IoT integration in 80% of vehicles. |
The market share goal (5.4%) is based on Sales Forecast Option A projections (i.e., connected revenue vs. global TAM). |
|
6. Post-Launch Support |
Ongoing |
Monitor vehicle performance using IoT analytics. |
Capital $1.4B per year (aligned with ongoing R&D forecasts). – Personnel 50 dedicated data analysts. |
-Maintain 95% software uptime. |
Continued capital allocation supports ongoing software and system updates. |
Development, Capital, Personnel, and Timeline Determination
Development Size
Involves complete redesign of the product line, incorporating advanced IoT hardware, software platforms, and cybersecurity measure
Capital
Additional capital is needed to support research and development and product development phases that include prototype, regulatory testing, and scale-up.
Additional capital is estimated as follows;
Year 0-1 = $ 8.2b (See appendix C from the problems R&D costs)
Year 2-10 = Average annual R&D spend of $1.4 B * 9 years
= $12.6 B
Total = 20.8 B
Assuming 50% cost sharing with strategic partners, the capital needed is reduced to $10.6B
Personnel
Specialized talent in IoT engineering and cybersecurity experts to combat cyber threats, considering that they are growing at an alarming rate and data analytics is vital (Raimundo & Rosário, 2022). The expansion of cross-functional teams is crucial for supporting the accelerated innovation cycle. Hiring specialized talent in IoT engineering, data analytics, and cybersecurity is essential. An additional 500 engineers are required as this represents 0.26% of the current workforce of 190000.
Timeline Approach
We will adopt a milestone-drive and agile methodology to manage the project. Implementation will be phase over a period of ten years dividend in into three phases summarized in table below
|
Phase |
Duration in Years |
|
Prototyping |
0-2 |
| Pilot Launch | 3 |
|
Scaling |
4-10 (Aligns with the 10-year CAGR for connected vehicles (25.2%). |
The above durations are determined by risk assessments, supplier readiness, and regulatory timelines
References
Abdelkader, G., Elgazzar, K., & Khamis, A. (2021). Connected vehicles: Technology review, state of the art, challenges and opportunities.
Sensors,
21(22), 7712.
https://doi.org/10.3390/s21227712
Das, K. P., Mukhopadhyay, S., & Suar, D. (2023). Enablers of workforce agility, firm performance, and corporate reputation.
Asia Pacific Management Review,
28(1), 33-44.
https://doi.org/10.1016/j.apmrv.2022.01.006
Raimundo, R. J., & Rosário, A. T. (2022). Cybersecurity in the internet of things in industrial management.
Applied Sciences,
12(3), 1598.
https://doi.org/10.3390/app12031598
Zadeh, E. K., & Safaei, M. (2024). Maximizing Lifecycle Profitability in Technology Products Through Enhanced Sentiment Analysis and Dynamic Pricing.
International Journal of Industrial Engineering and Construction Management (IJIECM),
1(1), 21-29.
Appendix
Appendix A: Comparative Operating Statistics
Appendix B: Comparative Growth Data
Appendix C: Option A for Innovation
Appendix D: Option B for Innovation
Appendix E: Sales Growth Whole Market
Appendix F: Sales Growth Connected Market
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