MTI Advent Corporation

Advent Corporation | Group 1 | Management of Technology and Innovation

Anto Abraham Arpit Rastogi Ritesh Jain Sandeep Tripathy

073 077 112 114

Shalina Bhatia Arun Ravindran Suman Kumar Saha

119 138 245

Shikha Gupta Suja Barua Suseendran Vishal Gagrai

300 306 308 316

Advent Corp Founded by Henry Kloss in 1967 for manufacturing specialized electronic products Motto was to make the most efficient piece of equipment at the lowest price to the customer Initial objective was to create and market a large screen TV system Suspended development of the TV system and switched to hifidelity audio products due to shortage of capital Group 1

Management of Technology and Innovation

IIM Kozhikode

Advent Corp • By 1970, Advent sold five products for home entertainment use – Advent Loudspeaker – Advent Frequency Balance Control – Advent Noise Reduction Unit – Advent Tape Deck Model – Advocate Crolyn Tape

• Licensed technology from Dolby Systems and Du Pont Group 1

Management of Technology and Innovation

IIM Kozhikode

Henry Kloss • Respected figure in consumer electronic product design • Keen on strong financial control and micromanagement of processes • President of KLH for 10 years and the driving force behind their high quality products • Constantly worked on and refined the design of the TV system

Group 1

Management of Technology and Innovation

IIM Kozhikode

Enactment (Modes of Experience)

Substance

External Technology Sourcing

Internal Technology Sourcing

Product Development

Process Development

Technical Support

Competitive Stance

Leader

Leader

Strong

Strong

N.A.

Value Chain Stance

Broad

Narrow

High

Continuous Optimization

N.A.

Resource Commitment Stance

High

Potential to expand

High

High

Moderate

Strong

Innovative

Optimization

Management Stance

Group 1

Strong, Centralized

Management of Technology and Innovation

IIM Kozhikode

WHAT ARE THE KEY ELEMENTS IN ADVENT'S STRATEGY? HOW SUCCESSFUL HAS ADVENT BEEN? WHY?

Group 1

Management of Technology and Innovation

IIM Kozhikode

Broad

Differentiation

Cost Focus

Differentiation Focus

Cost

Differentiation

Scope

Cost Leadership

Narrow

What are the key elements in Advent's strategy?

Source of Competitive Advantage Group 1

Management of Technology and Innovation

IIM Kozhikode

What are the key elements in Advent's strategy? Blue Ocean Strategy • Advent focused on specialized area of audio market • Targeted the low competitive sector Indulge in research directed at invention • Use existing inventions, usually off-the-shelf Need seekers • Identified latent needs and opportunities for innovation • No market research Brand Equity • Didn’t believe in patent protection • Gain market share through brand equity

Group 1

Management of Technology and Innovation

IIM Kozhikode

How successful has Advent been? Why? • Recorded a net profit of $30,000 in the month of September, 1970 which was mainly contributed due to the launch of M200 – M200 was first of its kind and there weren’t any competitors

• Audio Loudspeaker was one of the industry’s best sellers – Best quality in medium price category

• Response from nation-wide distribution and exposure through trade press had been overwhelmingly favorable – Carefully chosen 150 dealers handled distribution of Advent products across the country

• Not many products in the pipeline – Absence of idea generation team Group 1

Management of Technology and Innovation

IIM Kozhikode

What are Advent's distinct technological competencies? Please construct a matrix showing the technological competencies embodied in the different segments of the audio business.

Group 1

Management of Technology and Innovation

IIM Kozhikode

Advent’s Technological Competencies • Ability to aggregate existing components in response to a perceived customer need/product trend – Architectural Innovation • Ability to leverage knowledge and sensitivity to – Market trends, customer preferences – Technological progress, off-the-shelf products availability

• Ability to use knowledge across complementary products – e.g audio players and noise cancelling devices

• Simplification of design and production Group 1

Management of Technology and Innovation

IIM Kozhikode

Technological competencies embodied in the different segments of the audio business

• End product – loudspeaker, Tape deck (M 200) – Product differentiation through innovation – Identification of latent customer needs

• Intermediate product (noise reduction units, Crolyn tape) – Identification of existing issues and needs – Standardization of components – Simplification of design and production Group 1

Management of Technology and Innovation

IIM Kozhikode

How is this different for the video business? • Competencies for video business – More focus on end customer in video as no intermediate products – Scope for improvement in technical know-how – optics, CRTs and display technologies – Better trained sales force

Group 1

A means of finishing mirrors at a very low cost to support image projection

Access to screen technology which was owned by Kodak

Research to develop new ways of prolonging the life of the cathode ray tube

Indirect resources such as building space, raw materials, tools and investment capital

Management of Technology and Innovation

IIM Kozhikode

What are the key issues and problems facing Advent? Please prepare a detailed action plan.

Group 1

Management of Technology and Innovation

IIM Kozhikode

Issues/Challenges - External factors • No significant economies of scale existed in the industry • Success of large screen TVs depended on recorders’ capabilities to reproduce quality content

Group 1

• Outsource manufacturing and sales to achieve economies of scope • Complementary products – Hence, collaborate with recorder developers – And involve them from initial phase of product development i.e. idea generation

Management of Technology and Innovation

IIM Kozhikode

Issues/Challenges - Strategic decisions Operational Strategy • Decision to make or buy receiver units Distribution and marketing strategy • Dependency on dealer network to sell the products – Difficulty in selling products with sophisticated innovations – Uncertainty about distribution of video products through audio dealers

• Absence of advertising and promotional strategy

Group 1

• Cost benefit analysis for make/buy decision • Develop own sales force for new products and outsource sales for established products – Reduce uncertainty – Focus on core-competency i.e. new product development

• In-store displays, demo by own sales force

Management of Technology and Innovation

IIM Kozhikode

Issues/Challenges - Future outlook • How to increase sales while maintaining specialized and protected market niche

• Collaboration on profit sharing model – Relinquish control over non-core competencies

• Form ideation team • Institutionalization of innovation process

Group 1

– Members with different skills and backgrounds – Discuss ideas with suppliers and partners to check feasibility and to make necessary modifications

Management of Technology and Innovation

IIM Kozhikode

Characterize Kloss's style as a general manager. Does he need to change? How?

Group 1

Management of Technology and Innovation

IIM Kozhikode

Kloss's managerial style • Equity control – 75% equity shares • Active involvement with R&D team • Reliance on experience and intuition about product sales One-man army • Idea generation centralized in just one individual • Closely supervised production operations – Determined even the assembly steps and production rate

Group 1

Management of Technology and Innovation

IIM Kozhikode

Change Change required • To make the organization self-sustainable, independent of his association with the organization How? • Delegate powers and responsibilities • Build a core executive team – better decision making • Succession planning – identify and nurture future top management • Form ideation team – Members with different skills and backgrounds – Discuss ideas with suppliers and partners to check feasibility and to make necessary modifications

• Build capabilities in concept testing – To better estimate sales potential of a product – Build organizational capabilities, rather than depending on individual Group 1

Management of Technology and Innovation

IIM Kozhikode

Thank you

Group 1

Management of Technology and Innovation

IIM Kozhikode