MTI The Flight of Kittyhawk

Hewlett Packard The Flight of Kittyhawk GROUP 6

Ansa Ephraim

Tony Sebastian

9/23/2011

Nikhil John Kurian

Shashikiran

Alok K

Sidharth Ramachandran

Sudipta M

Supriya K

Veerender N

Kavitha Jayaram

Manikandan V

Management of Technological Innovations | Indian Institute of Management Kozhikode

1

Agenda

Context of the case

9/23/2011

Salient points of the Kittyhawk project

Major Players

Strengths and weaknesses of the team

Reasons for failure

Management of Technological Innovations | Indian Institute of Management Kozhikode

What could have been done

2

The Kittyhawk Introduced in June 1992 by HP

The smallest hard disk drive in the world

1.3 inches in diameter

The Kittyhawk 9/23/2011

20 MB of storage! Ability to withstand 3-foot fall without data loss

Management of Technological Innovations | Indian Institute of Management Kozhikode

3

The Divisional Story

President and CEO (Lew Platt)

Personal Information Products

Test and Measurement Organization

Computer Products Organization (Dick Hackborn)

Computer System Organization

Measurement Systems Organization

Printing Systems

Mass Storage Group (Ray Smelek)

Ink-Jet Products

Sales & Support

Disk Memory Division (Bruce Spenner)

9/23/2011

Management of Technological Innovations | Indian Institute of Management Kozhikode

4

The Disk Memory Division A niche player

Established in the 5.25” and 3.5” markets

High end work station and network server markets

Revenues in 1992 DMD

HP

First to introduce many new high capacity drives

Market Segments OEM

Focus on higher capacities and faster access times

Disk Drive Revenue 4000

Internal HP

3000 3%

20% 519

97% 9/23/2011

80%

HP

IBM

Management of Technological Innovations | Indian Institute of Management Kozhikode

Seagate 5

The Project Team

Executive support from top management

Limited support from functional management and R&D at DMD

The separation of Kittyhawk project from DMD

Team autonomy

Core project team

• Develop product • Find markets • Cultivate customer base

• • • •

9/23/2011

Manufacturing, Marketing and R&D Rick Seymour as leader ‘Can-do’ type of people Sign the creed “I am going to build a small, dumb, cheap disk drive” • Team dynamics and Group development research

Management of Technological Innovations | Indian Institute of Management Kozhikode

6

The Kittyhawk Project Charter • Introduce Kittyhawk in 12 months

1

• Accomplish break-even time of less than 36 months

2 • To be the first 1.3” disk drive in market

4 9/23/2011

• Achieve a $100 million revenue rate in 2 years after launch

3 • Grow faster than disk drive market to help HP become industry leader (~35%)

5

Management of Technological Innovations | Indian Institute of Management Kozhikode

7

The Original Kittyhawk Market

The Potential Markets

• Mobile information technologies • Communication technologies • Consumer electronics • Automotive electronics • New opportunities in standard computer technology 9/23/2011

Narrow focus

• Disk drive specifically focused at mobile computing market • Inexpensive drive for use in currently unviable applications

The Original Kittyhawk Market The strategy • Lead industry in 1.3” form factor • Ride mobile computing explosion to get to low cost • “I’ll sell you a drive for $49.95”

Management of Technological Innovations | Indian Institute of Management Kozhikode

8

The Competition and Customers The Competition

Flash Storage

Planned Customers

9/23/2011

1.8” disk drive

Actual Customers

• PDA • Japanese word processors • Sub-notebooks • PDAs • Hard copy devices • Digital Cameras • Printers • Cash registers • Copiers • Telecom switching systems Management of Technological Innovations | Indian Institute of Management Kozhikode • Fax Machines

9

The New Kittyhawk Market

The Way Out • Continue pursuit of ruggedness based applications • Leverage ruggedness and electronics integration technologies to make a 2.5” drive • A $50 disk drive 9/23/2011

Discontinuation of Project on September 7, 1994

• No enthusiasm from DMD Management • No profit cushion for further redesign • Flattening of existing sales growth • Need for critical new products

Management of Technological Innovations | Indian Institute of Management Kozhikode

10

Question 1

Who were the key players in the emergence of the Kittyhawk project? What did each of them contribute? 9/23/2011

Management of Technological Innovations | Indian Institute of Management Kozhikode

11

The key players

Bruce Spenner (General Manager, DMD)

Richard Hackborn (Exec VP, Computer Products)

Lew Platt (President and CEO)

Rick Seymour (Team Lead)

•Part of the RISC implementing team •A visionary & risk taker •Questions sparked entrepreneurial spirit •Attack a new hill •Allocated priority •Empowered the team •Strategic staffing •Clear, specific, aggressive goals

•Known for building HP’s highly successful printer business •Provided the banner of approval •Believed in the project scope Allocated funds from the Computer Products Organization •Failed to communicate between the notebook and DMD division

•Provided exec support, frequent checks, champion to the outside world

•Quick thinker •Recruiter for the rest of the team •Set the pace- the motivator •Bolstered HP’s commitment to Kittyhawk

9/23/2011

Jack White

George Drennan

• Analysis and research, zoned in on a few product options

• The first designer who gave shape to the product

Management of Technological Innovations | Indian Institute of Management Kozhikode

12

Question 2

What are the strengths and weaknesses of the way HP structured and supported the Kittyhawk development team? 9/23/2011

Management of Technological Innovations | Indian Institute of Management Kozhikode

13

Strengths Autonomy in product development Movement out of the current set up

Team Formation Senior Management

HP Culture

Leaders Technical expertise of employees

9/23/2011

Management of Technological Innovations | Indian Institute of Management Kozhikode

14

Weakness Market Survey

Senior leaders were not technical experts

Indecisiveness

Wrongly defined objectives

Conflict with the parent division

No support from internal clients Failure to recognize the potential of the product and give a second chance

9/23/2011

Management of Technological Innovations | Indian Institute of Management Kozhikode

15

The ‘Cheap, Dumb Disk drive’ Financial goals to break even in 36 months and a $100 MM

Failed to challenge the industry cost floor of $130

9/23/2011

Targeted specific customers with high requirements like sturdiness

A disruptive technology that pursued an industry that was in its infancy • assumed an explosion in mobile computing to reach low cost

Management of Technological Innovations | Indian Institute of Management Kozhikode

16

Question 3

Why did HP pursue the Kittyhawk project this way? What should they do differently if they could do it over? 9/23/2011

Management of Technological Innovations | Indian Institute of Management Kozhikode

17

Why did Hewlett-Packard pursue the Kittyhawk project this way?

Device market predictions

DMD functioned as an OEM and hence had to always follow the market and the major players

Market Research predictions

9/23/2011

$130 was thought to be the cost floor for manufacturing any hard disk drive; introducing innovative design changes to bring this down was thought near impossible in the short time

Ready internal customer in the form of Corvallis division that was making a super sub-notebooks; serves as a reassurance and safety net

Market research technique was used to identify potential markets that could prove ineffective with disruptive technologies like Kittyhawk

The MR firm did not have technology experts who could predict the future and therefore depended on the clients leading to a shared view Personal Digital Assistants were predicted to grow in usage and a lot of the major companies had invested in them

Technology restrictions

Internal customer requirements

Greater emphasis on the shock-proof requirements expressed by few potential customers defining the entire product design and characteristics

Management of Technological Innovations | Indian Institute of Management Kozhikode

18

What should they do differently if they could do it over?

Improved processes for evaluating new product directions

Creating silos within an organization does not always work

Better market understanding & company integration

Implement accepted innovation processes like the Stage Gate model that attempts to evaluate the market for a product before proceeding

Leads to a differentiation of values and ideas that can create out-of-the-box ideas but also lead to polarization within the organization

As a manufacturer of OEM devices, DMD would need companies to innovate and create new categories in order to drive their innovation

Allows a company to move from intuition and gut-feel to strategic direction based on calculated risks and estimates

HP need not have created an entirely separate area for this team but incorporated within the organization. Eg. Newton project for Apple had similar individualistic tendencies that attracted too much attention and also failed

Using internal customers in the Computer division would be a much easier way to drive innovation and create new technologies

9/23/2011

Management of Technological Innovations | Indian Institute of Management Kozhikode

19

Question 4

What key insights does the case offer related to innovator’s difficulty in executing on innovation?

9/23/2011

Management of Technological Innovations | Indian Institute of Management Kozhikode

20

Inadequate top management support

Conflict of Sustaining and Disruptive Technologies

DMD’s functional management and most of the R&D managers wanted to focus on their existing product line

They didn’t want to venture into something whose market was unclear

The Kittyhawk project had to be moved to a remote corner of the division site

9/23/2011

Management of Technological Innovations | Indian Institute of Management Kozhikode

21

The Five Forces of Disruptive Technology

Companies Depend on Customers and Investors for Resources

Small Markets Don’t Solve the Growth Needs of Large Companies

An Organization’s Capabilities Define Its Disabilities

9/23/2011

Markets that Don’t Exist Can’t Be Analyzed

Technology Supply May Not Equal Market Demand

Management of Technological Innovations | Indian Institute of Management Kozhikode

22

Inadequacy of end product

Kittyhawk’s main targeted end product PDA wasn’t materialized as expected • Apple’s Newton PDA was one of the major failure of its entire product line

9/23/2011

Mobile computing market still required break-through technologies to fit Kittyhawk into their products

Management of Technological Innovations | Indian Institute of Management Kozhikode

23

THANK YOU

9/23/2011

Management of Technological Innovations | Indian Institute of Management Kozhikode

24