Post on 15-Oct-2020
transcript
SMART WATCH –TECHNOLOGICAL DISRUPTION
University of Alberta Innovation
PROBLEM STATEMENT
PROBLEM ANALYSIS OPTIONS SOLUTION IMPLEMENT OBSTACLES SUMMARY
What is the best path forward for the Swatch Group in the smart watch segment?
SOLUTION
Expand into the Smart Watch Segment Innovation SimplicityQuality Fashion / Luxury
PROBLEM ANALYSIS OPTIONS SOLUTION IMPLEMENT OBSTACLES SUMMARY
CURRENT SITUATION
Among top 3 in luxury segmentMultiple brands in all price segments Design and sell watches, jewelry, components,
movements Swatch TOUCH Zero One – Smart watch for active users Swatch Bellamy – Smart Watch for payment
PROBLEM ANALYSIS OPTIONS SOLUTION IMPLEMENT OBSTACLES SUMMARY
COMPETITIVE SITUATIONChanging market landscape Apple introduced 3 types of smart watches for multiple
segments Apple Watch 2 coming soon In the current market:
27% prefer Apple Watch15% consider Apple Watch a substitute
Increasing sales of Swatch luxury among young people 16% 18+ own a wearable device and use it once per
month
PROBLEM ANALYSIS OPTIONS SOLUTION IMPLEMENT OBSTACLES SUMMARY
COMPETITOR MAP
PROBLEM ANALYSIS OPTIONS SOLUTION IMPLEMENT OBSTACLES SUMMARY
LUXU
RYM
ASS
M
ARK
ET
LOW ADVANCED
TISSOTSmart-Touch
SWATCHTouch Zero One
fitbit
WATCHEdition
TAG HEURConnected
WATCHHermes
FitbitSurge& Charge
MULTIPLES:Moto, Watch Sport, LG Watch
KEY TAKE AWAY: Swatch is present in the market but not competing in the same segments
ANALYSIS
PROBLEM ANALYSIS OPTIONS SOLUTION IMPLEMENT OBSTACLES SUMMARY
Strengths- Brand (established)- Patents - Components- Craftsmanship
Weaknesses- Slow to make changes
- Brand loyalty
Opportunities- Luxury market- Component sales / B2B - Partnerships
Threats- Smart Watches
- Technological disruption
SWOT
KEY TAKE AWAY: Apple Watch is a serious threat
10 TYPES OF INNOVATION
PROBLEM ANALYSIS OPTIONS SOLUTION IMPLEMENT OBSTACLES SUMMARY
KEY TAKE AWAY: Swatch can improve their process and specifically the product system
Apple (watch brand) Swatch (watch brand)Configuration Well known, luxury Luxury, CraftsmanshipOffering Apple Watch All segmentsExperience Standardized StandardizedService Channel Retail Stores Retail StoresBrand Cust. Exp. Familiar FamiliarProduct Performance Apple ecosystem MissingProduct System Standard StandardProfit Standard StandardNetwork Standard StandardStructure Standard StandardProcess Standard Vertically integrated
PORTERS 5 FORCES
PROBLEM ANALYSIS OPTIONS SOLUTION IMPLEMENT OBSTACLES SUMMARY
RIVALVRY
7 / 10
SUBSTITUTES6 / 10
BUYERS5 / 10
NEW ENTRANTS
6 / 10
SUPPLIERS1 / 10
KEY TAKE AWAY: Threat of substitutes must be mitigated
CUSTOMEREXPERIENCE
PROBLEM ANALYSIS OPTIONS SOLUTION IMPLEMENT OBSTACLES SUMMARY
THINK AND FEEL
DO AND SAY
HEAR
SEE
Luxury brandTimelessCraftsmanshipLimited
BeautifulFashion / JewelrySmart Watches Increase prevalence
Purchase for statusBrandReputationAttract Younger Gen.
“Smart watches not a threat”Apple Watch vs. Swatch
CUSTOMEREXPERIENCESmart Watch
PROBLEM ANALYSIS OPTIONS SOLUTION IMPLEMENT OBSTACLES SUMMARY
THINK AND FEEL
DO AND SAY
HEAR
SEE
ConvenientHigh Price
Increasing usePaired with smartphones
Purchase and use dailyCharge every day
“Cool”, “High Tech”Functionality
KEY TAKE AWAY: Smart Watch creates Blue Ocean segments
Financial Snapshot and Forecast
Net operating profit 1.45 B
Operating margin 17.2%
PROBLEM ANALYSIS OPTIONS SOLUTION IMPLEMENT OBSTACLES SUMMARY
Financial Snapshot and Forecast
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500
1,000
1,500
2,000
2,500
2013 2014 2015 2016 2017
Net Income CHF Million
PROBLEM ANALYSIS OPTIONS SOLUTION IMPLEMENT OBSTACLES SUMMARY
Financial Snapshot and Forecast
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
2012 2013 2014 2015 2016 2017
Net Sales CHF Million
PROBLEM ANALYSIS OPTIONS SOLUTION IMPLEMENT OBSTACLES SUMMARY
Financial Snapshot and Forecast
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
2012 2013 2014 2015 2016 2017
Unit Sales (Millions)
PROBLEM ANALYSIS OPTIONS SOLUTION IMPLEMENT OBSTACLES SUMMARY
ALTERNATIVES
Option Cost Profitability Growth Competitive ValueAlignment
1. Focus on luxury watches only
2. Components and B2B
3. Partner with Apple
4. Expand into the Smart Watch Segment
PROBLEM ANALYSIS OPTIONS SOLUTION IMPLEMENT OBSTACLES SUMMARY
ALTERNATIVE 1 – LUXURY WATCHES ONLY
PROS CONS- Focus on core competencies- Reduces IT and software demand- Use existing resources
- Low Profitability- Disruptive technologies- Exiting a potentially profitable market
PROBLEM ANALYSIS OPTIONS SOLUTION IMPLEMENT OBSTACLES SUMMARY
ALTERNATIVE 2 – COMPONENTS AND B2B
PROBLEM ANALYSIS OPTIONS SOLUTION IMPLEMENT OBSTACLES SUMMARY
PROS CONS
- Widens consumer base and customer segments- Uses core competencies and existing innovation resources
- Cuts out consumers from the luxury watch market- Would create high costs in the short term
ALTERNATIVE 3 – PARTNER WITH APPLE
PROBLEM ANALYSIS OPTIONS SOLUTION IMPLEMENT OBSTACLES SUMMARY
PROS CONS
- Wider reach with Apple and increased number of consumers- Does not tarnish brand- Increase capability and uses Apple’s tech reputation- Diversify offerings- Uses Apple’s brand
- Brand history not accounted for- No alignment with vision - Hard to implement - Not easily achieved with Apple brand
ALTERNATIVE 4 – SMART WATCH SEGMENT
PROBLEM ANALYSIS OPTIONS SOLUTION IMPLEMENT OBSTACLES SUMMARY
PROS CONS
- Brand alignment would be high- Growth potential is high- Can leverage existing reputation and quality- Can use market position – luxury- Less maneuverability for competitors
- Not core competency- Need to do Research and Development- Could potentially self-cannibalize
RECOMMENDATION
PROBLEM ANALYSIS OPTIONS SOLUTION IMPLEMENT OBSTACLES SUMMARY
THE SMART SWATCH PLAN
Growth Quality Innovation
IMPLEMENTATION
PROBLEM ANALYSIS OPTIONS SOLUTION IMPLEMENT OBSTACLES SUMMARY
Increase marketing
Organize for growthResearch and Development
Launch Smart Touch 2
Research and Development
Launch Swatch Diamond
Evaluate and Continue
Development12 months 24 months 36 months
IMPLEMENTATION – SHORT TERM
Action Timeline Cost KPI
Increase marketing for Swatch TissotSmart Touch
1-6 months $ 4 million Increase sales by 10%
Organize for growth
2-8 months $3.3 million Hire 20 developersHire 10 salesHire 3 support
Research and development
3-12 months $10.7 million Increased functionalityLuxury design
PROBLEM ANALYSIS OPTIONS SOLUTION IMPLEMENT OBSTACLES SUMMARY
IMPLEMENTATION – MEDIUM TERM
PROBLEM ANALYSIS OPTIONS SOLUTION IMPLEMENT OBSTACLES SUMMARY
Action Timeline Cost KPI
Launch Tissot Smart Touch 2
12-24 months $4.6 million Net incomeincrease by 5%
Research and development
16-24 months $9.1 million Incorporate more technologyLuxury design
IMPLEMENTATION – LONG TERM
PROBLEM ANALYSIS OPTIONS SOLUTION IMPLEMENT OBSTACLES SUMMARY
Action Timeline Cost KPI
Launch Swatch Diamond
36 months + $ 5 million Net income increase by 5%
Evaluate and continue R&D
36 months +
COMPETITOR MAP
PROBLEM ANALYSIS OPTIONS SOLUTION IMPLEMENT OBSTACLES SUMMARY
LUXU
RYM
ASS
M
ARK
ET
LOW ADVANCED
TISSOTSmart-Touch
SWATCHTouch Zero One
fitbit
WATCHEdition
TAG HEURConnected
WATCHHermes
FitbitSurge& Charge
MULTIPLES:Moto, Watch Sport, LG Watch
SWATCHDiamond
TISSOTSmart-Touch 2
IMPLEMENTATION – VRIO
VALUABLE•Brand value•Long history•Quality
RARITY•Owns the
segment•Patents
IMITABILITY•Simple •IP
ORGANIZED•Positioned for
growth
PROBLEM ANALYSIS OPTIONS SOLUTION IMPLEMENT OBSTACLES SUMMARY
SmartSwatch Plan Investment
0
2000000
4000000
6000000
8000000
10000000
12000000
2015 2016 2017 2018
HR R&D Marketing
PROBLEM ANALYSIS OPTIONS SOLUTION IMPLEMENT OBSTACLES SUMMARY
Past Finance
-
500
1,000
1,500
2,000
2,500
2013 2014 2015 2016 2017
Net Income CHF Million
PROBLEM ANALYSIS OPTIONS SOLUTION IMPLEMENT OBSTACLES SUMMARY
Financial Result of SmartSwatch
-
500
1,000
1,500
2,000
2,500
2013 2014 2015 2016 2017
Net Income CHF Million
PROBLEM ANALYSIS OPTIONS SOLUTION IMPLEMENT OBSTACLES SUMMARY
OBSTACLES
APPLE EXPANSION PRODUCT FAILURE COMPETITOR
ACTIONS
PROBLEM ANALYSIS OPTIONS SOLUTION IMPLEMENT OBSTACLES SUMMARY
0123456789
101112
0 1 2 3 4 5 6 7 8 9 10 11
Impa
ct o
n Sw
atch
Probability
OBSTACLE – Apple Expansion
Apple can move into the same space and imitateMITIGATION: Simplify products and make them practical
to consumer needs
PROBLEM ANALYSIS OPTIONS SOLUTION IMPLEMENT OBSTACLES SUMMARY
OBSTACLE – Product Failure
The product launch could be a failureMITIGATION: Prior to manufacturing and launch,
conduct extensive polls of consumers, use R&D core competency to provide innovative products reflecting the consumer needs
PROBLEM ANALYSIS OPTIONS SOLUTION IMPLEMENT OBSTACLES SUMMARY
OBSTACLE – Competitor Actions
The competitors can take the same path or even some of the presented alternatives
MITIGATION: For the smart watch segment, use multiple brands in the luxury, low
segment so that dependence on one brand is low If competitors partner with Apple, leverage quality and luxury
brands in the marketing approach If competitors focus on watches only, maintain current operations
and use marketing plans to separate the luxury watch brands from the smart watch products.
PROBLEM ANALYSIS OPTIONS SOLUTION IMPLEMENT OBSTACLES SUMMARY
SUMMARYFirst Mover
Quality
Diversify
Blue Ocean Strategy
PROBLEM ANALYSIS OPTIONS SOLUTION IMPLEMENT OBSTACLES SUMMARY
APPENDIX – BUSINESS CANVASRESOURCES- Patents- Brand- Innovation
PARTNERS VALUE PROPOSITION“Provide luxury,handmade, innovative products”
CUST.RELATIONS- Known for
quality- Maintain
relations
CHANNELS- B2B- Retail- Online
ACTIVITIES SEGMENTS- Sports- Techies- High earners- Traditionalist
COSTS- Normal costs
REVENUE- Dropping revenues due to decreased sales
APPENDIX
0
10
20
30
40
50
60
70
Smart Watches Wristband Sports Watch
30.3
2
30.1
5
21.0
2
50.4
34.9
7
23.9
8
66.7
1
44.1
26.9
2
Market Growth
2015 2016 2017