Question 1 e Fog question OPCO CASE The data management division of OPCO, a communications company decided to develop and sell a software accounting system that would process credit card transactions over its data network. To enter the business quickly. OPCO purchased a start-up firm with a system under development and after several months of additional work, the service was introduced to the market. The system did not operate properly, however, and was cancelled. As suggested by the quotes below, the innovation encountered many problems. The quotes also suggest that the participants interpreted issues from narrow departmental perspectives. The business manager saw no need to talk with customers, since he considered the market opportunity to be obvious. He now believes, however, that OPCO failed to position the product properly against its competitors. In response to the interviewer's question, "Did you talk to customers?' the business manager replied, "No because we knew that this was needed. We could see come competitors getting into the business.... "Had we done some market research and defined needs more carefully, and figured out the dozens of pieces we would need for a full system, we'd be position with a much better strategy". The technical director saw no "market" problems at all with the effort. He described design problems, however that perhaps could have been resolved had a thorough analysis of users and how they operate been carried out: These were no market problems with this product... Our mistake was we didnt understand the application in total... We had a difficult time trying to figure out the relationships between them and their banks and credit card clearing houses... There were a lot of players involved, which is different from our regular product), where we interface with one customer at a time. It looks very nice theoretically, but the more relationships there are the more complex the recovery The sales support person downplayed general positioning and technological design. Instead, he blamed OPCO's failure to specify which users in the market could best use the product: "I have never seen a definition of this service. There are no criteria on what makes a good or bad customer for this product... One person here had a pretty good understanding of what kind of customer would benefit from a system like this. More people here should have known. We needed a brain transplant. Tita Inis course from a system like this. More people here should have known. We needed a brain transplant. The innovators also followed established routines at OPCO to develop and launch this new service. These routines included project teams and matrices, structures that are recommended for innovation, but all participants noted how they did not work. The routines did not synthesize components of the innovation itself nor relevant knowledge and the squashed interaction. According to the business manager, 'We were not successful in fully integrating the new business within the organization. A new product is unique - it has different distribution, different billing, a myriad of activities have to work out well. It is difficult for a business unit to handle all these issues, so things fall apart. We didn't see the pitfalls. The technical director stated: At OPCO we tend to categorize people into roles, and give each only what they need to know... There are little shadings of meaning that get lost in the requirements statement from marketing". From the sales-support angle: "They (from the small company) were a very tight group, and they all talked to one another all the time. But when we brought them here they were dispersed into our matrix..." In hindsight at least, these innovators knew that they should link technological and market issues, but they had not done so.. Discussion Questions (a) Why is it important to understand customer requirements in the design of new products and services? (16 Marks) (b) If a firm is the first to enter the market with new technology, why would the customers buy? (06 Marks) (C) It is argued that, besides the four traditional measures of operational performance, lately service is regarded as one of the key measures in determining either to make or buy a product. Using a product of your choice explain how organizations can take advantage of this measure. (08 Marks) Internal Memo From: The Marketing Manager To: The Operations Manager One of the representatives has informed me that he can get an order - which could lead to substantial annual orders - for a product which would nicely fill up the spare capacity which you discussed with me. Moreover, the quality required is inferior to our present range so that you could transfer over any less satisfactory resources on this job. Of course the profit margin is not so great as we would normally expect, but since your resources are not fully occupied, it would, nevertheless, be an increase in total profit. As the volumes both immediate and potential are substantial, I shall take no action until I hear from you. Details of the product are being passed to you by my administrative assistant, Jennifer Rotich. Required: As the operations manager respond to the above memo. (10 Marks)