Euchner’s main concern is whether Stamp Expression was the right product to promote to market. Based on analysis below, it is found that Amita project has several pitfalls which led to the slow initial sales and possible failure in growing this product. It would be better if Pitney Bowes uses acquisition to grow the small business segment.
Innovation Process and personnel
One major issue that Pitney Bowes had is the total separation between their two essential roles, product engineering and future-scanning, in innovation process. For Amita’s innovation process, all concept development and commercial feasibility are being done in AC&T without engaging product engineering team. If product engineering team has been involved earlier, the lack of real-time support would be spot and the time spent on all feasibility activities would not be wasted. Furthermore, as many people have a say to the project, Amita has gone through much iteration which made project size growing and cost adding. Another issue was the personnel recruited to the company for leading the company growth. Neil Metviner, Dan Kohn and Lisa Somer were all hired in the sales team from credit card and consumer bank background. It is doubtful whether they had enough retail experience to define target markets and strategy to attract customers.
AC&T’s approach to finding new growth opportunities was “customer-centered innovation”. The drawback of customer input innovation is that customer should not be trusted to come up with solutions. Rather, customer should be asked only for what they want a new product or service to do for them (Ulwick, 2002). Although AC&T has employed staff of anthropologists, designers, engineers etc to understand customers’ unspoken needs and values, the judgment on whether to include functionality, like to hook the machine directly to telephone jack or PC, was made by asking ONE single client in the focus group. Decision would far better be made by asking more interviewees with different backgrounds in order to avoid personal preference. Furthermore, AC&T are heavily influenced by MIT professor Eric Von Hippel, who believed observing lead users do with products can yield insight into what further improvement and product ideas. This fact maybe true but normal user wants may not be covered, as well as requirements from non-customers.
In order to keep the manufacturing cost low, some important features, like ability to produce coloured image, are being removed from the product. Removing this feature has actually hurt the product potential because this is a function which stamp.com, who already possessed 85% of market share, already had. It is always extremely difficult for a company to tackle into a market which has already been dominated by a big player. In order to do so, it must have a product with functionalities matching with competitors in addition to new innovative features which can be a selling point for the product. In Amita’s case, the product is still not as good comparing with stamp.com.
Although Murray Martin, COO, indicated that they should reinvent in existing market space to ensure an ongoing healthy core, one point they did not investigate is that how much growth this industry will have in the upcoming future; and whether innovation is worth doing based on the growth rate. According to the U.S. Postal Service, the number of delivery points for residential is increasing while that for Business has been steady for years. This shows that residential postage service seems to be generating more revenue than business service. Yet Pitney Bowes’s postage meters and new Amita project were targeting to small businesses. Spending capital on this segment with limited growth may not be optimal.
The core business of Pitney Bowes is to produce and lease postage meters. To determine whether it should innovate very close to existing...
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