In this single-player simulation, pupils play the function of a concern unit director at a battery company confronting the authoritative Innovator’s Dilemma. Students have to pull off R & A; D investing trade-offs between the unit’s bing battery engineerings versus puting in a new, potentially riotous battery engineering. In this essay sample students will turn to a figure of challenges including the timing and degree of investing across both mature and new concerns, picks sing market chances and built-in merchandise public presentation features, demands to run into restraining fiscal aims and changeless tradeoffs between investing options, all in the context of unsure market information.
The full simulation can be played in 1. 5 place hours, plus debrief. This 2nd release of the web-based Strategic Innovation Simulation: Back Bay Battery combines the proven learning aims and plot line of the original with an updated user experience and enhanced administrative characteristics. A Teaching Note contains an overview of theory, simulation screens, and mention stuffs. Welcome to the Back Bay Battery Simulation
You are the President of Back Bay Battery. Inc., a $ 240 million gross division of a $ 40 billion consumer electronics maker. Back Bay Battery produces two types of batteries: Nickel Metal-Hydride ( NiMH ) batteries. which represent 80 % of the company’s gross. have been a pillar of the concern. The newer ultracapacitor batteries make up the staying 20 % . Back Bay Battery sells its batteries to concerns that produce consumer electronics. The three primary markets are: Portable power tools: Power tools are drills. smoothers. electric screwdrivers. and other radio tools.
Bipartisan wirelesss: Bipartisan wirelesss are commercial wirelesss and walkie-talkie systems used by service forces and cab companies. Portable power battalions: Portable power battalions are used for exigency back-up power. industrial merchandises. medical equipment. and little electric contraptions. The two battery types vary in their public presentation across five distinguishable characteristics. The characteristics are: energy denseness. figure of recharge rhythms. self-discharge to 50 % . recharge clip. and monetary value. Markets vary in footings of how these characteristics are graded comparative to each other.
Professors Willy Shih and Clayton Christensen prepared this reading. Copyright Â© 2012 Harvard Business School Publishing. No portion of this publication may be reproduced. stored in a retrieval system. used in a spreadsheet. or transmitted in any signifier or by any means-electronic. mechanical. run offing. entering. or otherwise-without the permission of Harvard Business Publishing.
Harvard Business Publishing is an affiliate of Harvard Business School. SIMULATION FOREGROUN D Reading
Back Bay Battery. Inc.
The battery industry is tremendous. with world-wide grosss of about $ 45 billion. It is extremely fragmented with at least 20 major makers in each engineering section. Because of the broad scope of applications of batteries. companies have tended to specialise in a peculiar engineering or market application. Disposable batteries. such as the widely available C -zinc and alkaline cells. are available in standard sizes such as AA. C. and D. and they are a fast-moving consumer-good class with accent on fabrication efficiency and graduated table. selling and stigmatization. and distribution efficiency.
One of the earliest signifiers of rechargeable battery was the wet lead-acid battery. the chemical science for which was invented in 1859. The application that drove this battery into prominence was to power a starter motor for vehicles. but today lead-acid batteries are normally used for uninterruptible power supplies-in forklift trucks. golf carts. boats and pigboats. and vehicles for indoor operation. They are cheap. albeit heavy. A discrepancy on the lead -acid battery is the Gel Cell. which is a certain lead-acid battery with a jellified electrolyte. leting a higher grade of portability. Smaller rechargeable batteries began as size-compatible replacings for disposable batteries and used engineerings such as nickel-cadmium ( NiCd ) . nickel-iron ( Ni-Fe ) . nickel metal hydride ( NiMH ) . and lithium ion ( Li-ion ) and lithium polymer. As demands for portable electronic devices such as laptop computing machines. music participants. and cellular telephone French telephones rose. shapers responded with new sizes and usage packaging to run into the alone demands of clients. Battery Performance Criteria
Important battery public presentation standards include:
Energy Density: The sum of charge stored within a battery. A battery with a higher energy denseness can hive away more charge. and therefore can power a device for a longer clip or present more power in the same clip period. As laptop computing machines took on larger screen sizes and more powerful processors. the demand for higher energy denseness drove a switch from NiMH to Li-ion batteries.
Back Bay Battery. Inc.
Recharge Cycles: The figure of times a battery can be recharged. Most batteries can travel through merely a limited figure of deep discharge – recharge rhythms. Many batteries can typically merely stand about 500 rhythms and so necessitate to be replaced. This is a challenge for portable device interior decorators ; the first failure manner is frequently the battery’s inability to keep a charge.
Self-discharge to 50 % : The clip it takes for a battery to self-discharge. Most rechargeable batteries lose some sum of their charge merely sitting on a shelf. This limits their application in devices such as safety equipment that might sit for unpredictable clip periods between usage.
Recharge Time: How rapidly a battery will reload. Fast recharge clip is normally a consumer benefit. particularly for things like nomadic phones or music participants. A typical NiMH battery can be recharged in two to four hours.
Monetary value: The cost discrepancy of different battery types. Since little rechargeable batteries tend to come in standard signifier factors and end product electromotive forces. they are a fungible trade good with about no barriers to permutation. Different battery types might necessitate different coursers. but in general the low permutation costs make batteries a extremely competitory trade good. where monetary value is a major factor driving purchase determinations.
Interestingly. battery shapers have tended to concentrate in comparatively narrow merchandise sections an vitamin D engineerings. Disposable-battery shapers have typically non go major participants in rechargeables. and rechargeable-battery makers tended to lodge with a peculiar engineering or merchandise focal point ( laptop computing machines. nomadic phones. portable power tools. etc. ) Back Bay Battery. Inc. . in 2012
Back Bay Battery is one of over 20 major makers of NiMH batteries. The field is crowded. but makers have been siting a lifting tide of demand from consumers for portable electrically powered devices.
Though the engineering is comparatively mature. the company is expecting go oning strong volume-growth rates. chiefly due to rapid consumer acceptance. The worldwide market is projected to turn at 9. 0 % . Pricing force per unit area is important. though. as more East Asiatic rivals continue to drive commoditization of NiMH cells. Back Bay’s gross revenues director has learned to track the market pricing closely. as being out of measure with the market can do dramatic market portion alterations in a comparatively short clip.
Li-ion batteries have reasonably much replaced NiMH in the market for laptop computing machine batteries. The first commercial Li-ion battery was produced by Sony in 1991. Li -ion batteries are favored for nomadic devices because they can hive away a high denseness of energy for a given weight. They can be fabricated in many forms. though most makers focus on cylindrical cells the size of standard AA cells. which so can be stacked and repackaged for specific applications. The cells contain a lithium-salt electrolyte carried in an organic dissolver.
The Li polymer battery is a fluctuation on the Li-ion design. Rather than utilize an electrolyte. these batteries employ a solid polymer complexs such as polyacrylonitrile. This has the advantage of a lower fabrication cost and is more robust against physical harm. These batteries besides use a flexible. foil laminate instance. so they can be fabricated in a wid er assortment of forms. Lithium polymer batteries started looking in consumer electronics around 1996. and their popularity increased when interior decorators started to work the capableness of doing them in form-fitting forms. as in Apple’s iPod and iPhone. Li-ion and Li polymer rechargeable batteries have many advantages over NiMH. They do non hold any “memory effect” which causes them to keep less charge depending on what sort of bear downing rhythm was used. but they do degrade over clip.
Lithium batteries besides have some not-so-well-known disadvantages. Typically they lose some per centum of their capacity every twelvemonth. and they merely can be recharged about 400 times. Newer engineering is on the skyline to enable the figure of bear downing rhythms to be increased by threefold. but this will necessitate uninterrupted R & A ; D investing. They besides have some well-known safety issues such as a roseola of fires and other safety concerns.
Back Bay Battery failed to do timely investings in Li-ion or Li-polymer batteries. Its NiMH concern was solid at the clip. but go oning monetary value force per unit areas forced it to keep a really thin concern theoretical account with tight reins on R & A ; D disbursement. The graduated table and larning curves of the Li battery concern are such that it would be virtually impossible for Back Bay to come in at this phase. But Back Bay was fortunate to hold chosen market sections that genuinely benefited from some of the alone strengths of NiMH engineering. viz. the ability to prolong high drain rates. lastingness for far more bear downing rhythms than Li types. and their huskiness ( and absence of safety issues ) . The three chief sections Back Bay Battery sell-into are:
Power tools. Power tools have to run in rugged environments. and they draw high current from the battery packs. NiMH batteries portion the market with the older NiCd type. but have been increasing their portion. Back Bay has been really competitory in this section. and it is their largest beginning of grosss and net incomes. Lithium batteries are considered excessively delicate for this environment.
Bipartisan wirelesss. These units have non switched yet to Li-ion because of their high currentdraw demands and usage in rough conditions.
Portable power battalions. These provide for exigency back-up power. industrial merchandises. medical equipment. little electric contraptions. and more. These have been used in all sorts of applications. many of which Back Bay is non familiar with. as they sell modular units that are incorporated by others into concluding applications. Market research suggests that this I s an spread outing chance.
While Back Bay direction is rather confident of these three market sections. there continues to be hazard that betterments in Li-ion or other competitory engineerings start to cut into its market place. much as the company lost to Li-ion in earlier old ages. Enhancing NiMH Technology
Back Bay Battery spends about 2 % -3 % of grosss on R & A ; D. It benefits from some of the betterments and larning curves ensuing from investings made by both itself and others in the engineering. R & A ; D investings can be in things like self-discharge or procedure betterment. They can besides be in “applications engineering” which is focused on happening new applications for a peculiar engineering. Back Bay has non historically exhausted much in applica tions technology. though. as NiMH batteries merely have to suit standard cell sizes and bring forth standard electromotive forces and currents.
Newly charged NiMH batteries lose about 5 % -10 % of their charge on the first twenty-four hours. and stabilise around 0. 5 % -1 % per twenty-four hours after that. A new engineering that can cut down self-discharge was developed at a major university and has become available. The engineering employs a new sort of internal cell centrifuge. The ensuing betterment means that 70 % to 85 % of charge capacity can be ret ained after one twelvemonth. The new cells are otherwise tantamount to normal NiMH batteries of comparable capacity and can be charged in standard NiMH coursers.
Back Bay Battery has been passing to cut down this self-discharge. taking to significant betterments over the last two old ages. Not doing the investing would potentially do the company to be disadvantaged comparative to its rivals. It could pass R & A ; D money in other countries as good. Procedure betterment is most likely to take to manufacturing-yield betterments and lower-product costs. If Back Bay Battery wants to maintain bettering energy denseness. that is likely one of the more expensive and longer scope R & A ; D plans to put in. Price competition is acquiring progressively intense. so the company has to be really careful how it spends its R & A ; D budget. Capacitors: an Alternative Energy Storage Device
A capacitance is a device that is made of two electrodes separated by an dielectric ( a insulator ) . When attached to a electromotive force beginning. it can hive away up charge ( energy ) . If the bear downing beginning is removed. it will so dispatch back into the circuit. How much charge a capacitance can hive away depends on the quality of the insulator. the electromotive force that is applied. and the surface country of the electrodes. The energy stored in a capacitance is relative to the electrical capacity. C. and to the square of the electromotive force. V. that is applied:
To increase the energy stored. one merely needs to increase the electrical capacity. The most common capacitances are composed of thin metal foil home bases separated by an electrical dielectric. which are so stacked or rolled and placed in a shell. Increasing the electrical capacity is the major proficient challenge. Capacitors could be fantastic energy-storage devices. They charge much more rapidly than any sort of battery. and they don’t have the job of battery memory or restrictions on the figure of bear downing rhythms. This is because there are no chemical reactions that go on inside a capacitance ; the capacitance merely shops charge. The challenge has been the physical size that is required to hive away a given sum of energy.
The Arrival of the Ultracapacitor
Over the last several old ages. scientists at several universities have been working on new categories of nanomaterials that have great possible to increase the public presentation of capacitances. Research workers at several universities have produced samples of ultracapacitors-small. lightweight capacitances that have a surprising sum of stored energy. The research workers demonstrated them by powering bantam LED torchs. radio-controlled plaything rushing autos. and other portable devices ( Exhibit 1 ) .
The major advantages of ultracapacitors. when used as a battery. are their highly rapid recharge clip. and their very long life ( 1000s of charge/discharge rhythms ) . Unlike most other rechargeable batteries. they do non degrade perceptibly over clip. Another advantage is that they provide immense current rushs without sick consequence. In fact. a NASA presentation undertaking showed a portable drill powered by ultracapacitors ( Exhibit 2 ) . The drill would bear down in one minute and provided three proceedingss of uninterrupted operation. or adequate power to drive about 30 wood prison guards. The drill could be recharged 1000s of times without debasement. The major disadvantage of ultracapacitors is their lower-energy denseness. Current engineering ultracapacitors would merely be able to keep somewhat over 15 watthours/kg. but they have really highpower denseness ( 4000 Watts/kg ) .
Ultracapacitors are thought to be ideal for applications that require explosions of power. Several groups are besides looking at intercrossed applications. By partner offing an ultracapacitor with a battery. one would be able to cut down the responsibility rhythm on the battery and protract its life. Thus in an exigency back-up power supply. the ultracapacitor could be used to supply short spikes of power. protracting the life of the battery that would take attention of longer outages. Similarly. in a intercrossed auto. an ultracapacitor could roll up the energy from dynamic braking and so feed it to the battery. The engineering for ultracapacitors is available for licencing from the taking university research group.
Considerable commercialisation work has yet to be done. but some early promising merchandise applications include exigency illuming. back-up power supplies. and portable power tools. For Back Bay Battery. required R & A ; D investing would be considerable as undertakings can be anyplace in a scope of $ 1 million to 7 million a twelvemonth for four to over seven old ages. This reflects the nature of most R & A ; D undertakings which are people- and time-intensive. Worse yet. there are five major foreparts to put in. and it is hard to measure what rivals are puting as their R & A ; D disbursement precedence.
Planing R & A ; D Investings
Market force per unit areas on pricing mean that Back Bay Battery ne’er has rather adequate R & A ; D money to pass on everything its research staff would wish to make. On the one manus. the squad gets day-to-day force per unit area from the gross revenues organisation to better the company’s NiMH offerings. for in this trade good concern. little public presentation or proficient advantages can swing a big order since pricing is pretty competitory. The company can “tweak” its demand a spot by seting monetary values. but one ever has to be careful non to lose a large client in the procedure. It besides has to factor in how long it will take for those investings to bear fruit. While some of the scientists wax poetic about the potency of ultracapacitors. the engineering has major defects for Back Bay’s nucleus markets today. and the company has to be careful non to delve excessively deep a hole financially.
The merchandise director at a major power tools maker. who happens to be one of Back Bay’s largest clients. has been promoting the company to concentrate on its specific demands for an approaching refresh of its consumer power tools line. The client is looking for higher power denseness and lower unit battery costs. as it is experiencing market force per unit area from Asiatic rivals as good. He has been shopping for competitory NiMH batteries sourced in China. and has made clear to Back Bay the importance of staying monetary value competitory. The NASA presentation of an ultracapacitor-powered drill caught his attending. and the rapid recharge clip for ultracapacitors was really appealing if merely the storage capacity was much larger. Concentrating on this client would devour basically all of the company’s limited R & A ; D resources.
Merely about everything that runs on batteries – torchs. cell phones. electric autos. missile-guidance systems – would be improved with a better energy supply. But traditional batteries haven’t progressed far beyond the basic design developed by Alessandro Volta in the nineteenth century. Until now.
Work at MIT’s Laboratory for Electromagnetic and Electronic Systems ( LEES ) holds out the promise of the first technologically important and economically feasible option to conventional batteries in more than 200 old ages.
Joel E. Schindall. the Bernard Gordon Professor of Electrical Engineering and Computer Science ( EECS ) a nd associate manager of the Laboratory for Electromagnetic and Electronic Systems ; John G. Kassakian. EECS professor and manager of LEES ; and Ph. D. campaigner Riccardo Signorelli are utilizing nanotube constructions to better on an energy storage device called an ultracapacitor. Capacitors store energy as an electrical field. doing them more efficient than standard batteries. which get their energy from chemical reactions. Ultracapacitors are capacitance -based storage cells that provide promptly. monolithic explosions of instant energy. They are sometimes used in fuel-cell vehicles to supply an excess explosion for speed uping into traffic and mounting hills.
However. ultracapacitors need to be much larger than batteries to keep the same charge. The LEES innovation would increase the storage capacity of bing commercial ultracapacitors by hive awaying electrical Fieldss at the atomic degree.
Although ultracapacitors have been around since the sixtiess. they are comparatively expensive and merely late began being manufactured in sufficient measures to go cost-competitive. Today you can happen ultracapacitors in a scope of electronic devices. from computing machines to autos. However. despite their built-in advantages – a 10-year-plus life-time. indifference to temperature alteration. high unsusceptibility to daze and quiver and high charging and dispatching efficiency – physical restraints on electrode surface country and spacing have limited ultracapacitors to an energy storage capacity about 25 times less than a similarly sized lithium-ion battery.
The LEES ultracapacitor has the capacity to get the better of this energy restriction by utilizing vertically aligned. single-wall C nanotubes – one thirty-thousandth the diameter of a human hair and 100. 000 times every bit long as they are broad. How does it work? Storage capacity in an ultracapacitor is relative to the surface country of the electrodes. Today’s ultracapacitors use electrodes made of activated C. which is highly porous and hence has a really big surface country.
However. the pores in the C are irregular in size and form. which reduces efficiency. The vertically aligned nanotubes in the LEES ultracapacitor have a regular form. and a size that is merely several atomic diameters in breadth. The consequence is a significantly more effectual surface country. which equates to significantly increased storage capacity.
The new nanotube-enhanced ultracapacitors could be made in any of the sizes presently available and be produced utilizing conventional engineering. “This constellation has the possible to keep and even better the high public presentation features of ultracapacitors while supplying energy storage densenesss comparable to batteries. ” Schindall said. “Nanotubeenhanced ultracapacitors would unite the long life and high power features of a commercial ultracapacitor with the higher energy storage denseness usually available merely from a chemical battery. ” This work was presented at the 15th International Seminar on Double Layer Capacitors and Hybrid Energy Storage Devices in Deerfield Beach. Fla. . in December 2005.