Dr Adrian Monaghan

Defining innovation, its drivers and implications for business Innovation dilemmas faced by firms and relevant concepts (the 4Ps of innovation space; the innovation life-cycle; innovation versus imitation) The diffusion of innovation Strategic advantages of innovation

Technology: the sum of knowledge of the means and methods of producing goods and services.

3 core areas of use:

Communications

and information

management Operations (e.g. in manufacturing) Product research and design

Provides opportunities to: Reduce costs e.g. automating manual tasks Increase quality e.g. by removal of human error and introduction of more consistent procedures Increase productivity e.g. more output can be produced for the same cost or less than by using human labour Accelerate processes e.g. through the mechanisation of tasks and the rapid transfer of information Make better and more accurate decisions

At the heart of this is INNOVATION!

 To

invent (L. invenire to encounter / find): to originate or create as a product of one's own ingenuity, experimentation, or contrivance To innovate (L. innovare to renew / alter): to make changes in anything established; to introduce (something new) for or as if for - the first time

the conversion of new knowledge into a new product, process or service 2. the putting of this new product, process or service into actual use
1.

Technological change Acceleration of knowledge production OECD estimates $1 trillion is spent p.a. on creating new knowledge extends the frontier along which breakthrough tech. developments may happen Global distribution of knowledge production Knowledge production increasingly involves new players e.g. BRICS knowledge workers are more widely distributed and concentrated in new locations

Competitive advantage can come from size, assets etc. BUT success increasingly comes to those firms that can mobilise knowledge, technological skills & experience to create novelty in their offerings & the ways in which these are created and delivered Innovation is a moving target competition among players in a game whose rules may change and leave players vulnerable

Do we have a clear innovation strategy?

Search how can Select what are we find we going to do opportunities for and why? innovation?

Implement how are we going to make it happen?

Capture how are we going to get the benefits from it?

Do we have an innovative organisation?

Technology push or market pull?

Technology push is the view that it is the new knowledge created by technologists or scientists that pushes the innovation process. Market pull is the view that it is the pull of users in the market that is responsible for innovation.

Product or process innovation?

Product

innovation relates to the final product (or service) to be sold, especially with regard to its features e.g. Apple. Process innovation relates to the way in which a product is produced and distributed, especially with regard to improvements in cost or reliability e.g. Dell.

Innovation Type

Incremental do what we do but better Windows Vista replacing Windows XP

Radical do something different New to the world software e.g. first speech recognition programme

Product what we offer the world

Process how we create and deliver the offering

Improved production Toyota production efficiency via upgraded system and other lean equipment approaches

Position where we Banking services Micro-financing & timetarget the offering targeted at key banks for the poor / and the story we tell segments e.g. students unemployed / elderly about it Paradigm how we Greener end-of-pipe Green business model frame what we do production technologies

Periods of product innovation based on new features are often followed by periods of process innovation based on efficiency in production & delivery

Exploration Uncertainty

Dominant design

Standardisation Integration

 New

developing industries favour product innovation. Maturing industries favour process innovation. Small new entrants have greatest opportunities in early stages of an industry. Large incumbent firms have advantage in later stages.

First-mover advantage exists where an organisation is better off than its competitors as a result of being first to market with a new product, process, or service. However there are also some disadvantages

Experience curve benefits (greater expertise through rapid accumulation of experience) Scale benefits (establish volumes for mass production and bulk buying) Pre-emption of scarce resources (first to get access to raw materials, skilled labour etc.) Reputation for being first through establishing a dominant brand in the market

 Free-riding: imitating at lower cost Learning from the first-movers

mistakes

This depends on: Capacity for profit capture is there little intellectual property protection? How easy is it for a rival to reverse-engineer an innovation? Complementary assets do you have the necessary resources to scale up the production of the innovation (finance, marketing, distribution etc.)? Fast-moving arenas where technologies and markets are highly

Open or closed innovation? Closed innovation the traditional approach to innovation relying on the organisations own internal resources its own laboratories and marketing departments. Innovation is secretive, anxious to protect intellectual property and avoid competitors free-riding on ideas. Open innovation involves the deliberate import and export of knowledge by an organisation (drawing on new ventures & external partners) in order to accelerate and enhance its innovation. Exchanging ideas openly is seen as likely to produce better products more quickly.

The balance between open and closed innovation depends on: Competitive rivalry if it is intense, closed innovation is better. One-shot or continuous innovation open innovation is best where innovation is continuous. Tight-linked innovation where technologies are complex and tightly interlinked, closed innovation is best in order to avoid inconsistent elements.

Diffusion is the process by which innovations spread amongst users. This can vary with respect to both speed and extent.

Degree of improvement vs. existing products Compatibility with other products e.g. digital TV as broadcasting networks adapt their programmes to this format Complexity of a product or how it is marketed (e.g. pricing plans) may deter consumers Experimentation by customers through free trial periods (to gather info about customers experiences for use in

 Consumer

awareness

Consumers need to be made aware of

your innovation!
Network

effects (the snowball

effect)
positive feedback dynamics driven by

the growth of the population of adopters

Customer

innovativeness (the key role of early adopters)

Mechanism

Strategic Advantage

E.g. Introducing the firstmobile phone etcin the world

Novelty in product / service Offering something no-one offering else can Novelty in process

Offering it in ways others Online bookselling, internet cannot match faster, lower banking cost, more customised Offering something others cannot do unless they pay a licence or other fee Blockbuster drugs

Legal protection of intellectual property Rewriting the rules

Offering a completely new Typewriter vs. PC; electricity product/process concept a vs. oil; car vs. horse new way of doing things that makes the old redundant

Tidd, J. & Bessant, J. (2009). Managing Innovation: Integrating Technological, Market and Organizational Change. Chichester: Wiley. Dodgson, M., Gann, D. & Salter, A. (2008). The Management of Technological Innovation. Oxford: Oxford University Press. Goffin, K. & Mitchell, R. (2005). Innovation Management. Basingstoke: Palgrave Macmillan.