Podcast
Questions and Answers
What does innovation mean to you?
What does innovation mean to you?
What is innovation 'in one sentence'?
What is innovation 'in one sentence'?
Define innovation according to Schumpeter.
Define innovation according to Schumpeter.
The doing of new things or the doing of things that are already being done in a new way.
What is Dosi's definition of innovation?
What is Dosi's definition of innovation?
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How do Boer & During define innovation?
How do Boer & During define innovation?
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What does Gemünden & Salomo say about innovation?
What does Gemünden & Salomo say about innovation?
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In what way did Baregheh, Rowley and Sambrook define innovation?
In what way did Baregheh, Rowley and Sambrook define innovation?
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Which of the following is NOT an output of innovation?
Which of the following is NOT an output of innovation?
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What is a new or improved product according to The Oslo Manual for Measuring Innovation?
What is a new or improved product according to The Oslo Manual for Measuring Innovation?
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What is a process innovation?
What is a process innovation?
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What is an example of product innovation mentioned?
What is an example of product innovation mentioned?
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Study Notes
Key Issues in Innovation Management
- Innovation is a strategic but complex process for firms.
- What does innovation mean?
- Definition of innovation in one sentence?
Academic Definitions
- Innovation is "the doing of new things or the doing of things that are already being done in a new way" (Schumpeter, 1947).
- "the search for, and the discovery, experimentation, development, imitation, and adoption of new products, new production processes and new organizational set-ups” (Dosi, 1988)
- "the creation of a new product-market-technology-organization-combination” (Boer & During, 2001).
- "the results of a creative process involving different actors from one or more organizations, which leads to a qualitatively new means-end combination that is introduced to the market or the operations of a firm for the first time” (Gemünden & Salomɔ, 2004).
Innovation as a Process
- Innovation is a multi-stage process, not a single event.
- The stages of innovation include:
- Ideation
- Screening
- Development
- Review
- Post-launch
Different Sources of Innovation
- Voice of customer analysis (customer insights)
- Design research (new meanings and languages)
- Technology research (new technological opportunities)
- Concept generations
- Product/service development
Different Outputs of Innovation
- Market
- Technology
- Process
- Product
- Service
- Value
- Design/meaning
- Business model
The outcome of the innovation process
- A new or improved good or service that differs significantly from the firm's previous goods or services and introduced into the market.
- Examples:
- 50% post-industrial plastics and 25% bio-based plastics for products.
- Energy-efficient LED bulbs.
- Bio-based plastics.
- Mobile banking applications
- Smart diagnostics applications
Product innovation: dental floss
Improving performances of existing products or adding new meanings (design-driven innovation)
The outcome of the innovation process (Process)
- A new or improved business process for one or more business functions that differs significantly from the firm's previous business processes.
- Examples:
- Using existing technology for new applications.
- Corporate identities, contracts, distribution channels, and commercials are also objects of innovation.
Process Simulation thanks to IT
- Examples of using IT for process simulation for manufacturing processes.
KONE and service innovation
- IBM and KONE used Watson IoT for innovation in smart buildings.
Product and service innovation: mass-customization
- Personalizing products to individual customer needs.
- Examples:
- Personalized M&M's® chocolate candies.
Business model innovation
- A new way to offer products or services to customers such that profitability increases.
- Example:
- Xerox 914:
- Introduced leasing models.
- Implemented pay-per-copy arrangements to make their products and services sustainable.
- Xerox 914:
Value innovation
- Offering products or services at an attractive price and in the right manner
- Examples:
- Packaging and storage of coffee capsules.
Market innovation
- Glocalization: Globalization + localization
- New geographical markets.
- New target customers.
- Examples:
- Coca Cola, in new geographies.
- A product that gains market share in new geographies.
Market innovation: new application
- Examples:
- Using existing technology in new and diverse ways to take advantage of new market segments.
- A new use for existing technologies.
The societal context for business is changing
- Escalating investor and social activism.
- Mounting sense of urgency to mitigate climate change impacts.
- Rising standards for a social license to operate.
- Integrating ESG performance in investment decisions.
- Rising expectations for a powerful corporate purpose.
- Expanding demand for good products that do good.
- Growing demand for transparency on ESG performance.
- Increasing collaboration for collective action
Reshaping corporate strategy
- Corporations are paying greater attention to environmental, social, and governance (ESG) measures and factors.
- This is a growing trend and companies are taking measures to build competitive advantages and new businesses in alignment with ESG measures.
Sustainability
LG's efforts to reduce carbon use, use eco-friendly materials, and recycle reusable parts from old appliances
Why should companies innovate?
- Creating value (for customers, the company, and society).
- Maintaining competitive advantage (which is usually temporary).
- Growth (or survival in a competitive environment).
Compani\es must innovate but...
- Innovation disturbs operations and logistics.
- Innovation incurs cost.
- Innovation is risky.
- Innovation does not ensure long term competitive advantage.
Innovation is a complex process
- Balancing investments and expected returns.
- Industry issue (different communication with markets, demand issue, and level of tastes and needs).
- Converging issue (blurring boundaries among industries and different competencies that are required).
- Information asymmetry issue (reduced information asymmetry between companies and customers allowing for better comparative analyses)
The financial issue: the value of speed
- Time to market is important for financial considerations.
- Companies carefully select the best time to introduce new products based on market dynamics, economic cycles, and specific events.
- The quicker a company is able to launch new products/services the quicker the company can benefit from profits.
The industry issue: some insights
- Percentage of projects that are actually introduced.
- The percentage of projects that break-even (B2C, B2B, Service sectors) in the business segment.
- Innovation is risky, and many new launches fail (especially in the B2C sector).
- The success of a new product/service depends critically on its acceptance by the market.
- Service industries often have a better ability to adapt their product or service offerings to market demands (compared to product industries.)
The convergence issue
- Products/services are complex.
- They require a combination of competencies from different fields/industries/technologies.
Industrial Internet of Things (IIoT), Better services
- Better services from industrial products.
New business model: SERVITIZATION
- A business model that helps reduce waste and optimize resource efficiency.
The competitive issue
- Easy to compare offers on prices, characteristics, and feedbacks through online marketplaces.
- Lower information asymmetry.
The technology issue
- Solar panel cost and efficiency have shown a trend of increasing efficiency and decreasing costs over time.
- Technological advances drive the improvement of solar cell efficiencies substantially, and continue to support the decreasing cost of production.
Innovation Management
- Critical success factors for process design:
- Strategy
- Learning
- Linkages
- Processes
- Organization (Strategy should be at the core of innovation)
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Description
Explore the essential concepts of innovation management in this quiz. Understand the definitions, processes, and strategic importance of innovation within organizations. Test your knowledge on innovation as a complex multi-stage process.
