Radical vs Routine Innovation

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Questions and Answers

What was the initial driver behind the radical innovation of containerization?

  • Increased security measures
  • Demand for faster shipping
  • Reduction of manual labor
  • Transportation of supplies and spare parts in WW II (correct)

What significant risk often accompanies performance improvements in innovations?

  • Regulatory compliance
  • Over-engineering (correct)
  • Under-engineering
  • Market saturation

Which material developed accidentally led to radical new performance features?

  • Nylon
  • Polyester
  • PTFE (Teflon) (correct)
  • PVC

In which industry was Teflon first applied?

<p>Nuclear weapons (B)</p> Signup and view all the answers

What percentage of development resources in companies is typically invested in routine product improvements?

<p>65% (D)</p> Signup and view all the answers

What was one outcome of smart's high-risk innovation in the car market?

<p>Accumulated losses for Mercedes (B)</p> Signup and view all the answers

Radical innovations often arise out of what kind of circumstances?

<p>Abundance (D)</p> Signup and view all the answers

What percentage of resources is typically used to develop later generation products that could be radically different?

<p>5% (D)</p> Signup and view all the answers

What is a key characteristic of radical innovations?

<p>They require large-scale internal overhauls. (A)</p> Signup and view all the answers

How do routine innovations typically derive value?

<p>By exploiting existing knowledge and processes. (A)</p> Signup and view all the answers

Which of the following is NOT an example of a radical innovation?

<p>Performance improvement in a product. (D)</p> Signup and view all the answers

What type of innovations are best suited for competing in existing markets?

<p>Routine innovations. (B)</p> Signup and view all the answers

Which statement accurately describes the nature of radical innovations?

<p>They often result in product obsolescence. (A)</p> Signup and view all the answers

What limiting factor affects market research for radical innovations?

<p>Customers cannot provide information about non-existent products. (C)</p> Signup and view all the answers

Which of the following describes the essence of routine innovation?

<p>Applying historical experience to current processes. (D)</p> Signup and view all the answers

What is a primary difference between radical and routine innovations?

<p>Radical innovations introduce new products, while routine innovations improve existing ones. (D)</p> Signup and view all the answers

What is the primary distinction between radical and routine innovation regarding project timelines?

<p>Routine innovations have short-term project timelines of 6 months to 2 years. (D)</p> Signup and view all the answers

What defines radical innovation compared to routine innovation?

<p>Radical innovation creates fundamentally new businesses or products. (A)</p> Signup and view all the answers

Which of the following statements is true about the impact of radical innovations?

<p>Radical innovations aim for rapid growth in new markets. (D)</p> Signup and view all the answers

Which of the following is NOT one of Schumpeter's five types of innovation?

<p>New marketing strategies. (D)</p> Signup and view all the answers

How does the degree of novelty compare between radical and routine innovations?

<p>Radical innovations have a high degree of novelty. (C)</p> Signup and view all the answers

Why are routine innovations generally seen as less risky compared to radical innovations?

<p>Routine innovations are grounded in existing knowledge and capabilities. (C)</p> Signup and view all the answers

Why is the 2005 VW Golf considered an example of routine innovation?

<p>The differences from the 2004 model are minor and continuous. (B)</p> Signup and view all the answers

Which characteristic is essential for a change to be considered a radical innovation?

<p>It must result in dramatic changes in technology. (C)</p> Signup and view all the answers

What type of learning method is associated with the business case for radical innovations?

<p>Discovery-based learning (C)</p> Signup and view all the answers

What significant change does a fully electric version of the VW Golf represent?

<p>Introduction of a new business model concerning battery leasing. (C)</p> Signup and view all the answers

Which of the following is a characteristic of routine innovations?

<p>They result in cost or feature improvements. (C)</p> Signup and view all the answers

How does the definition of innovation differ from invention?

<p>Innovation is broader and includes various improvements in processes and businesses. (A)</p> Signup and view all the answers

What is a common objective of both radical and routine innovations?

<p>Reducing operational costs. (A)</p> Signup and view all the answers

What is the nature of project processes for radical innovations?

<p>They begin in R&amp;D and transition throughout the organization. (A)</p> Signup and view all the answers

What might be a consequence of radical innovation in a business?

<p>Creation of entirely new combinations of products and processes. (A)</p> Signup and view all the answers

What is the primary driver behind radical innovations?

<p>New paradigms and revolutionary ideas. (C)</p> Signup and view all the answers

Flashcards

Innovation

Doing things differently in economic life. It can encompass changes in products, processes, markets, suppliers, or business organizations.

Radical Innovation

A type of innovation that dramatically changes existing technology, creating new paradigms.

Routine Innovation

A less significant innovation that involves incremental changes in existing technology.

Schumpeter's Five Types of Innovation

The five categories of innovation: new products, new production processes, new markets, new suppliers, and new business organizations.

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Product Innovation

A new product that fundamentally changes how something works or is used.

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Process Innovation

A change in the way a product is manufactured or produced.

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New Market Innovation

Entering a new market with a product or service.

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New Supplier Innovation

Finding a new supplier for raw materials or parts.

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Competence-destroying Innovation

When an innovation leads to the loss of necessary skills or knowledge, requiring a complete internal revamp.

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Company-destroying Innovation

An innovation that can lead to a company's failure due to its disruptive nature and potential for market disruption.

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User-focused Innovation

The process of creating innovations that are not just technically advanced, but also address unmet user needs and offer new benefits.

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Disruptive Innovation

An innovation that disrupts the market so drastically that it renders existing products obsolete or non-competitive.

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Uncertainty in Radical Innovation

The high uncertainty associated with radical innovations because of the difficulty in predicting both the success of the technology and the market demand for it.

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Competence-enhancing Innovation

The ability of routine innovation to easily build upon existing knowledge and resources, enhancing a company's existing skills and capabilities.

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Project Timeline

The time it takes to move from an idea to a launched product or service.

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Business Case

The method used to manage an innovative project, typically involving distinct stages for planning, development, testing, launch, etc.

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Discovery-based Learning

The process of gathering and analyzing data to understand customer needs and market trends, which helps refine an innovation.

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Phase-Gate Model

A structured approach for routine innovations, emphasizing planning, control, and phased execution.

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Planned Problem-Solving

A well-established process for managing routine innovations involving distinct stages with clear checkpoints.

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Cross-Functional Project Team

A team of experts from various departments working together to develop and launch a new product or service.

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Radical innovation drivers

Radical innovations often emerge not out of necessity, but from an abundance of resources.

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Routine Innovation Drivers

Routine innovations focus on improving existing processes or products, driven by cost reduction or customer feedback.

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Routine Innovation: Cost Reduction

Routine innovations are often focused on cost reduction, performance improvement, or addressing customer issues.

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Routine Innovation: Competence-enhancing

Routine innovations build on existing knowledge and skills, making them easier to implement.

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Radical Innovation: Market Disruption

Radical innovations often disrupt existing markets, leading to the potential for significant disruption.

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Radical Innovation: Accidental Breakthrough

Radical innovations are often driven by accident or unexpected discoveries.

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Radical Innovation: Company-destroying

A radical innovation can be so disruptive that it can lead to the failure of existing companies, as they struggle to adapt or compete.

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Study Notes

Radical Versus Routine Innovation

  • Innovation is essential for company success today, and it's easier than it was 50 years ago, particularly with technological advancements.
  • Radical innovation is difficult and often unplanned, its revolutionary impact recognized in retrospect.
  • Routine innovation, as opposed to radical, adjusts existing products or processes for existing markets.
  • Innovation is broadly defined as doing things differently in the economy. It is not the same as invention.
  • Schumpeter identified five types of innovation: products, processes, new markets, new suppliers, and new business organizations.
  • The 2005 VW Golf, compared to the 2004 model, was subtly different. However, these changes to manufacturing processes, markets, and suppliers weren't considered radical innovations but routine improvements by many consumers.
  • Radical innovation in the 2020 VW Golf Electric exemplifies drastic changes in product attributes, including acceleration and the elimination of a gasoline engine. This requires completely new manufacturing processes, new suppliers (batteries), new markets and a redesigned business model (leasing batteries).
  • Radical innovation is fundamental; it creates new businesses, products, and processes with significant shifts in prevailing technology, leading to new opportunities.
  • Radical innovations can be company-destroying for existing businesses.
  • Radical innovations provide unseen user benefits. They create entirely new market segments and customer demands.
  • Market research cannot predict radical innovation since it is brand new.
  • Routine innovation is about continuously improving existing products, services, or businesses.
  • Routine innovation is based on existing knowledge, problem-solving, and customer demands.
  • Routine innovation usually involves shorter timelines and less uncertainty.
  • Routine innovation is a more likely path to success when improving existing products.
  • An example of routine innovation could be changing from a 4 Mbit USB chip to a 1 Gbit USB chip.
  • Routine innovations, while not as impactful as radical ones, can accumulate to create a powerful effect over time.

Comparison of Radical and Routine Innovation

  • Radical and routine innovations have different characteristics relating to impact on existing businesses.
  • Radical innovation is about creating new things; routine innovation is about improving existing products or services.
  • Radical innovation often involves significant internal changes to competencies and resources. Routine innovations generally build upon existing competencies and resources.
  • Routine innovations typically have a shorter timeframe than radical innovations.
  • Radical innovations lead to substantial, often unforeseen changes in product attributes, market segments, and the business model.

Key Drivers of Innovation

  • Cost reduction is a strong driver for innovation.
  • Improved performance and new performance features can drive radical changes.

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