Business Innovation Processes PDF

# MKTBET NOUR ## Topic 7: Business Innovation Processes ### Chapter Learning Outcomes: - This chapter examines business innovation processes as an ongoing set of activities comprising invention, development, and implementation. - Invention implies the emergence of novel ideas of potential value. -...

# MKTBET NOUR ## Topic 7: Business Innovation Processes ### Chapter Learning Outcomes: - This chapter examines business innovation processes as an ongoing set of activities comprising invention, development, and implementation. - Invention implies the emergence of novel ideas of potential value. - However, to realize this potential, ideas have to be developed, a process that requires both their instantiation in the form of prototypes and the creation of an infrastructure to generate value in use. - In addition, the implementation of innovations (i.e., their widespread adoption) requires additional efforts. - After the explication of these three elements of innovation processes, the complexities involved are highlighted. - In particular, innovation processes do not progress in a neat, linear fashion from invention to development and implementation, but instead are characterized by considerable shifts between these elements. - The chapter concludes by highlighting implications for practice. ## Business Innovation - Business innovation is centrally concerned with the creation, development, and implementation of new ideas (Rogers, 2003). - An idea may be a novel recombination of old ideas, an invention that challenges the present order, or an unique formula or approach. As long as the idea is perceived as new, it can serve as the basis for a business innovation. ## Business Innovation - This chapter examines business innovations that - require concentrated efforts to develop and implement, - reflect substantial technical, organizational, and market uncertainty, - entail a collective effort of considerable duration, and - require greater resources than are held by the intrapreneurs undertaking the effort. ## Invention - The Minnesota Innovation Research Program (MIRP) and subsequent studies have examined how innovation processes unfold in a variety of settings. - One of the findings from MIRP and other studies is that a growth period precedes the emergence of novelty. - This research shows that many events, some intended and others unintended, are required to set the stage for acts of creative insight to occur. - Such creative insights occur through a recombination of ideas and artifacts across different domains of knowledge and practice. - Recombination can be led by individuals who have the capacity to "bisociate," or to associate ideas across two or more distinct domains of knowledge. ## Invention within firms - It ought to be easy for inventions to occur within firms, given that intellectual property produced within the firm belongs to the corporation, making it possible to recombine different strands of knowledge to foster ongoing inventions. - In reality, however, there are barriers. Knowledge in many organizations continues to remain in "silos" because of the structural mechanisms in place that lock communities of practice in "thought worlds". - As a result, members of one community are unable to recognize let alone share' ideas and knowledge with one another. - New ideas, to the extent that they emerge, can easily be stamped out by top management teams (TMTs) who are unable to fully appreciate the value of the new opportunity, thereby dampening or reducing the variations required for novelty to emerge. ## The Solution - What are the solutions to this problem? Process research suggests that individuals are likely to be creative in their work, especially in organizations that both enable and motivate innovation. - The availability of slack resources is one enabling factor that allows for exploration during work. - The integration of knowledge across boundaries within and between organizations, disciplinary communities, and regional/national cultures is also enabling factor. - Ideas that emerge from such bottom-up processes can be combined with other ideas through practices such as the rotation of people, the sponsorship of internal technology fairs, cross-functional teams, and intermediary organizational arrangements. ## Invention across the field - The process of invention does not occur within the confines/ borders of a single firm; it is embedded in a much larger community or network that defines the field within which inventions occur. Indeed, a stream of research confirms the importance of the flow of knowledge across networks. - These networks serve not only as "channels" through which information and knowledge flows but also as "prisms" reflecting these exchanges such that they can be perceived by others in the network. - Three issues are important for across the field invention: - First: Absorptive capacity and relative absorptive capacity become important because they will determine the capacity and rate at which companies can learn and apply knowledge from others, - Second, the location and the strategic orientation of a firm within a network of firms become important. - Third, given the possibilities of spillovers, acts of reverse engineering, and even intelligence, as well as the need to connect with others to generate more robust ideas, firms must continue to invent if they want to retain their competitive position in the industry. ## Business Model and Innovation - Companies commercialize new ideas and technologies through their business models. While companies may have extensive investments and processes for exploring new ideas and technologies, they often have little if any ability to innovate the business models through which these inputs will pass. - This matters - the same idea or technology taken to market through two different business models will yield two different economic outcomes. - So it makes good business sense for companies to develop the capability to innovate their business models. - Technology by itself has no single objective value. The economic value of a technology remains latent until it is commercialized in some way via a business model. The same technology commercialized in two different ways will yield two different returns. - In some instances, an innovation can successfully employ a business model already familiar to the firm, while, other times, a company will have a business model that can make use of the technology via licensing. ## What is a Business Model - It is suggested that a business model fulfills the following functions: - Articulates the value proposition (i.e., the value created for users by an offering based on technology); - Identifies a market segment and specify the revenue generation mechanism (i.e., users to whom technology is useful and for what purpose); - Defines the structure of the value chain required to create and distribute the offering and complementary assets needed to support position in the chain; - Details the revenue mechanism(s) by which the firm will be paid for the offering; - Estimates the cost structure and profit potential (given value proposition and value chain structure); - Describes the position of the firm within the value network linking suppliers and customers (inl. identifying potential complementors and competitors); and - Formulates the competitive strategy by which the innovating firm will gain and hold advantage over rivals.