Innovation And Strategy Formulation Pdf

INNOVATION AND STRATEGY FORMULATION KEY ISSUES IN INNOVATION MANAGEMENT CHRISTOPHER C. APSAY, CPA, LLB SEPTEMBER 17, 2024 KEY ISSUES IN INNOVATION MANAGEMENT WEEK 1-2 Definition of Innovation Strategic Advantages through Innovation...

INNOVATION AND STRATEGY FORMULATION KEY ISSUES IN INNOVATION MANAGEMENT CHRISTOPHER C. APSAY, CPA, LLB SEPTEMBER 17, 2024 KEY ISSUES IN INNOVATION MANAGEMENT WEEK 1-2 Definition of Innovation Strategic Advantages through Innovation Types of Innovation The importance of incremental innovation Innovation as a knowledge-based process The challenge of discontinuous innovation Stages of innovation life cycle Christensen’s disruptive innovation theory Sources of discontinuity  INNOVATION - DEFINITION Problem Idea Execution Benefit INNOVATION  INNOVATION Innovation is the practical implementation of ideas that result in the introduction of new goods or services or improvement in offering goods or services.  INNOVATION JOSEPH SCHUMPETER The “Godfather” of innovation studies. Economist and former Minister of Finance, Austria “Entrepreneurs will seek to use technological innovation to get strategic advantage Monopoly of Profits Creative Destruction – constant search to create something new which simultaneously destroys the old rules and establish new ones INNOVATION  STRATEGIC ADVANTAGES THROUGH INNOVATION Strategic Mechanism Examples Advantage Novelty in Offering Product or Introducing the something no Service first…. one else can offering Offering it in Internet Novelty in ways others banking, online Process cannot match selling  STRATEGIC ADVANTAGES THROUGH INNOVATION Strategic Mechanism Examples Advantage Offering something Rolls Royce and Complexity others find it aircraft engines difficult to master Offering something which others Legal protection of Drugs like Viagra, cannot do unless IP Zantac, Prozac they pay license or fee  STRATEGIC ADVANTAGES THROUGH INNOVATION Strategic Mechanism Examples Advantage Offering something Walkman architecture Robust/Platform which provides the to CD, DVD, MP3; Design platform on which Boeing 737; Intel and variations can be built AMD Offering something Typewrites into which completely Computers; Ice into represents a new Rewriting the Rules Refrigerators; Oil product or process Lamps into Electrical making the old ones Bulbs redundant  STRATEGIC ADVANTAGES THROUGH INNOVATION Strategic Mechanism Examples Advantage Zara in clothing; Rethinking the way Reconfiguring the Dell in computers; in which bits of the parts of the Toyota in supply system work process management together Recombining Polycarbonate Transferring across established wheels transferred different elements for from application application context different markets market into toys  TYPES OF INNOVATION Disruptiv Sustainin e or g or Modular Discontin uous Radical Increment or al Architect ural TYPES OF INNOVATION Gradual, continuous improvements on INCREMENTAL existing products and services.  INCREMENTAL INNOVATION IMPORTANCE: Cumulative gains in efficiency are often much greater over time than those which come from occasional radical changes. Concept of Platform or Robust Design Ability to enhance and improve performance over many years form the original design concepts Deploying the technology across a number of market fields.  TYPES OF INNOVATION Refers to a concept, product, or service that creates a new value network either by entering an existing market or by creating a new market. DISRUPTIVE Technology or new business model that disrupts the existing market. TYPES OF INNOVATION A significant improvement on a product that aims to sustain the position in an existing market. SUSTAINING TYPES OF INNOVATION TYPES OF INNOVATION RADICAL Technological breakthrough that transforms industries, often creates a new market. TYPES OF INNOVATION  INNOVATION AS A KNOWLEDGE-BASED PROCESS IMPORTANCE: Cumulative gains in efficiency are often much greater over time than those which come from occasional radical changes. Concept of Platform or Robust Design Ability to enhance and improve performance over many years form the original design concepts Deploying the technology across a number of market fields  4PS OF INNOVATION ess Posi Proc tion Par t duc adi Pro gm 4PS OF INNOVATION Product -Changes in the things (products/services) which an organization offers  4PS OF INNOVATION Process - Changes in the ways in which they are created and delivered.  4PS OF INNOVATION Position -changes in the context in which the products/services are introduced.  4PS OF INNOVATION Paradigm -changes in the underlying mental models which frame what the organization does. INNOVATION SPACE STAGES OF INNOVATION DISCONTINUOUS INNOVATION Major one that Or significantly AKA creates new transforms an Breakthrough or market existing one Disruptive Often built on More difficult to new technology commercialize platforms than Incremental  WHY USE DISCONTINUOUS INNOVATION Enter new Create new markets customers Target unserved or underserved Address new markets customer needs  HOW TO USE DISCONTINUOUS INNOVATION Develop Identify Develop an and a Build understan ding of the assess strategy a the risks market stron opportunit y g team  CHARACTERISTICS OF DISCONTINUOUS INNOVATION Requires Built on Creates With high Potential different new tech new levels of for high business platforms markets risks rewards model  ADVANTAGES OF DISCONTINUOUS INNOVATION Potential to create new markets or significantly disrupts existing ones Potential for high rewards Ability to stay ahead of the competition Potential to solve important problems  DISADVANTAGES OF DISCONTINUOUS INNOVATION High level of risks The need for a different business model The need for a strong team Possibility of failure The need for a long term commitment PHASES OF DISCONTINUOUS INNOVATION Specific Fluid Transitiona l  PHASES OF DISCONTINUOUS INNOVATION Two Dimensions: a. The Target – what will the new configuration be and who will want it Fluid or b. The Technical – how will Ferment we harness new technological knowledge Phase to create and deliver Co-existence of old and Can be applied to both new technology; product and process Rapid improvements of both (Sailing Ship effect)  PHASES OF DISCONTINUOUS INNOVATION The period in which dominant design emerges and emphasis shifts to Transitiona imitation and development around it; l also called Developmental Phase  PHASES OF DISCONTINUOUS INNOVATION Specific Concept of innovation matures; Incremental innovation is more significant and emphasis is shift to factor like cost (efforts are focused on rationalization, scale of economies, and process innovation Product innovation is increasingly about differentiation thorough customization to meet the particular needs of specific users. PHASES OF DISCONTINUOUS INNOVATION  DISCONTINUOUS INNOVATION NOT INVENTED HERE (NIH) A situation where firm finds out about a new technology but decides against following it because it does not fit with their perception of the industry or the likely rate and direction of its technological development. Examples: Kodak’s rejection of the polaroid process Western Union’s dismissal of Bell’s telephone invention  CHRISTENSEN’S DISRUPTIVE INNOVATION THEORY Reasons for failure: 1. Not the failure to cope up with a breakthrough in technology 2. Not being able to cope up on the emerging new markets with very different needs and expectations Thank You!