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INNOVATION

Presented By:

Ashwani Sharma

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INNOVATION

Innovationis the process and outcome of

creating something new, which is also of

value.

Innovation involves the whole processfrom

opportunity identification, ideation or

invention to development, prototyping,

production marketing and sales, while

entrepreneurship only needs to involve

commercialization

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Dimensions of Innovation

There are several types of innovation

Process, product/service, strategy,

which can vary in degree of newness:

Incremental to radical,

and impact:

continuous to discontinuous

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Types of Innovation

Product versus Process Innovation

Product innovationsare embodied in the outputsofan organizationits goods or services.

Process innovationsare innovations in the way anorganization conducts its business, such as intechniques of producing or marketing goods orservices.

Product innovationscan enableprocess innovationsand vice versa.

What is aproduct innovationfor one organization

might be aprocess innovationfor another E.g., UPS creates a new distribution service (product

innovation) that enables its customers to distributetheir goods more widely or more easily (processinnovation)

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Types of Innovation

Radical versus IncrementalInnovationThe radicalnessof an innovation is the

degree to which it is new and different

from previously existing products andprocesses.

Incremental innovationsmay involve onlya minor change from (or adjustment to)existing practices.

The radicalness of an innovation isrelative; it may change over time or withrespect to different observers. E.g., digital photography a more radical

innovation for Kodak than for Sony.

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Types of Innovation

Competence-Enhancing versus Competence-

Destroying Innovation

Competence-enhancinginnovations build on the

firms existing knowledge base

E.g., Intels Pentium 4 built on the technology forPentium III.

Competence-destroyinginnovations renders a firms

existing competencies obsolete.

E.g., electronic calculators rendered Keuffel & Essers

slide rule expertise obsolete. Whether an innovation is competence enhancing or

competence destroying depends on the perspective

of a particular firm.

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Types of Innovation

Architectural versus Component Innovation

A component innovation(or modular innovation)

entails changes to one or more components of a

product system without significantly affecting the

overall design. E.g., adding gel-filled material to a bicycle seat

An architectural innovationentails changing the

overall design of the system or the way components

interact.

E.g., transition from high-wheel bicycle to safety bicycle. Most architectural innovations require changes in the

underlying components also.

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Open Innovation

Open innovation occurs when a firm

finds that a good idea is not commercially

viable, given a firms present strategy;

rather than shelving the idea,

commercialization can take place through

licenses, spin-offs, and joint ventures

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Open innovation examples:

Nike and Apple developed a sensor that

transmits data from inside a shoe to the

runners iPod or iPhone.

Kimberly-Clark and SunHealth Solutions

developed Little Swimmers Sun Care, an

adhesive sticker that changes color to alert

parents to the risk of sunburn

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Closed Innovation

The paradigm of closed innovation says that

successful innovation requires control. A

company should control (the generating of)

their own ideas, as well as production,

marketing, distribution,

servicing, financing, and supporting.

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Technology S-Curves

Both the rate of a technologys improvement, and its rate of

diffusion to the market typically follow an s-shaped curve. S-curves in Technological Improvement

Technology improves slowly at

first because it is poorly

understood.

Then accelerates as

understanding increases.

Then tapers off as approaches

limits.

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Technology S-Curves

Technologies do not always get to reach theirlimits

May be displaced by new, discontinuous technology.

A discontinuous technology fulfills a similar marketneed by means of an entirely new knowledge base.

E.g., switch from carbon copying to photocopying, or vinylrecords to compact discs

Technological discontinuity may initially have lowerperformance than incumbent technology.

E.g., first automobiles were much slower than horse-drawncarriages.

Firms may be reluctant to adopt new technologybecause performance improvement is initially slowand costly, and they may have significant investmentin incumbent technology