All lectures summary
Week 1: Lecture 1 - Types of innovation
Fundamentals of Innovation
Subjects:
1. Historical background
2. Types of innovation
3. Theory of disruptive invasion
4. Technological trajectories
Strategic importance
1. Economies: Growth and development
2. Society: sustainability
3. Firms: Survival and Competitiveness
Innovation as a necessity for business:
- Globaliztion
- Increased competition (differentiation)
- Speed of knowledge development
- Shortened Product Development cycles and product life cycles
- Enabling technologies (such as 3D printing)
History of Innovation: negative response to innovators. This is still something that happens,
but is becoming less of an issue. Since 20th century this started changed.
Theory of long waves (by N. Kondratieff): Revolution goes in Waves of revolutions
which is led by technological innovation. !controversial theory, but puts “ technological
innovation” at center stage. Next wave will probably be regarding Data and/or artificial
intelligence. (See slide for visualization)
Concept of creative destruction (Joseph Schumpeter 1942): Innovation means that you
replace the previous substitute product. It means you destroy what came before and use
it to build on.
,Types of innovation
3 definitions of innovation:
1. Innovation is the practical implementation of an idea into a new device or process.
Focuses on technological innovation.
2. Process of turning ideas into reality and capturing value from then. Focuses on
producing Value
3. Theoretical conception + technical invention + commercial exploitation
Generic Phase Model: Innovation is the process of turning ideas into reality and capturing
value from them 4 steps:
1. Search
2. Select
3. Implement
4. Capture
,Stage gate model: The 5 gates are to optimise the success rate of innovation and prevent
wasting effort on the wrong innovation.
Discovery → Scoping → Build business case → Development → Testing & validation
→ Launch → Post launch review
Product vs process innovation
Product: Innovations that are embodied in the outputs of an organization—its goods or
services.
For example, Honda’s development of a new hybrid electric vehicle is a product
innovation.
Proces: Innovations in the way an organization conducts its business, such as in the
techniques of producing or marketing goods or services. These are often oriented toward
improving the effectiveness or efficiency of production.
For example, a process innovation at a biotechnology firm might entail developing a
genetic algorithm that can quickly search a set of disease-related genes.
, Component or architectural innovation
Component Innovation (or Modular Innovation): An innovation to one or more
components that does not significantly affect the overall configuration of the system.
Example: An innovation in bicycle seat technology does not require any changes in
the rest of the bicycle architecture.
Architectural Innovation: An innovation that changes the overall design of a system or the
way its components interact with each other.
Example: The transition from the high-wheel bicycle to the safety bicycle was an
architectural innovation that required changes in many components.
Incremental vs Radical innovation
Incremental: An innovation that makes a relatively minor change from (or adjustment to)
existing practices. Doesn’t necessarily need to be a sustainable innovation, you can make
small changes to terrible products.
Example, changing the configuration of a cell phone from one that has an exposed
keyboard to one that has a flip cover would represent incremental innovation.
Radical: An innovation that is very new and different from prior solutions. Requires
completely new knowledge and resources. Doesn’t necessarily disrupt.
Example: The introduction of wireless telecommunication products aptly illustrates
this. Radicalness can be conceived as the combination of newness and the degree of
differentness.
Sustaining vs. Disruptive Innovation
Sustaining innovation: making better products for higher prices, to attractive customers in
existing markets. Sustaining innovation makes incremental changes.
Disruptive innovation: Simpler or more convenient products, for lower prices to new or
unattractive customers (Netflix, Uber Eats, airbnb, Amazon). This has a bigger impact on the
market than Radical. Disruptive Innovations are NOT breakthrough technologies that make
good products better; rather, they are innovations that make products and services more
accessible and affordable, thereby making them available to a larger population.
- Targeting overlooked, low-end, or niche markets
- Product/service improve overtime, eventually meeting needs of mainstream
consumer
- The incumbent companies, focused on sustaining existing high-margin markets, are
too slow to respond, allowing the disruptor to take over.
Week 1: Lecture 1 - Types of innovation
Fundamentals of Innovation
Subjects:
1. Historical background
2. Types of innovation
3. Theory of disruptive invasion
4. Technological trajectories
Strategic importance
1. Economies: Growth and development
2. Society: sustainability
3. Firms: Survival and Competitiveness
Innovation as a necessity for business:
- Globaliztion
- Increased competition (differentiation)
- Speed of knowledge development
- Shortened Product Development cycles and product life cycles
- Enabling technologies (such as 3D printing)
History of Innovation: negative response to innovators. This is still something that happens,
but is becoming less of an issue. Since 20th century this started changed.
Theory of long waves (by N. Kondratieff): Revolution goes in Waves of revolutions
which is led by technological innovation. !controversial theory, but puts “ technological
innovation” at center stage. Next wave will probably be regarding Data and/or artificial
intelligence. (See slide for visualization)
Concept of creative destruction (Joseph Schumpeter 1942): Innovation means that you
replace the previous substitute product. It means you destroy what came before and use
it to build on.
,Types of innovation
3 definitions of innovation:
1. Innovation is the practical implementation of an idea into a new device or process.
Focuses on technological innovation.
2. Process of turning ideas into reality and capturing value from then. Focuses on
producing Value
3. Theoretical conception + technical invention + commercial exploitation
Generic Phase Model: Innovation is the process of turning ideas into reality and capturing
value from them 4 steps:
1. Search
2. Select
3. Implement
4. Capture
,Stage gate model: The 5 gates are to optimise the success rate of innovation and prevent
wasting effort on the wrong innovation.
Discovery → Scoping → Build business case → Development → Testing & validation
→ Launch → Post launch review
Product vs process innovation
Product: Innovations that are embodied in the outputs of an organization—its goods or
services.
For example, Honda’s development of a new hybrid electric vehicle is a product
innovation.
Proces: Innovations in the way an organization conducts its business, such as in the
techniques of producing or marketing goods or services. These are often oriented toward
improving the effectiveness or efficiency of production.
For example, a process innovation at a biotechnology firm might entail developing a
genetic algorithm that can quickly search a set of disease-related genes.
, Component or architectural innovation
Component Innovation (or Modular Innovation): An innovation to one or more
components that does not significantly affect the overall configuration of the system.
Example: An innovation in bicycle seat technology does not require any changes in
the rest of the bicycle architecture.
Architectural Innovation: An innovation that changes the overall design of a system or the
way its components interact with each other.
Example: The transition from the high-wheel bicycle to the safety bicycle was an
architectural innovation that required changes in many components.
Incremental vs Radical innovation
Incremental: An innovation that makes a relatively minor change from (or adjustment to)
existing practices. Doesn’t necessarily need to be a sustainable innovation, you can make
small changes to terrible products.
Example, changing the configuration of a cell phone from one that has an exposed
keyboard to one that has a flip cover would represent incremental innovation.
Radical: An innovation that is very new and different from prior solutions. Requires
completely new knowledge and resources. Doesn’t necessarily disrupt.
Example: The introduction of wireless telecommunication products aptly illustrates
this. Radicalness can be conceived as the combination of newness and the degree of
differentness.
Sustaining vs. Disruptive Innovation
Sustaining innovation: making better products for higher prices, to attractive customers in
existing markets. Sustaining innovation makes incremental changes.
Disruptive innovation: Simpler or more convenient products, for lower prices to new or
unattractive customers (Netflix, Uber Eats, airbnb, Amazon). This has a bigger impact on the
market than Radical. Disruptive Innovations are NOT breakthrough technologies that make
good products better; rather, they are innovations that make products and services more
accessible and affordable, thereby making them available to a larger population.
- Targeting overlooked, low-end, or niche markets
- Product/service improve overtime, eventually meeting needs of mainstream
consumer
- The incumbent companies, focused on sustaining existing high-margin markets, are
too slow to respond, allowing the disruptor to take over.
