simulation innovation iii: managing intellectual capital to drive innovation roger smith sparta inc....
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Simulation Innovation III: Managing Intellectual Capital to Drive Innovation
Roger SmithSPARTA Inc.
© Copyright 2005, Roger Smith
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Simulation Innovation
1947 1985 2005
Innovation & New Technology Displace Established Technology & Practitioners
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Innovation
Disruptive Innovation 3-Phase Innovation Intellectual Capital
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Disruptive Innovation
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Time
Pro
du
ct P
erfo
rman
ce
Progre
ss due to
sustaining technologies
Performance demanded at the low end of the market
Performance demanded at the high end of the market
Christensen’s Disruptive Innovation
Progre
ss due to
disruptiv
e technologies
Market disruption opportunity
Christensen, C. (1997). The Innovator’s Dilemma. Harvard Business Press.
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Squeezed OutNicheUpper Half
Share Low EndOwn the Market
Time
Pro
du
ct P
erfo
rman
ce
Progress = Waves of Disruption
High-end Customer Demand
Low-end Customer Demand
Defense S
imulatio
n
D 3 = W
ireless
Games
SIMNET
CCTT
OOSForterraAW-VTT
Closer Than You Think!
D 1 = P
C Games
D 2 = W
eb Games
America’s Army
SpearheadMS Flight
Smith, R. (2005). Simulation Innovation: Disruptive Effects of Innovation. VisTech Conference 2005.
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Disruptive Forces in Simulation
Customer Perspective Societal Immersion in Games Military Acceptance of Games
Computer Technology Graphics Cards Game Companies & Market
Physical Devices Theme Park Ride Technology Electric vs. Hydraulic Motion
Actuators
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Squeezed OutNicheUpper Half
Share Low EndOwn the Market
Simulation:Weather, Markets, Medical
Corporate Training, Education
Time
Growth StrategyP
rod
uct
Per
form
ance
Defense S
imulatio
n
D 1 = P
C Games
D 2 = C
onsole G
ames
D 3 = W
eb Servi
ces
Move Up: Change Customers
Move Vertical:
Change Technology
Move Down: Change Industries
Defense Training& Analysis
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Recommendations
Disruptive innovations move through markets
Move Vertical to new technologies Move Up to new customers Move Down to new industries
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3-Phase Innovation in Industry
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Fluid Phase
Explosion of different designs, Era of radical product innovation
TransitionalPhase
Standardization of design, Emergence of process innovation
Specific Phase
Contraction of competitors, Era of incremental innovation
Rate of Major Innovation
time
Utterback’s 3-Phases of Innovation
Product Innovation
Process Innovation
Lowest CostDominant Design
Utterback, J. (1996). Mastering the Dynamics of Innovation. Harvard Business School Press.
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Fluid Phase
Explosion of different designs, Era of radical product innovation
TransitionalPhase
Standardization of design, Emergence of process innovation
Specific Phase
Contraction of competitors, Era of incremental innovation
Product Innovation
Process Innovation
Rate of Major Innovation
time
Simulation Innovation Examples
Dominant DesignSim: LVC
Games: Genres (FPS, RTS, etc)
Military Simulation
SeriousGames
GameWeb
GameWireless
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Fluid Phase TransitionalPhase
Specific Phase
Product Innovation
Rate of Major Innovation
time
Unsuccessful Path: Stay The Course
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Successful Path: Jump Industries
Computer Simulation
Serious Games
Serious Web Games
Expertise
Expertise
Expertise
Fluid: R&D, New Products
Expertise
Expertise
Expertise
Transitional: Mass Production
Expertise
Expertise
Expertise
Specific: Services
Wireless Games
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Fluid Phase
Product Innovation
Process Innovation
Rate of Major Innovation
time
TransitionalPhase
Specific Phase
(1) Open with rapid and prolific innovation
(3) Push standards and build community around yours
(4) Focus on low-cost products and services
Successful Path: Skate the Top
(2) Create and own the dominant design
DominantDesign
LowestCost
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Every Organization Will Not Survive
85%Stay the Course
10%Jump Industries
5%Skate the Top
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Recommendations
Flexible Change the company to follow the market Fluid >> Transitional >> Specific
Specialized Jump across domains to grow specific
expertise Retain your specialized expertise
Immovable Stay the Course Until Extinction Most companies follow this path
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Applying Intellectual Capital
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2 Types of Innovation
Incremental “build on and reinforce the applicability
of existing knowledge” “improving and exploiting an existing
technological trajectory” Radical (a.k.a. Disruptive)
“destroy the value of an existing knowledge base”
“disrupt an existing technological trajectory”
Leifer, R. et al. (2000). Radical Innovation: How mature companies can outsmart upstarts. Harvard Business School Press.
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Incremental Innovation – The Pen
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Radical Innovation
“I will now claim -- until dispossessed -- that I was the first person in the world to apply the typewriter to literature.”
-- Mark Twain, 1875
“There is no reason for any individual to have a computer in his home.”
-- Ken Olson, 1977
“Either write something worth reading or do something worth writing.”
-- Benjamin Franklin, 1706
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Incremental & Radical Innovation
Radical Invention
Incremental Innovation Radical Innovation
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Radical and Incremental Waves
Time
Inn
ova
tio
n &
Ben
efit
s
Leifer, R. et al. (2000). Radical Innovation: How mature companies can outsmart upstarts. Harvard Business School Press.
Radical
Incremental
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3 Types of Intellectual Capital
Human Social Organizational
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Innovation from Intellectual Capital
Which flavors of IC promote radical innovation vs. incremental innovation
Radical Innovation
Incremental Innovation
Subramaniam, M. & Youndt, M. (June 2005). The Influence of intellectual capital on the types of innovative capabilities. Academy of Management Journal, 48(3), 450-463.
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Organizational Capital = Incremental Innovation
Organizational Capital
Incremental Innovation
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Social Capital = Incremental Innovation
Social Capital
Incremental Innovation
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Human Capital = Radical Innovation
Human Capital
Radical Innovation
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Human + Social = Radical Innovation
Human Capital
Social Capital
Radical Innovation
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Effective investments in IC
Human Resources Management Captures & Nurtures Human Capital
Information Technology Fosters Social Capital
Research & Development Generates Organizational Capital Motivates Human and Social Capital
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IC and Innovation a System View
Human Capital
Social Capital
Organizational Capital
Radical Innovation
Incremental Innovation
+
-+
+ ++
No Effect
Human Resource Mgt
IT R&D
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IC Recommendations
Investments in Social Capital are essential for both Incremental and Radical Innovation
Human Capital must be supplemented with Social Capital to have a positive impact on Radical Innovation
Organizational Capital is Strongly Correlated with Incremental innovation
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References Christensen, C. (1997). The Innovator’s Dilemma: When new
technologies cause great firms to fail. Harvard Business School Press.
Christensen, C. & Raynor, M. (2003). The Innovator’s Solution: Creating and sustaining successful growth. Harvard Business School Press.
Utterback, J. (1996). Mastering the Dynamics of Innovation. Harvard Business School Press.
Subramaniam, M. & Youndt, M. (June 2005). The Influence of intellectual capital on the types of innovative capabilities. Academy of Management Journal, 48(3), 450-463.
Leifer, R. et al. (2000). Radical Innovation: How mature companies can outsmart upstarts. Harvard Business School Press.