understand innovation

Faculty of Technology Management

MBA in Technology Management

© Gordon Graham 2008


Innovationin five minutes

understand


What can you learn from this?

• What innovation is

• Why it’s important

• The types of innovation

• The degrees of innovation


What is innovation?

Hundreds of similar definitions can be found in the literature. Here is the one I use,

adapted from various sources:

“Innovation is the profitable implementation of ideas.”


A Broad, American Perspective:

"Implementing new ideas that create value.” - Innovation Network, U.S.A.

"The intersection of invention and insight, leading to the creation of social and economic value."t

- U.S. National Innovation Initiative


What about the Brits?

"The development of new ideas and their economic application as new products or processes."a

- U.K. Dept. Trade and Industry


An innovation can increase profits on the value side (customers value an innovation enough to pay more

for it) . . .


. . . or the cost side (the company produces a product offering in a

more efficient way).


Either way, value is created for the firm and the consumer.

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What are the essential ingredients, or elements, of an innovation

ecosystem?

* *

* *

* * *

* *

*


There are many. They are rooted in national culture and can take years to develop: Trust,

Curiosity, Tolerance of Diversity, Faith, Confidence, Lack of Fear, the Will to a)

make the world a better place and b) wreck the status quo c) take risks and fail.


Some firm-level elements include: a written innovation strategy, a filter, an innovation process, a rewards and recognition system, humility, respect for seemingly insignificant technologies/competitors (healthy paranoia)

etc.


An invention is different from an innovation at any particular time in

that it doesn’t have commercial value but . . .


. . . it may have in future.


Think of invention as the laying of an egg, innovation as the laying,

incubation and hatching.


There is no shortage of ideas and inventions in the world. The

challenge is to introduce these successfully to a market.


Only then can the idea/invention be called an innovation.


In other words, innovation requires interplay between a product offering (technology) and a market (people).


Hard science + Social science.


A market can be inside or outside the firm’s physical walls.


Why is innovation important?


Innovation reduces waste and environmental damage.


Innovation creates growth, increases productivity, and economic wealth

(avoids stagnation).


Innovation provides better goods and services at a cheaper price –

higher standard of living.


More interesting work for employees.


Old strategies get replicated and, consequently, margins get squeezed.


Survival!

Source: United Kingdom Dept. Trade and Industry


What are the types of innovation?


Numerous types . . .


. . . but all these labels just describe where something new, better or

different occurs.


BROADLY:


Product

Process

Service

Business model

Value

Market


. . . and many more, depending on level of detail. Basically, innovation can occur anywhere in the firm’s business by anyone. We all have

great potential!


Note!

There is another type that needs to be considered separately. This is “disruptive

innovation,” a term first coined by Clayton Christensen. Disruptive innovation refers to a firm’s strategy relative to other firms. Often,

low-cost business models and “good enough” solutions/products for low-end and/or non-

consumers


The degrees of innovation.


Once again, many labels . . .


. . . however, they all describe the degree of change required by the

innovating firm and/or the market.


Incremental (sometimes called “continuous” or “evolutionary” or

“small”)


Semi-radical


Radical (sometimes called “discontinuous” or “revolutionary”

or “big”)


Incremental and radical innovations need to be managed differently.


Here’s a quote:

"He who innovates will have for his enemies all those who are well off under the

existing order of things, and only lukewarm supporters in those who might be

better off under the new."

Niccolo Machiaveli, The Prince


Thanks!

I completed an MSc dissertation on Innovation in Taiwanese/Chinese

companies active in multiple international markets. Please feel free to get in touch if your firm is working in China, Taiwan

etc., as I’m interested in these areas.e

[email protected]