This assignment deepens your understanding of innovation and entrepreneurship concepts introduced in Chapters 1?3 of Managing Innovation by connecting theo

Student Resource

Chapter 1: The innovation imperative

Chapter 1: The innovation imperative

• In the following PowerPoint slides you will find the key headings from CHAPTER 1 together with the main illustrations, tables, etc.

• There are also slides summarizing the key messages in bullet-point fashion, links to videos and a wide range of activities which you can use to help students explore around these themes.

• Finally there are some reflection questions which can be used as the basis for discussion or assignments.

Learning objectives

By the end of this chapter you will develop an understanding of:

what ‘innovation’ and ‘entrepreneurship’ mean and how they are essential for survival and growth

innovation as a process rather than a single flash of inspiration

the difficulties in managing what is an uncertain and risky process

the key themes in thinking about how to manage this process effectively

Core themes and material

from the book

Innovation?

• The word ‘innovation’ comes from the Latin, innovare, and is all about change.

• Perhaps a more helpful definition of innovation is:

‘the process of creating value from ideas’

The innovation imperative

‘A slow sort of country’ said the Red Queen. ‘Now here, you see, it takes all the running you can do to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!’

(Lewis Carroll, Alice through the Looking Glass)

Global R&D spend

Innovation and entrepreneurship

‘Innovation is the specific tool of entrepreneurs, the means by which they exploit change as an opportunity for a different business or service. It is capable of being presented as a discipline, capable of being learned,capable of being practised’

(Peter Drucker)

Innovation & Entrepreneurship

Stage in life cycle

Start-up Growth Sustain/scale Renew

Creating wealth Individual entrepreneur exploiting new technology or market opportunity

Growing the business through adding new products/services or moving into new markets

Building a portfolio of incremental and radical innovation to sustain the business and/or spread its influence into new markets

Returning to the radical frame- breaking kind of innovation which began the business and enables it to move forward as something very different

Creating social value

Social entrepreneur, passionately concerned to improve or change something in their immediate environment

Developing the ideas and engaging others in a network for change – perhaps in a region or around a key issue

Spreading the idea widely, diffusing it to other communities of social entrepreneurs, engaging links with mainstream players like public sector agencies

Changing the system – and then acting as agent for next wave of change

Hidden innovation

Type I: Innovation that is identical or similar to activities that are measured by traditional indicators, but which is excluded from measurement

Type II: Innovation without a major scientific and technological basis, such as innovation in organizational forms or business models.

Type III: Innovation created from the novel combination of existing technologies and processes.

Type IV: Locally-developed, small- scale innovations that take place ‘under the radar’, not only of traditional indicators but often also of many of the organizations and individuals working in a sector.

Examples of ‘hidden’ innovation

• Type I: the development of new technologies in oil exploration.

• Type II: the development of new contractual relationships between suppliers and clients on major construction projects.

• Type III: the way in which banks have integrated their various back office IT systems to deliver innovative customer services such as Internet banking.

• Type IV: the everyday innovation that occurs in classrooms and multidisciplinary construction teams

Investments in innovation

Challenges on the

innovation horizon

• Accelerating knowledge production

• Globalisation of knowledge production

• Market expansion – now <7billion people

• Market globalization and fragmentation

• Market virtualization

• Rise of active users/demand for customization

• Growing concern with sustainability challenges

• Shifting technological and social infrastructures

Innovation isn’t easy

Barriers to innovation include:

• Seeing innovation as ideas, not managing the whole journey;

• Not recognizing the need for change;

• Mindset and complacency – core competence becomes core rigidity;

• Closed information network, insulated from new ideas.

Successful innovators…

explore and understand different dimensions of innovation (ways in which we can change things)

Explore and understand

manage innovation as a process Manage

create conditions to enable them to repeat the innovation trick (building capability) Create

focus this capability to move their organizations forward (innovation strategy) Focus

build dynamic capability (the ability to rest and adapt their approaches in the face of a changing environment)Build

A process model for innovation

Scope for innovation

Dimension Type of change

‘Product’ Changes in the things (products/services) which an organization offers

‘Process’ Changes in the ways in which these offerings are created and delivered

‘Position’ Changes in the context into which the products/services are introduced

‘Paradigm’ Changes in the underlying mental models which frame what the organization does

Dimensions of innovation – what can we change?

Examples of the 4Ps model: Product

‘Product’

– what we offer the world

Windows 7 and 8 replacing Vista and XP – essentially improving on existing software idea New versions of established car models – e.g. the VW Golf essentially improving on established car design Improved performance – incandescent light bulbs CDs replacing vinyl records – essentially improving on the storage technology

New to the world software – for example the first speech recognition program Toyota Prius – bringing a new concept – hybrid engines. Tesla – high performance electric car. LED-based lighting, using completely different and more energy efficient principles Spotify and other music streaming services – changing the pattern from owning your own collection to renting a vast library of music

Examples of the 4Ps model: Process

‘Process’

– how we create and deliver that offering

Improved fixed line telephone services Extended range of stock broking services Improved auction house operations Improved factory operations efficiency through upgraded equipment Improved range of banking services delivered at branch banks Improved retailing logistics

Skype and other VOIP systems On-line share trading eBay Toyota Production System and other ‘lean’ approaches Online banking and now mobile banking in Kenya, Philippines – using phones as an alternative to banking systems On line shopping

Examples of the 4Ps model: Position

‘Position’

– where we target that offering and the story we tell about it

HaagenDazs changing the target market for ice cream from children to consenting adults Airlines segmenting service offering for different passenger groups – Virgin Upper Class, BA Premium Economy, etc. Dell and others segmenting and customizing computer configuration for individual users On line support for traditional higher education courses Banking services targeted at key segments – students, retired people, etc.

Addressing underserved markets – for example the Tata Nano aimed at emerging but relatively poor Indian market with car priced around $2000. Low cost airlines opening up air travel to those previously unable to afford it – create new market and also disrupt existing one Variations on the ‘One laptop per child’ project – e.g. Indian government $20 computer for schools University of Phoenix and others, building large education businesses via online approaches to reach different markets ‘Bottom of the pyramid’ approaches using a similar principle but tapping into huge and very different high volume/low margin markets – Aravind eye care, Cemex construction products

Examples of the 4Ps model: Paradigm

‘Paradigm’

– how we frame what we do

Bausch and Lomb – moved from ‘eye wear’ to ‘eye care’ as their business model, effectively letting go of the old business of spectacles, sunglasses (Raybans) and contact lenses all of which were becoming commodity businesses. Instead they moved into newer high tech fields like laser surgery equipment, specialist optical devices and research in artificial eyesight Dyson redefining the home appliance market in terms of high performance engineered products Rolls Royce – from high quality aero engines to becoming a service company offering ‘power by the hour’ IBM from being a machine maker to a service and solution company – selling off its computer making and building up its consultancy and service side.

Grameen Bank and other microfinance models – rethinking the assumptions about credit and the poor iTunes platform – a complete system of personalized entertainment Cirque de Soleil – redefining the circus experience Amazon, Google, Skype – redefining industries like retailing, advertising and telecoms through online models Linux, Mozilla, Apache – moving from passive users to active communities of users co-creating new products and services

Dimensions of

innovation

Incremental -→ Radical

Component and system

Architectures, platforms and systems

Types of Innovation

Knowledge architectures and innovation

The innovation life cycle

Stages in the life cycle

Discontinuous innovation

Triggers for discontinuity include:

• New market emerges

• New technology emerges

• New political rules emerge

• Running out of road

• Sea change in values and public opinion

• Changes in regulatory context

• Fractures along ‘fault lines’

• Architectural innovation/ business model innovation

• Unthinkable events

• Etc.

Summary

• Innovation is about growth – about recognising opportunities for doing something new and implementing those ideas to create some kind of value. It could be business growth, it could be social change. But at its heart it is the creative human spirit, the urge to make change in our environment.

Summary

• Innovation is also a survival imperative. If an organization doesn't change what it offers the world and the ways in which it creates and delivers those offerings it could well be in trouble.

• And innovation contributes to competitive success in many different ways – it’s a strategic resource – helping to get the organization where it is trying to go, whether it is delivering shareholder value for private sector firms, or providing better public services, or enabling the start-up and growth of new enterprises.

Summary

• Innovation doesn’t just happen – it is driven by entrepreneurship. This powerful mixture of energy, vision, passion, commitment, judgement and risk-taking – provides the engine behind the innovation process.

• It’s the same whether we are talking about a solo start-up venture or a key group within an established organization trying to renew its products or services.

Summary

• Innovation doesn’t happen simply because we hope it will – it’s a complex process which carries risks and needs careful and systematic management. Innovation isn’t a single event, like the light bulb going off above a cartoon character’s head. It’s an extended process of picking up on ideas for change and turning them through into effective reality.

Summary

We need to:

• Understand what we are trying to manage – the better our mental models, the more likely what we do

• with them in the way of building and running organizations and processes will work;

• • Understand the how – creating the conditions (and adapting/configuring them) to make it happen;

• • Understand the what, why and when of innovation activity – strategy shaping the innovation work

• that we do;

• • Understand that it is a moving target – managing innovation is about building a dynamic capability.

Summary

Innovation can take many forms, but they can be reduced to four directions of change:

• • ‘product innovation’ – changes in the things (products/services) that an organization offers;

• • ‘process innovation’ – changes in the ways in which they are created and delivered;

• • ‘position innovation’ – changes in the context in which the products/services are introduced;

• • ‘paradigm innovation’ – changes in the underlying mental models that frame what the organization

• does.

Summary

Research repeatedly suggests that if we want to succeed in managing innovation we need to:

• explore and understand different dimensions of innovation (ways in which we can change things)

• manage innovation as a process


• create enabling conditions to enable them to repeat the innovation trick (building capability)

• focus this capability to move their organizations forward (innovation strategy)

• build dynamic capability (the ability to reset and adapt their approaches in the face of a changing environment).

Summary

Any organization can get lucky once, but the real skill in innovation management is being able to repeat the trick. So if we want to manage innovation, we ought to ask ourselves the following check questions:

• • Do we have effective enabling mechanisms for the core process?

• • Do we have strategic direction and commitment for innovation?

• • Do we have an innovative organization?

• • Do we build rich proactive links?

• • Do we learn and develop our innovation capability?

Videos

• There are several short videos which can help explore and present the key themes of the chapter:

• What is innovation?

• Why does innovation matter?

• The innovation imperative

• Innovation model innovation ’

• The language of innovation

• Innovation management

Videos

• You can also watch longer films covering key themes:

• John Bessant explaining the challenge of Strategic innovation management

• John Bessant explain the 4Ps model – Exploring innovation space

• Joe Tidd discussing the question ‘Why innovate?’

Innovation managers

in their own words

• On the website there are several interviews with practising innovation managers which give an idea of the wide range of challenges in the field and the different areas (commercial and not-for-profit) in which innovation is playing a key role:

• https://johnbessant.org/case- studies/innovation-managers- in-their-own-words/

Innovation and growth

• Tim Jones has been studying growth champions for some time. His most recent work has built on this, looking to try and establish a link between those organizations which invest consistently in innovation and their subsequent performance. His findings show that over a sustained period of time there is a strongly positive link between the two; innovative organizations are more profitable and more successful.

• Watch a video of Tim explaining these ideas:

• https://www.youtube.com/watch?v=O9 1BxG14G1c

Creating value from ideas

• Follow the link to watch a video by The School of Life on ‘How to be an Entrepreneur’

• https://www.youtube.com/watc h?v=lJjILQu2xM8

Creating and capturing value

• Follow the link to watch Michael G. Jacobides’ TED Talk, ‘Creating and Capturing Value in Your Business Ecosystems’

• https://www.youtube.com/watch?v=hxQ HSyk5oyc

Blogs and podcasts

• There are several podcasts picking up key themes around managing innovation as a process and some of the key variables:

• Blog pieces here include innovation histories charting the ways in which innovation evolves and contributes – for example, ‘The birth of the bike’, ‘Sweeping the floor with innovation’ and the rise of the internet.

Tools

The chapter introduces a variety of tools for helping answer the question of where and when to innovate, including: • The 4Ps approach to mapping

innovation space • Blue Ocean strategy • Value curves • Competitiveness profiling

• They can all be found here: • https://johnbessant.org/tools-

for-innovation-and- entrepreneurship/

Innovation isn’t easy

The Museum of Failure gives a wide range of examples of innovations which have failed, including many coming from some of the world’s biggest business names. Invite students to explore the site and distil a list of the many ways in which good ideas can fail:

https://museumoffailure.com/