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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