Innovation in e-business

ELEKTRONINIO VERSLO STRATEGIJOS IR SPRENDIMAI

seminarų medžiaga

Lekt. Monika Mačiulienė

[email protected]

INNOVATION + E.BUSINESS

Lecturer Monika Mačiulienė

What is innovation?

• variety of meanings

• often associated with discoveries carried out by white-hairedscientist-types in high tech industry labs or universities or a smallgroup within successful company

• much broader definition and wider functions

In 2002, listeners to the Today Programme on Radio 4 in a poll to mark 150 years of the UK Patent Office voted for their top ten inventions :

1. Bicycle (Pierre Lallement, 1866) 2. Radio (Guglielmo Marconi, 1897) 3. Computer (Alan Turig, 1945) 4. Penicillin (Florey & Heatley, 1940) 5. Internal Combustion Engine (Nicolaus Otto, 1876) 6. World Wide Web (Tim Berners-Lee, 1989) 7. Light Bulb (Thomas Edison & Joseph Swan, 1829) 8. Cat’s Eyes (Percy Shaw, 1936) 9. Telephone (Alexander G. Bell, 1876) 10. Television (John Logie Baird, 1923)

Source: http://www.cnbc.com/id/44504579/page/14

KEY ELEMENTS

PROCESS: Innovation is a process (implying, among other things, that it can be learned andmanaged)

INTENTIONAL: That process is carried out on purpose

CHANGE: It results in some kind of change

VALUE: The whole point of the change is to create value in our economy, society and/or individuallives

OPPORTUNITY: Entrepreneurial individuals enable tomorrow's value creation by exploring for ittoday: having ideas, turning ideas into marketable insights and seeking ways to meet opportunities

ADVANTAGE: At the same time, they also create value by exploiting the opportunities they have athand

Using this conceptualization we are able to land on the following definition ofinnovation:

A PROCESS OF INTENTIONAL CHANGE MADE TO CREATE VALUE BY MEETING OPPORTUNITY AND SEEKING ADVANTAGE.

THEORIES ON INNOVATION

1. Schumpeter & Kondratiev – waves of innovation

2. Drucker – 7 sources of innovation

3. Rogers – diffusion of innovation

There is no dominant theory on the field and little agreement among managers and academics alike regarding what affects a company’s ability to innovate.

(1) Waves of innovationKondratiev + Schumpeter

K – WAVES

Attributes: change, entrance of radically new technology in leading economics -> diffused unevenlyaround the globe, impact on power hierarchies, culture and politics

Fifty to sixty years in length, the cycles consist of alternating periods between high sectoral growth and periods of slower growth.

creative destruction

“the opening up of new markets, foreign or domestic, and the organizational development [...]illustrate the same process of industrial mutation, that incessantly revolutionizes the economicstructure from within, incessantly destroying the old one, incessantly creating a new one”.

Each of the waves were unique, driven by different cluster of industries

Examples

INTERNET has acted as a catalyst for creative destruction. The internethas allowed businesses to compete in markets outside of theirgeographic location, reach more consumers, create efficiencies and cutcosts in manual processes as well as pioneer new techniques for doingbusiness.

(2) Drucker7 sources of innovation

SEVEN SOURCES FOR INNOVATIVE OPPORTUNITY

Source

The unexpected success, failure, outside eventNutrasweet (chemical by accident), Ford Edsel – carefully planned product, you can learn fasterfrom your mistakes in the market

Incongruities between reality as it actually is and reality as it is assumed to be or as it ought to be (overnightpackage delivery, small cars with enough space Smart)

Process needs Examples: Dropbox.com – you spend all that time editing it, cleaning it and spell checking it, only tonot have the most recent version, it fills in this gap

Industry and market structures changes that catch everyone unaware, new type of services (health care industry: changing tohome health care, auto industry transitioning from a luxury industry to a mass market)

Demographics changes in the population (retirement homes for older people)

Changes in perception also changes in mood and meaning , in older days health was seen as related to body mass,meaning fatter people were perceived as more healthy, exercise, health and green movement)

New knowledge both scientific and non-scientific (video industry, robotics, biotechnology, nano-technology)Google and the search engine.

By Drucker, P (1994) Innovation and Entrepreneurship, Elsevier and Drucker, P (2002) The Discipline of Innovation, Harvard Business Review, Aug 2002, Vol 80,

(3) Rogersdiffusion of innovation

Diffusion of innovations

HOW, WHY, AND AT WHAT RATE new ideas andtechnology spread through cultures?

The diffusion of innovation curve is useful to remember that trying toquickly and massively convince mass of a new controversial idea isuseless.

It makes more sense in these circumstances to start with convincinginnovators and early adopters first. All the categories and percentagescan be used as a first draft to estimate target groups forcommunication process.

Creativity and lead users

http://youtu.be/Lpaw__fOOtA?t=31m57s

Not doing something for money

Example of lead users importance in innovation and creativity

Shows importance of peers that is why entrepreneurs work in hubs, valleys and teams

http://youtu.be/Lpaw__fOOtA?t=31m57s

TYPES OF INNOVATION

Why you need to know with what type of innovation you are dealing with?

Understanding what type of innovation you are dealing with is ofcritical strategic importance when it comes to you deciding howyou will react to an innovation, whether someone else hasintroduced it or whether you plan to introduce it to themarketplace.

TYPES OF INNOVATIONHenderson & Clark

Source: Henderson and Clark (1990)



Incremental innovation

Incremental innovation refines and improves an existing design, through improvements in thecomponents. However it is important to stress these are improvements not changes, thecomponents are not radically altered. Christensen (1997) defines incremental innovation interms of:

‘a change that builds on a firm’s expertise in component technology within an established architecture.’

Most common type of innovation

A series of small improvements to an existing product or product line that usually helps maintain or improve its competitive position over time.

Incremental innovation would be case of offering a machine with a more powerful motor to give faster spin speeds. It leaves the architecture of the system unchanged

and instead involve refinements to particular components.



RADICAL INNOVATION

calls for a whole new design, ideally using new components configured (i.e. integrated into thedesign) in a new way. In Henderson and Clark’s (1990) terms,

‘Radical innovation establishes a new dominant design, and hence a new set of core design concepts embodied in components that are

linked together in a new architecture.

comparatively rare

Radical innovation is often associated with the introduction of a new technology. In some cases this will be a transforming technology, perhaps even one associated with the transforming effect of a Kondratiev long wave.

Examples

Goldcorp challenge

Arab spring

• New tools for fighting – internet & social media

• New systems – no hierarchy, everything happens so fast, there is noclear leader

Don Tapscott: Four principles for the open world http://www.youtube.com/watch?v=jfqwHT3u1-8

Opposite example: music industry

They had technologydisruption (digitalization)and instead of takingadvantage of that they tooklegal actions – by suingteenagers. And is danger ofcollapse.



MODULAR INNOVATION

• doesn’t involve a whole new design, but involve new or at leastsignificantly different components.

• function remains the same

Clockwork radio

The same radio but does not use external source of energyNew technology but not as radicalOpened up new markets for people who do not have access to power source

dragdis.com

smart walking stick with built-in sat-nav for elderly by fujitsu

designed by Egle Ugintaite fromLithuania, is a walking stick withbuilt-in sat-nav.

the next generation cane is designedto help elderly people find their way,as well as monitor things such asheart rate and temperature.its location can also be followedonline and can be set up to sendemail alerts if it thinks the user mayhave fallen over.

Source: http://www.designboom.com/design/smart-walking-stick-with-built-in-sat-nav-for-elderly-by-fujitsu/

http://vimeo.com/61210101



Architectural

Reconfiguration of established system to link together components in a new way

The function changes dramatically

There could be improved components, but they are not essential

http://www.youtube.com/watch?feature=player_embedded&v=oDAw7vW7H0c

Education

Innovation in e-business