Sources of Innovation

Topic 6
 Knowledge Push….
 Emerge as a result of scientific research
 Networking - people sharing their ideas
 R&D – specific commitment of specialist staff, equipment and
resources.

Need Pull…
 Innovation is often the response to the need of change.
 Understanding buyer behavior ( advertising and branding
plays a key role in the process/using psychology)
 Need pull innovation is important at mature stages of
industry/product
 Crisis create need pull innovation (food crisis, war, natural
disaster etc)
TYPES OF NEW INNOVATION
 Innovation making process better
 Example. Via “Kaizen model” – Japanese
Kaizen is a daily process, the purpose of which
goes beyond simple productivity improvement.
Kaizen eliminates overly hard work and teaches
people how to perform experiments on their work
using the scientific method and how to learn to
spot and eliminate waste in business processes.
People at all levels of an organization participate in
kaizen, from the CEO down to janitorial staff, as
well as external stakeholders when applicable. The
format for kaizen can be individual, suggestion
system, small group, or large group.
 DISRUPTIVE INNOVATION
 Change the rule of innovation
 Entrepreneurs working at the fringes of a
mainstream market and finding groups whose
needs are no being met.
 Low end market - serve group of potential user who
need something simpler and cheaper
 High end market – example: domestic broadband
or mobile telephone market.
 Over served market – example: office
software/computing operation system that needs
continuous improvement from time to time.
 Mass Customization (MC) as
important source of innovation
 The ability to offer highly configured bundles of non
price factors configured to serve different market
segments.
 Not all people wanting the same thing
 There is an underlying challenge to meet their
demands for variety and increasing customization.
 Mass production to mass customization
 There has always been a market for personalized
custom made goods/services: personal shoppers,
travel agents, physicians etc.
 But it carried a high price tag.
 Figure 5.1 gives some examples of MC options:
 USER AS INNOVATORS
 Their ideas plus with their frustration with
existing solutions (product) lead them to
experiment and create something new.
 Create innovative solutions on a
continuing basis
 Eg.: Tech-hobbyists keep on providing
ideas on technological innovations-new
models for pc, phones
 EXTREME USER
 “Tough customers mean good designs”
 The users in the toughest environments
may have needs which by definition are
at edge.
 Eg.: Military needs inspire more
innovations within the security industry.
 RECOMBINATION
 Transferring or combining old ideas in
new context.
 ‘Crossover’
 Combination of industries
 Eg.: Nike fashionable shock-absorbing
shoes-combination of arts, health and
fitness industry
 REGULATION
 Restrict certain things and opens up new
ones.
 Counter-innovation – solution designed to
get around existing rules or at least bend
them to advantage. – speed camera –
product to detect and avoid camera.
 Eg.: New tax rules on cigarettes- restricts
sales of cigarettes, opens up new market of
‘fake cigarettes’ and aids to quit smoking
 FUTURES AND FORECASTING
 Exploring alternatives
 Eg.: Exxon and Shell exploring
possibilities for alternatives for oil and
gas.
 ACCIDENTS
 Mistakes that turned out to be important
inventions
A map of innovation search space –
Exploit & explore
 Exploitation – doing what we do
better/incremental innovation
 What we did in the past will play a strong role
in shaping what we do next.
 Exploration – involve big leaps into new
knowledge territory – risky but enable
organization to do new and very different
things.
 Refer figure 6.1
 IMPLEMENTING SEARCH
STRATEGIES
 Ideas for innovation come from many different
sources – universities etc.
 Successful innovation is about spreading the net as
widely as possible, mobilizing multiple channels.
But this survey miss the important element:
1. Focusing on incremental innovation in product innovation
only.
2. Organizational change
3. Business model innovation
4. Focusing on R&D and market research dept. only
5. Deal with established organization only
6. Mainly tell about “exploit” and less detail about “explore”.
 OPEN INNOVATION
 Accessing external knowledge rather than relying on internally
generated ideas.
 Involves the recognition of external expertise.
 Throughout the years several factors emerged that paved the way for
open innovation paradigms:
1. The increasing availability and mobility of skilled workers
2. The growth of the venture capital market
3. External options for ideas sitting on the shelf
4. The increasing capability of external suppliers
 These four factors have resulted in a new market of knowledge.
 Knowledge is not anymore proprietary to the company.
 It resides in employees, suppliers, customers, competitors and
universities. If companies do not use the knowledge they have inside,
someone else will.
 Innovation can be generated either by means of closed innovation or
by open innovation paradigms
 Cont…
 Knowledge is not anymore proprietary to the company.
 It resides in employees, suppliers, customers, competitors
and universities. If companies do not use the knowledge
they have inside, someone else will.
 Innovation can be generated either by means of closed
innovation or by open innovation paradigms
 Converging/combining areas in open innovation:
1. Opening up search – new ways of accessing a wide
set of ideas o/side org.
2. Opening up engagement – engaging employees in
organized innovative activities across and organization.
3. Opening up stakeholder participation in innovation
activities.
CONVERGENCE AROUND OPEN
INNOVATION
The open innovation model – Chesbrough
(Opening up the enterprise to flows of
knowledge into/out from org.)
 STRATEGIES OF SEARCHING…
 Choice of techniques and structures depends
on variety of strategic factors – balancing their
costs and risks against quality and quantity of
knowledge they bring in.
 Managing innovation id dynamic capability –
need to be updated and extended on a
continuing basis.
 Structure to enable search consists of:
 Searching inside.
 Searching outside.
 Cont…
 Searching inside – how can organization tap
into rich knowledge ( and potential innovation
triggers) within its existing structure amongst its
workforce?
 To rotate or allow staff spend more time out working
with and listening to customers & others.
 Social network in organization – understand how
ideas flow within & across organization.
○ Gatekeeper –most ideas flow via key individuals to
those who can make use of them in developing
innovation.
 Cont…
 Searching outside – spreading the net widely
by building relationship with stakeholders.
 Finding: business partner & customer – top
sources for new ideas.
 Innovation agent – staff acts as channels to
monitor and bring back potential sources of
new ideas.
 Or developing new ways of searching such
as:
 Cont…
 Sending out scouts.
 Exploring multiple futures.
 Using web.
 Working with active users.
 Deep diving.
 Probe and learn.
 Mobilise the mainstream.
 Corporate venturing
 And etcs.