IB Business and Management

2.5 Innovation

Innovation

• What is innovation?• Why is it important?

Invention & innovation• Invention is the discovery of a totally

new and original product or new ways of doing or making something.

• Innovation is the process of transforming an invention into a product that customers will buy. It may be a different application of something that already exists, something that adds value or differentiates a product.

Invention

‘Necessity, who is the mother of invention’

What does this quote mean?

Lets look at some examples

Chester Greenwood – Ear Muffs

• In 1873, 13 year old Chester Greenwood found that his ears got too cold when he was iceskating meaning that he had to go home early

• To protect his ears while ice skating, he found a piece of wire, and with his grandmother's help, padded the ends.

• In the beginning, his friends laughed at him. However, when they realized that he was able to stay outside skating long after they had gone inside freezing, they stopped laughing. Instead, they began to ask Chester to make ear covers for them, too.

• At age 17 Chester applied for a patent. For the next 60 years, Chester's factory made earmuffs, and earmuffs made Chester rich.

Earle Dickinson - Bandaid• At the turn of the century, Mrs.

Earl Dickson, an inexperienced cook, often burned and cut herself.

• Mr. Dickson, a Johnson and Johnson employee, got plenty of practice in hand bandaging. Out of concern for his wife's safety, he began to prepare bandages ahead of time so that his wife could apply them by herself.

• By combining a piece of surgical tape and a piece of gauze, he fashioned the first crude adhesive strip bandage.

Arthur Fry and Spencer Silver – Post It Notes

• Spencer Silver was working in the 3M research laboratories in 1970 trying to find a strong adhesive.  Silver developed a new adhesive, but it was even weaker than what 3M already manufactured.  It stuck to objects, but could easily be lifted off.  

• No one knew what to do with the stuff  • Then one Sunday four years later, another 3M

scientist named Arthur Fry was singing in the church's choir.  He used markers to keep his place in the hymnal, but they kept falling out of the book. 

• Remembering Silver's adhesive, Fry used some to coat his markers.  Success!  With the weak adhesive, the markers stayed in place, yet lifted off without damaging the pages. 

• 3M began distributing Post-it ® Notes nationwide in 1980 -- ten years after Silver developed the super weak adhesive.  Today they are one of the most popular office products available.

James Dyson – Cyclone Vacuum Cleaner

• Watch the video

• Is James Dyson an inventor or an innovator?

A brief history of Dyson products

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Dyson washingmachine, 2000

© easilyinteractive.com 2009 10*

PROTECTING BUSINESS IDEAS

Task

• Watch the Dragon’s Den Nova Flo video

• How will the inventors protect this business idea?

Task

• Watch the video ‘How to protect your business ideas – Patents’

Protecting an Idea

1. Patents and the patent office

• Original products or processes can be protected using a patent

• The Patent Office Charges a fee for patenting a product

• If a patented product is unlawfully copied, the patent holder can take the inventor to court

http://v3.espacenet.com/publicationDetails/biblio?DB=EPODOC&adjacent=true&locale=en_gb&FT=D&date=20060511&CC=US&NR=2006096942A1&KC=A1

2. CopyrightThe creators of certain materials are automatically protected from being copied by Copyright Law.

Literary works including books, poems and publications

Motions pictures and dramatic works

Computer software and animations

Songs, song lyrics, sound recordings, and music Photographs, graphics, images, pictures

Web pages

Works of art including paintings, sculptures, architecture, and computer graphics Educational materials including texts and tests

3. Trademarks can be:1. Logos

2. Pictures or drawings

3. Combination of letters and a design

4. Slogans

5. Product Shape

Innovations

• The company that makes the best use of a new idea might not be its inventor.

• The innovator is the person who finds a way to make a new idea work.

• There are 2 types of Innovation:• 1. Product Innovation- New product Ideas• 2. Process Innovation- New ways of

working

Process Innovations - Examples

• Ford’s first use of the production line by bringing product to the person during fabrication

• The factory to customer delivery of custom-built computers by Dell Corporation

Factors affecting innovation:

• Level of competition• Industry• Corporate culture• Business objectives• Available finance• Leadership

Peter Drucker

• 1909-2005• An influential writer

and management consultant

Druckers 7 Sources of Innovation

• THE UNEXPECTED: An example of the unexpected is the development of Nutrasweet. A chemist developed a new chemical. Accidentally he got some of it in his mouth. To his surprise it tasted very sweet.

• INCONGRUITIES: Incongruities or conflicts between opposing functions, requirements or values may be the start of an innovation. For example the request for a small car with still enough space on the inside seems to be incongruent. This however was solved in a new design as the Smart.

• PROCESS NEEDS: “necessity is the mother of invention”. Looking at weaknesses as an inspiration for new ideas

• INDUSTRY AND MARKET STRUCTURE: Competition and changes in customers needs and wants creating the need for change

• DEMOGRAPHICS: Changes in demographic trends that create the demand for new products and services

• CHANGES IN PERCEPTION: Changes in customers perception and beliefs• NEW KNOWLEDGE: Availability of new technologies/knowledge

Diffusions of Innovation Theory

• Created by Everett Rogers in 1962• Identified 5 types of consumers• Particularly applies to technology

products

Sal

es

Adoption rates will depend on:

• Relative advantages – is it better than alternatives?

• Observable features – can the benefits be seen?

• Compatibility – Does it work with existing systems?

• Complexity – Do customers perceive that it will be difficult to use?

• Trialability – Can customers try before they buy?