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Innovation & Entrepreneurship 3e by Bessant & Tidd©2015 John Wiley and Sons

The innovation imperative

Definition of Innovation

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

‘the process of creating value from ideas’.

“the design, invention, development and/or implementation ofnew or altered products, services, processes, systems, organizational structures,

or business models for the purpose of creating new value for customers and financial

returns for the firm.”


Spengler Hoover

HoweSinger

©2015 John Wiley and Sons Innovation & Entrepreneurship 3e by Bessant & Tidd

Innovation vs. InventionInnovation is not a single action but a total process of interrelated sub processes. It is not just the conception of a new idea, nor the invention of a new device, nor the development of a new market. The process is all these things acting in an integrated fashion.

Invention:Converting the conception of the idea

Innovation:translation of the invention into the economy.

New ideas The process of converting intellectual thoughts into a tangible product or process

Innovation = theoretical conception + technical invention + commercial exploitation

InnovationInnovation has an inherent variability, but rate of

success can be improved through better & different management:

• 85% of new ideas never reach a market• 60% of R&D projects are market failures• 40% of consumer products & services fail• 20% of business products & services fail

Innovation Process

Factors affecting the precise process:

• Sector - competitors, structure & constraints• Markets - opportunities & rate of change• Technology - maturity & costs• Resources - firm & networks• Location - regulation, policy & systems of innovation

7© 2013 John Wiley & Sons Ltd. www.innovation-portal.info

Exploring innovation space

Types of Innovation


Do something different

Disruptive Innovation

– Entire new technology– Alters the existing market– Provide improvements than demanded by the customers

vacuum tube-powered table radio transistor radios

EXAMPLES TO DISRUPTIVE INNOVATIONDISRUPTEE DISRUPTOR

MAINFRAME AND MINI COMPUTERS PERSONAL COMPUTERS

PERSONAL COMPUTERS SMARTPHONES

METAL, WOOD, GLASS PLASTIC

CD, DVD DOWNLOADABLE DIGITAL MEDIA

TRADITIONAL ENCYLOPEDIAS WIKIPEDIA

TELEGRAPHY TELEPHONES

3.5 STANDARD CALCULATOR POCKET CALCULATOR

HIGH STREET RETAILING INTERNET SHOPPING

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 ideaNew versions of established car models – e.g. the VW Golf essentially improving on established car designImproved performance - incandescent light bulbsCDs replacing vinyl records – essentially improving on the storage technology

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


Incremental Radical

https://deuedutr-my.sharepoint.com/personal/banu_atrek_deu_edu_tr/Documents/2016-2017/G%C3%BCz%20D%C3%B6nemi/MRK4248/yeni/WEEK%201/Tesla%20Motors%20-%20The%20Future%20of%20Electric%20Cars%20(National%20Geographic).mp4

Elon MUSK

• He is the founder, SpaceX; Tesla Motors; SolarCity; OpenAI; Zip2; X.com which merged with PayPal - 83rd wealthiest person in the world


The underlying motivation for funding both SolarCity and Tesla is to help combat global warming

• Elon Musk’s Mars colonization announcement:– Sep 27, 2016

Examples of the 4Ps model: Process

‘Process’

- how we create and deliver that offering

Improved fixed line telephone servicesExtended range of stock broking servicesImproved auction house operationsImproved factory operations efficiency through upgraded equipmentImproved range of banking services delivered at branch banksImproved retailing logistics

Skype and other VOIP systemsOn-line share tradingeBayToyota Production System and other ‘lean’ approachesOnline banking and now mobile banking in Kenya, Philippines – using phones as an alternative to banking systemsOnline shopping


McDonald’s decided to take a radical, incredibly process-driven approach to delivering good quality at great speed for a remarkably low price.

Citibank did more than revolutionize American banking when it pioneered the use of automated teller machines; became the first bank to aggressively market credit cards;

Incremental Radical

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 adultsAirlines segmenting service offering for different passenger groups – Virgin Upper Class, BA Premium Economy, etc.Dell and others segmenting and customizing computer configuration for individual usersOn line support for traditional higher education coursesBanking 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.

Grameen Bank and other microfinance models –rethinking the assumptions about credit and the poor

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


Incremental Radical

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 eyesightDyson redefining the home appliance market in terms of high performance engineered productsRolls 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.

iTunes platform – a complete system of personalized entertainment

Cirque de Soleil – redefining the circus experience

Amazon, Google– 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


Incremental Radical

Paradigm Innovation

• Ownership to rental– Spotify : music-streaming company.It shifted the

model from people's desire to own the music they listened to towards one in which they rented access to a huge library of music.

– Zipcar: car rental company have transformed the need for car ownership in many large cities


Paradigm Innovation

• Mass customization and co-creation– New technologies and a growing desire for

customization have enabled the emergence not only of personalized products but platforms on which users can engage and co-create everything from toys (e.g. Lego), clothing (e.g. Adidas) to complex equipment like cars (Local Motors).


(R&P Ltd) making garden machinery

One day in l977, an engineer at Canon put a hot soldering iron a little too closeto an ink-filled syringe. The heat boiled a tiny amount of ink in the needle,expanding it into a gas, which pushed ink out the tip of the needle. The result ofthis accident was Canon’s innovative breakthrough: bubble jet printingtechnology.

At Pfizer Pharmaceuticals, scientists attempting to produce a drug that wouldstimulate receptors in the human heart ended up stimulating receptorselsewhere in the human anatomy, giving rise to theerectile dysfunction wonder-drug, Viagra.

BY CHANCE ???

New Product Development


Activity

©2015 John Wiley and Sons

A dead body is found in the forest with his swimwear and snorkel. The closest lake is

about 8 km away and the distance with thesea is approximately 50 km.

The fire fighting aircraft has taken water fromthe lake in order to extinguish the fire in theforest. Aircraft unfortunately also took theman who was swimming in the lake at that

moment and threw it to the forest.

How did the man die?

• Edward De Bono - 1967• Lateral thinking is about reasoning that is not

immediately obvious

• Ideas may not be obtainable by using only traditional step-by-step logic.

• Techniques that apply lateral thinking to problems are characterized by the shifting of thinking patterns away from entrenched or predictable thinking to new or unexpected ideas.

What is Lateral Thinking?

The Six Thinking HatsA Lateral Thinking Strategy by

Edward De Bono

The Six Thinking Hats

• Many successful people think from a very rational, positive viewpoint. This is part of the reason that they are successful.

• Often, though, they may fail to look at a problem from an emotional, intuitive, creative or negative viewpoint.

• This can mean that they underestimate resistance to plans, fail to make creative leaps and do not make essential contingency plans.


White Hat

• FACTS AND LOGIC• Separates fact from speculation• Questions

– Who, what, when, where?– What do you know about?– What are the facts about?– What do you need or want to know about?– Where might you go to find out about?


Red Hat• 'Wearing' the red hat, you look at problems using intuition, gut

reaction, and emotion.

• Also try to think how other people will react emotionally.

• Questions– What are you feeling now?– Did your feelings change? How?– What prejudices are present?– What does your intuition tell you?

The Six Thinking HatsBlack Hat• Using black hat thinking, look at all the bad points of the

decision.

• Look at it cautiously and defensively.

• Try to see why it might not work. This is important because it highlights the weak points in a plan.

• It allows you to eliminate them, alter them, or prepare contingency plans to counter them.


Yellow Hat

• The yellow hat helps you to think positively.

• It is the optimistic viewpoint that helps you to see all the benefits of the decision and the value in it.

• Yellow Hat thinking helps you to keep going when everything looks gloomy and difficult.


Green Hat

• The Green Hat stands for creativity.

• This is where you can develop creative solutions to a problem.

• It is a freewheeling way of thinking, in which there is little criticism of ideas.


Blue Hat

• The Blue Hat stands for process control.• Synthesis of different opinions• Decision is made• This is the hat worn by people chairing meetings.

FOCUS

Information & DataNeutral and objectiveChecked and believed factsMissing information & Where to source it

Managing the ThinkingSetting the focusMaking summariesOverviews & conclusionsAction Plans

Why it may not workCautions * DangersProblems * FaultsLogical reasons must be given

Why it may workValues * Benefits(both known and potential)Logical reasons must be given

Creative ThinkingPossibilities * AlternativesNew Ideas * New ThinkingOvercome black hat issuesReinforce yellow hat issues

Feelings and IntuitionEmotions and hunchesNo reasons or justifications“At this point”Keep it short

MONEY does not exist


• Lateral thinking is about reasoning that is not immediately obvious

• Ideas may not be obtainable by using only traditional step-by-step logic.

• Techniques that apply lateral thinking to problems are characterized by the shifting of thinking patterns away from entrenched or predictable thinking to new or unexpected ideas.

What is Lateral Thinking?

The Six Thinking HatsA Lateral Thinking Strategy by

Edward De Bono


• Many successful people think from a very rational, positive viewpoint. This is part of the reason that they are successful.

• Often, though, they may fail to look at a problem from an emotional, intuitive, creative or negative viewpoint.

• This can mean that they underestimate resistance to plans, fail to make creative leaps and do not make essential contingency plans.


• Similarly, pessimists may be excessively defensive, and more emotional people may fail to look at decisions calmly and rationally.

• If you look at a problem with the 'Six Thinking Hats' technique, then you will solve it using all approaches.

• Your decisions and plans will mix ambition, skill in execution, public sensitivity, creativity and good contingency planning.


White Hat

• With this thinking hat you focus on the data available. Look at the information you have, and see what you can learn from it.

• Look for gaps in your knowledge, and either try to fill them or take account of them.

• This is where you analyze past trends, and try to extrapolate from historical data.


Red Hat

• 'Wearing' the red hat, you look at problems using intuition, gut reaction, and emotion.

• Also try to think how other people will react emotionally.

• Try to understand the responses of people who do not fully know your reasoning.


Black Hat• Using black hat thinking, look at all the bad points of the

decision.

• Look at it cautiously and defensively.

• Try to see why it might not work. This is important because it highlights the weak points in a plan.

• It allows you to eliminate them, alter them, or prepare contingency plans to counter them.


Black Hat

• Black Hat thinking helps to make your plans 'tougher' and more resilient.

• It can also help you to spot fatal flaws and risks before you embark on a course of action.

• Black Hat thinking is one of the real benefits of this technique.


Yellow Hat

• The yellow hat helps you to think positively.

• It is the optimistic viewpoint that helps you to see all the benefits of the decision and the value in it.

• Yellow Hat thinking helps you to keep going when everything looks gloomy and difficult.


Green Hat

• The Green Hat stands for creativity.

• This is where you can develop creative solutions to a problem.

• It is a freewheeling way of thinking, in which there is little criticism of ideas.


Blue Hat

• The Blue Hat stands for process control.

• This is the hat worn by people chairing meetings.

• When running into difficulties because ideas are running dry, they may direct activity into Green Hat thinking.

• When contingency plans are needed, they will ask for Black Hat thinking, etc.

MONEY does not exist


Powerful tool to help explore problems and assist search for patterns and connections.

The five essential characteristics of Mind Mapping:

• The main idea, subject or focus is crystallized in a central image.• The main themes radiate from the central image as 'branches'.• The branches comprise a key image or key word drawn or printed on its associated

line.• Topics of lesser importance are represented as 'twigs' of the relevant branch.• The branches form a connected nodal structure.

Mind Mapping

The innovation imperativeSlayt Numarası 2Slayt Numarası 3Slayt Numarası 4InnovationSlayt Numarası 6Innovation ProcessSlayt Numarası 8Slayt Numarası 9Disruptive InnovationEXAMPLES TO DISRUPTIVE INNOVATIONSlayt Numarası 12Slayt Numarası 13Elon MUSKSlayt Numarası 15Slayt Numarası 16Slayt Numarası 17Slayt Numarası 18Slayt Numarası 19Paradigm InnovationSlayt Numarası 21Paradigm InnovationSlayt Numarası 23Slayt Numarası 24Slayt Numarası 25Slayt Numarası 26Slayt Numarası 27Slayt Numarası 28Slayt Numarası 29Slayt Numarası 30Slayt Numarası 31Slayt Numarası 33Slayt Numarası 34Slayt Numarası 35Slayt Numarası 36Slayt Numarası 37The Six Thinking HatsThe Six Thinking HatsThe Six Thinking HatsThe Six Thinking HatsThe Six Thinking HatsThe Six Thinking HatsThe Six Thinking HatsThe Six Thinking HatsSlayt Numarası 46Slayt Numarası 47Slayt Numarası 48Slayt Numarası 49The Six Thinking HatsThe Six Thinking HatsThe Six Thinking HatsThe Six Thinking HatsThe Six Thinking HatsThe Six Thinking HatsThe Six Thinking HatsThe Six Thinking HatsThe Six Thinking HatsThe Six Thinking Hats MONEY does not existSlayt Numarası 62