Presentation looking at innovation and the theories around innovation, including where does innovation come from, how governments help support innovation, barriers to innovation and the difference between invention and innovation.
The UK is facing greater competition than ever. The world has become flatter, with greater mobility of skills and knowledge and, with greater foreign investment in education and innovation, particularly in what was once considered third-world countries, we face the problem that “if we don’t change what we offer the world…and how we create and deliver them, we risk being overtaken by other who do” Bessant & Tidd (2007, p.4).
The UK is facing greater competition than ever. The world has become flatter, with greater mobility of skills and knowledge and, with greater foreign investment in education and innovation, particularly in what was once considered third-world countries, we face the problem that “if we don’t change what we offer the world…and how we create and deliver them, we risk being overtaken by other who do” Bessant & Tidd (2007, p.4).
This is why the Government believe innovation is crucial to the UK economy (BIS, 2010, p.5) and is investing £6 billion this year alone to support innovation to develop new technologies for job creation. They see it as a key imperative in an increasingly globalised world.Statistics from the Regional Development Agency (BIS, 2010) suggests that for every £1 million spent on research and innovation adds over £8 million to regional economies, so the investment in innovation is certainly reaping benefits.
Before I continue, I need to explain the differences between invention and innovation as they often get mixed up.Invention is a new, and previously undiscovered method, device, process algorithm or tangible material, that can be used for a specific purpose” (Duke University, 2009), so something which is new to the world and never been seen before.Innovation, however, is the successful exploitation of new ideas (DIUS, 2008, p.13), with new being something which is new to the firm.A good example of this is Post-it notes (3M, 2010). Dr Spencer Silver of 3M invented a new low-tack glue in 1968 but no-one could find a use for it.6 years later, Art Fry, who was a product development researcher for 3M, was looking for a way to attach bookmarks to his church hymn book and remembered a seminar by Dr Silver. And as they say…the rest is history.
Where once competitive advantage came from the size and assets of the firm, it is now seen as dependant on their knowledge and technical skills (Tidd, Bessant & Pavitt, 2005).Drucker (2007) suggests that innovation rarely comes from a eureka moment but from seven kinds of opportunities.Unexpected occurrences – Viagra created from a side-effect of a drug for hypertension.Incongruities – a discrepancy, what is and what ought to be – Budget Airlines, more profit / lower service, for example, British Airways’ gross profit margin is around 5%, compared with 29% for SouthWest Airlines (Investopedia, 2010)Process needs – Road cats eyes (see also ATM machines – customers need to get access to money out of hours).Industry and market changes – A great example is Yoghurt, High in fat, then low fat (alternative sweetners), then Luxury. Regulation/de-regulation, i.e. tougher emission regulations & hybrid cars, .Demographic changes – Long life expectancy driving demand for aids for the elderly – motorised scooters.Changes in perception – Fairtrade food production.New Knowledge – New inventions or discoveries.
Where once competitive advantage came from the size and assets of the firm, it is now seen as dependant on their knowledge and technical skills (Tidd, Bessant & Pavitt, 2005).Drucker (2007) suggests that innovation rarely comes from a eureka moment but from seven kinds of opportunities.Unexpected occurrences – Viagra created from a side-effect of a drug for hypertension.Incongruities – a discrepancy, what is and what ought to be – Budget Airlines, more profit / lower service, for example, British Airways’ gross profit margin is around 5%, compared with 29% for SouthWest Airlines (Investopedia, 2010)Process needs – Road cats eyes (see also ATM machines – customers need to get access to money out of hours).Industry and market changes – A great example is Yoghurt, High in fat, then low fat (alternative sweetners), then Luxury. Regulation/de-regulation, i.e. tougher emission regulations & hybrid cars, .Demographic changes – Long life expectancy driving demand for aids for the elderly – motorised scooters.Changes in perception – Fairtrade food production.New Knowledge – New inventions or discoveries.
Where once competitive advantage came from the size and assets of the firm, it is now seen as dependant on their knowledge and technical skills (Tidd, Bessant & Pavitt, 2005).Drucker (2007) suggests that innovation rarely comes from a eureka moment but from seven kinds of opportunities.Unexpected occurrences – Viagra created from a side-effect of a drug for hypertension.Incongruities – a discrepancy, what is and what ought to be – Budget Airlines, more profit / lower service, for example, British Airways’ gross profit margin is around 5%, compared with 29% for SouthWest Airlines (Investopedia, 2010)Process needs – Road cats eyes (see also ATM machines – customers need to get access to money out of hours).Industry and market changes – A great example is Yoghurt, High in fat, then low fat (alternative sweetners), then Luxury. Regulation/de-regulation, i.e. tougher emission regulations & hybrid cars, .Demographic changes – Long life expectancy driving demand for aids for the elderly – motorised scooters.Changes in perception – Fairtrade food production.New Knowledge – New inventions or discoveries.
Where once competitive advantage came from the size and assets of the firm, it is now seen as dependant on their knowledge and technical skills (Tidd, Bessant & Pavitt, 2005).Drucker (2007) suggests that innovation rarely comes from a eureka moment but from seven kinds of opportunities.Unexpected occurrences – Viagra created from a side-effect of a drug for hypertension.Incongruities – a discrepancy, what is and what ought to be – Budget Airlines, more profit / lower service, for example, British Airways’ gross profit margin is around 5%, compared with 29% for SouthWest Airlines (Investopedia, 2010)Process needs – Road cats eyes (see also ATM machines – customers need to get access to money out of hours).Industry and market changes – A great example is Yoghurt, High in fat, then low fat (alternative sweetners), then Luxury. Regulation/de-regulation, i.e. tougher emission regulations & hybrid cars, .Demographic changes – Long life expectancy driving demand for aids for the elderly – motorised scooters.Changes in perception – Fairtrade food production.New Knowledge – New inventions or discoveries.
Where once competitive advantage came from the size and assets of the firm, it is now seen as dependant on their knowledge and technical skills (Tidd, Bessant & Pavitt, 2005).Drucker (2007) suggests that innovation rarely comes from a eureka moment but from seven kinds of opportunities.Unexpected occurrences – Viagra created from a side-effect of a drug for hypertension.Incongruities – a discrepancy, what is and what ought to be – Budget Airlines, more profit / lower service, for example, British Airways’ gross profit margin is around 5%, compared with 29% for SouthWest Airlines (Investopedia, 2010)Process needs – Road cats eyes (see also ATM machines – customers need to get access to money out of hours).Industry and market changes – A great example is Yoghurt, High in fat, then low fat (alternative sweetners), then Luxury. Regulation/de-regulation, i.e. tougher emission regulations & hybrid cars, .Demographic changes – Long life expectancy driving demand for aids for the elderly – motorised scooters.Changes in perception – Fairtrade food production.New Knowledge – New inventions or discoveries.
Where once competitive advantage came from the size and assets of the firm, it is now seen as dependant on their knowledge and technical skills (Tidd, Bessant & Pavitt, 2005).Drucker (2007) suggests that innovation rarely comes from a eureka moment but from seven kinds of opportunities.Unexpected occurrences – Viagra created from a side-effect of a drug for hypertension.Incongruities – a discrepancy, what is and what ought to be – Budget Airlines, more profit / lower service, for example, British Airways’ gross profit margin is around 5%, compared with 29% for SouthWest Airlines (Investopedia, 2010)Process needs – Road cats eyes (see also ATM machines – customers need to get access to money out of hours).Industry and market changes – A great example is Yoghurt, High in fat, then low fat (alternative sweetners), then Luxury. Regulation/de-regulation, i.e. tougher emission regulations & hybrid cars, .Demographic changes – Long life expectancy driving demand for aids for the elderly – motorised scooters.Changes in perception – Fairtrade food production.New Knowledge – New inventions or discoveries.
Where once competitive advantage came from the size and assets of the firm, it is now seen as dependant on their knowledge and technical skills (Tidd, Bessant & Pavitt, 2005).Drucker (2007) suggests that innovation rarely comes from a eureka moment but from seven kinds of opportunities.Unexpected occurrences – Viagra created from a side-effect of a drug for hypertension.Incongruities – a discrepancy, what is and what ought to be – Budget Airlines, more profit / lower service, for example, British Airways’ gross profit margin is around 5%, compared with 29% for SouthWest Airlines (Investopedia, 2010)Process needs – Road cats eyes (see also ATM machines – customers need to get access to money out of hours).Industry and market changes – A great example is Yoghurt, High in fat, then low fat (alternative sweetners), then Luxury. Regulation/de-regulation, i.e. tougher emission regulations & hybrid cars, .Demographic changes – Long life expectancy driving demand for aids for the elderly – motorised scooters.Changes in perception – Fairtrade food production.New Knowledge – New inventions or discoveries.
Tidd, Bessant and Pavitt (2005) propose the 4 P’s of innovation as can be seen in the model on screen.The 4P’s…Product, Process, Position & ParadigmThese are placed around a circle with arrows depicting the relationship between incremental and radical innovation.So if I relate these 4 P’s to the mobile phone market…Product could refer to the change from the traditional phone, to the flip phone, the slider and now the touch screen variety.Process could relate to the way we add credit to our phones, from the voucher system to being able to top up in a shop or cash machine.Position could relate to the way in which the positioning of a phone has evolved from a phone to a music player, , voice recorder, camera, satellite navigation system and even video player and television.Paradigm could relate to the shift in business models from PAYG to contract.
Tidd, Bessant and Pavitt (2005) propose the 4 P’s of innovation as can be seen in the model on screen.The 4P’s…Product, Process, Position & ParadigmThese are placed around a circle with arrows depicting the relationship between incremental and radical innovation.So if I relate these 4 P’s to the mobile phone market…Product could refer to the change from the traditional phone, to the flip phone, the slider and now the touch screen variety.Process could relate to the way we add credit to our phones, from the voucher system to being able to top up in a shop or cash machine.Position could relate to the way in which the positioning of a phone has evolved from a phone to a music player, , voice recorder, camera, satellite navigation system and even video player and television.Paradigm could relate to the shift in business models from PAYG to contract.
Tidd, Bessant and Pavitt (2005) propose the 4 P’s of innovation as can be seen in the model on screen.The 4P’s…Product, Process, Position & ParadigmThese are placed around a circle with arrows depicting the relationship between incremental and radical innovation.So if I relate these 4 P’s to the mobile phone market…Product could refer to the change from the traditional phone, to the flip phone, the slider and now the touch screen variety.Process could relate to the way we add credit to our phones, from the voucher system to being able to top up in a shop or cash machine.Position could relate to the way in which the positioning of a phone has evolved from a phone to a music player, , voice recorder, camera, satellite navigation system and even video player and television.Paradigm could relate to the shift in business models from PAYG to contract.
Tidd, Bessant and Pavitt (2005) propose the 4 P’s of innovation as can be seen in the model on screen.The 4P’s…Product, Process, Position & ParadigmThese are placed around a circle with arrows depicting the relationship between incremental and radical innovation.So if I relate these 4 P’s to the mobile phone market…Product could refer to the change from the traditional phone, to the flip phone, the slider and now the touch screen variety.Process could relate to the way we add credit to our phones, from the voucher system to being able to top up in a shop or cash machine.Position could relate to the way in which the positioning of a phone has evolved from a phone to a music player, , voice recorder, camera, satellite navigation system and even video player and television.Paradigm could relate to the shift in business models from PAYG to contract.
Tidd, Bessant and Pavitt (2005) propose the 4 P’s of innovation as can be seen in the model on screen.The 4P’s…Product, Process, Position & ParadigmThese are placed around a circle with arrows depicting the relationship between incremental and radical innovation.So if I relate these 4 P’s to the mobile phone market…Product could refer to the change from the traditional phone, to the flip phone, the slider and now the touch screen variety.Process could relate to the way we add credit to our phones, from the voucher system to being able to top up in a shop or cash machine.Position could relate to the way in which the positioning of a phone has evolved from a phone to a music player, , voice recorder, camera, satellite navigation system and even video player and television.Paradigm could relate to the shift in business models from PAYG to contract.
Doblin (2010) expands on this theory and suggests 10 types of innovation which can be combined into a “chord of innovation” that be very difficult to duplicate. And an example could be the iPhone which not only introduced new, unique features to the marketplace but also changed the business model and radically affected other business models too, which competitors have found difficult to imitate.
Innovation can be in small steps or large leaps. Incremental innovation, often referred to as sustaining innovation, is the most common form of innovation and is often a low risk option.Usually small improvements to existing products or services and often a product of quality systems such as Kaizen (continuous improvement) , quality circles or more formal quality systems such as ISO9000.Radical innovation is often referred to as disruptive innovation for it can often disrupt the marketplace. Radical innovation is often high risk and requires lots of investment.Occasionally, such innovations can totally destroy existing markets which Schumpeter (2003) referred to as “Creative Destruction” . A recent example of this is the total erosion of the Polaroid film market by digital camera technology.Clayton Christenson (2007) refers to disruptive innovations as being either low-end or new to market.Low end disruptors often bring to the market a simple product or service which sufficiently meets the needs of the consumer, for example Ryan Airways’ budget airline service. Incumbents (such as British Airways) find it difficult to compete because of their existing enormous investment in assets and complex relationships with employees.New to market disruptors are often new innovations targeting non-consumers, for example digital camera technology removed many of the barriers around photography such as managing film installation, removal of film, the delay in having film processed, etc. Polaroid ultimately failed because its business was in selling film for its cameras and could not envisage a new business model for itself, having invested heavily in film production plants.
Risk vs. rewards and barriers in innovation.As can be seen in the graph, innovation can be a costly business. Negative cash-flow is often the case during the development and launch of a product or service. Once the break-even point is reached, only then are profits realised.This is often the reason why incremental innovation is seen as less risky but is itself risk for failure to recognise change may result in losing market share against a disruptive innovation.Risk can be reduced through public sector support such as grants or tax credits; through knowledge transfer partnerships; through licensing products designs/technology to others to develop.Barriers to innovation can come from two sides. On the ones side is the lack of market understanding, expertise and finance, but these factors can, in general, be overcome. However, some managers are averse to taking risks, may fear the outcome of failure, lack any ambition to innovate and often fail to recognise changes in the market that may damage their business.They may also be unable to change their business model due to investment in assets and people.
Rajiv Narang (2007) also proposes the metaphor of Gravity suggesting these four types: Organisational; Industry; Country and Cultural.With Organisational Gravity, an organisation may be set in their ways and be conditioned to standard company practices, whereas a varied and diverse workforce may bring new thinking into the firm.With Industry Gravity, there lies the ‘always done it this way’ attitude: everything looks the same, works the same and firms have the same strategies.With Country Gravity , the pre-conceived perceptions play a role, e.g. India is well known for low-cost labour but not for high quality.With Cultural Gravity, problems occur when cultures believe they are the best in something, e.g. France being the best in wine making when blind tasting has suggested that California wines are better.
Rajiv Narang (2007) also proposes the metaphor of Gravity suggesting these four types: Organisational; Industry; Country and Cultural.With Organisational Gravity, an organisation may be set in their ways and be conditioned to standard company practices, whereas a varied and diverse workforce may bring new thinking into the firm.With Industry Gravity, there lies the ‘always done it this way’ attitude: everything looks the same, works the same and firms have the same strategies.With Country Gravity , the pre-conceived perceptions play a role, e.g. India is well known for low-cost labour but not for high quality.With Cultural Gravity, problems occur when cultures believe they are the best in something, e.g. France being the best in wine making when blind tasting has suggested that California wines are better.
Rajiv Narang (2007) also proposes the metaphor of Gravity suggesting these four types: Organisational; Industry; Country and Cultural.With Organisational Gravity, an organisation may be set in their ways and be conditioned to standard company practices, whereas a varied and diverse workforce may bring new thinking into the firm.With Industry Gravity, there lies the ‘always done it this way’ attitude: everything looks the same, works the same and firms have the same strategies.With Country Gravity , the pre-conceived perceptions play a role, e.g. India is well known for low-cost labour but not for high quality.With Cultural Gravity, problems occur when cultures believe they are the best in something, e.g. France being the best in wine making when blind tasting has suggested that California wines are better.
Rajiv Narang (2007) also proposes the metaphor of Gravity suggesting these four types: Organisational; Industry; Country and Cultural.With Organisational Gravity, an organisation may be set in their ways and be conditioned to standard company practices, whereas a varied and diverse workforce may bring new thinking into the firm.With Industry Gravity, there lies the ‘always done it this way’ attitude: everything looks the same, works the same and firms have the same strategies.With Country Gravity , the pre-conceived perceptions play a role, e.g. India is well known for low-cost labour but not for high quality.With Cultural Gravity, problems occur when cultures believe they are the best in something, e.g. France being the best in wine making when blind tasting has suggested that California wines are better.
Rajiv Narang (2007) also proposes the metaphor of Gravity suggesting these four types: Organisational; Industry; Country and Cultural.With Organisational Gravity, an organisation may be set in their ways and be conditioned to standard company practices, whereas a varied and diverse workforce may bring new thinking into the firm.With Industry Gravity, there lies the ‘always done it this way’ attitude: everything looks the same, works the same and firms have the same strategies.With Country Gravity , the pre-conceived perceptions play a role, e.g. India is well known for low-cost labour but not for high quality.With Cultural Gravity, problems occur when cultures believe they are the best in something, e.g. France being the best in wine making when blind tasting has suggested that California wines are better.
A culture of learning and knowledge sharing is important to innovation. William Deming, often referred to as the father of quality, worked closely with Japanese companies to build a culture of quality through excellent management and as a result, Japan quickly became superior car manufacturers. As a result of his work, he created 14 key principles of management and the Plan-Do-Check-Act cycle used to ensure quality management.Sometimes, mergers or acquisitions are preferable as it reduces the learning curve. Apple for example purchased the rights to software called SoundJam, employed the developers on a 2 year secrecy deal and out of it came iTunes.In the UK, Knowledge Transfer Partnerships bring businesses and academia together to develop innovative ideas, from clean energy to nanotechnology.The idea of a learning organisation is heavily influenced by the prevailing management style. For example, the McGregor X/Y Theory (2006) proposes that Theory X style believes workers as lazy, lacking ambition and motivation is through fear or reward. This autocratic style of management can often stifle creativity.
That’s the end of my presentation and I’ll now open up the floor to questions.
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