1. Session 2: Basic Innovation Concepts Prof. Dr. Bernhard Katzy Winter 2011

2. Innovation Management 1 Innovation System Innovation Innovation Governance Organization of innovation Transformation and entrepreneurship Basic innovation concepts Introduction based on life cases Innovation Theory Dominant theory, Main issues and developments of innovation research Innovation Practice High tech entrepreneurship… 11/01/11 Prof. Dr. Bernhard Katzy

3. 2 Session 2 – An Overview Agenda Mini-Test A brief history of thinking about innovation Summary and assignments 11/01/11 Prof. Dr. Bernhard Katzy

4. Session 2 – Reading Engagement 3 Mini-Test Prof. Dr. Bernhard Katzy 11/01/11

6. A brief history of thinking about innovation1930ies: Entrepreneurs innovate the economy 5 T T 1 2 THE S model of Technology cycle Maturity of Technology Substitution Time Initiation Take-off Maturity [Source: Foster,1986] 11/01/11 Prof. Dr. Bernhard Katzy

7. A brief history of thinking about innovation1930ies: Entrepreneurs innovate the economy 6 The abernathy model of Dominant Design Rate of Innovation Dominant Design Process Innovation Product Innovation Time Fluid Pattern Transitional Pattern Specific Pattern 11/01/11 Prof. Dr. Bernhard Katzy

8. A brief history of thinking about innovation1930ies: Entrepreneurs innovate the economy Telecommunication or Media? 7 Case 11/01/11 Prof. Dr. Bernhard Katzy

9. A brief history of thinking about innovation1930ies: Entrepreneurs innovate the economy Incremental innovation? Or radical? 8 Case of Digital Television 11/01/11 Prof. Dr. Bernhard Katzy

10. A brief history of thinking about innovation1930ies: Entrepreneurs innovate the economy 9 Architectural innovation [Source: Henderson, Clark] 11/01/11 Prof. Dr. Bernhard Katzy

12. The entrepreneur is never the risk bearer. Risk taking is in no case an element of the entrepreneurial function, but may risk his reputation

13. First of all, there is the dream and the will to found a private kingdom, usually, though not necessarily, also a dynasty;

14. Then there is the will to conquer: the impulse to fight, to prove oneself superior to others, to succeed for the sake, not of the fruits of success, but of success itself;

15. Finally , there is the joy of creating, of getting things done, or simply of exercising one’s energy and ingenuity.Source :Schumpeter < the theory of economic development> 11/01/11 Prof. Dr. Bernhard Katzy

17. The traditional paradigm for managing R&DBureaucracy in innovation departments dominant

18. Elements for innovation through R&D laboratories paradigm

19. Main actors of R&D department

20. R&D laboratories : Philips since about 1914, the Bell Labs in 1925…

21. Capital resources: funding from organization, or public subsidies

22. Human resources: scientist, researchers……11 Schumpeter 2 11/01/11 Prof. Dr. Bernhard Katzy

23. A Brief history of thinking about innovation:1950ies – Innovation through R&D Departments Bell Labs has been at the forefront of technology since 1925. Here are ten Bell Labs innovations that changed the world : 12 Early cases of r&d labs Laser The Transistor Cellular Telephone Technology Solar Cells, Communications Satellites, Touch-Tone Telephone, Data Networking, Digital Transmission and Switching, Unix Operating System and C Language, Digital Signal Processor (DSP)…… Source :http://www.alcatel-lucent.com/wps/portal/BellLabs 11/01/11 Prof. Dr. Bernhard Katzy

25. The decisions are not authoritative or collective, each member of the social member of the social system faces his/her own innovation-decision that follows a 5-step process: -Knowledge -Persuasion -Decision -Implementation -Confirmation For most members of a social system, the innovation-decision depends heavily on the innovation-decisions of the other members of the system 13 Innovation as Diffusion over time 11/01/11 Prof. Dr. Bernhard Katzy

26. A Brief history of thinking about innovation: 1960ies: Innovation adoption of new ideas by society 14 INNOVATION AS DIFFUSION OVER TIME The Bell-shape Curve and S-shape Curve The scholars divide this bell-shape curve to characterize five categories of system member innovativeness. These groups are: Innovator, Early adopters, Early majority, Late majority, and Laggards. Source: Rogers <Diffusion of innovations> 11/01/11 Prof. Dr. Bernhard Katzy

27. A Brief history of thinking about innovation: 1960ies: Innovation adoption of new ideas by society 15 S – Shape curve and bcg matrix 11/01/11 Prof. Dr. Bernhard Katzy

28. A Brief history of thinking about innovation: 1960ies: Innovation adoption of new ideas by society Moore's CHASM 16 S – curve does not always go smooth 11/01/11 Prof. Dr. Bernhard Katzy

29. A Brief history of thinking about innovation:1970ies: Innovation as a business strategy National strategy - The relation ship between innovation and economic growth - Mainly concerns supporting small and medium sized enterprises in how to adopt innovations. - Policies and institutes such as TNO institute in Holland channelling more inventions through the process from basic to applied research and into production in firms. Innovation and organizational strategy - Viewing technology as a functional capability implies the need to develop a technology strategy, analogous to financial and human resource strategies - A set of interrelated decisions encompassing, among others, technology choice, level of technology competence, level of funding for technology development, timing of technology introduction in new products/ services, and organization for technology application and development (e.g., Maidique and Patch, 1978) 17 Innovation as a strategic means to differentiate in mature markets 11/01/11 Prof. Dr. Bernhard Katzy

30. A Brief history of thinking about innovation:1980ies: Innovation as a profession and competence 18 INNOVATION AS A DISCIPLINE - DRUCKER Innovationis an effect in economy and society Innovation is work Innovators must build on their strength Principles The practice (discipline) of innovation: ‘90% of Innovation is Transpiration’ 1 Analysis for opportunities 5 Gain leadership 2 Go out, look and listen conception & perception Do’s 4 Start small 3 Be effective,simple and focused [Drucker, 1996] 11/01/11 Prof. Dr. Bernhard Katzy

31. A Brief history of thinking about innovation 1990ies: Innovation through collaboration in networks - Stresses that the flow of technology and information among people, enterprises and institutions is key to an innovative process. It contains the interaction between the actors who are needed in order to turn an idea into a process, product or service on the market. - Innovation systems have been categorized into national innovation system, local innovation system, regional innovation systems and sectoral innovation systems 19 Innovation through strategic cooperation in innovation systems 11/01/11 Prof. Dr. Bernhard Katzy

32. A Brief history of thinking about innovation 1990ies: Innovation through collaboration in network 20 Regional Cluster Industry and Research Entities Company Research Centre Public Institution VPC VPC University Living Lab community LL client New product/ service Co-creation Social Community Territory Social Settings LL Collaborative Infrastructure Innovation system Sectoral Innovation System National Innovation System Innovation system [Katzy and Crownston 2008; Schuh, Katzy, Eisen 1997] 11/01/11 Prof. Dr. Bernhard Katzy

33. A Brief history of thinking about innovation: 2000: “open” Innovation in cooperation with the user 21 Innovation through open innovation Development Research licensing Other firms’ Market New Market Spin-off Internal Technology Base Current Market Labor mobility/ Venture Capital/ Numerous Start-ups/ research conducted at Universities/…… External Technology Base Technology insourcing [Source: Henry Chesbrough 2003] 11/01/11 Prof. Dr. Bernhard Katzy

34. A Brief history of thinking about innovation: 2000: “open” Innovation in cooperation with the user 22 Comparison between open innovation and closed innovation Henry Chesbrough <Open Innovation> 11/01/11 Prof. Dr. Bernhard Katzy

35. A Brief history of thinking about innovation: 2000: Innovation through Organization routines 23 Innovation through organization routines A congruence model of diagnosing organizational behaviour Transformation Process Informal Organization Context Output Formal Organization Arrangements Organization Group Individual Task Strategy Environment Resources History Individual Feedback Tushmanand Nadler < a congruence model for organization problem solving> 11/01/11 Prof. Dr. Bernhard Katzy

36. Summary and assignments Summary - Perspectives from the different sides to study innovation phenomenon - Different perspectives are complementary to each other - No clear boundary between different research orientation 24 11/01/11 Prof. Dr. Bernhard Katzy

38. Article 20: Tushman/O'Reilly. The ambidextrous organization: managing evolutionary and revolutionary changeBoth from: Michael L.Tushman and Philip Anderson. Managing Strategic Innovation and Change. 2ndediton, Oxford University Press, 2004. Prof. Dr. Bernhard Katzy 25 11/01/11