Understand innovation

Faculty of Technology
Management
MBA in Technology Management

© Gordon Graham 2008

understand
Innovation
in five minutes


What can you learn from this?
• What innovation is
• Why it’s important
• The types of innovation
• The degrees of innovation


What is innovation?
Hundreds of similar definitions can be found
in the literature. Here is the one I use,
adapted from various sources:
“Innovation is the profitable implementation of
ideas.”


A Broad, American Perspective:
"Implementing new ideas that create value.”
- Innovation Network, U.S.A.

"The intersection of invention and insight, leading to
t
the creation of social and economic value."
- U.S. National Innovation Initiative


What about the Brits?

"The development of new ideas and their economic
a
application as new products or processes."
- U.K. Dept. Trade and Industry


An innovation can increase profits
on the value side (customers value
an innovation enough to pay more
for it) . . .


. . . or the cost side (the company
produces a product offering in a
more efficient way).


Either way, value is created for the
firm and the consumer.

$

What are the essential ingredients, or
elements, of an innovation
ecosystem?
*
* * *
** *
* *
*

There are many. They are rooted in national
culture and can take years to develop: Trust,
Curiosity, Tolerance of Diversity, Faith,
Confidence, Lack of Fear, the Will to a)
make the world a better place and b) wreck
the status quo c) take risks and fail.


Some firm-level elements include: a written
innovation strategy, a filter, an innovation
process, a rewards and recognition system,
humility, respect for seemingly insignificant
technologies/competitors (healthy paranoia)
etc.


An invention is different from an
innovation at any particular time in
that it doesn’t have commercial
value but . . .


. . . it may have in future.


Think of invention as the laying of
an egg, innovation as the laying,
incubation and hatching.


There is no shortage of ideas and
inventions in the world. The
challenge is to introduce these
successfully to a market.


Only then can the idea/invention be
called an innovation.


In other words, innovation requires
interplay between a product offering
(technology) and a market (people).


Hard science + Social science.


A market can be inside or outside
the firm’s physical walls.


Why is innovation important?


Innovation reduces waste and
environmental damage.


Innovation creates growth, increases
productivity, and economic wealth
(avoids stagnation).


Innovation provides better goods
and services at a cheaper price –
higher standard of living.


More interesting work for
employees.


Old strategies get replicated and,
consequently, margins get squeezed.


Survival!
Source: United Kingdom Dept. Trade and
Industry


What are the types of innovation?


Numerous types . . .


. . . but all these labels just describe
where something new, better or
different occurs.


BROADLY:


Product
Process
Service
Business model
Value
Market


. . . and many more, depending on
level of detail. Basically, innovation
can occur anywhere in the firm’s
business by anyone. We all have
great potential!


Note!
There is another type that needs to be
considered separately. This is “disruptive
innovation,” a term first coined by Clayton
Christensen. Disruptive innovation refers to a
firm’s strategy relative to other firms. Often,
low-cost business models and “good enough”
solutions/products for low-end and/or non-
consumers

The degrees of innovation.


Once again, many labels . . .


. . . however, they all describe the
degree of change required by the
innovating firm and/or the market.


Incremental (sometimes called
“continuous” or “evolutionary” or
“small”)


Semi-radical


Radical (sometimes called
“discontinuous” or “revolutionary”
or “big”)


Incremental and radical innovations
need to be managed differently.


Here’s a quote:
"He who innovates will have for his
enemies all those who are well off under the
existing order of things, and only
lukewarm supporters in those who might be
better off under the new."

Niccolo Machiaveli, The Prince


Thanks!
I completed an MSc dissertation on
Innovation in Taiwanese/Chinese
companies active in multiple international
markets. Please feel free to get in touch if
your firm is working in China, Taiwan
e
etc., as I’m interested in these areas.
Gordon@ westportwire.com


Understand innovation

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