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Innovation lecture for hong kong

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Perspectives on Innovation.

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Innovation lecture for hong kong

  2. 2. INNOVATION JOURNEY • 1970: B. Tech, Electrical Engineering (Distinguished Alumnus) • Indian Institute of Technology, Bombay • 1973: PhD in Electrical Engineering • Carnegie Mellon University • Thesis: Performance Evaluation of Multiprocessor Computer Systems • 4 years - Texas Instruments • Research on magnetic bubble & CCD memory, Fault Tolerant DRAM • 17.5 years - Digital Equipment Corporation • Processor Architecture and Performance • 12 years - Intel • Performance, Architecture, Strategic Planning • 5.5 years - Microsoft • Distinguished Engineer, Data Center Hardware Engineering • Since January 2013 – Qualcomm Technologies Inc • VP Technology, Data Center Group
  3. 3. DON’T BE AFRAID! •“Follow the path of the unsafe, independent thinker. Expose your ideas to the danger of controversy. Speak your mind and fear less the label of ''crackpot'' than the stigma of conformity.” – Thomas J. Watson
  4. 4. WHAT IS INNOVATION? • The process of translating an idea or invention into a good or service that creates value or for which customers will pay. • To be called an innovation, an idea must be replicable at an economical cost and must satisfy a specific need. • Innovation involves deliberate application of information, imagination and initiative in deriving greater or different values from resources, and includes all processes by which new ideas are generated and converted into useful products. • In business, innovation often results when ideas are applied by the company in order to further satisfy the needs and expectations of the customers. Read more:
  5. 5. DEFINITION OF INNOVATION Basic definition Introduction of new ideas that add ‘value’ to a firm’s activities OECD The Oslo Manual Page 16 • introduction of a new product or a qualitative change in an existing product • process innovation new to an industry • the opening of a new market • development of new sources of supply for raw materials or other inputs • changes in industrial organisation
  6. 6. INVENTION A new manmade device or process
  7. 7. INNOVATION •A better way of doing things •An improvement
  8. 8. 1st Cell Phone Motorola 1983 Blackberry 2003 Invention Alexander Graham Bell’s Phone 1870 Old Phone Evolution of the Telephone iPhone 2007
  9. 9. INNOVATION TYPES •Innovation is simply the process of creating and implementing new ideas •Three main types of innovation exist: 1) Technical Innovation 2) Process Innovation 3) Administrative Innovation
  10. 10. TECHNICAL INNOVATION • Technical innovations are defined as new products and processes and major technological modifications to products and processes. An innovation is considered performed if it is introduced to the market (product innovation) or implemented in the production process (process innovation). Innovation includes many research, technological, organizational, financial and commercial activities.
  11. 11. TECHNICAL INNOVATION • Technical innovation is simply the creation of a new product or service. • Some examples: - A new line of automobiles - The introduction of cellular telephones
  12. 12. ROLE OF RESEARCH & DEVELOPMENT • R&D represents only one of these activities and can take place during various stages of the innovation process. It can play not only the role of the original source of the innovation ideas but also the role of problem solution framework, which can be turned to at any stage of the implementation. OECD, Frascati Manual 1992
  13. 13. PROCESS INNOVATION • Process innovation is achieved through the creation of a new means of producing, selling, and/or distributing an existing product or service. • Some examples are: - Online Banking, etc. - E-commerce
  14. 14. ADMINISTRATIVE INNOVATION • Administrative innovation is the creation of a new organization design which better supports the creation, production and delivery of services or products. • Examples: • Virtual Teams: any task-focused group that meets w/out all members being in the same room or even working at the same time. • Just In Time Manufacturing Supply Chain
  15. 15. CREATIVITY • The ability to see a problem in several dimensions • The ability to truly understand the problem at hand • The ability to solve the problem in a more efficient or effective way
  16. 16. INNOVATION AND BUSINESS • "Business has only two functions, innovation and marketing." - Peter F Drucker • “Creativity is thinking up new things. Innovation is doing new things.” - Theodore Levitt • “Innovation distinguishes between a leader and a follower.“ - Steve Jobs
  17. 17. THE INNOVATION PROCESS ACTIVITIES OUTPUTS Basic research Discoveries Ideas Applied research Information collation Inventions Blueprints Plans Development Testing Prototypes Beta-versions Investment Innovation (product or process) FIRM-LEVEL INITIATIVES EXTERNAL- OR FIRM-LEVEL INITIATIVES MARKET-LEVEL PROCESS DIFFUSIONCOMMERCIALISATIONRESEARCH AND DEVELOPMENT Adoption or purchase decision Market penetration Adaptation Improvement STAGE AGENTS 21 2 3 4 5 Source: Greenhalgh and Rogers (2010)
  18. 18. INVENTION, INNOVATION, DIFFUSION (SCHUMPETERIAN TRILOGY) • Invention: creation of an idea to do or make something (profitability not yet verified) • Innovation: new product/ process commercially valuable i.e. successfully developed inventions. • Diffusion: the spread of a new invention/innovation throughout society or at least throughout the relevant part of society. • Without this cannot gain full benefits • Some of this represents ‘spillovers’ or ‘positive externalities’
  19. 19. SCIENTISTS, KNOWLEDGE AND TECHNOLOGY Scientists • Discover knowledge by research • Disseminate knowledge (open science?) • Knowledge is public good(non-rival in use), hence created externalities • Universities, government labs, some large firms • It may represent the basis for technological advances Technology • Application of knowledge to ‘production’ • Firms driven by profit incentive • Private good: investment (R&D) projects, appropriate, use of intellectual property
  21. 21. OSLO MANUAL • Product innovation • A good or service that is new or significantly improved. This includes significant improvements in technical specifications, components and materials, software in the product, user friendliness or other functional characteristics. • Process innovation • A new or significantly improved production or delivery method. This includes significant changes in techniques, equipment and/or software. • Marketing innovation • A new marketing method involving significant changes in product design or packaging, product placement, product promotion or pricing. • Organisational innovation • A new organisational method in business practices, workplace organisation or external relations.
  22. 22. TECHNOLOGICAL & SOCIAL INNOVATIONS • Technological innovations – based on specific technology, invention, discovery, • Social innovations – in critical historic periods more important than technological ones (mail, educational systém, social systém, health care, …)
  23. 23. INNOVATION CLASSES • Sustaining Innovation that does not affect existing markets. It may be either: • Evolutionary innovation that improves a product in an existing market in ways that customers are expecting (e.g., fuel injection) • Revolutionary (discontinuous, radical) innovation that is unexpected, but nevertheless does not affect existing markets (e.g., the automobile) • Disruptive Innovation that creates a new market by applying a different set of values, which ultimately (and unexpectedly) overtakes an existing market (e.g., the lower-priced Ford Model T) • Disruptive innovation, a term of art coined by Clayton Christensen, describes a process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves up market, eventually displacing established competitors. - See more at:
  24. 24. SUSTAINING VS DISRUPTIVE INNOVATION Source: Clayton Christiansen
  25. 25. DISRUPTIVE INNOVATION • As companies tend to innovate faster than their customers’ needs evolve, most organizations eventually end up producing products or services that are actually too sophisticated, too expensive, and too complicated for many customers in their market. • Companies pursue these “sustaining innovations” at the higher tiers of their markets because this is what has historically helped them succeed: by charging the highest prices to their most demanding and sophisticated customers at the top of the market, companies will achieve the greatest profitability. • However, by doing so, companies unwittingly open the door to “disruptive innovations” at the bottom of the market. An innovation that is disruptive allows a whole new population of consumers at the bottom of a market access to a product or service that was historically only accessible to consumers with a lot of money or a lot of skill. • Characteristics of disruptive businesses, at least in their initial stages, can include: lower gross margins, smaller target markets, and simpler products and services that may not appear as attractive as existing solutions when compared against traditional performance metrics. Because these lower tiers of the market offer lower gross margins, they are unattractive to other firms moving upward in the market, creating space at the bottom of the market for new disruptive competitors to emerge. - See more at:
  26. 26. INNOVATION PROCESS • Research and development (R&D) • Production • Marketing Innovation is an opportunity for something new & different. It is always based on change. Innovators do not view any change as a threat but as an opportunity
  27. 27. CHAIN LINK MODEL OF INNOVATION Source: Organisation for Economic Co-operation and Development OSLO Manual
  28. 28. EVOLUTION OF COMPUTERS “The phone in your pocket will be as much of a computer as anyone needs”. – Dr. Irwin Jacobs, Qualcomm Founder, 2000 Mainframes Minicomputers IBM PC Desktops Notebooks Tablets Smartphones
  29. 29. MY INNOVATION EXPERIENCE • Failed: Magnetic Bubble Memory versus Hard Disk Drives • Evolution often beats Revolution especially when incumbent is strong • Minicomputers • Success against Mainframes • Failure: Denial against RISC Workstation Technology Threat • Personal Computers • Success against RISC Workstations • PC Technology eventually used in Enterprise Servers • Volume Economics Matters! • Smartphone Technology is the Next Wave
  30. 30. LESSONS LEARNED • Understand what the customer needs but don’t ask what he wants • Automobile vs Faster Horse • Never underestimate the incumbent • Denial is not the name of a river in Egypt • Strategy without Execution is Doomed • What worked in the past may not work in the future • There is often a Time and Place for New Ideas • Challenge Conventional Wisdom but Be Real • Do not wear Rose Colored Glasses – Measure The Situation Realistically • Understand the Risks • Monetization Strategy is important • Business Plan is Essential • Time To Market Matters!
  31. 31. CLAYTON CHRISTIANSEN QUOTES • “People don’t want to buy a quarter-inch drill. They want a quarter-inch hole.” • “Motivation is the catalyzing ingredient for every successful innovation. The same is true for learning.” • “Disruptive technologies typically enable new markets to emerge.” • "Generally, disruptive innovations were technologically straightforward, consisting of off-the-shelf components put together in a product architecture that was often simpler than prior approaches. They offered less of what customers in established markets wanted and so could rarely be initially employed there. They offered a different package of attributes valued only in emerging markets remote from, and unimportant to, the mainstream.“
  32. 32. FAVORITE QUOTES • “Don’t be encumbered by past history, go off and do something wonderful.” - Bob Noyce, Intel Founder “The only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do. If you haven’t found it yet, keep looking. Don’t settle. As with all matters of the heart, you’ll know when you find it.” - Steve Jobs • “Be A Nerd” – Mark Zuckerberg • The difference between theory and practice is always greater in practice than it is in theory!
  33. 33. RECOMMENDATIONS • Solve the correct problem with effectiveness and efficiently • Manage innovation as a project • Analyze risks • Use models, scenarios, simulations, proofs of concept • Study examples of succesful and unsuccesful innovation projects • Understand Strengths, Weaknesses, Opportunities, and Threats
  35. 35. QUESTIONS?