managing innovation_innovation concepts

www.CeTIM.orgProf. Dr. Bernhard R. Katzy

Session 2: Basic Innovation Concepts

Prof. Dr. Bernhard Katzy

2012

http://www.cetim.org/

www.CeTIM.org Prof. Dr. Bernhard Katzy 211. April 2023

Innovation Management

Basic innovation concepts

Innovation TheoryDominant theory, Main issues and developments of innovation research

Introduction to innovation…

Innovation System

Organization of innovation

Transformation and entrepreneurship

Innovation Governance Innovation



Session 2 – An Overview

● Mini-Test

● A brief history of thinking about innovation

● Summary and assignments

Agenda


www.CeTIM.org 4

Session 2 – Reading Engagement

Prof. Dr. Bernhard Katzy 11. April 2023

Mini-Test



A brief history of thinking about innovation1930ies: Entrepreneurs innovate the economy

• Schumpeter’s definition on innovation: A process of creative destruction

Driven by:- New markets or products- New equipment- New methods of organization or management- New methods of communication

• Schumpeter’s business (technology) cycle

A circular flow which, excluding any innovations and innovative activities, leads to a stationary state. The entrepreneur disturbs this equilibrium and this is the cause of economic development, which proceeds in cyclic fashions along several time scales.

CREATIVE DESTRUCTION OF SCHUMPETER'S ENTREPRENEUR




THE S MODEL OF TECHNOLOGY CYCLE

[Source: Foster,1986]

T1

T2

Initiation Take-off Maturity

Maturity of

Technology

Time

Substitution




THE ABERNATHY MODEL OF DOMINANT DESIGN

Time

Rate ofInnovation

Process Innovation

ProductInnovation

Fluid

Pattern

Transitional

Pattern

Specific

Pattern

Dominant Design




Telecommunication or Media?

CASE




Incremental innovation? Or radical?

CASE OF DIGITAL TELEVISION




ARCHITECTURAL INNOVATION

[Source: Henderson, Clark]




Definition on entrepreneurs (innovators):Individuals whose function is to carry new combination out

• The entrepreneur is the head of a firm and its employees

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

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

• 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;

• Finally , there is the joy of creating, of getting things done, or simply of exercising one’s energy and ingenuity.

CREATIVE DESTRUCTION OF SCHUMPETER ‘S ENTREPRENEUR

Source :Schumpeter < the theory of economic development>



A Brief history of thinking about innovation:1950ies – Innovation through R&D Departments

• Why this called Schumpeter 2 ?

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

• Elements for innovation through R&D laboratories paradigm

• Main actors of R&D department

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

• Capital resources: funding from organization, or public subsidies

• Human resources: scientist, researchers……

SCHUMPETER 2



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 :

EARLY CASES OF R&D LABS

Solar Cells, Communications Satellites, Touch-Tone Telephone, Data Networking, Digital Transmission and Switching, Unix Operating System and C Language, Digital Signal Processor (DSP)……

LaserCellular Telephone Technology

The Transistor

Source :http://www.alcatel-lucent.com/wps/portal/BellLabs



A Brief history of thinking about innovation: 1960ies: Innovation adoption of new ideas by society

• Diffusion is the process by which an innovation is communicated through certain channels over time among the members of a social system.

• 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

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.

INNOVATION AS DIFFUSION OVER TIME

Source: Rogers <Diffusion of innovations>




S – SHAPE CURVE AND BCG MATRIX




Moore's CHASM

S – CURVE DOES NOT ALWAYS GO SMOOTH

H3 H2 H1



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)

INNOVATION AS A STRATEGIC MEANS TO DIFFERENTIATE IN MATURE MARKETS



A Brief history of thinking about innovation:1980ies: Innovation as a profession and competence

INNOVATION AS A DISCIPLINE - DRUCKER

The practice (discipline) of innovation:

‘90% of Innovation is Transpiration’

[Drucker, 1996]

2Go out,

look and listenconception & perception

3

Be effective,simple

and focused

4

Start small

5

Gain leadership

Innovationis work

Innovators must build

on their strength

Innovationis an effect in economy

and societyPrinciples

Do’s

1 Analysis for opportunities



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

INNOVATION THROUGH STRATEGIC COOPERATION IN

INNOVATION SYSTEMS



A Brief history of thinking about innovation 1990ies: Innovation through collaboration in network

INNOVATION SYSTEM

University

Research Centre

Public

Institution

Regional Cluster

Industry and ResearchEntities

Territory Social Settings

LL client

Company

New produc

t/serviceCo-creation

Social Community

VPCVPC

Living Labcommunity

LL Collaborative

Infrastructure

Sectoral Innovation System

Innovation system

National Innovation System

[Katzy and Crownston 2008; Schuh, Katzy, Eisen 1997]



A Brief history of thinking about innovation: 2000: “open” Innovation in cooperation with the user

INNOVATION THROUGH OPEN INNOVATION

[Source: Henry Chesbrough 2003]

licensing

External Technology Base

Spin-off New Market

Other firms’ Market

Current Market

Technology insourcing

Internal Technology Base

Labor mobility/ Venture Capital/ Numerous Start-ups/ research conducted at Universities/……

Research Development



A Brief history of thinking about innovation: 2000: “open” Innovation in cooperation with the user

COMPARISON BETWEEN OPEN INNOVATION

AND CLOSED INNOVATIONClosed innovation Principles Open innovation Principles

The smart people in our field work for us Not all the smart people work for us

We need to work with smart people inside and outside our company

To profit from R&D

we must discover it, develop it and ship it ourselves

External R&D can create significant value, internal R&D is needed to claim some portion of that value

If we discover it ourselves, we will get it to market first

We don't have to originate the research to profit from it

The company that gets an innovation to market first will win

Building a better business model is better than getting to market first

If we create the most and the best ideas in the industry, we will win

If we make the best use of internal and external ideas, we will win

We should control our innovation process, so that our competitors don't profit from our ideas

We should profit from others' use of our innovation project, and we should buy others' IP whenever it advances our own business model

Henry Chesbrough <Open Innovation>



A Brief history of thinking about innovation: 2000: Innovation through Organization routines

A congruence model of diagnosing organizational behaviour

INNOVATION THROUGH ORGANIZATION ROUTINES

Environment Resources History

Strategy

Informal Organization

FormalOrganization Arrangements

Task

Individual

OrganizationGroup

Individual

Feedback

Context Output

Transformation Process

Tushman and Nadler < a congruence model for organization problem solving>



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



Readings for next sessions 3: Transformation and Entrepreneurship and session 4:Organization of Innovation

S4:

Transformation and Entrepreneurship

• Article 22: Dynamic capabilities and strategic management

• Article 36: Creating new ventures from Bell labs Technologies

Selective reading (available on the blackboard)

<Capturing value from technological innovation: integration, strategic partnering, and licensing decisions> by David Teece 1988

S3:

Organization of Innovation

•Article 18: Understanding power in organizations

•Article 20: The ambidextrous organization: managing evolutionary and revolutionary change


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