1. Introduction to Strategic Innovation Management Flashcards
Definition of an innovation
An innovation is the creation (invention), introduction (launch) and successful diffusion of products, systems, or processes, which are new from the perspective of the particular organization and/or user.
Invention terminology
Creation of idea to do or make something (profitability not yet verified)
Innovation terminology
Introducing a new product that is commercially valuable (i.e., successfully developed inventions)
Adoption terminology
Consumer purchasing and using a new product
Diffusion terminology
Spread of new invention/innovation throughout target population
Technology terminology
Application of scientific knowledge for practical purposes
Valley of death
A metaphor to describe space between research/discovery and product development
Four levels of innovation
- Business model innovation: Profound changes in how a company creates value
- Process innovation: Changes in the company’s logistics and operations
- Market innovation: Targeting new market segment, meeting new needs or new purchasing/consumption situation
- Product innovation: Technological change, line extensions targeted at the same consumer situation
Definition of a product
A product is an item or product or good offered for sale and consists of all tangible and intangible product facets that can result in customer benefits
Product newness dimensions
- Performance capabilities of the product
- Application advise for product
- Promoted image of the product
- Availability of product
- Price of product
- Packing of prodcut
Innovation based on exploration or exploitation of knowledge
- Exploration: Development of new/different technologies and finding new ways to meet customer needs
- Exploitation: Use and development of things that are already known.
Sustainable technologies
Incremental innovations introduced by incumbents with focus on improving margins for best existing customers
Disruptive technologies
Innovation beyond the high-volume, high-margin spotlight.
• Compete against non-consumption
• Compete against industry incumbents: target over-/under-served customers
Incremental innovation
- involves modest changes to existing products
- is a linear process
- occurs frequently
- favors existing players
- seeks increasing market penetration
Breakthrough innovation
- results from major breakthroughs
- is nonlinear and discontinous
- occurs rarely
- favors new market entries
- seeks to create new markets
Schumpeter’s theory of innovation profit extraction
Through innovation, firms gain a temporary monopolistic position that allows them to extract abnormal rents.
Such rents can be ceased for two reasons:
• Imitation from competitors that erode focal firm’s monopolistic power
• New innovation that makes focal firm’s innovation obsolete
Linear model of innovation
Science/technology push model:
RD –> Manufacturing –> Marketing –> User
Imply a strong product orientation
Market-based/demand pull model
Marketing –> RD –> Manufacturing –> User
Customer-centricity in firm to understand customer needs
Interactive model
Interactive models emphasize that innovations occur as a result of interaction of marketplace, science base and firm capabilities
Open innovation model
Innovation system has shifted from closed system internal to firm to new mode of open systems involving range of players
–> External sources contribute to innovation process
Stylized innovation process
- Idea generation
- Concept definition
- Concept evaluation and selection
- Development
- Market launch
Innovation of the day: Bose
- Example description: Noise-canceling headphones
- What made it stand out: Headphones that actively cancel out noise and provide considerably better travel and audio listening experience
