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Hoorcollege 2 Flashcards

1
Q

Innovation process

A
  1. Exploration
  2. Exploitation
  3. Diffusion
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2
Q

Exploration

A

The innovation process in an organization.
It is the awareness that you must do something new as an organization.

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3
Q

Exploitation

A

Creating the business model around the innovation you have made.

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4
Q

Diffusion

A

You hope the innovation will spread around the market. Spread from one person who wants to adopt the innovation to everyone.

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5
Q

Innovation as an organizational process

A

We often associate innovation with creative individuals (prototypical genius invents something in his garage). And we consider creativity to be an amalgamation of intellectual abilities, knowledge, personality, etc.
This is not the case: innovation is more often a group process. That is why there are often departments in organizations thinking about innovations. Innovations can also happen outside organizations. Innovation is a combination of organizational affordances (human capital, knowledge management, etc.).

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6
Q

Trigger events

A

There are several ways to start the innovation process in an organization. For an innovation to take place, there must be a trigger. Something must happen in the organization that
starts the innovation process. There are several trigger events:

  • Idea generation/creativity
  • Scientific discovery
  • Technological breakthrough
  • Market competitors
  • Society
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7
Q

Idea triggers

A

There can also be idea triggers (just like trigger events):

  • Lone ranger (someone who has a fantastic idea)
  • R&D (research & development (onderzoek en ontwikkeling))
  • Open innovation (people from outside the organizations help you to find the problem and/or to find a solution for this problem).
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8
Q

Process of innovation in the organization

A
  • Idea
  • Object
  • Practice

First, someone has an idea for an invention. In the object stage, something new is created. This doesn’t necessarily have to be a physical object. In the practice stage, you try to turn the object into practice. You develop something and you try to scale it up.

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9
Q

Innovation funnel

A

The process from ideation to practice is called the innovation funnel. You go from (many) ideas to ultimately few innovations in practice.

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10
Q

Closed innovation

A

In closed innovation, a company generates, develops, and commercializes its own ideas. This philosophy of self-reliance dominated the R&D operations of many leading industrial
corporation for most of the 20th century.

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11
Q

Open innovation

A

In the new model of open innovation, a company commercializes both its own ideas, innovations from other firms and seeks ways to bring its in-house ideas to market by deploying pathways outside its current businesses. The boundary between the company and its surrounding environment is porous, enabling innovations to move more easily between the line.

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12
Q

Crowdsourcing

A

A form of open innovation is crowdsourcing. This means that you ask the general public to
come up with solutions and innovations. There are different types of crowdsourcing:

  • Knowledge discovery & management: Gathering and processing existing information (e.g., Wikipedia, they ask the users to generate knowledge).
  • Broadcast search: Finding a single specialist or solution for the problem (e.g., contest for the best idea).
  • Peer-vetted creative production: Getting the crowd so far that they will innovate for you ((co-)Creation, voting,
    crowdfunding).
  • Distributed human intelligence tasking: Processing data and using the crowd for tasks a computer cannot do well (e.g., the ‘I’m not a robot’ checkboxes at websites).
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13
Q

4 types of innovation

A

There are many types of innovation. The four major types of innovation are:

  • Product/service innovation
  • Process innovation
  • Business model innovation
  • Paradigm innovation
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14
Q

Product/service innovation

A

The innovation of a product/service. The combining of available services to create a new
physical object/service (e.g., iPhone). Such a product must be a big change. There must be a
relative advantage in contrast to the previous version of the product (e.g., a new phone has
a better camera than the older version).

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15
Q

Process innovation

A

An organization looks at the way certain processes in the organization are organized. In case of a process innovation, some of these processes are being changed (e.g., apps such as Netflix). You can speak of an internal change.

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16
Q

Business model innovation

A

A completely new way of doing business (e.g., Spotify). It is a completely new way of making money. First you had to buy music in a store, now you can download it online.

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17
Q

Paradigm innovation

A

Changing the strategy of your company (e.g., Uber has completely changed the taxi market).

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18
Q

Innovation typologies

A

Innovation typologies are different ways to look at different types of innovations. There are
several ways to do that:

-Incremental vs. disruptive innovation
-Matrix Typology

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19
Q

Incremental vs. disruptive innovation

A

A disruptive or radical innovation is the
start of a new product/process/idea
lifecycle. It is at the early stage of diffusion and adoption. An incremental innovation is in the advanced stages of the product life cycle. This oftentimes occurs during the diffusion process in the form of continual
improvements and upgrades. There is a
dominant design, this design does not change very much in the innovation. For example, a disruptive innovation is the first iPhone, an incremental innovation is the iPhone 12.

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20
Q

Matrix Typology (Abernathy & Clark, 1985)

A

4 different types of innovations:

  • regular: you aim for the same market, there are minor changes in products (e.g., new type of iPhone).
  • architectural: you make a completely new product for a new market. (e.g., the first iPhone).
  • niche creation: finding a new market for an existing technology (e.g., an iPad for babies).
  • revolutionary: new technology for the same market and customers (e.g., from a vinyl record to a CD).
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21
Q

Innovation management

A

The innovation type is dependent of the structure of the company, culture in the company
and the type of people in the company. An organization’s characteristics affect innovation capabilities.

If you want to make an innovation for an organization, you must take into account that the
organization is suitable for this innovation. Often, the organization structure will change to let the innovation work.

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22
Q

Architectural innovation (innovation management)

A
  • Structure: professional
  • Culture: open
  • People: innovative / willing to change
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23
Q

Niche innovation (innovation management)

A
  • Structure: professional
  • Culture: open/rational
  • People: external-oriented
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24
Q

Revolutionary innovation (innovation management)

A
  • Structure: mechanistic
  • Culture: internal
  • People: process-oriented
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25
Regular innovation (innovation management)
- Structure: mechanistic - Culture: internal - People: little change required
26
Ways to stimulate innovations in an organization
Organizations think a lot about how to stimulate innovation in the organization. There are several ways to stimulate innovations in an organization: -Organizational encouragement -Supervisory encouragement -Work group support -Sufficient resources -Challenging work -Freedom -Organisational impediments -Workload pressures
27
Organizational encouragement
A culture that encourages creativity through fair, constructive judgement of ideas, reward and recognition of creative work
28
Supervisory encouragement
A supervisor who is a good work model, sets goals appropriately, supports the work group
29
Work group support
A diversely skilled group in which people communicate well, are open to new ideas, constructively challenge each other’s work
30
Sufficient resources
Access to appropriate resources including funds, materials, facilities and information
31
Challenging work
A sense of having to work hard on challenging tasks and important projects
32
Freedom
Freedom in deciding what work to do or how to do it: a sense of control over one’s work
33
Organisational impediments
A culture that impedes creativity through internal political problems, harsh criticism of new ideas, avoidance of risk
34
Workload pressures
- Extreme time pressures, unrealistic - Expectations for productivity, distractions
35
Organizational factors that affect innovation
There are some organizational factors that affect innovation: -Cultural -Structural -Human resource management
36
Cultural
-Respect for creativity and change -Innovation (seen essential to survive) -Exchange and debate (part of job) -Physical arrangements (help direct contact)
37
Structural
-Organic structure -Availability of resources -System to support innovation -Roles clarify expectations
38
Human resource management
-Recruitment and selection (priority to creative people) -Job security (removes defensiveness) -Development opportunities (aware of current science) -Incentives and rewards (value innovation)
39
Tension between organizations & innovation
In general, there is always some kind of tension between organizations & innovations. On the one hand, there are the efficient day-to-day operations within an organization that require stable routines. This is usually achieved in stable and controlled environments. On the other hand, the development of new products and services requires creativity and room to try out new ideas. This is usually achieved in a loose and flexible environment. There is always a tension between stable and flexible environments. Because of these tensions, most organizations have a Research & Development department.
40
Business model
A business model is about how organizations create value and how it profits from this value. Profit is not necessarily ‘money’, it depends on how organizations define value. A business model relates to the organization, the innovation, the value of the innovation and to how people benefit from the innovation. Without a valid business model, an innovation is a new technology without use. Business models connect the organization, the market, revenue, and the innovation. Business models is the relation among: - The innovation - The market - The organization - The cost & revenues
41
Business models & strategy
A business model connects the innovation & the organization’s wider strategy: Innovation must match organization’s strategy on four levels: o Societal level o Industry level o Market level o Firm level
42
Societal level
The innovation must fit within the wider societal developments: economic, social, etc. A tool for this is the PESTEL analysis.
43
Industry level
An analysis of the wider industry in which the innovation takes place. Everything that might be good or a risk for the innovation. A tool for this is the Five Forces Analysis.
44
Market level
The specific industry/area of the innovation to determine the attractiveness of the market, to determine who will be the early adopters and the laggards, etc. Tools for this are S-curves, diffusion of innovation, innovation typology, etc.
45
Firm level
On the firm level, the value proposition links the innovation to the rest of the organization. On the firm level, it is important to think about how the innovation fits within the organization.
46
Value Proposition
The value proposition is the innovation in terms of value it delivers for the customer. You need to convince people of the use of the innovation. - What needs does the innovation fulfill or what problems does it solve? - E.g., increasing performance of existing products, increased customization, better design, cheaper/reduced costs, reduce risks. - Tailored to different customer segments. The value proposition connects the innovation and the organization’s wider strategy.
47
Market: Customer Segments
In here, you define your customers in terms of the things that are important for the organization. This is done in terms of: - Demographics - Psychosocial - Gratification/needs/motivations - Skill level and expertise - Customer’s willingness to pay It is also important what type of market the organization is aiming for: - Niche market - Mass market - Segmented/diversified market - One-sided vs more sided market Customers have needs or problems to be solved. For the Customer Segments you have to think about how do the problems and needs of the user connect to your innovation and the value proposition. The value proposition canvas connects customers and the value propositions. This is different for each segment.
48
Niche market
A market with a very specific, small group of customers.
49
Mass market
A market in which potentially everyone could adopt a product.
50
Segmented/diversified market
Is there only one market or are there several submarkets?
51
One-sided vs more sided market
Is there only one market or are there several submarkets?
52
Revenue models
The revenue model is how the innovation actually will make money. There are many different revenue models, for example: -Direct Sales: online vs offline, self vs. partner -Usage Fee -Subscription fees -Leasing -Licensing -Virtual Goods -Freemium -The Middleman -On-Demand -The Marketplace
53
Direct sales
Selling your products or services in your own stores or on your own website.
54
Usage fees
You can generate revenue by usage fees, e.g., people pay per day they stay in a hotel, you pay per km for a Go Scooter.
55
Subscription fees
People buy something with regular intervals, e.g., phone subscriptions. Here, you don’t pay per use (usage fees) but you pay continuously once in a while.
56
Leasing
This is a subscription fee, but it offers more. For example, when you lease a car, companies take care of everything. All services are included (e.g., APK keuring).
57
Licensing
You do this by selling things you own to other companies. An example of this is franchising (e.g., McDonald’s). This are private restaurants, but the buy a lot of ingredients and clothing from McDonald’s. For McDonald’s this is a way of earning money in a very safe way.
58
Virtual goods
You can buy a lot of virtual goods in computer games (e.g., skins, coins, skip levels, etc.).
59
Freemium
You can use something for free, but after a while you must pay to use (e.g., Dropbox and Google Drive are free, but when you store a lot of documents you have to pay to store more documents).
60
The Middleman
Organizations sit in the middle of the market. These companies own nothing, but they are in the middle of another organization and the customer. This is a low-risk model because you are responsible for few things. (e.g., Thuisbezorgd, Booking.com).
61
On-demand
The on-demand revenue model revolves around providing goods, services, or access to resources instantly or within a short timeframe when requested by the customer. This model leverages technology platforms, such as apps or websites, to match supply and demand efficiently. (example: Uber and Deliveroo)
62
The marketplace
The marketplace revenue model involves a digital platform that connects buyers and sellers to facilitate transactions. The marketplace itself does not own the goods or services but earns revenue by enabling these exchanges. (example: Ebay and Airbnb)
63
Non-customer revenue models
There are also non-customer revenue models: Advertising, for example: - Location-based - In-item promotion - Banners on websites - Affiliate marketing Data brokers, for example: - Location-based data - User data - Search/browsing data - Ride/travel data Investment-based, for example: - Investments funds (hedge funds, banks) - Grant (non-profit, governmental)

Technology in Organizations (12 decks)

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