Lecture 11: Innovation

Question 1

Why innovation?

Answer 1

• No competition (first to market)
  
  • New source of values other don’t have - tech, knowledge, patented ideas and licensed to others
    => capture new value to turn innovation to growth
    => Intellectual property
  • Attract good clients
    => Google - Pioneering advances in AI, experts from uni and other companies, new expertise for more advances
    => people vital source of ideas for companies
  • Can set market and customer expectations => you create new market
    => apple - create idea of high quality computers, didn’t invent pc/laptop but created market they could dominate
    => Microsoft - create standard PC/operating system, didn’t invent or build PC but set expectations
  • Can attract and access more funding and expertise
    => Oil and gas innovation centre - oil and gas company collaborate with uni -> access gov funds, expertise
    => Tesla - obtained US gov loan, share price growth
  • Positive feedback
    => improving established process (e.g. new raw material supplier)
    => new technology, leads to more products (e.g. new product that takes time to establish)

Question 2

define innovation driven growth

Answer 2

• Original theory = Fund more r&d, get more growth => rarely true
• Evolutionary process
- Bit like mutation i.e. each mutation depends on previous one => same idea with innovation
• Longer term commitment challenge
- Longer amount of steps, retain staff and focus on project goal, fluctuating funding (innovation more dependent on public e.g. gov. funding)
Longer term of stability of funding, expertise and objectives