CHAPTER 1 The Innovation Imperative

Discussion Questions
10. You are a newly appointed director for a small charity which supports
homeless people. How could innovation improve the ways in which your
charity operates?
Answer:
Innovation will greatly increase the quantum of charity, modes of charity, the
methods of collection, distribution and the overall management and handling of
charity.
1. Innovation will help to open up the ways in which charity has
traditionally been seen. Instead of giving fish to the needy, the best
and most effective form of charity is to give them fishing rodsnets
so that they can catch fish on their own!.
2. Innovation into the management of charity itself will greatly improve
the handling, the distribution and the overall efficiency of managing
charity.
3. Innovation should be used to woo the general public, the business
entities especially corporate companies and related government
agencies to get together so that more meaningful contribution can
be made towards charity.
". Device creative means and modes of charity as well as provide
initives for businesses and corporations to be involved in charity
events. #eg promotional drives, ta$ reductions, image building,
political mileage and others%
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11. Innovation can take many forms. Give examples of product/service
process position and paradi!m "mental model# innovations.
Answer:
i. &roduct or service innovation ' (ey)less entry system! in the
car industry. *his idea was first introduced by +ercedes in its ,)
-lass lineup. .ut now it is even available in cheaper /apanese
#e.g. 0issan% and (orean #e.g. 1yundai% cars. *his system uses
an electronic sensor which sense a certain frequency and will
only allow entry and use of the vehicle as long as the equipment
senses the pre)set electronic frequency. 2riginally designed for
3ey)less entryloc3up and engine startstop facility. It has now
been up)graded as an alarm, immobili4er, anti)theft and
prevents 3eys! being loc3ed in the car inadvertently with the
owner on the outside. 2ther intelligent facility is total shutdown
of other electrical gadgets #radio, headlights etc% when the
engine is stopped.
ii. &rocess innovation ' new software #Distribution &ro5ects
+onitoring ,ystem ' D&+, in *0.% introduced to provide for
paperless authori4ation of pro5ects, paperless procurement,
scheduling, monitoring, triggering, reporting and supervisory
control possibilities on the budgetary utili4ation of *0. pro5ects.
iii. &osition innovation ' ,onata product launch at 1yundai +otor
Distribution -entres. *he product launch was served)up in an
up)mar3et style whereby each visitor is entertained by their
introducers #sales persons% and given a comprehensive
e$planation of the model)lineups and test drives. &ersonal
attention is the event of the day with free flowing refreshments.
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*his product launch is clearly aimed at changing the mind)set of
prospect customers that 1yundai products has improved greatly
and is better of than its /apanese competition.
iv. &aradigm innovation '
a. 6ow -ost 7light as in Air Asia and 7ire 7ly ) cheap and
economical flight fares with everyone can fly tag)line.
b. Double dec3er e$press buses ' comfortable for long haul
5ourneys. 0ew in +alaysia but normal in developed countries.
c. 8antry toll collection system providing for fast and save method
of collection.
9:. $he low%cost airline approach has massively chan!ed the way people
choose and use air%travel & and has 'een 'oth a source of !rowth
for new players and live%threatenin! challen!e for some existin!
players. (hat types or innovation have 'een involved in this?
Answer:
In this particular case, it involves all the four #"% types of innovation:)
a. &roduct,ervice innovation ' this is the way the product is offered to its
potential customers.
b. &rocess innovation ) this involves the process or handling of passengers
from tic3et boo3ings, chec3 ' in, embar3ation and disembar3ation, the air)
ports terminals #6--*% together with cabin services etc.
c. &osition Innovation ' the advertising and promotional activities
d. &aradigm innovation ' it changes the mindset of travelers that air travel is
reserved for the rich. It is cheap and in some cases cheaper than land or
sea transportation when it allows for daily commute compared to staying
overnight.
CHAPTER 1 The Innovation Imperative
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Assignment and Case Study Questions
1. )ector Innovation *atterns & +hildren $oy ,anufacturin!
Major Changes in the industry Major New Technologies
Main market demands
and how technology
affects them
How to become a
market leader
.ig influence of *; and films '
increasing tie)ins
<lectronics and
programmability
,trong price pressure '
pushes manufacturing to
low)cost locations)
technology relevant in
3eeping costs low while
enabling consistent quality
-lose mar3et
understanding and
the ability to
communicate this
deep into the
organi4ation and
configure products to
meet these demands
&rice pressures push actual
manufacturing to the far <ast
*;video and computer games
' as competitors to traditional
toys but also as complements
which can e$tend their range '
e.g 6ego bric3s plus
computer=programmable toys
+a5or emphasis on design
technologies
.road 3nowledge
base ' especially in
newer technologies
li3e computers and
software but also in
design of parts
7ashion industry with high ris3s '
and benefits for the right products
Interactive games using *;and
monitor consoles
+obile and wearable
design trends
Access to distribution
networ3s
-osts of new technologies mean
fewer players can stay in the game
of new product development ' so
consolidation of the industry
+obile downloadable
games+usicvideo.
8ames playable on
handphones
+ultiple functionality ,trong design and
mar3eting capability
Interactive and liveli3e ability ;irtual *echnology, 1ologram 7ast changing progress or
improvements
+iniature Design
1ow has the industry changed
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*he industry has evolved along with the biggest single influencing
media that is electronics. 7rom *; to computer consoles to
wal3man and +&> to handphones with its multiple functions.
*he handphones is becoming a mini computer with all the multi)
media capabilities built)in.
?hat new technologies have emerged
+ulti)media, interactive and miniaturi4ation technology
Interactive technology allows communication with modern toys
thereby ma3ing them appear alive!. +ulti)media capabilities
together with miniaturi4ation technology provide for unthin3able
possibilities as before.
?hat are the main mar3et demands ' #price, quality, design,
customi4ations, speed of response etc%
*rice ) prices have gone down drastically with each advance in the
technology.
+ustomi-ation is provided for with the advent of programmable
chips. 8reater customi4ation is allowed with micro)computer
technology.
Quality and Design improves e$ponentially during the last decade.
,peed of response is very competitive with each ma3e establishing
its own service centres and online connectivities.
*he most important observation is that all ma3es are almost at par
in terms of product technology, quality and user)friendliness. *he
superior or inferior quality associated with each ma3e or brand is
fast diminishing, whereby every ma3e showed no clear advantage
in terms of quality.
1owever the deciding factor is the ability to provide product
innovation fast using available technology and understanding the
mar3et trends.
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If a new entrant came into the industry what would he or she have to offer
to become a mar3et leader
*he most important factor to become mar3et leader is product
innovation. *he new player has to capitali4e on the four dimensions of
innovation:)
&roducts,ervices
) using latest technology a new player must be able to
offer innovative product eg latest state)of)the art
mobile phone with hologram pro5ection, interactive
multi)player game or even programmable remote
controller.
) <$cellent service such as pic3)up and delivery
coupled with :")hour guaranteed repair 5ob.
&rocess innovation
) change in the ways #productsservices% are created
and delivered to cut cost and maintain competitive
pricing.
&osition innovation
) employing innovative productsservices introduction
#e.g product launch% and advertising methods.
&aradigm innovation
' employing latest available technology, technique and
methods in its product development. .rainstorming,
wor3shops, laboratory wor3)out sessions used to
hatchout new ideas for product development.
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CHAPTER 1 The Innovation Imperative
-ase ,tudy Questions
1. .ookin! at the case study try and identify which of the chan!es are architectural and which are component.
(hat are the implications for different players in terms of the likely threat to them and the ways in which they
could respond?
Likely threat Likely opportunity Why
Architectural
nno!ation
Component nno!ation
&layer 9 ' -opy
right holder
Illegal distribution and
sharing of artistic materials.
6oss of sales and therefore
cannot pay out royalty
Affiliation with computer
companies to produce
new low)price web)based
products
eg i*unes
<ncourage legal downloads
and sharing of music
pieces
Internet websites Data compression software '
+&>
&layer : '
&roduction
1ouse
1ome production leading to
direct production
Does not require permanent
employment.
?or3ing from the house
+usic composition,
recording and editing at
home.
Do not require speciali4e
equipment or recording
studio.
+icro)computer
chipped musical
instrument.
Ability to replicate
orchestral music
at home
Digital 7ormat recording and
editing.
#1ome @ecording%
&layer > '
@eviews and
-ommentary
6ooses authority and
patronage
8eneral consensus.
@educes bureaucracy and
favoritism
@eal time consensus made
available
2n)line internet
forums
Aser groups
websites
&layer > ' +usic
Industry
Ancontrolled ;iral
mar3eting! and &:&
transaction
-heap and fast spreading
advertising across the internet
Incur less advertising costs
2pen -hannel for all to
participate.
-hain reaction spreading of
information
Internet e$change -omputer
,oftware Application
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:. +ompetence%destroyin! and +ompetence%enhancin! Innovation
Answer:
.oth elements of compentency are evident from this case study.
7or the establish music industry players li3e ,ony, the competition being
leveled at them is competence)destroying whereby their e$pertise is no
longer an advantage to them. *hey will have to innovate their business
activities altogether to remain competitive or viable in the music industry.
Internet provides an open channel for everyone who has the talents, the
courage to e$plore and therefore participate in the music industry. ,ong
writers, singers, musical players are now provided with an open channel to
contribute and most possibly involved in the distribution of their own
musical product. *herefore the internet application serves as a
competence)enhancing innovation.
In the study case therefore, song writers, singers, musical players, lyricists
appear to be the winners and the production house the losers. .ut in the
end, with innovation everyone will win. &roduction house will have to
completely revamp their nature of doing business. ?e are now living in a
completely different era where Bonly the paranoid will surviveC.
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An established
record company
A newcomer
wanting to offer
entertainment on
the web
A music publishing
company
#responsible for
copyrights on sheet
music, etc.%
7reelance song
writer
Is the change
competence)
enhancingD
0o Ees 0o Ees
?hyD +ay loose his
business due to
high capital outlay
but cannot secure
sales off the shelves
*he web offer an
open channel for
business round
the cloc3 and
across the globe.
0eed to affiliate
with subscription)
base service
provider to create
revenue
Difficult to curb
illegal distribution
and piracy
1ave a wider client
base. 0ot binded
by legal contracts
Is the change
competence)
destroyingD
Ees 0o Ees 0o
?hyD +ay not be viable to
e$ist anymore
*he web offers
unlimited
opportunities.
6imited by own
creativity only
,urvival is at ris3 2pportunity to
e$pand worldwide
?hat might you do
about this to secure
and improve your
positionD
;enture into e)
business.
&rovide for internet
base music
distribution. /oint
venture with internet
service provider
-apitalise on viral
mar3eting
,tudy into e)
distribution of
musical digital
formats. &rovide
consultation and
solicitation.
Develop world
music for the world
listeners
>. +an you map the different kinds of innovation in the case study? (hich
were incremental and which radical/discontinuous?
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Answer:
Internet -hannels through which you can obtain latest -Ds eg Ama4on,
-D)0ow F incremental
+&> ' allow for fast transfer across the internet F radical
Direct music industry against Artist and @epertoire #AG@%Fincremental
0apster.com enabled &:& transactionsFincremental
A, -ourt of Appeal ruling re5ecting &:& violated copyright lawFradical
i&od and i*unes ' generate download salesFincremental
;iral +ar3eting!Fradical
". )trate!ic advanta!e in innovation can come throu!h com'inations of four
'asic types of innovation. How has the pattern of strate!ic advanta!e
chan!ed in the music industry?
Answer:
&roduct innovation ) +&>, i&od, i*unes
&rocess innovation ' Internet transfer, download sales
&osition innovation ' none
&aradigm innovation ' Direct music industry,
;iral mar3eting
*he strategic advantage has changed drastically from &roduct and
process innovation into &aradigm innovation. At the point of paradigm
innovation, the shift is revolutionary whereby new players with the right
approach and technology will dominate and become mar3et leader.
?e are loo3ing at established players becoming e$tinct but new comers
are flourishing.
H. Is the /revolution0 in the music industry a result of the development of new
technolo!ies? 1r is it happenin! 'ecause of chan!es on the demand side
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& shifts in what people want and are prepared to pay for? 1r is it a mixture
of 'oth? (hat lessons mi!ht that offer to someone wantin! to enter the
industry as a new player? 2nd what mi!ht an esta'lish player do to
preserve their position?
Answer:
*he revolution in the music industry is a result of mi$ture of the
development of new technologies as well as changes on the demand
side. 0ew technologies brings about changes in the delivery methods
#process innovation%. 1owever, the shift in demand is a direct result of
free distribution and sharing of music pieces.
*he introduction of low)priced internet downloads has provide some
incentives for persons involved in the musical industry. *his presents
a benefit to the general public whereby the cost of purchasing a
musical piece is greatly reduced. *he internet has opened up the
possibility of participating in music business to many and at the same
time lowering the entry barriers into the music industry. *herefore the
revolution in the music industry brings about opportunities and
possibilities to everyone.
6essons for the new player:
i. must have talent
ii. innovative mar3eting
iii. go global through internet
iv. use creativity to innovate in terms of product or services,
innovative processes, innovative introduction or lauching of
products and strive for paradigm innovation or creating a new
trend.
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6essons to to the establish player:
i. must have creativity
ii. innovative mar3eting
iii. continuous improvement in quality music materials and quality
recordings
iv. search for new talents and business related technology
v. provide for motivational and improvement courses to staffs
vi. establish 5oint)ventures with I* service provider
vii. engage competent consultants to provide guidance
viii. establish research team or unit within the establishment.
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