LECTURE 4

Tidd & Bessant (2013) Ch 1-4

Innovation what it is and why it matters
Innovation as a core business process
Building the innovative organization
Developing an innovative organization
New products and processes
Seeing opportunities
New ways to serve existing markets
Using new technologies to do things better
Improving old products
Becoming more efficient
New ideas
Competitive advantage
Being able to create novelty in offerings, in
the ways theyre created and delivered
Business growth
Economic growth due to innovation
Entrepreneurship
New product development shorter life-
cycles, environmental concerns, new
processes also
Businesses need to innovate to survive, to
stay ahead of the competition
The changing world makes old business
models obsolete
Rate of knowledge production
(Table 1.2)
Schumpeters creative destruction
Coming up with a good idea that can become
reality, and that will satisfy a need
Growing good ideas into practical use
Invention leads to innovation
Need to also consider project management,
market development, financial management,
organizational behaviour
What are the sources of Innovation?
Do ideas for Innovation come from inside or
outside the organisation?
Push versus Pull?
Push from internal ideas, R&D, creativity
Pull from the marketplace customer/society
needs
Example of 'pull' innovation research
Turning ideas into reality and capturing value
from them
Search R&D, copying competitors, Eureka
moments, customers
Select involving some strategic choices
Implementation - -managing time, money,
people, equipment, knowledge
Core conditions necessary to allow it to happen
Organizational/environmental conditions
(e.g. NASA, USA v USSR Teflon, computers,
food)
New inventions, new technologies, new ideas
Conditions and need must exist
(Penicillin, Microwave oven)
New ways to meet existing needs
Needs redefined (e.g. Tune hotel, Ryanair)
Product
Process
Position
Paradigm

Finnegan's Fish Bar

If using one or more Ps, try also using others
Compare organizations for how they do
things, to identify gaps, find a different way
to innovate
Incremental or radical innovation. Which it is
depends on the view from the organization.
Continuous improvement (TQM). Learning-
curve effect
Platform innovation. One basic model (set of
models) that can be stretched out into a
family of products (Cadburys biscuits/cakes).
Also services, e.g. Mortgages, comparison
sites. Positioning by extending the brand,
e.g. Easyjet, Easycar, Easyhotel, etc
Discontinuous innovation
Creative destruction
Changes the way the industry operates, e.g.
Kodak, music/publishing industry
Sources of discontinuity (Table 1.4)
Knowledge create new possibilities from
different knowledge sets (e.g. Business and
Creative industry schools here)
The more we move into uncertain areas, the
greater the risk thats involved
Get those involved at the cutting-edge of
respective areas to work together?
(Figure 1.6)
What is being developed and how it is being
developed may vary as competing players vie
for superiority, e.g. VHS/Betamax,
DVDHD/BluRay
Using different technologies
Leads to a dominant design, industry
standards
Now everybody can move forward together
(low-energy bulbs still need bayonet-
cap/screw fitting)

Through the Fluid, Transitional and Specific
stages, some firms are better equipped than
others
Changes to an industry may come from
outside the industry, e.g. IT in financial
services, education, etc
NIH (not-invented-here) effect
Search
Select
Implement
Capture value, learn from the process

Solutions from around R&D, engineering,
project management, changing customer
needs depends on type of business sector
(e.g. ASDA chosen by you)
New products or processes
Services and innovation
Product/process/Position/Paradigm (Table
2.1)
Search for trigger signals strategic concept
product/market development launch
Development of product often involves
development of service package too
Switch from one to the other?

Outsourcing of key business processes
Still need to seek improvement
Process innovation
Not-for-profits also need to innovate
Size matters! Advantages and disadvantages
(Table 2.2)
Only 2% of high-growth SMEs are high-tech
Older companies are more likely to grow
rapidly than the youngest ones
Project-based organizations
Networks and systems
Geographic/industry clusters
Local/regional/national systems
Do better, do different degrees of novelty
the game may have to change altogether
Steady-state versus discontinuous innovation
Still follow the same processes, but may have
to look -search- in different places for
sources of innovation ideas
Linear models search, select, etc
But needs interaction with other functions,
other organizations -linkages, systems,
False starts, recycling, reiteration, stages,
dead ends, etc
(Rothwells five generations, Table 2.5)
Can we manage innovation? Murphys law
Create conditions where uncertainty is
resolved
Manage the process and the obstacles,
Manage technical resources and the
capabilities
Learned routines used while navigating the
obstacles
Project management from lessons learned

Basic skills enhanced by broader abilities e.g.
expertise in implementing change
Learning, changing the organization
Routines can become damaging, set in our
ways
Firms vary in terms of awareness of need for
change and the ability to make change (Fig
2.3)
Innovation is a process, not a single event,
and needs to be managed as such
The influences on the process can be
manipulated to affect the outcome, that is,
the process can be managed
Cycle of learning
Search-select-implement-capture
Beyond the steady-state discontinuous
innovation
Shared vision, leadership and the will to
innovate
Appropriate organization structure
Key individuals
High involvement in innovation
Effective team working
Creative climate
Boundary spanning - internal and external
forces
Firm-specific knowledge, including the capacity
to exploit it, is essential
Innovation strategy should be essential part of
corporate strategy
Innovation strategy must cope with eternal
environment
Internal structures and processes must balance
specialised knowledge with and across functions
and divisions
Incremental approach is needed (Porters new
entrants/substitutes) but technology can change
industry boundaries
Rationalist appraise, determine, act SWOT
Environment is complex and fast-changing,
so difficult to assess

Incrementalist inability to understand
present or predict the future, imperfect
knowledge of strengths and weaknesses
Make deliberate steps, or changes, towards
the desired objective
Measure and evaluate the effects of the steps,
or changes, towards the desired objective
Adjust if necessary
Emphasis on analysis and learning
Given the uncertainty, explore the
implications of a range of possible future
trends
Ensure broad participation and informal
channels of communication
Encourage the use of multiple sources of
information, debate and scepticism
Expect to change strategies in the light of
new (and often unexpected) evidence
Successful management practice is never fully
reproducible
According to Porter, firms must decide
between innovation leadership and innovation
followership
Pioneers spend on R&D most likely to be on
minor, incremental innovations
Late entrants tend to focus on competencies
such as distribution or promotion, or major
new product development in an effort to
compete
Lead to competitive advantage
Changing nature of the environment and
management ability to adapt internal and
eternal organizational skills
Match capabilities with user needs, must be
unique and difficult to replicate
Its about where we are (position) and
alternative paths available to us
Institutions: finance, management and
corporate governance
Two broad systems that determine the nature
of innovative behaviour
Anglo-Saxon versus Nippon-Rhineland
(Table 4.1)
They will be sources of firms with a strong
capacity to compete through innovation
They are also potential sources of
improvement in the corporate management
of innovation, and in national systems of
innovation
Firms can benefit more specifically from the
technology generated in foreign systems of
innovation
Knowledge of how to replicate competitors
product and process innovations is costly and
time-consuming to acquire
The firms capacity to translate its
technological advantage into commercially
viable products or processes
The firms capacity to defend its advantage
against imitators
Some factors depend on management
commitment, others depend more on the
general nature of the technology, the product
market, the regime of intellectual property
Secrecy Accumulated tacit knowledge
Lead times and after-sales service
Learning curve Complementary assets
Product complexity Standards
Pioneering radical new products
Strength of patent protection

Successful innovation strategy requires
understanding the key parameters of the
competitive game (markets, competitors,
external forces, etc) and also the role which
technological knowledge can play as a
resource in this game
Need some kind of framework that articulates
how innovation can help survival and growth,
and need to allocate scarce resources
Strategic analysis what, realistically, could
we do? (Four Ps framework?)
Strategic choice what are we going to do,
what will we leave out?
Strategic monitoring over time reviewing to
check is this still what we want to do?