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Why Innovate
Ideas & Commercialisation
8. Innovate or Perish 2
1. Why Innovate?
8. Innovate or Perish 4
Policy Approaches to Innovation
The rate of return on R&D expenditures is 26 percent for both small and
large firms, but only 14 percent for firms not involved with a University. The
estimated rates of return on total R&D for firms with a university relationship
are 30 percent for large firms and 44 percent for small firms.
Innovations coming from small high-tech firms are expected to increase in
the coming years as a result of the increase in the. Under the Small
Business Innovation Research (SBIR) program, federal agencies with large
R&D budgets must direct a share of their R&D funding to small firms, the
source of 55 percent of innovations and new technologies. Since the
inception of the SBIR program in FY 1983, almost $4 billion in competitive
federal R&D awards have been made to qualified small business concerns
under the program.
Among the important innovations by U.S. small firms in the 20th century are
the airplane, audio tape recorder, double-knit fabric, fiber optic examining
equipment, heart valve, optical scanner, pacemaker, personal computer,
soft contact lenses, and the zipper.
8. Innovate or Perish 5
European Policy Measures
“Europe has a structural trade deficit in high technology products of over
ECU 10million”.
“It is to hasten the emergence of new technology-orientated
entrepreneurialism in Europe to optimise the participation of SME’s - both
in research itself and in the exploitation of its results.” Edith Cresson
8. Innovate or Perish 6
Consensus?
The formation and development of high
technology firms have been encouraged
by Governments and other agencies in
developed economies.
– (Oakey, 1984; Malecki, 1991; Oakey, 1991a, 1991b; Henneberry,
1992; Garnsey and Cannon-Brookes, 1993; Garnsey et al.,
1994; Storey and Tether, 1998; Tether and Storey, 1998).
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Why Encourage High-Tech?
8. Innovate or Perish 8
Perceptions of Technology Based
SME’s
8. Innovate or Perish 9
SME, Innovation & Employment
Innovative or technology based new and small firms
are more likely to create employment than similar firms
in the general population.
8. Innovate or Perish 10
2.Ideas &
Commercialisation
EC10
Innovation & Commercialisation
Choosing a Direction
“Entrepreneurs are managers. They manage more than just
organisations, they manage the creation of new worlds.
This new world offers the possibility of value being
generated and made available to the venture’s
stakeholders. This value can only be created through
change - change in the way things are done, changes in
organisations and change in relationships.
“Effective entrepreneurs know where they are going, and why.
They are focused on the achievements of goals.”
“The entrepreneur’s vision is a picture of the new world he or
she wishes to create. The picture is a positive one. . He or
she is motivated to make their vision a reality.”
8. Innovate or Perish 12
Making the Vision into Reality
Vision must exist before strategy development and planning
The vision provides:
– sense of direction. The vision is constantly
– defines goals and refocused:
objectives. what is source of value to be
– provides focus when going created?
gets tough. Who will be involved?
– gives the venture a moral Why will they want to be
content and social priority. involved?
– It communicates and What rewards will they gain?
attracts venture support.
What new relations are needed
– It forms the basis of the
What is the potential for self
leadership strategy. development?
8. Innovate or Perish 13
Route Adopted
L
e Directorship
v Form a management team
e
l Licensing
Commercial arrangement through which licensor of IPR allows licensee to develop
o sell or use in return for a royalty payment
f
Assignation
C Sell rights and transfer the ownership of the invention and IPR to third party for lump
o sum
n
t
r Joint Venture & Partnerships
o Collaboration with one or more organisations to exploit IPR. Includes sharing of costs
and revenues
l
8. Innovate or Perish 14
Innovation Process
Prepare
– Evaluate the life cycle of existing services and products.
– Set-up is systematic abandonment process.
– Estimate the abandonment revenue gap.
– Set up separate organisation with reporting line, measures,
structures and sufficient resources to bridge revenue gap.
Conduct systematic, purposeful and organised of the seven
innovation sources (see next slide)
Perform diagnostic analysis of opportunities.
– What do the seven sources mean to the organisation’s
business processes, channels and technologies.
– Conduct analysis by listening to customers
– Use focus groups to corroborate the analysis (see Slide 3 for
analysis criteria)
Exploit Opportunity
– Conduct pilot tests
– Commercialised in stages Adapted from Drucker, P, Innovation & Entrepreneurship
– Allocate resources
– Evaluate and measure success.
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Drucker on Sources of Innovation
Unexpected Occurrences
– Unexpected successes existing management find
counter-intuitive.
– Unexpected failures.
– Unexpected out side events.
– Suppliers and customers and competitors.
Perception-Reality Incongruities.
– Internal misperceptions. Adapted from Drucker, P, Innovation
& Entrepreneurship
– Conflicting internal reality.
– Customer expectation gaps.
– Dysfunctional or imbalance at critical point in a business
process.
Process Weaknesses.
– Weak links in process.
– Constraints or vulnerability.
– Need to improve.
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Drucker on Innovation (2)
Industry and market changes.
– Competitive strategies.
– Change in players’.
– Structure of industry.
– Customer value propositions. Technology and operations.
Demographic Changes
– Ageing. Shifts in a wealth.
– Urbanisation and globalisation.
– Culture and societal changes (environmental).
– Changes in buyer’s attitudes.
– Changes in mood and perception.
– Changes in buying habits.
New scientific and business knowledge.
– Application of old innovations into new areas.
– Expensive innovation with long lead times and risks.
8. Innovate or Perish 17
Innovation Potential Checklist
How does it create new value for customers?
Is price related to value to customer not cost to
produce?
A response to unmet customer needs or
problems?
Does it delivers attributes not products?
Reasonable speed and access to market?
Simple and focused and does one thing and
satisfies one need for one group of customers?
Will it obtains a leadership position in the market
quickly?
Not too clever nor too far ahead of market?
Consistent with an organisation’s strength and
not Adapted
too from
diverse in terms of product?
Drucker, P, Innovation & Entrepreneurship
8. Innovate or Perish 18
Adopters of Technology
Innovators
– Willing to accept risk. Younger and higher income.
Aspirational.
Early Adopter
– Often opinion leaders, caution with risk. High
discretionary income. Highly independent.
Early Majority
– Only willing to accept new ideas when risk is low
Late Majority
– Sceptical. Place emphasis on word of mouth and seek
security from larger organisations
Laggards
– Traditionalists. Tend8.to be older
Innovate Perish from
or Source: Rogers Etlower social
al, Diffusion groups.
of Innovation,1962, 19
p162
3. The Innovation Process
How to Stimulate Innovation
Sector Innovation
• ‘An industrial sector is defined as ‘technology’ according
to its overall R&D intensity (sum of direct and indirect).
The direct intensity corresponds to the ratio of R&D
expenditure to value added for each sector and country.
For indirect intensity, embodied technology (R&D
expenditure) in intermediate and capital goods
purchased on the domestic market or imported was
taken into account. To calculate indirect intensity, the
technical coefficients of manufacturing industries
extracted from input-output matrices used.’ (OECD
Fact-book 2005)
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Wal-Mart Innovation network
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Support in Scotland
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4. Creative
Innovation
EC10
Innovation & Commercialisation
Types of Creativity
Normative
Original thinking used to solve known
problems
Exploratory
Blue Sky to identify opportunities
Serendipitous Creativity
Accidental eg post-it
8. Innovate or Perish 27
4. Creativity
Conceptual fluency-: the ability to produce many ideas
or solutions in a given situation.
Mental flexibility: also known as `lateral problem from
an entirely new angle.
Originality: usually evidenced by unusual answers to
problems. -
Suspension of Judgment: a willingness to defer
judgement of ideas of others.
Impulse acceptance: a willingness to react impulsively
to an idea
Attitude towards Authority: a willingness to challenge
Majaro (1992)
8. Innovate or Perish 28
Decision Making
‘The Prescriptive Approach
Linear and rational process, starting with where we are now
and then developing new strategies for the future.
One whose objective has been defined in advanced and
whose main elements have been developed before the
strategy commences.
The Emergent Approach
A a corporate strategy, which emerges, adapting to human
needs and continuing to develop over time. It is evolving,
incremental and continuous, and therefore cannot be
easily or usefully summarised in a plan which then
requires to be implemented.
Emergent corporate strategy whose final objective is unclear
and whose elements are developed during the course of
its life as the strategy proceeds’. Lynch, Richard – Corporate
Strategy, Second Edition (2000)
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What is a Learning
Organization (Team)?
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Why adopt the concept?
Organisations have increasingly taken an interest in
adopting the learning organisation concept because of
the increasing pressure on organisations to change
with developments in globalization, changes in
customer expectations and technology driving this
trend.
Organisations need to continuously develop themselves
to maintain their competitive advantage and learning is
considered the only way of obtaining and maintaining a
competitive edge.
In the knowledge era, knowledge is regarded as being
more important then financial resources, market
positioning and other corporate assets. (Marquardt
1996). 8. Innovate or Perish 31
Benefits of Becoming a
Learning Organisation
Learning organizations link individual performance with
organizational performance setting clear direction for
employees and achieve goal congruence.
provides continuous learning opportunities for all employees
and uses learning to achieve organizational goals and
objectives.
All employees including managers learn from their
experiences rather then being bound by their past
experiences
Learning organizations encourage communication and
innovation by fostering dialogue, making it safe for people to
share ideas and take risks.
Learning organizations seek to learn as much from its
failures as from its successes encouraging continuous
development and improvement.
A learning organization8.continuously
Innovate or Perish interacts and responds
32
to its external environment allowing for better customer
What do you
see?
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8. Innovate or Perish 34
The Elephants Legs
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What am I thinking?
8. Innovate or Perish 36
Beauty is in the eye of the beholder
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Dots before your eyes
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Putting a different light on things
The idea of a lighted flower pot may strike us as pretty humorous, but it was
the answer to a lifelong struggle for a Russian immigrant named Conrad
Hubert. Hubert came to the United States in 1890 when he was about 35
years old. He was flat broke. He did what he could to earn a living. He
worked in a cigar store, ran a restaurant for a while and managed a boarding
house. He even tried fanning and repairing watches. Whatever he did,
however, he never made much money. All he wanted was to stop worrying
about making ends meet. Now Hubert had a friend named Joshua Lionel
Cowen who was very interested in electricity. Joshua had invented a flower
pot with a battery in it. Electricity from the battery made the flower "light up"
when a button was pressed. Hubert decided he would try to sell these flower
pots. Meanwhile, Joshua became interested in something new, electric
trains and he sold his friend the flower pot idea for almost nothing.
Fortunately, Hubert never went ahead with the flower pots because he had
had an idea for a modification. He took the battery, the bulb and the paper
tube from the pot and remade it into what he called "an electric hand
torch." Hubert sold his invention at first as a novelty, but the usefulness of
the flashlight soon became apparent. When he died in 1928 it must have
seemed to Hubert a long time ago that he was poor. He was worth
$8,000,000.
8. Innovate or Perish 39
Would you trust this man?
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8. Innovate or Perish 41
Read these allow as fast as you can
8. Innovate or Perish 42
The Process of Idea
Generation
1.The Need
2. Collect Information
5. Implement Strategy
8. Innovate or Perish 43
The Moral of the Story
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Team & Creativity
It follows, then, that one common way managers kill creativity
is by assembling homogeneous teams. The lure to do so is
great. Homogeneous teams often reach “solutions” more
quickly and with less friction along the way. These teams
often report high morale, too. But homogeneous teams do
little to enhance expertise and creative thinking. Everyone
comes to the table with a similar mind-set. They leave with
the same”.
8. Innovate or Perish 45
How to Kill Creativity in Marketing
Workgroups:
When leadership becomes dominance
When questioning becomes accusation
When assertiveness becomes aggression
When myopia becomes focus
When opportunities become problems
When arrogance becomes confidence
When structures become strictures
When inclusion becomes exclusion
When rules become constraints
When support becomes ownership
When capabilities become impediments
When experience becomes intolerance
When collaboration becomes fragmentation
When identity becomes an excuse
8. Innovate or Perish 46
Creating the synergistic
team
There is no scientific formula to guarantee that synergism
will result.
LEAVE YOUR EGO BEHIND.
The team project is most important. It's OK to feel honoured to be
named as a special team member, but be committed to the work
and to working together with other members.
COMMUNICATE WELL.
Keep others informed of your progress. Be honest about what you
can do and what you have accomplished.
CO-OPERATE WITH THE TEAM LEADER.
Just as too many cooks spoil the stew, more than one leader can lead
to misdirected efforts. Be careful to do what you are assigned. Feel
free to express your own ideas, but let the leader decide if they can
be used now.
RELAX AND BE OPEN TO NEW IDEAS.
Small groups create a good setting for trying new techniques, so
leave your reluctance behind.
GET ENTHUSIASTIC, AND GIVE
8. Innovate A LITTLE EXTRA.
or Perish 47
That means caring a little more, thinking a little harder, making a little
Sheet 1
Old Clothes
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Things Can Make Money Sheet 2
Use As A R Use To
Substitute Provide
For E A Service
S
Alter Size
Package O Shape
Differently
U Colour?
R
Use for S Recycle
other Or
People E Reuse
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Sheet 3
SLEEPERS
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Sheet 4
People Or
Interest Groups
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Sheet 5
Problems Worksheet
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Problems Means Sheet 7
Opportunities
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Sheet 8
? Your Skill
Making Things
Personal fit
Degree of risk
Score Funding needed
your Ease of start-up
Idea(s)
Short-term potential
Level of preparation
Competitive threats
Other
Total
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Sheet
11
Could you make or provide the amount and quality of products or service that
the customer wants?
If you need people to help you provide your product or service, do you know
who those people are?
8. Innovate or Perish 57
Can You Get Your Idea in Front of Customers?Sheet
13
Action Points
Do you know who will buy this from you?
Are there any local outlets that would help you sell the service or idea?
8. Innovate or Perish 60