Lecture1 1
- 1. Lecture 1 IS INNOVATION STRATEGY RELEVANT? Mario Calderini 1 Is innovation strategy relevant? Mario Calderini 2 Page 1 1
- 2. is it? Royal Crown Cola Co's technicians made what industry leaders term "the most amazing breakthrough in soft drink technological history.” • True cola flavour; • completely free of sugar; • devoid of after taste; • caloric content less than one calorie per bottle. Mario Calderini 3 is it? Royal Crown Cola Co. in 1980, introduced the first caffeine free cola, RC 100 This was followed in 1983, by another innovation a reintroduction of Diet Rite as a salt/sodium free, caffeine free, sugar free cola. The first soft drinks to be sold in all-aluminum cans were R.C. Cola and Diet-Rite Cola, both made by the Royal Crown Cola company, in 1964. Mario Calderini 4 Page 2 2
- 3. Innovation Strategy is Relevant ! Product First Mover Follower Winner Instant Camera Polaroid Kodak First mover Video Recorder Ampex Sony Matsushita Follower 8 mm Video Cam Kodak Sony Follower Video game Magnavox Atari / Nintendo Follower Microwave oven Raytheon Samsung Follower Microprocessors Intel AMD / Cytix First mover PC MITIS (Altair) Apple / IBM Follower Word Processors MicroPro Microsoft Follower Groupware SW Lotus AT&T First mover Internet browser NCSA Mosaic Netscape/Explorer Follower Nappers Chux Pampers/Kiberley Follower Vetro float Pilkington Corning First mover Mario Calderini 5 The story of the common rail diesel engine Modern common rail systems, whilst working on the same principle, are governed by an engine control unit (ECU) which opens each injector electronically rather than mechanically. This was extensively prototyped in the 1990s with collaboration between Magneti Marelli, Centro Ricerche Fiat and Elasis. After research and development by the Fiat Group the design was acquired by the German company Robert Bosch GmbH for completion of development and refinement for mass-production. Mario Calderini 6 Page 3 3
- 4. Better technologies? Sony’s Betamax vs. Matsushita’s VHS Qwerty vs better layouts (Dvorak) Mario Calderini 7 We call “innovations” many different things Mario Calderini 8 Page 4 4
- 5. Definitions of innovation Mario Calderini 9 Many types Management Innovation Revolutionary Innovation Service Innovation Experiential Innovation Value Innovation Business Model Innovation Structural Innovation Market Innovation Process Innovation Strategic Innovation Evolutionary Innovation Application Innovation Marketing Innovation User Lead Innovation Product Innovation Technological Innovation Supply Chain Innovation Brand Innovation Disruptive Innovation 10Mario Calderini 10 Page 5 5
- 6. Innovations? Mario Calderini 11 Business model innovation Low cost airlines PC direct sales model Selling books online Mario Calderini 12 Page 6 6
- 7. technological innovation Technological innovation: improving a product’s functionalities or reducing its production cost with respect to the state of the art, through the application of knowledge and competencies to tangible features of the production process or of the product. Optimizing Trade-offs Battery life # songs Bag (device) size Battery size Mario Calderini 13 Types of innovation Product innovation: innovation is embedded in a product (service) supplied by the company. Process innovation: changes in the way the company carries out its activities, (production, quality control, logistics, marketing….. Radical innovation: leaps, breakthrough in product functionalities, determined by an evolution of internal knowledge and competences, i.e. by a growth of competencies that is organic and coherent with a company’s internal resources. Incremental innovations: small improvements in a product‘s functionalities determined by an evolution in knowledge and competences, i.e. by an organic growth of a company’s resources. Mario Calderini 14 Page 7 7
- 8. Types of innovation Continuous innovation (competence enhancing): improvements in product performances determined by an organic growth of a company’s knowledge and competencies. Discontinuous innovation (competence destroying): improvements in product performances determined by a destruction followed by a reconstruction of a company’s knowledge and competencies. Modular innovation: changes in one or more components of the product/ process without significant changes in the overall architecture of the system. Architectural innovation: a change in the overall architecture of the system or in the way the single components of the system interact. Mario Calderini 15 Schumpeterian trilogy and linear definitions • Inventive process (ideas) • Innovation process (products & processes) • Diffusion (economic value) • Basic research • Applied research • Development • Commercialization Mario Calderini 16 Page 8 8
- 9. Criticism Feedback process: fundamental principles emerge from applied activities. Serendipity: while doing basic, applied research or development, you unintentionally or unexpectedly run into a relevant innovation It is a bundle (continuum) of undetachable activities. Mario Calderini 17 Post-it® were not a planned product. A man named Spencer Silver was working in the 3M research laboratories in 1970 trying to find a strong adhesive. Silver developed a new adhesive, but it was even weaker than what 3M already manufactured. It stuck to objects, but could easily be lifted off. No one knew what to do with the stuff, but Silver didn't discard it. Then one Sunday four years later, another 3M scientist named Arthur Fry was singing in the church's choir. He used markers to keep his place in the hymnal, but they kept falling out of the book. Remembering Silver's adhesive, Fry used some to coat his markers. 3M began distributing Post-it ® Notes nationwide in 1980 Mario Calderini 18 Page 9 9
- 10. Creativity? Entrepreneurship? Talent? Polegato was born in 1952 near Treviso. Originally groomed to take over the family wine-making business, company promotional material has it the idea for the shoe came when he participated in a wine industry conference in Reno; While out jogging in Reno's hot desert climate, his feet got hot from the exertion and he had the idea to cut a couple of holes in the soles of his shoes with a Swiss Army knife. He developed the idea into a viable product with the help of a small leather- goods business his family owned. Mario Calderini 19 The long way to value creation & appropriation In 1937, Bulgarian physicist Georgi Nadjakov found that, when placed into an electric field and exposed to light, some dielectrics acquire permanent electric polarization in the exposed areas. That polarization persists in the dark and is destroyed in light. Chester Carlson, the inventor of photocopying, was originally a patent attorney, as well as a . part-time researcher and inventor. His job at the patent office in New York required him to make a large number of copies of important . papers. Carlson, who was arthritic, found this to be a painful and tedious process. This motivated him to conduct experiments with photoconductivity. Carlson used his kitchen for his "electrophotography" experiments, and, in 1938, he applied for a patent for the process Mario Calderini 20 Page 10 10
- 11. The long way to value creation & appropriation Carlson tried to sell his invention to some companies, but failed because the process was still underdeveloped. At the time, multiple copies were most commonly made at the point of document origination, using carbon paper or manual duplicating machines, and people did not see the need for an electronic machine. In 1944, the Battelle Memorial Institute, a non- profit organization in Columbus, Ohio, Between 1939 and 1944, Carlson was turned contracted with Carlson to refine his new down by over 20 companies, including IBM process. and General Electric neither of which believed there was a significant market for copiers. In 1947, Haloid Corporation (a small New York- based manufacturer and seller of photographic paper) approached Battelle to obtain a license to develop and market a copying machine based on this technology. Mario Calderini 21 The long way to value creation & appropriation Haloid felt that the word "electrophotography" was too complicated and did not have good recall value. After consulting a professor of classical language at Ohio State University, Haloid and Carlson changed the name of the process to "Xerography," which was derived from Greek words that meant "dry writing." Haloid called the new copier machines "Xerox Machines" and, in 1948, the word "Xerox" was trademarked. Haloid eventually changed its name to Xerox Corporation Mario Calderini 22 Page 11 11