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Samenvatting Innovatie Management
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RSM IBA Innovation Management (BT2106) - Full Summary (lectures and readings)
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Chapter 1: Innovation management and new business development:Learning objectives:
- Define IM and NBD
- Appreciate the different forms of innovation
- Understand the skills of an innovation manager
- Understand the role of uncertainty in innovation
- Appreciate the difference between the front end and the implementation process.
- Understand the role of innovation in the economy and government policies
1.1 What are innovation management and new business development:
Generating uncertainty and reducing it as soon as possible- core paradox of innovation
management and nbd. Innovation management concerns the management of innovation
activities. Originated in R&D contexts. New Business Development approaches innovation
more from a market perspective, strong focus on the creation of new markets. Innovation
and nbd are different from R&D. R&D focusses on technology development and the
successive creation of new products. Innovation and nbd are much broader. Can also focus
on the creation of new services, new markets, new business models.
Definitions:
Innovation management: The management of the development of new products, processes,
services and business models.
New business development: All the activities involved in realizing new business
opportunities, including product or service design, business model design and marketing
(from idea generation to implementation and sales).
Sorenson makes a distinction between the development stage and the implementation
stage of the creation of nb opportunities. He limits the role of new business developers to the
earlier development stage. Excludes strategy development from the tasks of a new business
developer.“ business development refers to the tasks and processes concerning
analytical preparation of potential growth opportunities, the support and monitoring of
the implementation of growth opportunities, but does not include decisions on strategy
and implementation of growth opportunities. Where Sorenson makes a separation of tasks
between nbd and other units in the firm, others argue for a more parallel division of tasks over
time during process. Innovation management and nbd are slightly different. Innovation
management focusses on research, new products and new processes in firms, new
services, new business models. NBD more limited, usually does not include process
innovation. It is broader, on the other hand since it includes the creation of new markets.
The creation of a new production plant is im not ndb. Expansion of a service to a new country
is nbd, not im.
Plaatje met overlapping:
, The innovation manager:
Five discovery skills which are typical for innovators (im and nbd)
• Associating refers to connecting seemingly unrelated questions, problems or ideas
from different fields.
• Questioning refers to asking questions about why things are the way they are and to
challenge the status quo.
• Observing refers to intensively looking at what people are actually doing, with a fresh
mind in the sense of not taking the world for granted.
• Experimenting refers to learning by creating imaginary or real image prototypes or pilots
of a new product, service or business model. We can so learn about its impact and
effectiveness. The leader should not decide on a direction to go himself but should create
a mindset and room for team to experiment, instead of working behind desk,
experimentation leads to better info.
• Networking refers to connecting to other people and institutes, internal and external to the
firm. X teams have strong external relations. Performance is not only affected by having
large networks, but by the specific structure of innovators within those,
Entrepreneurial alertness is also necessary. Constantly look for opportunities. These 5 skills are
mainly important in the front-end stage. Later stages require more execution-oriented skills.
1.2: Paradoxes of innovation
Paradox between uncertainty generation and reduction; At start of innovation uncertainty is
high. On the other hand most innovation activities aim at reducing uncertainty. Organizations have
to seek uncertainty because they need to develop themselves for an uncertain future, and returns
from uncertain activities can be high. But uncertainty means risk and potential losses.
Only exception is idea generation which increases uncertainty, From this point onwards the other
innovation activities should reduce uncertainty.
Front end; phase in which the team develops the innovative concept, and the implementation
phase in which it details the concept and brings it to the market. Second paradox. Innovators
generate uncertainty in the front end and reduce uncertainty in the implementation phase.
Two phases require different activities and capabilities. Emphases in front end is on creativity.
(associating, questioning, observing, facilitative and experiment orientated) are essential. In
implementation sticking to deadlines, project management, advertising and execution oriented,
hands-on management style. Creativity still important but not dominant. In front end more diverse
network is needed. In implementation network that supports the tasks of the team. More
coherent less diverse. Front end can apply iterative processes, in implementation sequential
processes are more appropriate. Leadership styles will also differ between front end and
implementation (7.3). Important challenge can be to overcome the change in type of activities and
the required competencies. A solution can be to assign tasks in front end and in
implementation to different people. Alternative solution is to assign both front end and
implementation phase to the same people, but the require different behaviors in different phases.
(contradiction between required skills, leadership and network)
Having a clear portfolio management approach and well-organized processes (chapter 5 and
6) contribute to effective and efficient implementation of innovations.
Third paradox incremental vs radical innovation. Incremental means the firms makes small
modifications on existing products, services or business models. Radical innovation means that
firm enters completely new markets, new competencies and moves away from its existing
products. Uncertainty is low in incremental innovation, high in radical. Therefore activities, skills,
processes, performance measures, leadership styles and time horzions are different. The
question is how firm can manage these differences. (chapter 7) > ambidexterity: the firm has to
perform well I short term (incremental innovation) and prepare for longer term (radical innovation).
The more radical the solution the more separate.
1.3: What is business model innovation:
,Business model canvas: sets out the scope of business model innovation. A business model
describes the rationale of how an organization creates, delivers, and captures value. Value: What
it means for your customers (create) and how you earn money in return (capture). Position of firms
in the value chain: what value you provide and what value you take from your suppliers. Business
model: A story around who we serve. What is the value proposition (what) and how we make
money. Trends in the business world clarify its popularity. IT gave options to new business models.
Facilitates collaboration. Made it easier to find appropriate parties You can also innovate your
channels (e-commerce), your relations with customers, the way you work with partners, or the
financial model for your business.
The business model canvas;
The business model canvas provides a tool to make a description of the business model of an
organization. The canvas had nine building blocks. In the centre is the value proposition which
describes the value we provide to our customers. Three building blocks on the right describe
the market part of the business model canvas (customer segments, channels, customer
relationships), three building blocks on the left describe the supply side (key activities, key
resources, key partnerships), and two building blocks at the bottom describe the financial
model (cost structure, revenue streams). As you can see supermarkets provide two value
propositions to different customer groups; providing all the groceries needed at a single place to
the one or twice a week shipper and providing all the ingredients for tonight’s meal to the just
before dinner shopper. The two value propositions require differences in the assortment of
services and products offered. A more precise definition of business model innovation:
Includes every innovation in any of the elements of a business model.
, Why business models are not strategy:
Business models are about how the firm creates and delivers value to its customers and how
it captures value for itself. Strategy is about how the firm differentiates itself from its competitors
and how the firm can create competitive advantages in the future. The strategy sets out what the
firm wants to achieve, and how it want to do so. A business model may facilitate the
implementation of a strategy. For example, selling products over the internet in addition to in stores
(a new business model) can facilitate internationalization in a company (an element of strategy).
The strategy (creating a cost advantage compared to competitors) can require business model
innovation (outsourcing of production).
1.4: Types and classifications of innovations:
Distinction between technological novelty and market novelty. > technology-market matrix.
Technological novelty refers to the technology embodied in the product. Market novelty refers
to the novelty of the target customer group, or the novelty of the preferences of the customer.
An incremental innovation only a marginal change on both aspects> a new cell phone design
which differs from existing cell phones. Technological innovations are new with respect to
technology but serve the same function as the existing products> digital watch. A niche
innovation uses existing technology, but it is aimed at new customers> a convertible version of
an existing car model. A radical innovation is an innovation in both technology and customers.
The first Iphone was a radical innovation wince it was new in terms of tech, and it created a new
market, since customers purchased a product with completely new features. > Technology-
market matrix addresses limited set of the business model canvas, mainly the value proposition,
resources and customer segment.
Modularity matrix> looks at technology only. Core concepts vs linkages>
Linkages: interfaces in the product which connect the separate parts (concepts). For example a
car consists of chassis, engine, body, interior, electrical installations etc. All these parts are
connected through certain interfaces> nuts and bolts, wiring, electrical parts. Innovators can either
change specific parts or change the interfaces between them. Incremental innovations refer
to neither of the two in a large extent. Architectural innovations change the interfaces radically.
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