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Summary - Innovation Management (HMI12A)
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English summary of the Innovation Management course of the Master's programme in Business Management & Entrepreneurship. Created in Dec 2023
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Samenvatting - Innovation ManagementInhoud
1 Introduction .................................................................................................................. 3
1.1 What is innovation?................................................................................................ 3
1.1.1 Changing the basis of competition through innovation............................................. 3
1.1.2 Four types of innovation and their dynamics .......................................................... 3
1.2 The drivers of innovation ........................................................................................ 5
1.2.1 Why the market for innovation fails ...................................................................... 5
1.2.2 Patterns underlying successful innovation .............................................................. 8
1.2.3 The innovators dilemma ...................................................................................... 9
1.2.4 Solutions fort he innovators dilemma ................................................................... 11
1.2.5 The Triple Helix ................................................................................................. 13
1.3 Exam review ........................................................................................................ 14
2 Exploring Innovation ..................................................................................................... 15
2.1 Tapping into diverse sources of innovation ............................................................... 15
2.1.1 Sources of innovation ........................................................................................ 15
2.1.2 Prediction markets............................................................................................. 16
2.1.3 Lead user innovation.......................................................................................... 20
2.2 Exam review ........................................................................................................ 21
3 Executing Innovation..................................................................................................... 22
3.1 Project Selection ................................................................................................... 22
3.1.1 The innovation funnel ........................................................................................ 22
3.1.2 Valuation of R&D projects ................................................................................... 24
3.1.3 Real option valuation ......................................................................................... 25
3.2 Managing teams and stars ..................................................................................... 33
3.2.1 The scarcity of star performance ......................................................................... 33
3.2.2 Why do stars matter? ........................................................................................ 34
3.2.3 The challenges of managing stars ........................................................................ 38
3.3 Innovation Networks ............................................................................................. 42
3.3.1 The small world phenomenon.............................................................................. 42
3.3.2 Small world networks......................................................................................... 42
3.3.3 Networks as social capital ................................................................................... 45
3.3.4 Why small world networks foster creativity ........................................................... 49
3.3.5 Networks as social capital for innovation .............................................................. 50
3.4 Systems thinking .................................................................................................. 53
3.4.1 The wide lens framework .................................................................................... 53
3.4.2 Mapping ecosystems .......................................................................................... 57
3.4.3 Reconfiguring ecosystems .................................................................................. 59
4 Exploiting Innovation .................................................................................................... 60
,4.1 Intellectual Property Rights .................................................................................... 60
4.1.1 Fixing the failing market for innovation ................................................................ 60
4.1.2 Key IP instruments ............................................................................................ 61
4.2 A detailed look at patents ...................................................................................... 62
4.2.1 What is a patent ................................................................................................ 62
4.2.2 The worldwide patent database ........................................................................... 62
4.2.3 How to apply for a patent ................................................................................... 63
4.2.4 Who uses patents .............................................................................................. 65
4.2.5 Strategic patenting by firms................................................................................ 66
4.2.6 The patent system ............................................................................................. 68
,1 Introduction
1.1 What is innovation?
1.1.1 Changing the basis of competition through innovation
What are the 5 forces of competition when making an industry analysis?
- Threat of new entrants
- Bargaining power of buyers
- Bargaining power of suppliers
- Threat of substitute products
Red Ocean Strategy VS Blue Ocean Strategy
Takeaway point: Innovation-based strategies aim to change the basis of competition in an
industry.
1.1.2 Four types of innovation and their dynamics
1. Product Innovation (Goods)
A product innovation is the introduction of a good or service that is new or significantly
improved with respect to its characteristics or intended uses. This includes significant
improvements in technical specifications, components and materials, incorporated software, user
friendliness or other functional characteristics.
Examples (goods): replacing inputs with materials with improved characteristics, a new medicine
that provides a significantly improved treatment for a disease.
Examples (services): video on demand via broadband, a new, self-service bank office.
2. Process Innovation
A process innovation is the implementation of a new or significantly improved production or
delivery method. This includes significant changes in techniques, equipment and/or software.
Examples: installation of a new or improved automated packaging system, installation of a new or
improved system for computer-assisted product development.
, 3. Marketing Innovation
A marketing innovation is the implementation of a new marketing method involving significant
changes in product design or packaging, product placement, production promotion or
pricing.
Examples: different positioning of an existing product, implementation of a personalized
information system, obtained from loyalty cards, to tailor the presentation of products to the
specific needs of individual customers.
4. Organizational Innovation
An organizational innovation is the implementation of a new organizational method in the firm’s
business practices, workplace organization or external relations.
Examples: first time introduction of a quality management system, first time implementation of
decentralized job responsibility, first time research collaboration with universities.
Definition of an innovation: an innovation is the implementation of new or significantly improved
product (good or service), or process, a new marketing method, or a new organizational
method in business practices, workplace organization or external relations.
The minimum requirement for an innovation is that the product, process, marketing method or
organizational method must be new (or significantly improved) to the firm.
Takeaway point: innovation is not necessarily about technology!
Dynamics of innovation
Takeaway point: industries tend to shift their focus from product to process innovation as they
mature.
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