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Samenvatting Organizing and managing innovation (300335-B-3)
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OMI extensiveModule 1
A paradigm is a common cohesive understanding of how a certain phenomenon must interpreted and
explained. “a set of theories that explain the way a particular subject is understood at a particular time”
Paradigm shifts: a revolutionary situation occurs: the dominant paradigm loses its momentum or
relevance and is challenged by other paradigms with alternative propositions or narratives. a
fundamental change in approach or underlying assumptions.
Examples of paradigm shifts are the movement of scientific theory from the Ptolemaic system (the
earth at the centre of the universe) to the Copernican system (the sun at the centre of the universe), and
the movement from Newtonian physics to the theory of relativity and to quantum physics.
The term paradigm shift refers to a major change in the worldview, concepts, and practices of how
something works or is accomplished. A paradigm shift can happen within a wide variety of contexts
from scientific research to industry. Paradigm shifts in industry often happen when new technology is
introduced that radically alters the production process or manufacturing of a good or service. These
shifts are key drivers in many of the processes that a society undergoes such as the American
Industrial Revolution.
What is innovation? – can be abstract
- An initial definition: transformation of an existing state of things, in order to introduce something
new
- Basically involves an “improvement” in how something is being done or offered
- It also suggests a contextual relevance: how are things done currently in a given society (for
instance) and how can they be improved
Innovation as a process:
1. Identify a need or a problem
2. Develop a feasible solution
3. Produce/manufacture and market the solution
4. Achieve adoption/diffusion of the innovation
Economic innovation: process of change that introduces economic and regulatory elements
concerning the needs of people in a society, how they are met, how the goods and services are
produced.
From an entrepreneur’s/innovator’s perspective, a problem-solving process that involves searching for
new combinations of known information, knowledge.
The role of the entrepreneurial innovator (small or large firm) is to activate and coordinate all the
relevant factors for the production of the innovation.
Innovation often can be a resource-intensive, uncertain, complex, and untidy process.
Process view of innovation:
1. Obtain and gather information and knowledge
2. Organize
3. Deploy for commercial purpose
Innovation can be understood in many different ways. A few are mentioned below:
- Application of knowledge to solve a problem
, - Technical approaches to improve business operations
- Application of science for commercial and industrial objectives
- Theoretical and practical knowledge and skills artefacts useful for developing products and
services, as well as their production and delivery systems and mechanisms.
The Oslo manual (OECD) considers innovation as: a new or improved product or process (or
combination thereof) that differs significantly from the unit's previous products or processes and that
has been made available to potential users (product) or brought into use by the unit (process). The
definition also includes organizational and marketing innovations.
Why innovate? It depends on how firms frame their problems and how they go forward to solve them.
What triggers an innovation:
- Unexplored/unexploited opportunities
- New discoveries/knowledge
- Scarcity
- Competition
Innovate to improve the economic value pie: by creating a new product, you create a consumer
surplus, and therefore a bigger economic value.
Technology push and demand pull: studies show that technological change is driven by two main
factors, namely
(a) technology push, i.e. factors that increase the supply of technological options by directly fostering
advances in science and technology
(b) demand-pull, i.e. factors that stimulate the demand for or affect the prices of specific technologies.
The rate and direction of innovative activity in a society are determined by these four important
dimensions:
- Economic growth
- Technical change
- Social change
- Institutional change
, The linkages across these four dimensions are often intricate (ingewikkeld). At large, the stock of and
diffusion of information/ideas; preferences, habits and needs of people; distribution of wealth and
knowledge, are major items to account of to obtain a deeper understanding of the nature of innovation
in a given society
An innovator will have to study the dynamics among these factors to better assess opportunities and
scope for creating new ones.
Environmental factors shaping innovation: The industry environment:
- National/international economic factors - Firms
- Technology factors
- Suppliers
- Government and political factors
- Competitors
- Ecological factors
- Customers
- Socio-demographic factors
Firms care for performance.
Expected profitability = E(revenue-costs)
What factors influence revenue and drive costs?
1. Barriers to enter
2. Bargaining power of buyers
3. Bargaining power of suppliers
4. Threat of substitutes
5. Power of complements
6. Industry competitors
Types of innovation:
- Product innovation: involves production of goods or services that are entirely new, or modified
- Process innovation: involves changes in the method of production or delivery of goods and services
- Organizational innovation: refers to new forms of organization of business operations
- Marketing innovation: involves design/packaging of the product, mode of promotion and
placement on the market, as well as methods for determining the selling prices of goods and services
- Business-model innovation: the discovery of a fundamentally different business model in an
existing business
Radical innovation:
- Emergence of a new ‘paradigm’, technical and business
- Significant level of newness, reconfiguring knowledge, and sometimes creates new markets
- Often combines distant and dissimilar ideas
- Strategic, involves high uncertainty, and could have potentially high impact
Continuous (incremental) innovation:
- Introduces no paradigmatic changes, and all modifications in production or use of particular
good/service are limited
- Low to medium uncertainty, and usually low impact; builds firm competencies
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