Summary of the MOOC course of innovation management in coursera. All lessons are transcripted including all examples and concepts. Very useful if you don't have time to watch the course.
INTRODUCTION
INNOVATION: the act of introducing a new device (product), method (assembling cars, business process,
business model) or material for application to commercial or practical objectives
• An innovation should be serving an internal need of a firm or be sold in the market
• It needs to have a certain value and needs to be interesting for a certain party à has to be useful
INNOVATION MANAGEMENT: it’s about how organizations and their employees manage their innovation
activities
• How organizations manage their acts of introducing new devices, methods or materials
• It also concerns ensuring that employees can be creative and come up with new ideas
• It concerns how to manage, select and improve ideas
• It concerns the execution of innovation projects: making decisions (which members should be on
the project team?), how to deal with unexpected events, etc.
Ex: innovation management concerns the activity of formulating an innovation strategy. A firm can use that
strategy to decide in which innovations it will develop and invest in.
PRODUCT, SERVICE AND PROCESS INNOVATIONS
• PRODUCT INNOVATION (SHOES) à The innovation of physical products
• SERVICE INNOVATION à a supermarket that starts delivering food at customer’s doorstep
*Product and service innovations renew the output of organizations (what they deliver to the outside
world)
• PROCESS INNOVATION à change in how a firm conducts its activities
o Ex: a HR department of a firm that tracks employee performance in paper files by collecting
reports on yearly appraisal talks. If this HR department would move into a new system using
a computer, then the process of keeping track of employee’s performance has been
innovated.
o Ex: barcode à abans les caixeres es sabien els preus dels productes de memoria. Quan es va
introduir la barcode es va produir un process innovation ja que van canviar la seva manera
de treballar: ara sols teien que escanejar un codi de barres.
RADICAL VS. INCREMENTAL INNOVATIONS
Incremental innovations: those which are slightly different from solutions that already exist
• Ex: Dutch company that sells cheeses with designed designs. It is incremental because they are
cheeses and the only thing they have innovated is that they have drawings
Radical innovations: new and very different from solutions that already exist
• Ex: cars, 3G, 4G, etc.
ARCHITECTURAL AND MODULAR INNOVATIONS
Modular innovation: changing a component without changing how a system is configured
,Architectural innovation: change in the configuration of the entire system and how its components
interact
Ex, BYCICLE: in the past, bicycle engineers were not able to build the chain that modern bikes have
between the front and the back wheel. The first bikes had no pedals, or the pedals were attached directly
to the front wheel. In modern bikes, pedals are in the middle but interact with both wheels.
• Once the way in which components within a system are reconfigured and the way in which they
interact changes (ex: the pedals with the bike) à Architectural innovation
• Just a single part of the bike has changed but not the way it interacts with the rest of the bike (Ex:
changing the seat or the lights or the handlebar but changing nothing else) à Modular innovation
Ex, CAMARA:
• Modular innovation à If a firm designed a new individual components like
lens, a new flash or a new user interface
• Architectural innovation à if they wanted to transform the photo camara into
the video camara. Individual components would have to be redesigned but
because of the different shape of the video camara, the way components
interact with each other would also change
-When companies develop products with a certain architecture, they tend to organize
the firm around the structure of that product à there’s a department focusing on the
development of lens which interacts with the department that designs the body of the camera because the
lenses have to fit into the body.
-In the case that the film decides to build the new video camera that has a completely different
architecture, the organization may not be ready to develop that product
• The way that the firm is organized and how routines and processes work are tailored (fets a mida)
to the old architecture.
• The firm needs to invest a lot of time and effort into reorganizing itself and working in a way that
will fit with the new video camara à so modular innovation is easier to carry than architectural
innovation
MOOC WEEK 2 – THE ADOPTION LIFECYCLE AND INNOVATION ADOPTION AT
THE INDIVIDUAL LEVEL
THE ADOPTION LIFCYCLE
*Adoption of innovation: acceptance of an innovation by
people in society or specific markets
• TV’s are an innovation that is widely adopted
• Smartwatches are not that adopted (not
everybody has one)
Adoption lifecycle: represents the number of people that adopt a certain innovation overtime starting at
the moment that an innovation becomes available.
• The first TV’s became available in the 30s. At the moment it was introduced only a few people
acquired one. But the number of people that adopted a TV at a certain moment grew. Up to the
moment at which 50% of potential adopters had acquired a TV. After that the number of persons
who acquired a TV decreased as when most of people owns a TV, the adoption rate becomes low
again. The graph represents the number of people that newly acquired an innovation. After that,
the number of people owning a TV increases, but the growth rate decreases.
,Rogers divided the graph into 5 sections representing
different adopted categories:
• The innovators: first group of people who first
adopts an innovation. People that don’t have
difficulty leading with the complexity of new
technologies or innovations. They focus on the
technology. They focus on the product and like it
even when it’s still in its infancy and not even
functioning properly
• Early adopters (Steve Jobs): they are not focused on
the technology itself but are more enthusiastic about
potential applications of an innovation. They are
visionary and see the potential of an innovation, even
when it has not fully mature and still has some kinks.
They don’t care what other people think about that
innovation.
o Intuitive
o Support revolution
o Follow own rules
o Take risks
o Motivated by possible opportunities
o Explore what’s possible
o “Look with their eyes shut” à visionaries
- - - - - - - - - - The chasm: gap between the Early adopters and the early majority. It indicates there’s a big
difference between two adaptor categories. The early majority
• Early majority: they want to see practical proof of how the innovation can be useful to them. They
need clarification of how the innovation can be useful to them. They only acquire an innovation
when it becomes more confident and has fewer faults. They also need role models who have
acquired the innovation to encourage them to do so.
o Analytical
o Support evolution
o Consult others
o Manage risks
o Motivated by current problems
o Pursue what it’s probable
o “Look with their eyes open”
• Late majority: wats to see even more proof. If they buy a product they want to be sure they
purchased the product from the firm that has the strongest support system surrounding that new
product. They only accept an innovation when it’s widely accepted and can be considered standard
• Laggards: people who assesses innovation by themselves. They check whether a certain innovation
is interesting to them or not. They are generally skeptical and they accept only a few innovations
and they do not adopt them at all. Not really aware of what is going on and not open to
innovations, even if they’re well developed.
CROSSING THE CHASM: FROM EARLY TO MASS MARKET
The distinction between early adopters and early majority is important for companies. If a company wants
to introduce an innovation, it needs to get some market share by building an innovation that is attractive
for Innovators and Early Adopters.
, -The company needs to proof the innovation is CENTRAL à essential for opening up the market
• The best product in its category
• Most elegant architecture
• Unique functionality
-The company has to put the MAKRET CENTRAL à essential for crossing the chasm and move to the
mainstream market. Innovation has to be redesigned and offered in a way that it can be easily used by the
mainstream market.
• Largest group of customers in its category
• Innovation perceived as current standard
• Quality of customer support around the product needs to be high
Ex: Apple – Steve Jobs saw many computers were not user friendly. He introduced the graphical interface
and the mainstream market adopted the personal computers much more easily.
INNOVATION ADOPTION AT THE INDIVUDUAL LEVEL
How individuals decide whether to adopt a certain innovation or not.
It is said that if someone creates something new that is superior to solutions that already exist, that person
will attract many customers that will accept that great product. Is this true?
• Video: Pepita brings her friend Juana a stove so she doesn't have to load up and look for Wood to
cook every day. The friend rejects the stove because she is afraid that her house will burn down and
because she says that looking for Wood makes her exercise. She also didn't know how to start it.
There’s research that shows that we all can show similar tendencies: evaluation of alternatives by
Daniel Kahneman.
EVALUATION OF ALTERNATIVES
1. Value is subjective: value of alternatives (such as innovation) is subjective
a. In the video, Pepita was really enthusiastic about the stove, but Juana was not. This can be
explained as follows:
2. Point of reference: if people evaluate an alternative, they have a point of reference. In the video,
Juana had the point of reference in the form of her daily activity of collecting firewood
3. Improvements are gains, shortcomings are losses: when people evaluate an alternative,
improvements are perceived to be gains and shortcomings to be losses
4. Losses have bigger impact on people’s decisions than improvements. People only participate when
the value of the potential gain is higher than the value of a potential loss.
a. Ex: In a bet you have a 50% chance of winning 100€ and a 50% chance of losing 100€. Would
you participate on it? à Chance that people would participate in this bet is very small bc
they have the same chance of losing or winning the same amount of money
b. If the bet was 50% chance winning 100€ and 50% chance losing 30 or 40 people would start
considering to participate.
STATUS QUO BIAS
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