Lecture 1
Types of innovation
- Product/service innovation:
o Food product with new functional characteristics: margarine that reduces blood
cholesterol levels.
o Delivering groceries?
- Process innovation:
o Pulsed Electric Field (PEF) is a relatively new mild technology for food processing. In
PEF, foods are subjected to an electric field with high field strength which causes
damages to cell membranes (electroporation). The result is the inactivation of bacteria
and pasteurization/sterilization of food samples with relatively low temperatures. So far
PEF technology has been mainly used as a non-thermal food preservation method.
Compared with traditional thermal pasteurization, it provides a better preservation of the
original sensorial properties (taste, colour, texture), but also of nutrients and heat labile
health-promoting functional components of foods.
- More recent concepts
o Business model innovation (delivering existing products that are produced by existing
technologies to existing markets): Apple that has evolved its customer offers of personal
computers to music delivery devices and service that ultimately included cellular phones
o Lean innovation (creating ever more value for customers with ever fewer resources): The
file transfer service now has over 500 million users worldwide, but it started life as a
minimal viable product in the form of a 3 minute-screencast showing consumers what
Dropbox could do. Response to the video enabled Dropbox to test if there was demand
for the product and, at the same time, capture an initial audience through a waiting list.
But most importantly comments on the video provided a way for Dropbox to gain high-
quality feedback from target customers which the team subsequently used to shape
product development in line with consumer needs.
Extent of innovation
- Radical or incremental innovation
o Radical innovation introduces a new meaning, potentially a paradigm: probiotic yoghurt.
o Incremental innovation introduces quality improvements in core components. The word
renovation would more precisely describe this type of innovation: low fat margarine.
- Continuous or discontinuous innovation
o Continuous innovation: menu changes in restaurants.
o Discontinuous innovation: fast-food phenomenon of McDonalds.
- Sustaining or disruptive innovation
o Sustaining innovation: making good products better. Keeps margins attractive and they
keep the market competitive and vibrand. They can improve profitability and create some
top-line growth through price increases, but they don’t create growth from new
consumption, nor do they generally create jobs. Example new version of a car.
o Disruptive innovation is the introduction of new technologies, products or services that
unexpectedly displace an established technology, product or service: dough mixing
systems was performed by hand first, but as higher volume bakers required more efficient
dough mixing systems, other types of mixers were developed.
- Modular or architectural innovation
o Modular innovation may result in the complete redesign of core components, while
leaving linkages between the components unchanged: change the seat of a bike.
o Architectural innovation changes the nature of interactions between core components,
while reinforcing the core design concepts: electric bike.
- Open or closed innovation
o Open innovation is a paradigm that assumes that firms can and should use external ideas
as well as internal ideas, and internal and external paths to market, as the firms look to
, advance their technology: Another open innovation model presented by Coca Cola is the
Freestyle dispenser machine that allows users from around the world to mix their own
flavours and suggest a new flavour for Coca-Cola products. The new product records the
consumer flavour, so they can get it from other Freestyle machines located around the
world using the Coca-Cola mobile application. This model of open innovation puts the
consumers in the heart of the production process as the company uses the suggested
flavours as part the external ideas that can be evaluated and processed as a new product
line.
o Closed innovation is being developed in a self-employed business environment: Coca-
Cola designs a new flavour and releases it.
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