Lecture 1, What is Innovation and Technology Management?
Innovation: A novel creation that generates value (New, creative, different, improvement)
• Tangible
o Innovation = product E.g. Mobile phones, computers, cars, robots
• Intangible
o Innovation = app (e.g. Facebook, What’s app, Instagram)
o Innovation = web shop (e.g. Amazon; Bol; Zalando)
o Innovation = service [with app/&website] (e.g. Airbnb, Booking, Uber)
o Innovation = service [with app/&website & hardware] (e.g. Low cost airlines)
→ Many innovations are intangible!!!
Types of Innovation
Product innovation: (tangible)
- Developing a radically new product, which has not existed so far (e.g. Smart phone, Hybrid &
Electric car; Robot for household/health care, 3D printing) ór
- Improving functional qualities and/or design in existing products (new line of iPhone)
Service innovation: (intangible)
- Improving the service delivered to customers (e.g. web shops, Booking.com, Airbnb)
- Improving the way ‘things are done’ (e.g. Uber, Airbnb)
Process innovation: (intangible)
- Improving the manufacturing process to produce the existing products at a lower cost or
with a better quality (e.g. automatization)
- Improving the way ‘things are done’, restricting and reconfiguring the manufactory process
to make it more efficient (e.g. the touchscreen at McDonalds to order yourself)
o If Burger King would implement this as well, it can be seen as an innovation for BK
itself. However, the real innovator was McD. So it depends on the point of analyses.
And it can also be seen as a service innovation.
Marketing innovation: (intangible) Improvements in any of the other elements in the marketing mix
Radical innovation: developing a new product or service, which had not existed so far
Incremental innovation: Improving functional qualities and/or design in existing products and/or
services. This type of innovation is most commonly pursued by existing companies.
We know that innovation is about: New, Creative, Different, Improvement. However, the goal is to
create value with this innovation
➔ Innovation: A novel creation that generates value.
Innovation is all about change. Where does change come from? => NEW IDEAS
➔ ‘The process of creating value from ideas’
The logic is simple: If we don’t change what:
- we offer to the world (e.g. products and services), and
- how we create and deliver them,
we risk being overtaken by others who do. Those enterprises which survive do so because they are
capable of regular and focused change.
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,The Innovation Challenge & Why Innovation is Crucial
The innovation challenge isn’t new – organizations have always had to think about changing what
they offer and the ways they create and deliver that offering if they are going to grow.
The trouble is that innovation involves a moving target – not only is there competition amongst
players in the game but the overall context in which the game is played out keeps shifting.
- Companies are currently operating in a highly complex and highly dynamic environment:
o Highly competitive global environment
o Highly complex technological dynamics
o Highly complex and interconnected global environment
Developing Innovations is highly complex, highly dynamic, and highly uncertain. How do companies
address this?
- Companies make innovation and innovation management a top priority
- Companies invest substantial resources (financial, human, technological, etc) to innovation
- Companies try to improve their innovation and technology management processes
- Innovation is at the core of the business
There is a strong positive link between the ‘consistent investments in innovation’ and their
subsequent ‘performance’.
- Innovative organizations are more profitable and more successful
- Jones, et al defined those organizations as ‘Growth champions’
Technology
Innovation and technology are interconnected
=> Managing Innovation (often) involves and requires managing technology as well
Managing innovation
Innovation is at the core of the business and is a core process, which needs to be organized and
managed in order to enable the renewal of any organization.
Managing innovation is crucial, but how do you do this?
Essentially we are talking about change, and this can take several forms
- Product innovation – changes in the products/services, which an organization offers;
- Process innovation – changes in the ways in which they are created and delivered;
- Position innovation – changes in the context in which the products/services are introduced;
- Paradigm innovation – changes in the underlying mental models which frame what the
organization does
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, Lecture 2, developing an innovation strategy
Two fundamentals:
- Do we have a clear innovation strategy?
- Do we have an innovative organization?
Generic strategies: the 3 main strategies companies use:
- Cost advantage: companies focus on reducing their cost. They focus on efficiency to be able
to offer their product/service for a lower price
- Differentiation: companies often offer a range of products and not only one, why? They try
to address the needs of users in the best possible way, so offering only one product is not
enough. More products= more adequality address the needs
o The need it satisfies is similar but the details are different
▪ E.g. shampoos; You have a range of shampoos, the shampoo solves the
same needs= wash hair. But the range of products are tailored to the
different types of hair
- Diversification: a company has a core business and offers a wide range of products within
the core business (e.g. shampoo and condition). Based on the knowledge gathered and the
manufacturing facilities that they have, they might identify similar niches/products that are
adjacent to the current products. The company extents the line of products and services
they offer (in a slightly different business), but close enough to the core business.
o Unilever started with soup bouillon, but diversified to personal care as well because
they believed they had the capabilities
➔ Companies make strategic choices of how to allocate the limited resources they have
Resource based view: Companies make strategic choices of how to allocate in a strategic way the
limited resources they have
Strategy is developed on different levels:
• Corporate strategy
• Functional strategies (R&D, Manufacturing & Operations, Marketing, Sales). The strategy for
each individual unit
• Strategic Business units (SBU) strategy
o Multinational companies have a wide area of activities and products. When they
offer different types of products in different industries the company often organizes
its operations around different industries e.g. Unilever has food industry and
personal care. These different SBU’s might have different strategies
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