Most important theme
Theme 6: Innovation & strategy
Game changing Management of Innovation
What will we see
• IBM Case: innovate or die – a darwinian interpretation
• Innovation & Strategic moves: offensive and defensive moves
• Innovation & operational scope: M&A, Alliances, Vertical & Horizontal integration
• Strategic Innovation: what, why, who, where and how
• Disruptive innovation:
(1) Technology
(2) Product
(3) Process
(4) Membership model
• Innovative internet of things & digitization (industry 4.0)
IBM Case (EXAM)
Innovate or Die: how to avoid being oblivious?
How do you adapt to a different context, to a different reality?
Here you see clearly: IBM was known for making machines (big computers) up to the 70. In the
90’s, a new CEO was pointed. He thought ‘the future may be in this whole internet, not in
machines’. IBM had such a structure that: any investment that was not one billion dollar big, was
not seen as important for IBM.
,Because of this structure. They didn’t embrace the opportunities of the internet. So, the new
CEO changed the organizational structure. He wanted to think like intrapreneurs. Not just
thinking about the big projects that they were used to work for. He needed to structure it in such
a manner that, every project that they would go into, was at least going to be big enough to
justify the investment.
Translating Darwin theory to IBM: IBM was firstly known as a company that sold main frame
computers and pc’s. In 97 the Internet became famous. IBM found out that there was nothing they
were doing captured this new trend. The whole structure as a group was in that way that they
would die because Internet companies were that small. IBM had to be more flexible. IBM was in
97 stuck to its mature businesses and not looking at growth business (being the internet) and at
future business. IBM had to explore the Internet business. IBM had to learn to adapt itself in order
to survive. Today IBM is not just a manufacturer for computers but they are a solution provider for
other companies in terms of creating software for them. This is way it reflects in the stock changes
because people believe that the new trends will generate revenue.
EBO: emerging business opportunities.
In 2000, when he executed that strategy (embracing internet), it was a very small portion of the
revenues. In 2006, it was 24%. Today: about 80% of all revenues, where coming from the
business software solutions.
These are projects like smart city’s, healthcare solutions, etc.
2
, Adaptability, prediction and resilience lie at the heart of great strategy
Resilience: you are strong enough (mentally or cash flow wise) to face unforeseen shocks (like
COVID).
IBM was a perfect example of a company that adapted to that environment.
The importance of strategic innovation
INNOVATION IN INDUSTRY 4.0
Offensive or defensive strategic moves.
• Offensive: you embrace new technology like your life is on the line (amazon)
Advantage of first mover: AMAZON.COM
It is an offensive move that they were the first.
• Which first-mover advantages did Jeff Bezos have in starting Amazon.com?
• What first-mover disadvantages did Bezos have to watch for after starting Amazon.com?
• Why was the learning curve to steep for Amazon.com?
E-commerce is driving this.
Amazon has been for 10 years an online retailer for books. They had a small portion of market
share. But suddenly (2005) they expanded. One of the reasons is that they bankrupted a big
bookstore chain. They couldn’t compete with the availability of all the books online. Amazon is
taking 40% of the bookmarket.
The use of autonomous drones: the wet dream of amazon would be that they send a title to
someone even before the person knows it exist. They predict the purchasing behaviour.
3
Theme 6: Innovation & strategy
Game changing Management of Innovation
What will we see
• IBM Case: innovate or die – a darwinian interpretation
• Innovation & Strategic moves: offensive and defensive moves
• Innovation & operational scope: M&A, Alliances, Vertical & Horizontal integration
• Strategic Innovation: what, why, who, where and how
• Disruptive innovation:
(1) Technology
(2) Product
(3) Process
(4) Membership model
• Innovative internet of things & digitization (industry 4.0)
IBM Case (EXAM)
Innovate or Die: how to avoid being oblivious?
How do you adapt to a different context, to a different reality?
Here you see clearly: IBM was known for making machines (big computers) up to the 70. In the
90’s, a new CEO was pointed. He thought ‘the future may be in this whole internet, not in
machines’. IBM had such a structure that: any investment that was not one billion dollar big, was
not seen as important for IBM.
,Because of this structure. They didn’t embrace the opportunities of the internet. So, the new
CEO changed the organizational structure. He wanted to think like intrapreneurs. Not just
thinking about the big projects that they were used to work for. He needed to structure it in such
a manner that, every project that they would go into, was at least going to be big enough to
justify the investment.
Translating Darwin theory to IBM: IBM was firstly known as a company that sold main frame
computers and pc’s. In 97 the Internet became famous. IBM found out that there was nothing they
were doing captured this new trend. The whole structure as a group was in that way that they
would die because Internet companies were that small. IBM had to be more flexible. IBM was in
97 stuck to its mature businesses and not looking at growth business (being the internet) and at
future business. IBM had to explore the Internet business. IBM had to learn to adapt itself in order
to survive. Today IBM is not just a manufacturer for computers but they are a solution provider for
other companies in terms of creating software for them. This is way it reflects in the stock changes
because people believe that the new trends will generate revenue.
EBO: emerging business opportunities.
In 2000, when he executed that strategy (embracing internet), it was a very small portion of the
revenues. In 2006, it was 24%. Today: about 80% of all revenues, where coming from the
business software solutions.
These are projects like smart city’s, healthcare solutions, etc.
2
, Adaptability, prediction and resilience lie at the heart of great strategy
Resilience: you are strong enough (mentally or cash flow wise) to face unforeseen shocks (like
COVID).
IBM was a perfect example of a company that adapted to that environment.
The importance of strategic innovation
INNOVATION IN INDUSTRY 4.0
Offensive or defensive strategic moves.
• Offensive: you embrace new technology like your life is on the line (amazon)
Advantage of first mover: AMAZON.COM
It is an offensive move that they were the first.
• Which first-mover advantages did Jeff Bezos have in starting Amazon.com?
• What first-mover disadvantages did Bezos have to watch for after starting Amazon.com?
• Why was the learning curve to steep for Amazon.com?
E-commerce is driving this.
Amazon has been for 10 years an online retailer for books. They had a small portion of market
share. But suddenly (2005) they expanded. One of the reasons is that they bankrupted a big
bookstore chain. They couldn’t compete with the availability of all the books online. Amazon is
taking 40% of the bookmarket.
The use of autonomous drones: the wet dream of amazon would be that they send a title to
someone even before the person knows it exist. They predict the purchasing behaviour.
3
