Notes Knowledge Clips SMTI
Week 1 Strategic importance of innovation, and innovation types & technology trajectories
Knowledge Clip 1: The importance of innovation
Importance sectors where innovation is fundamental and changing the landscape
1. Energy.
a. We know that especially in Europe and even in companies are switching towards a
sustainable direction. We can see how technology is affecting things a lot (Hydrogenic power
for example)
2. Healthcare
a. Replacement of organs for example. Researchers are trying to find organs.
3. Finance
a. Will be fully digital.
4. Automotive
a. Uber, Tesla, etc. They are trying to create driverless cars. Although they are experimental,
they are getting more and more real.
b. See clip à What is the motivation of the engineer in designing such a car (a good starting
point to think about the sources of innovation, especially of inventors).
https://www.youtube.com/watch?v=uHbMt6WDhQ8
Joseph Schumpeter (1883 – 1850)
He is one of the first economics that talked about innovation. In the time where economics talked about supply
and demand and basic stability on how you match these two. He said it’s not about stability, things change
fundamentally with the force of innovation. It destroys some firms and destroys some entrepreneurs and
instead makes others better, richer and so on. He called this pattern creative destruction.
“The process of creative destruction is the essential fact of capitalism” (Schumpeter, 1942)
Where a big innovation comes, it destroys percept’s the sector altogether and creates a new one where much
more efficient or better products or services are provided.
Example: Ice harvesters.
1
,Kondratieff (Russian economist) Waves
He has constructed innovation as broad waves of change. The Kondratieff Waves are about the fact that there
are these large periods of time where long defining general purpose technology changes economies and firms
fundamental. For example, the steam engine, it has kicked off the industrial revolution and textile industry was
born out of it. Or when you think of automobiles, which increased mobility and the transportation incredibly. It
created a new era. Likewise, the information technology as we used to know (first by hand calculations, now
excel).
Consequences of innovation: Employment
Innovation often creates jobs…but different jobs.
Researches have done a study about replacement of jobs. Which jobs are more likely to replace and which not
within the next 20 years by AI technologies?
Current economics and innovation ààààààà àààààà
Bottleneck Variables for Computerisation
Three things that they think humans are still doing better than any machine learning
technology.
These are:
2
,By using three variables and how much a job is based on for example social intelligence or not, they decided
the probability of replacement by AI. This study is an old one.
Ongoing study evidence
- Increased developments in AI (artificial intelligence) correlates with higher wages of high-software
dependent jobs
- Low- and high-software dependent jobs see a moderate increase in employment, whereas medium
software intensity jobs see a decrease in employment (though statistically all not significant).
Already after COVID-19, these companies have increased their worth (Apple 2.0 T, Amazon around 1.6T).
These companies were able to be successful, because they were focussing on their customers and improving
3
, lives. This doesn’t mean that they are saints, but also, it’s important to think that they are founded by
individual innovators (Steve Jobs), which were also focussed on how they can improve lives.
See Steve Jobs interview https://www.youtube.com/watch?v=kYfNvmF0Bqw
Knowledge Clip 2: The importance of innovation
Benchmarking innovation performance
How much performance differ between firms, whether they are at the top 20 percent on each Metric they
present here in terms of innovation etc. and the average Businesses?
Example: The top firms have 42.4% of the profits coming from NPs (New products) who released in the last
three years compared to average businesses that get their 28.4% of their profits.
You can see that those top firms, are not only good at basically profiting from their innovations, but their also
much better in innovating these projects. You can see that by how much percentage of projects commercial
fails, or they launch their projects much more on schedule (see figure above).
The important picture is that successful innovators lead not only basically profiting from that, but they also lead
on how to implement this project successful.
Ahead of the pack
4
Week 1 Strategic importance of innovation, and innovation types & technology trajectories
Knowledge Clip 1: The importance of innovation
Importance sectors where innovation is fundamental and changing the landscape
1. Energy.
a. We know that especially in Europe and even in companies are switching towards a
sustainable direction. We can see how technology is affecting things a lot (Hydrogenic power
for example)
2. Healthcare
a. Replacement of organs for example. Researchers are trying to find organs.
3. Finance
a. Will be fully digital.
4. Automotive
a. Uber, Tesla, etc. They are trying to create driverless cars. Although they are experimental,
they are getting more and more real.
b. See clip à What is the motivation of the engineer in designing such a car (a good starting
point to think about the sources of innovation, especially of inventors).
https://www.youtube.com/watch?v=uHbMt6WDhQ8
Joseph Schumpeter (1883 – 1850)
He is one of the first economics that talked about innovation. In the time where economics talked about supply
and demand and basic stability on how you match these two. He said it’s not about stability, things change
fundamentally with the force of innovation. It destroys some firms and destroys some entrepreneurs and
instead makes others better, richer and so on. He called this pattern creative destruction.
“The process of creative destruction is the essential fact of capitalism” (Schumpeter, 1942)
Where a big innovation comes, it destroys percept’s the sector altogether and creates a new one where much
more efficient or better products or services are provided.
Example: Ice harvesters.
1
,Kondratieff (Russian economist) Waves
He has constructed innovation as broad waves of change. The Kondratieff Waves are about the fact that there
are these large periods of time where long defining general purpose technology changes economies and firms
fundamental. For example, the steam engine, it has kicked off the industrial revolution and textile industry was
born out of it. Or when you think of automobiles, which increased mobility and the transportation incredibly. It
created a new era. Likewise, the information technology as we used to know (first by hand calculations, now
excel).
Consequences of innovation: Employment
Innovation often creates jobs…but different jobs.
Researches have done a study about replacement of jobs. Which jobs are more likely to replace and which not
within the next 20 years by AI technologies?
Current economics and innovation ààààààà àààààà
Bottleneck Variables for Computerisation
Three things that they think humans are still doing better than any machine learning
technology.
These are:
2
,By using three variables and how much a job is based on for example social intelligence or not, they decided
the probability of replacement by AI. This study is an old one.
Ongoing study evidence
- Increased developments in AI (artificial intelligence) correlates with higher wages of high-software
dependent jobs
- Low- and high-software dependent jobs see a moderate increase in employment, whereas medium
software intensity jobs see a decrease in employment (though statistically all not significant).
Already after COVID-19, these companies have increased their worth (Apple 2.0 T, Amazon around 1.6T).
These companies were able to be successful, because they were focussing on their customers and improving
3
, lives. This doesn’t mean that they are saints, but also, it’s important to think that they are founded by
individual innovators (Steve Jobs), which were also focussed on how they can improve lives.
See Steve Jobs interview https://www.youtube.com/watch?v=kYfNvmF0Bqw
Knowledge Clip 2: The importance of innovation
Benchmarking innovation performance
How much performance differ between firms, whether they are at the top 20 percent on each Metric they
present here in terms of innovation etc. and the average Businesses?
Example: The top firms have 42.4% of the profits coming from NPs (New products) who released in the last
three years compared to average businesses that get their 28.4% of their profits.
You can see that those top firms, are not only good at basically profiting from their innovations, but their also
much better in innovating these projects. You can see that by how much percentage of projects commercial
fails, or they launch their projects much more on schedule (see figure above).
The important picture is that successful innovators lead not only basically profiting from that, but they also lead
on how to implement this project successful.
Ahead of the pack
4
