Innovation Management hoorcollege aantekeningen
Week 1
What is innovation?
➢ Invention: an idea, sketch or model for a new or improved device, product,
process or system
➢ Innovation: process and outcome of creation and commercialization of
something new
Innovation includes opportunity identification, ideation (=creative process of generating,
developing and communication new ideas) or invention development, prototyping,
production, marketing and sales
Entrepreneurship only needs to involve commercialization (depending on definition
used) => Innovation = Invention + explotation
= > does benefit the society a lot
Standard economics of strategy can be boring: analyzing existing structures etc.
Innovation is about:
o Creation (and destruction)
o Change
o Novelty
Why is innovation so difficult?
Innovation funnel: most innovative ideas do
not become successful new products
(estimated 70% - 90%)
Carefully crafted strategies required
Barriers, competitiors, innovation
patterns, environment, etc.
Innovations emerge from failure => Jeff Bezos founding Amazon after his businesses
failed several times before
Sources of Innovation
- Firms
- Individuals
- Universities
- Private / non-profit
- Government/ funded research
R&D by firms
Research refers to both basic and applied research
Basic research: aims at increasing understanding of a topic or field without an
immediate commercial application in mind
, Applied research: aims at increasing understanding of a topic or field to meet a
specific need
Development: refers to activities that apply knowledge to produce useful devices,
materials, or processes.
R&D refers to a range of activities that extend form early exploration of a domain
to specific commercial implementations.
Demand pull / technology push
➢ Technology/science push
o Scientific discovery -> invention -> manufacturing -> marketing
o Linear model emphaszes “supply side”
➢ Need/Demand pull
o Costumer suggestions -> invention -> manufacturing
o Linear model emphasizes “demand side”
Innovation process likely to be non-linear
Most current research emphasizes that innovation originates from a variety of sources
and follow a variety of paths.
Supply determinants of innovation
Technological opportuninty -> state of the relevant scientific and technological
knowledge
Cost and availability of inputs -> knowledge workers, scientific personnel, equipment
Appropriability -> ability to capture profit from innovation
Demand determinants of innovation
Cost reduction potential from innovation (process innovation; new sources of supply;
organizational change)
Consumer or producer benefit from novel product (= product innovation)
Consumer or producer benefit from improvements (= incremental product innovation)
TP/DP risks
➢ Technology push => develop solution for which there is no problem
➢ Demand Pull => missing ability to invent technology to solve problem
Development of innovation model: Rothwell’s five generations of innovation models
1&2) Linear models – need pull and technology push
3) Interaction between different elements and feedback loops between them – the
coupling model
4) Parallel lines model, integration within the firm, upstream with key suppliers and
downstream with demanding and active costumers, emphasis on linkage and
alliances
5) systems integration and extensive networking, flexible and customized response,
continuous innovation
External sources
➢ licensing, purchasing
, ➢ externalities (technological, pecuniary)
Combinations of external and internal sources
➢ strategic partnership
➢ cross licensing
Innovation in collaborative networks
➢ Technology clusters are regional clusters of firms that have a connection to a
common technology
Though today’s information technology enables fast, cheap and easy communication
across the globe, knowledge does not always transfer so easily
Encompass an array of industries that are linked through relationships between
suppliers, buyers and producers of complements.
Technological spillovers / knowledge externaltities
➢ Technological spillovers occur when the benefits form the research activities of
one entity spill over to other entities
o Likelihood of spillovers is a function:
▪ Strength of protection mechanisms (patents, copyright, trade
secrets)
▪ Nature of underlying knowledge base
▪ Mobility of the labor pool
Types of Innovation - Product innovation vs process innovation
➢ Product innovation
o Embodied in firm output (good or service)
▪ New product
➢ Process innovation
o Techniques of producing output
▪ More efficient production
Appear very often in combination
Product innovations can enable process innovations and vice versa
Product innovation for one firm may be a process innovation for another firm
Types of Innovation - level of newness – radical vs incremental innovation
➢ Degree of ‘departure’ form exisisting practices
➢ Radical = high degree of newness / differentness
➢ Incremental = marginal degree of newness / differentness
Types of Innovation – competence-enhancing vs competence destroying innovation
➢ Always from the perspective of a specific actor
➢ An innovation is competence enhancing if the innovation build on the firm’s
existing knowledge base.
➢ An innovation is competence destroying if the innovation renders a firm existing
competencies obsolete
Week 1
What is innovation?
➢ Invention: an idea, sketch or model for a new or improved device, product,
process or system
➢ Innovation: process and outcome of creation and commercialization of
something new
Innovation includes opportunity identification, ideation (=creative process of generating,
developing and communication new ideas) or invention development, prototyping,
production, marketing and sales
Entrepreneurship only needs to involve commercialization (depending on definition
used) => Innovation = Invention + explotation
= > does benefit the society a lot
Standard economics of strategy can be boring: analyzing existing structures etc.
Innovation is about:
o Creation (and destruction)
o Change
o Novelty
Why is innovation so difficult?
Innovation funnel: most innovative ideas do
not become successful new products
(estimated 70% - 90%)
Carefully crafted strategies required
Barriers, competitiors, innovation
patterns, environment, etc.
Innovations emerge from failure => Jeff Bezos founding Amazon after his businesses
failed several times before
Sources of Innovation
- Firms
- Individuals
- Universities
- Private / non-profit
- Government/ funded research
R&D by firms
Research refers to both basic and applied research
Basic research: aims at increasing understanding of a topic or field without an
immediate commercial application in mind
, Applied research: aims at increasing understanding of a topic or field to meet a
specific need
Development: refers to activities that apply knowledge to produce useful devices,
materials, or processes.
R&D refers to a range of activities that extend form early exploration of a domain
to specific commercial implementations.
Demand pull / technology push
➢ Technology/science push
o Scientific discovery -> invention -> manufacturing -> marketing
o Linear model emphaszes “supply side”
➢ Need/Demand pull
o Costumer suggestions -> invention -> manufacturing
o Linear model emphasizes “demand side”
Innovation process likely to be non-linear
Most current research emphasizes that innovation originates from a variety of sources
and follow a variety of paths.
Supply determinants of innovation
Technological opportuninty -> state of the relevant scientific and technological
knowledge
Cost and availability of inputs -> knowledge workers, scientific personnel, equipment
Appropriability -> ability to capture profit from innovation
Demand determinants of innovation
Cost reduction potential from innovation (process innovation; new sources of supply;
organizational change)
Consumer or producer benefit from novel product (= product innovation)
Consumer or producer benefit from improvements (= incremental product innovation)
TP/DP risks
➢ Technology push => develop solution for which there is no problem
➢ Demand Pull => missing ability to invent technology to solve problem
Development of innovation model: Rothwell’s five generations of innovation models
1&2) Linear models – need pull and technology push
3) Interaction between different elements and feedback loops between them – the
coupling model
4) Parallel lines model, integration within the firm, upstream with key suppliers and
downstream with demanding and active costumers, emphasis on linkage and
alliances
5) systems integration and extensive networking, flexible and customized response,
continuous innovation
External sources
➢ licensing, purchasing
, ➢ externalities (technological, pecuniary)
Combinations of external and internal sources
➢ strategic partnership
➢ cross licensing
Innovation in collaborative networks
➢ Technology clusters are regional clusters of firms that have a connection to a
common technology
Though today’s information technology enables fast, cheap and easy communication
across the globe, knowledge does not always transfer so easily
Encompass an array of industries that are linked through relationships between
suppliers, buyers and producers of complements.
Technological spillovers / knowledge externaltities
➢ Technological spillovers occur when the benefits form the research activities of
one entity spill over to other entities
o Likelihood of spillovers is a function:
▪ Strength of protection mechanisms (patents, copyright, trade
secrets)
▪ Nature of underlying knowledge base
▪ Mobility of the labor pool
Types of Innovation - Product innovation vs process innovation
➢ Product innovation
o Embodied in firm output (good or service)
▪ New product
➢ Process innovation
o Techniques of producing output
▪ More efficient production
Appear very often in combination
Product innovations can enable process innovations and vice versa
Product innovation for one firm may be a process innovation for another firm
Types of Innovation - level of newness – radical vs incremental innovation
➢ Degree of ‘departure’ form exisisting practices
➢ Radical = high degree of newness / differentness
➢ Incremental = marginal degree of newness / differentness
Types of Innovation – competence-enhancing vs competence destroying innovation
➢ Always from the perspective of a specific actor
➢ An innovation is competence enhancing if the innovation build on the firm’s
existing knowledge base.
➢ An innovation is competence destroying if the innovation renders a firm existing
competencies obsolete
