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G3_ASm_Growth through Innovation (Growing through innovation (Who…
G3_ASm_Growth through Innovation
Innovation Strategies
Follower strategy
Avoid costs and risks of innovation
Leverage complementary capabilities to out-compete rivals
Key factors
firm's innovation capability
firm's ability to appropriate gains from
Innovator strategy
Use superior capabilities or industry structure to find off rivals
Continually innovate to capture temporary economic rents
Developing Innovative capability
Creating a climate to generate and pursue novel ideas
give freedom to fail
provide incentives to innovate
encourage free flows of information
Designing an effective development process
selecting and articulating clear product concepts
team composition and tenure
interfirm coordination
Assimilating knowledge generated outside the boundaries of the firm
Basic research is often public goods
understand developments must invest in seience
important knowledge distributed throughout firm and market
Growing through innovation
Definition
Development of new ways to create and deliver value
Why it's important?
Innovation drives our economy forward
An opportunity to avoid the creative destruction process
It's difficult because
R&D expense is high
Large capital investment
Billions
Return On Investment is hard to be calculated
NPV hard to predict
MES is relatively moderate
Arrive unannounced and from far afield from where you originally intended
Who innovates?
Entrepreneur vs Large incumbents
Demand pull vs Technology push
Users vs Product
Breadth vs Depth of expertise
Explorers vs Exploiters
Skunk works vs Planner
Complementary Assets :
what
those assets necessary to translate an innovation into commercial returns.
ex: hardware products and software products
How important
perspective of innovation /asset
specialized
high innovator, low asset
novelty and Walmart
low innovator, high asset
eBay and companies
co-specialized
high innovator, high asset
How tightly held
how to deal with monopoly companies
assets are freely available
ex: manufacturing capacity
Keys to innovation
Integrate diverse knowledge
establishing effective lines of communication
create cross functional teams
create broad vision and shared values
Manage expectations
Provide motivation for innovation
establish high-powered upside incentives for innovating
give greater ownership to managers
invest in creative search
encourage risk taking by sharing responsibility
Build absorptive capacity
invest in basic or leading edge research
reward individuals on the basis of their standing outside the firm and to allow participation
take part in joint ventures or industry consortia that keep the firm 'in the loop'
give away key ideas in order to be a 'player'
encourage diversity
Organising for Innovation
No single best way to organize
Each way of organising has pros and ocns
Best way depends on competition, rate of technological change, industry, complexity of product, time of market
Can be organise in a number of ways
Chaotic (unidivisional)
Description - generate idea then act(skunk costs)
-characterised by disorder and conflict
Pros and cons
Sequential (functional)
Description - project passed from one functions to the next
go/no-go decisions at each point in the process
-can be iterative or looping
Pros and cons
Concurrent (project)
Description - completely overlap (cross-functional teams)
all functions work together for the entire project
Pros and cons
Overlapping (matrix)
Description - allow earlier interaction between functions by overlapping
create cross-functional 'design house' from marketing & engineering (quality function deployment)
Pros and cons
Appropriating Value from Innovations
issue
capability to innovation
gain from innovation
Intellectual Property Protection
legal protect
copyright
trademarks
patents
first -mover advantage
learning curves
loyalty
network externalities
difficulty imitation
fast diffusion of consumer
large, lucrative early market
easy to adopt
Determining an lnnovation Strategy
Complementary assets
Widely available
Tightly held and specialized
IP protection
Weak
Strong
Is innovation important to our industry ?
