Transcript Simulation Innovation II

Simulation Innovation III:
Managing Intellectual Capital
to Drive Innovation
Roger Smith
SPARTA Inc.
[email protected]
407.380.0076
© Copyright 2005, Roger Smith
Simulation Innovation
Innovation & New Technology Displace Established Technology & Practitioners
1947
1985
2005
Innovation
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Disruptive Innovation
3-Phase Innovation
Intellectual Capital
Disruptive Innovation
Christensen’s Disruptive Innovation
Product Performance
Performance demanded
at the high end of the
market
Performance demanded
at the low end of the
market
Market disruption
opportunity
Time
Christensen, C. (1997). The Innovator’s Dilemma. Harvard Business Press.
Progress = Waves of Disruption
Own the Market
Share Low End Upper
Half
Niche
Squeezed Out
Product Performance
OOS
SIMNET
Forterra
AW-VTT
America’s
CCTT
Google
Army
Spearhead
MS Flight
Time
Closer Than You Think!
Smith, R. (2005). Simulation Innovation: Disruptive Effects of Innovation. VisTech Conference 2005.
Disruptive Forces in Simulation

Computer Technology
 Graphics Cards
 Game Companies & Market
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Physical Devices
 Theme Park Ride Technology
 Electric vs. Hydraulic Motion
Actuators
Customer Perspective
 Societal Immersion in Games
 Military Acceptance of Games
Growth Strategy
Own the Market
Product Performance
Simulation:
Weather,
Markets,
Medical
Share Low End Upper
Half
Move Up:
Change Customers
Defense Training
& Analysis
Corporate Training,
Education
Move Down:
Change Industries
Time
Niche
Squeezed Out
Recommendations
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Disruptive innovations move through markets
Move Vertical to new technologies
Move Up to new customers
Move Down to new industries
3-Phase Innovation in Industry
Utterback’s 3-Phases of Innovation
Explosion of
different
designs, Era of
radical product
innovation
Standardization
of design,
Emergence of
process
innovation
Contraction of
competitors,
Era of
incremental
innovation
Product Innovation
Process Innovation
Rate of
Major
Innovation
Dominant Design
Lowest Cost
Fluid Phase
time
Transitional
Phase
Specific Phase
Utterback, J. (1996). Mastering the Dynamics of Innovation. Harvard Business School Press.
Simulation Innovation Examples
Explosion of
different
designs, Era of
radical product
innovation
Standardization
of design,
Emergence of
process
innovation
Contraction of
competitors,
Era of
incremental
innovation
Product Innovation
Game
Wireless
Rate of
Major
Innovation
Process Innovation
Game
Web
Serious
Games
Military
Simulation
Dominant Design
Sim: LVC
Games: Genres (FPS, RTS, etc)
Fluid Phase
time
Transitional
Phase
Specific Phase
Unsuccessful Path: Stay The Course
Product Innovation
Rate of
Major
Innovation
Fluid Phase
time
Transitional
Phase
Specific Phase
Successful Path: Jump Industries
Wireless Games
Expertise
Serious Web Games
Expertise
Expertise
Expertise
Serious Games
Expertise
Expertise
Expertise
Expertise
Computer Simulation
Expertise
Fluid:
Transitional: Specific:
R&D, New Mass
Services
Products Production
Successful Path: Skate the Top
(1) Open with
rapid and
prolific
innovation
(3) Push
standards and
build community
around yours
(4) Focus on
low-cost
products and
services
Product
Innovation
Process
Innovation
Rate of
Major
Innovation
Dominant
Design
Lowest
Cost
(2) Create and
own the
dominant
design
Fluid Phase
time
Transitional
Phase
Specific Phase
Every Organization Will Not Survive
Skate the Top
Jump Industries
5%
10%
Stay the Course
85%
Recommendations
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Flexible
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Specialized
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Change the company to follow the market
Fluid >> Transitional >> Specific
Jump across domains to grow specific expertise
Retain your specialized expertise
Immovable
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Stay the Course Until Extinction
Most companies follow this path
Applying Intellectual Capital
2 Types of Innovation
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Incremental
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“build on and reinforce the applicability of
existing knowledge”
“improving and exploiting an existing
technological trajectory”
Radical (a.k.a. Disruptive)
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“destroy the value of an existing knowledge
base”
“disrupt an existing technological trajectory”
Leifer, R. et al. (2000). Radical Innovation: How mature companies can outsmart upstarts . Harvard Business School Press.
Incremental Innovation – The Pen
Radical Innovation
“Either write something
worth reading or do
something worth writing.”
-- Benjamin Franklin, 1706
“I will now claim -- until
dispossessed -- that I was the
first person in the world to apply
the typewriter to literature.”
-- Mark Twain, 1875
“There is no reason for
any individual to have a
computer in his home.”
-- Ken Olson, 1977
Incremental & Radical Innovation
Radical Invention
Incremental Innovation
Radical Innovation
Innovation & Benefits
Radical and Incremental Waves
Incremental
Radical
Time
Leifer, R. et al. (2000). Radical Innovation: How mature companies can outsmart upstarts . Harvard Business School Press.
3 Types of Intellectual Capital
Human
Social
Organizational
Innovation from Intellectual Capital
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Which flavors of IC promote radical
innovation vs. incremental innovation
Radical
Innovation
Incremental
Innovation
Subramaniam, M. & Youndt, M. (June 2005). The Influence of intellectual capital on the types of innovative capabilities.
Academy of Management Journal, 48(3), 450-463.
Organizational Capital = Incremental
Innovation
Organizational
Capital
Incremental
Innovation
Social Capital = Incremental Innovation
Social
Capital
Incremental
Innovation
Human Capital = Radical Innovation
Human
Capital
Radical
Innovation
Human + Social = Radical Innovation
Human
Capital
Social
Capital
Radical
Innovation
Effective investments in IC
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Human Resources Management
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Information Technology
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Captures & Nurtures Human Capital
Fosters Social Capital
Research & Development
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Generates Organizational Capital
Motivates Human and Social Capital
IC and Innovation a System View
Human
Resource Mgt
IT
Social
Capital
Human
Capital
Organizational
Capital
No Effect
+
-
R&D
+
Radical
Innovation
+
+ Incremental
Innovation
+
IC Recommendations
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Investments in Social Capital are essential for
both Incremental and Radical Innovation
Human Capital must be supplemented with
Social Capital to have a positive impact on
Radical Innovation
Organizational Capital is Strongly Correlated
with Incremental innovation
References
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Christensen, C. (1997). The Innovator’s Dilemma: When new
technologies cause great firms to fail. Harvard Business School Press.
Christensen, C. & Raynor, M. (2003). The Innovator’s Solution:
Creating and sustaining successful growth. Harvard Business School
Press.
Utterback, J. (1996). Mastering the Dynamics of Innovation. Harvard
Business School Press.
Subramaniam, M. & Youndt, M. (June 2005). The Influence of
intellectual capital on the types of innovative capabilities. Academy of
Management Journal, 48(3), 450-463.
Leifer, R. et al. (2000). Radical Innovation: How mature companies
can outsmart upstarts. Harvard Business School Press.