Transcript Innovation - California State University, Channel Islands

Innovation in the New Economy
Minder Chen
Professor of MIS
California State University Channel Islands
[email protected]
© Minder Chen, 2012-2014
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Importance of Innovation
• “In a world of ever-accelerating change,
innovation is the only insurance against
irrelevance.
• In an environment of steadily decreasing
friction and crumbling entry barriers,
innovation is the only antidote to margincrushing competition.
• And in a global economy where knowledge
advantages dissipate ever more rapidly,
innovation is the only brake on
commoditization.“
–
Gary Hamel, “Introduction” to the Innovation to the Core
© Minder Chen, 2012-2014
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Definition of Innovation
• An innovation is the creation and application of a
new or significantly improved technology,
product/service, process, or business model that
is accepted by markets and society.
– Adapted from OECD 2005 and Wikipedia.
• Innovation applies ideas and new knowledge to the
production of goods and services to improve
product/service quality and process performance.
– UK Design Council
http://www.youtube.com/watch?v=2NK0WR2GtFs&feature=watch-vrec
http://www.designcouncil.org.uk/Documents/Documents/OurWork/Insight/DesignForInnovation/DesignForInnovation_Dec2011.pdf
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Formula for True Innovation
• America’s advantage, if it continues to
have one, will be that it can produce
people who are also more creative and
imaginative, those who know how to
stand at the intersection of the
humanities and the sciences.
• That is the formula for true innovation, …
– Walter Isaacson is the author of “Steve Jobs.”
– http://www.nytimes.com/2011/10/30/opinion/sunday/
steve-jobss-genius.html?pagewanted=all&_r=0
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Innovation: Creative Destruction
• A commercialization process based on the
application of new materials and their
components, new technical methods, new
markets and new forms of organization.
– Joseph Schumpeter
• The innovation involves both technical world
and business world. A change in technology
only is just an "invention“.
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Creativity
• Creativity is the quality or ability to create or
invent something original.
• “Genius is 1% inspiration and 99% perspiration.”
– Thomas Edison
• Creativity is about coming up with the big idea.
Innovation is about executing the idea —
converting the idea into a successful business.
– Vijay Govindarajan
–
http://blogs.hbr.org/govindarajan/2010/08/innovation-is-not-creativity.html
• Innovation is applied creativity.
© Minder Chen, 2012-2014
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©
Minder Chen, 2012-2014
http://www.slideshare.net/Busarovs/innovations-3833340
Technology
Innovation
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Does Customer Know What They Want?
• Seeing what customers have not yet
imagined but will instantly desire.
• “If I had asked my customers what
they wanted, they’d have said a
faster horse.”
- Henry Ford
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Drivers for Innovation
• Necessity is the mother of invention.
• Where there is a friction (frustration), there is an
opportunity.
– Zappos’ founder Nick Swinmurn
– Dropbox file sharing: Drew Houston reportedly conceived
the idea for Dropbox after repeatedly forgetting his USB
drive
– Chinapages.com by Jack Ma
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Product & service
Innovation
© Minder Chen, 2012-2014
Polaroid Camera
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(Instant
Camera)
Model-T: a true innovation
available to a wide audience.
pleasure car  passenger car
Process
Innovation
Moving assembly line
Steal from : Meat Packing Plant
High wage;
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Business model
Innovation
Southwest
Zara: Fast Fashion
Dell: Direct sales
IKEA: Self-assembled furniture
Apple: iPod & iTune  ecosystem innovation
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Architecture of Innovation
Intersection & Integration
Science/Technology
Consumer
Humanity/Art
Business Model Innovation
Process Innovation
End product/
service
&
Component
Business
© Minder Chen, 2012-2014
Experience
Innovation
Technology
Innovation
Creativity & Imagination
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The Rate of Innovation: Product vs. Process
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Key Factors at Three Phases
Fluid
Transitional Specific
Product
Radical,
frequent
Dominant
design
Incremental,
rare
Process
Rare, rely
on skills
General
equipment
Specialised
equipment
Semistructured
Hierarchical
Fragmented Segments
Commodity
Organisation Organic
Market
Competition Increasing,
different
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Decreasing,
more similar
Few similar
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Innovation Diffusion
Invent
The Process of Innovation Diffusion
Persuade
Decide
Reject
Abandon
Accept
Adopt
Implement
The cumulative distribution of
innovation adopters who are
characterized by the timing of
their decision to accept and
implement the innovation.
S-Curve or the
logit function for
rate of diffusion
adoptation.
Innovation
Diffusion
Function to
Saturate a
Market
©Everett
MinderM.
Chen,
2012-2014
Rogers
(1931-2004), Diffusion of Innovations, 4th edition (1995)
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Technology Forecasting
• “I think there is a world market for maybe five
computers.”
– Thomas Watson, Chairman, IBM (mainframe giant),
1943
• “This telephone has too many shortcomings to
be seriously considered as a means of
communication. The device is inherently of no
value to us.”
– Western Union (telegraph) internal memo, 1876
• “There is no reason why anyone would want a
computer in their home.”
– Ken Olsen, Founder, Digital Equipment Corp.
(minicomputer giant) 1977
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5 Factors of Innovation Adoption Decision (Roger)
Factor
Definition
Relative
Advantage
How improved an innovation is over the previous
generation.
Compatibility
The level of compatibility that an innovation has to be
assimilated into an individual’s life.
Simplicity or
Complexity
If the innovation is perceived as complicated or difficult to
use, an individual is unlikely to adopt it.
Trialability
How easily an innovation may be experimented. If a user
is able to test an innovation, the individual will be more
likely to adopt it.
Observability
The extent that an innovation is visible to others. An
innovation that is more visible will drive communication
among the individual’s peers and personal networks and
will in turn create more positive or negative reactions.
© Minder Chen, 2012-2014
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Service innovation is inherently multidisciplinary
Knowledge sources driving “service” innovations…
Technology
Innovation
Science &
Engineering
Business
Innovation
Business
Administration
and
Management
TQM
Reengineering
Laser,
seminconductor
Social-Organizational
Innovation
Social Sciences
Demand
Innovation
Global
Economy
& Markets
Grameen Bank (Bank of
Groupon
the poor, Micro lending)
SSME = Service Sciences, Management, and Engineering
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Three Types of Restaurants
Hotpot
火
鍋
Teppanyaki-type
Restaurant
(i.e., Benihana)
Source: Service Is Front Stage
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T-Shaped Talents: skills, abilities, and knowledge
T-shaped professionals are in
high demand because they
have both depth and breadth
 Cross-disciplinary communication
 Service system design, management, and modeling
 Value co-creation analysis
They combine expert thinking
(depth in one or more areas)
and complex communications
(breadth across many areas)
complex communication
 Service lifecycle analysis (for quality assurance)
 Service supply and demand management
 New service development
 Business project management
 Business case development and analysis
expert thinking
 Organizational change management
 Marketing and sales
 Creative and critical thinking
 Communication skills
 Leadership and collaboration skills
Wendy Murphy & Bill Hefley, “What’s new in service science, management, and engineering?”
Presented at Frontiers in Service Conference, October 2008
© 2009 IBM Corporation
© 2005 IBM Corporation
For Innovation Opportunities
Demographics
New Perception
New knowledge
Rule
breaking
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Evolution of Dominant Market Demand and Firm’s Focus
Firm’s
Focus
Market
Demand
Time
Adapted from Felix Janszen, The Age of Innovation, 2000, p. 19.
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Discovery, Invention, and Innovation
“If an idea begat a discovery, and if a
discovery begat an invention, then an
innovation defined the lengthy and wholesale
transformation of an idea into a technological
product (or process) meant for widespread
practical use. Almost by definition, a single
person, or even a single group, could not
alone create an innovation. The task was too
variegated and involved.”
–
The Idea Factory, by Jon Gertner
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Discovery vs. Invention
• lightning was a form of electricity.
Applied creativity — taking clever
ideas and smart designs and
applying them to useful devices.
– Walter Isaacson
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Invention vs. Innovation
• iPod wasn't the first portable music device (Sony
popularized the "music anywhere, anytime" concept 22
years earlier with the Walkman; MP3)
• What made Apple innovative was that it combined all
of these elements -- design, ergonomics and ease of
use -- in a single device, and then tied it directly into a
platform that effortlessly kept that device updated with
music.
• Apple invented nothing. Its innovation was creating an
easy-to-use ecosystem (with iTune Store, iTune, ans
iPod) that unified music discovery, delivery and
device. And, in the process, they revolutionized the
music industry.  Creative Collision
Source:
http://www.pbs.org/idealab/2012/03/the-difference-between-invention-and-innovation086.html
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Innovation Arena: TAMO
New processes
New services
New materials
and components
A problem looks
for a solution.
A solution looks
for a problem.
Adapted from Felix Janszen, The Age of Innovation, 2000, p. 9.
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From Ideas to Product/Service/Business
Idea
Uncertainty
Is it possible?
Is it attractive?
Between the conception
And the creation
Between the emotion
And the response
Falls the Shadow
- T.S. Elliot
Is it do-able?
Is it what our customers want?
How do we implement it?
Product/Service/
Business
Resource allocated
Source: Felix Janszen, The Age of Innovation, 2000, p. 99.
And http://www.artofeurope.com/eliot/eli2.htm
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Manage the Product/Innovation Pipeline
© Minder Chen, 2012-2014
http://www.keytechinc.com/blog/index.php/2009/reduce-risk-product-development/
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Innovation Arithmetic
• Build up the pipeline
• Quantity matters
© Minder Chen, 2012-2014
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Innovation Pipeline
Source: http://www.cimaglobal.com/Documents/ImportedDocuments/cid_tg_innovation_management_jul07.pdf.pdf
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An Innovation Process
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Seven Innovation Myths
1. Innovation is risky.
2. Innovation is (only) about products.
3. Innovation is about "big" ideas.
4. Innovation can't be taught.
5. Innovation is a diversion.
6. Innovation is expensive.
7. Innovation is an exception.
Source: Innovation to the core
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