… .Sensitivity towards the notion….. … No final ‘right or wrong’ determination here… Why innovate in the first place? 1. Executive directive - Forbes induced fad 2. Problem/Opportunity recognition – commodity - obsolete 3. User needs & perceptual map changes – Maslov 4. Free to subscribe to Mr. Rumbolds’ strategy Upgrade? Want to be a reactor? (1957*) Generational composition… 5. Realization: People are capable – anywhere in the world (50% of all…) 6. With innovation there is no “last gold nugget” (J. Bezos) 7. Isn’t it better to succeed without innovation than failing with innovation? (80%) 8. Strategic imperative to answer: How to make money from a tech./inv. ? See Teece Matrix… *)Where does the triad (operational excellence, customer intimacy, innovation (product leadership)) come from? Michael Treacy and Fred Wiersema “The Discipline of Market Leaders”, Fig. 5. p. 45, 1997) Problem: 3 value dimensions but projected onto 2 dim space -> preposterous axiom of 3 (topologically) exclusive optima. Mr. Rumbold Are you being served? 3/22
technology or innovation/invention? Of course : The Fittest still has to compete with the Luckiest.
Difficult to make money - innovation race Inventor (patents) makes money Holder of CA Makes money Party with both, technology and CA or bargaining power makes money CA: Complement to what underpins tech/inv.: brand name, manufacturing, marketing, distribution channels, service, reputation, installed base of products, relationships with clients and suppliers and complementary technologies. 4/22
An Innovation is anything new that is actually used (‘enters the marketplace’) – whether major or minor. (Prof. Eric von Hippel)
“ An innovative product is one that makes a leap in the benefits-to-costs ratio in some area of endeavor.” “…definition of innovation is that it is the successful exploitation of new ideas.” - check for compatibility of definitions.
1) Scott Berkun, 10/08/07 googletechtalk 2) Aspirin >> Buffered, coated, child-sized, liquid… - rather well understood 3) Think of first member of a major new product line (GC) - more illusive 5/22
Companies are usually build around (very) few things they do very well, effectively and efficiently (e.g. Dell – build to demand – same for a long time. A company like an ‘engine with a single idea’). Introducing something new disrupts the pattern, obsoletes corporate expertise and production investments.
Change devalues personal intellectual property/expert knowledge & power e.g. know C, not C# (Change-management).
“ Be more innovative – across the company .” – Sometimes this is a disguise for: “save/cut cost” ROI – when it should be more focused on revenue, living up to basics: speed, quality, customer satisfaction & value created for partners.
5. Culture of expecting ‘instant perfection’ of ‘intolerance
towards mistakes’ ( Ups : High reliability Org.). Innovation is not about instant perfection.
Silicon valley : the art/understanding of falling forward – ability to survive a failure, to actually salvage and feed on it for the next step. Need an environment where there are consequences to failure in innovation, but you get to live to try another time. Diversity + purpose = win
3M Story . William McKnight. Sandpaper-engineer Richard Drew. Legends & Myths about innovation.
Attractiveness of Innovation as a function of lead-user-ness
Franke and von Hippel 2003: 1. Likelihood for innovating is higher for users having higher lead-user index. 2. Innovations developed by lead-users tend to be more (commercially) attractive. (See also: Morrison et al. 2004) Finding commercially attractive innovations: A test of lead user theory ; Franke Hippel, Schreier. Journal of Product Innovation Management, 2006, 23: 301-315 13/22
Get Stakeholders and commitment – housekeeping issues(!)
Identify the trend associated with your diffusion curve (e.g. Infection mitigation/control; Brakes)
Enter diffusion curve somewhere to the left. Start expert discussion:
“ You should really talk to …” Experts know usually someone who knows more and also about adjacent things.
4. Let this iterate and lateral moves are likely to occur. While language and questions change you begin to reach lead users and (e.g. in advanced analog markets)…
14/22 … Mindset … ..move past surface responses ..listen for unexpected nuggets ..semi-structured interviewing + ‘ snowballing/pyramiding’ vs. mass-screening (Mary Sonnack, 3M scientist & Joan Churchill, psychologist) DI p. 133…
Traditional Market Research focuses on the typical target market with functional fixedness i.e. where they don’t stray much from the needs and solutions they directly experience. Adopter categorization according to inventiveness; Source: Diagram based on: Rogers, E. M. Diffusion of Innovations . New York: Free Press, p. 182. Adopter categorization according to inventiveness 15/22
Some traditional approaches: (….“ Find a need and fill it .”)
Observation of users: “Many users are using / modifying our products this way – let’s add that feature for them.”
Sales channel inputs: “My customers are asking for visible sample indicators on gel-cartridge – I said we could do that for them.”
“ Me too / me better: “Competitors are getting good sales with their long shelf-life gels – lets do long shelf-life and Raspberry aroma !”
Traditional quantitative/qualitative marketing research, etc. + new
Customers stick to more complex problem solving strategy (p. 112 SI) steeped in the present, unlikely to come up with concepts that conflict with the familiar. (Even the “ new” is reasonably familiar.) Info shelf-life limited.
There is no mechanism to induce users to identify all product attributes potentially relevant to a product category (also those attributes currently not present) .
This, together with the stickiness of information hints that manufacturer innovations will tend to be DOM-type innovation. Lets see…
Solution types in which we specialize (Manufacturer)
Imagine information transfer had no cost associated with it:
Quality of Information available to problem solvers =/= F( x ).
We could understand user-needs deeply and well.
But it turns out that information is costly to transfer.
*) (raw) Data -> Information -> Knowledge ‘ Full-cooperation-Studies find : “…the costs of transferring information during product and service development are likely to be at least as high.” (DI, p. 67 - three studies) Consequence versus Cause : absorptive capacity (need learn more basic math or circuit board design first), Access fees, Tacit Map stickiness to cost: “ In any particular instance , the stickiness of a unit of information is defined as the incremental expenditure required to transfer that unit of information to a specified location in a form useable by a specified information seeker .” (von Hippel, 1994 DI p. 67) Tacitness - lack of explicit encoding: Apprenticeship Pedal, pedal,… 17/22
Amount of information required by a problem solver
Do not know in advance which particular items are important
Contingency on solution path
Team vs.. Group & cost of discrimination
Information Asymmetries affect User & Manufacturer Innovation: Different stocks of information - possibly expensive to acquire info that is needed but not in stock. Dimension of Function vs. Dimension of Merit (DOM Products) Controlling for profit expectations see Ogawa1998 Kendall Bringing full and accurate need and solution information together is often VERY difficult but Innovator/Problem solver needs both -> 50% prescriptions in U.S. are “off label” uses. 18/22
Reframe the initial product or service design problem which draws on two sticky information sites into sub problems each of which draws on sticky information located at only one site. (E. v. Hippel) E.g. Toolkits:
Full-Custom IC-Design vs. Gate-Array-IC Design or Flavors: With toolkits customers –not manufacturers -need to “understand customer need” . ($15 billion in 2000; development time down by 2/3)
Economics of sticky information tends to shift the locus of problem-solving to users (learn in own use-environment).
You can’t afford to understand the needs of smaller customers and design custom solutions for them – with
toolkits you can reach ‘potential customers’ that were out of reach before. ‘Outsource’ the need-intensive task to them.