1. Bus. 430 Final Exam
Management of Innovation
Prepared by Colton Goertzen #300092858 for Ken Blawatt - August 15, 2016
MANAGEMENT OF INNOVATION COLTON GOERTZEN 1

2. Question #1
1. Innova)on is an integral part of the entrepreneurial process.
• It requires an entrepreneurial mindset to engage innova)on and the iden)fica)on of
an opportunity.
• Discuss what would have been required in early Greece to commercialize the
aeolopile.
• Speculate on what might have happened to the global economy if there had been the
system and entrepreneurial people to introduce the “steam turbine” to the
economies of the )me.
The aeolopile was first invented in the 1st century a.d. by Heron of Alexandria. It used
compressed air to turn a sphere or cylinder using steam and jets facing opposite directions
(1). The fact that the aeolopile was not commercially introduced at the time of its conception
proves to us that a revolutionary product is useless until an entrepreneur enters the scene
with the foresight and passion to apply this invention to the market. By linking an invention
to an opportunity, solving a problem, then commercializing it generating profit and building
businesses, entrepreneurs drive the economies of the world forward (Lecture 1, slide 14),
(Lecture 3, slide 34). It would have been the entrepreneurs job at the time to educate his
customers as to the benefits of having an aeolopile work for them; particularly in the
shipping and mining industries which both were reliant on external forces.
Shipping relied on the weather to carry goods throughout the world and as a result was
unpredictable. If the ancient engineers could have devised a way for the aeolopile to be put in
place on-board ships the rotary motion of the cylinder could have given them the ability to
create the first paddle steamer. Another major application it could have had was mining. This
is because the mines would have had plenty of resources for aeolopile’s to work.(coal and
water). The workers could have used the technology to mechanically carry out mining,
reducing the need for workers to manually work the mines. However the aeolopile needed
considerable improvement for it to be commercially viable at that time. For example, the
steam engines that followed it used a much more effective nozzle design, they had high-
strength cast-iron boilers, much more efficient bearings and crucially, they had the necessary
gearing to handle the more rigorous loads (1). For these reasons the aeolopile never was able
MANAGEMENT OF INNOVATION COLTON GOERTZEN 2

3. to cope with the more demanding jobs and thus was the reason it was viewed as only a toy,
but with further development and drive the invention could have revolutionized the world.
What Greece lacked to make this product successful was the innovative culture to create
enterprises, renew existing businesses and revitalize current organizations (Lecture 1, slide
15). It lacked these three staples of an innovative country because the governing bodies of the
times viewed the populous as somewhat of an inconvenience. As such they felt education
was unimportant for everyone, however if they had been able to comprehend the
advancements individuals contribute to the economy, the graphs in figure 1 would be
dramatically shortened.
What this would
mean is that each of
these innovations in
the graph would have
come much sooner.
Had the Greeks
understood that the
aeolopile was not a
finished product and
kept refining it, asking
why it works and
trying to understand
the science behind it
our world today
would look very
different. If the
country had sought to encourage entrepreneurial thinking, develop and refine innovations,
given entrepreneurial freedom to individuals instead of dictating and offering creative
freedom to its people, the society of Greece would have seen the value the aeolopile offered
in the long run (Lecture 1, slide 37). Although the country lacked the infrastructure to
facilitate development of the aeolopile the main failing of the country at the time was that it
lacked the innovative processes necessary for commercialization of the invention, as a result
MANAGEMENT OF INNOVATION COLTON GOERTZEN 3
Figure 1 (Lecture 1, slide 32)

4. of this the society lacked the market pull to recognize the radical innovation of the steam
turbine (Lecture 4, slide 2).
Assuming that Greece and in fact the world at the time had in place the necessary processes
and facilities to manage an innovative society, i.e figure 2:
Greece would have been able to refine the aeolopile to increase it’s power output, they would
have been able to sell their idea to neighbouring countries through marketing and would
thus have become the worlds first entrepreneurial country. This would then spur them on to
develop other inventions with marketable potential by using the resources acquired from the
aeolopile. Seeing Greece’s success other nations would seek to capitalize on the profits Greece
would be achieving from their line of innovative products. At some point the governments of
the world would attempt to capture the wealth of Greece for themselves so they most likely
would attack Greece so Greece would have to innovate and develop defensive innovations to
keep the surrounding nations from trying to take the wealth from Greece by force. This
would not have been a problem for Greece because they would already have seen the value
of invention and would have probably discovered gun powder by this time, applying it to
create rifles. In short if Greece had the capabilities to recognize revolutionary ideas our waves
of innovation would have increased exponentially. As a result if Greece continued with the
entrepreneurial mindset they would be the superpower of the world today.
MANAGEMENT OF INNOVATION COLTON GOERTZEN 4
Figure 2 (Lecture 4, slide 8)

5. Today the state of the world would reflect the ground work Greece had put forward. Thus we
would put emphasis on the individuals who show entrepreneurial adeptness within both
organizations and the economy, resulting in the next evolutionary step for societies if not the
world. What I mean by this is that our world would be 2000 years farther along on it’s
evolution and the Kondratieff waves of innovation would be 2000 years more advanced on
their trajectory (Lecture 2, slide 40). Putting this into perspective and predicting what the
world would look like today, we would already have interstellar travel, Kurzweil’s
singularity would already be achieved in that our bodies would already have been
abandoned and been replaced with a virtual presence, education would be completely
revolutionized with downloadable programs, terrorism would come in the form of cyber
attacks or attacks on server warehouses where our minds would be housed, artificial
intelligence would have existed for 1900 years and we would have relationships with
programs (wether hostile or not), we would have perfected the innovation process already
and recognized it’s benefits much sooner and we would remedied global warming.
Essentially many if not all of the problems facing the world today would be solved, replaced
by new struggles for us to overcome.
1. Vortselas, A. (n.d.). How would the world today be different if the aeolipile device (steam
engine invented in 60 AD) had been developed further?. In Quora. Retrieved August 16,
2015, from https://www.quora.com/How-would-the-world-today-be-different-if-the-
aeolipile-device-steam-engine-invented-in-60-AD-had-been-developed-further
MANAGEMENT OF INNOVATION COLTON GOERTZEN 5

6. Question #3
2. New product and services innovation is important to three levels of society; the
government and the economy, to corporations/organizations and to the individual in
society.
How does new product and/or services development make a contribution to:
• Building the economy?
• Help corporations stay in business?
• Provide opportunity for individual success?
When someone invents some new improved device, product, or process it is only an
invention. What transforms inventions into innovations is when the invention is included
into a commercial transaction. Only then is it considered an innovation (Lecture 2, slide 13).
Building on this central idea being able to market an invention and sell it to customers is in
fact the majority of all economic activity. Thus when this action is repeated the economy is
running smoothly. Where the entrepreneur fits into the equation is when an individual is able
to identify an opportunity, then through researching the works of others, developing a
hypothesis, testing prototypes, marketing the idea and finally changing environment of the
world. This is known as the process of Marconomic Innovation as seen in figure 4.
If we carry this individualistic process of innovation over into a whole organization we see
that depending on the culture of that organization if the innovation will reach fruition or not.
The most innovative organizations are characterized by the 10 traits in figure 3, they promote
creativity in both product and process innovation, they are receptive to both internal and
externally developed forms of technology, they accept that with uncertainty comes risk and
are willing to accept this, they also promote cross functional cooperation between groups.
Companies such as these are the ones which influence the world dramatically because they
don’t let ideas become bogged down by bureaucracy within the business. It is then the
company that has a major impact on the economy. Now the company can avoid a large
portion of the risk associated with innovation by simply acquiring new technology or
processes from external factors. This mitigates the risk because the company doesn’t have to
go through the costly and problematic process of developing new products, technology or
MANAGEMENT OF INNOVATION COLTON GOERTZEN 6

7. techniques; which
we saw in class has
a one in 60 chance
of succeeding in
lecture 7 (slide 32).
One aspect of
modern business
which does help to
offset the cost of
R&D is the ability
for business within
the market to form
strategic alliances
with governments,
distributors,
different agents throughout the market, joint ventures, banks, support services and suppliers
(Lecture 5, slide 35). By utilizing these different groups and including them into the R&D,
marketing and sales processes, costs can be significantly lessened when introducing new
products. Another way for businesses to curtail spending during product development is the
limit their R&D to incremental innovation much like Sony does with it’s Playstation line of
gaming consoles. Essentially, every couple years they come out with a new version of the
same product which means that they don’t have to spend a vast amount coming out with a
new product which is as good as it will ever get. Thus spending is stretched out over many
years rather than all at once (Lecture 5).
Some may ask if new product development is so costly and problematic why should we
bother trying to do it? Well when we look at companies such as GM, Nokia and Blackberry
R&D was a large portion of their budgets so why did they perform poorly? Their downfall
came from the kind of R&D that they chose to perform which centred around incremental
innovation, ultimately bringing them to decline where as companies like 3M, Apple, Nvidia
and John Deere have utilized radical innovation which disrupts current markets and
displaces the slow to react companies, forcing them into decline (Lecture 3, slide 27). In the
MANAGEMENT OF INNOVATION COLTON GOERTZEN 7
Figure 3 (Lecture 3, slide 13)

8. end companies need to innovate because of the demands placed on them by consumers and
because the competition within the market requires companies to continually innovate.
When we couple the individual drive for change to the corporate drive to increase revenue
and finally to the overall economy whose goal is economic growth we find that the real
determining factor in the growth of the economy is based on the individuals ability and
access to process which facilitate fluidly, the marketing of inventions to the world. This is
more easily understood by analyzing the economy itself. Here we see it is based on
transactions between buyers and sellers, which create jobs and incomes for the population.
Taxation of these incomes gives societies governments, financial services and social
institutions, all which raise that societies standard of living and when the standard of living
increases we say that economy is prospering (Lecture 1, slide 13).
To summarize, innovation comes from the economic activity generated when an invention is
used or involved in some way during a commercial transaction. At this point the
entrepreneur has innovated either a product, service, or process and if an organization can
perform this same action repeatedly that company is said to be innovative. Applying to the
society, if enough companies carry out business in this fashion then the economy is
competition based and the organizations are required to innovate to stay relevant within the
market. As the societies compete the economy grows because those businesses attract
customers from around the world growing the country’s economy. This is shown in figure 4
quite effectively:
MANAGEMENT OF INNOVATION COLTON GOERTZEN 8
OrganizationIndividual Government
Figure 4 (Lecture 3)

9. This schematic gives an easy to follow step-by-step system for all individuals, organizations
and governments to follow so that they can understand the true driving factors for the
economy and rework the economic fallacies of supply and demand, which have been
accepted for the past 200 years.
MANAGEMENT OF INNOVATION COLTON GOERTZEN 9