Diskontinuierliche Innovation
Kompetenzen und Paradigmen im
Innovationsmanagement
Business Talk des integro-Projektes im R...
2




Kontext des Vortrags: Das Projekt Integro
  INTEGRO: Integriertes Innovations-, Wissens- und HR-Management in Untern...
3

About us


           tim.rwth-aachen.de
4




 Our team
With about 18 full time
research positions plus
about 25 graduate student
assistants, tutors, and
research...
5




RWTH-TIM Group: Facts and Figures

  Established in 1990 as one of the first dedicated chairs in technology & innova...
When googling "Innovation",
this picture shows up as the
            #1 hit.
"I' am happy to give you innovative thinking. What are the guidelines?"
What Is Innovation?



         “(Basic) research is the transfer of money into
         knowledge. Innovation is the tran...
Exploring the decision space of innovation mgmt

                                   ‘Paradigm’ (= mental model)




  Proc...
How we think about
something ... shapes the way
      we manage it.
Draw an alien on your
   notepad. NOW!
Experts' Confidence
                                                                                                      ...
Innovation follows a paradigm (basic model)


                                               Mildred
                     ...
(Radical) Innovation is
overcoming the problem
   of "local search".
The challenge


    Popper (1988):

    For radically new innovation to occur at all, the
    future must be unknowable, s...
Exploitation




                                   Exploration
(c) Copyright tim.rwth-aachen.de                 16
Gary Cooper
(c) Copyright tim.rwth-aachen.de   17
How it really happens ...




(c) Copyright tim.rwth-aachen.de   18
19



    Exploitation




                                     Exploration
Source: von Stamm / Bessant (2008)
Disruptive
            Innovation




(c) Copyright tim.rwth-aachen.de   20
                                   20
Sustaining vs. disruptive technologies




(c) Copyright tim.rwth-aachen.de
Source: Bower/Christiansen: Disruptive technol...
Why firms fail to
  master discontinuous innovation


       Resource dependency:
Listened too much to best customers.
   ...
Firms face many more sources of discontinuity
  than "just" new technologies (Bessant 2005)




(c) Copyright tim.rwth-aac...
Challenging some of our
common paradigms (mental
  models) of innovation
Innovation is high-tech
Dr G Venkataswamy




(c) Copyright tim.rwth-aachen.de
                                   26
But innovation is not just western "high tech":
 The fortune at the Bottom of the Pyramid (BoP)
        Book and articles ...
BoP Example: Aravind eye clinics

           Began 1976, Dr G Venkataswamy , retired eye surgeon
           9 million in I...
Further examples of BoP innovation

             EID Parry, ITC – e-choupals – internet in the village
             Casas ...
Learning from the BoP "real life lab"

         Create a new price/performance    Aravind eye care, Monsoon Hungama
      ...
Learning from the BoP "real life lab" (II)

                 Innovations must deal    Voxiva medical diagnostics, Cemex
  ...
Consider other "low tech" innovations
  breaking with the "high tech" paradigm


                                     The ...
Innovation is the domain of
   firms (manufacturers).
Users have the advantage of problem-solving in
their own use environments as they “do” a
desired activity – they are learn...
But whatever you do,
  inspire your most
important participant


Your Executive Board
If you find a
"chief innovation officer",
          run away.
Innovation cannot be
delegated or assigned to an
 "innovation function". It is
  the job of everyone in an
organization – ...
38




       piller@tim.rwth-aachen.de

tim.rwth-aachen.de | open-innovation.com
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Diskontinuierliche Innovation

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Kompetenzen und Paradigmen im Innovationsmanagement; X-Organisationen, Berlin; Integro

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Diskontinuierliche Innovation

  1. 1. Diskontinuierliche Innovation Kompetenzen und Paradigmen im Innovationsmanagement Business Talk des integro-Projektes im Rahmen der Tagung X-Organisationen, Berlin, 19. Nov. 2009 Frank T. Piller RWTH Technology & Innovation Management Group, RWTH Aachen, Germany MIT Smart Customization Group, Cambridge, MA, USA tim.rwth-aachen.de www.innovationsarbeit.de
  2. 2. 2 Kontext des Vortrags: Das Projekt Integro INTEGRO: Integriertes Innovations-, Wissens- und HR-Management in Unternehmen und Innovationsnetzwerken der High-Tech-Branche am Beispiel Informationstechnik und Mechatronik Ziel: Empirische Analyse der Strukturen, Prozesse und Arbeitsbedingungen in Wertschöpfungs- und Innovationsnetzwerken von KMU der High-Tech-Branche, exemplarisch der IT-Branche und der Mechatronik. Im Rahmen des Projektes (Laufzeit: 04/08 bis 04/11) werden Funktionsmechanismen elaborierter Innovationskonzepte untersucht und Maßnahmen zur breiten Unterstützung der Innovationstätigkeit sowie zur Kompetenzentwicklung zentraler Beschäftigtengruppen erarbeitet. Ein besonderer Fokus liegt darauf, wie Innovations-, Wissens- und HR-Management sowie Kompetenzentwicklung optimal verzahnt bzw. integriert werden können, um die Innovationsfähigkeit von Unternehmen zu stärken und externes Wissen durch Kundenintegration und Open Innovation für die Unternehmen nutzbar zu machen. Das Vorhaben wird aus Mitteln des Bundesministeriums für Bildung und Forschung und aus dem Europäischem Sozialfonds der Europäischen Union gefördert und vom Projektträger Arbeitsgestaltung und Dienstleistungen im Deutschen Zentrum für Luft- und Raumfahrt e.V. betreut. Projektpartner: Sozialforschungsstelle Dortmund (sfs) an der Technischen Universität Dortmund (Koordinator); Management Zentrum Witten; networker westfalen e. V. Dortmund; Ruhr-Universität Bochum - Institut für Arbeitswissenschaft (IAW) und Lehrstuhl Informations- und Technikmanagement (IMTM); RWTH Aachen - Lehrstuhl für Technologie- und Innovationsmanagement (TIM). Mehr Informationen: www.innovationsarbeit.de
  3. 3. 3 About us tim.rwth-aachen.de
  4. 4. 4 Our team With about 18 full time research positions plus about 25 graduate student assistants, tutors, and research affiliates, RWTH- TIM is one of the largest groups of its kind in the German-speaking academic landscape.
  5. 5. 5 RWTH-TIM Group: Facts and Figures Established in 1990 as one of the first dedicated chairs in technology & innovation management in Europe Part of RWTH's School of Business & Economics, with strong links to the RWTH Engineering Schools Ranked #1 in our school's faculty ranking w/r to research output (publications), and #2 w/r to external funding. Awarded "RWTH Price for Teaching Excellence 2009". Interdisciplinary team of about 18 full time positions for researchers plus about 25 support positions and student researchers (strong growth since 2007) 70% of budget funded by research contracts, grants, projects ("Drittmittel") Dedicated to research, but excellent in participant-centered learning on graduate student and executive education level. Strong industry partnerships, yet focus on scholarly research, not consulting. Network of affiliated companies & consultancies for direct project cooperation. November 2009: Moving to new building in RWTH Aachen Research Park next to Research Centers of, e.g., Microsoft, Sony Ericson and Ford (part of "RWTH Campus Project")
  6. 6. When googling "Innovation", this picture shows up as the #1 hit.
  7. 7. "I' am happy to give you innovative thinking. What are the guidelines?"
  8. 8. What Is Innovation? “(Basic) research is the transfer of money into knowledge. Innovation is the transfer of knowledge into money.” W. Sittenthaler, Wacker Chemie (German manufacturer of specialized chemical compounds) "Innovation: How to link creativity in new ideas with necessary rigor and discipline in execution." H. Kerminen, Kemira (Finish manufacturer of fertilizers and industrial chemicals) (c) Copyright tim.rwth-aachen.de 8
  9. 9. Exploring the decision space of innovation mgmt ‘Paradigm’ (= mental model) Process Innovation Product ‘do better’ ……… ‘do different’ Position Source: Bessant (2008) (c) Copyright tim.rwth-aachen.de 9
  10. 10. How we think about something ... shapes the way we manage it.
  11. 11. Draw an alien on your notepad. NOW!
  12. 12. Experts' Confidence Bu 50 55 60 65 70 75 80 si En ne te ss rta D W ig 2005 -T in o- m O ita i re Bu en nl lC le si in on ss ne t-o n- e ve Sm ss U D Fi rg ar (B til it em nan en t P 2B y a ce ce ho ) Co We nd ne m b s O E- n G re e G Fu pu 2. t in 0 G li n r e n l C Sm ov e i d g B e Energy & Environment ar ern Pub Co us ll C E-T 2010 t S m l i m in a a Bi Br en en shi put ess rs il in so t n g i ng g o o rs Sp me adb O P a c tric an e s d pt D rec ic es is To al ur Graph by Evan M. H. Faber C ig ion is 2010: The World Goes Online ne m M om Aqu d MFar H od pu a m Pe yb t c a i © TechCast, LLC. All Rights Reserved ul rv ri d ar ers ul tu teria ng H re l s In as Ca o In T tel ive rs 2015 Ar Pe me ti f rs s G tel li elem li ge Ne lo g n t ic Information Technology ia on M bal ent edic t Ca wo r lI al as W In in r ks nt iz R Vi s ar te e s el ed e Q M l ig Trcyc Vi Glo rt ua Cus mi n rfac Th ic en ea lin rt u ba l t g e ua ou ro nt gh -M ce tm g al l A Re om um Bi t ac en E cc al i i za o P du e ty C hi t ca ss ti o n om co m ow ne pu pu er s Ar t io n E-Commerce tin tin ti f g g N ic 2020 Al O an ial O D G te r o is e rn ga n te c rga tri D ne at ic hn ns bu es tic iv F o te e 2020: High-Tech Arrives d C ali n al ly En a rm l og an a M Po ce tio o er in y w r C n dif Sm gy g er ie G ur e d art ro O Ro w G rg n an bot O en is s rg et m Longitudinal Summary of Forecasts Sm ic s 2025 an al s Au Th M lA to er oo irc m ap Manufacturing & Robotics n C ra at ed y Ba hi ld ft H Most Likely Year to Enter Mainstream se Tr ig ai hw ts ay s H yp er N M so 2030 uc ni le en c ar on Pl F us M an es io ar n s Li fe 2030: Global Crisis of Maturity Ex M te Medicine and Biogenetics ag ns le i v on Tr ai ns 2035 Size Market Sta r Transportation Co Tr nta ave l ct 2040 (off scale) 12
  13. 13. Innovation follows a paradigm (basic model) Mildred McDaniel (1933) Olympic Games, Melbourne, 1956 World Record: 2,15 Richard Fosbury (1947), Olympic Games, Ray Ewry (1873-1937) Mexico, 1968 Olympic Games, London, 1908 World Record: 2,24 World record: 1,98 (c) Copyright tim.rwth-aachen.de 13
  14. 14. (Radical) Innovation is overcoming the problem of "local search".
  15. 15. The challenge Popper (1988): For radically new innovation to occur at all, the future must be unknowable, since otherwise innovation would, in principle, be already known and would occur in the present and not in the future. The inherent limits of organizations to forecast, especially discontinuous and radical new developments (Hogarth & Makridakis, 1981; Makridakis, 1990) (c) Copyright tim.rwth-aachen.de 15
  16. 16. Exploitation Exploration (c) Copyright tim.rwth-aachen.de 16
  17. 17. Gary Cooper (c) Copyright tim.rwth-aachen.de 17
  18. 18. How it really happens ... (c) Copyright tim.rwth-aachen.de 18
  19. 19. 19 Exploitation Exploration Source: von Stamm / Bessant (2008)
  20. 20. Disruptive Innovation (c) Copyright tim.rwth-aachen.de 20 20
  21. 21. Sustaining vs. disruptive technologies (c) Copyright tim.rwth-aachen.de Source: Bower/Christiansen: Disruptive technologies, HBR, 1995/1 21 21
  22. 22. Why firms fail to master discontinuous innovation Resource dependency: Listened too much to best customers. Internal inertia to change: Existing structures, mental models, and capabilities
  23. 23. Firms face many more sources of discontinuity than "just" new technologies (Bessant 2005) (c) Copyright tim.rwth-aachen.de Source: Bessant (2008) 23 23
  24. 24. Challenging some of our common paradigms (mental models) of innovation
  25. 25. Innovation is high-tech
  26. 26. Dr G Venkataswamy (c) Copyright tim.rwth-aachen.de 26
  27. 27. But innovation is not just western "high tech": The fortune at the Bottom of the Pyramid (BoP) Book and articles by C.K. Prahalad, University of Michigan Begins with potential position innovation – 4 billion people subsist on less than $2/day Products and services for this market? Significant paradigm innovation potential- challenges our assumptions about ‘the poor’ Case examples of experiments from wide range of countries Early warning signals of fundamental shifts in innovation landscape? (c) Copyright tim.rwth-aachen.de 27
  28. 28. BoP Example: Aravind eye clinics Began 1976, Dr G Venkataswamy , retired eye surgeon 9 million in India, 45 million worldwide suffer blindness due to cataracts Cataract operation cost in USA - $2500-$3000 Target cost in India - $50, but no compromise on quality Learning from other sectors – the McDonalds approach 200,000 operations/year @ $50 - $300 including hospital stay and any complications treatment 60% of patients treated free, so average cost is $25/operation Rich learning (200k ops) so world-class – NHS is looking at this as an option for the UK Extension to other operations – e.g. bypass surgery in India $4k vs $50k in USA (c) Copyright tim.rwth-aachen.de 28
  29. 29. Further examples of BoP innovation EID Parry, ITC – e-choupals – internet in the village Casas Bahia – 10m customers for electronics, appliances, furniture – 45% of spending is at BoP Jaipur Foot – as Aravind – US cost of foot $8000, target cost of JF is $30 and free to many. Extreme use innovation. 25million amputees worldwide. Voxiva medical alerts and communication – spread of SARS, etc. Robust comms. platform independent of specific hardware. Applicable to crime, safety, etc. Annapurna iodised salt – using extreme conditions as a laboratory to push the innovation frontier (micro-encapsulation technology) (c) Copyright tim.rwth-aachen.de 29
  30. 30. Learning from the BoP "real life lab" Create a new price/performance Aravind eye care, Monsoon Hungama envelope mobile phone, Grameen and other micro-finance Innovation requires hybrid Micro-encapsulation of iodine in salt (traditional and new technology) (Hindustan Lever), Amul Dairies solutions collection/distribution system Innovations must be adaptable and How to devolve/reach – mobilise local scalable entrepreneurs. Cemex, Casias Bahia Innovations must tackle Energy, water use, waste, etc. E+Co sustainability issues distributed energy Innovations must come from deep Jaipur Foot, TVS PoS system understanding of local needs and context Process innovations are as Aravind, Amul significant as product (c) Copyright tim.rwth-aachen.de 30
  31. 31. Learning from the BoP "real life lab" (II) Innovations must deal Voxiva medical diagnostics, Cemex with skill issue User education is critical and How to work in ‘media-dark’ requires innovation in approaches environments? HLL ‘clean hands’ campaign Innovations must suit hostile Jaipur Foot, ITC e-choupal, HLL environments – extreme innovation Annapurna salt Innovations require robust user Languages, input devices for illiterates, interfaces etc. Elektra Mexico fingerprint recognition in stores Innovations must reach dispersed Extending reach in marketing and markets delivery. Avon model – networks of local agents, direct to consumer Innovations must be Aravind, Voxiva, ITC models diffusing platform/architecture-based to ‘developed’ world (c) Copyright tim.rwth-aachen.de 31
  32. 32. Consider other "low tech" innovations breaking with the "high tech" paradigm The flip video camera The netbook The Apple-Nike "+" system Twitter Skype (c) Copyright tim.rwth-aachen.de 32
  33. 33. Innovation is the domain of firms (manufacturers).
  34. 34. Users have the advantage of problem-solving in their own use environments as they “do” a desired activity – they are learning by doing. Lead users innovate here # of users perceiving First manufacturer product appears here need “Voice of the customer” methods start here Time Time Source: Eric von Hippel 2005 34
  35. 35. But whatever you do, inspire your most important participant Your Executive Board
  36. 36. If you find a "chief innovation officer", run away.
  37. 37. Innovation cannot be delegated or assigned to an "innovation function". It is the job of everyone in an organization – including the executive board.
  38. 38. 38 piller@tim.rwth-aachen.de tim.rwth-aachen.de | open-innovation.com

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