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Innovation in e-business


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Lecture on innovation in e-business

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Innovation in e-business

  1. 1. ELEKTRONINIO VERSLO STRATEGIJOS IR SPRENDIMAI seminarų medžiaga Lekt. Monika Mačiulienė
  2. 2. INNOVATION + E.BUSINESS Lecturer Monika Mačiulienė
  3. 3. What is innovation? • variety of meanings • often associated with discoveries carried out by white-haired scientist-types in high tech industry labs or universities or a small group within successful company • much broader definition and wider functions
  4. 4. In 2002, listeners to the Today Programme on Radio 4 in a poll to mark 150 years of the UK Patent Office voted for their top ten inventions : 1. Bicycle (Pierre Lallement, 1866) 2. Radio (Guglielmo Marconi, 1897) 3. Computer (Alan Turig, 1945) 4. Penicillin (Florey & Heatley, 1940) 5. Internal Combustion Engine (Nicolaus Otto, 1876) 6. World Wide Web (Tim Berners-Lee, 1989) 7. Light Bulb (Thomas Edison & Joseph Swan, 1829) 8. Cat’s Eyes (Percy Shaw, 1936) 9. Telephone (Alexander G. Bell, 1876) 10. Television (John Logie Baird, 1923)
  5. 5. Source:
  6. 6. KEY ELEMENTS PROCESS: Innovation is a process (implying, among other things, that it can be learned and managed) INTENTIONAL: That process is carried out on purpose CHANGE: It results in some kind of change VALUE: The whole point of the change is to create value in our economy, society and/or individual lives OPPORTUNITY: Entrepreneurial individuals enable tomorrow's value creation by exploring for it today: having ideas, turning ideas into marketable insights and seeking ways to meet opportunities ADVANTAGE: At the same time, they also create value by exploiting the opportunities they have at hand
  7. 7. Using this conceptualization we are able to land on the following definition of innovation: A PROCESS OF INTENTIONAL CHANGE MADE TO CREATE VALUE BY MEETING OPPORTUNITY AND SEEKING ADVANTAGE.
  8. 8. THEORIES ON INNOVATION 1. Schumpeter & Kondratiev – waves of innovation 2. Drucker – 7 sources of innovation 3. Rogers – diffusion of innovation There is no dominant theory on the field and little agreement among managers and academics alike regarding what affects a company’s ability to innovate.
  9. 9. (1) Waves of innovation Kondratiev + Schumpeter
  10. 10. K – WAVES Attributes: change, entrance of radically new technology in leading economics -> diffused unevenly around the globe, impact on power hierarchies, culture and politics Fifty to sixty years in length, the cycles consist of alternating periods between high sectoral growth and periods of slower growth. creative destruction “the opening up of new markets, foreign or domestic, and the organizational development [...] illustrate the same process of industrial mutation, that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one”. Each of the waves were unique, driven by different cluster of industries
  11. 11. Examples INTERNET has acted as a catalyst for creative destruction. The internet has allowed businesses to compete in markets outside of their geographic location, reach more consumers, create efficiencies and cut costs in manual processes as well as pioneer new techniques for doing business.
  12. 12. (2) Drucker 7 sources of innovation
  13. 13. SEVEN SOURCES FOR INNOVATIVE OPPORTUNITY Source The unexpected success, failure, outside event Nutrasweet (chemical by accident), Ford Edsel – carefully planned product, you can learn faster from your mistakes in the market Incongruities between reality as it actually is and reality as it is assumed to be or as it ought to be (overnight package delivery, small cars with enough space Smart) Process needs Examples: – you spend all that time editing it, cleaning it and spell checking it, only to not have the most recent version, it fills in this gap Industry and market structures changes that catch everyone unaware, new type of services (health care industry: changing to home health care, auto industry transitioning from a luxury industry to a mass market) Demographics changes in the population (retirement homes for older people) Changes in perception also changes in mood and meaning , in older days health was seen as related to body mass, meaning fatter people were perceived as more healthy, exercise, health and green movement) New knowledge both scientific and non-scientific (video industry, robotics, biotechnology, nano-technology) Google and the search engine. By Drucker, P (1994) Innovation and Entrepreneurship, Elsevier and Drucker, P (2002) The Discipline of Innovation, Harvard Business Review, Aug 2002, Vol 80,
  14. 14. (3) Rogers diffusion of innovation
  15. 15. Diffusion of innovations HOW, WHY, AND AT WHAT RATE technology spread through cultures? new ideas and
  16. 16. The diffusion of innovation curve is useful to remember that trying to quickly and massively convince mass of a new controversial idea is useless. It makes more sense in these circumstances to start with convincing innovators and early adopters first. All the categories and percentages can be used as a first draft to estimate target groups for communication process.
  17. 17. Creativity and lead users Not doing something for money Example of lead users importance in innovation and creativity Shows importance of peers that is why entrepreneurs work in hubs, valleys and teams
  19. 19. Why you need to know with what type of innovation you are dealing with? Understanding what type of innovation you are dealing with is of critical strategic importance when it comes to you deciding how you will react to an innovation, whether someone else has introduced it or whether you plan to introduce it to the marketplace.
  20. 20. TYPES OF INNOVATION Henderson & Clark Source: Henderson and Clark (1990)
  21. 21. TYPES OF INNOVATION Henderson & Clark Source: Henderson and Clark (1990)
  22. 22. Incremental innovation Incremental innovation refines and improves an existing design, through improvements in the components. However it is important to stress these are improvements not changes, the components are not radically altered. Christensen (1997) defines incremental innovation in terms of: ‘a change that builds on a firm’s expertise in component technology within an established architecture.’ Most common type of innovation A series of small improvements to an existing product or product line that usually helps maintain or improve its competitive position over time.
  23. 23. Incremental innovation would be case of offering a machine with a more powerful motor to give faster spin speeds. It leaves the architecture of the system unchanged and instead involve refinements to particular components.
  24. 24. TYPES OF INNOVATION Henderson & Clark Source: Henderson and Clark (1990)
  25. 25. RADICAL INNOVATION calls for a whole new design, ideally using new components configured (i.e. integrated into the design) in a new way. In Henderson and Clark’s (1990) terms, ‘Radical innovation establishes a new dominant design, and hence a new set of core design concepts embodied in components that are linked together in a new architecture. comparatively rare Radical innovation is often associated with the introduction of a new technology. In some cases this will be a transforming technology, perhaps even one associated with the transforming effect of a Kondratiev long wave.
  26. 26. Examples
  27. 27. Goldcorp challenge
  28. 28. Arab spring • New tools for fighting – internet & social media • New systems – no hierarchy, everything happens so fast, there is no clear leader
  29. 29. Don Tapscott: Four principles for the open world
  30. 30. Opposite example: music industry They had technology disruption (digitalization) and instead of taking advantage of that they took legal actions – by suing teenagers. And is danger of collapse.
  31. 31. TYPES OF INNOVATION Henderson & Clark Source: Henderson and Clark (1990)
  32. 32. MODULAR INNOVATION • doesn’t involve a whole new design, but involve new or at least significantly different components. • function remains the same
  33. 33. Clockwork radio The same radio but does not use external source of energy New technology but not as radical Opened up new markets for people who do not have access to power source
  34. 34.
  35. 35. smart walking stick with built-in sat-nav for elderly by fujitsu designed by Egle Ugintaite from Lithuania, is a walking stick with built-in sat-nav. the next generation cane is designed to help elderly people find their way, as well as monitor things such as heart rate and temperature. its location can also be followed online and can be set up to send email alerts if it thinks the user may have fallen over. Source:
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  37. 37. TYPES OF INNOVATION Henderson & Clark Source: Henderson and Clark (1990)
  38. 38. Architectural Reconfiguration of established system to link together components in a new way The function changes dramatically There could be improved components, but they are not essential
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