Innovation

Dr Weifeng Chen © 2020 - 21
Module Introduction
Dr Weifeng Chen
Weifeng.Chen@brunel.ac.uk
MG3603 International Strategic Innovation
Management Study Guide

INNOVATION
in Business

Objectives Today
• Definition of Innovation: Exploration, Exploitation and Diffusion
• Forms of innovation: Product innovation, Service Innovation,
Process Innovation
• Technology Paradigm
• Types of Innovation
• Disruptive technological change
• Mechanisms of adopting an innovation

Some
Definitions of
innovation
‘The first commercial application or production of a new
product or process’
Freeman & Soete (1997: p1)
‘Innovation is production or adoption, assimilation, and
exploitation of a value-added novelty in economic and
social spheres; renewal and enlargement of products,
services, and markets; development of new methods of
production; and the establishment of new management
systems. It is both a process and an outcome.’
Organisation for Economic Co-operation and
Development (2014)
‘Innovation is the application of knowledge or ideas for the
development of products, services or processes – whether
in business, public services, or non-profit sectors.’
UK Research and Innovation (UKRI, 2019)

Different forms of “newness”

Inventions and Innovations

Exploration: the triggers to innovation

3 Routes to Invention
Invention
Individual
(heroic)
Corporate
(closed)
Open
•Dragon’s Den
•Google
•IBM
•AT&T
•Licensing
•Collaboration

Exploitation: the function of business
models
•Value Creation: a series of activities that enable the user to recognise the benefit
and thence the value that he/she can gain from the invention
•Value Capture: extracting or obtaining value from the activities undertaken by the
innovator

Diffusion

The phases of innovation: exploration,
exploitation and diffusion

Famous Inventions/Inventors
Bicycle
Telephone
Television
Penicillin
Computer
World Wide Web
eBay
Google
Facebook
Amazon
Pierre Lallement, 1866 
Alexander G. Bell, 1876 
John Logie Baird, 1923 
Alexander Fleming, 1928 
Alan Turing, 1945 
Tim Berners-Lee, 1989 
Pierre Omidyar ,1995 
Larry Page & Sergey Brin, 1998 
Mark Zuckerberg, 2004 
Jeff Bezos, 1994 

FORMS OF INNOVATION
Product, Service, Process

Forms of Innovation
Product Innovation
The development of a novel/new product
o Using a new technology (e.g.
Nanosolar, 5G)
o Re-configuring a technology (e.g.
Cassette Player to Sony Walkman)
o Better at meeting consumer needs
(e.g. Nintendo Wii, Workmate
workbench)
o Meeting new consumer needs (e.g.
JCB excavator mini)

Forms of Innovation
Service Innovation
Offering a new/different service to consumers
o Using a new technology (e.g. Amazon.com, First
Direct)
o Better at meeting consumer needs (e.g. EasyJet,
Paypal, Fintech, Monzo..)
o Meeting new consumer needs (e.g. Facebook)

Forms of Innovation
• Process
New way of making things or delivering
services
oNew technologies
o e.g. Pilkington’s ‘float glass’ process, 3D
Printing, Automation on Assembly Line
o
oNew methods/ organisation
o e.g. F.W.Taylor’s ‘scientific management’
o e.g. Ford’s moving assembly line
o e.g. Toyota’s Just-in-Time production

Form Innovation Innovator Country
Product Apple Computer, iPhone,
iPod
Ballpoint pen
Computer mouse
Steve Jobs/Apple
Laszlo Biro
Douglas Engelbart
US
Hungary
US
Service Google
Amazon
Facebook
World Wide Web
Larry Page / Sergey Brin
Jeff Bezos
Mark Zuckerberg
Tim Berners-Lee
US
US
US
UK
Process Moving assembly line
Float glass
Hub + spoke delivery
system
Computerised airline
reservations (SABRE)
Henry Ford
Alistair Pilkington
Fred Smith
IBM/American Airlines
US
UK
US
US

Innovation Matrix
Completely New
Products
New Product
Lines
Product Re-
positioning
Newness to market
Newness
to
Company
Cost
Reductions
Improvements to
Existing Products
Line
Extensions
Source: Adapted from R.G.Cooper (2001)

SOME INNOVATION
RELATED CONCEPTS
Scientific Paradigms, Technology, Long Wave Cycle of
Innovation

Scientific Paradigms (Thomas Kuhn,1962)
Kuhn defined scientific paradigms as "accepted examples of
actual scientific practice that include laws, theory,
application and instrumentation that provide models from
which particular coherent traditions of scientific research
springs’’.
Harvard and MIT

Technology
“….. knowledge that is
stored in millions of books,
in hundreds of billions of
human heads, and to an
important extent, in the
artefacts themselves”
Simon (1972)

Jet engine Microchip

Kondratiev’s 4 Phases of the Long Wave Cycle
• Recovery
• Increased innovation; new
products/services; competing
designs; high novelty value;
premium prices
• Prosperity
• Diffusion stage - spread of
innovations; new technology
spreads to other industries; new
industries emerge; standards
emerge; expansion & prosperity
• Recession
• Risky investments; spectacular
collapses
• Depression
• Consolidation; new industries
mature; intense price competition;
inventions & discoveries of next
phase

Kondratiev’s Long Wave Cycles of Innovation

Before After
iPhone

Before
After
iPad Tablet PC

Parkour Atlas
Spot Mini

TYPES OF INNOVATION

Incremental-Radical Dichotomy
 Radical innovation (High novelty): the technological
knowledge required to exploit is very different from existing
knowledge (e.g. Sony Walkman to MP3 player)
 Incremental innovation (Low novelty): the knowledge
required to offer a product builds on existing knowledge
(e.g. iPhone 5 to iPhone 6)
Incremental
innovation
Radical
Innovation
Low Novelty
High Novelty

Radical innovations Examples
Radical
innovation
Technology Impact on
society
Jet engine Gas turbine Permits mass travel
Carbon fibre F1
chassis
Carbon fibre Better handling & safer
car
Personal computer Integrated circuit Computing for all
Digital camera Digital imaging Photography more
flexible/accessible
MP3 player MP3 files Greater access to
recorded music

Typology of innovations

Innovation Types
Types Explanation COMPONENTS SYSTEM
Radical
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.” Henderson and Clark
(1990)
New
New
configuration
Architectural
“leaves the core technological concepts of
components intact but changes the way
they are designed to work together.” e.g.
Cassette Player to Sony Walkman
Improved
New
configuration
Modular
“an innovation that changes a core design
concept without changing the product’s
architecture.” Henderson and Clark (1990).
E.g. power supply of calculator
New No Change
Incremental
“ a change that builds on a firm’s expertise
in component technology within
established product architecture.”
Christensen (1993)
Improved No change

Disruptive innovation
Christensen defines a disruptive innovation as a product or
service designed for a new set of customers.
"Generally, disruptive innovations were technologically
straightforward, consisting of off-the-shelf components put
together in a product architecture that was often simpler than
prior approaches. They offered less of what customers in
established markets wanted and so could rarely be initially
employed there. They offered a different package of attributes
valued only in emerging markets remote from, and unimportant
to, the mainstream."

Porter’s Value Chain (competitive strategies paradigm)

Strategic leadership view

Adopting an innovation: Seven mechanisms

Group Exercise
Prepare a profile of a company that you feel has a strong
record of innovation
• Company background details
• Successful innovation(s) produced
• Why the innovation(s) have been successful

Innovation

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