Distinguish the different forms that innovation can take, such as product, service, process, organizational or service innovation Distinguish between sources of innovation Describe models of innovation management Analyze different types of innovation and appreciate their role in firms strategy and entrepreneurship

1. Innovation Management
Armend MUJA
University of Corvinus

2. Content
1. Introduction to Innovation
2. Typology of innovation
3. Sources of innovation
4. Models of innovation
5. Concluding remarks
6. Discussion

3. Learning outcomes
• Distinguish the different forms that innovation can take, such as
product, service, process, organizational or service innovation
• Distinguish between sources of innovation
• Describe models of innovation management
• Analyze different types of innovation and appreciate their role in
firms strategy and entrepreneurship

4. 1. Conceptualizing ‘innovation’
4

5. 1. The concept of innovation
• But, such views lead to misunderstanding. Science does not equal
innovation. Innovation is much more than science, e.g. scientific
discoveries pre-date commercial products by many years
• Innovation economics – Schumpeterian ‘creative destruction’
• Innovation management is not exclusively
associated with products
• Innovation management involves change, particularly technological
change
• Sometimes this involves product, service and process changes
• The level of change is an important dimension

6. 2. Categorizing innovations
6

7. 2.1 Grouping innovations
• Grouping innovation into two categories: forms of innovation and
degree of novelty
• Forms of innovation: product, process, service and organizational
• Degree of novelty: incremental, radical, modular, architectural
(Henderson & Clark) and disruptive (Christensen)

8. 2.2 Forms of innovation: traditional grouping
Product
•Development of a new
product
Process •Production techniques

9. 2.3 Forms of innovation (2): less attention
Service • E-Bay, Internet Banking
Organizational • TQM, Management, HRM

10. 2.4 Degree of novelty
• Some innovations employ a high degree of novelty, while others
involve little more than ‘cosmetic’ changes to an existing design. This
distinction between big change and small changes innovations has led
some to group innovations as either radical or incremental (Freeman,
1982)
• Henderson and Clark’s (1990) analytical framework provides a
typology that allows us to analyse more modest innovations and at
the same time predict their impact in terms of both competition and
the marketplace.
• Disruptive innovation (Christensen)

11. Henderson & Clark (1990) Typology
Incremental
innovation
Modular
Architectural
innovation
Radical
innovation

12. 3. Sources of innovation
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13. 3. Innovation Sources: Schools of thought
1. Context and market-based view of innovation;
market conditions provide the context which facilitate
or constrain the extent of firm innovation activity
(Slater & Narver, 1994; Porter, 1980, 1985). E.g Oil shocks…
2. Resource-based view of the firm; a firm’s own resources provide a much
more stable context in which to develop its innovation activity and they
are pursued systematically (Drucker, Tidd et al., 2001; Shavinina, L.V.
(ed.) (2003); Patel, P. and Pavitt, K. 2000).
3. Accidental
Innovation is all due to luck and good fortune
4. Disruptive (Christensen)

14. 3. Models of innovation
14

15. Models of innovations
195 0/60s Technology push Simple linear sequential process. Emphasis on
R&D. The market is a receptacle for the fruits
of R&D.
1970s Market-pull Simple linear sequential process. Emphasis on
marketing. The market is the source for
directing R&D. R&D has a reactive role.
1980s Coupling model Sequential, but with feedback loops.
Combinations of push and pull.
1980/90s Interactive model Emphasis on integrating R&D and marketing.
1990 s/00 Network models Emphasis on external linkages

16. Linear Model of innovation management
Research and
development
Manufacturing Marketing User
Technology push
Research and
development
ManufacturingMarketing User
Market pull

17. Coupling Model
Manufacturing
Marketing
Research and
development

18. Interactive Model
Science and
technology base
Needs of
the marketdevelopments
Technological
Creation of new knowledge
dominated by universities and
large science-based organisations
Technology development-
dominated by organisations
the consumption of products
Consumers express their
needs and wants through

19. EXTERNAL INPUTS:
societal needs;
competitors;
supplier partnerships;
distributors;
customers;
strategic alliances.
EXTERNAL INPUTS:
scientific and technological
development;
competitors;
suppliers;
customers;
university departments.
Organisation and
business strategy
EXTERNAL INPUTS:
macro factors
ROI
costs;
competition.
Organisation’s
knowledge base
accumulates
knowledge
over
time
Innovation System approach
New productsSource: Trott, 2005

20. 4. Concluding remarks & QA
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21. 4. Concluding remarks
Invention vs innovation
Innovation categories: forms of innovation and degree of novelty
 Models: liner, coupling, interactive and system based approach
Sources of innovation: role of market structure and social
developments important, role of technology important, cross-
functional process, knowledge base important

22. 4.2 Q.A
• Why product innovations get more attention?
• Why do process innovation have wide ranging social consequences?
• Identify process innovation that had an impact on you and your
society?
• Identify service innovation that had an impact on you and your
society?
• Can we differentiate between component and system knowledge?
• Identify radical vs incremental innovation
• What type of innovation is iPod?