Lecture on innovation in e-business

1. ELEKTRONINIO VERSLO
STRATEGIJOS IR SPRENDIMAI
seminarų medžiaga
Lekt. Monika Mačiulienė
monika.maciuliene@gmail.com

2. INNOVATION + E.BUSINESS
Lecturer Monika Mačiulienė

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. 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. Source: http://www.cnbc.com/id/44504579/page/14

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. 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. 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. (1) Waves of innovation
Kondratiev + Schumpeter

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

12. 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.

13. (2) Drucker
7 sources of innovation

14. 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: Dropbox.com – 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,

15. (3) Rogers
diffusion of innovation

16. Diffusion of innovations
HOW, WHY, AND AT WHAT RATE
technology spread through cultures?
new ideas and

19. 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.

20. Creativity and lead users
http://youtu.be/Lpaw__fOOtA?t=31m57s
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

21. TYPES OF INNOVATION

22. 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.

23. TYPES OF INNOVATION
Henderson & Clark
Source: Henderson and Clark (1990)

24. TYPES OF INNOVATION
Henderson & Clark
Source: Henderson and Clark (1990)

25. 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.

26. 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.

28. TYPES OF INNOVATION
Henderson & Clark
Source: Henderson and Clark (1990)

29. 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.

30. Examples

31. Goldcorp challenge

33. Arab spring
• New tools for fighting – internet & social media
• New systems – no hierarchy, everything happens so fast, there is no
clear leader

34. Don Tapscott: Four principles for the open world
http://www.youtube.com/watch?v=jfqwHT3u1-8

35. 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.

36. TYPES OF INNOVATION
Henderson & Clark
Source: Henderson and Clark (1990)

37. MODULAR INNOVATION
• doesn’t involve a whole new design, but involve new or at least
significantly different components.
• function remains the same

38. 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

39. dragdis.com

40. 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: http://www.designboom.com/design/smart-walking-stick-with-built-in-sat-nav-for-elderly-by-fujitsu/

41. http://vimeo.com/61210101

42. TYPES OF INNOVATION
Henderson & Clark
Source: Henderson and Clark (1990)

43. 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

44. http://www.youtube.com/watch?feature=player_embedded&v=oDAw7
vW7H0c