Innovation begreber, processer og strategier

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Innovation begreber, processer og strategier

• Jens Frøslev Christensen
• Professor in Management of Innovation
• Department of Innovation and Organizational
  Economics
• Copenhagen Business School
• PhD course, Hillerød, March 2009

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Agenda

• Typer af innovationer
• Innovationscycluser på brancheniveau
• Innovationsprocessen på mikro-niveau
• Typer af innovative virksomheder og deres aktiver
• Kommercialisering af teknologisk innovation
• Ufordringer ved Åben Innovation og bæredygtig
  innovation.

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Hvad er innovation?

• Kvalitativ forandring (ikke al forandring)
• Skabelsen af noget nyt (ikke blot anvendelse af
  andres nyheder)
• Innovationsprocessen inkluderer invention og
  succesrig implementering eller lancering
  (kommercialisering)
• Et målrettet forsøg på at forbedre brugerværdi
  eller produktivitet.

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Forskellige typer af innovation

• Produkt/service innovation
• Proces innovation
• Teknologisk innovation
• Organisatorisk innovation
• Forretningsmodel innovation
• ....
• Ofte stærkt forbundne

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Schumpeter The Grand Old man in Innovation theory
industrial mutation incessantly
revolutionizes the economic structure from
within, incessantly destroying the old one,
incessantly creating a new one. This process of
Creative Destruction is the essential fact about
capitalism Schumpeter, 1942
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Innovationstypology I
Teknologisk viden
Skabelse af ny viden
Forbedring af eksisterende viden
Skabelse af nye markeder/ segmenter
Markeds- innovation
Basis- innovation
Markedseffekter
Inkrementel innovation
Teknologisk substitution
Fastholdelse af eksisterende markeder
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Innovationtypologi II

• Autonom innovation
• Kan implementeres uden større ændringer i det
  tekniske, hvori det skal bruges

• Systemisk innovation
• Kræver markante ændringer i andre dele af
  brugersystemet måske komplementære innovationer
  eller ændringer i infrastruktur

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Innovationscycluser for produkter/brancher

• Inkrementel fase
• Forbedringer inden for Dominerende Design

Dominerende Design
(Anderson Tushman, 1990)
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Skiftende mønstre af innovation henover et
produkts eller en branches livscyklus
Dominerende design
Frekvensen af innovation
Produkt innovation
Procesinnovation
Gæringsfase/ radikal produktinnovation
Inkrementel fase/radikal process- innovation
(Abernathy Utterback)
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Den lineære forståelse af innovations- processen

Grund-forskning
Anvendt forskning
Marketing/ salg
Produk- tion
Udvikling/ prototype
Invention

• Forskningsinitieret
• Ingen feed-back loops

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Kædemodellen (Chain-link model)
Distribu-tion and marketing
Invention and/or analytical design
Re-design and production
Detailed design and testing
Kline and Rosenberg
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Drivkræfter bag innovation

• Forsknings/teknologi-drevet
• Kunde/bruger-drevet
• Leverandør-drevet
• Produktionsdrevet
• Design-drevet
• regulerings-drevet
• CSR/miljø-drevet
• ...
• Ikke gensidigt udelukkende!

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Keith Pavitt Den mest markante
innovationsforsker i vor tid
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Pavitts typologi for innovative virksomheder

• Technologi/forskningsbasede virksomheder (fx
  medicinal, biotek)
• Skala-intensive virksomheder (fx bilindustri,
  stålindustri, kunsumentelektronik)
• Specialiserede leverandører (fx medical devices)
• Leverandør-dominerede virksomheder (fx
  byggesektor, beklædning, møbler, kreative
  brancher)
• Informations-intensive virksomheder (fx banker,
  retail chains)

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Innovative Aktiver -involveret i teknologisk
innovation

• Forskningsbaserede aktiver (skabelse af ny
  videnskabelig viden, anvendelse af ekisterende
  videnskabelig viden)
• Processinnovative aktiver (udvikling af nyt
  procesudstyr, produktionssystemer, logistik,
  kvalitetskontrol, etc.)
• Produktinnovative aktiver (produktudvikling via
  teknisk eller bruger-funktionel
  applikation/design)
• Æstetisk/industriel/virtuel design
  (design/formgivning af produkter og emballage
  samkobler tekniske, funktionelle og marketing
  features)
• (Christensensen, 1995)

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Kravene til succesrig kommercialisering af
teknologisk innovation

• Stærkt approprieringsregime Når inventioner er
  vanskelige at imitere/substituere eller
  effektivt beskyttet af IPR - og/eller
• Stærke komplementære aktiver og en
• Effektiv forretningsmodel

(Teece, 86)
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Innovative assets and complementary assets
required for commercializing innovation
Complementary assets
Innovative assets
Production
Distribu- tion
Marke- ting
Science
Process
Product
Design
Service
Compl. technologies
Others
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En forretningsmodels funktioner relateret til
innovation

• Specificer value proposition (for kunder/brugere)
• Identificer markedssegment
• Definer strukturen af værdikæden/systemet og din
  position
• Specificer behovet for komplementære aktiver og
  din position
• Specificer indtægtsmekanismen (omkostningsstruktur
  og mål for indtjening)

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EMI CT-scanner case

• Computerized tomography (CT) scanning a
  breakthrough innovation in medical devices
• CT-scanner innovation involved linking X-ray,
  data processing and cathode ray tube display
  technologies in a new and complex manner
• The innovation was an outcome of EMIs RD labs
  by early 1970s.

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EMIs strategic clarification 1972

• Opponents against a direct CT-engagement
• No experience with medical products
• Production of CT deviates strongly from other
  EMI-production
• Lack of knowledge concerning the US-market
• Strong potential competitors
• Supporters.
• Access to a profitable, global growth market
• Part of a general diversification strategy into
  the medical equipment business
• EMI has a strong technology base for this
  diversification

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EMIs CT-strategy 1972

• 1. Production strategy
• - Significant focus on outsourcing
• - intention to minimize capital risk
• - rapid mobilization of production capacity
• 2. Marketing strategy
• Primary focus on the US-market
• - establish a sales organization in the US
• - focus efforts at prestigous hospitals
• 3. Technology strategy
• - a wall of patents upfront RD efforts

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Milestones for EMI CT (1972-76)

• April 72 - go-decision
• - implementation of production plan
• June 73 - establishment of small sales office in
  U.S.
• - first CT installed in Mayo Clinic
• June 74 - 35 CTs delivered, orders for another
  60
• Ult. 74 - first competitor (full-body, lower
  price)
• May 75 - EMI launches 2. Generation
• Dec. 75 - 6 new competitors, incl. GE (launching
  third
• generation)
• 1976 - General status EMIs CT a success,
  strong technological position. 450 CTs
  sold, orders for another 300.

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Milestones after 1976

• 1976 - 16 competitors, incl. Siemens, Philips
  and Hitachi
• 1978 - EMI loses its market leadership, first
  to Technicare, then to GE
• 1979 - Thorn Electric Industries acquires EMIs
  CT-business
• - GE acquires the CT-business from Thorn

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Spørgsmål

• Hvorfor fejlede EMI til trods for at de var først
  med en radikal innovation?
• Hvad kunne EMI have gjort anderledes for at opnå
  kommerciel suces?

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When the owner of complementary assets is a
potential rival (and big)

• the technology entrepreneur
• will face an opportunistic partner
• will have to share the rents from its innovation
  with a rival
• Will have to engage in difficult bargaining for a
  fair licensing agreement or an attractive
  acquisition offer
• The case of Toccata and Texas Instruments

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From big box to small module or chip
Tripath 120W amplifier chip compared to a US cent
Amplifier box
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Division of labour in radical innovation
Performance/ Market volume
Large firms domain
Technology entrepreneurs domain
Time
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Spørgsmål til innovation i jeres virksomheder

• Hvilken type innovation er I involveret i?
• Hvad er den centrale driver bag denne innovation?
• Hvilken type virksomhed sår bag?
• Hvilke innovative aktiver skal integreres i
  innovationsprocessen?
• Hvilke komplementære aktiver er vigtige for at
  kommercialisere innovationen?

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Two major challenges Open Innovation and
Sustainable Innovation
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From closed towards Open Innovation
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Open Innovation

• Open Innovation means that companies should (or
  have to) make much greater use of external ideas
  and technologies in their own business, while
  letting their unused ideas be used by other
  companies.
• With a more open business model, Open Innovation
  offers the prospects of lower costs for
  innovation, higher quality innovation, faster
  times to market, the chance to share risks with
  others.
• (Chesbrough, 2006, p. xiii)

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The Closed Paradigm for Managing Innovation
Research
Development
Boundary of the firm
Research projects
The market
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Closed innovation
Other firms market
Our new market
Our current market
Stolen with pride from Henry Chesbrough UC
Berkeley.
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Open Innovation implies

• Voluntarily revealing some of your knowledge to
  others
• Increasingly sourcing innovative ideas, solutions
  or technologies outside your organization
• Increasingly engaging with external
  agents/communities for co-development and
  knowledge-sharing.

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Open Innovation may relate to

• Suppliers of parts and components
• Suppliers of knowledge and ideas which again may
  be
• Users (user-centred innovation)
• Institutions, communities

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User-centered innovation

• Lead-user strategy
• Firm-hosted online user communities
• User communities of practice

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(No Transcript)
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Innocentive

• Market place for innovation seekers and
  innovation solvers
• Broadcasting firms RD questions to global
  Web-network of specialists, inventors, etc.
• Offering prizes to solvers with solutions
  selected by seekers

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Institutional drivers for Open Innovation since
1980s

• Global expansion of large new markets (BRIC,
  Eastern Europe, Asian tigers, etc)
• Expansion of the global science-technology base
  of knowledge
• Shaping of improved market institutions (IPR,
  venture capital and, standards institutions)
• Digitization/the Internet makes large-scale
  global knowledge exchange possible

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Exponentially expanding global RD and
constrained corporate RD budgets
Constant RD funding
Pressures for expanding the technology base
Number of technical fields
Depth/funding pr technical field (specialization)
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Implications for industrial dynamics

• Improved markets for specialized
  knowledge/technology Small companies
  increasingly pioneer specialized niches in
  technologies, components and services
• Vertical disintegration of large companies due to
  1) outsourcing of production, distribution, etc.,
  2) external sourcing of innovative and
  technological assets (Open Innovation)
• Increasing inter-weaving of products/components/co
  mplements and services.
• Implying increaing focus on external networking,
  knowledge-sharing, co-development, systems
  integration, and platform leadership for large
  firms.

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The movement towards Open Innovation

• Is a long-term trend at global markets,
• Is driven by necessity not necessarily with
  enthusiasm (colliding with NIHS),
• Is a difficult, costly and failure-prone route
  often characterized by trial-and-error.

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Open Innovation challenges conventional strategy
thinking

• A less protective/proprietary use of IPR
• A more including perspective on customers,
  suppliers and other stakeholders (e.g.
  environmentalists, BOP communities).
• A more external perspective on core comptencies
• More focus on external coordination using tools
  such as modularization, standardization and
  platform development

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Video Ipod from ApplePris 299

• 451 parts
• None produced by Apple
• Assembled in Cina (not by Apple)
• Apple earns 80 pr sold unit

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Economic pressures on the business model of
closed innovation
Revenues
Shorter product life in the market
Own market revenue
Own market revenue
0
Internal RD costs
Internal development costs
Rising costs of innovation
Closed model - after
Closed model - before
Costs
Chesbrough, 2006
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Pharmaceutical sales growth versus RD growth
1000
100
100
Billion (US sales)
10
Billion (RD)
10
Sales 11 CAGR
RD 15 CAGR
1
1
2005
2000
1980
1985
1995
1990
Eli Lilly/Chesbrough
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The new business model of Open Innovation
Sales/divestiture
Revenues
New revenues
Spin-off
License
Own market revenue
Own market revenue
0
Internal development costs
Internal RD costs
Cost and time savings from leveraging external
development
Open Innovation business model
Closed model
Costs
Chesbrough, 06
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Business models for more or less open value
creation and value capture
Value creation
Primarily internally
Community-driven
MySpace You Tube
Firm
Lego Mindstorm
Microsofts OS Google
Value capture
IBM Linux code Pirated music
Linux Kernel Wikipedia
Eco-System
(ChesbroughAppleyeard, 07)
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Stern-review 2006

• Climate change represents the greatest and
  widest-ranging market failure ever seen.
• Spending large sums of money now on measures to
  reduce carbon emissions will bring dividends on a
  colossal scale. It would be wholly irrational,
  therefore, not to spend this money.
• BBC News Oct. 2006

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Sustainable innovation requires open strategies

• Is often based on immature technolgies.
• Emphasizes features (e.g. low Co2 emission) which
  are subject to low priority by customers and
  higher priority by society.
• Has difficulties living up to traditional
  customer requirements for convenience,
  functionality and price.
• Often not supported by existing standards and
  infrastructures.
• Markets have to be created.

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Comparative advantage of climate-destructive
innovation

• Well-established markets
• Negative externalities/costs on environment are
  not (or only partly) integrated in business
  models.
• Narrow focus on user-friendliness.

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A Grundfos circulator pump

• Innovation up-hill
• EU standards made commercialization possible

• 90 millioner pumps in Europe 10 x Barsebäck
• 7 million tons CO2 reduction yearly with new
  pumps

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Wave power a technology with gigantic
opportunities
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Closed/Open Innovation Strategies towards
sustainability
Open innovation
Closed innovation

• Minimizing waste/
• pollution in processes
• Increasing resource-
• productivity

• Reduction of products
• life-cycle impact
• E.g. recycle systems

Incremental environmental innovation
Radical/ Sustainable innovation
New sustainable technologies (cleantech)
New sustainable systems
Wave power
Elecric car systems
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Spørgsmål

• Identificer et eksempel på bæredygtig innovation
  (eksisterende eller fremtidsmulighed)
• Er kunderne villige til at betale særskilt for
  bæredygtighedselementet? Hvorfor (ikke)?
• Kan miljøaspektet effektivt kommunikeres ud i
  markedet?
• Kan innovationen effektivt beskyttes mod (hurtig)
  imitation?

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Litteratur

• JFC Wither Core Competency for the large
  Corporation in an Open Innovation World. IN H.
  Chesbrough et al. (2006) Open Innovation
  Researching a New Paradigm, Oxford University
  Press
• JFC et al. (2005) The industrial dynamics of
  Open Innovation, Research Policy, December 2005.
• JFC Produktinnovation Proces og Strategi, CBS
  Press 1995.