LECTURE 3 INNOVATION TYPES Innovation management Lecture

LECTURE 3. INNOVATION TYPES Innovation management

Lecture content Innovation types: Depending on change type. - 4 types Depending on application area - 10 types (TEN TYPES OF INNOVATION - THE BUILDING BLOCKS OF BREAKTHROUGHS)

4 types innovation Your business can take a number of different approaches to innovation. Usually, this will depend on how much time and money you have available and what your business strategy is. These approaches can be part of a continuous cycle or employed on a more ad-hoc basis, depending on your needs.

4 innovation types

4 types innovation – Breakthrough or radical innovation creating a completely new process or product in response to a market need or opportunity DIFFICULT TO BE CREATED. WHY? Lack of resources Lack of laser-like focus Lack of a detailed understanding of the end user Lack of required technical competencies

4 types innovation – Breakthrough Benefit leadership or cost leadership? Charge premium Deliver high quality Example – AMAZON vs APPLE

4 types innovation – Sustaining Sustaining ideas have to do with improving the current product by developing generations 2, 3, 4, 5 and so on until the product reaches the end of it’s life cycle. Typically, sustain Feature fixes/additions breakthrough Cost reductions innovation Product line expansions (proliferation)

4 types innovation – New market applying a current product in a new way and sometimes even for a different segment of customers. The classic example often cited is Arm and Hammer baking soda. A leavening agent for dough when baking breads? OR a deodorizer? OR a multi-purpose product?

4 types innovation – New market Cost or benefit leadership? Baking soda – benefit Deodorizer - cost Adjacent spaces – what industries or uses would you consider as adjacent? Other jobs to be done - other jobs does your product do? Could those be marketed for other customers? Customer usage studies – for some products, customers may already be using your product in new and different ways that you haven’t considered yet.

4 types innovation – Disruptive the Harvard Business School professor Clayton Christensen https: //hbr. org/2015/12/w hat-is-disruptive-innovation Look for competitors that have overserved. Focus on one job to be done rather than several. Focus on making the solution the very best. Remove as much cost as possible to make the end price affordable for most users. Observe the industry trends regarding vertical integration. – DELL – example

Use combination!

Basic vs Systematic Often when people think of innovation, they mention product innovation There actually 10 types of innovation. The more types you implement, the more successful innovation is likely to be PRODUCT INNOVATION? SUCCESSFUL INNOVATION?

10 types of innovation

Configuration: Profit model The way in which you make money For example, how Netflix turned the video rental industry on its head by implementing a subscription model

Configuration: Network Connections with others to create value For example, how Target works with renowned external designers to differentiate itself http: //www. thebudgetfashionista. c om/archive/target-designercollaborations/

Configuration: Structure Alignment of your talent and assets For example, how Whole Foods has built a robust feedback system for internal teams

Configuration: Process Signature or superior methods for doing your work For example, how Zara’s “fast fashion“ strategy moves its clothing from sketch to shelf in record time

Offering: Product performance Distinguishing features and functionality For example, how OXO Good Grips cost a premium but its “universal design” has a loyal following

Offering: Product system Complementary products and services For example, how Nike+ parlayed shoes, sensors, apps and devices into a sport lifestyle suite

Experience: Service Support and enhancements that surround your offerings For example, how “Deliver WOW through service” is Zappos’ #1 internal core value Due to an internal error, one of their sites, 6 pm. com, accidentally marked down nearly all of its stock to $49. 95 for six hours. Items that should have sold for almost $2000 were sold at over 97% off! This mistake cost the company an estimated $1. 6 in revenue. So what did Zappos do? Nothing. CEO Tony Hsieh described it as a learning experience and decided to honor all sales made during the time period. Although this was an expensive decision, it generated a lot of positive buzz and goodwill in Zappos customers.

Experience: Brand Representation of your offerings and business For example, how Virgin extends its brand into sectors ranging from soft drinks to space travel

Experience: Channel How your offerings are delivered to customers and users For example, how Nespresso locks in customers with its useful members only club

Experience: Customer engagement Distinctive interactions you foster For example, how Wii’s experience draws more from the interactions in the room than on-screen

Suggestions to read http: //www. theinnovativemanager. com/the-four-types-of-innovation-and-thestrategic-choices-each-one-represents/ the Harvard Business School - Clayton Christensen https: //hbr. org/2015/12/what-is-disruptive-innovation //www. thestreet. com/story/13223113/1/netflix-beats-google-when-it-comes-tobusiness-models. html http: //www. cass. city. ac. uk/__data/assets/pdf_file/0017/220517/Netflix. pdf http: //www. forbes. com/sites/walterloeb/2015/03/30/zara-leads-in-fastfashion/#6101 a 68361 d 7 http: //www. inboundmarketingagents. com/inbound-marketing-agentsblog/bid/361859/Zappos-WOW-Philosophy-Tips-for-Fostering-Customer-Delight http: //universaldesign. ie/What-is-Universal-Design/Case-studies-and-examples/3 case-studies-on-UD/#oxo http: //smartdesignworldwide. com/work/oxo-good-grips/

Workshop 4 1. 2. Describe the structural, cultural and human resources variables that are necessary for innovation. Provide your own examples – companies that changed some variables and present them.

Workshop 5 2 or 3 teams - when every team will present new functions for a paperclip. How can you use it in a different way?

For the next week Your group will present one of the innovation types. Choose whatever you want. Then the other group will judge your presentation.

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