Week 2. Innovation Typologies, Innovation Management, & Value

What is the difference between invention and innovation?

Invention is the creation of something new

Innovation is using that invention to create impact, value, market entry, and behavior.

According to Boddy (2017), what is innovation?

The process of applying or implementing something new and useful.

What does the innovation process involve?

1. Exploration (innovation process in org)

2. Exploitation (value proposition)

3. Diffusion (innovation spread)

What are the “4Ps” of innovation?

1. Product/service innovation

2. Process innovation

3. Position (business model) innovation

4. Paradigm (strategy) innovation

What is product/service innovation?

New or improved goods or services offered to the customer.

What is process innovation?

Innovation that changes how a product or service is produced or delivered.

What is business model (position) innovation?

Changing how an organization creates, delivers, and captures value.

What is paradigm innovation?

Innovation that transforms the underlying mental models or strategic assumptions of the organization.

What is incremental innovation?

Small, continuous improvements during the later stages of the product life cycle.

What is radical/disruptive innovation?

The start of a new product or process lifecycle, and is at early stages of diffusion and adoption, that significantly changes markets or industries.

What does the Abernathy & Clark (1985) matrix classify?

Types of innovation based on whether they conserve or disrupt existing markets/customers and existing technologies/structures.

What are the four innovation types in the Abernathy & Clark matrix?

1. Regular (conserve tech + conserve market)

2. Niche creation (conserve tech + disrupt market)

3. Revolutionary (disrupt tech + conserve market)

4. Architectural (disrupt tech + disrupt market)

What organizational factors influence innovation?

1. Structure: availability of resources, system to support innovation, roles clarify expectations

2. Culture: respect for creativity & change, physical arrangements

3. HRM: recruitment, job security, development opportunities, incentives & rewards

How do different innovation types affect innovation management?

Radical innovations require flexibility and experimentation, while incremental innovations align with existing processes and structures.

What is a business model according to Magretta, 2002?

The rationale of how an organization creates, delivers, and captures value.

What is a business model according to Trott (2016)?

The capabilities and resources required to create, market, deliver value, and generate sustainable revenue.

Why is a business model necessary for innovation?

Without a viable business model, an innovation is just a technology without use. It connects the organization, market, revenue, and the innovation.

What four levels must an innovation align with strategically?

1. Societal level

2. Industry level

3. Market level

4. Firm level

Which tool helps assess societal-level alignment?

PESTEL analysis.

What is the societal level?

Wider societal developments: economic, social, etc.

Which tool helps assess industry-level alignment?

Porter’s Five Forces Model.

What is the Industry Level?

The wider industry in which the innovation takes place.

Which tools help analyze market-level alignment?

Diffusion of Innovation, S-curves

Which tools help assess firm-level alignment?

SWOT analysis, value chain analysis, Business Model

What is a value proposition?

The value an innovation delivers for the customer: the need it fulfills or problem it solves.

What types of customer needs can a value proposition fulfill?

Problem/pain relief, differentiators (features that competitors lack), expectation management (meeting customer needs)

What defines customer segments?

• Demographics

• Psychosocial (personality)

• Motivations

• Skill level

• Willingness to pay

• Whether the market is niche, mass, segmented, or multi-sided

What is the role of the Value Proposition Canvas?

It connects customer needs with the value the innovation provides. This is different for each segment.

What is a revenue model?

How the innovation will make money (direct sales (online vs. offline), usage fee (Uber), subscription fees, licensing (PS4), freemium), the middleman (booking.com, thuisbezorgd), the marketplace (airbnb, ebay)

Name at least 5 revenue models

1. Direct sales (online vs. offline)

2. Usage fee (Uber)

3. Subscription fees

4. Licensing (PS4), freemium)

5. The middleman (booking.com, thuisbezorgd)

6. The marketplace (airbnb, ebay)

What are examples of non-consumer revenue models?

• Advertising: location-based, banners, affiliate programs

• Data brokers location-based data, user data, search/browsing data

• Investment-based: investments funds (banks), grants (non-profit governmental)