innovation mgmt chapter 1

pillcam case

• capsule swallowed by patients that broadcasts images of small intestine

• development

  • hurdles: size, battery life, image quality

  • partnership with Gavriel Meron for raising capital & comercialisation capacity

  • partnership with other scientists contributing complementary knowledge

  • result: highly successful, revolutionary product

the oslo manual

• common framework for measuring innovation

• reference guide for collecting, reporting, & using data on innovation

• provides common definitions & rules, so everyone measures innovation in a consistent way

innovation

• new or improved product / process different from previous ones

• available to potential users or was brought into use by the unit (business, govs, households, non-profits serving households)

• it is both an activity & an outcome

  • eg. research & science

  • eg. development & technology

concept of innovation

• basis: knowledge

• novelty: new / original idea, product, or process

• utility: has practical use & delivers real-world benefit

• goal: value creation or prevention

• implementation is required

innovation activities

• everything a company does to create or introduce an innovation

• developments, financial, & commercial activities

product innovation

• a new or improved good or service that differs from the firm’s previous ones

• has been introduced on the market

types of firms

• innovative: produces innovative outcomes

• non-innovative: does not produce innovative outcomes

• innovation-active: engages in innovation activities (tries but fails)

sources of innovation

• firms

• universities

• individuals

• private non-profits

• government-funded research

individual vs organisational creativity

1. intellectual abilities: knowledge, style of thinking

2. personality: persistence, risk-taking

3. motivation: intrinsic (genuine interest)

4. environment: support, reward

5. individual creativity: coming up with solutions

6. context: contextual factors shaping individuals’ behaviours & interactions

creativity vs innovation

• creativity: process of generating new & useful ideas

• innovation: transformation of ideas into new products or business models

transforming creativity into innovation

1. user innovation

2. R&D

3. firms linkages with customers, suppliers, competitors, & complementers

4. universities, gov-funded research

5. innovation in collaboration networks

user innovation superglue example

• Loctite’s manager began exploring possibilities to use superglue as a suture for wounds

• 1960s: first experiment failed

• 1980s: pharmaceutical firm collabed with Loctite → failed

• may 11, 1985: tragedy in Valley Parade stadium in the UK → main stand burned down

• Dr Alan Robers & colleagues installed medical tents to care for patients & started using commercial superglue for skin grafting

• after → Robers gave a talk with Loctite managers, convincing them to pursue the project for superglue as a wound suture

• 2002: FDA approval for use of Inermil

user innovation

• users

  • have profound understanding of their own needs & motivation to fulfil them

  • they are professionals (doctors, engineers, athletes, housewives) experiencing problems that need solutions

research & development

• research: creation of new knowledge

  • basic: increase of existing knowledge & understanding of a topic or field, without concrete commerical applications in mind

  • applied: increase of knowledge on a topic to meet a specific need → in firms, this has specific commercial applications

• development: application of existing knowledge for producing useful devices, materials, or processes

• most firms consider in-house R&D to be their most important source of innovation

• a firms’ R&D expenditure as a & of its revenues have strong correlation with its sales growth rate, sales from new products, & profitability

R&D innovation models

• technology push: innovation starts in the lab with a scientific discovery or technical breakthrough

• demand pull: innovation starts with a customer problem, unmet need, or market signal

• integrative models: innovation is an interactive process combining technology capabilities & market needs

the pharmaceutical R&D process

1. basic research

2. drug discovery

3. pre-clinical trials (involves testing on living things)

4. investigational new drug submitted

5. clinical trials

   1. phase 1: test drug on 10-20 healthy people to discard possibility of toxicity → determine dosage

   2. phase 2: test min 20 patients → observe effectiveness

   3. phase 3: if phase 2 is effective, test on 2000-3000 people

6. FDA test if benefit > cost → monetary, social, environmental, etc → if yes, drug is commercialised

7. post-approval research & monitoring

   1. phase 4

how firms’ linkages with customers, suppliers, competitors, & complementers occur

• collaboration agreements: alliances with other orgs

• R&D outsourcing: subcontracting of R&D services

• licenses: acquisition of rights to exploit someone else’s intellectual property rights

• joint ventures: formation of a new company to exploit an R&D project

• complementers: orgs producing complementary goods

absorptive capacity

• the ability to understand & apply foreign knowledge

• investing in R&D contributes to better assimilating & using external info

• contarry to NIH syndrome

universities in R&D

• researchers generate inventions with potential value

• sometimes they lack the resources to develop & commercialise

• european unis have technology transfer offices (TTOs)

government-funded research

• programs: grants, subsidies, & tax incentive schemes

• in spain, CDTI (public entity under the ministry of science), innovation, & unis, boost innovation by providing R&D assistance to spanish firms

• science parls: agglomeration of innovation firms set up by govs

• incubators: organisations that nurture innovation projects

innovation in collaboration networks

• demonstrated sources of successful innovation

• types: joint ventures, licensing, research associations, gov-sponsored joint research programs, informal networks, etc

• relationships grow in many industries around firms

• networks are conduits of resources & info that support innovation

• a firms’ position in its network of collaboration is significant to promote innovation

• networks also emerge locally

technology cluster

• concentration of interconnected firms in a region, includign specialised providers, service providers, & firms related to a given industry sector

• advantages

  • access to relevant knowledge, through spillovers

  • agglomeration economies (cost savings & productivity gains businesses achieve when they cluster together in the same geographic area)

• disadvantages

  • margins reduction

  • the knowledge also goes to competitors

  • logistics: traffic congestion, high housing costs, higher pollution, etc

firm linkages vs unis vs collab networks

• firm linkages: specific, functional connections between commercial businesses (eg supply chains, buyer-supplier contracts, joint ventures)

• unis: academic & research institutions that create foundational knowledge, train talent, & supply new technologies

• collab networks: broader, systemic webs of interconnected actors (firms, unis, gov bodies) that exchange knowledge collectively

spillovers

• occur when the benefits from the research activity of one firm spill over to other firms

• +ve externality of R&D efforts

• knowledge spillovers influence business innovation

  • Jaffe 1986: showed that R&D expenditures of other firms & unis +vely influence patenting

  • extent to which R&D benefits spillover partially depends on the strength of intellectual property protection mechanisms

industry hubs

• concentrated geographic areas where manufacturing, production, tech, or resource extraction activities cluster together to drive economic growth