Innovation Bora Güngören

About the futility of the subject

• Innovation by definition is something you cannot predict easily,• Therefore any attempt to describe or even teach innovation is

inherently futile

• But we can discuss past innovations, or how innovative processes work in general

• Special thanks to Prof. Nazlı Wasti from METU, whose slides I have used in some parts of this presentation.

Invention, Commercialization, and Diffusion

Invention

Commercialization

Diffusion

• Innovation is the (sometimes systemic) process of inventions being commercialized. • The output of this process is also

called an innovation.

• So we can talk about the diffusion of innovation(s). • This is very much like chemical

substances diffusing in air or electromagnetic waves propagating in space.

A Generic Model of the Innovation

Process

• This model is the basic gate-keeping model.

• We assume that success at any stage leads to the next stage.

• We also assume that the process is linear and does not involve feedback.

• It is suitable as a learning example, and also applicable to fields where the rate of change (i.e. Technological development) is slow.

Insight/Research

Development Design Production Engineering

Full Scale Manufacture

MarketLaunch

A Generic Model of the Innovation Process

Research & Development (R&D) Commercialisation

Innovation

PilotTesting

Two Basic Types of Innovations

• Product innovations help firms protect profit margins by offering new, differentiated products or product features.• The first Iphone was a product

innovation.

• A hybrid version of an existing automobile usually just improves the features of the model, but it still is a product innovations.

• Process innovations help make producing (i.e. Manufacturing) more efficient.• Agile software development

is a process innovation.

• Take-out pizza is a process innovation.

When Should I Innovate?

• The correct answer is «yesterday» because there is abundance of effort for innovation. And it is much easier to innovate thanks to• Computer aided design,

modelling, simulation, manufacturing, and testing.

• What does a 3D printer do?

Not All Innovations Make Big Bucks

Why the funnel?

• The funnel model assumes that innovations are crafted in-house without feedback from the market. This assumption is often valid because of fear from • Copycats

• Facing the ugly truth about one’s idea (some kind of biased view of your own)

• Having to do it from scratch

Why the funnel?

• The funnel model also assumes that it takes alot of time and effort from the initial idea to the final product. • This assumption is particularly valid if market entry is heavily regulated,

such as in drugs.

• It is also valid if market entry is dependent on checking patents which is a type of self-regulation. This has been the case (until recently) for electric vehicles.

• It is not necessarily valid for the software industry, but not all software can be built within a weekend. Actually if it takes a weekend for you, by the next week you might see several clones around.

How to «bypass» the funnel?

• If possible, you should get early and precise feedback from the intended users of the innovative product or service. • Users is a generic term, it may also

mean anyone who is related to your idea.

• This includes suppliers you might need, marketing channels you will utilize, regulation authorities who might be interested, etc.

How to «bypass» the funnel?

• Whenever possible, you should develop prototypes. • But prototypes do not come for free,

so you might want to have prototypes with less but essential features first.

• When the stakeholders you contact ask for more features, you should be ready to estimate the benefit/cost ratio for that feature in a short time.

• Benefit/Cost is also not a constant, but depends on the size of the market (i.e. Production capacity you aim at.)

Be Ready For Reception

Many innovations are initiated by external factors.

So you should be watching out.

• Daily newspapers.

• Economics magazines.

• Scientific magazines and journals.

• PhD theses.

• Conferences, trade shows.

• Rival companies.

• Users.

Tangibility of Innovations Matter

Creativity and Innovations

• Creativity is the ability to produce something useful. It is an individual ability.

• Organizational creativity is an organization’s capacity to produce something useful. It is not simply the sum of all creativities in the individuals making up the organization. • Systems to collect creative ideas or test them (HP, Google,

Siemens, etc)

• An organizational culture that is positive towards trials (Apple, HP, Google)

Creativity and Innovations

• Innovation is the process of translating creative ideas into products and services that have a societal impact and most often monetary gain.

• Innovation requires resources and expertise, as well as some luck.

• Apple’s iPod • It was the company’s third trial and this time they used an external team.

• The external team had tried it twice, first at Philips and had failed technically.

• They found several high quality suppliers through Appke to commision parts.

• The actual lead engineer got retired shortly after.

Innovation is Strategic

A Better, Strategic Model of Innovation

Universities as Innovators?

Universities as Innovators?

A Third and Even Better Model of Innovation

• Innovations are developed collaboratively in a social network of actors.

• Modes of collaborations exist, and include• Joint ventures

• Licensing and second-sourcing agreements

• Research associations

• Government-sponsored joint research programs

• Informal networks

A Third and Even Better Model of Innovation

• Strong ties between actors provide• Accurate and reliable information

• Aligned strategies

• Weak ties between actors provide• Fast diffusion of new ideas

• Conflicting strategies

• IP spillovers

A Third and Even Better Model of Innovation

• Technology Clusters are regional clusters of firms that have a connection to a common technology

• Technoparks such as Cyberpark form such clusters.

Thanks for the Opportunity