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CROSS BORDER INNOVATION
Defining and categorizing
Dr. Iris Berdrow
DEFINING INNOVATION
What is your definition of innovation?
With 3 or 4 people around you,
share your definitions.
Pick out the main components.
Discuss the similarities and
differences.
CONVERGENCE?
What are the common elements of these definitions?
Are there still elements missing?
Comprehensive Definition of Innovation
“The design, invention, development and/or implantation of new or altered products, services, processes, systems, organizational structures, or business models for the purpose of creating new value for customers and financial returns for the firm.” (January 2008 report of
The Advisory Committee on Measuring Innovation in the 21st Century Economy, Innovation Measurement: Tracking the State of Innovation in the American Economy).
1. Action – design, invention, development…2. Outcome – product, process, system …3. Purpose – customer value and financial return
MORE SIMPLY…
An Innovation is the conversion of a new idea into revenues and profits.
Jeffrey Immelt, CEO of GE
INNOVATION TYPOLOGYWhat counts and where does it happen?
INNOVATION TYPOLOGYFROM Doblin Group, Chicago
FINANCE
Bu
sin
ess
Mo
de
l
How you
make mone
y
Ne
two
rks
and
A
llia
nce
s
How you join
forces with other
companies for mutual benefit
PROCESSESE
nab
ling
P
roce
sse
s
How you support
the company’
s core processe
s and workers
Co
re
Pro
cess
es
How you create
and add value to
your offerings
OFFERINGS
Pro
duct
P
erf
orm
ance
How you design
your core offerings
Pro
duct
S
yste
mHow you
link and/or
provide a platform
for multiple products
Se
rvic
e
How you provide value to custome
rs beyond
and around
your products
DELIVERY
Ch
ann
el
How you get
your offering
s to market
Bra
nd
How you communicate your offerings
Cu
sto
me
r E
xpe
rien
ce
How your
customers feel when they
interact with your
company and its offerings
INNOVATION TYPOLOGYFROM Doblin Group, Chicago
FINANCE
Bu
sin
ess
Mo
de
l
How you
make money
Ne
two
rks
and
A
llia
nce
s
How you join forces with other companies for mutual
benefit
PROCESSESE
nab
ling
P
roce
sse
s
How you support the company’s
core processes
and workers
Co
re
Pro
cess
es
How you create
and add value to
your offerings
OFFERINGS
Pro
duct
P
erf
orm
ance
How you design
your core offerings
Pro
duct
S
yste
mHow you
link and/or
provide a platform
for multiple products
Se
rvic
e
How you provide value to
customers beyond
and around
your products
DELIVERY
Ch
ann
el
How you get your offerings to market
Bra
nd
How you communicate your offerings
Cu
sto
me
r E
xpe
rien
ce
How your customers feel when
they interact
with your company
and its offerings
FINANCE
Business Model
How you make money
Google’s Revenue Machine
01/01/2001 01/01/2002 01/01/2003 01/01/2004 01/01/2005 01/01/2006 01/01/2007 01/01/2008 -
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
40,000,000
45,000,000
GOOGLE INC.Financial Performance (000$)
NET SALES GROSS PROFIT NET INCOME
Google’s revenue, which is almost entirely from ads, has grown significantly every quarter since 1993.
http://investor.google.com/pdf/2012Q1_google_earnings_slides.pdf
From we make, you buy to you buy, we make
FINANCE
Networks and Alliances
How you join forces with other companies for mutual benefit
The 700-hp two-seater with a V-12 biturbo engine is a unique custom model produced for Fulda Reifenwerke, which is using the Maybach Exelero as a reference vehicle for a newly developed generation of wide tyres. http://www.exelerocar.com/project.html
MAYBACH & FULDAThe idea: the tire + the car =
The Exelero project
Cooperation with the best - Fulda Carat Exelero & Maybach
Consumer goods company Sara Lee realized that its core competencies were in consumer insight, brand management, marketing and distribution. Thus it divested itself of a majority of its mfg. operations and formed alliances with mfg. and supply chain partners.
PROCESSES
Enabling Processes
How you support the company’s core processes and workers
Starbucks can deliver its profitable store/coffee experience to customers because it offers better-than-market compensation and employment benefits to its store workers--usually part time, educated, professional, and responsive people.
The Starbucks Total Pay package is called “Your Special Blend” because it’s just for you.Your Special Blend might include:• Competitive pay • Insurance: medical, prescription drug, dental, vision, life, disability • Bonuses • Paid time off • Retirement savings plan • Equity in the form of Starbucks stock and discounted stock purchase plan • Adoption assistance • Domestic partner benefits • Emergency financial aid • Referral and support resources for child and eldercare • A free pound of coffee each week
PROCESSES
Core Processes
How you create and add value to your offerings
Inside Volkswagen's cutting-edge Transparent Factory in Dresden
Volkswagen Phaeton
Mercedes-Benz SLS
Mercedes-Benz plant Bremen: Flexible production producing three models (C-Class Saloon, C-Class Estate and GLK) on a single assembly line. The vehicles are able to pass along the assembly line in any conceivable order precisely as customer orders require, irrespective of model, variant (right- or left-hand drive, all-wheel or rear-wheel drive) and equipment. From 2011 the Bremen plant will be integrating a fourth model into the production process.
Mercedes-Benz C-Class
FLEXIBLE PRODUCTION LINES
Wal-Mart continues to grow profitably through core process innovations such as real-time inventory management systems, aggressive volume/ pricing/delivery contracts with merchandise providers, and systems that give store managers the ability to identify changing buyer behaviors in and respond quickly with new pricing and merchandising configurations.
The Profits and Perils of Supplying to Wal-MartThe world's biggest retailer works with thousands of small suppliers on a regular basis. But landing a contract comes with downsides worth considering before applying.Bloomberg Business WeekGetting Started July 14, 2009Emily Schmitthttp://www.businessweek.com/smallbiz/content/jul2009/sb20090714_270767.htm
OFFERINGS
Product Performance
How you design your core offerings
Jonathan Ive joined Apple in 1992 and was put in charge of the company's design in 1997. In 2012 Apple’s design guru Jonathan Ive, received a knighthood for creating products such as the iPad.
OFFERINGS
Product System
How you link and/or provide a platform for multiple products
OFFERINGS
Service
How you provide value to customers beyond and around your products
FLYING = GETTING FROM POINT A TO
POINT B,RIGHT?
DELIVERY
Channel
How you get your offerings to market
DELIVERY
Brand
How you communicate your offerings
DELIVERYBrand: How you communicate your offering
Jeff Greenspoon, Ivey HBA ‘07CEO, SPOKE
Toronto-based advertising agency
Publicizing the Canadian cult film
FUBAR II at the 2010 Toronto
International Film Festival (TIFF)
Internet-based, social and mobile media have made the one-way marketing of the previous 100 years obsolete. “We’re now in a culture of participation. Corporate communication used to be a monologue directed at a target. Now the target can and will talk back: the deer have rifles!” (Scott Griffith, VP Energy BBDO)
Source: Ivey InTouch Magazine, Spring 2012, p.23
DELIVERY
Customer Experience
How your customers feel when they interact with your company and its offerings
INNOVATION TYPOLOGYFROM Doblin Group, Chicago
FINANCE
Bu
sin
ess
Mo
de
l
How you make
money
Ne
two
rks
and
A
llia
nce
s
How you join forces with other companies for mutual
benefit
PROCESSES
En
ablin
g
Pro
ce
sse
s
How you support the company’s
core processes
and workers
Co
re
Pro
ce
sse
s
How you create and
add value to your
offerings
OFFERINGS
Pro
du
ct
Pe
rfo
rman
ceHow you
design your core
offerings
Pro
du
ct
Sys
te
mHow you link
and/or provid
e a platform for
multiple
products
Se
rvi
ce
How you
provide
value to
customers beyond and
around your
products
DELIVERY
Ch
an
nel
How you get your
offerings to
market
Bra
nd
How you
communicate your offerin
gs
Cu
sto
me
r E
xpe
rien
ce
How your customers feel
when they
interact with your
company and
its offerin
gs
What is missing?
CONTEXT
Innovating where?
Domestic
Cross-Border
Global
STAKEHOLDER
Innovation for who?
Social Innovation
Environ-mental
Innovation
LIFE-CYCLE
What about the after life?
Reduce Reuse Recycle
internationalization and localization
Whirlpool’s Opportunity
Unmet Customer Need: Household appliances designed for single people
Orthodoxy: Dishwashers are big boxes that sit under the
kitchen work surface neat the sink. Why shouldn’t a dishwasher be more like a
microwave oven – very small, very compact, very fast?
Core Competence: designing, producing, and marketing low-cost, high-quality appliances.
Whirlpool’s Response
Briva: a mini, high-speed dishwasher that could be integrated on one side of a double-tub sink, saving a lot of space in the kitchen. Specifically designed for small loads. Completes a cycle in about 15 minutes. Top-loading so its lid comes down and doubles as
a drainer or a chopping-board surface. When not in use, the whole wash mechanism can
even be lifted out to provide a fully functional second sink.
LANGUAGE OF INNOVATION
Focus on processes and systems**:• Autonomous – can be
introduced without modifications to other components
• Systemic – requires significant modifications in other components
Focus on knowledge needed*:• Competence Enhancing –
improvement building on existing know-how
• Competence Destroying – shift in skills and knowledge base required
Focus on what is offered:• Invention, Radical,
Breakthrough• Optimization, Incremental,
Line Extension
*Tushman & Anderson, 1986** Teece 1996
INNOVATING LEARNING INNOVATION
Innovation for what purpose?• Meet unsatisfied customer need by providing:
– Same product/service, new features– Neil Young uses JavaOne
to create a chronological archive of his music
– New product/service, same features– iPhone
– New product/service, new features– 1st telephones
– Same product/service, same features, new market/use
– Wii Fit
– Same product/service/market, new price/cost/internal components, etc.
WALMART Strategies:• “opening price point items”• Bar codes• “Retail link” software• “Customized business plans”http://www.pbs.org/wgbh/pages/frontline/shows/walmart/secrets/pricing.html
CREATIVITY VERSUS INNOVATIONhttp://www.youtube.com/watch?v=a7Ny5BYc-Fs
CREATIVITYThere is no specific outcome
desired
Creative endeavors may or may not result in practical outcomes
INNOVATIONCreative solutions to a problem
The intent is for innovation to lead to a practical outcomes, although perhaps not immediately.
Who are the stakeholders of innovation? I.e. who can impact or is impacted by
organizational innovation?
ORGANIZATIONAL INNOVATION
?
?
?
?
?
?
Innovation Complexities
Is there such a thing as a completely new idea? A completely new innovation?
Tucker (and others) argues that all organizations must innovate and innovation must be everyone’s responsibility within the organization. Do you agree? Are there situations in which being innovative is in fact detrimental? Or at least, would not enhance business performance?
Effective innovations start small. They are not grandiose. They try to do one specific thing. It may be to enable a moving vehicle to draw electric power while it runs along rails – the innovation that makes possible the electric streetcar. Or it may be as elementary as putting the same number of matches into a matchbox (it used to be fifty), which made possible the automatic filling of matchboxes and gave the Swedish originators of the idea a world monopoly on matches for almost half a century. Grandiose ideas, plans that aim at revolutionizing an industry, are unlikely to work.
Peter Drucker
