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Jamille Cummins, Transworld Group
Knowledge Creation and Innovation
Jamille Cummins, Transworld Group
Jamille Cummins, Transworld Group
Interest in innovation and R&D performance has been rising on the back of a wide range of successful products and services
Context
Jamille Cummins, Transworld Group
Remember Innovation is not only based on natural sciences
Jamille Cummins, Transworld Group
What do companies think about innovation?
Jamille Cummins, Transworld Group
What is the real situation? Booz Allen Hamilton Global Innovation
1,000 Study 2006: Innovation can lead to higher performance,
but the process isn’t automatic and it does not necessarily require above average levels of investment. The most successful companies combine an integrated process and a supportive culture to create a sustainable competitive advantage
Money simply cannot buy effective innovation.
Patents generally don’t drive profits Less than 10% of companies are High-
Leverage Innovators and distinguish themselves not by the money they spend, but in having a very good innovation management system
Innovation Network Survey, fall 2004 [same result from 2005], new innovation leaders in medium to large companies:
71% said they had no metrics for their position
60% of them have innovation as part of their mission/job objectives
67% are allowed to work on “new” concepts for their company (“new” is not defined)
68% have no well defined innovation process within their company
54% have no working definition of innovation
Jamille Cummins, Transworld Group
Research vs Innovation – What is the relationship?
Research
Innovation
Research
Innovation
Creativity
Jamille Cummins, Transworld Group
EXPANDING THE INNOVATION HORIZON Innovation can be ignited by business and technology integration. Technology can enable and drive innovation. But to truly capitalize
on technology’s potential and unleash an organization’s creative energy, technology know-how must be combined with its business and marketing insights. CEOs view consistent business and technology integration as crucial to innovation
Source: Dr.V.S.R.Krishnaiah, Sr.Technical Director, NIC
Jamille Cummins, Transworld Group
Business Model Innovation is key A Value Proposition is an overall view of a company's bundle of products and services
that are of value to the customer. The Target Customer is a segment of customers a company wants to offer value to. A Distribution Channel is a means of getting in touch with the customer. The Relationship describes the kind of link a company establishes between itself and the
customer. The Value Configuration describes the arrangement of activities and resources that are
necessary to create value for the customer. Nornally these are expressed in IC-Navigator form and using the (Stabell and Fjeldstad 1998) Value Logics
The identified Resources that can be deployed by the firm to create value including those that form the basis for a competitive advantage
A Partnership is a voluntarily initiated cooperative agreement between two or more companies in order to create value for the customer
The Cost Structure is the representation in money of all the means employed in the business model.
The Revenue Model describes the way a company makes money through a variety of revenue flows.
Jamille Cummins, Transworld Group
Truly understand your customers and your customer’s customers [consumers]
Customers are trading both up and down within categories, demanding differentiated value from businesses
Gro
wth
Historical Demand
Emerging Demand
Price Positioning
Seeking “good enough” quality at rock-bottom prices when they perceive no differentiated value
Willing to pay large premiums for “new luxury” brands when they deliver differentiated value
Source: IBM Institute for Business Value analysis
Value Proposition
Target Customer
Jamille Cummins, Transworld Group
What drives the B2B relationship?Situational Importance of Different Perceived Value Driver Categories
Perceived Knowledge of BuyerPerceived Knowledge of Buyer
Impo
rtan
ce to
Buy
erIm
port
ance
to B
uyer
< Seller< Seller
HighHigh
LowLow
≥ ≥ SellerSeller
DistinctnessDistinctness
Mental ProximityMental Proximity
FunctionalityFunctionality
FunctionalityFunctionalityPricePrice
PricePrice DistinctnessDistinctness
Value Proposition
Target Customer
Jamille Cummins, Transworld Group
Value and knowledge distance
Known byKnown bynobodynobody
Known byKnown byeverybodyeverybody
Known by theSupplier
Known by theCustomer
Knowledgedistance
Potential Valueto be extracted
from the relationshipby the supplier
+-
Value Proposition
Target Customer
Jamille Cummins, Transworld Group
Value Chain
Inbound
logisticsService
Marketing
&
Sales
Outbound
logisticsOperations
Infrastructure
Human Resource Management
Technology development
Procurement
Margin
SupportSupportActivitiesActivities
PrimaryPrimaryActivitiesActivities
Source: Porter, M.E. 1985: Competitive Advantage; Creating and Sustaining Superior Performance, The Free Press
Value Configuration
Jamille Cummins, Transworld Group
Value Shop
Source: Stabel, . B., Fjeldstad,Ø. D.: Configuring Value for Competitive Advantage: On chains, shops, and networks, SMJ, Vol 19, No 5, 1998
Procurement
InfrastructureHuman Resource Management
Technology developmentSupportSupport
ActivitiesActivities
PrimaryPrimaryActivitiesActivities
Find someone
with a problem
Control/Evaluation
Execute
Develop alternative solutions
Acquire the right
to address the
problem
Co-select with
client one solution
Value Configuration
Jamille Cummins, Transworld Group
Value Network
Source: Stabel, . B., Fjeldstad,Ø. D.: Configuring Value for Competitive Advantage: On chains, shops, and networks, SMJ, Vol 19, No 5, 1998
PrimaryPrimaryActivitiesActivities
Procurement
Infrastructure
Human Resource Management
Technology development
SupportSupportActivitiesActivities
Promote Network
Manage Member Contracts
Service Provisioning
Infrastructure Operation
& Maintenance
Value Configuration
Jamille Cummins, Transworld Group
The presence of resources with different behaviour
Owned or ControlledOwned or ControlledBy the FirmBy the Firm
Owned or ControlledOwned or ControlledBy the FirmBy the Firm
Owned or ControlledOwned or ControlledBy the FirmBy the Firm
AdditiveAdditive AdditiveAdditive
Owned or ControlledOwned or Controlledby the Other Partyby the Other Party
Owned or ControlledOwned or ControlledBy the EmployeeBy the Employee
Resources
Jamille Cummins, Transworld Group
The utilisation of resources with different behaviour
KnowledgeKnowledgeEconomicsEconomics
IndustrialIndustrialEconomicsEconomics
NetworkNetworkEconomicsEconomics
Resources
Jamille Cummins, Transworld Group
Examples of Resource Transformations
HUMAN
ORGANISATIONAL
RELATIONAL
PHYSICAL
MONETARY
HUMAN ORG. REL. PHYSICAL MONETARY
Investmentin assets
Investmentin building
links
Investmentin brands,image andsystems
Recruitmenttraining,
conditions
Facilities totrain with
Possible new products& know-how
Facilitiesbuild
relationshipsSales ofproducts
Chance tobuild skills inrelationship
handling
Importing IP,processes, associationwith brands
Use of othercompany’s
assets
Relationshipselling,
preferentialdeals
Developingcompetencethrough use
Marketintelligence
ProduceBy
numbers
Sales of IP,processes &knowledge
Knowledgecodification,
new IP
Building &developing
relationships
Developingprototypes
Sales ofman-hours
InvestmentIn financialinstruments
Systemsgenerate
IP
Networking
Equipment generates products
Training
Resources
Jamille Cummins, Transworld Group
Revenue LogicsEffort-based pricing
A cost-based (or effort-driven) pricing model
Value-based pricing A value-based (or perception-driven) pricing model
Profit Sharing Revenue-sharing contract with primary customers
Licensing Charging on copyright (the right to use the IP)
Loss Leader-pricing Creating customer base (for later revenue) or supporting sales of other
parts of the product/service offering
Hybrid/Media model Vendor sells/leases ad space or information [space] based on customer
relationship
Channel charging Vendor charges for carrying information relating to other goods in/on its
primary product/offering
Membership fee Vendor charges for the right to take part in an activity
Negative Working capital Vendor generates financial returns on the capital held as a consequence of
getting paid by its customers before paying its suppliers
Revenue Model
Jamille Cummins, Transworld Group
Innovation does not happen by itself It is the result of hard work, well
planned and executed and is no happening
Innovation is work rather than genius,…and very much a matter of discipline (Peter F Drucker, 1985)
Jamille Cummins, Transworld Group
Summary
Innovation does make a difference at the bottom line Few companies do it well There is a difference between research and innovation and especially
in their management Innovation is more than technology Innovation Management is Key and is facilitated by applying the IC
lens We know how good innovation management looks It will become even more important in the future