It kind of feels too complex and very huge for me. You are commenting using your WordPress.
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The solid-state research program—which ultimately led to the invention of the transistor—was motivated by the need to lay the scientific foundation for developing newer, more reliable components for the communications system. Research on satellite communications was motivated in part by the limited bandwidth and the reliability risks of undersea cables.
Hence its emphasis on integrated hardware-software development, proprietary operating systems, and design makes total sense. Value-creating innovations attract imitators as quickly as they attract customers. Rarely is intellectual property alone sufficient to block these rivals. As imitators enter the market, they create price pressures that can reduce the value that the original innovator captures. Moreover, if the suppliers, distributors, and other companies required to deliver an innovation are dominant enough, they may have sufficient bargaining power to capture most of the value from an innovation.
Think about how most personal computer manufacturers were largely at the mercy of Intel and Microsoft. Companies must think through what complementary assets, capabilities, products, or services could prevent customers from defecting to rivals and keep their own position in the ecosystem strong. And by controlling the operating system, Apple makes itself an indispensable player in the digital ecosystem. One of the best ways to preserve bargaining power in an ecosystem and blunt imitators is to continue to invest in innovation.
I recently visited a furniture company in northern Italy that supplies several of the largest retailers in the world from its factories in its home region. Depending on a few global retailers for distribution is risky from a value-capture perspective. Because these megaretailers have access to dozens of other suppliers around the world, many of them in low-cost countries, and because furniture designs are not easily protected through patents, there is no guarantee of continued business. The company has managed to thrive, however, by investing both in new designs, which help it win business early in the product life cycle, and in sophisticated process technologies, which allow it to defend against rivals from low-cost countries as products mature.
Certainly, technological innovation is a huge creator of economic value and a driver of competitive advantage. But some important innovations may have little to do with new technology. In the past couple of decades, we have seen a plethora of companies Netflix, Amazon, LinkedIn, Uber master the art of business model innovation. Thus, in thinking about innovation opportunities, companies have a choice about how much of their efforts to focus on technological innovation and how much to invest in business model innovation.
Routine innovation is often called myopic or suicidal. That thinking is simplistic. Although each dimension exists on a continuum, together they suggest four quadrants, or categories, of innovation. Other examples include new versions of Microsoft Windows and the Apple iPhone. Disruptive innovation, a category named by my Harvard Business School colleague Clay Christensen, requires a new business model but not necessarily a technological breakthrough. For that reason, it also challenges, or disrupts, the business models of other companies.
Radical innovation is the polar opposite of disruptive innovation. The challenge here is purely technological. The emergence of genetic engineering and biotechnology in the s and s as an approach to drug discovery is an example. Established pharmaceutical companies with decades of experience in chemically synthesized drugs faced a major hurdle in building competences in molecular biology.
Architectural innovation combines technological and business model disruptions. An example is digital photography. For companies such as Kodak and Polaroid, entering the digital world meant mastering completely new competences in solid-state electronics, camera design, software, and display technology. As one might imagine, architectural innovations are the most challenging for incumbents to pursue.
In much of the writing on innovation today, radical, disruptive, and architectural innovations are viewed as the keys to growth, and routine innovation is denigrated as myopic at best and suicidal at worst. That line of thinking is simplistic. In fact, the vast majority of profits are created through routine innovation.
Microsoft is often criticized for milking its existing technologies rather than introducing true disruptions.
The point here is not that companies should focus solely on routine innovation. Rather, it is that there is not one preferred type. In fact, as the examples above suggest, different kinds of innovation can become complements, rather than substitutes, over time. Intel, Microsoft, and Apple would not have had the opportunity to garner massive profits from routine innovations had they not laid the foundations with various breakthroughs. Conversely, a company that introduces a disruptive innovation and cannot follow up with a stream of improvements will not hold new entrants at bay for long.
Businesses in markets where the core technology is evolving rapidly like pharmaceuticals, media, and communications will have to be much more keenly oriented toward radical technological innovation—both its opportunities and its threats. A company whose core business is maturing may have to seek opportunities through business model innovations and radical technological breakthroughs.
But a company whose platforms are growing rapidly would certainly want to focus most of its resources on building and extending them. In thinking strategically about the four types of innovation, then, the question is one of balance and mix. Google is certainly experiencing rapid growth through routine innovations in its advertising business, but it is also exploring opportunities for radical and architectural innovations, such as a driverless car, at its Google X facility.
Apple is not resting on its iPhone laurels as it explores wearable devices and payment systems. Without an explicit strategy indicating otherwise, a number of organizational forces will tend to drive innovation toward the home field. Some years ago I worked with a contact lens company whose leaders decided that it needed to focus less on routine innovations, such as adding color tints and modifying lens design, and be more aggressive in pursuing new materials that could dramatically improve visual acuity and comfort.
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After a few years, however, little progress had been made. Despite a strategic intent to venture into new territory, the company was trapped on its home field. The root of the problem was that business units and functions had continued to make resource allocation decisions, and each favored the projects it saw as the most pressing.
Only after senior management created explicit targets for different types of innovations—and allocated a specific percentage of resources to radical innovation projects—did the firm begin to make progress in developing new offerings that supported its long-term strategy. As this company found, innovation strategy matters most when an organization needs to change its prevailing patterns.
It also helps you navigate the inherent trade-offs. Consider one popular practice: crowdsourcing. The idea is that rather than relying on a few experts perhaps your own employees to solve specific innovation problems, you open up the process to anyone the crowd. One common example is when an organization posts a problem on a web platform like InnoCentive and invites solutions, perhaps offering a financial prize.
First, we need to decide on a definition. It can also pertain to modifying business models and adapting to changes to achieve better products and services.
5 Key Points to Consider when Developing an Innovation Strategy | Innovation Management
According to Merriam-Webster, the term creation means having the quality or power to create, and is the act of making, inventing or producing. Innovation is defined as the introduction of something new or different. The act of innovating leads to the introduction of new ideas, devices or methods. In short, creativity plus work results in innovation. Therefore, being innovative means you harness your creative ability.
In the business world, for an innovative idea to be useful, it has to be replicable without being too expensive and it has to resolve a particular need. Innovation is achieved by providing something original and is often seen to produce efficiency, leading to an idea that significantly affects the general society.
Originally, highway maintenance crews were forced to visit individual production plants before starting road repairs in order to collect fresh, hot asphalt materials. This not only used up valuable time, but also led to wasted material because of particular temperature requirements. Innovation sparked an idea to develop a mobile unit that mixes the key road-surface ingredients on-site, resulting in more efficiency.
This method costs about the same, saves the company and crews time, and the repairs are completed sooner for residents. Notice how compelling and effective this is for anyone who drives on these streets. Some companies, products and ideas revolutionize certain aspects of our lives more quietly. Sense-T is an intelligent farming initiative that utilizes sensor data to optimize farming operations. Haven't heard of them?