Innovation/Disruptive Innovation

Why disruptive technologies often threaten good firms

- Companies pay most attention to their current customers - Small markets - Perfected their organizational process to meet current customer's needs

how to handle disruptive technologies

- Identify whether a new technology has a potential to be disruptive - Identify likely initial markets - Keep the disruptive technology business in an independent organization

Issues with Managing Discontinuous information

- Shifts in the customer base - "our customers don't want it" - Genuine uncertainty - "It's not going to happen — certainly not now - Cannibalization - It will compete with our current products - Margin Erosion - It will make less money - Competency Traps and "Interia"

Disrupt yourself

A firm can protect themselves from a disruptive technology by doing this to themselves. Example: GE's developing portable ultrasound machine technology even though their original cost $250,000 versus eventually producing it to be under $30,000

Closed Innovation

A framework for R&D that proposes impenetrable firm boundaries. The key to success in the closed innovation model is that the firm discovers, develops, and commercializes new products internally.

Open Innovation

A framework for R&D that proposes permeable firm boundaries to allow a firm to benefit not only from internal ideas and inventions, but also from external ones. This sharing goes both ways. Some external ideas and inventions are in-sourced while others are spun out.

New sources of, renewal of existing

Innovations Provides: 1. and the 2. competitive advantage

Innovation

This is a massive driver in the competitive process

Idea, Invention, Innovation, Imitation

Outline of the four step innovation process 1. 2. 3. 4.

Innovation

Step in the Innovation Process: Concerns the commercialization of an invention by entrepreneurs

Invention

Step in the Innovation Process: Describes the transformation of an idea into a new product or service

Imitation

Step in the Innovation Process: This happens if an innovation is successful in the marketplace

Idea

Step in the Innovation Process: This is where the innovation process begins

Disruptive Innovation

Type of Innovation Existing Markets / New Tech. Leverages new technologies to attack existing markets from the bottom up. Stealth attack. Examples: Digital Photography, Data Storage Media

Incremental Innovation

Type of Innovation Existing Markets/Existing Tech. Builds on established knowledge base, and steadily improves an existing product/service. Often from incumbent firms. Examples: Gillette 6 bladed razors

Architectural Innovation

Type of Innovation New Markets / Existing Tech An embodied new product in which known components, based on existing technologies, are reconfigured to attack new markets. Examples: Cannon user-friendly copiers, GPS to handheld

Incremental, radical, architectural, and disruptive

Types of Innovation that emerge when applying existing versus new dimensions of technology and markets; 1. 2. 3. 4.

Discontinuity

What can disruptive innovations cause while the next industry/innovation is going through its early stages? At the end of the industry cycle when it's not truly "done".

Radical Innovation

Type of Innovation New Markets / New Tech. Draws on novel methods or materials and is derived entirely or partly from a different knowledge base. Often new firms. Exampels: Ford Model T, X-ray, Airplane