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Leading Innovation and
Change MHR 002
Week 2 Innovation
UBSS Sydney CBD Campus
Level 10 & 11 233 Castlereagh Street
Sydney NSW2000
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KEY POINT
HERE
WEEK 2
Session outline
♦ Overview of course and expectations – subject outline Review recap
♦ 3M case – reading now in Moodle
♦ Case study 1 Air Asia
♦ Review Lecture notes on Innovation;
♦ Presentation of answers to week 2 questions
♦ Micro soft Case chapter 1
Leading Innovation and change
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KEY POINT
HERE
WEEK 2
Session learning outcomes
♦ Explain the differences between Innovation invention and creativity
♦ Innovation defined
♦ Identify the process of innovation
♦ Explain how companies can exploit innovation
♦ Understand and explain the type and categories of innovation
♦ Explain the concept of trajectory of innovation and associated risk
Leading Innovation and change
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KEY POINT
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Week 1 Re cap – The new era
Why must companies change?
What are impacts on today’s commercial environment of an entrepreneur?
Define an Entrepreneur.
What are the differences between and Entrepreneur and a corporate
entrepreneur?
What are the characteristics of Successful Entrepreneurs?
Leading Innovation and change
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KEY POINT
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Innovation .. At the heart of entrepreneurship
Creates change and opportunity
Firms that grow do so because they innovate in some way “Invention and
entrepreneurship are at the heart of national advantage” – M Porter (The competitive
age of Nations 1990)
Differences between innovation and invention
Inventions – new to the world product or process
Often linked to new technology and research
Exploiting Innovation
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LO 1 Differences between Innovation, invention
and creativity
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KEY POINT
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♦ The terms entrepreneurship, creativity, and innovation are sometimes used
interchangeably, and while that is understandable, it can be misleading.
♦ Creativity and innovation are very similar concepts, but there are some
differences.
♦ Creativity is typically described as the process of generating new ideas, while
innovation takes creativity a step further by being a process that turns those
ideas into reality.
♦ Innovation is often the basis on which entrepreneurship is built because of the
competitive advantage it provides.
Innovation, Creativity, and
Entrepreneurship
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LO 2 Defining Innovation
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KEY POINT
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♦ Innovation is the specific function of entrepreneurship. . . . It is the means by
which the entrepreneur either creates new wealth-producing resources or
endows existing resources with enhanced potential for creating wealth.
♦ Thus, innovation is the process by which entrepreneurs convert opportunities
(ideas) into marketable solutions. Innovation is a process that transforms
ideas into outputs. It is the means by which entrepreneurs become catalysts
for change.
♦ The emerging perspective by researchers in the field of innovation is to
define innovation in the broadest context possible, as in this specific
example:
Defining Innovation
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KEY POINT
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♦ Innovation can also be viewed as the systematic approach to creating an
environment based on creative discovery, invention, and commercial
exploitation of ideas that meet unmet needs.
♦ However, there are millions of innovations that are often much smaller in
scale, do not involve an invention, or are not necessarily exploited in the
same commercial sense. Therefore, one simplified alternative definition
might be:
♦ Innovation = Creativity + Exploitation
♦ In this sense innovation becomes the composition of creative thoughts and
the determination to implement those ideas into a marketable concept.
Review the MIT view of innovation
Innovation Simple Definition
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SHORT BREAK
♦ 5 MINUTES
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LO-3 The innovation process
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KEY POINT
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♦Innovation is the process of making changes, large and
small, radical and incremental, to products, processes, and
services
♦ results in the introduction of something new for the
organization that adds value to customers and contributes to
the knowledge store of the organization.
♦There are numerous alternative definitions of innovation.
♦One popular alternative is to present innovation as an
invention that has been exploited commercially.
The Innovation process
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LO 5 Understand and explain the type and
categories of innovation
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KEY POINT
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Since there are numerous ways in which individuals apply
creative thoughts into exploitation of opportunities, there
also are numerous ways to categorize innovation. Types:
♦The term innovation can be associated with physical
products, processes that make products, services that
deliver products, and services that provide intangible
products.
♦Thus, the basic types of innovation relate to
● products,
● processes,
● and services.
Categorizing Innovation
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KEY POINT
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Types
♦Product innovation is about making beneficial
changes to physical products.
♦Process innovation is about making beneficial
changes to the processes that produce products or
services.
♦Service innovation is about making beneficial changes
to services that customers use.
Categorizing Innovation
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KEY POINT
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♦ Whether it is product, process, or service, there are four basic methods
that describe the ways that innovation will take place.
♦ These extend from new inventions to modifications of existing products
or services.
Methods
Categorizing Innovation
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KEY POINT
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♦ In order of originality, these are the four methods:
Invention: the creation of a new product, service, or process, often one that is novel
or untried. Such concepts tend to be “revolutionary.”
Extension: the expansion of a product, service, or process already in existence.
Such concepts make a different application of a current idea.
♦ Duplication: the replication of an already existing product, service, or process. The
duplication effort, however, is not simply copying but adding the entrepreneur’s own
creative touch to enhance or improve the concept to beat the competition.
♦ Synthesis: the combination of existing concepts and factors into a new formulation.
This involves taking a number of ideas or items already invented and finding a way
so together they form a new application.14
Methods
Categorizing Innovation
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SHORT BREAK
♦ 10 MINUTES
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LO 4 TRAJECTORIES OF INNOVATION
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KEY POINT
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♦ The final way to categorize innovation is through the trajectory that
the innovation takes.
♦ In this manner there are three major trajectories for innovation:
1. radical,
2. incremental, and
3. disruptive.
Trajectories
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KEY POINT
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Trajectories
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♦ In this manner there are three major trajectories for innovation: radical,
incremental, and disruptive.
♦ Radical innovation is the launching of inaugural breakthroughs such as
personal computers and overnight mail delivery. These innovations take
experimentation and determined vision, which are not necessarily managed
but must be recognized and nurtured. These are considered changes at a
significant magnitude.
Trajectories and risk
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KEY POINT
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♦Undertaking radical innovation can bring dramatic
benefits for an organization in terms of increased
sales and profits,
♦it also carries intensive resource requirements as
well as greater risk.
♦Radical innovation can transform the industry itself
by changing the existing market and developing the
next industry wave.
Trajectories and risk
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KEY POINT
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♦ Risk.
♦Consider pharmaceutical companies that can invest
more than $1 billion in drug development with no
guarantee that it will ever make it to the marketplace.
♦However, one major drug breakthrough could be
worth billions of dollars every year once it makes the
marketplace.
Trajectories
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KEY POINT
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♦ Although radical innovations often make headlines, most organizations
spread the risk associated with innovation by also looking for incremental
innovations to their products, processes, and services.
♦ Incremental innovation is less ambitious in its scope and offers less
potential for financial gains to the organization, but consequently the
associated risks are reduced.
♦ Incremental innovations consist of smaller initiatives, making them easier to
manage than their radical counterparts. However, organizations may have
to undertake numerous incremental innovations to achieve the necessary
growth.
Trajectories – Incremental
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KEY POINT
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♦ Incremental innovation refers to the systematic evolution of a product or service
into newer or larger markets. Examples include the typical improvements and
advances in current products and services.
♦ Many times the incremental innovation will take over after a radical innovation
introduces a breakthrough. The structure, marketing, financing, and formal
systems of a corporation can help implement incremental innovation.
Trajectories – incremental
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KEY POINT
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♦ Disruptive innovation goes beyond radical innovation and transforms
business practice to rewrite the rules of an industry. In other words, the
business practice of an entire industrial sector could be changed radically.
♦ Disruptive innovation often occurs because new sciences and technology
are introduced or applied to a new market that offers the potential to exceed
the existing limits of technology
♦ (The largest modern disruptive technology to emerge has been the
Internet.) Research laboratories and universities are usually a good source
of disruptive technologies.
Trajectories – disruptive Innovation
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KEY POINT
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♦ Many companies work in cooperation with universities in order to develop
the latest disruptive technologies, which can take many years to develop,
wait for the outcome of this type of technology, and choose the potential
successes that demonstrate market adoption.
♦ Organizations must be careful in pursuing the correct disruptive
innovations to pursue because the wrong technology can waste scarce
resources and place the organization in a position of significant
competitive disadvantage.
♦ organizations often struggle to achieve a successful balance between
developing radical and disruptive innovations while still protecting their
traditional business operations.
Trajectories – disruptive
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WORKSHP
CONFIRMATION OF
KNOWLEDGE
REVIEW
WORKSHOP 3
QUESTIONS
workshop
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LO 5 Motivation for individual innovation
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Motivation
The Motivation for individual Innovation
1. Although innovation can be characterized as the
interaction of the skills that we listed in the previous
section, it is the “motivation” towards innovative
behaviour that is most important.
2. The quest for innovative thinking as well as the
willingness to sustain that thinking is directly related to
an individual’s entrepreneurial motivation.
3. Examining the motivation to sustain entrepreneurial
behaviour is an effective analogy to the process of
innovative behaviour.
Intrapreneurship: Leading Innovation and Change
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Motivation
The Motivation for individual Innovation
The decision to behave entrepreneurially (or innovatively) is
the result of the interaction of several factors.
1. One set of factors includes:-
1. the individual’s personal characteristics,
2. the individual’s personal environment,
3. the relevant business environment,
4. the individual’s personal goal set,
5. and the existence of a viable business idea.
2. In addition, the individual compares their perception of the
probable outcomes with the personal expectations they have
in mind.
3. Next, an individual looks at the relationship between the
entrepreneurial (or innovative) behaviour they would
implement and the expected outcomes.
Intrapreneurship: Leading Innovation and Change
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Contradictions
An Experiential View
● The prevalent view in the literature is that entrepreneurs and
innovators create ventures. While that is a true statement, it
misses the complete process of entrepreneurship and
innovation because of its narrow framing.
● This narrow perspective misses much of the reality regarding
how ventures and entrepreneurs/innovators come into being.
● Researchers point out that as with a painting that emerges
based on the individual interacting with, feeling, and
agonizing over their creation, an entrepreneur does not
simply produce a venture.
Entrepreneurs do not pre-exist—they emerge as a
function of
the novel/unique
idiosyncratic, and
experiential nature of
the venture creation process.
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Contradictions
An Experiential View
● Venture creation is a lived experience that, as it unfolds, forms the
entrepreneur. In fact, the creation of a sustainable enterprise involves
three parallel, interactive phenomena: emergence of the opportunity,
emergence of the venture, and emergence of the entrepreneur.
● None are predetermined or fixed—they define and are defined by one
another.
● Thus, the perspective of the entrepreneurial or innovative experience
has gained new momentum in the research of the twenty-first century.
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Drivers (Sources) of
Innovation
1. So, where do innovators seek out sources for the ideas and concepts that
result in innovation? Most innovations result from a conscious, purposeful
search for new opportunities.
2. This process begins with the analysis of the sources of new opportunities.
3. Renowned business consultant and author Peter Drucker noted that because
innovation is both conceptual and perceptual, would-be innovators must go out
and look, ask, and listen. Successful innovators use both the right and left
sides of their brains.
Intrapreneurship: Leading Innovation and Change
Drivers (Sources) of Innovation
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Drivers (Sources) of
1. They look at figures. They look at people. They analytically work out what the Innovation
innovation has to be to satisfy the opportunity.
1. Then they go out and look at potential product users to study their expectations, values, and
needs.31 The following presents some of the most effective sources for the recognition of
opportunities.
2. Trends: trends signal shifts in the current paradigm (or thinking) of the major
population.
1. Observing trends closely will allow an entrepreneur the ability to recognize a potential opportunity.
2. Trends need to be observed in society, technology, economy, and government.
3. Unexpected occurrences: these are successes or failures that, because they were
unanticipated or unplanned, often end up proving to be a major innovative
surprise to everyone.
Intrapreneurship: Leading Innovation and Change
Drivers (Sources) of Innovation
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Drivers (Sources) of
Innovation
1. Incongruities: these occur whenever a gap or difference exists between
expectations and reality.
2. Process needs: these exist whenever a demand arises for an answer to
a particular need. Venture capitalists often refer to this as the “pain” that
exists in the marketplace and the entrepreneur must recognize an
innovative solution or “painkiller.”
3. Industry and market changes: continual shifts in the marketplace occur,
caused by developments such as consumer attitudes, advancements in
technology, and industry growth. Industries and markets are always
undergoing changes in structure, design, or definition.
Intrapreneurship: Leading Innovation and Change
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Drivers (Sources) of
Innovation
1. Demographic changes: as mentioned above with the trends, these arise
from trend changes in population, age, education, occupations,
geographic locations, and similar factors. Demographic shifts are
important and often provide new entrepreneurial opportunities.
2. Perceptual changes: these changes occur in people’s interpretation of
facts and concepts. They are intangible yet meaningful. Perception can
cause major shifts in ideas to take place.
3. Knowledge-based concepts: these are the basis for the creation or
development of something brand new. Inventions are knowledge-based;
they are the product of new thinking, new methods, and new knowledge.
Such innovations often require the longest time period between initiation
and market implementation because of the need for testing and
modification.
Intrapreneurship: Leading Innovation and Change
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WORKSHP
CONFIRMATION OF
KNOWLEDGE
REVIEW
WORKSHOP 4
QUESTIONS
workshop
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Workshop Review
questions
1. What is innovation and how does it differ from entrepreneurship?
2. Identify the three types of innovation.
3. Describe the four methods of innovation
4. Explain the different trajectories of innovation.
5. Identify three misconceptions about innovation.
6. Some of the characteristics attributed to innovators include internal locus of
control, tolerance for ambiguity, and calculated risk taking. Discuss how these relate
to the innovative mindset.
Intrapreneurship: Leading Innovation and Change
WORKSHP
Questions regarding 2 case Tutor Vista
In groups.
Exercise
1. Develop questions you would ask the
CEO of the Tutor Vista
workshop
End of session lecture
• Break 5 minutes
• Answers to revision questions
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