Appunti di Innovation Management

Open source: community of people who contribute to a project without being paid. The most

common example is software, in order to be able to work together without being on the same

place.

Community developed products creates an industry standard

• Increases demand for complementary goods and services

• Leverages on community development

• “Selection of the fittest”: best contribution always wins

• Signaling knowledge and capabilities

• Not-for sale product

• Shared knowledge impedes securing competitive advantage

• Securing contribution

• Control is community-dependent

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Crowdsourcing: is the act of taking a job traditionally performed by a designated agent and

outsourcing it to an undefined, generally large group of people in the form of an open call.

There are many types of crowds. depending on one hand to the level of contribution and on the

other and to the complexity of the tasks.

Crowdfunding: a way to finance a project. It involves an open call, essentially through the

Internet, for the provision of financial resources either in form of donations or in exchange for some

form of reward.

Advantages Disadvantages

access to untapped expertise Participation is based on self selection

• •

Compensation offered for tasks is null or Outcome may be sub-optimal

• •

limited Organization and integration of contributions

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Doesn’t divert employees’ time Economic value difficult to secure (IP rights

• •

May be adopted by a variety of actors issues)

• Social value (community creation)

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Lecture 5: The Discovery Phase

Technology Push VS Market Pull

These are two different approaches that usually inspire innovation.

Technology Push: some key issues

1. Need for R&D strategy, need for innovation strategy

2. Create a learning environment

3. Stimulate connections, inside & outside

R&D Management

1. Centralized Department: to create economy of scales or scope and to concentrate resources in

only one place.

2. Distributed R&D: many cells all over the world connected each other.

If you have one highly complex project with a clear aim it’s better to have a centralized department.

An other point is to find the optimal point of cognitive distance. With distributed R&D you can find

this optimal point. Also if a project is very uncertain and so things may change is better to go for

distributed R&D even if the project is only one.

3. Open Innovation: distributed R&D tend to be close to open innovation more than centralized

department.

4. R&D Outsourcing/Innovation by M&A: some companies tend to outsource the R&D, while

Innovation by M&A (merge and acquisition) is based to the idea that, instead of spend

resources in R&D, is better to buy for example startups which develop what you need. This

because the total cost for buying a startup is lower than the cost related to an internal R&D.

To have a very innovative company, your R&D strategy has to embrace and engage everybody in

the company, not only R&D department.

How can we stimulate innovation from the inside?

With.

1- Some Leading Technologies:

3D Printing

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Drones

• IoT

• Holograms

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2- Creating a Learning Environment, through:

1. Promote a innovation/learning culture

2. Remove organizational & “brain” barriers

3. Managerial and Technical systems

4. Create a creative/learning environment

The focus is on the creativity. Creativity is the combination among different existing elements by

using new useful connections. It’s a skill, not just a talent.

Techniques and exercise for creativity training:

1. Bisociation: try to invent a new product that leverage on those words

2. Inverted Stereotype (Children love healthy food): you take a stereotype and invert it and try to

invent a new product

3. Provocation (Children can fly): think of an absurd idea and try to give a chance to it

The paradox of the First Mover Advantage

Advantages Disadvantages

reputation as a pioneer pioneering costs, educating buyers, regulatory

• •

capture market share approval

• early learning curve benefits demand uncertainty

• •

definition of standards changing buyer needs

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establish entry barriers eg patents low-cost imitation

• •

dominate supply & distribution chains followers “leapfrog” technology

• •

earn “monopoly” profits

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Market Pull

The source of inspiration for the innovation is a question to the market to discover what market

wants and then to answer to that need. Market Pull approach is all about marketing and its

techniques.

The issue of this approach is that we are not talking about an already existing product.

Market Analysis:

1. Description and size of the market; Key trends, facts and figures

2. Competitors

3. Target

Description and Size

1. Market description/critical factor of success

2. Total size: today, growth, forecasts

3. Reasonable Share (target at time x, x+1,x+2…)

Red Ocean strategy Blue Ocean Strategy

Compete in existing market space Create uncontested market space

• •

Beat the competition Make the competition irrelevant

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Export existing demand Create & capture new demand

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Make the value-cost trade off Break the value-cost trade off

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Align strategy choice of differentiation Simultaneous pursuit strategy of differentiation

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or low cost and low cost

Red VS Blue Ocean Strategy

Example of BO strategy: Yellow Tail Wine. It has become the biggest winer worldwide with a wine

which has not an high quality. This tanks to a BO strategy: instead of being competitor of other

wines, they wanted to be competitor of beer. They moved from a product point of view to a need

point of view.

Non Markets & Non Customers

The more intense the competition is, the greater, on average, is the resulting customization of

offerings. As companies compete to embrace customer preferences through finer segmentation,

they often risk creating too-small target markets.

In order to innovate, companies need to take a sort of reverse course. Instead of concentrating on

customers/usual markets, they need to look to noncustomers/nonmarkets.

Instead of focusing in customer differences they need to leverage on latent value propositions and

on the meaning of different points of view.

It allows companies to reach beyond existing demand to unlock a new mass of customers that did

not exist before.

First Tier: “Soon to be” noncustomers who are on the edge of your market waiting to jump ship.

Kind of barriers are: price, social barriers, religion, asymmetrical info.

Second Tier: “Refusing” noncustomers who consciously choose against your market. We can try to

include them by adjusting something.

Third Tier: “Unexplored” noncustomers who are in markets distant from yours. You can try to

introduce some innovation in product, service or marketing.

Proxy Method: collect number that apparently you don’t need to obtain a result you need.

Say how you’re better or different, mind the niche, positioning matters

Examples of Variables:

Low vs High Level of Customization

• Cheap vs Expensive

• Mass vs Exclusive

• Consumer vs Enterprise

• Open vs Proprietary

• Fee vs Free

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Customer Profile: specific target group for which marketing can be directed to.

Three criteria:

1. The customer is willing to pay for the product

2. The cost of acquiring a new customer is less then what they pay for the product

3. There is sufficient evidence indicating the market is large enough to support the business

Lecture 6: The Development Phase

Design Phase: it has to contain the determination of formal attributes.

This phase has to manage four aspects:

Creativity Phase that is developed before the design phase

• Market that has to be consider before, during and after the design phase.

• Technological constraints

• Manufacturing constraints

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Business Plan 11

The business plan is the description of your business and its future, what you plan to do and how

you plan to doit, your roadmap to success.

Aims: to check the:

Feasibility

• Sustainability

• Profitability

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Of a business idea

Key Contents

Executive Summary

1. Description of the Business Idea/Competitive Advantage

2. Market Analysis and competitors

3. Competences and Resources

4. Business Model / Appropriability of the Competitive Advantage

5. Action Plan

6. Financials

Other elements

Company/Enterpreneur Profile: information regarding your histories, prior experience as

• entrepreneur, company’s business structure, key principals…

Design & Development Plan: description of the product’s design, organization of production, set

• up the development budget

Operations Plan: logistics of the organization, supply chain…

• Legal and Deal Structure

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What is a Startup?

The Startup is a temporary organization, with the goal to develop and implement a scalable and

repeatable business model.

Scalable market: market with big potential

Scalability: potential to generate growth in revenues significantly faster than its cost base. Since

growing revenues increase the operating margin, scalable business models have the potential for

earning very high profits.

Examples:

No scalability: Consulting, Architecture, graphics (in general people who sell themselves).

Replicability:

If it’s internal, it’s also scalable (ex. AirBnB)

• If it’s external, it’s also Imitable.

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Business Model

A business model describes the rationale of how an organization creates, delivers and captures

value.

Business Model is not the same thing of strategy and the same technology, product or service can

have numerous business models.

We can say that business model is the implementation of the strategy.

It’s composed by two main blocks: VALUE CREATION ARCHITECTURE and REVENUE MODEL/

COST STRUCTURE. 12

Value Proposition

It’s the combination of benefits to be delivered to the customer (WHAT+WHO) and it’s the answer

to the customer key question: why should I buy this product/service/brand?

It includes also the vision and the strategic positioning.

Value Creation Architecture

It’s the checklist of activities and the interconnection among them which creates value for client,

firm and partners/suppliers.

It’s divided into: FOCUS, MODUS, LOCUS.

Focus: the relevance and prioritization of these activities to achieving a critical milestone

• Locus: th