Chapter 1 - Innovation
Management and New Business
Development
Purpose of the chapter
• After this class, you will be able to:
 Describe innovation and differentiate innovation management from new business development
 Explain the skillset of an innovation manager
 Distinguish the idea development from the implementation phase in the innovation process
 Illustrate the role of uncertainty in the innovation process
 Categorize and define different types of innovation
 Implement the business model canvas in specific cases
 Assess the role of innovation in the economy and on public policy
 Describe what it means for countries to be innovative
Where are we?
What is innovation?
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iPhone
Online banking
Electric bicycles
Uber
Artificial intelligence
for marketing purposes
New product
New service
New market
New business model
New process
• And: a new way of looking at things!(see Volvo video)
https://www.media.volvocars.com/global/en-gb/media/videos/244515/this-is-not-a-car
Definition of new business development
“The creation and development of new products, services, business
models or processes in firms or other organizations”
Why do firms have to
innovate?
Survival of firms: Nokia
Why innovation? Effect on competition
Definitions
Innovation
• Schumpeter, 1934
1.
2.
3.
4.
5.
The introduction of a new good
The introduction of a new method of production
The opening of a new market
The application of a new source of supply of raw materials
A new organization of an industry
• Garud et al., 2013
•
the invention, development, and implementation of new ideas by people within an
organizational context
• This book / course
•
the creation and development of new products, services, business models or processes in
firms or other organizations
What is innovation?
•
New-to-the-world
•
Creation of new
product line(s)
•
Addition to existing
product line
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Targeting new
markets
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Similar performance
at lower cost
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Improvements
We include the whole surface in our definition of innovation
Innovation management
• Innovation management concerns the management of the creation
and development of new products, services, business models or
processes in firms or other organizations
New business development
• Sorensen, 2012
• Business development refers to the tasks and processes concerning analytical preparation of
potential growth opportunities, the support and monitoring of the implementation of growth
opportunities, but does not include decisions on strategy and implementation of growth
opportunities
• This book / course
• the creation and development of new products, services, business models or markets
The difference
Paradoxes
What is business model innovation?
DriveNow: business model innovation
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Car sharing service in municipal areas
DriveNow owned the cars
Initiators: BMW (car manufacturer) and Sixt (leasing company)
Business model innovation:
• User was not owner of the car
• The value proposition was: mobility (not: a car)
• New customer channel (internet), customer relations (membership), key activities (booking
system, maintenance system) and partners (BMW, Sixt)
What is a business model?
• System of interconnected and interdependent activities that
determines the way the company ‘Does business’ with its customers,
partners and vendors (Amit and Zott, 2012, p. 42).
• A business model describes the rationale of how an organization
creates, delivers, and captures value (Osterwalder and Pigneur, 2010)
• A story around who do we serve, what is the value proposition
(what), and how we make money
Business model canvas
(Osterwalder and Pigneur, 2006)
Business model canvas
(Osterwalder and Pigneur, 2006)
Examples: supermarket
Business model innovation
• What is it?
• A major change in business model
• Examples
• iPhone: major change in value proposition
• Easyjet: small changes in many elements of the business model, which together make a big
leap
Structure: 2 sided market
Classification of innovations
Technology-market matrix
Modularity matrix
Innovation and society
Why innovation: economic benefits
• Innovation has positive and negative externalities (external effects):
• Positive
• Economic growth
• Competitiveness of countries
• Solution to societal problems (e.g. Health care, sustainability)
• Negative
• Loss of jobs (on the short term)
• Pollution, use of resources
Long term economic waves
(Rursus, 2009)
Be careful: no proof that the waves are caused by technology
Government policy
• Governments support innovation because of its expected positive
externalities
• Direct subsidies: involve a payment to an organization or person,
dependent on the execution of a specific activity
• Indirect subsidies: financial compensations to an organization or
individual for a specific activity but that do not involve direct
payments, e.g. tax deductions
Innovativeness of countries
How well do countries do?
Global Innovation Index 2020:
https://www.wipo.int/edocs/pubdocs/en/wipo_pub_gii_2020.pdf
The European Innovation Index:
https://ec.europa.eu/docsroom/documents/42981
Measurement
https://ec.europa.eu/docsroom/documents/42981