Lecture 2
Innovation Management
GM0401
Johan Brink
Wednesday 8 sep
This lecture
The external context of innovation
• Techno-economic paradigm
• Increased R&D spending
• Innovation system
• Handout case 1
Techno-economic growth
• GDP= F (Land, Capital, labor, TFP)
Economy
Share of
national
output
GDP growth Share contributed by
Germany
1960-90
0,4
US 1960-90
Capital
Labor
TFP
3,2
59
-8
49
0,41
3,1
45
42
13
Argentina
1940-80
0,54
3,6
43
26
31
Singapore
1966-90
0,37
7,3
42
28
30
Techno-economic growth
• Total Factor Productivity
– Advances in knowledge
20-50%
– Catch-up effect (adoption of existing
technologies)
– Structural/improved allocation of resources 10-20%
(from low productivity to high)
– Economies of scale
20-40%
– Foreign trade effect
– Unexplained
Techno-economic paradigm
• Revolution &
Improvement
– Opportunities
• Application & Prosperity
– Saturation of markets
• Stagnation, Recession &
Depression
– Low rates & Speculation
Techno-economic paradigm
• Kondratiev: Technoeconomic ~50 year
• Kuznets: Infrastructural
investment ~20
• Juglar: Fixed investment ~10
• Kitchin: Inventory ~3 - 5
Joseph Schumpeter proposed
cluster of innovations as an explanation
Increased R&D spending
• In 1676, Isaac Newton
wrote famously to Robert
Hooke, “If I have seen
further it is by standing on
the shoulders of giants.”
• (Forever) Increasing
returns?
– Fishing out ideas –increase
R&D cost
– Takes increasingly long
time to learn accumulated
knowledge
– Specialization –”Death of
renaissance man” –
Teamwork & management
Increased R&D spending
Global R&D spending by top 25
corporations: 2006
Company (country)
R&D rank
R&D expense
($million
s)
Sales
($million
s)
R&D/sales
ratio (%)
2006
2005
2006
2006
2006
Toyota Motor (Japan)
1
4
7,486
201,254
3.7
Pfizer (United States)
2
2
7,423
48,201
15.4
Ford Motor (United States)
3
1
7,200
160,123
4.5
Johnson & Johnson (United States)
4
8
7,125
53,194
13.4
Microsoft (United States)
5
7
7,121
51,122
13.9
DaimlerChrysler (Germany)
6
3
7,007
199,246
3.5
GlaxoSmithKline (United Kingdom)
7
9
6,611
45,263
14.6
Siemens (Germany)
8
5
6,604
114,779
5.8
General Motors (United States)
9
6
6,600
207,349
3.2
Volkswagen (Germany)
10
12
6,030
137,846
4.4
Samsung Electronics (South Korea)
11
10
5,943
91,038
6.5
Intel (United States)
12
14
5,873
35,382
16.6
Sanofi-Aventis (France)
13
13
5,823
37,293
15.6
International Business Machines (US)
14
11
5,682
91,424
6.2
Roche Holding (Switzerland)
15
17
5,359
34,192
15.7
Novartis (Switzerland)
16
18
5,349
36,031
14.8
Nokia (Finland)
17
15
5,122
54,049
9.5
Matsushita Electric (Japan)
18
16
4,858
76,543
6.3
Honda Motor (Japan)
19
20
4,638
93,174
5.0
Innovation systems
What is a system?
Innovation systems
What is a system?
Macroeconomic and
regulatory context
International
networks
Education and
training system
Science
system
Cluster of
industries
Firms and
innovations
Product markets
Communication and
infrastructure
Supporting
institutions
Factor markets
Innovation systems
Stemcells
2001
Laws
History
Macroeconomic and
regulatory context
International
networks
Education and
training system
Science
system
Cluster of
industries
Firms and
innovations
Product markets
Communication and
infrastructure
Supporting
institutions
Factor markets
Innovation systems
• Regional
Marshall,1890
...and again
in the 70ties
– Industrial
districts
Innovation systems
Clusters
• Traded
• Non-traded
Diamond model; M. Porter
(The competitive advantage of nations)
Innovation systems
• Technological
– Generation
– Diffusion
– Utilization
CASE 1
What to do?
• Answer the questions: 3 pages, New Times
Roman 12
• Prepare slides/presentations (~20 min)
• Send text and slides no later than 18.00
Tuesday 14/9
• There are two groups per company
– Only one group will present, the other will lead the
discussion (ask questions, and complement with their
ideas)
• Use all sources of info such as the web, papers..
Questions
• Describe the development and the potential
future of the firm in terms of PLC
• Describe the development and the potential
future of the firm in terms of TLC
• How does the Innovation system look like?
• Are there any barriers limiting the diffusion of
this product? What do they look like?
• What would you advice the firm to do in order to
increase sales (product diffusion) in;
– The short run?
– The long run?
Case firm
Groups
Neonode: neonode.com
(Mobile industry)
Group One
Group A
Group B
Group gg
The 6 Stooges
The Swedes &
the Mexican
Tesla: Teslamotors.com
(Automotive industry)
Ocean Harvesting:
oceanharvesting.com
(Environmental technologies)
Some additional material
Wave energy
• http://www.oceanharvesting.com
• http://www.iea-oceans.org/_fich/6/Annual_Report_2009_v2.pdf
• http://ec.europa.eu/environment/etap/
Electric Car
• http://www.Teslamotors.com
• http://www.acea.be/ - Printed
• http://www.innovateuk.org/ourstrategy/innovationplatforms/lowcarbonvehicle
s.ashx
Telecom
• http://www.neonode.com/
• http://www.gsmarena.com/neonode-phones-22.php -Neonode old products
• Ericsson Trends - Printed