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Chapter 1
Defining Innovation
Applying Innovation
By David O’Sullivan and Lawrence Dooley
© Sage Publications 2008
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Reflections
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Activities
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Learning Targets
 Define innovation and explain the difference with
related terms
 Understand the drivers of the need for innovation and
change
 Explain product, process, and service innovation
 Describe the difference between radical and
incremental innovation
 Define disruptive technology
 Show how product and process innovations are
related
 Explain the relationship between innovation and
operations
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Definition
 Making changes to something
established by introducing something
new …
 that adds value to customers…
 And contributes to the knowledge
store of the organization.
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Business Imperative
 Companies ability to ‘innovate’ is key
to growth and distinguish it from its
competitors
 Innovation potential is
the ‘new’ measure of an
organisations assets
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Applying Innovation
 Applying innovation is the application
of practical tools and techniques that
make changes, large and small, to
products, processes, and services
that results in the introduction of
something new for the organization
that adds value to customers and
contributes to the knowledge store of
the organization.
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Related Concepts
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Invention
Growth
Creativity
Design
Exploitation
Change
Failure
Entrepreneurship
Customers
Knowledge
Society
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Innovation and Invention
 Invention:
 Creating something new that has
never existed before
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Alternative Definition
 Innovation = Invention + Exploitation
 Innovation = Creativity + Exploitation
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Drivers of Innovation
 Emerging technologies
 Competitor actions
 New ideas from customers, strategic
partners, and employees
 Emerging changes in the external
environment
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Diffusion
iPhone
Blueray
Hydrogen
Engine
Sanitation
Metric
System
Mobile
Phone
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Tech Diffusion
 Technology lag is
decreasing
 New technologies
“leapfrogging” over
older technologies
(i.e., cell phones)
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Diffusion Process
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Knowledge that the idea exists
Recognition that it adds value
Opinions and influence of others
Decision to adopt
Retention and confirmation
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Categories of Innovation
 Product Innovation
 Process Innovation
 Service Innovation
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Tangibility and Customer Contact
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Radical and Incremental Innovation
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Radical Characteristics
 New performance
 x2 times better than traditional!
 30% reduction in costs!
 Change basis of competition
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Incremental Innovation
 Safe, cheap, less risk, low impact,
quick returns
 Steady stream of small changes
 Caution:
 Avoid more ‘bells and whistles’
 Don’t ignore ‘radical’ innovations
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Product and Process Innovation
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Process Innovation
 Equally important – making high
quality products cheaply
e.g. Continuous Casting, Process
Reengineering
 Design vs. Make
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Service Innovation
 Rethink how best to serve customers
 Dell Computers
 Online purchasing, no dealerships,
customer configuration, …
 Ryan Air
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Low fares,
internet booking,
open seating,
frequent service, …
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Disruptive Innovation
 Every now and again a radical
innovation is introduced that
transforms business practice and
rewrites the rules of engagement. In
other words, business practice across
an entire industrial sector changes
radically.
 Christensen (1997)
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Disruptive Innovation
 Technological innovation that
radically disrupts business practice
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Transistor vs. Vacuum tube
Digital vs. Film photography
MP3 vs. CD
Ryanair vs. British Airways
RFID vs. Barcode
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Disruptive Innovation
 Technological innovation that
radically disrupts business practice
 Ten Major Disruptions …
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1997: Netflix
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1998: Google
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1999: BlackBerry
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2000: minuteclinic
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2001: Apple's iPod
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2002: IRobot's Roomba
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2003: Skype
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2004: Philips' HeartStart
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2005: YouTube
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2006: Nintendo's Wii
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20??
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Science Push – Market Pull
 Science Push
 Results from laboratories
 Journal Publications
 Market Pull
 Customers
 Lead Customers
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New Technology
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S-Curve for Performance
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Operations and Innovation
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Innovation Plan Titles
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Summary
 Define innovation and explain the difference with
related terms
 Understand the drivers of the need for innovation and
change
 Explain product, process, and service innovation
 Describe the difference between radical and
incremental innovation
 Define disruptive technology
 Show how product and process innovations are
related
 Explain the relationship between innovation and
operations
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Activities
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Search Online
 http://mitworld.mit.edu/
 Emerging Technologies: The Innovators’
View
 Why Large Companies Should OutInnovate Small Ones (Dan Hesse)
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Copyright
Copyright © 2009 Sage Publishing, Inc. All rights
reserved. Reproduction or translation of this work
beyond that permitted in Section 117 of the 1976
United State Copyright Act without the express
written permission of the copyright owner is unlawful.
Request for further information should be addressed
to the Permissions Department, Sage Publications,
Inc. The purchaser may make back-up copies for
his/her own use only and not for distribution or
resale. The Publisher assumes no responsibility for
errors, omissions, or damages, caused by the use of
these programs or from the use of the information
contained herein.
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