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Management of Technology (OM476). Innovation Patterns and Types January 25, 2006 S. Fisher. Agenda. Types of innovation Technology S-curves Trajectory of performance improvement in technology Exercise – evaluating innovation types. Types of Innovation. Product vs Process Innovation

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Management of technology om476

Management of Technology (OM476)

Innovation Patterns and Types

January 25, 2006

S. Fisher


  • Types of innovation

  • Technology S-curves

    • Trajectory of performance improvement in technology

  • Exercise – evaluating innovation types

Types of innovation
Types of Innovation

  • Product vs Process Innovation

    • Product innovations are embodied in the outputs of an organization – its goods or services.

    • Process innovations are innovations in the way an organization conducts its business, such as in techniques of producing or marketing goods or services.

    • Product innovations can enable process innovations and vice versa.

    • What is a product innovation for one organization might be a process innovation for another

Examples product or process
Examples: Product or process?

  • Trident Splash

    • Candy coated gum in “pillow shaped pellets” with a liquid center

    • Sugarless

    • New flavors

      • Peppermint with vanilla

      • Strawberry with lime

  • Airlines allowing travelers to print their own boarding passes at home

Types of innovation1
Types of Innovation

  • Radical vs Incremental Innovation

    • The radicalness of an innovation is the degree to which it is new and different from previously existing products and processes.

    • Incremental innovations may involve only a minor change from (or adjustment to) existing practices.

    • The radicalness of an innovation is relative; it may change over time or with respect to different observers.

      • For example, digital photography is a more radical innovation for Kodak than for Sony.

Types of innovation2
Types of Innovation

  • Competence-Enhancing vs. Competence-Destroying Innovation

    • Competence-enhancing innovations build on the firm’s existing knowledge base.

      • Creating opportunities to increase sales or market penetration

      • Examples?

    • Competence-destroying innovations render a firm’s existing competencies obsolete.

      • Eliminating an entire product line or type of technology

      • Examples?

    • Would a firm ever want to destroy its own competence in an area?

Types of innovation3
Types of Innovation

  • Architectural vs Component Innovation

    • A component innovation (or modular innovation) creates changes to one or more components of a product system without significantly affecting the overall design.

      • Examples?

    • An architectural innovation entails changing the overall design of the system or the way components interact.

      • Examples?

Another way to think about innovation types risk
Another way to think about innovation types: Risk

  • Lowest risk product innovations

    • Cost reduced version: Lower cost version of an existing product that has similar features and functions.

    • Product repositioning: Involves retargeting an old product into a new market segment or different application.

  • Innovation required?

Upgrades and extensions to existing products
Upgrades and extensions to existing products

  • Improvement to an existing product: Revision of existing product that offers greater value and improved performance over the older product.

  • Addition to an existing product line: New item to the company, but fits within an existing product line the company already manufactures.

  • Innovation required?

Truly new products
“Truly new products”

Highest risk products.

New product line: Product may not be new to the market, but is new to a company allowing entry into established market for the first time.

New product: Product is the first of its kind and may create an entire new market.

Highest levels of innovation required.

S curves in technological improvement
S-curves in Technological Improvement

  • Technology improves slowly at first because it is poorly understood.

  • Then accelerates as understanding increases.

  • Then tapers off as approaches limits.

Example hybrid engine technology
Example: Hybrid engine technology

  • What type of innovation is this?

    • Product vs. process

    • Radical vs. incremental

    • Competence-enhancing vs. competence-destroying

    • Architectural vs. component

Business impact of innovation types or why does all of this matter
Business Impact of Innovation Types (or, Why does all of this matter?)

  • How will other business decisions be affected by the type of innovation?

    • Marketing

    • Human resources

    • Capital investments

    • R&D investments

For monday
For Monday this matter?)

  • IDEO case deliverables

  • For Wednesday, Feb. 1: Technology diffusion

    • Read Ch. 3 pages 44-54

    • What causes people to adopt technology at different rates?

    • What can firms do to promote diffusion of a new technology?