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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
  • 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?