Design in Business

Approaches to Innovation

Dr Haley Beer
Assistant Professor of Performance & Responsibility
Warwick Business School
 This is a mindful classroom

• Take a deep breath and bring your attention

into the classroom
• Put away your phones and laptops if
possible (or switch your social media off)
• Control your own mind!
 Recap – In groups

• How can we improve cross-functional collaboration?

 Agenda – Lecture 4
• Approaches to innovation
• Involvement of users
 Lecture 4: Learning Outcomes
• Define and analyse the main types of innovation
– technology push vs. market pull
– radical vs. incremental
– Open vs. closed
– Social
– Disruptive

• Explain and critically apply the different types of

user involvement: user driven, user generated,
and user-centred
 Innovation

• Innovation is the management of all the activities involved in the

process of idea generation, technology development, manufacturing
and marketing of a new (or improved) product / service or
manufacturing process or equipment.
• Innovation is a management process: the conception of a new idea +
the invention of a new device + its commercial exploitation.
• Innovation – an internal view: the implementation of those ideas within
an organization (or between organizations/stakeholders).
• Innovation – the external view: creation of new customer value through
solutions that meet new needs, unarticulated needs, or old customer
and market needs in new ways.
• Innovation differs from improvement in that innovation refers to the
notion of doing something different (Lat. innovare: "to change") rather
than doing the same thing better.
Adapted from Trott (2012)
 Various types of innovation

Type of innovation Example

Product The development of a new product (technology, functions, etc.)

Service Starbucks, Virgin Atlantic, etc.

The development of a new manufacturing process, TQM (total quality

Process / management
management) systems, BPR (business process re-engineering)

New financing arrangements, new approaches of interacting with

Commercial / marketing
customers (e.g., direct marketing), brand

Organisational and A new venture division, a new internal communication system; supply
network chain
A business model describes the logic and principles that a firm uses to
Business model generate revenues and it also outlines the architecture of revenues,
costs and profits. Examples: airlines, pharmaceutical companies…
Juicero – Innovation?
 Design and Innovation
“Incremental development is defined as the gradual
improvement of a product through a series of product variants,
whereas radical development is defined as breakthrough
innovation associated with significant jumps or changes in the
product” (Bruce and Cooper, 1997).
“Breakthrough products, services, and solutions that create
growth engines for the future are the solution. That is, in
contrast to the ‘same old new product efforts’ – extensions,
modifications, upgrades, and tweaks, which swamp the
majority of companies’ portfolios – industry needs some
breakthrough, game-changing, bolder product innovation
initiatives in the development pipeline. This means larger-
scope and more systems-oriented solutions” (Cooper, 2011, p. 4).
 Design and Innovation
“Research shows that the major reason why new products and
services fail is that they are too similar to existing market
offerings” (Goffin et al, 2010; p.3).

“Radical breakthrough does not result from a sudden spark of

creativity, nothing could be more wrong” (Verganti, 2009; p.40).
 Design and Innovation

What are the pros and cons of

aiming for radical innovation?
Models and types of innovations
 Models of innovation

1950/60s Technology push Simple linear sequential process. Emphasis on

R&D. The market is a receptacle for the fruits
of R&D.

1970s Market-pull Simple linear sequential process. Emphasis on

marketing. The market is the source for

directing R&D. R&D has a reactive role.

1980s Coupling model Sequential, but with feedback loops.

Combinations of push and pull.

1980/90s Interactive model Emphasis on integrating R&D and marketing.

1990 s/00 Network models Emphasis on external linkages
Innovation Paradigms

Dr. Dorothea Seebode – Philips Research

 Linear models

Technology push

Research and
Manufacturing Marketing User
development

Market pull

Research and
Marketing Manufacturing User
development
 Conceptual framework - 1980s

Creation of new knowledge

Consumers express their
dominated by universities Technology development
needs in the
and large science-based dominated by organisations
consumption of products
organisations

Science and Technological Needs of

technology base developments the market
 Interactive model

latest sciences & technology

technology
advances in society
push

idea R&D design manufacturing marketing commercial product

need needs in society

and the marketplace
pull

Adapted from Rothwell B. & Zegveld, W. (1985), Reindustrialisation and Technology

A master framework for innovation management
EXTERNAL INPUTS:
macro factors; ROI;
costs; competition.

Organisation and
business strategy

Organisation’s
Re knowledge base
se
a rc accumulates
knowledge

ting
ha
EXTERNAL INPUTS: over EXTERNAL INPUTS:

rke
nd

scientific and technological time societal needs;

Ma
tec

development; competitors;
hn

competitors; supplier partnerships;

ol o

suppliers; distributors;
gy

customers; customers;
university departments. strategic alliances.

New services / products

Source: Trott, 2008
 Different approaches to Innovation

https://www.youtube.com/watch?v=3DHAnmTCS5Q
 Social Innovation
The process of inventing, securing support for, and
implementing novel solutions to social needs and
problems.

A novel solution to a social problem that is more

effective, efficient, sustainable, or just than existing
solutions and for which the value created accrues
primarily to society as a whole rather than private
individuals (Phills et al., SSIR, 2003; 2008)
https://www.youtube.com/watch?v=yYdSg3XEU
Fg
IKEA Flapjack
 Disruptive Innovation

Do innovations necessarily rely on advances in technology?

Disruptive innovations originate in low-end or new-market

‘footholds’; do it cheaper, simpler, and/or differently

http://www.youtube.com/watch?v=KGzXWO_anLI
 The Innovator‘s Dilemma
The Impact of Sustaining and Disruptive Technological Change

P Revolution

to s
due logie
ss no
r ogre tech
P ing
n
u stai
Performance s
Product Performance

demanded at the high

end of the market

to s
d ue logie Performance
s o
g res echn demanded at the low
Disruptive o
Pr ing t end of the market
n
Technological tai
innovation sus

Source: The Innovator‘s Dilemma

Clayton M. Christensen
The big picture
The Innovation System

International
Government / institutions
Public sector Regulators

Investments,
incentives, funding Regulatory
Investments, incentives, frameworks,
support for knowledge standardisation
transfer, infrastructure,
public procurement,
networks, labour policies The firm
(capabilities, R&D,
collaborations)
Knowledge generation
Investments, venture and dissemination,
capital, collaborations human capital, facilities

Funding, competencies,
connections (open innovation),
Private benchmarking, access to
markets Research
sector
Institutions

Intermediaries
and brokers
 The characteristics of innovation today

• A wide range of investments – much more than R&D

• A large contribution to productivity growth
• More collaborative and open
• A broader notion of innovation
• New players and a global system
• Greater participation
• More actors

(Dirk Pilat, Directorate for Science, Technology and Industry, OECD, 2009)
 Open innovation

https://www.youtube.com/watch?v=LbiJ_9W7UHM
 Closed Innovation Paradigm

Research Development

Boundary of the firm

Research The Market

Projects

Henry Chesbrough - Open Innovation

 Open Innovation Paradigm

Research Development

The New
Market
Boundary of the firm

Research The Current

Projects Market

Henry Chesbrough - Open Innovation

Example: Open.NASA
 Open Innovation

“Open innovation is the use of purposive inflows and outflows of knowledge

to accelerate internal innovation, and expand the markets for external use of
innovation, respectively. [This paradigm] assumes that firms can and should
use external ideas as well as internal ideas, and internal and external paths
to market, as they look to advance their technology.” (Chesbrough, 2006)

“There are two facets to open innovation. One is the “outside in” aspect,
where external ideas and technologies are brought into the firm’s own
innovation process. This is the most commonly recognized feature of open
innovation. The other, less commonly recognized aspect is the “inside out”
part, where un- and under-utilized ideas and technologies in the firm are
allowed to go outside to be incorporated into others’ innovation processes.”
(Chesbrough, 2011)
 Design and Innovation

What are the pros and cons of

aiming for open innovation?
 Crowdsourcing

“Crowdsourcing represents the act of a company or institution

taking a function once performed by employees and
outsourcing it to an undefined (and generally large) network of
people in the form of an open call. This can take the form of
peer-production (when the job is performed collaboratively), but
is also often undertaken by sole individuals. The crucial
prerequisite is the use of the open call format and the large
network of potential laborers.” (Howe and Robinson – editors of Wired,
2006)
Example: Mastercard Innocentive
Challenge
 Involving Users into Innovation

Users and open innovation (Changes in innovation approach at P&G):

http://www.youtube.com/watch?v=_7mMToRlAxs
 Customer Co-creation

A process in which customers consciously and actively

engage in a firm's innovation process, taking over
innovation activities traditionally executed by the firm.
Customer co-creation implies an innovation process
whereby the firm and its customers interact jointly for
innovation purposes.
(Perks and Gemser, 2015)
 Discussion

User-driven, user-centred and user-

generated innovation – what are the main
differences between these concepts?
 Critique

Read, discuss and critique the

Fastcompany article on User-led innovation