1 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

 Innovative  Proactive  Controlled risk taking  Driven by opportunity seeking 2 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Innovation - creating something new and making it useful. Proactivity - doing something before others do it. Controlled risk taking - combination of knowing what the risks really are, taking moderate risks in which the worst case is survivable, and finding ways to manage the risks to increase the chances of success while reducing the consequences of failure. Opportunity seeking - actively looking for opportunities and constantly evaluating how attractive prospective opportunities are. 3 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Exhibit 9-1 OPPORTUNITY RECOGNITION OPPORTUNITY RECOGNITION IDEA GENERATION IDEA GENERATION BUSINESS PLANNING BUSINESS PLANNING EXPERIMENTATION & EXPLORATION EXPERIMENTATION & EXPLORATION OBTAINING RESOURCES OBTAINING RESOURCES LAUNCH FEEDBACK REVISE BUSINESS IDEA DEVELOPMENT 4 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

 Hire people comfortable acting as Entrepreneurs  Direct appropriate activities  Remove impediments  Provide incentive 5 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

 Innovation in non-product offerings is very important  New product development creates value for the customer  Top management determines innovation strategy to utilize 6 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

 It is the result of hard work, well planned and executed and is no happening  Innovation is work rather than genius,…and very much a matter of discipline (Peter F Drucker, 1985)

Table 1.4 Twentieth-century technological innovations

 Product innovation › A good or service that is new or significantly improved. This includes significant improvements in technical specifications, components and materials, software in the product, user friendliness or other functional characteristics.  Process innovation › A new or significantly improved production or delivery method. This includes significant changes in techniques, equipment and/or software.  Marketing innovation › A new marketing method involving significant changes in product design or packaging, product placement, product promotion or pricing.  Organisational innovation › A new organisational method in business practices, workplace organisation or external relations.

Table 1.5 A typology of innovations

Incremental innovations take the existing product and offering and make small-step improvements Radical innovations produce large changes in the functions and performance of a product or offering Breakthrough innovations create a different kind of product or offering that produces a new kind of value 11 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Disruptive Innovation  Product or business idea with new value that disrupts a market or industry Sustaining Innovation  Improves existing technologies or product offerings within a market or industry 12 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Inno vations Market Pull Technology Push Society demand Main focus: Innovations based on own technologies and on market knowledge Main focus: Innovation trends backed by governmental funds and regulations

 Cooperation with external experts (universities, research laboratories…)  Proper rate of risk-taking  Employees’ motivation (the employees are willing to improve the product and the operation of the whole company)  Continued education of employees  Ability to finance the innovation activities

Table 1.7 Explanations for innovative capability

1. Separate self from existing company and look for new customers 2. Address new/small business with small market size 3. Use exploratory approach to find market 4. Use process and decision making rules 5. Develop markets that want offering 16 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

 Research and development (R&D)  Production  Marketing Innovation is an opportunity for something new, different. It is always based on change. Innovators do not view any change as a threat but as an opportunity

Figure 1.6 The simultaneous coupling model

 Hire the Right People  Direct Appropriate Activities  Remove Impediments  Provide Incentives for Innovation 19 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Match person to type of innovation being pursued:  Someone that takes a visionary, extensive redesign approach to every problem would not be appropriate for incremental innovation.  Someone that takes an impatient, results- oriented approach may become frustrated in a setting with the uncertainty and uneven progress common to disruptive or radical innovation.  Hire people who are creative and innovative.  Avoid hiring those with a strong territorial tendencies. 20 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

 Establish networks of people who are good information sources  Radical innovation needs autonomy and constant rethinking  A large problem in product commercialization is the match between company and customer beliefs 21 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

A Top Manager needs to address these issues:  A requirement for extensive justification increases the time it takes to launch initiatives  A tendency to punish failure makes managers cautious 22 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

 Providing a range of incentives needs to be considered  Award the incentives for doing the right things  To reinforce the desired activity, provide rewards soon enough after actions occur 23 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall1-24 Copyright © 2009 Pearson Education, Inc. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.