1 Transforming Invention into Innovation: The Conceptualization Stage

2 Outline l What is “Innovation”? l Conceptualization of new business opportunities l “Technology Push” and “Need Pull” l Corporate interests l Effective conceptualization l Innovation traps

3 Innovation l “Innovation” involves welding marketplace opportunities with inventive technology and new technical knowledge.  Substantial skill l Three elements:  Technical competency  Market need  Corporate interest

4 Conceptualization of New Business Opportunities l Marketing-oriented managers can direct scientists into what appear to be exciting markets with assured high demand.  Demand pull  Here, innovation is father to (or mother to) the new “invention”. l Scientists, attuned to the realities of the corporation’s interests, look for new technologies and scientific breakthroughs with good commercialization potential.  Technology push l Marketing and scientific specialists work together, bringing their own skills to a joint endeavor to develop new technology with sound market possibilities.

5 Technology Push l Require a great deal of technical knowledge and experience  Technological lock  Unique patentable technologies l Link up their conception of what ideas are marketable with new technological discoveries coming both from within and outside of their own laboratory l R&D personnel should have the ability not only to conduct relevant research but to monitor and link up with other relevant work wherever it may be going on, and to see some overall pattern or implication in these diverse streams.

6 The Scheme of Technology Push

7 Problems with “Technology Push” l Start with what can be easily researched and evaluated. l Get locked into a particular technical solution. l Address the needs of the atypical user and invoke their acceptance of the new product as evidence for the existence of a new business “opportunity.”

8 Need Pull l R&D can be targeted by specific market in advance. l The definition and exploration of markets are handled by business / marketing-trained specialists.

9 The Scheme of Need Pull Internal scientific and technical knowledge External scientific and technical knowledge External market needs Technical issues and problems Technical solutions

10 Problems with “Need Pull” l Danger of two extremes:  Superficial broad generalizations  Very narrow applications with limited potential l Too many market-oriented compromises can destroy a basically sound innovative idea. l Have greater risk of not being able to generate the required technology to solve an existing problem.

11 The Double Linking Required l Technical-linking and need-linking are both necessary for successful innovation.  Technical linking requires someone who can combine a promising technical problem with external and/or internal scientific knowledge.  Taking a “logical” step forward.  Need linking represents the ability to perceive interrelationships between the existing or potential technical breakthroughs and actual or potential market demand.

12 “Technology Push” and “Need Pull” Models Compared l Technology Push  Start with what easily can be researched and evaluated.  Address the needs of the atypical user.  Get locked into one technical solution. l Need Pull  Look at needs that are easily identified but with minor potential.  Continue to change the definition of the “opportunity”; “miss the opportunity.”  Lack a “champion” or “true believer.”

13 Corporate Interests l The corporate long-range plan for the new-venture division read: Instead of dealing with an ever-growing number of separate arenas, attention should be focused on a critical few major fields, within each of which arenas may be expanded, grouped together, or added. l A group leader who usually turned out to be the driving force in the definition of a new business opportunity.

14 Three Elements Requiring Linkage Relevant “ problems ”  As defined by top management’s professed “interests”  Problems of operating divisions  New opportunities created by external events l Technology sources  Researcher’s personal interests  Existing corporate expertise  New technological developments l Market demand  Marketer ’ s personal search  Areas of customer dissatisfaction  Potential for new need satisfaction

15 Effective Conceptualization l Successful managers are synthesizers, able to put together and link ongoing technical streams with existing corporate commitments and directions and then to relate these to market needs.  Example: Steve Jobs of Apple Computer visiting PARC Even with the two processes — technology and market linkages —combined, there is no guarantee of success.

16 Emphasis on “Technical Linking” and “Need Linking” IV I Technology Push II Need Pull II Technology Push Low High Emphasis on “technical linking” Emphasis on “need linking”

17 A Classification Scheme l The most successful ventures appeared to be those in quadrant II (double linking). l Most new ventures in R&D-oriented corporations appear to be in the domain of technology.

18 Innovation Traps l More realistically better definitions are made when there is flexibility and modification.  For such flexibility to be present during conceptualization it is important that scientists maintain their perspective. Often the alternatives can turn out to be even more worthwhile than the original breakthrough. There can also be too much flexibility. Too much flexibility on the technical side. When the market success of the innovation is too dependent on a potential variable environmental component of the market.

19 Conclusion l Always think about the 3 elements at strategy formulation. l Both technology push and need pull have their advantages and disadvantages. l Proponents of new ventures must consider the corporate interests. l The classification scheme can help us know how to do right. l Be care of the innovation traps.