AN OUTLOOK ON INNOVATION - unicas.it · AN OUTLOOK ON INNOVATION Esther Ferrándiz León...

AN OUTLOOK ON INNOVATION

Esther Ferrándiz LeónDepartamento de Economía General

(Universidad de Cádiz, SPAIN)

Seminar at Universitá of Cassino and Southern Lazio21th September, 2015

lunes, 28 de septiembre de 15

• 1. Introduction

• 2. Concepts and the basics

• 3. Factors affecting innovation

• 4. Open innovation

• 5. Case study

• 6. Innovation theories: beyond the firm

• 7. Conclusions


WHY INNOVATION?


• 1. Introduction




• 5. Case study


• 7. Conclusions


WHAT IS INNOVATION?

• Many definitions• ‘the implementation of a new or significantly

improved • product (good or service), • or process, • new marketing method, • or a new organisational method’ (OECD, 2005)

MLA


INVENTION VS INNOVATION

Inventions

Innovations

Inventions

Innovations


INVENTION VS INNOVATION• Only 1/3 of inventions become innovations

(Webster & Jensen 2010)


DIFFUSION AND DEGREE OF NOVELTY

• Degree of novelty: – Firm;– Market;– World;

• Radical innovations:– Significant impact on a market;– Impact of innovations (as opposed to their novelty);– May become apparent only long after introduction.


TYPES OF INNOVATION

Product Process

Organisational Marketing

OECD (2005). Oslo Manual. Proposed Guidelines for Collecting and Interpreting Innovation Data, 3rd Edition. Paris.MLAlunes, 28 de septiembre de 15

TYPES OF INNOVATION

Product(goods and services)

Process



TYPES OF INNOVATION

Product

Process(production or delivery methods: techniques, equipment and/or

software)



TYPES OF INNOVATION

Product Process

Organisational(business practices,

workplace organisation, external relations)

Marketing


TYPES OF INNOVATION

Product Process

OrganisationalMarketing

(product, place,price promotion)


SOME EXAMPLES

Waterproof mobiles

Online booking system for a hotelWaterproof mobiles

Introduction of GPS tracking devices for transport services


-Direct emails to any company leader-Google Gafés

-20% projects of personal interestlunes, 28 de septiembre de 15

Exploration Exploitation Diffusion

PHASES OF INNOVATION

Innovation

Search, R&D Re-use ideas, Commercialisation

Adoption rate


EXPLORATION AND EXPLOITATION

Ipad 3 Ipad 4 lunes, 28 de septiembre de 15

• Tendency to exploitation over time. Why?

EXPLORATION AND EXPLOITATION


• 1. Introduction




• 5. Case study


• 7. Conclusions


FACTORS INFLUENCING INNOVATION

!Objectives and effects: Motivates innovation!Competition, demand and markets!Production and delivery!Meet regulatory requirements

!Hampering factors:• Cost factors• Lack of qualified personnel or attitude• Market factors • Institutional factors

MLA


Ideas

Scientific discoveries

Technological breakthroughs

Compound UK92480


ATTRIBUTES OF INNOVATION PROCESS

• Uncertainty and risk• Accumulativeness• Diversity• Interactive• Appropiability


APPROPRIABILITY!Ability to appropriate gains from innovation activities:

• Formal methods: patents, registration of design, trademarks, copyrights, confidentiality agreements, trade secrecy;

• Informal methods: secrecy that is not covered by legal agreements, complexity of product design, lead time advantage over competitors.

Adapted from: Unesco (2012). Measuring innovation: Main definitions & indicators. Regional Workshop on science

Technology and Innovation (STI) indicators for Gulf countries


• Appropiability is a crucial issue, but not easy.

• Example: Selfie stick . Patent 7684694.


• 1. Introduction




• 5. Case study


• 7. Conclusions


OPEN INNOVATION: THE CONCEPT

• “The use of purposive inflows and outflows of knowledge and technology

• to accelerate internal innovation,

• and expand the markets for external use of innovation, respectively” (Chesbrough 2003)”.

•


ROUTES TO INVENTIONSIndividual

Corporate(closed)

Open


Source: Motara, L et al (2009)How to implement open innovation. Centre for Technology Management, Institute for Manufacturing, Cambridge University.


CLOSED VS. OPEN INNOVATION

• All smart people in the field work for us

• To profit from R&D must discover, develop & ship

• We can get to market first if we innovate

• First company to market will win• If we create most and best

ideas, we’ll win• We must control our IP

• There are smart people outside & inside

• External R&D can add value alongside internal

• We need not originate research to benefit

• Building better business model more important than first to market

• We win if we make best use internal & external

• We can profit from others’ use of our IP and benefit from theirs when appropriate

SOURCE: Chesbrough, Henry W., MIT Sloan Management review, Spring 2003; análisis propio de Innoradar, S.A.


Chesbrough’s drivers of open innovation (2003)

• (i) the increased availability and mobility of skilled “knowledge-workers”

• (ii) the new external options available for unused ideas

• iii) external suppliers increasing capability and finally

• (iiii) (...) new strategic opportunities for companies


• 1. Introduction




• 5. Case study


• 7. Conclusions


CASE STUDY: OPEN INNOVATION AT P&G


QUESTIONS• How has the innovation model of P&G evolved? What factors

motivated it?

• Give two examples of ways on which P&G is applying OI. Can you think in any other firm applying OI? If so, please give an example

• How many types of innovation are described in the case?

• What role plays technology and networking on OI at P&G? What external sources do they rely on?

• How P&G know what to look for?

• What barriers need to be overcome for OI?


QUESTIONS• How has the innovation model of P&G evolved? What factors

motivated it?

• From closed to open innovation

• Factors: need to growth, innovation budgets restrictions, R&D productivity leveled off, innovation rate not enough, high competition, flattening sales, earnings miss, realize the potential of external sources of innovation, need to reduce time to market, loss of market capitalisation


QUESTIONS• Give two examples of products developed under OI? How it became

open?

• They created a technology brief that defined the problems they needed to solve and circulated it thought their network of individuals and institutions.

• Doing so, they found a small bakery in Bologna that already had this equipment

• Can you think in any other firm applying OI? If so, please give an example


QUESTIONS• How many types of innovation are described in the case? (product,

organizational, marketing, process).

• Organisational innovation

• product innovation

• marketing innovation

• -


QUESTIONS

• What role plays technology and networking on OI at P&G? What external sources do they rely on?

• Enhancing factor (ninesigma,Yet 2.com, yourenconre)

• Suppliers, competitors, academia, reserach institutions and private labs, developments and trade partners.


QUESTIONS• How P&G know what to look for?

• Identify consumer needs.

• Ask business unit leaders which consumers need, when satisfied, will drive brand’s growth.

• Translate needs into brief describing problems to solve.

• Consider where you might seek solutions

• Identify adjacencies: Ask which new product categories, related to your current categories, can enhance your existing brand. P&G expanded Crest brand beyond toothpaste to include whitening strips, power toothbrushes and flosses


QUESTIONS• What barriers need to be overcome for OI?

• Not invented here syndrome

• Employees fears to job loses

• Others not mentioned in the case: absorptive capability, context, strategy...

• -


• 1. Introduction




• 5. Case study


• 7. Conclusions


INNOVATION THEORIES

-Neoclassical: knowledge as a public good, “mana from heaven”

-Endogenous growth theories: knowledge explicitly included in the model through R&D investment, that generates spillovers (Romer, 1986; Lucas, 1988; Romer, 1990; Grossman y Helpman, 1991; Aghion y Howitt, 1992, 1998) .

-Evolutionary theory: innovation as a complex sytems based on interrelations among agents.

Basic research

Applied research

Technical progress

Productivity gains

Economic growth


-From a territorial view, proximity is required for interactions to take place. Increasing interest for local and regions

-Organizational (Mode 2, Triple Helix, entrepreneurial university) : importance of interrelations among agents

(Triple Helix (Etzkowitz y Leydesdorff, 2000)


• 1. Introduction




• 5. Case study


• 7. Conclusions


CONCLUSIONS• Importance of innovation for businesses and economies

• Multidimensional approach

• Sources for innovation not only inside “four walls”, but also outside the firms-->Open innovation

• There are barriers to OI, but still a lot of potential that deserves to be explored


THANK YOU!

50

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MAIN REFERENCES• OECD (2005). Oslo Manual. Proposed Guidelines for Collecting and

Interpreting Innovation Data, 3rd Edition. Paris.

• Smith, D.(2015). Exploring innovation. McGraw-Hill Higher Education.


• Cooke, P., Boekholt, P., Tödtling, F., 2000. The governance of innovation in Europe: regional perspectives on global competitiveness. Printer, London.

• Etzkowitz, H., Leydesdorff, L., 2000. The dynamics of innovation: from National Systems and "Mode 2" to a Triple Helix of university-industry-government relations. Research Policy 29, 109-123

• Etzkowitz, H., Webster, A., Gebhardt, C., Terra, B.R.C., 2000. The future of the university and the university of the future: evolution of ivory tower to entrepreneurial paradigm. Research Policy 29, 313-330.

• Freeman, C., 1987. Technology policy and economic performance: lessons from Japan. Pinter, London.

• Geuna, A., Nesta, L.J.J., 2006. University patenting and its effects on academic research: the emerging European evidence. Research Policy 35, 790-807.

• Gibbons, M., Limoges, C., Nowotny, H., Schwartzman, S., Scott, P., Trow, M., 1994. The new production of knowledge: the dynamics of science and research in contemporary societies Sage Publications, London.

• Grossman, G., Helpman, E., 1991. Innovation and growth in the global economy. MIT Press.• Howells, J.R.L., 2002. Tacit knowledge, innovation and economic geography. Urban Studies 39,

871-884.

OTHER REFERENCES


• Kline, S.J., Rosenberg, N., 1986. An overview of innovation, in: Landau, Rosenberg (Eds.). The Positive sum strategy: harnessing technology for economic growth. National Academy Press, Washington.

• Krimsky, S., 1991. Academic-corporate ties in biotechnology: a quantitative study. Science Technology and Human Values 16, 275–287.

• Lucas, R., 1988. On the mechanics of economic development. Journal of Monetary Economics 22 3-42.• Lundvall, B.Å., 1992. National systems of innovation: towards a theory of innovation and interactive

learning. Pinter Publishers, London Moulaert, F. & Sekia, F. (2003): «Territorial innovation models: a critical survey». Regional Studies 37,289-302.

• Romer, P., 1986. Increasing returns and long-run growth. Journal of. Political Economy 94, 1002-1037.• Romer, P., 1990. Endogenous technological change. Journal of Political Economy 98, S71-S102.• Rosenberg, N., Nelson, R.R., 1994. American universities and technical advance in industry. Research

Policy 23, 323-348.• Stepah, P. (1996) .The economics of science. Journal of Economic Literature, 34 (3), 1199-1235.• Solow, R.M. (1956). A contribution to the theory of economic growth.Quartely Journal of Economics,

70,65-94.• Solow, R.M. (1957). Technical change and the aggregate production function. The Review Of Economics

and Statistics, 39,312-320.


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