Introduction & Core Concepts of Creativity and Innovation

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1 School of Business Yonsei University Introduction & Core Concepts of Creativity and Innovation Sung Joo Bae Assistant Professor Operations and Technology Management

2 Innovation Much More Complicated than Invention Invention & Innovation: Difference? Generation of Ideas Problem-solving (Design) Implementation(Mfr, Mkt, Dist) Diffusion Basic Science Applied Science New Product Development User Innovation What is the role of the basic science?

3 Which is better & more prevalent? Market-oriented innovation (market or demand pull??) or Manufacturer/service providerdriven innovation (technology or supply push??)

4 A sample of innovations Web learning Television Penicillin Third generation (3G) wireless Hand calculators Polyester Digital cameras Tupperware Touch screens Internet gambling Financial options Transistor Peer-to-peer computing Satellite telephony Electronic ink Web-based social networking DARPA-net Alternative fuel automobiles Virtual Reality (Second Life)

5 Demand-pull and supply-push Market Take-off No/Not Yet Yes Demand Pull Supply Push

6 Demand-pull and supply-push Market Take-off Demand Pull Web learning No/Not Yet Yes Hand calculators Digital cameras Tupperware Penicillin Internet gambling DARPA-net Alternative fuel automobiles Supply Push Virtual Reality Satellite telephony Electronic ink? Polyester Financial options Television Transistor Peer-to-peer computing Touch screens Web-based social networking?

7 Conventional wisdom? The best innovations are customer/needs/demand-driven. Common thoughts: Nothing is worse than a technology in search of an application, or a solution in search of a problem and a customer Necessity is the mother of invention How many billions of dollars has this company spent on R&D that goes nowhere?!

8 Internal vs. External Sources Of the 157 cases studied by Myers and Marquis, how many innovations are evoked by information from sources outside the firm? 98 = 62% How about in the case of new scientific and measuring instruments? 39/59 ideas = 66% Case of DuPont s major product and process innovations? 14/25 = 56%

9 Diffusion An important part of the technological innovation Early Majority Late Majority Early Adopters Laggards Avg. time of adoption t Source: Rogers (Diffusion of Innovation)

10 User Innovation - Another Important Factor Adopter categorization on the basis of innovativeness Innovators Early Majority Late Majority Lead Users Early Adopters Laggards Avg. time of adoption t Source: Rogers (Diffusion of Innovation)

11 Chasm? Source: Rogers (Crossing the Chasm)

12 Traditional, Manufacturer-Centered Innovation Paradigm Manufacturers identify user needs, develop products at private expense, And profit by protecting and selling what they have developed. User-Centered (Democratized) Innovation Paradigm Lead Users innovate to solve their own needs at private expense - and then freely reveal their innovations Users innovate here # of users perceiving need First manufacturer product appears here Time

13 What is meant by Innovation is becoming democratized? Increasing numbers of users are able to develop innovations for themselves at a steadily more professional level. Why? Improvements in design tools via computing (like simulation) Improvements in communication (like the Internet) All being provided at lower costs

14 Harnessing the Capability of Users

15 Moore s Law

16 Moore s Law The number of transistors on a chip will double about every two years

17 Moore s Law Is there a limit to this law? dce83c4ca94278fb30c7dfeb01aef16&rf= bm

18 What s the main point of the disposable diaper story?

19 The History of Disposable Diaper Mills Technology Layered tissue Finely shredded cellulose (Fluff) Harmon & Harper Super-absorbent polymer Size Absorbing Performance Product Innovation Pampers introduced P&G Luvs introduced Present

20 Technical Progress and Its Nature A series of problem-solving Performance-enhancing Smallness matters not only for the convenience, but also for the ripple effect on distribution & inventory With the distribution costs down, the number of necessary factories went down Corporate restructuring Price went down

21 Industry Life-cycle as an S-Curve Performance Maturity Takeoff Discontinuity Ferment Source: Foster (1986) t

22 The S-Curve Maps Major Transitions Performance Maturity Takeoff Discontinuity Ferment Source: Foster (1986) t

23 Dominant Design # of Innovations Product Innovation Dominant Design Process Innovation Era of Ferment (Abernathy & Utterback, 1975) t

24 The Nature of Technical Work Changes Performance We need to be responsive & flexible but controlled Maturity Takeoff Can we make 100,000 and service them? Will it work? Exploration, Fun, Creativity Discontinuity Will it work? Exploration, Fun, Creativity Source: MIT s Tech Strategy t

25 The Basis for Competition Changes Performance Price, Quality, Incremental Features Product Differentiation Intellectual Property Speed Frontier Performance Discontinuity Product Differentiation Intellectual Property Speed Frontier Performance Source: MIT s Tech Strategy t

26 The Organizational Dynamics Changes Performance Coordination and Control Critical Entrepreneurial Energy Critical Discontinuity Entrepreneurial Energy Critical Source: MIT s Tech Strategy t

27 Disruptive Innovation; Technologies that disrupt an established trajectory of performance improvement Performance High-End Mkt Demand Disruptive Innovation Mid-End Mkt Demand Low-End Mkt Demand Source: Christensen (1997) t

28 Disruptive Innovation

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30 The Organizational Dynamics Changes Performance Coordination and Control Critical Entrepreneurial Energy Critical Discontinuity Entrepreneurial Energy Critical Source: MIT s Tech Strategy t

31 Component (incremental) vs. Architectural Innovation? Performance Maturity Takeoff Discontinuity Ferment Source: Foster (1986) t