From the foundation of innovation to the future of innovation

From the foundation of innovation to the future of innovation

Once upon a time, firms used to compete mainly on products...

Product portfolio matrixes for product diversification strategies

The competitive advantage of firms according to the RBV Not valuable Competitive disadvantage Not rare Competitive parity Valuable Rare Assumptions: RESOURCES are heterogeneous in nature and not perfectly mobile Imitable Imperfectly Imitable Substitutable Non-substitutable Temporary competitive advatage Apparently sustainable competitive adv. Sustainable competitive advantage Barney (1986; 1991); Wernerfelt (1984); Peteraf (1993) 4

Then the "service" era came. Capabilities became more important than resources...

The core competencies perspective (Prahalad and Hamel, 1990) STARTING POINT: Many firms are highly diversified and see themselves as a "portfolio" (of products/brands). They adopt a static perspective that consists in targeting profitable markets and diversifying the production mainly through the creation of new products and/or business units. 6

The core competencies perspective However, technology evolves rapidly and so does the market: with market boundaries changing ever more quickly, targets are elusive and capture is at best temporary Consumers are less and less loyal to products and brands Being too much diversified can be a risky strategy: firms loose competiveness towards competitors that are able to offer "complex solutions" instead of "simple products" only. 7

The core competencies perspective Firms need to identify interrelated streams of technological and market evolution and to develop the (core) competences needed to deal with these changes and offer to the market more complete "solutions" Core competencies are the collective learning in the organization, especially how to coordinate diverse production skills and integrate multiple streams of technologies The real sources of advantage are to be found in management s ability to consolidate corporate-wide technologies and production skills into competencies that empower individual businesses to adapt quickly to changing opportunities SOURCE: Prahalad and Hamel, 1990 8

Example The Carl Zeiss Group is an international leader in the fields of optics and optoelectronics. 9

...and then everything changed again, and the battle shifted to the level of business model innovation

Dynamic Capabilities What dynamic capabilities are: (Teece, Pisano and Shuen, 1997) The ability to sense and then seize new opportunities, and to reconfigure [...] to achieve a competitive advantage 11

Dynamic capabilities vs. the RBV and the Core Competencies Today s competition is mostly Schumpeterian (new technological trajectories disrupt the formers; new business models substitute the formers) In this context, identifying difficult-to-imitate resources is difficult; locking in in current technological trajectories is risky Since the firms choices about domains of competencies to develop are influenced by path dependency, firms risk to remain trapped into technological cages built by themselves 12

Sensing Discontinuities in Technological Trajectories create new market opportunities Increasingly, strategic advantage requires the integration of external activities and technologies Firms need to develop organizational routines in order to cope with discontinuities 13

Seizing Get ready to re-define your business model Build new platforms (or use existing ones) Take advantage of innovation eco-systems (build coalitions; use networks) Turn your products into services and experiences 14

Reconfiguring The business model of the firm must evolve The talent within the firm must also adapt Success advances the firm, but in a path-dependent way Complexity increases with size Capabilities become rigidities When (not if) the environment shifts again, the firm must reconfigure itself, or risk increasing irrelevance 15

Nowadays Innovation at the service and at the business model level is paramount in order to create lock-in effects and to escape the COMMODITY TRAP ON SALE! 30% OFF! 50% OFF!! 80% OFF!!! 99% OFF!!!!

The new INNOVATION BRICKS: Key Enabling Technologies A significant part of future goods and services are as yet unknown, but the main driving force behind their development will be Key Enabling Technologies (KETs), such as nanotechnology, micro- and nano-electronics including semiconductors, advanced materials, biotechnology and photonics. Mastering these technologies means being at the forefront of managing the shift to a low carbon, knowledgebased economy. They play an important role in the R&D, innovation and cluster strategies of many industries and are regarded as crucial for ensuring the competitiveness of European industries in the knowledge economy. http://ec.europa.eu/enterprise/sectors/ict/key_technologies/i ndex_en.htm)

Mobile Internet Increasingly inexpensive and capable mobile computing devices and Internet connectivity Automation of knowledge work The Internet of Things Intelligent software systems that can perform knowledge work tasks involving unstructured commands and subtle judgments Networks of low-cost sensors and actuators for data collection, monitoring, decision making, and process optimization Cloud technology Use of computer hardware and software resources delivered over a network or the Internet, often as a service Advanced robotics Increasingly capable robots with enhanced senses, dexterity, and intelligence used to automate tasks or augment humans Autonomous and near-autonomous vehicles Vehicles that can navigate and operate with reduced or no human intervention

Next-generation genomics Fast, low-cost gene sequencing, advanced big data analytics, and synthetic biology ( writing DNA) Energy storage Devices or systems that store energy for later use, including batteries 3D printing Additive manufacturing techniques to create objects by printing layers of material based on digital models Advanced materials Materials designed to have superior characteristics (e.g., strength, weight, conductivity) or functionality Advanced oil and gas exploration and recovery Exploration and recovery techniques that make extraction of unconventional oil and gas economical Renewable energy Generation of electricity from renewable sources with reduced harmful climate impact

From products to smart and connected products!

Keith Pavitt's technological trajectories (or, the sectorial paths of innovation) SUPPLIER- DOMINATED SCALE- INTENSIVE SCIENCE- BASED INFORMATION- INTENSIVE SPECIALIZED SUPPLIERS TYPICAL PRODUCTS Traditional manufacture Consumer durables Bulk materials Automobiles Electronics Chemicals Finance Retailing Travel Publishing Machinery Instruments Software MAIN SOURCE OF TECH. INNOV. Suppliers Production learning Production engineering Production learning R&D research Software and systems departments Suppliers Design Advanced users MAIN TASK OF INNOV. STRATEGY Use technology developed elsewhere to reinforce competitive strategy Technological improvements Diffusion of already tested best-practices in design and production Monitor and exploit signals coming from basic research to develop tech related products Development of informationprocessing services (think at GOOGLE and FACEBOOK: how do they make money?) Keeping up with users' needs, learning from advanced users, matching new tech to users' needs. 22

From... To... From technological trajectories IN specific industries and markets TO technological adjacencies ACROSS industries that create new market spaces 23

Identifying market adjacencies: the convergence Map The CM makes visible how areas of daily life or industries are beginning to overlap and how new behaviors (at the consumer level) and new strategies (at the firm level) are emerging HOW IT WORKS: Identify topics that are overlapping most with your area of business Identify trends and innovations in these topics and summarize them in brief statements Build a VENN diagram showing overlapping regions Identify and discuss emerging opportunities 24

The Convergence Map Topic 2 Trend Innovation Topic 1 Trend Innovation Trend Trend Innovation Innovation Innovation Trend Innovation Trend Innovation Trend Trend Innovation Topic 3 Converging dynamics Source: Kumar V., (2013), 101 Design Methods, Wiley 25

Innovation life cycle in the automatic gates industry 26

Technological trajectories '60 '70 '80 '90 '00 today hydraulic era electronic era digital era 27

60/70 : hand built by blacksmiths; heavy (ironbased); integrated (with the gate); costly; mainly for industrial use (big gates) 70/80': mass produced; standardized components; lighter structures (aluminum); specialized producers; medium-high prices; both industrial and home market 80/90': newcomers adopting the electronic technology; lighter products, less reliable but achievable by the mass market Some incumbents refused to shift to the new technological trajectory. Try to improve the former technology with the aim to cut production costs and be competitive 28

90/10: production of electronic components moved to the Far East; reliability of products increased; competitors products converged around some dominant designs electronic automations won the battle in the home segment; hydraulic devices still compete in the industrial segment NOWADAYS: ARE WE IN FRONT OF THE START OF A NEW (DIGITAL) ERA? 29

The convergence map X INDUSTRY OR TECHNOLOGY AUTOMATIC GATE TECHNOLOGY Y INDUSTRY OR TECHNOLOGY CONVERGENCE AREA FOR NEW PRODUCTS AND NEW USES FOR AUTOMATIC DOORS AND GATES (ALREADY EXISTING OR NOT)

The convergence map HOME SECURITY AUTOMATIC GATE TECHNOLOGY BIOMETRICS ACCESS AND HOME SECURITY INTEGRATED SYSTEMS USING BIOMETRICS RECOGNITION TECHNOLOGIES

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