BDA 10602 :CHAPTER 2

INTRODUCTION TO
INNOVATION
CONTENTS:

2.1 DEFINITION AND CONCEPT OF INNOVATION

2.2 RADICAL VS EVOLUTIONARY CHANGE
2.3 PRODUCT, SERVICE AND PROCESS?
2.4 DISRUPTIVE AND OPEN INNOVATION
2.5 OBSERVATION AND OPINIONS ON THE
INVENTIONS
2.1 Definition & Concept
of Innovation

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2.1 DEFINITION AND CONCEPT OF
INNOVATION
Definition of Innovation
- A new idea, creative thoughts, new imaginations in form
of device or method.
- The act or process of introducing new ideas, devices or
methods.

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Concept of Innovation

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 2.2 Radical vs
Evolutionary Change

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2.2 EVOLUTIONARY VS RADICAL CHANGE

Two categories of innovation for products or services:

Evolutionary
Change
Innovation
Product & Service
Radical Change
2.2 EVOLUTIONARY VS RADICAL CHANGE

Evolutionary change:

• improvements within a given frame of solutions;

• can be thought of as a process that modifies,
adjusts,minor changes (i.e., “doing better what
we already do”); OR
• an incremental change and takes place gradually,
over time
2.2 EVOLUTIONARY VS RADICAL CHANGE

Radical change
• a change of frame (i.e., “doing what we did not
do before”)
• new, unique, and discontinuous.
Dahlin and Behrens suggest three criteria for identifying an innovation
as radical:
• Criterion 1: The invention must be novel: It needs to be
dissimilar from prior inventions.
• Criterion 2: The invention must be unique: It needs to be
dissimilar from current inventions.
• Criterion 3: The invention must be adopted: It needs to
influence the content of future inventions.

Ref-Design Issues: Volume 30, Number 1 Winter 2014

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 Radical vs Evolutions
 Explores new technology  Exploits existing technology

 High uncertainty  Low uncertainty

 Focuses on products,  Focuses on cost or feature

processes or services with improvements in existing
unprecedented performance processes, products or
features services
 Creates a “DRAMATIC” change  Improves competitiveness
that transforms existing within current markets or
markets or industries, or industries
creates new ones

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2.3 Product, Service &
Process

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2.3 PRODUCT, SERVICE & PROCESS

• Innovation can be everywhere

• Innovation can be everything
• Innovation can be anytime
• Innovation not limited to product innovation only

Innovation non-stop = continuous improvement

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 2.3 PRODUCT, SERVICE & PROCESS

Process Innovation
Product Innovation

Service Innovation

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2.3.1 Product Innovation

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Product innovation categorized into three (3):
(i) New product
 A product which not exist before, i.e; when the
first time telephone introduced by Alexander
Graham Bell.

(ii) New Perfomance

 Improvement of existing product performance,
i.e; the improvement of engine specification to a
new model compared to previous model.

(iii) New Features

 New Feature to existing product, i.e; addition of
airbag system to a car.

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2.3.2 Service Innovation

INNOVATION

• New or improvement of service, i.e McD delivery system, direct line call to
mobile app for delivery order

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Food Delivery

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Courier Service

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Online Shopping

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• The service innovation change the systems to serve the customer/user better and
most applied in business or organization management.

• The innovation in services able to focus on following areas:

 Service concept - type of service such as retail concept, online concept for shop

organization
 Client interface - the way of dealing with customer, i.e; Hunting Line, Website,

Translator etc.
 Technological option - The used of technology to delivering the services and

survey the services. i.e; loyalty cards, communication, the way to inform the
customer about sales, discount etc.
 Delivery system - improvement on transportation, packaging, way of deliver etc.

• Impact of service innovation

 Gain customer/user satisfaction

 Reduce time

 Smooth work flow

• Example of service innovation

 Taxi service to Grab service

 Online shopping, i.e; Shopee, Lazada

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2.3.3 Process Innovation

Process is the combination of facilities, skills, and technologies to

produce product or service.

• Process innovation could be achieved by:

i. Implement updated equipment and technologies
ii. Tools improvement
iii. New techniques
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• In process innovation, most step are less visible compared to product
innovation which typically seen and valued internally. Differed to
process innovation, most of the changes affect the cost and time.

• Impact of Process innovation

 Reduce cost
 Reduce time
 Increase productivity

• Example of process innovation

 Moving assembly line by Henry Ford
 Toyota Production System

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2.4 Disruptive & Open
Innovation

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2.4.1 Disruptive Innovation

• A disruptive innovation is an innovation that creates a

new market and value network and eventually disrupts an existing market
and value network, displacing established market-leading firms, products,
and alliances.

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2.4.1 Disruptive Innovation
 The term is used in business and technology literature to describe
innovations that improve a product or service in ways that the
market does not expect.

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High technology – known as disruptive technology

Example;
• Electric cars disrupts the support network for gasoline cars (network of
gas and service stations). Such disruption is fully expected and therefore
effectively resisted by support net owners. In the long run, high
(disruptive) technology bypasses, upgrades, or replaces the outdated
support network.

• Mobile phone

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2.4.2 Open Innovation

 Open innovation is a situation where an

organisation does not just rely on their own
internal knowledge, sources and resources (such
as their own staff or R&D for example) for
innovation (of products, services, business models,
processes etc.)
 But also uses multiple external sources (such as
customer feedback, published patents,
competitors, external agencies, the public etc.) to
drive innovation.

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2.4.2 Open Innovation

 Reduced cost of conducting research and development

 Potential for improvement in development productivity
 Incorporation of customers early in the development process
 Increase in accuracy for market research and customer targeting
 Potential for synergism between internal and external innovations
 Potential for viral marketing
 Enhanced digital transformation
 Potential for completely new business models
 Leveraging of innovation ecosystems

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 2.4.2 Open Innovation

 Possibility of revealing information not intended for sharing

 Potential for the hosting organization to lose their competitive
advantage as a consequence of revealing intellectual property
 Increased complexity of controlling innovation and regulating how
contributors affect a project
 Devising a means to properly identify and incorporate external
innovation
 Realigning innovation strategies to extend beyond the firm in order to
maximize the return from external innovation

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 Table 1: The differences between Closed and Open Innovation Principles (Source: Chesbrough, 2003)

CLOSED INNOVATION PRINCIPLES OPEN INNOVATION PRINCIPLES

The smart people in our field work for us. Not all the smart people work for us so we must find
and tap into the knowledge and expertise of bright
individuals outside our company.
To profit from R&D, we must discover, develop and External R&D can create significant value; internal R&D
ship it ourselves. is needed to claim some portion of that value.
If we discover it ourselves, we will get it to market first. We do not have to originate the research in order to
profit from it.
If we are the first to commercialise an innovation, we Building a better business model is better than getting
will win. to the market first.

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2.5 Observation &
Opinions on The
Inventions

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• Nowadays it is impossible to imagine our life without
technological inventions. We can not do without them and our
lives depend on them a lot.

• Some people suppose inventions to be the most important

things on the way to progress, but others think that they
make us unable to do a lot of useful and necessary actions
that help humans to be healthy, sporty and smart.

• Where is the truth? Let’s try to look at the problem to find out
the answer.

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The History of the Invention of Steam Trains

• George and Robert Stephenson built the first steam train, the
«Rocket», in 1829.
• It had a lot of problems and was very slow. By 1870, trains became
more
popular and easier to run.
• By 1895, people started
using electric trains.
• They were cleaner and
quieter than steam trains.

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• By 1920, most countries in Europe had railways. Today there are
railways all over the world. They have greatly changed our lives and
helped to save a lot of time for travellers.

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• The US rail network, with an operating route length over 250,000km is
the biggest in the world.
• Modern trains are fast and comfortable. People can find beds,
restaurants, watch TV and listen to the radio there.

• No doubt, the invention of the train was a great step toward progress.
• To travel long distances in old days was tiring, uncomfortable and
dangerous.
• Travelling by train nowadays is not the fastest, but convenient and not
very expensive.
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Iron
• People wanted to look smart through all the time.
• They dreamt to have clean and accurate clothes. So, the thirst irons
appeared.
• They were very heavy and hot because
people made them from iron and heated
in the fire.
• Later they decided to put hot charcoal inside.

• There were irons which worked with the help of spirit that burnt inside,
but they were not very good and the flammable liquid often burnt the
clothes.
• Due to the inventor Earl Richardson the first electric iron was made in
1903. He convinced some of housewives to test it.
• The new invention became very successful, though it was too hot in the
centre and not hot enough at the edges .
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• Richardson produced an advanced model 1905.Now at the market there
is a number of various models of irons.
• They are light, multifunctional and even wireless. Some of them have a
special device which helps not to spoil clothes. No doubt that it is a very
useful and helpful invention.

Can you imagine your

life without this
device??

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A lot of inventions appeared in people’s lives to make
their existence more comfortable and easier.
The inventions help us to save much time for our
hobbies and interests and to get much freedom from
our housework.
There is another point of view on the problem. A lot of
people suppose that all the inventions make us lazy,
passive and unhealthy.
But if you are sensible, you will always have something
interesting to do such as exercise regularly, eat healthy
food and manage your stress properly.

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