Innovation

What is Innovation?
The act of introducing something new (the
American heritage dictionary)
A new idea, method or device (Webster online)
Change that creates a new dimension of
performance (Peter Drucker)
The introduction of new goods, new methods of
production, the opening of new markets, the
conquest of new sources of supply and the
carrying out of a new organization of any
industry (Joseph Schumpeter)

Growing through Innovation
Senior Management Dreams:
A steady and predictable stream of breakthrough
products and services
High margins and growth due to first-mover
advantage
Investment in disruptive technologies addressing
new markets and customer needs
. . . . . . .
But why is Innovation so Difficult?
Manager faces strong incentive for short term
growth.
Managers do not know how to achieve
breakthrough products and technologies
Organisation encourages incremental changes
but discourages risk taking and
experimentation
Core Challenge: Ability to manage uncertainty is
fundamental to innovation
Integrative Framework for Innovation
Four Phases of Innovation Processes
Initiation,
Ideation,
Integration, and
Implementation

Initiation
Understanding and analysis of the surrounding
ecosystem
Ecosystem comprises players such as customers,
suppliers, competitors, or governments
Key Challenges: (2)
understanding of the needs of the players
identification of change drivers
Ideation
Generation of ideas for potential new business
models
Deals with transformation of opportunities
identified in initiation phase
Key Challenges: (3)
difficulty to overcome the current business logic
difficulties to think in business models
no systematic tools to develop new business
model ideas

Integration
Focus on development of a new business
model
4 business dimensions to look at: (Business
Model Architecture)
Who: "Who is the customer?"
What: What the customer values? (Customer
value proposition)
How: Process and activities to distribute the value
along with resources and capabilities.
Revenue Model: Cost structure and the applied
revenue mechanisms
Integration ..cont
Key Challenges: (2)
integrate all pieces of their new business model
management of partners
Implementation
Implementation of the Business Model
Key Challenges: (2)
overcome internal resistance
pilots, trial and error, and experimentation
4I Framework for Business Model Innovation