Contemporary Management

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  • Topic: Innovation, Diffusion of innovations, Market share
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  • Published : February 25, 2013
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Show slide youtube on Mercedes innovation:

Trivia: Did you know that 280 years ago, the British government announced if not the world’s first, then certainly the world’s largest prize for innovation at 20,000 pounds reward for anyone who can “discover the longitude”- according to John Brandt.

What is innovation? Why do organizations pay so much on research and development just to develop more of these?

In a nutshell:

1. Innovation is something that is created as “new”. * According to Marion Hembrick: Deliberate use of resources to create something new whether a new product, process, policy or procedure.

Ex: An example of an innovation is that of a three-wheel car in 1886 by Mercedes Benz.

* People use innovations for competitive advantage or to increase market share or ta have a better system, but is innovation alone essential in an existence of an organization?

2. Innovation is a game changer: Something that is perceived to be different and could contribute to a change in lifestyle. As said by Sheremata in “Strategy in Network Markets” there are two types of innovation: radical and incremental. -In competing with market leaders, challengers do innovations to gain market shares. * Radical

* provide large improvements, costly and risky. Challengers hoping to gain monopoly power. * high possible return and embodies new knowledge
* may affect competitive outcome
* DISRUPTIVE-can penetrate and be widely accepted or it can fail and may bring about signification loss/cost an organization according to Christensen * Example: radical innovation of a 3-wheel petrol car to a 4-wheel petrol car which change lives and made it so easy with the convenience of driving or riding. * The move of a four wheel car was a game changer because it was an radical innovation that was widely accepted, where it changed lives. * Combined, adapted and improved and introduced as a “new and independent” innovation - replacing the new from the old. * In technology, progress has been achieved through small incremental innovations that build upon each other: Jeff Lill of Microsoft said: A competitor comes in and does something interesting, then we come in and basically clone it and do it marginally better and throw some marketing clout behind it and then relentlessly make it better through the years. That is our strategy and it has worked”. * Incremental

* Small or minor improvement.
* Sustaining according to Christensen.
* Market leaders merely do incremental innovations
* Cheaper, doesn’t give impact in market share, but still done for sustainability * Ex: a minor change in a car’s dashboard, door or design.

According to Everett Rogers:

Innovation has five stages:
1. Knowledge stage- awareness stage
2. Persuasion stage- gather interest through be informed about the dimensions of the innovation 3. Decision- adopt or reject
4. Implementation- using the innovation
5. Confirmation- continue using or acceptance of innovation/ market penetration

Innovation comes a long way not only with products. There are lots of successful innovations and there where those that failed as well. Innovation comes in different forms with the hope of improvement in shares, systems, and process. It may be changing the policies in your workplace to gain a more conducive environment. Is innovation important in your industry, because in this fast changing world, innovation plays a very big role in technology, but is it the same with other industries? With your company perhaps?

Today the group is going to show you different views of different situations where innovation came distinct. Listen and Decide.

Angelmar, R. 1990, "Product innovation: A tool for competitive advantage", European Journal of Operational Research, vol. 47, no. 2, pp. 182-189.

den Butter, Frank A. G, Möhlmann, J.L. & Wit, P....
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