An

Assignment on

Board of directors

Subject:

Strategic management

Prepared to:

Mr. Yukesh Agrawal

Bachelor of Business Administration (BBA)

Nepal Business College (NBC)

Lincoln University College, Malaysia

Prepared by:

Sonam purbe

LC00016000121

Semester: Sixth

Date of Submission:

June -26 -2020

Author Note

Mr.Yukesh Agrawal , who is faculty member of Nepal Business College, assigned this
assignment and under his supervision, this assignment was prepared
 Acknowledgement

The successful accomplishment of this report is the outcome of contribution of a number of

people to whom I am grateful and thanked them from the very deep of my heart. At the
beginning, I would like to pay our humble gratitude to the almighty for giving me ability to work
hard under pressure.

Foremost, I would like to thank Lincoln University College affiliated Nepal Business College of
Management and Secondly the credit of thanks goes to our honorable Founder Chairman of NBC
Dr. BheshaParsadDhamala for making good study environment likewise, I am very much
thankful to our respected Academic Director of NBC Prof. Dr. Ved Raj Acharya moving forward
a big thanks to our respect Managing Director of NBC Mr. Deepak Koirala

I would like to convey my sincere gratitude to my honorable lecture Mr. Yukesh Agrawal Nepal
Business College of management lecture department of Bachelor of Business Administration,
Lincoln University College. Without guidance and assistance this report would not have seen the
light of day.

I want to acknowledge my family and friends with great respect. Their love, encouragement and
support have been exemplary. All of the above I want to acknowledge and thank god that I have
been able to complete this expedition successfully.
 Abstract

The notion that innovation is essentially about the commercialisation of ideas and

inventions suggests that it is relatively straightforward and simple. Far from it, not

only is the step from invention to commercially successful innovation often a large

one that takes much effort and time, innovations can and do vary enormously. In

addition the term ‘innovation’ is widely used, probably because it frequently has very

positive associations, and is often applied to things that really have little to do with

innovation, certainly in the sense of technological innovation.

 Chapter 1 : Innovation and Its types

1.1 Definition of innovation

The word “innovation” is derived from the Latin verb innovare, which means to renew. In
essence, the word has retained its meaning up until today. Innovation means to improve or to
replace something, for example, a process, a product, or a service. In the context of companies,
however, the term needs a definition. In the complex context of business, a definition is needed.
Innovation is a process by which a domain, a product, or a service is renewed and brought up to
date by applying new processes, introducing new techniques, or establishing successful ideas to
create new value. Innovation is a process by which a domain, a product, or a service is renewed
and brought up to date by applying new processes, introducing new techniques, or establishing
successful ideas to create new value. The creation of value is a defining characteristic of
innovation

1.2 Types of innovation

It has long been noted that one can differentiate innovations in terms of the degree of novelty
associated with them. Some innovations employ a high degree of novelty, while others involve
little more than ‘cosmetic’ changes to an existing design. This distinction between big change
and small changes innovations has led some to group innovations as either radical or incremental
(Freeman, 1982). However differentiating innovations using just two classes in this way is rather
limited and does not bring out the subtle but important differences between innovations. In
particular it fails to show where the novelty often lies. To cater for this Henderson and Clark
(1990) use a more sophisticated analysis. Their analysis incorporates both radical and
incremental innovation but within a more wide-ranging analysis that is both robust and
meaningful. Henderson and Clark’s (1990) analytical framework provides a typology that allows
us to analyse more modest innovations and at the same time predict their impact in terms of both
competition and the marketplace. Although this typology focuses primarily on product
innovations it can equally be applied to service and process innovations. At the heart of
Henderson and Clark’s analytical framework is the recognition that products are actually
systems. As systems they are made up of components that fit together in a particular way in order
to carry out a given function.
Example

Pen = knib + ink storage + stem + cover + ink

System = interaction of components

Incremental innovation

Incremental innovation refines and improves an existing design, through improvements in the
components. However it is important to stress these are improvements not changes, the
components are not radically altered. Christensen (1997) defines incremental innovation in terms
of:‘a change that builds on a firm’s expertise in component technology within an established
architecture. Incremental Innovation is the continuous improvement of existing products or
services to provide more value to an existing market. It focuses on reducing defects and
incrementally improving performance with features like product line expansions, cost reductions,
and next-generation products. Incremental innovation is a series of small improvements
or upgrades made to a company's existing products, services, processes or methods. The changes
implemented through incremental innovation are usually focused on improving an existing
product's development efficiency, productivity and competitive differentiation. This type of
innovation occurs in the short-term and has low technological advancement and low market
impact. In the case of the washing machine example used earlier, incremental innovation would
be case of offering a machine with a more powerful motor to give faster spin speeds. Incremental
innovations are the commonest. Gradual improvements in knowledge and materials lead to most
products and services being enhanced over time. However these enhancements typically take the
form of refinements in components rather than changes in the system. Examples: Next-
generation 3 series for BMW, Gillett.

Disruptive Innovation

Disruptive innovation, also known as stealth innovation, involves applying new technology or
processes to your company’s current market. It is stealthy in nature since newer tech will often
be inferior to existing market technology. This newer technology is often more expensive, has
fewer features, is harder to use, and is not as aesthetically pleasing. It is only after a few
iterations that the newer tech surpasses the old and disrupts all existing companies. By then, it
might be too late for the established companies to quickly compete with the newer technology.

There are quite a few examples of disruptive innovation, one of the more prominent being
Apple’s iPhone disruption of the mobile phone market. Prior to the iPhone, most popular
phones relied on buttons, keypads or scroll wheels for user input. The iPhone was the result of a
technological movement that was years in making, mostly iterated by Palm Treo phones and
personal digital assistants (PDAs). Frequently you will find that it is not the first mover who
ends up disrupting the existing market. In order to disrupt the mobile phone market, Apple had
to cobble together an amazing touch screen that had a simple to use interface, and provide users
access to a large assortment of built-in and third-party mobile applications. Disruptive
Innovation is when new technologies and products are created to serve an existing market. This
type of innovation is enabled by new technology that provides a more efficient and accessible
alternative to what already exists in the market. Businesses apply disruptive innovation to serve
the evolving needs of their consumer base, creating entirely new value streams and service
offerings that did not exist before. Disruptive innovation mostly originates at the lower end of the
market segment, however, as the maturity of the technology increases, it eventually displaces
established market leaders. This innovation occurs in the medium to long term. Examples: Open
source software, Peer-to-peer platforms (Airbnb), video streaming

Architectural Innovation

Architectural innovation is simply taking the lessons, skills and overall technology and applying
them within a different market. This innovation is amazing at increasing new customers as long
as the new market is receptive. Most of the time, the risk involved in architectural innovation is
low due to the reliance and reintroduction of proven technology. Though most of the time it
requires tweaking to match the requirements of the new market. With architectural innovation,
the components and associated design concepts remain unchanged but the configuration of the
system changes as new linkages are instituted. As Henderson and Clark (1990, p12) point out,
‘the essence of an architectural innovation is the reconfiguration of an established system to link
together existing components in a new way.’ This is not to say that there won’t be some changes
to components. Manufacturers may well take the opportunity to refine and improve some
components, but essentially the changes will be minor leaving the components to function as
they have in the past but within a new re-designed and re-configured system.

In 1966, NASA’s Ames Research Center attempted to improve the safety of aircraft cushions.
They succeeded by creating a new type of foam, which reacts to the pressure applied to it, yet
magically forms back to its original shape. Originally it was commercially marketed as medical
equipment table pads and sports equipment, before having larger success as use in mattresses.
This “slow spring back foam” technology falls under architectural innovation. It is commonly
known as memory foam. Architectural Innovation is the modification of existing solutions for an
entirely new market. Architectural innovation refers to changing the overall design of a product
by putting existing components together in new ways. This innovation occurs in the short to
medium term. Examples: Sony Walkman, desktop photocopiers Architectural Innovation

Examples of SONY WALKMAN

The Sony Walkman provides a good example of architectural innovation. The Walkman when it
first came out was a highly innovative new product, but it involved little or no new technology.
All the main components that went into the Walkman were tried and tested having been used on
a variety if other products. Portable audio tape recorders that could both play and record music
had been on the market for many years. Designers at Sony, started with an existing small audio
cassette tape recorder, the Pressman (Henry and Walker, 1991), a small lightweight tape recorder
designed for press reporters. They proceeded to remove the recording circuitry and the speakers,
and added a small stereo amplifier. A set of lightweight headphones completed the package.
Because there were no speakers the new machine needed much less power. The absence of
speakers meant it could be made much smaller while the fact that it needed much less power
meant it could use only small batteries making it very much lighter. Thus a very different kind of
system with a very different kind of architecture began to emerge. And so the Walkman was
borne. It was new type of audio product. It was a personal stereo, that enable its young, mobile
users to listen to music whenever and wherever they wanted, and without being harassed by
older generations concerned about noise. The Walkman was a huge commercial success, selling
1.5 million units in just two years (Sanderson and Uzumeri, 1995) . However the significance of
the Walkman is not just that it sold well. It illustrates the power that is sometimes associated with
architectural innovations. As well as securing Sony’s future as a consumer electronics
manufacturer, it had much wider impact on society. It was soon copied by other manufacturers,
but more significantly it changed the behaviour of consumers. Young people found they could
combine a healthy lifestyle while continuing to listen to music so that the Walkman may be said
to have helped promote a whole range of activities like the jogging, walking and the use of the
gym.[ CITATION goo1 \l 2057 ]

Radical innovation

Radical innovation is what we think of mostly when considering innovation. It gives birth to
new industries (or swallows existing ones) and involves creating revolutionary technology. The
airplane, for example, was not the first mode of transportation, but it is revolutionary as it
allowed commercialized air travel to develop and prosper. Radical Innovation is when an
organization applies new technology to a new market. This type of innovation is when a new
product, process, or service with high technological advancement has a high market impact and
completely replaces an existing offering. This innovation occurs in the long-term. Radical
innovation is about much more than improvements to existing designs. A radical innovation calls
for a whole new design, ideally using new components configured (i.e. integrated into the
design) in a new way. In Henderson and Clark’s (1990) terms, ‘Radical innovation establishes a
new dominant design, and hence a new set of core design concepts embodied in components that
are linked together in a new architecture.’Radical innovations are comparatively rare. Rothwell
and Gardner (1989) estimated that at the most about 10 per cent of innovations are radical.
Radical innovation is often associated with the introduction of a new technology. In some cases
this will be a transforming technology, perhaps even one associated with the transforming effect
of a Kondratiev long wave. In terms of Henderson and Clark’s framework radical innovation is
located in the bottom right hand quadrant, at the opposite extreme from incremental innovation,
as it involves both new components and a new design with a new architecture that links the
components together in a different way Examples: Salesforce, Metromile etc.[ CITATION www12 \l
2057 ]

.
 Chapter 2 : Conclusion

The four different types of innovation mentioned here and they are Incremental, Architectural,
Modular and Radical help illustrate the various ways that companies can innovate. There are
more ways to innovate than these four. The important thing is to find the type(s) that suit your
company and turn those into success. Whether a business is in the initial stage of exploring
innovation or has already gained some experience from it, new opportunities exist across the
entire growth cycle. By classifying innovation into four distinct categories, companies can assess
the opportunities that exist and how different approaches can enable them to create and capture
value.
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