COMP 20233 TECHNOPRENEURSHIP 3

Types / Sources, and

Dynamics of Innovations
Assoc. Professor Darwin Kim Bulawan
Course Map
Week Number Topics

1-3 Course Introduction; Discussion of Deliverables

Definition of IT Innovation; IT Innovation System; IT Innovation in the Philippines; Introduction to Technological / IT
innovation; Examples of IT innovation in industry sectors; Class Consultations

4-5 Technology Evolution: Types and Sources of Innovation; Dynamics of Technological / IT Innovation; Class Consultations

6-7 Open / Closed innovation, Distributed innovations 1: Accelerators/Investment, Platform/Product innovation; Class
Consultations

8 Distributed innovation 2: Web APIs, Crowd innovations, Open Data, Free and Open-Source Software, User innovation,
Platform ecosystem; Class Consultations

9-10 Midterm Examination

11-12 Managing Projects for Innovation; Class Consultations

13-14 Innovation ecosystem; Judging IT Innovation; Class Consultations

15-16 Course Review, Class Consultations and Summary Session

17-18 Final Examinations

Learning Objectives

• Know about the different dimensions of innovations

• Understanding of the major aspects (sources and types) of innovation
• Identify sources of innovation and transforming creativity into innovation
• Know about modelling maturity and adoption of technology
• Understand design dominance and product category
Dimensions/ Types of Innovations

A. What type of thing is being innovated?

B. How different is it from what’s already available?
C. What impact will it have on the consumer?
D. What impact will it have on the market or industry?
E. What scope of the product/service/process does it affect?
F. What impact will the innovation have on the producers?
Dimensions/ Types of Innovations

A. What type of thing is being innovated?

Product innovation vs process innovation vs business model innovation

the development of new products, changes in

design of established products, or use of
new materials or components in the
manufacture of established products
Dimensions/ Types of Innovations

A. What type of thing is being innovated?

Product innovation vs process innovation vs business model innovation

–Process innovation involves the discovery and implementation

of a new or improved production or delivery method
–The process could be related to production/engineering or
related to business processes
Dimensions/ Types of Innovations

A. What type of thing is being innovated?

Product innovation vs process innovation vs business model innovation

–New and radically new business models

–Many web-based innovations are built around
business model innovations enabled by
technology, e.g.,
Dimensions/ Types of Innovations

B. How different is it from what’s already available?

Radical innovation vs Incremental innovation

Radicalness of an innovation is the degree

to which it is new and different from existing
products and processes.

Incremental innovations may involve only

a minor change from (or adjustment to)
existing practices.
Dimensions/ Types of Innovations

C. What impact will it have on the consumer?

Life-changing innovation vs Incidental innovation
Dimensions/ Types of Innovations

D. What impact will it have on the market or industry?

Disruptive or Sustaining
Dimensions/ Types of Innovations

E. What scope of the product/service/process does it affect?

Architectural vs. Component Innovation

An architectural innovation entails A component innovation involves changes to one

changing the overall design of the
system or the way components
interact.
–e.g., cloud computing
–e.g., sharing economy platforms
or more components of a product system without
significantly affecting the overall design.
–e.g., changing the algorithm for face detection in a
camera for higher performance
–e.g., smartphone generations…
Dimensions/ Types of Innovations

F. What impact will the innovation have on the producers?

Competence-Enhancing vs. Competence-Destroying Innovation

Competence-enhancing: Competence-destroying innovations render a firm’s

innovations build on the firm’s
existing knowledge base
– e.g., Intel’s Pentium 4 built on the
technology for Pentium III.
existing competencies obsolete.
– e.g., Kodak invented the first digital camera
– But they struggled to make the transition from
analog film to digital photography as most of their
competence related to analog film (rather than micro-
electronics).
Diffusion of Innovation
– Originally a rural scholar studying
agricultural innovations
– Interested in why some farmers adopted
new innovations and some others didn’t e.g.,
hybrid seed yielded 25% more crops and
resistant to drought
– He noticed that some farmers did not
adopt innovations even if economically
sensible
Everett Rogers,
Sociologist and communications scholar
(1931 –2004)
Diffusion of
Innovation
Stages in Innovation-Development Process

• Recognizing a problem or need

• Basic and applied research (scientific investigation [applied=addressing practical problem])
• Development (putting new idea into form to meet the needs of user)
• Commercialization (production, manufacture, packaging, marketing, distribution)
• Diffusion and adoption (spreading innovation through members of a social system)
• Consequences
Technology
Adoption
Lifecycle
Model
Cumulative Adoption Curve

–Another way of representing

the same information
(cumulatively)
–This is known as a “technology
adoption S-curve”
Process of Innovation Adoption:
Adoption by Individuals or Organizations

–Another way of representing

the same information
(cumulatively)
–This is known as a “technology
adoption S-curve”
Emergence of New Product Categories

Technology:

• “the practical application of knowledge especially in a particular area”

• “a manner of accomplishing a task especially using technical
processes, methods, or knowledge”

Product Category:
• “A product category is all the products offering the same general
functionality.”
• “A socially constructed partition of products that are perceived to be
similar and in which firms choose to position their products”
Dominant Design

–Came from a study of the automotive industry in the

1970s (by Utterbackand Abernathy)
–Their model allows explanation and prediction of the
dynamics of product and process innovation in the
industry
–A “Dominant Design” is the design around which the
industry settles.
Dominant Design Phases

–The fluid phase:

•Uncertainty about the technology and its market
•Firms experiment with different product designs

–The specific phase (i.e., innovations are specific to the dominant design):
•There is a stable architecture (dominant design) for the technology
•Firms focus on incremental innovations to improve components
•Firms focus on process innovations to produce them efficiently and effectively
Dominant Design in IT

Examples of dominant designs in IT

–IBM PC Architecture
–WIMP (window, icon, menu, pointing device)
–Internet protocol stack (TCP/IP, etc)
–The core web standards (HTML, HTTP, URL)
–LAMP (Linux, Apache, MySQLand Perl/PHP/Python)
–Relational Database Management Systems
–Apple iPhoneapplication architecture
–The Android architecture
–Smartspeaker API architecture
Standards for Design Dominance
Why Dominant Designs are Selected?

Learning Effects
• Industry gains knowledge in all aspects of the tech
• When design is dominant, there is greater use of the tech
• Greater use leads to greater knowledge accumulation about that tech
• Greater knowledge enables a fast rate of improvement of the tech
• Company structures and culture are based around the tech
Network Effects
• Benefit of using the tech increases with the number of users (i.e., railways, Facebook, Skype)
Why Dominant Designs are Selected?
Dominant Designs Strategy
–First mover–getting into market quickly and hoping that your product becomes the dominant design
–Second mover–waiting for the dominant design to be completely established and accepted in the
market and then producing ‘me-too’ product under that standard
–Competing on low cost and low price and trying to be better than the competition (little innovation)
–Fast second –waiting for the dominant design to begin to emerge and then move in to be a part
of it (that is, helping to create it)

Examples of fast second –Expand this with real examples

–Microsoft
–Procter & Gamble –Consumer goods
–Amazon
–Canon–Printer / Camera
–JVC–Audio Visual
–Heinz –Food
Dominant Designs Strategy
Fast Followers (Second Mover)
• “first mover in a disruptive market is not in reality the most likely to succeed. In fact, a first
mover has a 47%”
• Fast followers have a working business model to emulate.

Example:
• Lyft, as an example, have exploited Uber’s success well with a design immediately accessible to
Uber users. But this can only take you so far in July of this year, for example, Uber completed 62
million trips to Lyft’s 13.9 million.
Technology Performance over Time

–Used to show and predict performance

improvement of a technology
–Shows that the performance of a
technology starts slowly, then improves
approximately exponentially, then slows
and eventually saturates
• Creative Destruction: fastest substitution,
fastest to adapt
• Robust Coexistence: gradual substitution,
when both the old and new coexists
• Illusion of Resilience: statis (period of
equilibrium) followed by rapid substitution
when old tech does not adapt and fade

• Robust Resilience: slowest substitution –

adopts tech but slowly
Disruptive Innovation

• Clayton Christensen introduced the concept of “disruptive technology”

(1995), later reframing it to be “disruptive innovation” (1997)
• He reframed it as he recognized that few technologies are disruptive
or sustaining in character. It is the business model that the technology
enables that creates the disruptive impact
• Christensen's evolution from a technological focus to a business
modelling focus is central to understanding the evolution of business
at the market or industry level.
Disruptive Innovation

–“Disruptive innovations” disrupt markets

–They create new markets or change the value network in an existing market.
–Term “value network” first used by Clayton Christensen
–Similar concept to “industry value chain” but usually more focused overall system
rather than for a specific product/service type
Disruptive Technology vs. Disruptive Innovation

Why did Christensen change from “disruptive technology” to “disruptive innovation” ?

–Recognized that few technologies are disruptive or sustaining in character

–It is the business model that the technology enables that creates the disruptive impact
–Christensen's evolution from a technological focus to a business-modelling focus is
central to understanding the evolution of business at the market or industry level
Innovator’s Dilemma

• Effective established companies study the needs of their customers

• The companies innovate to meet these customer needs
• The companies sell new products/versions to their customers
• The most important existing customers are the high-end ones who spend the most so the
focus is on them
• The dilemma is that the more a company focuses on the needs of their high-end
customers, the more likely it is that they will miss opportunities in emerging technologies

Examples:
–Kodak and digital camera
–Microsoft and their Operating System…
–Blockbuster and online movie streaming
Types of Disruptive Innovation
Value Chains

–Michael Porter introduced the concept of “value chains” (1985)

–In best-selling book: “Competitive advantage: Creating and
sustaining superior performance”
–The father of company strategy.
–Most cited author in business and economics.
Industry Value Chains
Use of Value Chains/Networks

Analyzing value chains/systems/networks is

useful for:
–Understanding an industry (including relationships
between companies)
–Understanding your company’s position within the
market
–Deciding where your company wants to be within
that market
–Looking for opportunities for disruptive innovations
M2 Activity
(Individual Activity): In this short article (https://arvr.google.com/daydream/), Android’s strategy for the VR is
following similar principles to what made Android the dominant design for the smartphone OS (as we studied in
the lecture). However, after few years, this VR strategy appears to be not working. Why do you think its failing?
You may think about this in the context of concepts learned in the class.

Minimum of 10 sentences is required for this activity. (30 points)

Further instructions will be announced via Google Forms. Due Date: BEFORE MAY 1, 2022