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Prof. Göran Roos
Interest in innovation and R&D performance has been rising on the back of a wide range of successful products and services
©Göran Roos 2007
VTT Remember Innovation is not only based on natural sciences ©Göran Roos 2007 .
VTT What do companies think about innovation? ©Göran Roos 2007 .
The most successful companies combine an integrated process and a supportive culture to create a sustainable competitive advantage Money simply cannot buy effective innovation. but the process isn’t automatic and it does not necessarily require above average levels of investment.VTT What is the real situation? w Booz Allen Hamilton Global Innovation 1.000 Study 2006: – w – – – Innovation can lead to higher performance. Patents generally don’t drive profits Less than 10% of companies are High-Leverage Innovators and distinguish themselves not by the money they spend. but in having a very good innovation management system Innovation Network Survey. fall 2004 [same result from 2005]. new innovation leaders in medium to large companies: – – – – – 71% said they had no metrics for their position 60% of them have innovation as part of their mission/job objectives 67% are allowed to work on “new” concepts for their company (“new” is not defined) 68% have no well defined innovation process within their company 54% have no working definition of innovation ©Göran Roos 2007 .
VTT Research vs Innovation – What is the relationship? ©Göran Roos 2007 .
CEOs view consistent business and technology integration as crucial to innovation ©Göran Roos 2007 Source: Dr. Sr. Technology can enable and drive innovation.Technical Director.VTT EXPANDING THE INNOVATION HORIZON w w Innovation can be ignited by business and technology integration.Krishnaiah. NIC .R.V. But to truly capitalize on technology’s potential and unleash an organization’s creative energy.S. technology know-how must be combined with its business and marketing insights.
The Revenue Model describes the way a company makes money through a variety of revenue flows. The Target Customer is a segment of customers a company wants to offer value to. Nornally these are expressed in IC-Navigator form and using the (Stabell and Fjeldstad 1998) Value Logics The identified Resources that can be deployed by the firm to create value including those that form the basis for a competitive advantage A Partnership is a voluntarily initiated cooperative agreement between two or more companies in order to create value for the customer The Cost Structure is the representation in money of all the means employed in the business model. The Relationship describes the kind of link a company establishes between itself and the customer.VTT Business Model Innovation is key w w w w w w w w w A Value Proposition is an overall view of a company's bundle of products and services that are of value to the customer. ©Göran Roos 2007 . The Value Configuration describes the arrangement of activities and resources that are necessary to create value for the customer. A Distribution Channel is a means of getting in touch with the customer.
demanding differentiated value from businesses Historical Demand Seeking “good enough” quality at rock-bottom prices when they perceive no differentiated value w Emerging Demand Price Positioning Willing to pay large premiums for “new luxury” brands when they deliver differentiated value w Growth ©Göran Roos 2007 Source: IBM Institute for Business Value analysis .Value Proposition VTT Target Customer Truly understand your customers and your customer’s customers [consumers] Customers are trading both up and down within categories.
Value Proposition VTT Target Customer What drives the B2B relationship? Situational Importance of Different Perceived Value Driver Categories High Importance to Buyer Functionality Distinctness ⇓ ⇓ Price Mental Proximity ⇓ Functionality Low Price ≥ Seller Distinctness < Seller Perceived Knowledge of Buyer 0 ©Göran Roos 2007 .
Value Proposition VTT Target Customer Value and knowledge distance + Potential Value to be extracted from the relationship by the supplier Knowledge distance Known by nobody Known by everybody Known by the Supplier Known by the Customer 1 ©Göran Roos 2007 .
E. The Free Press . M. 1985: Competitive Advantage.Value Configuration VTT Value Chain Infrastructure Support Activities Primary Activities Inbound logistics Human Resource Management Technology development Procurement Marketing & Sales Service M ar gi n Operations Outbound logistics 2 ©Göran Roos 2007 Source: Porter. Creating and Sustaining Superior Performance.
. Fjeldstad. B. Vol 19. shops. and networks.Value Configuration VTT Value Shop Support Activities Find someone with a problem Infrastructure Human Resource Management Technology development Procurement Acquire the right to address the problem Develop alternative solutions Primary Activities Control/Evaluation Execute Co-select with client one solution Source: 3 ©Göran Roos 2007 Stabel. 1998 . . No 5.: Configuring Value for Competitive Advantage: On chains. D.Ø. SMJ.
Value Configuration VTT Value Network Support Activities Infrastructure Human Resource Management Technology development Procurement Promote Network Primary Activities Manage Member Contracts Service Provisioning Infrastructure Operation & Maintenance Source: 4 ©Göran Roos 2007 Stabel. 1998 . D. . Vol 19. Fjeldstad.Ø. SMJ.: Configuring Value for Competitive Advantage: On chains. B. No 5. shops. and networks..
Resources VTT The presence of resources with different behaviour Owned or Controlled By the Firm Owned or Controlled By the Firm Owned or Controlled by the Other Party Owned or Controlled By the Firm Owned or Controlled By the Employee Additive Additive 5 ©Göran Roos 2007 .
Resources VTT The utilisation of resources with different behaviour Industrial Economics Network Economics Knowledge Economics 6 ©Göran Roos 2007 .
preferential deals Sales of products RELATIONAL Networking PHYSICAL Facilities build relationships Investment in building links MONETARY Recruitment training. image and systems REL. processes & knowledge Relationship selling. processes.Resources VTT Examples of Resource Transformations HUMAN HUMAN Training ORG. conditions Investment in assets Investment In financial instruments 7 ©Göran Roos 2007 . association with brands Possible new products & know-how Investment in brands. Knowledge codification. new IP Systems generate IP Importing IP. Building & developing relationships PHYSICAL Developing prototypes MONETARY Sales of man-hours ORGANISATIONAL Developing competence through use Chance to build skills in relationship handling Facilities to train with Market intelligence Produce By numbers Use of other company’s assets Equipment generates products Sales of IP.
Revenue Model VTT Revenue Logics w Effort-based pricing – A cost-based (or effort-driven) pricing model A value-based (or perception-driven) pricing model Revenue-sharing contract with primary customers Charging on copyright (the right to use the IP) Creating customer base (for later revenue) or supporting sales of other parts of the product/service offering Vendor sells/leases ad space or information [space] based on customer relationship Vendor charges for carrying information relating to other goods in/on its primary product/offering Vendor charges for the right to take part in an activity Vendor generates financial returns on the capital held as a consequence of getting paid by its customers before paying its suppliers w Value-based pricing – w Profit Sharing – w Licensing – w Loss Leader-pricing – w Hybrid/Media model – w Channel charging – w Membership fee – w Negative Working capital – 8 ©Göran Roos 2007 .
VTT Innovation does not happen by itself w w It is the result of hard work.…and very much a matter of discipline (Peter F Drucker. well planned and executed and is no happening Innovation is work rather than genius. 1985) 9 ©Göran Roos 2007 .
VTT Summary w w w w w w w Innovation does make a difference at the bottom line Few companies do it well There is a difference between research and innovation and especially in their management Innovation is more than technology Innovation Management is Key and is facilitated by applying the IC lens We know how good innovation management looks It will become even more important in the future 0 ©Göran Roos 2007 .