Paradigms of Innovation

McKinsey and Co.

Breakthrough innovation Replicable innovation

Paradigms of Innovation

Basic research Applied research Development

Synthesizing a new How some chemical can BS-VI development

chemical help a specific medical
condition
o Augmenting the o Targeted at some specific o Targeted at commercial
envelope of knowledge purpose scalability
Levels of innovation (Pharma industry)
• extremely complex science involved in discovery
and development of a new drug (new chemical
Radical Innovation NCEs
entity or NCE)
• can be either first in class drug to treat incurable
disease or having better efficacy on prevailing set of
drugs

• new dosage form is developed for already known drug. Differentiated

Incremental
Innovation Dosage forms
• Either better efficacy Or Patient convenience

• Development focused around reverse engineering to

Process innovation develop copycats of already known drug / dosage Generics
form; to achieve end goal of cost / affordability
Assessing a development

NCE

INVESTMENT
REWAR
DIFFERENTIATED
FORMULATION
D

GENERICS

RISK

What specific criterions captures these three entities?

R&D intensity
o Different industry sectors has different R&D intensity

o R&D-intensive companies (R&D budget is > 5% of annual sales)

Food Pharma and

Automotive
production biotech

How R&D intensities would be different across these sectors?

Changing nature of R&D
• Technology explosion: Around 90% of our present technical knowledge has been
generated in last 55 years

• Shortening of technology lifecycle:

- Mass produced cars had a life cycle of more than 10 years in 1970s that has
reduced significantly in recent year
- Same with consumer electronics

• Globalization rate of technology

 Country’s patent application

Country’s R&D budget

Innovation and R&D

Source: Innovation mgmt. and NPD (Pearson)

Partnership for innovation (Academia-Industry)
Orchestrating innovation through R & D
Communication and positioning related to Innovation

The art of innovation | Guy Kawasaki | TEDxBerkeley

The Art of Innovation, Guy Kawasaki, DevNet Create

Keynote
Exercise

Consider any product centric innovation

1.How are you making meaning?

2.Whats your Mantra?

3.Are you jumping the curve – in what ways?

4.Where do you stand on the uniqueness vs. value matrix?

Major Challenges associated with open innovation?
Funding

Intellectual property

Lack of clear stakeholders and their stake

Commitment
Open innovation business model for research and development
Articulate the value Identify market Specify the revenue Describe the
proposition- value segment(s) the users Define the structure of generation positioning of the
created for users by to whom the the value-chain mechanism and, cost research lab linking
offering based on technology is useful required to create the structure, and profit suppliers, customers,
technology and what purpose value including assets potential competitors etc.

 What will you use?

 What research
 What do you do?  Orientation in  What will you  Whom will you
projects you will
 What respect to produce work with?
pursue
contributions you department/cente a) Papers; b)  Collaboration both
a) Pure/applied; b)
are looking to r Patents; c) internal and
Industry related;
make  Pooled resources Technology external
c) Government
 Define couple of of purchase your demonstrators  Theory vs.
funded; e)
fields that you look own equipments • Focus on “big” experimental
Startup-up styled
to work initially  Utilization of papers or multiple  If the project is
ideas
 Researchers with external resources “moderate level” industry based
 Can you handle
previous labs can such as industry papers what aspect to
multiple research
utilize their prior developed • Costs, grants, lab product you are
projects
experience materials/equipme maintenance considering
simultaneously
nt s
Management of structures in innovation and R&D
 Technology

 Organization of R&D

 Alliance formation

 Way-forward
Management of structures in innovation and R&D- Technology
1) A large automotive manufacturer having
certain expertise in engine development as
well had two major challenges during
II I implementation of BS-VI emissions technology
first revolved around developing BS-VI
technology itself and integrating the resulting
engines and associated systems within the
existing product

2) A large construction equipment

manufacturer owing to changes in the DGMS
norms that dictated usage of Laminated glass
III IV over toughened glass in the windshield had to
directly buy the proprietary method of putting
together the laminated glass

3) A reputed commercial vehicle manufacturing

firm directly got into a contract with another
specialized supplier for LIFT AXLE technology
for future development
Management of structures in innovation and R&D- Organizing R & D

Centralized laboratories

Internal R & D
Decentralized laboratories

Industrial R & D

Contract

Collaborative

External R & D
Consortium

Open source
Management of structures in innovation and R&D- Alliances
“Go-it-alone” strategy to Octopus strategy
Toshiba for LCD
technology

Infineon for microchip Microsoft develops

technology software

IBM
Real Network for Siemens develops
developing online digital memory technology
services

CISCO develops security HP develops OS for

systems workstations
Management of structures in innovation and R&D- Alliances (Frictions)
Micro Instrumentation and
Telemetry Systems (MITS)

Microsoft

IBM Apple

# Legal contract dictated that IBM/Apple will promote

and market Microsoft’s OS

Business Wars (Apple vs. Microsoft) on Amazon podcast

Management of structures in innovation and R&D- Way forward

Go through reading “Managing your innovation

portfolio”
Final thoughts

Key takeaways from the course