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Radical innovation and Open innovation - Creating new growth opportunities for business

©2010 Masterarbeit 119 Seiten

Zusammenfassung

Inhaltsangabe:Introduction:
Henry Chesbrough – the Harvard professor and a worldwide expert for Open Innovation – has stated that 'most innovations fail. And companies that don’t innovate die.' In Germany only less than 0.5 % ideas pursued by industrial companies have led to a success. The question being addressed is how can companies drive innovations effectively and efficiently to create new growth opportunities, particularly in this difficult time due to the global economic crisis. These challenges could be captured by driving radical innovations using open innovation methodology. Radical innovations can create new markets and huge growth potential for the business and they can be developed faster and cheaper via an open innovation approach.
The aim of this Master Thesis is to provide a deep insight into radical innovation and open innovation management based on a thorough literature review. Thereby basic concepts of both innovation models are explored and compared with other innovation types, e.g. incremental and closed innovations. Moreover, the CHRISTENSEN’s model of disruptive innovation and CHESBROUGH’s theory about open innovation are explained in detail. In addition, opportunities and challenges as well as managing a concept of radical and open innovations are analyzed and illuminated with concrete examples and cases, amongst others the eco-friendly Light Emitting Diode (LED). Beside technology and market breakthroughs, other aspects like future trends, key success factors and strategies for capturing sustainable growth of disruptive LED technologies in the lighting industry are studied. It could be stated that companies should drive intensively open innovation and boost the outside-in and inside-out processes for creating new breakthroughs in LED technologies. The increase of involving customers, suppliers and the outside scientific world into internal R&D, strengthened collaboration within the LED supply chain and intensified out-licensing of own technologies help companies to accelerate the innovation process and create new markets. Besides driving forceful innovation management, companies should boost their new product development by exploitation of government supports which have been increased strongly due to the current global climate change problems. Inhaltsverzeichnis:Table of Contents:
Acknowledgement3
Declaration in lieu of oath4
Executive Summary5
Table of Contents6
List of Abbreviations8
List of Figures10
List of […]

Leseprobe

Inhaltsverzeichnis


Table of Contents

Acknowledgement

Declaration in lieu of oath

Executive Summary

List of Abbreviations

List of Figures

List of Tables

1 Introduction
1.1 Problem definition
1.2 Objective
1.3 Methodology

2 Basics of innovation management
2.1 Types of innovations
2.1.1 Classification of innovation types
2.1.2 Examples of the most important innovation types
2.2 Radical innovation versus incremental innovation
2.2.1 General differences
2.2.2 Technical and market dimensions of innovations
2.2.2.1 Technical dimension
2.2.2.2 Innovation framework of technology and market
2.2.3 Uncertainties and management of radical innovations
2.2.4 Disruptive innovations
2.2.4.1 CHRISTENSEN’s model of disruptive innovation
2.2.4.2 Managing disruptive innovations
2.2.4.2.1 Difficulties and limitations
2.2.4.2.2 Realization of disruptive innovations in practice
2.2.4.2.3 Methodology for capturing disruption opportunities
2.3 Open innovation versus closed innovation
2.3.1 Shift in innovation paradigms
2.3.2 Open and closed innovation – the main differences
2.3.3 The core open innovation processes
2.3.4 Managing open innovation
2.4 Analysis of innovation models for the lighting industry

3 Radical and open innovations for LED
3.1 LED as a radical innovation in the lighting industry
3.2 LED market breakthroughs
3.2.1 LED market history
3.2.2 LED future market trend
3.2.3 Competitive landscape
3.3 Open innovation for LED breakthroughs
3.3.1 Future trend in LED development
3.3.2 Managing open innovation for LED
3.3.2.1 The outside-in process
3.3.2.2 The inside-out process
3.4 Managing future growth in LED business

4 Conclusion

5 ITM Checklist

6 Bibliography

Acknowledgement

I would like to express my gratitude to all those who gave me the possibility to complete this thesis. I am deeply indebted to my supervisor Prof. Dr. Thomas Peisl from Munich University of Applied Science who inspired me to choose this exciting topic and helped me to switch from conventional to holistic thinking. This work would not have been successfully completed without his help and support as well as his stimulating suggestions and encouragement.

Especially, I would like to give my special thanks to my loving wife Anh Van and my daughter Khanh Linh who stood beside me and encouraged me constantly during the whole MBA study. My great thanks to my family for their patient love, enabling me to complete this work.

Declaration in lieu of oath

I hereby declare that I produced the submitted paper with no assistance from any other party and without the use of any unauthorized aids and, in particular, that I have marked as quotations all passages, which are reproduced verbatim or nearby-verbatim from publications. Also, I declare that the submitted print version of this thesis is identical with its digital version. Further, I declare that this thesis has never been submitted before to any other examination board in either its present form or in any other similar version.

I herewith disagree that this thesis may be published.

I herewith consent that this thesis may be uploaded to the server of external contractors for the purpose of submitting it to the contractor’s plagiarism detection systems. Uploading this thesis for the purpose of submitting it to plagiarism detection systems is not a form of publication.

Munich, April 10th, 2010

Executive Summary

Henry Chesbrough – the Harvard professor and a worldwide expert for Open Innovation – has stated that “most innovations fail. And companies that don’t innovate die.” In Germany only less than 0.5 % ideas pursued by industrial companies have led to a success. The question being addressed is how can companies drive innovations effectively and efficiently to create new growth opportunities, particularly in this difficult time due to the global economic crisis. These challenges could be captured by driving radical innovations using open innovation methodology. Radical innovations can create new markets and huge growth potential for the business and they can be developed faster and cheaper via an open innovation approach.

The aim of this Master Thesis is to provide a deep insight into radical innovation and open innovation management based on a thorough literature review. Thereby basic concepts of both innovation models are explored and compared with other innovation types, e.g. incremental and closed innovations. Moreover, the CHRISTENSEN’s model of disruptive innovation and CHESBROUGH’s theory about open innovation are explained in detail. In addition, opportunities and challenges as well as managing a concept of radical and open innovations are analyzed and illuminated with concrete examples and cases, amongst others the eco-friendly Light Emitting Diode (LED). Beside technology and market breakthroughs, other aspects like future trends, key success factors and strategies for capturing sustainable growth of disruptive LED technologies in the lighting industry are studied. It could be stated that companies should drive intensively open innovation and boost the outside-in and inside-out processes for creating new breakthroughs in LED technologies. The increase of involving customers, suppliers and the outside scientific world into internal R&D, strengthened collaboration within the LED supply chain and intensified out-licensing of own technologies help companies to accelerate the innovation process and create new markets. Besides driving forceful innovation management, companies should boost their new product development by exploitation of government supports which have been increased strongly due to the current global climate change problems.

List of Abbreviations

illustration not visible in this excerpt

List of Figures

Figure 2-1: Impact of incremental and radical innovations on business

Figure 2-2: Innovation types according to HENDERSON and CLARK

Figure 2-3: Innovations from customer-need and technology aspects

Figure 2-4: Technology and market innovation framework of KROY

Figure 2-5: Technology-based evolutionary and revolutionary innovations

Figure 2-6: CHRISTENSEN’s model of disruptive innovation

Figure 2-7: The most important capabilities of companies

Figure 2-8: Shift from invention to innovation and customer value

Figure 2-9: CHESBROUGH’s model of closed and open innovation

Figure 2-10: Model of the dynamics of innovation

Figure 3-1: Working principle of the Light Emitting Diode (LED)

Figure 3-2: Evolution of lighting technologies

Figure 3-3: Evolution of LED efficiency

Figure 3-4: HAITZ’s law to LED’s performance and cost history

Figure 3-5: Market breakthroughs for LED applications

Figure 3-6: Market growth driven by efficiency and cost improvements

Figure 3-7: LED market segments in 2008

Figure 3-8: High-brightness LED market history 1995 – 2007

Figure 3-9: Market segments for high-brightness LEDs 2003 – 2008

Figure 3-10: Market forecast for high-brightness LEDs 2008 – 2013

Figure 3-11: Market forecast for LED lighting segment

Figure 3-12: Roadmaps for white LED

Figure 3-13: Increasing trend of worldwide R&D collaboration of Nichia

Figure 3-14: Global leading companies with patents in SSL technologies

Figure 3-15: The key patent relationships in the white LED industry in 2005

List of Tables

Table 2-1: Examples of the four types of innovations in various industries

Table 2-2: Comparison between incremental and radical innovations

Table 2-3: Examples of innovations regarding the technical dimension

Table 2-4: Common uncertainties in radical innovation projects

Table 2-5: Managerial challenges and competencies for radical innovations

Table 2-6: Features of sustaining and disruptive innovations

Table 2-7: Characteristics of the ambidextrous organization

Table 2-8: Shift in innovation management practices

Table 2-9: Principles of open and closed innovation

Table 2-10: Managerial issues of open and closed innovation

Table 2-11: Key success factors for open innovation

Table 2-12: Examples of technical innovations in the lighting industry

Table 2-13: Examples of technical innovations for LED

Table 2-14: Stages in innovation life cycle

Table 3-1: Comparison between LED and traditional light sources

Table 3-2: Market segments of high-brightness LEDs in 2003 – 2008

Table 3-3: Market forecast for LED demand in LCD televisions

Table 3-4: Key global players in different stages of the LED supply chain

Table 3-5: Top ten ranking of global players in upstream LED market 2007

Table 3-6: OIDA roadmap goals for future LED

Table 3-7: Worldwide R&D investment in solid-state lighting LED in 2006

1 Introduction

1.1 Problem definition

Economically, the world is in a recession, the deepest since the Second World War. The global financial crisis, initially caused by a real estate bubble in the US, led to a loss of more than 4 trillion USD.[1] According to a study of the Boston Consulting Group (BCG) banks worldwide had a value destruction of 5.5 trillion USD for their market capital.[2] Hence, many economic sectors and industries were strongly affected by the economic crisis. Although prime interest rates dropped to historical lows between zero and 0.25% in the US and 1.0% in the EU a fast economic pick-up is not expected in the next years.[3],[4]

As a result of the global economic crisis, German exports crashed as never before since 1949.[5] The export volume in April 2009 dropped to 64 billion EUR and reached only 71 % of last year’s level. According to the Federal Statistical Office, the German Gross Domestic Product (GDP) has fallen continuously since Summer 2008.[6] Several companies became insolvent or must fight for survival. Besides prominent examples of Quimonda, Woolworth, Märklin, Schiesser, and Quelle, a further 35,000 companies are expected to go bankrupt in 2009.[7]

Most companies reacted against the economic crisis with restructuring, mass layoffs, short-time work, and belt-tightening. They reduced the budget, stopped investment, and behaved with care and reservation. Also the internal Research and Development (R&D) department – the innovation creator for companies, suffered from this financial shortage. The paradox by R&D is the necessity of new products and innovations for long-term success on the one hand and the lack of the company’s willingness to invest on the other hand. For many companies a survival in this difficult time is much more important than driving innovation and capturing future growth. However, innovations are still an important Key Success Factor for all economic sectors. Innovations can help companies to develop new markets, provide competitive advantage, and create new growth opportunities for a way out of the economic crisis. Thus, the economic crisis offers also a new chance for companies which can transform quickly to a lean organization with high effectiveness, competitiveness, and innovation capability. The questions here are which innovations with high impact on business success are needed and how can innovation management be realized sufficiently and effectively in this difficult budget situation.

These problems could be solved by the use of radical and open innovations. The concept idea is very attractive: New markets and growth opportunities could be created with radical innovations which are based on disruptive technologies or breakthroughs in business processes and business models. The huge successes of Apple’s iPod, Nokia’s cell phone, Amazon’s online bookstore, Dell’s direct-selling computers, Google’s internet search engines etc. in the last decades confirmed the importance of radical innovations. Furthermore, innovations could be developed efficiently and effectively by means of open innovation which combines powerful internal and external innovation capabilities and resources. The strategy of creating radical innovations using open innovation methodology is an important way for industrial R&D and will be viewed in detail in this study.

1.2 Objective

The objective of this master thesis is to provide a thorough overview of radical innovation and open innovation approaches. Thereby the basic concepts of these innovation types are studied and their opportunities as well as challenges are analyzed. Furthermore, the realization of these innovation concepts in practice regarding requirements, problems, limitations, strategies, and management solutions is illuminated with concrete examples and cases.

1.3 Methodology

In this study a summary about the status, trend and limitations of radical and open innovations is provided by literature research and assessment. Thereby different aspects of these innovation types are studied and evaluated. Chapter 2 deals with the basic concept of both innovation models. A comparison with other innovation types, e.g. incremental and closed innovation, is accomplished. In particular, the CHRISTENSEN’s model of disruptive innovation and CHESBROUGH’s theory about open innovation are explored in detail. Moreover, benefits and disadvantages as well as managing approaches of radical and open innovations are described. Applying different models, e.g. HENDERSON and CLARK about architectural innovations and ABERNATHY and UTTERBACK about the dynamics of industrial innovations, the development of innovations in the lighting industry is analyzed. In chapter 3 radical and open innovations for a concrete industrial product, the eco-friendly Light Emitting Diode (LED), are illuminated explicitly. Beside technology and market breakthroughs, other aspects like future trends, key success factors and strategies for capturing sustainable growth of disruptive LED technologies in the lighting industry are analyzed.

2 Basics of innovation management

2.1 Types of innovations

2.1.1 Classification of innovation types

A widely spread definition of innovation is from ROBERTS[8] who regarded innovation as an entity of invention and exploitation. An innovation is not only a great idea or invention; it must be also transferred into a commercial product or business which can meet the market’s needs. According to ROBERT’s view “the invention process covers all efforts aimed at creating new ideas and getting them to work. The exploitation process includes all stages of commercial development, application, and transfer, including the focussing of ideas or inventions towards specific objectives, evaluating those objectives, downstream transfer of research and/or development results, and the eventual broad-based utilization, dissemination, and diffusion of the technology-based outcomes.”

Due to a large spectrum of innovations and high complexity in this field many approaches to classify different types of innovations are used. The basic classification focuses on the considered object, e.g. innovation item, degree of innovativeness, or innovation paradigm:

- Innovation item: Related to the object of innovations it could be differentiated between product innovation, process innovation, social/ organizational innovation, and market innovation.[9],[10],[11]

Product or service innovations cover all changes and improvements in functionality, feature, performance, quality, and cost of products and services.

The process innovations are characterized by new tangible and intangible, as well as core and administrative processes, e.g. novel manufacturing process or a new business chain.

Social and organizational innovations include innovations in human behaviour, or in organization, institution, and management.

Market innovations are innovations in terms of regions, customers, regulations, marketing instruments and business models.

- Degree of innovativeness: According to the extent of innovations it could be distinguished between incremental and radical innovations.

Incremental innovations are mostly minor changes and improvements of existing products and services. They are provided for existing markets and built on the company’s core competencies.

In contrast, radical innovations are breakthrough novelties which change the market fundamentally. They require completely new competencies and can destroy actually the old competences of the company.[12],[13]

- Innovation paradigm: The classification here does not focus on a specific innovation but it differs from the way to process innovation.

Closed innovations were generated “within the four walls” of a company and cover all R&D activities in the own engineering department as well as marketing of innovations by the company’s own marketing and sales departments.[14] The innovation process is strongly internally focused and the company tries to provide and control innovation by itself.

Conversely, the goal of Open innovation is to combine external and internal knowledge sources to accelerate innovation processes and expand market opportunities for internal knowledge to the outside world.[15] Instead of controlled operating within the company’s boundaries, open innovations are processed “between” different networks inside and outside the company. The approaches of open innovation are e.g. intellectual properties (IP) licensing, joint R&D agreements, and corporate venture capital.

2.1.2 Examples of the most important innovation types

According to MORRIS the most important innovations can be divided into four major types:[16]

- Incremental innovations
- Product and technology breakthroughs
- Business model innovations, and
- New ventures.

These four types of innovation address different aspects of the competitive situation, amongst others the competitiveness, market, development effort, benefit and risk of failure. For example, incremental innovations have relatively low risk and they are needed for keeping competition with existing products and services in core markets. In contrast, breakthroughs, new business models, and new ventures take more efforts for development, have higher risk, but they can create new markets. In the following the four innovation types are shortly described and illuminated with some concrete examples.

1. Incremental innovations (also called “continuous” or “sustaining” innovations) focus generally on successive modifications of existing products and services. The goal is to improve functionality, increase the quality, reduce cost, or create new design of a product. Incremental innovations help companies to keep up with the competition and protect market share, and thus they contribute essentially to maintain the profits and cash flow.[17] For creating incremental innovations product development teams and marketing groups play a key role. They strive for bringing new innovations to market before the competitors do it and help the company to ensure its market position.

An example for successful management of incremental innovations is the development of the Walkman by Sony.[18] Between 1980 and 1990, Sony launched 160 different versions of Walkman on the market, which amounts to a new model on average every 25 days. Using incremental innovations Sony built up a leading position in the global market for consumer electronics. Another telling example is Toyota with its famous production system which enables the production of cars with the highest efficiency and quality in the world. Based on a continuous process of incremental improvements in manufacturing and assembly in the last 30 years, Toyota became the world’s leader in car manufacturing with an enormous productivity advantage over its competitors. Toyota developed the most efficient car manufacturing process which cuts changeover time from initially three hours to three minutes.[19] This successful “KAIZEN” concept (Japanese word for “continuous improvements”) was adapted and applied by manufactures in many industries around the world.

2. Breakthrough product and technology innovations (also called “radical”, “discontinuous”, or “disruptive” innovations) are innovations which overcome problems that have not been solved, or even not been recognized before.[20] These innovations are mostly based on breakthrough technologies and offer significantly better solutions than incremental changes of an existing problem. They lead to fundamental and structural change in the market and can disrupt the marketplace or the organization that comes up with them. Consequently, breakthrough innovations help the company to grow rapidly and usually effect a change of power and profit distribution between companies in the market.[21]

An example of technology-based breakthrough is the development of the mobile phone. Mobile phones changed conventional telephoning and revolutionized the telecommunication market. It enabled first movers like Nokia to become the market leader and taught a lesson to companies like AT&T which could not recognize the huge potential of new breakthrough technology. Nokia entered the digital mobile telephony in 1979 and has rebuilt forcefully from an industrial conglomerate with traditional products like paper, tires, footwear, consumer electronics, and chemicals into a pure mobile phone company. In 2007 Nokia sold 435 million mobile phones across the world and achieved 37.8 % market share.[22] The worldwide mobile phone sales totalled 1,152 million units in this year. Contrary, in the early 1980s consultants of McKinsey and AT&T foresaw a mobile phone market of only 0.9 million units by year 2000 and largely missed the market.[23] In reality, the mobile phone market reached already 400 million users in 2000.[24]

There are many other success stories about breakthrough innovations which changed the market completely. The innovative technologies and products like the Windows operating system, internet, digital photography, MP3 technology, and other endless examples revolutionized the world and rewarded companies like Microsoft, Google, Sony and Apple with large profits and a pole position in the global market. Ten years ago nobody knew anything about Google but the company has developed rapidly in the last decade with its breakthrough solution as an internet searching machine to a highly profitable giant. Google earns money with advertising on its internet searching engine (cost-free for users) and achieved in 2008 with 10,000 employees a revenue of 21.8 billion USD and a net income of 4.2 billion USD.[25]

3. Business model innovations aim to provide significant competitive advantages for companies by developing new innovative ways to deliver products and services that created superior experiences for their customers.[26] They do not focus on development of breakthrough technologies or products but on providing new and better business models to fit the customer’s needs. For example, the success of Dell is explicitly due to its innovative business model instead of innovations in technologies or products. Dell developed a very competitive “Direct Sell Model” with fast delivery of customized and low-priced computers, particularly notebooks, directly to end users.[27] Dell invested little in R&D or product development but the company has high strength in inventory turnaround time and well-controlled relationships with suppliers which enable large cost savings. Thus, Dell’s competitive advantage is based on its strong capabilities in supply chain management, low-cost build-to-order manufacturing, direct sales capabilities, and customer-based marketing.

Another prominent example for business model innovation is Starbucks Coffee. Starbucks entered the premium specialty coffee market with its great “Espresso bar idea” in which there was essentially no competition at all. The main marketing strategy is to represent Starbucks’ store as a new life style, a “third place” between work and home where customers can enjoy a variety of hot and cold beverages with different flavours in a convenient atmosphere. In this “White Space” or “Blue Ocean” of the coffee market Starbucks could expand rapidly. Starbucks opened on average 720 stores annually in the last 20 years. For the fiscal year 2007, the company opened 2400 coffee stores worldwide, that corresponds to 6.5 new stores a day. The Starbucks Corporation is nowadays a multinational coffee and coffeehouse chain with more than 16,600 stores in 43 countries. The breakthrough innovation in a business model enables Starbucks to develop from a local coffee bean roaster and retailer in Seattle to a famous international corporation with 10.4 billion USD sales and 315 million USD earnings in 2008.[28]

4. New venture innovations open new prospects for the future by enlarging a company’s scope of operations into completely new markets that are different from the current markets.[29] New venture requires new skills, perspectives, even a new identity, and separate organizational units (commonly spin-offs, subsidiaries, acquired corporations in new markets, and venture capital supported start-ups). These separate units help companies to reduce risk by expanding into new markets that are far outside of current competencies and do not have much impact on existing operations or markets.

There are three common forms of new venture: spin-offs, promoting new ventures inside, and promoting new ventures outside.[30] Spin-offs enable the realization of great ideas or innovations outside the existing corporation, when they do not fit into the core operation. There are countless examples for spin-offs, like Agilent of HP, Lucent of AT&T, or Lexus of Toyota. They help companies to compete in new markets on the one hand and enable the existing units to focus on their core competencies and markets on the other hand.

The second form of new venture is systematic corporate programs for promoting new venture inside. An advanced example is the “GameChanger” approach developed and applied by Shell.[31] “GameChanger” is a program initiated from management which helps employees to transform their innovative ideas into new business. People inside or outside of the company can submit ideas via a simple online database system (www.shell.com/gamechanger). The ideas are systematically evaluated and reviewed and the best of them are funded. In success cases Shell will make the investment to bring the idea into the market. The “GameChanger” program pays off: in more than a decade Shell has invested tens of millions USD in this new venture program, and founded new business valued at more than 2.5 billion USD.

The third form of new venture is corporate venture capital for promoting new ventures outside. For example, Intel’s venture capital invests to support the development of emerging markets. The investment in profitable companies in these regions will finally drive the sales of Intel’s chips. In 2006 Intel Capital owned more than 250 companies in its portfolio and the company has invested totally a billion USD.[32]

New venture innovation is a powerful tool for creating new compelling options for the future of the organization. Following this concept General Electrics (GE) has transformed from a traditional industrial manufacturing company in 1960 into a financial services giant nowadays. In 2008 GE gained total revenue of 182.5 billion USD; 67 billion thereof come from capital finance. The business with financial services brought GE a profit of 8.63 billion, a half of the total consolidated net income of 17.4 billion in 2008.[33]

There are more well-known examples of these four important innovation types in different industries. Some of them are listed in the table 2-1.

One of the central questions is which types of innovations could be the mass-tailored driving force for the individual company to capture new growth opportunities in the future. Which Key Success Factors (KSF) are required for companies to get a better competitive position in the market? Finally, which management framework should be implemented to drive innovation in an efficient and effective manner?

In fact, each company has its own strategy and business philosophy which contributed considerably to their success:[34]

- Intel: Destroy business before someone else does it for you.
- 3M: Innovate or die trying.
- UPS: Grow horizontally and vertically, evolve diagonally.
- Dutch Boy: Design – don’t be better, be different.
- Harley Davidson: Brand excessively, tattoos for everyone.
- Dell: Cut out all of the crap and eliminate the bureaucracy.
- IBM: Add services and solutions profusely.
- Starbucks: Engage all of the customer’s senses.

However, what about a successful innovation strategy for the future?

These questions will be answered in this study whereby it will focus strongly on radical innovation and open innovation due to their clear benefits. In chapters 2.2 and 2.3 a thorough comparison of radical with incremental innovation as well as open with closed innovation will be accomplished.

Table 2-1: Examples of the four types of innovations in various industries[35]

illustration not visible in this excerpt

2.2 Radical innovation versus incremental innovation

2.2.1 General differences

As mentioned before radical and incremental innovations are built on different concepts: Incremental innovations focus on refining or expanding existing products or processes (exploitation) whereas radical innovations aim to create fundamentally new products and processes or their combination (exploration). This major difference leads to general distinctions in several key points which are presented in the table 2-2.[36]

Table 2-2: Comparison between incremental and radical innovations

illustration not visible in this excerpt

In general, incremental innovations are easier to realize and less risky than radical innovations. The project time line for incremental innovations is significantly shorter. Companies take faster feedback and cash-flow from the market so that they can strongly reduce market and financial risks. Moreover, incremental innovations involve core competencies (competence-enhancing instead of competence-destroying by radical innovations) and high participation of every employee. They focus on providing process innovations which can lead to large quality improvements and cost savings for companies. Due to lower level of uncertainties and easier processing most innovations in practice are incremental in nature. In accumulation, sustained incremental innovations can have such far-reaching impacts as one radical breakthrough. For instance, effective incremental innovations and huge improvements in operating efficiency helped Asian firms to beat western companies fiercely during the 1980s.[38] The markets for e.g. photocopiers, consumer electronics and automotives which normally were controlled by giants like Xerox, Motorola, Zenith and GM, were taken over by new competitors like Canon, Sharp, Sony, Panasonic, Toyota, and Honda. In response, US companies increased their cost competitiveness and quality of products and processes. They gained successes again with incremental innovations based on e.g. six sigma quality management in manufacturing, concurrent engineering, reduced cycle time, just-in-time inventory management, and phase-gate product development systems. From these aspects, incremental innovations are best suited for competing in existing markets and creating ways out of the economic crisis in the short-term.

[...]


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[6] Statistisches Bundesamt Deutschland (2009). Volkswirtschaftliche Gesamtrechnungen.

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[9] Thom N. (1980). p. 32.

[10] Pleschak F. et al. (1996). p. 14.

[11] Zahn E. et al. (1995). p. 362.

[12] Tushman M. L. et al. (1986). p. 440.

[13] Green S. G. et al. (1995). p. 203.

[14] Chesbrough H. W. (2006). p. 4.

[15] Chesbrough H. W. et al. (2008). p. 1.

[16] Morris L. (2006). p. 16.

[17] Morris L. (2006). p. 22.

[18] Morris L. (2006). p. 23.

[19] Ohno T. (1988). p. 39.

[20] Morris L. (2006). p. 24-26.

[21] Morris L. (2006). p. 135-143.

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[29] Morris L. (2006). p. 29-31.

[30] Morris L. (2006). p. 155.

[31] Morris L. (2006). p. 156.

[32] Morris L. (2006). p. 161.

[33] General Electrics Company’s Information (2009). Available from http://www.ge.com/investors/

(accessed on 10.01.2010).

[34] Stephens R. T. (2006). p. 24-26.

[35] Table adapted from Morris L. (2006). p. 32.

[36] Leifer R. et al. (2001). p. 5-6, 19-20.

[37] Copper R. G. et al. (1991).

[38] Leifer R. et al. (2001). p. 2.

Details

Seiten
Erscheinungsform
Originalausgabe
Jahr
2010
ISBN (eBook)
9783836649780
DOI
10.3239/9783836649780
Dateigröße
1.5 MB
Sprache
Englisch
Institution / Hochschule
FOM Hochschule für Oekonomie & Management gemeinnützige GmbH, München früher Fachhochschule – Master of Business Administration
Erscheinungsdatum
2010 (Juli)
Note
1,0
Schlagworte
innovation strategy open radical
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Titel: Radical innovation and Open innovation - Creating new growth opportunities for business
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