Lecture given by Anna Sabidussi on the 16th of June for MBA candidates

1. INNOVATION
Anna Sabidussi

2. Some facts and figures…
29%
of new business founded in 1992
were still alive in 2002.
• Source: Shane (2008)

3. Some facts and figures…
1/3
of companies listed in the
FORTUNE 500 in 1970 had
disappeared by 1983.

4. Mapping the innovation space
ATTRIBUTE
DEGREE

5. Mapping the innovation space
Product- Process Strategic
Service
Product
Radical
Process Re-
Revolution engineering Strategic
Transformation
Current Incremental
Product Process Strategic
Evolution Change Development
Market Process Strategic
Penetration Efficiency Focus
Source: Ahmed and Shepherd, 2010

6. Mapping the innovation space
• Disruptive innovation (source: Clayton Christensen)

7. • Target overshot customers or non-customers;
• Prioritize good-enough;
• Do what established competitors don’t want to do,
can’t do or are uninterested in doing.
Source: Anthony, Johnson, Sinfield and Altman, 2008

8. Mapping the innovation space
• Business Model Innovation canvas (Osterwalder and Pigneur)

9. • NYTD’s organizational evolution
Ability to borrow
Integrated Distinct but
(1995) linked (2004) High
Unsopported Isolated (1999)
Low
Low High
Ability to forget
Source: Govindarajan and Trimble, 2005

10. INNOVATION NETWORK
R&D partnerships in software 1970-1979,
MERIT-CATI
R&D partnerships in software 1995-1999,
MERIT-CATI
Source: Cloodt et al. 2010

11. Relative importance of external sourcing drivers
Market entry
Time-to -Market*
Cost
SMEs
LARGE
Uncertainty
Knowledge
Monitoring
0.0 1.0 2.0 3.0 4.0 5.0
Market entry
Time-to -market
Cost
Large average
Large best in class
Uncertainty
Knowledge
Monitoring**
0.0 1.0 2.0 3.0 4.0 5.0
Source: Sabidussi, 2009

12. Cooperation …
70
60
50
40 positive
negative
30 neutral
20
10
0
Patents Sales/New Products Economic Indicators R&D inputs Process Innovation
Performance implications of cooperation
Source: Belderbos, Duysters and Sabidussi, 2012

13. … and beyond …
HIGH
Acquisition
Joint Ventures
CONTROL
CVC
Alliance
Licensing
LOW
SHORT LONG
TIME HORIZON

14. Innovation strategy Upsides Downsides Requirements Examples
-Organic growth is
-Better control of IP
Slower
Recruiting and -Long term growth -Astute strategic human -Google
-Challenge of
Retaining superior focus Resource management -Merk
Identifying and
Human capital -Difficult for competitors - Organizational flexibility -Goldman Sachs
valuing superior
to imitate
human capital.
-Apple
-Internalization of skills -Full risk exposure -Culture of risk tolerance
Internal R&D -Intel
and capabilities -Long time horizon -Organizational flexibility
Spending -BMW
- Full capture of returns -Uncertain returns -Long term commitment
-HP
-Shared risk
-Potential loss of
Multiple, small-scale -IBM
IP control Dedicated function
Strategic investments provide -Eli Lilly
-Challenge of for the management
Alliances strategic options -Oracle
alignment of goals of partnerships
-Faster than internal -Procter & Gamble
-Shared returns
internal development
-Faster than growing -Risk of overpaying
organically -Cultural integration Capability to identify -Cisco
Acquisitions -Acquire innovative -Involves relying and assimilate -GE
technologies before startups on others for acquisition targets -Microsoft
become competitors innovation
Source: Frank Rothaermel and A. Hess. MITSLoan management review spring 2010

15. Non-Stars Stars R&D Alliances Acquisitions
Non-stars
Stars
R&D
Alliances
Acquisitions
Source: Frank Rothaermel and A. Hess. MITSLoan management review spring 2010

16. 2
Portfolio Balance
Individual GC
Assessment
1
(risk-return profile)
Governance choice
selection
3
no yes
B2B ?
OTHER Update total
portfolio
t= t0 + ∆t
EXTERNAL
4
Internal
INTERNAL sourcing no
Technology
Vs.
change
external
sourcing ?
Mayor Evolutions ? Market
yes
development
Corporate
Strategy shift
Start
t= t0
Source: Sabidussi et al., 2011