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An open Innovation Approach to the radical Innovation Process

An Analysis of the Management of the Process of Radical Innovation in an Open Innovation Paradigm

Written by P. Altmann, O. Kämpe

Paper category

Master Thesis

Subject

Business Administration>Management

Year

2010

Abstract

Thesis: The nature of innovation-radical innovation Innovation has been evolving throughout history, and this concept may be ambiguous to some people. Avoid ambiguity; this section will explain innovation, especially RI. As for the actual evolution of the innovative concept, readers can refer to 2.2 for a brief overview. Innovation is defined here as: a market proof/concept with novel market and technological significance. This definition is derived from the work of Abernathy & Clark in 1985. Radical (RI) or incremental (II). II strengthened established organizational capabilities, while RI forced it to deal with new things in the market and technology (Tao, Probert, and Phaal, 2010). RI is essential for the company to dominate the world market and achieve growth (Tellis, Prabhu and Chandy, 2009). Innovations can be further divided into categories and measured on a continuum (for example, high-tech/low-tech, radical/incremental, technology/administrative, process/product, etc.. For details, see Appendix A, B, C, and D .). All these continuums, together with the main management logic of the governance innovation paradigm, will affect innovation management, that is, the operation of management methods will vary from generation to generation. RI is an innovative organization and management perspective. It is usually unintentional and develops in unexpected locations in the organization (even outside). This ambiguity makes RI difficult to manage (Robinson & Stern, 1998). Abernathy & Clark (1985) divided innovation into 4 different categories according to its destructive power/protective power. The innovation category building obsolete existing market and technical knowledge (ibid.). For example, when mobile phones first appeared, the marketing and technical knowledge of fixed telephones was outdated in many ways. Henderson & Clark (1990) paid more attention to the technological aspects of innovation and ignored the market aspects. They divide innovation into incremental, modular, architectural, and radical based on whether the core concepts have been strengthened, and whether the links between core components have changed or remained the same. Take a hard disk as an example; if the speed is increased to enhance performance but the components and the connections between them remain the same, then the innovation is considered incremental, but if the components are changed so that the head is replaced with an optical head, and the disk board is replaced with an optical Yes, then innovation is considered radical. Since there are many definitions of what RI is, it is necessary to define how RI is viewed in this article. RI is regarded as a capability destruction process in which the knowledge required to exploit the invention is different from the existing knowledge. Existing products are not competitive in many cases. The mobile phone example above is a good example, and the optical drive is a good example. 2.2 The creation of innovation To clarify the importance of OI, based on the relevant historical overview of Rothwell's 1994 and Ortt's 2008 articles, it is essential before in-depth study of how OI can promote RI management. The first generation (from the 1950s to the mid-1960s) was characterized by a firm belief in the omnipotence of technology and the consumption boom that led to technology-driven concepts; a model of internal linear progress from scientific discoveries initiated by R&D to the market (Rothwell, 1994). The subsequent second generation (from the mid-1960s to the early 1970s) intensified competition and balanced supply and demand, leading to market pull methods; emphasizing marketing and R&D as a reactive role in order to achieve certain ideas in the market (ibid.). The subsequent third generation (early 1970s-mid 1980s) abandoned static economies of scale and paid more attention to cost control/reduction. Contemporary research points to the need for a new model; a coupled model, including the previous model and the added feedback loop (ibid.). Subsequently, the fourth generation (from the early 1980s to the early 1990s) now regards the core competitiveness (CC) of the company as the main source of competitive advantage and the way to enter new markets (Prahalad & Hamel, 1990). The focus has also shifted to globalization, strategic alliances, the ability to overcome problems associated with shorter PLCs, parallel development, and large-scale integration (Rothwell, 1994). Later studies have shown that if the company's growth is too concentrated on those CCs, then CC will usually become core rigidity or core incompetence (O'Connor, 2006). Rothwell (1990) proposed the fifth generation, elaborated the fourth generation, and pointed out the future importance of rapid innovation processes. The time to market is considered the new CC. In addition, the importance of IT's role, main users, iterative development sequence, and access to external know-how is emphasized (ibid.). 2.3 The end of the linear model and the acquisition of external knowledge In the past decade, the main logic of the first four generations has been debated. Researchers have pointed out the end of the linear model (eg Gassman, 2006; Chiaroni et al., 2009a, 2009b; Chesbrough, 2003a) , 2003b, 2003c, 2010). The innovation process has evolved to include external resources, multiple channels for technological development, and internationalization of R&D (Chiaroni, Chiesa, and Frattini, 2009a). The innovation process is now more iterative and interactive (Gassman, Enkel, and Chesbrough, 2010). As mentioned earlier, R&D managers can use the benefits of OI in their work with RI and alleviate some of the management problems they face today. However, successfully adapting to OI requires new daily RI working methods. The concept of relying on external sources of knowledge leads to the question: Is it more economical to achieve the goal by licensing another organization’s technology than initiating an internal R&D project? (Tevez, 1992, p. 3). Read Less