Business Innovation – beyond Science and Technology Dr. Frank Devitt 18th June 2009 1 The Joint...

Business Innovation – beyond Science and TechnologyBusiness Innovation – beyond Science and Technology Dr. Frank Dr. Frank DevittDevitt

18th June 2009

1

The Joint Oireachtas Committee on Education and Science

The role of Education in Business Innovation:How we can improve the innovation performance of business in Ireland

Whole-brained, connected innovationWhole-brained, connected innovation– – beyond Science and Technologybeyond Science and Technology

Frank DevittDepartment of Design and Innovation

School of Business and LawNUI Maynooth

Leinster House18th June 2009Notes:

11 main presentation pages;

21 supplemental information pages.


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InnovationInnovation

• For the ordinary person:

• For the scientist or engineer:

• For the business person or economist:

doing something newdoing something new

inventing or discovering something newinventing or discovering something new

doing something new that adds economic value, doing something new that adds economic value, through being adopted by a userthrough being adopted by a user


2 key points2 key points

1.1. Science is less than half of the innovation storyScience is less than half of the innovation story– Over-reliance on S&T research to drive economic renewal is incomplete and

hence economically wasteful

2.2. Innovation is a whole-brained, social Innovation is a whole-brained, social BusinessBusiness ProcessProcess– It requires (beyond technology knowledge generation) …

• specialist management skills (Innovation Management)

• deep user/market understanding (Design, Marketing, empathy)

• interdisciplinary, continuous learning (CPD, Networking)

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Ireland has not yet recognised or supported innovation as a Ireland has not yet recognised or supported innovation as a connected Business Processconnected Business Process

This weakness is not adequately addressed by current policy.This weakness is not adequately addressed by current policy.


Comparing Science Research and InnovationComparing Science Research and Innovation

Research converts money into knowledge

Innovation converts knowledge into money (Primary roles)

Knowledge

Research Innovation

€ €18th June 2009

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€ €Current policy is heavy on science research – and needs to be re-balanced: €


What have they in common?What have they in common?

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All are modern, innovative, successful, internationally trading businesses, whose success is not dependent on direct or proprietary science research (now or past).


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Innovation comes from many sourcesInnovation comes from many sources

Tech

nolo

gica

l

Focu

s

DesignerFocus

Operational

Focus

Custo

mer

Focu

s

Innovating from the INSIDE-OUT

Innovating from the OUTSIDE-IN

Darrel Rhea, “Bringing Clarity to the Fuzzy Front End”,Design Research Methods and Perspectives, Edited by Brenda Laurel, MIT Press, 2003

it workswe can make it

the customer wants it

the customer loves it

Science & Science & EngineeringEngineering

INN

OV

AT

ION

IN

NO

VA

TIO

N

MA

NA

GE

ME

NT

MA

NA

GE

ME

NT

DESIGN DESIGN (user-centred (user-centred innovation)innovation)


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Linear Model of Innovation – too simplistic!Linear Model of Innovation – too simplistic!

Basic Science

Engineering(Technology)

Manufact-uring

Marketing Sales

Science Push Current Innovation Policy focus

Current Innovation Policy focus

“.. non-technical innovation may well be the 'missing link' that prevents Europe from taking full advantage of new technological opportunities”

(CORDIS, European Commission, EIS commentary, 2004)

“Innovations that sustain prosperity have a variety of forms and are developed and used through a massively multiplayer, mutlilevel and multiperiod game.”

(Amar Bhide, The Venturesome Economy, 2008)


Innovation systemInnovation system

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9

Educating for 21Educating for 21stst Century Innovation - general Century Innovation - general

(rational)science & technology

depth

detailed rigour

didacticism

exam success

strict procedure

analysis

specialised

(emotional/personal)design and creativity

breadth

speed

discovery

learning from failure

open experimentation

synthesis/creativity

integrative

2009 +2008

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Preparing fo

r use

r-centre

d

(whole-brained, d

esign-driv

en)

innova

tion


Educating for 21Educating for 21stst Century Innovation – 2 Century Innovation – 2ndnd level level

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“Countries showing a higher performance in creativity and design also show, taking into account differences in per capita income, a higher innovation performance as measured by the EIS Summary Innovation Index.”

Design Creativity and Innovation: A Scoreboard approach, Inno-Metrics, EU: DG for Enterprise and Industry, February 2009


Actions – 3Actions – 3rdrd, 4, 4thth level and CPD level and CPD

1.1. Postgraduate programmes inPostgraduate programmes in

(i) Innovation Management(i) Innovation Management

(ii) User-centred Innovation (Design)(ii) User-centred Innovation (Design)– Supported by EI, HEA, e.g. Graduate Skills Conversion (now for ICT only)

2.2. In-service CPD + Networking coursesIn-service CPD + Networking courses– Thinking, Practices and Tools for Innovation Excellence– Delivered by consultants, colleges, EI (Applied Innovation Department)– Dual, concurrent purposes: Expert direction and Peer learning– Supported by HEA / DETE / EI / Fas

3.3. Irish Business Innovation FoundationIrish Business Innovation Foundation– Responsible for national coordination of strategies and structures– Policy, Research, Education, CPD, Consulting, International Expertise– Modelled on SFI’s success for Science applied to Business Innovation– Budget = 10% x SFI …

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NEW!NEW!

€ €€


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ENDThe role of Education in Business Innovation:

How we can improve the innovation performance of business in Ireland

… … beyond Science and Technologybeyond Science and Technology



Leinster House18th June 2009


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Doblin - Ten Types of InnovationDoblin - Ten Types of Innovation

Process

En

ab

lin

g P

roc

es

s

OfferingC

ore

Pro

ce

ss

es

Pro

du

ct/

Se

rvic

eP

erf

orm

an

ce

Pro

du

ct/

Se

rvic

eS

ys

tem

Cu

sto

me

r S

erv

ice

Delivery

Ch

an

ne

l

Bra

nd

Cu

sto

me

rE

xp

eri

en

ce

Finance

Bu

sin

es

s M

od

el

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two

rks

an

dA

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nc

es

Inside-out Outside-in

“Ten Types of Innovation”, Larry Keeley, Doblin Inc. (1999)Current Current

Policy Policy

focusfocus

DESIGNDESIGN

INNOVATION MANAGEMENTINNOVATION MANAGEMENT

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The Chain-Linked Model of InnovationThe Chain-Linked Model of Innovation

Research

ExistingKnowledge

Potential Market

Invent and/or Produce Analytic Design

Detailed Design and

Test

Re-design and Produce

Distribute and Market

1 2

3 4

1 2

3 4

1 2

3 4

K K K

R R R

D I S

C C C C

F

f f

ff ff

Kline and Rosenberg (1986)

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Research

ExistingKnowledge

Potential Market

Invent and/or Produce Analytic Design

Detailed Design and

Test

Re-design and Produce

Distribute and Market

Kline and Rosenberg (1986)

User-centred DESIGNUser-centred DESIGN

Current Current

Policy Policy

focusfocus

INNOVATION MANAGEMENTINNOVATION MANAGEMENT

The Chain-Linked Model of InnovationThe Chain-Linked Model of Innovationsu

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more about Business Innovation …more about Business Innovation …

• ““Innovation is the successful exploitation of new ideas.”Innovation is the successful exploitation of new ideas.”– (Innovation Unit, UK Department of Trade and Industry, 2004)

• ““[Innovation is] The creation and adoption of new products, [Innovation is] The creation and adoption of new products, services, technologies, and business models”services, technologies, and business models”– Boosting Productivity, Innovation and Growth through a National

Innovation Foundation (2008), Brookings Institution, USA.– Quoted in Building Ireland’s Smart Economy, p30.

• Innovation is: creative problem solvingInnovation is: creative problem solving

• Innovation is: using creativity to add valueInnovation is: using creativity to add valuesup

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Innovation TrendsInnovation Trends

19th century 21st century20th century

# o

f pa

rtic

ipa

nts

# o

f in

tera

ctio

ns

Lone inventor

Corporate innovation process

Networked, social, interdisciplinary,

innovation SYSTEM

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Business Innovation is multi-dimensionalBusiness Innovation is multi-dimensional

• ““Innovations that sustain prosperity have a variety of forms and are Innovations that sustain prosperity have a variety of forms and are developed and used through a massively multiplayer, mutlilevel and developed and used through a massively multiplayer, mutlilevel and multiperiod game.”multiperiod game.”– (Amar Bhide, The Venturesome Economy, 2008)

• ““General national welfare is highly dependent on the ability of a General national welfare is highly dependent on the ability of a country to foster innovation and use that as a wealth building platform”country to foster innovation and use that as a wealth building platform”– Brookings Institution (USA), Boosting Productivity, Innovation and Growth through a

National Innovation Foundation, 2008.– Quoted in Building Ireland’s Smart Economy, p30.

• ““Innovation is the specific tool of entrepreneurs, the means by which Innovation is the specific tool of entrepreneurs, the means by which they exploit change as an opportunity for a different business or they exploit change as an opportunity for a different business or service. It is capable of being presented as a discipline, capable of service. It is capable of being presented as a discipline, capable of being learned, capable of being practised.”being learned, capable of being practised.”– (Peter Drucker, Innovation and Entrepreneurship , 1985)

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‘‘Business Innovation’Business Innovation’

Business success requires competence in:ManagementUser/market understandingProduct Development and Delivery

“Because it is its purpose to create a customer, any business enterprise has two – and only these two – basic functions: marketing and innovation. They are the entrepreneurial functions. … Marketing and innovation create value, all the rest are costs.”

Peter Drucker, The Practice of Management (1954)

Business is the mechanism for delivering value to users/markets/economies

Changing any

Changing any

of these to add

of these to add

more Value

more Value

= =

Innovation!

Innovation!sup

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Main sources of information for innovation:

Forfas: Making Technological Knowledge Work (2005)

“within the

enterprise”

customers

competitors

suppliers

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Innovation is more than Science and Technology!!Innovation is more than Science and Technology!!

> 50% of innovations are not differentiated by proprietary technology

> 95% of innovations do not rely directly on basic research in Science and Engineering

“Public sector research accounts for a vanishingly small share of[OECD firms’] knowledge inputs.”(Technopolis UK: Some New Ideas about Research, Technology and Development, 2001)

“.. non-technical innovation may well be the 'missing link' that prevents Europe from taking full advantage of new technological opportunities” (CORDIS, European Commission, EIS commentary, 2004)

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Economic Value of Science ResearchEconomic Value of Science Research

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There is a lot more to business innovation than There is a lot more to business innovation than Science and Technology research!Science and Technology research!

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Linear Model of InnovationLinear Model of InnovationScience Science Technology Technology Manufacturing Manufacturing Market Market Sales Sales ????

• “Everyone knows that the linear model of innovation is dead … the linear model is no longer credible”

– Nathan Rosenberg, Exploring the Black Box: Technology, Economics and History, Cambridge University Press, 1994

• “Technology draws on scientific knowledge in highly unpredictable ways. … The body of knowledge called ‘science’ consists of an immense pool to which small annual increments are made at the ‘frontier’. The true significance of science is diminished, rather than enhanced, by extreme emphasis on the importance of the most recent increment to that pool.”

– Nathan Rosenberg, Exploring the Black Box: Technology, Economics and History, Cambridge University Press, 1994

• “.. non-technical innovation may well be the 'missing link' that prevents Europe from taking full advantage of new technological opportunities”

– CORDIS (EU), European Innovation Scoreboard commentary, 2004

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Innovation is personal – know the user!Innovation is personal – know the user!

Innovation is: using creativity to add value.

To whom do we add value?

The customer ... the user.

Understanding the user is the most importantIngredient for successful innovation

“To develop the required knowledge of markets and customer needs, companies need a well-developed system of market intelligence that encompasses knowledge of sectoral developments, competitor positioning, technological advances, and regulatory changes. They also need to build strong relationships with individual customers, in which they develop a comprehensive understanding of the customers businesses and their problems, so that they can sell them solutions that meet or exceed their expectations.”

Ahead of The CurveAhead of The Curve, Enterprise Strategy Group (Forfas), 2004, Enterprise Strategy Group (Forfas), 2004

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Innovation is personal - whole-brained innovationInnovation is personal - whole-brained innovation

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Right Brain

Intuition / empathy

Synthesis

Holism / integration

Symbols

Creative expression Uncertainty

Left Brain

Logic

Analysis

Detail

Facts

Order / patterns

Knowledge

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Innovation is personal -Innovation is personal -Products are more than technologyProducts are more than technology

e.g. iPod– technology is no better than Sony, Creative, etc.…– styling and ergonomics is “cool” and “sexy” – user feels good– accessories and colours allow flexibility and convenience– music download and organisation– customisable for a personalised experience (h/w and s/w)– iTunes is essential to the success

It’s not just an MP3 player – it’s a Music for Life system

Users judge a product by the complete, extended-product experience

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Innovation is personal –Innovation is personal –Products are more than the core productProducts are more than the core product

Products as Experience– Hardware-as-a service is common in the internet server market, following on Software-as-a-

Service. The service provides a trouble-free, determinate, reliable experience.– Rolls Royce: “Power by the Hour” provides full maintenance shop contracts on a per flight-hour

rate. The service provides a trouble-free, reliable, determinate user experience.– Goodyear Tyres sell a tyre service where fleet managers pay per mile travelled.– Really successful services don’t just ‘remove hassle’ – they add extra value (beyond the core

and extended products) through meaningful experiences.– Branding projects a promise of experience. Branding has become the domain of (strategic)

product designers more than marketers, because the essence of the brand promise is delivered through the (extended) product.

In mature markets, users look for “solutions” (extended products)that provide a value-adding life-cycle experience.

“Value is now based on unique personalised experiences of customers.Value is shifting from Products to Service and Solutions to Experiences.”

CK Prahalad and MS Krishnan, The New Age of Innovation, 2008

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With sophisticated markets or sophisticated innovations, the consumer wants and is able to define and customise the value received from the product experience –

consumers co-create value.

Note: Mass-customisation requires sophisticated organisation and use of technology.

Products as experienceProducts as experience– Hardware-as-a service is common in the internet server market, following on Software-as-a-

Service. The service provides a trouble-free, determinate, reliable experience.– Rolls Royce: “Power by the Hour” provides full maintenance shop contracts on a per flight-hour

rate. The service provides a trouble-free, reliable, determinate user experience.– Really successful services don’t just ‘remove hassle’ – they add extra value (beyond the core and

extended products) through meaningful experiences.– Branding projects a promise of experience. Branding has become the domain of (strategic)

product designers more than marketers, because the essence of the brand promise is delivered through the (extended) product.

Personalised experiencesPersonalised experiences– Mobile-phone casings and accessories– Mercedes, and many others: manufacturing batch = 1– Facebook, Bebo etc– Goodyear Tyres sell a tyre service where fleet managers pay per mile travelled. Goodyear provides

data analysis feedback to fleet managers on driving habits, miles travelled etc. for each driver.– Amazon.com sends information on new releases of interest to each user according to the user’s

unique profile.

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Innovation is personal – each user is unique!Innovation is personal – each user is unique!

Product Service Individual ExperienceIndividual Experience

Innovation ideas come from understandinghow to add value to the lives of individual users.

Innovation Designers call it Deep User Understanding.

Ethnographic research, market analysis, design discourse,voice-of-customer research, focus groups, strategic conversations …

“Value is now based on unique personalised experiences of customers.Value is shifting from Products to Service and Solutions to Experiences. …

N=1N=1”CK Prahalad and MS Krishnan, The New Age of Innovation, 2008

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Design and ResearchDesign and Research

Basic Research (S&T) provides:Human CapitalAbsorptive capacitySome (limited) IP

Design provides complementary benefits:Application to ALL businesses - goods and servicesEnhanced value added across (nearly) all types of innovationA natural gateway to open innovation – technology “agnostic”Faster return on investment – from idea to cash

Recommend IBIF as complement to SFI,Recommend IBIF as complement to SFI,

with balanced spending budgets.with balanced spending budgets.

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Design-driven innovationDesign-driven innovation

• “The results are compelling: companies that invest in design tend to be more innovative, more profitable and grow faster than those who do not. At a macro-economic level, there is a strong positive correlation between the use of design and national competitiveness.”

• “The document concludes that design has the potential to become an integral part of European innovation policy, a building block of a policy model that encourages innovation driven by societal and user needs, and that builds on existing European strengths such as our heritage, creativity and diversity”

– Design as a driver of user-centred innovation, EU Commission Staff Working Document, April 2009

• “Countries showing a higher performance in creativity and design also show, taking into account differences in per capita income, a higher innovation performance as measured by the EIS Summary Innovation Index.”

– Design Creativity and Innovation: A Scoreboard approach, Inno-Metrics, EU: DG for Enterprise and Industry, February 2009

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ENDThe role of Education in Business Innovation:

How we can improve the innovation performance of business in Ireland

… … beyond Science and Technologybeyond Science and Technology



Leinster House18th June 2009

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Business Innovation – beyond Science and Technology Dr. Frank Devitt 18th June 2009 1 The Joint...

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