Read this document about the models of innovation. Models of Innovation.pdf
1. Using the examples provided, Christensen product examples.docx find 5 similar products/technologies and determine whether they are disruptive or sustaining technology? First state sustaining or disruptive (today) then explain your choice. (minimum of one paragraph of 3-8 sentences for each product).
Include references in APA format and grammar checks. One example is medical testing. What other kinds of medical testing can you find? the second one is related to medical treatments, the third to construction innovations, the fourth to alternative energy products, The fifth and last is Poo-Pourri has many competitors in the bathroom fragrance space, you need to find one that is similar. Optional: select a product or technology that you have learned about in this course or are passionate about as one of the 5 required. State that this is the optional product/technology.
2. Under each similar product you found above, identify what other models (other than Christensen's) describe each product innovation? (such as Abernathy-Clark or Value chain) Explain.
Here is an optional article that may help in defining the terms:
For a deeper dive in a more recent article from Christensen, et. al.
What Is Disruptive Innovation_HBR.pdf
The Innovation Value Chain by Morten T. Hansen and Julian Birkinshaw
From the Magazine (June 2007)
Summary. Reprint: R0706J The challenges of coming up with fresh ideas and
realizing profits from them are different for every company. One firm may excel at
finding good ideas but may have weak systems for bringing them to market.
Another organization may have a terrific…
Executives in large companies often ask themselves, “Why aren’t we
better at innovation?” After all, there is no shortage of sound advice
on how to improve: Come up with better ideas. Look outside the
company for concepts and partners. Establish different funding
mechanisms. Protect the new and radically different businesses from
the old. Sharpen the execution.
Such strategic counsel, however, is based on the assumption that all
organizations face the same obstacles to developing new products,
services, or lines of business. In reality, innovation challenges differ
from firm to firm, and otherwise commonly followed advice can be
wasteful, even harmful, if applied to the wrong situations.
Consider how two different CEOs confronted the innovation
challenges facing their companies. When Steve Bennett joined Intuit,
the maker of the financial software programs Quicken and
QuickBooks, in January 2000, it was a company with lots of ideas—
most collected from outside the organization—but little discipline for
bringing those ideas to market. “We had a lot of energy focused on
learning from customers,” the CEO recalls, “but we were struggling to
decide which ideas would have the highest impact.” To fix this,
Bennett demanded that clear business objectives be set for ideas in
development, and he held people accountable for delivering on them.
Intuit is now just as good at executing on ideas as it is at generating
them. The company’s revenues and profits are up 47% and 65%,
respectively, from three years ago, in part because of this effort.
About the same time that Bennett took the helm at Intuit, A.G. Lafley
became CEO of Procter & Gamble, a company that had traditionally
been good mainly at developing new products internally and bringing
them to market. But a persistent weakness was its insular culture.
Lafley wanted the company to become better at cultivating ideas from
the outside. After five years of investments, P&G now has a state-of-
the-art process for sourcing ideas externally, which includes a global
network of resources and online knowledge-exchange sites. This
process complements P&G’s core competency in executing on ideas
and has helped fuel an increase in sales and profits of 42% and 84%,
respectively, over the past five years.
Bennett and Lafley faced different innovation challenges, which
required different solutions. Intuit and Procter & Gamble probably
would be worse off today had their CEOs simply imported the latest
best practices in innovation management. Now consider a computer
hardware company we analyzed. Buying into the latest advice about
innovation—companies should focus on generating more ideas—
managers set up a series of formal brainstorming sessions. Idea
generation wasn’t the problem, however. The company had
inadequate screening and funding processes: Concepts never
flourished, nor did they die. The brainstorming sessions actually
aggravated the innovation process—employees were pumping more
and more ideas into an already badly broken system.
Even the strongest dose of the best analgesic on the market won’t
help mend a broken bone. Likewise, companies can’t just import the
latest fads in innovation to cure what’s ailing them. Instead, they need
to consider their existing processes for creating innovations, pinpoint
their unique challenges, and develop ways to address them. In this
article, we offer a comprehensive framework—“the innovation value
chain”—for doing just that.
The innovation value chain is derived from the findings of five large
research projects on innovation that we undertook over the past
decade. We interviewed more than 130 executives from over 30
multinationals in North America and Europe. We also surveyed 4,000
nonexecutive employees in 15 multinationals, and we analyzed
innovation effectiveness in 120 new-product-development projects
and 100 corporate venturing units.
The innovation value chain view presents innovation as a sequential,
three-phase process that involves idea generation, idea development,
and the diffusion of developed concepts. Across all the phases,
managers must perform six critical tasks—internal sourcing, cross-
unit sourcing, external sourcing, selection, development, and
companywide spread of the idea. Each is a link in the chain. Along the
innovation value chain, there may be one or more activities that a
company excels in—the firm’s strongest links. Conversely, there may
be one or more activities that a company struggles with—the firm’s
weakest links. (See the exhibit “The Innovation Value Chain: An
The Innovation Value Chain: An Integrated Flow
Viewing innovation as an end-to-end process rather than
focusing on a part allows you to spot both the weakest
and the strongest …
Our framework asks executives to take an end-to-end view of their
innovation efforts. It discourages managers from reflexively
importing innovation practices that may address a part of the chain
but not necessarily the one that the company needs to improve most.
It centers their attention on the weakest links and prompts executives
to be more selective about which practices to apply in their quest for
improved innovation performance.
The innovation value chain can also help managers realize that a
perceived innovation strength may actually turn out to be a weakness:
When managers target only the strongest links in the innovation
value chain—heeding popular advice for bolstering a core capability
in, say, idea generation or diffusion—they often further debilitate the
weakest parts of the chain, compromising their innovation
Think Innovation Value Chain
To improve innovation, executives need to view the process of
transforming ideas into commercial outputs as an integrated flow—
rather like Michael Porter’s value chain for transforming raw
materials into finished goods. The first of the three phases in the
chain is to generate ideas; this can happen inside a unit, across units
in a company, or outside the firm. The second phase is to convert
ideas, or, more specifically, select ideas for funding and developing
them into products or practices. The third is to diffuse those products
and practices. Let’s examine the activities and challenges associated
Executives understand that innovation starts with good ideas—but
where do these concepts come from? Managers naturally look first
inside their own functional groups or business units for creative
sparks; they usually find they have a pretty good sense of what’s close
at hand. The bigger sparks, they discover, are ignited when fragments
of ideas come together—specifically, when individuals across units
brainstorm or when companies tap external partners for ideas.
Cross-unit collaboration—combining insights and knowledge from
different parts of the same company in order to develop new products
and businesses—is not easily achieved. Decentralized organizational
structures and geographical dispersion make it hard for people to
work across units. Managers at Bertelsmann, the large German global
media company, took a staggering three years to catch up with
Amazon in launching an online bookstore, in large part because of
their company’s decentralized makeup. Bertelsmann’s autonomous
publishing houses, book and music clubs, and distribution and
multimedia divisions could not and did not collaborate on this new
Companies also need to assess whether they are sourcing enough
good ideas from outside the company and even outside the industry—
that is, tapping into the insights and knowledge of customers, end
users, competitors, universities, independent entrepreneurs,
investors, inventors, scientists, and suppliers. Many companies do
this poorly, resulting in missed opportunities and lower innovation
productivity. Sony, for example, had an impressive track record
throughout the 1980s for developing new-to-the-world products such
as the Walkman and PlayStation. But by the 1990s, the company’s
engineers were becoming increasingly insular. As CEO Sir Howard
Stringer recalled in a 2005 New Yorker article, the engineers started
to suffer from a damaging “not invented here syndrome,” even as
rivals were introducing next-generation products such as the iPod
and Xbox. As a result of their belief that outside ideas were not as
good as inside ones, they missed opportunities in such areas as MP3
players and flat-screen TVs and developed unwanted products—
cameras that weren’t compatible with the most popular forms of
memory, for instance.
Generating lots of good ideas is one thing; how you handle (or
mishandle) them once you have them is another matter entirely. New
concepts won’t prosper without strong screening and funding
mechanisms. Instead, they’ll just create bottlenecks and headaches
across the organization. In many companies, tight budgets,
conventional thinking, and strict funding criteria combine to shut
down most novel ideas. Employees quickly get the message, and the
flow of ideas dries up. When Stewart Davies became head of R&D at
BT in 1999, the UK telecommunications group was in financial
trouble. Davies reviewed operations within R&D and recalled being
staggered by the inventiveness—and the frustration—of the people he
met. There was no shortage of good ideas at the company, he
concluded. But inadequate commercial skills and a shortage of seed
money for high-risk projects made it difficult for anyone to move
forward with ideas for new technologies.
Other companies have the opposite problem: Managers don’t apply
their screens strictly enough. The organization overflows with new
projects of varying quality (often underfunded and understaffed) and
no clear sense of how the initiatives fit into the overarching corporate
strategy. For instance, in 1999 the UK media company Emap
earmarked approximately £100 million to create a digital division to
develop Internet-based offerings for its magazine and radio
businesses. Worried that it was falling behind its competitors, the
company aggressively invested in whatever digital business ideas
were put forward, with little regard for business cases or budgets. By
2000, Emap had 43 separate businesses focused on online media
offerings, with projected revenues in excess of £100 million. In
reality, revenues never rose above £20 million. Most of the businesses
shut their doors; and the division reported losses of £60 million in
2001 and £17 million in 2002.
No matter how well screened or funded, ideas still must be turned
into revenue-generating products, services, and processes. Concepts
that have been selected for further development often go nowhere
because they’re languishing in a part of the organization that’s too
busy doing other things or that fails to see their potential. For
instance, to address the burgeoning demand for energy-efficient
lighting, consumer appliances, and heating systems, General Electric
invested in a small energy-management services business in Canada
in the 1990s. Despite the business’s early successes in winning
contracts and some market share, there was no natural home for it
within the product-focused GE. The business struggled along as a
misfit for a few years before being shut down, and GE missed an
opportunity to gain early-mover advantage in a growing industry.
Concepts that have been sourced, vetted, funded, and developed still
need to receive buy in—and not just from customers. Companies
must get the relevant constituencies within the organization to
support and spread the new products, businesses, and practices
across desirable geographic locations, channels, and customer groups.
In large companies with many subsidiaries and organizations, such
diffusion is far from automatic. At Procter & Gamble in Europe, for
instance, the focus several years ago was on extensive product and
market testing to prove “superior total value,” and the company
placed ultimate authority for launching new products on the
shoulders of its national brand managers. These policies led to
painfully slow rollouts. Because of P&G’s rigorous market-test
requirements, managers launched Pampers diapers in France an
astonishing five years after the product was first introduced in
Germany. Meanwhile, Colgate-Palmolive, noticing P&G’s early
success in Germany, launched a me-too line of diapers in France,
gaining dominant market share there, two full years before P&G
introduced Pampers in that country.
Focus on the Right Links
When executives view their companies’ innovation processes as a
value chain, engaging in a link-by-link analysis, they may be surprised
by what they learn. The managers we’ve worked with are often quick
to tout their particular innovation strengths: “We’re really creative.”
“We’re very good at developing products fast.” Perhaps—but these so-
called innovation strengths can actually lead to weaknesses in the
process if they’re not complemented by equivalent strengths in other
areas. Consider the computer hardware manufacturer we referred to
earlier. At any point in time, there were at least 50 very good ideas for
new products and businesses floating around the company. But
because managers did not screen the ideas properly—funding the best
ones and killing the others—few ideas took hold, and new ones just
kept coming. The engineers at the firm became increasingly
frustrated, seeing their creative talents go to waste. The
brainstorming sessions that senior management implemented to help
mend fences with the engineers only contributed to the problem. By
failing to recognize the weak link (idea selection) and focusing more
time and resources on an already strong link (idea generation), the
management team undermined the company’s overall innovation
Similarly, it doesn’t matter how great a company’s idea-selection
process is if only a few good concepts are on the table or if the
subsequent development process is weak. It’s also a waste of time and
money to develop state-of-the-art capabilities for rolling out products
or services when there’s nothing worthwhile to diffuse.
A company’s capacity to innovate is only
as good as the weakest link in its
innovation value chain.
In short, a company’s strongest innovation links are simply no good if
they prompt the organization to spend money with little hope of solid
returns or if the attention paid to them further weakens other parts of
the innovation value chain. Managers need to stop putting all their
effort into improving their core innovation capabilities and focus
instead on strengthening their weak links. Indeed, our research
suggests that a company’s capacity to innovate is only as good as the
weakest link in its innovation value chain. (See the exhibit “Which
Innovation Strategy Is Right for You?”)
Which Innovation Strategy Is Right for You?
There are many excellent innovation perspectives, as this
small sample of published works indicates. The
innovation value …
Organizations typically fall into one of three broad “weakest link”
scenarios. First is the idea-poor company, which spends a lot of time
and money developing and diffusing mediocre ideas that result in
mediocre products and financial returns. The problem is in idea
generation, not execution.
By contrast, the conversion-poor company has lots of good ideas, but
managers don’t screen and develop them properly. Instead, ideas die
in budgeting processes that emphasize the incremental and the
certain, not the novel. Or managers adopt the “1,000 flowers”
approach, letting ideas bloom where they may but never culling them.
The need is for better screening capabilities, not better idea
Finally, the diffusion-poor company has trouble monetizing its good
ideas. Decisions about what to bring to market are made locally, and
not-invented-here thinking dominates. As a result, new products and
services aren’t properly rolled out across geographic locations,
distribution channels, or customer groups. For such companies, the
real upside lies in aggressively monetizing what it has already been
able to develop, not in paying further attention to idea generation or
Here’s a closer look at the three typical weakest-link scenarios and
some possible best practices that would be appropriate for managers
Fixing the Idea-Poor Company
Why do some companies experience a shortage of good new ideas?
Our research indicates it’s partly due to inadequate networks.
Managers fail to forge quality links with others outside their
company. Or people prefer to talk to their immediate colleagues
rather than reach out to counterparts in other departments or
divisions. These companies need to build external networks as well as
internal cross-unit networks to generate ideas from new connections.
Build external networks.
There are two fundamentally different approaches to building
external networks, each of which fulfills different objectives. The first
approach is to develop a solution network, geared toward finding
answers to specific problems. This is what A.G. Lafley mainly has
built at P&G. In-house product developers translate customer needs
into technology briefs that include descriptions of the problems to be
solved. The technology briefs traverse the company’s external
network—which comprises technology scouts, suppliers, research
labs, and retailers worldwide—to see whether someone, somewhere
can offer solutions to the problems posted. (For more details about
P&G’s external solution network, see Larry Huston and Nabil
Sakkab’s “Connect and Develop: Inside Procter & Gamble’s New
Model for Innovation,” HBR March 2006.)
Likewise, the pharmaceutical company Eli Lilly has spearheaded
InnoCentive (www.innocentive.com), a solution-seeking Web site
that Lilly, P&G, and other companies use to find answers to specific
technical or scientific problems. The companies post questions—for
instance, “How can we protect fatty acids from oxidation?”—that any
of the more than 10,000 engineers, chemists, and other scientists
registered at the site can tackle. The individual or group offering the
best acceptable solution gets a financial reward; the winner of the
fatty acids challenge received $20,000.
The second approach is to build a discovery network geared toward
unearthing new ideas within broad technology or product domains.
This is what Siemens, the Germany-based electronics and
engineering company, has done in Silicon Valley. Since 1999, it has
sited a 15-person scouting unit in Berkeley, California. Members of
the Technology-to-Business (TTB) Center cultivate personal
relationships with scientists, doctoral students, venture capitalists,
and entrepreneurs as well as government labs and corporate research
centers. Through these relationships, they learn about emerging
technologies and business ideas. Their real value as scouts, though,
lies in their ability to match emerging technologies to specific
Siemens businesses. For instance, TTB scouts learned about
technology for optimizing the quality of service on computer
networks from a Columbia University doctoral student. They were
able to deliver that knowledge to the appropriate parties—first to
Siemens’s telecommunications division, and then, after that industry
experienced an unrelated downturn, to the company’s factory
communications division. That group aspired to meet the customer
need for guaranteed real-time traffic over wireless local area
networks (WLAN). As a result of TTB’s diverse external network,
Siemens was able to release the first-ever WLAN product with real-
time guarantees and take a leading place in that market.
The objective of discovery networks should be to learn, not to tell.
Consider how Intuit developed its Simple Start edition of QuickBooks
in 2003. Developers wanted to observe the owners of one- or two-
person businesses: Exactly how did they manage their accounts? How
did they handle their payables and receivables? Intuit created a fact-
finding process: A ten-member development team visited with small
business owners in 40 “follow me homes,” where the developers
experienced firsthand the business problems facing users. Many
customers didn’t need or want certain higher-end accounting
functions in their software, the developers learned, so the team set
out to simplify QuickBooks. They tested six successive stripped-down
versions of the software in the follow-me-homes before arriving at
the Simple Start edition—which proved to be a best seller for Intuit.
Whether managers are developing solution networks or discovery
networks, the key metric for them to keep in mind is diversity, not
number, of contacts. The goal here should be to tap as many unique
sources of information and ideas as possible as opposed to interacting
with many similar contacts.
Build internal cross-unit networks.
A complementary approach to generating new ideas from outside
companies is to build cross-unit networks inside organizations. After
all, employees who don’t know one another can’t collaborate on new
ideas. And the occasional cross-functional brainstorming session
won’t do the trick: It unfairly assumes that people who are unfamiliar
with one another will be able to work together to generate ideas on
demand. What’s needed is an ongoing dialogue and knowledge
exchange between people from different units.
P&G has done this for years, resulting in many successful cross-
fertilized product and business creations. Take, for example, the
company’s development of Olay Daily Facials. The idea was to make a
face cream that was an excellent cleanser and moisturizer. Experts
from P&G’s skin care, tissue and paper towel, and detergents and
fabric softeners groups joined together, and their combined
knowledge about surfactants, substrates, and fragrances helped P&G
create and launch a highly successful new product.
These kinds of collaborations don’t happen by chance; they are the
result of well-established organizational mechanisms. P&G has
developed 30 communities of practice. Each comprises volunteers
from different parts of the organization and is built around an area of
expertise (such as fragrance, bleach, analytical chemistry, or skin and
hair science). The teams solve specific problems that are brought to
them, and they participate in monthly technology summits with
representatives from P&G’s ten business units. The company has also
posted an “ask me” feature on its intranet, where employees can
describe a business problem or need. Their questions or concerns get
pushed out to 10,000 P&G employees worldwide and are ultimately
funneled to those people with relevant expertise. At a more
fundamental level, P&G promotes from within and moves people
across countries and units. As a result, its employees build extensive
personal cross-unit networks.
Fixing the Conversion-Poor Company
Why do companies find it difficult to convert good ideas into
products and services? Most companies have no shortage of formal
systems for managing ideas. The number and diversity of people
involved, however, can create a risk-averse and bureaucratic process
that grinds execution to a halt. As one senior executive in a financial
services company told us, “If I want to get a new idea to market
quickly, I take personal control of it, and I steer it through the system.
If I want to kill an idea, I send it through the formal process.” Two
innovation practices can go a long way toward addressing the idea-
conversion problem—multichannel funding and safe havens.
Most companies have no shortage of
formal systems for managing ideas. The
number and diversity of people involved,
however, can create a risk-averse and
bureaucratic process that grinds
execution to a halt.
In conversion-poor companies, innovation stalls when, say, the boss
doesn’t like a particular new idea or doesn’t consider it good enough
to supplant an existing initiative that’s already accounted for in the
budget. That’s usually the end of it; another potential line of business
or method for improving corporate performance falls by the wayside.
A multichannel funding model, however, opens up different options
outside the boss’s immediate purview—from small discretionary pots
of seed money all the way to full-scale venture funds.
Consider the success of Shell Oil’s GameChanger unit: It was set up in
1996 to fund the development of radical ideas that might lead to
entirely new businesses, and it has been a great success over the past
decade. Today it operates across all the major divisions of Shell
(exploration and production, retail, and chemical) and has an annual
seed-funding budget of $40 million. Leo Roodhart, a corporate-level
executive, oversees the 25-person unit. Shell employees submit their
ideas to the GameChanger Web site. Unit members review all ideas,
and, over the course of six months to a year, the proposals go through
various rounds of vetting, prototyping, and funding. Employees take
time away from their day jobs to explore their ideas further, and they
are compensated for their efforts. As proposals turn into business
plans, employees may receive between $300,000 and $500,000 in
initial funding from GameChanger. Project milestones are formally
set up, and clear deliverables and progress reviews are required at
each stage. Ventures that achieve “proof of concept” (about 10% of all
original submissions) leave GameChanger at that point and are either
moved into one of the divisions (where most projects go) or into Shell
Technology Ventures, a corporate spinout vehicle.
Since GameChanger was formed, some 1,600 ideas have been
submitted. The flow of proposals is constant, and the unit has built up
a track record of success: forty percent of all development projects in
the exploration and production business started out as GameChanger
Some companies are better than others at building safe havens for
their emerging concepts. Such havens can be critical to the successful
conversion of good ideas into profitable products or businesses.
Consider the situation at a UK technology company we’ll call Tenco.
Frustrated by its anemic top-line growth, the firm in 2000
established a separate unit focused on developing new business ideas
that were clearly relevant to Tenco’s overall strategy but that would
probably stagnate in the line organization. Of the 13 ventures the unit
was responsible for sheltering, nine went on to become viable
businesses with combined annual revenues in excess of £100 million.
Tenco’s executives saw their role as shielding these new businesses
from the short-term thinking and budget constraints that pervaded
the rest of the organization, but without isolating them. On the one
hand, the management team built a governance structure that kept
the new businesses close to the mainstre
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