Innovation - Managing Trade-offs

With innovation there are inherent trade-offs.

Two examples

i) public outsourcing innovation, ie rather than relying on a few experts to solve specific innovation problems, it is opened up to anybody, ie the public, eg Linux software development, etc. The advantages of this include

- increased probability of developing a novel solution

- can lead to faster, more efficient and more creative problem-solving.

Public outsourcing

"...is simply a tool whose strength (exploiting large numbers of diverse problem solvers (is a benefit in some contexts (highly diffused knowledge base, relatively inexpensive ways to test proposed solutions, modular system) but in others (concentrated knowledge base, expensive testing, system with integral architectures)..."

Gary Pisano, 2015

ii) co-creation, ie customer involvement in the innovation process. It is claimed that customer involvement can reveal insights that can lead to novel offerings. However, others have claimed that customers do not always know what they want. Two examples:

- Henry Ford claim that it he asked his customers (users of horse-drawn vehicles), what they wanted. The answers would around improved horse-drawn service, not an automobile!!!

- Steve Jobs (Apple) had a similar view of customer research.

Trade-offs in 'demand pull' and 'supply push'

Demand pull involves finding customers' highly challenging problems and determining how the organisation's core competencies can solve them. Important elements of this are customers' imagination and risk willingness.

Supply-push, on the other hand, involves developing something new, like technology, and then finding or creating a market. An example of this is the integrated circuit

"...invented in the late 1950s by Texas Instruments and Fairchild semiconductors. Both came up with the idea of putting model transistors on a chip as a way to solve a reliability problem, not to spawn smaller computers. In fact, with the exception of the military, there was little demand for integrated circuits. Producers of computers, electronics equipment, and telecommunications systems preferred discrete transistors, which were cheaper and less risky. To help create demand, Texas Instruments invented and commercialised another device: the hand-held calculator..."

Gary Pisano, 2015

The trade-off between demand pull and supply push is that if you choose demand pull, you could miss out on technologies in markets which have not yet emerged. If you choose the supply push, you could create technologies that will never find a market.

Trade-offs in innovation processes, ie 'phase-gate' vs 'unbridled creativity'

The phase-gate is a structured approach which injects a degree of predictability and discipline while unbridled creativity can be very messy.

"...Highly structured phase-gate processes, which tend to focus on resolving as much technical and market uncertainty as possible early on, work well for innovations involving a known technology for a known market. But they generally do not allow for the considerable iterations required for a combination of new markets and new technologies. These uncertain and complex projects require a different kind of process, one that involves rapid prototyping, early experimentation, parallel problem-solving and iteration..."

Gary Pisano, 2015

Clarity needs to be developed around trade-ofs or priorities as part of the innovation strategy

 

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