Twisted - Entrepreneurship, Innovation & Invention

I recently read an article that referenced Jeffrey Phillips' article, "Innovation, Invention and Entrepreneurs," and its wisdom. Having spent a great deal of time dealing with innovation, invention and entrepreneurs, I was intrigued. Although I support Mr. Phillips desire to clarify these keywords, after reading his article I believe that some further clarification is warranted.

Lets start with Mr. Phillips comment that "[a]n entrepreneur is a person who starts a new business." In order to analyze this statement, we must first define what is meant by entrepreneur and by close association “innovation.”  The terms “entrepreneur” and “innovation” are widely used, yet often misunderstood by the public, academics, professionals and government officials.  Ask ten people about the difference between an entrepreneur and an innovator and you will get ten answers.  According to The National Commission on Entrepreneurship, entrepreneurs are “men and women who lead small companies that are based on an innovation and are designed to grow quickly — at an annual rate of 15 to 20 percent.”   Two key aspects of this definition are “fast growth” and “innovation.”  According to leading scholars and professionals, innovation deals with an idea or invention and the commercialization of that idea or invention. Another way to think about this is that entrepreneurship is a sub-set of innovation. Every entrepreneurial venture is an example of innovation, but not every innovation deals with entrepreneurship. 

For example, what makes an entrepreneur different from a person who starts up a standard pizza place? The pizza place owner launches a business based on an existing product concept and proven business model. An entrepreneur launches a business based on either a new product concept and/or new business model. In either case the entrepreneur is dealing with some type of innovation from incremental to radical. The pizza place owner is not dealing with any innovation at all.

Although the pizza place owner and entrepreneur are both taking risks when they launch their businesses, the entrepreneur deals with a greater degree of uncertainty. Uncertainty is a classic characteristic of the innovation process. Most innovations have some level of technical, market, resource and organizational (TMRO) uncertainty associated with the process. If you compare the degree of TMRO uncertainty between the entrepreneur and pizza place owner, you'll find that TMRO uncertainty is higher for the entrepreneur.

With so many books and articles written about innovation, invention and entrepreneurship one would think that we would all have a clear understanding of these basic concepts, but from professionals to academics these terms are often twisted to fit the needs of the moment.

Innovation Types - Part 5 - Sustaining Innovation

The following is Part Four of a discussion on some of the more popular innovation types including:

• Architectural Innovation - Part One
  
• Discontinuous Innovation - Part Two
  
• Disruptive Innovation - Part Three
  
• Radical Innovation - Part Four
  
• Sustaining Innovation
• Incremental Innovation

With each innovation type, I attempt to capture what the authors had written about their innovation type and break down the innovation type into the dimensions which are described in an earlier blog - 27 Questions to Ask When Analyzing Innovations. In addition, I ordinal scale each dimension from 0 to 5. With 0 indicating that the innovation type either is not dependent on a certain dimension or the answers to the questions are negative.

The innovation type that is covered in Part Five is . . .

Sustaining Innovation

• Author: Clayton M. Christensen
• Book/Article: The Innovator's Dilemma, The Innovator’s Solution, Seeing What’s Next

From The Author
Sustaining innovations are often confused with incremental innovations. They are not the same. Incremental innovations are small incremental improvements to a current product or process. Sustaining innovations can be incremental or radical improvements to a current product or process. Christensen and O'Connor among other authors refer to this type of innovation.

The Invention

• Element Change – 0 or 5
  Depending on whether or not the invention is incremental or radical, will depend on whether or not there is a dramatic change to the elements.

• Systems Change - 0 or 5
  Depending on whether or not the invention is incremental or radical, will depend on whether or not there is a dramatic change to the system.
  

• Performance - 0 or 5
  Depending on whether or not the invention is incremental or radical, will depend on whether or not there is a dramatic change in performance.
  

• Benefit - 0
  These types of innovations are not about offering a benefit that is desirable to non-consumers or over-served customers.
  

Commercialization

• Target Customers - 1
  Targets under-served and well served customers.
  

• Need Creation - 0
  Attempts to fully address current customer’s needs.
  

• Value Network/Industry Shakeup - 1
  Industries remain stable.
  
  Production systems tend to be the same, although a radical invention may require new equipment and systems.
  

• Market Size & Growth - 1
  Targets large current markets. Generally not high growth unless it’s a radical innovation.
  

In the next blog I will cover Incremental Innovation. I welcome your comments and thoughts.

Innovation Types - Part 4 - Radical Innovation

The following is Part Four of a discussion on some of the more popular innovation types including:

• Architectural Innovation - Part One
  
• Discontinuous Innovation - Part Two
  
• Disruptive Innovation - Part Three
  
• Radical Innovation - Part Four
  
• Sustaining Innovation
• Incremental Innovation

With each innovation type, I attempt to capture what the authors had written about their innovation type and break down the innovation type into the dimensions which are described in an earlier blog - 27 Questions to Ask When Analyzing Innovations. In addition, I ordinal scale each dimension from 0 to 5. With 0 indicating that the innovation type either is not dependent on a certain dimension or the answers to the questions are negative.

The innovation type that is covered in Part Four is . . .

Radical Innovation

• Author: Richard Leifer, Christopher M. McDermott, Dr. Gina O'Connor, Dr. Lois S. Peters, Mark Rice, and Robert W. Veryzer
• Book/Article: Radical Innovation: How Mature Companies Can Outsmart Upstarts

From The Author
“…radical innovation concerns the development of new businesses or product lines – based on new ideas or technologies or substantial cost reductions – that transform the economies of a business. . . Thus a radical innovation is a product, process or service with either unprecedented performance features or familiar features that offer potential for significant improvements in performance or cost” (O’Connor et al.,).

The Invention

• Element Change – 0 or 5
  A radical innovation can take place on either the invention side or the commercialization side. This means that it can be either a radical invention or have a radical impact on the commercialization end. In that case the elements of the invention will be either be a dramatic leap forward or like a disruptive innovation, be technologically straightforward.

• Systems Change - 5
  This can be either be a totally new system, a real breakthrough over the current systems or be a novel way to integrate existing technologies.
  

• Performance - 5
  It may offer unprecedented performance.
  

• Benefit - 5
  It may have familiar features that offer significant benefits.
  

Commercialization

• Target Customers - 0 or 5
  A radical innovation can target underserved and well served customers with a radical invention. For example a new light bulb that could produce the same lumens at a tenth of the energy consumption, would be a radical invention that targets the same customers who currently use light bulbs. However, a radical innovation may target non-consumers or over-served customers. For example a light bulb that produced one fourth the lumens at the a 10th of the current energy consumption, and produced no heat would not be of interest to the current light bulb consumer but might be of interest to non-consumers or over served consumers.
  

• Need Creation - 0 or 5
  If targeting underserved or well served customers, then the needs are being fully addressed. If targeting non-consumers or over-served customers, then the needs of the current customer are not being addressed.
  

• Value Network/Industry Shakeup - 5
  “…radical innovations create such a dramatic change in products, processes, or services that they transform existing markets or industries, or create new ones” (O’Connor et al.,).
  

• Market Size & Growth - 5
  Radical innovations are high growth opportunities. Initially the market size tends to be small and then explodes as innovation reaches mainstream customers.
  

In the next blog I will cover Sustaining Innovation. I welcome your comments and thoughts.

Innovation Types - Part 3 - Disruptive Innovation

The following is Part Three of a discussion on some of the more popular innovation types including:

• Architectural Innovation - Part One
  
• Discontinuous Innovation - Part Two
  
• Disruptive Innovation - Part Three
  
• Radical Innovation
• Sustaining Innovation
• Incremental Innovation

With each innovation type, I attempt to capture what the authors had written about their innovation type and break down the innovation type into the dimensions which are described in an earlier blog - 27 Questions to Ask When Analyzing Innovations. In addition, I ordinal scale each dimension from 0 to 5. With 0 indicating that the innovation type either is not dependent on a certain dimension or the answers to the questions are negative.

The innovation type that is covered in Part Three is . . .
Disruptive Innovation

• Author: Clayton M. Christensen
• Book/Article: The Innovator's Dilemma, The Innovator’s Solution, Seeing What’s Next
  

From The Author
“The disruptive innovation theory points to situations in which new organizations can use relatively simple, convenient, low-cost innovations to create growth and triumph over powerful incumbents. The theory holds that existing companies have a high probability of beating entrant attackers when the contest is about sustaining innovations. But established companies almost always lose to attackers armed with disruptive innovations. . . Disruptive innovations introduce a new value proposition. They either create new markets or reshape existing markets” (Christensen, Anthony and Roth).

The Invention

• Element Change – 0
  “Generally disruptive innovations were technologically straightforward, consisting of off the shelf components put together in a product architecture that was often simpler than prior approaches” (Christensen).

• Systems Change - 5
  See comment under “Elements”. Disruptive innovations offer a different package of attributes.
  

• Performance - 5
  Disruptive innovations tend to introduce products and services that are not as good as existing products and services.
  

• Benefit - 5
  Disruptive innovations offer other benefits - they are simpler, more convenient and less expensive (Christensen and Raynor).
  

Commercialization

• Target Customers - 5
  There are two types of disruptive innovations “low end” and “new market”. Low end disruptive innovations target those customers who stopped paying for further product improvements (overshot customers). New market disruptive innovations target those customers who lack the ability, wealth or access to conveniently and easily accomplish an important job for themselves (non-consumers) (Chrstensen, Anthony & Roth).
  

• Need Creation - 5
  In both types of innovations they are addressing unaddressed needs. In both cases they do not address the current customer’s needs. Instead, they tend to under perform. In the disk drive example given in the Innovator’s Dilemma, the incumbent’s customers were never interested in the disruptive innovation, until down the road when the disruptive innovation became good enough. Instead these innovations address the needs of non-consumers and over-served customers.
  

• Value Network/Industry Shakeup - 5
  Disruptive innovations disrupt industries. Incumbents either ignore or move up market when disruptive innovations are first introduced. Eventually, when the innovations meet the mainstream customer’s needs, then the entrants take over and incumbents crumble.
  
  To the extent that these innovations produce a new set of activities along the value chain, the procedures are dramatically altered. However, since many of these innovations are based on existing technologies the equipment and processes to produce the innovation are not that different.
  
  Disruption has a paralyzing effect on industry’s leaders. These firms became leaders because they knew how differentiate themselves through their activities. They optimized these activities toward producing better products and when presented with a disruptive innovation that requires a different set of activities, they are crushed under the weight of their own previously successful strategies. Disruptive innovations create a whole new value network that is geared to commercializing these inventions. They tend to include whole new distribution channels, although the suppliers in many cases are similar.
  
  “Competence destroying discontinuities are so fundamentally different from previously dominant technologies that the skills and knowledge base required to operate the core technology shift. Such major changes in skills, distinctive competence, and production processes are associated with major changes in the distribution of power and control within firms and industries.” This redistribution of power and control within industries results in new players, new relationships and thus a dramatically new value network.
  

• Market Size & Growth - 5
  Initially the market size tends to be much smaller than the mainstream market. This is one of the reasons that entrants often win, as incumbents ignore or flee up market in the face of such a small market. Growth tends to be high.
  

In the next blog I will cover Radical Innovation. I welcome your comments and thoughts.

Innovation Types - Part 2 - Discontinuous Innovation

The following is Part Two of a discussion on some of the more popular innovation types including:

• Architectural Innovation
• Discontinuous Innovation
• Disruptive Innovation
• Radical Innovation
• Sustaining Innovation
• Incremental Innovation

With each innovation type, I attempt to capture what the authors had written about their innovation type and break down the innovation type into the dimensions which are described in an earlier blog - 27 Questions to Ask When Analyzing Innovations. In addition, I ordinal scale each dimension from 0 to 5. With 0 indicating that the innovation type either is not dependent on a certain dimension or the answers to the questions are negative.

The innovation type that is covered in Part Two is . . .
Discontinuous Innovation

• Author: Julian Birkinshaw, Rick Delbridge and John Bessant
• Book/Article: A leap into the unknown, Managing the Challenge of Discontinuous Innovation
  
  
• Author: Michael L. Tushman and Philip Anderson
• Book/Article: Technological Discontinuities and Organizational Environments

From The Author
“Technological change is a bit-by-bit, cumulative process until it is punctuated by a major advance. Such discontinuities offer sharp price-performance improvements over exiting technologies” (Tushman and Anderson). Discontinuous innovation “involves the development of competencies and network linkages with other firms that take it away from its existing trajectory of development. . . [and it] assumes some form of abrupt change in the business environment that makes it necessary or possible for the firm to break out of its exiting trajectory of development” (Bessant, Birkinshaw, and Delbridge).

The Invention

• Element Change – 5
  A discontinuous innovation represents a major technical advance. Although the authors do not specifically state whether or not the advance takes within the elements or the system, they do give examples such as the automobile, plain paper copier, transistors, and turbojets.

• Systems Change - 5
  A discontinuous innovation represents a major technical advance. Although the authors do not specifically state whether or not the advance takes within the elements or the system, they do give examples such as the automobile, plain paper copier, transistors, and turbojets.
  

• Performance - 5
  The authors (Tushman & Anderson) classify discontinuous innovations into two classes. The first is Competence Enhancing discontinuity and the second is Competence destroying discontinuity. In the case of Competence Enhancing discontinuity the invention dramatically outperforms the current invention as it dramatically alters previously obtainable price/perform ratios.
  

• Benefit - 5
  In the case of Competence Destroying innovations the invention introduces some benefit that was previously unobtainable. A benefit that gives new entrants competitive advantage.
  

Commercialization

• Target Customers - 0
  The authors do not write about this dimension.
  

• Need Creation - 0
  The authors do not write about this dimension.
  

• Value Network/Industry Shakeup - 5
  Competence Destroying innovations disrupt industry structure (Tushman & Anderson). “Skills that brought product class leaders to preeminence are rendered largely obsolete; new firms founded to exploit the new technology will gain market share at the expense of organizations that, bound by traditions, sunk costs, and internal political constraints, remain committed to outmoded technology” (Tushman & Anderson).
  
  “Competence destroying discontinuities are so fundamentally different from previously dominant technologies that the skills and knowledge base required to operate the core technology shift. Such major changes in skills, distinctive competence, and production processes are associated with major changes in the distribution of power and control within firms and industries.” This redistribution of power and control within industries results in new players, new relationships and thus a dramatically new value network.
  
  In competence enhancing discontinuities the opposite is true. The invention builds on the industry’s know how and relationships, which are strengthening as the incumbents consolidate leadership while the industry sees an increase in barriers to entry.
  
  Tushman and Anderson break up each class of discontinuity into either product or process. “Competence destroying process discontinuities represent a new way of making a given product. . . Competence destroying process breakthroughs may involve combining previously discrete steps into a more continuous flow (eg. float glass) or may involve a completely different process” (Tushman & Anderson 9).
  

• Market Size & Growth - 4
  Sales variability decreases in the case of competence enhancing innovations as small firms drop out of the industry and entry barriers are raised (Tushman & Anderson). Sales variability increases in the case of competence destroying innovations as incumbents experience drop in sales and new entrants experience dramatic growth.
  

In the next blog I will cover Disruptive Innovation. I welcome your comments and thoughts.

Innovation Types - Part 1

The following is Part One of a discussion on some of the more popular innovation types including:

• Architectural Innovation
• Discontinuous Innovation
• Disruptive Innovation
• Radical Innovation
• Sustaining Innovation
• Incremental Innovation

With each innovation type, I attempt to capture what the authors had written about their innovation type and break down the innovation type into the dimensions which are described in an earlier blog - 27 Questions to Ask When Analyzing Innovations. In addition, I ordinal scale each dimension from 0 to 5. With 0 indicating that the innovation type either is not dependent on a certain dimension or the answers to the questions are negative.

The innovation type that is covered in Part One is . . .
Architectural Innovation

• Author: Rebecca M. Henderson and Kim B. Clark
• Book/Article: Architectural Innovation - The Reconfiguration Of Existing Product Technologies And The Failure Of Established Firms

From The Author
Architectural Innovation is “innovation that changes a product’s architecture but leaves the components, and core design concepts that they embody, unchanged. The essence of an architectural innovation is the reconfiguration of an established system to link together existing components is a new way” (Henderson and Clark).

The Invention

• Element Change – 0
  The elements’ core design functions (and associated scientific and engineering knowledge) remain unchanged. A core design function would be the primary function of a particular element. For example in a fan, the electric motor would be an element within the fan’s system and the primary function would be to deliver power. If there is a change in an element, it will be some subsidiary design parameter – such as size – this creates new interactions and new linkages within the invention’s system.

• Systems Change - 5
  The linkages and/or interactions between elements are changed. This is often triggered by a change in an element within the system. There is a significant impact on the relationship between elements within a system, not on the technologies of the elements.
  

• Performance - 3
  The authors [Clark & Henderson] do not address this dimension directly; however they imply that architectural innovations can bring about significant performance improvements. While describing the impact the new entrants had in the Photo lithographic Aligners industry the authors wrote “their performance has improved dramatically over the last twenty-five years . . . although the core technologies have changed only marginally since the technique was first invented.”
  

• Benefit - 0
  No mention is made about an architectural innovation offering a significant benefit.
  

Commercialization

• Target Customers - 0
  The authors do not write about this dimension.
  

• Need Creation - 0
  The authors do not write about this dimension.
  

• Value Network/Industry Shakeup - 5
  Architectural innovations tend to significantly impact the industry, as it often creates problems for established firms. Firms not only fail to recognize an invention as a possible architectural innovation, they also need to build and apply new knowledge. According to the authors, “architectural innovation, in contrast, places a premium on exploration in design and the assimilation of new knowledge. . . New entrants, with smaller commitments to older ways of learning about the environment and organizing their knowledge, often find it easier to build the organizational flexibility that abandoning old architectural knowledge and building new requires” (Henderson and Clark)
  
  The authors do not specifically reference value networks, however they do write about firms developing expertise and knowledge about the activities needed to produce a certain product. The activities can be thought of as activities within the value chain. Since Architectural Innovations require that new activities be developed, it can be concluded that Architectural Innovations can significantly impact an industry’s value network.
  

• Market Size & Growth - 0
  The authors do not write about this dimension.
  

In the next blog I will cover Discontinuous Innovation. I welcome your comments and thoughts.

Social Media, Innovation & Entrepreneurship Daily Twitter Digest #6

Of Facebook, MySpace, YouTube and Twitter: http://bit.ly/13N7gx

Twitter API getting location data: http://bit.ly/13XvMn

Has Generation Y developed social networking into a Social Media Revolution? http://bit.ly/148XYL

Poll: Should the SEC ban social media from college stadiums? [UPDATED] http://bit.ly/WaKb6

Social Media as a Dating Tool: http://bit.ly/KQVnP

Communing With God Via Social Media, Tweets: Sacrilegious or Wise? http://bit.ly/3F5F8

Fight to Own Social Media Heats Up: http://bit.ly/pqCxI

Good advice - Social media: You have to be there: http://bit.ly/cEGp2

"Don't mistake invention for innovation." http://bit.ly/HkUMz

Kinda' funny. "Kick social media addiction by embracing social media" http://bit.ly/48iDUf

"Good ideas have no genitals" http://bit.ly/3YBkPZ