The Australian Business Foundation is proudly sponsored by:

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The Australian Business Foundation is proudly
sponsored by
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Innovation carriers new faces of
competition Mark Dodgson
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The importance of innovation What the CEOs say
Innovation is our lifeblood new ideas and new
products that make consumers lives better,
build customers sales and profits, and build
PGs market share, sales, profit and Total
Shareholder Returns AG Lafley, Chairman,
President CEO, Procter Gamble. The
companies that know how to develop things are
ultimately going to create the most shareholder
value. Its as simple as that J. Immelt,
Chairman CEO, General Electric You get a
position in the future by investing, creating
something new, and staying ahead of the
competition. So its simple invest or die C.
Barrett, CEO, Intel
300
250
billions of constant 1996 dollars
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1961
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1994
2002
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The importance of innovation What the CEOs say
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You can only win the war with ideas, not with
spending cuts Klaus Kleinfeld, President and
CEO, Siemens The world is changing very fast.
Big will not beat small anymore. It will be the
fast beating the slow Rupert Murdoch. Chairman
and CEO, News Corporation We will fight our
battles not on the low road to commoditization,
but on the high road of innovation Howard
Stringer, Chairman and CEO, Sony
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billions of constant 1996 dollars
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New research on the innovation process
New challenges, but new opportunities for firms
in all sectors of all sizes to be innovative
to reduce its risk
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• In a nutshell
• Research finds innovation
• in technology, products, markets, organization
  
• business models
• occurring in an increasingly broad range of
  sectors,
• including services
• produced by a wider range of contributors,
• including consultancies, SMEs, start-ups
• involving new connections combinations firms,
  
• technologies services
• supported by new kinds of technology.

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Innovation is occurring in an increasingly broad
range of sectors, including services
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Service firms facts myths
Services account for three-quarters of
value-added employment in advanced
economies Services are the only part of the
economy with expanding employment Services
occupy the top the bottom of the economy Some
services industries are the most innovative parts
of advanced economies.
Salter and Tether, 2006
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Types of service firms
Traditional usually small weak
technologically, with undemanding customers
limited managerial skills. Systems firms
typically large sophisticated banks,
retailers, insurers, airlines, with heavy
dependence on technology excellent managerial
skills. Knowledge intensive firms all sizes
legal accountancy, engineering design,
advertising, market research management consulta
ncy, with heavy dependence on professional
employees close connections to customers.
Salter and Tether, 2006
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Types of KISA and their Role in Innovation
Routine Services
Compliance Services
Network Services
Adapted from OECD, 2006
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Innovation is produced by a wider range of
contributors, including consultancies, SMEs,
start-ups
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from closed to the new distributed, or open
innovation model
interaction between participants
19th Century
20th Century
21st Century
Dodgson, Gann Salter, 2003
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New strategiesOpen Innovation at Procter
Gamble

• Large investment in RD but frustrated by the
  NIH syndrome
• New model of RD organisation shift from RD to
  Connect Develop
• Historically, 20 of innovations from external
  sources, 35 now and trying to get to 50 by 2010
• New practices
• InnovationNet
• Technology Entrepreneurs Network
• Global Technology Council

Source Dodgson, Gann and Salter, RD Management,
2006
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Fractal Technologies - Innovation in mining
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Cognitive Mapping in Project-Based Organisations
Intensifying Innovation
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Innovation involves new connections
combinations firms, technologies services
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Blurred industrial corporate boundaries The
closer integration of manufacturing services
Manufacturing Industries
Service Industries
Integrated Solutions
Competing through service provision
Generating efficiencies in activities
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Source Zhang Dodgson, 2006
New combinations
Mobile Payment Technologies
Advances in Mobile communications
Advances in payment solutions
Convergence
m- commerce
e-cash
MMS
smart cards
Data
Plastic cards
SMS
Cheque
Voice
Cash
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The innovation factory

• IDEO
• Design consulting firm
• Founded in 1978
• Helps companies innovate
• Today 350 people in 6 locations
• Contributed to the design of over 3000 products
  for hundreds of clients in 40 industries
• Specialized in the innovation process

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The innovation brokerage
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Innovation is supported by new kinds of technology
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Three generic types of technology

• Innovation Technology
• e.g.
• Modelling Simulation
• Artificial intelligence
• Data searching mining
• Rapid Prototyping
• Visualization/Virtual Reality
• Grid technologies

Innovation Technology

• Production Technology
• e.g
• CNC
• FMS
• CAM
• CIM
• CIP
• Coordination Technology
• e.g.
• MRP
• ERP
• PMS
• TQM
• JIT

• Information Technology
• e.g.
• Computers Servers
• Open systems
• Bandwidth
• Sensors
• Communications
• Technology e.g.
• Internet/www
• WiFi/3G
• EDI

Information Communications Technology
Operations Manufacturing Technology
Source Dodgson, Gann and Salter, Think, Play,
Do, OUP, 2005
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The importance of enabling technologyConnect
Develop at PG

• the ability to . . . virtually create the
  brand story, to virtually create products, to
  take virtual models and test them interactively
  with consumers over the Internet . . . to
  simulate the storage shelf with that virtual
  product on it and see whether people buy it . . .
  this is the future, the future . . .
• Larry Huston,
• Vice-President of Knowledge and Innovation
  PG Worldwide

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Arup
Employs 7000 in 32 countries Works on several
thousand projects simultaneously Problem solving
capabilities are based on abilities of employees
to develop nurture their own professional
networks Strong management of knowledge skills
networks
KM Examples Arup People
Skills Networks

• Yellow pages of expertise
• Who knew what was unknown
• Collection of individual Web pages, describing
• skills capabilities of staff
• Sets of information containing
• List of skills
• Presentations to external bodies
• associations
• Areas of interest hobbies.
• Self-regulated social pressure not to
  over-claim

• Problem-solving ideas sharing about
• practices new technologies
• Each Network is organized differently
• different websites, tools practices
• Concern may become insular fail to
• pick common problems
• Solution create new networks when
• key issues emerge, spanning a range
• of skills areas
• eg Extreme Event Skills Networks

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Arup Fire

• 6 fire engineers in 1998, now 200 worldwide
• Shift toward performance-based regulation
• Key clients are high profile architects
• Fire engineering as a pre-emptive design tool
• Simulation creates new design options
• visions about what is and what is not safe
• Using elevators for egress

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Conclusions
Innovation is a core source of competitive
advantage. It has become much more open complex
involves many more players presenting new
threats opportunities. Knowledge intensive
services provide new competitive opportunities
for firms in all kinds of sectors all sizes
in manufacturing, resources services in
new combinations especially for innovation
brokers the constructors of new
connections. Technology can enable the carriage
of innovation from firm to firm sector to
sector.
Cont
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Conclusions
Innovation is open to all, its risks can be
ameliorated through working effectively with
carriers of innovation, including - partners,
especially demanding customers innovative
suppliers - consultancies/service providers
(but be demanding!) - innovation technology
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The Australian Business Foundation is proudly
sponsored by
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MTV Networks Europe

• Over 2000 staff. Average age lt24
• 22 offices from Stockholm to Rome,
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• Over 100 million viewers
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• IT Department of 350