Free Business Essays - Low Technology Innovation
The Success of Low-Technology Innovation
This essay sheds light on the success of low-technology innovation. A literature review was conducted to understand the nature of innovation. Shared the definition of low-technology according to OECD categories and other definition of low-technology. A study on human thinking process. How human beings think and act. Innovation is often the result of being able to satisfy human needs and desires.
In experience economy, product is nothing but appeasement of the brain and mind. The influence of mind, brain, body, and society makes the final decisions. Case studies on companies that have succeeded in gaining market share with low-technology and low-budget offerings. Analyze innovative improvements that could increase the organizational quality and process performance.
A pattern and principles of low-technology and low-budget innovation for wider application were emerged from this project to benefits potential innovative improvements. Key factors affecting low-technology innovation success were identified. This can bring about greater alignment of motivation and integration. The better the innovation system functions are fulfilled, the greater the chance of success.
I Acknowledgements
Sincere thanks to my project supervisor, Prof. Tan Kay Chuan for his direction, assistance, and guidance. Thanks are also due to all my friends and colleagues for their encouragement and support. Finally, words alone cannot express the thanks I owe to Siew Lian, my wife, for her endless patience, encouragement, and support.
Chapter 1 Introduction
Innovation need not require high-technology and large budgets. It is often the result of being able to satisfy human needs and desires where relatively little capital investment is needed and the technology needed to create the innovative products or services is already widely available. The objective of this project is to derive the principles of low-technology and low-budget innovation for wider application.
Low-technology activities account for about 97 percent of all economic activity in the region. All low-technology industries are innovative. They generate significant proportions of their sales from new and technological changed products.
Many low-technology industries and products are surviving and growing because of technological upgrading, high-grade design skills, and the intensive application of knowledge to innovation. They have unique forms of industrial organisation and knowledge creation, complex links to science and technology knowledge infrastructures, and important regional dimensions.
To prepare an effective innovation case study and an innovative major design project you need to understand the nature of innovation.
What is innovation
Innovation is a new product or process that has an impact on the market. It is about finding new ways to create customer value. Innovation can be an outcome of changing technology, new business model or both. Radical and incremental changes to processes, products, or services may be termed as innovation. A key challenge in innovation is maintaining a balance between process and product innovations where process innovations tend to involve a business model while product innovations develop customer support.
Why innovate
In today’s rapid technology changes and intensively competitive environment, higher levels of productivity are achievable only through continuous education and innovation. Perceived quality is kept alive by consistent innovation. Change is the only thing constant these days. Much of this change is due to growth in technology. Neither the strongest nor the most intelligent species will survive, but the one most responsive to change. Growth in technology takes place through continual innovations. Innovation is essential and necessary for value creation. The succession of innovations grows the whole economy. Innovation is intended to make people better off.
How innovation occurs
For innovation to flourish, an environment that encourage staff to gain new insights need to be created, need to do things differently and to experiment, with the goal of achieving better outcomes. It also requires staff to be comfortable with change, to move out of their comfort zones and to take calculated risks. Maximizing human potential through continuous learning and education in this borderless and knowledge-based economy will underpin the drive for innovation, which is vital in sustaining growth.
How to innovate successfully
There are methods and tools for innovation. Define the ideal outcome first; what you want the product or process to perform. Next, is to figure out how to best utilize your organization’s resources to work towards that goal. Lastly, run scenarios and devise models to try to achieve the desired outcome.
Developing meaningful products is a key to long-term success. Do not limit innovations to incremental changes of existing products. Actively anticipate the products and services that people will need. Take a holistic approach by focusing on excellence in presales, post sales, service, and many other areas. Create an emotional attachment to the products and/or services, generating brand loyalty in the process. Offer a unique product that also has high value.
Where innovation occurs
Innovation occurs in all organisations including universities, hospitals, multi national companies, government bodies, food industries, warehouses, retail outlets, telecommunications etc. In the organisational context, innovation may be linked to performance and growth through improvements in efficiency, productivity, quality, competitive positioning, market share, etc. Innovation is not just about new products or services, it can also occurs in processes, policies and the measures taken to implement them.
Measures of innovation
There is no definitive metric to measure innovative success. The measurement of innovation success varies by companies and industries. R&D and patent creation are the most common metrics used. R&D is an input of the innovation process. R&D metric refers to the amount of money spent on research and development correlates directly to the amount of innovative processes, products, and services.
Assessing innovation activity through research expenditures alone does not provide a comprehensive measure of innovation. Patents are a more direct measure of innovation output than R&D spending. Not all innovations with the propensity to patent being likely to vary across sectors and classes of firms. Many patents never translate into commercially viable products and the economic impact of individual patents may differ considerably. Other possible approaches include innovation surveys that attempt to measure more aspects of the innovation process and gaining popularity in shareholder return.
Success of innovation
The success of innovation emerges from the disciplined application of a proven innovation methodology. It does not depend on genius. Efficient and repeatable innovation methodologies are used by innovators to create successful innovations.
Barriers of innovation
Two standing out hindrances to innovation are culture and leadership. Inventions will not break through to the market place if culture is not set-up to accept new ideas and creative contributions. Although innovation is increasingly seen as a powerful way of obtaining competitive advantage and more secure approach to defending strategic positions, innovation may also have a negative or destructive effect as new developments clear away or change old organisational forms and practices.
Organisations that do not innovate effectively or chose not to innovate may be destroyed by those that do. In the rapid change of the technology and the economics, the approach of doing nothing is rarely an option. There is a great deal of uncertainty in innovation, made up of technical, market, social, political, and other factors. Hence, innovation typically involves risk.
Innovation in different sector of industries
An innovation’s impact decides its qualification regardless of the type, style, and industry of innovation. Innovation need not be big, complex, or new. It can be small, simple, or slightly different from the existing. Innovation can be in terms of design and technical achievement.
Examples of innovation in different sector of industries
The steam engine sparked the Industrial Revolution in England, whose effects spread throughout Western Europe and North America, and eventually changed the world.
Henry Ford’s innovation of a moving assembly line revolutionalized manufacturing and ushered in a new era of mass production.
Through its creative designs of the digital watch, Swatch successfully captured a large slice of the watch market.
Harley Davidson adopted emotive approach to innovation. The company created an emotional attachment to its products and services, and generated brand loyalty in its processes.
Apple MP3 players were designed with one wheel to serve all functions, making iPod much more elegant than previous Japanese MP3 players, which were equipped with many buttons.
Instead of just selling cars, Lexus focused on excellence in pre-sales, post-sales, service and many other areas.
Pharmaceutical innovation often occurs as a series of incremental improvements in safety, efficacy, and utility with the same general class of medicines that together have a significant impact on patient care.
Chapter 3 Definition of Low-Technology
The question of differentiation, from a marketing strategy perspective, between high technology and lower levels of technology and the resulting implications for marketing are largely unanswered.
A more precise understanding and definition of what low technology is would be useful. High-tech and low-tech environments can be distinguished from one another by at least two key attributes: the technological intensiveness of strategies adopted by firms in the environments, and the volatility of the environments.
Low-tech environments are characterized as having a high concentration of industries with low research and development component. Firms are subject to relatively low levels of environmental volatility in which they have product-driven strategies. Consistent with this, OECD invented an economic classification that has a spectacular career – the concept of high-technology, medium-technology, and low-technology industries.
This taxonomy was based on the intensity of the industries research and development, which is the ratio of research and development expenditure to output. Industries with ratio less than one percent were classified as low-tech.
This means industries that are not research-intensive are referred to low-technology sectors. Another consistent, Hayes and Wheelwright (1984) define low-technology firms as those that have a material or product orientation and follow those uses into a variety of markets. Other definition is, low-technology can be practiced or fabricated with relatively little capital investment.
The knowledge of the practice can be completely comprehended by a single individual, free from highly advanced or specialized systems. The products in this sector are those that employ familiar and accepted technology, whose acceptance and use are generally understood. The training period for use of such products is relatively short.
Chapter 4
Study of Human Needs and Desires
Innovation is often the result of being able to satisfy human needs and desires. We need to know how customers think and buy their products. In an experience economy, product is nothing but appeasement of the brain and mind. The five senses are just inputs to stimulate our brain and mind. The influence of mind, brain, body, and society makes the final decisions. Customers thinking process is dominated by emotions.
They make choices using rational thinking and automatic selection process. For rational thinking, customers compare attributes, place values, calculate, and then make decisions. For automatic selection process, customers are stems from habits and unconscious forces, and influence by social and physical context. When customers purchase, 95 percent of their thinking, including the memories and emotions that lead to behaviour, take place in their unconscious mind.
They are unaware of this thinking and therefore cannot articulate it. Unconscious mind in action appears to over rule by our brain and consciousness. Our stated intent and actual behaviour is usually different. Customers use their conscious level of thinking primarily to make sense of their behaviours after the fact, rather than to guide or control purchases. Leading companies are "mining the unconscious" with remarkable results.
New mindset and tools are introduced to help innovators. They are: (a) develop research questions that speak to the unconscious brain of the customer, (b) measure customer reactions to marketing stimuli and alter positioning strategies or advertising, (c) evoke valuable meaning through a customer's metaphors and instil those images in brand communications, (d) build "consensus maps" that reflect a market segment's universal thinking and reengineer them to boost customer satisfaction, loyalty, and sales, and (e) understand how their minds work and how they can think in creative new ways. The fate of product launch is determined by the complex interplay between the innovator and customer thinking.
Chapter 5
Case Studies of Low Technology and Low Budget Innovation
The case studies focused on both product and process innovations in different low-technology industries. These case studies are based on publicly available documents, books, articles, journals, catalogues, product specifications, internet, companies’ profiles, and media. Twenty case studies have been conducted. The list of case studies is shown in Appendix A. The firms selected were distributed across various industries.
In the course of the analysis of the case studies, found that most low-technology innovations are incremental. The finding does not justify low-technology innovation as market driven and high-technology innovation as research driven. Low-technology innovations are usually regarded as less knowledge intensive. In the course of the analysis of the case studies, a pattern of these cases was emerged.
Ability to use, transform and advance the knowledge, which is already available. Ability to integrate new knowledge. Capability to recombine available knowledge and technology elements in order to realise enhanced products and process structures. Nine principles were derived after the research. Key factors affecting low-technology innovation success were identified. Examples of the case studies were co-related to these nine principles and key factors.
Chapter 6
Analysis of Low Technology and Low Budget Innovation
In the course of the analysis of the case studies, found that most innovations in low-technology industries are incremental. A value-added business process, this involves making minor changes over time to sustain the growth of a company without making major investments and sweeping changes to product lines, services, or markets in which competition currently exists.
While breakthroughs are important, incremental innovations also contribute to enhancing the competitiveness and meeting the customers’ needs. The process of continuous incremental improvement is the predominant mechanism of technological innovation and product development in most manufacturing. Companies have found it easier to work in the incremental space than to undertake semi-radical and radical changes. Incremental innovations appear safer and more comfortable because they are more predictable.
OECD invented an economic classification that had a spectacular career - the concept of high-technology, medium-technology, and low-technology industries. This taxonomy was based on the industries research and development intensity. Industries with research and development/turnover ratio of more than four percent were categorised as high-tech. Those between one and four percent were medium-tech, and less than one percent were low-tech. This schema has become widely used in business, economic analysis, and policy discussion.
It links with other classifications that seek to differentiate ‘knowledge intensive’ or ‘science-based’ industries. Characteristics specific to non-science-based innovations might be disclosed when one analyses the drivers of technical change. The driver of product innovation is customer or market demand and the driver of process innovation is regulatory incentives or requirements. Research and development activities did contributed, but these were not significant to describe as a trigger for change. This finding does not justify a classification that described innovation in low-technology industries as market driven and innovation in high-technology industries as research driven.
In the globally leading economies, the societal production process becomes more and more knowledge intensive that the relevance of knowledge intensive industries for these economies increases.
High-technology industries are identified with knowledge intensive sectors, whereas the low-technology industries are usually regarded as less knowledge intensive sectors. This hold true for innovations in the respective industries too. In low-technology innovation, only certain types of knowledge are applicable.
A pattern of these cases emerged in the course of the analysis of the case studies.
The ability to use, transform and advance the knowledge, which is already available in the product and process innovations context. This ability plays a decisive role regarding the gradual modification of specific products functions.
The ability to integrate new knowledge. Number of companies examined, continue to pick up new, externally generated knowledge, and integrate it into their existing knowledge base, consequently developing new products and processes on this enhanced knowledge base.
The knowledge they pick up include practical experience of the sales personnel about completely changed marketing conditions, research results from engineering concerning new machining procedures and potential product materials.
The capability to recombine available knowledge and technology elements in order to realise enhanced products and process structures. This ability is of particular importance to the service-oriented type of company. Here existing product modules are constantly reassembled to new product variants.
Chapter 7
Principles of Low Technology, Low Budget Innovation
Nine principles were derived after the research. Each of the principles is invaluable guides for bringing about swift and continual low-technology and low-budget innovation for wider application. Applying these principles allow innovators to develop conscious competence and to create a successful and imbedded process. The nine principles are:
- Do it on a small scale. The requirements for people and money are modest if the scale is small. Focus on one specific thing; do not do too many things at once. Initial innovations are rarely perfect. Frequent changes and adjustment are necessary. This is a trial and error process involving continuous development and adjustment. Mistakes are inevitably a part of this process. Doing this on a large scale only invites large-scale mistakes, unnecessary high costs, and waste of precious resources. It is obviously better and more economical to do this on a small scale than risk big mistakes. Such process is inevitably slow, especially when the required knowledge and experience is being made in the process as it develops, and cannot be acquired through textbooks. A large number of small improvements can create a huge marketplace success.
Case Study: Bette Nesmith Graham started on a small scale
Company: Gillette
Liquid paper is a very simple example of low-technology and low-budget innovation. In its simplest and most basic original form, Liquid Paper is white paint in a nail polish bottle. Bette Nesmith Graham was a secretary. She never intended to be an inventor. In the days before Liquid Paper, the only way to correct a typing error was either to erase it with eraser or type all over again.
The eraser did not do that good a job; the paper would tear easily as it was a harsh eraser. Graham ended retyping a lot. One day, while watching artists painted over their mistakes on canvas, she had a thought, why could not typists paint over their typing errors. Therefore, with a small brush, she applied some white paint over her typing error without retyping the entire sheet. From there Liquid Paper was born. Bette Nesmith Graham started this on a small scale.
By 1967, it had grown into a million dollar business. She believed money to be a tool, not a solution to a problem. In 1979, the company was sold to Gillette for $47.5 million. These days, through research and development, we have a very different product in the bottle from the original white paint. We also have different methods of application such as correction tape and correction pen.
- Simple and understandable. An innovation to be effective, the product, process, or service has to be simple and understandable. As mentioned earlier, initial innovations are rarely perfect. It is not economical to repair or fix if the product, process, or service is complicated. It should be focused on a specific need that it satisfies, on a specific result that it produces. The innovation that creates new uses and new markets should be directed towards a specific, clear, designed application.
Case Study: Simple, functional and understandable
Company: Design Tray Interior (S) Pte Ltd
Managing director Jacqueline Suah was planning to shift to another apartment. She found that the wooden platform she had constructed in her apartment need to strip to meet the housing regulations. It set her thinking, if only she could have something that can be easily lifted and shifted just like table or chair. After a rigorous process to determine the configuration, material composition, cost, and usability, her concept became reality.
She has developed the 2 by 2 ft wooden modules. Simple and functional with minimal installation, the versatile modules can open up into neat storage boxes or assemble to form a raised platform. Topped with a mattress, the platform becomes a bed and topped with cushions, the platform becomes a sofa set.
A coffee table and fishpond can also be transformed from the wooden modules. If customers are tired of the clutter in their rooms, they can easily re-arrange the wooden modules to have a fresh look, unlike the design of the traditional furniture that is fixed. Ms Suah has developed a system so unique that Design Tray Interiors was granted an international patent. The innovative design was impressed by the Japan Industrial
Design Promotion Organisation that it awarded SystemindsTM Platform a Good Design Award for 2003. SystemindsTM Platform also attained a merit award in the 20th ASEAN Furniture Show. The 2 by 2 ft wooden modules sold well with its targeted audience. Following its breakthrough in Singapore, the company is ready to head overseas.
- Eliminate all costs that do not add competitive value to a product. Methods include just-in-time inventory control, waste reduction, total quality management, statistical process control, minimize space, eliminate inventories, and integrate quality control into the production process. Lean management can be applied to this principle. Lean management has been used quite successfully in the manufacturing industries and recently it is used in health-care setting. A study of more than 90 plants in 14 countries, representing half of the world's automobile-assembly capacity, showed that lean production has significantly improved productivity, quality, product development, and model range. Such efficiencies have translated into both cheaper and better-value products, leading to rapid growth. The implementation of lean production has also resulted in the reduction of managerial roles, more responsibility given to engineers and workers and a concomitant increase in multitask activities.
Case Study: Reduction of board waste
Company: Sime Rengo
Sime Rengo is one of the leading local suppliers of corrugated boxes to the manufacturing sector. Board waste is one of the major shop floor wastes in this organisation. It is measured in terms of kilograms per day and is converted to dollar amount based on the cost of production. The making of the board involves two processes. The first roll of paper goes through the corrugator for alignment of walls.
Another roll of paper goes through the corrugator to form zigzag flutings between the two layers of paper. The edges are secured with lamination or glue. In the past, workers did their sampling at the end of whole process. They would cast out the rejects after all the paper had gone through the machine. This was costly, especially when the whole lot of board had to be rejected because the edges were not secured, or the walls were not properly aligned throughout the process.
Now, the workers check every process right at the beginning of the corrugation. They try to use less board samples and even recycle the paper during sampling by using the other side of the paper for the printing process. As a result, the average reject rate of board was reduced significantly from 2.4% to 1.3% per month. This translates into a reduction of board waste from 1250 kg per day to 700 kg per day, accounting savings of $96,000 per year.
- Educate customers in product usage. Showing and telling is more effective than just showing or just telling. When customers see the products being used in real situations, they are stretched outside of their normal consciousness. User training may need to be given especially with dynamic products, new products or those where the operator needs to be skilled. These should be considered in the design stage and arrangements made for the preparation of user manuals and training schemes.
Case Study: Educate customers in product usage
Company: OSIM International Ltd
OSIM uses innovative selling approaches and constantly enhances its innovation capabilities to produce successful products with superior designs, features, and quality. Instead of just displaying its products, OSIM demonstrates its products to the customers, let them try, and feel its products.
OSIM also placed leg massagers at shopping centres for shoppers to massage their legs when they are tired. Being innovation-driven, the group was ranked first in Business Times’ Corporate Transparency Index 2002. Awarded 5th strongest brand at the inaugural Singapore Brand Award 2002. Selected by Forbes Global List as one of the “Top 200 Best Under a Billion” companies outside U.S. Finalist in the Most Transparent Company Award (Commerce) in Securities Investors Association (Singapore)’s Investors’ Choice Award 2002.
Capitalising on its strategic marketing focus and niche business concept, OSIM aims to increase its worldwide point-of-sale network to 1,000 by 2008 generating revenues of over one billion Singapore dollars.
- Eco-friendly products. Going GREEN is not just about saving the planet; it is also about savings for the customers. Evaluate and optimize the full life cycle of products and processes, to approach the state of natural systems in which there is no waste. Reduced resource intensity and rely on natural energy flows. Like the living world, innovator designs should derive their creative forces from perpetual solar income. Incorporate this energy efficiently and safely for responsible use. Innovator can deliver a side message on environmental awareness via product using recycled materials.
Case Study: Environmental friendly products
Company: Technocracker Pte Ltd
Technocracker was founded by three Singaporean using pneumatic technology to innovate and invent new celebratory products that are safe and realistic in simulating the sonic and visual impacts of the ‘explosion’ for the public to use during celebration and grand ceremonies. It is the only company to invent and manufacture Technocracker. Technocracker was invented to replace the traditional firecracker, which due to the explosive nature had been restricted and even ban from use in many countries.
Technocracker is safe to use, as it does not make use of explosive to create the explosion. It is environmental friendly, as it does not contain any hazardous air pollutants. It is also recyclable after use; making it a Green Product. Technocracker is far more superior than the traditional firecracker as it can be used for both outdoor and indoor celebrations, rain or shine. Currently, Technocracker has filed for patent application in 33 countries.
- Requires a vision. There must be a driving motivator compelling the organization to develop the systems, resources, and culture to support low-technology innovation. A vision helps to define the portfolio of projects and the criteria that innovator need to use to evaluate new opportunities. Having a clear vision translated in a portfolio of projects and check regularly whether that portfolio still makes sense helps innovator to weed out the bad projects.
Case Study: Vision being translated into goals
Company: L’Oreal
L’Oreal is a successful French cosmetics company. The chairman’s vision of being the world leader in cosmetics is translated into concrete goals for branding and research. In research, it is translated into broad and yet
ambitious goals such as gaining an in-depth understanding of healthy skin and hair at a cellular level; pinpointing biological processes behind the skin ageing process, sun damage, pigmentation as well as natural hair colour, greying and loss; to synthesizing active molecules which protect, repair and colour, and translating this into new products in all cosmetic fields.
- Applicability to target audience. Make the product, process, or service customer-centred. Listen to customers to permeate the design and development of new ideas. The more an innovator has the customer in mind, the greater the chance the concept will be accepted and used. Innovator should focus on creating value for the customers, market facts and the intangible. Interaction with customers and understand their problems and needs is one of the best stimulators of new possibilities, learn how to step outside the normal perception processes and the motivation for implementing them.
Case Study: Customer-centred
Company: Amazon
Amazon’s one-click online ordering makes customer more productive at the purchase stage of the cycle, it rates highly on simplicity and convenience. The delivery options allow packages to be received at home
or at work. Ordering through Amazon is secure, which reduces the risks of transacting, and the company’s returns policy allows customers to return books if they feel they have made a mistake buying them. Amazon challenge is to make the customer more productive, make their life simpler and more convenient, reduce their risks, and let them enjoy themselves at every possible stage from purchase through to disposal. That is Amazon key to success.
- Adherence to low budget. Inventing is a combination of brains and materials; the more brains you use, the less material you will need, said American engineer Charles F. Kettering. Innovators must stretch the design dollar, be creative, and get down to the bolts and nuts of design. Innovation is not necessary new. Innovators can use the widely available technology to create the innovative products or services. They need to think alternatively, alter the normal approach, and launch an ordinary `object in new direction. Innovator can economically design a product to deliver few functions, appropriately executed to prevent unnecessary costs, waste of resources, and even ruin the whole project. A project that obviously has saved money can promote a positive work ethic as well as its more obvious commercial objective.
Case Study: Product that deliver few functions
Company: Victorinox
Swiss Army Knife is a product that delivers few functions. In its classic version it supplies the following: a small blade, scissors, a nail file that double as a screwdriver, a toothpick, tweezers, corkscrew, bottle opener, wire stripper and a small saw. These are not the best but they are the most integrated. That value proposition has made the product a standout for more than a century.
- Lowering the cost without lowering the standards. Innovators should not burden future generations with vigilant administration of potential danger due to the careless creations of products, processes, or standards. Safe products should be created to long-term value. Focusing on time to market and low cost should not be used as an excuse for not doing proper due diligence. A detailed market analysis should be done by innovators to give them a clearer and better idea of the market opportunity and avoid many quality problems later on.
Case Study: Zero defects bearing
Company: Belgian Company
A company in Belgium illustrates the importance of invisible process excellence. This company makes castings for bearings that are buries deep
inside huge machines made by one of its customers, Caterpillar. The bearings themselves do not cost much, but the cost to Caterpillar can be very large if the machine breaks down because of a bearing failure. This Belgian company differentiated itself from its competitors by using advanced testing equipment to check every single casting. Any flaw, the castings will require to be melted again. Thus, the company has invested in the strategically important invisible process of monitoring product quality. The result is bearings for Caterpillar that has zero defects and a lot of business for the Belgian foundry.
Chapter 8
Factors That Influence Low-Technology Innovation Success
Key factors affecting low-technology innovation success were identified. This can bring about greater alignment of motivation and integration to ensure innovation success. The better the innovation system functions are fulfilled, the greater the chance of success.
Success of current business model. Successful companies are prone to resist change and be complacent. They react without any regard for future implications. The attitude of self-satisfaction becomes inability to grow internal ventures. The days of continuous well-being seldom continue. The future will not be the same. Even successful companies need to change constantly.
Case Study: Business model change
Company: Dell
An example of a business model change, Dell focused its efforts on changing the business model of the customer interface in retail personal computer sales. It radically changed the business model. Dell sold directly to customers, offered new value propositions and significantly changed the supply chain and cost structure.
This was an innovation of major proportions, which continues to influence the direction of the personal computer market. A successful innovator knows how and when to change business models and technology individually or together.
Non-supportive infrastructure. It would take innovator with extraordinary patience and commitment to pursue low-technology innovation that lacked adequate support. Most of the time, innovator is faced with threats, and those threats to some extent depend on the organisation’s infrastructure.
This infrastructure includes purposes, vision, objectives, structure, strategies, management attributes, attitudes toward managing uncertainties and risk, role of policies and practices, leadership, managing essential partnerships, communication, and support for low-technology innovation.
Case Study: Exert Strong Leadership on Innovation Direction and Decisions
Company: Microsoft
To achieve success in innovation, strong leadership support from top management is required. Bill Gates of Microsoft is an example of CEO who droves his management team and his company’s innovation performance to the highest level. Decisions on innovation strategies are made by the CEO and top management team.
These include the amount of investments, the level of risks, and the balance of the innovation portfolios. The decisions are communicated to enable managers and members of the innovation team to execute throughout the organization. In innovation management, the leadership on top has to depend upon. The team at the top wants it to happen and trust its people to make it happen. It cannot be an espoused theory where senior managers preach it but do not believe it. Innovation
has to be a theory in action; senior managers must be committed and follow their commitment with actions. Then the other managers throughout the company will be motivated to follow suit.
Refuse to obsolete products. Not many organizations attempt to obsolete their products when sales and profits are exceeding expectations. As the world becomes more technologically advanced, the life of a product will become shorter and shorter. When new advances outdate the product, it is important before the product goes stale, identify the change approaching. Low-technology innovation needs to bring something new to the market. Replacing an existing product will increase revenue as well as profit.
Case Study: Product renewals and program innovation
Company: Sentosa Underwater World
Effective marketing strategy and product renewal resulted in the increased of visitors visited Sentosa Underwater World. The visitors increased by 5 percent to 1.57 million in 2005. The three programs of Sentosa Underwater World; ‘Living in the Ocean’, ‘Dive with the Sharks’ and ‘Swim with the Dolphins’ were popular with the visitors.
‘Living in the Ocean’ which received positive feedback for its educational value, attracted many overseas students for its ever-popular sleepover program. In February 2005 Lunar New Year, the award-wining martial arts exponents performed underwater Wushu at Sentosa Underwater World. During
that period, Sentosa Underwater World was packed with visitors. In May 2005, The Sea Angel exhibit was launched in Sentosa Underwater World. The Sea Angel is a unique, shell-less, jelly-like sea snail. The Sea Angel exhibit was housed in a specially constructed setting that replicates the pristine and icy waters of the Northern Hemisphere where they are originated. The experience of the visitors was enhanced by The Sea Angel exhibit.
In November 2005, to thrill the visitors, an exhibit displaying more than 10 species of crabs was launched in custom-built tanks with informative and interactive displays. Those among displayed are the world’s largest land crab; the daunting giant spider crab and the coconut crab. The opening of new Underwater Worlds in neighbouring countries posed a challenge to Sentosa Underwater World. Nevertheless, to provide all visitors with a unique fun-filled experience, Sentosa Underwater World is actively engaged in program innovation and regular product renewals.
Risk of losing entire capital investment. Innovators should prepare themselves to cope psychologically with the consequences of failure before taking the plunge. They should consider the risk-reward trade-off before putting their personal assets and their mental well-being at risk. Innovators can lower the risk by gaining more experience, having a sound innovation model, maintaining objectivity, and managing expenses. Always have a contingency plan to cope if innovation fails.
Case Study: Risk of losing start up capital
Company: Pasir Ris Fishing Pond
An ex-operator of Singapore’s Pasir Ris Fishing Pond lost thousand of dollars in less than one year and was forced to break its three years contract with the Singapore Parks and Recreation Department in 1995. The external environment was totally against them and there was nothing much they could do to overcome the odds.
They were troubled by the unexpected Indonesian forest fires that have created a prolonged haze that blanketed Singapore for months. The unhealthy haze led to poor air quality warnings and kept many anglers away from their outdoor fishing activities. Although this company was facing much greater odds than others were, they could still be in operation today if they have possessed contingency funds that could tide them over months of low average business.
Fierce competition. The quality and speed of innovation will determine the shape of the market in the approaching years. While organisation may be well positioned in the current market, competitors could change or new competitors could enter, especially if the competitive dynamics change drastically.
Innovators can approach two classes of innovation strategies. Implement significant competitive advantages that its competitors will not be easily or quickly match. Innovators have built-in barriers to adoption that will prevent others from adopting the same approach. Sometimes less-than-optimum conditions do not allow the innovators to adopt the first strategy.
For example, if the external competitive environment is extremely intense or uncertain, it is advisable to adopt a second strategy. A strategy that typically includes more incremental innovation in the portfolio, and aims to ensure the company can get there so much sooner than anyone else that it can reap a windfall profit during the time it takes the others to catch on and catch up.
Case Study: Produce significant competitive advantage
Company: Nucor
The largest steel company in US, its process innovation around minimills has been well documented by Clay Christensen and Michael Raynor in The Innovator’s Dilemma and The Innovator’s Solution. By using recycled steel as its primary raw ingredient, the company was able to enter the steel business at the low end in the rebar market and then with other minimill competitors, leverage the price umbrella created by traditional manufacturers to move upstream.
At each market transition, as the last traditional vendor was driven from the market, the low-cost minimill vendors faced only themselves as cutthroat competitors and were forced to innovate on process in order to break into the nearest higher-margin opportunity. Nucor achieved its current market position by leading the process transition to sheet steel. Process innovations like these set companies apart from the others in their competitive set. They are distinct from the kind of day-to-day process innovation needed to maintain market-standard efficiency in a maturing category.
High levels of stress. Launching and running a low-technology innovation can be extremely rewarding experience, but also can be highly stressful. Once the innovation is introduced, stresses and strains develop. The stresses and strains will influence the effectiveness of innovation and prejudice the results.
Case Study: Innovation can be stressful
A five-year study by a group of faculty members at the Rensselaer Polytechnic Institute in New York State tracked twelve innovation projects in ten large companies. Of twelve project leaders, four resigned, two threatened to resign and two were dismissed. This stress, the researchers found, derives largely from false expectations on the part of the host organization. Innovators’ motivation and self-confidence can be damaged by the success ethic.
The source of a successful may be forgotten; nobody ever forgets a major failure. Senior management fail to understand that innovators tend to be technically proficient but lacking in the skills to sell the business benefits of an idea. Some may not even see the benefits until someone else points them out.
Some companies, apparently, claim to welcome new ideas but lack the systems to support them. They ignore an innovative idea because it does not fit into existing business units. This inability to find a place for innovation within an organization can become translated into political or behavioural manoeuvring. Precisely because the structure has no place for them, innovators tends to be viewed as ‘irritating viruses’ in the host organization.
Chapter 9
Conclusion
Need to understand the nature of innovation in order to prepare an effective innovation case study and an innovative design project. Innovation is a new product or process that has an impact on the market. Perceived quality is kept alive by consistent innovation. Innovation is essential and necessary for value creation. For innovation to flourish, an environment that encourage staff to gain new insights need to be created, need to do things differently and carry out experiment, with the goal of achieving better outcomes.
In order to innovate successfully, we need to anticipate the products and services that people will need. Take a holistic approach by focusing on excellence in presales, post sales, service, and many other areas. Create an emotional attachment to the products and/or services, generating brand loyalty in the process. Offer a unique product that has a high value.
The question of differentiation, from a marketing strategy perspective, between high technology and lower levels of technology and the resulting implications for marketing are largely unanswered. A more precise understanding and definition of what low technology is would be useful. High-tech and low-tech environments can be distinguished from one another by at least two key attributes: the technological intensiveness of strategies adopted by firms in the environments, and the volatility of the environments.
Low-tech environments are characterized as having a high concentration of industries with a low R&D component, where firms have product-driven strategies and are subject to relatively low levels of environmental volatility. Innovation is often the result of being able to satisfy human needs and desires. We need to know how customers think and buy their products. In an experience economy, product is nothing but appeasement of the brain and mind. New mindset and tools are introduced to help innovators.
This project also analyzes and documents the instances of low-technology and low-budget innovation. The case studies focused on both product and process innovations in different low-technology industries. It can be concluded that innovation need not require high technology and large budgets. Innovation need not be new. The technology needed to create the innovative products or services is already widely available.
A pattern of these cases emerged in the course of the analysis of the case studies. The objective of this project, to derive the principles of low-technology and low-budget innovation was achieved. Nine principles were derived after the research. Each of the principles is invaluable guides for bringing about swift and continual low-technology and low-budget innovation for wider application.
Applying these principles allow innovators to develop conscious competence and to create a successful and imbedded process. Key factors affecting low-technology innovation success were identified. This can bring about greater alignment of motivation and integration to ensure innovation success. The better the innovation system functions are fulfilled, the greater the chance of success.
References
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APPENDIX A
LIST OF CASE STUDIES
Amazon
Awe-In-One Enterprise
Belgian Company
Dell
Design Tray Interior (S) Pte Ltd
Gillette
Kingsmen Creatives Pte Ltd
L’Oreal
Microsoft
Nucor
OSIM International Ltd
Pasir Ris Fishing Pond
Sembcorp Enviromental Management
Sentosa Underwater World
Serial System Ltd
Sime Rengo
Surgilance Pte Ltd
Technocracker Pte Ltd
Thong Siek Food Industry Pte Ltd
Victorinox
