Accelerating innovation related theory discussions
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The document discusses various theoretical topics related to accelerating innovation, including entrepreneurial marketing, branding, effectuation, creation theory, social commerce, business modeling, and experimentation. It provides overviews and summaries of key concepts within each topic, along with examples and seminal works. The topics are discussed at a high-level to help understand acceleration approaches to innovation.
Accelerating innovation related theory discussions
- 1. Accelerating innovation Related theory discussions & business literature models Tiina Apilo, VTT ([email protected] ) Thanks to the partners of Accelerate-project for contributing to the content of these slides
- 2. Entrepreneurial marketing 4 Branding 5 Effectuation 10 Creation theory 15 Social commerce 17 Business modelling 18 Experimentation 21 User driven approach 23 Networked innovation 24 .. and other topics to help understand acceleration approach 26 Theoretical discussions related to acceleration of innovation includes topics:
- 3. Theoretical discussions related to acceleration of innovation
- 4. Entrepreneurial marketing School of thought Concept Seminal works EM as entrepreneurship in marketing Different way of doing marketing Creates value by exploring anticipated and latent needs and satisfying them Entrepreneurship enables a firm to create radical innovations (new uses for existing products, new products, new markets) through opportunity discovery, assessment and exploitation Hills 1981, Dickson & Giglieraro 1986, Miles and Arnold 1991, Hills & LaForge 1992, Becherer & Maurer 1997, Morris et al. 2002 EM as relationship and network marketing in SMEs SMEs conduct business and marketing in a fundamentally different way than large corporation Owner-manager viewpoint Network integration into SME marketing CRM activities through personal networking and face-to-face interaction (versus formal software-driven CRM) Adoption of social media Birley 1982, Carson 1985, Carson & Cromie 1989, Grönroos 1990, Coviello et al. 1999, Coviello & Brodie 1998, Hultman 1999, Hultman & Shaw 2003, Read et al. 2009, O’Dwyer et al. 2009, Harrigan et al. 2008, 2011, 2012 EM as marketing in entrepreneurship Marketing tactics as a function of opportunity-seeking strategic management Based on understanding of customers, competitors, suppliers and business environment Need for appropriate organisational culture Murray 1982, Morris & Paul 1987, Covin & Covin 1990, Covin et al. 1994, McDougall et al. 1994, Schindehutte et al. 2008, Webb et al. 2011 Entrepreneurial marketing schools (adapted from Miles et al. 2014)
- 5. Branding Brands can be seen for the company as • markers for the offerings • metrics for measuring effectiveness of marketing activity • financial asset Consumption model Motivation Functional •reducing effort or money •gaining tacit knowledge Emotional •alleviatingpersonal problems or situation •feeling privileged, recognised and valued by a brand Self-oriented •self-actualization •enhancing self-perception •self-branding Social •changing experience •attaching community •building links •social interaction Relational •co-creation of the service offering •the desire for personalized brand interaction •the desire to know real people behind the brand Brand consumption • is increasingly carried out in social media • Has became the social co- production of shared meanings Davis, R., Piven, I., & Breazeale, M. (2014). Conceptualizing the brand in social media community: The five sourcesmodel. Journal of Retailingand Consumer Services, 21(4),468-481 Five core drivers of brand consumption (adapted from Davis et al. 2014)
- 6. Branding Although brands are mainly build on product base, in the marketing management research, branding of new products is seen only as a way of brand extension. • e.g. how brand extensions strengthen parent brand association. Common research topics • brand positioning • brand intangibles • brand personality • brand relationships • brand experience • corporate image and reputation • strategically managing of brands • integrating bran elements and marketing • assessing brand performance in a large company with wide consumer product portfolio
- 7. Branding Research • Focus on B2C market • B2B • two different acceleration approaches through branding (Kotler and Pfoertsch 2006): • suggest customer-based brand equity pyramid (CBBE) • brand strategy model, which emphasize values and association, not only a product itself Kotler, P., & Pfoertsch, W. (2006).B2B brand management Springer Science & Business Media.Kraus,S., Harms, R., & Fink, M. (2010). Entrepreneurialmarketing: Moving beyond marketing in new ventures. InternationalJournal of Entrepreneurshipand Innovation Management, 11(1), 19-34.
- 8. Branding • 5 step brand building process Clancy K. J., & Krieg P. C. (2000) For start-ups, new ventures or new identity building Clancy K. J., & Krieg P. C. (2000),CounterintuitiveMarketing Achieving Great ResultsUsing Common Sense, Free Press, New York 2000. Inspirational vision Transformational strategy Model-based marketing planning Obsessive implementation Diagnostic metrics • Built-to-last view • Brand personality • Accessible • Touchable • Value chain view • Value proposition • Distribution of value • Brand image •DuPont’s ratio analysis •Value-based planning • Consistent brand delivering • BI methods
- 9. Companies have lost their pivotal role in marketing communication -> new marketing strategies & tactics needed Branding Conceptual pinball framework of brand message (Henning-Thurau et al. 2010) Hennig-Thurau,Thorsten, EdwardC. Malthouse, Christian Friege, Sonja Gensler, Lara Lobschat, Arving Rangaswamy,and Bernd Skiera (2010), “The Impact of NewMediaon Customer Relationships,”Journal of Service Research,13, 3, 311–30.
- 10. Effectuation Categories of differentiation Causation processes Effectuation processes Givens • Effect is given • Only some means or tools are given Decision-making selection criteria • Help choose between means to achieve the given effect • Selection criteriabased on expected return • Effect dependent: choice of means is driven by characteristicsof the effect the decision maker wants to create and his/her knowledge of possible means • Help choose between possible effects that can be created with given means • Selection criteriabased on affordable loss or acceptable risk • Actor dependent: given specific means, choice of effect is driven by characteristicsof the actor and his /her ability to discover and use contingencies Competencies employed • Excellent at exploiting knowledge • Excellent at exploiting contingencies Context of relevance • More ubiquitous in nature • More ubiquitous of dynamic, nonlinear and ecological environments Nature of unknowns • More useful in static, linear, and independent environments • Focus on the controllable aspects of an unpredictable future Underlying logic • To the extent we can predict future, we can control it • To the extent we can control future, we do not need to predict it Outcomes • Market share in existent markets through competitive strategies • New markets created through alliances and other cooperative strategies Contrasting causation and effectuation (Sarasvathy 2001) More about effectuationthinking http://www.effectuation.org Effectuation - logic of control Causation - logic of prediction Sarasvathy, S. (2001). Causation and Effectuation:Towarda Theoretical Shift from Economic Inevitabilityto Entrepreneurial Contingency.Academy of Management Review, 26(2), 243–263.
- 11. Effectuation Effectuation theory • introduced in 2001 by Sarasvathy • describes process of firm creation in markets that do not exist Main principles of effectuation (Sarasvathy 2001, 2004) 1. affordable loss rather than expected returns 2. strategic alliances rather than competitive analyses 3. exploitation of contingencies rather than exploitation of pre-existing knowledge 4. controlling an unpredictable future rather than predicting an uncertain one Sarasvathy, S. (2001). Causation and Effectuation:Towarda Theoretical Shift from Economic Inevitabilityto Entrepreneurial Contingency. Academy of Management Review, 26(2), 243–263. Sarasvathy, S. (2004). Making it Happen: Beyond Theories of the Firm to Theories of Firm Design. EntrepreneurshipTheory and Practice, 28(6), 519–531.
- 12. Effectuation Effect Effect Effect Effect Effect Effect Effect Effect Effect Human aspiration Human aspiration Human aspiration Human aspiration Human aspiration Individuallevel: Traits, tastes, and abilities Firm level: Physical resources Level of economy: Demographics WhoIamWhatIknowWhomIknow Individuallevel: Traits, tastes, and abilities Firm level: Physical resources Level of economy: Demographics Individuallevel: Traits, tastes, and abilities Firm level: Physical resources Level of economy: Demographics Imagination Contingencies Affordable loss Acceptable risk Strategic partnership The logic of control Effectuator’s (given) set of means Effectuator’s (contingent) aspirations Theory of effectuation (Sarasvathy 2001) Sarasvathy, S. (2001). Causation and Effectuation:Towarda Theoretical Shift from Economic Inevitabilityto Entrepreneurial Contingency.Academy of Management Review, 26(2), 243–263.
- 13. Effectuation Example of a causation model – new product/service to existing market (Kotler 1991) 1. analyse long-run opportunities in the market 2. research and select target markets • identify segmentation variables and segment the market • develop profiles of resulting segments • evaluate the attractiveness of each segment • select the target segment(s) • identify possible positioning concepts for each target segments • select, develop, and communicate the chosen positioning concept 3. design marketing strategies 4. plan marketing programs 5. organize, implement, and control marketing effort Kotler, P, 1991. Marketing management. Englewood Cliffs,NJ: Prentice-Hall.
- 14. Effectuation Idea generation Practical example of effectuation model – Entrepreneur-friendly sales model for start-ups (Onyemah et al. 2013) Product execution Original idea Revised idea Refine idea Invite and collate feedback from prospects Share idea with select group of prospects Consider dropping idea No, and not improvable Is idea’s appeal strong and broad? No, but improvable Yes Develop and test prototype with prospects Obtain conditional commitment “If I deliver the product by X date, would you buy it in the Y-Z€ price?” Develop and test product Assess leads Follow up with customers Generate leads from large group of prospects Identify qualified prospects Explore product with prospects Address objections Close deal Deliver product Onyemah, V., Rivera Pesquera, M., & Ali, A. (2013). What entrepreneursget wrong. Harvard Business Review, 91(5), 74-79.
- 15. Creation theory Creation theory • alternative theory of entrepreneurial actions to discovery • example of teleological theory • seek to explain actions that entrepreneurs take to form and exploit opportunities Creation • No business opportunities independent on entrepreneurship • New business opportunities are created by the actions, reactions, and enactment of entrepreneurs exploring ways to produce new products or services Discovery • New entrepreneurial business opportunities exist and wait just to be discovered • New business opportunities exist due to technological, political or regulatory changes = exogenous shock
- 16. Creation theory Alvarez, S. A., & Barney, J. B. (2007). Discovery and creation: Alternative theories of entrepreneurial action. Strategic EntrepreneurshipJournal, 1(1-2), 11-26. Discovery Creation Leadership • Based on expertise and (perhaps) experience • Based on charisma Decision making • Risk-based data collection tools • Risk-based decision making tools • Importance of opportunity costs • Iterative, inductive, incremental decision making • Use of bias and heuristics • Importance of affordable loss Human resource practices • Recruitment: specific human capital recruited broadly • Recruitment: general and flexiblehuman capital recruited from pre- existing social networks Strategy • Relativelycomplete and unchanging • Emergent and changing Finance • External capital sources: banks and venture capital firms • Bootstrapping and friends, familiesand fools Marketing • Changes in marketing mix may be how new opportunities manifest themselves • Marketing mix may fundamentallychange as a result of new opportunities that emergence Sustaining competitive advantage • Speed, secrecy, and erecting barriers to entry may sustain advantages • Tacit learning in path dependent process may sustain advantages Entrepreneurial actions in discovery and creation contexts (Alvarez & Barney 2007)
- 17. Social commerce Social commerce • is a form of commerce mediated by social media involving convergence between the online and offline environments (Wang and Zhang 2012) • involves the use of Internet-based media that allows people to participate in the marketing, selling, comparing, curating, buying, and sharing of products and services in both online and offline marketplaces, and in communities (Zhou et al. 2013) • not just a simple fusion between e-commerce and social networking technology, regardless of whether it takes the form of adding a social layer to e-commerce web sites or plugging a retail layer into social media sites (Zhou et al. 2013) • people are new dimension to the original ‘‘4P’’ marketing mix (McCarthy 1964) framework - product, price, place, and promotion McCarthy, E. J. Basic Marketing. Richard D. Irwin, IL, 1964. Wang, C., and Zhang, P. The evolution of social commerce: an examination from the people, business, technology,and information perspective. Communication of the Associationfor Information Systems, 31, 5, 2012, 105–127. Zhou, L., Zhang, P., & Zimmermann, H. (2013). Social commerce research:An integrated view. ElectronicCommerce Research and Applications, 12(2), 61-68
- 18. Business modelling • “A business model reflects management’s hypothesis about what customers want, how they want it and what they will pay, and how an enterprise can organize to best meet customer needs, and get paid well for doing so” (Teece 2010) • Business model innovation • disruptive innovation (Christensen1997) • blue ocean strategy (Kim & Mauborgne 2005) • open innovation (Chesbrough 2006) • Business model design stands as a key issue also for any entrepreneur willing to create a new business (Zott and Amit 2010) Chesbrough, H. (2003) Open innovation: The New Imperative for Creating and Profitingfrom Technology.Harvard Business School Press. Boston. Christensen,C. M. (1997) The Innovator's Dilemma: When New TechnologiesCause Great Firms to Fail. Harvard Business School Press. Boston. Kim, W. C. & Mauborgne, R. (2005) Blue ocean strategy:How to create uncontestedmarket space and make competition irrelevant. Harvard Business Press. Teece, D. J. (2010). Businessmodels, business strategyand innovation. Long Range Planning, 43(2–3), 172-194. Zott, C., & Amit, R. (2010). Businessmodel design: An activity system perspective.Long Range Planning,43(2), 216-226.
- 19. Business modelling Teece, D. J. (2010). Businessmodels, business strategyand innovation. Long Range Planning, 43(2–3), 172-194. Select technologies and features to be embedded in the product/service Determine benefit to the customer from consuming/using the product/service Identify market segments to be targeted Confirm available revenue streams Design mechanisms to capture value Design mechanisms to capture value Elements of business model design (Teece, 2010) Create value for customers, entice payments, and convert payments to profits
- 20. Business modelling The business model canvas (Osterwalder & Pigneur, 2010) • practical method and tool for business modelling http://www.businessmodelgeneration.com/ Osterwalder,A., Pigneur, Y., & Clark, T. (2010). Business model generation:A handbook for visionaries, game changers,and challengers . Hoboken, New Jersey: Wiley-Blackwell.
- 21. Experimentation Importance of experimentation approach • in strategy execution (Thomke 2003, Lester & Piore 2004) • staying at the cutting edge of competition in a rapidly changing industry (Brown & Eisenhardt, 1997; 1998) • in the development of business models (Chesbrough 2010) • new start-up process (Ries 2011, Blank 2013) Blank, S. (2013) Why lean startup changes everything, Harvard BusinessReview May 2013.Blank,S.G. (2005) The Four Steps to Epiphany.Cafepress.com. Brown, S. L. & Eisenhardt,K. M. (1997) The art of continuous change: linking complexity theory and time-paced evolution in relentlesslyshifting organizations. Adminis-trativeScience Quarterly, Vol. 42, pp. 1–34. Brown, S. L. & Eisenhardt,K. M. (1998) Competing on the edge. Strategy as structuredchaos. Harvard Business School Press. Boston. Chesbrough, H. (2003) Open innovation: The New Imperative for Creating and Profitingfrom Technology.Harvard BusinessSchool Press.Boston. Lester, R. K. & Piore, M. J. (2004) Innovation- the missing dimension. Harvard University Press. Boston, USA. Ries, E. (2011). The lean startup: How today's entrepreneursuse continuous innovation to create radically successfulbusinesses Random House LLC. Thomke, S. H. (2003) Experimentationmatters. Unlocking the potential of new technologiesfor innovation. Harvard BusinessSchool Press. Boston.
- 22. Experimentation Thomke, S. H. (2003) Experimentationmatters. Unlocking the potential of new technologiesfor innovation. Harvard BusinessSchool Press. Boston. Customer Iterations Learning by experimentation Step 1: Design •Conceive new ideas and concepts (the experiments) •Refine concepts using information from last cycle Step 2: Build •Build virtual models or physical prototypes to be used in experiments •Prepare testing set up Step 3: Run •Run tests using models or prototypes •Test environment, conditions, and cases correspond to real or simulated use conditions Step 4: Analyse •Carefully analyse observations •Develop or modify understanding about cause and effect Experimentation as four-step iterative cycles (Thomke 2003)
- 23. User driven approach Concept/approach References Lead user von Hippel 1986, 1988, 1989, Urban & von Hippel 1988, Herstatt & von Hippel 1992 User-oriented product development Rosenblad-Wallin(1983, 1985, 1988), Dahlman 1986 User-centred product concept (UCPCD) Kankainen 2002 User-centred design Beyer & Holtzblatt1998, Hackos & Redish 1998 Concept testing Acito & Hurstad 1981, Moore 1982, Page & Rosenbaum1992 Beta-testing Dolan & Matthews 1993, Nielsen 1993 QFD Sullivan 1986, Eureka & Ryan 1988, Hauser & Clausing 1988, Akao 1990, Ullman 1992 Usability experience Nielsen 1993, User experience (UX) Norman et al. 1995, Beyer & Holtzblatt1998 Participatory ergonomics Noro & Imada 1991 Participatory innovation Buur & Matthews 2008 Design anthropology Suchman 1987 User innovator von Hippel 2005 Consumer idealised design Ciciantelli & Magdison 1993 Open communities Hienerth 2006 Open source Lakhani & von Hippel 2003 Service-dominant logic Vargo & Luch 2004 Customer development process Blank 2013 Different approaches to be user driven – forms of gathering information about customers and end-users and methods and practices to involve customers and users in the innovation process (product, service, new business )
- 24. Networked innovation comprehensive innovation definitions: A novel combination of new or existing elements of a solution – customer – organization – value ”system” Valkokari et al 2011.
- 25. Networked innovation Between other functions Manufacturing, marketing, R&D etc. Cross-functional teams Between R&D units Research labs and units Support/adaptive units, development labs, research labs, technology scanning units In supply chain Main supplier, system supplier, subcontractor Simultaneous Engineering/ Concurrent Engineering, module outsourcing Research cooperation Universities, research institutes Technology programs, testing services, technology development With customer Customers, consumers, users Lead user, user innovator R&D partners Design and planning companies Outsourcing of design work, orchestration With competitors Competitors Technology development, standards, international technology programs, exchange basis With community Governments, EU, societies Legislation, directives, standards Between companies in same branch Companies, designer, strategic alliance Technology development, standards Between technology utiliser Companies, designer, consortia Technology development, standards, Between system user Companies, designer User group of software etc. Between member of community Members Communities of practice, knowledge exchange
- 26. .. and other topics to help understand acceleration approach • in marketing area • viral marketing (e.g. Juvetson & Draper 1998, Godin & Gladwell 2001, Krauz et al. 2009) • digital marketing • real time marketing • guerrilla marketing (e.g. Levinson 1984, Krauz et al. 2009) • buzz marketing (e.g. Rosenbloom 2000, Krauz et al. 2009) • agile (e.g. Higsmith 2002, Abrahamsson 2002, Nerur & Balijepally 2007) • lean (e.g.Womack et al. 1990, Womack & Jones 2010) • organisational learning (Argyris & Schön 1978, Huber 1991, Nonaka & Takeuchi 1995) • ecosystem building (Moore 1993, Iansity & Levien 2004) • ambidextrous change management (March 1991, Tuchman & O’Reilly 1996)
- 27. Acceleration challenges and relevant approaches Acceleration challenge Description Relevant approaches, models Business creation “from scratch” - start-up - new business model concept Effectuation, creation theory, lean start-up, business modelling, social commerce, business modelling, experimentation, customer development process New technology - start-up - new technology based product idea Discovery theory, EM as relationship and network marketing in SMEs, entrepreneur-friendly sales model, social commerce, business modelling, experimentation New solution - large, mature company - solution and business model in line of recent strategy and offering portfolio Customer-based brand management, EM as entrepreneurship in marketing, branding through new media, social commerce, business modelling, experimentation New business - large, mature company - radical solution and/or business model Lean start-up, business modelling, EM as marketing in entrepreneurship, effectuation, social commerce, experimentation, customer development process Growth - SME - new solution/market/business model EM as relationship and network marketing in SMEs, entrepreneur-friendly sales model, social commerce, business modelling, experimentation