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1 NOTE: This document is prepared by Vladislav Dimitrov (s3610497), a second year IB student at RUG. The document is a mere summary of the mandatory materials (WEEK 1 to WEEK 5) for the course Innovation Management in Multinationals (EBB034AO5) for the academic year 2019- 2020. This document cannot ...

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INNOVATION MANAGEMENT IN MULTINATIONALS (EBB034AO5) FINAL EXAM SUMMARY

In this extensive document (73 pages long): 9 I have summarised all lecture slides from WEEK 1 to WEEK 5 (including) in a clear and systematic way (Lectures 1-5) 9 Summarised in detail all mandatory articles from WEEK 1 to WEEK 5 (see the full list of summarised articles on the next page) 9 Summarised everything what the lecturer has been talking during the lectures (Lectures 1-5)

1 NOTE: This document is prepared by Vladislav Dimitrov (s3610497), a second year IB student at RUG. The document is a mere summary of the mandatory materials (WEEK 1 to WEEK 5) for the course Innovation Management in Multinationals (EBB034AO5) for the academic year 20192020. This document cannot replace the original articles and lecture slides. Therefore, the author will not be liable for any kind of typos, mistakes or misunderstandings. This document does not provide 100% guarantee for passing the exam or having a high grade. Please consult the original materials. This material is subject to copyright. ©

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List of summarised articles in my summary: Week 1: Innovation Baregheh, A., J. Rowley & S. Sambrook (2009), Towards a Multidisciplinary Definition of Innovation, Management Decision, 47(8): 1323-1339. Ireland, R.D. & J.W. Webb (2007), Strategic Entrepreneurship: Creating Competitive Advantage Through Streams of Innovation, Business Horizons, 50(1): 49-59. Christensen, C.M., E. Ojomo & K. Dillon (2019), Cracking Frontier Markets, Harvard Business Review, 97(1): 90-101.

Week 2: Innovation process Cooper, R.G. (2019), The Drivers of Success in New-Product Development, Industrial Marketing Management, 76: 36-47. Salerno, M.S., L.A. de Vasconcelos Gomes, D.O. da Silva, R.B. Bagno & S.L.T.U. Freitas (2015), Innovation Processes: Which Process for Which Project?, Technovation, 35: 59-70.

Week 3: Innovation management Von Zedtwitz, M., S. Corsi, P.V. Søberg and R. Frega (2015), A Typology of Reverse Innovation, Journal of Product Innovation Management, 32(1): 12-28. Anthony, S.D., P. Cobban, R. Nair & N. Painchaud (2019), Breaking Down the Barriers to Innovation, Harvard Business Review, 97(6): 92-101. Pisano, G. (2019), The Hard Truth about Innovative Cultures, Harvard Business Review, 97(1): 6271.

Week 4: Business model innovation Johnson, M.W., C.M. Christensen and H. Kagermann (2008), Reinventing Your Business Model, Harvard Business Review, 86(12), 50-59. Hagiu, A. and E.J. Altman (2017), Finding the Platform in Your Product, Harvard Business Review, 95(4): 94-100. Broekhuizen, T.L.J., T. Bakker & T.J.B.M. Postma (2018), Implementing New Business Models: What Challenges Lie Ahead? Business Horizons, 61(4): 555-566.

Week 5: Collaboration in innovation Faems, D., B. van Looy and K. Debackere (2005), Interorganizational Collaboration and Innovation: Toward a Portfolio Approach, Journal of Product Innovation Management, 22(3): 238-250. Chesbrough (2012), Open Innovation; Where We’ve Been and Where We’re Going, Research Technology Management, 55(4): 20-27. Gino, F. (2019), Cracking the Code of Sustained Collaboration, Harvard Business Review, 97(5): 7381. NOTE: Articles for WEEK 6&7 are not summarized in my summary (due to the Corona crises 😊

2 NOTE: This document is prepared by Vladislav Dimitrov (s3610497), a second year IB student at RUG. The document is a mere summary of the mandatory materials (WEEK 1 to WEEK 5) for the course Innovation Management in Multinationals (EBB034AO5) for the academic year 20192020. This document cannot replace the original articles and lecture slides. Therefore, the author will not be liable for any kind of typos, mistakes or misunderstandings. This document does not provide 100% guarantee for passing the exam or having a high grade. Please consult the original materials. This material is subject to copyright. ©

Gedownload van Knoowy.nl - Marktplaats voor studiedocumenten

WEEK 1 Lecture 1: Introduction to innovation 1. Definition of innovation - Defining innovation in only one word is very hard and among 272 respondents, 182 gave unique answers - However, the top 5 answers were: creativity; change; transformational; different; new - From the song of Brad Paisley – “Welcome to the future”, the lines “now I have got it on my phone” clearly describes innovation (now everything is on your phone including: camera; camera-recorder; gps; compass; radio; books; credit cards and even your car keys (2020)) - All these devises were separate only 20 years ago!!! - For different people from different cultures innovation is defined differently IMPORTANT: def. of innovation: “Innovation is the process by which an idea or invention is translated into a good or service for which customers are willing to pay, or the result from this process” > > > Innovation = invention + commercialization (just inventing something is not enough. You should made people willing to pay for your idea or innovation) EXAMPLES: Thomas Edison is a perfect example of the idea that the inventing something is not enough. He was able to commercialize his idea and to sell the first commercial light bulbs. Nikola Tesla is also another example. He had more than 300 patents but most of them were patented by others. 2. Misperceptions about innovation x MISPERCEPTION about innovation #1: “Innovation is about getting a good idea” - Innovation is not only about getting a good idea. EXAMPLE: Sara Blakely (the founder of SPANX) is the perfect example that innovation is not only about getting a good idea. As she cut off the feet of the pantyhose and improved the product so that it no longer rolls up her legs, she contacted a manufacturer and by 2012 Sra becomes the youngest self-made female billionaire in history by Forbes. !!! A good idea is just a starting point!!!

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x MISPERCEPTION about innovation #2: “The innovation process cannot be managed” Innovation is not “creativity”; it is a discipline you manage!!! Innovation is a well-structured process which can be monitored, improved and manged As Peter Drucker once said: “Business has only two functions: marketing and innovation”

3. Importance of innovation: IMPORTANT - Innovation improves a firm’s competitive position: ¾ respond to market opportunities, which results in new products and/or new markets ¾ new products help to differentiate from the competition ¾ innovation contributes to growth: many companies get 30% of their current sales from new products ¾ product lifecycles get shorter; innovation is needed to remain attractive to customers ¾ without constant renewal you will be overtaken by the competition; innovation results in competitive advantage 3 NOTE: This document is prepared by Vladislav Dimitrov (s3610497), a second year IB student at RUG. The document is a mere summary of the mandatory materials (WEEK 1 to WEEK 5) for the course Innovation Management in Multinationals (EBB034AO5) for the academic year 20192020. This document cannot replace the original articles and lecture slides. Therefore, the author will not be liable for any kind of typos, mistakes or misunderstandings. This document does not provide 100% guarantee for passing the exam or having a high grade. Please consult the original materials. This material is subject to copyright. ©

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Innovation improves society: ¾ radical innovations improve health, safety and comfort of customers ¾ cloud computing, artificial intelligence, internet of things, online shopping

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Changing technologies, customer needs and global economies create many opportunities for innovation

EXAMPLE: A perfect example of the importance of innovation is the company Rituals which every year launch some three hundred new products which is necessary to keep the company competitive and attractive -

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According to McKinsey about 85% of CEOs worldwide has innovation at the top of their agenda; 80% are concerned that their business model is at risk; and only 6% are pleased with their company’s innovation performance. However, the 94% who are not pleased with their company’s innovation performance have no idea what the problem is Each year more than 30,000 new consumer products are launched and 80% of them fail (Clayton Christensen, Harvard University) > we have a very high dialing rate 30,000 new consumer products are launched annually, 95% of them fail (another source) The failure rate for new products launched in the grocery sector is 70 to 80 percent (Inez Blackburn, University of Toronto) Ask anyone what percentage of new products fail; the usual answer is somewhere between 70-90 percent More than 85% of new consumer packaged goods fail (Nielsen Report) 95% of new products introduced each year fail Up to 80% of new product launches in the consumer-packaged goods industry fail In addition, 50% of the money spend on innovation end up as being not effective or even do not enter the market.

4. Most innovative countries - Based on the Global Innovation Index 2019: the most innovative countries are: Switzerland (Europe); Sweden; USA (North America); The Netherlands; United Kingdom; Finland; Denmark; Singapore (South East Asia); Israel (Northern Africa and Western Asia); Chile (Latin America); India (Central and Southern Asia); South Africa (Sub-Saharan Africa) 5. Most innovative companies - Companies in the healthcare and software and Internet sectors demonstrate the most substantial growth in R&D spending - The top R&D spenders for 2018 are: Amazon; Alphabet; Volkswagen; Samsung; Intel; Microsoft; Apple (based on Global Innovation 1000) - The most innovative companies for 2018 are: Apple; Alphabet; etc. -

R&D spending vs. innovation performance: ¾ Studies show that there is no direct relationship between money spent on R&D and firm innovation performance (IMPORTANT). There is no relationship between the input (R&D) and the output (Innovation) 4

NOTE: This document is prepared by Vladislav Dimitrov (s3610497), a second year IB student at RUG. The document is a mere summary of the mandatory materials (WEEK 1 to WEEK 5) for the course Innovation Management in Multinationals (EBB034AO5) for the academic year 20192020. This document cannot replace the original articles and lecture slides. Therefore, the author will not be liable for any kind of typos, mistakes or misunderstandings. This document does not provide 100% guarantee for passing the exam or having a high grade. Please consult the original materials. This material is subject to copyright. ©

Gedownload van Knoowy.nl - Marktplaats voor studiedocumenten

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in every Global Innovation 1000 study: The Top 10 most innovative companies outperform the Top 10 R&D spenders on several financial metrics ¾ In 2018, Apple spent less on R&D as percentage of sales (5.1%) than eight of the other nine companies selected as most innovative ▫ Intel (20.9%), Facebook (19.1%), Alphabet (14.6%), Amazon (12.7%) -

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According to Forbes (2018) the most innovative companies are: Now; Workday; Salesforce.com; Tesla; Amazon.com; Netflix; Incyte, etc. which shows that even not popular companies might outperform many established giants According to the Boston Consulting Group (2019), the most innovative company is Alphabet followed by Amazon and Apple. However, based on Statistica (2020) IBM has the highest number of patents followed by Samsung and Canon Despite the differences in ranking between the different magazines, only three companies made it to the top 50 of all four lists (Boston Consulting Group; Forbes; Fast Company; MIT) and these companies are: Google (Alphabet); Amazon and Tencent.

6. Types of innovation IMPORTANT: Characteristics of successful innovators: 1. Strategic alignment: between innovation strategy and business strategy 2. Cultural support: corporate culture aligned with innovation strategy 3. Executive involvement: top management involved in R&D program 4. Focus on customer insights: value deep customer insights 5. Focus on project selection: considered most important and critical to success -

The most promising areas of innovation/product development is in the technology platforms; new products; speed of adopting tech; digital design; big data analytics; etc.

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The future of innovation is digital!!! x Companies expect to invest more in digital technologies and products ¾ Three types of products: ▫ pure information goods: ruled by digital companies (Google in search and Facebook in social networking) ▫ once-analog products that have been converted into digital products: ruled by digital companies (Audible.com for books (from the old paper books to audio books), Spotify for music, Netflix for movies) ▫ analog products with digital being integrated (Internet of Things): dominated by manufacturers such as Caterpillar, Tesla, Ford x

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Who will come to dominate the third category? ▫ the industry incumbents (titular), such as Caterpillar or Ford? ▫ or the tech giants, such as Microsoft or Amazon?

Innovation powerhouse: Amazon x Largest number of new products and services in the last decade: 5

NOTE: This document is prepared by Vladislav Dimitrov (s3610497), a second year IB student at RUG. The document is a mere summary of the mandatory materials (WEEK 1 to WEEK 5) for the course Innovation Management in Multinationals (EBB034AO5) for the academic year 20192020. This document cannot replace the original articles and lecture slides. Therefore, the author will not be liable for any kind of typos, mistakes or misunderstandings. This document does not provide 100% guarantee for passing the exam or having a high grade. Please consult the original materials. This material is subject to copyright. ©

Gedownload van Knoowy.nl - Marktplaats voor studiedocumenten

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Amazon Prime, Amazon Fresh, Amazon Video, Amazon Music, Amazon Publishing, Amazon Web Services, Kindle, Echo ▫ In ebooks app. 83% market share in US; in smart speakers app. 30% market share Amazon Go: tested in 2017, launched January 2018 February 2018: Amazon announces to use big data to transform healthcare In 2019, Q3: range of new Echo devices, Personal Shopper by Prime Wardrobe (styling service), several tools and services for small and midsized sellers -

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Amazon Leadership Principle #1: Customer obsession (Start with the customer and work backwards; work vigorously to earn and ke ep customer trust; pay attention to competitors, but keep obsessing over customers) > the customer is at the center Degrees of newness: (how innovative and radically different your product is) Newness to the market vs newness to the company: ¾ Incremental innovation ▫ minor product change ▫ high success rate ▫ low returns ¾ Radical innovation ▫ large product change ▫ low success rate ▫ high potential returns

7. Lecture Takeaways: IMPORTANT 9 Innovation is the process by which an idea or invention is translated into a good or service for which customers are willing to pay, or the result from this process 9 Innovation is of critical importance for a firm’s future, but creates many challenges, resulting in many failed innovations 9 Successful innovation is not about having good ideas, but about successfully developing them into new products or services and launching them in the market 9 R&D spending by firms does not directly result in firm innovation performance; you cannot buy your way to success 9 Innovations differ in their degree of newness, from very minor, incremental innovations to new-to-the-world radical innovations 8. Sample MC-questions 1. Which of the following examples or definitions of “innovation” is NOT covered in this course?

6 NOTE: This document is prepared by Vladislav Dimitrov (s3610497), a second year IB student at RUG. The document is a mere summary of the mandatory materials (WEEK 1 to WEEK 5) for the course Innovation Management in Multinationals (EBB034AO5) for the academic year 20192020. This document cannot replace the original articles and lecture slides. Therefore, the author will not be liable for any kind of typos, mistakes or misunderstandings. This document does not provide 100% guarantee for passing the exam or having a high grade. Please consult the original materials. This material is subject to copyright. ©

Gedownload van Knoowy.nl - Marktplaats voor studiedocumenten

a. New furniture, developed by IKEA, which allows customers to wirelessly charge their smartphones b. A new information system, developed by Procter and Gamble, to improve their collection and sharing of customer data (this is the correct answer as the company will use the new system only internally and will not commercialize it which is one of the characteristics of innovation) c. A new service, called Medicast, which allows customers to schedule a same-day doctor’s appointment online d. The combined process of invention and commercialization 2. Beregheh et al. (2009) develop a comprehensive definition of innovation. Which of the following attributes is not part of their innovation definition? a. The nature of the innovation: whether it is new or just improved b. The aim of the innovation: the result that the organization wants to achieve with the innovation c. The organization of innovation: whether the innovation is developed within the regular organization of within a new business unit (just read and learn the article) d. The means of innovation: the resources that are required for the innovation -----------------------------------------------------------------------------------------------------------------------Mandatory article 1: Towards a multidisciplinary definition of innovation (Baregheh et al. 2009) -

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Purpose: this paper aims to undertake a content analysis of extant definitions of “innovation” as a basis for proposing an integrative definition of organizational “innovation” Findings: the key attributes in the paper present in definitions were identified as: 1. Nature of innovation 2. Type of innovation 3. Stages of innovation, social context 4. Means of innovation 5. Aim of innovation Value: this paper proposes a general and integrative definition of organizational “innovation” that encompasses the different perspectives on, and aspects of, innovation, and captures its essence

1. Introduction - Orgs. need to innovate in response to changing customer demands and lifestyle and in order to capitalise on opportunities offered by technology and changing marketplaces, structures and dynamics - Schumpeter, 1950 argued that organizations should innovate in order to renew the value of their asset endowment - Zahra and Covin suggest that: “Innovation is widely considered as the life blood of corporate survival and growth” - There is a close connection between innovation, jobs and profit, and standard of living (if companies fail to innovate, there is a risk that the standard of living might decrease) - Innovation is a key policy and strategic issue (at least in the UK) - Innovation is of interest to many business and management disciplines > innovation is studied in many disciplines and has been defined from different perspectives > at the end there is no clear and authoritative definition of innovation > undermines understanding of the nature of innovation - The main aim of the paper is to identify one multidisciplinary definition of innovation based on a content analysis of previous definitions 2. Literature review 7 NOTE: This document is prepared by Vladislav Dimitrov (s3610497), a second year IB student at RUG. The document is a mere summary of the mandatory materials (WEEK 1 to WEEK 5) for the course Innovation Management in Multinationals (EBB034AO5) for the academic year 20192020. This document cannot replace the original articles and lecture slides. Therefore, the author will not be liable for any kind of typos, mistakes...