Innovation, Technology, and Ordinary Course of Business

1. Innovation, Technology, and Ordinary Course of Business BUSI 7220/6 Cegielski Lecture #1

2. Innovation, Technology, and Ordinary Course of Business • Perhaps a better title for this section would be “Concepts that Businesses don’t truly understand.” • In almost every business today, innovation is a buzz word that receives tremendous lip service. • Employees are routinely told to… • “Be creative!” • “Think outside the box”! • “Innovate!”

3. Innovation, Technology, and Ordinary Course of Business • Why is innovation so pressing to businesses? • The answer is simply – it is seemingly the only thing in today’s business environment that cannot be commoditized. • Consider the following products and services… • Personal computers • Cell phones service • Railroad transportation • Web services • Commoditizing has shortened the life of most every product or service currently available – AT&T, Wriley’s and Motorola • We’ll talk a lot more about commoditization when we discuss “Does IT Matter” by Carr.

4. Innovation, Technology, and Ordinary Course of Business • Fact: most employees have neither the time nor the support from their enterprises to do anything other than manage their daily responsibilities! • Fact: most companies and employees don’t really have a clear understanding of what it means to innovate. • Fact: most companies still operate under the notion that innovation synonymous with revolutionary inventions

5. Innovation, Technology, and Ordinary Course of Business • What is an innovation? • an idea, practice, or an object perceived as new by an individual or group Idea – political ideologies, religious philosophies Practice – boiling of water, crop rotations Object – Chainsaw, airplane Software & Hardware – ideas vs. that which is tangible

6. Innovation, Technology, and Ordinary Course of Business • So what is Technology and how does Technology relate to innovation? • Technology is a design for action that reduces uncertainty in achieving a desired outcome. • Think for a moment about our examples of hardware and software.

7. Innovation, Technology, and Ordinary Course of Business • Innovations generally don’t spontaneously generate in societies and the same is true within business organizations. • There is a well defined process known as diffusion that is applied to the movement of innovations from one population to another. • The process of diffusion of innovations is governed by a set of universal characterisitcs.

8. Innovation, Technology, and Ordinary Course of Business • Innovation diffusion - the process by which communication regarding an innovation occurs through certain channels over time among the members of a population. • Important elements: • The innovation itself • Time • Communication Channels • Population groupings

9. Innovation, Technology, and Ordinary Course of Business Cycle of Innovation Adoption Decision

10. Innovation, Technology, and Ordinary Course of Business • Variable in the Adoption Decision Process • Relative advantage (the ‘degree to which an innovation is perceived as being better than the idea it supersedes’); • Compatibility (‘the degree to which an innovation is perceived to be consistent with the existing values, past experiences and needs of potential adopters’); • Complexity (‘the degree to which an innovation is perceived as difficult to use’); • Trialability (‘the opportunity to experiment with the innovation on a limited basis’); and • Observability (‘the degree to which the results of an innovation are visible to others’).

11. Innovation, Technology, and Ordinary Course of Business

12. Innovation, Technology, and Ordinary Course of Business • InnovatorsThe first 2.5% of adopters are called "Innovators". Innovators are venturesome and educated, have multiple sources of information and show greater propensity to take risks. They appreciate technology for its own sake and are motivated by the idea of being a change agent in their reference group. They are willing to tolerate initial problems that may accompany new products or services and are willing to make shift solutions to such problems.Early AdoptersThe next 13.5% of adopters are "Early Adopters". They are the social leaders, popular and educated. They are the visionaries in their market and are looking to adopt and use new technology to achieve a revolutionary breakthrough that will achieve dramatic competitive advantage in their industries. They are attracted by high-risk, high-reward projects and are not very price sensitive because they envision great gains in competitive advantage from adopting a new technology. They typically demand personalized solutions and quick-response, highly qualified sales and support.

13. Innovation, Technology, and Ordinary Course of Business • Early MajorityThe next 34% of adopters are formed by the "Early Majority". They are deliberate and have many informal social contacts. Rather than looking for revolutionary changes to gain productivity enhancements in their firms, they are motivated by evolutionary changes. They have three principles in the adoption of new technology:- “When it is time to move, let’s move all together”. This principle defines why adoption increases so rapidly in the diffusion process and causes a landslide in demand.- “When we pick a vendor to lead us to the new paradigm, let us all pick the same one”. This principle explains which firm will become the market leader.- “Once the transition starts, the sooner we get it over with, the better”. This principle shows why the transition stage occurs rapidly.

14. Innovation, Technology, and Ordinary Course of Business • Late MajorityThe next 34% of adopters are the "Late Majority". They are skeptical, traditional and of lower socio-economic status. They are very price sensitive and require completely preassembled, bulletproof solutions. They are motivated to buy technology just to stay even with the competition and often rely on a single, trusted adviser to help them make sense of technology. LaggardsThe last 16% of the adopters consists of "Laggards". Laggards are technology skeptics who want only to maintain the status quo. They tend not to believe that technology can enhance productivity and are likely to block new technology purchases.

15. Innovation, Technology, and Ordinary Course of Business • Find 3 companies that mention in their mission statement “innovation.” • Research one of the three companies you identified and explain how the company follows through with its commitment to innovation through action. Well begin our discussion on Tuesday with a survey of your findings.