Building Capacity to Innovate Insights and Lessons to be Learned

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1 Building Capacity to Innovate Insights and Lessons to be Learned Christoph Mandl Christoph Mandl, Building Capacity to Innovate: Insights and Lessons to be Learned 27 November 2010, What is Innovation? An innovation is a new or improved product, equipment or service which is successful on the market. Green Paper on Innovation European Commission Christoph Mandl, Building Capacity to Innovate: Insights and Lessons to be Learned 27 November 2010, - 2-1

2 Invention and Innovation Invention is the creation of something new. Innovation is the creation of something new that becomes economically successful and earns profits. Inventors and innovators are different groups of people: Inventors create something new. Innovators buy something new and thus create its economic success. Christoph Mandl, Building Capacity to Innovate: Insights and Lessons to be Learned 27 November 2010, Where success of an invention comes from Christoph Mandl, Building Capacity to Innovate: Insights and Lessons to be Learned 27 November 2010, - 4-2

3 Diffusion of Innovations Diffusion is the spread of innovations, through market or non-market channels, from first implementation anywhere in the world to other countries and regions, and to other markets and firms. Christoph Mandl, Building Capacity to Innovate: Insights and Lessons to be Learned 27 November 2010, Systemic Model of Innovation Change in Customs Market Success Innovation Cycle Human Knowledge Development Invention Christoph Mandl, Building Capacity to Innovate: Insights and Lessons to be Learned 27 November 2010, - 6-3

4 Christoph Mandl, Building Capacity to Innovate: Insights and Lessons to be Learned 27 November 2010, At an Early Stage, every Growth looks linear New Time (Day) New : current Christoph Mandl, Building Capacity to Innovate: Insights and Lessons to be Learned 27 November 2010, - 8-4

5 Tipping Point The diffusion of an innovation in which, beyond a certain point, the rate at which the diffusion proceeds increases dramatically. Christoph Mandl, Building Capacity to Innovate: Insights and Lessons to be Learned 27 November 2010, Tipping Point in Action I Potential Active Former New per Month New Former per Month - Contacts per Month 5 - Total Population Adoption Fraction Average Number of Months of Being an Active Adopter Initial Potential Christoph Mandl, Building Capacity to Innovate: Insights and Lessons to be Learned 27 November 2010,

6 Tipping Point in Action II Potential Active Former New per Month New Former per Month - Contacts per Month 6 - Total Population Adoption Fraction Average Number of Months of Being an Active Adopter Initial Potential Christoph Mandl, Building Capacity to Innovate: Insights and Lessons to be Learned 27 November 2010, Tipping Point in Action III Potential Active Former New per Month New Former per Month - Contacts per Month 7 - Total Population Adoption Fraction Average Number of Months of Being an Active Adopter Initial Potential Christoph Mandl, Building Capacity to Innovate: Insights and Lessons to be Learned 27 November 2010,

7 Tipping Point in Action IV Potential Active Former New per Month New Former per Month - Contacts per Month 7 - Total Population Adoption Fraction Average Number of Months of Being an Active Adopter Initial Potential Christoph Mandl, Building Capacity to Innovate: Insights and Lessons to be Learned 27 November 2010, US Sales of VCRs by Format Million Units/Year Year VHS Betamax The great majority of innovations never get off the bottom of the curve, and never produce appropriate returns. Christoph Mandl, Building Capacity to Innovate: Insights and Lessons to be Learned 27 November 2010,

8 Christoph Mandl, Building Capacity to Innovate: Insights and Lessons to be Learned 27 November 2010, From Finding the Innovative Idea to Economic Success: The Valley of Death or the Adoption Risk Revenues Time Costs Christoph Mandl, Building Capacity to Innovate: Insights and Lessons to be Learned 27 November 2010,

9 Adoption Risk Management The Valley of Death or the Adoption Risk is the maximal accumulated financial loss occurring before the revenues take off. It can be reduced by reducing the costs of development and invention. by increasing the likelihood of substantial order inflow in the (near) future. Christoph Mandl, Building Capacity to Innovate: Insights and Lessons to be Learned 27 November 2010, Red Ocean Red Oceans are all the industries in existence today the known market space. In the red oceans, industry boundaries are defined and accepted, and the competitive rules of the game are known. Here companies try to outperform their rivals to grab a greater share of product or service demand. As the market space gets crowded, prospects for profits and growth are reduced. Products become commodities or niche, and cutthroat competition turns the ocean bloody. Christoph Mandl, Building Capacity to Innovate: Insights and Lessons to be Learned 27 November 2010,

10 Blue Ocean Blue oceans denote all the industries not in existence today the unknown market space, untainted by competition. In blue oceans, demand is created rather than fought over. In blue oceans, competition is irrelevant because the rules of the game are waiting to be set. Blue ocean is an analogy to describe the wider, deeper potential of market space that is not yet explored. Christoph Mandl, Building Capacity to Innovate: Insights and Lessons to be Learned 27 November 2010,