INNOVATION – The creation and delivery of new customer value

in the marketplace with the sustainable business model for the

enterprise producing it.

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 MOKSLO IR INOVACIJŲ VADYBA
RESEARCH AND INNOVATION MANAGEMENT

Lecture Nr.5

Product/service innovations
Dr. Pranciškus Vitta
Vilniaus Universitetas, Apšvietimo tyrimo grupė
www.lrg.projektas.vu.lt , pranciskus.vitta@ff.vu.lt

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 Types of Innovations

Product/service Process

Marketing Organizational
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 Content

• Types of product innovations;

• Product lifecycle;
• Technology adoption cycle;
• Innovation ecosystems;

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TYPES OF PRODUCT
INNOVATIONS

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Types of Product innovations
Sustainable

Breakthrough Blue ocean

Disruptive New market

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 Breakthrough innovations
A large, discrete step change in performance, technology and value. 
... something new, bold and way ahead of the next best thing.
Smartphones (touch screens), Colour TVs, OLED displays...  

Principal difficulties and struggles to implement Breakthrough innovations:

•Lack of resources – startups especially struggle with this;

•Lack of laser-like focus necessary to achieve a breakthrough – large companies
can often struggle to maintain an intense focus on perfecting a new idea;
•Lack of a detailed understanding of the end user – without a sufficient
understanding of users needs, new product ideas can become a grueling exercise
in trial and error;
•Lack of required technical competencies – even with vast resources, intense
focus and an understanding of end users, some projects will fail due to a lack of
the core competencies needed in order to execute the project;

https://www.theinnovativemanager.com/the-four-types-of-innovation-and-the-strategic-choices-each-one-represents/

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 Breakthrough, HOW?
How it is possible to try to implement Breakthrough innovations:

•Access to resources – regardless of how you slice it, making a totally new and
breakthrough product will likely require access to a pool of potentially vast
resources. But don’t get discouraged, if you have a breakthrough idea, you may be
able to secure venture capital funding so long as the market and business case
warrants it.
•Laser-like focus – one of Steve Jobs’ best quotes is that focus is about saying no
to 1000 things. That’s the kind of focus that’s required to achieve a breakthrough.
•A detailed understanding of the end user – start with the idea of jobs to be done
and go from there. Understand exactly what the job to be done is and build out
your idea to ensure it gets the job done better than the next best solution.
•The right technical competencies – do whatever it takes to learn or acquire the
skills necessary to execute on the idea. If you or your team has the expertise
required or at least if they have a similar expertise then learn quickly and you will
be able to execute the idea to fruition.
https://www.theinnovativemanager.com/the-four-types-of-innovation-and-the-strategic-choices-each-one-represents/

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 Breakthrough, WHEN?

When and why to implement Breakthrough innovations:

•For successful start-up. If you have deep knowledge (personal) in technology,

technological advancement in the market, the start-up and sell-up is the only way
to become RICH...

•Premium product companies based on “benefit leadership” (instead of “price

leadership”) MUST implement Breakthrough innovations whatever it might cost.
Elon Musk with Tesla, SpaceX, Gigafactory etc. is the best example.

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 Sustaining innovations
Incremental value gain over existing sulutions available. 
Automotive industry, consumer electronics, etc...  

• It is relatively easy and common to run sustaining innovations, since company

resources, business processes and cultures usually are setup in a way to
enable sustaining efforts.

• For the most of the companies Sustaining innovations are the MUST option.

• These technologies are not so inspiring as Breakthrough big ideas, but they are
vital for company survival and weapon No. 1 in the competition of everyday
battle.

https://www.theinnovativemanager.com/the-four-types-of-innovation-and-the-strategic-choices-each-one-represents/

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 New Market innovations
Existing product applied in a new way for previously unrelated customers. 
Baking soda for baking and as deodorizer, military vs. civil market, etc ...  

• Adjacent spaces – what industries or uses would you consider as adjacent?

Often adjacent spaces are fertile grounds for introduction of your existing
product(s) or service(s).
• Other jobs to be done – like in the “Arm and Hammer” example, baking soda
was capable of performing multiple “jobs” for the customer quite well, even
though at the beginning Arm and Hammer was only thinking of the job of
baking. What other jobs does your product do? Could those be marketed for
other customers?
• Customer usage studies – for some products, customers may already be using
your product in new and different ways that you haven’t considered yet.
Ethnographies or other observation type market research methods are best
suited to bring those use cases to light.

https://www.theinnovativemanager.com/the-four-types-of-innovation-and-the-strategic-choices-each-one-represents/

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 Disruptive innovations
More simple, easy to use product intended for the masses at a much lower cost. 
Internet commerce and supermarkets vs department stores, etc ...  

• Look for competitors that have overserved their customers to the point where
the solution is far more advanced (and expensive) than it needs to be in order to
accomplish the main job to be done for that product
• Focus on one job to be done rather than several. Disruptive innovation is all
about simplification and removal, the polar opposite of breakthrough
innovations.
• Focus on making the solution the very best when it comes to doing that one
thing for your customers
• Remove as much cost as possible to make the end price affordable for most
users. This often includes more than just product changes and it can mean
removing middle men such as distributors and retailers who always add another
successive layer of price burden to the product as it goes through the channel.

https://www.theinnovativemanager.com/the-four-types-of-innovation-and-the-strategic-choices-each-one-represents/

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 Disruptive innovations

Established technology Disruptive technology

Silver halide photo film Digital photography
Wired telephony Mobile telephony
Offset printing Digital printing
Department stores Supermarkets
Physical shops Internet commerce
Hard disk drives Solid-state drives

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Book about Disruptive
innovations

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 Blue ocean innovations
Value innovation is the simultaneous pursuit of differentiation and cost, creating
value for both the buyer, the company, and its employees, thereby opening up
new and uncontested market space. 

Nintendo Wii, 2006

Kim, W.C.; Mauborgne, R. (2005). Blue Ocean Strategy: How to Create Uncontested Market
Space and Make the Competition Irrelevant. Boston: Harvard Business School Press. ISBN 978-1591396192
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Product lifecycle

http://harambee.co/?p=2235

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Innovation lifecycle

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Technology adoption

https://blog.kaplanit.com/tag/innovation/
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Technology adoption rate

https://marketrealist.com/2015/12/adoption-rates-dizzying-heights
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INNOVATION ECOSYSTEM

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 Nokia failure with 3G
• Mobile telecommunications started 1990;
• In 2000 there were >700 million users world wide;
• Nokia, Ericsson, NEC, Samsung and Motorola
were world leaders;
• Market almost saturated, no chance to grow
business and earnings.
• Nokia decided to be the first offering 3G internet connectivity;
• Nokia forecasted to be 300 million users connected to the internet by 2002;
• In 2002, NOKIA 6650 was the first GSM/WCDMA phone with 3G (7.2 Mbps);
• Reality: <3 mil. users in 2002 and most of them in Japan, 300 mil reached only in
2008;
• The main reason, service providers were not ready for 3G:
a) they had not updated expensive GSM/3G equipment;
b) they had no business plan how to make money from 3G internet data.
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Co-innovation risk

Ron Adner, “The Wide Lens. A New Strategy for Innovation” 2013.
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Adoption chain risk

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Mapping the Ecosystem

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 Right time and place
• 1993: mp3 file format introduced;
• 1997: first portable mp3 player;
• 1999: Napster launch;
• 2000. S. Jobs decide to develop MP3 player;
• 2001.12: First 5Gb iPod introduced;
• 2002: 600 000 units sold, 15% mp3 player market;
• 2003: iTunes music store launched;
• 2008: iPod had 48% of the market, closest https://
competitor SanDisk Sansa ~8%; commons.wikimedia.o
rg/w/index.php?
• by 2009: 8 billion songs sold, 220 millions iPods curid=12976762
sold;

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 Sequencing success
• 2007: iPhone introduced:
• Only 2G connectivity;
• Only still image camera;
• Offered by single provider (AT&T, T-Mobile, etc.);
• $499 with 24 month contract (competitors $99-
240).
• 6 millions (entire stock) sold in 12 month;
• 2008: App store launched with 500 Apps;

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 Questions to the teams:

1. Breakthrough innovation in your life?

2. Disruptive innovation being developed currently?

3. Any Blue Ocean type innovation in your list?

4. Example of innovation ecosystem?

5. Can you attribute Apple products to Blue Ocean strategy ?

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Questions???

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 Summary:

1. Innovations can be different and different strategies needed;

2. Ability to differentiate your product/service can help to deliver
value to all participants of the party;
3. Timing is extremely important for the innovation success;
4. In Global world usually you cannot innovate alone and
innovation ecosystem has to be considered.

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Thank you for your attention!

www.lrg.projektas.vu.lt
pranciskus.vitta@ff.vu.lt

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