2007/04/28 14:50 Papers on "Hybrid Innovation and New Product Development in a Services Context"

daviding — Thu, 12 Jul 2007 21:53:30 -0400

2007/04/28 14:50 Papers on "Hybrid Innovation and New Product Development in a Services Context", Innovation in Services Conference, Berkeley, California

This digest was created in real-time during the meeting, based on the speaker's presentation(s) and comments from the audience. The content should not be viewed as an official transcript of the meeting, but only as an interpretation by a single individual. Lapses, grammatical errors, and typing mistakes may not have been corrected. Questions about content should be directed to the originator. The digest has been made available for purposes of scholarship, posted on the Coevolving Innovations web site by David Ing.

Discussant: Marja Toivonen

Papers

“Hybrid Innovation Management – Lessons Learned from Mobile TV Development”, by Kirsimarja Blomqvist, Kaisa Henttonen, Pia Hurmelinna-Laukkanen, and Paavo Ritala
“Creating and Managing Hybrid Innovations”, by Shankar, Berry, and Dotzel
“New Product Creation Process of KIBS Firms: A Case Study”, by Salmi, Torkkeli, Ojanen, and Hilmola
“Innovation Processes In Professional Business Service Firms: Their Drivers, Nature And Management Challenges”, by Marja Toivonen and Anssi Smedlund

“Hybrid Innovation Management – Lessons Learned from Mobile TV Development”, by Kirsimarja Blomqvist, Kaisa Henttonen, Pia Hurmelinna-Laukkanen, and Paavo Ritala

Kirsimarja and Paavo

Lappeenranta

Hybrid has a different meaning

Mobile tv markets

Finns are good in technology, but what about services?

Hybrid as multiple forces, e.g. competition-collaboration

Singapore and Italy have mobile tv ahead, e.g. Italy as 400,000 subscribers, ahead of Finland

DVD-H technology, low battery consumption and faster than 3G
Consumers want to watch, but also want to be interactive, e.g. voting, video blogs

Includes Nokia, carriers, broadcasters

Forum Virium Helsinki, uses open innovation paradigm

Turning point

Contradictions and paradoxes

Sequencing: one extreme at a time, e.g. R&D, then marketing
Layering: have to rise above, picturing the whole market perspective
Taking a third perspective: bring in a third party

Old boys network on technology development

Bonding
Need to bridging to build social capitals
Also link

Project manager can act as boundary spanners

Technology-based service development plus service development as a new capability

Have to find new networks

In Finland, can use trust, as don't have governance

[Questions]

Lobbying?

Legislation is falling behind

Forgot to invite people to work out IPR, a mistake

“Creating and Managing Hybrid Innovations”, by Shankar, Berry, and Dotzel

Hybrid as combination of product and service innovations

Quotation from Embarq, spun off from Sprint: "bundled package of products and services"

Examples:

Tivo, the digital video recorder, plus controlled live tv
Xerox: copier, printer, supplies, plus maintenance, configuration and user support

Definition of hybrid innovation

Utility of purchasing and consuming goods and services increase with each other
Firm sells both
Good and service are combined in a way unique to the firm
Not tying in, so don't violate Sherman Act

Good-Service Continuum

Goods dominant ... to services dominant
Balanced: contract IT

Economics

Three zones
Dead zone, when price is below total unit cost, when scaling up
Likely sweet spot zone: price about cost
Nirvana zone: making so much money

For a service innovation ...

Dead zone is shorter
Likely sweet spot zone longer but thinner
In the Nirvana zone, don't make as much profit

If combine product and service, may be able to get a better curve

Dimensions:

Degree of complementary: Combining good and service to improve utility
Degree of independence: Extent of availability

Taxonomy

	High complementarity	Low complementarity
High independence	Flexible combo	Controllable bundle
Low independence	Twin Gain	Forced bundling

Have studied 50 hybrid innovations, found success drivers

Greater degree of commoditization, the higher the value of hybrid
Solution centricity
Revenue and profit potential
Scalability, how long can you prolong
Importance of branding
Order of customer choice, whether customer chooses good or service first, e.g. cell phone North America picks service first, Europe picks product first

[Questions]

Like curves. Fixed or variable costs?

That was for typical innovation, across 50 innovations

“New Product Creation Process of KIBS Firms: A Case Study”, by Pekka Salmi, Marko Torkkeli, Ville Ojanen, and Olli-Pekka Hilmola

Marko, Saari

Lappeenranta University of Technology

Research in 2004 and 2006, developed framework for multimedia and technology

Focus on processes

Productization, bringing more tangible features to services

Advantages

Few scholarly works

Gronroos 2003 introduced a process model
Vaattovaara 1999 model, based on case studies in an engineering consulting company

Concept of a service package

Standard part
Optional modules
Customized parts

Case: Aptual Ltd., small KIBS firm specializing in Internet communications, founded in 2000, employs 7 people

Core: Jalusta technology, helps company to design new web pages

Productization process

1. Determine the starting point, what does the customer need? What technology core?
2. Define the service package: standard part, module 1, module 2, integrated communication service
3. Development of the service package: build features, develop expertise

Conclusions:

Need a clearly-defined service package
Can reuse knowledge on an ongoing basis

[Questions]

Choice of firm?

Started working with company 4 years ago, natural approach, constructive approach where company had a problem and we had theory
Happy that company hasn't gone into bankrupcy

“Innovation Processes In Professional Business Service Firms: Their Drivers, Nature And Management Challenges”, by Marja Toivonen and Anssi Smedlund

Innovation Management Institute, Helsinki University of Technology

Also KIBS research, but use "professional services" phrase that is more common in the U.S.

Have selected professional business services firms, because they tend to be at the edge of innovation

Clarification of the concept of service innovation, applying the Schumpeterian perspective
Multiple case studies

Service innovation have had limitied definition, Schumpeter had a broad view that helps

5 types of innovation
Helpful, except that can't separate out products and processes, since a service product constitutes a process in its basic nature

Criteria for innovation

1. Innovation is carried into practice, must be applied
2. Innovation is reproducible, i.e. not that every time they have a new client, it's innovation
3. Innovation leads other companies to follow, with competitors, possibly not a creation but could be diffusion
4. Innovation means a break in business-as-usual, discontinuous

Problem that innovations are discussed both as an outcome and a process

Have tried to define service innovation as an outcome
Innovation involves insecurity, so also need to consider processes that don't lead to an innovative outcome

Nature of innovation processes, four drivers

Usually market pull and technology push, that are useful
- During past 2 decades, impact of IT
- Market pull as more business like
In professional service firms, also
3. impact of societal development
4. ideas emerging in the professional community

Innovation processes, three approaches

1. Stage-gate model: planned

Black box

2. Nordic school of service marketing, modeling the service, Edvarsson

Service concept, service process, and service system

3. Analyzing the nature of innovation, Lille School, Gallouj and Weinstein 1977, what changes can be made

(a) can improve innovation
(b) add innovation
(c) recombine (architectural)
(d) formalization

Multiple case study approach, blending the three approaches

12 cases
Interesting 5a started 12 years ago, now 5b same case

Found all four innovation drivers in study

Most common model was rapid application: not separate testing or piloting stage

Most important reason, the issues are so complex, that if you try to develop your service in-house, you can't find all of the important questions

Also found open innovation is important

Big-four accounting firm developing service with partners in Finland

Conclusions:

Former successful innovation can give birth to a new innovation process
Now moving to a new project so know how a new innovation can be managed

Summarizing:

Many drivers for innovation, 4
Stage-gate models don't always apply in professional service firms, so speeding up with rapid application helps
Innovation without any planning

[Questions]

Innovation begets innovation. This is the finding in product innovation. However, a technology push will generate 3 or 4 market pull innovations, but market pull won't generate technology push.

One case not even market pull, it was in-house pull

If you find your customer's hidden needs, could you find a radical innovation?

Common, leads to better business

One case where innovation recognized a posteriori?

Maybe the way we collected data

Innovation with dedicated resources?

Yes, at least some

Coevolving Innovations - 2007/04/28 14:50 Papers on "Hybrid Innovation and New Product Development in a Services Context" - Comments

2007/04/28 14:50 Papers on "Hybrid Innovation and New Product Development in a Services Context"

“Hybrid Innovation Management – Lessons Learned from Mobile TV Development”, by Kirsimarja Blomqvist, Kaisa Henttonen, Pia Hurmelinna-Laukkanen, and Paavo Ritala

“Creating and Managing Hybrid Innovations”, by Shankar, Berry, and Dotzel

“New Product Creation Process of KIBS Firms: A Case Study”, by Pekka Salmi, Marko Torkkeli, Ville Ojanen, and Olli-Pekka Hilmola

“Innovation Processes In Professional Business Service Firms: Their Drivers, Nature And Management Challenges”, by Marja Toivonen and Anssi Smedlund