Innovation and Open Innovation

Invention and Innovation

Idea
Invention and Innovation
Technology





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Invention and Innovation
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Invention and Innovation
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Invention and Innovation
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Invention and Innovation
Technology





Idea
Diffusion of Innovations
Developed by Everett Rogers

Diffusion is the process by which an
innovation is communicated through certain
channels over time among the members of a
social system.

2 3 4 5
RANKING MUNDIAL DE USURIOS DE INTERNET
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Knowledge
Person becomes aware of an innovation and has
some idea of how it functions
Persuasion
Person forms a favorable or unfavorable attitude
toward the innovation
Decision
Person engages in activities that lead to a choice to
adopt or reject the innovation
Implementation Person puts an innovation into use
Confirmation
Person evaluates the results of an innovation-
decision already made
Adoption of Innovation Step Process
Adoption of Innovation over time
Adoption of Innovation over time
Adoption of Innovation over time
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Relative advantage
Compatibility
Complexity of transition
Possibility of testing
Visibility of benefits
Adoption probability grows if innovation has clear
advantages for product, service or current behavior
The more innovation is consistent with pre-existing
higher the adoption probability
Complex changes involved in innovation, reduce
adoption likelihood
A chance to try an innovation before making a final
decision increase adoption likelihood
The more obvious innovation benefits the greater
adoption likelihood
5 Critical Factors Influencing
Innovation Diffusion
Innovation
Following Joseph Schumpeters 1934 book
The Theory of Economic Development: An
Inquiry into Profits, Capital, Credit, Interest,
and the Business Cycle innovation is
distinguished from invention by the fact that
innovation is usually applied successfully in
practice.
Innovation - Diffusion
When innovation occurs, innovations may be
spread from the innovator to other individuals
and groups.
This process has been proposed that the life
cycle of innovations can be described using
the 's-curve' or diffusion curve. The s-curve
maps growth of revenue or productivity
against time.
Innovation - Diffusion
In the early stage of a particular innovation, growth is
relatively slow as the new product establishes itself.
At some point customers begin to demand and the
product growth increases more rapidly.
New incremental innovations or changes to the
product allow growth to continue.
Towards the end of its life cycle growth slows and
may even begin to decline. In the later stages, no
amount of new investment in that product will yield a
normal rate of return.
Innovation - Diffusion
The s-curve derives from an assumption that
new products are likely to have "product
Life". i.e. a start-up phase, a rapid increase in
revenue and eventual decline.
But in fact the great majority of innovations
never get off the bottom of the curve, and
never produce normal returns.
Innovation - Diffusion
Innovative companies will typically be working on
new innovations that will eventually replace older
ones. Successive s-curves will come along to
replace older ones and continue to drive growth
upwards. In the figure above the first curve shows a
current technology. The second shows an emerging
technology that current yields lower growth but will
eventually overtake current technology and lead to
even greater levels of growth. The length of life will
depend on many factors.
Open Innovation
Open innovation is a paradigm that assumes that
firms can and should use external ideas as well as
internal ideas, and internal and external paths to
market, as the firms look to advance their
technology.
The boundaries between a firm and its environment
have become more permeable; innovations can
easily transfer inward and outward.
Open Innovation
The central idea behind open innovation is that in a
world of widely distributed knowledge, companies
cannot afford to rely entirely on their own research,
but should instead buy or license processes or
inventions (e.g. patents) from other companies. In
addition, internal inventions not being used in a firm's
business should be taken outside the company (e.g.,
through licensing, joint ventures, spin-offs)
Open Innovation
Idea Generation Selection Execution Commercialization
Open Innovation
Idea Generation Selection Execution Commercialization
Open Innovation
Idea Generation Selection Execution Commercialization
Open Innovation
Idea Generation Selection Execution Commercialization
Develop
New ideas
Open Innovation
Idea Generation Selection Execution Commercialization
Ideas and
innovations
from inside the
organisation
patents and
innovations
from outside the
organisation
Develop
New ideas
Open Innovation
Idea Generation Selection Execution Commercialization
Ideas and
innovations
from inside the
organisation
patents and
innovations
from outside the
organisation
Develop
New ideas
Open Innovation
Idea Generation Selection Execution Commercialization
Ideas and
innovations
from inside the
organisation
patents and
innovations
from outside the
organisation
Select
Successful
Ideas
Develop
New ideas
Open Innovation
Idea Generation Selection Execution Commercialization
Ideas and
innovations
from inside the
organisation
patents and
innovations
from outside the
organisation
Select
Successful
Ideas
Develop
New ideas
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Open Innovation
Idea Generation Selection Execution Commercialization
Ideas and
innovations
from inside the
organisation
patents and
innovations
from outside the
organisation
Select
Successful
Ideas
Develop
New ideas
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Open Innovation
Idea Generation Selection Execution Commercialization
Ideas and
innovations
from inside the
organisation
patents and
innovations
from outside the
organisation
Select
Successful
Ideas
Prototypes
and
Production
Develop
New ideas
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Open Innovation
Idea Generation Selection Execution Commercialization
Ideas and
innovations
from inside the
organisation
patents and
innovations
from outside the
organisation
Select
Successful
Ideas
Prototypes
and
Production
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Open Innovation
Idea Generation Selection Execution Commercialization
Ideas and
innovations
from inside the
organisation
patents and
innovations
from outside the
organisation
Select
Successful
Ideas
Prototypes
and
Production
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Open Innovation
Idea Generation Selection Execution Commercialization
Ideas and
innovations
from inside the
organisation
patents and
innovations
from outside the
organisation
Select
Successful
Ideas
Prototypes
and
Production
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Product
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Open Innovation
Idea Generation Selection Execution Commercialization
Ideas and
innovations
from inside the
organisation
patents and
innovations
from outside the
organisation
Select
Successful
Ideas
Prototypes
and
Production
I
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Crowdfunding
The Status Quo
Venture capital difficult to find for smaller
requirements
Debt finance hard to come by
Business angels limited investments
Typically a syndicate each investing 10k - 100k
What if there was a way to have say 5000 angels
each investing 10?
What if anyone could become a business angel?
Crowdfunding is an approach to raising the capital
required for a new project or enterprise by appealing
to large numbers of people for small donations

Crowdfunding examples
Kiva.org - $325m funding raised, >777,000 lenders,
~800,000 entrepreneurs
Kickstarter.com >24,000 projects funded, >
$250m pledged to-date, 2m people have pledged

Crowdfunding
Three Types of Crowdfunding
1. Donations, Philanthropy and Sponsorship
where there is no expected financial return
Kickstarter, IndieGoGo, RocketHub, Faithfunder,
CharitySub, ChipIn, Catchafire
2. Lending/Borrowing
KIVA, RateSetter, Funding Circle
3. Investment in exchange for equity, profit or
revenue sharing
Profounder, AppBackr, PeerBackers, Quirky,
GrowVC








Fast Growing Retail Business
Funding Circle is a UK
clearinghouse for semi-
anonymous lenders and
borrowers (bank)
Primarily for expanding existing
small businesses
Variable loan rates/term
Average return 8.3%
Funding Circle does the credit
check, rates risk
Lender amounts small
$40 million in transactions to
date

Common Crowdfunding Mistakes
1. Asking for Too Much or Too Little
2. A Bad Promo Video: too long, not clear on the
benefits, no humour, no excitement
3. No Clear Itemized Budget
4. Poor or Overpriced Perks
5. Failing to Promote Your Project to Your Social
Media Network
6. Failing to Inspire - No Good Story or Hook
7. Giving Up Too Early