Inovasi Sistem Pengembangan Agroindustri

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1. Innovation Process Week 2

2. Innovation = theoretical conceptions + technical invention + commercial exploitation Innovation is the management of all the activities involved in the process of idea generation, technology development, manufacturing and marketing of a new (or improved) product or manufacturing process or equipment

3. Models of Innovation Serendipity The importance of the unexpected discovery Discoveries may not be expected, but “chance favors the prepared mind” Linear Models

4. Technology push Assumed that scientists make discoveries  technologist apply them to develop product ideas  engineers & designers turn them into prototypes  manufacturing produce them  marketing promote and sale them to users Market pull Marketing initiates ideas and the importance of understanding what the customers want

5. Simultaneous coupling model The linear models (1) does not concentrate on how innovations occurs & (2) only able to offer an explanation of where the initial stimulus triggered Simultaneous coupling of the knowledge within three functions that will foster innovation

6. Interactive Model Links technology push and market pull models Innovation occur as the result of the interaction of the marketplace, the science base and the organization’s capabilities Innovation process can be thought of as a complex set of communication paths over which knowledge is transferred

7. Innovation as a management process Innovation is not a singular event, but a series of activities that are linked in some way to the others Innovation as a process and involves: A response to either a need or an opportunity that is context dependent A creative effort that if successful results in the introduction of novelty The need for further changes

8. Network models Innovation is describes as an information-creation processes that arises out of social interaction Organization provides a structure within which the creative process is located The importance of interaction and communication within and between functions and with the external environment Interactions provide the opportunity for thoughts, potential ideas and views to be shared and exchanged Creation of new knowledge within an organization depends on tapping the tacit and often highly subjective insights, intuitions and hunches The need for a ‘shared language’ to facilitate communication Specialized language  effective in communication Overlap of knowledge is needed for communication to occur the need for diversity vs the need for communality to facilitate effective internal communication

9. Innovation as a knowledge-based process Innovation  creating new possibilities through combining different technological sets Innovation rarely involves dealing with a single technology or market but a configuration

10. Problems if we see innovation partially

11. Partial thinking Seeing innovation as a linear ‘technology push’ process or one in which only the market is relied upon to pull though innovation Seeing innovation simply in terms of major “breakthrough” – and ignoring the significant potential of incremental innovation Seeing innovation as a single isolated change rather than as part of a wider system Seeing innovation as product as process only, without recognizing the interrelationship between the two

12. If innovation is only be seen as…. …the result can be Strong R&D capability Technology which fails to meet user needs and may not be accepted The province of specialists Lack of involvement by others, and a lack of knowledge and experience input from other perspective in the R&D Understanding and meeting customer needs Lack of technical progression, leading to inability to gain competitive edge Advances along the technology frontier Producing products or services which the market does not want or designing processes which do not meet the needs of the user and whose implementation is resisted The province only of large firms Weak small firms with too high a dependence on large customers. Disruptive small players seize new technical or market opportunities

13. If innovation is only be seen as…. …the result can be Only about ‘breakthrough’ changes Neglect the potential of incremental innovation Only about strategically targeted project May miss out on lucky ‘accidents’ which open up new possibilities Only associated with key individuals Failure to utilize the creativity of the remainder of employees, and to secure their inputs and perspectives to improve innovation Only internally generated The ‘not invented here’ effect, where good ideas from outside are resisted or rejected Only externally generated Innovation becomes simply a matter of filling a shopping list of needs from outside and there is little internal learning or development of technological competence Only concerning single firms Exclude the possibility of various forms of inter-organizational networking to create new products, streamline shared processes, etc

14. Innovation Life Cycle

15. Innovation Life Cycle

16. The challenge of discontinuous innovation Schumpeter’s theory of innovation A process of ‘creative destruction’ ‘steady state’ innovation conditions are punctuated by occasional discontinuities This discontinuities can cause one or more of the basic conditions (technology, market, social, regulatory, etc ) to shift dramatically Christensen’s disruptive innovation theory –the innovator’s dilemma

17. The Innovator’s Dilemma The best of conventional good business practices can ultimately weaken a great firm from “The Innovator’s Dilemma”, by Clayton M. Christensen, Harvard Business School Professor, on technological innovation and disruptive technologies

18. Disruptive Technology: Famous Incorrect Predictions “What could be more palpably absurd than the prospect of locomotives traveling twice as fast as stagecoaches” The Quarterly Review, March 1825 “The horse is here to stay, but the automobile is only a novelty – a fad” Advice to Henry Ford’s Lawyer, 1922 “Well informed people know that it is impossible to transmit the voice over wires and were that it were possible to do so, it would be of no practical value” Editorial in the Boston Post, 1865 “This telephone has too many shortcomings to be seriously considered as a means of communication.  The device is inherently of no value to us.”  Western Union Internal Memo, 1876

19. Disruptive Technology: Famous Incorrect Predictions “The wireless music box has no imaginable commercial value.  Who would pay for a message sent to nobody in particular?” Response of Associates of David Sarnoff, when invited to invest in radio “I think there is a market for about five computers.” Thomas Watson, Sr. Founder of IBM, 1943 “There is no reason anyone would want a computer in their home.” Ken Olsen, President and Founder of Digital Equipment Corp., 1977 “640k ought to be enough for anybody” Attributed to Bill Gates in 1981

20. Disruptive Technology: Famous Incorrect Predictions A cookie store is a bad idea. Besides, the market research reports say America likes crispy cookies, not soft and chewy cookies like you make. --Response to Debbi Fields' idea of starting Mrs. Fields' Cookies. Airplanes are interesting toys but of no military value. -- Marechal Ferdinand Foch, Professor of Strategy, Ecole Superieure de Guerre. But what ... is it good for? --Engineer at the Advanced Computing Systems Division of IBM, 1968, commenting on the microchip. Computers in the future may weigh no more than 1.5 tons. --Popular Mechanics, forecasting the relentless march of science, 1949 Drill for oil? You mean drill into the ground to try and find oil? You're crazy. --Drillers who Edwin L. Drake tried to enlist to his project to drill for oil in 1859. Everything that can be invented has been invented. --Charles H. Duell , Commissioner, U.S. Office of Patents, 1899.

21. Disruptive Technology: Famous Incorrect Predictions People predict the future incorrectly because the “wrong” answer makes sense at the time Watson could not have know about: Miniaturization Networking The Internet User friendly, graphical user interfaces Falling costs of computer components

22. Technologies Sustaining – Steady, linear improvement of existing technology Disruptive – Introduction of completely new approaches that have the potential to create a new industry or transform an existing one Revolutionary – radical innovations digital photography, microbots , high-temperature superconductors Evolutionary – formed by the convergence of previously separate research areas MRI imaging, faxing, electronic banking

23. The Innovator’s Dilemma The PC is a prime example of a "disruptive technology" that was dismissed out of hand by an industry's established leaders until it was too late. Disruptive technologies work by offering, at least initially, little in the way of performance, but plenty in terms of cheapness, convenience and ease of use. As such, they appeal to a different class of customers, carving out new markets for themselves before going on to have the industrial Goliaths' business for lunch.

24. The Innovator’s Dilemma The Innovator's Dilemma: A company which is in an existing business and listening to its existing customers feels that there is no need for anything new. Should it invest its money to make new products that its best customers can use and that would improve the company’s profit margins" or invest its money to create worse products that none of its customers can use, that would wreck its profit margins. Sustaining technologies – meet the needs of customers today and the ones who are paying Disruptive technologies – come from innovators who keep improving the product performance till it comes "from below" and starts hurting the entrenched incumbents.

25. Dilemmas of Disruptive Technology performance demanded at the high end of the market New performance trajectory Disruptive technology PERFORMANCE TIME performance demanded at the low end of the market or in a new emerging market Established Market Technology Trajectory Emerging Market Technology Trajectory

26. Disruptive Technology The sustaining technologies are on the blue line e.g., incremental engineering advances that all good companies are able to grind out. The downward yellow arrow , a disruptive technology, is something that brings to the market a product or service that is not as good as what historically had been available, and therefore it can't be valued or used by customers in the mainstream of the market. Yet it takes root in a different application. The green line represents the new performance trajectory - it slopes upward faster than the sustaining technology and intersects with the customers needs and the mainstream.

27. Innovator’s Dilemma Disruptive technologies do not initially satisfy the demands of even the high end of the market.  Large companies choose to overlook disruptive technologies until they become more attractive profit-wise.  Eventually they surpass sustaining technologies in satisfying market demand with lower costs.  Large companies who did not invest in the disruptive technology sooner are left behind. 

28. Disruptive Technologies Well-established companies have problems dealing with disruptive technologies because they aren't prepared to handle the changes they bring on. Christensen defines disruptive technologies as "simple, convenient-to-use innovations that initially are used by only unsophisticated customers at the low end of markets.“ Large companies tend not to pay attention to these disruptive technologies because they don't satisfy the demands of high-end users -- at least, not at first. But because these radical innovations initially emerge in small markets, they can, and often do, become full-blown competitors for already established products If a company is prepared to deal only with "sustaining technologies," or technologies that improve product performance, and not disruptive technologies, it can fail.

29. Digital Equipment Corporation Although it was considered one of the best companies in the 1970s and 1980s, Digital was destroyed by a disruptive technology -- the PC During the mid-1980s, Digital kept pace with users' demands for increased amounts of computing power. As the company continued to supply this power, it also continued to lower prices. The well-managed Digital appeared to be on the road to complete dominance of its market. Introduced by a few start-ups, the PC appealed to individuals, not enterprises, who wanted to use them mainly to play games. In 1977, Ken Olsen, the founder and CEO of Digital Equipment Corporation, said, "There is no reason for any individual to have a computer in his home." DEC decided not to invest time, or money, in a product its customer companies didn't want. Digital's management continued to invest in its high-end products. The rest is history. Digital's customers decided they didn't want to pay high prices for its products when the PC was cheaper and performed adequately. Digital was done in by a disruptive technology it failed to recognize.

30. Technology Adoption Lifecycle Curve The curve is loosely divided into 5 segment: Innovators, Early Adopters, Early Majority, Late Majority and lastly Laggards. The area under the curve can be interpreted as the User Expectations from the technology. The more mature the technology, the higher the user expectations. The laggards are the most difficult customers often requiring the most resources - most companies adopt the 80/20 rule. “Crossing the Chasm”, Geoff Moore

31. 80/20 Rule Innovation is absolutely critical to future competitive advantage and it can be easier by considering the following ideas: 80% of value perceived by customers relates to 20% of what your organization does 80% of the benefit from any product or service can be provided at 20% of the cost 80% of the profits made in your industry are made by 20% of firms. If you are not one of these, what are they doing right that you're not?

32. 2/10 Rule of Technology Adoption The 2-10 rule defines when a technology moves from the interesting and cool stage to the really useful. The really useful stage is when you are willing to spend money to implement the technology products and services at your company. Year 2 Cool Stage Year 10 Useful Stage

33. 2/10 Rule of Technology Adoption Examples: fax machine; desktop PCs; operating systems; PDAs; GPS; mobile phones; email and ecommerce. All of these products and services were launched with great fanfare that touted the way they would revolutionize our lives. All of them failed to live up to their hype in the early days. But all of them have gone on to over-deliver on their original promises and expectations.

34. More Heresies Don’t depend on customers mainstream customers initially reject disruptive technologies Don’t plan conventionally markets that don’t exist can’t be analyzed; plan to learn--not to execute

35. Historical Disruptive Technologies What are some disruptive technologies that help civilization advance

36. Sources of discontinuities Triggers Explanation Problems posed New market Most markets evolve through a process of growth, or segmentation Established players don’t see it because they are too focused on their existing markets New technologies Step change takes place in product or process technologies – resulting from convergence and maturing of several streams Established players don’t see it because it is beyond the periphery of technology search environment New political rules Political conditions which shape the economic and social rules may shift dramatically Old mindset about how business is done is challenged and established firms fail to understand or learn new rules

37. Triggers Explanation Problems posed Market exhaustion Firms in mature industries may need to escape he constraints of diminishing space for product and process innovation and the increasing competition of industry structures by either exit or by radical reorientation Current system is built around a particular trajectory and embedded in a steady-state set of innovation routines which militate against widespread search or risk taking experiments Sea change in market sentiment of behavior Public opinion or behavior shifts slowly and then tips into a new model Established players don’t pick up on it or persist in alternative explanation until it may be too late Deregulation/shifts in regulatory regime Political and market pressures lead to shifts in the regulatory framework and enable the emergence of a new set of rules New rules of the game but old mindsets persist and existing players is unable to move fast enough or to see new opportunities opening up

38. Triggers Explanation Problems posed Fractures along “fault lines” Long standing issues of concern to a minority accumulate momentum and suddenly the system switches /tips over Rules of the game suddenly shift and then new pattern gathers rapid momentum. Other players who have been in the background developing parallel alternatives may suddenly come into the limelight as new conditions favor them Unthinkable events Unimagined and therefore not prepared for events which change the world and set up new rules of game New rules may disempower existing players or render competencies unnecessary Business model innovation Established business models are challenged by a reframing, usually a new entrant who redefines/reframes the problem and the consequent ‘rules of the game’ New entrants see opportunity to deliver product/services via new business model and rewrite rules – existing players have at best to be fast followers

39. Triggers Explanation Problems posed Shifts in “techno-economic paradigm” – systemic changes which impact whole sectors or even who societies Change takes place at system level, involving technology and market shifts. This involves the convergence of a number trend which results in a ‘paradigm shift’ where the old order is replaced Hard to see where new paradigm begins until rules become established. Existing players tend to reinforce their commitment to old model, reinforced by ‘sailing ship’ effects Architectural innovation Changes at the level of the system architecture rewrite the rules of games for those involved at component level Established players develop particular ways of seeing and frame their interactions. Architectural shifts may involve reframing but at the component level it is difficult to pick up the need for doing so= and thus new entrants better able to work with new architecture can emerge

40. Stages in innovation life cycle

41. Assignment Read “Christensen, C. 1997. Patterns in the Evolution of Product Competition. European Management Journal Vol. 15 (2): 117-127. Take a look at the Indonesian policy of Industri 4.0. and reflect on this.

42. Why certain innovation spread more quickly than others? Why do other fails?

43. Diffusion and Insights Seeks to explain how innovation are diffused or taken up in a population Gives insights: What qualities make an innovation spread The importance of peer-peer conversation and peer networks Understanding the needs of different user segments

44. Qualities that make innovation spread Relative advantage Compatibility with existing values and practices Simplicity and ease of use Trialability Observable results

45. Importance of network Formal marketing (advertising and media stories) spread information Conversation spread adoption

46. Understanding the needs of different user segments Innovators Characteristics: lavish great time, energy, creativity on developing ideas How to work: Track them down, invite keen innovators in designing your project

47. Early adopters Characteristics: On the lookout for a strategic leap Quick to make connections between clever innovations and their personal needs Love getting and advantage over their peers and they have time and money to invest Social prestige and trend setters are parts of their biggest driers Important as an independent test bed  adaptation of innovation to mainstream needs

48. How to work with: Offer strong face-to-face support Study the trials carefully to discover how to make the idea more comfortable, convenient, lost cost and marketable Reward their egos, e.g. with media coverage Promote them as fashion leaders Recruit and train some as peer educators Maintain relationship with regular feedback

49. Early majority Characteristics are pragmatists, comfortable with moderately progressive ideas Won’t act without solid proof of benenefits Cost sensitive and risk averse Looking for simple, proven, better ways of doing what they have already do They want to hear plug and play, no sweat, user friendly and value for money

50. How to work with: Offer give-aways or compettition to stimulate buzz Use mainstream advertising and media stories featuring endorsement from credible and respected folks Lower entry cost and guarantee performance Redesign to maximize ease and simplicity Simplify forms and instructions Provide strong customer service and supports

51. Late majority Characteristics Conservative pragmatists who hate risk Their only driver is the fear of not fitting in  follow mainstream fashion and established standards Often influenced by the fears and opinions of laggards How to work with: Focus on promoting social norms rather than product benefits Keep refining the product to increase convenience and reduce cost Emphasis the risks of being left behind Respond to criticism from laggards

52. Laggards: Characteristics: See a high risk in adopting a particular product of behavior Tossing and turning, thinking up arguments against some ideas. Remember they might be right! They might not be really laggards but innovators that challenge your idea How to work with: Give them high levels of personal control over when, where, how and whether they do the new behavior Maximise their familitarity with ne products or behaviors

53. Innovators : 2.5% Early adopters: 13.5% Early majority: 34% Late majority: 34% Laggards: 16%