Dear Students,
Please share at least three takeaways from Lecture #2 posted on the class website. Please stay original and not reiterate others’ ideas and comments as there was enough material covered to go around to share your thoughts and opinions.
UGBA 193I- Lecture Takeaways
The first key takeaway that I got from the Lecture #2 is that there are many different types of people that are necessary in executing successful innovation. To be specific, there are A and B personality types. I am dominantly a B personality because I plan for retirement more than I spend on my inventions, I believe that research is a necessary evil, and I focus on incremental improvement rather than creating something entirely different. There is also a third characteristic that some people have which is the catalyst aspect to their personalities. This means the ability to simply start and do something yourself. It is important however to have all different types of people for an effective team because it ensures that not only is the product and innovation being created, it is being executed and made, and commercialized as well. As an example that all different types of personalities are needed, Professor Darwin discussed how Edison was not actually the one to invent every aspect of the lightbulb, it took dozens of other people who were all working hard to discover different components of electricity that led to the invention of the most important invention of the lightbulb!
The second key takeaway which I learned was about the paradign shift from resources to dynamic capabilities. It is important to note that is it no longer essential to simply study the balance sheet view of assets and capabilities. Since then, it has migrated to the capabilities of people enabled by the digital age. Continuing off of this, the old way of doing business was having lots of assets with a minimal emphasis on orchestration of utilizing the assets. The key success factor was to simply utilize a balance sheet view of the entire business. However, the new way is to now own less assets coupled with more orchestration. The term for this is called asset utilization. (Maulik from Ahmedabad utilizes asset utilization in his start-up very effectively.) With this new and improved method, it allows for businesses to be more successful with rapid deployment.
Lastly, the key takeaway that I received was that although we are taught in business school to collaborate and to promote open innovation, closed innovation is actually a really effective catalyst for innovation. A great example that Professor Darwin used was how during World War II, the United States was competing with other nations to produce the most innovative and effective weaponry against other countries. Through this process, the United States came out on top. This is an example of closed innovation because the United States was not collaborating with other countries to innovate, they were working with just themselves.
Lecture 2 was the first time our entire team reunited after India! It was great to see familiar faces back in Berkeley. I also really like that the class lecture focused on learning more about ourselves and our team (A and B exercise). My team ended up being very balanced in terms of our Type A and Type B members. I leaned more towards Type B which is not surprising for me especially because I have taken many personality quizzes like this before and they all provide similar results. One interesting personality quiz our whole class could take is the Myers Briggs personality test: http://www.humanmetrics.com/cgi-win/jtypes2.asp
Also, here is the information on the upcoming Bay Area Events on Smart Cities that our class can take advantage of:
1. Innovation council meeting feb 26
2. IOT for cities summit march 10-11
I am looking forward to working more with my team and start developing a proposal for SF!
Professor Darwin’s lecture in today’s class focused first on team composition and how innovations come to fruition. He pointed out the difference between an innovator and an inventor, and my first key takeaway is that both skill sets are necessary for innovation. While none of us knew the inventors of many very common innovations the professor proposed, we were extremely familiar with the inventors because they had the ability to actually commercialize the product.
I also found it interesting when Professor Darwin pointed out that Thomas Edison had to become a “politician” to lobby for the utilities necessary to evangelize the light bulb. The number of people needed and obstacles to cross in order to actually make a product that we now think of as commonplace is important to keep in mind as we move forward with new ideas for smart cities. I assume that the number of political and social hurdles that a city faces in implementing new technologies for activities in daily life is very large, yet in focusing on the example of the light bulb, it is easier to see that an end achievement may be worth the fight.
While the professor then moved on to explain in more detail the differences between open and closed innovation, one thing that really stuck with me from today’s class was the differences between people in my group and class and how these differences are crucial to forming a cohesive team for innovation. The fact that our personal preferences translate into roles such as an inventor, innovator, and catalyst make for both interesting discussions and big ideas, and we will need to think of a strategy moving forward that takes advantage of these characteristics to match individual’s capabilities with opportunities in the marketplace. This will make our ideas a success.
Takeaway 1. – “Thomas Edison didn’t invent the lightbulb by himself, but he did it with the help of Humphry Davy, Henry Woodward, Charles Jenkins, and many other inventors.”
Innovation is not just an outcome, but it’s a process. The advent of a long-lasting electric lightbulb would have been impossible without the invention of an electric battery, failures of a carbon paper filament, and the discovery of a tungsten filament. Such is also true in the introduction of the iPod. It was the transition from the big CD players to clunky mp3 players that alerted Apple to create a more slim and portable music player and capture a quickly growing market. Inventions are the stepping stones of technological development, and they pave the way for cities and countries to innovate, which leads to economic expansion.
Takeaway 2. – “Innovation is putting a dot beyond the frontier.”
Organizations either want to spend less and be less differentiated, or spend more and be more differentiated. These two extremes are what make up the differentiation frontier. In order for organizations to reach the frontier, it needs to optimize its operations. This means increasing profits by cutting costs, increasing revenues, or a combination of both. Strategy is deciding which extreme to lean more towards. Do I want to be a low cost, low differentiated company like Wal-Mart? Or do I want to be a high cost, high differentiated company like Nordstrom? Innovation is leveraging operations and strategy to expand the frontier. This could mean being highly differentiated at half of what it would’ve costed on the previous frontier.
Takeaway 3. – “In the 21st century, open innovation > closed innovation”
While closed innovation has been successful in the First and Second World War, it has been slowing technological progress in the 21st century. For example, the United States’ strict regulation on patents has given Apple the power to prevent many companies like Samsung and Motorola from using a rectangular form-factor for building tablets and smart phones. This forced them to research new form factors, when they could’ve spent their time and resources researching ways to improve the functionalities of the smartphone. Such type of closed innovation curbed the growth of knowledge, and further slowed down technological advancement. Today, there is an urgent need for open innovation, where companies and organizations can build off of each other’s ideas. Creating an open platform will contribute to faster technological advancement and economic growth of cities, countries, and the world.
Professor Darwin’s second lecture provided the following three key takeaways: (1) valuing an innovative business model over new technology, (2) cultivating dynamic capabilities, and (3) leveraging inventors, innovators, and catalysts. First, companies can innovate beyond the limits of creating new technology. Rather, they can innovate within the context of their business model. Using the case example of Nespresso, we saw how a nearly unprofitable home espresso machine brand, innovated by selling espresso pouches rather than the machine itself. The machine itself was a one-time purchase and the pouches provided reoccurring revenue to the firm. In the context of a smart city, city leaders must alter a fixed mentality of taxes, tolls, parking rates, etc. as sole means of funding their “business.” Second, companies no longer grow based off the size of their balance sheet. Ultimately, excess assets can hinder the growth and internal communication of an organization. In order to compete today, companies must be able to communicate internally and externally. This ultimately leads to rapid deployment of information that optimizes decisions. In the context of smart cities, this means that the city governance can create more value by communicating between building, organizations, and users, to optimize decision and resource allocation. Third, any organization must provide inventors, innovators, and catalysts the opportunity to think, develop, and create. As discussed, inventors build technological capacity, innovators commercialize that technology, and catalysts orchestrate everything in between. To leverage the broad skillset of all three, organizations must not fear “false positives” but rather focus on minimizing “false negatives.” A company’s ability to inspire “intrapreneurship” and cross-company collaboration can maximize innovation, minimize wasted R&D budgets, and cultivate healthy profits.
Lecture 2 Takeaways:
• Creating new inventions is important, but only one part of the innovation process. If an invention cannot be adopted by the masses, then it is not an innovation—it is simply a product. For an invention to become an innovation, there must be a business model in place.
• Growth is compounded in open environments where knowledge can be shared. In contrast, closed environments stifle growth and result in redundancy that can be costly.
• Interoperability is the key to success in today’s open global economy. The existence of resources is not enough. Dynamic relationships between resources transform them from being static objects to means of revenue and value creation.
Lecture 2 Takeaways:
Innovation is an iterative process of generation, application, and diffusion of new ideas or new applications of old ideas.
• It requires inputs (e.g. skill/education of employees, press information, linkage with knowledge institutions), process (e.g. marketing, organizational strategy, design), outputs (e.g. patents, publications, trademarks, prototypes), and impacts (e.g. citations, improved processes/reduced costs, new market entry).
• It is also an interactive process involving multiple actors and agents, exchanging different knowledge sets. A certain “cognitive distance” is necessary within a team or an organization to encourage higher levels of innovation. In fact, there have been studies conducted to measure the relationship between cognitive distance and innovation performance of firms, particularly in tech-based alliances, that found positive effects for firms that engage in more radical, exploratory alliances than in more exploitative ones. In moving forward with our semester, it will be important to explore the dissimilarities in skill set and differences in opinions within my team to bring about the optimal cognitive distance.
• As new forms of innovative capabilities form, open innovation becomes increasingly more important as a means to uncover new ideas, reduce risk, increase speed and leverage scarce resources. Whether it is through firm-to-firm sharing, open sourcing, clustering, or the like, open innovation promotes efficiency and long-term sustainability.
In class today, Professor Darwin introduced us to the differences between inventors and innovators. We got the chance to get to know our teammates through short exercises that revealed which personality we identify more with. Through this lecture and the various exercises that were a part of it, I left class with 3 takeaways:
1) Having an idea is not enough- Total Product Experience is key!
Implementation is just as important as the idea itself. There needs to be a means for execution in order to engage the end user. For example, Thomas Edison was not the first to invent the light bulb, but he was the first to develop the means for the light bulb to be adopted (utility system).
2) Invest in what you already have
Today, it does not matter how much of something you have; rather, how well you can utilize what you already have. Professor Darwin called this a paradigm shift from resources to dynamic capabilities. We can work on becoming smarter on how we orchestrate the resources we already have rather then immediately turning to accumulating more resources.
3) Research and Innovation go hand in hand-> open innovation!
We learned that research turns money into knowledge, and innovation turns that knowledge into money. This money can then feedback directly into the research. Thus, open innovation is that critical step that links the two processes. If someone does pure research but does nothing with the knowledge, s/he may eventually run out of funding. Even if that knowledge is not applicable to that person’s direct line of business, it may be relevant to someone else. By licensing findings or some other type of agreement, the original researcher can still benefit from sharing his/her research, which can generate further funds for that work.
Three main takeaways:
1. Success requires more than just creating a great product but requires one to be politically savvy.
Today we were presented with this binary – in that inventors are more likely to create and innovators are more likely to improve. (I’m not completely sure if I agree with this dichotomy, as binaries in their very nature tend to set bounds and limitations.) However, I think Professor Darwin provided a compelling example of Thomas Edison and the light bulb (see above comments for more info). Edison (an innovator) is credited with the invention of the light bulb because he was the first one to commercialize it and set up political and physical infrastructure to take the product to market; however, when Nikola Tesla invented something better…Edison quickly fired him because that would ruin all his efforts of pushing his version of the light bulb. Even though Tesla’s product was more innovative, it didn’t make it to market because Edison was more impactful and had more levers to work with making him a powerful opponent. (Here is a good rap song about their relationship: https://www.youtube.com/watch?v=gJ1Mz7kGVf0) But I suppose, what I’m trying to say is that if you want to change the world, knowledge in itself is not useful. For instance, you can craft out the perfect policies to alleviate poverty, but the actual practice and implementation requires more than knowledge – it requires a lot of people-skills, collaborative communities, intuition, and trust.
2. Stop valuing the “Eureka” moment!*
This seems to be a point that has been reiterated in my UGBA 192A* class too. It’s the idea that we don’t need the groundbreaking revolutionizing ideas to be successful, but there are still a lot of systems that need to be improved upon. But at the same time, we live in a society that highly admires and values these groundbreaking ideas. For instance, “disruptive tech” is everyone’s favorite buzzword (i.e: Uber/Lyft, maybe Facebook?). But I think a lot of success and real work that has been done is through the improvement of current systems and ideology. My History of Economic Thought professor said that a lot of the times people who win the Nobel Peace Prize in Economics all have roughly the same ideas/conclusions from older philosophers like Aristotle and Hegel. So perhaps, in thinking about innovation, there is still a lot of value in studying philosophy, history, and anthropology.
3. Innovation funnel is a decision-making tool to help a person select ideas, which is optimally used for closed innovation. But for closed innovation, is there such a thing as an open funnel?
Instead of being called the innovation funnel, it should just be called a normal funnel? The funnel is a classic decision making tool – in that ideas (good or bad) are easy to come up with as it doesn’t cost money but once you put all these ideas in the funnel – some will work and some will not work depending on constraints. The ones that work are “funneled” out and target the specific market. This model is perfect for closed innovation. However, for open innovation, the funnel has many holes in it, which spreads these ideas out and targets various groups – thus, defeating the point of the funnel. Perhaps, I’m being too technical and going overboard with the idea of the funnel. But this model feels so linear and it doesn’t sit well with me. I’m not really an expert on this subject – but would it be possible to move beyond the innovation funnel model?
Takeaway 1: In the beginning of the class, Professor Darwin had us complete a short evaluation to determine whether we are Type A or Type B personalities. Type A and Type B personalities both exhibit many characteristics. For example, Type A’s tend to be inventors while Type B’s tend to the catalysts. What I realized is that most people exhibit certain characteristics from both categories. It is important for us to recognize which characteristics we have as a team and to leverage our strengths and work together to produce successful projects.
Takeaway 2: The second takeaway from Tuesday’s lecture is that there has been a paradigm shift from resources to dynamic capabilities. In the past, business models revolved around having assets. The more assets a company had, the more successful it was considered. However, success today is often not attributed to company’s assets but its orchestration- in other words, how effectively a company uses its assets. This requires dynamic capabilities such as employee skills.
Takeaway 3: Time and time again, leaders in today’s society have claimed that open innovation is a key element to progress. However, it is important to note that in the past, closed innovation has actually contributed to unprecedented success and progress. For example, during the Cold War, innovation was very closed up and secretive. This actually pushed the United States to further innovate in areas such as space exploration to compete with its counterpart in the USSR. However, today, closed innovation is not longer are relevant. Because of mechanisms such as the Internet, information is often free flowing and hard to contain. This sort of changing environment has required changes in the way innovation is pursued. Today’s society no longer encourages closed innovation, but rather open innovation in which knowledge is shared amongst multiple groups to encourage progress.
Lecture #2 was extremely eye opening as it made me reevaluate the meaning of the most basic terms along the topic of Open Innovation. For example, research versus innovation, in which research turns money into knowledge but doesn’t guarantee results in advance, compared to innovation which turns knowledge into money, with a focus on achieving specific outcomes and targeting unmet needs. As we delved further into the discussion of Inventors versus Innovators, a key takeaway for me was that the two roles are so distinct, yet they are equally as crucial in the development and overall success of a product’s life cycle. It was interesting to note that majority of people are unaware of the actual inventor of products, and only associate the innovators to the original ‘creators’ (Personally, I had never even heard of Elisha Grey as the inventor of the telephone, in contrast to Alexander Graham Bell!). There is such a rapid shift in the development and progress of innovation in today’s age. In relation to this, one other key takeaway that I thought was very useful is Professor Darwin’s emphasis on dynamic capabilities of the city over resources. Cities previously approached planning with the idea that the most critical success factor should always be referenced to the balance sheet. However, we should instead be focusing on how well the city is able to utilize these resources accordingly in the most efficient manner. This will prove to be critical food of thought as we continue to progress through our project this semester of developing innovative business models for our respective cities.
In the words of Henry Chesborough: “The highest and best use of [a company’s] capabilities is in open innovation approaches to constructing business platforms. These platforms induce others to invest their time, money, energy, and ideas in extending your initiatives. As they do, your platform becomes more attractive to more customers, while becoming more profitable and sustainable for you.”
One of the most surprising aspects of this lecture for me was that closed innovation, although extremely effective in the past, is no longer an effective method of innovation. Open innovation represents a paradigm shift in the way we establish and grow companies. The greatest differences one must note in order to encourage open innovation is taking advantage of:
– Both internal AND external technology bases
– Be open to insourcing technology and outsourcing venture handling
– Realize the potential of all ideas: those that can be licensed and divested, those that open to new markets, and those that target the current market
One must also know how to work with all players of a team — because there are both A types and B types. A types are the inventors while B types are the catalysts and team-builders. A company cannot exist and thrive without BOTH. Just like in a company, in our own groups, it is best for us to identify our individual strengths early on and create synergies between the A’s and B’s to not only operate, or strategize, but to figure out how to break constraints and establish a new frontier.
Takeaway #1: The Commodity Trap
As the world has shifted from an industrial economy into a knowledge economy with information flowing freely on the Internet, companies have experienced decreases in revenue due to greater competition. At the same time, costs of internal development have increased since product lifecycles are shorter and companies have to invest more in R&D to remain competitive. However, the solution to this commodity trap lies in open business models. Open business models allow companies to decrease internal costs by sharing the costs of R&D and product development, and they also enable companies to generate revenue in new ways (licensing, spin offs, outright sales, etc.). Companies that have embraced this new model have already begun to reap the benefits, while those with closed business models are struggling to keep up with competition.
Takeaway #2: Enabling Technologies
In the knowledge economy, competition comes from unknown and unexpected sources. Also, certain innovations can act as enabling technologies and make all other similar technologies obsolete or significantly reduce their demand within a short period of time. For example, Southwest disrupted the hub-and-spoke model when it introduced the point-to-point model that required one airplane model, one pilot, and one type of engine. Now, this engine has been improved so that it can travel from California to Honolulu, the UK, and other relatively far locations; this has become one of the biggest threats to traditional airlines utilizing larger commercial airplanes.
Takeaway #3: Two Types of Orchestrators
Organizations need orchestrators (catalysts) to drive innovation, and the two types of orchestrators are those with executive capabilities and those with dynamic capabilities. People with executive capabilities thrive in operational, administrative, and governance roles, and their focus is typically “doing things right.” On the other hand, people with dynamic capabilities effectively sense, seize, and transform, and they focus on adapting and “doing the right things.” In the modern economy, it is more difficult to be a dynamic orchestrator since competitive environments are constantly changing and new products and services are regularly disrupting industries. However, both are needed for a company to reach its maximum potential.
#1 Inventors and Innovators: Professor Darwin today made a distinction between inventors and innovators, creating and capturing value. He showed us a list of products that we use everyday along with the inventors, but we didn’t recognize any of those names. He then revealed the innovators, which were all names that we knew. Joseph Swan and numerous others made gradual progress towards creating the light bulb, but they were focused on creating value. On the other hand, innovator Thomas Edison
was the one who captured the value by creating a business model for the light bulb by successfully convincing New York to create an electric infrastructure to support the installation of lightbulbs, and the rest is history. While both inventors and innovators are needed to create products that have never existed before, we end up remembering the innovators because they are the ones who successfully commercialize the inventions.
#2: Closed innovation is obsolete: During WWII and the Cold War, keeping the fruits of R&D a secret within a closed innovation model was crucial to make sure that enemies could not steal American technology and that the US could compete with the USSR in areas such as space exploration. That’s no longer relevant today. Tech companies still using a closed innovation are experiencing a brain drain because its top researchers have grown frustrated with the restrictions of closed innovation and want to leave for competitors. Open innovation is now in vogue because it allows anyone to tap into knowledge from anywhere on Earth. This will accelerate technological advancement because it allows inventors to quickly build upon the success and mistakes of others so that effort does not have to be wasted on repeated trial-and-error.
#3: Shift in paradigm from resources to dynamic capabilities: What is essential is no longer reflected on the balance sheet. For example, in the past, armies would emphasize how many soldiers and tanks they have as a measure of their power. Developed countries currently need to rapidly deploy troops and weapons in a specific area half-way across the world. Thus, what’s important now are the technologies and capabilities that enable orchestration.
My classmates brought up fantastic points about the differences between inventors and innovators and the paradigm shift from exclusive resource utilization to the necessity of dynamic capabilities. To add another dimension to this discussion, I will describe three other key takeaways that are core to adding context to the necessity of open innovation business models in the 21st century:
(1) Research and Strategy vs. Innovation
“Research turns money into knowledge, innovation turns knowledge into money.” As Professor Darwin aptly stated, corporations traditionally focused on competing based on having the best resources and knowledge pool through acquiring talent and research. However, to make a product or idea commercially viable, corporations need to have “political champions” who position the product appropriately for the target market and can be flexible to adapt to changing industry dynamics. This is called strategy. A company’s strategy describes its decision to match its capabilities with opportunities in the marketplace and choose its constraints according to their business-level strategy (i.e. the strategic decisions made by a cost leader and a premium brand are very different). If a company retains the same or similar strategy but is able to do more with what they have, this is called innovation.
The most effective illustration of this concept is the production frontier graph. Operations dictate how the company optimizes its decisions within the constraints of the frontier (i.e. reaching the frontier of possibilities). Strategy determines the company’s operating constraints (i.e. choosing where on the frontier a company wants to be). Innovation is neither—it is the act of breaking the constraints and establishing a new frontier (i.e. leveraging disruptive technology to push the frontier of possibilities forward—the further the better).
Some examples of disruptive innovation discussed in class include Southwest Airlines’ hub-and-spoke route formation and the Tata Nano’s invention of a car that is much cheaper than the Ford Model T and can run on much faster Horsepower. I would also recommend reviewing Henry Chesbrough’s Funnel of Closed Innovation System for a more detailed understanding of how research can be transformed into a commercially viable product. There must be an alignment between the inventor and the innovator within R&D.
(2) Changes in Education, Government, Corporations, and Internal R&D
Amidst the rapidly evolving market dynamics, the role of universities, government institutions, and large corporations have also changed radically. Unlike during the World War I and World War II periods where schools such as Stanford and Berkeley were given large sums of money to innovate for military purposes and keep their inventions confidential, universities now acknowledge that research alone cannot provide an edge for their students in the corporate world. From my perspective, Berkeley has seen an influx of aspiring entrepreneurs and reacted accordingly with the building of the Skydeck incubator and communities such as the Berkeley Startup Cluster. Governments and corporations have also recognized that a business model is not “smart” if it does not enable participation with knowledge flows outside of their organizations—successful organizations must share information.
The most direct exemplification of this trend is the emergence of innovations from SME’s (small and medium-sized enterprises). Knowledge is becoming increasingly “free,” both in monetary value and in terms of the mediums through which they are shared, so creativity is coming from the ideas of people in smaller companies where knowledge flows are more efficient and suffer less from corporate bureaucracy. SME’s tend to encourage societal progress, because they benefit from overall market growth and are incentivized to share technology, patents, and talent.
For example, Xerox PARC had lost the innovation game due to its Closed Innovation business model. In the 1970’s, Xerox was a Fortune 500 behemoth and created the Palo Alto Research Center to discover ways to make a better and faster printer product. However, they began to see the departure of key employees due to their emphasis on minimizing “false positive” errors (ideas that look very good in the development funnel but would fail if the product went to the market) and minimizing “false negative” errors (ideas that look terrible in the funnel but would have had tremendous potential after launching to market). This risk aversion and unwillingness to collaborate with other companies who may have case studies that they can benchmark or existing platforms on which they can improve their products caused key talent to leave for other companies (i.e. Apple, Adobe, Microsoft) and watch their ideas come to fruition in those environments.
(3) The Commodity Trap vs. Open Innovation
As Henry Chesbrough coined, “Open innovation is the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the market for external use of innovation, respectively.” This renown concept is a stark contrast to what companies were familiar with in the past, “The Commodity Trap,” where the revenue generated by the products were seen as more important than investing in internal development. This overt concentration on the bottom line and cost minimization was detrimental to corporate innovation. Today, it is entirely possible to have both exceedingly healthy revenue figures and low costs, because Open Innovation enables companies to learn from each other’s existing capabilities without investing heavily in their own R&D. As a result, Open Innovation promotes both economies of scope and economies of scale: it enables companies to sell more products under their existing infrastructure without adding costs, and allows them to sell a greater volume of products that cause costs per unit to decline.
It was wonderful to be reunited with all of my classmates on our first day back at class in Berkeley! Professor Darwin provided us with a lecture entitled, “Why is Open Innovation Relevant?” Although this was a recurring topic of conversation throughout our time in India, Professor Darwin offered multiple new takeaways.
First, Professor Darwin started with a group exercise in which we were able to see the differing characteristics and strengths among our team members. For each pair of Statements A and B, individuals were told to stand up if they identified more with Statement B. I found that I tended to identify more with Column B Column than Column A. Our group was scattered across the board so I feel that we will each balance each other and bring something unique to the table. Similarly, Professor Darwin outlined the different qualities of “inventors,” “innovators,” and “catalysts.” I also believe that our team is fairly balanced under these three roles.
Second, Professor Darwin delineated the “paradigm shift” from the “old way” to the “new way.” In other words, what is essential is no longer on the balance sheet. The old way maintained a balance sheet view of assets and capabilities. This has migrated to the capabilities of people enabled by the digital age. In the new way, there is a heavy emphasis on soft assets which emphasizes orchestration as the key success factor.
Third, Professor Darwin described the differences between open and closed innovation. Closed innovation assumes that solely internal idea generation, production, marketing, distribution, servicing, financing, and supporting are the way to successful innovation. In contrast, open innovation is the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation. This discussion of open innovation was reminiscent on our conversation with Dr. Anil Gupta of IIM-Ahmedabad. He spoke of the Honeybee network, a website that facilitates the transfer of research, and stressed its importance in accelerating innovation. Overall, this first lecture in the Innovation Lab at Berkeley provided key groundwork for our discussions to come.
This lecture focused on categorizing different characteristics into innovator and inventor types. This activity, like many others provides a rough snapshot of a positioning but does not account for the immense amount of gray area that exists. Moreover, Professor Darwin highlighted on the ingenuity of the likes of Thomas Edison and Henry Ford for bringing innovations to market. These “innovators” are celebrated for their work. Capitalism breeds this kind of scaling of technology under the intention of monetary gain. There’s an argument of utility here. We as consumers reap the benefits of available stuff at the expense of recognizing true the efforts of true inventors. I encourage a change in mentality. GO TESLA http://theoatmeal.com/comics/tesla
My Lecture 2 Takeaways:
“Why do we remember the innovators and not the inventors?”
In today’s lecture, Professor Darwin asked us the question above. In order to tackle this question, Professor Darwin elucidated the distinction by creating and capturing value. We were shown everyday products and their respective innovators. It wasn’t until a picture of the light bulb came up did I really understand what Professor Darwin was talking about. The innovator who captures the value by creating a business model is the one who gets credit. I had no idea Joseph Swan was one of the key innovators that kept the creation of light blubs moving forward. It’s only Thomas Edison that gets credit for the invention.
“Open innovation is needed. No more closed innovation!”
Professor explained this topic of closed innovation as a necessity during the World War II and the Cold War times, as it was imperative that certain areas such as R&D remained a secret so that the enemies could not steal American ideals and technology. With much confidence, that idea is no longer relevant. We now need open innovation to be instilled on all parts within the business model. Open innovation will act as a catalysis for extreme technological advancement as knowledge can be adapted anywhere and from anyone. This is the ideals of open innovation that I took away from Professors lecture.
“Paradigm Shift From Resources to Dynamic Capabilities”
I found this interesting as its something I noticed but never really thought about. Bottom line is that, what was consisted essential is no longer reflected on the balance sheet. Professor Darwin gave the example of how armies used to exemplify power based on how many soldiers, tank, and over army weaponry they had. Now more than ever technologies that could be implemented are what is needed and is now shown on the balance sheet.