Today, I was most impressed by the attentiveness of my students to my lecture as well as the many good questions that were asked in the process. I liked this a lot! I expect this trend to continue and hope that more of my students will engage with me going forward. I also fed off the energy that was in the room as I spoke. Many of the students seemed to have read my syllabus and were on track as to what is going on especially about the phone calls tomorrow morning – many of them remembered and were ready to get to work. I also observed that several groups got together after class to plan for their meeting in the morning.
Today’s lecture focused on Open Innovation – however, I took some at the start to explain “why business models fail?” I felt that this is important for students to know – I gave examples from the real world scenarios to drive the point home.
I did not quite finish expanding the concept of open innovation fully but will continue and take the time to explain it well with some good examples. It seemed fine with the students that I did not want to rush through the syllabus and take my time.
This group seems to be a very enthusiastic and self-motivated group unlike many others I had taught before – so far I did not hear any grumbles or complaints about group assignments thus far – what a blessing! I wish to stay up beyond midnight if the students want to run by their questions they plan to ask their executives tomorrow. I wish them success as they establish contact with their sponsors.
Solomon Darwin
The one part of the lecture that struck me the most today was about the importance of culture in making innovation happen. Having grew up in Hong Kong, I definitely felt the difference in culture of the people and companies in Berkeley and the Bay Area compared to those in China. There is a lot more exchange of ideas and here, which actively encourages people to be innovative and have the available channels to empower them to do so. This open culture is something that is missing inherently in the culture of Hong Kong, where the education emphasizes more in following instructions and the textbook. And just like the situation in Russia that Professor Darwin talked about, Hong Kong and China also needs more people to come over and experience the culture here in order for their culture to change and innovation to occur more naturally.
I too was intrigued by the topic of ‘culture.’ This ties in with another class I’m taking (entitled Innovation and Entrepreneurship) where we discussed this idea that education suppresses creativity and certain skills (math and science) are valued more because they are considered more employable skills. The way education works in places like UC Berkeley, however, is students are encouraged to share ideas and participate in open innovation. With classes like this one we are able to realize the importance of thinking outside the box and we are encouraged and empowered to follow through with our ideas. The birth and success of startups in this area is due to this wonderful combination of inventive and creative thinking as well as a general openness and acceptance of change and new technologies.
Thank you for another enlightening lecture this afternoon! For the first exercise when you asked us to write down the first word that came to mind for strategy, I came up with analysis. I believe that a thorough and detailed analysis of your product and the market is necessary to develop a strong strategy. Analysis also seemed essential for strategy when you talked about matching capabilities with opportunities in the marketplaces. For innovation, I came up with “accident” and “R&D.” From your lecture, it seemed to me that innovation is very purpose driven, which can explain the growth of R&D in some companies. I’m not sure where my line of thinking was earlier, but are there some examples of where innovation happens accidentally?
Epiphany,
Maybe you were confusing “innovation” with “invention”. Although the two concepts work together, they are slightly different. I also thought about the two terms interchangeably when Professor Darwin had us write down two words that popped into our brains. Innovation does not happen accidently because it requires a planned model. I cannot think of any examples of innovation as an accident. However, there are many examples for invention as an accident. The main difference between innovation and invention is that invention is a product but innovation is the way you market that product.
Best,
Alexandra
Hi Alexandra,
Yes, I think you were right! I was definitely confusing the two but after these last two lectures, the differences between innovation and invention is much more clear to me. Thanks!
Epiphany
The discussion that we had in class over the difference between strategy and innovation really stood out to me. I had never thought of those two concepts in the way that Professor Darwin described. Originally it seemed clear to me that innovation and strategy go hand in hand as strategy drives what areas to innovate and innovation drives changes in strategy to capture the new value generated from that innovation. However, it was fascinating to think of strategy as finding the optimal constraints to operate under and innovation as breaking existing constraints and finding new frontiers and markets. Now that I think about this, it makes so much sense! There have been so many innovative companies, such as Apple, that have created a new product or service which in turn created a whole new market that didn’t exist before and new value which customers didn’t even know they needed.
Culture is an interesting thing. After reflecting on the importance of an open culture during Professor Darwin’s lecture, our team heard similar things during our conversation with the Director of External Technology at Coca-Cola. The company often struggled “to get the Coca-Cola system culture to change”, and the R&D team even experienced negative feedback when the idea of Open Innovation was first introduced. They realize, however, that openness to new technology is necessary for constant innovation throughout the organization. During lecture, we learned that Business Models > Technology, because business models serve as vehicles for technological improvement and innovation. I’m excited to see how our team will develop a disruptive business model that will enable Coke’s technological adaption and foster a culture of openness.
One particular part of lecture that caught my attention was the growth vs. time graph. Innovation, the leading factor that ignites the start of this curve, proves to be the area for continual success. As stated in class, with more recent years, the curve has decreased in size meaning that a company’s emerging, established and maturity periods dwindle at a quicker pace. The quicker decline is attributed to technology’s constant growth – a movement that is both good and bad. To combat this decline, companies need both innovation and a successful business model. With both, companies are able to grow within the forthcoming years by altering products and/or pushing boundaries – a difficult, albeit feasible, task.
While I learned that disruption in business models often draws from drastic & costly measures, like product development and technology integration, sometimes it can be found with simple changes to product positioning. The Nespresso machine initially experienced poor sales, but Jean-Paul Gaillard decided to reposition the appliance as “the experience of coffee,” focusing on the single-serve pods for revenue rather than the machines themselves. With this shift in marketing, he was able to create new consumer demand and boost Nespresso sales. (i.e. the single-serve coffee pod market is valued at $10.8 billion, and Nestlé ranked #1 globally with ~33% market share in 2013, NYT). Moving forward, I would love to explore more examples of “re-inventing” product experiences and how it can apply to open innovation.
Aileen,
I too am interested in learning more about how companies have “re-invented” products to develop a better business model. Personally, I enjoyed seeing the example of how Nespresso changed its business model to provide customers with different drink options rather than trying to push its espresso machine. This example helped me get a better understanding about what innovation really means.
Reflecting on the lecture as a whole, I enjoyed the interactive environment of the class. Although we were unable to complete the planned lecture, like the professor mentioned, I found it to be a more enriching use of time. I was able to get a clearer understanding of the topics covered, such as the factors behind why business models fail and how innovation differs from strategy. All in all, I truly enjoyed this lecture and am excited for tomorrow’s.
Hello Professor Solomon,
As stated in your blog, I think it was completely fine that we weren’t able to get through the entire planned lecture yesterday in exchange for really narrowing down on the details of why business models fail. Personally, I would rather spend time on an important topic and really stress it rather than rush through it in the essence of time, so I was pleased with yesterday’s lecture.
One thing that really caught my attention was the graph between Time and Growth of a company that showed the 4 different stages (emerging, established, mature, declining, and new innovation). When we saw the graph that displayed incremental innovations in products, it seemed to look as if the innovations were getting smaller and smaller. As a math enthusiast, this reminded me of a potential limit which brought up the question that I would like you to answer: Is there a limit to innovation? For example in solar power, we have been innovating for years. At first there were large gains in efficiency improvements, but now even a .5-1% gain in efficiency is difficult to achieve. So, once again, is there ever a limit to innovation?
It felt like yesterday the class started to mesh more and become more active as the professor mentioned. I enjoy seeing this synergy and active participation. It makes my experience as a student more engaging. As we have been seeing asking questions is what pushes innovation and new ways of thinking. The more thoughtful questions, the more we will learn. So thank you all for your contributions.
I also found the Time and Growth chart interesting. I have seen these charts before, but never thought about what the chart would look like to continuously save a company from it’s death through innovation. Seeing the visual put things in perspective . It is an exhausting and exciting thought to have to always re-innovate. I would imagine that innovation in excess could also be a bad thing. I’m curious to learn more about the other side of innovation. When is it good to slow down? And is there a time when innovation is a distraction?
I’m saying this as a major innovator that always pushes the boundaries of thinking. I know there are always two sides. I am biased towards innovation and curious about stabilization.
I really enjoyed the lecture yesterday as there was a lot of very exciting topics discussed. I really enjoyed the examples and anecdotes that were brought up because it really helped me in particular understand what exactly allowed some companies to succeed. The example of the Nespresso machine was relatable and I can relate to the importance of having people of different expertise giving insight and creating value. Having grown up in Silicon Valley, the short list of reasons why business models failed were relatable as I could see how each successful company lacked weaknesses in those areas.
I also learned a lot in regards in differentiating strategy and innovation. I never thought of innovation of breaking through constraints versus strategy which is operating in constraints. I am very excited for the next lecture!
The idea that really stimulated me in this class was that Innovation for the business models comes from knowledge from others industries such as fashion world in Nespresso. Because it´s not only about selling a high-quality product but also about selling a different experience.
I would like to mention that one of the things that made Apple succeed was the esthetic sense that other technological companies didn´t have .This artistic sense came from the calligraphy classes that Steve Jobs took in college and inspired him to make a unique product.
I also find the quotes that we read really inspiring. The need to have vision for not perishing and being adaptable to the environment.
I completely agree with Beatriz’s point here about Nespresso. I think it’s fascinating to see where a completely different mindset of a business model drastically changes the course of the company. In the UGBA 167 course on pricing, we examined a similar model in Keurig, with the same story.
Keurig’s coffee machines were far too expensive, and this initial big purchase deterred away consumers. By giving away the machine for free to bigger companies and organizations, Keurig was able to “milk the cow” through its K-Cups which is where it made most of the money.
I’d be curious to see which other industries have similar stories, where a shift in the business model changed the company from a zero to a hero.
I truly enjoyed today’s class, both the continuation of last week’s lecture as well as analyzing what “open innovation” truly means when applied realistically.
In understanding how to define the culture of a company, we explored a few graphs to display how a company’s downfall can arise overtime. One component that struck me in particular was the relationship between having a vision and the culture of the company. In this sense, through exploring yesterday’s lecture, I was reminded of something that I wanted to share with everyone, and this is a poster I once saw in my father’s office years ago. Titled “Olympian Technology”, it utilizes three different symbols to represent vision, passion and action. Essentially, if someone or a company has all three, that leads to “exceptional human performance.” However, it goes on to define the possible outcomes of having two of the three:
vision + passion (without action) = dreamer
passion + action (without vision) = workaholic
vision + action (without passion) = moderately successful
While this can be applied to a number of different industries or activities, I really think this is something interesting to consider in relation to our discussion yesterday of a company’s business model and its ability to be long standing and sustainable.
“Focus on the experience, not the product” and “Strategy is not innovation” are two takeaways that I’m sure I will apply in various aspects of this class during the semester, specifically when designing the business model with my group. Professor Darwin did a fantastic job providing examples that helped visualize why products fail when the consumer’s taste is not taken into consideration (i.e. coffee expresso machine example) and how innovation expands the strategy frontier (i.e. cost vs. differentiation frontier graph).
Even though we didn’t get to finish the lecture about innovation to its full extent, I’m glad the majority of the class seemed fine with no rushing through the syllabus. I much prefer taking the time to thoroughly finish a topic before jumping on to the next one.
On another note, after reviewing my notes, I realized I didn’t quite grasp the concept of the Commodity Trap which I should follow up on next class.
Overall, fun class, excellent pace, memorable takeaways. Looking forward to the next one.
The piece from this lecture regarding what makes an Innovative Culture was of much interest to me. Having been a part of many various design teams I personally believe very strongly in the impact culture has in defining a team’s ability to innovate. Understanding what works vs. what doesn’t through the context of comparing the Silicon Valley culture to Russia’s culture was extremely eye opening. My takeaway from this example was the importance of having truly multi disciplinary teams coming from various backgrounds with blended experiences and cultures to create a melting pot of ideas and foster lots of healthy conflict of ideas before settling into a certain solution. Following this conversation it was fantastic getting to hear my team not only consists of members from different education backgrounds, but various geographical and cultural backgrounds as well! I hope to be able to take this lesson and encourage my team to bring all our various opinions to the table before pursuing any single person’s idea right off the bat!
The relationship between operation, strategy and innovation explained in class really interested me. The graph of frontier lines shows how these three terms are related in a larger picture and offers me a different perspective. Before, I only identified these three terms separately as what they are. However, after the class yesterday, I was able to understand the goals and causes of operation, strategy and innovation as well as where they come under different situations. The culture of innovation also stood out to me. When we think of innovation, for most of the time, we think of individuals, or a group of people. We rarely think further about culture which actually affects the way people think and behave. I think only in a culture that supports and encourages innovation will innovative ideas spark and innovations be carried out.
I agree with you on the graph representation about strategy, operation and innovation. It really made me realize how important is innovation in order to make an industry grow. About the culture comment where you said there must be a culture that supports and encourages innovation for innovative ideas to succeed, I agree about the importance of the culture on the innovation process, but I also believe that since culture is changing all the time you can “build” a receptive environment for a specific innovation.
From this lecture, the concept of open innovation is being explained into three details: Economies of scale, economies of scope and creation of ecosystem. I can easily understand the first two, as they are the strategic and innovative process of margindizing your product and product line. But I am most interested by creation of an ecosystem. For example, a major concept of startup trending is to build a platform. For example, when Apple launched iTunes, they don’t just launch an app or a music store, they also creates a platform for music sharing.
I was especially fascinated by the concept of disruptive innovation in this class which is different from strategy in that it opens up new frontiers of the market by offering an even better product for the same price or offering an even better experience. Companies have to keep innovating to avoid losses due to today’s short product life cycles. I also liked the Nespresso story of realizing that the coffee experience is what really sells rather than the coffee machine. We had a good introductory discussion with J&J today and we will have another call next week.
I am personally intrigued by the idea that strategy is different from innovation. Open innovation is far more than constructing game plans and tactics. It goes beyond the ordinary decision making and problem solving of a business. Just as professor said during lecture, innovation is about pushing boundaries, breaking the constraints and seeing challenges through a completely fresh perspective. It is important for companies to understand the importance of innovation as well as internalize the dynamics of innovation in order to keep profiting from the business. Once a company almost reaches the stage of maturity, it should no longer focus on ordinary ways of doing things. It should start questioning old conventions and strategies and start to seek for new ways to innovate.
I have heard and read many theories and studies about leadership and always thought leadership could not be learnt in theory but should be acquired through practical application or experience. Though it is cliche leadership is evaluated based on various things such as charisma, communication skills, intelligence, action and etc. However, the professor has redefined leadership for me in two concrete elements: vision and adaptable to change. I believe these two elements of leadership are the most relevant in our contemporary world which is rapidly changing in technology and other things. I would like to elaborate my thoughts on how these two elements are essential to leadership today. The primary reason leaders need specific and concrete vision more than ever is because the world has been rapidly changing into a very complex world as people, ideas, places have come closer to each other and intermixed. In this complex world, I believe simplification is important and a leader should stick to this vision in order to make progress and step forward. At the same time, a leader needs to be not obstinate about things that leads up to vision; he needs to be adaptable to change and not be confined in his own world but step out to explore various options that best leads him and his team to the vision. Thus, good leadership today needs to be a balance between sticking to vision and relaxing to change.
Given our strong cultural bias against failure, I was pleasantly surprised to see that this lecture focused on business failure. To me this lecture stretched beyond business, the wisdom of learning from failure is incontrovertible in most settings. Yet, as we saw in Prof. Darwin’s illustrative examples, organizations and people that do it well are extraordinarily rare.
I would’ve liked to know more about the conditions of failure specific to each stage of a business life cycle. For example, beginnings of businesses are special and the conditions of failure are qualitatively different from what comes after. For new startups, the #1 cause of failure is lack of market. In other words, they aren’t making something people want. In a market with lots of real potential customers — the market needs to be fulfilled and the first viable product that comes along will fulfill the market.
This lecture also successfully expanded my definition of innovation to any new or improved way of doing things and in the context of businesses, making products that suit customers better! Thanks, Prof. Darwin!