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Creating value through innovation

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Creating value through innovation

  1. 1. MS34H – Creativity and Innovation Management for Entrepreneurship CREATING VALUE
  2. 2. • Discuss whether current marketing practices compliments innovation within organisations • Explain how to make marketing decisions at the foundation, proprietary and rules levels • Explain the emergence of business models Objectives
  3. 3. • For whom?!! – The target market – Is there a ‘pain’ or problem that needs to be resolved? – How can the innovation manage to solve the problem for the target market • Consider movies – why did changes occur – Big Screen to – Tape Reels to – Video Cassettes to – DVDs to – Computers, telephones, tablets, etc. Creating Value
  4. 4. • Some innovations are marketing solely for economic value. Benefit comes only from only purchasing the product/service – This is the situation for most products/services • Other innovations are to improve the social environment, to allow easier interactions, for sharing knowledge, etc. – Open Source Code – Freemiums VALUE – economic and social!
  5. 5. • Leaders – Get to market due to advanced processes, technology, research and development – Not necessarily the best position – High cost to be leader • Followers – Deliberately gets to market late by studying first entrants, their mistakes, their successes – Late entry can also be detrimental, as the target may get attached to the leader Leader or Follower
  6. 6. • Organisations must connect with their target market – What are their needs • Organisation’s activities should be customer driven • Peter Drucker – “ What the business thinks it produces is not first importance-especially not to the future of the business and its success, What the customer thinks he is buying, what he considers “value” is decisive…Because it is its purpose to create a customer, any business enterprise has two and only these two basic functions: marketing and innovation.” How Important is the Customer?!!
  7. 7. • Drucker • Not a separate function or department • Central for the entire organisation • Marketing is for everyone within the organisation – but marketing alone is not enough Marketing
  8. 8. • Drucker – “ the second function of a business therefore, is innovation – the provision of different economic satisfactions…” – Innovation is not a separate function of the organisation – “..”Innovation can be defined as the task of endowing human and material resources with new and greater wealth-producing capacity.” Innovation
  9. 9. • Focuses on the customer – that is the genesis of marketing • Finding our the customer’s need and delivering as quickly and efficiently as possible • Sometimes innovation comes before having a customer – but the innovation creates customers – eg. Disney World, Television • Sometimes the customer is created Effective marketing
  10. 10. • Globalisation forces greater emphasis on customer satisfaction, due to high levels of competition • Organisation then focuses on ‘Marketing’ to capture market share • Innovation becomes critical to create and to segment the current market • Globalisation is turbulent and everyone is trying to survive • Increasing difficult to differentiate Impact of Globalisation
  11. 11. Marketing and Innovation • Changing needs of the customer can be a moving target for customer oriented organisations – E.g. the computer hardware industry • Flow of learning flows both ways from customer to innovation and vice versa – Involves traditional market research – Informal information – observation, secret shopper, etc. • Some innovations changes person’s lives eg. Telephone, cars, airplanes, etc.Markets can MISLEAD as well as to INFORM
  12. 12. Organisation’s Focus – Innovation and or Customer • Isolate – – Organisation focuses on itself – Technology Stagnates or developed for the organisation – Very little market research Four Strategic Modes FOLLOWER B INTERACT D ISOLATE A SHAPER C
  13. 13. • Follow – Ovation driven by Customer response or needs – Airline Industry responds to customers; also It industry and more • Shape – Innovation Technology shapes the market – Creates customers, as persons don’t realise that they need a product/service until the innovation exists eg. Telephones, tablets, etc. – High risk and sometimes fails • Interact – Dialogue with the customer
  14. 14. • Follow – Ovation driven by Customer response or needs – Airline Industry responds to customers; also It industry and more • Shape – Innovation Technology shapes the market – Creates customers, as persons don’t realise that they need a product/service until the innovation exists eg. Telephones, tablets, etc. – High risk and sometimes fails • Interact – Dialogue with the customer
  15. 15. Selecting Area of Focus • Some organisations may simply select based on their empasis – whether research - Innovate and shape; market driven – follow the customer, but the reality is not simple • Depends on Management style and business environment – Environmental factors – stable or unstable, may lead to following – Economic Strength of customers – bargaining power, may lead to follow – Competitive Factors – Globalisation, deregulation, may choose shaping or interacting with the customer – Political factors – within the organisation. Strong unions, strong management, may support a particular area of focus How can an organisation know which area to focus
  16. 16. • Creating Value and capturing it - is the business model • Considerations includes – Value Proposition – Revenue Generation – Capabilities and Processes – Position in the network • Innovative Models exists – Amazon, Skype, Paymaster and more • Business Model Canvas – new approach • Read article on OurVLE – Running a Different Race – Dr. Michael Morris Business Models

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