Managing Innovation & Change
Instructor: Henry Chesbrough
Abstract Most innovations fail. Yet companies that don’t innovate die. Managing innovation thus constitutes one of the most difficult and critical tasks facing a manager. Nor is this solely the concern of high tech companies – companies in traditionally “low tech” businesses such as consumer packaged goods (like Procter & Gamble) find that innovation translates directly into growth in new businesses, and better profits in existing businesses. The course adopts a capabilities-based view of the firm, drawing from economic, organizational, and engineering perspectives. The goal of the course is to identify the sources of innovative success and failure inside corporations, and how companies can develop and sustain a capability to innovate. Managing Innovation is divided into five modules: The first module is understanding disruptive technology, a theory of why great companies fail in managing certain types of technological change. This theory was introduced by Clayton Christensen in his book, “The Innovator’s Dilemma”. I taught with Clay for 6 years while at Harvard Business School. The second module is about Innovation and the Business Model. The sources of failure for great companies lie in what they do very well. The business model that has created great success, is a barrier to change, as well as a source of advantage. Disruptive Technologies fundamentally challenge the company’s current business model – which is why they are so disruptive. The third module examines Sources of Innovative Ideas. Once we understand the barriers to change, we must then find out how companies can overcome their disabilities, and where to look for new ideas. We will examine university research, military research, individual inventors, and corporate discovery processes. The fourth module considers Creating Innovation Capabilities. These are alternative ways that companies have tried to escape the limits of their current business. We will examine these experiments, and look for processes and structures (including incubators, spin-offs, corporate venture capital) that attempt to sustain a company’s success. The fifth and final module discusses Business Model Innovation. The first four modules took the business model as essentially fixed. In this last module, we relax this assumption, and then examine ways companies can experiment with their business model. We will also discuss limits on companies’ abilities to do this, and how those might be overcome.
Open Business Models & Open Innovation
Business Model Creation through Collaborative and Interactive Learning Project Based Course working with Senior Corporate Executives This course presents an opportunity for those students who are passionate about employing their innovative and creative talents to learn the process of Open Innovation to address the business model challenges of real companies. To demonstrate the solid understanding of the process, concepts and strategies, the students work in groups of five to seven to formulate a solution to the problems the companies are currently facing. Students work with respective Senior Corporate Executives who present their challenges. This includes exploring new business models and prospective markets in light of the changing economic landscape, social trends, and emerging technological advances. The intent of the course is to create heterogeneous groups to leverage the diverse experiences, skill-sets, and tacit knowledge of individuals within each group to frame and solve problems. The groups tap into both internal and external ideas, generated on ideation platforms, to explore and create innovative business models to deliver products and services. Sourcing of external ideas from a larger and diverse population is preferred in building good business models.