Lecture 3: Managing Innovation and
• How many bought a new calculator?
• Dave Swanston’s 30 year old calculator works just like the ones today
• But, technology that goes in to the calculator hasn’t dramatically changed during these
• Many years ago, the only revolution was no more batteries
• However, the 30 year old calculator was promoted as an anti-calculator
• Many products haven’t changed but may look different
• A stove is a stove
• A calculator is a calculator
• Basic functionality hasn’t changed but may have incremental improvements, and
• There are situations or industries where they face rapid change
• Examples: phone market’s change, in the early phones you can only pay a few games
now you can do so much on your phone
• Ex. Cell phones before they had cord phones
• Sometimes disruptive technologies are new technologies with new business models that
complete alter the industry
• What is innovation, how should managers respond to innovation?
• Article on bitcoin:
• Bitcoin technology is a currency created online and there is a certain amount of bitcoins
released each year and the maximum amount is 21 billion bitcoins
• Has a computer code attached to it
• To earn these bitcoins you have to mine them • What purpose do theses bitcoins have?
• Bitcoin is more anonymous than using your debit card or credit card.
• Is expensive
• Gets rid of exchange rates
• Can become a universal virtual coin
• In Canada legal tender is Canadian dollar. Canadian businesses may not accept bitcoins
as it is not officially considered tender. But they can accept US dollar as well
• Bartering like old fashioned is still possible
• There are lager networks that provide services for barter coins m even though it’s not
• 1) It is an innovative product or service
• 2) it could revolutionize how we make transactions in the future
• 3) If the bitcoins don’t gain me any value then there’s no point of using it.
• Value of bitcoin could go up or go down and become worthless, there is a risk
• Most businesses don’t want that because they have other costs to cover such as salary
• There are many challenges for the bitcoin to be universally accepted
• As an innovation it is a challenge for them to become the first to do this.
• If this innovation becomes more well-known other innovators will try to imitate this
• People and business adopt technology at different rates, and there’s costs and benefits
at each stage of adoption
• The language used to explain bitcoin is hard and not in easy terms and may not be
attractive for those without technological knowledge or experience
• Bitcoin Video: Bitcoin is the first decentralized digital coin. Can transfer person to person
via internet, account cannot be frozen and can change them universally. Mining requires
a certain amount of work. Stored in digital wallet. An electronic signature goes with the
transaction. Bitcoin is changing finance. You can purchase other currencies as well.
• Although shows it benefits it is still unclear about how coins are collected or mined.
• The reality is that: we are in a more global economy, there is high competition and
greater degree of innovation and rapid changes and product and services are changing. • Greater consolidation, we started interacting with more global competitors
• Fewer larger competitors as opposed to smaller multiple corporations
• Domestic companies face the same challenge as the compete against foreign
• New business models have to be created for innovation
• For example, traditional auction used be done at public market where people bid
amongst people. Now ebay, is a virtual auction and bid.
• New type of Auction: Quibid. How it works? You set up an account, and you use your
own money and you buy bids. Every bid costs you 60 cents. In Quibid every item starts
at one penny. Interesting business model due to its approach, it’s innovative. This could
not have happened without the availability of the web.
• Several innovations:
o Industry evolve through incremental innovations
o Availability and use of the internet has rapidly changed
o Purchase online
o New business models emerge
o Some incremental or some are disruptive, it changed every industry and
behaviour of businesses that existed prior to that.
• Innovators are those who adopt technology and want to learn what they could produce
from what works and what doesn’t work
• Innovators can become early adopters, they give new technology a change have a
comparative advantage by taking risks and want to give other haven’t given yet.
Sometimes for pride
• When this technology improves and becomes better, customers start using it more and it
becomes popular • At this point some retailers will adopt this technology and some leaders will still not adopt
to the new technology.
• As new technology becomes popular the cost decreases and when cost is extremely
low, some leaders want to adopt it later than the others so thy have can have lower costs
• The latest leaders to adopt to new technology, adopt because they have no reason to
avoid it. And if they avoid it further on, they may lose business
• Looking at this pattern we can see where organization want to adopt to technologies
• The early ones want to get an advantage over the other ones
• The later ones won’t benefit as that much because at the time they implement such
innovative technology there will be another innovative technology.
• Around 20 years ago, people were new to the internet technology. Dave’s professor said
the internet will provide people with unlimited information and it is an opportunity to have
all the information in our finger tips. The problem is, we are going to have a lot of
information and we need to know how to manage information.
• At some point, there will be a company that will help people find information on this
internet. This is Google. He foresaw google. There are people who can foresee
opportunities when technologies are first presented and become early adopters.
• Innovations also change services, the process is the product, and service innovation is
• Ex. The education industry:
o Every country on earth at the moment is reforming public education.
o There are two reasons:
o 1) Economic, people are trying to find out how do we educate our children to take
their place in the economies of the 21 century?
o Given that we can’t anticipate what the economy will look like at the end of the
o 2) Cultural: Every country on earth is trying to figure out how do we educate our
children so they will have a sense of cultural identity, so that we can pass on the
genes of our communities while being in the process of globalization.
o Problem: they are trying to meet the future but doing what they did in the past.
And on the way they are alienating millions of kids who don’t have any purpose
of going to school.
o When we went to school, they were told a story: That if they worked hard and did
well, they would get a college degree and get a job. o However, our kids don’t believe that
o You are better having a degree than not but it’s not a guarantee that you will find
a job. Not if the rou