Presentation On Innovation, Globalization And Development

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Chapter 3: Innovation, globalization and development

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Chapter 3: Innovation, globalization and development Innovation & Entrepreneurship 3e by 02015 John Wiley and Sons Bessant & Tidd
Chapter 3: Building the case In the following PowerPoint slides you will find the key headings from CHAPTER 3 together with the main illustrations, tables, etc. There are also slides summarizing the key messages in bullet-point fashion, and a wide range of activities which you can use to help students explore around these themes. Finally there are some reflection questions which can be used as the basis for discussion or assignments. Innovation & Entrepreneurship 3e by 02015 John Wiley and Sons Bessant & Tidd
Learning Objectives LEARNING OBJECTIVES By the end of this chapter you will develop an understanding of: • the reasons for, and implications of, the uneven global distribution of innovation • the main components of a national system of innovation, and how these interact to influence the degree and direction of innovation in a country • the challenges faced and the opportunities offered by emerging markets, in particular meeting needs at 'the bottom of the pyramid'. Innovation & Entrepreneurship 3e by 02015 John Wiley and Sons Bessant & Tidd
Value creating aspects of innovation The national system of innovation in which the firm is embedded, and which in part defines its range of choices in dealing with opportunities and threats. • Its power and market position within the international value chain, which in part defines the innovation- based opportunities and threats that it faces. The capability and processes of the firm, including research, design, development, production, marketing and distribution. The ability to identify and exploit external sources of innovation, especially international networks. Innovation & Entrepreneurship 3e by 02015 John Wiley and Sons Bessant & Tidd
Emergence of new players and themes • BRICS — Brazil, Russia, India, China • Others — Indonesia, South Africa • Growth of 'bottom of the pyramid' markets • 'Frugal innovation' Innovation & Entrepreneurship 3e by 02015 John Wiley and Sons Bessant & Tidd
Examples of emerging economy innovation Spirit (Russia) htt ://www.innovation- ortal.info/resources/s irit-entre reneurial- usiness-development-in-an-emerging-market/ Natura (Brazil) http://www.innovation-portal.info/resources/natura/ Alibaba (China) http://www.innovation-portal.info/resources/alibaba/ NHL (India) htt ://www.innovation- ortal.info/resources/nara ana-hruda ala a- ospitals-nhl- Innovation & Entrepreneurship 3e by 02015 John Wiley and Sons Bessant & Tidd
The bottom of the pyramid TABLE 20.1 Challenging Assumptions about the Bottom of the Pyramid Assumption The poor have no purchasing power and do not represent a viable market The poor are not brand-conscious The poor are hard to reach The poor are unable to use and not interested in advanced technology Reality — and opportunity Although low income, the sheer scale of this market makes it interesting. Additionally, the poor often pay a premium for access to many goods and services (e.g. borrowing money, clean water, telecommunications and basic medicines) because they cannot access mainstream channels like shops and banks. The innovation challenge is to offer low-cost, low-margin but high-quality goods and services across a potential market of four billion people. Evidence suggests a high degree Of brand and value consciousness — so if an entrepreneur can come up with a high-quality low-cost solution, it will be subject to hard testing in this market. Learning to deal with this can help migrate to other markets, essentially the classic pattern of 'disruptive innovation'. By 2015, there are likely to be nearly 400 cities in the developing world with populations Of over one million and 23 with over 10 million. Thirty to forty per cent of these will be poor, so the potential market access is considerable. Innovative thinking around distribution —via new networks or agents (such as the women village entrepreneurs used by Hindustan Lever in India or the 'Avon ladies' in rural Brazil) — can open up untapped markets. Experience with PC kiosks, low-cost mobile phone sharing and access to the Internet suggests that rates of take-up and sophistication of use are extremely fast amongst this group. Innovation & Entre reneurshi 3e b Bessant & Tidd
Frugal innovation INNOVATION IN ACTION 20.1 Frugal Innovation from Emerging Economies An Economist Special Report argues that emerging economies are fast becoming sources of innovation, rather than simply relying on low-cost labour, and appears to support the popular belief that innovation is increasingly a global phenomenon. The report estimates that there are more than 20 000 multinationals originating from the emerging economies, and that the firms in the Financial Tinzes' SOO list from the BRIC — Brazil, Russia, India and China — more than quadrupled in from IS to 62. focus Of innovation is not confined to technological breakthroughs, but typically incremental progress and product innovations, aimed at the middle or the bottom Of the income pyramid, such as the car (El 800), $300 (El 80) computer and $30 (El 8) mobile phone, so-called frugal innovation. For example, in India, Tata Consultancy Services (TCS) has developed a water filter which uses rice husks. It is simple, portable and relatively cheap, giving a large family an abundant supply of bacteria-free water for an initial investment of about $24 (El 5) and around $4 (E2.50) every few months for a new filter. Similarly, General Electric's Bangalore R&D facility has developed a hand-held electrocardiogram (ECG) called the Mac 400. Through simplification, the Mac 400 can run on batteries and fit in a rucksack and sells for $800 (GOO), instead of S2000 (E 1200) for a conventional ECG, which reduces the cost of an ECG test to just $1 (60p) per patient. These innovations target two Of India's most Common health problems: contaminated water and heart disease, which cause millions of deaths each year. Source: Derived from Adrian Wooldridge (2010) 'The World Turned Upside Down', The Economist, April IS Special Report. Innovation & Entre reneurshi 3e b essant
Summary • In formulating and executing their development and innovation strategies, business firms cannot ignore the national systems of innovation and international value chains in which they are embedded. Through their strong influences on demand and competitive conditions, the provision of human resources, and forms of corporate governance, national systems of innovation both open opportunities and impose constraints on what firms can do. Innovation & Entrepreneurship 3e by 02015 John Wiley and Sons Bessant & Tidd
Summary However, although firms' strategies are influenced by their own national systems of innovation, and their position in international value chains, they are not determined by them. Learning (i.e. assimilating knowledge) from competitors and external sources of innovation is essential for developing capabilities, but does require costly investments in R&D, training and skills development to develop the necessary absorptive capacity. Innovation & Entrepreneurship 3e by 02015 John Wiley and Sons Bessant & Tidd
Summary Recent developments have accelerated the globalization of innovation such that countries like India, Brazil and China are major players and even tiny economies like Singapore and Denmark are playing an increasingly important role in creating the knowledge on which future generations of innovation may be built. Innovation & Entrepreneurship 3e by 02015 John Wiley and Sons Bessant & Tidd
Summary It is not countries but firms which carry out much of the R&D — and their activities and locations are themselves becoming globalized. New players are joining the old established giants and playing an increasingly significant role in a world characterized by knowledge flow and open innovation. Innovation & Entrepreneurship 3e by 02015 John Wiley and Sons Bessant & Tidd
Summary On the demand side of innovation the pattern has shifted out of all recognition in the past decade. Most population growth is in the regions of the world where economic growth is also accelerating, driving rising incomes and expectations and creating an explosion of market demand. These 'emerging markets' are often different in shape, size and segmentation, but they represent one of the major drivers for innovation in products and services. Innovation & Entrepreneurship 3e by 02015 John Wiley and Sons Bessant & Tidd
Summary We have already seen the growing importance of user-led innovation, so in a world where much of the growth is coming from very different places with different user characteristics, we should expect to see significant shifts in innovations which are aimed at meeting their needs. Innovation & Entrepreneurship 3e by 02015 John Wiley and Sons Bessant & Tidd
Assessment questions • What factors influence the location of innovation, and how might these constrain the globalization of innovation? • How can firms learn from overseas sources of innovation? • Compare the development of capabilities in China and India. What are the key lessons for developing economies? Innovation & Entrepreneurship 3e by 02015 John Wiley and Sons Bessant & Tidd
Innovation Portal Innovation & Entrepreneurship 3e by 02015 John Wiley and Sons Bessant & Tidd

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Presentation On Innovation, Globalization And Development

Huzaif N / Dubai

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