THE GENERAL THEORY OF INNOVATION (GTI) - IFIP
Transcript of THE GENERAL THEORY OF INNOVATION (GTI) - IFIP
THE GENERAL THEORY
OF INNOVATION (GTI)
Fundamentals, Capabilities, Applications
Greg Yezersky, President
Institute of Professional Innovators
© 2007 Institute of Professional Innovators
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Innovation as We See It: A Delta
Innovation is perceived by the majority as a change in an object state
5 types of innovations: Product
Method of production
Sources of supply
Markets
Way to organize a business
Schumpeter, J.
The Theory of Economic
Development (1934)
The world complexity demands for the universality of a theory of innovation, but this complicates its creation
© 2007 Institute of Professional Innovators
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SYSTEM LIFECYCLE
System Conceptual Design (Value Offer Formation)
System Production (Implementation of the Value Offer), Its Use and Retirement
Innovation
As It Should Be Seen
Subjects of innovation are systems As any result, innovation is determined by the preceding process!
Definitions1. Innovation is a process of value creation, which consists in changing the
composition of a set of variables describing a system.
2. Innovation is a result of the process that fits the definition 1
Identify needs of
the Environment
System
“production”
System
design
System concept
formation
Solutions
evaluation
Problems analysis
and solution
Identify problems
to be solved
System delivery
to the market
System use by
the customer
System
retirement
© 2007 Institute of Professional Innovators
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The Definition Benefits
Definition 2 benefits: alignment with the rest of the world
Definition 1 delivers MAJOR benefits:
Innovation as a Process with clearly defined stages
The need for control over the process of innovation
Identifies the ROOT CAUSE behind the UNIVERSAL
phenomenon of “Growth Cessation, Market Share Loss
and Eventual Death” of business entities
Defines a set of requirements for a theory of innovation
The Process of Innovation
Identify needs ofthe Environment
Value offer contentformation
Problemssolution
Problemsanalysis
Identify problemsto be solved
© 2007 Institute of Professional Innovators
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The GTI Foundation
Requirements for a theory
Universal (any type of a system)
Analyze and solve existing problems
Forecast (identify) future problems (needs of the market)
Establish objective criteria of judgment
Approach Evolutionary analysis of
systems
Investigation double focus Various systems; modifications
Relationships between systems and their respective Environments, including
Emergence of systems
Results: success / failure
A
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Finding 1: Evolution as
A Continuum of Problems and Solutions
Evolution is a sequence of problems and solutions Multiple implications; major one: the supremacy of problems
There are generic problems and generic respective solutions “To control the outcome of an interaction, Create / Destroy the
path of least resistance for attracting / diverting the Flow toward / away from a system.”
© 2007 Institute of Professional Innovators
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CFreedom =Functions
Connections= VALUE= VALUECFreedom =
Functions
Connections= VALUE= VALUE
MAJOR FINDING: Systems
Evolve in the Predominant Direction
Evolution is governed by a set of Natural Laws.
The Law of an Increasing Degree of Freedom
The direction of a system evolution coincides with an increase of the CF of its Environment
GTI is a theory concerned with the Natural Laws of the Evolutionary Cycle and their applications
A
=VALUE
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This is the first Hard Disk. In September
1956 IBM launched the 305 RAMAC, the
first computer with a hard disk drive
(HDD). The HDD weight was over 1 ton,
and it stored 4.4MB of data.
2007
Weight: less than 0.1 lb
Capacity: 4GB
Size: 64mm x 21mm x
10mm
The Law of an Increasing
Degree of Freedom: an Example
WHAT IS THIS???
© 2007 Institute of Professional Innovators
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GTI Major Capabilities and
Implications for a Business
The nature of being „problem-free‟
Correspondence to the Natural Laws of Evolutionary Cycle assures the „problem-free‟ existence and business success
The nature of problems
The conflict between the Choices we make and the Natural Laws of Evolution
Effective solution of problems
Reliable evolution forecasting
Objective judgment of proposed changes
© 2007 Institute of Professional Innovators
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GTI Applications
Description Applications
Reactive
Innovation
1. Value is known 1. A performance-based challenge
2. Cost reduction
3. Quality / Reliability improvement
4. Innovation assessment
5. Failure prevention*
6. Patent circumvention/protection*
Pro-active
Innovation
1. Business goal is
typically known
2. Value is
unknown
1. System evolution forecasting
2. Strategic Innovation Portfolio
3. Business applications such as
Growth (HYLR), incl. turnaround
Business strategy and/or model
Increasing ROI (incl. R&D)
Investment opportunities (M&A)
On-Demand
Innovation
1. Capability 1. Entity‟s capability (deployment)
2. Entity‟s resilience / survivability
© 2007 Institute of Professional Innovators
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Business Applications
GTI DOES work for
technical issues!
Business applications
provide greatest IMPACT:
Long-term Advantage
Sustainable Growth
GTI Tools
Evolutionary Templates
Generic Growth Strategies
Value Matrix
Value Growth Templates
Time-to-Value
Reduction Template
© 2007 Institute of Professional Innovators
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A Case Study (2003 – 2004): Future
Trends in the Movie Rental Market
No late fees
No trips to stores
Limited number of
movies on hands
CFreedom =Functions
Connections= VALUE= VALUECFreedom =
Functions
Connections= VALUE= VALUE
© 2007 Institute of Professional Innovators
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Market: the Movie Rental Niche Is on
the Verge of a Major Change
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SP500
Blockbuster
Netflix
Hollywood
BBI, NFLX, HLYW, SPc1
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Movie Rental Niche Ultimate
Destination: Movie On-Demand
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The Future of Movie Rental:
Download On-Demand
In addition to Internet, download on-demand alternatives
Phones, PDAs,
DVD playersCars
Office buildings,
hotels, hospitalsHouses
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Movie Rental Retail Business:
the Future of Competition
The retail will stay but shrink greatly
When download is not suitable
Airports
Vacations
Cars
Other opportunities
Use resources
Lower end of the market, incl. third world
Retail stores will be replaced by
Gas stations
Convenience (grocery) stores
© 2007 Institute of Professional Innovators
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Blockbuster’s 2005 Stock Performance
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Blockbuster Inc. stock performance in 2005
1/1/05 - $9.30
12/30/05 - $3.75
BLOCKBUSTER STK A (3.53000, 3.76000, 3.37000, 3.75000, +0.21000)
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August of 2007:
The Saga Continues As Predicted
In 2007, both Blockbuster and
Netflix entered the DOD niche
08/2007: BBI might be a good buy now
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Blockbuster’s Stock Grew With an
Improvement of Its Strategic Position
August 4, 2007
Blockbuster
acquired Movielink
August 13, 2007
BBI $4.20
October 2, 2007
BBI $5.69
Growth
More than 35% in
less than 2
months
August 13, 2007
© 2007 Institute of Professional Innovators
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Acknowledgements
© 2007 Institute of Professional Innovators
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Concluding Thoughts
The needs being addressed To succeed continually, any
entity MUST continually control the process of competition Innovation is the very first
stage of this process that determines the content of Value Offer and, in principle, entity’s fate!
CAI movement success is directly dependent on the quality of an underlying theory of innovation
General Theory of Innovation Satisfies the requirements
Has proven capabilities
Enables the “On-Demand” Innovation