Why innovate? Creating & capturing value



chav and I've used the term capture rather than I can't remember the light bulb one now did I have success or something question mark it's because the idea is to create and capture some benefit and they used to turn benefit or value rather than profit or growth because organizations have different motives for innovating yeah some want to make lots of money someone would grow very quickly some don't do either of those if you look at entrepreneurial startups I can't remem the exact figure they say like 96% a lifestyle businesses I said that with some disdain damnation I said let's try again 96 percent that lifestyle businesses yeah people do it because they want Ratana me in control or they've got no other options frankly yeah but we tend to think of startups of vengeance or entrepreneurial and growth and interested they're not round about 4% or any of those things yeah and they're very different to the other 96% okay so why you're innovating what is your goal in terms of end value utility it's really really really really important because it has to filter back to where you look and what types of things you pursue and select okay so this is important the sense it does feed back to here it does feed back to where you look for solutions and such right okay so I am NOT drawing all those arrows back they're given but really they do are motivated by what is the goal why are you innovating is to save lives is to make money yeah is it to dominate the world is it several of these things okay so a very important part to be managed and in that there are two separate sets of activities one is the creation of value how does this innovation create value it's the same question we asked in the other session didn't it it might do these fancy things in terms of function but who would value that how does it create value that's the more naive question and then the separate question which is hardly ever a hostage how might we capture some of that value and you see so many cases where the two are disconnected that you figured out okay that segment or application will create some value and we can talk to those guys and create a product and they don't think until it's far too late but how can actually appropriate some value from that transaction in the horrible terms of internet start like how do we monetize it it's not just about monetization how do we capture any value from it and when you get dislocation from the creation of value from innovation and its capture what you think happens yes do one more yes there is may-maybe we discuss it in the next session when we look at the blurred of that distinction yeah I think you're right they're different partly because services can have tangibles and intangibles so you have a product and process but most products are more about product by definition what what is delivered rather than how it's delivered but yes you're right they're different they're different but products will have ecosystems as well see with milk in this session with apple on androids I don't think it's I don't think that's the big distinct where you're dead right they know very different entities but what we all say the warning against if you have a disconnect between the creation of values from innovation and how we capture some benefit from that why what happens next if you fail to connect those two things up yeah true you don't learn what most couple concessions don't learn I mean they did have a success and they pat themselves on the back of here on TV and then fall in their face all that or they have a failure and they blame the wrong things they blame the team rather than the timing or something so okay yes I mother company come in and benefit and the HAP that happens I'm afraid innovation suppose you don't get it right and another company will benefit from your mistakes that's a given but more fundamentally what yes you will run out of resources because you're not capturing value to rejuvenate more fundamentally innovation stops how dramatic can that be it does it stops and whether you look at companies to do it whether you look at countries who do it if you look at business sectors who do it where you disconnect the creation through in a creation of value through innovation and capture some of that benefit the incentive and the resources to innovate are no longer available and after one or two iterations innovation doesn't happen so you get whole economies and the whole sectors where innovation just doesn't really happen because you have that disconnect so one of the tricks here you know whether you're an entrepreneur trying to figure out how do I make this thing fly or whether you're a policy maker saying how do I make this region or country grow again is to try to reconnect that so you align the incentives in terms of well if people are successful in terms of innovation create value there should be some mechanism that they can capture some that value to reinvest and hopefully learn for the next cycle but the default is often a disconnect those who benefit didn't create and those who crave don't benefit very much and it all breaks down really quickly problems I see is that capturing the benefits can take a very long time it's not like you just you've done your innovation you found the innovation you'll etc etc the capturing is not okay just sitting it out let's say it's a product yeah maybe it'll take you five years to get all the benefits mmm what happens in terms of the overall innovation process in the meantime you just concentrate on capturing those yeah yeah but but your did right you did right and we talked about this one of these either we talked you think we saw in the last session on the next session but we will talk about the next session about capturing values that's what's all about really but aren't you a question that's the dead right you've identified a common failing of product based particularly startups is it figure out sort of how they're going to get develop it maybe get their first customer maybe their first product but they don't think beyond that and then everything dries up in terms of resources unless they're in biotech and they just have another round of funding and the party but outside by toe I think we have no income yeah and often they cease to exist or there's a crate sale and the original managers have put two on site and the bigger companies then sit out the thing and that's quite a sad story the lesson example with disconnect is the group that developed it don't directly benefit there might be a trade sale but they might not yeah that's why a product based pure product based strategy is really a bad idea in most cases whatever the lead time so when we talk about things like licensing joint ventures often you need sort of wider repertoire of how you capture value from that otherwise if you rhyme products well I mean it's a bit like the you can tell getting philosophical now it's a bit like this whole of explanations we're beginning the universe it's really easy to explain what happens off the first billionth of a second it's reinforcing but what happened before that is really hard in terms of bootstrapping that's the problem you're right when you have several products or innovations than the last two or three are paying for the next one that's easier to maintain but how do you bootstrap that and that's the interesting one I talked about later okay so by model we mean we're simplifying it but what we're doing is trying to isolate and distill things that we know should be managed and can be managed to improve the outcome yeah that's what we're saying we're not saying captures all of reality but we're saying it captures it more than the essence and more importantly things that we know empirically make a difference okay

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