1 00:00:05,790 --> 00:00:07,310 The next thing I want to talk about 2 00:00:07,310 --> 00:00:10,520 is what types of innovation are there. 3 00:00:20,390 --> 00:00:22,990 We at the Massachusetts Institute of Technology 4 00:00:22,990 --> 00:00:24,330 think about technology. 5 00:00:24,330 --> 00:00:27,550 But we also think about a lot of other things. 6 00:00:27,550 --> 00:00:34,490 If you have types of innovation, you have can technology. 7 00:00:39,480 --> 00:00:43,450 But you could also have process innovations as well. 8 00:00:46,294 --> 00:00:48,370 You can have process innovations, 9 00:00:48,370 --> 00:00:49,740 where we change a process. 10 00:00:49,740 --> 00:00:51,281 Someone looks at something, says it's 11 00:00:51,281 --> 00:00:52,530 going to be done differently. 12 00:00:52,530 --> 00:00:56,510 We also can have business model innovations. 13 00:00:56,510 --> 00:00:59,530 This is probably one of the most interesting areas 14 00:00:59,530 --> 00:01:05,800 right now, because you see terrific value 15 00:01:05,800 --> 00:01:08,930 creation in innovative business models, 16 00:01:08,930 --> 00:01:11,810 not just things like Blockbuster or Salesforce 17 00:01:11,810 --> 00:01:16,260 but the underlying innovation at Google that was creating value, 18 00:01:16,260 --> 00:01:20,780 I would argue, is the new way that they do advertising. 19 00:01:20,780 --> 00:01:23,390 Previously, before that, there were banner ads. 20 00:01:23,390 --> 00:01:28,290 But Google, again, took the idea from Overture with Bill Gross 21 00:01:28,290 --> 00:01:31,080 and commercialized that to change 22 00:01:31,080 --> 00:01:37,210 the game for business models, how they extracted their value. 23 00:01:37,210 --> 00:01:39,440 They did it by Google AdWords. 24 00:01:39,440 --> 00:01:41,790 So they were charging, they were advertising 25 00:01:41,790 --> 00:01:45,022 using the words as opposed to just the real estate. 26 00:01:45,022 --> 00:01:46,480 Another one that's very interesting 27 00:01:46,480 --> 00:01:49,830 when you talk about innovative business models-- 28 00:01:49,830 --> 00:01:52,360 In hindsight, looking back at iTunes now, 29 00:01:52,360 --> 00:01:55,590 one of the big breakthroughs that made iTunes successful 30 00:01:55,590 --> 00:01:58,840 was, before them, everybody was charging on a subscription 31 00:01:58,840 --> 00:02:00,560 basis for the music. 32 00:02:00,560 --> 00:02:04,620 What Apple did was they charged $0.99 per song, 33 00:02:04,620 --> 00:02:05,810 and you got to keep it. 34 00:02:05,810 --> 00:02:09,050 Turns out, that was a very good business model innovation 35 00:02:09,050 --> 00:02:12,506 as to how to price it and extract value. 36 00:02:12,506 --> 00:02:15,460 Because that made it more familiar with the past, 37 00:02:15,460 --> 00:02:18,400 where they were buying CDs and the like. 38 00:02:18,400 --> 00:02:22,270 So business model innovation is a very interesting one. 39 00:02:22,270 --> 00:02:28,300 You can also have positioning, how you position yourself. 40 00:02:28,300 --> 00:02:30,370 And then we'll just say other, because it's 41 00:02:30,370 --> 00:02:35,610 hard to limit your types of innovation. 42 00:02:35,610 --> 00:02:36,110 Yeah. 43 00:02:36,110 --> 00:02:38,150 When you have types of innovation, 44 00:02:38,150 --> 00:02:41,400 I would also say, indeed, we also 45 00:02:41,400 --> 00:02:43,005 have categories of innovation. 46 00:02:47,700 --> 00:02:55,860 And, in this case, we have disruptive, which is the word 47 00:02:55,860 --> 00:02:57,510 that we hear so often now. 48 00:02:57,510 --> 00:02:59,640 This is disruptive, this is disruptive. 49 00:02:59,640 --> 00:03:01,830 That can be a very good thing if you're not 50 00:03:01,830 --> 00:03:03,290 the entrenched player. 51 00:03:03,290 --> 00:03:07,080 If you're the new player in the market, you want disruptive. 52 00:03:07,080 --> 00:03:09,300 However, if you're the entrenched player, 53 00:03:09,300 --> 00:03:16,270 you're looking for incremental innovation that says, 54 00:03:16,270 --> 00:03:17,340 this is 10% better. 55 00:03:17,340 --> 00:03:18,770 20% percent better. 56 00:03:18,770 --> 00:03:21,400 And the last one I'll say is a very interesting one, 57 00:03:21,400 --> 00:03:23,980 is what we'll call later innovation. 58 00:03:23,980 --> 00:03:26,940 Or I think Stefan Thomke at Harvard 59 00:03:26,940 --> 00:03:29,270 calls it general innovation. 60 00:03:29,270 --> 00:03:32,030 And this is something that was an innovation that you 61 00:03:32,030 --> 00:03:34,460 saw in another industry and you're just bringing back 62 00:03:34,460 --> 00:03:37,950 into your industry. 63 00:03:37,950 --> 00:03:40,530 Now why do I have types and categories? 64 00:03:40,530 --> 00:03:44,560 Because, in this case, you could have a technology 65 00:03:44,560 --> 00:03:46,350 that was disruptive innovation. 66 00:03:46,350 --> 00:03:48,880 You could have a technology that's incremental. 67 00:03:48,880 --> 00:03:50,440 Or you could have a technology that's 68 00:03:50,440 --> 00:03:52,890 already worked in another industry, and you bring it in. 69 00:03:52,890 --> 00:03:55,180 So really what you have is a matrix 70 00:03:55,180 --> 00:03:59,070 where you have three different categories for each type. 71 00:03:59,070 --> 00:04:01,090 And there could be more, but my point here 72 00:04:01,090 --> 00:04:05,300 is that, as we're about to go through these 24 steps, 73 00:04:05,300 --> 00:04:08,510 innovation can be driven by a number of things. 74 00:04:08,510 --> 00:04:10,450 It's not just technology. 75 00:04:10,450 --> 00:04:13,840 And sometimes your innovation can be disruptive. 76 00:04:13,840 --> 00:04:15,570 And sometimes it can be incremental. 77 00:04:15,570 --> 00:04:17,430 And sometimes it can be general. 78 00:04:17,430 --> 00:04:21,220 All of these are good, and it depends on your situation. 79 00:04:21,220 --> 00:04:25,220 Don't just look for disruptive, technological innovations.