1. Lecture 2 Innovation Management GM0401 Johan Brink Wednesday 8 sep

2. This lecture The external context of innovation Techno-economic paradigm Increased R&D spending Innovation system Handout case 1

3. Techno-economic growth GDP= F (Land, Capital, labor, TFP) EconomyShare of national output GDP growthShare contributed by CapitalLaborTFP Germany 1960-90 0,43,259-849 US 1960-900,413,1454213 Argentina 1940-80 0,543,6432631 Singapore 1966-90 0,377,3422830

4. Techno-economic growth Total Factor Productivity –Advances in knowledge –Catch-up effect (adoption of existing technologies) –Structural/improved allocation of resources (from low productivity to high) –Economies of scale –Foreign trade effect –Unexplained 20-50% 20-40% 10-20%

5. Techno-economic paradigm Revolution & Improvement –Opportunities Application & Prosperity –Saturation of markets Stagnation, Recession & Depression –Low rates & Speculation

6. Techno-economic paradigm Kondratiev: Techno- economic ~50 year Kuznets: Infrastructural investment ~20 Juglar: Fixed investment ~10 Kitchin: Inventory ~3 - 5 Joseph Schumpeter proposed cluster of innovations as an explanation

7. Increased R&D spending In 1676, Isaac Newton wrote famously to Robert Hooke, “If I have seen further it is by standing on the shoulders of giants.” (Forever) Increasing returns? –Fishing out ideas –increase R&D cost –Takes increasingly long time to learn accumulated knowledge –Specialization –”Death of renaissance man” – Teamwork & management

8. Increased R&D spending

11. Global R&D spending by top 25 corporations: 2006R&D rank R&D expense ($million s) Sales ($million s) R&D/sales ratio (%) Company (country)200620052006 Toyota Motor (Japan)147,486201,2543.7 Pfizer (United States)227,42348,20115.4 Ford Motor (United States) 317,200160,1234.5 Johnson & Johnson (United States) 487,12553,19413.4 Microsoft (United States)577,12151,12213.9 DaimlerChrysler (Germany) 637,007199,2463.5 GlaxoSmithKline (United Kingdom) 796,61145,26314.6 Siemens (Germany)856,604114,7795.8 General Motors (United States) 966,600207,3493.2 Volkswagen (Germany)10126,030137,8464.4 Samsung Electronics (South Korea) 11105,94391,0386.5 Intel (United States)12145,87335,38216.6 Sanofi-Aventis (France)13 5,82337,29315.6 International Business Machines (US) 14115,68291,4246.2 Roche Holding (Switzerland) 15175,35934,19215.7 Novartis (Switzerland)16185,34936,03114.8 Nokia (Finland)17155,12254,0499.5 Matsushita Electric (Japan)18164,85876,5436.3 Honda Motor (Japan)19204,63893,1745.0 Sony (Japan)20194,57169,7156.6 Robert Bosch GmbH (Germany) 21 4,40157,4187.7 Motorola (United States)22244,10642,8799.6 Cisco Systems (United States) 23304,06728,48414.3 Merck (United States)24224,02022,63617.8 Telefonaktiebolaget LM Ericsson (Sweden) 25 3,99025,40315.7

12. Innovation systems What is a system?

13. Innovation systems What is a system? Macroeconomic and regulatory context Education and training system Communication and infrastructure Product markets Factor markets Firms and innovations Cluster of industries International networks Science system Supporting institutions

14. Innovation systems Stemcells 2001 Laws History Macroeconomic and regulatory context Education and training system Communication and infrastructure Product markets Factor markets Firms and innovations Cluster of industries International networks Science system Supporting institutions

15. Innovation systems Regional Marshall,1890...and again in the 70ties –Industrial districts

16. Innovation systems Diamond model; M. Porter (The competitive advantage of nations) Clusters Traded Non-traded

17. Innovation systems Technological –Generation –Diffusion –Utilization

18. CASE 1

19. What to do? Answer the questions: 3 pages, New Times Roman 12 Prepare slides/presentations (~20 min) Send text and slides no later than 18.00 Tuesday 14/9 There are two groups per company –Only one group will present, the other will lead the discussion (ask questions, and complement with their ideas) Use all sources of info such as the web, papers..

20. Questions Describe the development and the potential future of the firm in terms of PLC Describe the development and the potential future of the firm in terms of TLC How does the Innovation system look like? Are there any barriers limiting the diffusion of this product? What do they look like? What would you advice the firm to do in order to increase sales (product diffusion) in; –The short run? –The long run?

21. Case firmGroups Neonode: neonode.com (Mobile industry) Group One Group A Tesla: Teslamotors.com (Automotive industry) Group B Group gg Ocean Harvesting: oceanharvesting.com (Environmental technologies) The 6 Stooges The Swedes & the Mexican

22. Some additional material Wave energy http://www.oceanharvesting.com http://www.iea-oceans.org/_fich/6/Annual_Report_2009_v2.pdf http://ec.europa.eu/environment/etap/ Electric Car http://www.Teslamotors.com http://www.acea.be/ - Printed http://www.innovateuk.org/ourstrategy/innovationplatforms/lowcarbonvehicle s.ashx Telecom http://www.neonode.com/ http://www.gsmarena.com/neonode-phones-22.php -Neonode old products Ericsson Trends - Printed