When we think about innovation we often think about product innovations and that innovations are limited to features or functions. Well that's correct in part. When we think about types of innovations we're going to challenge you to think beyond just the product. We want to think about business models. Business model innovation. Dell did not invent the PC, they invented no part of the personal computer. But they invented this build to order model when Michael Dell was in his dorm room in the mid 80s at the University of Texas. He thought that there was a market for individuals that wanted to choose what they wanted in their computer rather than being restricted to what was on the shelf at your local computer retailer. So business model innovations might be a great opportunity for you. Where you're not going to invent a new product. You're not going to innovate in the feature or the function of a new product. But how the pieces connect? How the business works? How customers and suppliers and partners may be interconnected? So there are business model innovations, we're going to talk about in the course and that we encourage you to think about. There are marketing innovations. Nike's Air Jordan brand, was largely unprecedented. Nike did not invent the shoe. Nike did not invent the But they did do a large part to invent the celebrity sports endorser. And in 1984, when they signed Michael Jordan as Air Jordan, it was somewhat unprecedented. For companies and particularly apparel companies. To sign sports celebrities. Now, today it's common practice. But then 30 years ago, it was rare. And it was seen as very risky. And Nike was still a small company. So, when you signed a basketball player at the University of North Carolina that had never played yet in an NBA game, there was believed to have great potential, as many college athletes do, but was unproven. And to really quantify the level of risk that Nike took with that in their marketing innovation. They spent half of their marketing dollars, for the year, to sign Micheal Jordan, to an endorsement deal with Nike. Now it's proven to be one of the greatest endorsement deals of all time, for both Micheal Jordan and Nike. It's proven to be one of the greatest brands of all time. And that people are still buying Air Jordan products long after Michael Jordan's retired from professional basketball. But at the time, tremendous risk. Very innovative for Nike to recognize the potential of celebrity endorsement. And so you may have ideas that are going to be driven by marketing innovations. Not a product innovation, but something you're going to do different to bring your product to market and to position your product, or a service in the market. Other types of innovations include organizational innovations. How are you going to organize? Avon did not invent cosmetics. But they were a leader in using a customer based sales force, where they weren't going to do what many of the other cosmetic retailers do. Build a store and sell within a store or sell to a large retailer. And have the reliance on the Macy's or the oller, other large retailers for their traffic, but they were going to equip individuals. And they were going to equip largely women and largely women that were working part time, when Avon started to be able to sell cosmetics to their friends and family. At a very direct customer base sales force. Very innovative for its time. Process innovations. Netflix doing mail order movie rentals. Blockbuster at the time in the U.S was the leader. It was let me go to the video rental store and choose my movie. Netflix did not invent the movie. Netflix had no role at the time in the production of the movie. They were going to have a process innovation that let individuals mail order the product from a website. Now they're into streaming, and they've continued to innovate, but when they first came to market it was purely a mail order. Doing something different, doing something novel by process. There are other innovations. There a product innovations that are out there. So I don't want to forget about those. They're certainly encouraged and certainly advantageous as you do have a new product idea to bring that to market. Beyond product innovations there's also service. There's a company here in the U.S called Zipcar. Zipcar does car rentals. They do car rentals differently than many of the other car rental companies out there that set up shop via a retail outlet or at the airport. What Zipcar does is they have a membership model. You can go online and become a Zipcar member. What's different about Zipcar one is you rent by the hour. So you may eight or $10 per hour, as opposed to 30 or $40 per day. So if you only need the car for an hour, if you need to run to the grocery store, if you need to pick a friend up from the airport, you can do that very easily and very affordably. Zipcar also is novel in that they position their cars in a very distributed fashion. So here on campus there are a few parking lots here and there, where there's one Zipcar here and one Zipcar there. So they are distributed. So I can go online, I can go on my mobile device and I can find a Zipcar that's near me that I can walk to. If I live in an apartment building, there may be one in my garage. So in that way, what we see with Zipcar. No role in inventing the automobile, no role in inventing the car rental model. But they have been very novel in the service innovation, of let's rent differently. Let's position our cars in different places that are convenient to our customers. And let's have a service innovation that's going to be very novel for what's out there, that better aligns with what our customers' interests are there's supply chain innovations. Alibaba is a company that we've heard a lot about in 2014, as they went public one of the largest public offerings ever globally. But what they do is have web based supplier directory where they are disintermediating this supply chain and allowing individuals, and businesses to find each other in a more easier fashion and a more cost effective fashion and a more global fashion. Now as we've talked about Apple, and we talked about great product innovations that are out there, even Apple has had some failures. And this is one of those. The Apple Newton came to market in 1992 as a $700 device that you could use as a calculator. That you could use as a calendar, that you could use to take notes, and that you could use to catalog your contacts. 1992 was a pre-internet, pre-Wi-Fi, pre-smartphone era. So there were no music, no movie, no cell phone, no steaming, no app opportunities for the Apple Newton. It was rather large. You can see it in comparison here on the left hand side to what the iPhone four currently is so a big device, an expensive device. A rather limited device in it's functionality and what Apple found is that for what it did, as a calculator, note taker, calendar, contacts management tool, it was not successful in the market. People were not willing to pay $700 for such a device. So, even apple fails sometimes. Dell brought to market a computer that was designed to be a combination of a laptop and a desktop. So what you see here is the device where 20 inch screen, of a device that is portable. A device that has a full-size keyboard, a device where the keyboard detaches from the rest of the device and connects wirelessly. So it lends itself to many of the aspects of a desktop in that we don't need to lean over our laptop to work on it. We can lean back in our office chair. We can detach the keyboard. We can have some space between ourselves and the computer monitor. We can have a large monitor at 20 inches. Then we can have a desktop-like experience. It's also portable and it's even portable without having a case. So, what you see in the background is an expandable handle. Where the hinge that connects the screen to the CPU has a dual purpose as a handle. So it lends itself to mobility as well. You would think, perhaps, a great device, and it was a failure. It was 17 pounds which is arguably two or three or four times the weight of your current laptop it was $3400. So a $3,400 at its time, you could've bought a laptop and bought a desktop and had money leftover. And what we found here is that even when it lent itself to being able to being portable with a handle. People were conditioned to put laptops in travel bags, which made it even more cumbersome and even more larger and even more heavier. And so what we find is that even Dell, which has had great success in bring great product to market, tried to do perhaps too much. They tried to be a laptop and a desktop, and what they found was that they were unsuccessful in really doing either. $3650, the retail price, tax is included in the U.S once it was brought to market. We also want to think about innovation in the context of beyond technology. It is certainly not limited to technology products. What we see here is a Herman Miller Aeron chair. This was a product that was brought to market and it was in a climate where the existing chairs, the executive chairs were a large, bulky, leather, heavy, unattractive, banker's chair. So, what Herman Miller brought was something that was an aesthetic chair that even won design awards based on the look which brought tilt mechanisms, and cradling, and breathability. And flexibility, and customization, and recyclability to market this chair is not an inexpensive chair. If you buy the actual Herman Miller design chair and not one of the knockoffs that have come since then, it's close to $1000 for a chair. Now is $1000 expensive? Well, it depends, if you compare it in its category, at its time, to the banker's chair, the large leather high-backed wooden armchairs, those were nearly $2000. So when you think about bringing your product to market, don't. Purely look at the number and what's the price? Think about how does it compare to the market? What are the comparable products and services selling for? And how does your compare there? So for a product that's near a $1,000 when it's competing offerings are near 2,000 there's a price advantage here as well. Google Glass is something that I saw for the first time when I was out at Google visiting them last year. And I saw Sergey Brin, University of Maryland graduate, with the President of Turkey walking around around Google Campus wearing the Google Glass. And so Google Glass at that time was not something that most people had heard or were even familiar with. But it is something that we're beginning to see, beginning to see in different forms and fashions. It's still rare. It's still novel. We're not exactly sure, what the ultimate success is going to be of it. But it's the type of thing that Google does and Google does well. And they experiment and try new things. And that way, when you're walking around such a campus, you're not surprised when you see such things pop up here and there. You can hear a little bit more about Google Glass and what some of the ambition and motivation was and Sergey Brin's Ted Talk. So, we encourage you to take a look at that. And see and learn a bit more about what it is and what their vision is so, in summary, when we think about types of innovations, it can be products. But it can also be a variety of other innovations. It can be business models. It can be marketing innovations. It can be service innovations. It can be innovations in the supply chain. And in other categories as well. So don't limit yourself just to thinking about product innovations. Think broadly. Think wildly. And think about what the market needs and what types of innovations might make sense for you as you're considering what you might like to launch.
