LDRS 673 – 4 Innovation Capital: Capacity, Who You Are and Who You Know

Overview

This unit introduces the fundamentals of innovation capital and its role in promoting innovative capacity. Additionally, this unit will also introduce the essential aspects of innovation leadership, focusing on forward-thinking skills and effective communication for venture support. Closely related to these skills is the need to develop and leverage strong and weak social ties to cultivate diverse networks that can support innovation. One such strategy that will be introduced is the idea of open-innovation. This is a dynamic strategy for collaboration-based business model innovation – it is especially relevant to multigenerational entrepreneurship. As you will learn, this approach challenges organizational boundaries which, in turn, enables the co-creation of innovative business models that are aligned with evolving market needs. This helps to create the conditions for successful business pursuits.

The following video will provide some additional information about the key points you will be learning in this section of the course

Learning Outcomes

When you have completed this unit, you should be able to:

Examine the concept of ‘innovation capital,’ including its three key components: innovation-specific human capital (who you are), social capital (who you know), and reputation capital (what you are known for)
Recognize how personal skills are crucial for building innovation capital. This includes forward thinking, creative problem-solving, and persuasion
Analyze the importance of building both strong and weak social ties to enhance innovation capital.
Assess how open innovation can be used as a strategy for collaboration-based business model innovation, particularly among multigenerational entrepreneurs.
Identify key success factors for business model innovation, especially in the context of science parks and brownfield regeneration.
Outline the steps involved in innovating business models and the strategic planning required to implement these innovations successfully.

Activity Checklist

Here is a checklist of learning activities you will benefit from in completing this unit. You may find it useful for planning your work.

Learning Activities

Read Chapters 1, 2, and 3 of “Innovation Capital: How to Compete and Win Like the World’s Most Innovative Organizations”
Read the article “Open innovation as a strategy for collaboration-based business model innovation: The moderating effect among multigenerational entrepreneurs”
Review the case study “Identification of Key Success Factors for Private Science Parks Established from Brownfield Regeneration: A Case Study from China”
Watch the video titled “Strategy in practice - Business Model Innovation and strategic planning”

Resources

Here are the resources you will need to complete this unit.

Dyer, J., Furr, N., & Lefrandt, C. (2019). Innovation Capital: How to Compete and Win Like the World’s Most Innovative Organizations. Harvard Business Review Press. Chapters 1, 2, and 3.
Srisathan, W. A., Ketkaew, C., Jitjak, W., Ngiwphrom, S., & Naruetharadhol, P. (2022). Open innovation as a strategy for collaboration-based business model innovation: The moderating effect among multigenerational entrepreneurs. PLoS ONE, 17(6), 1–25. Access the text online here.
Strategy in practice - Business Model Innovation and strategic planning Access the video here.
Weng, X.-H., Zhu, Y.-M., Song, X.-Y., & Ahmad, N. (2019). Identification of Key Success Factors for Private Science Parks Established from Brownfield Regeneration: A Case Study from China. International Journal of Environmental Research and Public Health, 16(7). Access the text online here.

4.1 Understanding Innovation Capital and Its Components

Effectively navigating the realities of the modern global economy requires a thorough understanding of innovation capital. This multifaceted concept comprises three vital components:

Innovation-Specific Human Capital - revolves around individual skills and attributes;
Social Capital - highlights the importance of networks and relationships;
Reputation Capital - reflects one’s recognized achievements.

By understanding these elements, individuals and businesses can enhance their capacity to generate, and implement innovative ideas. More importantly, these concepts can help them effectively mobilize support and resources, amplifying their impact.

4.1.1 Activity: Read and Reflect

Read Chapter 1 from Innovation Capital: How to Compete and Win Like the World’s Most Innovative Organizations, and take a moment to consider this connects to what you have learned.

4.2 Developing Personal Skills for Innovation Leadership

Innovation leadership demands the development of certain personal skills. While having the ability to be forward-thinking (to foresee trends and envision the future) will allow leaders challenge those around them to seek out inventive solutions, they must also master the art of persuasion. Persuasion plays a critical role as leaders must be able to communicate in a persuasive manner in order to gain support for their ventures. As you might imagine, effective application of these skills involves a complex relationship between personal capabilities and the ability to articulate ideas. By refining these skills, individuals not only contribute to their personal growth, but also become catalysts for transformative innovation within a business organization.

4.2.1 Activity: Read and Reflect

Read Chapter 2 from Innovation Capital: How to Compete and Win Like the World’s Most Innovative Organizations, and take a moment to consider this connects to what you have learned.

4.3 Leveraging Social Networks for Innovation Support

Understanding the importance of cultivating both strong and weak social ties is crucial for enhancing innovation capital. The key lies in appreciating the dynamic interplay between robust connections - built on collaboration and shared vision - and more delicate ties that expand one’s sphere of influence. Diverse networks that include innovators, leaders, benefactors, influencers, and customers can serve as a robust network of support for successful innovation. The strong ties of a network can provide a solid foundation, while weak ties extend your reach and bring in fresh perspectives. Innovative leaders benefit not only from like-minded collaborators but also from weaving connections across different spheres; leaders can offer guidance, benefactors can provide financial support, influencers can shape public perception, and customers can offer invaluable feedback. Embracing the diversity of social networks becomes a strategic imperative for those seeking to cultivate a thriving innovation ecosystem.

4.3.1 Activity: Read and Reflect

Read Chapter 3 from Innovation Capital: How to Compete and Win Like the World’s Most Innovative Organizations, and take a moment to consider this connects to what you have learned.

4.4 Exploring Open Innovation Strategies for Business Model Innovation

Open innovation serves as a dynamic strategy for promoting collaboration-based business model innovation - especially within the domain of multigenerational entrepreneurs. This approach goes beyond traditional organizational boundaries by encouraging the exchange of ideas, resources, and expertise among different generations of entrepreneurs. By embracing open innovation, businesses can tap into a rich pool of creativity and experience to leverage the unique perspectives and skills that each generation offers. This collaborative framework allows for collaboration and the co-creation of innovative business models that align with the evolving needs of the market. Multigenerational entrepreneurs, with their distinct viewpoints and varied experiences, can find common ground through open innovation, leading to the development of more resilient and adaptable business models that stand the test of time.

4.4.1 Activity: Read and Reflect

Read the article titled “Open innovation as a strategy for collaboration-based business model innovation: The moderating effect among multigenerational entrepreneurs.” After reading the article, consider the following questions:

How can individuals and organizations effectively build and leverage both strong and weak social ties to enhance their innovation capital? What are the potential challenges and benefits of actively expanding networks beyond immediate social circles, especially in diverse and multigenerational entrepreneurial settings as discussed in the article by Srisathan et al.?

Note: These questions are also used for your Forum Discussion entries that will be submitted at the end of Unit 6.

4.5 Identifying Key Success Factors in Business Model Innovation

In the ever-changing world of modern business, it is crucial to pinpoint the key factors that drive success in business model innovation. Successful companies recognize the vital relationship between strategic planning and innovation. Strategic planning serves as the guiding force, setting clear directions for organizational goals, while innovation acts as the driving engine, pushing the business forward in a constantly changing market. Essential success factors include understanding customer needs, staying updated on technological advancements, and fostering a culture that encourages creativity. To establish a robust business model innovation framework, a holistic approach is necessary, integrating strategic foresight, adaptability, and a willingness to challenge traditional norms. The effective implementation of strategic planning and innovation not only enhances a company’s competitiveness but also ensures its resilience in the face of constant change.

4.5.1 Activity: Read and Reflect

Read the case study titled “Identification of Key Success Factors for Private Science Parks Established from Brownfield Regeneration: A Case Study from China.” Consider how these ideas connect to what you have learned.

4.6 Applying Business Model Innovation and Strategic Planning in Practice

Business model innovation and strategic planning are crucial for the long-term success of any modern business. Understanding how to effectively merge innovative business models with strategic planning is an essential skill. This means grasping the nuanced steps required to make meaningful changes in business structures and operations. Whether it’s identifying new revenue streams, redefining customer value propositions, or streamlining internal processes, a well-rounded comprehension of business model innovation is vital. Additionally, strategic planning plays a crucial role in ensuring the successful implementation of these innovations. This involves aligning organizational goals, resources, and capabilities to create a roadmap for sustained growth and competitive advantage.

4.6.1 Activity: Watch and Reflect

Take a moment to watch the following video – think about what you have learned in this video, and in the previous section. Consider the questions below:

Watch: Strategy in practice - Business Model Innovation and strategic planning

4.6.1.1 Questions for Consideration

Drawing from the case study on private science parks and the video on business model innovation and strategic planning, how can the principles of innovation capital be applied to foster successful business model innovation in different contexts, such as brownfield regeneration projects and in established organizations looking to innovate?

Note: These questions are also used for your Forum Discussion entries that will be submitted at the end of Unit 6.

Summary

This section began by introducing three crucial components of innovation capital: Innovation-Specific Human Capital, Social Capital, and Reputation Capital. You learned that these components can be developed and leveraged to enhance capacity for generating and implementing innovative ideas. Moreover, this unit explored the vital role of innovation leadership - emphasizing the development of forward-thinking skills and the art of persuasion to effectively communicate and gain support for ventures. In turn, you also learned how these skills can be effectively used with strong and weak social ties to cultivate a diverse network that can support innovative pursuits.

This section also examined open innovation and multigenerational entrepreneurship. Here, we examined how open innovation can serve as a dynamic strategy for collaboration-based business model innovation, especially within the realm of multigenerational entrepreneurs. The approach transcends traditional organizational boundaries, promoting the exchange of ideas, resources, and expertise among different generations. The collaborative framework allows for the co-creation of innovative business models, aligning with evolving market needs. As we saw, this concept underscores the significance of strategic planning in tandem with innovation for long-term success.

Checking Your Learning

Use the learning outcomes for this unit as a checklist of understanding before you move to the next unit. Can you:

Examine the concept of ‘innovation capital,’ including its three key components: innovation-specific human capital (who you are), social capital (who you know), and reputation capital (what you are known for)
Recognize how personal skills are crucial for building innovation capital. This includes forward thinking, creative problem-solving, and persuasion
Analyze the importance of building both strong and weak social ties to enhance innovation capital.
Assess how open innovation can be used as a strategy for collaboration-based business model innovation, particularly among multigenerational entrepreneurs.
Identify key success factors for business model innovation, especially in the context of science parks and brownfield regeneration.
Outline the steps involved in innovating business models and the strategic planning required to implement these innovations successfully.