Application of the Hypercube of Innovation to Business Objects v4.0
I.Context
The launch of the product Business Objects v4.0 is very complex. The context of this launch is very difficult to grasp because of several points that need to be analysed if we want to figure out what really happened :
- Business Objects v4.0 was totally recoded
- A lot of new core functionalities had been added (and not destructed and modified)
- It was synchronized with the launch of Windows 95
All this points made that the fail of the launch is not easy to analyze. We cannot remain limited to classic analysis of the product. Everything is mixed, and need to be see separately. That’s why we will use the Hypercube of Innovation theory developed by Alan H. Afuah and Nik Bahram.
II.The Hypercube of Innovation Theory
II.1.The main idea
Often the studiesof innovation are focused on the end of the value-chain: the innovation are analysed through the product. We can refer to Abernathy and Clark (1985), Henderson and Clark (1990) who classified according different scales innovations in four categories. Independently from the extraordinary quality of these studies, the impact of critical complementary innovation, of learning by customer or positive network externalities (David, 1985 ; Kartz and Shapiro, 1985) due to the product are not seen. Considering products like Business Objects v4.0, it is not enough to focus only on the innovative product, too many changes had happened at the same time on different points of the value-added chain. Afuah and Bahram concluded that “an analysis must also look at the impact of the innovation on the capabilities of suppliers of components, customers, and complementary innovators[1]”.
In the hypercube theory, the questions about effects of innovation are not only limited to your core competencies and your assets. You decline this question to all parts of your value-added chain : you wonder how your innovative product will affect the customers’ capabilities, the suppliers’ capabilities…
II.2.The model
It is obvious that the model can be useful only under certain conditions. The product must have some specifities in order the analysis to be relevant. Its production needs “critical components or high-tech equipment” and either end-customers buy it or OEM add value to it before selling it to end-customers. Afuah and Bahram also distinguished bunch of propositions which should be true amongst these one :
- High level of skills or knowledge are needed, this implies formation of users
- Positive network externalities : the more users it exists the more efficient it is
- The innovative product needs other complementary to success
Considering a product which responds to these conditions, we can discern four steps in the value added chain :
- The supplier
- The innovator
- The customer
- The complementary innovator
So, if we take the quadrant of innovations of Henderson and Clark (1990) we can duplicate it in other dimensions ; we create an hypercube :
However, the goal is to apply the quadrant to all steps of the value-added chain, that’s why we burst the hypercube in four different cubes where each step will be analyzed :
As Afuah and Barham did in their work, we will analyze each cube created by the explosion of the hypercube of innovation.
II.3.The quadrant of innovation
The cube of the innovative product is the one which had been the most studied, almost the only one. We have already quoted the famous studies of Abernathy and Clark (1985) and Henderson and Clark (1990) which are the basis of the hypercube model in the extent that this structure remains.
Indeed, the last two has developed the quadrant of innovation according two axes :
- Core concepts : this dimension “captures an innovation’s impact on components[2]”
- Linkage between core concepts and components : this dimension captures innovation’s impact between them
With these two dimensions we can discern four types of innovation.
II.3.1.Architectural
In this case, the core concepts remain the same but the linkage with the components are changed. So the notion of architectural innovation is quite logical, especially in IT software we can find examples. Often the software’s new releases consist of architectural innovation.
We can quote “Windows Live Hotmail” and the former “Hotmail”. The design has changed, some functions about search or organization too, nevertheless, it’s still a mail account. Another example is the digital tuner where you can set directly the station by choosing the frequency whereas before you had to turned a button and it was more difficult to detect your favourite station and have a good quality.
II.3.2.Radical
It is the most innovative innovation ! Both core concepts and linkage between them and components are changed. It is a very complicated case because everything change and all the points of reference disappear.
It is not easy to find innovations responding to the two scales. We can think at the introduction of Compact Disc which replaced the magnetic bands of cassettes. Technologically speaking, this was a brand-new one ad moreover, people had to buy a new equipment to hear music.
II.3.3.Incremental
This innovation is the most spread in firms. Incremental innovations can be framed in process innovation. Basically, neither the core concepts nor the linkage between them and components had changed. This is a mean to keep in touch with the needs and demands of customers without changing everything.
At the supermarket, when a brand launches the same biscuit with a new flavour we can qualify it of incremental innovation.
II.3.4.Modular
This last type is special : core concepts have changed without changing the linkage between them and the components.
The genetically engineered vaccine are an example [3]: “Genetic engineering, recombinant DNA technology, genetic modification/manipulation (GM) and gene splicing are terms that are applied to the direct manipulation of an organism's genes. Genetic modification of an organism can be achieved through a number of methods, most notably traditional breeding and recombinant technologies[4]”
II.4.The innovative product
II.5.The customer
II.6.The complementary innovative product
II.7.The supplier
III.Application to Business Objects v4.0
We need to prove why this theory can be used
For example Windows 95 was an terrible architectural innovation
Indeed, the core concepts was the same : it was an Operating System
IV.How take in account that theory
[1] Afuah and Barham, The Hypercube of Innovation 1993
[2]Henderson and Clark, Architectural Innovation: The Reconfiguration of Existing Product Technologies and the Failure of Established Firms 1990
[3]Brevet, innovation modulaire et collaboration : Le cas des vaccins géniques , A. BURETH, M. MUELLER, J. PÉNIN, S. WOLFF Juin 2007
[4] Wikipedia’s definition