INNOVATION CASE STUDY the history of technological revolution in automotive industry is bound with initial invention of full scale mass production, followed by radical innovation

In terms of the invention and innovation in automotive industry, we tend to provide the table: Minor innovation Major innovation Parkesine - Cracking process: new types of cracking disco

NATIONAL ECONOMICS UNIVERSITY

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INNOVATION CASE STUDY

Tran Quyet Thang MAJOR: FACULTY OF BUSSINESS MANAGEMENT

CLASS: EMQI 61 LECTURER: Bui Thu Van

Ha Noi, 03/2022

Table of Contents

Question 1:. 3

Question 2: 4

Question 3: 6

Question 4: 8

Question 5:: 9

Question 6: 13

REFERENCES 14

Question 1: The history of technological revolution in automotive industry is bound with initial invention of full-scale mass production, followed by radical innovations in motor vehicle and energy system, and incremental innovations in particular products Highlight the inventions and innovations in the automotive industry Determine the difference between (1) inventions of technological breakthroughs and (2) major innovations and (3) minor/incremental innovations.

When it comes to innovation and invention, it has been unanimously confusion for those who use these terms Indeed, there is a slight difference between two terms There has been a diversity of definitions of innovation and invention According to Trott (2017), the process of transfering intellectual thoughts into to actions to make it become product of service called invention Innovation was defined as an interrelated processes containing a various actions combined (Myers and Marquis, 1969) Till 2017, Trott defined the innovation includes theoretical conception, technical invention and commercial exploitation However, some contend in recent years that innovation is just invention*commercialization This means that from the initial invention, this product or service needs to be accepted by the public with the hard work of many people to make it exploited to make it be bought by the mass

In terms of the invention and innovation in automotive industry, we tend to provide the table:

Minor innovation Major innovation Parkesine

- Cracking process: new types of cracking discovered in 1920s thermal cracking and catalytic cracking (flow process) (1920s)

- From Celluloid (1969)

to bakelite (1909)

- Model T versions through years in 1900s-1927s

- Steam engine/ power (flash boiler)

- Electric engine/ power

- Internal combustion engine

- Massproduction: Process innovation including Ford model

T (1913) with assembly-line production and Oldsmobile (1901)

- Gasoline power

- Cracking process

- Electric starter

- Plastics

- Oil

As a I mentioned above about the definition of 2 terms innovation and invention, invention tends to refer to a specific product or service that is not brought into usage of users or customers On the other hand, innovation is brought into commercialization, which includes 2 smaller terms called minor innovation and major innovation While the former based on what you have already done in the earlier time, e.g the better camera, the wider screen for smart phone, the later creates the totally new products, which consists of radical and disruptive innovation lying in the existing marketing and totally new market respectively The airpod 1 in the year of 2000s perfectly exemplifies this situation At the time, the prototype of music player based on CD disk, Apple can have a mindset of create something that was portable, not the quality of the sound Apple airpod 1 was created, representing for disruptive innovation and the later generation of Airpod from 2 generations would be considered as minor/ incremental innovation due to the fact that they have been created to better the products and experiences of users However, Apple was not the first innovator of portable music player, in the year of 1980s, Sonic created prototype that was also portable, but it was not used to sell to the public or brought to the mass, in another word of commercialization, and thus being considered as an invention

Question 2: Analyze the different sources of innovations related to the Ford's Model T:

Describe the different functional sources of the innovations related to these products, using theory of von Hippel (1988).

Evaluate how these sources of innovation help the firms to generate new-product innovations.

The theory of Von Hippel related to source of innovations include four sources which are users, manufacturers, suppliers and others We need to consider the benefit between what they would achieve and the role of them in a chain Users are those using the products, manufacturers those who make the product and suppliers are the individuals providing parts to manufacturers (Philipson, 2020) According to Von Hippel (1988), users, manufacturers, and suppliers are those who benefit from using, manufacturing and supplying materials needed to build its innovation respectively In Ford's case, the Model

T was known as innovated by a user innovator before transforming to supplier innovation

(Hinterhuber & Liozu, 2017) Henry Ford was an entrepreneur seeing a totally new market opportunity that others could not make use of, which was the high demand for reasonably priced cars in bot rural areas and urban areas According to Well (2007), Ford called his Ford model T car “the farmer car”, “the merchant car”, before setting its name to “the universal car” For those who are farmers, they switched to Ford model T in 1910s, and had ingenuity in adapting this kind of vehicles in daily routines such as grinding, sawing, pumping, shelling, plowing, and even running washing machines (Ronald Kline, 1996)

Thus, for these reasons, Henry Ford developed the assembly line, which allowed him to sell cars at prices that ordinary people could afford for the first time The affordable car thus represented a user innovation: the demand for cars created by these new price points induced suppliers to innovate in order to meet this demand The Model T also represented

a supplier innovation, but it did so after becoming successful as a user innovation when competitors like General Motors started offering similar products at different price points and in different styles

Users

As a matter of fact, Ford was a user innovator when he unveiled the Ford Model T At that time, other competitors or other brands of automotives seem to be exorbitantly priced, highly weighed, not very suitable for the road conditions in the United States (Well, 2007) Oldsmobile, Mercedes brands can be taken into account of example, and thus they are not suitable for the low-priced market and conditions in the United States at that time With the experiences of previous brands of horseless carriage in the former time, Henry Ford desired to create a lightweight automobile Before the optimal model T, Henry Ford had created various types of model including model N with $500 in 1906 and later updated model R and S, giving rise to the leading brand of automotives at that time

Afterward, Ford wrote in Automobiles in 1906 that low-priced, light car was a must with

the build of best material, which needed to be durable and powerful enough to adapt to the road conditions in America, and capable of carrying passengers, stuffs Afterward, the Ford model T was created and given birth, debuted in 1908 with very affordable priced with the ability of $2000 power compared to other rivals at that time (Flink, 1970) The Model T was a huge step for Ford in terms of innovation in his products

Manufactures

Furthermore, Ford brand is a case in point of a manufacturer innovator as well Once this organization created the Ford Model T, it then revolutionized the way cars were

manufactured with his production assembly line This allowed for many different models

to be made on an assembly line, all built to be similar and uniform in quality simultaneously, but each different from one another

The mass-produced automobile is successfully attributed to Henry Ford, but he was not the first of seeing the possibilities in a mass market Ransom E Olds was known to be the first major bid for the automotive market with an Oldsmobile buggy in 1901, which was too lightly built to withstand rough conditions in the United States However, Ford was more successful in making “a car for the great multitude,” designed his car first and then considered the problem of producing it cheaply

When the design of the Model T proved successful, Ford and his partners turned to both producing the car in large volume and producing with a low unit cost The solution was then attributed to moving assembly line, which broke down activities into small parts and gave workers a small amount of time to conduct this task Thus, the high productivity gave rise to relatively low-priced product, leading to rapid growth of the sales of the Model-T Ford, leaving other automobiles brands far behind

Suppliers

In fact, Ford did not use supplier innovations to create new products because Ford can itself provide needed material for manufacturing to meet their needs

Question 3: Using the models of demand-pull and/or technological push to explain the interaction of technology and business performance in making Ford's Model T Did the Ford get the ideas for innovations from the customers, or it were the firms’ engineers who recognizes that a specific piece of new technological knowledge resulted in the firms’ new products? Provide your analyses to prove your arguments.

To begin with, I would provide some basic understanding of (Hötte, 2021), demand-pull and technology-push has close interaction when demand shocks in the market, pulling innovation and innovation pushes growth in the market

The model T was one of the first mass production vehicles using assembly product line, which allowed Ford to achieve his aim of manufacturing the farmer car, merchant car and finally universal car Due to the mass production of the vehicle, Ford Motor Company could sell the vehicle for between $260 and $850, which this price helped its customer save a huge amount of money compared to the cars at the same period

There is a question of whether Ford model T was created from demand pull or technology push still a debated topic When it comes to demand pull, in the light of 1900s, people got used to the use of horse to carry people and items to the farm, and owning a car seems to

be a luxurious thing However, according to Well (2007), people still desired to own one for their family American farmers who are super into horse bought Model T in high numbers during the 1910s Moreover, they made use of Ford model T in daily life in activities such as grinding, sawing, pumping, shelling, plowing, and even running washing machines In general, we can say that farmers at that time had a desire of using an affordable car to do their own daily activities and Ford Model T was created to meet that demand

Despite the aforementioned demand-pull reasons, some contend that Ford model T was given birth by Ford due to high technological advancement at that time According to Jamie (2015), although Ford popularized the use of car by the Ford model T, he was not the first one using the method of special assembly line and mass production, which had existed for a long time in the earlier time Ford was known to be an individual combining the usage of moving assembly-line manufacturing and car building This made the cost per unit gradually reduced and the speed to create a car faster many times compared to other rivals at the same time To be more specific, the cost through time from 1908 to 1927 reduced from around $850 to $250$ due to the advancement of technology (Well, 2007) Furthermore, the strength, the weight of Ford model T gradually declined due to high-tech equipment Thanks to development of equipments, Ford can successfully create lightweight automobiles by applying new alloy’s strength and low weight (Well, 2007), specifically, 4 cylinders, twenty horsepower engine, carrying only 1200 pounds, which seemed to super lighter than other at that time According to Flink (1970), at that period,

no car can be compared to that price, durability and the weight of Ford model T As a result, thanks to the creativity, dedication of Ford and the development of technology, Ford created Ford Model T (after many times trials with previous models), bringing the new era for the automotive industry

Some achievement that can be seen in the Ford Model T afterward can be seen the placement of the steering wheel on the left side, allowing passengers easy access to and from the cars; engine block and the crankcase cast as a single unit, the first to have a removable cylinder head for easy access, and the first to make such extensive use of the lightweight but strong alloy known as vanadium steel All of that made Ford model T leading in automotive industry for around 20 years

Question 4: Explain how Ford’s organisational vision, leadership, culture shaped the company innovations and commercialisations toward Model T.

It has been unanimously acknowledged that the innovation and commecialization depends largely on the mindset of the leader of that organization, and thus Ford was not an exception for that When it comes to the vision of Henry Ford at that time, he embraced of

a lightweight, affordable, reasonably priced, durable and household car, which was suitable for any family at that time To a larger extent, the Ford vision through the automotive history has been being the most trusted company, designing optimal vehicles for the world, which statement truthly reflected a multinational company of desiring to become leader in automotive industry

Moreover, in terms of the leadership style, Henry Ford was known as a person having autocratic leadership style, which means that he was very demanding for his employees to better themselves and products day by day He demanded for his staff to try their best and had strict rule to control them And when it comes to Ford culture, the Hofstede model would be used Ford had a very low power distance, relative individualism, low masculinity, and low uncertainty avoidance which means that people were treated fairly, individual to some extent be championed or prioritized, engines preferred and open culture (Matthew Harvey, 2020)

To consider the relationship to the innovation of Henry Ford of for the birth of Ford model

T, we can say that the aforementioned chracteristics largely contributed to the birth of model T It can be very clear that with the desires for automotives, Ford endlessly tried to develop model T, and his dream of a durable, lightweight car can not be done just by his dedication itself but with the help of the engineer team He once said that the difficult task could be simplier by dividing this into smaller tasks This was very true for the assembly line that union of labor workforce was taken advantage of ultimately to create the low-priced model T Moreover, thanks to Ford’s autocratic leadership, he desired to better his product gradually The evidence that we can see was the diversity of versions of Ford model before coming to model T including Ford model N, R, S, etc (Well, 2007) And in terms of the culture, due to this open organizational culture, people can freely express their ideas of innovation towards automotives, which would be then considered by Henry Ford whether they can be applied or not Thanks to the endless dedication, efforts towards automotive industry, Henry Ford enhance the productivity of labor workforce, cut cost and then helped company unveil the product of Ford model T to meet the needs of farmers in particular and low-priced market in general (Well, 2007)

Question 5: Analyze the competition between Ford' Model T and Morris Motors' cars:

Build the S-curves for Ford's Model T and Morris Motors's Car (S-curves for established technology and for new rival).

How was the performance of Ford's Model T improved over time?

When was Ford's Model T challenged by a rival technology of Morris

Motors? Describe these rival technologies and explain how was the rival technology introduced at time T1 in the S-curve?

How was the performance of the Ford's Model T by the time T1 when the rival technology first enters the market?

Did Ford's Model T still enjoy performance or cost advantage?

Apply the 4Ps of innovation and the innovation funnel to understand how it shapes innovations in Ford's Model T Give your analysis.

When it comes to the performance of Ford model T in the years after 1908 to 1927, we can offer the line chart retrieved from Tomac and his partners (2019) as below:

In the first five years, the production volume of Ford model T increased by over 160.000 units while the producive hour spending on a car reduced drastically from over 400 hours per car to nearly 150 hours per unit In six months, the time to build a Model T was reduced from nine hours and fifty-four minutes for one motor to five hours and fifty-six minutes (Tomac, 2019) In October 1913, mass production of the Model T began at Ford's Highland Park, Michigan, Assembly Plant because other plant can not meet the demand of production, and thus leading to larger plant namely Highland Park