Innovation Matrix analysis – Udemy Case Study

Various studies have recognised innovation as the main parameter for economic growth and the source of competitive advantage for organisations (Ugwuoke and Abbott, 2018; Nezhadi et al., 2018; Nazari-Shirkouhi and Keramati, 2017). Using the definition of Schumpeter (1912), some scholars have defined innovation as a combinatorial type of problem-solving process which searches for new combinations of known elements. Base on the Innovation management module textbook in Loughborough University and Schilling (2017) there are four different innovations which are: Incremental, Radical, Architectural and Disruptive. In this post, we want to go in deep on these innovation levels and see what is the Udemy status here.

What are the different types of Innovation?

– Incremental Innovation

Incremental Innovation is the most common form of innovation. It utilizes existing technology and increases the value to the customer (features, design changes, etc.) within the existing market.  Almost all companies engage in incremental innovation in one form or another. Examples include adding new features to existing products or services or even removing features (value through simplification).  Even small updates to the user experience can add value.

Graph 1 – Schilling, M., 2017. What’s Your Best Innovation Bet?

– Disruptive Innovation

Disruptive innovation, also known as stealth innovation, involves applying new technology or processes to the company’s current market. It is stealthy in nature since newer tech will often be inferior to existing market technology. This newer technology is often more expensive, has fewer features, is harder to use, and is not as aesthetically pleasing. It is only after a few iterations that the newer tech surpasses the old and disrupts all existing companies.  By then, it might be too late for the established companies to quickly compete with the newer technology.

– Architectural Innovation

Architectural innovation is simply taking the lessons, skills and overall technology and applying them within a different market. This innovation is amazing at increasing new customers as long as the new market is receptive. Most of the time, the risk involved in architectural innovation is low due to the reliance and reintroduction of proven technology. Though most of the time it requires tweaking to match the requirements of the new market.

– Radical innovation

Radical innovation is what we think of most when considering innovation.  It gives birth to new industries (or swallows existing ones) and involves creating revolutionary technology.

Which innovations do E-learning services use

Chart 1 – Researcher findings

To examine innovation in Udemy, we should see them in two contexts:

• First, in educational ecosystems, E-learning services provide new technologies that play radical innovation in the ecosystem and not only offer services to current students but also attract new users for the services.
• Second, Udemy as an online educational platform, similar to other services, provides learning opportunities for different learners and has Incremental innovation in terms of its services.

But all in all Udemy’s services in comparison with other E-learning is not at the end of the innovation trend.

Open or Close Innovation?

The distinction between open innovation and closed innovation is determined by the way in which innovation is created. While a closed innovation is developed in a self-contained company environment, Open Innovation incorporates external knowledge into innovation management.

Closed Innovation

A closed innovation is based on the view that innovations are developed by companies themselves. From the generation of ideas to development and marketing, the innovation process takes place exclusively within the company.

Open Innovation

Open innovation means opening up the innovation process beyond company boundaries in order to increase one’s own innovation potential through active strategic use of the environment. Innovation, therefore, arises through the interaction of internal and external ideas, technologies, processes and sales channels with the aim of the company to develop promising innovative products, services or business models. Own employees, customers, suppliers, LEAD users, universities, competitors or companies of other industries can be integrated.

Base on this there are two types of open innovation that can be described as follow:

Open Innovation — “Outside-In” Innovation

The most commonly followed practices and assumption of the concept of OI is a series of activities that help with the integration and interaction with external sources of knowledge. This could include everyone in the ecosystem right from suppliers, clients, and customers to competitors, research institutes, and non-customers from completely different industries. The objective boils down to stimulating innovation by creating strategic alliances and networks. This process is characterized as the “Outside-In” processes.

Open Innovation — “Inside-out” Innovation

The other way in which OI is approached is the “Inside-Out” process. The idea is for companies to appropriate value by bringing ideas to the market, trade their IP, and undertake technology transfer to the external market for further development of the technology/idea being transferred.

Which kind of innovation does Udemy use?

Because of the co-creational strategy in Udemy services, teachers can put their innovative way in teaching style and at the same time, Udemy has been optimising its services base on the interactions with users and competitors that bring new innovations ( service and process innovations) to their core strategy. So, Udemy is using Outside-in innovation as a competitive advantage. that can be seen as the following diagram.

Udemy’s Innovation Matrix

Refrences

• Ugwuoke, A.A. and Abbott, C. (2018) ‘The impacts of economic crisis on firm-level innovation implementation: implications for sustainable development in the construction industry’, Journal of Construction Project Management and Innovation, Vol. 8, No. 1, pp.1814–1828.
• Nezhadi, K., Faryabi, M. and Faraji. S. (2018) ‘Achieving superior performance in small and medium-sized organizations: pervasive role of innovation and marketing capabilities’, Pacific Business Review International, Vol. 11, No. 6, pp.109–116.
• Nazari-Shirkouhi, S., Keramati, A. and Rezaie, K. (2015) ‘Investigating the effects of customer relationship management and supplier relationship management on new product development’, Tehnički Vjesnik, Vol. 22, No. 1, pp.191–200.
• Schumpeter, J.A. (1912) 1934. The theory of Economic Development, Transaction Publishers, UK
• Schilling, M., 2017. What’s Your Best Innovation Bet? By Mapping A Technology’s Past, You Can Predict What Future Customers Will Want. Harvard Business Review, 95(4), pp.86-93.
• https://www.planbox.com/open-innovation-compared-to-closed-innovation/