Comparing the Automobile Industry and the Banking Industry

The two industries that I want to compare are the automobile industry and the banking industry. In the automobile industry, there has been an increasing demand of cleaner and greener cars, cars that are pollutes the air less. Many car owners opt for hybrid cars instead of commercial cars to lessen their carbon footprint. In the banking industry, depositing and withdrawing of cash has been made convenient with the Automated Teller Machine (ATM). One of the differences between the hybrid car and the ATM is the nature of innovation the hybrid car is a product innovation while the ATM is a service innovation. The hybrid car is a product innovation as it is a new type of car that functions differently from the conventional car. On the other hand, the ATM is a service innovation as it is a new way of providing banking service. Secondly, the type of innovation of the hybrid car and the ATM is also different. The hybrid car is a modular innovation whereas the ATM is a radical innovation. The hybrid car looks and functions the same as the conventional car. The hybrid car has an additional electric motor that powers the car to move whereas the conventional car did not have. The electric motor is an alternative source of power for the car as opposed to the traditional rotary motor that powers the car. By introducing the electric motor into the car, it reduces the emission produced by the conventional car without affecting the speed or range of the car. As the introduction of a new component changes the way the overall the system operates but does not change the architectural and configuration of the car, the hybrid car is a modular innovation from the conventional car. However, the ATM is a radical innovation, it is a completely new design with a completely new function that never existed before. With the ATM, we do not have to visit a bank teller to deposit, withdraw cash or some complete simple transactions. Therefore, the type of innovation of the hybrid car and the ATM is different. At the individual level, the gain of insight by the two industries is also different. Victor Wouk gained his insight in building the first hybrid car by association. He knew that with the continual increase use of commercial cars in the world, would lead to an unsustainable level of air pollution. In 1962, Russell Feldman approached Wouk with an electric car and he learnt that the electric car has zero emission. However, the batteries could not provide enough range and power for a car. Thus, having the knowledge of the problem of air pollution with continual use of commercial cars and recognizing the advantages of an electric car, he brought this two unconnected ideas and came up with a hybrid car. Wouk wanted to come up with a solution where the car do not contribute to air pollution as much and can retain the speed and range of the normal cars. Having this inspiration, he successfully managed to convert a Buick Skylark vehicle with a 20-kilowatt direct-current electric motor and an RX-2 Mazda rotary engine, which eventually passed the test by the US Environmental Protection Agency (EPA). Comparing the automobile and banking industry, the gain of insights by both industries is different. Victor Wouk uses the association method, as described by David Smith in Exploring Innovation, but Luther George Simijan got his inspiration by the serendipity method. Luther George Simijan realized that there is always a long queue at the bank to visit the teller for simple transactions such as depositing, withdrawing or transferring of funds.

Furthermore, the banks were only open during office hours. Thus, when customers in need of cash after during after office hours, there is no way to withdraw cash other than visiting the bank the next working day. He just toyed with the idea of having a hole in the wall machine that customers could use to make financial transactions. His gain of insight of the ATM was by chance. He continued building on the idea with the idea and registered for patents in 1939. The moments of inspiration for innovations for these two industries by the individuals are different. However so, these innovations eventually made a great impact in the world today. The ATM has allowed us to make financial transactions around the clock without a bank teller and the hybrid car offered the world an option for cleaner cars. The first commercial hybrid car available in the market was the Toyota Prius that was introduced in 1997. In 1993, the executive vice president of research and technology division, Mr Yoshimo Kimbara, wanted to find alternative ways to increase future competitiveness and thus formed a small study group to look for solutions. He tasked Mr Ritsuke Koboshi; the general manager of the general engineering division together with 10 experienced and committed managers. The managed to come up with a prototype for a motor show in 1995 but the prototype failed due to basic engineering fault. The development group continued to face problems developing a suitable battery for the Toyota Prius and hence decided to seek the expertise of Matsushita Battery Industrial Company to develop a battery suitable for extreme weather conditions and can be massproduced. The Toyota Prius follows the demand-pull model of the innovation process. The pollution caused by vehicles on the road has been a major concern for the world. With increasing affluence in the world, more people could afford cars. This resulted in the increased level of pollution in the world today especially in emerging economies such as China and India. There was a need for a vehicle to be more fuel-efficient not only to reduce the level of pollution, but also because the prices of fuel were on the rise. Consumers will want to have car that is fuel-efficient and can reduce their carbon footprint. Acknowledging such a demand in the market, Mr Yoshimo Kimbara realized that Toyota needed to be the first in the market to launch a cleaner and greener vehicle for Toyota to continue to be a major player in the automobile industry. In contrast, the ATM actually follows the technology push model of the innovation process.. HERE ONE MORE PARAGRAH! WOOT By using the form of open innovation, Toyota was able to hasten the process of launching the Toyota Prius into the market. The biggest problem that the team faced while developing the car was the battery. The battery needed to be small and powerful enough for the car. Toyota also faced problems with the battery, as it was not able to withstand extreme conditions and often failed due to excess heat due to the combustion engine. By tapping on the expertise of Matsushita Battery, Toyota and Matsushita were able to develop a suitable battery in a short period of time and successfully test drive the car in extreme conditions. Toyota sort of relied on Matsushita to complete the biggest challenge of the project. Although Toyota was the company that came up with the idea, they relied on Matsushita to develop the battery physically. Similarly, the success of the ATM was also because the banking industry adopted the form of open innovation. The City bank of New York introduced the first ATM prototype in the early 1960s but it was pulled out after 6 months due to a lack of customer demand. This

was because this first ATM used single-time use cheques for customers to make financial transactions. Security measures were low and it also meant that customers needed to hold many cheques to make as many transactions. Thus, with such inconvenience, not many people used the ATM. It seems the only people using the machines were a small number of prostitutes and gamblers who didn't want to deal with tellers face to face Simijan wrote. After a few years of innovation that happened in Japan, Sweden, United Kingdom and United States, ATMs were reintroduced in the world again and this time it was much more successful. These innovations include using plastic magnetic bankcards by the Speytec and Midland Bank and incorporation of the personal identification number (PIN) developed by British engineer James Goodfellow. Together with other independent and simultaneous improvements by other individuals and companies, the ATM became widely used in the 1980s. Many of us now use the ATM to make financial transactions instead of visiting a bank teller. Although both industries make further improvements to the hybrid car and the ATM using open innovation, the automobile industry only took part in innovation with another company. On the other hand, the banking innovation took part in innovation in many other companies in the same industry and as well as other industries. In that sense, the form of open innovation in the banking industry is much bigger in scope than in the automobile industry. Following the introduction of Toyota Prius in the market, other competitors began to introduce their own brand of hybrid cars such as the Honda Insight and the Ford Fusion. The industry continued to make further improvements to the hybrid cars market making it more affordable and more readily available for consumers in the world.