M.Sc. Irma Bejarano24.04.2012

Managing

Innovation

Objectives• Why Management Innovation Maters?

o Global Tendencies and Benefits o Which are the most innovative countries and companies.

• What is Management Innovation?o Concept and Implications o Types of innovations o Modes of innovations

• How to become a Manager Innovator?o The innovation Challenge o The innovation process

1.- Why Managing Innovation Matters?

Which are the most innovative countries?

1 US

2 Germany

3 UK

4 Japan

5 France

6 Switzerland

7 Singapore

8 Canada

Global Innovation Index (GII)

1 Policies

2 Human Capacity

3 Infrastructure

4 Technological

Sophistication

5 Markets and Capital

1 Knowledge

2 Competitiveness

3 Wealth

This countries are also the most rich?

1 US

2 Germany

3 UK

4 Japan

5 France

6 Switzerland

7 Singapore

8 Canada

YES or NOT?

Which are the leading innovative companies?

Most Innovative Companies Ranking

Most Known for its Innovative…..

1 Apple Products (52%)

2 Google Customer Experience (26%)

3 Toyota Motor Processes (36%)

4 General Electric

Process (43%)

5 Microsoft Products (26%)

6 Tata Group Products (58%)

7 Nintendo Products (63%)

Business Week & BCG

Ranking (04-07)2,950 senior

executives3 yr stock returns revenue growth margin growth

This companies are also the most rich?

Most Innovative Companies Ranking

1 Apple

2 Google

3 Toyota Motor

4 General Electric

5 Microsoft

6 Tata Group

7 Nintendo

Business Week & BCG

Ranking (04-07): 19%

increase their revenue.Innovaro: Sustainable

growth in their price per

share in the last seven years

YES or NOT?

Managing Innovation= Economic Progress

• The world economic progress has been lead by key innovations and inventions. Changed the way do business.

Joseph Schumpter,

The “Godfather of Innovation studies"

• Entrepreneurship + innovation: capitalism and economic progress.

2.-What is Managing innovation?

Successful exploitation of new ideas

leading to the creation of a new product and service.

It is more that just generating good ideas

it is the process of growing them into practical use and bringing them to the market.

Managing Innovation: Change

Managing innovation in a company involves organizational changes:

Traditional management principles, processes and practices.

Alters the way the work of management is performed:• Setting goals • laying out plans• Motivating and aligning efforts• Coordinating activities, etc

The 4p’s of Innovation

Process

Product

Position

BusinessModel

INNOVATION

(incremental……radical) (incremental……radical)

(in

crem

enta

l……

rad

ical

)(i

ncr

emen

tal…

…ra

dic

al)

Exercise: Types of Innovation

Nissan Leaf

A1: ProductInnovation

E1:

A2: ProcessInnovation

E2:

A3: Position

E3:

A4: Business

ModelInnovation

E4:

1 2

3 4

Modes of Innovation

1

2

Incremental Innovation

Modest step-by-step advances

Quantum Innovation

Major improvement of an existing technology that

replaced another one

3

Disruptive Innovation

Help to create a new market and value network eventually displacing an

earlier technology

ClaytonChristensen

Exercise: Modes of Innovation

A1: Quantum

Innovation

A2: Incremental Innovation

A3: Quantum

Innovation

A5: DisruptiveInnovation

1 2 3

A1:

A2:

A3:

A4: A5:

A4: Incremental Innovation

3.- How to Become a Manager Innovator?

The Innovation Challenge

“The best innovators aren’t lone geniuses.

They are people how can take an idea that is obvious in one context

The best companies have learnt to systematize that process”

(Hagardon, Sutton 1990)

and apply it in not-so-obvious ways to a different context.

The Innovation Challenge

Out of the box thinking, change in management

orthodoxies.

Part of the core business process.

Process that generates innovations continually.

Have a clear structure, be organized and managed.

Innovative organization infrastructure.

Design a clear innovation strategy.

The Innovative Organization

Culture of focused creativity, leadership and motivation.

Entrepreneurial talent.

Multifunctional talented team-works.

Information-knowledge infrastructure.

R&D procedures and infrastructure.

Project portfolio management.

.

Which functional areas contribute to the process?

Marketing R&D

Operations Human Resources

Finance

• Identify customer’s needs.

• Dev. concepts and products.

• Pricing and positioning strategies.

• Launch of products.

• Development of novel products aligned with customer needs.

• Process re-engineering

• ROI Calculations and pricing strategies.

• Hiring, developing and motivating HR.

• Development of a culture of innovation

The Innovation Process

Ideas “filtered out”

Ideas

Capturing the

Benefits

Rejected concepts

Ideas coming from open innovation

Screening and

selection of ideas

Idea Generation

Concepts…

Implementation-

Bring to the maket

Projects…MARKET • New product

• New services• New Process• New Business Processes

Rejected Projects

 

• Company • Society • World

Ideas… Value Generation…

1.- Idea Generation• Changes begins, looking for customer pains.

• Where companies look for inspiration

• Find what triggers the innovation process

• Soft management, creative part.

• Spontaneous, unexpected, accidents.

• Formal methodologies or techniques

1.- Idea GenerationKnowledge Pull

Existing technology or a defined service and tries to find a market for it.

Knowledge Push

Creation of a new technology or service for an identified market.

Users as InnovatorsTechniques as innovation blitz

and focus groups to get close to customers.

Recombinant Innovation

Transferring or combining old ideas or products in new context or mkts.

2.- Screening and Selection of Ideas

Idea Selection Process

Creation of New

Concepts

Prototyping Testing Concepts

Analysis

MKT Research

•Cross Functional Teams: R&D, MKT•Creativity Techniques:

Creativity Sessions

Brainstorming Innovation Blitz Morphology

Charts

•Full Description of the products/services

Principal Characteristics Features, Scopes Competitive Advantage Target market Differentiations offer Initial Price Commercialization Strategy

•R&D•Physical Products

•MKT Methodologies: Interviews Surveys online Testing

prototypes with end customers

Focus groups QDF

•Investment •ROI •Mkt size potential •Viability•Design Procedures

•Quantitative

• Screening of a large number of ideas

2.- Screening and Selection of Ideas

3.- Implementation

Project Assessment &

Selection

Product Development

Product Commercializatio

n

•Portfolio management

Selection and rejection of projects

Business Attractiveness

Risk Cumulative Cost

•Physical products•Design of products •Manufacturing procedures

• Testing • Launching • Marketing • Commercializing

4.- Capturing the Benefits

• The ultimate purpose of innovation: create value. Commercial success Market share Cost reduction Knowledge generation Customer’s lifestyles improvement Positive changes in society, patents, etc  

• They are reflected in: Bottom line Specific KPI’s Economic development: price/earning ratio

Conclusion“We have reached the end of incrementalism

Only those companies that are capable of creating industry revolutions

will prosper in the new economy.”

-Gary Hamel