9. Internal Processes -2003

8/6/2019 9. Internal Processes -2003

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MOI 9. Managing the

Internal Processes

Prof.V.Seshadri

NMIMS


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Figure 9.1 Innovation process model

2005 Joe Tidd, John Bessant and Keith Pavitt


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Stages in the Internal Processes

Picking up a wide range of signals and processing

them for relevance to the org.

Selecting projects which have a good strategic fit.

Monitoring and managing the projects

Deciding on project discontinuation or

acceleration

Preparing for effective launch.

Reviewing and capturing learnings

MOIV- 9. Internal Processes Ref 1 Ch 9Prof.V.Seshadri

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Enabling effective Search

Picking up various kinds of trigger signals about

the technology, markets and competitor

behavior, shifts in political or regulatory

environment, new social trends etc. It involves:

1. Defining the boundaries of the marketplace

2. Understanding market dynamics

3. Trend- spotting

4. Monitoring technology trends


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Possible sources from which links can be made:

Suppliers

Universities

Research/technology institutions Trade associations

International bodies (e.g. for standards)

e.g. Xerox: 23,000 technical representatives fromaround the world are linked into a network ofcommunities to share knowledge about unusualmachine faults and methods used to fixing them.


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For effective search, various kinds of trigger signals

need to be captured. Approaches to explore and

extend the search space are:

1. Defining the boundaries of the marketplace

2. Understanding market dynamics

3. Trend spotting

4. Monitoring technological trends5. Technological Forecasting


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6. Integrated future search

7. Learning from others

8. Involving stakeholders

9. Involving insiders

10. Mistakes management

11. Communication and connection


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Defining the boundaries of the marketplace

Analyse and decide on Current and potential

markets based on clear understanding of what

is the business we are in and want to be.

e.g. amazon.com from on-line retailer to

software developer and supplier also.


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Understanding market dynamics

Understanding where the potential markets may

arise.

E.g. Cell phones was earlier a specialized business

tool but is now used by everyone

E.g. low chloresterol health foods are being

adopted by the common man too.

E.g. Zara and Benetton have sophisticated I.T.system in place to quickly identify which lines are

selling well and base plans accordingly.


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Trend spotting

Developing antennae to pick up on the earlywarnings of developing trends in the marketfor new products or processes or services

where none exist at present.e.g. Use of mobile phone by school going

children

e.g. Kishore Biyani ( of Pantaloon) spotted trendtowards denim wear in college going studentsand adapted business towards this line.


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Monitoring technological trends

Identification of emerging trends intechnologies, where existing trajectories maybe challenged or re-directed as a result of new

knowledge. e.g. Open heart surgeries replaced with

Angioplasty.

Use of laser in place of knife for cataractoperations.

Use of laser for metal cutting.


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Case: Proctor & Gamble

connect and develop

P&G spends about $2 bn each year and employsaround 7000 people on research.

P&G sources much of the ideas for its research from

outside the company through a programme calledconnect and develop.

There are more than 1.5 million active researchersoutside working for the company. They are tapped by ateam of dedicated employees who track and mine theinformation using the internet and othercommunication channels and using sophisticatedsearch and visualization


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Case: Proctor & Gamble

connect and develop This team gathers intelligence on areas like technology,

market, behavioral, competitors, social and politicaltrends. These information are sorted and passed onwithin P&G, who may analyze them to trigger

innovations. The search process is complimented by internet based

tools (nine sigma.com. Innocentive.com etc.). Intranetgroups also connect the company with communities ofpractice around particular product groups,

technologies, market segments etc. Retired employeesare also part of the network.

Significant contributions from internal ideas are alsoconcurrently on.


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Market Forecasting

Tools such as simple extrapolation of currenttrends through to complex techniques forhandling discontinuous change, such as Delphipanels and Scenario writing are widelyemployed for market forecasting.

Apart from Sales, other factors like demographic,technological, environmental political and socialneed to be considered.

Identifying markets which do not as yet exist, butmay emerge in future need to be identified byusing appropriate techniques.


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Technology forecasting

Standard tools such as Delphi panels and scenariowriting are used to forecast technology also.

An effective technique is the use of S curves to try

and identify the point at which an emerging newtechnological trajectory takes over from an existingone.

We need to be watchful of possible discontinuousinnovation, where new opportunities may emergefrom making different use of existing technologiesconfigured in new ways.


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Integrated Future Search

A more accurate forecasting technique is to take anintegrated view of what different futures may look likeand then explore innovation triggers within thosespaces.

E.g Shell looked at possible scenarios for 2020 in termsof 2 alternatives: Business class and prism. Theformer offers a vision of connected freedom in whichcities become powerful at the expense of the centralgovt. The latter offers a scenario in which people

increasingly go to their roots and re-orient towardsvalues as the focus around which to organize theirlives. Within these two, the Shell team explored andsimulate various threats and opportunities.


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Learning from Others

Comparisons against competitors and other

organizations, looking at others best practices,

demonstration projects and reverse engineering.

For e.g. Early growth of Korean companies

happened by their learning from foreign

companies for whom they executed orders,

adopting the strategy of copy and develop. Benchmarking is a powerful tool used for learning


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Involving Stakeholders

Involve suppliers, customers, users, contractors togenerate new product, process or service ideas.

E.g. Danish pharma company Novo Nordisk developeda highly successful range of insulin delivery devices

which originated in a young English girls home madedevice.

Working with lead users is an effective method oftapping consumer requirements well before the needbeing widely felt by regular users. The company canrespond well within this time.

However, users response may not be always valid,particularly in the case of disruptive innovations


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Involving Insiders

In a study of large FMCG companies in U.K., it wasseen that they benefited immensely throughemployee involvement and suggestions.

Chevron Texaco incorporates commitment tohigh-involvement innovation by employees andother stake holders in its mission statement. Itset up a system to involve all of its 56,000

employees worldwide with remarkable results. Kaizen is an excellent movement for promoting

fruitful and focused employee involvement.


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Mistakes Management

Trigger signals can also come from mistakes or apparentfailures which may open up new applications or untappedareas of technology.

For e.g. 3M s Post It technology was born out of a failed

experiment of a Polymer Scientist. For e.g. Pfizers blockbuster drug Viagra was born out a

failed experiment on a compound code named UK-92,480for the treatment of Angina.

The organization must create an atmosphere where

Scientists are encouraged to view failures positively. 11 out of 35 rejected projects of Xerox were later

commercialized by others ( such as Ethernet by 3Com andPostscript language by Adobe Systems.)


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Communication and Connection

User perspectives must be communicated to allconcerned in the organization so that they reallyunderstand and work towards these.

Concept of internal customers and job rotationof development personnel to marketing functionsare some useful tools to achieve this.

Informal interactions like in coffee areas or in

common parties help in promoting this. Some organizations have gate keepers who

disseminate information regularly.


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Figure 9.3



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Strategy Making

Framework for developing strategy

1. Strategic Analysis

2. Strategic Choice3. Strategic Monitoring

MOIV- 9. Internal Processes Ref 1 Ch 9Prof.V.Seshadri 24


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Strategic Analysis

The basic criteria is does the innovation we

are considering help to reach the strategic

goals we have set ourselves? ( growth, market

share, profit share etc.)

There are many structured methodologies to

help organizations evolve the strategy. Usually

the exercise is done by top level team of theorganization at an outside venue.



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Strategic Choice

Most companies have to choose betweenmultiple innovation options. While theyusually concentrate on one or two core

product offerings, they have severalinnovation activities running at any moment.

3M has around 60,000 product portfolio andhence the choices are many and complicated.

There should be a balance between risk,reward, novelty, experience etc.



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Table 9.1 Problems arising from poor portfolio management



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Portfolio Management Approaches

1. Benefit Management Techniques

2. Economic Models

3. Portfolio Models

Benefit management techniques comprise of relativelysimple subjective judgments e.g. checklists

Economic models try to put in some quantitative or

financial data into the equation for e.g. payback timePortfolio models consider all the products and construct

multiple charts to develop an overall picture.



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Figure 9.4 Process innovation portfolio bubble chart



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Figure 9.5



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Knowledge acquisition phase

It involves

Generation of technological and

market knowledge

Technology transfer



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Knowledge acquisition phase

Effective management of R&D requires

1. Clear strategic direction

2. Effective communication and buy-in

3. Integration of effort across different groups4. Have a well developed network of external

sources which can supply needed inputs.

5. Ability to put that acquired technology to

effective use.6. Negotiate for full technology transfer including

know-why.



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Criteria for deciding on

sourcing of technology

Arthur D Little uses a matrix which groups

technological knowledge into 4 key groups

1. Base2. Key

3. Pacing

4. Emerging



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Base technologies

Technologies on which products/processes are

based. These are available with competitors

too.

May make sense to source from outside



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Key Technologies

Key Technologies are those which form the

core of current products/services and which

have a high competitive impact. They are

usually protected by Patents.

In house R&D or a carefully selected strategic

alliance/partner is needed



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Pacing Technologies

Pacing Technologies are those which are at the

leading edge. They may be under

experimentation by competitors also.

Work may be done in this area in own R&D of

large firms, but for SMEs these could be

sourced from outside

MOIV- 9. Internal Processes Ref 1 Ch 9

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Emerging Technologies

Are those which are at the technological

frontier, still under development and whose

impact is promising by as yet unclear.

These may be nurtured by tie-ups with

Universities or professional R&D set up. They

are best served by a watching strategy


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Figure 9.6



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Technology Acquisition Mechanisms

1. Mobilizing tacit knowledge

2. In-house formal R&D

3. Reverse engineering

4. Covert acquisition5. Technology transfer and acquisition

6. Contract R&D

7. Strategic R&D partnership

8. Licensing

9. M&A

10. Joint Ventures


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Figure 9.7



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Enabling Implementation

Implementation is the task of making innovationshappen moving the idea through to successfulproduct/process/service.

It is one of managing the development funnel. Managing innovations is a fine balancing act

between the cost of continuing with projectswhich may not eventually succeed and the

danger of closing down too soon and eliminatingpotentially fruitful options.

Stage gate approach is precisely meant for this.


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Figure 9.8 The development funnel



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Figure 9.9 Accelerating idea to market - the AIM process



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Table 9.4 Key features of emerging good practice model



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Classification of customization

1. Distribution e.g. amazon.com gift wrapping anddelivery services.

2. Features: colour, size, specs., e.g. Dell

Computers offer of customized computers. LevisStrauss tailored suits, BMW custom built carwhich owner can visit to see their car beingmade, if they wish.

3. Design customization: customer can make hisdesign from a software. Rapid prototyping andsimulation packages.


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Figure 9.10



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Launch

It is the process of identifying, exploring and

preparing the market and finally arranging for the

delivery mechanism. Enabling steps include:

1. Customer testing

2. Test Marketing

3. Develop a marketing strategy

4. Develop a marketing plan

5. Develop a support organization


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Figure 9.11



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Learning and Re-innovation

This is the final stage in the innovationprocess. It involves a review of the completedproject and an attempt to capture the

learnings from the experience. These learnings need to be consolidated along

with available accumulated tacit knowledge ofthe company.

The upgraded knowledge will be the platformfor re-innovations.


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Documents

9. Internal Processes -2003