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Management of Innovation Management of Innovation

Ch 1. Introduction

Kimin Kim, Ph.D.

Innovation?

2

What is Innovation?• http://www.youtube.com/watch?v=2NK0WR2GtFs

What is Innovation Management?• http://www.youtube.com/watch?v=Cv4Y3LzgdrM

Innovation is a process of turning ideas into reality and capturing value from them.

Importance of Technological Innovation

3

Technological innovation is now the single most important driver of competitive success in many industries.

• Many firms earn over one-third of sales on products developed within last 5 years.

• Product innovations help firms protect and increase margins by offering new, differentiated features.

• Process innovations help firms make manufacturing more efficient.

Importance of Technological Innovation (cont.)

4

Advances in IT (information technology) & rapid globalization have enabled faster innovation with more efficiency .• CAD/CAM systems enable rapid design & shorter

production runs.• R&D, outsourcing, manufacturing, & marketing at the

global level has already become a norm.• How would 3D printing technology change the world?

Advances in IT & rapid globalization have lead to:• More rapid new product introductions• Greater market segmentation

Impact of Innovation on Society

5

Innovation enables a wider range of goods & services to be delivered to people worldwide.

• Enables more efficient food production, improved medical technologies, better transportation, etc.

• Increases Gross Domestic Product by making labor & capital more effective and efficient.

• However, may result in negative externalities. - e.g., pollution, erosion, antibiotic-resistant bacteria, etc.

Innovation by Industry: The Importance of Strategy

6

Successful innovation requires carefully crafted strategies & implementation processes.

Innovation funnel

• Most innovative ideas do NOT become successful new products.

Brief Research

7

How long does new product development (in industry) take?• A recent study found:

Length of development cycle varies with innovativeness of project:

Incremental projects took 6.5 months from concept to market introduction.

More innovative projects took just over 14 months. New-to-the-world products took 24 months. On average, however, firms reported 12% to 40%

shorter cycle times than they reported in 1995.

Discussion Questions

8

1. Why is innovation so important for firms to compete in many industries?

2. What are some of the advantages of technological innovation? Disadvantages?

3. Why do you think so many innovation projects fail to generate an economic return?

Let’s set up teams & schedule

Ice break & partner selection

Team formation & scheduling

Cf. Midterm exam period: Apr. 20~24 Final exam period: Jun. 15~199

Team #

MembersAssnmt. I Assnmt. II

Date of Case PT

Chap.

Date of Disc. PT

Chap.

1 March 20 3 May 1 9

2 March 27 4 May 8 10

3 April 3 5 May 15 11

4 April 10 7 May 22 12

5 April 17 8 May 29 13