The Strategic Management of Innovation

Mohsen El Shammaa, Ph.D.

2008

The Innovation Concept

Product innovation: a new product or a new service.Process innovation: a new production method or process.Organizational innovation: a new form of organization or management.Delivery innovation: a new form of delivery or distribution.

The Nature of Negotiation

Negotiations occur for one of two reasons:to create something new that neither party could do on his or her own.to resolve a problem or dispute between the parties.

The Nature of Negotiation(contd)

Because people can negotiate about so many different things, understanding the fundamental processes of negotiation is essential for anyone who works with other people.Sometimes people fail to negotiate because they do not recognize that they are in a bargaining situation.By choosing options other than negotiation, people may fail to identify a good opportunity and not achieve their goals, or they may not manage their problems as smoothly as they might like to.

The Nature of Negotiation(contd)

People may also recognize the need for bargaining but do poorly because they misunderstand the process and do not have good negotiating skills.

The Nature of Negotiation(contd)

After attending this course, participants should be well prepared to recognize the following:negotiation situations.understand the process of bargaining.know how to analyze.plan and implement successful negotiations.and perhaps most important, be able to obtain better negotiation outcomes than before.

The Nature of Negotiation(contd)

Bargaining to get the best price!Negotiationa more formal process that occurs when parties are trying to find a mutually acceptable solution to a complex situation.

The Nature of Negotiation(contd)

Characteristics of a Negotiation Situations:there are two or more parties.there is a conflict of interest between two or more parties.parties negotiate because they think they can use some form of influence to get a better deal.negotiation occurs when there is no system- no fixed or established set of rules or procedures.when we negotiate, we expect give and take.successful negotiation involves the management of quantifiable and unquantifiable benefits for both parties.

The Nature of Negotiation(contd)

Characteristics of a Negotiation Situations:when you shouldnt negotiate:when youd lose everything.when youre sold out.when the demands are unethical.when you do not care.when you do not have time.when they act in bad faith.when waiting would improve your position.when youre not prepared.

The Nature of Negotiation(contd)

Interdependencein negotiation, both parties need each other. A buyer cannot buy unless someone else sells, and vice versa.parties need each other to achieve goals.

The Nature of Negotiation(contd)

Mutual adjustmentboth parties know that they can influence the others outcomes and that their outcomes can, in turn, be influenced by the other. This mutual adjustment continues throughout the negotiation as both parties act to influence the other.having information about your negotiation partners perceptions is an important element of negotiation success. When your expectations of a negotiated outcome are based on faulty information, it is likely that you will not be taken seriously by the other party.

The Nature of Negotiation(contd)

Mutual adjustmentparties have to work toward a solution that takes into account each persons requirements.a necessary step in all negotiations is to clarify and share information about what both parties really want as outcomes.when one party accepts a change in his or her position, a concession has been made.honesty and trust are two dilemmas that all negotiators face.

The Nature of Negotiation(contd)

Mutual adjustmentgive and take, is essential to joint problem solving.appropriate decisions by both parties.

The Nature of Negotiation(contd)

Value creationone of the main sources of value creation is contained in the differences that exist between negotiators. Negotiators are seldom identical and the key differences among negotiators may include:difference in interests.difference in opinions.difference in risk.difference in time preference.

The Nature of Negotiation(contd)

Conflictsharp disagreement or opposition for interests and ideas.Levels of conflictIntrapersonal, occurs within an individual:ideasthoughtsemotionsvalues

The Nature of Negotiation(contd)

Levels of conflictInterpersonal conflict:bosses and subordinatesspousesInteragroup conflict:team and committee membersfamilieswork groupsclasses

The Nature of Negotiation(contd)

Levels of conflictInterpersonal conflict:unions and managementnationsgovernment authorities

The Nature of Negotiation(contd)

Functions and dysfunction of conflictmost people think that conflict is bad or dysfunctional. This notion has 2 aspects:conflict is an indication that something is wrong.conflict creates largely destructive consequences.

The Nature of Negotiation(contd)

Elements that contribute to conflicts destructive image:competitive processes.bias!emotionality.decreased communication.

The Nature of Negotiation(contd)

Elements that contribute to conflicts destructive image:generalization.rigid commitments.magnified differences.escalation of the conflict.

The Nature of Negotiation(contd)

Benefits of conflictmakes members more aware and able to cope with problems.promises change and adaptation.strengthens relationships.promotes awareness.enhances personal development.encourages psychological development.

Thank you

Egyptian Banks Co. for Technological Advancement, SAE

The Innovation Concept Product innovation: a new product or a new service.

Process innovation: a new production method or process.

Organizational innovation: a new form of organization or management.

Delivery innovation: a new form of delivery or distribution.

The Innovation Concept (Contd)

Market Innovation: a new form of marketing a general market behavior, including a different relationship with the state and the other parts of the public regularity system, or other of societys organizations or specific consumers.

Raw material innovation: use of a new raw material.

The Innovation Concept (Contd)The types of innovation result in:

Creation of a new product.

Establishing a new delivery system.

Giving advantage over the competition.

Increasing productivity

The Innovation Concept (Contd)Why innovation?

1. Market Saturation

Many markets have become saturated because people and firms have had most of their needs fulfilled. This makes it more difficult to introduce innovations in the market, and firms are forced to focus on many factors to develop more advanced innovations that have a chance of acceptance in the market.

The Innovation Concept (Contd)2. Customer orientationThe customer has become a central actor and more sophisticated than ever before.

3. Increased importance of serviceMany firms add services to their products/services that they provide to their customers.

The Innovation Concept (Contd)4. Flexibility and modularization:Production today has to be more flexible and modularized. This further means that process and organization innovations are becoming increasingly necessary.

5. Changes in societyNew political and ethical waves in society affect the consumers preferences.

The Innovation Concept (Contd) 6. Knowledge is more important

Innovation are becoming more knowledge- based even in services.

7. Technology is more important

In services, technology, in particular information and communication technology, has become more important as an innovation determinant.

The Innovation Concept (Contd)The driving forces behind service Innovation

A. Trajectories1.Technology trajectoriesUsing technology which generally influence products and production processes. Examples are information and communication technology the wave and more specifically the internet, or the freezer and microwave oven which together have created a new distribution system within catering.

The Innovation Concept (Contd)2. Service profession trajectoriesMethods, general knowledge and behavioral rules (for example, ethics) that exist in the various service professions (for example, law, nursing, catering).

3. General management ideas or ideas for new organizational forms such as motivational systems, business process, reengineering, service management and so on.

The Innovation Concept (Contd)B. ActorsPersons, firms, or organizations whose behavior is important to the firms ability to sell products and services and thus to their innovation activities.

The actors define market possibilities and are sometimes involved in the development of innovations. They may also be obstacles to innovation.

The Innovation Concept (Contd)

Actors are:

1. Shareholders2. Competitors3. Customers4. Public sector5. Suppliers

The Innovation Concept (Contd)The decision to innovate strategy as a modifying factor

The driving forces dont produce innovations. They produce the conditions for innovations and put pressure on the firm to innovate; but the firm itself must decide to innovate before innovations can be carried.

The Innovation Concept (Contd)Strategy has two aspects:

1. The market guides the firms development

2. Management must make the decision whether to innovate or not and when to do it.

The Innovation Concept (Contd)In the decision-making situation, management must look externally to see the nature of the market, and it must look internally to see the resources and capabilities that the firm possesses.

The Innovation Concept (Contd)A. External

1. External aspects of strategyThe strategy expresses the market position that the management wants the firm to have in the future.The management does so on the basis of knowledge of its environment:Customers needs, preferences and problemsCompetitors behavior

The Innovation Concept (Contd)2. Forms of strategy:

1. Offensive strategyUsed when the firm decides to take a step forward in growth and development such as:

Product renewal, radical product innovations and the introduction of new quality standards. Professionalization, recruitment of new professionalsOpening new markets, finding markets that never existed before.

The Innovation Concept (Contd)2. Defensive strategy:Used when the firm is in a good market position: it sells well, but the competition is increasing. In that situation, the firm will attempt to maintain its market position in the following way:a. Minor improvements of products, processes, organizationsetc,b. Price leadership, reducing costs and profits to sell.c. Merger and acquisition to create larger and more efficient units.

The Innovation Concept (Contd)B. Internal

The principal internal factors related to innovation management and constitute the scope of the firms innovation behavior. They are the basis for the managements decision as whether or not to innovate.

Thank You