1
Managing Innovation
MANAGING INNOVATION
2
Managing Innovation
• Introduction• What is invention and innovation
• Different types of innovations• Models of innovation
MANAGING INNOVATION
3
Managing Innovation
Corporations must be able to change, adapt and evolve if they wish to survive
By 1994-95, 275 books published in US had the word “innovation” in their titles
“.. not to innovate is to die” - Christopher FreemanThough the term is now embedded in our language:
What is meant by innovation? Do we fully understand the concept? To what extend is this understanding shared? Is a scientist’s view of innovation the same or different
from that of an accountant in the same company? Why are some business more innovative than the others? Is innovation at the heart of all companies’ activities?
THE IMPORTANCE OF INNOVATION
4
Managing Innovation
Certain companies that have established themselves as technical and market leaders have demonstrated an ability to develop successful new products and to innovate
MARKET LEADERS
THE IMPORTANCE OF INNOVATION
Industry Market leaders ?Aerospace Airbus, BoeingPharmaceuticals Pfizer, GSK, NovartisMotor cars Toyota, BMWComputers & software development
Microsoft, SAP, Intel
5
Managing Innovation
YEAR NEW PRODUCT COMPANY1930s PE ICI1945 Ballpoint pen Reynolds Intl
Pen1950s Float glass -
manufacturing process
Pilkington
1970/80s
Zantac GlaxoSmithKline
1970/80s
Photocopying Xerox
1980s PC Apple Computer
1980/90s
Windows 95 Microsoft
1995 Viagra Pfizer2000s Cell phones Nokia
IMPORTANT TECHNOLOGICAL INNOVATIONS
THE IMPORTANCE OF INNOVATION
6
Managing Innovation
QUESTION:
Not all firms develop innovative new products, but they still seem to survive. Do they thrive?
THE IMPORTANCE OF INNOVATION
7
Managing Innovation
How a number of different disciplines contribute to our understanding of the innovation process.
THE IMPORTANCE OF INNOVATION
Firms architecture& external linkages
Firms operatingfunctions &
activitiesCreativeindividuals
Scientific and technological developments inevitably lead to knowledge inputs
Societal changes andmarket needs lead todemands and opportunities
Firm’s developknowledge,processes andproducts
8
Managing Innovation
Creativity is the key to making changeCreativity is not a gift for a chosen few. Virtually everyone is borne with creativity and uses it extensively during childhood
While we don’t all have the same amount or type of creativity, we use substantial more than a friction, perhaps 10%, of their natural creativity every day
Creativity has little connection to IQ, sex, age or any other demographic factors
Most people can tap into more of their natural creativity by learning a few basic process skills – and by using these skills deliberately to “uncondition” themselves.
DEFINITIONS & VOCABULARY: Creativity
9
Managing Innovation
1. We try too hard to get along with others instead of trying to introduce fresh facts and points of view.
2. We feel a need to account for all our actions instead of visualizing the future or playing with ideas.
3. Wishing to be seen as practical and economical, we often judge less than perfect ideas too quickly.
4. We worry about expressing doubt or ignorance or asking ‘Why’ about things that everyone accepts; we try to be polite and not placing others on the defensive.
5. We favour the adversarial approach to making decisions and resolving issues; like the adversarial nature of the courtroom and the political arena. Developing a good solution becomes secondary, we think how to win at all costs.
DEFINITIONS & VOCABULARY: Creativity
How our attitudes suppress Creativity [1/2]
10
Managing Innovation
6. We desire the safety of the known and familiar instead of venturing new ideas.
7. Because we know too much about our work, we often squelch open-minded consideration of new ideas.
8. Reluctant to admit that others’ ideas are better than our own, we reject attempts to improve our ideas. Accepting an improvement would be like admitting that our original idea was wrong.
9. We are unable to built on imperfect ideas trying to have the “perfect” idea otherwise we won’t go ahead.
DEFINITIONS & VOCABULARY: Creativity
How our attitudes suppress Creativity[2/2]
11
Managing Innovation
1. Because we fear appearing foolish, we do anything to avoid making mistakes and looking bad.
2. Our distrust of others’ motives makes us hesitant about sharing information or venturing new ideas.
3. Rather than solve the ‘real’ problem, we go with the first available solution and fail to uncover better possibilities.
4. Believing there is one right answer to any problem, we are content to stop with a workable solution.
DEFINITIONS & VOCABULARY: Creativity
How our behaviors suppress Creativity[1/2]
12
Managing Innovation
5. We try to solve a problem immediately; we lack the confidence to let the problem incubate for a time. We feel that, if we don’t solve the problem immediately, we have somehow failed.
6. We feel compelled to solve a problem directly instead of taking apparently off-course detours.
7. After finding a workable solution, we fail to drive the problem solving process through to implementation.
8. We are too quick to assume that something cannot be done or that a problem cannot be solved. Avoid negative attitudes toward problems at all costs.
DEFINITIONS & VOCABULARY: Creativity
How our behaviors suppress Creativity[2/2]
13
Managing Innovation
1. When evaluating a new idea, we often rely too heavily on our mental processes instead of physically trying out the idea. [“try it, you’ll like it”]
2. Rather than strive for a clear interpretation of the facts, we often make assumptions based on preconceived ideas, or categorize based on our experience and hearsay. Better to leave aside assumptions and start with the facts.
3. We are inflexible and rely too much in our biased view of the world. A mental rigidity which “kills” creativity.
4. During problem solving we are unable to separate the underlying key facts from the apparent symptoms, or separate cause from effect. We assume that we “already know the real problem”.
DEFINITIONS & VOCABULARY: Creativity
How our thought processes suppress Creativity[1/2]
14
Managing Innovation
5.We discuss problems in language that we assume others will understand; we use jargon and ambiguous terminology.
6.We take on enormous problems without separating them into smaller components.
7.Hung upon the smaller components of a problem, we lose sight of the large challenge. [we “lose sight of the forest for the tree”].
8.If information lacks a clear connection to everyday activities, we prematurely discard it as irrelevant. [“Gee, I can’t see what this new information has to do with my work”].
9.Believing that problem solving is complicated, we fail to see the obvious. Children are excellent problem solvers because they are see nothing as being too obvious.
DEFINITIONS & VOCABULARY: Creativity
How our thought processes suppress Creativity[2/2]
15
Managing Innovation
1. Getting bogged down (βαλτώνουν) Inter-functional teams formed to tackle a
common problem often bog down, for various reasons
2. Trusting myself and my colleagues, e.g. I fear asking for help as it might be seen as
incompetence I don’t dare mention my real problem before
my fellow managers. That would be displaying weakness
I don’t think the group’s members trust one another enough to share what is really going on
What if the solution doesn’t work? This is too radical-what will headquarters
say
DEFINITIONS & VOCABULARY: Creativity
What happens without a Creative process[1/4]
16
Managing Innovation
3. Parlor discussion, which shows up as as the following:
What’s the point of having a good solution if you are unwilling to implement it?
Talking about it is one thing: doing it is another
4. Wanting a new management style, but…….. which shows up as:
Afraid of straying into unfamiliar territory Preference of the relative safety of the
firm’s admittedly poor but more customary approach
DEFINITIONS & VOCABULARY: Creativity
What happens without a Creative process[2/4]
17
Managing Innovation
5. Change: fearful or fearless, which appears as follows:
We need more participatory management at all levels of the company
We want employees to feel that they are also owners of the company
How do we train senior management in this applied creative process and get them to use it on a daily basis?
I want employee involvement. But if I allow too much leeway (παρέκλιση) for self-management and creativity, I don’t know where employees will take it
Deep down, we fear getting involved. We fear the unknown. We might not be ready for more innovation.
I’d rather stick with the unacceptable solution we’ve accepted for the last 5 years than take the risk of trying a new idea even though it looks good.
DEFINITIONS & VOCABULARY: Creativity
What happens without a Creative process[3/4]
18
Managing Innovation
6. Sharing the risk, which shows up as: I’m afraid to report to my manager without having
everything pinned down My manager talks a good game about not killing ideas, but
he challenges almost everything I say as soon as I’ve said it. I find myself choosing my words carefully every time we speak and getting ready to defend myself.
We have taken the problem as far as we can, but will senior management be happy with our results?
How might we get senior management to share the risk with us?
Good ideas and projects languish (μαραζώνουν) in this system because people feel they have to perfect their idea before they will share their project.
I don’t want to be told I didn’t do my homework Unless a senor manager is willing to visibly use this creative
thinking process, no one else will.
DEFINITIONS & VOCABULARY: Creativity
What happens without a Creative process[4/4]
19
Managing Innovation
Summary Creativity is a continuous process of discovering good problems, solving these problems, and implementing solution
Adaptability requires creativityEveryone is borne with creativity, but it’s suppressed as we mature in 3 main ways:
Our attitudesOur behaviorsOur thought processes
By learning skills to unleash your innate creativity, you can dramatically improve your performance and make valuable change
DEFINITIONS & VOCABULARY: Creativity
20
Managing Innovation
What I Wish I Knew When I Was 20…
1. Every problem is an opportunity for a creative solution
• The harder I work, the luckier I get!• Find the intersection between your
interests, your skills, and the market• Try lots of things and keep what works.• Don’t wait to be anointed. Just do it!• It is a very small world… Don’t burn
bridges!• It is the little things that matter most.• “Creativity is allowing yourself to make
mistakes. Art is knowing which ones to keep.” [Scott Adams]
21
Managing Innovation
QUESTION:
Describe the role of individual in the innovation process?
ANSWER: Individuals play a key role in the innovation
processThey are define the problems, have ideas and
perform creative linkages and associations that lead to innovations
Their role as managers make them decide: what activities should be undertaken the amount of resources to be deployed and how they should be carried out.
THE IMPORTANCE OF INNOVATION
22
Managing Innovation
Arguments and debates happen with all fields of management, so innovation management is not an exception
This is particular true, when innovation is viewed as a single event rather than a process.
BUT
DEFINITIONS & VOCABULARY
23
Managing Innovation
DEFINITIONS & VOCABULARY
Is innovation a new idea? Is innovation a new way of doing business? What is new? What is idea? What is new to one company, may be old to
another What is success? How someone judges success in terms of
commercial gain or scientific achievement? What is invention? What is then innovation?
24
Managing Innovation
– What is an idea– What is a concept– Idea concept (i.e. concept generation)
DEFINITIONS & VOCABULARY: Idea vs. Concept
25
Managing Innovation
Ideas for new product or service concept can come from sources within the organization, such as staff, R&D, and from sources outside the organization, such as customers or competitors.
CONCEPT GENERATION
DEFINITIONS & VOCABULARY: Idea vs. Concept
26
Managing InnovationConcept generation
Marketingdepartment
External sourcesInternal sourcesAnalysis of
customer needsMarket
surveys
Suggestions fromcustomer contact
staff
Ideas from R & D
Suggestions fromcustomers
Actions ofcompetitors
Ideas for new product or service concept can come from sources within the organization, such as staff, R&D, and from sources outside the organization, such as customers or competitors.
CONCEPT GENERATION
DEFINITIONS & VOCABULARY: Idea vs. Concept
27
Managing Innovation
Ideas from Competitors:
Ideas from Staff:
Ideas from R & D:
Ideas from Customers:
DEFINITIONS & VOCABULARY: Idea vs. Concept
CONCEPT GENERATION
28
Managing Innovation
Product: SalesmanService: Contact person
Ideas from Staff:
Research: to develop new knowledge and ideas in order to solve a particular problem or to grasp an opportunity.Development is the attempt to try to utilize &operationalize the ideas that come from researchAlthough Development sounds less exciting than Research, it often requires as much creativity and even more persistence
Ideas from R & D:
DEFINITIONS & VOCABULARY: Idea vs. Concept
CONCEPT GENERATION
29
Managing Innovation
Reverse EngineeringIdeas from Competitors:
Product: SalesmanService: Contact person
Ideas from Staff:
Research: to develop new knowledge and ideas in orderto solve a particular problem or to grasp an opportunity.Development is the attempt to try to utilize &operationalize the ideas that come from research
Ideas from R & D:
DEFINITIONS & VOCABULARY: Idea vs. Concept
CONCEPT GENERATION
30
Managing Innovation
Reverse Engineering refers to carefully dismantling and inspecting a competitor’s product:• to understand how the competitor has made it• to look for design features that can be incorporated
into your own productExamplesProduct: Ford used this approach successfully in the Taurus model, assessing 400 features of competitors’ products and copying, adapting or enhancing more than 300 of them including Audi’s accelerator pedal, Toyota’s fuel-gauge accuracy, and BMW’s tire and jack storageService: Maybe difficult to reverse engineering (especially back-office services) as they are less transparent to competitors. Some use consumer testing, e.g. supermarkets investigate new services such as delivery, telephone ordering.
DEFINITIONS & VOCABULARY: Idea vs. Concept
31
Managing Innovation
Reverse EngineeringIdeas from Competitors:
Product: SalesmanService: Contact person
Ideas from Staff:
Research: to develop new knowledge and ideas in orderto solve a particular problem or to grasp an opportunity.Development is the attempt to try to utilize &operationalize the ideas that come from research
Ideas from R & D:
• Focus groups• Listening to the customers
Ideas from Customers:
DEFINITIONS & VOCABULARY: Idea vs. Concept
CONCEPT GENERATION
32
Managing Innovation
Focus group
• It typically comprises 7-10 participants who are unfamiliar with each other
• They have been selected because they have certain characteristics in common that relate to the particular topic
• Participants are invited to “discuss” or “share ideas with others”
• The concept researcher tries to create an environment that nurtures different perceptions and points of view without pressurizing participants
• The group discussion is conducted several times with similar types of participants in order to identify trends and patterns in perceptions.
DEFINITIONS & VOCABULARY: Idea vs. Concept
33
Managing Innovation
DEFINITIONS & VOCABULARY: Idea vs. Concept
Ideas from Customers: Listening to the customers
34
Managing Innovation
Transforming an idea into a concept may involve including details of: the form, function, purpose and benefit of the product/ service
DEFINITIONS & VOCABULARY: Idea vs. Concept
35
Managing Innovation
Concept
1. FormThe overall shape of
the product or service
2. FunctionThe way in which the
product/service operates
4. BenefitsThe advantages the product/service will bring to customers
3. PurposeThe need the product/
service is intended to satisfy
Idea
Transforming an idea into a concept may involve including details of: the form, function, purpose and benefit of the product/service
DEFINITIONS & VOCABULARY: Idea vs. Concept
36
Managing Innovation
QUESTION
What is the difference between idea and concept?
DEFINITIONS & VOCABULARY: Idea vs. Concept
37
Managing Innovation
QUESTION
What is the difference between idea and concept?
ANSWER
Ideas need to be transformed into concepts so that they can be evaluated and then “operationalized” by the organization.
Concepts, on the other hand, are clear statements that both encapsulate the ideas and indicate the overall form, function, purpose and benefits of the idea.
DEFINITIONS & VOCABULARY: Idea vs. Concept
38
Managing Innovation
A holiday which is:• One week long• Residential• Multi-activity• Adventure• In a safe but exciting environment• For 14-16 year old boys and girls• Away from their parents
IdeaAdventure holidayfor young people
A telephone which is:
• In the lower price range• Multi-colored• Fashionable style• Easy to use• Dual position• Wireless• Light
IdeaAn inexpensive
telephone
Concept Concept
Examples
DEFINITIONS & VOCABULARY: Idea vs. Concept
39
Managing Innovation
What is invention and innovation
DEFINITIONS & VOCABULARY: Innovation
40
Managing Innovation
Inventions are new discoveries or new ways of doing things
Products are the outputs from the invention
Innovation has to be viewed as a process from new discovery to eventual product
ProductNew discoveryInvention Output
Innovation
DEFINITIONS & VOCABULARY: Innovation
41
Managing Innovation
Inventions are new discoveries or new ways of doing things
Products are the outputs from the invention
Innovation has to be viewed as a process from new discovery to eventual product
ProductNew discoveryInvention Output
Innovation
DEFINITIONS & VOCABULARY: Innovation
• Consider “Education”Is “education” an event or a process?
42
Managing Innovation
Inventions are new discoveries or new ways of doing things
Products are the outputs from the invention
Innovation has to be viewed as a process from new discovery to eventual product
ProductNew discoveryInvention Output
Innovation
DEFINITIONS & VOCABULARY: Innovation
• Consider “Education”
Definitely a process with output being the qualifications.
Is “education” an event or a process?
43
Managing Innovation
Terms that are the first cousins but they are not identical twins that can be interchanged, so very important to establish a clear meaning for them.
Innovation is not a single action but a total process of interrelated sub process. It is not just the conception of a new idea, nor the invention of a new device, nor the development of a new market. The process is all these things in an integrated fashion [Myers & Marquis, 1969]
DEFINITIONS & VOCABULARY: Innovation & Invention
44
Managing Innovation
Innovation = Theoretical conception
+ Technical Invention
+ Commercial Exploitation
DEFINITIONS & VOCABULARY: Innovation & Invention
45
Managing Innovation
Innovation = Theoretical conception
+ Technical Invention
+ Commercial Exploitation
DEFINITIONS & VOCABULARY: Innovation & Invention
ProductNew discoveryInvention Output
Innovation
46
Managing Innovation
Scientists and development engineers working for months developed a new lavatory cleaning product. They had developed a liquid that when sprayed into the toilet pan, on contact with water, would fizz and sparkle. The effect was to give the impression of a tough, active cleaning product. The company applied for a patent and further development and market research were planned.
However, initial research both from technical and market specialist led to the abandonment of the project. The preliminary market feedback suggested a fear of such a product on the part of consumers. This was because the fizz and sparkle looked too dramatic and frightening. Furthermore, additional technical research revealed a short shelf-life for the mixture.
QUESTION:
Is this a new idea, creativity, discovery, success, invention or innovation?
DEFINITIONS & VOCABULARY: Innovation & Invention
47
Managing Innovation
ANSWER
This is a clear example of an invention but not innovation because it did not progress beyond the organization to a commercial product.
Innovation = Theoretical conception + Technical Invention
+ Commercial Exploitation
ProductNew discoveryInvention Output
Innovation without
DEFINITIONS & VOCABULARY: Innovation & Invention
48
Managing Innovation
Clive Sinclair is the individual behind the development of a small, electrically driven tricycle or car, the famous Sinclair C5 which it was not commercially successful.
QUESTION:
Is this an invention or innovation?
DEFINITIONS & VOCABULARY: Innovation & Invention
49
Managing Innovation
ANSWER
Using the definition below, the fact that the product progress from the drawing board into the marketplace makes it an innovation, BUT an unsuccessful one; so be careful not to confuse innovation from commercial success
Innovation = Theoretical conception
+ Technical Invention
+ Commercial Exploitation
ProductNew discoveryInvention Output
Innovation
with
but without
Commercial Success
DEFINITIONS & VOCABULARY: Innovation & Invention
50
Managing Innovation
In 2003 the BBC run a series of TV programmes exploring the innovation route from idea to retail shelf. Viewers were asked to cast their vote on a selection of innovative prototype products; the winning three products would receive financial and technical backing to develop and market their idea. Some of the winning ideas were: revolutionary winning goggles; a new type of ink pen; a collapsing waste basket.
QUESTION:
Which of these are inventions and which are innovations?
DEFINITIONS & VOCABULARY: Innovation & Invention
51
Managing Innovation
ANSWER
None as all ideas would be financed for development & marketing.
Innovation = Theoretical conception
+ Technical Invention
+ Commercial Exploitation
ProductNew discoveryInvention Output
Innovation
without
DEFINITIONS & VOCABULARY: Innovation & Invention
52
Managing Innovation
QUESTION:
Is it true that technological innovations may result substantial managerial & organizational changes?
Any example to support it?
DEFINITIONS & VOCABULARY: Innovation
53
Managing Innovation
ANSWER
Yes indeed. Technological innovations may result substantial organizational changes in the functions of manufacturing, marketing and sales
An example is the introduction of a new ERP (e.g. SAP) system, which brings a lot of organizational and managerial changes
DEFINITIONS & VOCABULARY: Innovation
54
Managing Innovation
DIFFERENT TYPES OF INNOVATIONS
Type of innovation ExampleProduct innovation The development of a new productProcess innovation The development of a new
manufacturing process, e.g. Pilkington’s float glass process
Organizational innovation
- A new venture division - A new accounting procedure
Management innovation
- TQM systems - BPR systems - SAP R/3
Production innovation
- Quality circles - JIT - MRP II or a new inspection system
Commercial / marketing innovation
- CRM - Direct marketing
Service innovation Internet-based financial services
55
Managing Innovation
DIFFERENT TYPES OF INNOVATIONS
• The above table widens the definition of innovation to include virtually any organizational or managerial change.
• Innovation may also defined as the application of knowledge.
56
Managing Innovation
• Science and Technology play an important role in innovation
• Science can be defined as systematic and formulated knowledge
• Technology is often seen as the application of science
• It is important to remember that technology is not an accident of nature but a product of deliberate action by human beings
• Technology is knowledge applied to products or production processes
• Technology, like education, cannot be purchased off the shelf (like a can of tomatoes). It is embedded in knowledge and skills.
THE IMPORTANCE OF TECHNOLOGY AND SCIENCE IN INNOVATION
57
Managing Innovation
QUESTIONExplain how technology differs from science, yet still does not equal innovation
ANSWER•Science is the systematic and formulated knowledge
•Technology is often seen as the application of science (i.e. the application of systematic and formulated knowledge) to products or production processes
Innovation = Theoretical conception
+ Technical Invention
+ Commercial Exploitation
THE IMPORTANCE OF TECHNOLOGY AND SCIENCE IN INNOVATION
58
Managing Innovation
MODELS OF INNOVATION
59
Managing Innovation
MODELS OF INNOVATION
- LINEAR MODEL
- SIMULTANEOUS COUPLING MODEL
- INTERACTIVE MODEL
60
Managing Innovation
MODELS OF INNOVATION - LINEAR MODELS
Innovation process has traditionally been viewed as a sequence of separable stages of activities. There are two basic variations of this model for product innovation.A. The technology-driven model, often
referred to as “technology - push”
B.The market-driven model, often referred to as “market-pull”.
61
Managing Innovation
MODELS OF INNOVATION - LINEAR MODELS
Characteristics1.Scientists make unexpected discoveries,
technologists apply them to develop product ideas and engineers and designers turn them into prototypes for testing. Manufacturing devise ways to produce the products efficiently; and marketing and sales promote the product to the potential customer.
2.In this model, the marketplace is a passive recipient for the fruits of R&D.
R & D Manufacturing Marketing User
Technology push model
62
Managing Innovation
B.The market-driven model, often referred to as “market-pull”.
MODELS OF INNOVATION - LINEAR MODELS
1.Here the role of marketplace is influential
2.The customer-driven model emphasizes the role of marketing as an initiator of new ideas resulting from close interactions with customers. These, in turn, are conveyed to R&D for design and engineering and then to manufacturing for production
3.The role of market and the customer remains powerful and very influential.
Marketing R & D Manufacturing User
Market pull model
63
Managing Innovation
MODELS OF INNOVATION - LINEAR MODELS
QUESTION
In which industries do you think that:
a. The push model is applicable, and
b. The pull model is applicable?
ANSWER
a. Push model Pharmaceutical
b. Pull model Food industry
Note that for most industries and organizations innovations are the result of a mixture of the two.
64
Managing Innovation
MODELS OF INNOVATION- SIMULTANEOUS COUPLING MODEL
• The linear models are only able to offer an explanation of where the initial stimulus for innovation was born, i.e. where the trigger for the idea or need was initiated. They concentrate on what is driving the downstrean efforts AND NOT on how innovations occur.
• The simultaneous coupling model, below, suggests that it is the result of the simultaneous coupling of the knowledge within all 3 functions that will foster innovation.
• Furthermore, the point of commencement for innovation is not known in advance.
Manufacturing
R & D Marketing
65
Managing Innovation
MODELS OF INNOVATION - INTERACTIVE MODEL
• Here the technology-push is linked together with the market-pull models
• There is no explicit starting point, like the simultaneous coupling model.
• It emphasizes that innovation occurs as the result of the interaction of the needs in society and the marketplace, the latest science and technology advances in society together with the organization capabilities
Market pull
Technology push
Latest sciences & technologyadvances in society
R&D Manufacturing Marketing
Needs in society& the marketplace
CommercialproductIdea
66
Managing Innovation
• At the centre of the model are the organizational functions of R&D, Manufacturing and Marketing
• Though it appears as a linear model it is not necessarily.• The linkage with science/technology and the market place
occur between all function, not just with R&D or manufacturing or marketing
• Finally the generation of ideas is shown to depend on inputs from 3 basic components: - see figure below - organizational capabilities, needs of the marketplace and the science and technology base.
MODELS OF INNOVATION - INTERACTIVE MODEL
Market pull
Technology push
Latest sciences & technologyadvances in society
R & D Manufacturing Marketing
Needs in society& the marketplace
CommercialproductIdea
67
Managing Innovation
Science and technology base
Technologicaldevelopments
Needs of the market
Consumers expresstheir needs and wants
through the consumptionof products
Technology development,dominated by organizations
Creation of new knowledge, dominated by
universities and large science-based organizations
MODELS OF INNOVATION - INTERACTIVE MODEL
68
Managing Innovation
MODELS OF INNOVATION – CHRONOLOGICAL DEVELOPMENT
Date Model Characteristics1950/60s Linear
model: Technology push
Simple linear sequential process Emphasis on R&D The markets is a recipient of the fruits
of R&D
1970s Linear model:
Market pull
Simple linear sequential process Emphasis on marketing The market is the source for directing R&D R&D has a reactive role
1980s Coupling model
Emphasis on integrating R&D, marketing & manufacturing
1980/90s Interactive Combinations of push and pull2000s Network
model Emphasis on knowledge accumulation
and external linkages
69
Managing Innovation
QUESTIONSurely all innovations start with an idea and end with a product, does that not make it a linear process?
MODELS OF INNOVATION
70
Managing Innovation
MODELS OF INNOVATION - INTERACTIVE MODEL
Market pull
Technology push
Latest sciences & technologyadvances in society
R & D Manufacturing Marketing
Needs in society& the marketplace
CommercialproductIdea
71
Managing Innovation
“Its only by understanding what the customers wants that we can identify the innovative opportunities. Then we see if there’s technology that we can bring to bear on the opportunities that exist. Being innovative is relatively easy – the hard part is ensuring your ideas become commercial viable”. ..Managing director of McCain Foods
QUESTION1. What is the message from the above statement
2. Which model of innovation does he support [push
or pull?]
MODELS OF INNOVATION
72
Managing Innovation
“Its only by understanding what the customers wants that we can identify the innovative opportunities. Then we see if there’s technology that we can bring to bear on the opportunities that exist. Being innovative is relatively easy – the hard part is ensuring your ideas become commercial viable”. ..Managing director of McCain Foods
QUESTION1.What is the message from the above statement2.Which model of innovation does he support
[push or pull?]
ANSWER3. That invention is easy but innovation is
difficult4. Pull, arguing that knowing your customer is
crucial to turning innovation into profits
MODELS OF INNOVATION
73
Managing Innovation
INNOVATION AS A MANAGEMENT PROCESS
74
Managing Innovation
INNOVATION AS A MANAGEMENT PROCESS
Organization’s knowledge baseaccumulates knowledge over time
Finance and business leadership
Mar
ketin
g
R &
Tech
nolo
gy
External inputs:• Societal needs; • Competitors;• Supplier partnerships;• Distributors;• Customers;• Strategic alliances
External inputs:• Macro factors; Competition;
• Profit; Growth; Diversification;• Costs and input prices;
• Political influences
External inputs:• Scientific & technological development;• Competitors;• Suppliers;• Customers;• Universities
75
Managing Innovation
INNOVATION AS A MANAGEMENT PROCESS
•Practically, this means that while there will always be an interaction amongst the various function in the organization, like manufacturing, marketing, etc, there are also interactions between:R&D with fellow scientists in universities and other firms about scientific and technological developments
marketing with customers, distributors, competitors, suppliers, etc to ensure that day-to-day activities of understanding customer needs
Senior management with a wide variety of firms and other external institutions, such as government departments, suppliers, customers, etc.
76
Managing Innovation
INNOVATION AS A MANAGEMENT PROCESS
• The functions inside the orghanization can be many, although three are presented in the figure: R&Technology, marketing and finance, as traditionally are considered as the most influential.
• Which function is more influential than the other, it is a matter of the nature of the business, but at the end it does not make any difference. The point is to examine the interaction of these internal functions and the flow of knowledge between them, as well as their effective communication with the external environment.
77
Managing Innovation
INNOVATION AS A MANAGEMENT PROCESS
• The centre of the framework is represented as organizational heritage or organizational knowledge base.
• This does not mean the culture of the organization but a combination of:
the organization’s knowledge base (established and built up over the years of operating) and
the organization’s unique architecture
• This organizational heritage represents for many firms a powerful competitive advantage that enables them to compete with other firms.
Organization’s knowledge base accumulates knowledge
over time
Finance and business leadership
Mar
ketin
g
R &
Tech
nolo
gy
ORGANIATIONAL HERITAGE
78
Managing Innovation
QUESTION:
Explain how organizational heritage influences the innovation process
INNOVATION AS A MANAGEMENT PROCESS
79
Managing Innovation
QUESTION: Explain how organizational heritage influences the innovation process
INNOVATION AS A MANAGEMENT PROCESS
ANSWERThe organizational heritage of the firm will influence its future decisions regarding the market in which it will operate. The point here is that firms do not have a completely free choice. What they do in the future will depend to some extent in what they have done in the past.
80
Managing Innovation
INNOVATION AS A MANAGEMENT PROCESS
Examples Tesco – its distribution efficiencies and
customer service, developed and built up over decades
Siemens – its continual investment over almost 100 years in science and technology and the high profile to science and technology within its business
Unilever – its brand name skills and know-how developed over the years
Dell -
ORGANIATIONAL HERITAGE
81
Managing Innovation
QUESTION:
Not all firms develop innovative new products, but they still seem to survive. Do they thrive?
INNOVATION MANAGEMENT: INTRODUCTION
82
Managing Innovation
QUESTION:
If two different firms, similar in size, operating in the same industry spend the same R&D, will their level of innovation be the same?
INNOVATION MANAGEMENT: INTRODUCTION
83
Managing Innovation
QUESTION
What is wrong with the popular view of innovation in which eccentric scientists develop new products?
ANSWER
This view contributes to a misleading image of the innovation process because a complex phenomenon is simplified thus causing an immense harm to the understanding of science and technology
INNOVATION MANAGEMENT: INTRODUCTION
84
Managing Innovation
QUESTION:
Many innovations today are associated with companies as opposed to individuals. Why is this, and what does it tell us?
INNOVATION MANAGEMENT: INTRODUCTION
ANSWER:• invention needs money• innovation requires money to
materialize the invention and only big companies can affort
85
Managing Innovation
We define innovation as “the successful exploitation of new ideas”. Often it involves new technologies or technologicalapplications. Innovation matters because it can deliver better products and services, new, cleaner and more efficient production processes and improved business models.For consumers, innovation means higher quality and better value goods, more efficient services (both private and public) and higher standards of living.For businesses, innovation means sustained or improved growth. The innovative company or organisationdelivers higher profits for its owners and investors. For employees, innovation means new and more interesting work, better skills and higher wages. Equally, an absence of innovation can lead to business stagnation and a loss of jobs.
INNOVATION MANAGEMENT: SUMMARY
Why Innovation is Important?
86
Managing Innovation
For the economy as a whole innovation is the key to higher productivity and greater prosperity for all. Innovation will also be essential for meeting the environmental challenges of the future – including moving to a low carbon economy and reducing waste. We need to find new ways to break the link between economic growth and resource depletion and environmental degradation. It is important to every sector of our economy, in both manufacturing and services. To hold our own in modern manufacturing we will need to innovate strongly, creating new high-tech manufacturing industries such as biotechnology and upgrading traditional sectors such as steel and textiles.
Why Innovation is Important? (continued)
INNOVATION MANAGEMENT: SUMMARY
87
Managing Innovation
☺ CASE STUDY
Unilever Grabage Bags
INNOVATION MANAGEMENT
88
Managing Innovation
☺ CASE STUDY
An Analysis of 3M, the Innovation Company
INNOVATION MANAGEMENT