Organizations as Organizations as Innovation SystemsInnovation Systems
GE 393 DEGGE 393 DEG
Final ProjectFinal Project
Andy WilliamsAndy Williams
Innovate or Die?Innovate or Die?
Innovate or Die?Innovate or Die?
Everyone seems to agree, but…Everyone seems to agree, but…• Can’t agree on what innovation isCan’t agree on what innovation is• Can’t agree on how to measure itCan’t agree on how to measure it• Can’t agree on how to develop a clear Can’t agree on how to develop a clear
strategystrategy• Can’t agree on how to influence their Can’t agree on how to influence their
capacity to innovatecapacity to innovate
OutlineOutline
Defining InnovationDefining Innovation Measuring InnovationMeasuring Innovation Building a System of InnovationBuilding a System of Innovation Corporate Innovation StrategyCorporate Innovation Strategy Strategy Influencing Innovative Strategy Influencing Innovative
CapacityCapacity ConclusionsConclusions Future WorkFuture Work
Defining InnovationDefining Innovation ““Whatever changes the wealth-producing Whatever changes the wealth-producing
potential of already existing resources potential of already existing resources constitutes innovation” - Druckerconstitutes innovation” - Drucker
““Innovations take the form of producing new Innovations take the form of producing new commodities, organizing new technological commodities, organizing new technological changes in the production of commodities changes in the production of commodities already in use, opening up new markets, already in use, opening up new markets, discovering new sources of raw materials, discovering new sources of raw materials, and setting up new management and setting up new management organizations, like the creation of a organizations, like the creation of a monopoly position or the breaking up of a monopoly position or the breaking up of a monopoly position.” - Schumpetermonopoly position.” - Schumpeter
A Useful Definition for InnovationA Useful Definition for Innovation
To be useful it shouldTo be useful it should• Guide policyGuide policy• Be measurableBe measurable
Therefore innovation should beTherefore innovation should be• Something with a measurable amount of Something with a measurable amount of
newnessnewness• Resulting in a measurable business Resulting in a measurable business
advantageadvantage
Measuring Innovation? Measuring Innovation? PerformancePerformance QualityQuality TimingTiming FinancialsFinancials Development CostDevelopment Cost Cycle TimeCycle Time Resource CapabilityResource Capability Resource CapacityResource Capacity Team EffectivenessTeam Effectiveness Competitive ComparisonsCompetitive Comparisons
Measuring Innovation - NewnessMeasuring Innovation - Newness
Newness is relative to the firm, Newness is relative to the firm, industry, and worldindustry, and world
Subjective rating of project versus Subjective rating of project versus capacitiescapacities
Subjective rating is useful – when Subjective rating is useful – when consistentconsistent
Micro and Macro levelMicro and Macro level Technological and Market basedTechnological and Market based
Measuring Innovation - NewnessMeasuring Innovation - Newness
Categories Categories • Familiarity of technological environmentFamiliarity of technological environment• Fit of technological resourcesFit of technological resources• Familiarity of market environmentFamiliarity of market environment• Fit of market resources Fit of market resources
Measuring Innovation - NewnessMeasuring Innovation - Newness
Examples of MetricsExamples of Metrics• New customersNew customers• Class of products new to firmClass of products new to firm• Science new to worldScience new to world• Technology new to industryTechnology new to industry• Production processes new to firmProduction processes new to firm
Measuring Innovation – Business Measuring Innovation – Business AdvantageAdvantage
Increase Market Size/ShareIncrease Market Size/Share Increase Ability to Increase Market Increase Ability to Increase Market
Size/ShareSize/Share Decrease CostDecrease Cost Increase Ability to Decrease CostIncrease Ability to Decrease Cost Increase ProfitIncrease Profit Increase Ability to Increase ProfitIncrease Ability to Increase Profit
An Innovation SystemAn Innovation System
Establish your metricsEstablish your metrics Determine current state along each metric Determine current state along each metric
keeping in mindkeeping in mind• Fit and Familiarity Fit and Familiarity • Capacity and CompatibilityCapacity and Compatibility
Establish desired stateEstablish desired state Measure potential projects relative to Measure potential projects relative to
statesstates Predict how projects will cause state to Predict how projects will cause state to
evolveevolve
Innovation StrategyInnovation Strategy
Determine optimal portfolio of Determine optimal portfolio of innovationinnovation
Portfolio will lead to the desired state Portfolio will lead to the desired state along each metricalong each metric
Desired state may evolve over timeDesired state may evolve over time
Strategy Influencing InnovationStrategy Influencing Innovation
Hiring PoliciesHiring Policies SalarySalary IncentivesIncentives ReorganizationReorganization Team EffectivenessTeam Effectiveness BenchmarkingBenchmarking
ConclusionsConclusions
Need for a useful definitionNeed for a useful definition Need for firm specific metricsNeed for firm specific metrics Measurement systemMeasurement system Attribution issuesAttribution issues Systematic InnovationSystematic Innovation Innovation StrategyInnovation Strategy
QuestionsQuestions