Innovation Management for Organizational setup
- 1. Innovation Management Introduction Basic concepts Importance of innovations
- 2. Innovation vs Invention Innovation and invention are words that are used often in conversation and written English. These words have similar meanings and even used interchangeably by some people. However, it has to be understood that innovation is not creation of a new product or process while an invention is clearly a creation of a new product or process that has not been there earlier.
- 3. Difference between Innovation and Invention • Invention is when a new idea strikes a scientist, and he files for a patent. • Innovation is when a need is felt for a product, and an existing product is redesigned or improved upon, to develop a new one. • Novelty is the basic premise of an invention while it is not the central idea behind innovation. • Inventions are new without any precedent while innovations are changes that add value to an existing product or service.
- 4. CHARACTERISTICS OF SUCCESSFUL INNOVATING COMPANIES - 1 • Systematic collection of all impulses that could lead to innovation • Creativity of employees • Ability to evaluate the possibility of the innovation idea • Good team work • Project-based approach and ability to manage projects
- 5. CHARACTERISTICS OF SUCCESSFUL INNOVATING COMPANIES - 2 • Cooperation with external experts (universities, research laboratories…) • Proper rate of risk-taking • Employees’ motivation (the employees are willing to improve the product and the operation of the whole company) • Continued education of employees • Ability to finance the innovation activities
- 6. Definition of innovation - 1 • “Technological innovations are defined as new products and processes and major technological modifications to products and processes. An innovation is considered performed if it is introduced to the market (product innovation) or implemented in the production process (process innovation). Innovation includes many research, technological, organizational, financial and commercial activities.
- 7. Definition of innovation - 2 • R&D represents only one of these activities and can take place during various stages of the innovation process. It can play not only the role of the original source of the innovation ideas but also the role of problem solution framework, which can be turned to at any stage of the implementation.„ OECD, Frascati Manual 1992
- 8. Oslo Manual • Product innovation – A good or service that is new or significantly improved. This includes significant improvements in technical specifications, components and materials, software in the product, user friendliness or other functional characteristics. • Process innovation – A new or significantly improved production or delivery method. This includes significant changes in techniques, equipment and/or software. • Marketing innovation – A new marketing method involving significant changes in product design or packaging, product placement, product promotion or pricing. • Organisational innovation – A new organisational method in business practices, workplace organisation or external relations.
- 9. • Technological innovations – based on specific technology, invention, discovery, • Social innovations – in critical historic periods more important than technological ones (mail, educational systém, social systém, health care, …)
- 10. DEGREE OF NOVELTY • Incremental innovations • Radical innovations • Systemic innovations • Component innovations
- 11. Classification of innovations SYSTEM New series of cars, planes, computers, TV New generation (MP3 and download as substitution of CD) Steam engine, ICT, biotechnology, nanotechnology COMPONENT Improvement of components New components for existing systems Advanced materials improving component properties INCREMENTAL „do better what we already do“ „new for the company“ RADICAL „new for the world“
- 12. INNOVATION PROCESS • Research and development (R&D) • Production • Marketing Innovation is an opportunity for something new, different. It is always based on change. Innovators do not view any change as a threat but as an opportunity
- 13. FOCUS • Use the limited resources in the most effective manner; focus on one of the following: – Operational output – Top-quality products – Perfect knowledge of customers
- 14. RECOMMENDATIONS • Solve the correct problem correctly – be effective and efficient • Manage innovation as a project • Analyze risks • Use models, scenarios, computer simulation • Study examples of succesful and unsuccesful innovation projects
- 15. WHAT TO DO 1. Start with analysis and study of opportunities. 2. Go among people, ask questions, listen 3. Effective innovations are surprisingly simple. They must be focused on specific needs and on specific final products. 4. Effective innovation start on a small scale. 5. A successful innovation always tries to win a leading position, otherwise you create opportunities for your competitors.
- 16. WHAT TO AVOID 1. Don’t try to be too “clever”. All that is too sophisticated will almost certainly go wrong. 2. Don’t try to do too many things at once. Focus on the core of the problem. 3. Don’t try to make innovations for the future but for today. An innovation can have a long- term impact but there must be an immediate need for it.
- 17. Three conditions for innovations 1. Innovation means work, hard, concentrated and thorough work. If these qualities are lacking then there is no use for the big talent, cleverness or knowledge. 2. Successful innovations must build on your strong points. The innovation must be important to the innovator. 3. Innovation must focus on a market, must be controlled by the market (market-pull).
- 18. Innovation Strategies and Models
- 19. Innovation categories • sustaining – better products that can be sold with higher margin to demanding customers; incumbents win • disruptive – commercialization of simpler, more user-friendly products, which are chepaer and targeted to new or less demanding customers; new entrants win
- 20. Key elements of disruption • Customers at each market has limited absorption capacity • Technological progress usually is faster that the ability of the market to employ it. Companies focus on better products to be sold with higher margin to unsatisfied customers.
- 21. Sustaining vs. disruptive • Sustaining: focused on demanding customers; both incremental and radical. Incumbents have resources and motivation. • Disruptive: introduce products and services not as advanced as existing ones, but offering other advantages (simpler, cheaper, more user friendly, ...) and focus on new or less demanding customers.
- 22. Clayton M. Christensen: The Innovator´s Solution, Harvard Business Press, 2003
- 23. • Due to technological progress the trajectory of the disruptive innovation after some time crosses the trajectory of demands of more demanding customers and starts to replace incumbents who are not principally ready to react adequately, as they are motivated to succeed at ‘better’ markets, not to defend themselves on ‘inferior’ ones.
- 28. Conditions of success - 1 • Disruption is successful, as it is easier to defeat competition that tries to escape than the competition who fights • Innovation must be disruptive for all companies in the industry • Ex. Internet – for Dell sustaining, they sold computers formerly by mail, phone, etc.
- 29. Conditions of success - 2 • Following the trajectory upwards to market tiers where it is possible to attain higher margins is what good manager is expected to do. • Each company therefore prepares its own disruption. This is the innovator´s dilemma, but also the start of innovator´s solution. • The advice to new, growing firms: focus on products and markets ignored or neglected ba incumbents.
- 30. Two types of disruption • New markets: compete with non- consumption: simpler, more user frindly, can be used by less sophisticated customers (PC, transistor radio, desk copiers). • Low-end: focus on lower tiers of main markets (minimills, discount stores, Korean auto- makers); motivate incumbents to leave the market
- 35. OPEN INNOVATION • Chesbrough, H., “Open Innovation”, Harvard Business School Publishing, Boston MA, 2003 • Closed innovation - requires control • Open innovation – companies use external as well as internal ideas and both external and internal ways to market – internal ideas can be taken to the market through external channels to generate additional value
- 36. Chesbrough H.W.: The Era of Open Innovation, MIT Sloan Management Review, Spring 203, p. 35 - 41
- 38. Closed innovation Open innovation All the best people are working for us Not all the best people are working for us . We must work with clever people within and outside our company. R&D creates profit only when we invent, develop and market everything ourselves. External R&D can create remarkable value; to employ it, we need absorption capacity, often as internal R&D. If we develop the product ourselves, we will be the first on the market. R&D can create profit even if we do not initialize and perform it ourselves. Winner is who gets the innovation to the market first. To develop better business model is more important than to be the first in the market. We will win if we develop most of the ideas (an the best of them). We will win if we make best use of internal and external ideas. We must have our intellectual property under control so that our competitors can make advantage of it. We must be able to profit from others using our intellectual property and we must license the intellectual property if it supports our business model.
- 39. Closed innovation Open innovation Examples: nuclear industry, mainframe computers Examples : PC, movies Mostly internal ideas Many external ideas Low workforce mobility High workforce mobility Low role of the venture capital Active venture capital Few new businesses, weak ones Many new businesses Universities are not important as the sources of ideas Universities are not important as the sources of ideas and people
- 40. Business model • Formulate value proposition, i.e. the value delivered to the customer by the product based on specific technology. • Identify market segment, ie. users to whom the technology brings value and performs the job to be done. • Define structure of the value chain, required for the product creation and distribution. Value creation is necessary, however not sufficient condition of profitability; value creation is conditioned by: – balance of forces among our business, suppliers and competitors – presence of complementary assets (e.g. in production, distribution, etc.) necessary for supporting the company position in the value chain.
- 41. Business model– cont´d • Specify the mechanism of profit creation and evaluate product cost structure and target margin • Describe the company position in the value network that connects suppliers and customers, including identification of potential alternative producers and competitors. • Formulate competitive strategy enabling to the innovative company to gain and keep competitive advantage.
- 42. Product and process innovation A product innovation is the introduction of a good or service that is new or has significantly improved characteristics or intended uses; a process innovation refers to the implementation of a new or significantly improved production or delivery method. Evidence from firm innovation surveys suggests that the share of firms with a product or process innovation varies significantly across countries and that firms often adopt mixed modes of innovation, meaning that they combine product and process innovations.
- 43. Product innovation A product innovation is the introduction of a good or service that is new or significantly improved with respect to its characteristics or intended uses. These include significant improvements in technical specifications, components and materials, incorporated software, user friendliness or other functional characteristics. Product innovations include both new products and new uses for existing products: New products. These are goods and services that differ significantly in their characteristics or intended uses from products previously produced by the firm. The first microprocessors and digital cameras are examples of new products using new technologies. The first portable MP3 player, which combined existing software standards with miniaturized hard-drive technology, was a new product combining existing technologies. New uses for products. The development of a new use for a product with only minor changes to its technical specifications is a product innovation. An example is the introduction of a new detergent using an existing chemical composition that was previously used as an intermediary for coating production only.
- 45. DESIGN FOR X <>
- 46. „X“ - examples Design for Manufacturing and Assembly (DFMA) Design for Environment (DFE) Design for Dimensional Control (DDC) Design for Inspectability Design for Storability Design for Reliability (DFR) Design for Electromagnetic Compatibility Design for Disassembly (DFD)
- 48. House of Quality Interrelationships Technical Features Relationship between Customer Desired Traits and Technical Features Importance of Technical Features Importance of Traits to Customer Assessment of Competition Voice of the Customer
- 49. House of Quality: Steps for Generation 1. Identify Customer Attributes 2. Identify Supporting Technical Characteristics 3. Correlate Customer Attributes with Supporting Technical Features 4. Assign Priorities to Customer Requirements and Technical Features 5. Evaluate Competitors’ Stances and Products 6. Identify Technical Characteristics to Deploy in the Final Product Design
- 50. Process innovation A process innovation is the implementation of a new or significantly improved production or delivery method. This includes significant changes in techniques, equipment and/or software. Process innovations can be intended to decrease unit costs of production or delivery, to increase quality or to produce or deliver new or significantly improved products. Process innovations can be distinguished by production methods or delivery methods, or both: Production methods. These methods involve the techniques, equipment and software used to produce goods or services. Examples of new production methods are the implementation of new automation equipment on a production line or the implementation of computer-assisted design for product development. Delivery methods. These concern the logistics of the firm and encompass equipment, software and techniques to source inputs, allocate supplies within the firm or deliver final products. An example of a new delivery method is the introduction of a bar-coded or active RFID (radio frequency identification) goods tracking system. •
- 52. DESIGN FOR MANUFACTURING AND ASSEMBLY (DFMA)
- 53. LEAN THINKING
- 55. JUST IN TIME (JIT)
- 57. https://www.innovationpolicyplatform.org/cont ent/product-and-process-innovation
- 59. FAILURE MODE AND EFFECT ANALYSIS (FMEA)
- 62. PEER EVALUATION
- 63. TEAM BUILDING
- 64. ISO 9000 ISO14000 refers to procedures for ensuring sustainable and environmentally friendly operations EIA – Environmental Impact Assessment