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Management of Innovation

Prof. V.Seshadri
SVKM’s NMIMS
References
1. Joe Tidd, John Bessant and Keith
Pavitt;Managing Innovation – integrating
technological, market and organizational
change; 3rd ed.; Wiley India.
2. John E Ettlie, Managing Innovation – new
technology, new products and new services
in a global economy,, Rochester Institute of
Technology
3. Harward Business Essentials, Managing
Creativity and Innovation , Harward Business
School – 2003
4. Shlomo Maital & DVR Seshadri, Innovation
Management – Strategies, Concepts & Tools
for Growth & Profit
5. Robert A Bungerman & Madisto A Maiidique; 2
Strategic Management of Technology and
References – contd.
6. Peter Drucker, Innovation and
Entrepreneurship – Harper & Row, 1985, NY
7. Dr. K.V.Khurana, Management of

Technology & Innovation , Ane Books India ,


2007
8. Tarek M.Khalil, Management of Technology,

Mc Graw Hill
9. Curtis R. Carlson & William W. Wilmot,

Innovation, Crown Business, 2006


10. Wolfgang Grulke with Gus Silver, Lessons

in Radical Innovation, Prentice Hall, 2001


11. Margret A White & Garry D.Bruton, The

Management of Technology and Innovation,


Cengage learning, 2007 3
Objectives
• Understand the innovation process at
the operational and strategic levels.
• Understand the integration of market,
organizational and technological
change to improve the
competitiveness of companies.
• Understand the processes, tools &
techniques for the successful
commercialization of new product,
process and service innovations
• To help connect the academic learning
with industry practices. 4
Key Concepts
• Invention and Discoveries are at the
origin of the technological
innovation process.
• Discover – something unknown but
already existing- eg White light is
made of 7 colours (VIBGYOR)
• Invent – something that did not exist
before eg telescope to view the
stars
5
Basic Concepts – contd.
• Scientific Research: Investigation
carried out for a certain purpose
using scientific tools and based on
scientific laws
• Basic Scientific Research: Activities
involved in generating new
knowledge about physical,
biological and social phenomena.
• Applied Scientific Research: Activities
geared towards solving particular 6
Technology
• the practical application of science
to commerce or industry
• the discipline dealing with the art or
science of applying scientific
knowledge to practical problems
• Refers to the theoretical and practical
knowledge, skills and artifacts that
can be used to develop products,
process and services as well as
production and delivery systems
• 7
Technology –contd.
• technology can be embodied in
people, materials, cognitive and
physical processes, plant,
equipment and tools
• criteria for success of a technology is
technical rather than commercial.

8
Technology -contd
• Technologies are the outcome of
development activities undertaken
to put inventions and discoveries to
practical use.
• The invention of the transistor(1947),
I.C. (1959) and Microprocessor
( 1971) gave rise to successive
generations of new technologies in
the semiconductor industry that in
turn led new applications in the
telecom , computing and
automation areas.
9
Innovation
• Innovation is the successful exploitation of
new ideas.
• The term comes from the latin – innovare
meaning ‘to make something new’
• Innovation is the process of turning
opportunity into new ideas and putting
these to widely used practice. ( Ref 1)
• Innovation is the process whereby new and
improved products , processes, materials
and services are developed and
transferred to a plant and /or market
where they are appropriate – Rubenstein
10
Components of an
Innovation cycle
May never be
developed into
marketable products INVENTION

Adopting
innovation

SCIENTIFIC DISCOVERY INNOVATION

Has no
instantaneous
commercial
value MARKET

Fountainhead of
innovation
Buying or ignoring the
innovation
11
Invention vs Innovation
INVENTION INNOVATION
It is the creation of a new It is the introduction of new
Product,
May not Process or Service
be commercialized product, process
Results into or service into
commercialization
Activities centred in R&D or in the marketplace
Activities and applications
some lab ororworkplace
May have may not have spread across the
For economic organization
motive
economic
May bringmotive
few changes in the Brings organizational change
workplace

12
Invention vs Innovation
May or may not be patentedEssential to patent before
Precedes Innovation Succeeds Invention
commercialization
Invention = Innovation – Innovation = Invention +
Involves
CommercialfewExploitation
people ( even Innovation
Commercialinvolves a team,
Exploitation
one person) – usually from organization of multi
one or few technical discipline people.
disciplines

13
KAIZEN
• Kaizen is the Japanese concept of
continuous improvement. The motto
of Kaizen is
• “Today better than yesterday and
tomorrow better than today”
• Deep, systematic and continuous
involvement of people and using
certain techniques, mainly people’s
brains to cause an improvement.
• It is continuous because it is ongoing
activity and never stops.
• Job rotation and cross training are
employed to give workers a complete
14
Difference between Innovation
and Kaizen
Criteria Kaizen Innovation
Effect Long term and long Usually short term effect
lasting
Undramatic on org’s systems
Dramatic
Pace Small steps /technologies
Big steps
Time frame Continuous Intermittent – project
Involvement Everybody from top oriented
Select few –multi functional
to bottom teams

15
Difference between Innovation
and Kaizen
Criteria Kaizen Innovation
Spark Conventional know- Technological breakthroughs
Effort how
People oriented Technology oriented
orientation Small
Investment Big
Human effortMajor Less
Suitability Works well in slow Works well in fast growth
growth economy

16
Innovation Process
• It is the process which facilitates
innovation and involves search and
selection , exploration and
synthesis, cycles of divergent
thinking and convergence.

17
What is Innovation? – contd.
• Innovation is a specific tool of
entrepreneurs, the means by which
they exploit change as an
opportunity for a different business
or service.
• It is capable of being presented as a
discipline, capable of being learned,
capable of being practiced.
- Peter Drucker (1985)

18
What is Innovation? – contd
• An innovative business is one which
lives and breathes “outside the
box”.
• It is not just good ideas, it is a
combination of - -good ideas,
 -motivated staff
 -and an instinctive
understanding of what your
customer wants
 - Richard Branson (1998) 19
Invention vs Innovation
• Innovation indices confuse innovation with
invention. The innovation value chain–in a
national context– encompasses the end-
to-end cycle from R&D invention to its
value realization in the society at large.

• As such, invention is only a subset of
innovation that’s generally science-based
research or focused on product design
and results in patentable inventions.

• National employment, power, wealth, and
well-being depend more on the 20
deployment of innovations than on the
Invention and Innovation
• "Countries, like firms, can most easily reap the
rewards of innovation through a global
ecosystem in which firms, universities, NGOs,
and governments collaborate. We call this an
Innovation Network.

• Within such a network, nations will fluidly weave
internally and externally available inventions
and innovation services by taking on one of
four innovation roles: Inventor, Transformer,
Financier, or Broker."

21
Management of Innovation
1.It requires the fostering of an
environment where innovative
thought and work are encouraged
2.It involves leading a firm from
existing processes and products to
something that is better and more
valuable.
3.It is proactive and encourages
creativity and risk taking.
22
Characteristics of Firms that
manage Innovation process
well
1.Separate funds for INNOVATION
2.Periodic reviews of informal proposals by a
group outside line management
3.Clear definition on studies to be done and
follow –ups that are expected
4.Extensive boundary- spanning activities to
learn from others and to gain an
understanding of what others are doing.
5.Set of realistic expectations
6.Supportive atmosphere for de-bugging and
exploring variations as well as
appropriate resources for maintenance
and service
23
Management of Innovation -
Definition
• A comprehensive approach to
managerial problem solving and
action based on an integrative
problem-solving framework and an
understanding of the linkages among
innovative streams, organizational
streams and organization evolution.
• It is about implementation- managing
politics, control and individual
resistance to change.
• The manager is an architect/engineer,
politician/network builder and 24
Innovation catagories
Product / Proce
ss
New Old

Us C 1- New Solution to an old problem


Old
ag Product : new medication C-2 No Innovation
e / Process : Just - in - time
Pr
ob
le
C 3 New product that leads Cto4-Old
new product
opportunities
used in a new way
m New
Product : PC in 1980 Product : DVDs
Process : Bar codes for
Process
inventory
: Testing
control
soils with satellite imagery

25
Invention and Innovation
• For instance, "inventor nations" lead in research
and design. These countries (think India 20
years from now) have the academic institutions
and scientists to file a lot of patents.

• "Transformer nations" take those ideas and turn
them into businesses with investment.

• "Financiers" bankroll the innovation with venture
capital (think U.S.).

• "Broker nations" connect all of these pieces with
"multiculturalism, workforce diversity, cross-
border scientific collaboration, Internet
adoption, language proficiency, foreign student
rates, patents created with foreign co-
inventors, and international venture capital
funding." 26
Stages of Technological
Innovation
1.Basic Research
2.Applied Research
3.Technology Development
4.Technology implementation
5.Production
6.Marketing
7.Proliferation
8.Technology Enhancement

27
Some minimalist definitions
– Mills (1996)
• Science: How things are
• Technology: How to do things
• Management: How to get things done
• Technology Management: Doing
things
• Entrepreneurship: Doing things to
make money
• Innovation: Doing Entrepreneurship
28
The Innovation Chain
Equation

29
Process of Technological
Innovation
Concept Definition
Technical Analysis

Idea Generation Approved by Top Mgmt

Market Analysis Business Plan

Disposal Test Marketing Development


Full Production & C Commercialization

30
Process of Technological
Innovation – 1. Idea Generation

• Recognition of need
• Study Alternatives
• Select best solution
• Make proposal for
implementation

31
Process of Technological
Innovation – 2. Concept
Definition
• Conceptual Definition of
Product/Service
• Setting technical goals and priorities
• Setting expected performance
standards

32
Process of Technological
Innovation – 3. Market Analysis
• Defining Markets
• Analysis of current and future needs
• Know the customers
• Know the competitors
• Window of Opportunity

33
Process of Technological
Innovation-
4. Technical Analysis
• Resources required
• Resources available
• Time frame for development
5. SWOT analysis

• Economic analysis
• Capital
• Strategic outlook ( Identify NICHE
area)
 34
Process of Technological
Innovation
• 7. Development
• R&D
• Prototype
• Testing
• Start-up needs

35
Process of Technological
Innovation
8. Test Marketing

• Strategy for market introduction


• Marketing Innovations
• Testing
• Measuring response

36
Process of Technological
Innovation 9.
9. Full Production and

Commercialization
• Production
• Testing
• Operational Control
• Supply organization
• Logistics

37
Innovation Process
• Search for new Ideas
• Feasible Idea are selected and
pursued
• Search , select, implement (acquire,
execute, launch, sustain) all to
LEARN (time)

38
Innovation process at Enterprise level -
Traditional phase gate model ( Linear Model
of Innovation )
Gate 1 Gate 2 Gate 3 Gate 4

Idea Capability
Generatio Concept Ramp - up Launch
feasibi Development
n
lity

Launch & ProposalSanity Check


Project Charter Business Plan

Test Feedback
Financial & Prototype Marketi &
Technical Development ng Correcti
Feasibility onsCommercializat
ion
39
Innovation Process – Flexible
Model
TRADITIONAL MODEL

Concept Development Implementation

Project Concept
Start Frozen Market
Introduction

Concept Development

Implementation

Concurrent
Engineering FLEXIBLE
(Implementation MODEL
)
40
Industrial Innovation
• Industrial Innovation includes the
technical, design, manufacturing,
management and commercial
activities involved in the marketing
of a new (or improved) process or
equipment - Chris Freeman (1982)

41
Drivers of Innovation
1.Need to improve quality
2.Create new markets
3.Extend product range
4.Reduce labour cost
5.Improve production process
6.Reduce materials/ material cost
7.Reduce environmental damage
8.Replace products/Services
9.Reduce energy consumption
10.Conform to regulations
42
Innovation mode
– Supply Pushed
( Technology Pushed)

 Or
– Market Pulled

43
Technology Push Model
• It is the first generation linear model
• Technology is regarded as the key
driver of innovation.
• When a new/improved technology
emerges, it leads to innovations to
new products/services or processes
• Sequential steps that follows are: R&D,
Design, Engineering, Manufacturing,
Marketing and Sales.
• E.g. Menu Operated Computer
Software, instant messaging, Original
Blacberry (wireless email)
44
Market Pull Model
• This is the second generation linear
model. It includes and integrates
consumer needs in the innovation
process.
• Assessment of consumer needs/market
requirements, concept/idea
generation, refining of idea to meet
consumer need, design, engineering,
manufacturing, test marketing and
sales.

e.g. Phones, UPS, Investors , lakme lip
duo, 3G services on the phone
45
Model for technological
Innovation in Bio-medical
Devices case
Generation of Ideas

Testing the feasibility of the ideas


sign , Prototype development and testing Design the manufacturing pr

FDA approval & Patenting

Production

Marketing

Customer

46
GENERATION OF IDEAS - BIO-MEDICAL DEVICES
CASE
Bio - medical Industry University & Research Labs

Intrapreneurs R & D Departments Researchers Entrepreneurs

Technology Push

Generation of Ideas
Market Pull

Physician Patients Bio medical Rngineers


Health care professionals Marketing & Sa

Health care Sector Bio - medical Industry

47
Feasibility of Ideas
– Bio-medical devices case
1.Market Potential
2.Capital
2.1 Venture Capital

2.2 Funding agencies

3. Manufacturing requirements

4. Professional advice

4.1 Industrial alliances

4.2 Govt. programs

4.3 Universities & Research Labs

48
Product deign, development &
testing – Bio-medical devices
case
1.Technology
2.Cost
3.Cost-Function relationship
4.Simplicity and ease of use
5.Expandability
6.Quality
7.Safety and environmental factors w.r.t.
use in hospitals, operation theatres,
human beings etc. and Use &
Disposal of hazardous consumables.
49
Conclusion of Bio- medical
devices -case study
• Unique characteristics of healthcare
industry & rigorous FDA approval
requirements needs to be taken into
account.
• Market pull is an important factor in
selecting the right idea for
implementation
• Low success potential and high costs of
development necessitates an elaborate
mechanism for choosing the right idea.
• Timely introduction in market and
shortening of the innovation process from
concept to market are also crucial for
success.
50
• Strong IPR regime also needs to be factored
Sources for Innovation
• Users/Customers
• Manufacturers
• Competitors
• Suppliers/Vendors/Contractors/Sub-
contractors
• Others like R&D Institutions,
Universities
• Employees
• 51
TYPES OF INNOVATIONS
1)PRODUCT – PROCESS – SERVICE –
INNOVATIONS
2)INCREMENTAL – RADICAL
INNOVATIONS
3)MODULAR – ARCHITECTURAL
INNOVATIONS
4)GENERIC - EPOCHIAL INNOVATIONS
5)TECHNOVATION – GENERIC
INNOVATIONS
6)VISION – INNOVISION
52
Dimensions of Innovation

System Level

Steam
, TVPower , ICT revolution,
New versions of motore.car
New generations , aeroplane
g. MP3 and download vs CD & cassette music
Bio-Technology

Component level
New components
Improvements to Advanced
components
for
materials
existing
to improve
systems
component performance

Incremental Radical

53
The 4 Ps of Innovation
• Product Innovation - Changes in the
things (products/services) which an
organization offers
• Process Innovation: Changes in the way
in which they are created and
delivered.
• Position Innovation: Changes in the
context in which the products/services
are introduced.
• Paradigm Innovation: Changes in the
underlying mental models which 54
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Product Innovation
Example:
A new car, a new insurance package

for accident prone babies, a new


home entertainment system.

60
Process Innovation
• Example:
• Changes in the manufacturing
methods
• Equipment used to produce the car
or the home entertainment system
• Change of office procedure and
sequencing of an insurance
package.

61
Positioning innovation
• Example: An old, established product
“Lucozade” which is presently
selling as a children’s tonic or for
convalescing patients was re-
launched as a health drink aimed at
the “fitness” segment.

62
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Paradigm Innovation
• Examples: Shift to ‘low cost airlines’
• Re- position Coffee as premium
designer product.
• Energy saving as a “Carbon credit”
business opportunity.

65
Incremental - Radical
Innovation
• Another dimension is the degree of
novelty involved.
• Incremental: doing what we do better
• Radical: doing something new to the
world
• Example: Car with revamped styling
vs New Concept car with electric
engine.
• New welding machine with auto –
gap control vs New laser welding 66
Incremental Innovation through
Platform/Robust design
• Create a strong basic platform or
family which can e stretched to
extend the range and life of the
product.
• E.g. Boeing aircraft, Intel Chipsets,
Proctor & Gamble’s Cyclodextrin

67
Incremental Innovation through
combining different knowledge
sets
• Innovation is about combining a bundle
of knowledge sets.
• The process of weaving these different
knowledge stets together into a
successful innovation involves several
unknown and uncertain conditions.
The development of these knowledge
bases requires commitment of
resources to reduce the uncertainties
involved.
• As resources are increasingly
committed, the uncertainty reduces. 68
Incremental Innovation through
combining different knowledge
sets

69
Incremental Innovation through
combining different knowledge
sets
• Successful innovation management
requires not only the development
and use of the knowledge of the
components but also about how those
can be put together. This is called the
architecture of the innovation.
• Technology Fusion is the convergance of
different technology streams such
that products which had discrete
identity begin to merge into new
architectures. E.g. Home automation 70
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Triggers/Sources of
discontinuity
1.New market emerges
2.New technology emerges
3.New political rules emerge
4.Running out of ‘road’
5.Sea-change in market sentiment or
behavior.
6.De-regulation/shifts in regulatory
regime
7.Fractures along ‘fault lines’
8.Unthinkable events
9.Business model innovation
72
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DIFFUSION OF INNOVATION – S
-Curve
• It is said that only one in every 3000
inventions manage to get
implemented.
• The extent of adoption of an innovation
depends on
1)How the characteristics of an
innovation affect adoption
2)How the process of commercialization
affects adoption
3)What techniques are available for
forecasting future patterns of
adoption
78
Effect of Innovations on Market
& Technology Linkages
Technology Linkages
Enhances/Destroys

Mark
et DISRUPTIVE INNOVATION RADICAL
Link (Disrupting the market) INNOVATION
ages
Enha
nces/
Dest
roys
DISRUPTIVE
EVOLUTIONARYINNOVATION
INNOVATION(Disrupting the technology base)

79
How the characteristics of an
innovation affects diffusion?

• Relative advantage
• Compatibility
• Complexity
• Triability
• Observability

80
S - Curve
• Innovations usually follow a certain
pattern . Initially there is a slow
growth in the performance, market
and cost competiveness.
• This is followed by a stage of steep
exponential growth
• Finally there is a tapering off stage
when further progress is prohibitively
expensive or too time consuming;
hence not worthwhile.
• The course of innovation is typically
depicted through an S - Curve 81
Typical Diffusion curve of a
new product – S - Curve
Ma
rk 80
et
la
Pe late gg
ne 60 majo ar
tr rity ds
at ea
40
io rl
n In
y
ad
( no op
20 va
% te
to rs
) rs

1968 1972 1976 1980


Year of Adoption
82
Process of Diffusion -S
Curve
• Process of diffusion/adoption of
innovation is affected as follows:
1)Initially the rate of adoption is low
and confined to so-called
“innovators”
2)Next to adopt are the “early
adopters”

3)This is followed by the “late


majority”. The market growth is 83
Product or Service Life Cycle
curve
S - Curve
C
Va Profits
lu Maturity
e
Rs
-
mi New Product or
ll B Service
io Investme
ns nt

New
Concept
A
Time - years
84
S – Curve – an established
technology and a new rival.
New Rival
Pe
rf 80
or Established
ma Technology
nc 60
e
(
40
%
)
20

T1 T2
Time / Investment
85
Failure of Innovation
• 90% of all innovations have no
impact on the organizational goals.
• As per one survey, only one in 3000
new ideas become successful.
Causes of failure:

• Internal
• External

86
Failure of Innovation – Internal
Causes
Cultural:
• Poor Leadership; Organization;
Communication ; Empowerment;
Knowledge Management
Process

Poor definition of goals

Poor alignment of actions with Goals

Poor participation in teams

Poor monitoring of results

Poor access to information

87
Failure of Innovation – Internal
Causes
• R&D efforts are not guided by market
research or customer requirements
• R&D efforts not in synch with
manufacturing/Skill capabilities
• When there is no corresponding
changes in organizational
processes
• When new product launch is not
accompanied by change in
marketing strategies 88
Failure of Innovation – External
Causes
• Mismatch between price charged and
value benefit perceived by
customer
• Not enough value addition perceived
by customer
• Competitor brings in Disruptive
technology /innovation
• Government regulations undergo
change adversely affecting
innovation
• Market not as yet ready to accept the
89
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Roadmaps for success
Innovation process can be depicted as a
3 stage model:
1.Search
2.Select
3.Implement
3.1 Acquire

3.2 Execute

3.3 Launch

3.4 Sustain

91

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