MOI Innovation Strategy Framework,

Prof. V.Seshadri NMIMS

Innovation Strategy
2.1 Developing the framework 2.2 Positions National & Competitive environment 2.3 Paths- Exploiting technological trajecteries 2.4 Processes Leveraging R&D; 2.5 Processes - Allocating resources

Porf.V.Seshadri, MOI- Innovation Strategy

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; Strategic Management of Technology and Innovation; Irwin

MOI - Prof.V.Seshadri

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
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What is Strategy?
Strategy is a coordinated set of actions that fulfill a firm s objectives, purposes and goals Strategic Management is an on-going process in which the organization (org) defines the nature of the businesses in which the firm will be active, the kind of economic and human org it intends to be and the nature of contributions it intends to make to it s various constituents
Porf.V.Seshadri, MOI- Innovation Strategy, Ref 11 Ch 2 5

Levels of Strategy
VISION & MISSION CORPORATE STRATEGY

BUSINESS-LEVEL STRATEGY

FUNCTIONAL - LEVEL STRATEGY

Porf.V.Seshadri, MOI- Innovation Strategy Ref 11 Ch 2

Central role of Technology in strategic management

Strategic management is critical and it helps the entire org move towards consistent goals Technology is considered throughout the stategic process; both internally and externally.

Porf.V.Seshadri, MOI- Innovation Strategy

Capabilities
Capabilities are skills that a firm develops. To be successful any firm needs five or six capabilities in which it is superior to it s competitors. It is from these capabilities that the firm s integration of technology with strategic concerns should begin. It is these capabilities that are at the root of the firm s competitive advantage over competitors
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Capabilities
There are 2 areas of capabilities: 1. Technical 2. Market

Porf.V.Seshadri, MOI- Innovation Strategy

Technical Capabilities
How the firm approaches technologies it has or wishes to have. Firm may decide strategically to either destroy, preserve or develop the technologies The strategic decision is implemented through people, structure and processes.

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Market Capabilities
Knowledge and skills pertaining to Market forces and customers are important.

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Competitive Advantage
A competitive advantage is something a firm does better than any of its competition. The activity/area of competitive advantage should be something that the other firms cannot easily duplicate (cost , performance or quality) and something that the customer really values. Only then will it lead to a sustainable and tangible benefit. E.g faster processing by a new computer chip. When the competitive advantage involves a hi- tech area or activity, the firm is said to have a technology advantage. Firms seek to use this technology advantage towards an innovative venture to launch a new product/process /service. This is called technological innovation strategy.
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Guidelines for strategy formation process

1. Explore the implications of a range of possible future trends 2. Ensure broad participation and informal channels of communication 3. Encourage the use of multiple sources of information, debate and skepticism 4. Expect to change strategies in the light of new evidence
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Innovation Strategy essential features

1. Firm-specific knowledge and the capacity to exploit it 2. A Strategy to deliberately accumulate such knowledge 3. Ability to cope with threats from external environment 4. An internal structure that balances potentially conflicting requirements
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Innovation strategy
A firm s capabilities is one of the important basis for deciding the technological innovation strategy. A firm generally strives to build on those areas where it has competitive advantage. At the corporate level, a firm needs to define and implement an innovation strategy. It can adopt one of two approaches for this purpose.
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Approaches
Approaches for mobilization of technology for the purpose of creating a corporate innovation strategy Rationalist Strategy Incrementalist Strategy

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Rationalist Strategy
It consists of the following steps 1. Describe, analyze and understand the environment. ( may use SWOT) 2. Determine a course of action in the light of the analysis 3. Carry on the decided course of action Such a a linear process is usually followed in the military; but is not always successful in the complex corporate context.
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Incrementalist Strategy
Rationalist approach assumes a complete understanding of the present and emerging future. However, this is usually very limited. The alternative incrementalist strategy involves 1. Make deliberate steps towards the stated objectives 2. Measure and evaluate the effects of the steps (changes) 3. Adjust the objectives (if necessary) and decide on the next step (change)
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Incrementalist strategy (ex: for medical doctors)

Symptom Diagnosis Treatment

Cure

Adjust treatment

Diagnosis

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Incrementalist strategy (ex: for product/process innovations)

Design Development Test

Operate

Retest

Adjust design

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The strategic process in MTI Porter s Model

The strategic process of a firm is made up of three principle activities. 1. Planning 2. Implementation 3. Evaluation and control These activities go on concurrently and are an ongoing internal process. Planning consist of: 1) Data gathering 2) Mission generation 3) Objective seeking and 4) Strategy establishment Porters Industry model is a useful tool for gathering and organizing information for planning the strategy of a firm in relation to the industry in which it operates.
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Porter s Industry Model

Porter proposed a five forces analysis. The model builds on industrial organization s economics to analyze how various parties influence an industry

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Five forces driving industry competition - Porter

According to Porter, the unit of analysis is the industry producing similar products. The goal of competitive strategy is to find a position in the industry where a firm can best defend itself against these competitive forces. The five forces driving industry competition are: 1. Relations with suppliers; 2. Relations with buyers 3. New entrants 4. Substitute products 5. Rivalry amongst established firms
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Porters Approach
Porter linked technology to the five forces driving industry competition. In each of these areas, firms must choose from generic market strategies. Porters approach situates the firm s technological activities in a wider context of industry competition. He developed a systematic SWOT analysis for this purpose. A sixth force: COMPLIMENTORS is now added to examine technology focused concerns
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Generic Market Strategies -Porter

According to Porter, a firm has to decide on which market strategy it is going to adopt: 1. Cost leadership/ Cost focus 2. Product Differentiation / Differentiation focus

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Generic strategies for firms - Porter

cost leadership differentiation
Product Development Product Development Process development Process development Process development Lower material inputs Ease of manufacture New logistics Minimize cost Enhance quality/features Niche market Precision quality control Miniaturization

Economies of Response time scale Porf.V.Seshadri, MOI- Innovation Strategy

Ref 1 Ch 3

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Threats and Opportunities from changes in technology -Porter

Potential Entrants and Substitute Products:
Increased threat Increased threat Reduced threat Reduced threat No economies of scale Telecommunication Publishing Substitute Products Lock-in to technological standards Patent and Legal protection Aluminum cans in place of Steel cans Microsoft

Major ethical drugs

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Threats and Opportunities from changes in technology -Porter

Power of Suppliers over Buyers
Increased Innovations in key Microprocessors in threat components computers

Reduced threat

Innovations that reduce dependence

Engineering materials

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Threats and Opportunities from changes in technology -Porter

Rivalry amongst established firms
Increased Innovations in key Polaroid in instant Threat of areas photography monopoly

Reduced Imitation in key threat of area monopoly

GE in brain scanners

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Leadership vs Followership -Porter

A firm should decide which market strategy it intends to follow: Innovation leadership or Innovation followership

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Innovation strategy in small firms

Small companies have the following charecteristics: 1) Similar objectives to develop and technological and other competencies to provide superior products and services. 2) Org strengths: ease of communication, speed of decision making, degree of employee commitment and receptiveness to novelty 3) Technological weaknesses 4) Strong in certain sectors like machinery, instruments and software; Weak in chemical, electronics and transport
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Table 3.2 Misleading assertions about innovation in small firms

Porf.V.Seshadri, MOI- Innovation Strategy, Ref 1 Ch 3 2005 Joe Tidd, John Bessant and Keith Pavitt

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