INNOVATION MANAGEMENTStrategy and Implementation using the Pentathlon Framework

SECOND EDITION

KEITH GOFFIN & RICK MITCHELL

Includes 77 innovation case studies - from the service and manufacturingsectors and from around the globe

macmillan

Table of Contents

List of Case Studies xiAcknowledgements xviiPreface xixAbout the Authors xxiCopyright Material • xxiii

1 KEY ASPECTS OF INNOVATION MANAGEMENT . 1Introduction 1Innovation Drivers 2Technological Advances; Changing Customers and Needs;Intensified Competition; Changing Business Environment;Responding to the Environment — Strategic IntentCharacteristics Of Innovation 6Definitions of Innovation; Dimensions of Innovation;Dimensions of Innovation in Services; Degrees of Innovation;Evaluating Dimensions and Degrees; Innovationand Continuous Improvement; Phases of Innovation;Innovation throughout the OrganizationKey Research On Innovation 20Macro-Level Investigations; Micro-Level Investigations;Project-Level Investigations; Service Innovation ResearchManaging Innovation - The Challenge , 26Need for a Framework; The Innovation Pentathlon FrameworkThe Structure Of This Book 32Format of the ChaptersSummary 34

2 INNOVATION AND ECONOMICS 41Introduction 41Economic Measures Of Innovation 42Factors Mediating Innovation 44Company Size and Innovation; Market Sectors and Innovation;Education Levels, National Culture and Innovation;Government Policies and InnovationImpacts Of Innovation 51Innovation and Business Cycles; Innovation and Employment;Innovation and Company Performance;Product Innovation and GrowthDiffusion Of Innovations 56

VII

VIII TABLE OF CONTENTS

The Influence of Product Features; The Adoption Life CycleSummary^ . 60

3 CONTRASTING SERVICES WITH MANUFACTURING 65Introduction 65The Importance Of Services 66Service and the Economy; R&D.in Services;Manufacturers Need ServicesCharacteristics Of Services 70Terminology of Services and Manufacturing; Service Delivery;The Servicescape; Service Characteristics and Innovation;Managing Quality in ServicesInnovation In Services 80The Need.for Innovation; Managing Service Innovation;New Service Development ProcessesServices And Innovation Management 85Summary 86

4 DEVELOPING AN INNOVATION STRATEGY 93Introduction 93Innovation Strategy And Stakeholder Satisfaction 97Kano's Feature Analysis <Technology: The Capability Ceiling 101

• The Technology CS' Curve; An Alternative Perspective: DominantDesign; Evolution of Strategy as Technology MaturesCustomer Satisfaction: Feature Fatigue 109Disruptive Innovation; Responses to a Disruptive ThreatCompetition 115Value Innovation: Blue Ocean Strategies; Protecting the ValueOpen Innovation 119Strategic IssuesLinking The Components Of Strategy 123Roadmapping; Scenario PlanningThe Success Trap 131Summary 132

5 GENERATING CREATIVE CUSTOMER-FOCUSED^ IDEAS 139Introduction ' 139Creativity 140Types of Business Creativity; Individual Creativity; Team Creativityand Culture; Creativity Techniques for InnovationTriz 149Managing Knowledge 150Nature of Knowledge; Capturing Tacit Knowledge;Promoting Knowledge Transfer . 'Ideas And Innovation 154

TABLE OF CONTENTS IX

Identifying Customer Needs - Traditional Approaches; Hidden NeedsAnalysis; Empathic Design; Lead Users; Experimentation; VirtualCommunities; Identifying Priorities - Conjoint Analysis; Choosingthe Correct Approach to Market ResearchProtecting Ideas 175Copyright; Design Right; Trademarks; PatentsSummary 181

6 SELECTING AND MANAGING ANINNOVATION PORTFOLIO 187Introduction 187Principles Of Portfolio Management 188The Need for a Process; Elements of a Good PortfolioValuing Individual Projects 191Types of Project; Financial Valuation Methods; Single-StageProjects; Estimating Probabilities in Projects; Multistageand Network Projects; Comparing the Values of Risky Projects;Valuing Large and Small Portfolios of Projects; Non-financialMethods; Choosing a Valuation MethodChoosing And Managing A Portfolio 210Ranking Projects for Selection; BalanceThe Management Process ' 216People Issues; Selecting the ToolsSummary 222

7 IMPLEMENTING INNOVATIONS 227Introduction 227Project Management Techniques 229Setting Project Aims and Tradeoffs; Work Breakdown Structure;The Project Schedule; The Resource; Plan;Agile Project ManagementManaging Project Risks 236Collecting Risk Information;Appraising the Risks: The FMEA ProcessLinking Customer Needs To Product Design 239Embedding the Features: Quality Function Deployment;Defining and Delivering Service ProductsManaging Stakeholders 248Managing An Innovation Department 250Phase Gates; Managing Simultaneous Projects;Managing CollaborationsSummary 259

8 CREATING AN INNOVATIVE CULTURE 265Introduction 265Organizational Culture And Innovation 266

TABLE OF CONTENTS

Understanding and Assessing Culture; Applying theCultural Web; Studies of Innovation CultureManaging Innovation Teams 282Team Structures; Making Project Teams WorkManaging People For Innovation 297Recruiting and Job Assignment; Managing Performance;Development of EmployeesSummary • 306

BOOSTING INNOVATION PERFORMANCE 311Introduction 311Performance Improvement '» 312Assessing Current Performance 313Performance Measures; The Innovation AuditPriorities And Linkages 323Priority Areas; Considering LinkagesActions To Boost Performance 329Change Management and Innovation; Making a Breakthrough;The Role of an Innovation ManagerSummary 337

10 THE FUTURE OF INNOVATION MANAGEMENTIntroduction: The Innovation EnvironmentCustomersImplications for Innovation ManagementTechnologyImplications for Innovation ManagementCompetitionImplications for Innovation ManagementThe Business EnvironmentOpen Innovation; The Dangers of Open Innovation;Implications for Innovation ManagementConclusionSummary

AppendixReferences and NotesIndex

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