Innovation Mangt

7/28/2019 Innovation Mangt

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INNOVATION

MANAGEMENT


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Introduction

Innovation is at the top of executive agendas today across all

industries, but no more so than in the consumer and packaged goods

industries. With tens of thousands of products launched annually, and

competition now on a truly global scale, companies must differentiate

their products by more than just price and promotional activities if

they are to gain a share of the consumers wallet. They must create

products that offer unique and novel consumer value. A lack of

innovation will result in the inability to differentiate their products

from their competitors and ultimately lead to market commoditization,

declining margins and reduced product profitability.


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In the organizational context, innovation may be linked toperformance and growth through improvements in efficiency,productivity, quality, competitive positioning, market share, etc.All organizations can innovate, including for example hospitals,

universities, and local governments.

While innovation typically adds value, innovation may also have anegative or destructive effect as new developments clear awayor change old organizational forms and practices. Organizations

that do not innovate effectively may be destroyed by those thatdo. Hence innovation typically involves risk. A key challenge ininnovation is maintaining a balance between process and productinnovations where process innovations tend to involve a

business model which may develop shareholder satisfaction

through improved efficiencies while product innovationsdevelop customer support however at the risk of costly R&Dthat can erode shareholder return
http://en.wikipedia.org/wiki/Productivityhttp://en.wikipedia.org/wiki/Qualityhttp://en.wikipedia.org/w/index.php?title=Competitive_positioning&action=edit&redlink=1http://en.wikipedia.org/wiki/Market_sharehttp://en.wikipedia.org/wiki/Business_modelhttp://en.wikipedia.org/wiki/R&Dhttp://en.wikipedia.org/wiki/R&Dhttp://en.wikipedia.org/wiki/Business_modelhttp://en.wikipedia.org/wiki/Market_sharehttp://en.wikipedia.org/w/index.php?title=Competitive_positioning&action=edit&redlink=1http://en.wikipedia.org/wiki/Qualityhttp://en.wikipedia.org/wiki/Productivity


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What is Innovation?

One good definition is that innovation is the process of

taking an original idea and converting it into

measurable business value to an organization.

This can be achieved either by the commercialization ofthe idea into a product or service that can be taken to

market or by the institutionalization of an idea, like a

method or process, that enables the company to

achieve higher productivity and quality at lower total

cost.


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Meaning

Innovation means introduction of something new

and useful, for example introducing new

methods, techniques, or practices or new or

altered products and services.


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Definition

According to Luecke and Katz

"Innovation . . . is generally understood as the

successful introduction of a new thing or

method . . . Innovation is the embodiment,

combination, or synthesis of knowledge in

original, relevant, valued new products,

processes, or services.


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In general innovation means

The introduction of a new good that is one withwhich consumers are not yet familiaror of a new

quality of a good. The introduction of a new method of production,

which need by no means be founded upon adiscovery scientifically new, and can also exist in a

new way of handling a commodity commercially.Innovation = Creativity * Risk Taking


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Where does innovation fit into the corporate

framework?

In many organizations innovation management isan integral part of the business framework. The

graphic below illustrates this with the innovation

pipeline taking input from competitor and marketintelligence and driving that into the planning,

new product development and new product

introduction processes.


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Stages

Three stages of innovation

idea creation

development commercialization


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The importance of innovation

Why you have to innovate?

Advancing technology

Changing environment

Changing industrial structures and strategies

Evolving society

Evolving customer desires Competitors improve their products, processes and services

Customers stop buying your old products and services so you need toreplace them and add new products and services

Innovation happens in every industry

From new industries such as genetic engineering, electronics and Telecommunications through automotive and aerospace to old

industries such as shipbuilding and mining


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What happens if you don't

innovate? Customers stop buying your products, processes

and services

Sales drop

Revenues drop

Shareholder returns drop

Stock price drops

Key employees leave

More customers stop buying your products,processes and services

Sales drop


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Why innovation is becoming more important

?

Technology is changing fast, new products come from new competitors

Fast changing environment, product lifetimes shorter, need to replaceproducts sooner

Products are increasingly difficult to differentiate

Customers are more sophisticated, segmented and demanding, and

expect more in terms of customization, newness, quality and price Customers have more choice

New technologies no-one understands

Apparently separate technologies come together

Markets forming and changing fast

With markets and technology changing fast, and good ideas quicklycopied, there is continual pressure to devise new and better products,processes and services faster


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Innovation as your corporate

strategy Poor implementation of many recent corporate initiatives -

such as ERP implementation, ISO 9000 implementation,reengineering, and downsizing - hasn't resulted in fastgrowth. Often it's led to a reduction in quality levels and

stagnation in sales Innovation leads to faster growth, increased market share

and better corporate positioning

Innovation is the prime strategy for the first decade of thetwenty-first century


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The difficulty of innovation The failure rate is high

Barriers to innovation

Why innovation is so difficult to manage Reasons for failure to innovate

Misjudgments about the future

Reasons for misjudgments


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The failure rate is high

Less than 10% of proposed innovations get

to the market

Less than 10% of new products succeed in

the marketplace


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Barriers to innovation

Organization not conducive to innovation

Environment not conducive to innovation

Insufficient resources Traditional management behavior

Group behavior

Individual behavior Traditional accounting practices


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Organization not conducive to innovation

Interdepartmental borders prevent communication of innovative ideas

Incorrect measures hinder the advance of innovative products andservices

No processes defined for innovation

Not listening to customers

Not knowing what customers really want to buy

No recognition of the need for a creativity process

Inappropriate incentives

Incompatible innovations producing confusion rather than growth

Inability to handle uncertainties about risks, results and timing ofinnovationLack of information on markets and technologies


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Environment not conducive to innovation

Over-regulated market prevents introduction ofnew products

No competitive pressure (Necessity is the motherof invention)

Government rules make it difficult to introducenew services

Lack of opportunity for partnerships with otherorganizations

No opportunity to see how similar companies andindustries are innovating


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Insufficient resources

Good people not available

Funding not available

Facilities not available


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Traditional management behavior Management desire to be in control prevents people being creative

Middle managers prevent innovations getting top level visibility

Poor leadership style

Maintaining traditional ways of thinking

Intolerance of fanatics wanting to change the world

Excessive rules, constraints and bureaucracy Unwillingness to change a winning formula

Resistance to change

Excessive demands to produce lengthy written reports

No free time allowed for new ideas


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Group Behavior

Interdepartmental warfare - everyday insults and lack oftrust

Traditional mind set - 'we are right, they are wrong'

Negative influence of peer group - 'we the developers, theythe shop floor'

Not Invented Here

Middle management warfare - everyday fights, plots andtraps

Interdepartmental rivalry

Indifference of peer group Fear of offending peer group

Fear of being excluded from peer group


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Individual behavior

Fear of trying

Fear of risk

Fear of change

Fear of being laughed at

Fear of making mistakes

Fear of appearing stupid by proposing something that is not possible Fear of showing ignorance

Fear of showing personal thoughts

Fear that personal ideas are so easy to copy they can not be sharedwith colleaguesJealousy of colleagues

Never done before, don't know how to do

Holding on to past successes

People feeling indifferent and apathetic about their work


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Traditional accounting practices

Bean counter mentality

Short term focus

Accounting practices that don't value innovation

Conventional financial projections and planning Innovation costs too high

Lack of finance

Payback period too long

Excessive apparent risks of innovative productsand services


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Why innovation is so difficult to manage

Management is used to running the existing

business, not building the future business

Management hasn't set aside time to focus on

innovation Management is too far removed from the details of

individual products and services

Nobody knows what will happen in the future


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Reasons for failure to innovate

Innovation is a long-term activity (failure tomaintain interest)

Innovation has a long payback period

Innovation is expensive (failure to continue to

invest) Innovation is too complex to manage

Everyone's overloaded with everyday problems

Competing priorities

Management systems can't handle innovation

Innovation costs are too hard to control


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Misjudgments about the future

The Commissioner of US Patents said thateverything that can be invented has been invented(1899)

Thomas Watson forecast a world market for aboutfive computers (1943)

Ken Olsen, founder of Digital EquipmentCorporation, said no one needed to have a

personal computer at home (1977) Bill Gates said that 640K would be enough

memory for anyone (1981)


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Reasons for misjudgments

Difficulty of forecasting the future

Unwillingness to listen to customers

Inability to read the market

Belief in the infallibility of corporatestrategy committees

Belief in the infallibility of the boss

Innovation is not just about products andR&D


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Benefits and examples of good innovation

Typical reasons for innovating

Benefits of good innovation

Examples of good innovation Different ways to innovate
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Typical reasons for innovating

Responding to customers

Increasing market share

Being at the forefront of industry

Establishing a new market

Improving the quality and speed of service

Expanding the product range

Meeting Government standards/regulations

Reducing costs Increasing revenues


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Benefits of good innovation

First to market

Premium prices

Best customers Large market share

Increased shareholder return

Increased employee motivation and morale


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Examples of good innovation

Dell Computer

Microsoft Corp.


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Different ways to innovate

Traditional approaches

Best practices

New approaches


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Traditional approaches

Necessity - the mother of invention

Market pressure

Brainstorming sessions

Employee suggestion box

Laboratory research

Literature search Copy and improve competitor's products

Copy the process used to develop past innovations

Benefit from weaknesses of slow-moving public organizations

Provide everyone time for innovation

Fill the funnel


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Best practices

Questionnaires and assessments

Search for alternative solutions

Monitor patent applications

Use Web search engines

Various benchmarking activities

Look in the value chain

Learn from customers

Product platforms

Quality Function Deployment

Look in unexplored fields

Strategic alliances


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New approaches

Apply TRIZ

Virtual prototyping

Implement a knowledge management system

Rapid prototyping and market experimentation

Hire the finest

Import external innovators

Cultivate visionaries

Distributed network of experts

Build an incubator

Offer everyone a venture planning toolkit Set up a venture finance team


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Principles of good innovation

Strategies of the success stories

Understand the market

Be open

Keep a firm grip on technology

Create the organizational conditions in whichinnovation can flourish

Get everyone on board

Define the business processes for innovation

Demonstrate management commitment

Be patient but tough
http://www.johnstark.com/in41.htmlhttp://www.johnstark.com/in41.html


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Strategies of the success stories

Learn from the experience of the best

innovators

Identify the key success factors

Build your organization's principles of good

innovation


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Understand the market

Understand customer desires - articulated

and unarticulated

Get as much information as possible about

customer desires


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Be open

Open to any type of innovation, not just product innovation Open to any source of innovation, not just R&D

Open to ideas from outside the organization

Open to partnerships with other companies

Open to partnerships with companies in other industries

Open to research, advice and information from educational establishments

Open to the market

Open to customers, listening to what they ask for, listening to what theycomplain they

can't get, looking at what they are doing

Aware of competitors, watching what they are offering, how they are evolving


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Keep a firm grip on technology

Develop and communicate the technical

vision

Keep abreast of advanced technology

Get as much information as possible about

technology


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Create the organizational conditions in which innovation can flourish

An environment for innovation

A flexible organization

Build an infrastructure that encourages

communication

Put in place a good Change Management program

Create measures of innovation performance

Build a climate of trust

Provide venture finance for innovation projects


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Get everyone on board

Implement cross-functional and inter-company teamstructures

Enable collaborative working

Ensure working relationships are win-win not win-lose

Provide incentives - financial and other - for innovation

Train your people to be great innovators

Encourage people to be creative

Create the desire to innovate

Provide career and skills development opportunities

Provide role-modeling


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Define the business processes for

innovation

Innovation process

Product Development process

Process Development process Service Development process

Engineering Change process


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Demonstrate management commitment

Develop, communicate and implement theinnovation strategy

Communicate the right top-down messages

Take the lead on the road to innovation

Set goals for innovation - aim to be themarket leader

Challenge orthodoxies Review progress


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Be patient but tough

Innovation can take time, so don't expect instantresults

Review progress, screen results, analyze risks, beprepared to weed out low potential innovations sothat resources are available for the best hopes

Remove the blockers who are afraid of change andafraid of success

Remove the cynics who lack confidence in yourpeople and ideas

Documents

Innovation Mangt