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Managing Technology and Innovation

Managing Innovation and Technology

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Page 1: Managing Innovation and Technology

Managing Technology and Innovation

Page 2: Managing Innovation and Technology

• Microsoft• Intel• IBM• GE• 3M• Nokia• Xerox• Sony• Toyota• Adidas

• Amul• Tata• Airtel• Maruti-Suzuki• Pidilite• Shahnaz Husain• IPL• ITC• Parle• Future Group

Page 3: Managing Innovation and Technology

What is Innovation ?• Creativity is doing something new • Innovation is something new that adds value; • “Invention implies bringing something new into being,

Innovation implies bringing something new into use”.• Innovation is a breakthrough approach or idea that can

be completely new or an enhancement to something that already exists; it is a refreshing perspective that will challenge many who cannot see beyond what their own experience is telling them to think or do.

• Invention + Commercialization = Innovation

Page 4: Managing Innovation and Technology

What is Innovation ?• The act of introducing a new product, device, method or

material for application to commercial or practical objectives

• The creation of new knowledge that is applied to practical problems

• The new knowledge can be technological or market related– Technological – knowledge of components, linkages between

components, methods, processes, and techniques that go into a product or service.

– Market – knowledge of distribution channels, product applications, customer expectations, preferences, needs, and wants.

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Why Innovation?

• Today the two major challenges for businesses and for countries and local regions are:– Responding to Globalism– Fostering and managing innovation and

entrepreneurship• These two challenges are inter-related.

Page 7: Managing Innovation and Technology

Empires of the Mind

“Empires of the future are empires of the mind”

Winston Churchill

Page 8: Managing Innovation and Technology

Empires of the Mind

“The winners in these global games (business) will be those who can put together the world’s best design, manufacturing, research, execution, and marketing on the largest scale. Rarely are all of these elements found in one country or on one continent.”Welch,J.F. Jr. “Evolving Industrial Alliances”, The

Bridge, 1987, 17(4),p.10

Page 9: Managing Innovation and Technology

Empires of the Mind“ Technology is the embodiment of knowledge, an

embodiment of the creations of the mind. Our world economy is increasingly an economy of the mind, an economy that is dominated by knowledge rather than commodities. It includes hardware, that kind of knowledge we normally think of when we say the word technology, but it also includes software knowledge, methodologies, organizational understanding and the mental skills (tacit knowledge) of the workforce.

The global economy, while driven by many forces, is increasingly dominated by technological forces.”

William F. Miller

Page 10: Managing Innovation and Technology

The World is Flat

According to Thomas Friedman “The world is flat”.

Indeed there are strong forces of deglommeration that are leveling playing fields and facilitating a broader distribution of the factors of production. At the same time there are forces for agglomeration that are giving rise to concentration of activities in clusters and regions.

Page 11: Managing Innovation and Technology

The Challenge of Globalism• From producer’s market to buyer’s market (from Economy of

Need to Economy of Choice)• Geographical shifts in demand • Shifts in production• New business models• Environmental regulatory changes• Demographic changes affect health and consumption • New regional strengths

– New technology development– New talents– New sources of innovation and entrepreneurship

Page 12: Managing Innovation and Technology

Why Innovation ?

• The Indian economy has entered a higher growth trajectory and rates of 9% and over may well become the norm.

• If we want to sustain growth, our companies have to reduce business cycles, time to market (quick supply) and ensure quality.

• Most economic growth comes from new technologies and technology related services.

Page 13: Managing Innovation and Technology

Why Innovation ?

• Innovation can– Result in new products that better satisfy

customer needs– Improve the quality of existing products– Reduce costs

Page 14: Managing Innovation and Technology

Why Innovation?

• In today’s world, to be a leader in industry you have to be innovative.

• Companies must be able to look forward at the strategy and know how to bring products to market faster than their competitors.

• Innovation is the key. It’s not just about technology; it’s about business strategies as well.

Page 15: Managing Innovation and Technology

Why Innovation?

• Significant value created for society or business:– Creates new industries– Spurs productivity and economic growth– Fuels wealth creation and profits– Generates high-value, higher-paying jobs– Raises standard of living

Page 16: Managing Innovation and Technology

Why Innovation?• The returns to innovation for industry have become so

significant that managing innovation, especially managing technology, has become a major concern for companies.

• Technological innovation is the most important driver of competitive advantage in many industries

• The increasing importance of technological innovation is due to(1) Globalization of markets(2) Advent of advanced technologies (CAD, CAM, flexible

manufacturing technologies)(3) Advances in information technology

Page 17: Managing Innovation and Technology

Creativity and Innovation

• Innovation begins with creativity.– Creativity is the ability to generate new and useful ideas. It

enables individuals and organizations to produce work that is useful and novel.

– Individual creativity is a function of • Intellectual abilities• Knowledge• Thinking styles• Personality traits• Intrinsic motivation• Environment that provides support & rewards

Page 18: Managing Innovation and Technology

Creativity and Innovation

• Organizational creativity is a function of– Creativity of individuals within the organization– Social process & contextual factors that shape the

way individuals interact and behave• Structure• Routines• Incentives• Ideas collection systems (suggestion boxes, Intranet)

Page 19: Managing Innovation and Technology

Importance of Strategic Management of Technological Innovation

• Most innovative ideas do not become successful new products

• Between 33% and 60% of all new products that reach the market fail to make a profit.

• Management has obligation to not only encourage new product development, but also to develop a system to ensure that technology is being used most effectively with the consumer in mind.

Page 20: Managing Innovation and Technology

Importance of Strategic Management of Technological Innovation

• Improving a firm’s innovation success rate requires:1. An in-depth understanding of the dynamics of

innovation2. A well-crafted innovation strategy3. A well-designed process for implementing the

innovation strategy.

Page 21: Managing Innovation and Technology

Role of Management

• Encourage new product development– Ensure that technology is being used most

effectively with the consumer in mind.• Environmental Scanning:

– External Scanning• New developments in technology

– Motorola’s intelligence department monitors the latest technology developments introduced at scientific conferences, journals and in trade gossip.

Page 22: Managing Innovation and Technology

Role of Management

• Impact of Stakeholders on Innovation– to look at customers, suppliers, and distributors, for source

of product and service improvements. – Lead Users

• Lay the foundation• Determine the trends• Identify lead users• Develop the breakthrough

– Market research : to survey current users regarding what they would like in a new product.

– New product experimentation

Page 23: Managing Innovation and Technology

Role of Management

• Internal Scanning– Has the company developed the resources needed to

try new ideas?– Do the managers allow experimentation with new

products or services?– Does the corporation encourage risk taking and

tolerate mistakes?– Are people more concerned with new ideas or with

defending their turf?– Is it easy to form autonomous project teams?

Page 24: Managing Innovation and Technology

Role of Management

• Resource Allocation Issues:– R&D Intensity

• Spending on R&D as a percentage of sales revenue• Eg. 11-13% of sales revenue are spent for R&D in

computer software and drug industries.– Time to Market Issues:

• Time from inception to profitability• 60% of patented innovations are generally imitated

within 4 years at 65% of the cost of innovation

Page 25: Managing Innovation and Technology

Role of Management

• Strategy Formulation:– R&D Strategy

• Leader or follower in terms of technology and market entry

• Source of technology– Develop– Purchase

– Product vs. Process R&D• Product innovations• Process innovations

Page 26: Managing Innovation and Technology

Sources of Innovation

• Within a company– Unexpected occurrences– Incongruities– Process needs

• Outside a company– Industry and market changes– Demographic changes– Changes in perception– New knowledge

Page 27: Managing Innovation and Technology

Sources of Innovation

• Unexpected occurrences– Unplanned of unanticipated successes or failures

• Incongruities– Occur when there is gap or difference between

expectation and reality, what is needed and the way business is currently run

• Process needs– Demand from the industry to innovate and answer a

particular need or to sustain in ever-rising competition

Page 28: Managing Innovation and Technology

Sources of Innovation• Demographic changes

– Trend changes in population because of age, education, occupation, geographic location

• Market changes– Change in consumer attitude, advancement in technology,

industry growth etc.• Knowledge based concepts

– Products of new thinking, new methods, and new knowledge– Require longest time between initiation and market

implementation, because of need for testing and midification

Page 29: Managing Innovation and Technology

Source 1 : The Unexpected

• The unexpected success• The unexpected failure• The unexpected outside event

Page 30: Managing Innovation and Technology

The unexpected success• Often the richest opportunities for successful innovation, with

less risky and less arduous • Yet the unexpected success is almost totally neglected• The first thing is to ensure that the unexpected is being seen. It

must be properly featured in the information management obtains and studies

• Management must look at every unexpected success with the questions:1. What would it mean to us if we exploited it?2. Where could it lead us?3. What would we have to do to convert it into an opportunity? 4. How do we go about it?

Page 31: Managing Innovation and Technology

The unexpected failure• If something fails despite being carefully planned,

designed and conscientiously executed, that failure often bespeaks underlying change, and with it, opportunity

• The assumptions on which a product or service, its design or its marketing strategy, were based may no longer fit reality. Any change like this is an opportunity for innovation

• The unexpected failure demands that you go out look around and listen.

• It is equally important to watch out for unexpected event in the supplier’s business, and among the customers

Page 32: Managing Innovation and Technology

The unexpected outside event

• The unexpected outside event are often more important

• It is a condition of success in exploiting the unexpected event that it must fit the knowledge and expertise of one’s own business

• But exploiting the unexpected outside event appears to be something that particularly fit the existing enterprise, and a fairly sizable one

Page 33: Managing Innovation and Technology

Source 2: Incongruities

• Incongruous economic realities• The incongruity between reality and the

assumptions about it• The incongruity between reality and the

assumptions about perceived and actual customer values and expectations

Page 34: Managing Innovation and Technology

Source 3: Process Needs

• Need is a major innovative opportunity• Process need exists within the process of a

business, an industry, or a service• It perfects a process that already exists, replaces

a link that is weak, redesigns an existing old process around newly available knowledge.

• Incongruities and demographics may be the most common causes of a process need

Page 35: Managing Innovation and Technology

Basic Innovation Criteria of Process Need

• One “week” or ”missing” link• A clear definition of objective• That the specification for the solution can be defined clearly• Widespread realization that “there ought to be a better

way.”• Three important caveats

– The need must be understood– We may have even understood a process and still not have the

knowledge to do the job– The solution must fit the way people do the work and want to do

it

Page 36: Managing Innovation and Technology

Source 4: Industry and Market Structures

• Industry and market structure sometimes last for many, many years and seem completely stable

• Actually, market and industry structure are quite brittle. One small scratch and they disintegrate, often fast

• When this happens, every member of the industry has to act• To continue to do business as before is almost a guarantee of

disaster• A change in industry structure offers exceptional

opportunities, highly visible and quite predictable to outsiders• But insiders may perceive these same changes primarily as

threats

Page 37: Managing Innovation and Technology

Source 4: Industry and Market Structures

• The most reliable and the most easily spotted of these indicator is rapid growth of an industry

• By the time an industry growing rapidly have doubled in volume, the way it perceives and services its market is likely to have become inappropriate

• Another development that will predictably lead to sudden changes in industry structure is the convergence of technologies that hitherto were seen as distinctly separate

Page 38: Managing Innovation and Technology

Models of Innovation

• Serendipity– Very rare – May not be the case always

“Chance favours the prepared mind”- Loius Pasteur

Page 39: Managing Innovation and Technology

Linear Models of Innovation

Research &

Development

Manufacturing

Marketing

User

Marketing

Research &

Development

Manufacturing

User

Technology Push

Marketing Pull

Page 40: Managing Innovation and Technology

Linear Models of InnovationTechnology Push Model

Scientists make unexpected discoveries

Technologists apply them to develop product ideas

Engineers and designers turn them into prototypes for testing

Manufacturing devices ways to produce them efficiently

Marketing and sales promotes the products to potential customers

Market Pull Model

Customer needs

Marketing initiates new ideas resulting from close interaction with customers

Conveyed to R&D for design and engineering

Manufacturing produces the product

Eg. Pharmaceutical industry

Page 41: Managing Innovation and Technology

Simultaneous Coupling Model

Manufacturing

MarketingResearch & Development

Page 42: Managing Innovation and Technology

Simultaneous Coupling Model• Linear model only tells what drives the downstream efforts

rather than how innovation occurs• Only offers an explanation of where the initial stimulus for

innovation was born, where the trigger for the idea or need was initiated

• Simultaneous coupling model suggests that innovation is the result of simultaneous coupling knowledge within all three functions

• Point of commencement of innovation not known in advance• Innovation comes from the coupling of markets needs and

technological opportunities.

Page 43: Managing Innovation and Technology

Interactive Model

• Links together technology push and market pull models

• Innovation occurs as the result of interaction of the marketplace, the science base and the organization’s capabilities

• There is provision for feedback• Linkages with science base and marketplace

occur between all functions

Page 44: Managing Innovation and Technology

Interactive ModelLatest science and technology

Advances in society

Needs in society

And the marketplace

Idea R & D Manufacturing Marketing Commercial product

TECHNOLOGY PUSH

MARKET PULL

Page 45: Managing Innovation and Technology

N = 1, R = G (Prof. C. K. Prahlad)

N = 1• Flexibility• Quality, Cost and

experience• Complexity• Customer interfaces• Scalability

R = G• Access to resources• Speed• Scalability• Innovation arbitrage• Collaborative networks

Page 46: Managing Innovation and Technology

R = GGlobal

access to resources and talent

N = 1Personalized

cocreated experiences

The New House of Innovation

Social architecture of the firm

Technical architecture of the firm

Flexible and resilient business

processes and focused analytics

Page 47: Managing Innovation and Technology

A Framework for Capability Building

Clarity in Business Strategy

HR policies and practices

ICT architecture and tools

Technical architecture

Business Processes

Social architecture

Business Model(s)

Business result(s)

Page 48: Managing Innovation and Technology

Building Blocks of N = 1 Capabilities

Social Architecture

Technical Architecture

Focus on Individual choiceIndividual’s preference, skills

Capacity to cocoreate with customersWillingness, skills, time

Anticipation of customer evolution pathwaysConsumer behaviour, expectations

InsightsContinuous improvement, strategic redirection

Page 49: Managing Innovation and Technology

Building Blocks of R = G Capabilities

Social Architecture

Technical Architecture

Visibility to processes and dataTransparency, accuracy, consistency and timeliness

Real-time configuration of resourcesCapacity, capability, cost

Anticipation of demand and resource needsConsumer behaviour, expectations

InsightsContinuous improvement, strategic redirection

Page 50: Managing Innovation and Technology

Models of Innovation Types• Product innovation vs. Process innovation

– Product innovations are embodied in the outputs of a firm – its goods and services

– Process innovations are often oriented toward improving the effectiveness or efficiency of producing or marketing goods or services (e.g., reducing defect rates).

– New product innovations and process innovations often occur in tandem:

• New processes may enable the manufacture of new products• New products may enable the development of new processes• A product innovation for one firm may simultaneously be a

process innovation for another

Page 51: Managing Innovation and Technology

Models of Innovation Types• Radical innovation vs. Incremental innovation

– Radical innovation • An innovation that is very new and different from existing products and

processes.• The most radical innovations

– Are risky – they embody new knowledge, producers and customers– May be relative and may change over time or with respect to different

observers.

– Incremental innovation• An innovation that makes a relatively minor change from (or adjustment

to) existing products and processes• It may not be particularly new or exceptional• It might have been previously known to the firm or industry

Page 52: Managing Innovation and Technology

Forms of Innovation

• Radical Innovation

• Incremental Innovation

Page 53: Managing Innovation and Technology

Forms of Innovation

Radical Innovation Incremental Innovation

Page 54: Managing Innovation and Technology

Models of Innovation Types• Architectural vs. Component Innovation

– Most products and processes are made up of a hierarchically nested system of components.

– Component Innovation• An innovation to one or more components that does not significantly

affect the overall configuration of the system.– Architectural Innovation

• An innovation that changes the overall design of a system or the way its components interact with each other.

– Knowledge about a component is required to initiate or adopt a component innovation

– To initiate and adopt an architectural innovation typically requires the architectural knowledge about how the components link and integrate to form the whole system.

Page 55: Managing Innovation and Technology

Levels of Innovation in the Organization

1. Product innovation2. Process Innovation3. Technology innovation4. Organizational innovation5. Management Innovation6. Marketing innovation7. Business innovation8. Service Innovation

Page 56: Managing Innovation and Technology

Innovation in the Organization

• Product innovation – Technology developments that are oriented

towards creation of products with higher performance, smaller size, lower price and better features

– Today, with the emphasis on environmental issues gaining ground, developments aimed at generation of products, which are environmentally friendly, efficient in terms of energy usage, safe to operate etc.

Page 57: Managing Innovation and Technology

Innovation in the Organization• Product innovation can further be sub-

divided into four categories:– Incremental innovation:

• This refers to those efforts directed towards extending existing product concepts and is essential for strengthening the competitiveness of products.

• This form of innovation takes place continuously in any organization, has low risk and a high degree of certainty.

– Technical innovation: • Such innovation contributes less towards market

creation, but leads to an entirely novel product based on developments in respect of existing technology.

Page 58: Managing Innovation and Technology

Innovation in the Organization– Application innovation:

• This is development of products guided by the customer's views.

• Eg. Walkman and Camcorder.– Radical innovation:

• This involves creation of both technology and market. It involves generation of new product concepts, convincing world markets and creation of new business concepts.

• Examples are the television, personal computer, VCR and such others. These are high-risk innovations involving long term R&D efforts.

Page 59: Managing Innovation and Technology

Value oftechnology

asperceived

by themarket

High

Applicationinnovation

Radicalinnovation

Low

Incrementalinnovation

Technicalinnovation

Low High

Technology creation effort

Page 60: Managing Innovation and Technology

Innovation in the Organization• Technology Innovation

– Evolutional (Incremental)• When the progress is continuous, there are significant

changes in a short period of time and the efforts required towards technical innovation are considerable.

• The improvement in transmission loss by a factor of fifty, in 10 years, through low-transmission-loss-optical cables is an example of such innovation.

• Evolutional limit pushing innovations can lead to either:– i) explosive technology, in other words technology, which

expands domains, (eg. Space research, deep-sea exploration, genetic manipulation), or

– ii) implosive technology, in other words technology which enriches domains (eg. microelectronics, composite materials, chemical analysis).

Page 61: Managing Innovation and Technology

Innovation in the Organization• Technology Innovation

– Revolutional (Radical)• Where the technological progress is discontinuous. • These generally remain as inventions or discoveries

until their potential is unsheathed. • These occur quite rarely, roughly once in fifty to

hundred years, and these can completely change the foundation or structure of industry and society.

• Eg. Penicillin, the practical application of nuclear energy and description of the structure of DNA.

Page 62: Managing Innovation and Technology

Innovation in the Organization• Process Innovation

– New manufacturing process– New distribution process– Eg. E-commerce

Page 63: Managing Innovation and Technology

Innovation in the Organization• Market Innovation

– In today's competitive situation, innovation in the marketplace is not solely dependent on inputs from any single source.

– It is preferable that products are developed by working together with customers to create goods that receive high acclaim.

– Ensure that adequate exchange of opinion and discussion takes place regarding product prices and distribution channels between R&D and Marketing units.

– An integrated marketing approach in which the manufacturer, buyer and seller function in a unified manner, is more beneficial compared to the conventional approach where the units operate independent of each other.

Page 64: Managing Innovation and Technology

Innovation and Marketing StrategyDegree of differentiation

Low HighCompetitive emphasis placed on..

Cost reduction Product/service variation

Functional product performance

Innovation stimulated by..

Pressure to reduce costs, improve quality

Opportunities created by external technical capability

Information on user needs

Predominant type of innovation

Incremental product & process innovation

Major process innovations required by rising volume

Frequent major changes in product/service

Productline

Undifferentiated standard products

Includes at least one stable or dominant design

Diverse often including custom designs

Production process

Efficient, often capital intensive & rigid

Becoming more rigid & defined

Flexible Experiment & change frequently

Page 65: Managing Innovation and Technology

Innovation in the Organization• Business Innovation: Lowering risk of innovation

– Innovation that fundamentally transforms the way a business works or drives revenue.

– Diversification: An organization must invest the income of existing businesses in new business development when the former is still growing steadily in its late growth period rather than be caught unawares in the mature period or beyond, when business is likely to become stagnant.

– Also, in order to venture into any new area it would first of all be essential to be sure of the core technology or generic technology, so that related business areas come into scope easily, and existing resources can easily adapt to the new developments. This would also enable usage of the same marketing resources for both the existing as well as new business.

– Judicial use of acquisitions and joint ventures.– Selection of right personnel, providing appropriate leadership, use of

the brand name and identification of idle assets are some of the important measures involved in the management of business innovation.

Page 66: Managing Innovation and Technology

Innovation in the Organization

• Business Innovation: Balancing the Portfolio– High-risk, high return and low-risk, low return

innovations– Discrete, dynamic and continuous innovations– Product/service and market innovations– Short and long-to-market innovations– Innovations that employ new technologies and

those that employ existing technologies

Page 67: Managing Innovation and Technology

Innovation in the Organization

• Business Innovation– Strategic innovation occurs when a company

identifies gaps in the industry positioning map, decides to fill them, and the gaps grow to become the new mass market.

• New emerging customer segment or existing customer segments that other competitors have neglected

• New emerging customer needs or existing customer needs not served well by other competitors

• New ways of producing, delivering, or distributing existing or new products or services to existing or new customer segments

Page 68: Managing Innovation and Technology

Innovation in the Organization• Organizational Innovation

– Eg. a new venture division, a new internal communication system, a new accounting procedure

– The tacit and intangible knowledge present in each individual employee becomes the collective knowledge bank of an organization only if structured and managed effectively.

– A 'Learning Organization', where "people continually expand their capacity to create the results they truly desire, where new and expansive patterns of thinking are nurtured, collective aspiration is set free and where people are continually learning how to learn together".

– Should provide for both "slack innovation" which takes place only when the need for innovation is created, and also for "distress innovation“ which occurs in a crisis situation.

Page 69: Managing Innovation and Technology

Innovation in the Organization• Management Innovation

– Strategies like 'Kaizen', which propagates continuous improvement in all units in all areas of operation and 'continuous risk-taking‘ are interesting variations of measures aimed at creating such an environment.

– It is also essential for the top management to be closely involved in such measures to ensure that concerned personnel feel sufficiently motivated and resources deployed are effectively utilized. Top management also needs to identify a vision that each employee in the organization can identify oneself with.

– In respect of internal organizational linkages to promote innovation, management styles need be introduced depending upon several factors like the size, history, culture, field of operation.

– Importantly, integration between the various functional departments whether they relate to technology, development or marketing; should be achieved.

Page 70: Managing Innovation and Technology

Innovation Process

Idea Genera

tion

Opportunity

Recognition

Development

Commercia

lisation

Idea Evaluation

•Will the idea work?•Does the team have know-how to make it work?•Does the idea represent value for customers?•Is the idea congruous with company strategy?•Is the idea cost effective?

Page 71: Managing Innovation and Technology

Process of Innovation•The Innovation process can be depicted as a series of funnels each getting progressively smaller. •Typically sixty ideas into the top funnel only produces just one innovation. •The funnels are labeled as the four phases in the process - idea generation, idea screening, feasibility and implementation.

Page 72: Managing Innovation and Technology

10 ways to invent winning products10 ways to invent winning products

Hartmunt Essilinger’s innovation lessons

1 Respect Usability A love for users and focus on usability is a timeless formula for success

2 Doing good is good business

If it isn’t somehow good for the world, it’s not going to be good for business

3 Invest wisely in Innovation Innovation is dependant on wise investment. Innovators need to learn how to get it, and how to spend it

4 Resources + Talent + Luck Innovation is equal parts resources, talent and luck

5 Foster a creative culture Don’t just create innovative products. Create a corporate culture of innovation. Wrap your people and process in it

Page 73: Managing Innovation and Technology

10 ways to invent winning products10 ways to invent winning products

Hartmunt Essilinger’s innovation lessons

6 Strategy comes before design

Lead with strategy. Support with design. As businesses adapt to meet new market needs and opportunities, strategy must lead, design must contribute

7 Pay attention to detail Obsess about details. The world’s best brands have customer base that will settle for nothing less than the best

8 Predict the future Anticipate what’s next. Work with the present to design the future

9 Balance passion and business goals

Designers must think like business people and create like artists. They must understand the business model, its goals, and its financial capabilities, limitations and expectations

10 Understand how products live

Think beyond a product or service. Envision how it lives – at home, at work, in people’s minds

Page 74: Managing Innovation and Technology

Commitment from top

inter-unit communication

Resourcesavailability

Organic Structures

Structural Factors to Foster

Innovation

Page 75: Managing Innovation and Technology

Characteristics of

Innovative Organization

Tolerance of the impractical

Tolerance of risk

Focus on ends

Open systems focus

Acceptance of ambiguity

Tolerance of conflict

Low external control

Page 76: Managing Innovation and Technology

Organizational Characteristics that Support Creativity and Innovation

• Risk taking is acceptable to management• Employees have access to knowledge sources• Innovators are rewarded• New ideas and new ways of doing things are

welcomed• Information is free flowing• Good ideas are supported by executive

patrons

Page 77: Managing Innovation and Technology

Organizational Characteristics that Facilitate Innovation Process

Organizational requirement CharacteristicsGrowth orientation A commitment to long-term growth rather than short-term profitVigilance The ability of the organization to be aware of its threats and

opportunities

Commitment to technology The willingness to invest in the long-term development of technology

Acceptance of risks The willingness to include risky opportunities in a balanced portfolio

Cross-functional co-operation Mutual respect among individuals and a willingness to work together across functions

Receptivity The ability to be aware of, to identify and to take effective advantage of externally developed technology

Slack An ability to manage the innovation dilemma and provide room for creativity

Adaptability A readiness to accept changeDiverse range of skills A combination of specialization and diversity of knowledge and

skills

Page 78: Managing Innovation and Technology

How to be an Innovative Organization

• Create a Strategic Vision• Establish Innovation as a Priority• Create Organizational Structures that Promote

Collaboration• Establish Processes to Convert Ideas to Innovations• Allocate Resources• Train Workforce on Creativity Tools• Measure & Communicate Results• Recognize Creative Behavior• Reward Innovative Results

Page 79: Managing Innovation and Technology

How to be an Innovative Organization

• Innovative, Entrepreneurial Culture– Positive attitude toward change– Decentralized decision making– Complexity– Informal structure– Interconnectedness– Organizational slack– System openness

Page 80: Managing Innovation and Technology

Propagating a Virtuous Circle of Innovation

Organization’s reputation for innovation

Attraction of creative people

Organizational encouragement of

creativity and innovation

Development of innovative products

Willingness to accept new ideas

Motivates people and reduces frustration

High morale and retention of creative people

Page 81: Managing Innovation and Technology

How to generate an overall enthusiasm for innovative behavior and risk taking?

• One way is to include innovation in corporation’s mission statement:

– At&T: We believe innovation is engine that keep us vital and growing….

– Gillette: We will invest in and master the key technologies vital to category success.

– Hallmark: We believe that creativity and quality – in our concept, products and services – are essential to our success.

Page 82: Managing Innovation and Technology

Stages of Innovativeness

1. Background – random problem-solving, occasional winners, no strategic impact

2. Structured – formal problem-solving process, training, idea management and reward system

3. Goal-oriented – bottom-line impact, formal strategic goals, measuring performance

4. Proactive – empowered staff to internally directed innovation, high levels of experimentation

5. Strategic – dominant culture, systematic problem approach, all levels of organisation involved

Page 83: Managing Innovation and Technology

Barriers to Innovation• Regard new ideas with suspicion• Enforce cumbersome approval mechanisms• Pit departments & individuals against each other• Express criticism without praise• Treat problem identification as a sign of failure• Control everything carefully• Plan reorganisation in secret• Keep tight control over information• Delegate unpleasant duties to inferiors• Assume you know everything about the business

Page 84: Managing Innovation and Technology

Ways to Kill Good Ideas1. It’s against company policy.2. It doesn’t fit the system.3. It will never be approved.4. The timing just isn’t right.5. Anyone else tried it?6. It didn’t work before.7. It’s too wild.8. We’re not ready for that. 9. Costs too much / Isn’t in the budget.10. Will not work in our department/ company/ industry.11. I will think about it, put it in writing and get back to me.12. Let’s form a committee.

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Key individual roles within the Innovation process

Key Individual Role

Technical Innovator Expert in 1 or 2 fields. Generates new ideas and sees new and different ways of doing things. Also referred to as the ‘mad scientist’.

Technical / Commercial Scanner

Acquires vast amount of information from outside the organization, often through networking. This may include market and technical information

Gatekeeper Keeps informed of related developments that occur outside the organization through journals, conferences, colleagues and other companies, and passes it on to colleagues. Serves as an information resource for others in organization.

Product Champion Sells new ideas to others in the organization. Acquires resources. Aggressive in championing his or her cause. Takes risks.

Project Leader Provides the team with leadership and motivation. Plans and organizes the project. Ensures that administrative requirements are met. Provides necessary co-ordination among team members. Sees that the project moves forward effectively. Balances project goals with organizational needs.

Sponsor Provides access to power base within the organization, a senior person. Buffers project team from unnecessary organizational constraints. Helps project team to get what it needs from other parts of the organization. Provides legitimacy and organizational confidence in the project.

Page 87: Managing Innovation and Technology

Traits of an Innovation Leader

• Create an external focus– define success in market terms

• Be a clear thinker– simplify strategy into specific actions, make decisions and

communicate priorities• Have imagination and courage

– take risks on people and ideas• Energize teams through inclusiveness

– connect with people, build both loyalty and commitment• Develop expertise in a function or domain

– use depth as a source of confidence to drive change

Page 88: Managing Innovation and Technology

Enhancing Organizational Creativity

• Right organizational environment can encourage people to develop & cultivate them

• Ensuring that workers have the FREEDOM and the INCENTIVE to be creative is one of the best ways to achieve innovation

Page 89: Managing Innovation and Technology

Enhancing Organizational Creativity

• The leader's job is not only to be the source of ideas but to encourage and champion ideas.

• Leaders must tap the imagination of employees at all ranks and ask inspiring questions.

• They also need to help their organizations incorporate diverse perspectives, which spur creative insights, and facilitate creative collaboration by, for instance, harnessing new technologies.

Page 90: Managing Innovation and Technology

Enhancing Organizational Creativity

• Drawing on the Right Minds– The first priority of leadership is to engage the

right people, at the right times, to the right degree in creative work.

• Expecting Creativity– One of the best ways to communicate the

expectation of creativity is to give employees permission to be creative

Page 91: Managing Innovation and Technology

Enhancing Organizational Creativity

• Encouraging Curiosity– Entrepreneurs and their employees constantly

should ask “what if…” questions and to take a “maybe we could…” attitude

– Doing so breaks out the assumptions that limit creativity

• Tolerance of Failure– Creativity requires chances and managers must

remove employees’ fear of failure

Page 92: Managing Innovation and Technology

Enhancing Organizational Creativity

• Viewing Problems as Challenges– Every problem offers the opportunity for INNOVATION– Instead of the Entrepreneur fix all the problems, let the

employees take part in finding the solutions (empowerment)• Providing Creativity Training

– Everyone has the capacity to be creative, but developing that creativity requires training

– Training: books, seminars, workshops, professional meetings

– helps everyone learn to tap their creativity

Page 93: Managing Innovation and Technology

Enhancing Organizational Creativity

• Providing Support– Entrepreneurs must give employees the tools and the

resources they need to be creative– Entrepreneurs should remember that creativity often

requires nonwork phases, and allowing employees time to “daydream”

• Rewarding Creativity– Encourage creativity by rewarding it when it occurs– Financial rewards– Non-monetary – more powerful

Page 94: Managing Innovation and Technology

Enhancing Organizational Creativity

• Enhance diversity– Get people with different backgrounds and expertise to work

together.– Encourage individuals to gain diverse experiences that will

increase their creativity.– Open up the organization to outside creative contributors.

• Modeling Creative Behavior– Creativity is “caught” as much as it is “taught”– Entrepreneurs set examples of creative behavior, taking

chances, and challenging the status quo, will soon find their employees doing the same

Page 95: Managing Innovation and Technology

Corporate Entrepreneurship

• “Intrapreneurship”• Internal innovation or venturing• Transformation of organizations• Strategic renewal

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Designs for Corporate Entrepreneurship

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Challenges of Innovation

• Deciding the merits of innovative ideas– Seeds – likely to bear fruit– Weeds – should be cast aside

• Dilemma • Some innovation projects require considerable

level of investment before merit can be determined

Seeds versus weeds

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Challenges of Innovation

Deciding who will lead an innovation projectSenior managers

Have experience and credibilityTend to be more risk averse

Midlevel employeesMay be the innovators themselvesMay have more enthusiasm

Experience versus initiative

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Challenges of Innovation

Innovation projects need competent staffs to succeedPeople drawn from inside the firm

May have greater social capitalKnow the organization’s culture and routines May not be able to think outside the box

People drawn from outside the firmAre costly to recruit, hire, trainMay have difficulty building relationships

Internal versus external staffing

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Challenges of Innovation

Innovation projects often require building new sets of skillsFirms can seek help

Other departmentsPartner with other companies that bring

resources and experiencePartnerships

Create dependencies and inhibit internal skills development

Sharing benefits of innovation may create conflict

Building capabilities versus

collaborating

Page 101: Managing Innovation and Technology

Collaborating with Innovation Partners

Innovation often requires collaborating with others who possess complementary knowledge and skills

Partners can come from several sourcesOther personnel within the departmentPersonnel within the firm but from another

departmentPartners outside the firmNon-business sources, including research

universities and the federal government

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Open Innovation Drives Creativity • Open Innovation means looking outside your

organization for partners, suppliers and customers for new and innovative ideas

• Open innovation has also been stimulated by decreasing time frames during which companies can command premium prices from proprietary technologies.

• As activities that relate to innovation become increasingly global and open and so draw the public and private sectors into complex networks of partnerships, these activities also tend to concentrate where the ecosystem is most supportive.

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Challenges of Innovation

Companies must manage the timing and scale of new innovation projectsIncremental launch

Less riskyRequires few resourcesServes as a market testCan undermine the project’s credibility if too

tentativeLarge-scale launch

Requires more resourcesCan effectively preempt a competitive

response

Incremental versus preemptive launch

Page 104: Managing Innovation and Technology

Managing the Pace of Innovation

Firms need to regulate the pace of innovationIncremental innovation

May be six months to two yearsMay use a milestone approach driven by

goals and deadlinesRadical innovation

Typically long term – 10 years or moreOften involves open-ended experimentation

and time-consuming mistakesStrict timelines unrealistic