Lebanese University

Faculty of Business & Economics

New Product Development

2nd Semester 2022-2023

Dr. Ziad F. Haddad

 Part One

Chapter 4:
•Managing Innovation
within Firms
 Chapter’s Objectives

• Identify the factors organizations have to manage to achieve

success in innovation;
• Explain the dilemma facing all organizations concerning the
need for creativity and stability;
• Recognize the difficulties of managing uncertainty;
• Identify the activities performed by key individuals in the
management of innovation; and
• Recognize the relationship between the activities performed and
the organizational environment in promoting innovation.
 Innovation Management
Within virtually all organizations, there is a fundamental tension
between the need for stability and the need for creativity. On the
one hand, companies require stability and static routines to
accomplish daily tasks efficiently and quickly. This enables the
organization to compete today.
The efficient day-to-day operations within an organization require
stable routines. This is usually achieved in stable and controlled
environments.
On the other hand, companies also need to develop new ideas
and new products to be competitive in the future. Hence they
need to nurture a creative environment where ideas can be tested
and developed.
The development of new products and services requires creativity
and room to try out new ideas. This is usually achieved in a loose
and flexible environment.
 Dynamic Capabilities
How do firms escape from the innovation dilemma?
Organizational capabilities offers insight into the different
resources and environment necessary for developing incremental
and radical innovations.
Incremental innovation reinforces the capabilities of established
organizations, while radical innovation forces them to ask a new
set of questions, to draw on new technical and commercial skills,
and to employ new problem-solving approaches.
The impact of this on the nature of innovation activities is that, as
the organization learns and increases its efficiency, subsequent
innovation is increasingly incremental.
Another constraint on innovation that can arise from this is a shift
to simply meeting existing customer needs.
Dynamic capabilities implement the change of old routines with
new ones.
Managing Uncertainty
 Managing Innovation Projects:
Matrix of Complexity of Architectural/component knowledge
 Managing Innovation Projects
Technological knowledge is divided into two dimensions:
knowledge of the components and knowledge of the
linkage between them, which they called architectural
knowledge.
Technology development could be a Radical innovation,
only if it revolutionizes both component and architectural
knowledge.
Incremental innovation will build upon existing
component and architectural knowledge.
Modular innovation will require new knowledge for one
or more components, but the architectural knowledge
remains unchanged.
Architectural innovation will have a great impact upon
the linkage of components, the knowledge of single
components will remain the same.
Two-dimensional Typology of Innovation Projects
Innovation stimulus, capacity and performance
There is a strong relationship between innovation stimulus,
innovation capacity and innovation performance
•Innovation stimulus
•Leadership
•People management
•Knowledge management
•Creativity management
•Innovation capacity
•Technology management
•R&D management
•Innovation performance
•Product innovation
•Process innovation
Critical Factors for Innovation Success
Innovation Management Measurement Areas
Organizational Characteristics Facilitating Innovation
 Cross-Functional Cooperation
Interdepartmental conflict is a major barrier to innovation.
Cross functional coordination is needed across all operating
departments including the R&D.
some conflict is desirable, probably acting as a motivational force.
The ability to confront and resolve frustration and conflict is
required.
Most technology-based innovations involve a combination of
several different technologies. businesses are witnessing an
increasing number of joint ventures and alliances often with
former competitors.
Creativity is a major factor.
 IT and Innovation
The impact of large IT systems on firms and the way they operate has been
one of the most noticeable changes within organizations of the late 1990s and
early twenty-first century.
Enterprise resource planning (ERP) business software has become one of the
most successful products in the world. Some benefits of implementing ERP are:
 more efficient business processes;
 reduction of costs to several business procedures;
 better coordination between different departments;
 better management monitoring and controlling functions;
 modification and adaptation abilities accordingly to company and market
requirements;
 more competitive and efficient entrance to electronic markets and electronic
commerce;
 possible redesigning of ineffective business functions;
 access to globalization and integration to the global economy;
 inventory visibility and better decision support;
 active technology for market research and media environment; and
 improving communication between partners of the channel.
 Innovation Audit
Firms should undertake an innovation audit. The
purpose of which is to uncover areas of strengths and
weaknesses to see how to improve the firm’s
performance.

Innovation audit is a useful starting point for senior

managers to consider how best to improve and where to
invest resources.
NEXT…..

•Chapter Twelve:
•Business Models