Professional Documents
Culture Documents
Innovation Management
Innovation Management
MANAGEMENT
Jiří Vacek
vacekj@kip.zcu.cz
Department of Management, Innovations
and Projects
UWB, Faculty of Economics
Summer semester 2009/10
Lesson 1
Introduction
Basic concepts
Importance of innovations
CHARACTERISTICS OF SUCCESSFUL
INNOVATING COMPANIES - 1
• Systematic collection of all impulses that
could lead to innovation
• Creativity of employees
• Ability to evaluate the possibility of the
innovation idea
• Good team work
• Project-based approach and ability to
manage projects
CHARACTERISTICS OF SUCCESSFUL
INNOVATING COMPANIES - 2
• Cooperation with external experts
(universities, research laboratories…)
• Proper rate of risk-taking
• Employees’ motivation (the employees are
willing to improve the product and the
operation of the whole company)
• Continued education of employees
• Ability to finance the innovation activities
Definition of innovation - 1
• “Technological innovations are defined as new
products and processes and major technological
modifications to products and processes. An
innovation is considered performed if it is
introduced to the market (product innovation)
or implemented in the production process
(process innovation). Innovation includes
many research, technological, organizational,
financial and commercial activities.
Definition of innovation - 2
• R&D represents only one of these activities and
can take place during various stages of the
innovation process. It can play not only the role
of the original source of the innovation ideas but
also the role of problem solution framework,
which can be turned to at any stage of the
implementation.„
• Nursing-care products
• Nursing beds, bed accessories, bedside
cabinets, mattresses and other furniture.
No comment …
1990
2005
TOSHULIN
Development of new machines:
1. Customized – the machines developed
for the specific customer according to
its requirements – market pull
2. Prototypes – there is no specific
customer – market push
35
3 0 ,2 2
30 2 8 ,8
2 5 ,7
25 2 2 ,7
t i me of del i v er y (i n
20
mont hs )
1 4 ,9
15
12
1 0 ,7 1 0 ,8 cus t omi zat i on coeffi ci ent
10 8 ,5 8 ,8
9 ,6 9 ,5 9 ,6 9 ,4
8 ,3
9 ,5
(%)
6 ,8 6 ,9
0
1998 2000 2002 2004 2006
Types of design engineers
suggests designs examines all ideas elaborates efficient and performs routine
and problem and thoughts independently in reliable engineer; tasks
solutions without systematically details the ideas however, without
detailed which he gets to creative approach
consideration of all elaborate
possible results and
consequences
Connective
tissue
products
Customers in 43 countries
Sales in regions
3 pillars of success
http://www.3m.com/us/office/postit/pastpresent/history_ws.htm
l
More about 3M
http://solutions.3m.com/wps/portal/3M/en_US/Ab
out/3M/
iGO – distribution of bateries
• Bateries and accessories for notebooks,
mobiles, cameras and other equipment
• Vision: to develop and sell simple and elegant
solutions, facilitate the use of electronic
devices
• online catalogue, e-commerce, CRM
• Customer - targeted marketing, flexibility
• Growth of sales by 80% in the first year, by
100% in the following year
http://corporate.igo.com/about_us.aspx
Adaptors
• http://www.pbs.org/nbr/site/features/specia
l/subdir/top-30-innovations_slide-show/
Lesson 2
Winner is who gets the innovation to the To develop better business model is more
market first. important than to be the first in the market.
We will win if we develop most of the ideas We will win if we make best use of internal
(an the best of them). and external ideas.
We must have our intellectual property We must be able to profit from others using
under control so that our competitors can our intellectual property and we must
make advantage of it. license the intellectual property if it
supports our business model.
Closed innovation Open innovation
Examples: nuclear industry, Examples : PC, movies
mainframe computers
Universities are not important as the Universities are not important as the
sources of ideas sources of ideas and people
Business model
• Formulate value proposition, i.e. the value delivered
to the customer by the product based on specific
technology.
• Identify market segment, ie. users to whom the
technology brings value and performs the job to be
done.
• Define structure of the value chain, required for the
product creation and distribution. Value creation is
necessary, however not sufficient condition of
profitability; value creation is conditioned by:
– balance of forces among our business, suppliers and
competitors
– presence of complementary assets (e.g. in production,
distribution, etc.) necessary for supporting the company
position in the value chain.
Business model– cont´d
• Specify the mechanism of profit creation and
evaluate product cost structure and target
margin
• Describe the company position in the value
network that connects suppliers and
customers, including identification of potential
alternative producers and competitors.
• Formulate competitive strategy enabling to
the innovative company to gain and keep
competitive advantage.
Product architecture
Component Component
A B
Component
C
Interdependent Architecture
• changing one component requires
changes in all other parts of the system,
because the relationships between the
parts are not clearly understood
• can be best managed through internal
processes
Modular Architecture
System
Component Component
A B
Component
C
Modular Architecture
• components could change without causing any
change in other components
• modular design enables to assemble system
more easily, from “plug and play” components
whose interfaces are well understood
• modular architecture makes it easy for many
companies to innovate components without
worrying about possible impact on other parts of
the system
IMPLICATIONS FOR NPD
• extended circle of company stakeholders -
customers, NGOs, local and regional
governments
• not only superior quality, but also
environmentally friendly, aesthetically appealing
new products
• designed for X, where X can be quite large and
multi-faceted set
• after-sale service plays an increasing role –
and brings increased turnover and profit
Lesson 3
Assessment of company
innovation potential
COMPANY INNOVATION POTENTIAL
1. Employees satisfaction
2. Employees motivation
3. Management and communication
4. Conflict resolution
5. Company information system
6. Company culture
Innovation potential assessm ent
A
4,0 B
3,5
3,0 C
2,5
2,0 D
1,5 E
1,0
F
Innovation potential assessm ent
Strategy
4,0
3,0
People Marketing
2,0
1,0
Logistics Technology A
B
C
Quality D
E
F
Lesson 4
STRUCTURING THE NEW PRODUCT
DEVELOPMENT PROCESSES
DEVELOPMENT PROCESSES
The objectives of process models
Stage-gate process
• R. Cooper, 1960´s
• phases with inputs and outputs specified
beforehand
• gates, in which the gatekeepers decide
about the continuation of the process
• Activities were standardized and the
indicators of the process performance
significantly improved.
2-nd generation SG process
Evaluation criteria
• Operational, realistic, differentiating
• Must meet: to kill not well proceeding
projects as soon as possible
• Should meet: prioritization, support of
portfolio management
• Strategic buckets: resources allocated to
various strategic goals
Interdisciplinary view
Fuzzy Front End (FFE, FEI)
• quality of pre-development phases significantly
influence the product success
• early phases to a large extent influence, which
projects will be realized, why, what will be final
costs, time, and – in the end – the final success
in the market
• highly dynamic, not strictly documented,
creativity competes with systemization.
Phase 0
• results in product concept, including
preliminary identification of customer
requirements, market segments,
competitive position, business opportunity
and compliance with strategy
Incremental vs. radical innovations
• Koen: systematic approaches using process models can
be successful in the case of incremental innovations,
where both business and technical uncertainty is rather
low
• whenever at least one of those uncertainties is high, we
need more flexible approaches with iterations and
parallelization of activities
• successful radical innovations often use rapid or virtual
prototyping even in the 0-th or 1-st phase, as it allows
better visualization and communication of the product
concept.
New concept development model
• in the early phases it is not suitable to use the
same approaches as in the later, more
structured process phases
Difference Between FFE and NPD
Fuzzy Front End (FFE) New Product Development (NPD)
Commercialization
Unpredictable or uncertain. High degree of certainty.
Date
Market
pull
NCD components
• Engine: represents management support
• Engine powers the five elements of the
NCD model
• The engine and the five elements are
placed on top of the influencing factors.
Technology stage-gate process (TSG)
Stage 2
Gate 2 Product definition
Detailed evaluation
Stage 3
Gate 3 Development
Decision to develop
Stage 4
Gate 4 Testing
Decision to test
Stage 5
Gate 5 Commercialization EVALUATION
Decision to commercialize
Project feasibility
• The stage-gate model divides the innovation
process into five stages with gates, in which
evaluators decide if to continue or kill the project.
• Each phase has its cost, duration and probability
of success. Usually only the last stage generate
profits.
• To justify the project development cost, we
should prove at the very beginning its feasibility.
Traditionally we have to show that the project
net present value is greater than zero, i.e. that
the whole project, taking into account the time
value of the money, will generate net profit.
DCF methods
• The generally accepted method of evaluation of
investment, is based on discounted cash flows
(DCF).
• The method is successfully used for investment
projects with low level of uncertainty and
duration from several months up to few years.
• In many cases it is not suited to long-term NPD
and R&D projects, as it penalizes projects with
high risk and potentially valuable projects can be
rejected or terminated.
Weakness of DCF methods
• Do not take into account the typical nature of the
NPD and R&D projects that can be divided into
stages separated by gates, deciding about
project continuation or termination.
• Financial models assume that the decision about
the project realization is done at its very
beginning and is irreversible. However,
investments into NPD or R&D projects are
incremental and the evaluators at the gates
decides about the project fate on the basis of
changing situation.
Project Expected Commercial
Value (ECV)
• Takes into consideration all three important
characteristics of each phase – its cost, duration
and probability of success
• The project is modeled by the probability tree.
• The stage duration, together with the discount
rate, is reflected in the net present value
calculation.
• Illustration: project with only two stages –
development and commercialization
Success
pC
Success
YES PV
pd
Commercialization
YES C
Development
ECV D NO
NO Failure
Failure
= 37,5%
Stage x 0,706M
3 – Year 4 =
0,265M
NPV = $3,0 M
DCF = $1,907M
Stage 1 – Year 1
Cost = $0,5 M 12,5% x (-1,201M) =
DCF = -$0,446M 50% -0,150M
25% Stop
Weak decision points (broad Too many low value projects Too few stellar product
gates) Good projects are starved winners
Poor Go/Kill decisions Many ho hum launches
Probability of Probability of
technical commercial Development Commercializat
Project PV success success cost* ion cost* ECV
B 19,50 5,00
E 15,70 10,00
F 15,50 20,00
A 5,00 23,00
C 2,10 25,00
D 1,50 26,00
A 20% 10 5 80%
B 15% 2 2 70%
C 10% 5 3 90%
D 17% 12 2 65%
E 12% 20 4 90%
F 22% 6 1 85%
31.10.-1.11.2008 AEDS 2008 - Jiří Vacek, KIP FEK UWB 122
Project ranking
• Project ranking procedure is the following
– calculate adjusted values of IRR and NPV –
multiply them by PTS.
– rank projects according to adjusted values of
IRR and NPV and according to SI.
– calculate the average value of those three
rankings and use it for final ranking
A 16,0% 2 8 2 5 1 1,67 1
E 10,8% 4 18 1 4 2 2,33 2
70
OYSTERS PEARLS
60
50
40
reward
10
0
0,00% 10,00% 20,00% 30,00% 40,00% 50,00% 60,00% 70,00%
PTS
Innovation impulses
SOURCES OF INNOVATION IMPULSES
Internal environment
• Own R&D
• Technical divisions – design, technology
• Production divisions (production, provision of
services)
• Marketing and sales
• Logistics (purchase and supplies)
• Guarantee and post-guarantee service
• Owners
SOURCES OF INNOVATION IMPULSES
External environment
• Unexpected failure
• Unexpected external event
2. Contradiction
• Non-compliance with economic reality
• Contradiction between reality and
anticipations about it
• Contradiction between the anticipated and
real behavior of customers and their
values
3. Change of process
• realize the necessity of change, identify
the weak point of the chain
• be convinced that if something does not
work the way it should, then it is necessary
to attempt a change
• the solution must be convenient for those
who will implement it. It must place
moderate and feasible requirements
4. Change in the structure of
industry and market
• Rapid growth of the industry
• Identification of new market segments
• Convergence of technologies (e.g. use of
computers in telecommunications)
• Rapid change of the industry and resulting
need of a structural change
5. Demography
• easiest to describe and to predict
• influence what will be bought, who and in
which amounts will purchase
6. Change of attitudes
• change in the approach to health: health-
care, food, spending the leisure time
• “upper-middle class”: a chance to offer
non-standard services at non-standard
prices
• increasing migration, feminism,
regionalism etc
• Timing is essential - to be the first
7. New knowledge
• Based on convergence or synergy of various
kinds of knowledge, their success requires, high
rate of risk
– Thorough analysis of all factors. identify the “missing
elements” of the chain and possibilities of their
supplementing or substitution;
– Focus on winning the strategic position at the market.
the second chance usually does not come;
– Entrepreneurial management style. Quality is not
what is technically perfect but what adds the product
its value for the end user
IMPULSES FROM THE MARKET
ENVIRONMENT
• Customers
product presentation
– realistic
– simple, demonstrative and precise
– moderate
– representative sample of customers
• Suppliers
• Competitors
INNOVATION IMPULSES OF THE R&D
• REGISTER OF IMPULSES
Lesson 6
INNOMAT
http://www.inno-pro.com/aainn0.htm
General Innovation Tools
BENCHMARKING
BRAINSTORMING
REENGINEERING
CHANGE MANAGEMENT
Specific techniques useful at the different
change management process steps.
CHANGE MANAGEMENT STEP SPECIFIC TECHNIQUE
Making time time management techniques
Preparing a vision statement SWOT analysis
Identify what factors will hinder force field analysis
change
Selling the change internal marketing techniques
Developing a plan strategic planning techniques
Learning
Monitoring effectiveness
<>
„X“ - examples
Interrelationships
Technical Features
Voice of
the Relationship
between Customer Importance Assessment
Customer of Traits to of
Desired Traits and
Technical Features Customer Competition
Importance of
Technical Features
House of Quality:
Steps for Generation
ISO14000
refers to procedures for ensuring sustainable and
environmentally friendly operations
EIA – Environmental Impact Assessment
TOTAL PRODUCTIVE
MAINTENANCE
Process Innovation Tools
DESIGN FOR MANUFACTURING
AND ASSEMBLY (DFMA)
LEAN THINKING
CONTINUOUS IMPROVEMENT
CONCURRENT ENGINEERING
JUST IN TIME (JIT)
INNOSKILLS
FASTER
Lesson 7
CREATIVITY
BASICS & TECHNIQUES
Innovation and creativity
• creativity is manifested in the production of
a creative work (for example, a new work
of art or a scientific hypothesis) that is both
original and useful
• innovation begins with creative ideas,
– creativity by individuals and teams is a
starting point for innovation; the first is a
necessary but not sufficient condition for the
second
• creativity results:
– in producing or bringing about something
partly or wholly new;
– in investing an existing object with new
properties or characteristics;
– in imagining new possibilities that were not
conceived of before;
– and in seeing or performing something in a
manner different from what was thought
possible or normal previously.
• Many creative ideas are generated when
somebody discards preconceived
assumptions and decides on a new
approach or method that might seem to
others unthinkable
• Serendipity - effect by which one
accidentally discovers something
fortunate, especially while looking for
something else entirely
Quotations on serendipity
• "In the field of observation, chance favors only the prepared mind." Louis
Pasteur
• "Serendipity. Look for something, find something else, and realize that what
you've found is more suited to your needs than what you thought you were
looking for." Lawrence Block
• "The most exciting phrase to hear in science, the one that heralds new
discoveries, is not 'Eureka!', but 'That's funny …'" Isaac Asimov
• "In reality, serendipity accounts for one percent of the blessings we receive in
life, work and love. The other 99 percent is due to our efforts." Peter
McWilliams
• "Serendipity is looking in a haystack for a needle and discovering a farmer's
daughter." Julius Comroe Jr.
• "Serendipity is putting a quarter in the gumball machine and having three
pieces come rattling out instead of one—all red." Peter H. Reynolds
• "--- you don't reach Serendib by plotting a course for it. You have to set out in
good faith for elsewhere and lose your bearings ... serendipitously." John
Barth, The Last Voyage of Somebody the Sailor
• "Serendipity is the art of making an unsought finding." Pek van Andel (1994)
source: wikipedia
BASIC CONCEPTS
• Creative thinking represents a combination
of logic and intuitive approaches
• Being creative means dealing with the aspects
and possibilities of today and tomorrow
• That requires a person to be open to everything
new, do not stick to things that we are all used
to, do not adhere to yesterday so much
• Creativity does not mean dreaming, it means
productive managing of specific tasks.
• Only a creative approach to the problem solution
can be successful.
Creativity in organizations
• Amabile: to enhance creativity in business,
three components are needed:
– Expertise (technical, procedural & intellectual
knowledge),
– Creative thinking skills (how flexibly and imaginatively
people approach problems),
– and Motivation (especially intrinsic motivation).
• Nonaka: creativity and knowledge creation are
important to the success of organizations. In
particular, he emphasized the role that tacit
knowledge has to play in the creative process.
Creativity and economics
• Joseph Schumpeter: creative destruction - the way in
which old ways of doing things are endogenously
destroyed and replaced by the new.
• Paul Romer: the recombination of elements to produce
new technologies and products and, consequently,
economic growth. Creativity leads to capital, creative
products are protected by intellectual property laws.
• The creative class as important driver of modern
economies. Richard Florida in The Rise of the Creative
Class, 2002 popularized the notion that regions with "3
T's of economic development: Technology, Talent and
Tolerance" also have high concentrations of creative
professionals and tend to have a higher level of
economic development.
• Important aspect to understanding Entrepreneurship.
Stages of creative process
• Orientation: Need identification, intention to
create
• Preparation: Information collection, problem
formulation
• Incubation: seeking solution, evaluation of
variants, unconscious thinking
• Illumination (Eureka!): synthesis, creation of
ideas
• Realization: transformation of the idea into
reality
• Verification: evaluation, learning, improvement
Barriers to creativity - 1
• The value of getting things right time can induce a fear of
mistakes and experimentation.
• So can a blame culture where people become afraid of
making mistakes.
• Managers who are not as secure as they should be can
resist or block ideas that are not their own or which they
see as threatening.
• A culture that over emphasizes cost containment,
processes, consistency or efficiency.
• A reward system that too exclusively celebrates getting
things done fast with no mistakes.
• A general fear of risk taking, wanting to analyze
everything to death, to wait and see what others do in the
market before acting.
Barriers to creativity - 2
• A lack of explicit funding for experimentation.
• A strict requirement to demonstrate the value of an idea
before it has a chance to prove itself.
• A tendency to shoot down novel ideas as a way of
scoring points.
• An over allegiance to past successes, proven experience
and tried and tested methods.
• A suspicion of novelty, a fear of the unproven.
• A resistance to learning from mistakes or trial and error,
a tendency to blame external factors or other people for
failures rather than to learn from them.
• Short termism - a drive to meet short term financial goals
rather than to invest in the future.
Barriers to creativity - 3
• http://members.optusnet.com.au/~charles
57/Creative/Basics/obstacles.htm
CREATIVITY STIMULATION
• Keep in touch with creative people
• Accommodate the effort to the targets
• Evaluate and appreciate the effort
• Protect creative employees
• Leave them peace and time
• Provide them with security
• Tolerate failures
• Maintain creative atmosphere
• Evaluate the creative ideas quickly
• Be persistent - nothing comes for free
Fostering creativity
• Establishing purpose and intention
• Building basic skills
• Encouraging acquisitions of domain-specific
knowledge
• Stimulating and rewarding curiosity and exploration
• Building motivation, especially internal motivation
• Encouraging confidence and a willingness to take risks
• Focusing on mastery and self-competition
• Promoting supportable beliefs about creativity
• Providing opportunities for choice and discovery
• Developing self-management (metacognitive skills)
• Teaching techniques and strategies for facilitating
creative performance
• Providing balance
METHODS OF CREATIVE ACTIVITY
• http://www.mycoted.com/Category:Creativity_Techniques
Brain hemispheres
Left brain functions Right brain functions
sequential simultaneous
analytical holistic
verbal imagistic
logical intuitive
http://www.sciencenewsforkids.org/articles/20041027/PuzzleZone.asp
Dots and lines - generalization
• a three-dot-by-three-dot puzzle requires
four lines.
• a four-dot-by-four-dot puzzle requires six
lines,
• a five-dot-by-five-dot puzzle requires eight
lines, and
• an n-dot-by-n-dot puzzle requires 2(n – 1)
dots.
Puzzle Archive
• http://www.sciencenewsforkids.org/pages/
zonearchive.asp?type=1
Lesson 8
TEAM WORK
TEAM DEFINITION
• group of people whose individual
members share a common goal
• their expert skills and personal abilities are
complementary
• its members work activities and skills are
purposefully and smoothly linked together.
TEAM EFFECTIVENESS
• dynamic balance among
– Necessity to perform a joint task
– Individual needs of team members
– Necessity to maintain a team
• synergic effect: every member
– contributes to performance of the mutual task
– adopts specific roles necessary for the effective team
functioning.
– contributes to the satisfaction of the individual needs
of other team members
Successful team characteristics
• Team members identify themselves with the team
• There is relaxed, non-bureaucratic atmosphere, interest
in achieving joint goals, optimistic work mood.
• Tasks and goals are clear to all members and all identify
themselves with them. Differences in opinions are
accepted. Disputable points are discussed and a solution
is looked for.
• Communication is open, spontaneous, and fluent. Team
members are sincere to each other, listen to each other.
Criticism is constructive and it is not taken personally.
• Team management is of participative, eventually
consulting, character. Rules are clearly defined.
Unsuccessful team characteristics
• Team members do not identify themselves with team.
• Strained atmosphere, blocked communication is. Team
members hide their real feelings and opinions.
• Autocratic supervision, discussion about goals and tasks
not allowed.
• Diversity of opinions leads to conflicts. Disagreement is
not openly expressed; the decision is undermined.
• Personal issues are settled by means of criticism.
People gossip.
• The rules are not clearly defined.
Team structure and organization
• Formal: clearly visible, represents
distribution of work among the team
members in order to ensure performance
of certain functions.
• Informal: influences procedures, in which
things are actually done – prestige of
people, their influence, power, seniority,
ability to convince others play roles there.
TEAM DEVELOPMENT
Forming
Storming
Norming
Performing
Dissolving
ROLES IN THE TEAM
• Initiator • Observer
• Company employee • Team worker
• Chairman • Finisher
• Forming person • Orienting member
• Operational employee • Energy supplier
• Coordinator • Recorder
• Resource researcher • Harmonizer
Advantages and disadvantages
of team work
• (+) Mutual cooperation and support
• (?) teams often accept more risk than
individuals
• (+) can produce high quality ideas by
accepting the conflict and exploring
differences in the individual members’
opinions
Group cohesion
• (+) larger degree of cooperation, better
communication, higher resistance against
frustration, lower fluctuation and
absences, lower level of tolerance towards
lazy people
• (-) difficult for new members, limited
possibility to enforce new ideas, opposition
against changes in work procedures, often
overprotective against outsiders
Team forming by a manager
Manager On the way to rigidity On the way to teamwork
Defines Everything if possible Vision
Prefers Conformity Individuality, mutuality
Believes in Plan, task, control Trust, motivation climate
Views the problem As denial of his/ her As natural and necessary
solving by the team authority, waste of time
Communicates with team When they require it or need As much as possible
members it
Conflicts inside or outside Ignores them or solves them Opens them for team
the team him- or herself solving before they
become destructive
Understands group unity As a potential threat to his/ As necessity
her position
Anticipates People’s worries of Independence and
responsibility responsibility of people
Lesson 9
DECISION MAKING
DECISION PROCESS
1. Identify the problem
2. Specify objectives and decision criteria
3. Develop alternatives
4. Analyze and compare alternatives
5. Select the best alternative
6. Implement the chosen alternative
7. Monitor the results
REASONS FOR POOR DECISIONS
• Physical
• Schematic
• Mathematical
• Computer
USE OF MODELS
1. The purpose of the model
2. How to use model to generate results
3. How results are interpreted and used
4. What assumptions and limitations apply
advantages disadvantages
Fewer defectives Increase in costs
slipping through by
increasing inspections
SENSITIVITY ANALYSIS
How sensitive the solution is to a change
in one or more parameters
• UNCERTAINTY – it is impossible to
assess the likelihood of various possible
outcomes
DECISION THEORY
1. Identify possible future conditions – states of
nature
2. Develop a list of possible alternatives
3. Determine or estimate payoff associated with
each alternative for every possible state of
nature
4. Estimate the likelihood of every possible state
of nature (if possible)
5. Evaluate alternatives according to decision
criterion and select best alternative
PAYOFF TABLE
Small 10 10 10
Medium 7 12 12
Large -4 2 16
Decision making under certainty
Choose the alternative with the highest
payoff
Demand Highest payoff Best alternative
Low 10 small
Moderate 12 medium
High 16 large
Decision making under uncertainty
• Maximin – determine the worst possible payoff
for each alternative, and than choose the
alternative with the „best worst“
• Maximax – determine the best possible payoff,
and choose the alternative with this payoff
• Laplace - determine the average payoff for each
alternative, and choose the alternative with the
best average
• Minimax regret - determine the worst regret for
each alternative, and than choose the alternative
with the „best worst“
• Maximin: worst payoffs are
Alternative small medium large
Payoff 10 7 -4
regrets
Alternative low moderate high worst
Small 0 2 6 6
Medium 3 0 4 4
Large 14 10 0 14
The lowest regret is 4 – choose medium
Decision making under risk
• Expexted monetary value (EMV) criterion:
calculate expected value (EV) for each alternative
and select one with the highest EV
Alternative probability EV
Small 0,30 10
Medium 0,50 10.5
Large 0,20 3
10
8 y1
y2
6
y3
4 P
0
0 1 2 3 4 5 6 7 8 9 1 1 1
Lesson 10
CONFLICT RESOLUTION
Conflict management
• Conflict cannot always be avoided, but it can be
managed
• Sources of conflicts:
– Aggressive or conflict-prone personality
– Ambiguous or conflicting roles, interdependence
– Difference in objectives, values, perceptions
– Inadequate authority, oppressive management
– Inadequate resources
– Unsatisfactory communication
Conflict consequences
• Positive:
– Competition tends to enhance the general welfare, if
the conflict level is not too high
– Loyalty increases when people unite against a
common foe
– If problems are recognized, solutions may be
forthcoming
• Negative:
– Activities, not results, become important
– Attack individual rather than problem
– Blocked communication
– Need of strong leaders
Two-dimensional model of a conflict
Conflict resolution styles - 1
• Avoidance: no assertiveness, no cooperation –
problem solution postponed
• Accommodation: no assertiveness, cooperation –
give in
• Collaboration: assertiveness and cooperation
-problem solving, win-win
• Competition: assertiveness, no cooperation -win-
lose, adhere to rules, do not seek to harm the
other’s self-image, impulse to change and improve
the organization
• Authoritarianism: aggression, no cooperation
Conflict resolution styles - 2
• Smoothing: low assertion, low cooperation –
focus on similarities, seeks resolution, move
parties to a common goal
• Superordinate goals: increasing assertiveness,
increasing cooperation – attempt to find a
common set of objectives, forget the differences
• Bargaining (compromise): moderate assertion,
moderate cooperation – give-and-také, both
parties satisfy some of their needs
Lesson 11
COMPANY INNOVATION
CULTURE
• Behavior standards
• Key values
• Management and leadership style
• Roles
• Organizational structure and diversification
Influenced by:
• Organization’s strategy
• Organization’s system
• Level of cooperation between the individual organization
structures
• Employees’ abilities
Four types of company orientation
Organizations preferring
• power
• roles
• tasks
• human side of their processes and people
MANAGEMENT STYLES
shift from directive to participative style of
management
Note:
normal – individual
italic – organization and manager
Hierarchy of needs (A. Maslow)
1. Physiological needs – immediate survival,
food, shelter, clothing, bodily needs
2. Security needs – stability, protection, freedom
from fear, provisions for the future
3. Social needs – acceptance, affection,
affiliation, love, interaction
4. Esteem needs – self-esteem, esteem of
others, status, power, autonomy, competence,
prestige, recognition
5. Self actualization – achieving one’s full
potential, personal growth, creative fulfillment
Characteristics of peak performers
INNOVATION PROGRAMS
AND EDUCATION
Paradigm shifts
• Information and knowledge society
• Lifelong learning
• Lean companies, networking
COURSE CONCLUSION
TERM PAPER PRESENTATIONS
Adapt the knowledge to your culture, local
conditions, …
But at the same time, do not over-adapt, try
also to affect your environment
Good luck
COMPANY INNOVATION SYSTEM
• Company strategy
• Collection of innovation impulses
• Setting of priorities
• Looking for innovation ideas and their
discussion
• Feasibility study
• Decision about project preparation
• Project preparation
• Project implementation
• Monitoring of innovation performance
PROCESS MAP
MARKET Communication with customer
Idea CUSTOMER
Development
Production
Design
Design
modification
modification
Strategy
Strategy Product
Product Product
Product
according
according++
development
development development
development delivery
delivery
customer‘s
customer‘s
requirements
requirements