Innovation Management Innovation Management:: An Introduction

Slide 1.
Part 1
Innovation management
Chapter 1
Innovation management:
an introduction
Trott, Innovation Management and New Product Development, 5th Edition, © Pearson Education Limited 2013
Slide 1.2
Slide 1.3
The importance of innovation

• Corporations must be able to adapt and evolve if they wish to
survive. Businesses operate with the knowledge that their
competitors will, certainly, come to the market with a product
that changes the basis of competition.
• The ability to change and adapt is essential to survival. But can
firms manage innovation? The answer is certainly yes, as Bill
Gates confirmed in 2008:
“The share price is not something we control. We control
innovation, sales and profits”
• A scientist’s view of innovation may be very different from that
of an accountant in the same organisation.
Slide 1.4
The importance of innovation (Cont…)

• The Apple Inc. story puts into context the subject of innovation and new product
development. In this case, Apple’s launch of a new product in the mobile phone
market will help Apple generate increases in revenue and grow the firm. Innovation
is at the heart of many companies’ activities. But to what extent is this true of all
businesses? And why are some businesses more innovative than others?
• What is meant by innovation? And can it be managed? These are questions that
needs to be addressed.
• ‘not to innovate is to die’, wrote Christopher Freeman (1982) in his famous study of
the economics of innovation. Certainly, companies that have established
themselves as technical and market leaders have shown an ability to develop
successful new products.
• In virtually every industry, from aerospace to pharmaceuticals and from motor cars
to computers, the dominant companies have demonstrated an ability to innovate.
Slide 1.5
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
Slide 1.6
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
Slide 1.7
Definition of innovation
• 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.
• Innovation is the process and outcome of creating
something new, which is also of value.
Slide 1.8
Some innovations
• Product innovation
– A good or service that is new or significantly improved. This includes
significant improvements in technical specifications, components and
materials, software in the product, user friendliness or other functional
characteristics.
• Process innovation
– A new or significantly improved production or delivery method. This includes
significant changes in techniques, equipment and/or software.
• Marketing innovation
– A new marketing method involving significant changes in product design or
packaging, product placement, product promotion or pricing.
• Organisational innovation
– A new organisational method in business practices, workplace organisation
or external relations.
Slide 1.9
Some innovations (Cont…)

• Technological innovations
– based on specific technology, invention, discovery,
• Social innovations
– in critical historic periods more important than technological ones (mail,
educational systém, social systém, health care, …)
Slide 1.10
Types of Innovation
• Incremental Innovation, is the most common form of
innovation. It utilizes your existing technology and increases
value to the customer (features, design changes, etc.) within your
existing market. Almost all companies engage in incremental
innovation in one form or another. E.g. Indoor Lighting, Cocacola
• Disruptive innovation, involves applying new technology or
processes to your company’s current market. Apple’s iPhone
disruption of the mobile phone market. Prior to the iPhone, most
popular phones relied on buttons, keypads or scroll wheels for
user input. Netflix is a classic example of disruptive
innovation that used a new business model and technology to
disrupt an existing market.
Slide 1.11
Types of Innovation (Cont…)

• Architectural innovation is simply taking the lessons, skills and
overall technology and applying them within a different
market. This innovation is amazing at increasing new customers
as long as the new market is receptive. Most of the time, the risk
involved in architectural innovation is low due to the reliance and
reintroduction of proven technology.
• Architectural innovation refers to the innovation of an architecture
of any product that changes or modifies the way various
components of the systems link or relate to each other. The
different components of the system can be changed within the
improved architecture (lighter weight, the smaller form factor, etc.);
however, the main technologies at a component level remain
unmodified. E.g Digital Photocopier Machines, Multi-core
Processor
Slide 1.12
Types of Innovation (Cont…)

• Radical innovation is what we think of mostly
when considering innovation. It gives birth to new
industries (or swallows existing ones) and involves
creating revolutionary technology. The airplane, for
example, was not the first mode of transportation,
but it is revolutionary as it allowed commercialized
air travel to develop and prosper.
Slide 1.13
Slide 1.14
Indeed, the industrial revolution of the nineteenth century was fuelled by

technological innovations (see Table 1.3). Technological innovations have
also been an important component in the progress of human societies.
Nineteenth-century economic development fuelled by technological

Table 1.3
innovations
Slide 1.15
Overview of the innovation process

Figure 1.1
This overview of the innovation process includes an economic perspective, a business
management strategy perspective and organisational behaviour, which attempts to
look at the internal activities. It also recognises that firms form relationships with other
firms and trade, compete and cooperate with each other. It further recognises that the
activities of individuals within the firm also affect the process of innovation.
Slide 1.16
In previous centuries it was easier in many ways to mobilise the resources necessary to
develop and commercialise a product, largely because the resources required were, in
comparison, minimal. Today, however, the resources required, in terms of knowledge,
skills, money and market experience, mean that significant innovations are synonymous
with organisations. Indeed, it is worthy of note that more recent innovations and
scientific developments, such as significant discoveries like mobile phones or computer
software and hardware developments, are associated with organisations rather than
individuals.
Table 1.4 Twentieth-century technological innovations

Slide 1.17
Figure 1.2 The interaction between development activities and design environment
Slide 1.18
Table 1.5 A typology of innovations
Slide 1.19
Figure 1.4 Conceptual framework of innovation
Slide 1.20
It is assumed that scientists make unexpected discoveries, technologists apply them to develop
product ideas and engineers and designers turn them into prototypes for testing. It is left to
manufacturing to devise ways of producing the products efficiently. Finally, marketing and sales
will promote the product to the potential consumer.
The customer need-driven model emphasises the role of marketing as an

initiator of new ideas resulting from close interactions with customers.
Model is explaining that where the initial motivation for innovation was born, that
is, where the trigger for the idea or need was initiated.
Figure 1.5 Linear models of innovation

Slide 1.21
The simultaneous coupling model shown in Figure 1.6 suggests that it is the
result of the simultaneous coupling of the knowledge within all three functions that
will foster innovation.
Figure 1.6 The simultaneous coupling model
Slide 1.22
Interactive model of innovation (links together the technology-push and

Figure 1.7
market-pull models)
Source: Adapted from R. Rothwell and W. Zegveld (1985) Reindustrialisation and Technology, Longman, London.
Slide 1.23
Table 1.6 The chronological development of models of innovation
Slide 1.24
What makes some firms more innovative than others
The fact is coming up with an idea is the least important part of creating something
great. The execution and delivery are what’s key.
(Sergey Brin, Co-founder of Google, quoted in The Guardian (2009))
Table 1.7 Explanations for innovative capability
Slide 1.25
Table 1.8 Studies of innovation management
Slide 1.26
The innovation circle with interconnected cycles (shows that the

Figure 1.9
combination of change and entrepreneurship is the basis of new business)
Source: Berkhout et al. (2010).
Slide 1.27
Figure 1.10 The rise and fall and rise of Apple
Slide 1.28
Slide 1.29
Figure 1.11 The future handheld device will probably incorporate many separate
devices
Slide 1.30
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Slide 1.

The importance of innovation

The importance of innovation (Cont…)

• Systematic collection of all impulses that

Some innovations (Cont…)

Types of Innovation (Cont…)

Types of Innovation (Cont…)

Indeed, the industrial revolution of the nineteenth century was fuelled by

Nineteenth-century economic development fuelled by technological

Overview of the innovation process

Table 1.4 Twentieth-century technological innovations

Table 1.5 A typology of innovations

Figure 1.4 Conceptual framework of innovation

The customer need-driven model emphasises the role of marketing as an

Figure 1.5 Linear models of innovation

Figure 1.6 The simultaneous coupling model

Interactive model of innovation (links together the technology-push and

Table 1.6 The chronological development of models of innovation

What makes some firms more innovative than others

(Sergey Brin, Co-founder of Google, quoted in The Guardian (2009))

Table 1.7 Explanations for innovative capability

Table 1.8 Studies of innovation management

The innovation circle with interconnected cycles (shows that the

Figure 1.10 The rise and fall and rise of Apple

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