INNOVATION MANAGEMENT

Contents
• Innovation vs Invention

• Types of Innovation

• Innovation Strategies

• Innovation Models

• Concurrent Engineering

• Process Innovation

• Economics of Innovation

• Innovation Management
WHAT IS INNOVATION?

Innovation refers to both the

output and the process of arriving
at a technologically feasible
solution to a problem triggered by
a technological opportunity or
customer’s need
INNOVATION

Innovation takes place through the

interaction of three intermingled factors
or forces i.e.

1.What technology is available to

produce

2.Whether that technology is viable in

the marketplace

3.What features or services are desired

by consumers
INNOVATION
Innovation and Invention
• Invention is a new technology either physically or conceptually. It’s
the core idea
• Innovation is when the invention becomes economically successful.
It’s the exploited version of that idea
All innovations are inventions but not vice versa
Why Innovate?
Types of Innovation

Minor
change

Component
knowledge

Novel
change

Existing Novel
component configuration
Types of Innovation

• Product & Process Innovation

• Open & Closed Innovation
• Incremental & Radical Innovation
• Modular and Architectural Innovation
Types of Innovation:

• Product & Process Innovation

Types of Innovation

• Open & Closed Innovation

PROJECT CONCEPT MARKET

START FROZEN INTRODUCTION

Concept
Implementation
Development

Closed Model For Innovation

PROJECT CONCEPT
START FROZEN
Concept MARKET
Development INTRODUCTION

Implementation

Open Model For Innovation

Types of Innovation

Modular
Innovation
Steam Engine Fuel Engine
Change in
of Car of Car
Component
Technology
Types of Innovation

Improving inherent processes/inputs

to achieve higher output
Types of Innovation

Architectural
Innovation
Change in
Product Structure
Architectural Innovation and Competition:
Xerox Case
• Xerox was confronted with competitors offering copiers that were smaller and
more reliable
• These were based upon the same core technologies that Xerox had pioneered
and, thus, required little new scientific or engineering knowledge on the part
of the company
• Xerox seemed unable to reconfigure these technologies into a viable product
until well after the competition had gained significant lead.
• Thus, in the case of small copiers, the emergence of an architectural innovation
changed the face of industry completion in two ways:
▫ It allowed new entrants with no previous position in the industry to gain
solid market holds in a short period of time
▫ It provided the conditions that forced the undisputed industry leader,
Xerox, to fall to a position best described as that of a “slow follower”
Types of Innovation

Displacing Existing
Technology
Innovation Occurs at Three Levels

Govt. Policies &

NATIONAL LEVEL support

Enterprise
ENTERPRISE LEVEL policies, support
& initiatives

Individual &
INDIVIDUAL LEVEL group
innovation
activities
Innovation Strategies: Factors
Organization Structure

Direct Managed
High New Ventures
Integration Contracting

Medium New Products New Ventures Contracting

Operational
Relatedness Independent
Low Strategic B.U. Spin Off
B.U.

High Medium Low

Strategic Importance
Innovation Strategies
Innovation Models
Drucker’S Model of Innovation

Innovation Process
Drucker’s Model
1 2
Drucker’s Model
3 4
Linear/Pipeline/Ladder/Bucket Model Approach

Each level produces output that are

transferred as inputs for next level
R&D Model Explains Link Between Knowledge &
Economic Performance
Criticism Of Linear Model
• It diverts attention from the social & economic determinants of
scientific research activity.
• It neglects the non scientific origins of many technological
developments.
• It creates barrier to innovations.
• It is an expensive model since R & D needs a lot of infrastructure.
Innovation is much Broader than R&D
• R & D concentrates on product development, aims at introducing
genuine invention with major or radical innovations.
• Innovation requires the coupling of the technical and economic know-
how to align
▫ Activities in the market + R & D+ production functions
Difference between R&D and Innovation
• Reported formal R & D expenditures are only a part of the innovation
related outlays made by firms

• Formal R & D not effected by alliances and relationships of power

between agencies & firms

Research sparks innovation but does not initiate it

Innovation passes through a design stage , market need appreciation &

then commercialization
Non Linear Model: Stephen Kline’s Chain –
Linked Model
• It emphasizes the social-cultural-technical nature of innovation in
context to industry & technology

• The first path of innovation process , central chain of-innovation,

begins with DESIGN & continues through DEVELOPMENT &
PRODUCTION to MARKETING

• The second path is a series of feedbacks

Chain-Linked models

RESEARCH

SECOND Existing corpus of knowledge

PATH

Invent/
Detailed
Potential produce Redesign & Distribute &
design &
Market analytic procedure market
test
design

FIRST PATH
The Two Phases
Innovation process at firm’s level

• The innovation chain is visualized as a path starting with the

perception of a new market opportunity and/or a new science &
technology- based invention

• Feedback relations are generated : short feedback loops link each

downstream phase in the central chain with the phase immediately
preceding it and longer feedback loops link perceived market demand
and product users with phase upstream

• Problems identified by the processes of designing and testing new

products and new processes often spawn research engineering
disciplines & also in sciences.
The Two Phases
Industry focused process of innovation

• Innovation takes place with the help of available knowledge.

when corporate engineers confront a problem in technical innovation,
they will call first on known science & technology e.g. automobile
industry

• Only when those sources of information fail to provide adequate

information the industry goes in for R & D in the innovation process .
Firms below a certain size cannot bear the cost of an R & D team.
Ralf Gomory’s Circle Model

Two Phases
1 2

Cyclic development
The Ladder Process Process

Relationship of science &

New things come from science-
step by step into practice
Scientists play dominant role in
basic research & early phases
technology-repeated,
continuous incremental
improvement
Later stages on already
commercial products
The Holistic Model
Alic-Branscomb’s Model
• Innovation is a social process
 Application of knowledge & other inputs to design, develop,
create& market products

• D&D: Design and Development

• Results from artful combination of new with old

Henderson-Clark Model
Process Innovation
• It is an approach in business process reengineering by which radical
changes are made through innovations

• Business Process Reengineering

▫ A methodology for process improvement comprising a study of the
"As-Is" state of the process and then the development and
implementation of process changes, leading to the "To-Be" state of
the process, together with policy changes, organizational structure
changes and a variety of other "interventions"
Business Process Reengineering
Concurrent Engineering
• Concurrent Engineering is defined as a systematic approach to the
concurrent design of products and their related processes, including
manufacture and support
• The goal of Concurrent Engineering is to improve the interactive work
of different disciplines affecting a product
• The concurrent engineering environment is a conceptual arena created
by any or all technologies enabling collaborating efforts in the
building process
Concurrent Engineering
Concurrent Engineering vs Traditional
Engineering Process
Benefits of Concurrent Engineering
Concurrent Engineering Relies On
• Carrying out the product development activities simultaneously in the
areas of: product planning, design, process planning and
manufacturing
• Team work within special created multidisciplinary task force team
which consists usually of:
▫ Designers
▫ Process planners
▫ Marketing specialists
▫ Supply manager
▫ Finance specialist
▫ Main suppliers of manufacturing equipment
▫ Suppliers of key components of the product
Innovation Drives Customer Delight
Innovation Management
• Innovation management emerged as a discipline in the 1890s with
Edison’s innovation factory
• Edison changed the image of the sole inventor by converting innovation
to a process with recognized steps practiced by a team of inventors
working together – laying the basic design of the R&D department
• These steps are streamlined to the major extent in all industries and
include idea generation, concept development, feasibility studies,
product development, market testing and launch
• Innovation management is thus corresponds to the development of new
products, processes and services
• In cases where the organization does not make or offer products (goods
or services), innovation lies in improving the way jobs are done to meet
the organization’s mission (i.e. process innovation)
Innovation Management
Why Innovation Management?
• The high demand for innovation in the knowledge economy – brought
about by shorter technology and product life cycles as well as the
sophistication of customers – increased the organizational demand for
new ideas
• This meant two things:
1. Innovation has to be pushed down to the frontline where
knowledge of the customer is and where the number of ideas
generated are greater
2. It meant that top management has to adopt appropriate
innovation strategies to lead the surge of the innovative activity
Why Innovation Management?
• As a result innovation needed to be systemized as a business process
into the way that the organization does business – and hence the need
for innovation management
• Only organizations that liberate the innovative spirit of their
employees, tap into the knowledge of their customers and partners,
and manage innovation projects as a portfolio are able to reduce time
to market with successful products
▫ Examples of such companies are HP, 3M and Procter and Gamble
Organizational Process for Innovation
Management
Goals of Innovation Management
• Effect a shift in the way the organization sees itself where innovation is
recognized as the way of doing business

• Deciding upon the innovation strategy that best fits the organization’s
situation, and enable it attain its vision

• Creating a portfolio of innovation projects to translate competitive strategies

and to manage risk across the whole organization

• Define a criteria for the selection and prioritization of projects within the
portfolio to weed out less probable projects as soon as possible

• Effect the necessary structural changes to arrange skills throughout the

organization in competence centers, to enable the formation of the right team
for the purposes of the innovation project.
Requirements for Innovation Management
Requirements for Innovation Management
Thank You !