INOVATION PROCESS

Innovation Process

Systems Innovation

Searching and scanning –looking for threats and opportunities for change within and outside of the organisation.

Technological opportunity

Changing requirements on the part of the market

Filtering and Selecting – deciding (strategically from how the enterprise can develop and taking into account risk) what to respond to.

Flow of opportunities

Current technological competence

Fit with the current organizational competence

Fit with how we want to change

 

Acquiring the technical, financial & market resources

Implement – turn potential ideas into a new product or service, a change in process.

Acquiring – to combine new and existing knowledge (available within and outside the organization) to offer a solution to the problem

Executing – to turn knowledge into a developed innovation and a prepared market ready for final launch

Launching – to manage the initial adoption

Sustaining – to manage the long term use

Reviewing & learning from experience

Scanning the external environment:

identify, segment & exploit lead customers

identify, segment & involve key suppliers

explicit criteria for selecting alliance partners

clear objectives & guidelines for licensing & out-sourcing

involve all relevant parties e.g. financial & regulatory

use formal exploratory techniques to identify future trends

Lead users can be critical. These typically:

Recognize requirements early - are ahead of the market in identifying and planning for new requirements.

Expect high level of benefits - due to their market position and complementary assets.

Develop their own innovations and applications - have sufficient sophistication to identify and capabilities to contribute to development of the innovation.

Perceived to be pioneering and innovative - by themselves and their peer group.

Why universities commercialize technology:

No existing company is ready or able to take on the project on a licensing basis;

invention consists of a portfolio of products, or is an “enabling technology”;

inventors have a strong preference for forming a company;

income - changes in funding & IPR law;

technological opportunity

But, successful commercialization still rare:

•highly concentrated in a small number of elite universities - top 20 account for 70%;

•a very small number of key patents account for most of licensing income, the 5 most successful patents typically account for 70-90% of total;

•suggests that a (rare) combination of research excellence & critical mass is required.

 

Selecting & filtering the opportunities for innovation:

Strategic e.g. ‘fit’

Capabilities e.g. relatedness

Commercial e.g opportunity & competition

Risk/Reward e.g. probability, scale

Financial e.g. NPV, option value

Resourcing

Resourcing the chosen innovations:

Scope of innovation – internal versus external resources

Structure of project – e.g. alliances, joint ventures, licensing 

Implementing

Implementing the innovation:

Functional integration & group structure

Roles of suppliers, users & other stakeholders

Timing & degree of involvement

Project management

Supporting tools & techniques

Innovation & Context

These are generic stages, but differences in organization

sector, size, activity, etc. shape the way in which this works in

practice

Variation on Themes

1.Innovation and service

2.The extended enterprise

3.What about profit

4.Size matters

5.Project-based organizations

6.Networks and systems

7.Variations in national, regional and local context

8.Do better / do different

 

Problems of partial models

How we think about something shapes what we do about it. So if

our mental models of innovation are too simplistic and linear we

risk only organizing and managing to fit that kind of model.

Examples of such ‘partial thinking ‘here include:

• Seeing innovation as a linear ‘technology push’ process (in which case all the attention goes into funding R&D with little input from users) or one in which the market can be relied upon to pull through innovation.

• Seeing innovation simply in terms of major ‘breakthroughs’ — and ignoring the significant potential of incremental innovation.

• Seeing innovation as a single isolated change rather than as part of a wider system (effectively restricting innovation to component level rather than see-ing the bigger potential of architectural changes).

• Seeing innovation as product or process only, without recognizing the inter-relationship between the two

 

Can we manage innovation?

The majority of failures are due to some weakness in the way the innovation process is managed.

Technical resources (people, equipment, knowledge, money, etc.)

Capabilities in the organization to manage them

Organizational routines or capabilities are “the way we do things around here (in this organization)” as a result of repetition and reinforcement

Routines are firm-specific and must be learned.

“To manage” innovation means to create an organisation where routines can be learned as to cope with the complexity and uncertainty of the innovation process

Unlearning is important

Evidence suggests that firms learn to handle the innovation process in systematic fashion and develop – largely through trial and error – ‘routines’ for dealing with it.

Routines & Innovation

What are organizational routines (Nelson & Winter, 1982)?

Regular & predictable

Collective, social & tacit

Guide cognition, behaviour & performance

Promise to bridge (economic & cognition) theory & (management & organizational) practices

“the way we do things around here”

Can promote or prohibit innovation

Capturing Benefits & Learning

Characteristics of a learning organization:

Knowledge management & IPR

Experimentation & structured reflection;

Challenges & multiple perspectives;

Formal processes & documentation;

Measurement & targets;

Display & dissemination of results;

Emphasis on training & development.

 

Groups of Firms - Capability

Type A: unaware about the need for innovation. They lack the ability to recognize the need for change in what may be a hostile environment and where technological and market know-how is vital to survival.

Type B: recognize the challenge of change but are unclear about how to go about the process in the most effective fashion. Because their internal resources are limited and they often lack key skills and experience, they tend to react to external threats and possibilities, but are unable to shape and exploit events to their advantage.

Type C: have a well-developed sense of the need for change and are highly capable in implementing new projects and take a strategic approach to the process of continuous innovation. They have a clear idea of priorities as to what has to be done, when and by whom, and also have a strong internal capabilities in both technical and managerial areas and can implement changes with skills and speed.

Type D: operate at the international knowledge frontier and take a creative and proactive approach to exploiting technological and market knowledge for competitive advantage and do so via extensive and diverse networks.

Measuring successful innovation

 

Innovative firms have to be strategic focus – “balance scorecard” and consider the time perspective

Success relates to the overall innovation process and its ability to contribute consistently to growth.

New products, processes and services account for  an increasing share of sales

Lower prices, better-performing products, better features for certain users (niche)

½ of resources devoted to the development of new products go to unsuccessful projects

35% of products launched fail commercially

What factors make for innovation success in your view?

 

Encouragement and empowerment

Positive reinforcement of behaviours

Driven through large-scale programmes of change

Golilocks resources – not too much, not too little

Top management commitment

Sufficient slack time to allow idea generation, experimentation, etc

An integral part of the strategy

A culture for cooperation and networking

A good mix of people and differing skills

Willingness to learn and make mistakes

etc

Key contextual influences

 

The strategic context of innovation: How far is there a clear understanding of the ways in which the innovation will take the organization forward? And is this made explicit, shared and bought into by the rest of the organization.

The innovativeness of the organization: How far do the structure and systems support and motivate innovative behaviour? Is there a sense of support for creativity and risk taking, can people communicate across boundaries, is there a climate conducive to innovation?