Innovation within firms

1 Slide 3.3

Lecture 2

Managing innovation within firms

Chapters 3 & 4

Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008 Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008

Slide 3.2 Slide 3.4

Management of innovation within firms

1. Introduction
2. The dilemma of innovation
3. Managing uncertainty
4. Organisations and innovation
5. Organisational characteristics that facilitate the
innovation process
6. The role of the individual
7. Establishing a creative environment
8. Summary and recap


5 Slide 3.7

Some firms have built a Managing uncertainty
reputation for being innovative
High
• Long-term success is associated with innovation
• Science or technology-based companies often associated
with innovation Uncertainty 3. Applications 1. Exploratory
about
• 3M, Microsoft, Pfizer are regarded as examples of output
engineering research

innovative companies
• The role of research and development (R&D) (Siemens)? 4. Combining
• Can you acquire technology from outside? market
opportunities 2. Development
engineering
• The role of “prior knowledge” with technical
capabilities
£3.7billion!
Low High
Uncertainty about process


Slide 3.6 Slide 3.8

EXTERNAL INPUTS:
The innovation dilemma: Managing the Organisations and macro factors; diversification;

tension between the need for creativity innovation competition; costs and input
prices;
profit; political influences.
and efficiency growth;
Organisation and
business strategy Innovation
Organisation management
organisation‟s framework
The efficient The development knowledge base
day-to-day of new products accumulates
operations and services knowledge
Creativity gains

over
Efficiency gains

within an requires creativity
EXTERNAL INPUTS: time EXTERNAL INPUTS:
organisation and room to try
scientific and technological societal needs;
require stable out new ideas.
development; competitors;
routines. This This is usually
competitors; supplier partnerships;
is usually achieved in a
suppliers; distributors;
achieved in loose and flexible
customers; customers;
stable and environment.
university departments. strategic alliances.
controlled
environments.

New products
Source: Trott, 1998


9 Slide 3.11

Firm-related factors:
Organisational heritage
Experience Product-related factors:
R&D team Relative price
Strategy towards Relative quality
innovation Uniqueness
Organisational structure Technologically advanced
R&D intensity
Innovation stimulus
Leadership Innovation capacity Innovation performance
Successful
People management Technology management Product innovation Technological Commercial
marketable
Knowledge management R&D management Process innovation viability product viability
Creativity management
Market-related factors:
Concentration of
Project-related factors: Target market
Complementarity Timing of market entry
Management style Competitive pressure
Top management support Marketing

Innovation stimulus, capacity and performance Critical factors for innovative success
Source: Prajogo and Ahmed (2006)


Slide 3.10 Slide 3.12

Steps toward innovation Framework category Measurement area
Inputs People
Physical and financial resources
Tools

• Create environment that stimulates innovation Knowledge management Idea generation
Knowledge repository

• Build innovation capacity using technology Innovation strategy
Information flows
Strategic orientation
Strategic leadership
and HR resources, project management, and Organisation and culture Culture
risk management Portfolio management
Structure
Risk/return balance

• Manage performance of firm-related factors, Project management
Optimisation tool use
Project efficiency
Tools
project-related factors, product-related factors Communications
Collaborations
and market-related factors (Fig 3.4) Commercialisation Market research
Market testing
Marketing and sales

Innovation management measurement areas
Source: (Adams et al., 2006)


13 Slide 3.15

Organisational characteristics that Key individual roles within the
facilitate the innovation process innovation process
Organisational Characterised by • Technical innovator
requirement
• Technical/commercial scanner
1 Growth orientation A commitment to long-term growth rather than • Gatekeeper
short-term profit.
2 Vigilance The ability of the organisation to be aware of • Product champion
its threats and opportunities. • Project leader
3 Commitment to The willingness to invest in the long-term
technology development of technology. • Sponsor
4 Assemble knowledge The ability to assemble knowledge into business
opportunities.
5 Acceptance of risks The willingness to include risky opportunities in
a balanced portfolio.



Organisational characteristics that IT Systems - advantages
facilitate the innovation process (Continued)
• Enterprise Resource Planning ERP employed
Organisational Characterised by by all major organisations
requirement
• Provides accurate and timely imformation
6 Cross-functional
cooperation
Mutual respect amongst individuals and a
willingness to work together across functions.
• Makes business processes more efficient and
7 Receptivity The ability to be aware of, to identify and to take effective
effective advantage of externally developed
technology. • Better coordination and control
8 „Slack‟ An ability to manage the innovation dilemma and
provide room for creativity.
• Better communication within parts of firms
9 Adaptability A readiness to accept change. • Better communication between partners in
10 Diverse range of skills A combination of specialisation and diversity of
knowledge and skills.
channel


17 Slide 3.19

ERP - Disadvantages
• Emphasises standardisation
• May not foster creativity
• Informal processes and tacit knowledge gives
way to a culture of control and accountability
• Makes risk-taking and experimentation
becomes less desirable
• Standardised systems generally lack
inspiration



Propagating a virtuous cycle of innovation

The organisation‟s
reputation for innovation

High morale and
retention of creative people
Attraction of
creative people
Motivates people
within the organisation Organisational
and reduces frustration encouragement of
creativity and innovation

A willingness within Development of
the organisation to innovative products
accept new ideas


21 Slide 3.23

The functional links A good innovative design

• Meets customer requirements
• Is simple to make
• Can be rapidly developed into production
Operation Marketing
s • Few modifications are required during the
development phase
Research and
development



Ideas generation Design for manufacturing
Internal sources External sources • If a product is easy to make, it will be
economical
Customer needs Marketing Surveys to produce
analysis
• It is important to consider the
Research departments Customer suggestions
manufacturability early in the design phase
Suggestions from staff Competitors • Integrate product design with process
planning
and design
Concept generation


25 Slide 3.27

Design simplification Awards
PRODUCTS DESIGN

• Malcolm Baldridge
• Demming
• ISO 9000
• EFQM

Assembly One-piece Push and snap
using base and in assembly
common elimination of
fasteners fasteners


Product process types Excellence model
PROCESSES
ENABLERS RESULTS
High Project
Jobbing People
People
Results
Batch
Variety

Key
Policy & Customer Performance
Mass Leadership
Strategy
Processes
Results Results

Continuous Partnerships Society
& Resources Results
Low
Low Volume High INNOVATION AND LEARNING

EFQM, 1999. The Model is a registered trademark of the EFQM
THE MOST APPROPRIATE METHOD (PARTICULARLY IN
COST TERMS) CHANGES WITH TIME


29 Slide 3.31

What is self assessment? NHS2 Why innovate?
• Self-assessment is a comprehensive,
systematic and regular review of an “This Government formally committed the NHS to
organisation’s activities and results against a becoming an innovative organisation when it
‘continuous improvement model’. published the NHS plan back in 2000.”
Lord Warner, Parliamentary Under-Secretary of State in the Lords, April 2004
Source: EFQM (2003) EFQM Excellence Model

• The process allows the organisation to discern “As the NHS is a service, driven first and foremost
clearly its strengths and areas for by science and scientific advances, innovation
improvement should be a natural part of our business.”
Rt Hon John Hutton MP, Minister of State (Health), June 2004
and culminates in planned improvement
action plans which are then monitored for
progress.


NHS1 Innovation NHS3 General

• Introducing into practice new ideas (or ideas new to you) • NHS Direct
which lead to improvements in efficiency, effectiveness – Telephone
or better value for money – Online
– Sky TV
• Intellectual property (IP) includes services, systems devices,
diagnostics, consumables and therapeutics • Care in the community
• NHS Plus
• Innovative staff let down by: – Workplace health care (self-funding)
– Not capturing their ideas • Patient choice
– Wasting assets by not implementing them – Choose and book
– Resistance to innovative ideas for service development, drugs and • Walk-in centres and treatment centres
products from other health care systems and health care industries in – Run by commercial companies on behalf of NHS
the UK and internationally


33 Slide 3.35

LA1 Making improvements
Customer feedback
Survey results
Website

New ideas and
innovation

Staff feedback
Workshops Influence of other Councils/best Practice
Competitions Legislation, Government Requirements
Newsletters Need to lead by example
Management support for ideas

Full senior management
support


LA2 Actions already undertaken

Innovation outputs : (Resulting from staff suggestions)

• Installed timers on the water coolers, vending machines to reduce
energy use out of working hours
• Fitted new Building management system that allows for automatic
switching on and off, dependant upon weather and time of day.
• Now replacing all new plant with versions that can be operated with
our new building management system.
• New lighting using triphosphorus. These last longer and use less
electricity.
• Newsletters with helpful hints.


37 Slide 3.39



Illustration DELL
• Mass customisation
• SCM good links with flexible vendors
• Background in telemarketing
• Customer knowledge leading to ‘premier
pages’ that have saved Ford $2m
• High reliability: Dell has received awards for
performance
• Delivery support 24/7
• Adaptive business strategy by moving up the
value chain
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
• Concentrating on what customers wanted

41

Conclusions

• Whilst you might not be directly involved in
R&D you will be involved in innovation.


Innovation within firms

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