Paul Trott, Innovation Management and New Product Development, 4 th Edition, © Pearson Education Limited 2008 Slide 1.1 Chapter 1 Innovation management: an introduction

Paul Trott, Innovation Management and New Product Development, 4 th Edition, © Pearson Education Limited 2008 Slide Introduction 2. Product and process innovations 3. Typology of innovations 4. Different schools of thought 5. Models of understanding of innovation management 6. Implications for developing products and services 7. Summary and review Theories and models of innovation management

Paul Trott, Innovation Management and New Product Development, 4 th Edition, © Pearson Education Limited 2008 Slide 1.3 Innovation management is not exclusively associated with products New ways of doing business in service sector Innovation management involves change, particularly technological change Sometimes this involves product, service and process changes The level of change is an important dimension Introduction

Paul Trott, Innovation Management and New Product Development, 4 th Edition, © Pearson Education Limited 2008 Slide 1.4 Pfizer’s Sildenfil – aka Viagra: The fastest selling human drug Gore Associates’ Gore-Tex: the versatile polymer polytetrafluoroethylene (PTFE) Dyson’s vacuum cleaner: Revolutionised a very stable mature industry Product technology advantages

Paul Trott, Innovation Management and New Product Development, 4 th Edition, © Pearson Education Limited 2008 Slide 1.5 Enterprise Resource Planning (ERP) business software; virtually all large firms have installed it. SAP, Oracle, Baan and PeopleSoft. SAP has over 20,000 products installed worldwide and Oracle has installed databases in nearly every one of the world’s top 500 companies. Moreover, it has changed the way they work (Gartner, 2002). Process technologies

Paul Trott, Innovation Management and New Product Development, 4 th Edition, © Pearson Education Limited 2008 Slide 1.6 Type of innovationExample Product innovationThe development of a new or improved product Process innovationThe development of a new manufacturing process such as Pilkington’s float glass process Organisational innovationA new venture division, a new internal communication system; Management innovationTQM (total quality management) systems, BPR (business process re-engineering); introduction of SAPR3 Production innovationsQuality circles, JIT manufacturing system, new production planning software, e.g. MRP II, new inspection system Commercial/marketing innovationsNew financing arrangements, new sales approach, e.g. direct marketing Service innovationsebay; Internet banking, etc. Typology of innovations

Paul Trott, Innovation Management and New Product Development, 4 th Edition, © Pearson Education Limited 2008 Slide 1.7 The lone inventor/mad professor. But, such views lead to misunderstanding. Science does not equal innovation. Innovation is much more than science, e.g. scientific discoveries pre-date commercial products by many years. Popular view of innovation:

Paul Trott, Innovation Management and New Product Development, 4 th Edition, © Pearson Education Limited 2008 Slide Market-based view of innovation; market conditions provide the context which facilitate or constrain the extent of firm innovation activity (Slater & Narver, 1994; Porter, 1980, 1985). 2.Resource-based view of the firm; a firm’s own resources provide a much more stable context in which to develop its innovation activity, and to shape its markets in accordance to its own view (Tidd et al., 2001; Shavinina, L.V. (ed.) (2003); Patel, P. and Pavitt, K. 2000). 3.Serendipity Innovation is all due to luck and good fortune Three key schools of thought:

Paul Trott, Innovation Management and New Product Development, 4 th Edition, © Pearson Education Limited 2008 Slide 1.9 Table showing the chronological development of models of innovation

Paul Trott, Innovation Management and New Product Development, 4 th Edition, © Pearson Education Limited 2008 Slide 1.10 Research and development Manufacturing Marketing User Technology push Research and development ManufacturingMarketing User Market pull Linear models of innovation management

Paul Trott, Innovation Management and New Product Development, 4 th Edition, © Pearson Education Limited 2008 Slide 1.11 Manufacturing Marketing Research and development Coupling model of innovation management

Paul Trott, Innovation Management and New Product Development, 4 th Edition, © Pearson Education Limited 2008 Slide 1.12 Science and technology base Needs of the market developments Technological Creation of new knowledge dominated by universities and large science-based organisations Technology development- dominated by organisations the consumption of products Consumers express their needs and wants through Conceptual framework

Paul Trott, Innovation Management and New Product Development, 4 th Edition, © Pearson Education Limited 2008 Slide 1.13 EXTERNAL INPUTS: societal needs; competitors; supplier partnerships; distributors; customers; strategic alliances. EXTERNAL INPUTS: scientific and technological development; competitors; suppliers; customers; university departments. Organisation and business strategy Marketing EXTERNAL INPUTS: macro factors ROI costs; competition. Organisation’s knowledge base accumulates knowledge over time Research and technology Innovation management framework New products Source: Trott, 2005

Paul Trott, Innovation Management and New Product Development, 4 th Edition, © Pearson Education Limited 2008 Slide 1.14 Innovative firmExplanation for innovative capability AppleInnovative chief executive GoogleScientific freedom for employees SamsungSpeed of product development Procter & GambleUtilisation of external sources of technology IBMShare patents with collaborators BMWDesign StarbucksIn-depth understanding of customers and their cultures ToyotaClose co-operation with suppliers Explanations for innovative capability

Paul Trott, Innovation Management and New Product Development, 4 th Edition, © Pearson Education Limited 2008 Slide 1.15 Role of the market is important Role of technology is important It’s a cross functional process Role of external linkages and networks are important Skills and knowledge are acquired over time and firms develop competencies Useful references: Patel, P. and Pavitt, K. (2000) ‘How technological competencies help define the core (not the boundaries) of the firm’, in Dosi, G., Nelson, R. and Winter, S. G. (eds) The Nature and Dynamics of Organisational Capabilities, Oxford University Press, Oxford. Shavinina, L.V. ( ed.) (2003) The international handbook on Innovation, Pergamon, Oxford. Tidd, J., Bessant, J. and Pavitt, K. (2001) Managing Innovation, 2nd edn, John Wiley & Sons, Chichester. Implications for developing products and services

Paul Trott, Innovation Management and New Product Development, 4 th Edition, © Pearson Education Limited 2008 Slide 1.16 Any questions? Thanks for listening I hope you enjoy the unit.

Paul Trott, Innovation Management and New Product Development, 4 th Edition, © Pearson Education Limited 2008 Slide 1.17 Chapter 3 Managing innovation within firms

Paul Trott, Innovation Management and New Product Development, 4 th Edition, © Pearson Education Limited 2008 Slide 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 Management of innovation within firms

Paul Trott, Innovation Management and New Product Development, 4 th Edition, © Pearson Education Limited 2008 Slide 1.19 Long-term success is associated with innovation Science or technology-based companies often associated with innovation 3M, Microsoft, Pfizer are regarded as examples of innovative companies The role of research and development (R&D) (Siemens)? Can you acquire technology from outside? The role of “prior knowledge” £3.7billion! Some firms have built a reputation for being innovative

Paul Trott, Innovation Management and New Product Development, 4 th Edition, © Pearson Education Limited 2008 Slide 1.20 Organisation The efficient day-to-day operations within an organisation require stable routines. This is usually achieved in stable and controlled environments. The development of new products and services requires creativity and room to try out new ideas. This is usually achieved in a loose and flexible environment. Efficiency gains Creativity gains The innovation dilemma: Managing the tension between the need for creativity and efficiency

Paul Trott, Innovation Management and New Product Development, 4 th Edition, © Pearson Education Limited 2008 Slide Applications engineering 4. Combining market opportunities with technical capabilities 1. Exploratory research 2. Development engineering Low High Uncertainty about output Uncertainty about process Managing uncertainty

Paul Trott, Innovation Management and New Product Development, 4 th Edition, © Pearson Education Limited 2008 Slide 1.22 EXTERNAL INPUTS: societal needs; competitors; supplier partnerships; distributors; customers; strategic alliances. EXTERNAL INPUTS: scientific and technological development; competitors; suppliers; customers; university departments. Organisation and business strategy Marketing EXTERNAL INPUTS: macro factors; diversification; competition; costs and input prices; profit; political influences. growth; organisation’s knowledge base accumulates knowledge over time Research and technology New products Source: Trott, 1998 Organisations and innovation Innovation management framework

Paul Trott, Innovation Management and New Product Development, 4 th Edition, © Pearson Education Limited 2008 Slide 1.23 Innovation stimulus Leadership People management Knowledge management Creativity management Innovation capacity Technology management R&D management Innovation performance Product innovation Process innovation Innovation stimulus, capacity and performance Source: Prajogo and Ahmed (2006)

Paul Trott, Innovation Management and New Product Development, 4 th Edition, © Pearson Education Limited 2008 Slide 1.24 Firm-related factors: Organisational heritage Experience R&D team Strategy towards innovation Organisational structure R&D intensity Project-related factors: Complementarity Management style Top management support Product-related factors: Relative price Relative quality Uniqueness Technologically advanced Market-related factors: Concentration of Target market Timing of market entry Competitive pressure Marketing Technological viability Commercial viability Successful marketable product Critical factors for innovative success

Paul Trott, Innovation Management and New Product Development, 4 th Edition, © Pearson Education Limited 2008 Slide 1.25 Framework categoryMeasurement area InputsPeople Physical and financial resources Tools Knowledge managementIdea generation Knowledge repository Information flows Innovation strategyStrategic orientation Strategic leadership Organisation and cultureCulture Structure Portfolio managementRisk/return balance Optimisation tool use Project managementProject efficiency Tools Communications Collaborations CommercialisationMarket research Market testing Marketing and sales Innovation management measurement areas Source: (Adams et al., 2006)

Paul Trott, Innovation Management and New Product Development, 4 th Edition, © Pearson Education Limited 2008 Slide 1.26 Organisational Characterised by requirement 1 Growth orientation A commitment to long-term growth rather than short-term profit. 2 VigilanceThe ability of the organisation to be aware of its threats and opportunities. 3 Commitment to The willingness to invest in the long-term technology development of technology. 4 Assemble knowledgeThe ability to assemble knowledge into business opportunities. 5 Acceptance of risksThe willingness to include risky opportunities in a balanced portfolio. Organisational characteristics that facilitate the innovation process

Paul Trott, Innovation Management and New Product Development, 4 th Edition, © Pearson Education Limited 2008 Slide 1.27 Organisational Characterised by requirement 6 Cross-functional Mutual respect amongst individuals and a cooperationwillingness to work together across functions. 7 ReceptivityThe ability to be aware of, to identify and to take effective advantage of externally developed technology. 8 ‘Slack’An ability to manage the innovation dilemma and provide room for creativity. 9 AdaptabilityA readiness to accept change. 10 Diverse range of skillsA combination of specialisation and diversity of knowledge and skills. Organisational characteristics that facilitate the innovation process (Continued)

Paul Trott, Innovation Management and New Product Development, 4 th Edition, © Pearson Education Limited 2008 Slide 1.28 Technical innovator Technical/commercial scanner Gatekeeper Product champion Project leader Sponsor Key individual roles within the innovation process

Paul Trott, Innovation Management and New Product Development, 4 th Edition, © Pearson Education Limited 2008 Slide 1.29 The organisation’s reputation for innovation Attraction of creative people Organisational encouragement of creativity and innovation Development of innovative products A willingness within the organisation to accept new ideas Motivates people within the organisation and reduces frustration High morale and retention of creative people Propagating a virtuous cycle of innovation

Paul Trott, Innovation Management and New Product Development, 4 th Edition, © Pearson Education Limited 2008 Slide 1.30 Any questions? Thanks for listening.