Week 6 Innovation Process Managing Innovation

Outline Firms & Innovation Innovation as a management process

Innovation as a management process Innovation & Innovation management: The process of creating and implementing a business design surrounding a creative idea, with the goal of transforming an invention into an innovation, and ultimately to achieving sustained competitive advantage, leading to growth and profit, in the marketplace. https://www.youtube.com/watch?v=oD7X3KvJAVk https://www.youtube.com/watch?v=1mw_Uo5ba58

Influences on the process Innovation needs: Strategy; Innovative organization; Proactive linkages; Learning and improvement loop.

Firm size and innovation

Core abilities in innovation

© 2013 John Wiley & Sons Ltd. www.innovation-portal.info

Innovation as a management process

© 2013 John Wiley & Sons Ltd. www.innovation-portal.info Innovation Process Generic phases of the innovation process: Searching & scanning the internal & external environments Filtering & selecting potential opportunities acquiring the technical, financial & market resources implementing development & commercialisation reviewing & learning from experience © 2013 John Wiley & Sons Ltd. www.innovation-portal.info

Key stages in the process Searching for trigger ideas. Selecting from the possibilities the one we are going to follow through. Acquiring the resources to make it happen. Developing the idea from initial ‘gleam in the eye’ to a fully-developed reality. Managing its diffusion and take up in our chosen market. Capturing value from the process.

© 2013 John Wiley & Sons Ltd. www.innovation-portal.info Innovation Process 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 © 2013 John Wiley & Sons Ltd. www.innovation-portal.info

© 2013 John Wiley & Sons Ltd. www.innovation-portal.info Searching 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. © 2013 John Wiley & Sons Ltd. www.innovation-portal.info

© 2013 John Wiley & Sons Ltd. www.innovation-portal.info Searching 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 © 2013 John Wiley & Sons Ltd. www.innovation-portal.info

© 2013 John Wiley & Sons Ltd. www.innovation-portal.info Searching 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. © 2013 John Wiley & Sons Ltd. www.innovation-portal.info

Different versions of the core process model For a start-up entrepreneur the ‘search’ stage is often called ‘opportunity recognition’ – but once they have spotted something they think they can exploit the challenge is of making it happen. They have to acquire resources making various pitches to get backing and buy-in. Then they have to develop the venture and finally launch it into their chosen marketplace and capture the rewards and also the learning to allow them to do it again.

Different versions of the process model (continued) For a new product development team in a company it is about searching for ideas (maybe in the R&D lab, maybe via customer survey, maybe some combination of both). Then they have to secure internal resources – pitching for backing against other competing projects form different teams. Then they manage the development process, bringing the product through various stages of prototyping and simultaneously developing the market and launch plans. Finally launch and, hopefully, widespread adoption – and capturing the gains in commercial terms but also in terms of what has been learned for next time.

Different versions of the process model (continued) For a public service team in a hospital the search may be for more efficient ways of delivering the service under resource constraints. Once again an individual or team has to convince others and secure resources and the permission to explore, they have to develop it and then diffuse it as a new method to an internal market of people in the service who will adopt the new way. And once again they capture value, in terms of efficiency improvement but also in learning.

Different versions of the core model (continued) For the social entrepreneur it is about finding a trigger need, then developing and sharing a vision around how to meet that need better. Securing support and buy in is followed by development, implementation and hopefully widespread adoption – and the value is captured in social improvements as well as learning.

© 2013 John Wiley & Sons Ltd. www.innovation-portal.info

© 2013 John Wiley & Sons Ltd. www.innovation-portal.info Innovation Process 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 © 2013 John Wiley & Sons Ltd. www.innovation-portal.info

© 2013 John Wiley & Sons Ltd. www.innovation-portal.info Innovation Process Resourcing the chosen innovations: Scope of innovation – internal versus external resources Structure of project – e.g. alliances, joint ventures, licensing © 2013 John Wiley & Sons Ltd. www.innovation-portal.info

© 2013 John Wiley & Sons Ltd. www.innovation-portal.info Innovation Process Implementing the innovation: Functional integration & group structure Roles of suppliers, users & other stakeholders Timing & degree of involvement Project management Supporting tools & techniques © 2013 John Wiley & Sons Ltd. www.innovation-portal.info

© 2013 John Wiley & Sons Ltd. www.innovation-portal.info

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. © 2013 John Wiley & Sons Ltd. www.innovation-portal.info

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