Innovation management: an introduction Chapter 1 Innovation management: an introduction

Theories and models of innovation management Introduction Product and process innovations Typology of innovations Different schools of thought Models of understanding of innovation management Implications for developing products and services Summary and review

Product technology advantages 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

Process technologies 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).

Typology of innovations Type of innovation Example Product innovation The development of a new or improved product Process innovation The development of a new manufacturing process such as Pilkington’s float glass process Organisational innovation A new venture division, a new internal communication system; Management innovation TQM (total quality management) systems, BPR (business process re-engineering); introduction of SAPR3 Production innovations Quality circles, JIT manufacturing system, new production planning software, e.g. MRP II, new inspection system Commercial/marketing innovations New financing arrangements, new sales approach, e.g. direct marketing Service innovations ebay; Internet banking, etc.

Popular view of innovation: 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.

Three key schools of thought: 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). 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). Serendipity Innovation is all due to luck and good fortune

Table showing the chronological development of models of innovation 195 0/60s Technology push Simple linear sequential process. Emphasis on R&D. The market is a receptacle for the fruits of R&D. 1970s Market-pull marketing. The market is the source for directing R&D. R&D has a reactive role. 1980s Coupling model Sequential, but with feedback loops. Combinations of push and pull. 1980/90s Interactive model Emphasis on integrating R&D and marketing. 1990 s/00 Network models Emphasis on external linkages

Linear models of innovation management

Coupling model of innovation management

Conceptual framework 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

Organisation’s knowledge base accumulates knowledge Innovation management framework EXTERNAL INPUTS: macro factors ROI costs; competition. Organisation and business strategy Organisation’s knowledge base accumulates knowledge over time Marketing EXTERNAL INPUTS: societal needs; competitors; supplier partnerships; distributors; customers; strategic alliances. EXTERNAL INPUTS: scientific and technological development; competitors; suppliers; customers; university departments. Research and technology New products Source: Trott, 2005

Explanations for innovative capability Innovative firm Explanation for innovative capability Apple Innovative chief executive Google Scientific freedom for employees Samsung Speed of product development Procter & Gamble Utilisation of external sources of technology IBM Share patents with collaborators BMW Design Starbucks In-depth understanding of customers and their cultures Toyota Close co-operation with suppliers Explanations for innovative capability

Implications for developing products and services 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.

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