Intrapreneurship, and Creativity Innovation, Intrapreneurship, and Creativity Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 13-1

Learning Objectives Describe how innovation and technological change affect each other Discuss the relationship among innovation, intrapreneurship, and creativity Understand the many steps involved in creating an organizational setting that fosters innovation and creativity 13-2

Learning Objectives Identify the ways in which information technology can be used to foster creativity and to speed innovation and new product development 13-3

Innovation and Technological Change Innovation: Process by which new goods and services or new production and operating systems are developed Enables better response to customer needs 13-4

Types of Innovation Quantum technological change: A fundamental shift in technology that revolutionizes products or the way they are produced Quantum innovation: New products or operating systems that incorporate quantum technological improvement These can cause major changes in the environment 13-5

Types of Innovation (cont.) Incremental technological change: Technological change that represents a continual refinement of some base technology Incremental innovations: Products or operating systems that incorporate refinements of some base technology 13-6

Property Rights Innovation is expensive and needs to be protected Patents Copyrights Trademarks 13-7

Innovation, Intrapreneurship, and Creativity Intrapreneurs: Entrepreneurs inside an organization who are responsible for the success or failure of a project Notice opportunities Manage product development May leave organization if their ideas are not supported Become entrepreneurs 13-8

Innovation, Intrapreneurship, and Creativity (cont.) Creativity: Ideas going beyond the current boundaries, whether those boundaries are based on technology, knowledge, social norms, or beliefs May involve combining and synthesizing new things Knowledge-creating organization: An organization where innovation is going on at all levels and in all areas 13-9

Entrepreneurship as “Creative Destruction” Creative destruction - The widespread technological changes brought about by increasing global competition that generate new innovations It leads older, less-forward looking companies to become uncompetitive or driven out of business by new, more innovative ones 13-10

Innovation and the Product Life Cycle Product life cycle: The changes in demand for a product that occur over time Demand for most successful products passes through four stages: The embryonic stage The growth stage The maturity stage The decline stage 13-11

Innovation and the Product Life Cycle (cont.) Determinants of the length of the product life cycle Rate of technological change Faster the rate of change, the shorter the product life cycle Role of fads and fashion Determine the attractiveness of products to customers 13-12

Figure 13.1 - Technological Change and Length of the Product Life Cycle 13-13

Managing the Innovation Process Project management: The process of leading and controlling a project so that it results in the creation of effective new or improved products Project: A subunit whose goal centers on developing the products or service on time, within budget, and in conformance with predetermined performance specifications 13-14

Managing the Innovation Process (cont.) Effective product management begins with a clearly articulated plan Takes a product through the concept, initial test, modification, and manufacturing phases 13-15

Managing the Innovation Process (cont.) Project manager’s (PMs) tasks are different from regular managers Manages high proportion of highly skilled and educated professionals Balances team members creative efforts with cost and time considerations Maintains the momentum of the project Key to a PM’s success - The ability to think ahead and conduct effective advance planning 13-16

Managing the Innovation Process (cont.) Quantitative modeling PERT/CAM network or GANTT chart - Flowcharts of a project that can be built with many proprietary software packages These software packages focus on: Modeling the sequence of actions necessary to reach a project’s goal Relating these actions to cost and time criteria Sorting out and defining the optimal path for reaching the goal 13-17

Managing the Innovation Process (cont.) Critical path method (CPM) Goal is to determine: Which particular tasks or activities of the many that have to be performed are critical in their effect on project time and cost How to sequence or schedule critical tasks so that a project can meet a target date at minimum cost Optimal sequencing of tasks is often worked out by a team Analysis is an important learning tool 13-18

Figure 13.2 - CPM Project Design 13-19

Managing the Innovation Process (cont.) Stage-gate development funnel A structured and coherent innovation process that improves control over the product development effort Forces managers to make choices among competing new product development projects so that resources are not spread thinly over too many projects 13-20

Figure 13.3 - A Stage-Gate Development Funnel 13-21

Managing the Innovation Process (cont.) Stage 1: Funnel has a wide mouth to encourage as many new product ideas as possible from both new and established project managers Stage 2: Specify all of the information required to make a decision about whether to go ahead with a full-blown product development effort Stage 3: Proceed to development phase 13-22

Managing the Innovation Process (cont.) Cross-functional teams Coordinating R&D function with other functions is critical but often difficult New product development teams Marketing, engineering, and manufacturing need to be core members of product teams Core members - A nucleus of three to six people who bear primary responsibility for the product development effort 13-23

Figure 13.4 - Innovation as a Cross-Functional Activity 13-24

Managing the Innovation Process (cont.) Team leadership Having cross-functional teams is not sufficient for innovation – they have to be managed properly Lightweight team leader - A mid-level functional manager who has lower status than the head of a functional department Heavyweight team leader - A true project manager who has higher status within the organization 13-25

Managing the Innovation Process (cont.) Skunk works - a temporary task force that is created to expedite new product design and to promote innovation by coordinating the activities of functional groups An island of innovation located away from the organization Dissolved when the product is brought to market 13-26

Managing the Innovation Process (cont.) New venture divisions - A self-contained, independent division given the resources to develop a complete set of value-creating functions to manage a project from beginning to end Assumes full responsibility for the commercialization of the product Balance of control between the division and the corporate center is problematic 13-27

Managing the Innovation Process (cont.) Joint venture Allows organizations to combine their skills and technologies and pool their resources to embark on risky R&D projects Partners may disagree over future development plans 13-28

Managing the Innovation Process (cont.) Creating a culture for innovation Organizational structure - Creating the right setting is important to fostering innovation People – Organizations need to guard against too much similarity Property rights – Create career paths to show that success is closely linked with future promotion and rewards 13-29

Innovation and Information Technology Information efficiencies: The cost and time savings that occur when IT allows employees to perform current tasks at a higher level Enables employees to assume additional tasks Enables employees to expand their roles in the organization due to advances in the ability to gather and analyze data also allows information efficiencies 13-30

Innovation and Information Synergies Information synergies: The knowledge building created when individuals or subunits pool their resources and collaborate across boundaries Boundary-spanning activity: The interactions of people/groups across the organizational boundary to obtain valuable information and knowledge from the environment to help promote innovation 13-31

IT and Organizational Structure and Culture IT affects the innovation process through its many effects on organizational structure IT gives lower-level employees more detailed and current knowledge of consumer and market trends and opportunities IT can produce information synergies Facilitates increased communication and coordination between decentralized decision makers and top managers 13-32

IT and Organizational Structure and Culture (cont.) IT means that fewer levels of managers are needed to handle problem solving and decision making IT provides lower-level employees with more freedom to coordinate their actions Information synergies may emerge as employees experiment and find better ways of performing their tasks 13-33

IT and Organizational Structure and Culture (cont.) IT facilitates the sharing of beliefs, values, and norms Allows for the quick transmission of rich and detailed information between people and subunits 13-34

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