Management of Technology (OM476) Sources of Innovation January 23, 2006 S. Fisher

Agenda Where does innovation come from? Applicability of different types of research Review requirements for case deliverables

Individual assessment Complete the assessment Will score it when everyone is done What do you think this measures?

Creativity The ability to produce work that is useful and novel. Individual creativity is a function of: Intellectual abilities (e.g., ability to articulate ideas) Knowledge (e.g., understand field, but not wed to paradigms) Style of thinking (e.g., choose to think in novel ways) Personality (e.g., confidence in own capabilities) Motivation (e.g., rely on intrinsic motivation) Environment (e.g., support and rewards for creative ideas)

Not wed to paradigms? “Space travel is utter bilge.” – Sir Richard van der Riet Wooley, The Astronomer Royal, 1956 “With over 50 foreign cars already on sale here, the Japanese auto industry isn’t likely to carve out a big slice of the U.S. market” – Business Week Aug “There is no reason for an individual to have a computer in their home” – Ken Olsen, President of DEC, 1977 “People will soon get tired of staring at a plywood box every night” – Darryl Zanuck, Head of 20 th Century Fox, 1946

Organizational Creativity Function of creative individuals and social processes & contextual factors that shape how those individuals interact and behave Methods of encouraging/tapping organizational creativity: Idea collection systems (e.g., suggestion box) Training Culture

CREATIVITY AND INNOVATION CREATIVITY is developing new ideas….inventing. INNOVATION is converting ideas or inventions into tangible products, services and processes

Systems supporting innovation Google [Source: Elgin (Oct ) Business Week] Engineers have one day/week to work on pet projects Ideas mailing list Dir. of consumer web products has office hours OXO International Culture of trial and error – mistakes are acceptable and lead to learning “Overprocessing” would kill creativity

Innovation by Inventors Classic inventors: Ben Franklin, Edison, Bell, etc) Who are today’s inventors? Are Larry Page and Sergey Brin ‘inventors’?

Drucker’s Sources of Innovation: Finding Opportunity Inventors (wherever they are located) can identify and respond to: Unexpected occurrences Incongruities Process needs Industry and market changes Demographic changes Changes in perception New knowledge

Innovation by Users Continued development of Linux Represents a process innovation (open source) as well as the product innovation (operating system) Potential benefits and drawbacks of innovation by users?

R&D by Firms R&D spending by many firms is huge Motorola – 10% of sales Cisco – 14.5% Nokia – around 10% Range of basic to very applied research Bell Labs (now part of Lucent) is the classic example ( Transistors, lasers, digital encryption Averaging two patents per day!

Example: H-P labs 6 labs around the globe; Palo Alto, CA; Bangalore, India; Bristol, UK; Haifa, Israel; Tokyo; Beijing; employ about 600 people Collaboration with governments and universities Creating a distributed, virtual museum with over 100 Chinese university museums Source: Singer (2005). HP opens R&D lab in China.

Universities and Government Funded Research Universities can often do more basic research that becomes a component of future innovations Science-push model Measured outcome is typically publications rather than new products to market Technology transfer – taking ideas developed at universities and making them marketable Bayh-Dole Act allows universities to keep some rights to IP developed on gov’t funded grants Source:

Inter-firm relationships Complementors Where would Griffin Technology be without the iPod? Technology clusters Silicon Valley Detroit (Auburn Hills, really) Develop the labor market, supplier base, etc, to support industry efforts

For Wednesday Topic: Case #1 IDEO Product Development Team 1 will be presenting Team 5 will have review/question role All other teams must hand in exec summary

Team Presentations (15 points) Approximately 30 minutes long Each team member must have a speaking role Must be professional – presentation style, dress, visual aids, etc. Discuss: Overview of company and case Analyses conducted to answer case questions (may not always be quantitative) Answers to case questions Specific recommendations for the company

Review and questioning role Prepare executive summary of case questions Prepare a list of additional questions to ask the presenters, along with written answers to those questions Ask the prepared questions that were not addressed in the presentation 8 points

Team Executive Summaries Answer questions for the case Demonstrate understanding of the key issues in the case Conduct some analysis Approximately 2-3 pages long Due at the beginning of class 2 points each (12 points total)