1. Management of Technology (OM476) Creativity and Innovation January 18, 2006 S. Fisher

2. Agenda Why is innovation important? How does it affect society? Lessons learned from Gunfire at Sea reading Start thinking about where innovation comes from

3. Technological Innovation Process TECHNOLOGICAL ADVANCES NEW AND IMPROVED PRODUCTS INDIVIDUAL CREATIVITY ORGANI- ZATIONAL CREATIVITY IMPROVED PROCESSES AND PRODUCTIVITY ENHANCED GLOBAL COMPETITION INCREASED SALES RISING EMPLOYMENT AND LIVING STANDARDS

4. Impact on Society Increases in GDP, standard of living, availability of products "Increasingly, patents have become an essential ingredient of our economic vitality, paving the way for investment in commerce and in research and development, and creating jobs for millions of Americans.” Jon Dudas, Under Secretary of Commerce for Intellectual Property (http://www.uspto.gov/main/homepagenews/bak11jan2005.htm)

5. Top Private Sector Patent Recipients, 2004 Company# PatentsRank IBM32481 Matsushita19342 Canon18053 H-P17754 Micron17605 Samsung16046 Intel16017 Hitachi15148 Toshiba13109 Sony130510 Source: US Patent and Trademark Office (www.uspto.gov)

6. Sales from new products Indicator of contribution from innovation to the organization’s bottom line For example, Bayer (2004) - 20% of sales from new products 3M – up to 45% according to Schilling, but how are they defining “new” products? Subaru B9 Tribeca (newest model) – sold 12,000 out of 187,400 total vehicles in 2005 Several other models were also redesigned – how does this affect return on innovation?

7. Negative effects (externalities) of innovation? Effects on communities and environments? Shorter product life cycles Increased use of the internet Advances in medical technology Cloning, creation of chimeras Need to think long term A problem with the technology or just the application of the technology?

8. The World is Flat Premise is that technology is serving to remove boundaries and “flatten the world” Increasing global competitiveness Key question – do we want to lose all of those boundaries? Are some boundaries important sources of identity and belonging that we want to protect?

9. Strategic Management of Innovation Costly process; must allocate resources wisely Even 3M started constraining the innovation process McNerney – 1500 products in the developmental pipeline is too many. Funnel resources toward those ideas with greater market promise Should be aligned with firm’s resources and objectives Intel and Cisco – moving into consumer electronics. Alignment? Challenges?

10. Innovation Funnel

11. In-class writing Briefly describe two key points about technological innovation from the Gunfire at Sea reading.

12. Gunfire at Sea What were the key lessons regarding technological innovation? Factors enhancing innovation? Factors holding innovation back? Do these lessons still apply today? If not, how have things changed?

13. For Monday Topic: Sources of innovation How do people/organizations come up with innovative ideas? Read Schilling Chapter 2 Discipline of Innovation – Peter Drucker