1. Managing Innovation and Change
Dr Larry Stapleton Millikin University

2. Invention, Innovation and Continuous Improvement?
Creating something that does not currently exist
Innovation:
the process of bring an invention to market or introducing a radical step change
Continuous Improvement:
making incremental changes to a product, service or process
Creation of a new food

3. What does Innovation look like?
A new way of doing something
Method Process Technology
Product Service
Level of Innovation
New Product
Significant Improvement to a product or process
New Application of current product/service
Boeings use high speed machining example
KFC use of pressure cookers example
Airlines use of online check-in or use of kiosks

4. What Drives our need to Innovate?
External Forces
Technology Changes
Globalized Markets
Fragmented Markets
Government Regulation / Deregulation
Social Change
Technology: computer tablets
Globalized Markets: South East Asia
Fragmented Markets:
Govt Regulations: Higher MPG
Govt De regulations:
Social Change: use of social media
How has people used social media; contacting friends, journalists and others are using it to get information out ; Eygpt

5. What are the Challenges to Innovation?
Efficient time to take a new product to market
How to apply resources to increase a product portfolio
There is a need to promote and succeed in an area that you are not familiar.
Adapting a culture that understands that individual failure is probable but overall success is the goal to achieve.

6. Types of Innovation Discontinuous Innovation Dynamically Continuous
Breakthrough : High Risk; Misreading the market
Dynamically Continuous
dramatic improvement over an existing state-of-the- art solution
lower risk as market demands are better understood
Continuous Innovation
Incremental change; step at a time
Low risk as focus is on slight changes to product or process
Imitation
Copying/adapting from another firm
May not be necessarily the same
Level of risk depends on the speed of the market demand

7. What are the Characteristics of Companies that Innovate well?
CEO involvement in innovation
Defining innovation as critical for long term success
Emphasis on concept of managing change
Innovation and Creativity in Mission statement
Demonstrated openness to outside ideas
Formal programs for idea generation and problem solving
Strong emphasis on cross- function communications\
Encourage employee communications with customers
Increased level of R&D, strong product development focus
Providing rewards for individual creativity and innovation
Creating budgets exclusively to innovation
Synectics study (1993)

8. Is Innovation systematic or by chance?
Can you Manage Innovation?
Idea Generation
Concept Testing
Technical Feasibility Assessment
Product Testing
Financial Assessment
Test Marketing
Launch
Life Cycle Management
No, not in the traditional sense.
Why leave innovation to chance. Use a systematic approach
But we do need to understand that there is a process which we need to recognize
We will move back and forth based on the feedback we get from each step

9. How to structure our company to promote innovation?
Depends on the level of Innovation
Dedicated Team, ad hoc or hybrid
Keys factors to consider
Level of Communication
Expertise required: Specialist or Generalist
Control: Centralized vs Decentralized
Autonomous or Integrated
Full or Part time team members
Similarities to Project Management
Dedicated teams have high team cohesion, project focus, cross functional integration ; better for breakthrough and key innovations (Skunk Works)
Functional teams project managers work thru functional managers; better for continuous improvements

10. Strategy & Portfolio Development
Recognition that the success and failure of a single project is not as important as the success of the whole.
May drive a different way of managing and rewarding employees
Develop Portfolio of projects that coincide with company’s current lifecycle.
Promote a product maturity and market diversified portfolio
Recognize that a flexible and adaptive structure is key to Innovation
General structure is necessary to guide the process
Portfolio should contact High, Medium and Low risk projects
Product Lifecycle: new products are necessary to continue the viability of the company and to remain current in the market place.
Older products need continuous improvement in both product and process. The process makes them more profitable; product keeps them one step ahead of the competition. Growth products need innovation in supply chain, marketing, design issue resolution.

11. Technology vs Market Drivers
Companies are guided to innovate based upon a new technology, new market or a change in the market.
Technology Pull: Likely a break through product or process
does the market desires the new product.
moving the product from the design stage to product launch
Market Pull: based on perceived market changes
Assumes customer knows what they want
May not know until they see product
Many focus on continuous improvement

12. Strategy & Portfolio Development
Aspects of a good Portfolio:
Portfolio must be company wide with Management involvement
Focus on current products or new diversified markets
What type of technology will be of focus.
Type of market including maturity
Planned level of resource commitment. % of revenue
Is innovation thru internal or external sources
Similar to stock market portfolio

13. Setting Goals and Measuring Performance
Goals are necessary to see if we got where we wanted to go.
Financial Metrics alone do not work
they focus on short term gains while innovation is strategic
Innovation metrics we prefer:
% of revenues gained from new products in 3-5 years
Holding a team and individual accountable
difficult to schedule innovation
Look at Idea generation, development of portfolio, understanding of lifecycle.

14. Innovation Metrics Products in development at any one point (11)
New Products (4)
Product Revisions (4)
Product Support (3)
New Product Launches per year (4)
Average Development Cycle
New products and Product Revisions (18 & 6 months)
Average Development Costs
New products and Product Revisions ($2M, $1.1M)
Company revenue, by %, innovations over last 3 years (35%)
Managers time spent on innovation activity (10%)
Average ROI on new product development (30%)
Morris & Kuratko, 2002

15. How do we create a culture that fosters Innovation
What do we need to allow Innovation to occur?
Requires gathering the right people, money, materials, machines, processes, methods and procedures
Requires a group action and is managed
Create a culture that fosters individuals that are willing to take a risk and are success driven.
How do we create a culture of change?

16. Corporate Culture
Represented by a set of key values, beliefs, understanding and norms shared by members of an organization.
Typically generated from Top Management
Successful if communicated by a strong focused leader.
Means of Communication
Symbols
Stories
Heroes
Slogans
Ceremonies
Focus on customers and internal people and processes that bring about useful change towards attainment of organizational goals.

17. Organizational Change
Def: The adoption of a new idea or behavior by an organization.
Change is common aspect of current business environment
Adaptation to change is central point of learning organization
For success, adaptation to change must exist in current workforce
Change includes redefining of roles, processes, values and removal of barriers
Model for Planned Change
1. Both internal and external forces contribute to change
2. Organizations must monitor the forces of change and determine when
there is a need for change.
3. Initiate search for response to the change
4. Implement the response to the change

18. Forces of Change Environmental (External) Forces Customers Competitors
Technology
Economic
International arena
What are examples of these forces?
Internal Forces
Goals
Employees
Labor Unions
Production efficiencies
Company performance
What are examples of these forces?

19. Need For Change Management’s responsibility is to:
a. Monitor threats and opportunities in the external environment
b. Identify strengths and weaknesses in the organization.
How does a manager determine a need for change?
Disparity between existing and desired performance levels ( Performance Gap).
Is this gap due solely to non-performance?
How does the sense of urgency enter into the identification of the need for change?

20. Initiating Change
Def: To search for or create ideas that solve perceived needs are developed.
Search: process of learning about current developments inside or outside the
organization that can meet the perceived need.
Creativity: Generating novel ideas with the potential of meeting the perceived
need or opportunity.
Characteristics of a Creative individual
1. Conceptual Fluency
2. Originality
3. Open mindedness
4. Less authority, Independence
5. Playfulness, Curiosity, Undisciplined exploration
6. Persistence, commitment, focused approach
Idea Champion: Passionate , committed to the idea despite rejection by others.
Inventor: Develops the idea but does not have the ability or interest to promote.
Sponsor: High-level manager who approves, protects and removes major barriers.
Critic: Challenges the concept and provides reality checks.

21. Development of a Creative Organization
1. Open channels of communication
2. Contact with outside sources
3. Brainstorming, suggestion systems
4. Eccentricity allowed
5. Use of teams
6. Decentralization, loosely defined positions
7. Acceptance of mistakes, risk taking
8. Freedom to pursue and choose problems
9. Playful culture
10. Freedom to discuss ideas, long time horizon
Resources allocated to creative personnel and projects without immediate payoff
12. Reward system that encourages innovation

22. What is meant by this statement?
Implementing Change
Why do we resist change?
Self Interest: Perceived loss of power, prestige, pay, or benefits.
Lack of Understanding and Trust: purpose unknown.
Uncertainty: Lack of information.
Different Assessments of goals: Goals conflict, differ in perceived outcome.
Force Field Analysis
To implement a change requires an analysis of the driving forces and the restraining forces. Removal of restraining forces allows driving forces to implement change.
What is meant by this statement?

23. Implementation Tactics
Communication and Education
Change is technical
Users need accurate information and analysis to understand change.
Participation
Users need to feel involved
Design requires information from others
Users have power to resist
Negotiation
Group has power over implementation
Group will lose out in the change
Coercion
A crisis exists
Initiators clearly have power
Other implementation techniques have failed
Top Management support
Change involves multiple departments or reallocation of resources
Users doubt legitimacy of change
Examples?

24. Types of Planned Change
Technology changes
Related to the organization’s production process. (efficiency)
Technology change is from the bottom up.
Lower level techs act as idea champions Why
What type of Implementation tactic would you use and Why?
Structural Changes
Involves the hierarchy of authority, goals, structural characteristics, administrative procedures and management systems.
Accomplished thru a Top - Down approach Why?
Champions are Top level and Middle management
Why would the Preferred Implementation Tactics be
Education, Negotiation & Participation?

25. New Product Changes
Change in the organization’s product or service output
Primary way that organizations adapt to changes in markets,
technologies and competition.
Implemented more along a Horizontal line
Horizontal Linkage Model shows that a new product must be
developed simultaneously by marketing, research & manufacturing.
What roles do these depts play in a successful development of new product?
(Marketing, Technical specialists, research, manufacturing)
How does time play into the new product strategy?
(Time Based Competition)

26. Cultural / People Changes
A change in values, norms, attitudes, beliefs and behaviors of employees.
Way people think, Mindset rather than technology, structure or products
Training is the most frequently used tool.
Organizational Development: promotes improvement of internal relationships and increased problem solving capabilities to improve an organization’s effectiveness.
Team building Survey feedback activities Large group intervention
OD Steps:
Unfreezing: participants become aware of problems and then increase
willingness to change (Change Agent)
2. Changing: Experiment with new behavior and learn new skills.
3. Refreezing: New behaviors are evaluated and reinforced by individuals who
have newly acquired attitudes or values and are rewarded by the organization.