H.M. Bwisa (2006)1 SCHOOL FOR HUMAN RESOURCE DEVELOPMENT (SHRD) Department of Entrepreneurship and Procurement HR 3112: TECHNOLOGY AND INNOVATION BY Prof.

H.M. Bwisa (2006)1 SCHOOL FOR HUMAN RESOURCE DEVELOPMENT (SHRD) Department of Entrepreneurship and Procurement HR 3112: TECHNOLOGY AND INNOVATION BY Prof. Henry M. Bwisa bwihem@yahoo.com www.professorbwisa.com 0722858507 6/7/2016

H.M. Bwisa (2006)2 HR 3112 TECHNOLOGY AND INNOVATION BY PROFESSOR HENRY M. BWISA (PhD ) 6/7/2016

PURPOSE This course unit is designed to instil into the student the culture of technology and innovation as the core aspects of any entrepreneurial process. COURSE UNIT OBJECTIVES At the end of this course unit the student should be able to: Define the terms technology and innovation Practice innovation PURPOSE AND OBJECTIVES OF THE UNIT 6/7/20163H.M. Bwisa (2006)

Unit course description What your course description says Significance of quality control Role of productivity Quality circles, Maintaining and improving quality Approach to innovation Achieving success through innovation Managing innovation Facilitating innovation in small firms Innovation by design New product development Reducing time to market Organization renewal Characteristics of winning enterprises 6/7/20164H.M. Bwisa (2006)

Teaching method and instructional materials INSTRUCTIONAL METHODS Lectures and readings Group and individual assignments and discussions Field studies and observations Case studies INSTRUCTIONAL MATERIALS Boards, lecture notes, reading materials, case studies/successful stories, computer, and projector. 6/7/20165H.M. Bwisa (2006)

FIRST THINGS FIRST 66/7/2016H.M. Bwisa (2006)

6/7/2016H.M. Bwisa (2006)7 I wish to acknowledge all internet sources I used to build up these notes

LET’S START BY SEARCHING FOR A DEFINITION FOR MASTERS DEGREE

What do others say? 96/7/2016H.M. Bwisa (2006)

A master's degree is an academic degree granted to individuals who have undergone study demonstrating a mastery or high-order overview of a specific field of study or area of professional practice. Within the area studied, graduates are posited to possess advanced knowledge of a specialized body of theoretical and applied topics; high order skills in analysis, critical evaluation or professional application; and the ability to solve complex problems and think rigorously and independently. en.wikipedia.org/wiki/Master's_degree 106/7/2016H.M. Bwisa (2006)

Master’s degree programs entail classes, similar to your undergraduate classes. However the classes are usually conducted as seminars, with a great deal of discussion. The professors tend to expect a higher level of analysis in master’s classes than undergraduate classes. en.wikipedia.org/wiki/Graduate_school 116/7/2016H.M. Bwisa (2006)

“At no level—least of all at the level of graduate education—do I think of my primary mission as the conveying of information that can as easily be read in books, presented on tapes, or called up from databases. I am always aiming to teach how to do something, to teach a mode of action. On the level of graduate seminars and the advising of dissertations, the formulations of the questions themselves and of appropriate methods for answering them become the principal focus of attention for student and teacher alike.” –Anthony Newcomb, Music (Distinguished Teaching Award 1989), in "What Good Teachers Say about Teaching" 126/7/2016H.M. Bwisa (2006)

Master's degrees — do employers value them? there are some skills that can't be taught in a classroom. Here are the best bits from our live Q&A careers.guardian.co.uk/master-s- degrees-do-employers-value-them 136/7/2016H.M. Bwisa (2006)

Some skills can't be taught in the classroom: Academics won't like me saying this but, as someone who has worked in industry for more than 30 years, there is no substitute to 'doing it' versus 'studying it'. ……. You can't learn what it is like to manage a team and develop a business in a classroom. You need real- life work to experience all the things you can't be taught in a classroom. While most employers value good qualifications unquestionably, they value work and real life experiences and behaviours more highly. Angela Edkins is MBA careers adviser at Aston Business School extracted from: careers.guardian.co.uk/master-s-degrees-do- employers-value-them 146/7/2016H.M. Bwisa (2006)

Stanford example 156/7/2016H.M. Bwisa (2006)

Here is my masters definition M astery A nd S ynthesis of T heory to E xcel in R eal-world S ituations 166/7/2016H.M. Bwisa (2006)

The philosophy and approach of this course The course will be conducted on Confucius’ (450 BC) philosophy of: I hear and I forget I see and I remember I do and I understand 176/7/2016H.M. Bwisa (2006)

THERE IS A CONE OF LEARNING THEORY AND MODEL DEVELOPED IN 1946 BY THE GREAT EDUCATOR DALE EDGAR 186/7/2016H.M. Bwisa (2006)

I HEAR AND I FORGET I SEE AND I REMEMBER I DO AND I UNDERSTAND 196/7/2016H.M. Bwisa (2006)

EXPERIENTIAL LEARNING DEVELOPED BY DAVID KOLB IN THE 1970S AND PUBLISHED IN 1984 WHEN I WAS MIDWAY MY PhD 206/7/2016H.M. Bwisa (2006)

Do Reflect Apply Experiential Learning Model 1 EXPERIENCE the activity; perform, do it 2 SHARE the results, reactions, and observations publicly 3 PROCESS by discussing, locking at the experience; analyze, reflect 4 GENERALIZE to connect the experience to real world examples 5 APPLY what was learned to a similar or different situation; practice Teaching methodologies: Lecturers, group work and case studies. Instruction materials/equipment: Lecturer manuals, Flip charts, Whiteboard, relevant computer soft and hardware. 216/7/2016H.M. Bwisa (2006)

COURSE STRUCTURE ACTIVITYSTART-ENDDURATION% OF TOTAL TIME CLASSROOM LECTURES WEEK 1-44 WEEKS 27 FIELD WORKWEEK 5- 117 WEEKS 47 CLASS PRESENTATIONS WEEK 12-143 WEEKS 20 EXAMINATIONWEEK 151 WEEK 06 TOTALSWEEK 1-1515 WEEKS100 GUIDED BY CONFUCIUS, DALE AND KOLB PHILOSOPHIES 226/7/2016H.M. Bwisa (2006)

Unit course assessment ASSESSMENT MODE MARKS Class participation 10% Group presentations 20% Continuous assessment tests 20% End of semester project 50% TOTAL 100% 6/7/201623H.M. Bwisa (2006)

Course evaluations The course will be evaluated via class participation, group presentations and an end of semester project as an examination CATs will comprise of regular classroom queries and class presentations End of semester project will be a practical assignment that addresses real issues in the Kenyan environment and calls for the application of the theoretical knowledge gained from this unit in particular and other course units in general 6/7/201624H.M. Bwisa (2006)

Assignment for group presentation In a group of not more than three scout for a micro or small business that is suffering from innovation redundancy and/or obsolescence. Study it to identify the real causes of the situation. Write a proposal to remedy the situation. The proposed solution could be an innovation of the extension, duplication or synthesis type. Make a presentation in class. Use comments on the presentation to improve the proposal. Send a copy to the business studied, the class email and to bwihem@gmail.com 6/7/201625H.M. Bwisa (2006)

Identify a small business that you think needs an innovational approach to achieve growth and write a report on how it can use technology and innovation to succeed. Your report should have as a minimum the following sections: Name, owner of business; type of business, activities of the business, factors that would influence its ability to innovate, aspects of the business that would benefit from innovation, types of innovation that would benefit the business, how to carry out the innovation END OF SEMESTER INDIVIDUAL EXAMINATION PROJECT: THE 2009 GROUP 6/7/201626H.M. Bwisa (2006)

GUIDE TO END OF SEMESTER EXAMINATION IDENTIFY THE BUSINESS STUDY THE BUSINESS UNDERTAKE RELEVANT INTERVIEWS BUILD SCENARIOS FOR POSSIBLE SOLUTIONS EVALUATE THE SCENARIOS SELECT BEST SOLUTION WRITE REPORT THIS IS JUST BUT A GUIDE 6/7/201627H.M. Bwisa (2006)

RULES FOR THE END OF SEMESTER EXAMINATION YOU MAY WORK IN GROUPS BUT THE END PROJECT MUST BE INDIVIDUAL PROJECTS FOUND TO BE SIMILAR WILL BE CONSIDERED AN EXAMINATION IRREGULARITY (CHEATING) AND MARKED OUT OF ZERO PERCENT A SOFT COPY OF THE PROJECT MUST BE SUBMITTED TO bwihem@yahoo.com LATEST A DAY BEFORE THE OFFICIAL UNIVERSITY EXAMINATION DATE A HARD COPY MUST BE SUBMITTED (NO PRESENTATIONS) IN PERSON ON THE OFFICIAL UNIVERSITY EXAMINATION DAY EVERY STUDENT WILL SIGN THE EXAMINATION ROLL CALL ON SUBMISSION OF THE HARD COPY FAILURE TO SUBMIT BY THE SAID DEADLINES WILL BE DEEMED AN EXAMINATION FAILURE I.E. A ZERO MARK WILL BE AWARDED 6/7/201628H.M. Bwisa (2006)

Text books Burch, J. (1986). Entrepreneurship. John Wileys and sons N.Y Bwisa, H., (1998). How to find and evaluate a business opportunity, mukmik consultants, Nairobi. David Holt (2000). Entrepreneurship and New venture creation. Prentice-Hall Publishers Drucker, P., (1986). Innovation and entrepreneurship: practices and principles. Affiliated East-West Press Hisrich, R., (2005). Entrepreneurship. McGraw-Hill Kanungo, R., N., (1998). Entrepreneurship innovations: models for development. Sage Kao, J., (1989). Entrepreneurship creativity and organization: text, cases and readings, Kuratko, D. F., (1998). Entrepreneurship: a contemporary approach Narayanan, V. K., (2001). Manageing technology and innovation for competitive advantage. Pearson educational publishers Proctor, T., (1997). The essence of management creativity. Prentice-Hall Warnock, G. J.(1979). Philosophy of Economic Theory: Oxford readings in Philosophy. OUP www.professorbwisa.com Google search machine 6/7/201629H.M. Bwisa (2006)

30 LECTURE NOTES 6/7/2016

TOPIC ONE Introduction: What is entrepreneurship? H.M. Bwisa (2006)316/7/2016

H.M. Bwisa (2006)32 A process of destroying the existing economic order by introducing new products and services, by creating new forms of organization, or by exploiting new raw materials – adapted from Schumpeter Perception of an opportunity and creation of an organization to pursue it – adapted from Bygrave A way of thinking and acting that is opportunity obsessed, holistic in approach and leadership balanced for the purpose of wealth creation - Babson College 6/7/2016

Who are entrepreneurs? H.M. Bwisa (2006)336/7/2016

H.M. Bwisa (2006)34 Entrepreneurs make things happen; are change agents They are individuals who take a concept and convert it into a reality. A product, policy or institution. They become the champions of a new process, and they are engines of change. Entrepreneurship occurs in all areas of life. In business, academy, government and Ngos. Entrepreneurship can be used for good and evil. The Godfather was an entrepreneur that misused his talent. 6/7/2016

H.M. Bwisa (2006)35H.M. Bwisa (2006)35 Entrepreneurs Can Be Encouraged and Promoted Openness to new ideas, freedom from investigation of operation, and promotion and pay based on merit encourage entrepreneurship. Excessive regulation, rigid hierarchy, lack of freedom, and excess control discourage entrepreneurship. 6/7/2016

H.M. Bwisa (2006)36 Requirements of Entrepreneurs Entrepreneurs need a keen eye to understand economic, social, and scientific realities and the capacity to understand evolutionary processes in the future. They need to understand how institutions work, and individuals react in order to introduce activities and products that serve peoples’ need and that are sustainable economically and politically. Entrepreneurs also need dedication and commitments and the capacity to overcome failure. 6/7/2016

H.M. Bwisa (2006)37 Entrepreneurship: Advantages & Disadvantages Entrepreneurship Autonomy Challenge of a start-up Financial control Personal sacrifices Burden of responsibility Little margin for error Advantages Disadvantages 6/7/2016

H.M. Bwisa (2006)38 Let us dispel some myths I can start living off the business immediately I’ll be my own boss I’ll get rich overnight I have nothing to lose: I’ll incorporate and use other people’s money Entrepreneurs are gamblers Money is the most important start-up ingredient Entrepreneurs are motivated solely by money If an entrepreneur is talented, success will happen in a year or two 6/7/2016

H.M. Bwisa (2006)39 Business behaviour:Life Cycle Sh.100M Sh. 1 M Sh. 500000 Sh. 10000 Sh. 100 Sh. 0 Time (years) Start upHigh Growth MaturityStability Window of opportunity 6/7/2016

H.M. Bwisa (2006)40 Three classic life cycles 500 100 25 5 1 1 2 3 4 5 6 7 8 9 10 High potential firm Foundation firm Lifestyle firm In $Millions Year 6/7/2016

H.M. Bwisa (2006)41 GET IT FROM ME ALL ENTREPRENEURS ARE BUSINESS PEOPLE BUT NOT ALL BUSINESS PEOPLE ARE ENTREPRENEURS THE ABILITY TO SPOT OPPORTUNITIES AND TO INNOVATE ARE KEY DISTINGUISHING FEATURES OF ENTREPRENEURS. ENTREPRENEURIAL FIRMS ARE HIGH POTENTIAL FIRMS NON-ENTREPRENEURIAL FIRMS ARE LIFESTYLE FIRMS TECHNOLOGY AND INNOVATION CREATES ENTREPRENEURIAL FIRMS 6/7/2016

Bwisa’s characteristics of entrepreneurs? H.M. Bwisa (2006)426/7/2016

H.M. Bwisa (2006)43 CHARACTERISTICEXPLANATION E NERGETIC High self drive N OVELTY-ORIENTED Creative T OLERANT Endure long hours R EALISTIC Don’t build air castles E NTERPRISING Continuously compete P ROFIT-ORIENTED Use money to make more money R ESOURCEFUL Take initiative & responsibility E FFICIENT Economy conscious N ETWORKING Build bridges not walls E NVISAGE Look into the future U NSTOPPABLE Say a slip is not a fall R ISK-LOVING Calculate their risks; no gamble S ELF-CONFIDENT Believe in themselves 6/7/2016

H.M. Bwisa (2006)44 Assignment one Alone or with a maximum of two colleagues identify two entrepreneurs in your locality – a woman and a man and write their entrepreneurial profiles i.e. why do you think they are entrepreneurs? 6/7/2016

TOPIC TWO What is quality? H.M. Bwisa (2006)456/7/2016

H.M. Bwisa (2006)46 Some Definitions of Quality “Quality is conformance to requirements” --Philip Crosby, “Quality is Free” 1979 The totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs. --ASQC 6/7/2016

H.M. Bwisa (2006)47 What is Quality? User-based: “In the eyes of the beholder” Manufacturing-based: “Right the first time” Product-based: Precise measurement 6/7/2016

H.M. Bwisa (2006)48 Further Definitions “Conformance to valid customer requirements” Goalpost View: “Acceptable as long as it is within acceptable limits” p. 17 “a predictable degree of uniformity and dependability, at low cost and suited to the market.” p.18 6/7/2016

H.M. Bwisa (2006)49 Quality Dimensions Quality of Design –Quality characteristics suited to needs and wants of a market at a given cost –Continuous, never-ending improvement Quality of Conformance –Predictable degree of uniformity and dependability Quality of Performance –How is product performing in the marketplace? 6/7/2016

H.M. Bwisa (2006)50 Dimensions of Quality Performance Aesthetics Special features: convenience, high tech Safety Reliability Durability Perceived Quality Service after sale 6/7/2016

H.M. Bwisa (2006)51 What is Quality? –Quality is the ability of your product to be able to satisfy your users What is Quality Assurance? –Quality Assurance is the process that demonstrates your product is able to satisfy your users What is Quality Assurance? 6/7/2016

H.M. Bwisa (2006)52 What is the aim of Quality Assurance? –When good Quality Assurance is implemented there should be improvement in usability and performance and lessening rates of defects What is the Aim of QA? 6/7/2016

H.M. Bwisa (2006)53 What does QA give? –‘ Quality’ can help to future-proof projects –But ‘quality assurance’ needs documented standards and best practices to be meaningful –‘Quality’ & ‘Best Practice’ can be considered in terms of being ‘Fit for Purpose’ –Quality’ means your project is ‘useful’ - without ‘quality’ you may have little to offer 6/7/2016

H.M. Bwisa (2006)54 Why is QA needed? In the past JISC had standards-based philosophy but: –Approach of "let a 1,000 flowers bloom" –Diversification as no killer application Things are different now: –The Web is the killer application –There is now a need for interoperability (now self-contained independent Web sites) –There is a need for publicly-funded services to be seen to provide value for money 6/7/2016

H.M. Bwisa (2006)55 What is Quality Control? Quality Control (QC) is the implementation of regular testing procedures against your definitions of quality and more specifically the refinement of these procedures –Formal use of testing –Acting on the results of your tests –Requires planning, structured tests, good documentation –Relates to output - Quality Circle –Standards - ISO 9000 & BS5750 however there is currently no such standard for Web sites 6/7/2016

H.M. Bwisa (2006)56 The Quality Cycle Refine site Quality Control Quality Assurance Quality output input Test results Create site Test site 6/7/2016

Productivity H.M. Bwisa (2006)576/7/2016

H.M. Bwisa (2006)58 Opening quote “… productivity measurement is all about comparing outputs with inputs, …” Ross Gittins, “Productivity should be a spin-free zone”, The Sydney Morning Herald, June 23-24, 2007. 6/7/2016

H.M. Bwisa (2006)59 Usual neo-classical assumptions – Technology exhibits constant returns to scale (CRS). – Competitive input and output markets (exogenously given prices). – Production unit maximizes profit. – Production unit has perfect foresight (ex post prices used as if ex ante known). Can we dispense with such assumptions? 6/7/2016

H.M. Bwisa (2006)60 Generic model (market) INPUT Unit OUTPUT Input value: Output value: Cost Revenue 6/7/2016

H.M. Bwisa (2006)61 KLEMS-Y model Capital K Labour L Output Y Energy E Unit (Goods & Materials M Services) Services S Input: (Gross) Output: Cost+ Profit = Revenue 6/7/2016

H.M. Bwisa (2006)62 What is productivity (change)? Usual financial performance measures are: – profit = revenue minus cost (positive, negative, or zero); – profitability = revenue divided by cost (greater than 1, less than 1, or equal to 1). Profit and profitability change can be decomposed in price and quantity components. Natural decomposition for profit is additive (indicators) and for profitability multiplicative (indices). The quantity component of profit (-ability) change, or real profit (-ability) change, is called (total factor) productivity change. 6/7/2016

63 Productivity Labor productivity = (Output / Labor input*) *Where labor input = people or hours Multi-factor productivity = (Output / Labor input**) **Where labor input = expanded to include multiple forms 6/7/2016H.M. Bwisa (2006)

64 PRODUCTIVITY (P) OUTPUT (O) INPUT (I) SERVICES PRODUCTS, REVENUE ETC LABOUR RAW MATERIALS, TECHNOLOGY, CAPITAL INCREASE O WITH I CONSTANT DECREASE I WITH O CONSTANT INCREASE O FASTER THAN I DECREASE I FASTER THAN O INCREASE O AND DECREASE I LET’S DISCUSS THESE FIVE ROUTES TO INCREASING PRODUCTIVITY 6/7/2016

65 Measurement of services Process Resource levels Risk Social capital Variability Waste Value Labor + Capital Cohesiveness Complexity Correction Efficiency Optimization Risk Revenue Price Flexibility Competitiveness Service outcomes Availability Quality Value Variability Accessibility Experience Prestige Satisfaction Output Input Capability Capacity Cost ~=~= = Adaptability Innovation Focus Interchangeability Productivity Employees Total Cost 6/7/2016H.M. Bwisa (2006)

66 Innovation and productivity Technology key to eliminate repetitive work –Free people up to be creative What can we learn from manufacturing? –Are there well known frameworks we can use to increase productivity in services? 6/7/2016H.M. Bwisa (2006)

67 High Low HighLow Employee Pro-activeness Individualized Experience to customers Individual Creativity Employee motivation To apply own creativity and ingenuity To invent solutions to problems Adapted from Terrill and Middlebrooks, Employment (security) Encouragement (respect) Empowerment (responsibility) Employable (independence) “Innovention” (personal fulfillment) Phases of a company’s view toward its people 6/7/2016H.M. Bwisa (2006)

Topic three: Technology H.M. Bwisa (2006)686/7/2016

What is technology? H.M. Bwisa (2006)696/7/2016

H.M. Bwisa (2006)70 What is Technology? What Counts as Technology? There are “classes” of technology: 1. Technology as Objects: Tools, machines, instruments, weapons, appliances - the physical devices of technical performance 2. Technology as Knowledge: The know-how behind technological innovation 3. Technology as Activities: What people do - their skills, methods, procedures, routines 4. Technology as a Process: Begins with a need and ends with a solution 5. Technology as a Socio-technical System: The manufacture and use of objects involving people and other objects in combination 6/7/2016

H.M. Bwisa (2006)71 The nature of Technology: it has a number of characteristics 6/7/2016

H.M. Bwisa (2006)72 1. It is Related to Science? Science is concerned with understanding how nature and the physical world work. Science is a process by which we try to understand how the natural and physical world works and how it came to be that way. You see something happen, you ask why? You want to make something happen, you ask how? Science is a tool for answering why and how. 6/7/2016

H.M. Bwisa (2006)73 2. It Involves Design:. The design process begins with the perception of a need, to formulation of a specification, to the generation of ideas and a final solution, and ends with an evaluation of the solution. For the term “design process,” we can also read “problem-solving process”. The process begins with the identification and analysis of a problem or need and proceeds through a structured sequence in which information is researched and ideas explored and evaluated until the optimum solution to the problem or need is devised. 6/7/2016

H.M. Bwisa (2006)74 3. It Involves Making: The motivating factor behind all technological activity is the desire to fulfill a need. Making = devising: the act that results in something coming to be; "the devising of plans"; "the fashioning of pots and pans"; "the making of measurements... 6/7/2016

H.M. Bwisa (2006)75 4. It is Multi-Dimensional: involves co-operation between different specialisms (e.g. between designer, production engineer and materials scientist) 6/7/2016

H.M. Bwisa (2006)76 5. It Is Concerned With Values: Value decisions may be called for not only in relation to the specific design criteria (i.e. aesthetic, ergonomic and economic judgments, suitability for purpose and ease of manufacture) but also in relation to the rightness or wrongness of a particular solution in ethical terms. 6/7/2016

H.M. Bwisa (2006)77 6. It is Socially Shaped/Shaping: Technological enterprises are determined by advances in knowledge, the identification of needs and by social interests. Thus technology is shaped by society, by consumer choice. True also technology shapes society - the technology of the motor car, for example, has shaped our environment and our whole way of life. 6/7/2016

H.M. Bwisa (2006)78 What is technology? HARDWARE physical embodiments e.g. tools, equipment SOFTWARE skills to make hardware work INNOVATION-WARE know how to improve, add value, innovate SYSTEM-WARE infrastructure to make hardware work e.g. institutions, legal framework LIVE-WARE technical and managerial skills TECHNOLOGY 6/7/2016

H.M. Bwisa (2006)79 TOPIC FOUR Innovation 6/7/2016

What is “innovation” ? 6/7/201680H.M. Bwisa (2006)

81 A Few “Truths” 6/7/2016

H.M. Bwisa (2006)82 Of Course Innovations Do Happen FIRETHE WHEELPRINTING PRESSASSEMBLY LINEELECTRICITYINTERNET 6/7/2016

H.M. Bwisa (2006)83 A number of definitions 6/7/2016

Innovation has been defined as: “The commercialisation of all new combinations based upon the application of –New material and components –Introduction of new processes –Opening of new market –Introduction of new organisational form” J. Schumpeter 6/7/201684H.M. Bwisa (2006)

85 in·no·vate verb –To begin or introduce (something new) for or as if for the first time. in·vent verb, transitive –To produce or contrive (something previously unknown) by the use of ingenuity or imagination. –(The American Heritage® Dictionary) Innovation: effort to create purposeful, focused change in enterprise’s economic or social potential (Drucker) Innovation 6/7/2016

 True Innovation begins at intersection of invention and insight  Fusion of new developments and new approaches to solve real problems  Significant value created for society or business:  Creates new industries  Spurs productivity and economic growth  Fuels wealth creation and profits  Generates high-value, higher-paying jobs  Raises standard of living What is Innovation? Stephen W.Brian, GPE, IBM Asia Pacific, 2004 6/7/201686H.M. Bwisa (2006)

Definition Innovation is a breakthrough approach or idea that can be completely new or an enhancement to something that already exists; it is a refreshing perspective that will challenge many who just cannot see beyond what their own experience is telling them to think or do. Innovation is something new that adds value; creativity is something new 6/7/201687H.M. Bwisa (2006)

88 What is innovation? “to introduce something new” Webster Innovation is used to create or exploit opportunity, in essence innovation is about doing things differently To innovate is to add value; to improve –An innovative product makes a leap in the benefits-to-costs ratio in some area of endeavor 6/7/2016

Innovation Is: Merriam-Webster defines innovation as: 1) the introduction of something new, and 2) a new idea, method, or device. 6/7/201689H.M. Bwisa (2006)

Innovation Is: Not Just Products and Technology. – Innovation needs to be understood in a broad context – it is about innovation in all aspects of the business, including processes, services, methods, management practices, strategy and business design, not just products and technology. From: An Innovation Framework, a position paper of the Right Place Manufacturers’ Council, John Cleveland. 6/7/201690H.M. Bwisa (2006)

Innovation Is: A Continuum – The “innovation continuum” runs from incremental process improvements to radically new business designs. Each company needs to make choices about how much resources it will focus on which part of the continuum. From: An Innovation Framework, a position paper of the Right Place Manufacturers’ Council, John Cleveland. 6/7/201691H.M. Bwisa (2006)

Innovation Is: Strategy Maps by Kaplan and Norton identify four core innovation processes: 1) opportunity identification, 2) research and development portfolio management, 3) new product design and development, and 4) launch. From: An Innovation Framework, a position paper of the Right Place Manufacturers’ Council, John Cleveland. 6/7/201692H.M. Bwisa (2006)

Innovation Is: Innovation is the process whereby ideas for new (or improved) products, processes, or services are developed and commercialized in the marketplace. The process of innovation affects the whole business – not just specific products, services, or technologies. (Industry Canada) From: An Innovation Framework, a position paper of the Right Place Manufacturers’ Council, John Cleveland. 6/7/201693H.M. Bwisa (2006)

Innovation Is: Innovation – A new idea, method, or device. The act of creating a new product or process. The act includes invention as well as the work required to bring a new idea or concept into final form. (PDMA Handbook of New Product Development) From: An Innovation Framework, a position paper of the Right Place Manufacturers’ Council, John Cleveland. 6/7/201694H.M. Bwisa (2006)

Innovation Is: Innovation is the specific tool of entrepreneurs, the means by which they exploit change as an opportunity for a different business or a different service. It is capable of being presented as a discipline, capable of being learned, capable of being practiced. (Peter Drucker, Innovation and Entrepreneurship) From: An Innovation Framework, a position paper of the Right Place Manufacturers’ Council, John Cleveland. 6/7/201695H.M. Bwisa (2006)

Innovation Is: Your approach to innovation needs to be driven by your “theory of the business.” You need a clear theory about where the best opportunities are for innovation in your markets (product; process; business design). Based on your theory about your business, you need to create clear screens and criteria for your innovation efforts (communicable visions and action plans). From: An Innovation Framework, a position paper of the Right Place Manufacturers’ Council, John Cleveland. 6/7/201696H.M. Bwisa (2006)

Innovation Is: A BusinessWeek definition: Innovation is the ability to create and capture economic value from invention. From: BusinessWeek, August 2005 6/7/201697H.M. Bwisa (2006)

Innovation Is: Another BusinessWeek definition: Today innovation is about much more than new products. It is about reinventing business processes and building entirely new markets that meet untapped customer needs. Most important, as the Internet and globalization widen the pool of new ideas, it’s about selecting and executing the right ideas and bringing them to market in record time. In the 1990s, innovation was about technology and control of quality and cost. Today, it's about taking corporate organizations built for efficiency and rewiring them for creativity and growth. “There are a lot of different things that fall under the rubric of innovation.” says Vijay Govindarajan. “Innovation does not have to have anything to do with technology.” From: BusinessWeek, April 2006 6/7/201698H.M. Bwisa (2006)

Innovation Is: Innovation as Language Action definition: We found that the key is to understand innovation as adoption of new practice. How do we know for sure when an innovation has happened? It is simple: we observe that a group or community has adopted a new practice. The word practice is very important. Innovators induce changes of habit by offering and supporting new tools or processes perceived as high value by adopters. Many people suffer great expense and frustration because they think clever ideas are innovations. From: Innovation as Language Action by Peter Denning and Robert Dunham, ACM May 2006 6/7/201699H.M. Bwisa (2006)

Innovation Is: CQIN Innovation Curriculum Project definition: Innovation is the introduction and adoption of something new that creates value. This can be a process, a product, or a service. From: The WIRED CQIN Innovation Curriculum Working Definition, March 2007 6/7/2016100H.M. Bwisa (2006)

Some orthodox thinking 1016/7/2016H.M. Bwisa (2006)

Orthodox Thinking: 1 Innovation is primarily about new product development

Yes but… The term ‘innovation’ is means different things to different people product innovation is very important but we shouldn’t underestimate the importance of: –process innovation –service innovation –value innovation 6/7/2016103H.M. Bwisa (2006)

Some issues... The need to be alert to the ways in which innovation debates are framed. How do we generate new knowledge? What do we know about creativity and the kinds of organisational contexts that promote innovation? 6/7/2016104H.M. Bwisa (2006)

Orthodox Thinking: 2 Innovation is about ‘Eureka’ moments and radical new ideas 6/7/2016105H.M. Bwisa (2006)

Yes but… Should be cautious about –assuming that innovation comes from within the individual i.e. is a self reflective process – characterising innovation as radical or involving ‘big ideas’ 6/7/2016106H.M. Bwisa (2006)

Some issues... how do we encourage individual and group learning? what are the factors that encourage or discourage knowledge sharing? 6/7/2016107H.M. Bwisa (2006)

Orthodox Thinking: 3 Innovative firms are in touch with their stakeholders; they listen closely to their customers and investors 6/7/2016108H.M. Bwisa (2006)

Yes but... Listening to stakeholders can sometimes blind companies to the threat from disruptive technologies Why? –Companies depend on customers and investors for resources –small markets don’t solve the growth needs of large companies –an organisation’s capabilities defines its disabilities –technology supply may not equal market demand Source: Christensen, C (1997) The Innovator’s Dilemma Harvard Business School Press 6/7/2016109H.M. Bwisa (2006)

Some issues… How do firms recognise the emergence of disruptive technologies? How do firms learn from failure? 6/7/2016110H.M. Bwisa (2006)

Orthodox thinking: 4 Innovation is about –Hiring bright people –Putting them in special conditions –Transforming ideas into products –Delivering to passive waiting consumers 6/7/2016111H.M. Bwisa (2006)

Yes but… Assumes innovation is a closed process –knowledge can be codified, sent and received –authors of inventions can define their use –there is a clear distinction between ‘creators’ and ‘consumers’ or ‘professionals’ and amateurs’ Source: Charles Leadbeater (2004) Presentation at the Evolution of Business Knowledge launch event 6/7/2016112H.M. Bwisa (2006)

Some issues... How do we encourage investment in the boundaries and not just the core? move ideas from the margins to the mainstream? encourage clusters, networking and boundary-spanning activity? 6/7/2016113H.M. Bwisa (2006)

Concluding Comments One size does not fit all detailed appreciation of context and circumstances is vital raising awareness is half the battle there is nothing so practical as a good theory creating a climate of sustained innovation is hard but not as hard as ….. 6/7/2016114H.M. Bwisa (2006)

115 Innovation is the golden route to building a growing and prosperous company 6/7/2016

Why Innovate? “Management research suggests that innovative firms – those which are able to use innovation to differentiate their products and services from competition – are on average twice as profitable as other firms” Tidd et al (ix) “Shorter product lifecycles, global competition, innovative competitors or competitors changing your industry model can damage your financial health” Lars Nicolls 6/7/2016116H.M. Bwisa (2006)

Why you have to be innovative? In today’s world, to be a leader in industry you have to be innovative. Companies must be able to look forward at the strategy and know how to bring products to market faster than their competitors. Innovation is the key. It’s not just for the technology; it’s for the business strategies as well. 6/7/2016117H.M. Bwisa (2006)

The Four P’s of Innovation Innovation can be continuous or discontinuous in any of these areas Product Innovation Good Service Process Innovation Production Technology or Systems Administration Systems Supply Chain Business Paradigm Business Philosophy Staff Policy Management Style Market Position Exploitation of Territorial Areas Penetration of New Market or Market Segment © CENTRIM 6/7/2016118H.M. Bwisa (2006)

6/7/2016119H.M. Bwisa (2006)

120 Myths about Innovation 1. Innovation is planned and predictable 2. Technical specifications should be thoroughly prepared 3. Creativity relies on dreams and blue-sky ideas 4. Big projects will develop better innovations than smaller ones 5.Technology is the driving force of innovation and success 6.Innovations are sexy 6/7/2016

H.M. Bwisa (2006)121 Types of innovation 6/7/2016

Types of Innovation Products and services —Innovation applied to products or services or market related activities Operational —Innovation that improves the effectiveness and efficiency of core processes and functions Business model —Innovation that fundamentally transforms the way a business works or drives revenue. 6/7/2016122H.M. Bwisa (2006)

123 Some types of Innovations Types of innovations include: –Mechanical—tractors, cars. –Chemical—pesticides. –Biological—seed varieties. –Managerial—IPM, extra pay for work, overtime. –Institutional—water users’ association, patents, banks, stock market, conservation districts, monks. It is useful to distinguish between process innovations (new biotechnology procedures) and product innovations (Bt cotton). 6/7/2016

H.M. Bwisa (2006)124 High, Low and No Tech Innovation High Tech innovation happens through new discoveries (mostly in natural sciences)  NMR  Human Genome Project No Tech innovation happens by finding gaps in market created as a result of changes in values, perceptions, attitudes, and demographics  Ready-made food packets, fast food chains  Installment buying  Insurance 6/7/2016

H.M. Bwisa (2006)125 Types of Innovation TypeDescriptionExamples 1) Invention Totally new product, service or process Wright Brothers – airplane Thomas Edison – light bulb Alexander Graham Bell - telephone 2) Extension New use or different application of an already existing product, service or process Cinema halls for churches Personal car for taxi Car engine as source of power for printer via inverter 3) Duplication Creative replication of an existing concept Cereal banks Parallel degree programmes Lonely hearts column 4) Synthesis Combination of existing concepts and factors into a new formulation or use Christian disco bar Petrol station with supermarket Nyama choma bars 6/7/2016

The innovation process H.M. Bwisa (2006)1266/7/2016

What do innovators do? Connect unconnectable Dream,Dream,Dream See beyond what is visible Expect the unexpected Enjoy contradictions, shun consistency Remember: Experiments never fail, mind does 6/7/2016127H.M. Bwisa (2006)

ACTION DREAMS PASSIONATE DESIRE STRATEGY&INNOVATION REALITY 6/7/2016128H.M. Bwisa (2006)

The Innovation “Funnel” 1. Opportunity Identification 2. Opportunity Selection 3. Development & Testing 4. Production & Launch 5. Managing the R&D Portfolio The five different innovation processes relate to different stages of the “innovation funnel” – the progression from a broad set of innovation ideas to actual implementation and commercialization. 6/7/2016129H.M. Bwisa (2006)

130 Innovation Process Ref: Peter Drucker: Innovation and Entrepreneurship Innovation is a systematic, organized, rational work – usually done in many stages Analyze, test, pilot, experiment Treat change as opportunity, look for new realities and incongruity between people’s perception of reality and what has become actual reality. 6/7/2016

H.M. Bwisa (2006)131 The Innovation Process An innovation starts as a concept that is refined and developed before application. Innovations may be inspired by reality. The innovation process, which leads to useful technology, requires: –Research &Development (up-scaling, testing) –Production –Marketing & Use Experience with a product results in feedback and leads to improved innovations. 6/7/2016

H.M. Bwisa (2006)132 The typical innovation process 6/7/2016

H.M. Bwisa (2006)133 Product and Process R&D in Innovative Life Cycle 6/7/2016

H.M. Bwisa (2006)134 Positive cash flow Launch Negative cash flow Process R&D Cash flow Time Breakeven R&D Idea birth Product extinct Net profit Product and process R&D in innovative life cycle Innovative cycle time 6/7/2016

H.M. Bwisa (2006)135 Requirements of successful innovation React to customer demand – existing or future Insight into customers and markets Timing - luck 6/7/2016

Recognition of technical feasibility Search, experimentation & calculation activity Solution through invention Fusion into design concept & evaluation Recognition of potential demand Information readily available Solution through adoption Model of the Process of Innovation (Marquis, 1969) Implementation & use 1. Recognition 2. Idea formulation 3. Problem Solving 4. Solution 5. Development 6.Utilization & Diffusion Work out bugs & scale-up State of Technology State of Societal Demand 6/7/2016136H.M. Bwisa (2006)

We now live in the age of Innovation 6/7/2016137H.M. Bwisa (2006)

138 Time Market demand FocusFirm 1960 1970 1980 1990 + Price, quality, choice, time of delivery Price, quality Price Efficiency + quality Efficiency The efficient firm The quality firm Price, quality, choice, time, uniqueness Efficiency + quality + flexibility Efficiency + quality + flexibility + innovativeness The flexible firm The innovative firm 6/7/2016

Sources of innovation H.M. Bwisa (2006)1396/7/2016

Sources of innovation Competitors Private and public laboratories Universities supplierscustomers Related Industries R&DMarketingManufacturing 6/7/2016140H.M. Bwisa (2006)

141 Sources of Innovation SourceExamples 1) Unexpected occurrencesUnexpected success/failure in plan 2) Incongruities Patronage rising & profitability dropping 3 ) Process needs Sugar-free products Caffeine-free coffee 4) Industry changes Health care industry : changing to home health care 5) Demographic changesHomes for the aged 6) Perceptual changesExercise, fitness, health food, 7) Knowledge-based conceptsVideo industry; robotics 6/7/2016

Topic five: Success through innovation H.M. Bwisa (2006)1426/7/2016

H.M. Bwisa (2006)143 Let us first look at some basic definitions 6/7/2016

H.M. Bwisa (2006)144 Invention Innovation Discovery Creativity Patents Trademarks Copyrights Science Engineering Technology Design 6/7/2016

Invention A new manmade device or process 6/7/2016145H.M. Bwisa (2006)

146 Thomas Edison – light bulb Benjamin Franklin - bifocals Elijah McCoy – engine lubricator Eli Whitney – cotton gin Alexander Graham Bell - telephone Henry Ford – assembly line Some renowned inventors 6/7/2016

H.M. Bwisa (2006)147 Happily there are Kenyan inventors too 6/7/2016

H.M. Bwisa (2006)148 Pascal Katana's innovation (below) literally rings the till for poor fishermen - notice the mobile phone on the right. I have a million questions about the "fish trap", but I'm more concerned about the government walking its 2030 talk and setting up technology parks and technology incubators. Without these local inventors and innovators like Katana are simply whistling up wind. Pascal Katana – student at University of Nairobi 6/7/2016

H.M. Bwisa (2006)149 Theft System - 05-05-2009, 12:48 PM Forget cell phones that can play music, take pictures and occasionally make a call, this cell phone system controls your car. It can thwart a car theft by stopping the car in its tracks. This Block & Track anti-theft system was invented by 18-year-old Morris Mbetsa. The self-taught Kenyan inventor created the system that uses a combination of voice, DTMF and SMS text messages to issue commands to your car’s electrical system. If someone starts your car, the system will send a message to your cell phone. At that point a message can be relayed to the car, issuing a command to shut down while automatically notifying the police. For the finishing touch, a listening device can even be activated to record the sounds in the car. 6/7/2016

H.M. Bwisa (2006)150 Born in 1932, in Nyeri District, Morris Tito Gachamba is arguably Kenya's most celebrated aviator. Gachamba dropped out of Kenya's Standard Four after his mathematics teacher beat him for not being able to answer a question. He has commented on his education experience, "I was never one to remember things easily and that made me a bad student." Later in the 1960s, Gachamba became friends with an English tourist he would go out fishing with. The tourist owned a small plane and took Gachamba out for a short trip around Lake Naivasha. Gachamba became enamoured with flying and soon wanted to build his own. Come the 1970s, he became the first Kenyan to build an airplane. It was a single-seater plane with aluminium sheets for the body and a Volkswagen Beetle engine. Testing it out at a local airstrip, Gachamba was surprised it flew. Once in the air, he decided to take advantage of the opportunity and fly the craft to his nearby home. Minutes into the trip, the engine overheated and the plane crashed. Gachamba walks with a limp to this day that he acquired from that test ride. Lack of support stymied Gachamba's innovation. 6/7/2016

H.M. Bwisa (2006)151 First he put together a human robot, then an FM radio transmitter and now electronics wizard David Mwangi Macharia is achieving his dream - owning a television station. The latest feather in his cap is the self-made television transmitter for the Unjiru TV (UTV) he operates in Machakos. He has no professional training in engineering or broadcasting. His transmitter, fashioned out of electronic transistors purchased from scrap metal dealers Equipment for his TV station is sourced locally, mostly electronic waste that is considered of no value. 6/7/2016

H.M. Bwisa (2006)152 Self-trained innovator Simon Mwacharo developed a simple wind-powered electricity generator in his tiny workshop in Sagalla, Taita Hills. He has since turned his innovation into a commercial venture. The low-end commercial model costs KSh. 40,000 ($520) and generates enough electricity to light-up a bed-roomed house and run several appliances. The high-end version generates 12kW (enough to run a small village) and retails for KSh. 1.5m ($20,000). On his motivation Mwacharo had this to say: "I was inspired by a challenge from my rural home where we have not had power for the last 40 plus years since [Kenya's] independence [in 1963]. I come from a hill side village in Sagalla, Taita Hills in Coast Province where we receive quite some strong wind from the Nyika Plateau. This wind passes through without being tapped and sometimes our roofs can not stand in its way." 6/7/2016

H.M. Bwisa (2006)153 A Kenyan inventor has won the $75,000 prize for his solar cooker made from cardboard. The cooker is made from two cardboard boxes, which use reflective foil and black paint to maximise absorption of solar energy. The temperatures inside the pot can reach at least 80C. The device can be used for cooking and for sterilising water. The competition was organized by the organization Forum for the Future in association with Financial Times newspaper and technology company HP. The inventor says the device will help to reduce dependence on firewood thereby putting a brake on deforestation. According to him it will also give a boost to health as it has the potential to reduce the ill effects of smoke. Name? Jon Bohmer, who founded the company Kyoto Energy in Kenya. 6/7/2016

H.M. Bwisa (2006)154 Richard Njagu a trained as a "Jua Kali" mechanic started his career repairing gasoline and diesel engines before designing machines to build soil blocks, which he used to construct inexpensive houses and water tanks. In 1995, Njagu turned his attention to the problem of cook stoves. He saw an American "Rocket Stove“ and combined this design with aspects of the Kenyan Jiko stove. The result is an attractive, efficient and inexpensive stove that Njagu calls the Henya Stove. Fuel is fed in from the side, and exhaust gases are captured to help produce heat. The stove liner is made from local clay, like the Jiko stoves, and contributes to the stove's efficiency by preventing heat from leaking out from the sides 6/7/2016

H.M. Bwisa (2006)155 A young Kenyan boy enjoys pumping water with a Super Money Maker pump A Kenyan farmer and his wife spray their field Martin Fisher, who won the 2008 Lemelson-MIT Award for Sustainability for his work, demonstrates his Super Soaker pump Jane Mathendu bought a KickStart oilseed press in 1996, and now has a successful business that contracts 20 local farmers t o grow sunflowers and employs 2 full time workers Engineer and inventor Martin Fisher has applied his passion for improving things to the challenge of eliminating poverty in rural Africa. 6/7/2016

Where are these Kenyan inventors? H.M. Bwisa (2006)1566/7/2016

H.M. Bwisa (2006)157 In the 1960s, Mr. Morris Tito Gachamba startled the world when he flew his home-made aircraft. In 1965 Mr. Boaz Owuor from Nyanza made a clock out of wood, a guitar and a weighing machine. In 1972, students Stephen Alumasa and James Ndambi made a ticker-tapetelegraph. In 1975 student, John Kipyego Murgor made simple radio sets. In 1981, physically handicapped Christopher Wathungi Chege from Ruiru made a helicopter using Corrugated iron sheets and a Volkswagen engine. In the late 1980s, a Tana River student invented an effective insecticide. In 198818 year-old David Mwangi Macharia from General China High School, Nyeri invented a radio station, Sauti ya Unjiru (Voice of Unjiru). The station comprised a combination of a receiver, transmitter, record player and cassette player. The then VoK Quickly ordered him to close down the station for encroaching upon its Broadcasting territory. The student also made electricity from pit latrines. Later on, he developed a remote-controlled car. Disabled Wycliffe Kepha Anyanzwa, became famous for his “Kefa-mobile”, a three-wheel Scooter for the disabled. The man responsible for designing wheelchairs and polio boots depended on wellwishers to keep his innovations going because institutional support was not forthcoming. In 1989, Shadrack Opiyo marked the 25 th anniversary of Kenya’s independence on December 12 by making electronic keyless locks and a dual light-operated switch. We have never heard of him ever since 6/7/2016

H.M. Bwisa (2006)158 THIS KENYAN PRIMARY SCHOOL BOY HAS CONVERTED A SWEATER INTO A HEAD GEAR 6/7/2016

Innovation A better way of doing things An improvement 6/7/2016159H.M. Bwisa (2006)

1 st Cell Phone March 6, 1983 Razr 2006 Alexander Graham Bell’s Phone 1876 Old Phone Evolution of the Telephone 6/7/2016160H.M. Bwisa (2006)

Old Computers Dell Computers 2006 6/7/2016161H.M. Bwisa (2006)

Discovery The primary process used in science to uncover new knowledge. 6/7/2016162H.M. Bwisa (2006)

Creativity The ability to see a problem in several dimensions. The ability to truly understand the problem at hand. 6/7/2016163H.M. Bwisa (2006)

Patents Provide inventors with exclusive rights to manufacture a device for a period of time that has been fixed. (Currently 17 yrs.) Assigned to individuals, not corporations. 6/7/2016164H.M. Bwisa (2006)

Patents Cont. The inventor must keep dated logs in order to prove who invented something first. “Patent Pending” – the inventor has applied for a patent, but not received it yet. 6/7/2016165H.M. Bwisa (2006)

Trademarks Trademarks give an individual or corporation a right to identify a product with a graphic symbol that customers can readily recognize for the quality and service they have earned. Generally, a trademark has no time limit. 6/7/2016166H.M. Bwisa (2006)

Trademark Examples Adidas Mountain Dew Abercrombie & Fitch Nike 6/7/2016167H.M. Bwisa (2006)

Copyrights Provide the creators of written materials the right to a profit from the sale of their works for a definite period of time. Related to written material, graphic material, or music. 6/7/2016168H.M. Bwisa (2006)

Science The pursuit of new knowledge about nature. Its primary goal is knowledge, not solutions to problems. 6/7/2016169H.M. Bwisa (2006)

Engineering The profession in which the knowledge of the mathematical and natural sciences gained by study, experience and practice is applied with judgment to develop ways to utilize economically the materials and the forces of nature for the benefit of mankind. The deliberate, orderly process through which technology is created. 6/7/2016170H.M. Bwisa (2006)

Technology The innovation, change, or modification of the natural environment to satisfy the perceived human wants and needs. 6/7/2016171H.M. Bwisa (2006)

Design The process of designing solutions to technological problems—innovating and inventing. 6/7/2016172H.M. Bwisa (2006)

History of Invention, Innovation and Discovery The greatest difference between science and technology is purpose. 6/7/2016173H.M. Bwisa (2006)

The main purpose of science was curiosity, where the main purpose of technology was a matter of survival. Science and technology need and serve each other while serving mankind. 6/7/2016174H.M. Bwisa (2006)

Early civilizations were based on just a few inventions: The plow Handwriting Metallurgy Pottery Brick making Stonecutting Spinning Weaving Surveying instruments And more… 6/7/2016175H.M. Bwisa (2006)

7 Mechanisms that affect Invention and Innovation 1.Deliberate search 2.Deliberate search for 1 thing that leads to something else 3.Totally unrelated developments have an effect on the main event 6/7/2016176H.M. Bwisa (2006)

4.Military needs or military inventions give rise to intense development efforts and equally significant social change. 5.Result of religion 6.Weather & other natural forces 7.Pure accident 6/7/2016177H.M. Bwisa (2006)

Invention, Innovation and Discovery Today A few of the most influential factors which are of a different origin than the previous 7 mechanisms… 6/7/2016178H.M. Bwisa (2006)

1.Information and Communication Technology –The faster we can communicate, the faster we can influence others with new inspiration and new inventions. 2.Specialization of knowledge and teamwork 3.The rise of organized science –In the past, discoveries often followed the practical application. –Technology preceded science –Today, technology rarely precedes science 6/7/2016179H.M. Bwisa (2006)

4.The influence of government –The need for rapid wartime development of technology tends to push the envelope of efficiency. –The funding of research which is often available for the asking. –Government can also influence invention and innovation by legislation that creates the rules others must play by 6/7/2016180H.M. Bwisa (2006)

To promote rapid growth of technology, there had to be something in it for both users and producers, and if the correct balance could be found, it would be good for the country. Intellectual Property 6/7/2016181H.M. Bwisa (2006)

Topic six: Managing innovation H.M. Bwisa (2006)1826/7/2016

It all starts with recognising the potential of an innovation …. “This ‘telephone’ has too many shortcomings to be seriously considered as a means of communication. The device is inherently of no value to us” –Western Union internal memo, 1876 “I think there is a world market for maybe five computers”. –Thomas Watson, chairman of IBM 1943 “The concept is interesting and well-formed, but in order to earn better than a ‘C’, the idea must be feasible.” –A Yale University management professor in response to Fred Smith’s paper proposing reliable overnight delivery service. (Smith went on to found Federal Express.) 6/7/2016183H.M. Bwisa (2006)

Supercomputer S curves Rate of technological progress Communication bottlenecks Speed of light Multiprocessors computers Single-processors computers Effort … and understanding the behaviour of technological progress 6/7/2016184H.M. Bwisa (2006)

Electronics Discontinuities within electronics Transistors Vacuum tubesElectronic computers Cheaper computers Calculators Integrated circuits Personal computers Workstations Watches (1973) Minicomputers (1969) Cash registers (1969) 6/7/2016185H.M. Bwisa (2006)

Product Many products have several life cycles Business of factory Home Portable or car = Time, effort, and advances in technology Sales 6/7/2016186H.M. Bwisa (2006)

Migration of innovations from business to home to portable to car From business to home to car. Is this a mature market? From sound studio to home to car to portable; being invaded by CDs From office to home to portable to personal computers Used by phone companies to connect calls. To private business as private branch exchanges (PBX). Where to next? Home or car? From government to business or factory to home to notebook to car. From utility companies to business to home to portable. From electric train to business to home to portable. From business to home to computer. From hospital to home? From office desktop to factory floor to home to car to portable. From TV studio to home to portable to Internet clients. From theater to home. From post office to home to portable to car. From street market to mall to home. From defense applications to business to home. Where to next? Car and individual? From studio to portable. To notebook PC? From business to home to portable to car. To notebook PC? From TV recording studio to home to portable Air conditioners Audio tape recorders Calculators Central office switches Computers Electric generators Electric motors Fax machines Medical diagnostic equipment Microprocessors Movie cameras Movies Radios Retailing Satellite systems Still picture cameras Telephones VCRs ProductInnovation migration trend 6/7/2016187H.M. Bwisa (2006)

You must also understand the business world H.M. Bwisa (2006)1886/7/2016

189 A Characteristic of Today’s Business World  Ever-increasing diversification of products in the market today due to: –Rapidly accelerating technological innovation –Shortened product life-cycles –Diversification of customer needs New technology spawns new markets 6/7/2016H.M. Bwisa (2006)

190 Trends in the Global Marketplace 1950s and 60s  American industries dominated markets  American industries originated most of the world’s technologies  Consumers preferred “Made in USA” labels; USA meant quality 1970s and 80s  Worldwide global competition  Other nations capture markets  Innovation is no guarantee of product success  Ineffective U.S. response to market trends 1990s and 00s  Success requires understanding customer needs and expectations  Success requires meeting market needs promptly  Success requires providing value to all customers  Success requires innovative products  Success can be attained through Systematic Innovation 6/7/2016H.M. Bwisa (2006)

191 Business Challenges  Expanding Breadth of Business Opportunities  Matching of Technological Solutions to Market Needs –Managing Technology, Society, and Market  Increasing Probability of Success –Rapidly Overcoming Technological Problems  Shrinking Time to Market –Development and Implementation of Products and Processes  Reducing Cycle Time While Maximizing Quality & Reliability –Integration of Innovation  Maximizing Return on Capital Investment –Cost of Development, Capital Equipment, Facilities –Life Expectancy of Capital Investment  Controlling growth and profitability 6/7/2016H.M. Bwisa (2006)

192 Managing the Strategic Challenge of Change Levels of Change Events Strategy Leading Anticipating Reacting Create new technologies and products Launch new markets Raise industry standards Redefine customer expectations Increase pace of industry product cycles Globalization of markets Creation of new customer segments Emergence of conflicting technologies Competitor’s product moves New government policies Unexpected customer demands Force other firms to follow Line up resources (e.g. venture partners, cross-cultural employees, currency trading skills) early Develop corresponding marketing channels Create technical options Release better products Create services that exploit change Repackage existing products 6/7/2016H.M. Bwisa (2006)

193 Framework for Managing Innovation Understand your business and competitive position (SWOT ANALYSIS) Baseline your business—its products / services, processes and model Assess competitive strategies and “disruptive” opportunities Identify where the impact areas are to your business Invite team attention, empower creative thinking Institute a process for channeling “innovation” ideas Know when to pounce on the ideas Commit to follow through 6/7/2016

H.M. Bwisa (2006)194 The Questions to Managers Today Where will my innovation come from? What type and how much do I need / want? How do I foster innovation in my business? How do I know how effective we are with it? 6/7/2016

Let’s now introduce creativity H.M. Bwisa (2006)1956/7/2016

196 Creative activity of humans starts with the human history:  ~1500 BC – myths about Dedalus – the first human-inventor  Beginning of AD – descriptions of group search for solutions applied by Scythian and German tribes – Brainstorming predecessors.  4th century of AD – attempts to create a science of invention (heuristics) by Papp from Alexandria.  13th century – Great Art by R. Lullius (St. Lullius) published in 1480 – a technique for systematic exploration of possibilities – predecessor of morphological charts.  19th century – evolutionary theories by Lamarck and Darwin (biology), Comte and Marks (sociology). Attempts of techno- and socio-Darwinism by Spencer.  End of 19th – beginning of the 20th century - beginning of psychological research in creativity. Creative Imagination by T. Ribot, works of Freud, etc.  Middle of the 20th century - System approach by Bertalanffy, Brainstorming by A. Osborn; control questions for inventors by Osborn, Thring, Laithwait, etc. History of Creativity 6/7/2016H.M. Bwisa (2006)

197 Adults' ThinkingChildren's Thinking"TRIZ" Thinking Fear of contradictions, aspiration to avoid them Non sensitiveness to contradictions, absence of aspiration to avoid them in their arguments Love for contradictions, search for contradictions in problems. Understanding that revealing and formulation of an obvious contradiction is a step toward to its resolution Metaphysical approach, consideration the objects, processes and phenomena separately, non systematically Syncretism, aspiration to connect "everything with everything" Systematic approach, aspiration to reveal the connections between remote objects, processes and phenomena, that often look as though they are not connected at all Unorganized combination of various types of deductions, that are often applied erroneously Traduction - type of deduction, erroneous from the classical logic viewpoint, were the deductions are made from the one specific fact to another specific one Deductions by analogue, transition of deductions, ideas, solutions between various systems, with various levels of generality (an organized combination of induction, deduction, and traduction) Combination of logic thinking and natural intuition Natural, inborn ability to produce an intuitive deduction Combination of logic thinking with purposely formed intuition "Laws obedience" - use of intuitively known or verbalized laws "Creation of laws " -spontaneous search and development of intuitive and verbalized laws Purposeful search and development of laws; verbalization of the intuitive laws Attempts to brain storm the difficult problem from one shot, retreat and giving the solving up in the case of failure Substitution of the problem. If a child is not able to solve a problem, he will purposely modify the conditions and the rules and than will solve the problem, that is possible for him to solve Substitution of the problem by another one, that can be solved by certain rules. Components of Creative Thinking 6/7/2016H.M. Bwisa (2006)

198  1950s  Brainstorming by A. Osborn  Morphological analysis by F. Zwicky  Value Engineering Analysis by L. Miles  Taghuchi methods  Fishbone diagram by Ishikawa, etc.  1960s  Synectics by Gordon – professional Brainstorming with the utilization of analogies  Revealing and resolving contradictions by J. Page  Control of though in creative work by E. Matchett  Systemic design – PERT and PATTERN  Technological forecasting  1970s  Innovative design by J. Jones  Evolution of technology by D. Sahal  Quality Function Deployment (QFD)  Psychological activation by DeBono  1980s  Third Wave by A. Toffler  Six Sigma  HAZOP and FMEA  DFMA  1990s  Innovative design by J. Jones  Concurrent engineering  TOC by Goldratt  Reengineering by M. Hammer  DFSS Innovation Techniques besides TRIZ 6/7/2016H.M. Bwisa (2006)

199  Russian acronym for the Theory of Inventive Problem Solving  Systematic, structured way of thinking supported by numerous tools  Science based on patterns of invention and evolution What is TRIZ? 6/7/2016H.M. Bwisa (2006)

200 Creativity The ability to bring something new into existence. But good and creative ideas have little value until they are converted into new products, services or processes. Innovation is the process of transforming creative ideas into useful application. Creativity is, therefore, a prerequisite to innovation. 6/7/2016

H.M. Bwisa (2006)201 Peter Drucker on creativity Successful entrepreneurs do not wait until "the Muse kisses them" and gives them a "bright idea"; they go to work Successful entrepreneurs do not depend on lady luck smiling at them. They create value and make a contribution. They aim high. THEY ARE CREATIVE 6/7/2016

H.M. Bwisa (2006)202 Creative thinking and innovation Incubation Creative Process Knowledge Accumulation Ideas Evaluation and Implementation 6/7/2016

H.M. Bwisa (2006)203 CREATIVE THINKING STAGES 1. IDEA GERMINATION Discover, recognize problem 2. PREPARATION Define problem and get all known facts 3. EFFORT Think divergently to get solution or frustration 4. INCUBATION Leave the problem in your subconscious mind 5. INSIGHT OR ILLUMINATION Recognize idea as feasible 6. EVALUATION AND VERIFICATION Counterchecking to support the insight RECOGNIZE RATIONALIZE FANTASIZE VALIDATE REALIZE 6/7/2016

H.M. Bwisa (2006)204 CREATIVITY ENHANCING TECHNIQUES 1. Brainstorming. 2. Idea checklist e.g. which other uses? How about modifying? Adaptation? Minification? rearrangement? Etc 3. Attribute listing i.e. weight, colour, shape, texture, material etc. How can they be useful? 4. Forced relationships e.g. combinations 6. Brain writing sessions. E.g. next slide 6/7/2016

H.M. Bwisa (2006)205 Brain writing sessions Boys Whirl In Secretive Activities Becoming Wise Is Seldom Acquired Big Wrestlers Inconvenience Sports Agents Beautiful Women Indulge Sparingly Altogether Business Wisdom Is Scarcely Achieved B achelors’ W ays I nvolve S erious A rguments B eing W asteful I s S erious A ntientrepreneurship 6/7/2016

H.M. Bwisa (2006)206 Innovation : Not a Linear Process Market knowledge Technology developments Changes in the external environment Knowledge of customer needs Company strategies Scientific advances IDEAS OPPORTUNITY IDENTIFICATION CONCEPT/ TECHNOLOGY DEVELOPMENT SCREENING AND BUSINESS ANALYSIS DEVELOPMENT AND COMMERCIALIZATION MARKET PENETRATION AND DEVELOPMENT 6/7/2016

H.M. Bwisa (2006)207 So what makes creative people creative? If we could look into the minds of creative geniuses, what would we see? Joy of discovery Questioning Desire to interrelate Tolerance of ambiguity Curiosity Sense of challenge Playfulness Inquisitiveness Willingness to take risks Positive discontent Desire to see things differently Desire to learn Willingness to experiment Wonder 6/7/2016

H.M. Bwisa (2006)208 Silvia Ashton-Warner J. P. Guilford E. Paul Torrance Howard Gardner Tell Me Show Me Involve Me Reach Me I Will Forget I May Remember I Will Begin to Learn We Will Learn Together Confucius Socrates John Dewey Maria Montesorri 6/7/2016

H.M. Bwisa (2006)209 Knowledge Comprehension Application Analysis Synthesis Evaluation Knowledge Application Comprehension Analysis Synthesis Creation Evaluation Benjamin Bloom’s Taxonomy Apparent Classroom Reality 6/7/2016

H.M. Bwisa (2006)210 __ jewelry__ tie tack __ fence__ art statue __ clean nails__ pipe cleaner __ gas appliance__ dwarf trombone cleaner __ anchor__ ammunition __ magnets__ sling shot __ bubble blower__ pin __ eyeglass frames__ zipper __ house wiring__ decoration __ plug puller__ corn skewers __ handles__ belt hanger __ swinging bridge__ jump rope __ bobby pin__ curler __ fork__ ear cleaner __ toothpick__ missile __ welding rod__ tie clip __ fish hook__ chain link __ cheese slicer__ tie wire During Workshops on Creative Thinking, participants were asked to come with ideas to improve, better use, or sell paper clips. Your task is to pick which of their ideas you think are creative. Work for three minutes. __ skewer__ stirrer __ needle__ toad stabber __ ladder__ hammock __ tire poker__ coat hanger __ hypo needle__ knitting needles __ eye scratcher__ sword __ paint stirrer__ flower holder __ picture hanger__ spring __ snowshoe__ lightning rod __ ice skate blade__ scrap iron __ ski pole__ toe brace __ tracer tool__ finger brace __ boot strap__ boot hook __ animal trap__ sled __ Christmas__ doll clothes ornaments hanger __ wind chime__ cigarette holder __ tinsel__ languages __ alphabets__ numbers __ hanging __ plant stake What is Creative? 6/7/2016

creativity techniques multiple interpretations: what is this: (… except from the obvious house) 6/7/2016211H.M. Bwisa (2006)

creativity techniques multiple interpretations & forced associations: how does this relate to reducing traffic jams: (… except from staying at home) flying instead of driving using (e- )mail as alternativ e make only prelimina ry appointm ents regard driving as a treat mouse traps … promote driving st night ANWB severe punishme nts car=mobil e office use ballistics or intelligent projectiles smaller cars associate prestige to non- driving external power source no alcohol: no accidents promote quiet life style drill holes in a jam 6/7/2016212H.M. Bwisa (2006)

213 Let’s now integrate technology & innovation with business 6/7/2016

H.M. Bwisa (2006)214The Small and Medium-Sized Enterprises (SMEs) Division of WIPO From Invention to Innovation While invention depends upon creativity, successful technological innovation requires integrating new knowledge with multiple business functions. 6/7/2016

215 Integration within Business Controlled Growth Sales Growth Earnings Growth Financial Perspective Business Dynamics Market Change Industry Change Organizational Change Social Change Technological Change Business Environment Competitive Intelligence Regulatory Awareness Directing the Evolution of Technological Systems Technology Awareness Business Intelligence Knowledge Application Business Core Competencies, Investments & Assets 6/7/2016H.M. Bwisa (2006)

216 Innovation by design 6/7/2016

design methodology design = taking decisions to increase the future happiness of stakeholders - proposing (many) concepts -selecting (the most) promising one(s) -identify choice-attributes (‘parameters’) -providing adequate values for choice-attributes - inventory of stakeholders -explicitly state ‘happiness’-attributes -optimise values for ‘happiness’-attributes via model-argumentation … …and (automated) optimisation C C C/M M M C C C/S M M M M C: creativity; S: selection; M: modelling 6/7/2016217H.M. Bwisa (2006)

design methodology design = taking decisions to increase the future happiness of stakeholders C: creativity; S: selection; M: modelling time activity M M S S C C M: introduce variables and relations; manipulate the values to achieve a purpose S: reduce the size of this collection on the basis of criteria C: create a large, varied collection of ‘things’ 6/7/2016218H.M. Bwisa (2006)

219 Topic seven: The innovative firm 6/7/2016

H.M. Bwisa (2006)220The Small and Medium-Sized Enterprises (SMEs) Division of WIPO Innovation, Intellectual Property and Poverty Reduction Critical Ingredients for Innovation: Intellectual Capital Human Capital Financial Capital Proximity Social Network Capital 6/7/2016

What characterises the best innovative companies? CENTRIM research findings: Creative Culture Ambitious Expectations Developmental Leadership Rigorous Decision-Making Processes for Managing Innovation Well-Defined Project Management Disciplines UPWARD © CENTRIM 6/7/2016221H.M. Bwisa (2006)

Creative Culture High energy, can-do spirit, open-minded Learn from outside the company & industry Many ideas to do things better or differently Personal initiatives supported by management Objective evaluation process selects best ideas to implement Succeed or fail fast, learn from failure, move on “Everyone feels proud of helping the enterprise to be more innovative” © CENTRIM 6/7/2016222H.M. Bwisa (2006)

Ambitious Expectations Everyone knows that ‘innovation is my job’ In the job description and assessment criteria Staff want company to change for the better High standards set - clear achievable targets Staff –are eager to implement new ideas –offer & accept help to implement new ideas Progress against plan is publicised “Everyone is expected to play their part in the innovation process” © CENTRIM 6/7/2016223H.M. Bwisa (2006)

Developmental Leadership Say ‘yes’ to new ideas, make input. Listen to staff input Set priority areas for innovation, explain benefits Permit, encourage, support, praise, coach, barrier breaker Identify training needs and fund their delivery Review lessons of success and failure “Innovation is being driven from the top” © CENTRIM6/7/2016224H.M. Bwisa (2006)

Rigorous Decision-Making Decisions can be taken quickly There are clear decisions about which ideas to adopt and which to drop Risks associated with new ideas are assessed systematically Not too many ideas are undertaken at once, so that the company is not over-stretched © CENTRIM “Timely, definite, evidence-based, comprehensive and comprehensible decisions are taken about which ideas to support” 6/7/2016225H.M. Bwisa (2006)

The Optimising Model Assumes rationality – choices made are consistent and value maximising Inherent assumptions that determine accuracy –Single, well-defined goal –All relevant criteria and viable options known –Preferences are clear and can be scored numerically –Criteria, weightings and scores are stable over time –The highest scoring option will be chosen Good for simple problems with limited options, low cost of researching and evaluating options © TVT BI 6/7/2016226H.M. Bwisa (2006)

Implicit Favourite Model Neither rational nor objective – typical entrepreneur! Satisfies the need for ‘acceptable’ solutions Decision quality depends on how your preferences on an issue align with reality Widely practised! Disincentivises colleagues from contributing © TVT BI for intuitive decisions that support personal preferences 6/7/2016227H.M. Bwisa (2006)

Processes for Managing Innovation Generate lots of ideas Analyse and evaluate opportunities and threats, study good practice Identify and evaluate risks and benefits ideas Develop & test ideas: multiple pilots, allocate time, review progress, learn from experience Exploit ideas fully: cost & benefit analysis, train, routinise © CENTRIM 6/7/2016228H.M. Bwisa (2006)

Project Management Disciplines Cross-company working without barriers Teams analyse/solve problems, commit to making projects work Identify, allocate, monitor & re-allocate resources to ensure progress Structure to deliver – a plan with critical path analysis, milestones, task list & success criteria © CENTRIM “We are good at creating teams that perform one-off tasks creatively and effectively” 6/7/2016229H.M. Bwisa (2006)

Innovation Projects Characteristics More uncertainty Higher risk Something new Optimistic and Enthusiastic people Involving change New technology Doing things for the first time © TVT BI 6/7/2016230H.M. Bwisa (2006)

To create something of value, the imagination must soar, unfettered, it must fly like a bird in search of new horizons. EXPANDING THE INNOVATION HORIZON 6/7/2016231H.M. Bwisa (2006)

EXPANDING THE INNOVATION HORIZON Deep business model innovation is critical. Product, service and operational innovations remain important, but competitive pressures have pushed business model innovation much higher on the CEO’s innovation agenda. Companies that can substantially change how they add value to their own or other industries differentiate themselves and gain a competitive edge. 6/7/2016232H.M. Bwisa (2006)

EXPANDING THE INNOVATION HORIZON External collaboration is indispensable. CEOs stressed the overwhelming importance of collaborative innovation, not just internally across traditional silos but also externally beyond company walls. Business partners and customers were cited as top external sources for innovative ideas 6/7/2016233H.M. Bwisa (2006)

EXPANDING THE INNOVATION HORIZON Innovation can be ignited by business and technology integration. Technology can enable and drive innovation. But to truly capitalize on technology’s potential and unleash an organization’s creative energy, technology know-how must be combined with its business and marketing insights. CEOs view consistent business and technology integration as crucial to innovation 6/7/2016234H.M. Bwisa (2006)

How to be an Innovative Organization Create a Strategic Vision Establish Innovation as a Priority Create Organizational Structures that Promote Collaboration Establish Processes to Convert Ideas to Innovations Allocate Resources Train Workforce on Creativity Tools Measure & Communicate Results Recognize Creative Behavior Reward Innovative Results 6/7/2016235H.M. Bwisa (2006)

 Create an external focus - define success in market terms  Be a clear thinker - simplify strategy into specific actions, make decisions and communicate priorities  Have imagination and courage - take risks on people and ideas  Energize teams through inclusiveness - connect with people, build both loyalty and committment  Develop expertise in a function or domain - use depth as a source of confidence to drive change Focus on People Traits of an Innovation Leader 6/7/2016236H.M. Bwisa (2006)

237 Risk & Return Competing Resources Examples Licensing Outsourcing certain functions Strategic Alliance Joint Venture Internal Commercialization Small risk, but limited returns also (unless patent position very strong Limits investment, but dependence on suppliers & partners Benefits of flexibility; risks of informal structure Shares investment & risk. Risk of partner conflict & culture clash Biggest risks & benefits. Allows complete control Few Allows outside resources & capabilities To be accessed Permits pooling of the resources/capabilities of more than one firm Substantial resource requirements Konica licensing its digital camera to HP Pixar’s movies (e.g. “Toy Story”) marketed & distributed by Disney. Apple and Sharp build the “Newton” PDA Microsoft and NBC formed MSNBC TI’s development of Digital Signal Processing Chips Alternative Strategies for Exploiting Innovation 6/7/2016

H.M. Bwisa (2006)238The Small and Medium-Sized Enterprises (SMEs) Division of WIPO Uncertainty & Risk Management in Tech-based Industries Sources of uncertainty Technological uncertainty Selection process for standards and dominant designs emerge is complex and difficult to predict, e.g. future of 3G Customer acceptance and adoption rates of innovations notoriously difficult to predict, e.g. PC, Xerox copier, Walkman Market uncertainty Strategies for managing risk Cooperating with lead users early identification of customer requirements –assistance in new product development Flexibilility —keep options open —use speed of response to adapt quickly to new information —learn from mistakes Limiting risk exposure —avoid major capital commitments (e.g. lease don’t buy) —outsource —alliances to access other firms’ resources & capabilities —keep debt low 6/7/2016

H.M. Bwisa (2006)239The Small and Medium-Sized Enterprises (SMEs) Division of WIPO Technology Adoption – Diffusion of Innovation Innovators:venturesome; greatest need Early adopters:opinion leaders; needs driven Early majority:deliberate Late majority:skeptics Laggards:traditionalists; suspicious 6/7/2016

H.M. Bwisa (2006)240The Small and Medium-Sized Enterprises (SMEs) Division of WIPO Innovation risk RISKS COSTS RESEARCH DEVELOPMENT COMMERCIALISATION 6/7/2016

H.M. Bwisa (2006)241 Topic eight: Innovation in small firms 6/7/2016

H.M. Bwisa (2006)242 There is no universally accepted definition of small firms. They are at times abbreviated MSEs (micro and small enterprises) and other times as SMEs (small and medium enterprises). Combining the two gives MSMEs. The definition of MSMEs varies considerably from country to country. Most countries have adopted the benchmark of employment. Some define them in terms of assets, a few in terms of sales turnover and yet others, in terms of share-holders’ fund. In a few countries, a hybrid definition is used such as employment as well as assets or turnover. Although definitions differ across countries, they have one thing in common; the vast majority of MSMEs are relatively small and over 95 percent of MSMEs employ less than 100 people. DEFINITION OF SMALL FIRMS 6/7/2016

H.M. Bwisa (2006)243 No. of EmployeesAdditional criteria Micro enterprises 1 to 9- - Small enterprises10 to 49Annual turnover < 7m Euro Total assets <5 m. Euro Medium enterprises50 to 249Annual turnover <40 m Euro or Total assets <27m. Euro GLOBAL PROJECTS & SERVICES (P) LTD. EUROPEAN DEFINITION OF SMEs 6/7/2016

H.M. Bwisa (2006)244 EnterpriseNumber of Employees Micro Enterprise1-3 Small Enterprise4-50 Medium Enterprise51-100 Large Enterprise101 and above GLOBAL PROJECTS & SERVICES (P) LTD. SUGGESTED DEFINITION OF SMEs IN UAE 6/7/2016

H.M. Bwisa (2006) 245 Schematic diagram illustrating Kenya’s criteria for defining size of enterprise (Ref: Based on Data from GoK Statistical Abstracts) 100+ employees =Large enterprise 10 – 49 employees = small enterprise 0-9 employees = micro enterprise 50-99 employees = medium enterprise (the missing middle) 6/7/2016245

H.M. Bwisa (2006) 246 Schematic Diagram illustrating the Missing Gap in the MSE Growth (Ref: Based on Data from GoK Statistical Abstracts) Large (21%) MSEs (65%) Medium (14%) A bsent 6/7/2016246

247 While MSEs generate employment and wealth, the majority are unable to grow vertically, thus resulting in the gap between MSEs and the Large enterprises, i.e. the missing middle/gap It is now well acknowledged that without vertical growth it would be difficult for MSEs to generate sustainable employment and serve as seedbed for industrialization. 6/7/2016H.M. Bwisa (2006)

248 Key major constraints continue to hinder the vertical growth of the MSE sector, i.e.; –Lack of Credit –Low level of Education –Negative “Jua Kali” Attitude –Lack of Market Information –Lack of Technology Advancement As well, limited work sites and lack of clear vision also contribute to the slow growth of the sector 6/7/2016H.M. Bwisa (2006)

249 Bwisa’s criteria for definition TiPPS Ti = Time = definition changes over time P = Place = it is not the same in USA as Kenya P = Purpose = e.g. For taxation even small is big S = Sector = labour intensive or capital intensive? 6/7/2016

H.M. Bwisa (2006)250 Small Firms Matter to Economies 94% +90% 93% % of economy 40% 70% 60% % contribution to GDP 87% % of business are self- employed individuals 90% % of workers are in microenterprise informal sector 6/7/2016

H.M. Bwisa (2006)251 Sl. No. CountryPercentage of SMEs in total businesses Percentage of Persons employed by SMEs in total businesses Percentage of Turn- over Generated by SMEs in total businesses 1.United Kingdom 99.855.445.4 2.Switzerland99.771.4N.A. 3.Australia88.051.043.9 4.Europe99.866.454.6 5.USA92.346.052.0 6.Japan99.769.542.5 GLOBAL PROJECTS & SERVICES (P) LTD. World-wise Contribution of SMEs 6/7/2016

H.M. Bwisa (2006)252 The global view: SME contribution to employment and GDP SME contribution to employment and GDP (median values) For government, SMEs contribute to wealth creation and generate tax revenues. SMEs constitute an important source of local supply and service provision to larger corporations. SMEs have extensive local knowledge of resources, supply patterns and purchasing trends. In society, they are an important source of employment. In business, SMEs represent an important source of innovation. Source: World Bank 6/7/2016

H.M. Bwisa (2006)253 The persistence of the informal economy Average size of the informal economy, in % of official GDP Source: Schneider, Friedrich. 2005. "Size and Measurement of the Informal Economy in 100 Countries around the world. " Working Paper. 2005-13. Center for Research in Economics, Management and the Arts, Johannes Kepler University of Linz. Informality is a matter of degree In developing countries, the size of the informal economy has been increasing as a percentage of official GDP. Many SMEs choose to remain informal because the costs and procedural burden of joining the formal economy outweigh the benefits. 6/7/2016

H.M. Bwisa (2006)254 6/7/2016MSEs - TIPS Presentation254 MSEs in Africa  What do they do?  Who works in them?  Where are they located?  How do they start? Change?

H.M. Bwisa (2006)255 Kenya: SME market overview Most SMEs operate in the Nairobi area Companies by Geography Source: CBS Data FIC SME Survey Region# of SMEsPercent Nairobi and environs18,41456% Coastal Region (Mombasa and Malindi)6,57720% Other Towns (including Kisumu, Nakuru, Nyeri, Eldoret) 7,89224% Total32,883100% 6/7/2016

H.M. Bwisa (2006)256 Kenya: SME market analysis Wholesale and retail trade, agriculture and manufacturing represent over 60 percent of the SME companies Source: CBS Data (Government of Kenya). IndustryAll SMEsPercent Wholesale and Retail Trade11,573 Manufacturing5,470 Agriculture4,706 Hotels and Restaurants2,660 Real Estate and Business Services2,192 Financial Services2,127 Transportation, Storage and Communication 1,948 Construction1,761 Others446 Total32,883 100% 6/7/2016

H.M. Bwisa (2006)257 Some facts on Micro and Small Enterprises in Africa By Dorothy McCormick Institute for Development Studies, University of Nairobi 30 October 2008 6/7/2016

H.M. Bwisa (2006)258 6/7/2016MSEs - TIPS Presentation258 Kenyan MSEs by Sector

H.M. Bwisa (2006)259 6/7/2016MSEs - TIPS Presentation259 Kenyan MSE Owners Gender: –52% male and 48% female –Women predominate in trade and particular service and manufacturing activities Age: mean age of 35 years Education: –90% have at least primary –35% have secondary or better

H.M. Bwisa (2006)260 6/7/2016MSEs - TIPS Presentation260 Kenyan MSE Workers 70% of businesses have no workers other than the owner Many are casual workers, trainees, and, especially in rural areas, family members Terms and conditions of work vary greatly

H.M. Bwisa (2006)261 6/7/2016MSEs - TIPS Presentation261 Enterprise Location

H.M. Bwisa (2006)262 6/7/2016MSEs - TIPS Presentation262 Start-ups  What attracts people into business? Hope for better income, preference for self- employment, skills, family background in business Lack of alternatives  What resources do entrepreneurs have? Own savings An idea of what they want to do

H.M. Bwisa (2006)263 6/7/2016MSEs - TIPS Presentation263 Business Life  Mean age of a Kenyan micro business is 6.9 years  Few outlive the founder  Most are under-capitalised  Few can access credit for expansion or working capital  Many suffer from poor infrastructure, insecurity, extremely competitive markets, and an unfavourable institutional environment  There is little information on “new” micro-enterprises such as technology firms, business process outsourcing, etc.

H.M. Bwisa (2006)264 6/7/2016MSEs - TIPS Presentation264 Closures  Urban enterprises more likely to close than rural  Age at closure 3 years for urban businesses 5 years for rural  Main reasons given for closure: Lack of operating funds Personal reasons Lack of customers End of McCormick

H.M. Bwisa (2006)265 What are some of the SME needs? If many entrepreneurs dip into their personal savings when financing a business, what are the implications when personal savings are scarce? Greater actual risk? Fewer business opportunities? Less investment for future growth? Slower overall business growth? When income does not fully cover even daily necessities, everything else becomes a luxury. Thus there are a great many things that the poor cannot afford to buy. Tools, materials, and upkeep for income- generating assets like transportation or farm equipment are all expenses that are routinely left out of the family budget. -World Resources Institute (2005). "Life on a Dollar a Day" Small and medium enterprises firms have more financing barriers than large firms. 1 Higher interest rates Less access to long-term loans, foreign banks, non-equity, and export finance More bank paperwork 6/7/2016

H.M. Bwisa (2006)266 Starting a business in developing countries Number of days to start a business Source: World Bank. 2007. Doing Business. "Starting a business is a leap of faith even in the best of circumstances. Governments should encourage the daring." World Bank. 2006. Doing Business. Ease of doing business rankings vs. number of SMEs Source: IFC. 2006. Micro, Small and Medium Enterprises: A Collection of Published Data. Business registration for SMEs needs to be quick, easy and of reasonable cost. 6/7/2016

H.M. Bwisa (2006)267 What are the challenges? Burdensome regulatory frameworks Lack of tax incentives and subsidies Absence of investor-friendly environment Lack of access to finance Lack of capacity-building programs and inadequate provision of vocational training 6/7/2016

H.M. Bwisa (2006)268 capacity to innovate. Creativity comes from individuals, using their own cultural background, their knowledge and their skills. Local content creation does not come from multinational companies whose object is to sell intellectual property developed elsewhere, and to implement and adapt their own solutions. Special characteristics of SMEs 6/7/2016

H.M. Bwisa (2006)269 Small enterprises are easier to manage, faster and more efficient in decision making, and can more easily adapt to different cultures and traditions. Characteristics of SMEs (cont ’ d) 6/7/2016

H.M. Bwisa (2006)270 Survival, Growth and Failure of Small Firms Competitive advantage and small firms –flexibility –quality of service –production efficiency and low overheads –product development and innovation Problems facing small businesses –selling and marketing –funding R&D –management skills –less ability to gain economies of scale Competitive advantage and small firms –flexibility –quality of service –production efficiency and low overheads –product development and innovation Problems facing small businesses –selling and marketing –funding R&D –management skills –less ability to gain economies of scale 6/7/2016

H.M. Bwisa (2006)271 The growth of small businesses –the process of growth The growth of small businesses –the process of growth Survival, Growth and Failure of Small Firms 6/7/2016

H.M. Bwisa (2006)272 COMMON PROBLEMS IN SME TECHNOLOGICAL UP GRADATION Poor financial situations and low levels of R&D Poor adaptability to changing trade trends Desire to avoid risk Non-availability of technically trained human resources; Emphasis on production and not on production costs. Lack of management skills Lack of access to technological information and consultancy services Isolation from technology hubs 6/7/2016

Characteristics of the innovation process that SMEs must take on board Increasing complexity in products –T–Technology convergence and integration –C–Customers demanding total solutions Technological excellence is not enough for success –C–Customer and business focus is also necessary Many different actors involved –S–Specialist companies play an increasing role Markets are getting increasingly complex –G–Globalization and more competition Knowledge and not hard technology is ever more important –N–Need to manage knowledge for innovation 6/7/2016273H.M. Bwisa (2006)

SME Innovation challenges Managing different phases in the technology life- cycle Developing foresight for emerging technologies Including a business and customer focus from the earliest phases of the innovation process Developing network relations Managing knowledge for innovative success 6/7/2016274H.M. Bwisa (2006)

Managing different technology phases Time, Effort and Cumulative Investment Rate of progress Physical limit Emerging Key Mature Each phase requires a different management approach 6/7/2016275H.M. Bwisa (2006)

Managing different phases Emerging technology Learning about the potential and development path of the technology Securing the protection of the technology Determining future investment needs Finding first commercial uses Key technology Maintaining a lead over competition Finding new uses – exploiting to the fullest Creating a viable and profitable business Mature technology Harvesting the technology Quitting at the right time Develop readiness to deal with new emerging tech. 6/7/2016276H.M. Bwisa (2006)

Developing foresight for emerging technologies Methods for market analysis does not work well for emerging technologies –Because of their key assumptions, which are: Known customer groups Known markets Known demand Known standards (and dominant designs) Known development of demand Known metrics and performance standards etc… What to do instead? –Working with lead-users –Trial and error processes to learn about the market –Using scenarios and other forecasting techniques where you don’t look into the past –Use several different methods in combination – if possible 6/7/2016277H.M. Bwisa (2006)

Business and customer perspective Technological excellence in isolation is not enough anymore Technological inventions only have value when they are united with customer needs –Can you find potential uses and users for the technology? –Is there a need? Has the technology any commercial value –Is the business case positive? –Are there any potential customers? –Are the necessary complementary assets in place? –Do you serve an existing market or do you need to create a new market? –etc.. 6/7/2016278H.M. Bwisa (2006)

Networks and open innovation No single company can expect to master all necessary skills and areas of expertise Networks and alliances are essential for success –Getting access to and control over critical resources –Getting access to capital A sharper division of labor within the innovation process –Firms focusing on generating inventions –Firms focusing on commercializing inventions Innovative ideas needs to flow between different actors in order to be successful 6/7/2016279H.M. Bwisa (2006)

Innovation and knowledge Need to focus on knowledge transformations and not just knowledge creation Creating new knowledge is just one element in innovation success Transforming knowledge is equally important – e.g.: –Capturing knowledge –Storing knowledge –Sharing knowledge –etc… 6/7/2016280H.M. Bwisa (2006)

Managing knowledge for innovation Knowledge creation Knowledge sharing Knowledge capture Knowledge Leverage Knowledge assembly Knowledge integration New knowledge Stock of knowledge New product Knowledge exploitation Knowledge Acquisition 6/7/2016281H.M. Bwisa (2006)

Five Key Lessons 1.Manage innovations according to the phase the technology is in 2.For emerging technologies do not solely rely on traditional techniques for market analysis 3.Make sure that the business and customer perspectives are included 4.Use and exploit networks to get success 5.Manage knowledge actively within the innovation process – do not just focus on knowledge creation but also on knowledge transformations 6/7/2016282H.M. Bwisa (2006)

Characteristics of the typical SME: technology point of view Barriers to innovation management Often focus on day-to-day management and survival –L–Little or no recognition new opportunities The financial situation of the SME is often fragile –N–No financial resources to invest in new projects Few managerial resources –L–Lack of specialized staff resources –L–Little documentation and few systems Need to rely on networks and alliances to get access to critical resources and competences Narrow product line/narrow market –“–“Putting all their eggs in one basket” 6/7/2016283H.M. Bwisa (2006)

Concluding remarks The manager of an SME should Change management style according to the phase Foresee the future development of technologies and markets Use networks and alliances to access critical resources – for example –Capital –Distribution channels Juggle different perspectives simultaneously Develop and maintain flexibility and readiness to cope with changing market and customer demands Manage knowledge transformations and not just knowledge creation 6/7/2016284H.M. Bwisa (2006)

285 Management role and style in the five stages of a small business Management role and style in the five stages of a small business 6/7/2016

H.M. Bwisa (2006)286 Management role and style in the five stages of a small business Management role and style in the five stages of a small business 6/7/2016

H.M. Bwisa (2006)291 Innovation: Small firms vs. large firms Advantages for small firms Internal flexibility Responsiveness to changing circumstances Small firm innovations Finding new market niches Market and customer service Key account management and customer relations 6/7/2016

H.M. Bwisa (2006)292 Large firm advantages: Capital High degree of market power with existing products Distribution and service facilities Access to technical expertise Access to professional management Greater ability to protect innovation 6/7/2016

H.M. Bwisa (2006)293 3M: Core Innovation policies 25% of annual revenues are generated from products less than 5 years old Each division must generate this ratio staff encouraged to take 15% off of work time to explore ideas that could become new products Innovators receive money to buy equipment and hire extra help to have an idea accepted, must get personal backing from a board member The innovator has the chance to become the division head of the new product and is also financially compensated failure is not punished but success is well-rewarded 6/7/2016

H.M. Bwisa (2006)294 The Indian SME example 6/7/2016

H.M. Bwisa (2006)295 Number 11.395 million Registered units 1.554 million Un-registered units9.841 million Employment 27.136 million ProductionIRs. 3514 billion Share of Industrial units95 percent Contribution to output of manufacturing sector 40 percent Contribution to direct exports34 percent Number of products7,500 Contribution to GDP6.81 percent GLOBAL PROJECTS & SERVICES (P) LTD. SMEs IN INDIA 6/7/2016

NEED A CONDUCIVE ENVIRONMENT TO BUILD UP INDEGENOUSTECHNOLOGICAL CAPABILITIES (ITC) LOCAL TRANSFER DATA BANKS (APCTT, NRDC) HUMAN RESOURCE R&D LABS (PATSER, HGT). FINANCIAL RESOURCES (ICICI, IDBI, SIDB) INT. TRANSFER 1. POLICIES and PROGRAMMES SMEs 6/7/2016296H.M. Bwisa (2006)

A conducive environment: 1Formulation of appropriate national policies and programmes, 2Building up Indigenous Technological Capacity and R&D alliances, 3Knowledge flows and technology databases, 4Inter firm linkages, communication and cooperation – Clusters, S&T Parks etc 6/7/2016297H.M. Bwisa (2006)

1.Formulation of appropriate national policies and programmes, Setting up Industrial District/Technology Parks/Clusters to promote sourcing of new technology, innovation and effective transfer Organizing local level information services, data banks and seminars in collaboration with professional bodies. Sending experts to SMEs to assist them with the introduction of new technologies To establish training centers for human resource development for SMEs. Establishing business centers Promote strategic alliances with R&D institutions, universities and other enterprises at national, regional and international level. 6/7/2016298H.M. Bwisa (2006)

MAJOR INDIAN GOVERNMENT INITIATIVES PROMOTING R&D AGENCY – INDUSTRY PARTNERSHIP Sl. No. Name of Agency /Programme Name of Programme/ Purpose Launch Year Accomplishments 1.NRDCTransfer of Technologies 1953Forged strong links with Indian / foreign R&D agencies; has large repository of wide range of technologies in almost all industrial R&D sector; has successfully exported technologies to Brazil, Burma, Bangladesh, Germany, Indonesia, Kenya, Madagascar, Malaysia, Nepal, Philippine, Senegal, Sri Lanka, Vietnam and USA 2.NSTEDB of DST S&T Entrepreneurship Programme (STEP) 17 STEP’s established near educational and research infrastructure to facilitate continued closer ties between R&D agencies and industry 3.NSTEDB of DST Entrepreneurship Development Cell (EDC) EDC set up in 55 academic institutions to provide information to budding technopreneurs; creating entrepreneurial culture, fostering better parent institute – industries - R&D agencies linkages. 6/7/2016 299H.M. Bwisa (2006)

Sl. No. Name of Agency /Programme Name of Programme/ Purpose Launch Year Accomplishments 4DOSTechnology Transfer and Industrial Consultancy Group ~1990~ 268 technologies of ISRO have been transferred to industries for commercialisation and more than 265 consultancy assignments have been undertaken by ISRO for small, medium and large-scale industries 5DBTBiotech Consortium India Ltd. (BCIL) 1990Provides linkages amongst res. institutions, industry, government and funding institutions to facilitate accelerated commercialisation of biotechnology. ~9 technologies transferred to industry and ~ 300 trainees trained for industry during last 5 years. 6TIFACHome Grown Technology (HGT) 1993>50 projects supported resulting in development of 30 technologies (10 commercialised) 7DSIRProgramme Aimed at Technological Self-Reliance (PATSER) (now called Tech. Development and Demonstration Prog.) 165 projects supported. 65 projects completed resulting in commercialisation of 30 technologies / prototypes; strengthening linkages of industry with over 30 research institutes. 6/7/2016300H.M. Bwisa (2006)

Sl. No. Name of Agency /Programme Name of Programme/ Purpose Launch Year Accomplishments 8DSTDrugs & Pharma Research Programme (DPRD) 199570 projects supported resulting in development of 6 products and filing of 13 process patents 9TDBConverting the fruits of indigenous res. into commercial products or services 1996131 projects of 107 industries resulting in development of many industries, rise of new industry 10DBTMicropropagation Technology Parks (MTP) 19972 MTPs at TERI and NCL; State-of-the-art tissue culture production facility with an annual production capacity of 2 million plants at TERI 11CSIRNew Millennium Indian Technology Leadership Initiative (NMITLI) 200133 projects supported resulting in 3 major technologies developed, 3 commercialised, many minor under development and networking of 167 R&D institutes with 55 industries 6/7/2016301H.M. Bwisa (2006)

Sl. No. Name of Agency /Programme Name of Programme/ Purpose Launch Year Accomplishments 12NSTEDB of DST Technology Business Incubator (TBI) Scheme 200116 TBIs established to provide hand holding, mentoring, specialised support services and networking during start-up phase of an enterprise 13DSTPharmaceuticals R&D Support Fund (PRDSF) 20055 projects being supported (Source: BANSAL, Rama Swami (2005): ‘R&D Agency – Industry Partnership for Technology Development and Transfer in Indian Cont ext’. PhD Thesis, Birla Institute of Technology and Science, Pilani, Rajasthan 6/7/2016302H.M. Bwisa (2006)

2. BUILDING UP INDEGENOUS TECHNOLOGICAL CAPACITY (ITCs) AND R&D ALLIANCES, IN INDIA, MOST OF THE SMEs ARE BUILDING UP ITCs THROUGH THE PROCESS OF LEARNING BY DOING. THE PROCESS OF ‘LEARNING BY DOING’ IS CENTRAL TO ‘INCREMENTAL INNOVATION’ AND ‘TECHNOLOGICAL CHANGE’. PROPER LINKAGES BETWEEN THE MANAGERIAL STAFF, INCLUDING ENGINEERS AND WORKERS AT THE SHOP FLOOR WITHIN AN ENTERPRISE. TWO WAY INFORMATION FLOW THE STUDIES SHOW THAT LEARNING BY DOING AND ENTREPRENEURIAL CAPABILITIES HAVE BEEN INSTRUMENTAL IN STRENGTHENING HUMANWARE AND TECHNOWARE AT THE ENTERPRISE LEVEL. INDIA (BOWONDER AND MIYAKE, 1988; KHARBANDA AND JAIN, 1997). 6/7/2016303H.M. Bwisa (2006)

LINKAGES WITH R&D INSTITUTIONS: mainly through CSIR Labs and SMES LEATHER: CENTRAL LEATHER RESEARCH INSTITUTE (CLRI), CHENNAI, INDIA, HAS SUCCESSFULLY INTRODUCED MICROPROCESSOR CONTROL IN TANNERY WET OPERATIONS AT INDUSTRY LEVEL AND PROMOTED CLEANER PROCESSING, WITH QUALITY AT INTERNATIONAL LEVEL. CAD IS TODAY WIDELY EMPLOYED BY EXPORT MANUFACTURERS OF FOOTWEAR AND GARMENTS. 6/7/2016304H.M. Bwisa (2006)

LINKAGES WITH R&D INSTITUTIONS: mainly through CSIR Labs and SMES MACHINERY INDUSTRY: MECHANICAL ENGINEERING RESEARCH AND DEVELOPMENT ORGANIZATION (MERADO) LUDHIANA, ASSISTS GROWING INDUSTRIAL CLUSTERS IN LUDHIANA IN THE FIELD OF KNITWEAR, AGRO INDUSTRIAL MACHINE TOOLS AND BICYCLES INDUSTRY. IT HAS CONTRIBUTED SIGNIFICANTLY TOWARDS DESIGN, DEVELOPMENT AND STANDARDIZATION OF INDUSTRIAL MACHINERY, AGRICULTURE MACHINERY, MACHINE TOOLS, SPECIAL PURPOSE MACHINES, CONSUMER DURABLES ETC. THE TECHNOLOGIES DEVELOPED BY MERADO, LUDHIANA HAVE BENEFITED NOT ONLY THE SMES IN THE STATE BUT ALSO IN OTHER STATES E.G. IN WEST BENGAL, HARYANA AND UP ETC. IT ALSO CATERS TO MAJOR TESTING FACILITIES FOR THE SMES IN LUDHIANA 6/7/2016305H.M. Bwisa (2006)

LINKAGES WITH R&D INSTITUTIONS: mainly through CSIR Labs and SMES TEXTILES: IN ANOTHER EXAMPLE, UNDER NISTADS BANKURA PROJECT, A SOFTWARE PACKAGE CALLED AS ‘MADHU’ (MODERNIZATION OF ARTISTIC DESIGN FOR HANDLOOM UNIT) WAS DEVELOPED IN COLLABORATION WITH INDIAN INSTITUTE OF TECHNOLOGY, KHARAGPUR. THIS CAD SOFTWARE PACKAGE FACILITATES COMPUTERIZED DIGITIZATION OF THE PICTURE/DESIGN PRODUCED BY THE ARTIST/DESIGNER. AS A RESULT A LARGE NUMBER OF CRAFTSMEN HAVE ADOPTED BLENDING OF THIS NEW TECHNOLOGY TO INCREASE EFFICIENCY, QUALITY, FLEXIBILITY AND COST EFFECTIVENESS. 6/7/2016306H.M. Bwisa (2006)

LINKAGES WITH R&D INSTITUTIONS: mainly through CSIR Labs and SMES CERAMICS: CENTRAL GLASS & CERAMIC RESEARCH INSTITUTE (CGCRI) NARODA CENTRE, AHMEDABAD, IS ACTIVELY SERVING THE CERAMIC CLUSTERS IN THE REGION. THIS IS A SMALL INSTITUTE WITH 18 SCIENTISTS PRIMARILY ENGAGED IN IMPROVEMENT OF TRADITIONAL CERAMICS AND RURAL POTTERY. THERE ARE 950 CERAMIC UNITS IN GUJARAT. MOST OF THESE CLUSTERS ARE POOR IN KNOWLEDGE BUT HAVE HIGH ENTREPRENEURIAL SPIRIT. IT HAS BEEN CONDUCTING TRAINING-CUM-DEMONSTRATION PROGRAMMES AND CAPSULE COURSES ON VARIOUS TOPICS OF CURRENT INTERESTS TO THE CERAMIC INDUSTRIES IT HAS ALSO CONDUCTED THREE ENTREPRENEURSHIP DEVELOPMENT PROGRAMMES FOR ENCOURAGING NEW ENTERPRISES. 6/7/2016307H.M. Bwisa (2006)

LINKAGES WITH R&D INSTITUTIONS: mainly through CSIR Labs and SMES THE CLUSTERS AT MORBI, HIMMAT NAGAR AND MEHSANA ETC. HAVE BENEFITED A LOT IN TECHNOLOGY DEVELOPMENT FROM CGCRI, IN IMPROVING THE QUALITY OF THE RAW MATERIALS FOR THE MANUFACTURE OF CERAMIC TILES AND IN IMPROVING PROCESS CONTROL PARAMETERS. ONE OF THE IMPORTANT ACHIEVEMENTS OF THE INSTITUTE HAS BEEN THAT IT HAS BEEN ABLE TO USE THE FLY ASH (A HIGHLY POLLUTING WASTE PRODUCT OF THERMAL PLANTS) IN THE MANUFACTURE OF CERAMIC TILES. IT HAS DEVELOPED THE TECHNOLOGY FOR PRODUCTION OF BONE CHINA UTILIZING THE CHINA CLAYS OF GUJARAT. THIS TECHNOLOGY HAS BEEN TRANSFERRED TO 21 UNITS THE TRAINING OF THE WORKERS IS CARRIED ON THE SITE WHICH HAS RECEIVED VERY ENCOURAGING RESPONSE. 6/7/2016308H.M. Bwisa (2006)

LINKAGES WITH R&D INSTITUTIONS: mainly through CSIR Labs and SMES ONE OF THE CASE EXAMPLES OF ACADEMIA – ENTERPRISE LINKAGES IS THE ‘SONYA CERAMICS’ IN AHMEDABAD. IN COOPERATION WITH CGCRI, IT HAS BEEN ABLE TO IMPROVE THE PROCESS TECHNOLOGY. TODAY THE ENTERPRISE IS MANUFACTURING ABOUT 560 PRODUCTS - FROM THERMAL INSULATORS TO SEWAGE PIPES. IT HAS TAKEN 9002 ISO STANDARD AND WORKS IN CLOSE COOPERATION WITH THE CUSTOMERS. TODAY THE PRODUCTS OF THIS ENTERPRISE ARE BEING EXPORTED TO 15 COUNTRIES IN USA AND EUROPE. 6/7/2016309H.M. Bwisa (2006)

NUMBER OF TECHNOLOGIES DEVELOPED BY INDUSTRIES THROUGH PARTNERSHIP WITH R&D AGENCIES IN 10 YEARS TILL 2005 Type / DisciplineName of IndustryR&D Investment (% of Annual turnover) New Tech developed through Partnership in last 10 yrs Tech inducted / commercialised from R&D agencies in last 10 yrs. PharmaNicholas Piramal India Ltd.>100 Cr.------- BiotechShantha Biotechnics Ltd., Hyderabad 10-15%20/1 DrugsJ. Mitra & Co. Ltd., DelhiRs. 1.55 Cr. during 2003-04 33 / 3 BiotechDalmia Centre for R&D, Coimbatore Rs. 100 lakhs1515 / 10 Microbiological & Chemical Sc. Arbro Pharmaceuticals Ltd., New Delhi 17.59 lakhs----NA Biopharma / Biotech Millipore India Pvt. Ltd., BangaloreNA AgricultureSungro Seeds Ltd., Delhi----100 new products100 / 100 Petrochemical Production Indian Petro-chemicals Corp. Ltd., Vadodra Rs. 10 Cr.88 /8 Chem (Agro)Rallis Research Centre, BangaloreRs.10 Cr.Nil ChemicalGodavari Sugar Mills Ltd., MumbaiRs.80 lakhs2 Chemicals, drugsRubamin Limited, Vadodra--------------------- Chemicals & PaintsMathur Corr-Tech (P) Ltd, Coimbatore Rs 3 lakhs6------ 6/7/2016 310H.M. Bwisa (2006)

Type / DisciplineName of IndustryR&D Investment (% of Annual turnover) New Tech developed through Partnership in last 10 yrs Tech inducted / commercialised from R&D agencies in last 10 yrs. SteelTata Steel Mines Division, Jharkhand ~ Rs 150 Cr.11/0 EngineeringTata Refractories Ltd., Orissa~Rs.15 Cr. (T/O Rs. 400 cr.) NilNil/Nil Electro-chemicalHigh Energy Batteries India Ltd, Pudukottai ~Rs 434.01 lakhs as on 31.3.2005 31/1 Consumer Electronics Ahuja Radios, New DelhiRs.44 lakhsManyNil/Nil ElectronicsOmtek Electronics (P) Ltd., Bhubaneswar Rs. 50 lakhs (T/O Rs.1.50 cr.) Nil (36 Self developed Tech.) 36 / 13 EngineeringBasic Technology (P) Ltd., KolkataRs. 20 lakhs106 / 4 MinesSatna Cement Works, Satna~Rs.1.5 lakhsNilNil/Nil EngineeringSt. Josephs Tiles, Ernakulam--------11/1 Engineering & Infrastructure Shriram Energy Systems Ltd. Hyderabad ------1Nil/Nil EngineeringAbaqus Engg. India, ChennaiNil Nil/Nil EngineeringAdor Fontech. Ltd., BangaloreNil Nil/Nil Atomic EnergyIndira Gandhi Centre for Atomic Res., Kalpakkam ---- (Source: BANSAL, Rama Swami (2005): ‘R&D Agency – Industry Partnership for Technology Development and Transfer in Indian Context’. PhD Thesis, Birla Institute of Technology and Science, Pilani, Rajasthan 6/7/2016 311H.M. Bwisa (2006)

3. KNOWLEDGE FLOWS AND TECHNOLOGY DATABASES MOST OF THE SMES DO NOT HAVE ACCESS TO WELL RESEARCHED TECHNOLOGY DATABASES MAJOR TECHNOLOGY INFORMATION DATA BANK IS THE NATIONAL RESEARCH AND DEVELOPMENT CORPORATION (NRDC), WHICH SERVE AS AN IMPORTANT LINK BETWEEN RESEARCH AND SMEs. NRDC ACQUIRES, EVALUATES, DEVELOPS AND TRANSFERS ALL WORTHWHILE TECHNOLOGIES GENERATED AT THE VARIOUS NATIONAL LABORATORIES. THE TECHNOLOGIES AVAILABLE WITH NRDC FOR COMMERCIAL EXPLOITATION COVER A WIDE RANGE OF PRODUCTS, NAMELY, DRUGS AND PHARMACEUTICAL, PESTICIDES AND HERBICIDES, PLASTICIZERS, RESINS, ELECTRO-CHEMICAL PRODUCTS, METALS, PAINTS AND VARNISHES, LEATHER CHEMICALS AND AUXILLIARIES, ELECTRICAL AND ELECTRONIC GOODS, BUILDING MATERIALS, ETC. 6/7/2016312H.M. Bwisa (2006)

IT PROVIDES A VERY COMPREHENSIVE INTERNATIONAL PATENT SEARCH AND ALSO HAS A FEW RENOWNED INTERNATIONAL DATA BASES ON LINE FOR CARRYING OUT SEARCH. AN IMPORTANT DATABASE ON LOCAL INNOVATIONS IS THE “HONEY BEE DATABASE” SUPPORTED BY SRISTI WHICH IS ONE OF THE BIGGEST STORES OF KNOWLEDGE ON LOCAL INNOVATIONS BY FARMERS AND ARTISANS COVERING ABOUT 72 COUNTRIES. IT IS A KNOWLEDGE NETWORK, WHICH POOLS THE TECHNOLOGICAL SOLUTIONS DEVELOPED BY PEOPLE AROUND THE WORLD. NETWORKING OF THESE DATABASES CAN BE OF IMMENSE USE TO MITIGATE THE NUMEROUS TECHNOLOGICAL PROBLEMS OF THE SMES 6/7/2016313H.M. Bwisa (2006)

4. INTER FIRM LINKAGES, Communication and Cooperation AS MOST SMES LACK FINANCIAL RESOURCES, THE BEST WAY IS TO ENTER INTO LINKAGES AND PARTNERSHIPS WITH OTHER ENTERPRISES, ACADEMIA AND/OR R&D INSTITUTIONS. OVER THE PAST DECADE, EMPHASIS IN THE CONCEPT OF TECHNOLOGY TRANSFER HAS GRADUALLY SHIFTED TOWARDS "CREATIVE PARTNERSHIPS" OR “STRATEGIC ALLIANCES” TO FORM LEARNING ORGANIZATIONS. LEARNING BY DOING SHIFTING TO “LEARNING BY INTERACTION’ IS AN IMPORTANT FEATURE OF TECHNOLOGICAL UPGRADATION AND CAN ONLY HAPPEN WHEN FIRMS COOPERATE AND INTERACT THROUGH STRATEGIC ALLIANCES AND OTHER FORMS OF LINKAGES. 6/7/2016314H.M. Bwisa (2006)

THE CLUSTERS, WHICH OFFER GOOD OPPORTUNITIES FOR INTERACTION AND INDUSTRIAL UPGRADING THE COMMON FEATURE OF THESE NEW FORMS LIES IN THE SHARING OF KNOWLEDGE IN TECHNOLOGICAL CAPABILITIES AND IN COOPERATIVE INTENTIONS, THE DIVERSE FORMS OF ALLIANCES INCLUDE : CLUSTERS, S&T PARKS, ASSOCIATIONS, INCUBATORS,CONSORTIA AND INDUSTRIAL PARKS SUCH PARTNERSHIPS HAVE TECHNICAL EDUCATION, TRAINING AND RETRAINING, INNOVATION, AND SUSTAINABILITY AS INHERENT FEATURES. 6/7/2016315H.M. Bwisa (2006)

NETWORKING / INDUSTRIAL DISTRICTS / CLUSTERS A SIMPLE DEFINITION OF A CLUSTER SUGGESTS THAT IT IS A NETWORK MADE FOR INFORMATION AND RESOURCE SHARING BETWEEN PEOPLE. CLUSTERS ARE DEFINED AS CONCENTRATION OF ACTIVITIES BELONGING TO THE SAME SUB SECTOR. SUCH CLUSTERS ARE A COMMON PHENOMENON IN ASIA. 6/7/2016316H.M. Bwisa (2006)

Cluster Functions as WEB COMMUNICATION, COOPEARTION and LINKAGES FOR TRANSFER OF TECHNOLOGY and SHARING OF RESOURCES BETWEEN SMEs LEARNING BY DOING AND LEARNING BY INTERACTION COMMUNICATION AND FEED BACKS FROM TOP TO BOTTOM AND BOTTOM TO TOP IMPORTANT FOR INCREMENTAL INNOVATION AND TECHNOLOGICAL CHANGE 6/7/2016317H.M. Bwisa (2006)

CLUSTERS APPROACH DEVELOPMENTS IN INDIA 138 INDUSTRIAL CLUSTERS A LARGE NUMBER OF SMALL FIRMS ENGAGED IN SPECIALIZED INDUSTRIES SUCH AS: LOCKS AT ALIGARH, LEATHER FOOTWEAR AT AGRA AND KANPUR; AGRA CLUSTER MAKES.15 MILLION PAIRS OF SHOES PER DAY WITH A PRODUCTION VALUE OF 1.3 M US$ AND EXPORTING SHOES WORTH US $ 57.14 MILLION PER YEAR. COTTON HOSIERY AT CALCUTTA AND DELHI; BLANKETS IN PANIPAT; POWER LOOMS AT BHIWADI; DIAMOND POLISHING IN SURAT. WOOLLEN GARMENTS, BICYCLE AND BICYCLE PARTS, SEWING MACHINE PARTS AND MACHINE TOOLS IN LUDHIANA; LUDHIANA CLUSTERS MAKE 95% OF COUNTRY’S WOOLEN KNITWEAR; 85% OF SEWING MACHINES AND 60% OF BICYCLE AND BICYCLE PARTS. PRINTING AND PRINTING GOODS, WATER PIPES AND BATHROOM FIXTURES IN JALLANDHAR; FOUNDRIES IN BATALA, ETC. 6/7/2016318H.M. Bwisa (2006)

KNITWEAR CLUSTER IN TIRUPPUR, TAMIL NADU IS RESPONSIBLE FOR 85% OF INDIAN MARKET AND ITS EXPORT EARNINGS HAVE EXPANDED FROM US$ 25 MILLION IN 1986 TO US$ 636 MILLION IN 1997. WHAT IS INTERESTING ABOUT TIRUPPUR CLUSTER IS THAT IT IS ORGANIZED IN A WEB OF SMALL WORK PLACES THROUGH WHICH THE ENTIRE TOWN WORKS LIKE A LIVING INDUSTRIAL ORGANIZATION DIESEL ENGINE CLUSTER-RAJKOT, GUJARAT, INDIA RAJKOT DIESEL ENGINE INDUSTRY IS THE LEADER IN INDIAN DIESEL ENGINE MARKET WITH MORE THAN 60% OF INDIA’S TOTAL DIESEL ENGINE PRODUCTION. THE INDUSTRY IS MADE UP OF SMALL-SCALE MANUFACTURERS AND HAS ABOUT 400 FOUNDRY UNITS IN THE CITY. IT EMPLOYS MORE THAN 40,000 WORKERS. INDIA CONTINUED TO RELY ON THE INDIGENISED DIESEL ENGINES, AND IS ALSO ABLE TO EXPORT TO DEVELOPING COUNTRIES 6/7/2016319H.M. Bwisa (2006)

GERMAN MODEL OF ENTREPRENEURIAL INNOVATIONS LEARNING BY DOING LEARNING BY INTERACTION LEARNING REGION IN GERMANY THE AACHEN REGION HAS BEEN DESCRIBED AS THE LEARNING REGION, AS IT HAS A UNIQUE NETWORK OF ACADEMIA AND THE ENTERPRISE FOR CONTINUOUS INNOVATIONS AND TRANSFER OF TECHNOLOGIES FROM ACADEMIA TO THE ENTERPRISE. THE AACHEN REGION HAS A TOTAL POPULATION OF 3,50,000. IN THE REGION THERE ARE AT PRESENT 8000 COMPANIES, FOUR UNIVERSITIES, 20 R&D INSTITUTES HAVING 50000 RESEARCHERS EACH. 6/7/2016320H.M. Bwisa (2006)

A CONSIDERABLE PROPORTION OF NEW BUSINESSES IN THE AACHEN REGION ARE SPIN-OFFS RESULTING FROM RESEARCH STAFF MOVING FROM THE UNIVERSITY TO THE PRIVATE SECTOR. MORE THAN 80 PER CENT OF THE NEW ENTERPRISES LAUNCHED IN THE AACHEN TECHNOLOGY CENTRE (TZA) SINCE 1984 HAVE ORIGINATED FROM THE IMMEDIATE ENVIRONMENT OF AACHEN UNIVERSITY OF TECHNOLOGY. The main features of this region are: The companies in the cluster cooperate with each other to find solutions to the problems. Has strong linkages with the University of Aachen for finding out high tech solutions. Learning by doing has been the main characteristic feature in the development of the company. It also gives VOCATIONAL training to the students of the university. 6/7/2016321H.M. Bwisa (2006)

EMILIA-ROMAGNA IN ITALY IS THE CHARACTERISTIC MODEL OF INNOVATIVE SMES IN ITALY, AND IS ALSO KNOWN AS THE THIRD ITALY. THE POPULATION OF EMILIA-ROMAGNA IS 3,924,352, APPROXIMATELY 7% OF THE NATIONAL POPULATION. THE REGION ACCOUNTS FOR 8.3 PERCENT OF NATIONAL EMPLOYMENT AND NEARLY 9 PERCENT OF THE GROSS NATIONAL PRODUCT THE REGION HAS THE THIRD LOWEST RATE OF UNEMPLOYMENT (4.5% COMPARED TO THE NATIONAL AVERAGE OF OVER 11%) AMONG ITALY’S 20 REGIONS, THE PRODUCTIVE SYSTEM IS CHARACTERIZED BY SMALL AND MEDIUM- SIZED ENTERPRISES (SMES) (EMPLOYING AN AVERAGE OF 5.48 PEOPLE PER ENTERPRISE), WITH A HUGE NUMBER OF ARTISAN ENTERPRISES (126,639 OUT OF 304,947) AND CO-OPERATIVES (7,923, INCLUDING 2,336 FARMING CO-OPERATIVES AND 1,187 LABOUR AND MANUFACTURING CO-OPERATIVES). THE REGION COMPRISES OF NINE PROVINCES i.e. BOLOGNA, FERRARA, FORLI-CESENA, MODENA, PARMA, PIACENZA, RAVENNA, REGGIO EMILIA AND RIMINI. 6/7/2016322H.M. Bwisa (2006)

CHARACTERISTICS ARE: HORIZONTAL INTEGRATION FORMATION OF ASSOCIATIONS TO PROMOTE EXPORTS AND FORM BUSINESS ALLIANCES. FOR EXAMPLE THE EMILIA-ROMAGNA REGIONAL FEDERATION OF THE NATIONAL CONFEDERATION OF THE CRAFT AND THE SMALL AND MEDIUM ENTERPRISES (THE EMILIA-ROMAGNA CAN) REPRESENTS AND DEFENDS ALL INTERESTS OF CRAFT FIRMS, OF SMALL AND MEDIUM ENTERPRISES AND WORKERS IN RELATIONS WITH PUBLIC ADMINISTRATION, AND WITH POLITICAL, SOCIAL AND ECONOMIC ORGANIZATIONS. 6/7/2016323H.M. Bwisa (2006)

THE EMILIA-ROMAGNA CAN HAS SET UP AN EXTRAORDINARY RANGE OF SERVICES AND BENEFITS WHICH INCLUDE: ASSISTANCE IN THE STARTING UP OF NEW BUSINESSES ASSISTANCE AND CONSULTANCY TO ENTERPRISES RUN BY YOUNG ENTREPRENEURS BUSINESS, MANAGERIAL, VOCATIONAL TRAINING INFORMATION AND CONSULTANCY IN EXPORT, PROMOTION, INTERNATIONALIZATION AND MARKETING ASSISTANCE IN THE AREA OF QUALITY CONTROL CERTIFICATION TAX SERVICES ASSISTANCE IN CONTRACTS 6/7/2016324H.M. Bwisa (2006)

THE SUSSEX INNOVATION CENTRE, SCIENCE PARK SQUARE, BRIGHTON, UK THE SUSSEX INNOVATION CENTRE, OPENED IN MAY 1996, PROVIDES SUPPORT FOR THE CREATION AND GROWTH OF TECHNOLOGY AND KNOWLEDGE BASED COMPANIES IN SUSSEX. THE CENTRE IS A NOW THRIVING BUSINESS ENVIRONMENT FOR NEARLY 30 HIGH GROWTH COMPANIES. THE BASIC FEATURES OF THE SUSSEX INNOVATION CENTRE ARE: THROUGH AN INITIAL PUBLIC INVESTMENT OF OVER 2 MILLION THE SUSSEX INNOVATION CENTRE WAS DEVELOPED AS A PURPOSE BUILT BUSINESS INCUBATION FACILITY BASED ON THE CAMPUS OF THE UNIVERSITY OF SUSSEX. RENT LEVELS ARE SET WHICH, WHILE REFLECTING THE PRIME LOCATION AND EXCELLENT FACILITIES OFFER THE TENANT COMPANIES AN IDEAL, FLEXIBLE AND RELATIVELY INEXPENSIVE ENVIRONMENT TO GROW THEIR BUSINESS. 6/7/2016325H.M. Bwisa (2006)

THE INNOVATION CENTRE SUPPLEMENTS ITS INCOME THROUGH UNDERTAKING PROJECTS, CONSULTANCY, SPONSORSHIP AND RUNNING EVENTS WHICH ARE CONSISTENT WITH ITS CORE OBJECTIVES OF INCUBATION, COMMERCIALIZATION AND TO ACT AS A FOCUS FOR NEW TECHNOLOGY COMPANIES IN SUSSEX. THE UNIVERSITIES GAINS THROUGH AN INCREASED FOCUS ON COMMERCIALIZATION, A HIGHER PROFILE WITHIN THE LOCAL BUSINESS COMMUNITY AND A CLEAR ROUTE FOR ACADEMIC SPIN OFFS. 6/7/2016326H.M. Bwisa (2006)

MAJOR INDIAN GOVERNMENT INITIATIVES PROMOTING R&D AGENCY – INDUSTRY PARTNERSHIP Sl. No. Name of Agency /Programme Name of Programme/ Purpose Launch Year Accomplishments 1.NRDCTransfer of Technologies 1953Forged strong links with Indian / foreign R&D agencies; has large repository of wide range of technologies in almost all industrial R&D sector; has successfully exported technologies to Brazil, Burma, Bangladesh, Germany, Indonesia, Kenya, Madagascar, Malaysia, Nepal, Philippine, Senegal, Sri Lanka, Vietnam and USA 2.NSTEDB of DST S&T Entrepreneurship Programme (STEP) 17 STEP’s established near educational and research infrastructure to facilitate continued closer ties between R&D agencies and industry 3.NSTEDB of DST Entrepreneurship Development Cell (EDC) EDC set up in 55 academic institutions to provide information to budding technopreneurs; creating entrepreneurial culture, fostering better parent institute – industries - R&D agencies linkages. 6/7/2016 327H.M. Bwisa (2006)

Sl. No. Name of Agency /Programme Name of Programme/ Purpose Launch Year Accomplishments 4DOSTechnology Transfer and Industrial Consultancy Group ~1990~ 268 technologies of ISRO have been transferred to industries for commercialisation and more than 265 consultancy assignments have been undertaken by ISRO for small, medium and large-scale industries 5DBTBiotech Consortium India Ltd. (BCIL) 1990Provides linkages amongst res. institutions, industry, government and funding institutions to facilitate accelerated commercialisation of biotechnology. ~9 technologies transferred to industry and ~ 300 trainees trained for industry during last 5 years. 6TIFACHome Grown Technology (HGT) 1993>50 projects supported resulting in development of 30 technologies (10 commercialised) 7DSIRProgramme Aimed at Technological Self-Reliance (PATSER) (now called Tech. Development and Demonstration Prog.) 165 projects supported. 65 projects completed resulting in commercialisation of 30 technologies / prototypes; strengthening linkages of industry with over 30 research institutes. 6/7/2016328H.M. Bwisa (2006)

Sl. No. Name of Agency /Programme Name of Programme/ Purpose Launch Year Accomplishments 8DSTDrugs & Pharma Research Programme (DPRD) 199570 projects supported resulting in development of 6 products and filing of 13 process patents 9TDBConverting the fruits of indigenous res. into commercial products or services 1996131 projects of 107 industries resulting in development of many industries, rise of new industry 10DBTMicropropagation Technology Parks (MTP) 19972 MTPs at TERI and NCL; State-of-the-art tissue culture production facility with an annual production capacity of 2 million plants at TERI 11CSIRNew Millennium Indian Technology Leadership Initiative (NMITLI) 200133 projects supported resulting in 3 major technologies developed, 3 commercialised, many minor under development and networking of 167 R&D institutes with 55 industries 6/7/2016329H.M. Bwisa (2006)

Sl. No. Name of Agency /Programme Name of Programme/ Purpose Launch Year Accomplishments 12NSTEDB of DST Technology Business Incubator (TBI) Scheme 200116 TBIs established to provide hand holding, mentoring, specialised support services and networking during start-up phase of an enterprise 13DSTPharmaceuticals R&D Support Fund (PRDSF) 20055 projects being supported (Source: BANSAL, Rama Swami (2005): ‘R&D Agency – Industry Partnership for Technology Development and Transfer in Indian Cont ext’. PhD Thesis, Birla Institute of Technology and Science, Pilani, Rajasthan 6/7/2016330H.M. Bwisa (2006)

331 Topic nine: New- Product Development and Product Life-Cycle Strategies 6/7/2016

H.M. Bwisa (2006)332 Profitability from New Product Development: why or why not? It’s a great little product, but we’re still working on packaging and handling 6/7/2016

H.M. Bwisa (2006)333 new product development is risky business Anders Olsson and Lisa Olsdotter emigrated from Nora August 25, 1854 to the United States and Bishop Hill, Illinois 6/7/2016

H.M. Bwisa (2006)334 Success Rate Entirely New Products 3000 raw ideas.03% 300 submitted ideas.3% 125 beginning projects.8% 9 large developments 11% 4 major developments 25% 1.7 launches 60% 1 commercial success Stevens and Burley, RTM May-June 1997 6/7/2016

H.M. Bwisa (2006)335 The chances for failure are greatest when you know the least about the technology being developed and/or the target market The “Familiarity Matrix” allows mapping of R&D projects based on the extent of knowledge about technologies and markets 6/7/2016

H.M. Bwisa (2006)336 Familiarity Matrix: A Guide Place Your Project in One of the Nine Boxes Decreasing knowledge of the technology Decreasing knowledge of the market Increasing risk of failure Familiar New, familiar New, unfamiliar 6/7/2016

H.M. Bwisa (2006)337 Familiarity Matrix: A Guide Place Your Project in One of the Nine Boxes Decreasing knowledge of the technology Decreasing knowledge of the market Market Penetration Market Extension Market Expansion Product Extension Business Extension Business Expansion New Business Model Business Expansion Product Expansion 6/7/2016

H.M. Bwisa (2006)338 Familiarity Matrix: A Guide Place Your Project in One of the Nine Boxes Market Penetration Market Extension Market Expansion Product Extension Business Extension Business Expansion New Business Model Business Expansion Product Expansion Probability of Success New Product with unrelated technology in existing market: 50% 6/7/2016

H.M. Bwisa (2006)339 Familiarity Matrix: A Guide Place Your Project in One of the Nine Boxes Market Penetration Market Extension Market Expansion Product Extension Business Extension Business Expansion New Business Model Business Expansion Product Expansion Probability of Success Existing product in a new market: 15% 6/7/2016

H.M. Bwisa (2006)340 Familiarity Matrix: A Guide Place Your Project in One of the Nine Boxes Market Penetration Market Extension Market Expansion Product Extension Business Extension Business Expansion New Business Model Business Expansion Product Expansion Probability of Success Improved product in existing market: 75% “Suicide Square”.03% 6/7/2016

H.M. Bwisa (2006)341 Familiarity Matrix: A Guide Place Your Project in One of the Nine Boxes Market Penetration Market Extension Market Expansion Product Extension Business Extension Business Expansion New Business Model Business Expansion Product Expansion Probability of Success New Product in a New Market: 5% 6/7/2016

H.M. Bwisa (2006)342 Time Profitability Disruptive Innovation Application Innovation Product Innovation Process Innovation Marketing Innovation Business Model Innovation Structural Innovation Different types of Innovation give greater profitability at different points in the life cycle of a product family Geoffrey A. Moore “Darwin and the Demon: Innovating Within Established Enterprises” HBR July-August 2004 pp.87-92 New product invention, tailoring, and development 6/7/2016

H.M. Bwisa (2006)343 Different types of Innovation Disruptive Innovation – an invention that can displace the present market leader or create an entirely new market DuPont Diamond Award Winners 2002 Tetra Pak, Inc., Sweden / USA Nestlé Purina PetCare, Italy First Retortable Carton System for Nestlé Dog Food. This represents the first retortable carton packaging system on the market. 6/7/2016

H.M. Bwisa (2006)344 Different types of Innovation Application Innovation: Takes existing technologies into new markets to serve new purposes 6/7/2016

H.M. Bwisa (2006)345 Different types of Innovation Product Innovation: Takes an established product to the next level – reduced cost, improved quality, greater functionality 6/7/2016

H.M. Bwisa (2006)346 Different types of Innovation Process Innovation: Makes processes for established products in established markets more effective and more efficient 6/7/2016

H.M. Bwisa (2006)347 Different types of Innovation Experiential Innovation: Makes some superficial changes in the product that improve the customer’s experience with the product – adding delight, greater satisfaction, or reassurance 6/7/2016

H.M. Bwisa (2006)348 Different types of Innovation Marketing Innovation: Improves the interaction with customers 6/7/2016

H.M. Bwisa (2006)349 Different types of Innovation Business Model Innovation: Reframes the role of the company in the value chain or the way in which the company meets customer needs 6/7/2016

H.M. Bwisa (2006)350 Different types of Innovation Structural Innovation: Capitalizes on disruption and changes in the industry to restructure industry relationships 6/7/2016

H.M. Bwisa (2006)351 It all starts with New Product Development But New types of innovation need to be introduced with new innovation skills to sustain profitability 6/7/2016

H.M. Bwisa (2006)352 A company cannot rest on its laurels; many product class winners have fallen victim to their success US Steel (steel) ICI (chemicals) Kodak (photography) Goodyear (tires) Polaroid (instant photography) Zenith (TVs) IBM (PCs) Smith-Corona (typewriters) 6/7/2016

H.M. Bwisa (2006)353 1802183018501900192519451990200020502090 Birth Growth Maturity Birth Growth Maturity Birth Growth Maturity Explosives Chemicals,Energy Chemistry, Biology... Knowledge - Intensive Solutions 6/7/2016

H.M. Bwisa (2006)354 Familiarity Matrix: Optimum Strategies for Technological Innovation: Finding others who know more about the markets or the technology Decreasing knowledge of the technology Decreasing knowledge of the market Internal Development, Acquisition, or Joint Venture Joint Venture Internal Development Venture Capital or Educational Acquisition Internal Venture or Acquisition or License Internal project, or Acquisition, or License Venture capital, or Educational Acquisition, or University Relationship Venture Capital or Educational Acquisition Joint Venture, Strategic Alliance or University Relationship 6/7/2016

H.M. Bwisa (2006)355The Small and Medium-Sized Enterprises (SMEs) Division of WIPO Mortality of New Product Ideas 6/7/2016

H.M. Bwisa (2006)356The Small and Medium-Sized Enterprises (SMEs) Division of WIPO The “ Right” Innovative Product?  The right product is one that becomes available at the right time (i.e., when the market needs it), and is better and/or less expensive that its competition.  To have the right product, therefore, one must:  Predict a market need  Envisage a product whose performance and capability will meet that need  Develop the product to the appropriate time scale and produce it.  Sell the product at the right price 6/7/2016

H.M. Bwisa (2006)357 Causes of New Product Failures Overestimation of Market Size Product Design Problems Product Incorrectly Positioned, Priced or Advertised Costs of Product Development Competitive Actions To create successful new products, the company must: – understand it’s customers, markets and competitors – develop products that deliver superior value to customers. 6/7/2016

H.M. Bwisa (2006)358 New Product Development Process Idea Generation and Screening Concept Development and Testing Marketing Strategy Business Analysis Product Development Test Marketing Commercialization 6/7/2016

H.M. Bwisa (2006)359 New Product Development Process Step 1. Idea Generation Systematic Search for New Product Ideas Internal sources Customers Competitors Distributors Suppliers 6/7/2016

H.M. Bwisa (2006)360 Process to spot good ideas and drop poor ones Criteria – Market Size – Product Price – Development Time & Costs – Manufacturing Costs – Rate of Return New Product Development Process Step 2. Idea Screening 6/7/2016

H.M. Bwisa (2006)361 New Product Development Process Step 3. Concept Development & Testing 1. Develop Product Ideas into Alternative Product Concepts 1. Develop Product Ideas into Alternative Product Concepts 2. Concept Testing - Test the Product Concepts with Groups of Target Customers 2. Concept Testing - Test the Product Concepts with Groups of Target Customers 3. Choose the Best One 6/7/2016

H.M. Bwisa (2006)362 New Product Development Process Step 4. Marketing Strategy Development Part Two - Short-Term: Product’s Planned Price Distribution Marketing Budget Part Two - Short-Term: Product’s Planned Price Distribution Marketing Budget Part Three - Long-Term: Sales & Profit Goals Marketing Mix Strategy Part Three - Long-Term: Sales & Profit Goals Marketing Mix Strategy Marketing Strategy Statement Formulation Part One - Overall: Target Market Planned Product Positioning Sales & Profit Goals Market Share Part One - Overall: Target Market Planned Product Positioning Sales & Profit Goals Market Share 6/7/2016

H.M. Bwisa (2006)363 New Product Development Process Step 5. Business Analysis Step 6. Product Development New Product Development Process Step 5. Business Analysis Step 6. Product Development Business Analysis Review of Product Sales, Costs, and Profits Projections to See if They Meet Company Objectives Business Analysis Review of Product Sales, Costs, and Profits Projections to See if They Meet Company Objectives If Yes, Move to Product Development If Yes, Move to Product Development If No, Eliminate Product Concept If No, Eliminate Product Concept 6/7/2016

H.M. Bwisa (2006)364 New Product Development Process Step 7. Test Marketing Standard Test Market Full marketing campaign in a small number of representative towns. Standard Test Market Full marketing campaign in a small number of representative towns. Simulated Test Market Test in a simulated shopping environment to a sample of consumers. Simulated Test Market Test in a simulated shopping environment to a sample of consumers. Controlled Test Market A few stores that have agreed to carry new products for a fee. Controlled Test Market A few stores that have agreed to carry new products for a fee. 6/7/2016

H.M. Bwisa (2006)365 Organizing New-Product Development Sequential Approach: each stage completed before moving to next phase of the project. Simultaneous Approach: Cross-functional teams work through overlapping steps to save time and increase effectiveness. 6/7/2016

H.M. Bwisa (2006)366 Companies are Successful because: They provide products that satisfy the customer’s needs and expectations better than the competition. They create enough “Value” in their products such that they can sell them at a price that provides enough profit to fund future investments in new product development. That “value” may take on very different characteristics. Successful Companies develop successful products 6/7/2016

H.M. Bwisa (2006)367The Small and Medium-Sized Enterprises (SMEs) Division of WIPO Major factors determining success of a new product in the market The product provides functional advantages Lower price for comparable product More attractive design (look) Reputation of brand Easy access: Available in the main retail shops Consistent product quality Excellent after-sales services 6/7/2016

H.M. Bwisa (2006)368The Small and Medium-Sized Enterprises (SMEs) Division of WIPO Protection of IP Ideas Ideas Research Research Technologies Technologies Products Products Utility models, Patents Collaborative Research Agreement Confidentiality or Nondisclosure Agreements (Trade Secrets) Technology Licensing Agreement, Branding Value adding 6/7/2016

H.M. Bwisa (2006)369 The Lifeblood of Successful Companies is new products Year since introduction New product revenue as a percentage of total revenue 6/7/2016

H.M. Bwisa (2006)370 Product life-cycle curves with normal and faster time-to-market Delayed introduction 6/7/2016

H.M. Bwisa (2006)371 The only sustainable source of product advantage is a superior product development process. –Advantages based on brilliant design, fortunate timing, a competitor’s misstep, or a lucky break cannot be sustained. 6/7/2016

H.M. Bwisa (2006)372 Development time-T Development cost-C Product Features-F C=F/T The key parameters of Development Trade offs between the key product development factors. 6/7/2016

H.M. Bwisa (2006)373 Development time-T Development cost-C Product Features-F C=F/T The key parameters of Development If you want to reduce development time... You will need to increase development costs …and, keep product features…. “Marketing says that if we don’t get the product out sooner we will not be the market leader, and by-the-way, ‘you can’t cut features!’” 6/7/2016

H.M. Bwisa (2006)374 Development time-T Development cost-C Product Features-F C=F/T The key parameters of Development If you want to maintain time-to-market.....and your budget just got cut... …you will need to cut product features Or…. “You know how important Project X is to the company, we still need it on time, but I am having to cut your expenses to make the quarter!!” 6/7/2016

H.M. Bwisa (2006)375 Development time-T Development cost-C Product Features-F C=F/T The key parameters of Development …and, it is going to take longer to develop!! Your budget is the same... …but we need to add a few features... “The good news is that we haven’t cut your budget, but we still need to add auto-sensing to the product!!” 6/7/2016

H.M. Bwisa (2006)376 Summary –Companies are in the business to make money –Successful companies consistently out-engineer their competition. –The way you implement a design is often as important as the design itself. –You must make trade-offs between feature, time, and resources. C=F/T. 6/7/2016

H.M. Bwisa (2006)377 Characteristics of successful Product Development Product Quality –Does it meet customer needs. Is it robust and reliable? Product Cost –Can we make a profit against competition? Development time –Did the product meet the market window? Development Cost –Can we earn a return on our investment? Development Capability –Did we learn from the experience, will we do better next time? 6/7/2016

H.M. Bwisa (2006)3786/7/2016

H.M. Bwisa (2006)379 Conventional Linear Model of Research, Technology Development and Deployment Product Manufacturing/ Distribution Demonstration (including Test and Evaluation) Technology Development Applied Research Basic Research Customers Time to Market 6/7/2016

H.M. Bwisa (2006)380 Conventional Linear Model of Research, Technology Development and Deployment Product Manufacturing/ Distribution Demonstration (including Test and Evaluation) Technology Development Applied Research Basic Research Customers Time to Market Oversight/ Rework 6/7/2016

H.M. Bwisa (2006)381 A National Innovation Process Science and Technology Research Base Market Compression Customers & Markets Integrated Public/Private Partnerships 6/7/2016

H.M. Bwisa (2006)382 What Matters in Innovation People Research Partnerships Manufacturing Regulatory and legal frameworks Capital 6/7/2016

H.M. Bwisa (2006)3836/7/2016

H.M. Bwisa (2006)384 Product Life Cycle Time Product Develop- ment Introduction Profits Sales GrowthMaturityDecline Losses/ Investments ($) Sales and Profits ($) 6/7/2016

H.M. Bwisa (2006)385 PLC - Product Life Cycle The purpose of having a diagram is to help you understand the changes, in the revenue that is made, as you go through the different stages of selling a product, from the beginning, to the end. 6/7/2016

H.M. Bwisa (2006)386 Stages in the Product Life Cycle Introduction Growth Maturity Decline The time at each stage varies greatly THE YEAR 2000 DVD Mini-disc Electric cars VR* *= virtual reality Digital cameras 6/7/2016

H.M. Bwisa (2006)387 Stages in the Product Life Cycle Introduction Growth Maturity Decline Introduction The seller tries to stimulate demand Promotion campaigns to get increase public awareness Explain how the product is used, Features Advantages Benefits You will lose money, but you expect to make profits in the future 6/7/2016

H.M. Bwisa (2006)388 Stages in the Product Life Cycle Introduction Growth Maturity Decline Introduction Sales are low, and profits are below the line because your costs are greater than the amount of money you make you have “negative” profit Need to spend a lot of money on promotion 6/7/2016

H.M. Bwisa (2006)389 Introduction Stage of the PLC Sales Costs Profits Marketing Objectives Product Price Low sales High cost per customer Negative Create product awareness and trial Create product awareness and trial Offer a basic product Use cost-plus Distribution Build selective distribution Advertising Build product awareness among early adopters and dealers 6/7/2016

H.M. Bwisa (2006)390 Stages in the Product Life Cycle Introduction Growth Maturity Decline Growth A lot is sold - The seller tries to sell as much as possible Other competitor companies watch, and decide about joining in with a competitor product “success breeds imitation” (Text) Growth will continue until too many competitors in the market - and the market is saturated 6/7/2016

H.M. Bwisa (2006)391 Stages in the Product Life Cycle Introduction Growth Maturity Decline Growth At the end of the growth stage, profits start to decline when competition means you have to spend more money on promotion to keep sales going. Spending money on promotion cuts into your profit 6/7/2016

H.M. Bwisa (2006)392 Growth Stage of the PLC Sales Costs Profits Marketing Objectives Product Price Rapidly rising sales Average cost per customer Rising profits Maximize market share Offer product extensions, service, warranty Price to penetrate market Distribution Build intensive distribution Advertising Build awareness and interest in the mass market 6/7/2016

H.M. Bwisa (2006)393 Stages in the Product Life Cycle Introduction Growth Maturity Decline Maturity Many competitors have joined - the market is saturated The only way to sell is to begin to lower the price - and profits decrease It is difficult to tell the different between products since most have the same F.A.B. - Features, Advantages & Benefits Competition can get “Nasty” and commercials are intense 6/7/2016

H.M. Bwisa (2006)394 Stages in the Product Life Cycle Introduction Growth Maturity Decline Maturity “Persuasive Promotion” becomes more important during this stage That is to say, you have commercials almost begging the customer to still buy your product because you still make it just as good. 6/7/2016

H.M. Bwisa (2006)395 Maturity Stage of the PLC Sales Costs Profits Marketing Objectives Product Price Peak sales Low cost per customer High profits Maximize profit while defending market share Maximize profit while defending market share Diversify brand and models Price to match or best competitors Distribution Build more intensive distribution Advertising Stress brand differences and benefits 6/7/2016

H.M. Bwisa (2006)396 Maturity Stage of the PLC Modifying the Market: Increase the consumption of the current product. How? –Look for new users and market segments –Reposition the brand to appeal to larger or faster-growing segment –Look for ways to increase usage among present customers 6/7/2016

H.M. Bwisa (2006)397 Maturity Stage of the PLC Modifying the Product: Changing characteristics such as quality, features, or style to attract new users and to inspire more usage. How? –Improve durability, reliability, speed, taste –Improve styling and attractiveness –Add new features –Expand usefulness, safety, convenience 6/7/2016

H.M. Bwisa (2006)398 Maturity Stage of the PLC Modifying the Marketing Mix: Improving sales by changing one or more marketing mix elements. How? –Cut prices –Launch a better ad campaign –Move into larger market channels –Offer new or improved services to buyers 6/7/2016

H.M. Bwisa (2006)399 Stages in the Product Life Cycle Introduction Growth Maturity Decline Decline Newer products are now more attractive - even a low low price does not make consumers want to buy. Profit margin declines - and so the only way to make money is to sell a high volume 6/7/2016

H.M. Bwisa (2006)400 Stages in the Product Life Cycle Introduction Growth Maturity Decline Decline To increase volume you try to 1. Increase the number of customers - get new customers 2. Increase the amount each customer uses Extending the Product Life Cycle 6/7/2016

H.M. Bwisa (2006)401 Decline Stage of the PLC Sales Costs Profits Marketing Objectives Product Price Declining sales Low cost per customer Declining profits Reduce expenditure and milk the brand Phase out weak items Cut price Distribution Go selective: phase out unprofitable outlets Advertising Reduce to level needed to retain hard-core loyal customers Reduce to level needed to retain hard-core loyal customers 6/7/2016

H.M. Bwisa (2006)402 1.Increase frequency of use by present customers 2.Add new users 3.Find new uses 4.Change product quality or packaging Extending the Product Life Cycle Market Modification Product Modification Purpose: to sell more product and cover original investment 6/7/2016

H.M. Bwisa (2006)403 Extending the product Cycle to prevent the product going into decline you modify the market MARKET MODIFICATIONto prevent the product going into decline you modify the market MARKET MODIFICATION (Baking soda, vinegar, Q- tips, Avon Skin So Soft, vaselineyou look for new consumers by changing the product so it has new users - and then new customers (Baking soda, vinegar, Q- tips, Avon Skin So Soft, vaseline Examples from class 6/7/2016

H.M. Bwisa (2006)404 Extending the product Cycle MARKET MODIFICATIONMARKET MODIFICATION examples Windex for cleaning jewelry Javex bleach for toilets Lemons for hair colouring beer for hair Bounce for in the garbage, gym bag etc. Examples from class 6/7/2016

H.M. Bwisa (2006)405 to prevent the product going into decline you modify the product PRODUCT MODIFICATIONto prevent the product going into decline you modify the product PRODUCT MODIFICATION adding new features, variations, model varieties will change the consumer reaction - create more demand therefore you attract more users Extending the product Cycle Examples from class 6/7/2016

H.M. Bwisa (2006)406 PRODUCT MODIFICATIONPRODUCT MODIFICATION examples condoms - colours, features CD players chip flavours - many kinds flavoured tongue depressors couples seats at movie theatre Extending the product Cycle Examples from class 6/7/2016

H.M. Bwisa (2006)407 Overlap of Life Cycle for Products A and B WINDOWS 95 1991 1995 1996 1997 WINDOWS 3.1 6/7/2016

H.M. Bwisa (2006)408 Length of Cycle Stages Products move through the cycle at different speeds sometimes introduction is very long, or very short, depending on how easy it is for the public to understand the F.A.B. Not all products follow the same pattern 6/7/2016

H.M. Bwisa (2006)409 Life Cycle Length Some products move very fast because they are new and have no competition so the intro stage is short, and they go direct to growth stage. 6/7/2016

H.M. Bwisa (2006)410 Life Cycle Length Because of technology and globalization the introduction stage is getting very short some cycles more quickly to maturity, then have many product modifications so the decline stage drags on and on 6/7/2016

H.M. Bwisa (2006)411 Speed of the PLC Since the Intro Stage is getting shorter, and sometimes the Growth Stage doesn’t last too long (because competitors move in) companies must continually come up with new products You can tell when they are in the growth stage because this is when they introduce new model variations, and some improvements to the product 6/7/2016

H.M. Bwisa (2006)412 Alternative Product Life Cycles Tamagachi Pocket pagers Failures that do not go through the 4 steps 6/7/2016

H.M. Bwisa (2006)413 Fashions - currently popular products that tend to follow recurring life cycles eg. Wide lapels, 3 button suits, high heels vs. wedge heel “the currently acceptable style” 6/7/2016

H.M. Bwisa (2006)414 Fads - Fashions with abbreviated life cycles - only popular with certain groups - music - fast food - children’s toys - “adult toys” 6/7/2016

H.M. Bwisa (2006)415 Eg. Watches w red LCD 6/7/2016

H.M. Bwisa (2006)416 Product Life Cycle Considerations in Marketing Strategy Understand that profits have a predictable pattern in the early stages, focus is on product information in the later stages, focus is on brand promotion use market segmentation in maturity stage to maintain strong core customer basis Page 188 6/7/2016

H.M. Bwisa (2006)417 Stages in the Product Life Cycle Introduction Growth Maturity Decline The time at each stage varies greatly Mini-disc Electric cars *= virtual reality Digital cameras Monopoly Monopolistic Oligopoly Pure Competition 6/7/2016

H.M. Bwisa (2006)418 Product Life Cycle Applications Product class has the longest life cycle (e.g., gas-powered cars) Product form tends to have the standard PLC shape (e.g., dial telephone) Brand can change quickly because of changing competitive attacks and responses (e.g., Tide, Cheer) Style is a basic and distinctive mode of expression (e.g., formal clothing, Danish modern furniture) Fashion is a popular style in a given field (e.g., business casual) Fad is a fashion that enters quickly, is adopted quickly, and declines fast (e.g., pet rocks) 6/7/2016

H.M. Bwisa (2006)419 Practical Problems of PLC Hard to identify which stage of the PLC the product is in. Hard to pinpoint when the product moves to the next stage. Hard to identify factors that affect product’s movement through stages. Hard to forecast sales level, length of each stage, and shape of PLC. Strategy is both a cause and result of the PLC. 6/7/2016

H.M. Bwisa (2006)420 SCHOOL FOR HUMAN RESOURCE DEVELOPMENT (SHRD) Department of Entrepreneurship and Procurement HEE 4102: TECHNOLOGY AND INNOVATION IN ENTERPRISE BY Prof. Henry M. Bwisa bwihem@yahoo.com www.professorbwisa.com 0722858507 6/7/2016

H.M. Bwisa (2006)1 SCHOOL FOR HUMAN RESOURCE DEVELOPMENT (SHRD) Department of Entrepreneurship and Procurement HR 3112: TECHNOLOGY AND INNOVATION BY Prof.

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H.M. Bwisa (2006)1 SCHOOL FOR HUMAN RESOURCE DEVELOPMENT (SHRD) Department of Entrepreneurship and Procurement HR 3112: TECHNOLOGY AND INNOVATION BY Prof.

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Presentation on theme: "H.M. Bwisa (2006)1 SCHOOL FOR HUMAN RESOURCE DEVELOPMENT (SHRD) Department of Entrepreneurship and Procurement HR 3112: TECHNOLOGY AND INNOVATION BY Prof."— Presentation transcript:

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