1. INNOVATION AS A MANAGEMENT PROCESS INNOVATION & TECHNOLOGY MANAGEMENT
BAHRIA UNIVERSITY, ISLAMABAD.
LECTURE 3:
INNOVATION AS A MANAGEMENT PROCESS
INNOVATION & TECHNOLOGY MANAGEMENT

2. Evolving models of the innovation process
Can we manage innovation? Introducing the concepts of Organizational Routines or Capabilities
Specify the different phases of the innovation process
How context affects innovation

3. THOMAS ALVA EDISON Over 1000 patents Inventions like:
Electric Bulb
35mm Cinema Film
Even the Electric Chair
He realized that the real challenge in innovation was not inventing, but making it work technically and commercially. After inventing the electric bulb, Edison Corp. developed the infrastructure for electricity generation and distribution, including designing lamp stands, switches and wiring.
Worth of Edison’s business empire in 1920 = $ 21.6 B
Hence, Innovation is not simply coming up with new ideas; it is the process of growing them into practical use.

4. INNOVATION AS A CORE BUSINESS PROCESS
The process involves:
Searching: Scanning the environment (internal & external) for, and processing signals about, threats and opportunities for change
Selecting: Deciding which of these signals to respond to.
Implementing: Translating the potential into something new and launching it in an internal or external market. This involves:
Acquiring the knowledge to innovate
Executing the project under uncertainty
Launching the innovation and managing initial adoption
Sustaining adoption or re-innovating as necessary
Learning to innovate better in the future

5. THE INNOVATION MANAGEMENT PROCESS

6. EVOLVING MODELS OF THE INNOVATION PROCESS

7. First and second generation models
First generation (50’s-60’s): Need PULL & Technology PUSH “Linear model”
R&D
DESIGN &
ENGINEERING
MANU-
FACTURING
MARKETING
SALES
Second generation (mid 60’s-70’s): Demand PULL
MARKET
NEEDS
MARKETING
DEPT.
R&D
MANU-
FACTURING
SALES

8. 3rd generation model (70s-80s)

9. 4th generation model (80s-90s)
Marketing
R&D
Product
development
Components
manufacture
Product
manufacture

10. 4th generation model marketing R&D Product development Components
manufacture
Product
manufacture
Reduced time to market

11. 5TH generation model (90s-2000s)
University
Financial
System
R&T
Centres
INDUSTRY
Users
Suppliers
Government

12. Innovation processes – 5th generation model
Relevance of external sources of knowledge
“firms do not innovate in isolation”
Related to Innovation System concept
Focus on networking
Still strong emphasis on R&D and formal knowledge (ICT)

13. 6th generation of innovation processes NOW
“Revolve around knowledge and learning”
Networks embrace all knowledge types, not only R&D.
Most innovative firm is the one that learns fastest
It is the use of knowledge that makes the competitive difference, and creates the advantage

14. Table 2.2 Rothwell’s five generations of innovation models

15. Innovation can come: From the market (demand pull - 2nd)
From the “R&D department” (tech push - 1st )
From any department (interactive – 3rd)
From process reinvention (integrated – 4th)
From external sources of information (networks - 5th)
From intangible assets (6th)

16. Managing complexity Radical product Market R&D Networks Capital
Incremental
R&D
Networks
Intellectual
Capital
processes

17. Can we manage innovation?
The majority of failures are due to some weakness in the way the innovation process is managed.
Technical resources (people, equipment, knowledge, money, etc.)
Capabilities in the organization to manage them

18. Routines are firm-specific and must be learned.
Organizational routines or capabilities are “the way we do things around here (in this organization)” as a result of repetition and reinforcement
Routines are firm-specific and must be learned.
“To manage” innovation means to create an organisation where routines can be learned as to cope with the complexity and uncertainty of the innovation process
Here emerges the negative side of routines. They represent behavioural patterns which become reinforced to the point of being almost second nature. By analogy with driving a car, our driving behaviour is reinforced by traffic rules embedded in traffic lights, signs, etc. However, if driving a car has been made more effective (for example in reducing the number of car accidents) by enforcing everybody to follow the same rules, routines for managing innovation can become difficult to change when the ‘way we do things around here’ becomes inappropriate and the organization is too committed to the old ways to change. So it is important, from the standpoint of innovation management, not only to build routines but also to recognize when and how to destroy them and allow new ones to emerge.

19. Searching –looking for threats and opportunities for change within and outside of the organisation.
Technological opportunity
Changing requirements on the part of the market
Selecting – deciding (strategically from how the enterprise can develop and taking into account risk) what to respond to.
Flow of opportunities
Current technological competence
Fit with the current organizational competence
Fit with how we want to change

20. Implement – turn potential ideas into a new product or service, a change in process.
Acquiring – to combine new and existing knowledge (available within and outside the organization) to offer a solution to the problem
Executing – to turn knowledge into a developed innovation and a prepared market ready for final launch
Launching – to manage the initial adoption
Sustaining – to manage the long term use

21. In the implementation phase
Cope with uncertainty about:
Technological feasibility
Market demand
Competitor behaviour
Regulatory and other influences
Replaced by knowledge accumulated → technology & market research

22. Learning – to learn from progressing through this cycle so that they can build their knowledge base and can improve the ways in which the process is managed.
Restart the cycle
Failure – why?
Refine, improvement → next generation
Learning about technology, routines & organization

23. Almost the same - again

24. Almost the same - again SCAN Definition: Activities
Detecting signals in the environment about potential change (market niches, technology development, etc)
Activities
Scanning environment for technological, market, regulatory and other signals
Collect and filter signal from background noise
Scan forward in time
Process signals into relevant information for decision making

25. Almost the same - again FOCUS Definition: Inputs:
Selection of the various market and technological opportunities.
Inputs:
(1) the flow of signals coming from the previous phase
(2) the current technological base of the firm
(3) the fit with the overall business strategy.

26. Almost the same - again RESOURCE Definition: Activities:
Combining new and existing knowledge to offer a solution to the problem.
Activities:
Invent in-house through R&D activities
Create the conditions for creativity
Use existing knowledge in-house
Technology transfer and knowledge transfer
Licensing..etc

27. Almost the same - again IMPLEMENT Definition: Activities:
Close interaction between marketing related activities and technical activities to develop the idea into a marketable product or service.
Activities:
Develop to maturity
Technical development
Development of the market
Launch
After-sales support

28. Almost the same - again LEARN Definition Activities:
Analysing the failures and success to input the innovation process
Activities:
Continuous improvement
Knowledge and IC management

29. Table 2.3 Problems of partial views of innovation

30. Table 2.3 Problems of partial views of innovation (continued)

31. “Innovation is a risky process. but also a mandatory one”
“Innovation is a risky process....but also a mandatory one”. Success depends of a variety of:
Internal factors
Good management
Core competencies
Clear innovation strategy
Right technology
External factors
Links with market and suppliers
Learning from competitors
Institutional support: financing, human capital, etc

32. Successful innovation
New products, processes and services account for an increasing share of sales
Lower prices
Better-performing products
Better features for certain users (niche)
½ of resources devoted to the development of new products go to unsuccessful projects
35% of products launched fail commercially

33. THANK YOU