Invention: Creating something that does not currently exist Innovation: the process of bring an invention to market or introducing a radical step change Continuous Improvement: making incremental changes to a product, service or process 2
A new way of doing something MethodProcessTechnology Product Service Level of Innovation New Product Significant Improvement to a product or process New Application of current product/service 3
External Forces Technology Changes Globalized Markets Fragmented Markets Government Regulation / Deregulation Social Change 4
Efficient time to take a new product to market How to apply resources to increase a product portfolio There is a need to promote and succeed in an area that you are not familiar. Adapting a culture that understands that individual failure is probable but overall success is the goal to achieve. 5
Discontinuous Innovation Breakthrough : High Risk; Misreading the market Dynamically Continuous dramatic improvement over an existing state-of-the- art solution lower risk as market demands are better understood Continuous Innovation Incremental change; step at a time Low risk as focus is on slight changes to product or process Imitation Copying/adapting from another firm May not be necessarily the same Level of risk depends on the speed of the market demand 6
CEO involvement in innovation Defining innovation as critical for long term success Emphasis on concept of managing change Innovation and Creativity in Mission statement Demonstrated openness to outside ideas Formal programs for idea generation and problem solving Strong emphasis on cross- function communications\ Encourage employee communications with customers Increased level of R&D, strong product development focus Providing rewards for individual creativity and innovation Creating budgets exclusively to innovation 7 Synectics study (1993)
Can you Manage Innovation? Idea Generation Concept Testing Technical Feasibility Assessment Product Testing Financial Assessment Test Marketing Launch Life Cycle Management 8
Depends on the level of Innovation 9 Dedicated Team, ad hoc or hybrid Keys factors to consider Level of Communication Expertise required: Specialist or Generalist Control: Centralized vs Decentralized Autonomous or Integrated Full or Part time team members
Recognition that the success and failure of a single project is not as important as the success of the whole. May drive a different way of managing and rewarding employees Develop Portfolio of projects that coincide with companys current lifecycle. Promote a product maturity and market diversified portfolio Recognize that a flexible and adaptive structure is key to Innovation General structure is necessary to guide the process Portfolio should contact High, Medium and Low risk projects 10
Companies are guided to innovate based upon a new technology, new market or a change in the market. Technology Pull: Likely a break through product or process does the market desires the new product. moving the product from the design stage to product launch Market Pull: based on perceived market changes Assumes customer knows what they want May not know until they see product Many focus on continuous improvement 11
Aspects of a good Portfolio: Portfolio must be company wide with Management involvement Focus on current products or new diversified markets What type of technology will be of focus. Type of market including maturity Planned level of resource commitment. % of revenue Is innovation thru internal or external sources 12
Goals are necessary to see if we got where we wanted to go. Financial Metrics alone do not work they focus on short term gains while innovation is strategic Innovation metrics we prefer: % of revenues gained from new products in 3-5 years Holding a team and individual accountable difficult to schedule innovation Look at Idea generation, development of portfolio, understanding of lifecycle. 13
Products in development at any one point (11) New Products (4) Product Revisions (4) Product Support (3) New Product Launches per year (4) Average Development Cycle New products and Product Revisions (18 & 6 months) Average Development Costs New products and Product Revisions ($2M, $1.1M) Company revenue, by %, innovations over last 3 years (35%) Managers time spent on innovation activity (10%) Average ROI on new product development (30%) 14 Morris & Kuratko, 2002
15 What do we need to allow Innovation to occur? Requires gathering the right people, money, materials, machines, processes, methods and procedures Requires a group action and is managed Create a culture that fosters individuals that are willing to take a risk and are success driven. How do we create a culture of change?
16 Represented by a set of key values, beliefs, understanding and norms shared by members of an organization. Typically generated from Top Management Successful if communicated by a strong focused leader. Means of Communication Symbols Stories Heroes Slogans Ceremonies Focus on customers and internal people and processes that bring about useful change towards attainment of organizational goals.
Def: The adoption of a new idea or behavior by an organization. Change is common aspect of current business environment Adaptation to change is central point of learning organization For success, adaptation to change must exist in current workforce Change includes redefining of roles, processes, values and removal of barriers Model for Planned Change 1. Both internal and external forces contribute to change 2. Organizations must monitor the forces of change and determine when there is a need for change. 3. Initiate search for response to the change 4. Implement the response to the change Organizational Change
Forces of Change Environmental (External) Forces Customers Competitors Technology Economic International arena What are examples of these forces? Internal Forces Goals Employees Labor Unions Production efficiencies Company performance What are examples of these forces?
Need For Change How does a manager determine a need for change? Disparity between existing and desired performance levels ( Performance Gap). Is this gap due solely to non-performance? How does the sense of urgency enter into the identification of the need for change? Managements responsibility is to: a. Monitor threats and opportunities in the external environment b. Identify strengths and weaknesses in the organization.
Initiating Change Def: To search for or create ideas that solve perceived needs are developed. Search: process of learning about current developments inside or outside the organization that can meet the perceived need. Creativity: Generating novel ideas with the potential of meeting the perceived need or opportunity. Characteristics of a Creative individual 1. Conceptual Fluency 2. Originality 3. Open mindedness 4. Less authority, Independence 5. Playfulness, Curiosity, Undisciplined exploration 6. Persistence, commitment, focused approach Idea Champion: Passionate, committed to the idea despite rejection by others. Inventor: Develops the idea but does not have the ability or interest to promote. Sponsor: High-level manager who approves, protects and removes major barriers. Critic: Challenges the concept and provides reality checks.
1. Open channels of communication 2. Contact with outside sources 3. Brainstorming, suggestion systems 4. Eccentricity allowed 5. Use of teams 6. Decentralization, loosely defined positions 7. Acceptance of mistakes, risk taking 8. Freedom to pursue and choose problems 9. Playful culture 10. Freedom to discuss ideas, long time horizon 11.Resources allocated to creative personnel and projects without immediate payoff 12. Reward system that encourages innovation Development of a Creative Organization
Implementing Change Why do we resist change? Self Interest: Perceived loss of power, prestige, pay, or benefits. Lack of Understanding and Trust: purpose unknown. Uncertainty: Lack of information. Different Assessments of goals: Goals conflict, differ in perceived outcome. Force Field Analysis To implement a change requires an analysis of the driving forces and the restraining forces. Removal of restraining forces allows driving forces to implement change. What is meant by this statement?
Implementation Tactics Communication and Education Change is technical Users need accurate information and analysis to understand change. Participation Users need to feel involved Design requires information from others Users have power to resist Negotiation Group has power over implementation Group will lose out in the change Coercion A crisis exists Initiators clearly have power Other implementation techniques have failed Top Management support Change involves multiple departments or reallocation of resources Users doubt legitimacy of change Examples?