Transcript hand out for lecture D&I2 - University of Portsmouth

Innovation Management: an overview
innovation
Dr Paul Trott, Reader in Innovation Management,
University of Portsmouth.
Professor of Innovation & Entrepreneurship,
TU Delft, The Netherlands.
P Trott
January 2009 Slide 1
PAUL TROTT
INNOVATION MANAGEMENT
AND
NEW PRODUCT DEVELOPMENT
4th Edition
innovation
P Trott
January 2009 Slide 2
Management of Innovation: an overview
1.
2.
3.
4.
5.
6.
Introduction
Can we manage innovation?
Models of understanding of innovation management
Factors that influence the innovation process
A framework for innovation management
Conclusions
innovation
P Trott
January 2009 Slide 3
Popular view of innovation:
innovation
. . . the lone inventor/mad professor.
P Trott
January 2009 Slide 4
Table 1: World’s most innovative companies
Company
Margin Growth Stock Returns
1995-2005 %
1995-2005 %
1
Apple
7.1
24.6
2
Google
NA**
NA**
3
3M
3.4
11.2
4
Toyota
10.7
11.8
5
Microsoft
2.0
18.5
6
General
Electric
5.7
13.4
7
Procter &
Gamble
4.4
12.6
8
Nokia
0.0
34.6
9
Starbucks
2.2
27.6
10
IBM
-0.7
14.4
2006 Rank
innovation
Source: Business Week April 24, (2006)
P Trott
January 2009 Slide 5
Overview of the innovation process
Scientific &
technological
developments
inevitably
lead to knowledge
inputs.
{
Creative
individuals
Firms
operating
functions &
activities
innovation
{
Firms architecture
& external
linkages
Firm’s develop
knowledge,
processes &
products.
Societal changes &
market needs lead to
demands &
opportunities.
P Trott
January 2009 Slide 6
2. What is innovation ?
Invention & innovation
Innovation = conception + invention + exploitation
innovation
Source: Henry & Walker (1991)
Innovation is not a single action but a total process of interrelated
sub processes. It is not just the conception of a new idea, nor
the invention of a new device, nor the development of a new market.
The process is all these things acting in an integrated fashion . . .'
Myers and Marquis (1969).
P Trott
January 2009 Slide 7
3. Types of innovation
Dimensions of
Innovation space
discontinuous
Perceived
radical
extent of change
innovation
incremental
New manufacturing
technique
Launch of
ebay
New improved
detergent
product
service
process
What is changed?
P Trott
January 2009 Slide 8
New services that also create new business models/value
Industry sector
New service/new business model/value
Ebay
On-line auction
A new way of buying and selling through a
community of individual users
Ryanair
Airline
A new way of consuming air-travel with no frills
service and emphasis on economy.
Company
Amazon
innovation
Retailer
New way to buy goods- on-line retailer
Napster; iTunes
Music retailer
New way to buy and download music.
Google
Internet search
engine
A fast way to search for information on the
internet
Partygaming
On-line gambling
Gambling and gaming from the comfort of your
own home
Myspace/
Facebook
Social networking
A community of users on-line who can chat and
share music, images, news from their own home.
You-Tube
On-line video and
film archive
A community of users sharing home made video
clips plus recorded favourite clips from movies.
* The world’s largest internet poker company (Moules, 2007).
P Trott
January 2009 Slide 9
Disruptive innovations
•Research by Utterback (1994) & Christensen (2000)
suggests many firms find it difficult to manage
disruptive innovations;
• e.g. IBM, Hoover, UK Banks, etc.
innovation
•Incumbents in an industry do not respond well to
dramatic shifts in behaviour
•How do firms manage both continuous change
and discontinuous change?
P Trott
January 2009 Slide 10
5 studies of innovation management
Studies of Innovation management
1. Carter & Williams
2. Project Hindsight- TRACES
(Isensen)
3. Wealth from knowledge (Langrish et al.)
4. Project Sappho
1957
1968
5. Minnesota Studies (van de van)
6. Rothwell
7. Sources of innovation
(Wheelwright & Clark)
8. MIT studies (Utterback)
9. Project NEWPROD (Cooper)
1989
1992
10. Radical innovation (Leifer)
2000
1972
1974
Industry & technical progress
Historical reviews of US gvt funded
defence industry
Queens Awards for tech innov
Success & failure factors in chemical
industry
14 case studies of innovations
25 yr review of studies
innovation
1992
1994
1994
Different levels of user involvement
5 major industry-level cases
Longditudinal survey of success &
failure in new products
Review of mature businesses
P Trott
January 2009 Slide 11
Factors that affect innovation
Firm related factors:
Organisational heritage
Experience
R&D team
Strategy towards
Innovation
Organisational structure
R&D intensity
Product related factors:
Relative price
Relative quality
Uniqueness
Technologically advanced
innovation
Technological
viability
Successful
marketable
product
Commercial
viability
Project related factors:
Complementarity
Management style
Top management
support
Market related factors:
Concentration of
Target market
Timing of market entry
Competitive pressure
Marketing
P Trott
January 2009 Slide 12
Linear models of innovation management
technology push
Research &
development
Manufacturing
Marketing
user
innovation
market pull
Marketing
Research &
development
Manufacturing
user
P Trott
January 2009 Slide 13
Interactive model of innovation
TECHNOLOGY
PUSH
latest science and technology
advances in society
innovation
idea
MARKET
PULL
R&D
Manufacturing
Marketing
commercia
l
product
needs of society
and the market place
Source: Rothwell & Zegweld (1985)
P Trott
January 2009 Slide 14
Open Innovation
Basic Research
New Product
Development
innovation
Internal
research
projects
Current market
And business model
Technology Technology
In-licensing acquisition
Venture investing
External research
project
(Chesbrough, 2003)
P Trott
January 2009 Slide 15
Open innovation . . .
Procter & Gamble’s web of links for
innovation and new product development
innovation
Source: HBR (2006)
P Trott
January 2009 Slide 16
Cyclic Innovation Model
Technological
research
integrated
engineering cycle
hard sciences
cycle
innovation
Scientific
exploration
Entrepreneurship
Product
creation
Marketing
cycle
soft sciences
cycle
Market
transitions
Source: G Berkhout (2007), TU Delft.
P Trott
January 2009 Slide 17
The end
innovation
Thank you
For listening
P Trott
January 2009 Slide 18