INTRODUCTION TO
INNOVATION MANAGEMENT
(INN001, 5 p.)
INTRODUCTORY LECTURE
August 27-28th 2007
Emelie Stenborg
Today’s contents
• Course outline
• The role of innovation
• What is innovation (definitions, typologies
of innovation)
• What is innovation management?
• Models of the innovative process
PEOPLE
• Main teacher and course responsible:
– Emelie Stenborg, 046-2223892,
[email protected]
• Teachers in week 2 and 3:
– Lars Coenen, 046-2227744,
[email protected]
– Olof Ejermo, 046-2229650,
[email protected]
• Course secretary, matters of registration &
administrative character:
– Elna Jönsson, 046-2220576,
[email protected]
LOCATIONS
Teaching the first three weeks mainly in the
Math’s house Sölvegatan 18
The following 4 weeks in CIRCLE’s new
location at Sölvegatan 16 (MNO-house)
– Mondays 10-12: Lecture
– Tuesdays 13-15: Lecture
– Wednesdays/Thursdays 10-15: Seminar
LOCATIONS
MNO-house
CIRCLE
COURSE AIMS...
(1) to provide students with fundamental
knowledge of the phenomenon of innovation
and innovation processes in capitalist
economies from the perspective of firms and
industries;
(2) to enable students to use basic theoretical tools
that help analyse and manage real-world
processes of innovation;
(3) to enhance students’ appreciation of the
importance of understanding innovation-related
issues for the development of businesses,
industries, countries and citizens.
WEEKLY THEMES
1.
2.
3.
4.
5.
6.
Overview of the study field, with basic definitions,
concepts and typologies, Chapter 1-2
Strategy analysis: I - building the framework and the
environment, II - technology and learning, Chapter 3-6
The external dimension: markets, networks,
institutions, systems, Chapter 7-8
Resource mobilization and strategy implementation,
Chapter 9-10
Creating an innovative organisation, Chapter 11-12
Assessing and improving, Chapter 13
WEEK 1-5
• Mondays and Tuesdays: Lecture
• Thursdays (one Wednesday): intensive
seminar
– The seminar is strongly compulsory
– Active participation expected
– Assignments to be handed in before the
seminar
– Seminar may include presentations etc.
LAST 2 WEEKS
• Sixth week:
– Mainly reserved for writing the home exam.
– One lecture on the Monday (and Tuesday if
you need it) with room for questions.
• Seventh week:
– Examination – presentation and discussion in
small groups (5-6 people) of the final essay
(which is a part of the home exam).
EXAMINATION
Your progress and learning is assessed not only at
the end of the course but throughout the entire
course. Different forms of examination are used
to gauge students’ progress:
1. Weekly written assignments in preparation
for seminars
2. Formal presentations at seminars
3. Home exam, including final discussion
seminar
The home exam is the more important of the three.
About the grading
• The seminar assignments are not graded,
but you have to hand them in – otherwise
you will not get a grade on the course
• The first part of the home exam
determines half of your grade
• The second half of the home exam
determines the second half of the grade
Home exam
• The first part is a number of short questions
relating to the course literature. These questions
will be handed out on Monday of the sixth
course week (October 1st)
• The second part is a more open essay: students
are asked to select a specific firm (or other
organization) of their own choice and then relate
the firm and its innovation activities to a number
of more specific issues that have been taken up
in the course literature and in teaching.
Questions for the second part of the home exam
•
•
•
•
•
•
•
•
•
•
•
What types of innovation does the firm (not) concentrate on?
Does it seem to be successful in its innovative activities? Why (not)?
To which technological trajectory does the firm belong?
How would you characterise the firm’s innovation strategy?
What parts of the firm seem most important for innovation to be
successful in the firm?
Does the firm use external collaboration to enhance its innovations? If
so, what types of collaboration, and why exactly those forms? And what
types of partners?
What type of competition is threatening the survival of the firm on the
short and the long term?
Does the firm use corporate ventures, and if so, of what type are they?
In what stage of development is the industry in which the firm is active?
What type of market (international?, local?, mass market?, niche
market?) is at focus?
Are there any institutional regulations or other political developments
that are particularly important influencing the innovation activities of the
firm? And how does the firm itself try to influence political
developments?
What is expected from you?
 You can choose between width and depth – answer
several questions or just a few
 You are not expected to answer all questions – neither to
do so in detail
 Specify the questions you are addressing
 2 000 words per part – in sum 4 000 words
(approximately 8 pages)
 A LTH grade is given U, 3, 4, 5
Note the following about plagiarism
• Copying text from someone else without using
quotation marks and citing the source is
considered plagiarism.
• For the home exam, there are no requirements
of listing your references (however, this may
show that you have found adequate resources),
but you MUST USE quotation marks and list the
source if you quote (you are not allowed to just
copy text)!
• If you violate this rule you may be reported! I will
check for plagiarism.
• If there is anything unclear about this, don’t
hesitate to contact me
Week
Mon
Tues
Wed
1
27/8-31/8
Lecture 10-12
MH362D
Lecture 13-15
MH362D
Seminar 10-12
MH143
Seminar 13-15
MH229
2
3/9-7/9
Lecture 10-12
M:D
Lecture 13-15
MH362D
Lars Coenen
Seminar 10-12
MH362A
Seminar 13-15
MH362A
3
10/9-14/9
Lecture 10-12
MH362D
Olof Ejermo
Lecture 13-15
MH362D
Seminar 10-12
MH362A
Seminar 13-15
MH362A
4
17/9-22/9
Lecture 10-12
Lecture 13-15
Seminar 10-12
Seminar 13-15
5
25/9-29/9
Lecture 10-12
Lecture 13-15
Seminar 10-12
Seminar 13-15
6
1/10-5/10
Lecture 13-15
7
8/10-12/10
Examination
10-12
Examination
10-12
Examination
10-12
Thu
Examination
10-12
Fri
Examination
10-12
Course literature
Managing Innovation
Integrating Technological Market and
Organizational Change 3ed
Joe Tidd
John Bessant
Keith Pavitt
ISBN 0470093269
Today’s contents
•
•
•
•
•
Course outline
The role of innovation
What is innovation?
What is innovation management?
Models of the innovative process
Chapter 1:
Key Concepts in Innovation Management
The aim of innovation...
• Depends on the type of firm
• Goal is mostly to survive, to grow, to make profit
• R&D departments generally strive for the best
technical solution...
• ... but what matters for innovation is how it
influences survival chances, profit and growth
opportunities!
Innovation and the corporate strategy
Innovation management.....
• has to be understood as a core process of the
organisation -> It is related to what is being produced
• Is a long term race
• Is about continuity
• Has to deal with complexity!!
• Is about being systematic  developing routines around
innovation
WHAT IS INNOVATION?
•
•
•
•
Invention
Technology
Innovation
Creating new or improved products,
processes and services
• Knowledge and learning
• Uncertainty
Schumpeter’s distinction between
”Invention” and ”innovation”
• An ’invention’ is an idea, a sketch or model for
a new or improved device, product, process or
system. It has not yet entered to economic
system, and most inventions never do so.
• An ’innovation’ is accomplished only with the
first commercial transaction involving the new
product, process, system or device. It is part of
the economic system.
Dimensions of Innovation
the ‘4Ps’ of innovation
– Product innovation: changes in the things (products
or services) which an organization offers
– Process innovation: changes in the ways in which
they are created an delivered
– Position innovation: changes in the context in which
the product or services are introduced
– Paradigm innovation: changes in the underlying
mental modes which frame what an organization does
According to the degree of codification:
Information to tacit knowledge
Wisdom
Tacit
Tacit knowledge
Explicit Knowledge
Information
Data
Codified
Figure 1.1 Dimensions of innovation
©2005 Joe Tidd, John Bessant and Keith Pavitt
Figure 1.4 Component and architectural innovation
©2005 Joe Tidd, John Bessant and Keith Pavitt
The knowledge of innovation
Knowledge product space
Trade
secrets
Pr
ow iva
ne tely
d
Fully disclosed
Di
sc
los
ur
e
Shared
expertise
Property
Source: David y Foray (1994)
Scientific
papers
lic
Codification
Completely
tacit
Patents &
copyrights
Pu
b
Fully
codifiable
Restricted access
Triggers of discontinuity
•
•
•
•
•
•
•
•
•
•
•
New market emerges
New technology emerges
New political rules emerge
Running out of road
Change in market sentiment or behaviour
Deregulation or reregulation
Fractures along ’fault lines’
Unthinkable events
Business model innovation
Shifts in techno-economic paradigm
Architectural innovation
Important contextual factors
•
•
•
•
•
Type of sector
Size of firm
The country and region
The stage in the industry life cycle
Political regulations
Abernathy & Utterback – industry
life cycles
• The fluid phase – co-existence of old and new
technologies
– rapid improvement of both →’the sailing ship
effect’
– Target: What product and what market?
– Technical: What product who will produce it ?
– Experimentation
Important contextual factors
• Globalisation
• Sustainability
• Networking organisation
• The transitional phase
– A dominant design
• Convergence around one design
• Rolling bandwagon → innovation channeled around a core
set of possibilities → a technological trajectory
– Imitation and development
• Reliability, cheaply, higher functionality, quality
• The specific phase
– Rationalization & scale economies
– Differentiation through customization
– Scope for innovation becomes smaller
Table 1.2
Stages in innovation life cycle
©2005 Joe Tidd, John Bessant and Keith Pavitt
Three key questions
1. How do we structure the innovation
process?
2. How do we develop effective routines?
3. How do we adapt or develop parallell
routines to deal with incremental vs.
discontinuous innovation?
Conclusions
•
•
•
•
Different kind of innovations
Context specific
Innovation has different stages
Knowledge is the key
Repetition Chapter 1
Four dimensions of innovation
1. Product, process, position, paradigm
2. System-Component
3. Incremental-New to the firm-Radical
4. Codified-Tacit
Figure 1.4 Component and architectural innovation
©2005 Joe Tidd, John Bessant and Keith Pavitt
Repetition Chapter 1
Innovation:
• Depends on the type of firm, sector, industry life
cycle, country and so on
• Depends on the ”environment”
• Goal is mostly to survive, to grow, to make profit
• Technical solutions vs. societal and
organisational aspects
• Different from invention
Innovation management
• Core process
• Production
• Commercialisation – design, marketing, resources,
competence
• Long term
• Continuity
• Complexity
• Systematic, routines
New factors affecting innovation
• Globalisation
• Sustainability
• Networking organisation
Chapter 2:
The innovation management process
– 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
First and second generation models
First generation (50’s-60’s): Technology push “Linear model”
R&D
DESIGN &
ENGINEERING
MANUFACTURING
MARKETING
SALES
Second generation (mid 60’s-70’s): Demand pull
MARKET
NEEDS
MARKETING
DEPT.
R&D
MANUFACTURING
SALES
3rd generation model
Research
Knowledge
D
Potential
market
K
K
Invent and/or
produce
analytic
design
I
K
Detailed
design and
test
Redesign
and
product
S
Distribute
and
market
: Direct link to and from research from problems in invention and design
I : Support of scientific research by instruments, machines, tools
S : Support of research in sciences underlying the product areas
D
4th generation model
marketing
R&D
Product
development
Components
manufacture
Product
manufacture
4th generation model
marketing
R&D
Product
development
Components
manufacture
Product
manufacture
Reduced time to market
5TH generation model
University
Financial
System
Suppliers
IP
INDUSTRY
IP
Government
R&T
Centres
IP
Users
Innovation processes –
generation model
th
5
• 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)
6th generation of
innovation processes
“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
Managing complexity
product
Radical
Increment
al
Market
R&D
Networks
Intellectual
Capital
processe
s
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)
Table 2.2 Rothwell’s five generations of innovation
models
©2005 Joe Tidd, John Bessant and Keith Pavitt
Innovation models
SO, WHICH ONE IS RIGHT?
• A fast food restaurant chain?
• An electronic test equipment maker?
• A hospital?
• An insurance company?
• A new entrant biotechnology firm?
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
• 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
• Unlearning is important
The innovation management process
• 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
• 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
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
• 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
Figure 2.1 Simple representation of the innovation
process
©2005 Joe Tidd, John Bessant and Keith Pavitt
Almost the same - again
Almost the same - again
SCAN
• Definition:
– 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
Almost the same - again
FOCUS
• Definition:
– 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.
Almost the same - again
RESOURCE
• Definition:
– 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
Almost the same - again
IMPLEMENT
• Definition:
– 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
Almost the same - again
LEARN
• Definition
– Analysing the failures and success to input the
innovation process
• Activities:
– Continuous improvement
– Knowledge and IC management
“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
Table 2.3 Problems of partial views of innovation
©2005 Joe Tidd, John Bessant and Keith Pavitt
Table 2.3 Problems of partial views of innovation
(continued)
©2005 Joe Tidd, John Bessant and Keith Pavitt
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
Summary of Chapter 2
•
•
•
•
Models of the innovation process
Routines and capabilities
Innovation management process
Partial views on innovation
SEMINAR ASSIGNMENT WEEK 1
• Give examples from the real world of
– a firm that has been successful at innovation
– a firm that has failed to innovate successfully
• What, would you say, might be the most
important difference between the successful and
the unsuccessful firm?
• Please hand in half a page or one page or so,
and bring a print-out of your answer with you to
the seminar!
• (The assignment will not be graded, but you
have to bring it with you to the seminar in
order to participate!)
How to select firms
• See separate sheet for guidelines
• You could:
a) Follow one firm over the entire course
- Of course, you should be able to cover many aspects
of innovation using this case
b) ...or switch firm based on the assignment
- Note! Doing this too often may take a lot of time!
•
•
You don’t have to decide now...
...however, a recommended strategy is that
you choose case(s) with enough ’richness’ to
cover several aspects of innovation