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INTRODUCTION TO INNOVATION MANAGEMENT

(INN001, 5 p.)

INTRODUCTORY LECTURE August 27-28th 2007 Emelie Stenborg

Todays 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, emelie.stenborg@circle.lu.se

Teachers in week 2 and 3:


Lars Coenen, 046-2227744, lars.coenen@circle.lu.se Olof Ejermo, 046-2229650, olof.ejermo@circle.lu.se

Course secretary, matters of registration & administrative character:


Elna Jnsson, 046-2220576, elna.jonsson@circle.lu.se

LOCATIONS
Teaching the first three weeks mainly in the Maths house Slvegatan 18 The following 4 weeks in CIRCLEs new location at Slvegatan 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. 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

5. 6.

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 firms 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, dont hesitate to contact me

Week 1 27/8-31/8

Mon Lecture 10-12 MH362D

Tues Lecture 13-15 MH362D

Wed Seminar 10-12 MH143 Seminar 13-15 MH229

Thu

Fri

2 3/9-7/9

Lecture 10-12 M:D

Lecture 13-15 MH362D Lars Coenen Lecture 13-15 MH362D

Seminar 10-12 MH362A Seminar 13-15 MH362A Seminar 10-12 MH362A Seminar 13-15 MH362A Seminar 10-12 Seminar 13-15 Seminar 10-12 Seminar 13-15

3 10/9-14/9

Lecture 10-12 MH362D Olof Ejermo Lecture 10-12

4 17/9-22/9 5 25/9-29/9 6 1/10-5/10 7 8/10-12/10

Lecture 13-15

Lecture 10-12

Lecture 13-15

Lecture 13-15

Examination 10-12

Examination 10-12

Examination 10-12

Examination 10-12

Examination 10-12

Course literature
Managing Innovation
Integrating Technological Market and
Organizational Change 3ed

Joe Tidd John Bessant Keith Pavitt

ISBN 0470093269

Todays 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

Schumpeters 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 knowledge Explicit Knowledge Information Data Codified Tacit

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

Fully codifiable

Patents & copyrights

Scientific papers

Codification

Trade secrets Shared expertise

Property
Pr ow iva ne tely d

Source: David y Foray (1994)

Pu

bl

ic

Di

Completely tacit

sc

los
Restricted access

ur

Fully disclosed

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 (50s-60s): Technology push Linear model
R&D DESIGN & ENGINEERING MANUFACTURING MARKETING SALES

Second generation (mid 60s-70s): Demand pull


MARKET NEEDS MARKETING DEPT. R&D MANUFACTURING SALES

3rd generation model


Research

Knowledge

Potential market

Invent and/or produce analytic design

Detailed design and test

Redesign and product

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

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 R&T Centres IP

IP

Suppliers

INDUSTRY

Users

IP

Government

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
Radical Market R&D Networks
Increment al

product

Intellectual

processe s

Capital

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 Rothwells 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)

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 dont have to decide now... ...however, a recommended strategy is that you choose case(s) with enough richness to cover several aspects of innovation