8/10/2019 3.3 mtic

1/42

MTICInnovation ManagementBy

Prof. (Dr.) Vijay Kr Khurana

8/10/2019 3.3 mtic

2/42

Topics in Syllabus

Innovation Strategies Innovation Management

8/10/2019 3.3 mtic

3/42

Questions in Univ Exams Why do innovations fail? Why successful

management of innovation is important? Challenges for innovation management.

What do you understand by innovative strategy of

firm. Explain various types of innovation

strategies giving examples

Key steps for becoming an innovative organization

Internal capabilities for innovative environment

Cooperation & competition for value creation

Patents vs Copyrights

8/10/2019 3.3 mtic

4/42

Why do innovations fail?

Innovations have high failure rate.

There are many causes of failure of innovations.

Some causes are external to the organisation and

outside its influence of control. Others are

internal and ultimately within the control of the

organisation.

8/10/2019 3.3 mtic

5/42

Deloittes Survey: Barriers to Innovation

8/10/2019 3.3 mtic

6/42

Why do innovations fail? Internal causes of failure can be divided into causes

associated with the cultural infrastructure and causes

associated with the innovation process itself. O'Sullivan, (2002): Failure in the cultural infrastructure

varies between organisations but the following are

common across all organisations at some stage in their

life cycle Poor Leadership

Poor Organisation

Poor Communication Systems

Poor Empowerment

Poor Knowledge Management

8/10/2019 3.3 mtic

7/42

Why do innovations fail?

Common causes of failure within the innovation

process in most organisations are as under: Poor goal definition

Poor alignment of actions to goals

Poor participation in teams

Poor monitoring of results

Poor communication and access to information

8/10/2019 3.3 mtic

8/42

Why do innovations fail?Innovation can fail if seen as an organisational process

whose success stems from a mechanistic approach i.e.

'pull lever obtain result'.Some examples of internal causes are:

R&D efforts not guided by marketing research or

customer requirements & preferences

R&D efforts not guided by manufacturing capabilities& skills and no change / improvement in mfg

capabilities/skills

No corresponding change in organizational processes

New product launch not accompanied by change in

marketing strategies.

8/10/2019 3.3 mtic

9/42

Why do innovations fail?External causes are beyond the control of the

organization. Some examples of external causes

are:

Mismatch between price charged & value benefits

perceived by customer

Mere imitation /copy without any increase invalue/utility to customer

Competitor brings in disruptive technology /

innovation

Govt regulations undergo change adverslyaffecting innovation.

8/10/2019 3.3 mtic

10/42

Why management of innovation is important?

Economics of Innovation

Economics call for study of cost vs benefitsinvolved in the innovation for making a rationaldecision about the viability of innovation.

Total costs of innovation including invisible costs,need to be studied for making a rational decisionabout the viability of innovation.

Organisations spend a significant amount of theirturnover on innovation. The average investment isestimated to be around four percent.

8/10/2019 3.3 mtic

11/42

Economics of InnovationWhy management of innovation is important?

Innovations have high rate of failure. Thus there are

chances of huge losses [due to high investment]. The impact of failure goes beyond the simple loss of

investment. Failure can also lead to loss of moraleamong employees, an increase in cynicism and evenhigher resistance to change in the future.

Sometimes innovations lead to displacement of existingproducts or services.

Sometimes, innovation may lead to price war.Competitor may introduce better product at lowerprice. Thus benefits of innovation may not be fully

realized. Such losses also need to be accounted for.

8/10/2019 3.3 mtic

12/42

Economics of InnovationWhy management of innovation is important? Innovation should drive growth and, consequently,

improve shareholder value. Business measures like balanced scorecards related to

finances, processes, employees and customers should be

used to find out benefits of innovation (e.g. new product

revenue, time to market, customer and employee

perception & satisfaction).

Organizational capabilities can be evaluated through

various evaluation frameworks e.g. EFQM (European

Foundation for Quality Management).

Innovations are pursued when their estimated benefits

outweigh total estimated costs.

8/10/2019 3.3 mtic

13/42

Innovation StrategiesInnovation strategies of an organization depend upon

following factors:

Government support and policies for technology andinnovation

Risk taking abilities of the organization

Risk taking attitude of Top Management

Organizational goals & policies

Degree of technological changes

Degre of competition

Availabilty of funds / budgetory support for innovation

process

Age of organiztion viz new vs old organization

8/10/2019 3.3 mtic

14/42

Innovation StrategiesTypes of Innovation Strategies:

Innovation Leader- Under this strategy, a firm seeks to

be the first to introduce innovations and aims at tappingfirst mover advantages like increased reputation, pre-

empting competition, early profits, new sales etc. Such

stratgies focus on radical , open, non-linear, flexible

innovation process.

Innovation Follower A conscious & active strategy, by

which a firm chooses not to be first on innovations and

aims at learning from the experiences of innovation

leader, by low cost imitation, by bringing better products

or services through improvement. etc. Such stratgies

focus on incremental , closed, linear innovation process.

8/10/2019 3.3 mtic

15/42

Innovation Strategies

Types of Innovation Strategies:

Competition vs Collaboration Strategies Whether to go for competitive development of

innovation or to go for collaborative

development of innovation?

8/10/2019 3.3 mtic

16/42

Innovation StrategiesChange in Innovation Strategies

It is very likely that a firm may like to change its

innovation strategies at some point of time. A firm

pursuing incremental innovation can shift to / transform

to radical innovation by using some of following tools:

Strategic Framing

Scouting R&D

High Impact Research

Target Selection

Rapid Product Development Rapid Commercialization

8/10/2019 3.3 mtic

17/42

Innovation StrategiesChange in Innovation Strategies . Contd ..

Similarly a firm pusuing pursuing radicalinnovation can shift to / transform toincremental innovation by taking some offollowing steps:

Installing more gatekeepers at various stages Spreading budgetory support over longer

periods

Carrying out rigorous progress reviews

Using more controls etc.

8/10/2019 3.3 mtic

18/42

Innovative Organization

Innovative Organization can be defined as an

organization in which ideas spread and breed like

viruses.

Prominent examples are Apple, Microsoft,

3M etc.

Sometimes innovative organization is also referred as

organizational innovation i.e. new ways through which

work can be organized, and accomplished within an

organization to encourage and promote competitive

advantage.

An innovative organization is one which facilitates

creative chaos within a flexible guiding structure

These are also called adhocracy organizations.

8/10/2019 3.3 mtic

19/42

Innovative Organization Innovation requires a structure that is capable of

coalescing /motivating individual technological

performers & non-technological performers into aneffectively functioning team.

According to Mintzberg - An Innovative organizationcannot rely on any form of standardized co-

ordination. The enterprise must avoid : bureaucraticstructures including structures that result into sharpdivision of labour, extensive unit differentiation,highly formalized behaviour.

8/10/2019 3.3 mtic

20/42

In the Deloitte MillenniumInnovation Survey 2013,66% respondents opined

that innovativeorganizations are betterpositioned to attracttalented employees, asshown in figure below.

Power of Innovative Organization to Attract

Talented Employees

8/10/2019 3.3 mtic

21/42

Fig . Power of Innovative Organization to

Attract Talented Employees

8/10/2019 3.3 mtic

22/42

Innovative organizationsare better positioned toretain them for longer

period, as emphasized inthe Technology InnovationSurvey 2013 conducted by

Mortimer Spinks.

Impact of Innovation on Retention

8/10/2019 3.3 mtic

23/42

Impact of Innovation on Retention

8/10/2019 3.3 mtic

24/42

Traits of Innovative OrganizationThe enterprises should emphasize on :

Top managements commitment and support

Capability / need to manage in the light of corporaterestructuring & transient senior management

Planning & control systems with high degree offlexibility

Effective communication system

Absolute integrity between various sub-systems /parts of an organization - Tight coupling ofcomplimentary skill sets

Use of multifunctional teams - Higher order teaming

8/10/2019 3.3 mtic

25/42

Traits of Innovative Organization

Supporting organiztional culture & environment

like

Appropriate reward / incentive system

Respect for individual inititaive & personal

growth

Tolerance for honest mistakesAllowing room for failure

Enthusiasm for knowledge

Drive to stay ahead in knowledge

Willingness for alteration to activities

8/10/2019 3.3 mtic

26/42

Innovative OrganizationA. Modes of Enterprise Innovationbased on approach

towards technology & innovation

Science Based Product Innovation Mode Enterprises - Theseenterprises spend big amounts on R&D and are

Technological leaders & Pace setters. Viz Microsoft

The Enterpreneurial Fast Track Experimentation Innovation

Mode Enterprises - are characterized by high degree ofexperimentation to develop a continuous flow of products &

services. Viz. 3M

Global Cost Leadership Innovation Mode Enterprises - are

process innovaters, with strength driven from developmentor acquisition of new processes. These are high quality &

low cost driven. E.g. Japanese firms

8/10/2019 3.3 mtic

27/42

Innovation OrganizationA. Modes of Enterprise Innovation Contd

Reliance on Information Technology & Process Adoption

Mode Enterprises - are innovators who incorporate new

ideas stemming from information technology or other

engineering enterprises e.g. ATM in Banks

Social Innovation Mode Enterprises combine busniess

methods and social value creation. They plug the gap

between the roles that governmental and philonthropic

efforts play, often solving societal problems, not in

opposition to or even at the charity of the organizations,

but rather in collaboration and mutual benefit to the

private sector.

8/10/2019 3.3 mtic

28/42

Innovation Organization

B. Modes of Enterprise Innovation Another

way of classification on the basis of underlying

business philosophy and structures

Ambidextrous organizationwhich explores as

well as exploits. e.g. IBM, Microsoft etc

Collaborative organizationwhich usescollaboration as a base of all of their activities.

e.g. P&G, IBM etc

8/10/2019 3.3 mtic

29/42

Innovation Organization

Self organizationwhich pursues distributed

structures and shows emergent behaviour. Self-

organization is a process where some form of

order or coordination arises out of the

interactions between the components of a system.

Emergent behavior is unanticipated behaviorshown by a system. e.g. Wikipedia, Skype,

Google etc

Learning organizationwhich pursues learning

based approach to all activities. e.g. Toyota,Motorola etc.

8/10/2019 3.3 mtic

30/42

Management of Innovation Innovation management is the process of

managing innovations in organisations.

According to National Research Council (NRC),Management of Innovation means linking ofengineering, science & management disciplinesto plan, develop and implement technologicalcapabilities to shape & accomplish the strategicand operational objectives of an organization.

Management of Innovation deals with meetingand managing eight primary needs of anorganization.

Management of Innovation

8/10/2019 3.3 mtic

31/42

Management of InnovationThese eight primary needs are as under : -

How to integrate technology into overall strategic objectives of

an organization?

How to get into & out of technologies faster & more efficiently?

How to assess or evaluate technology more efficiently?

How to accomplish technology transfer?

How to reduce new product development time? How to manage, large, complex & interdisciplinary or inter-

organisational projects & systems?

How to manage organizations internal use of technology?

How to leverage the effectiveness of the technicalprofessionals?

8/10/2019 3.3 mtic

32/42

Factors which affect InnovationManagement in Organization

Top Managements philosophy Organizational culture

Degree of formalization, formal structures,systems & procedures

Degree of Centralization Openness to external information

Degree of informal communication

Resources available

8/10/2019 3.3 mtic

33/42

8/10/2019 3.3 mtic

34/42

8/10/2019 3.3 mtic

35/42

Management of InnovationFor proper management of Innovation, following should be

ensured:

Likely Failures should be identified and screened out asearly in the process as possible.

Exceptional productivity is concentrated among a few

people. There is need to employ, develop and retain

exceptionally talented inventors. Seeking maximum participation of all the concerened

individuals. Individuals are the 'atoms' of the organisation

close to the minutiae of daily activities.

Strong integration & orchestration of cross functional

activities

Top managements commitment and support

8/10/2019 3.3 mtic

36/42

Management of Innovation

Contd

Capability / need to manage in the light of corporate

restructuring & transient senior management

The enterprises should emphasis on

Planning & control systems with high degree of

flexibility Respect for individual initiative & personal

growth

Tolerance for honest mistakes; allowing room for

failure

8/10/2019 3.3 mtic

37/42

Management of InnovationContd

Innovation management education should be

aimed at upper level managers & middle level

managers comprising both non-technical

managers as well as technological managers, for

creating a common ground across the organization

Building a unified and committed multifunctional

team

Supportive organizational culture & environment

8/10/2019 3.3 mtic

38/42

Management of Innovation

Contd

The incharge / manager of technology must be welltrained & sensitive to patterns of technology changes,

market needs, vision to see business opportunities &

have commitment for protection of firms technology .

Supportive management structures, rationales &actions.

Avoiding bureaucratic structures including structures

that result into sharp division of labour, extensive

unit differentiation, highly formalized behaviour Effective communication in the organization

C ti & C m titi f

8/10/2019 3.3 mtic

39/42

Cooperation & Competition forvalue creation

Cooperation for value creation discuss about

collaboration , external collaboration, R& DAlliances, Marketing Alliances, Outsourcingagreements etc AND internal collaboration ----multifunctional team, people lever in

organization viz kaizen, ringi, quality circlesCompetition for value creation discuss about

technology / innovation leadership strategy, firstmover advantages, patenting, benchmarking,

business process re-engineering, reverseengineering, disruptive innovations etc

8/10/2019 3.3 mtic

40/42

Patents vs CopyrightsInvention & Patent

Patent gives the inventor exclusive use of thatinvention & the right to assign that use.Invention need to be registered with specifiedgovernment bodies who in turn grant patent.

Trade Secret A Trade Secret is any commercial formula,

device, pattern, process or information thatprovides an enterprise an competitive edge over

others who do not know it.

8/10/2019 3.3 mtic

41/42

Patents vs CopyrightsKnow How

Knowhow is a factual accumulation of knowledge-usually as a result of trial & error. It cannot be

protected or licensed until it is recorded in tangible

medium.

Copy Right A Copy Right is an exclusive right granted to

authors, composers, artists or their assignees usually

for large number of years. These rights are granted

to individuals when some new work is done / createdby them.

8/10/2019 3.3 mtic

42/42

Patents vs CopyrightsTrade Mark

A Trade Mark is a word, name, symbol, device,letter, numeral, picture or any combination of these

in any form or arrangement that is used to identify

the origin of goods or services. Like copy-rights,

trade marks can also be registered.