Innovation

Reference:Making Innovation Work by Davila

Innovator’s Dilemma by Clay Christensen

Teng , TianLih

• Professor• Department of Technology and Society• College of Engineering and Applied Science• State University of New York at Stony Brook• Stony Brook, New York, 11746• Telephone: 631-632-8962

Innovation

• Bill Gate’s Windows & Microsoft Office• Apple’s iPHONE– Touch screen Cell– 500,000 in first 3 months in 2007

• Boeing’s 787 Dreamliner– 200 to 300 passengers– Best parts of 747 & 777– No long distance fatigues feeling

• Post-it– Art Fry used it for music sheets in the church

Major Topics in innovation

• Mapping innovation• How to design a winning innovation strategy• How to structure a company for innovation• Designing the process of innovation• How to measure innovation• How to reward the innovation• Applying the innovation rules to your organization

What is innovation?

• Innovation is – Create New or Changes old technology or business

process• Innovation– Does not require a revolution inside company– Is not alchemy, with mystifying transformation– Is not primary about creativity and having a creative

culture– Nor is it solely about processes and stage-gate tools– Does not focus exclusively on cool new technology– Is not something that every company need large quantities

Rules of innovation1. Exert strong leadership on the innovation strategy and

portfolio decision2. Integrate innovation into the company’s basic business

mentality3. Align the amount and type of innovation to the company’s

business4. Manage the mutual tension between creativity and value

capture5. Neutralize organizational antibodies6. Recognize that the basic unit ( or fundamental building

block) of innovation is a network that includes people and knowledge both inside and outside the company

7. Create the right metrics and rewards for innovation

Exert strong leadership on the innovation strategy and portfolio decision

The team at the top must want innovation management happen and trust its people to make it happen.

Surveys in 1997 and 2002, Top management support ranked as the most important competency.

• Steve Jobs Of Apple• Bill Gates of Microsoft• Strong leadership from top management is essential to achieving success

in innovation• The most important aspect of business is people, and the business is

about managing people.• Jack Welch former CEO of GE Made comments on the curriculum of

business school in MIT & Stanford.== only one HR course in MBA pgm

Six levers of innovations

• Three in Business model– 1. Value proposition– 2. Supply chain– 3. Target customer

• Three in Technology model– 4. Product and services– 5. Process technologies– 6. Enabling technologies

Three types of innovation

• Incremental• Semi-radical• Radical

Incremental Innovation

• It is most prevalent form of innovation in most companies, about 80 % of total innovations.

• They are a way to wring out as much value as possible from existing products or services without making significant changes or major investments such as FORD or GMC

• But in some cases, the business processes have not been tuned up for long periods of time and a more dramatic refinement is required== such as RBP.

Incremental Innovation

• One of CEOs said “Our goal is to find ways to make our products non-commodities through differentiation- through innovation”

• Having too little II can be dangerous to your company’s health because it allows your competitors to piggyback your innovations and grabs your customers using copycat technologies and business models.

• The II is easier , safer , and predictable.• Without leveraging the innovation rules, the break away from

rampant incrementalism will not happen. The company will stay stuck in II and eventually die.

Semi-radical • It can provide crucial changes to the competitive

environment that an II cannot.• It involves substantial changes to either in business

model and technology of an organization-but not both.

• Wal-Mart is best example in this innovation.• Also in DuPont and Novartis cases, the competitive

advantage for these innovators is tied to intellectual property in plant genetics technology that generates new value to the customers.

Radical

• It is significant change that simultaneously affects both the business model and technology of a company.

• It usually brings fundamental changes to the competitive environment in an industry.

• Disposable baby diapers in 1970s.• The keys is to maintain a balanced portfolio of

radical innovations so that the investment matches the business needs.

Choosing the right strategy

• One of the 1st rules of innovation is that you must clearly decide how your organization is to going to play the innovation game.

• This is senior management’s responsibility• The management team has to craft its own

innovation strategy, adapt to changing conditions, and choose the right time to make key moves.

• It must support the business strategy.

PTW or PTNL

• Play-to-win strategy:–The goal is to produce significant

competitive advantages that its competitors will not be able to easily or quickly match.–It is for most high-tech startups.–The failure rate for this strategy is

large

Five steps to balancing creative and commercial markets

1. Develop innovation platforms for the different types of innovation you want to pursue

2. Create portfolios of projects in each platform3. Form internal and external partnership and

networks4. Ensure that markets for creativity and

commercialization are open and transparent5. Guard against organizational antibodies that may

limit or destroy your rejuvenated creative markets and processes.

Recognize that the basic unit ( or fundamental building block) of innovation is a network that

includes people and knowledge both inside and outside the company

• A person is not the basic building block. Rather, it is the network that extends inside and outside

• Coca-Cola• 3M• Johnson & Johnson

To measure or not to measure

• Measurement is critical to success with innovation

• A fundamental rule of innovation is that linking strategy to innovation measurement with a few sharp metrics provides a clear picture of performance

What gets measure what gets done

• A careless measurement may cause more harms than good.

• Managers rely on non-financial measures give more real-time, granular evaluation of progress and likelihood of success.

• ROCE == Return on Capital Employed.– The success of specific innovation measures such

as new product acceptance rate and new product ROI.

Three rules of a measurement systems

• Plan– Define and communicate strategy

• Monitor– Track and access the changes in the environment

and evaluate performance

• Learn– Identify new opportunities

A Balanced scoreboard for measuring innovation

• A balanced scoreboard is one of the most powerful concepts in measurement systems.

• The basic tenet of BB is that Business model for innovation = the measurement is just as good as the underling business model which describes how the company will be innovative and how it will generate value from innovation

• The richer our understanding of the innovation processes, the better our business model will be and the derived measurement systems will provide a more informed management of innovation.

• Third innovation rule: integrate innovation into the company’s basic mentality

Business model of innovation

• Input, • processes , • output, and • outcomes

Measurement and the innovation rules

• Direct link measurement to innovation strategy and business model

• Don’t be rigid• Know the specific purpose of each type of

measurement systems• Keep it simple• Stay in charge

Motivation

• Four elements of motivation– Incentive– Recognition– Vision– Economic incentives

• Different strokes for different folk– The size of the bonus depends on the difference

between the target and the actual released date.

Recognition

– It is a reward that occurs after the outcomes of the project are available.

– They are based on subjective assessments of the value generated.

– For the research to find proper clip for blood vessels, the research team manager said that an important part of what kept the team going during the long search was the internal drive to solve the problem and the strong interest and support from the CEO.

– In the school or University, Professors seek recognition.

More on recognition

• On Art Fry’s recognition as the father of post-it is a major , long-lasting part of his reward.

Passion

• Some people innovate because they have a passion about what they do and not because of extrinsic rewards.

• They are self-motivated and are less influenced by external factors

Economic Incentive

• Formal reward systems are well-suited fro incremental innovation, such as increasing the efficiency of a manufacturing plant or improving quality through quality circles.

• It is much harder to be used for radical and semi-radical innovations. Because the targets are not well-defined and often changes during the project.

Create the right metrics and rewards for innovation

• Rewards to drive innovation• These rewards focus on meeting budgets and

avoiding risk.• Organizational structures are often a barrier

to innovation. R&D teams can develop powerful ideas.

Integrate innovation into the company’s basic business

mentality• It is not a “nice to have” element.• It is essential to the continuation of the

organization.• 3M has said the innovation equals survival,

and made it part of their culture.

Align the amount and type of innovation to the company’s business• The amount and type of innovation must

match the company strategy• More innovation is not necessarily better.• There is no turnkey solution, not one-size-fits-

all program

Manage the mutual tension between creativity and value capture

• Artist vs Movie Director• Apple– iPod– iPhone– iTv

Neutralize organizational antibodies

• The more radical the innovation and the more it challenges the status quo, the more and stronger are the antibodies.

• To achieve innovation success, a company must overcome the organization “antibodies” that inevitably come out attack and defeat innovation.

DT == Disruptive Technology

• Sustaining Technology– New technology foster improved product

performance.• Disruptive Technology – Innovations result in worse product performance,

at least at near-term.– Precipitated the leading firms’ failure– The DT products generally are cheaper, smaller,

simpler , more convenient to use ex. Transistors, internet, And PC

Managing Disruptive technological changes

• Give responsibility for DT to organizations whose customers need them

• Match the size of the organization to size of the market

• Discovering new and emerging markets• How to appraise your organization ‘s capabilities and

disabilities• Performance provided, market demand, and the

product life cycle• Managing DT changes

10 IT to watch

• Social Software– Social software is normally defined as a range of web-based software programs. The programs allow users to interact

and share data with other users. This computer-mediated communication has become very popular with social sites like MySpace and Facebook, media sites like Flickr and YouTube, commercial sites like Amazon and E-bay. Many of these programs share characteristics like open API's, service oriented (customizable), and the ability to upload (data, media).

• Mashup– In technology, a mashup is a web application that combines data from more than one

source into a single integrated tool; an example is the use of cartographic data from Google Maps to add location information to real-estate data from Craigslist, thereby creating a new and distinct web service that was not originally provided by either source.

• WEB 2.0– Web 2.0 is a knowledge-oriented environment where human interactions generate content that is

published, managed and used through network applications in a service-oriented architecture." [7]

My Projects

• eLearning (3) in Taiwan– Working professionals to take our MSTSM using Hybrid

model without leaving from their job– Horizon Wimba provides the 21th centre learning platform

• eLearning (8) == add Malaysia, China, and Egypt• 4 win Project == China, Australia , Taiwan , and SBU• Home Schooling == Help handicapped and poor

students to obtain HS certificates . 2M in NY• JD• Gnet 2030