• Need for an innovation process• Searching for opportunities: sources & strategies• Selecting successful ventures: criteria & methods• Implementing projects: acquiring & organising resources• Creating & capturing value: business model innovation
This session
Linear (wrong!) model
How innovation happens?
Process Success(?)Brilliant Idea
Real (messy!) model
How it really happens…
Research Concept Design Implementation …
Uncertainty, Patterns, Insights Clarity, Focus
Need for an Innovation Process
Innovation = invention * commercialisation
Innovation• isn’t a single event but a complex process• carries risks• needs careful and systematic management• picks up ideas for change and turning them into effective reality
If we understand the nature of this process, we are better prepared to arrive successfully at our value-creating destination.
An (our!) Innovation Process Model
Source: Tidd and Bessant (2014) Strategic Innovation Management, pp. 87, Wiley
SEARCH- How can we find opportunities for innovation? -
SELECT- What are we going to do and why? -
IMPLEMENT- How are we going to make it happen? -
CAPTURE- How are we going to get the benefits from it? -
LEARNING
- Do we have an innovative organisation? -
- Do we have a clear Innovation Strategy? -
1 2 3 4
What we need to pay attention to if we are going to manage innovation well:
Innovation Process Model How Context Affects Innovation Management
Source: Tidd and Bessant (2014) Strategic Innovation Management, pp. 88, Wiley
Innovation Process Model Manging innovation isn’t easy, automatic, or universal
Global Innovation Index (GII) 2016 rankings
1 Switzerland 66.32 Sweden 63.63 United Kingdom 61.94 USA 61.45 Finland 59.96 Singapore 59.27 Ireland 59.08 Denmark 58.59 Netherlands 58.310 Germany 57.911 Korea, Republic of 57.116 Japan 54.518 France 54.025 China 50.6
https://www.globalinnovationindex.org/userfiles/file/reportpdf/gii-full-report-2016-v1.pdfThe Global Innovation Index (2016), available at:
• The GII ranks world economies according to their innovation capabilities and results
• Using approx. 80 indicators that include measures of:– Human capital development
and research,– Development funding, – University performance,– International dimensions of
patent applications
Innovation Process Model 1. Searching for opportunities: sources & strategies
SEARCH- How can we find opportunities for innovation? -
SELECT- What are we going to do and why? -
IMPLEMENT- How are we going to make it happen? -
CAPTURE- How are we going to get the benefits from it? -
LEARNING
- Do we have an innovative organisation? -
- Do we have a clear Innovation Strategy? -
1 2 3 4
Source: Tidd and Bessant (2014) Strategic Innovation Management, Wiley
Innovation Process Model 1. Searching for opportunities: sources & strategies
Source: Tidd and Bessant (2014) Strategic Innovation Management, pp. 98, Wiley
1
Exploring alternative future and opening up different
possibilities
Users as innovators
Inspiration – the Archimedes moment
Advertising – uncovering and amplifying latent needs
Need pull – necessity as the mother of invention, and
innovation
Knowledge push – creating opportunity by pushing the frontiers of science forward
Shocks to the system –events which change the world and the way we think about it and to force us to innovate in
new directions
Recombinant innovation –ideas and applications in one
world transferred to a new context
Regulation – changing rules of the game push and pull
innovation in new directions
Accidents – unexpected and surprising things which offer new
directions for innovation
Watching others –innovations arising from
imitating or extending what others do - benchmarking,
reverse engineering, copying
Where do innovations come
from?
Innovation Process Model 1. Searching for opportunities: sources & strategies
Source: Tidd and Bessant (2014) Strategic Innovation Management, Wiley
• Does the idea fit a business strategy?• Does the idea build on something we know about or where we can get access
to that knowledge easily?• Do we have the skills and resources to take it forward?• How can we build a portfolio of projects which balances the risks and the
potential rewards?
1
Search Strategy Mode of Operation
Sending out scouts Dispatch idea hunters to track down new innovation triggers
Using the web Harness the power of the web, through online communities, and virtual worlds – to detect new trends
Deep diving Study what people actually do
Probe and learn Use prototyping as a mechanism to explore emergent phenomena and act as boundary object to bring key stakeholders into the innovation process
Innovation Process Model 2. Selecting successful ventures: criteria & methods
SEARCH- How can we find opportunities for innovation? -
SELECT- What are we going to do and why? -
IMPLEMENT- How are we going to make it happen? -
CAPTURE- How are we going to get the benefits from it? -
LEARNING
- Do we have an innovative organisation? -
1 2 3 4
Source: Tidd and Bessant (2014) Strategic Innovation Management, Wiley
- Do we have a clear Innovation Strategy? -
Innovation Process Model 2. Selecting successful ventures: criteria & methods
2
SELECT
Possible technological and market
opportunities –What could we do?
Distinctive competencies –
Can we build on our knowledge base?
Fit with overall business –
Do we want to do it?
Innovation Process Model 2. Selecting successful ventures: criteria & methods
2
SELECT: Success Factors
Factors affecting new product success:• Significant product advantage• Clear definition of target market • Proficiency of pre-development
SELECT: Services
SELECT: Assessment Methods SELECT: Resources
1 2
43
Factors influencing success of service Innovation: • Comprehensive customer-experience
management• Investment in employee performance• Continuous operational innovation• Brand differentiation
Usefulness of different techniques: Factors influencing success: • Diversity (expertise) of team • Financial resources – assets & access to funding • Supply chain – identifying & working with
strategic partners • Marketing & industry experience• Existence of intellectual property
Berry et al. 2006.
Novel• Segmentation• Focus groups• Lead users• Market trials• Scenarios(ranked, 5=critical; n=50 projects
Routine3.42 4.504.50 4.004.43 3.674.00 3.703.75 2.80
Source: Tidd & Bodley, 2002 ‘The affect of project novelty on the new product development process’, R&D Management, 32(2), 127-138.
Song et al. 2008, ‘Success factors in new ventures: a meta-analysis’, Journal of Product Innovation Management, 25, 7-27.
Innovation Process Model 2. Selecting successful ventures: criteria & methods
2
• 94% firms fail to innovate or grow• 85% of new ideas never reach a market• 60% of R&D projects are market failures• 40% of consumer products & services fail• 20% of business products & services fail• 6% of firms innovate & grow
Innovative organizations are typically twice as successful as non-innovators, in terms of profit, growth and employment
Innovation has an inherent variability, but its rate of success can be improved through management:
Innovation Process Model 3. Implementing projects: acquiring and organising resources
SEARCH- How can we find opportunities for innovation? -
SELECT- What are we going to do and why? -
IMPLEMENT- How are we going to make it happen? -
CAPTURE- How are we going to get the benefits from it? -
LEARNING
- Do we have an innovative organisation? -
- Do we have a clear Innovation Strategy? -
1 2 3 4
Source: Tidd and Bessant (2014) Strategic Innovation Management, Wiley
Innovation Process Model 3. Implementing projects: acquiring and organising resources
3Quality Function Deployment= aims to translate customer requirements into real products & services
• Identify and group customer requirements• Rank or weight according to importance• Translate into measurable characteristics• Establish correlations between requirements & technical response• Benchmark against competitor offerings
Source: Hauser and Clausing (1988)
Correlation matrix for options
Design options
Matrix of relationships between customer requirements and
design options
Technical assessment
Financial assessment
Competitor assessment
and customer perceptions
Customer requirements
in order of preference
QFD matrix
Innovation Process Model 3. Implementing projects: acquiring and organising resources
3New Service Development
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00Customer Focus
Strategy FormulationPlanned Opportunism
Clear Strategic Objectives
Core Business Competencies
Core Technology Competencies
Design Reviews
Design Standards
Market Assessment
Requirements Management
Documentation
Cross-functionality
Development Planning
Co-LocationLife Cycle Responsibility
Team BoundariesExternal PartneringProject Orientation
Ambidexterity
Organic Structure
Market Analysis
Process Control
Analytical Methods
Electronic Data Interchange
Information Systems
Flexible Manufacturing
Voice of Customer
Design Controls
Voice of SupplierIntegration
Agility
Best-in-ClassCompany A
• This chart provides a comprehensive view of product development improvement opportunities.
• For example, Company Alpha is doing relatively well in use of design documentation, cross-functionality, and development planning, but is significantly below BIC in most other areas.
Strengths
Source: Tidd & Hull, 2006. (n=108 service businesses); Hull & Storey (2016)
Innovation Process Model 4. Creating & capturing value: business model innovation
SEARCH- How can we find opportunities for innovation? -
SELECT- What are we going to do and why? -
IMPLEMENT- How are we going to make it happen? -
CAPTURE- How are we going to get the benefits from it? -
LEARNING
- Do we have an innovative organisation? -
- Do we have a clear Innovation Strategy? -
1 2 3 4
Source: Tidd and Bessant (2014) Strategic Innovation Management, Wiley
Innovation Process Model 4. Creating & capturing value: business model innovation
4How does Volkswagen capture value?
Innovation Process Model 4. Creating & capturing value: business model innovation
Source: J. Tidd (2012) From Knowledge Management to Strategic Competence (Imperial College Press, 3rd edition); J. Bessant & J. Tidd (2011) Innovation and Entrepreneurship (Wiley, 2nd edition); J. Tidd, & J. Bessant (2013) Managing Innovation: Integrating technological, market & organizational change (Wiley, 5th edition); S. Isaksen & J. Tidd (2006) Meeting the Innovation Challenge: Leadership for Transformation and Growth (Wiley).
4Facts’ about the relationship between innovation and performance
• New products are associated with higher value-added values • Returns from use of new technology are higher than from its generation• Returns from process innovation are typically four times those from product
innovation• Management & organisation typically account for 15-50% of variance
Learning to Manage Innovation
SEARCH- How can we find opportunities for innovation? -
SELECT- What are we going to do and why? -
IMPLEMENT- How are we going to make it happen? -
CAPTURE- How are we going to get the benefits from it? -
LEARNING
1 2 3 4
Source: Tidd and Bessant (2014) Strategic Innovation Management, Wiley
à Finding behaviour pattern (routines) which work
à Process of regular review and reconfiguration is at the of innovation management – “dynamic capability”
Conclusions and implications from research & practice:
• Management and the ability to learn matter in translating innovation into value• Innovation needs: Clear strategic leadership and direction, plus the commitment of
resources to make this happen • The structure and climate of an organisation should enable people to deploy their
creativity and share their knowledge to bring about change• Success flows from active search & exploitation of external opportunities, combined
with strong internal capabilities---• Too much emphasis on the generation of new technology or products• Greater focus on a wider range of innovation e.g. positional & paradigm innovation
has potential to improve returns from innovation
Sources: J. Tidd (2012) From Knowledge Management to Strategic Competence (Imperial College Press, 3rd edition);J. Tidd, & J. Bessant (2013) Managing Innovation: Integrating technological, market & organizational change (Wiley, 5th edition); J. Bessant & J. Tidd
(2015) Innovation and Entrepreneurship (Wiley, 3rd edition).
Conclusion