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Service / Product Innovation

Managing the solution specific investments in innovation

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Service / Product Innovation

  1. 1. Service / Product Innovation<br />Managing the solution specific investments in innovation<br />Anand Subramaniam<br />
  2. 2. 2<br />“I once knew a chap who had a system of just hanging the baby on the clothes line to dry and he was greatly admired by his fellow citizens for having discovered a wonderful innovation on changing a diaper.” <br />- Damon Runyon <br />
  3. 3. 3<br />Highlights<br />Service Innovation<br />Product Innovation<br />New Business Model Innovation<br />Project Portfolio Management<br />
  4. 4. New Service Development (NSD)<br />
  5. 5. Innovation - New Service Development<br />Involves implementation & improvement of information technology<br />Solution specific investments in innovation<br />More on investments in human capital (skills, knowledge) & org. changes than on tangible innovation<br />SMEs produce more innovation but at lower rates than large service companies & are less frequent adopters<br />Majority of service providers are SMEs, which may face particular impediments in innovation<br />Service Innovation<br />Heavy use of trademark protection & brand loyalty<br />Traditional view that services are less innovative than manufacturing & tend not to have R & D<br />Service firms often implement patented technologies & so transactions costs matter<br />Difficult to measure innovation inputs and outputs<br />5<br />
  6. 6. Traditional <br />Small & weak technologically, with un-demanding customers & limited managerial skills<br />System Firms<br />Large & sophisticated: (banks, retailers,<br />insurers, airlines) with heavy dependence on technology & excellent managerial skills<br />Knowledge Intensive Firms<br />All sizes (legal & accounting,<br />engineering & design, advertising, market research & management<br />Consultancy) with heavy dependence on professional employees & close<br />connections to customers<br />Innovation - Service Firms Types<br />
  7. 7. Standardisation of the Service<br />Mix of Physical Goods and Intangible Services<br />Customer Contact (high / low level) in Delivering the Service<br />New Services – Design Focus<br />
  8. 8. Service Innovation - Levels<br />8<br />Radical<br /><ul><li>Major Innovation: new service driven by information and computer based technology
  9. 9. Start-up Business: new service for existing market
  10. 10. New Services for the Market Presently Served: new services to customers of an organisation</li></ul>Incremental<br /><ul><li>Service Line Extensions: augmentation of existing service line (e.g. new menu items)
  11. 11. Service Improvements: changes in features of currently offered service
  12. 12. Style Changes: modest visible changes in appearances</li></li></ul><li>Service Innovation - Elements<br />Capture and use information <br />anticipate customer needs<br />market and competitor trends<br />analyse own performance<br />Management / People Skills<br />respond to opportunities, threats<br />exceed customer expectations<br />Quality framework<br />Standards<br />Business planning, processes<br />9<br />Process<br />Offering<br />Delivery<br />Business model<br />
  13. 13. Service Innovation Charter <br />10<br />Problem Statement : What service related innovation policy seeks to achieve?<br />Outcomes :<br />What outcomes do the service users / stakeholders seek to achieve from the service policy program? <br />Goal : What is the aim / impact of the service policy program ? <br />Rationale : <br />Why undertake this program & what results are expected?<br />Outputs <br />Verifiable products or services related to innovation policy<br />Resources<br />Money, Materials, Methods, Measures,<br />Machines, Manpower <br />Tasks <br />Tasks and activities under-taken to achieve the desire results / targets<br />Assumptions:<br />What factors are necessary and are in place?<br />External Factors : What external factors influence the service program policy results / outcomes? <br />
  14. 14. Service Innovation – Interrelationship<br />11<br />Business Models <br />Substantial change how revenues and profits earned (business model); often accompanied by organisational changes / restructure and extend the enterprise<br />Process / Systems / Operations<br />Changes in how information is exchanged between customers & service providers and improve effectiveness and efficiency of core functional areas<br />Products / Services / Markets<br />Introduction of entirely new services – customer focused / go-to market strategies<br />All three are interrelated and is an iterative process<br />
  15. 15. Integrated Service Innovation System<br />12<br />Capacity<br />& Manpower<br />Planning,<br />Training <br />Employees &<br />Stockholders<br />Value<br />Value<br />Value<br />Community<br />Service<br />Provider<br />Customer<br />Value<br />Facility<br />Location<br />& Design<br />Service<br />Experience<br />Partners<br />Governance<br />Social<br />Networking<br />Competition<br />Competitive<br />Strategy<br />Customer<br />Flow &<br />Service<br />Delivery<br />Service<br />Concept<br />Realised<br />Market<br />Segmentation<br />Society<br />Operating<br />Strategy<br />Society<br />
  16. 16. New Services - Stage-gate Process<br />13<br />Customers<br />Generate & assemble ideas<br />Immerse with Customers<br />Focus your energies<br />Gate<br />Strategy, Organisation, Culture fit<br />Gate<br />Design service solution<br />Gate<br />Evaluate / Feedback into NSD<br />Market Test / Launch<br />Gate<br />Gate<br />
  17. 17. Knowledge Protection Methods<br />14<br />
  18. 18. New Product Development (NPD)<br />
  19. 19. Autonomous design and development teams<br />Improved time to market and cost<br />Simultaneous (concurrent) engineering <br />Continuous interaction between product / service design and product process<br />Computer-aided design / computer-aided manufacturing (CAD / CAM)<br />Generate many views of parts, rotate images, magnify views, and check for interference between parts<br />New Product – Design Focus<br />
  20. 20. New Product - Roadmap<br />Technical & economic feasibility studies<br />Prototype design (form, fit, function)<br />Performance testing / redesign of prototype<br />Market surveys, sensing & economic evaluation of the prototype<br />Design of production model (product evolution) <br />Market / performance / process testing & economic evaluation of production model<br />Continuous modification of production model (adapt to changes in market, IT)<br />
  21. 21. New Product – Stage Gate Process<br />18<br />
  22. 22. New Product - Inter-disciplinary<br />19<br />
  23. 23. New Business Model Innovation<br />
  24. 24. Innovation - Business Model Process<br />Formulate value proposition, i.e. the value delivered to the customer by the product based on specific technology<br />Identify marketsegment, ie. users to whom the technology brings value and performs the job to be done<br />Define structure of the value chain, required for the product creation and distribution<br />Specify the mechanism of profit creation and evaluate product coststructure and target margin<br />Describe the company position in the value network that connects suppliers and customers, including identification of potential alternative producers and competitors<br />Formulate competitive strategy enabling to the innovative company to gain and keep competitive advantage<br />
  25. 25. Innovation – Technology Significance<br />Using extensive use of technology where it becomes difficult to replicate and can often be protected (patented)<br />First mover advantage<br />High level of scalability<br />Technology<br />High level of initial risk which can be translated into high levels of return <br />Barriers to entry<br />Adding value for to customers<br />22<br />
  26. 26. Business Model & Technological Innovation<br />23<br />Disruptive<br />Sustain<br /><ul><li>Improve on current performance
  27. 27. Enhance market share for existing players
  28. 28. Fill an existing unmet demand
  29. 29. Offer significant improvement over current solutions
  30. 30. Foster new venture creation </li></li></ul><li>New Product / Services – Project Portfolio Management<br />
  31. 31. New Product / Service - Portfolio Goals<br />25<br />Maximising the portfolio value <br />Strategic alignment<br />Balance<br /><ul><li>Long-term profitability
  32. 32. Return on Investment
  33. 33. probability of success</li></ul>Portfolio is strategically aligned and reflects the business’s strategy<br /><ul><li>Long-term projects vs. short, fast ones
  34. 34. High risk projects with high potential vs. lower-risk sure bets
  35. 35. Focus on different market segments / technologies</li></li></ul><li>Lack of Project Portfolio…<br />26<br />
  36. 36. 27<br />“Innovation is hard to schedule.” <br />- Dan Fylstra<br />
  37. 37. 28<br />Good Luck<br />http://www.linkedin.com/in/anandsubramaniam<br />

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