Introduction to Innovation

1

Lecture 1

Innovation management:
an introduction
Text reference Chapters 1 &2

Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008

Slide 1.2

Theories and models
of innovation management
1. Introduction
2. Product and process innovations
3. Typology of innovations
4. Different schools of thought
5. Models of understanding of innovation management
6. Implications for developing products and services
7. Summary and review


1

3

Introduction

• Innovation management is not exclusively
associated with products
• New ways of doing business in service sector
• Innovation management involves change,
particularly technological change
• Sometimes this involves product, service and
process changes
• The level of change is an important dimension


Slide 1.4

an introduction
Text reference


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5


Slide 1.6

Lecture 1

an introduction
Text reference


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7

Why is innovation important?

• Firms must change as needs and wants change
• So over time firms tend to evolve into new areas
• Need to be mindful of what competitors are doing
• The ability to change and adapt is critical to long-
term survival
• The most successful firms have demonstrated an
ability to innovate


Slide 1.8

Why study innovation
•Its the engine of national growth
•Josef Schumpeter one of the first to
emphasise that new products stimulate
economic growth
•Growth tends to occur in waves
•Post war industrial R&D


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9


Slide 1.10

Roles in the innovation process:
•The innovation process centres
around individuals
•People define problems and have
ideas
•Managers decide what activities
should be undertaken and the
amount of resources to be deployed
•Inventors, enterpreneurs, sponsors
all play a critical role.


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Lecture 1

an introduction
Text reference


Slide 1.12

Recent studies on innovation


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13

Innovation in organisations


Slide 1.14

Lecture 1

an introduction
Text reference


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15

Innovation and invention


Slide 1.16

Lecture 1

an introduction
Text reference


8

17

Lecture 1

an introduction
Text reference


Slide 1.18

Typology of innovations

Type of innovation Example
Product innovation The development of a new or improved product
Process innovation The development of a new manufacturing
process such as Pilkington‟s float glass process
Organisational innovation A new venture division, a new internal
communication system;
Management innovation TQM (total quality management) systems, BPR
(business process re-engineering); introduction
of SAPR3
Production innovations Quality circles, JIT manufacturing system, new
production planning software, e.g. MRP II, new
inspection system
Commercial/marketing innovations New financing arrangements, new sales
approach, e.g. direct marketing
Service innovations ebay; Internet banking, etc.


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Technology and Science


Slide 1.20

Role of Marketing in innovation

• The major contribution is understanding of
potential customers
• Marketing provides important information for the
successful development of innovative new
products
• Marketing is critical in the acceptance and
diffusion of new products


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21

Key marketing questions

• What are the potential applications of a technology as a
product?
• Which applications should be pursued first?
• What benefits can the proposed product offer to
potential customers?
• What is the potential market size?
• Is this market size sufficient for profitability?


Slide 1.22

Product technology advantages

• Pfizer‟s Sildenfil – aka Viagra:
The fastest selling human drug

• Gore Associates‟ Gore-Tex:
the versatile polymer polytetrafluoroethylene (PTFE)

• Dyson‟s vacuum cleaner:
Revolutionised a very stable mature industry


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Process technologies

• Enterprise Resource Planning (ERP) business
software; virtually all large firms have installed it.
• SAP, Oracle, Baan and PeopleSoft.
• SAP has over 20,000 products installed worldwide
and Oracle has installed databases
in nearly every one of the world‟s top 500
companies.
• Moreover, it has changed the way they work
(Gartner, 2002).


Slide 1.24

Popular view of innovation:

The lone inventor/mad professor.

But, such views lead to misunderstanding. Science does
not equal innovation. Innovation is much more than
science, e.g. scientific discoveries pre-date commercial
products by many years.


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Three key schools of thought:

1. Market-based view of innovation;
market conditions provide the context which facilitate
or constrain the extent of firm innovation activity
(Slater & Narver, 1994; Porter, 1980, 1985).

2. Resource-based view of the firm; a firm‟s own resources
provide a much more stable context in which to develop
its innovation activity, and to shape its markets in
accordance to its own view (Tidd et al., 2001; Shavinina,
L.V. (ed.) (2003); Patel, P. and Pavitt, K. 2000).

3. Serendipity
Innovation is all due to luck and good fortune

Slide 1.26

Table showing the chronological
development of models of innovation

1950/60s Technology push Simple linear sequential process. Emphasis on
R&D. The market is a receptacle for the fruits
of R&D.

1970s Market-pull Simple linear sequential process. Emphasis on
marketing. The market is the source for
directing R&D. R&D has a reactive role.

1980s Coupling model Sequential, but with feedback loops.
Combinations of push and pull.
1980/90s Interactive model Emphasis on integrating R&D and marketing.
1990s/00 Network models Emphasis on external linkages


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Linear models of innovation
management

Technology push

Research and Marketing
Manufacturing User
development

Market pull

Research and
Marketing Manufacturing User
development


Slide 1.28

Coupling model of innovation
management

Manufacturing

Research and
Marketing
development


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Conceptual framework

Creation of new knowledge Consumers express their
Technology development-
dominated by universities and needs and wants through
dominated by organisations
large science-based organisations the consumption of products

Science and Technological Needs of
technology base developments the market


Slide 1.30

Innovation management EXTERNAL INPUTS:
macro factors
framework ROI
costs;
competition.
Organisation and
business strategy
Organisation‟s
knowledge base
accumulates
knowledge
over EXTERNAL INPUTS:
EXTERNAL INPUTS: societal needs;
scientific and technological time
competitors;
development; supplier partnerships;
competitors; distributors;
suppliers; customers;
customers; strategic alliances.
university departments.

Source: Trott, 2005
New products

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Innovative firm Explanation for innovative capability
Apple Innovative chief executive
Google Scientific freedom for employees
Samsung Speed of product development
Procter & Gamble Utilisation of external sources of technology
IBM Share patents with collaborators
BMW Design
Starbucks In-depth understanding of customers and their cultures
Toyota Close co-operation with suppliers

Explanations for innovative capability

Slide 1.32

Implications for developing
products and services
• Role of the market is important
• Role of technology is important
• It‟s a cross functional process
• Role of external linkages and networks are important
• Skills and knowledge are acquired over time and firms
develop competencies
Useful references:
Patel, P. and Pavitt, K. (2000) „How technological competencies help define the core (not the boundaries) of the firm‟, in
Dosi, G., Nelson, R. and Winter, S. G. (eds) The Nature and Dynamics of Organisational Capabilities, Oxford University Press, Oxford.
Shavinina, L.V. ( ed.) (2003) The international handbook on Innovation, Pergamon, Oxford.
Tidd, J., Bessant, J. and Pavitt, K. (2001) Managing Innovation, 2nd edn, John Wiley & Sons, Chichester.


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33

What can national governments do?

• The public nature of knowledge
• Uncertainty
• The need for complementary assets
• The need for cooperation and governance
• Politics


Slide 1.34

Facilitating innovation through
government actions
• Financing R&D (via universities, defence, R&D, etc)
• Government can become a “lead user”
• Information centre and political stability
• Provide economic stability
• Provide complementary assets
• Act as regulator
• Educator


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