Innovation Management


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Fundamentals of Innovation, Quality Management

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Innovation Management

  1. 1. Innovation ManagementIndustry Perspective<br />
  2. 2. Topics<br />What is innovation?<br />What are the boundaries, where does it start/stop<br />Where does innovation fit within the overall business context<br />What links do you see to other classes and concepts<br />Is there a function for innovation or is it a process<br />As CEO how do you manage innovation<br />What are key metrics, how are trade-offs managed<br />
  3. 3. What is innovation?<br />Primary sources<br />Internal – Marketing, Sales, R&D, Service Tech’s, Phone support, other<br />External – Suppliers, customers, competitors, Universities – mad scientists<br />Is innovation a Product, Process, Service ????<br />Consider i-Pods – repackaged MP3 technology<br />Amazon ordering process – patented 1-click ordering process<br />CountryWide and WaMu – developed new services in sub-prime mortgage space<br />
  4. 4. Boundary Conditions<br />Are there boundaries for innovation?<br />Consider these concepts – types of innovation<br />Semiconductors – Break-through (science project)<br />Tremendous investment in core research – leading edge physics, chemistry, EE<br />i-Pod – Derivative (VOC, music industry market need – DRM)<br />Limited innovation, new ID yet repackaged known technology<br />Post-it Notes – Stumble upon (<br />were never a VOC topic – sometimes a product leads you to demand<br />
  5. 5. Post Its Story<br />In 1968, Dr. Spencer Silver, a scientist at 3M in the United States, developed a &quot;low-tack&quot;, reusable adhesive. For five years, Silver promoted his invention within 3M, both informally and through seminars, but without much success. In 1974, a colleague of his, Arthur Fry, who sang in a church choir, was frustrated that his bookmarks kept falling out of his hymnal. He had attended one of Silver&apos;s seminars, and, while listening to a sermon in church, he came up with the idea of using the adhesive to anchor his bookmarks.[1] He then developed the idea by taking advantage of 3M&apos;s officially sanctioned bootlegging policy. 3M launched the product in 1977 but it failed as consumers had not tried the product. A year later 3M issued free samples to residents of Boise, Idaho. 90% of people who tried them said that they would buy the product. By 1980 the product was sold nationwide in the US and a year later they were launched in Canada and Europe.[2] In 2003, the company came out with Post-it Super Sticky notes, with a stronger glue that adheres better to vertical and non-smooth surfaces.<br />
  6. 6. Basis for Innovation<br />Marketing?<br />Sales?<br />Engineering/R&D?<br />Operations?<br />Service?<br />
  7. 7. Where does innovation fit?<br />Everyone owns it<br />Sales for customer interaction and VOC<br />Marketing for core research and unserved needs<br />R&D for new ideas, solutions looking for an answer<br />Operations for supplier engagement and new ideas<br />Services for post-sales VOC and understanding use conditions<br />Because innovation has many potential sources and is diffused in the business it’s challenging<br />IdeaStorm from Dell – collaborate on innovation<br />
  8. 8. Principles of Innovation<br />Understand the customer and the market<br />Voice of the Customer, Hierarchy of Needs can help<br />Develop and maintain a portfolio of opportunities<br />Front-end opportunities require development<br />Back-end opportunities need to be euthanized<br />Angelow’s Law – Killing a product is twice as difficult as launching a new item<br />No one wants to lose revenue opportunity – there is always one deal on the horizon<br />Generally, no one knows true costs, and killing one product might increase costs of other products because of Overhead<br />Personal investment – it’s fun to create something new, no fun to bury a legacy of success – after all it’s someone’s baby<br />Discipline drives success<br />Discipline in project selection<br />Discipline in stage gate reviews<br />Discipline in project plan execution (Scope, Risk and People Management)<br />
  9. 9. Levers of Performance<br />Increase Revenue<br />Decrease Cost<br />
  10. 10. What’s the portfolio about?<br />Portfolio Analysis - Investing in the right products at the right time to balance innovative products with lower risk investments<br />Ideas & Money<br />Slide 10<br />
  11. 11. Tunnel or Funnel<br />The tunnel effect is what happens when a company doesn’t have an effective stage gate process<br />Everything is built – no killing of ideas<br />May invest resources in things that don’t matter to the market<br />Funnel uses gate reviews to evaluate progress<br />Not only progress on development of the idea<br />Progress of the market – validate the opportunity is still there<br />
  12. 12. Innovation matters to CEO’s because of revenue and margin<br />
  13. 13. Premise of Product Lifecycle Management – up and to the right<br />Concept<br />Design &Develop<br />Prototype<br />& Pilot<br />Launch<br />& Ramp<br />Service <br />& Support<br />Phase-out<br />& Disposal<br />Production<br />DRIVE MARGINS& REDUCE SUPPLY RISK<br />OPTIMIZE<br />INVESTMENT<br />DECISIONS<br />RAMP TO VOLUME& HIT TARGET COST<br />MITIGATE RISK<br />ASSOCIATED WITH<br />REGULATORY COMPLIANCE<br />REDUCE SERVICE & WARRANTY<br />COSTS<br />GET TO MARKET<br />FASTER<br />DEVELOP PRODUCTS<br />“RIGHT TO MARKET”<br />
  14. 14. Stage Gate Reviews<br />What happens in stage gate reviews<br />What’s the intent<br />Who is involved <br />What decisions are made<br />