TOWARDS DEVELOPING A PROCESS AND FRAMEWORK IN MANAGING FRONT END OF INNOVATION EFFECTIVELY Mat Kamil Awang Graduate School of Management Universiti Putra Malaysia Supervisors: Dr. Yee Choy Leong Prof. Dr. Zainal Abidin Mohamed Dr. Kenny Teoh Guan Cheng
TABLE OF CONTENTS• Introduction• Definition of Innovation & Front End of Innovation• Strategic, Process, & Systems View of Innovation• Front End of Innovation Process• Proposed Framework• Conclusion• Questions & Answers
Objectives of The Paper• Conceptual Paper• Propose a process and framework for managing front end of innovation• Pre-cursor to PhD research “Developing a Process and Framework in Managing Front End of Innovation Effectively”• To get feedback from the audience on the proposed framework
Why Do We Need Research in Front Endof Innovation• Front end as the greatest weakness in product innovation (Khurana and Rosenthal 1997).• “the greatest differences between winners and losers were found in the quality of execution of pre-development activities”. (Cooper and Kleinschmidt, 1994)• At macro/country level, Malaysian Government spending on Innovation but with mixed result• At micro/organization level, for example, an R&D arm of telecommunication company (Telekom Malaysia) yearly spending of RM60-80 million but with minimal impact on the market.
FUNDING FOR INNOVATION 9th MP
COMPARISON OF SPENDING ONINNOVATION
Importance of FEI• Improving return on investment in front end activities• Ability to develop high quality stream of ideas• Reducing uncertainty and risk associated with projects• Fitting ideas to the company and their context.
Defining Innovation from TechnologicalPerspective• “Innovation consists of all of those scientific, technical, commercial and financial steps necessary for the successful development and marketing of new or improved manufactured products, the commercial use of new or improved process or equipment or the introduction of a new approach to a social service” - OECD
Defining Innovation from OrganizationPerspective• Innovation . . . is generally understood as the successful introduction of a new thing or method . . . Innovation is the embodiment, combination, or synthesis of knowledge in original, relevant, valued new products, processes, or services – Luecke & Katz (2003)
Defining Innovation from CreativityPerspective• All innovation begins with creative ideas . . . We define innovation as the successful implementation of creative ideas within an organization. In this view, creativity by individuals and teams is a starting point for innovation; the first is necessary but not sufficient condition for the second – Amabile (1996)
Defining Innovation from businessfunction perspective• Innovation, like many business functions, is a management process that requires specific tools, rules, and discipline – Davila et. al. (2006)
Working Definition of Innovation• A strategic process which: • Consists of scientific, technical, commercial, financial steps • Involves implementation of new ideas • Requires tools, rules and disciplines • Has commercial values
Definition of Front End of Innovation• “The messy „getting started‟ period of product development, when the product concept is still very fuzzy. Preceding the more formal product development process, it generally consists of three tasks: strategic planning, concept generation, and, especially, pre-technical evaluation. These activities are often chaotic, unpredictable, and unstructured. In comparison, the subsequent new product development process is typically structured, predictable, and formal, with prescribed sets of activities, questions to be answered, and decisions to be made”. (PDMA)
FEI versus NPD Stages (Koen)• FRONT END INNOVATION • NEW PRODUCT DEVELOPMENT • Experimental, often chaotic, STAGES „eureka‟ moment • Discipline, goal oriented with a project plan • Commercialization date • Commercialization date can be unpredictable determined with high degree of • Funding is depending on certainty situation. In the beginning may • Funding is budgeted be “bootlegged” • Revenue expectation can be • Revenue expectation is uncertain reasonably determine, especially with great deal of speculation closer to the release date • Individual or team emphasis on • Multi-function product or process minimizing risk development team • Milestone achievement as • Strengthen concept as measure measure of progress of progress
Strategic View on Innovation• The motives for looking at innovation from strategic point of views are; • The FEI in innovation is gaining strategic importance in firms and academia. • Mainstream business needs to be combined with new stream innovation (Miller & Morris 1999, Lawson & Samson 2001) • Networking (including cooperative and collaborative arrangement between firms) and information and knowledge sharing are emphasized (Blomqvist et. al. 2003) • Innovation is becoming an organization-wide issue (Miles et al 2000) • Innovation process are becoming more open to external sources of ideas and innovation (Chesbrough 2003)
Process View of Innovation• The motives of looking at FEI from the innovation process point of views are: • The balance between systematic and flexibility in R&D and innovation processes is difficult to manage (MacCormack et. al. 2001) – this issue is pivotal during the front end • Part-whole relationships in innovation process are difficult to manage (Van de Ven 1986) • Different types of innovation processes are required for different types of innovations
Systems View of Innovation• The motives of looking at FEI from the innovation system view are: • Methods and tools are often difficult to use (Piippo et. al. 2002) • Methods and tools should provide support over the activities in the innovation process (Piippo et. al. 2002) • Electronification of the whole innovation process is on the way (Rothwell 1994) • The open innovation paradigm has an effect on the innovation systems and methods
MALAYSIAN NATIONAL INNOVATION MODEL Source: Pusat Inovasi Negara (MOSTI)
INNOVATION PROCESS Source: Koen
Khurana & Rosenthal‟s FEI Model
KOEN‟S NCD FEI MODEL Source: Koen
FEI Description ApplicableProcess ModelLinear Front end steps are relatively deterministic and tightly Stage Gate™ coupled. Each step must be successfully completed Khurana& before obtaining management approval to proceed to Rosenthal‟s the next stage of product development based on Significant Customer profitability and strategic alignment. Steps may overlap Request (SCR) one another to improve timelines. Fast Track CompressionRecursive Front end steps are loosely coupled with multiple NCD feedbacks and feed forward loops between elements Integrative that produce an iterative and integrative type of Deft Product Innovation behavior. Outcomes from each step are harder to predict.Evolving A process where initial steps begin with vague Serial Experimentation - requirements. Emphasis is on feedback learning for the rapid learning purpose of exploiting and refining direction. Complex Adaptive System Techniques include, but not limited to, prototyping or Agile simulation. FlexibleSelectionis Front end generates multiple independent concepts for Selectionismm testing and based on ex-post learning, the best Parallel concept is picked.Trial and A process where initial steps exhibit non-linear, non- Serial Experimentation -Error orderly, non-predictable, non- stochastic process. minimal learning Emphasis is on either trial-and-error. Trial-and-error is Chaotic comprised of two dimensions:exploration (purpose of Improvisational discovery) and exploitation (achievement).
GENERAL PROBLEMS AND ISSUES WITHEXISTING FEI MODELS• Many of the process models for the FFE share similar problems and issues: • No formal integration of gate in some models • Poor visual representation of cost, effort, time, and money • Poor integration of portfolio management and company strategy • Very poor link to idea management and idea banks • Poor link to knowledge management • Poor link to creativity management.
DRAWBACKS OF KOEN‟S MODEL• the lack of a (go/no-go) gate to minimize risk• the unclear flow of activities• lack of a link to time, effort, and energy• the confusion about when to eliminate or transfer ideas weaken this model.
Proposed Framework for FEI
Characteristics of the ProposedFramework• Takes into consideration the strategy, systems and process views of innovation• Resource-Based View, Knowledge-Base View, Dynamic Capability View, Entrepreneurship Theory,• Combination of Linear, Recursive & Iterative Processes• Prescription of Tools for each sub-processes• The Framework is to address the short-comings of previous models
Proposed Framework to Achieve• Reduction of uncertainty and risk associated with projects• Fit of ideas to the company and their context.• Ability to develop high quality stream of ideas• Improvement on return on investment in front end activities
Next Steps of Research• To conduct study in accordance to Case Study Methodology & Action Research Method• Detail development of the tools, and process for the framework• Pilot test of the tools, process and framework in companies in Malaysia
Contribution to Practice• An Integrated process and framework for managers to manage front end of innovation
Contribution to Knowledge• A New Framework for Front End of Innovation• Generation of Mode 2 Knowledge
Conclusion• FEI is important aspect of innovation process• Various models were proposed but suffer some weaknesses• New framework for managing front end of innovation is proposed
References• Please refer to full paper in the CD provided
Summary of the Innovation Process(Amidon) 1st 2nd 3rd 4th 5th Technology Project Enterprise Customer Knowledge as the Asset as the Asset as the Asset as the Asset as the Asset Core Strategy R&D in Isolation Link to Business Technology/Busin Integration With Collaborative ess Integration Customer R&D Innovation System Change Factors Unpredictable Inter-dependence Systematic R&D Accelerated Kaleidoscopic Serendipity Management Discontinuous Dynamics Global Change Performance R&D as Overhead Cost-Sharing Balancing Productivity Intellectual Risk/Reward Paradox Capacity/Impact Structure Hierarchical; Matrix Distributed Multi Dimensional Symbiotic Functionally Coordination Communities of Networks Driven Practice People We/They Proactive Structured Focus on Values Self Managing Competition Cooperation Collaboration and Capacity Knowledge Workers Process Minimal Project to Project Purposeful Feedback Loops Cross-Boundary Communication Basis R&D/Portfolio and information Learning and persistence Knowledge Flow Technology Embryonic Data-Based Information-Based IT as a Competitive Intelligent Weapon Knowledge Processors
DELIVERABLES FROM FFE• a clear product concept• knowledge and understanding required to develop the product concept• selection of the right/best idea/concepts• a strong business case• a development plan required to managed the NPD activities• assets such as intellectual property or working prototypes
DRAWBACK OF KOEN‟S MODEL• the lack of a (go/no-go) gate to minimize risk• the unclear flow of activities• lack of a link to time, effort, and energy• the confusion about when to eliminate or transfer ideas weaken this model.