Introduction to Innovation

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Introductory lecture on innovation in a marketing degree program

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Introduction to Innovation

  1. 1. Slide 1.1 Lecture 1 Innovation management: an introduction Text reference Chapters 1 &2 Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008Slide 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 Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008 1
  2. 2. Slide 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 Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008Slide 1.4 Innovation management: an introduction Text reference Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008 2
  3. 3. Slide 1.5 Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008Slide 1.6 Lecture 1 Innovation management: an introduction Text reference Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008 3
  4. 4. Slide 1.7 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 Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008Slide 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 Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008 4
  5. 5. Slide 1.9 Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008Slide 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. Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008 5
  6. 6. Slide 1.11 Lecture 1 Innovation management: an introduction Text reference Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008Slide 1.12 Recent studies on innovation Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008 6
  7. 7. Slide 1.13 Innovation in organisations Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008Slide 1.14 Lecture 1 Innovation management: an introduction Text reference Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008 7
  8. 8. Slide 1.15 Innovation and invention Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008Slide 1.16 Lecture 1 Innovation management: an introduction Text reference Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008 8
  9. 9. Slide 1.17 Lecture 1 Innovation management: an introduction Text reference Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008Slide 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. Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008 9
  10. 10. Slide 1.19 Technology and Science Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008Slide 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 Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008 10
  11. 11. Slide 1.21 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? Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008Slide 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 Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008 11
  12. 12. Slide 1.23 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). Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008Slide 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. Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008 12
  13. 13. Slide 1.25 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 Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008Slide 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 Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008 13
  14. 14. Slide 1.27 Linear models of innovation management Technology push Research and Marketing Manufacturing User development Market pull Research and Marketing Manufacturing User development Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008Slide 1.28 Coupling model of innovation management Manufacturing Research and Marketing development Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008 14
  15. 15. Slide 1.29 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 Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008Slide 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 Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008 15
  16. 16. Slide 1.31 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 Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008Slide 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. Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008 16
  17. 17. Slide 1.33 What can national governments do? • The public nature of knowledge • Uncertainty • The need for complementary assets • The need for cooperation and governance • Politics Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008Slide 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 Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008 17
  18. 18. Slide 1.35 Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008Slide 1.36 Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008 18
  19. 19. Slide 1.37 Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008Slide 1.38 Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008 19
  20. 20. Slide 1.39 Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008 20

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