The document discusses innovation and its management. It outlines that innovation matters for economic growth and business success. It defines innovation as the process of translating ideas into goods and services with value. The document presents innovation as a multi-stage process involving searching for opportunities, selecting ideas, implementing solutions, and capturing value. It also explores different aspects of innovation such as the degree of novelty, platform innovation, and the innovation life cycle.

1. By Sayed Eltaweel10/9/2014
Managing Innovation١
Managing Innovation
Chapter 1
Innovation - what it is and why
it matters
By Sayed Eltaweel
eltaweel2000@hotmail.com
Outlines:Outlines:
1.1 Introduction
1.2 Why innovation matters
1.3 Old question, new context
1.4 What is innovation?
1.5 A process view of innovation
1.6 Exploring different aspects of innovation
By Sayed Eltaweel 2

2. By Sayed Eltaweel10/9/2014
Managing Innovation٢
• Innovation distinguishes between a leader and a follower.
Steve Jobs
• Innovation is the ability to convert ideas into invoices. [L.
Duncan]
• Business has only two functions - marketing and innovation.
Milan Kundera
• You have all the reason in the world to achieve your grandest
dreams. Imagination plus innovation equals realization.
Denis Waitley
Quotes:Quotes:
By Sayed Eltaweel 3
11..11 IntroductionIntroduction
• Innovation is driven by the ability to see
connections, to spot opportunities and take
advantage of them.
• Innovation is not just about opening new markets-
it can also offer new ways of serving established
ones.
• Innovations is not only manufactured products.
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3. By Sayed Eltaweel10/9/2014
Managing Innovation٣
11..22 Why innovation mattersWhy innovation matters
• “Virtually all of the economic growth that has occurred
since the eighteenth century is ultimately attributable to
innovation” Baumol
• The median profit margin of the top 25 innovative firms
was 3.4% in the period 1995-2005 whereas it was 0.4%
for the other firms in S&P Global Index.
• The annual Stock return of the top 25 innovative firms
was 14.3% whereas it was 11.3% for the other firms.
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• “Innovation is the motor of the modern economy , turning ideas and
knowledge into products and services.” UK Office of science and
innovation.
• Companies that do not invest in innovation put their future at risk.
Their business is unlikely to prosper, and they are unlikely to be able
to compete if they do not seek innovative solutions to emerging
problems. Australian Government Website
• According to statistics Canada:
 Innovation is consistently found to be the most important Ch’s
associated with success
 Innovative enterprises typically achieve stronger growth or are more
successful that those that do not innovate
 Enterprises that gain market share
11..22 Why innovation mattersWhy innovation matters ––Cont’dCont’d
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4. By Sayed Eltaweel10/9/2014
Managing Innovation٤
• Product Innovation, Research suggests a strong
correlation between market performance and new
products. New products help capture and retain
market shares.
• Process innovation is a powerful source of
advantage. Being able to make something no one
else can, or to do so in ways better than anyone else
• Service innovation, being able to offer better
service-faster, cheaper, higher quality- seen as a
source of competitive edge.
11..22 Why innovation mattersWhy innovation matters ––Cont’dCont’d
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11..33 Old question, new contextOld question, new context
• The innovation challenges is not new- organizations
have always had to think about changing what they
offer the world and the ways they create and
deliver that offering if they are to survive and grow.
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5. By Sayed Eltaweel10/9/2014
Managing Innovation٥
11..33 Old question, new contextOld question, new context –– Cont’dCont’d
• Changing Context for innovation
 Acceleration of knowledge production
 Global distribution of knowledge production
 Market fragmentation
 Market virtualization
 Rise of active users
 Development of technological and social infrastructure
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6. By Sayed Eltaweel10/9/2014
Managing Innovation٦
11By Sayed Eltaweel
Where do you see the top four challenges
in managing innovation?
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1-
2-
3-
4-

7. By Sayed Eltaweel10/9/2014
Managing Innovation٧
11..44 What is innovation?What is innovation?
• The term comes from the Latin term innovare which means “
to make something new”
• Innovation is the process of translating an idea
or invention into a good or service that creates value or for
which customers will pay.
• “Innovation is the successful exploitation of new ideas –
Innovation unit (2004) UK department of trade and industry
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• Industrial innovation includes the technical, design,
manufacturing, management and commercial activities
involved in the marketing of a new or (improved)
product or the first commercial use of a new or
(improved) process or equipment – Chris Freeman
(1982).
• An innovative business is one which lives and breathes
“outside the box”. It is not just good ideas, it is
combination of good ideas, motivated staff and an
instinctive understanding of what your customer wants
– Richard Branson (1998)
11..44 What is innovation?What is innovation? ––Cont’dCont’d
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8. By Sayed Eltaweel10/9/2014
Managing Innovation٨
11..44 What is innovation?What is innovation? ––Cont’dCont’d
• Invention and innovation
 Innovation is often confused with invention – invention
is only the first step in a long process of bringing a good
idea to widespread and effective use.
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11..44 What is innovation?What is innovation? ––Cont’dCont’d
• Invention and innovation
InnovatorInventorProduct
W.H HooverJames Murray
Spangler
Isaac SingerElias Howe
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9. By Sayed Eltaweel10/9/2014
Managing Innovation٩
11..55 A process view of innovationA process view of innovation
• It is the process of turning ideas into reality and
capturing value from them
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11..55 A process view of innovationA process view of innovation--Cont’dCont’d
•• Phase one:Phase one: SearchSearch
 Bringing new ideas to the system: How we can find
opportunities for innovation? – these that can come
from R&D, Copying, market signals, regulations,
competitor behavior.
•• Phase two:Phase two: SelectSelect
 Selecting from set of option the variants most likely to
help us grow and develop: out of all things that we
could do, what are we going to do – and Why?
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10. By Sayed Eltaweel10/9/2014
Managing Innovation١٠
11..55 A process view of innovationA process view of innovation--Cont’dCont’d
•• Phase Three:Phase Three: ImplementationImplementation
 Converting ideas into reality: Developing something
which may never have been done before- and the only
way we know whether or not we will succeed is by trying
it out.
•• Phase Four:Phase Four: CaptureCapture
 Managing the complex project through to successful
completion: how are we going to get the benefits from
it.
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11..55 A process view of innovationA process view of innovation--Cont’dCont’d
•• Scope for innovation:Scope for innovation:
 What kinds of opportunities exist to create somethingWhat kinds of opportunities exist to create something
different and capture value from bringing those ideasdifferent and capture value from bringing those ideas
into the world?into the world?
 Innovation is not just about opening up new marketsInnovation is not just about opening up new markets –– itit
can also offer new ways for serving established andcan also offer new ways for serving established and
mature ones.mature ones.
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11. By Sayed Eltaweel10/9/2014
Managing Innovation١١
11..55 A process view of innovationA process view of innovation--Cont’dCont’d
•• Four dimensions of innovation spaceFour dimensions of innovation space 44P’s:P’s:
 Product innovation:Product innovation:
Changes in the things ( products/services)Changes in the things ( products/services)
 Process innovation:Process innovation:
Changes in the ways that ( products/services) areChanges in the ways that ( products/services) are
created and deliveredcreated and delivered
 Position innovation:Position innovation:
Changes in the context in which ( products/services) areChanges in the context in which ( products/services) are
introduced.introduced.
 Paradigm innovation:Paradigm innovation:
Changes in the underlying mental models which frameChanges in the underlying mental models which frame
what the organization does.what the organization does.
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12. By Sayed Eltaweel10/9/2014
Managing Innovation١٢
Exercise:Exercise:Types ofInnovationTypes ofInnovation
NissanLeaf
A1: Product
Innovation
E1:
A2: Process
Innovation
E2:
A3: Position
E3:
A4: Business
Model
Innovation
E4:
1 2
3 4
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11..66 Exploring different aspects of innovationExploring different aspects of innovation
A.A. Degree of noveltyDegree of novelty
I. Incremental Innovation – doing what we do but
better.
II. Radical innovation – do something different
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13. By Sayed Eltaweel10/9/2014
Managing Innovation١٣
11..66 Exploring different aspects of innovationExploring different aspects of innovation
B.B. Platform innovationPlatform innovation
A way of creating stretch and space around an innovation and
depends on being able to establish a strong basic platform or
family which can be extended
 Boeing, Intel and AMDBoeing, Intel and AMD
 LeanLean
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11..66 Exploring different aspects of innovationExploring different aspects of innovation
C.C. Discontinuous innovationDiscontinuous innovation –– what happens whenwhat happens when
the game changes?the game changes?
Reframing the way we think about an industry –
changing the dominant business model and hence the
‘ rules of the game’
 Emergence of a new technology
 Emergence of a new market with new ch’s and
expectations
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14. By Sayed Eltaweel10/9/2014
Managing Innovation١٤
11..66 Exploring different aspects of innovationExploring different aspects of innovation
D.D. Component/architecture innovation and theComponent/architecture innovation and the
importance of knowledge.importance of knowledge.
Creating new possibilities through combining
different knowledge sets.
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Component/architectureinnovation and theComponent/architectureinnovation and the
importanceof knowledge.importanceof knowledge.
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15. By Sayed Eltaweel10/9/2014
Managing Innovation١٥
11..66 Exploring different aspects of innovationExploring different aspects of innovation
•• ZoneZone11.
• The rules of the game are clear – steady-state
improvements to products or processes and uses
knowledge accumulated around core components
•• ZoneZone22.
• There is significant change in one element but the
overall architecture remains the same. here there is a
need to learn new knowledge but within established
and clear framework of sources and users.
Component/architecture innovation and the importanceComponent/architecture innovation and the importance
of knowledge.of knowledge.
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11..66 Exploring different aspects of innovationExploring different aspects of innovation
•• ZoneZone33.
• Neither the end state nor the ways in which it can
be achieved are known – the whole set of rules of
the game changes and there is a scope for new
entrants.
•• ZoneZone44.
• We have the condition where new combinations-
architecture – emerge, possible around the needs
of different groups of users
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16. By Sayed Eltaweel10/9/2014
Managing Innovation١٦
31By Sayed Eltaweel
11..66 Exploring different aspects of innovationExploring different aspects of innovation
D.D. Innovation lifeInnovation life cyclecycle ((Three stages):Three stages):
StageStage 11: fluid: fluid
Where there is high uncertainty along twoWhere there is high uncertainty along two
dimensions;dimensions;
 The target – what will the new configuration be and
who will want it?
 The technical – how will we harness new technological
knowledge to create and deliver this
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17. By Sayed Eltaweel10/9/2014
Managing Innovation١٧
11..66 Exploring different aspects of innovationExploring different aspects of innovation
D.D. Innovation lifeInnovation life cyclecycle (Three stages):(Three stages):
StageStage 22: Transitional: Transitional
Experiments begin to converge around what is calledExperiments begin to converge around what is called
‘Dominant design’‘Dominant design’-- something which begins to setup thesomething which begins to setup the
rule of the game.rule of the game.
Innovation options become increasingly channeledInnovation options become increasingly channeled
around a core set of possibilities.around a core set of possibilities.
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11..66 Exploring different aspects of innovationExploring different aspects of innovation
D.D. Innovation lifeInnovation life cyclecycle (Three stages):(Three stages):
StageStage 33: Specific: Specific
Efforts within the industries that grow up around theseEfforts within the industries that grow up around these
product areas tend to focus increasingly onproduct areas tend to focus increasingly on
rationalization, on scale economies and on processrationalization, on scale economies and on process
innovation to drive out cost and improve productivityinnovation to drive out cost and improve productivity
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18. By Sayed Eltaweel10/9/2014
Managing Innovation١٨
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19. By Sayed Eltaweel10/9/2014
Managing Innovation١٩
Sayed Eltaweel
Eltaweel2000@hotmail.com
http://www.linkedin.com/pub/sayed-eltaweel-mba-
cidtt/27/3aa/597
By Sayed Eltaweel 37
THE ENDTHE END
By Sayed Eltaweel