Operations Management

1. Module 2:
Product and service innovation
By-
Dr. Anushree Singh
Associate Professor
SOM

2. What is the Innovation Process?
• The innovation process is translating new or existing knowledge
into marketable products, solutions, and services. Businesses,
companies, brands, and organizations that pursue
excellent/successful innovation projects have something definite
that puts them ahead of others.

3. Innovation Process Benefits
• Solving problems
• Maximizing on Globalization
• Adapting to Change
• Evolving Workplace Dynamics
• Facing Up the Competition

5. Innovation Process Steps
• The innovation process, i.e., phases of innovation, can be divided into
five main steps.
• Each innovation process step has its features.
• The first two steps are more creative and less structured, while the
last two are focused and process-oriented.
• The development of the individual steps depends more on the
requirement of a company.

6. Innovation Process Steps
• For instance, larger companies have a more intensive assessment of
most decision-making stages at the idea generation step.
• Also, a technology-based company with complex products and
services will require a more comprehensive production
implementation.
• And service providers, on the other hand, have many requirements.

7. Step 1: Innovative Idea Generation
• The innovation process begins with the search for innovative potentials
and innovative idea generation that are subsequently evaluated.
• There are various ways and techniques to brainstorm and come up with
innovative ideas,
Idea Generation Techniques:
• Creativity Techniques
• Design Thinking

8. Step 1: Innovative Idea Generation
• An innovative potential is a newly discovered opportunity for
innovation and can be a new technical solution, a possible new
market, a problem with a customer, or an unfulfilled customer
requirement.
• There are different possibilities for tracking innovative idea
potentials. Some require targeted search, which involves searching
for innovation potentials based on derived search fields
and innovation strategy. This can be achieved through idea
generation contests, LEAD user workshops, or creativity workshops.

9. Step 2: Concept (Advocacy, screening,
and experimentation)
• After step 1 of the innovation process comes the phase of advocacy
screening and experimentation.
• This involves extensive analysis to gather as much information as
possible.
• It helps to evaluate the feasibility of a business idea with its potential
problems and benefits.
• Hence decisions can be made about an idea’s future and potential.
• Companies looking to develop the best cultures, virtues, and practices
can establish a few best practices for business growth.

10. Step 2: Concept (Advocacy, screening,
and experimentation)
• The most important analysis, screening, and experimentation is that
of the customer requirement. For example:
• What are the customer’s needs?
• Are there any unconscious or unfulfilled needs?
• Which customer problems are predominant, and how can they be
resolved?

11. Step 2: Concept (Advocacy, screening,
and experimentation)
• The experimentation phase tests the sustainability of ideas
generated from the idea generation phase for an organization’s
growth.
• It helps new idea generation with the ideas gathered on the
feasibility and results of the original idea.
• For instance, after Amazon tested its grocery delivery services in
certain Seattle suburbs, it expanded to New York City, San Diego, and
Los Angeles.

12. Step 3: Solution
• The innovation process step 3 aims to develop a worthwhile and
ready-to-use solution that can be brought to the market.
• Solutions are developed, prototypes built, and tests carried out.
• In addition to concept and lab tests, the tests also include market
tests under real-life conditions to gain first hand experience and
comprehensive feedback.
• Once the solution has reached maturity, it will then be released for
implementation: commercialization and marketing.
• At the same time, the concepts for marketing and implementation
are further adapted and developed.

13. Step 4: Commercialization and marketing
• The commercialization step develops market value for an idea,
product, or service by focusing on its impact.
• An important aspect of this step is establishing the given idea,
product, or service specifications.
• The commercialization stage involves bringing the product to
potential customers.
• It also requires the physical availability of the product by the
manufacturers.
• These include mass production, procurement, and logistics
based on defined concepts.

14. Step 5: Diffusion and Implementation
• Diffusion is the spread and acceptance of a company’s innovative
idea.
• The diffusion and implementation step allows the organization to
determine the next set of customer needs, Benchmarks, indicators
for success metrics, and receiving feedback enables the organization
to stimulate the innovation process.

15. Common Innovation Management Processes
• All organizations leverage all types of innovation management
processes for their growth.
• Choosing the right one depends on several factors, such as the
nature of the business and the way it operates.
• The most common innovation management processes include:
• Push vs. pull
• Lean Startup Model
• Phase-Gate Process

16. Push vs. pull
• The ‘Technology push’ models are the approaches where products
and services are at the core of the innovation process. The push-
based models involve technologically and internally oriented
processes, while the pull-based models are more customer and
market-based processes for managing innovation. The ‘market
pull’ models are driven by external market forces and are designed
to meet market demands.

17. Lean Startup Model
• The lean startup model is a concept used in product and business
development to assess market risks and customer demands.
• The model focuses on finding customer needs and promoting speed
and urgency in idea search to avoid spending too much on marketing
strategies that do not target customer needs.

18. Phase-Gate Process
• The Phase-Gate Process is the best process for product innovation. It
is implemented by companies of all sizes and falls under the
‘technology push’ model. The Phase-Gate process is used for idea
development to reduce project uncertainty and cycle time
in developing new concepts

19. Innovation Process Risks & Dangers
• 1- Innovation Process Technological Failure
• 2- Financial strain
• 3- Market Failure
• 4- Capacity Lack of Implementation
• 5- Organizational risks
• 6- Unpredictable Risks

20. Five Stages of Innovation
(Process of Innovation)
• Innovation is too important to ignore, and too important to fail. If
managed improperly, an organization may lose its competitiveness
in the market, or worse, be eliminated by its competitors.
• Innovation is also a complicated subject that involves a lot of
resources, people, and need to be managed properly to achieve its
ultimately goal - to push the release of new product, process,
business flow to an existing or a new market.

21. Five Stages of Innovation
(Process of Innovation)

22. Stage One: Find Ideas
• The need for change could come from everywhere:
• from the saturated domestic market,
• organization crisis,
• changes of business environment,
• users or customers' feedback,
• emergences of new competitors,
• or the sense of mission to reap greater benefits.
Inspiration for innovation, or the urgency to create new products, processes, or market, also
comes from those places.

23. Stage One: Find Ideas
• Searching and finding inspiration that can be turned into innovative initiatives
is the key starting point of innovation. There are two main approaches here -
they can be used independently, or together:
• The proactive approach: by adopting this approach, an organization is actively
looking for new ideas based on its innovation plan and business strategy.
Methods used for this approach include idea challenge, and innovation
campaigns.
• The demand-driven approach: ideas coming from customer's feedback,
employees’ brainstorm sessions based on company’s need, or technology
change are some of the examples of the demand-driven approach.

24. Stage Two: Preparation
• Innovation is not out of thin air, nor is it occasionally acquired, it has a
gradual process from old to new.
• If innovators want to implement their new ideas, they have to draw the
enlightenment from the knowledge and experience of their
predecessors.
• This stage includes accumulating knowledge, investigating and studying,
collecting and analyzing data, and so on.
• It is market research that play a vital role at this stage, though market
research, organizations will have a fair idea of market demand, market
size, feasibility of innovation, and risks of it.

25. Stage Two: Preparation
• Resources is another crucial aspect in innovation. There are two ways to obtain resources:
• research and development, and
• technology transfer.
At this stage, sometimes organizations can buy ready-made resources, or they can develop
the required resources from within.
• In the stage of concept development and product preparation, the idea itself, resources
available, market opportunities, competitiveness, and production demand are combined to
determine the framework of the new product.
• It is important to notice that without the right communication channels, the right progresses
for collecting useful data and information, the right infrastructure for implementing ideas, very
few of the ideas could be realized.

26. Stage Three: Innovation
• After two first stages of development, it is time to turn ideas into final product with
thorough preparations and proper testing. The aim of stage three is to develop a
ready-to-use product that can be brought to the market. Procedures are being
developed, prototypes built and tests carried out.
• Both of the product and processes should be defined conceptually, and reflected in the
prototype of products, and then, should take a test about simulated uses of products.
If the prototype does not reflect the desired characteristics, the organization should
seek improvements to make up for this difference, and repeat the cycle “design-built-
test”.
• At the end of the innovation phase, the final sign of ending is products meet the
specified requirements and put products into production.
•

27. Stage Four: Market and Expansion
• At this stage, innovative products have been developed maturely. In this stage, the key
is to push the product to the market and spread it though marketing and sales
initiatives.
• Because products coming from innovation are normally new and unknown to the
majority, organizations should use various marketing methods to promote the
product, in order to improve the exposure of the product and make it easier for
targeted and interested customers to find the product.
• At the end of this stage, the new product is transferred to the maintenance phase
where it will be continuously evaluated and improved based on customer feedback or
market analysis. After the growth period where the market of products has been
developed and expanded, it will enter into a mature period, which marks the end of
the innovation stage.
•

28. Stage Five: Learning and Re-innovation
• One of the results of an innovation is to provide impetus for the next cycle of
innovation.
• Even if a product or process innovation fails, it still provides valuable insights for
organizations for its future innovation endeavors.
• The stage of learning and adjusting in future innovation process is indispensable.
• What organizations really need is to grasp the valuable lessons from the success or
failure of the past, and apply these experiences to the next innovation process.
• Innovation management always entails establishing a process by which an organization
can continuously and effectively promote innovative activities.