Successful Innovation Management

vs.
Successful Innovation Management
The most powerful concepts and solutions of Innovation Management
and Product Development to dramatically improve competitiveness
1S. Kutter, Successful Innovation Management, SRTD-Project, Amman, 2010

Intro
 Stefan Kutter
 Dipl-Ing. (BA), MSc. Technology & Innovation Management
 Founder & Head of consurge Innovationsmanagement (2005)
 Own Ventures:
– Innobest.net …inno-auditing & venture assentment online tools
– Bestellshop-sw.de …local ERP/CRM for home order agencies & shops
– Start-office.de …Berlin based incubator & shared office hub
 Consulting projects & trainings mainly for SMEs in IT, service &
manufacturing
 Research in innovation- & start-up management

Opening Questions
 How do you experience innovation activities in
Jordan?
 Where do you see potential wasted?
 What additional knowledge / approaches / skills /
conditions could help you to innovate?
 What are your expectations reg. this seminar?
S. Kutter, Successful Innovation Management, SRTD-Project, Amman, 2010 3

Outline
 Part 1 Challenges: understanding the immanent dangers to
any business and why most approaches to innovate still fail so
often (15 min)
 Part 2 Success Factors: discussing the most important success
factors of innovation management and its implications for
improving the corporate ability to innovate focusing on idea
management and the stage-gate process of new product
development (25)
 Part 3 Business Model Innovation: leveraging profits by
designing and proving business models for each innovation to
successfully implement it into the market (20)
 Part 4 Questions & Answers

Definition: What is an innovation?
Anything, that is NEW
&
Successful
… to anyone
(Company, Group of People, Area…)
… not necessarily inventive!
I claim:
… in any way
(economic, penetration/diffusion…)

6
Stunning statistic on product innovation success
Source: IAI, Bochum, Germany
100
33
13
6
0
20
40
60
80
100
started projects prototype
development
market
introduction
product success
%
percent
Expon. (percent)
S. Kutter, Successful Innovation Management, SRTD-Project, Amman, 2010

!! There are more innovation projects actually killing the
company rather than providing breakthrough success!!
Stunning statistic on product innovation success
7
Ability to innovate is turning into an essential core competence
Product Ideas
Graph Sources: IAI Bochum & WU Wien in TR
Innovation Projects Success
Market

Innovation Management Impact
Competetive Advantage
Time
Today
Innovation Management
Productivity
Quality

Innovation pressure
Innovation abilities
The Goal: sustainable profit
Profitable
growth
create continious profitable revenue streams even under difficult market
conditions

Product Life Cycle under pressure
11
Source: Pahl/Beitz
Sales
Profit
Sales / Profit
Possible Relaunch
Time

Product Life Cycle
Profit
Sales
Screening / BM Development Implementation Growth Mature Saturation Decline
1
Market cycle
Development / T2M

Source: Trommsdorff nach IMT Berlin , InWert-Vortragsreihe
The PLC-Scissors
2
1
13
Average market cycles
Average development time
Years
Time

2
Surviving the „Scissors-Effect“
higher
success
rates
- Focusing on „Big Ideas“
- Business Model Design
- Integrated Stage Gate Process / Portfolios
- Customer Development / BM Innovation
T 2 M - shorter Time to Market
- pioneer margins
- longer market circle
- more profit
sustainable,
profitable
growth
Increasing corporate
„Innobility“

Corporate Life Cycle by Adizes
15
Product Innovation
Business Model
Design/Innovation
Process Innovation
Organisation/ Service
Innovation
Business Model
Innovation

Macro-Economics & Innovation Management
Kondratiev & Currency-Cycles
Implications to corporate innovation strategy & crisis management

Economic crisis?
Dept crisis!

Kondratiev-Charts
(Allianz Global Investors)
(A. Nefiodow, Wikipedia)

The Challenge: Handling Innovation
Complexity
 Innovation: necessary but often
complex & risky
 How high is innovation pressure?
 Is my company’s ability to innovate
sufficient?
 Which IM concepts & methods fit
best?
?
20

Ability to innovate: managing the innovation
cycle
Proactive management of continuous innovation circle
What?
When ?
For whom?
Wich extend?
Ideas & projects
Processes
Resources
Market implementation

Factors of Innovation Success
motivation Scenario analysis cooperation reference customers /
lead users risk-management portfolio analysis promoters innovation-
culture technology scouting innovation strategy foresight
stage gate process open communication life cycle management
intrapreneurship portfolio analysis idea management incentive
system knowledge management core competence management market orientation
resource planning innovation financing & controlling

Ability to innovate
Methodology
Factors of Innovation Success – Core Elements
Resources
& Relations
Motivation
Opportunities
Motivation
Opportunities
Ressources &
Relations
Methods

Factors of Innovation Success: Dimensions

Corporate Innovation Strategy
Pic: http://blog.bluesummit.net/strategy/mission-vs-vision/2007/
Vision (to identify)
Goals (to achieve)
Strategies (to guide)
What?
When ?
Which extend?
… to innovate
For innovation strategy the core questions are:
Products, Services, Business Model, Processes, Organisation, Markets
Innovation leader, fast follower, late adopter
Radical, semi radical, incremental, Imitation

 Examples: fast followers faster than inno-leaders
– AltaVista -> Google
– Napster -> iTunes
– Netscape -> Internet Explorer
– Apple Newton -> Palm Pilot -> Blackberry –> iPhone
– IBM PC -> Compaq -> Dell
– Double Click -> Google Ad Sense
– Ofoto -> Flickr
– Nintendo –> Xbox
– Friendster –> Facebook

• Corporate Culture
• Core Competences
• SWOT
• Market Powers
Current Situation
• Technological
Developments
• Market / Megatrends
• Scenario Analysis
Trend Recognition
& Forecasting • Vision / Mission
• Strategic Goals
• Strategy Options
• Selection & Wording
Strategy
Development
• Operative Goals
• Criteria / Indicators
• Scorecards
Implementation-
preperations
Starting Point : Strategy (change) needed?! (routine assessment, new challenges etc.)
!!! Fit of corporate and innovation strategy
28
Strategy development process

Internal
Strength Weaknesses
E
x
t
e
r
n
a
l
Chances
++ Strategies:
Taking chances that fit the
strenghts
- + Strategies:
Eliminate weaknesses to
take on new chances
Threads
+ - Strategies:
Use strengths to
fight/anticipate thread
- - Strategies:
Weakening the scope of
Weaknesses & AVIOD
thread / weakness
combinations
SWOT – related strategy Options

Potential
Market Entries
Suppliers
Potential
Substitutes
Customers
Negotiation
Power
Competition-
Rivalry
Porters Market
Powers
Negotiation
Power
Thees 5 powers are the strongest
external drivers & sources of
innovations, ideas etc.
Others will be discussed in the
„opportunity“ Block of Day 2

Innovation Culture
 company culture portfolio
External orientation
Internal orientation
Hirarchical Cooperative
Military
Web Start up

Promoters
 Innovation Champion (all in one?)
 Power promoter
 Know-How-Promoter (capabilities, skills)
 Process Promotor
 Relationship Promotor (force field)

Operational Management
 Technology Management
 Portfolio Management
 Project Management
 Risk Management
 R&D Management
– Stage Gate Process Management
– Idea Management

Operational Management

Closed (Industrial) Innovation Model

Open (Industrial) Innovation Model

Stage Gate – the product innovation process model
by Cooper
 Quality enhancement of developing process
 sharp focus and clear prioritizing
 Parallel processes with higher pace
 Cross-functional team
 Including market orientation & assessment explicitly
 Detailed information gains und forecasts in pre-
development-stage
 Create products with competitive advantage
 Critic: does not include the service design
component combined with product innovation

Stage Gate – the innovation process model by Cooper
39S. Kutter, Successful Innovation Management, SRTD-Project, Amman,

Stage Gate – the innovation process
Gate
1
Idea
Screen
Stage
1
Scoping
Gate
2
Second
Screen
Stage
2
Build
Business Case
Gate
3
Go to
Development
Stage
3
Development
Gate
4
Go to
Testing
Stage
4
Testing &
Validation
Gate
5
Go to
Launch
Stage
5
LaunchDiscovery
Stage
Post-Launch
Review
$!?
Idea management
Project management
Market preparation & implementation
erspecti
Concept
Drafts
Construction
Detailing

Stage Gate Process Implementation

Source: Perspective: The Stage-Gate Idea-to-Launch Process – Update, What’s New and
NexGen Systems Dr. Robert G. Cooper

Gate Review Template

Three components of creativity
Expertise
Motivation
Creative
Thinking
Skills
Creativity
Teresa Amabile HBR Sept ‘98

Creativity techniques
 Problem: unflexible thinking due to (sussess-)Patterns
 Not enjoying change/ uncertainty
 Weakness to discover and accept opportunities off the
common and well known

De Bono lateral & parallel thinking
 Edward de Bono (19 May 1933, Malta )
 Physician, author, inventor and consultant
 The originator of the term lateral thinking
 Best selling book: “Six Thinking Hats”
Source: http://en.wikipedia.org/wiki/Edward_de_Bono

Human thinking is based on:
 Facts and Information
 Emotions and Feelings
 Cautious and Careful
 Positive
 Creative Thinking
 Control of Thinking
 White Hat
 Red Hat
 Black Hat
 Yellow Hat
 Green Hat
 Blue Hat

Systematic Innovation (TRIZ)
 TRIZ: The theory of inventor's problem solving
 TRIZ provides tools and methods for:
1. Problem Formulation
2. System Analysis
3. Patterns of System Evolution
4. Much more
Based on the analysis of 400,000 inventive solutions
(more than 1.5 mln patents studied by today)
Source: http://en.wikipedia.org/wiki/TRIZ
Genrich Altshuller
(1926-1998)

Contradictions: Service Innovation
http://problemsolvingfire.files.wordpress.com/2008/06/good-cheap-fast3.jpg

 Wow can we make sure that problems play out & that
potentials stay wasted?
Guided Brainstorming

Ideenmanagement - Pipelinemodell
monitor/ screening
collect / capture
generate
purchase
assess
select
projects
improvements
clear, strategy related criteria
Assessment & selection routines
processes and routines
Creativity techniques

External Sources of Ideas
5
5
5
5
5
5
10
1010
10
10
10
1015
15 15
15
15 15 15
20
20
20
20 20
20
20
5
20
suppliers
competitors
customers
consultants
literature
laws
research
Trade fair shows
All SMEs
SMEs up to 2,5 Mio. €
sales
External sources of impulses for
innovations (mentions in %)
KfW-Study in SMEs
80
100

Idea Management
Involvement in
Idea management
Proper reasons if
rejected
Sufficient Bonus
Aktive support
Realising many
suggestions/ ideas
Feedback when
realised
36%
17%
5%
15%
2%
19%
Fast realisasion
source: Uni Graz 2001
Motivation: Influence-Factors on employee involvement

From suggestion systems (QM) to Idea
Management
Classic Improovement:
•collect many ideas, pic
few
•centralized assessment
•Bonus reward
•adminitration-like
handling
Ideen-Management
•Decisions whether to implement
are taken from employee and
direct supervisor
•small improovements/ changes
are welcome
•High share of ideas realized
•immaterial rewards (appreciation)
Source: Kammer 2004

Integration des Ideenmanagements
 Interfaces and Interactions
Strategies / Goal-system
 Criteria
CRM
Idea management
QM
Knowledge
management
Innovation cultur,
Reward Systems
HRM
(multi) Project
management

Goals in Portfolio Management
 Value Maximization
 Cost control
 Strategic fit of projects/ products
 Balancing projects/ products
– Sequence & timing
– Quantity & pipeline alternatives
– Resource demands
Source: New Problems, New Solutions: Making Portfolio Management
More Effective
By: Dr. Robert G. Cooper Dr. Scott J. Edgett

Portfolio Management – Chance/Value

Force Field Analysis
V. Bräutigam, Uni Speyer, 2010
High influence
Low influence
Veto-Player
Close relation
Weak relation
Dominated relation
Alliances & cooperation
Tensions, conflicts,
opposings interests
Broken relation
Unclear relation
Relations
Actors

Risk Management
 Definition: Risk
– unclear
– The probable frequency and probable magnitude of future
loss
– in risk management: probability of hazardous impacts
gain <-> loss

Risk Management
ISO 31000 from http://www.enhancesolutions.com.au/web/articles.php?category_id=1

Risk Management
 Assessment dimensions:
– How severe?
• Damage/ magnitude caused/ expected
– How far?
• Scope
• Range
• Areas
– How often?
• Repeatable / self triggering
• Several independent occurence
– How probable?
 Risk Formula:
Damage x Scope x Times x Probability

21.10.2006

Szenario Analysis

Scenario Development

Business Model Innovation
Source: IMB

Understanding Business Models
„ […] we define a business model as a
representation of a firm’s underlying core logic
and strategic choices for creating and capturing
value within a value network.“ (Shafer, S. M./
Smith, H. J./ Linder, J. C. (2005))
… sharp definition - but does it really help?

Understanding Business Models
Business Model ≠ Business Process Model
Business Model ≠ Enterprise Model
Business Model ≠ Business Plan
No business plan survives the first customer contact!?

Business Model Canvas by Dr. Osterwalder

Core Questions:
•Who is the customer?
•What does the customer value?
•What is the underlying economic logic?
•How do we make money in this business?
http://www.youtube.com/watch?v=dtfNsuP2AQQ

BM Design Dr. Osterwalder
Validate, Prototype & Test it!

BM Design Dr. Osterwalder
Linking Customer Development to stage-gate

Mass Prototyping Campaign
Sales Automation
Online Campaigns
PR SEO
Social Media
Adverts Videos
Pitches
Newsletter
specified
Communication Mix
Attraction Offer
„Heating up steps“
Sale

Communi-
cation
Problem
Stress
Demand
Pricing &
Revenues
€
Cost Structure
€
Potential
Competences / Resources
Inhouse
Partner
Sales-
Channels &
Pipelines
Solution
Relief
Job
Target GroupsOffers
 x
 y
 z x
 y
 z

SME
Multi Level Audit Approach
•Pre-research
•Key Values

Multi Level Audit approach
0
1
2
3
4
5
Strategy
corporate culture
Innovation driver
Innovation processes
Idea management
Portfolio management
Knowledge / Qualification
Kooperations
Financing
external Orientation
Risk Management
Marketing
Innovation Profile
sample- comp Benchmark
Inno- ability
Inno- pressure
Innovation Balance

Results & Perspective
Outside Perception
Interview Results
Key Values Inno-Profile
Inno-BalanceMarket Trends
Feedback:
-Customers
-Partners
-Staff
Analysis
Evaluation
Alternatives
of action
Roadmap Coaching
Implementation
Rapid increasement of competitiveness
Sustainable safeguarding of future returns & market position

skutter@consurge.net
+49 (0)30 692068930
vs.
Successful Innovation Management
The most powerful concepts and solutions of Innovation Management
and Product Development to dramatically improve competitiveness

Successful Innovation Management

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