Professional Documents
Culture Documents
INNOVATION
by
David Sullivan
Preface
Few topics have exercised our minds as much as innovation. Yet for
most of us, many aspects of it continue to remain a mystery. The
application of innovation in our specific circumstances remains
difficult to understand and stubbornly difficult to apply. Despite
the many books and articles published on innovation, managers Key Question
continue to face the same persistent question: How can innovation How can innovation be
better applied in any
be better applied in my organisation? organisation?
The aim of this book is to give you some important insights into
how ideas can be managed and transformed into innovation in any
organisation. The book presents a systematic approach to managing
ideas, what causes them and where they will lead you. The book
Aims
brings together a number of techniques that can be used to To give you some important
improve the innovation process. It includes a range of ideas that insights into how ideas can
be managed and
are easy to implement and have worked very successfully in leading transformed in innovation.
companies throughout the world.
David Sullivan
National University of Ireland Galway
Contents
Introduction ............................................................................ 4
Managing Innovation.................................................................. 11
Conclusions ............................................................................ 59
Bibliography ........................................................................... 60
Notes.................................................................................... 61
Learning Goal
Apply what you have
learned to managing
innovation in any
organisation
High Impact
Introduction Web
This
More
Linkcontains a
booklet
detailed
systematic information
approach to
on the ideashigh-impact
developing covered in
this bookletincan
innovation anybe found
Innovation is an important force in creating and sustaining business
at: http://www.owl.ie
organization.
growth. Effective innovation can mean the difference between
leading with a particular product, process or service and simply
following the pack with the risk of stagnation and decline.
Innovation transforms mediocre companies into world leaders, and
ordinary organisations into stimulating environments for employees.
Learning Goals
When you have completed this booklet you will be able to:
4
Goal
Define innovation and the
difference with concepts
such as invention, change,
ideas and so on.
Invention
Creating something new
Introduction
Learning Goals
When you have completed this section you will be able to:
Definition of Innovation
1
The New Oxford Dictionary of English. 1998: Oxford University Press.
5
customers.
Innovation
Management
Innovation management is
Defining Innovation the process of managing
information, people and
changes associated with
innovation so that value can
television, on the other hand, was an innovation. It met a desire
Web Link
be added to customers.
from customers to have flatter, more high-definition television
Visit
http://www.wikipedia.org
sets. It made changes to the already-established tube television.
for a number of alternative
When Philips introduced the Interactive TV in the 1980s, some
definitions from experts in
the field.
analysts viewed it as another innovation by a company renowned
for its innovation processes. They argued that it could destroy the
traditional tube television market. However, customers found the
new interactive TV too expensive and too cumbersome to use. The
Interactive TV itself was ultimately destroyed by the innovation
process and replaced by more successful ideas.
Alternative Definition
Products
Processes
Services
The definition of innovation does not refer to the size and scope of
the change to the product, process or service. For example
introducing a new flat-screen television is clearly a major or radical
change to the older established television market. On the other
hand, a change such as changing the colour or the size of the
screen is relatively small or incremental. Innovation can be:
Radical
Incremental
Incremental
Innovation
Revenue/
Efficiency
Radical
Innovation
Time
Figure 1: Radical and Incremental Innovation2
Disruptive Innovation
Digital Photography
Radio Frequency Tags
Digital Media (Music and Video)
Internet and World Wide Web
Summary
Reflections
Managing Innovation
Introduction
Learning Goals
When you have completed this section you will be able to:
Investment in Innovation
Improved quality
Creation of new markets
3
http://cordis.europa.eu/itt/itt-en/99-7/innov3.htm (14th December 2006)
11
Managing Innovation
Innovation Failure
Failure can also lead to
Extension of the product range loss of morale among
Reduced labour costs employees and an increase
in cynicism and even
Improved production processes higher resistance to change
Reduced materials in the future.
Reduced environmental damage
Replacement of products/services
Reduced energy consumption and
Conformance to regulations.
Failure of Innovation
The causes of failure have been widely researched. They can vary
considerably between organisations. Some causes will be external
to the organisation and outside its influence of control. Others will
be internal and ultimately within the control of the organisation.
Internal causes of failure can be divided into causes associated with
the cultural infrastructure and causes associated with the
innovation process. Failure in the cultural infrastructure varies
from one organisation to another, but the following are common
across all organisations at some stage:
Definition: Actions
The expenditure of effort
Defining these goals is a key factor in creating high impact
innovation. We will deal with Goals in more detail in the section Definition: Teams
Resources for an effort
on: Defining Innovation Goals.
Definition: Results
The outcome of an effort
Actions: An action is defined as the expenditure of effort. Actions
include such activities as: Definition:
Communities
Individuals with a common
(i) Problem identification and solution purpose
(ii) Idea generation
(iii) Managing initiatives and projects
(iv) Balancing project portfolios
A key issue is that actions are in some way aligned with the goals of
the organisation e.g. ideas have goals. We will deal with Actions in
more detail in the section on: Managing Innovation Actions.
(iii) Communications
(iv) Knowledge Management
Innovation Goals
We will deal with Community in more detail in the section Tightly
on: defined goals can
be visualised as closing the
Building Innovation Community. neck of the innovation
funnel allowing fewer
ideas flowing through.
Innovation Funnel
GOALS
ACTIONS
RESULTS
COMMUNITIES
TEAMS
Summary
Reflections
Defining Goals
Introduction
Learning Goals
When you have completed this section you will be able to:
Defining Goals
17
Defining Innovation Goals
GOALS
Statements
Requirements
Objectives
Standards
Indicators
ACTIONS
RESULTS
COMMUNITIES
TEAMS
Performance Indicators
Performance Charts
Stretch Value
(97%)
Target Value
(90%)
Balanced Scorecard
Financial Perspective
Customer Perspective
Internal Processes Perspective
Learning & Growth Perspective
Financial
Objectives
How we should
Indicators
Projects
Targets
appear to our
stakeholders?
Customer Business
Objectives
Objectives
Projects
Projects
Targets
Targets
appear to our
What business
customers? Vision & processes must
Strategy we excel at?
Learning
Objectives
& Growth
Indicators
Projects
Targets
How will we
sustain our
ability to
change?
Summary
Reflections
Introduction
Learning Goals
When you have completed this section you will be able to:
Describe the problem solving process and a number of tools for solving
problems systematically
Explain idea generation and use tools for generating new ideas
Identify broader aspects of project management appropriate to the
innovation process
Explain the procedure for project portfolio management where a group
of projects are chosen to meet short- and long-term goals
Managing Actions
25
Managing Innovation Actions Problems
Search
Problems can be reactive
Search the internet using a
or proactive.
popular search engine using
often regarded as the seed of innovation e.g. a problem exists with
the key words in Table 1
a particular product when compared with a competitor. On the
other hand ideas or goals are viewed as stimulating innovation. We
begin this section by looking a problem solving. Later we explore
idea generation and project portfolio management.
GOALS
ACTIONS
Problems
Ideas
RESULTS
Projects
Initiatives
COMMUNITIES
TEAMS
Solving Problems
Serendipity
Some ideas occur because
of serendipity i.e. an idea
suddenly arises without
any prompting. Most ideas
are planned.
Generating Ideas
Sources of Ideas
6
Managing Creativity and Innovation, Harvard Business Essentials, Harvard
Business School Press, 2003
Customer Ideas
One weakness of using
customers solely for
Managing Innovation Actions generating ideas is that
customers often defend
the products they
purchase.
benchmarking, practice and experience. Many sources of new
knowledge can be used to generate new ideas.
Evaluation of Ideas
The most direct way of evaluating an idea is judging its merits with
respect to its impact on meeting the goals of the organization
versus any risk of not achieving its impact. Score each idea on a
scale from one to five on its impact, and then score each idea on
a scale from five to one on its risk. Multiply both scores and you
get an overall score for the idea. Other factors that need to be
considered are the technical and business competencies available
in the organization. There is little point in choosing a good idea if
the competencies to implement and exploit the idea are not
Utility Levers
Productivity
Simplicity
Convenience
Managing Innovation Actions Risk
Fun and image
Environmental friendliness
available in the organization. Cost benefit analysis is another direct
way of evaluating an idea, although it is often difficult to
Buyer Life Cycle
determine benefit from an idea that has not been tested in Purchasethe
marketplace. Delivery
Use
Supplements
7 Maintenance
Another approach to evaluating ideas is the buyer-utility map . The
Disposal
buyer-utility map is a two-dimensional matrix with six utility levers
on the y-axis and six stages of buyer experience on the x-axis, see
Figure 10. The approach suggests that every customer measures the
utility of a product, process or service according to the criteria on
the map. The six utility levers are productivity, simplicity,
convenience, risk, fun and image, and environmental friendliness.
If a comparison of product, process or service shows that your idea
is better than competitors, then the idea is a good one. All six of
these utility levers can then be applied for each stage in the buyer
experience life cycle from purchase, delivery and use to
supplements, maintenance and disposal. Again, if the comparison
with competitors shows your idea is better, then the idea is a good
one. An alternative approach to using the buyer-utility map is to
use it to compare customer requirements with the idea.
nt nts
po ce
an
e
e
l
as
sa
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en
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ch
pl
iv
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ai
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el
is
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D
Collective Productivity
Simplicity
Convenience
Risk
Fun and Image
Environmental Friendliness
Sample: A low cost airline recently completed a buyer-utility map for its
innovative service to airline passengers. They later contrasted this map with the
map developed following an analysis of requirements by airline passengers. The
map is illustrated in
Figure 11.
7
Kim and Mauborgne, Knowing a winning business idea when you see one.
Harvard Business Review, 2000. September-October: p. 129-136.
Managing Innovation Actions
nt nts
po ce
an
e
se
l
sa
y
en
ha
er
le
pp
iv
rc
se
ai
el
is
Pu
Su
M
D
D
Collective Productivity
Simplicity
Convenience
Risk
Fun and Image
Environmental Friendliness
Product Development
The stage gate process is a powerful tool for managing the new
product development process [12]. Cooper describes the stages by
which products flow from concept to market as a generic stage-
gate process consisting of sequential stages.
Managing Innovation Actions
Ideation Stage
Detailed Investigation Stage
Development Stage
Testing and Validation Stage
Commercialization Stage
Idea
Idea
Stage Review: at each stage gate (Figure 12), the project team and
senior management review the progress of the project during the
previous stage. This review results in a decision as to the fate of
the project. The success of a project depends exclusively on what
happens inside the project, for example, is the project meeting its
goals and progressing according to plan? If the outcome of the
review is satisfactory, then it is allowed to proceed to the next
stage of the process. Otherwise the decision can be made as to
whether the project should return to the previous phase for further
development or be abandoned altogether. The decision to kill-off
the project completely can be taken in scenarios where initial
development and testing has highlighted unforeseen challenges that
alter the attractiveness of the particular project.
Project Management
Work packages
Tasks
Deliverables
Milestones or Stages
Resources
Milestones or Stages: These are sub actions that mark the end of a
task or other event such as a deliverable in the implementation of
the project.
Project Scheduling
Risk
Low
Portfolio Dominates
High Low The portfolio as a whole
and the organizational
goals as a whole are
Reward reviewed regularly rather
than detailed evaluations
of individuals projects.
Oysters White Elephants
High
FMEA
Creativity
for reviewing a portfolio while it is in the process of being
Idea Generation
Project Portfolio
executed: (i) the Gates Dominate approach and the (ii) Portfolio
Buyer-Utility Map
Dominates approach. Bubble Diagram
Summary
Reflections
Empowering Teams
innovation process: funding
and individuals or teams.
Introduction
Learning Targets
When you have completed this section you will be able to:
Empowering Teams
There are two major resources used in the innovation process. The
first is funding and the second individuals, and in particular teams.
Individuals are necessary for setting goals, generating ideas,
relating ideas to goals and executing projects. Individuals have
many different skills and perspectives to bring to the innovation
process. They also have differing levels of engagement and
motivation. There are a number of key techniques for increasing
the engagement and motivation of individuals in the innovation
process. Some of them involve managing the information and
structure surrounding teams. The most important techniques
address the behaviour and motivation of teams. In terms of
information and structure, we can visualise the innovation funnel as
comprising a number of knowledge elements as illustrated in Figure
14. These are Individuals, Responsibilities, Teams, Workgroups and
41
Leadership
Leadership is the ability to
influence a team towards
the achievement of well
Empowering Innovation Teams defined, communicated
and accepted goals.
GOALS
ACTIONS
RESULTS
COMMUNITIES
TEAMS
Individuals
Responsibilities
Teams
Workgroups
Appraisals
Leading Innovation
Highly self-motivated
Leadership Culture
9
Jones, P., et al., Delivering Exceptional Performance. 1996, London: Pitman
Publishing.
Knowledge Access
Risk
The Taking
internet has recently
Taking
createdrisks is a necessary
an explosion in
part of creating sources.
new knowledge new ideas.
Empowering Innovation Teams
Reward
organizational culture is right to allow them to grow and prosper.
Creative energy is easily
There are many factors necessary for developing an effective dissipated. Reward and
innovation culture in any organization, including the following: recognition replenishes
this energy in the minds of
individuals.
Risk taking is encouraged and accepted
New ideas are welcomed
Information exchange is open and shared
Extensive and uncontrolled access to new knowledge
Good ideas are supported
Innovations are rewarded and recognised
Support for Ideas: Ideas and the individuals who create them are
like young seedlings if they do not receive support and
encouragement, they can wither and die. Innovation leaders need
to learn how to support ideas and protect the often delicate egos
and sensitivities of the individuals who create them.
10
Pava, C., Managing new office technology: An organisational strategy. 1983,
New York.: The Free Press.
Involvement
Innovative organisations
Empowering Innovation Teams have high employee
involvement in teams.
Building Teams
Management
Team
Functional
Team
(Department)
Heavyweight
Project
Team
Lightweight
Project
Team
Tiger
Team
High
Empowerment
Loose Fully
Cannons Empowered
Entrenched Caged
Bunkers Eagles
Low High
Enablement
Openly Assertive
Aggressive
High
(I boldly insist that (I clearly express
my ideas prevail) we both have ideas)
Openness
in Communication
Concealed Passive
Aggressive
Low
(I subtly make sure (Other peoples ideas
my ideas prevail) take precedence)
Low High
Motivating Performance
Summary
Reflections
Monitoring Results
Introduction
Learning Goals
When you have completed this section you will be able to:
Illustrate a number of ways that results of goals, actions and teams can
be highlighted
Map the connections between different sets of innovation information
Use techniques for managing innovation meetings
Monitoring Results
53
Watchdog
TheIdeal Report
individual labelled as
An ideal report
responsible is aactivity
for an full
Monitoring Innovation Results knowledge
takes on themanagement
role of
system that and
watchdog users can the
brings
explore online
activity to and reflects
the attention of
changes
the teamaswhen
theynecessary.
occur.
GOALS
ACTIONS
RESULTS
Exceptions
Relationships
Reports
TEAMS COMMUNITIES
Progress
Connections
the first column of a new matrix. A new list can then be related to
these data elements. For example, customer requirements can be
related to, say, design features in the first matrix. Design features
can then be related to, say, performance indicators in a second
matrix. Performance indicators can them be related to project
initiatives in a third matrix and so on.
Exceptions
Meetings
Traffic Lights
Time Management: This need not be a major challenge. Consider Balanced Scorecard
the time requirements in advance of a meeting and once a time Meeting
slot Management
DHL Case Study
is decided, communicate this in advance of the meeting with the
agenda. Each item then needs to be allocated time within this time
slot. A good chairperson will judge where allocated times can be
shortened or lengthened during the meeting. Largely, meetings
should be kept formal regarding timekeeping and always finish on
time except in exceptional circumstances.
Summary
Reflections
59
Bibliography
0 60
Notes
1 61
2 62