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Chapter 1 Innovation management: an introduction
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
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Theories and models of innovation management 1.
2. 3. 4.
5. 6. 7.
Introduction Product and process innovations Typology of innovations Different schools of thought Models of understanding of innovation management Implications for developing products and services Summary and review
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
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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 2008
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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
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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 2008
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Typology of innovations Type of innovation Product innovation Process innovation
Example The development of a new or improved product 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
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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
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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 2008
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Table showing the chronological development of models of innovation 195 0/60s
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.
1990 s/00
Network models
Emphasis on external linkages
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
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Linear models of innovation management
Technology push Research and development
Manufacturing
Marketing
User
Market pull Marketing
Research and development
Manufacturing
User
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
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Coupling model of innovation management
Manufacturing
Research and development
Marketing
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
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Conceptual framework
Creation of new knowledge dominated by universities and large science-based organisations
Science and technology base
Technology developmentdominated by organisations
Technological developments
Consumers express their needs and wants through the consumption of products
Needs of the market
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
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Innovation management framework
EXTERNAL INPUTS: macro factors ROI costs; competition.
Organisation and business strategy
EXTERNAL INPUTS: scientific and technological development; competitors; suppliers; customers; university departments.
Source: Trott, 2005
Organisation’s knowledge base accumulates knowledge over time
EXTERNAL INPUTS: societal needs; competitors; supplier partnerships; distributors; customers; strategic alliances.
New products Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
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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 2008
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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
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Any questions? Thanks for listening I hope you enjoy the unit.
Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008
