introduction to innovation

Paul Trott, Innovation Management and New Product Development, 4th Edition, © Pearson Education Limited 2008

Lecture 1

Innovation management:

an introduction

Text reference Chapters 1 &2

1. Introduction

2. Product and process innovations

3. Typology of innovations

4. Different schools of thought

5. Models of understanding of innovation management

6. Implications for developing products and services

7. Summary and review

Theories and models

of innovation management

• 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

Introduction

an introduction

Text reference

Lecture 1

an introduction

Text reference

• Firms must change as needs and wants change

• So over time firms tend to evolve into new areas

• Need to be mindful of what competitors are doing

• The ability to change and adapt is critical to long-

term survival

• The most successful firms have demonstrated an

ability to innovate

Why is innovation important?

Why study innovation•Its the engine of national growth

•Josef Schumpeter one of the first to

emphasise that new products stimulate

economic growth

•Growth tends to occur in waves

•Post war industrial R&D

Roles in the innovation process:

•The innovation process centres

around individuals

•People define problems and have

•Managers decide what activities

should be undertaken and the

amount of resources to be deployed

•Inventors, enterpreneurs, sponsors

all play a critical role.

Lecture 1

an introduction

Text reference

Recent studies on innovation

Innovation in organisations

Lecture 1

an introduction

Text reference

Innovation and invention

Lecture 1

an introduction

Text reference

Lecture 1

an introduction

Text reference

Type of innovation Example

Product innovation The development of a new or improved product

Process innovation 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.

Typology of innovations

Technology and Science

• The major contribution is understanding of

potential customers

• Marketing provides important information for the

successful development of innovative new

products

• Marketing is critical in the acceptance and

diffusion of new products

Role of Marketing in innovation

• What are the potential applications of a technology as a

product?

• Which applications should be pursued first?

• What benefits can the proposed product offer to

potential customers?

• What is the potential market size?

• Is this market size sufficient for profitability?

Key marketing questions

• 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

Product technology advantages

• 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).

Process technologies

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.

Popular view of innovation:

1. Market-based view of innovation;market conditions provide the context which facilitateor 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. SerendipityInnovation is all due to luck and good fortune

Three key schools of thought:

1950/60s 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.

1990s/00 Network models Emphasis on external linkages

Table showing the chronological

development of models of innovation

Research and

developmentManufacturing Marketing User

Technology push

Research and

developmentManufacturingMarketing User

Market pull

Linear models of innovation

management

Manufacturing

MarketingResearch and

development

Coupling model of innovation

management

Science and

technology base

Needs of

the marketdevelopments

Technological

Creation of new knowledge

dominated by universities and

large science-based organisations

Technology development-

dominated by organisationsthe consumption of products

Consumers express their

needs and wants through

Conceptual framework

EXTERNAL INPUTS:

societal needs;

competitors;

supplier partnerships;

distributors;

customers;

strategic alliances.

EXTERNAL INPUTS:

scientific and technological

development;

competitors;

suppliers;

customers;

university departments.

Organisation and

business strategy

EXTERNAL INPUTS:

macro factors

costs;

competition.

Organisation‟s

knowledge base

accumulates

knowledge

Innovation management

framework

New productsSource: Trott, 2005

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

• 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.

Implications for developing

products and services

• The public nature of knowledge

• Uncertainty

• The need for complementary assets

• The need for cooperation and governance

• Politics

What can national governments do?

• Financing R&D (via universities, defence, R&D, etc)

• Government can become a “lead user”

• Information centre and political stability

• Provide economic stability

• Provide complementary assets

• Act as regulator

• Educator

Facilitating innovation through

government actions

introduction to innovation

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