INNOVATION MANAGEMENT IN INNOVATION MANAGEMENT IN DESIGN PROCESSDESIGN PROCESS
JJiříiří Vacek VacekDepartment of management, innovations and projectsDepartment of management, innovations and projects
UWB, Faculty of EconomicsUWB, Faculty of Economics
vacekjvacekj@@kip.zcu.czkip.zcu.cz
MOPP 2005February 10, 2005, Pilsen
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Importance of innovationImportance of innovation
innovation is critical to successinnovation is critical to success product life cycle is getting shorter product life cycle is getting shorter
and shorterand shorter new products must me introduced new products must me introduced
ever more frequentlyever more frequently design-push approachdesign-push approach must be must be
changed to market-pullchanged to market-pull
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Problems encounteredProblems encountered
most new products are most new products are overengineeredoverengineered
majority of businesses commercialize majority of businesses commercialize less than 20% of promising ideasless than 20% of promising ideas
the biggest barrier is a lack of people the biggest barrier is a lack of people with adequate skillswith adequate skills
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Possible solutionsPossible solutions
technological excellence is technological excellence is necessary, however often not necessary, however often not sufficient for the innovation’s successsufficient for the innovation’s success
technical skills must be combined technical skills must be combined with business and managerial oneswith business and managerial ones
information and communication information and communication technologies, can support design technologies, can support design process innovationprocess innovation
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Change of the design paradigmChange of the design paradigm
Design process must incorporate Design process must incorporate such disciplines assuch disciplines as• innovation managementinnovation management• team workteam work• creativitycreativity• knowledge managementknowledge management
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Design-driven cost reductionDesign-driven cost reduction
FFour cornerstones of the design-driven our cornerstones of the design-driven cost reductioncost reduction::• Process discipline imposed at every stageProcess discipline imposed at every stage • Target setting and transparent monitoringTarget setting and transparent monitoring • CCross-functional organization removing ross-functional organization removing
organizational barriers and fostering organizational barriers and fostering collaboration and creativitycollaboration and creativity
• Management commitment, empowering design Management commitment, empowering design teams to make and implement difficult teams to make and implement difficult decisionsdecisions
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Stage-Gate processStage-Gate process
Kill unsuccessful projects in early stages, before they waste significant resources
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DISRUPTIVE INNOVATIONDISRUPTIVE INNOVATION Christensen, C.M., “Christensen, C.M., “The Innovator’s DilemmaThe Innovator’s Dilemma”, ”,
Harvard Business School Publishing, Boston MA, Harvard Business School Publishing, Boston MA, 1997 1997
Christensen, C.M., Raynor, M., “Christensen, C.M., Raynor, M., “The Innovator’s The Innovator’s SolutionSolution”, Harvard Business School Publishing, ”, Harvard Business School Publishing, Boston MA, 2003Boston MA, 2003
Even the best managed companies, Even the best managed companies, focused on their best customers and focused on their best customers and most profitable markets, often fail in most profitable markets, often fail in
competition with far less competition with far less technologically sophisticated technologically sophisticated
products. products.
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SSustaining ustaining vs.vs.disruptive disruptive innovationinnovation
sustainingsustaining:: focus on better product focus on better product that can be sold with greater marginthat can be sold with greater margin
disruptivedisruptive:: brings to the market brings to the market simpler, more convenient, cheaper simpler, more convenient, cheaper product that at the beginning product that at the beginning appeals to new or unattractive appeals to new or unattractive customerscustomers
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The disruptive innovation modelThe disruptive innovation model C
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3
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The Up-market Migration of Steel MinimillsThe Up-market Migration of Steel Minimills C
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.37
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Innovator's dilemma and solutionInnovator's dilemma and solution
moving up the trajectory into successively moving up the trajectory into successively higher-margin tiers of the market and higher-margin tiers of the market and shedding less-profitable products at the shedding less-profitable products at the low end is something that all good low end is something that all good managers must domanagers must do
innovator’s dilemmainnovator’s dilemma – each company – each company prepares its own disruptionprepares its own disruption
start of the start of the innovator’s solutioninnovator’s solution: the : the company has to be prepared to disrupt company has to be prepared to disrupt itself, before anybody else does ititself, before anybody else does it
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New market disruptionNew market disruption products compete with non-consumption. products compete with non-consumption.
• more affordable and simpler to use by new more affordable and simpler to use by new users (PC, transistor radio, desk copiers)users (PC, transistor radio, desk copiers)
• as their performance improves, they become as their performance improves, they become good enough for the mainstream market with good enough for the mainstream market with all the consequencesall the consequences
there has to be sufficient number of less there has to be sufficient number of less skilled or less affluent people who can own skilled or less affluent people who can own and use the technology that was formerly and use the technology that was formerly available only to more skilled or more available only to more skilled or more affluent people, possibly only in affluent people, possibly only in centralized, inconvenient location.centralized, inconvenient location.
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Low-end disruptionLow-end disruption
focuses on the low end of the mainstream focuses on the low end of the mainstream market (minimills, discount retail stores, market (minimills, discount retail stores, Korean car makers)Korean car makers)
there are customers happy to purchase a there are customers happy to purchase a cheaper product with less (but good cheaper product with less (but good enough) performanceenough) performance
it is possible to create a business model it is possible to create a business model making money at lower price per unit sold. making money at lower price per unit sold.
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OPEN INNOVATIONOPEN INNOVATION
Chesbrough, H., “Chesbrough, H., “Open InnovationOpen Innovation”, ”, Harvard Business School Publishing, Harvard Business School Publishing, Boston MA, 2003Boston MA, 2003
Closed innovationClosed innovation - requires control - requires control Open innovationOpen innovation
• companies use external as well as internal companies use external as well as internal ideas and both external and internal ways to ideas and both external and internal ways to marketmarket
• internal ideas can be taken to the market internal ideas can be taken to the market through external channels to generate through external channels to generate additional value additional value
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Product architectureProduct architecture
Hierarchy of connections Hierarchy of connections between disparate functions between disparate functions
within a systemwithin a system
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Interdependent ArchitectureInterdependent Architecture
System
Component A
Component B
Component C
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Interdependent ArchitectureInterdependent Architecture
changing one component requires changing one component requires changes in all other parts of the changes in all other parts of the system, because the relationships system, because the relationships between the parts are not clearly between the parts are not clearly understoodunderstood
can be best managed through can be best managed through internal processes internal processes
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Modular ArchitectureModular Architecture
System
Component A
Component B
Component C
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Modular ArchitectureModular Architecture
components could change without causing components could change without causing any change in other componentsany change in other components
modular design enables to assemble modular design enables to assemble system more easily, from “plug and play” system more easily, from “plug and play” components whose interfaces are well components whose interfaces are well understoodunderstood
modular architecture makes it easy for modular architecture makes it easy for many companies to innovate components many companies to innovate components without worrying about possible impact on without worrying about possible impact on other parts of the systemother parts of the system
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IMPLICATIONS FOR NPDIMPLICATIONS FOR NPD extended circle of company extended circle of company stakeholdersstakeholders
- customers, NGOs, local and regional - customers, NGOs, local and regional governmentsgovernments
not only superior quality, but also not only superior quality, but also environmentally friendly, aesthetically environmentally friendly, aesthetically appealing new productsappealing new products
designed for Xdesigned for X, where X can be quite , where X can be quite large and multi-faceted setlarge and multi-faceted set
after-sale serviceafter-sale service plays an increasing plays an increasing role – and brings increased turnover and role – and brings increased turnover and profitprofit
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Life-long learningLife-long learning
The engineers of tomorrow must be The engineers of tomorrow must be able to solve problems that have not able to solve problems that have not been even formulated during their been even formulated during their studiesstudies
life-long learning becomes necessarylife-long learning becomes necessary
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WhatWhat to do to do
look for unsatisfied needs, new ways look for unsatisfied needs, new ways of delivering value to their customersof delivering value to their customers
create new business models for new create new business models for new productsproducts
technological and business technological and business intelligence intelligence
competently work with intellectual competently work with intellectual property property
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AcknowledgementAcknowledgement
The work summarized in the paper was The work summarized in the paper was performed with financial support of the performed with financial support of the Czech Ministry of Education, Youth and Czech Ministry of Education, Youth and Sports Research project Sports Research project
MSM 232100006 - “Research and MSM 232100006 - “Research and Development of Innovations, Design, Development of Innovations, Design, Technology and Material Engineering of Technology and Material Engineering of Machinery Products”. Machinery Products”.
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ContactsContacts
Jiří VacekJiří Vacek University of West Bohemia, Faculty of University of West Bohemia, Faculty of
Economics, Department of management, Economics, Department of management, innovations and projectsinnovations and projects
Husova 11, Plzeň, 306 14, Czech RepublicHusova 11, Plzeň, 306 14, Czech Republic Tel.: +420-377633204, fax: +420-Tel.: +420-377633204, fax: +420-
377633202377633202 e-mail: e-mail: vacekj@[email protected] web: web: http://www.kip.zcu.czhttp://www.kip.zcu.cz, , http://www.http://www.fekfek
..zcuzcu..czcz