innovation

Management of Innovation

Prof. V.SeshadriSVKM’s NMIMS

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References

1. Joe Tidd, John Bessant and Keith Pavitt;Managing Innovation – integrating technological, market and organizational change; 3rd ed.; Wiley India.

2. John E Ettlie, Managing Innovation – new technology, new products and new services in a global economy,, Rochester Institute of Technology

3.Harward Business Essentials, Managing Creativity and Innovation , Harward Business School – 2003

4.Shlomo Maital & DVR Seshadri, Innovation Management – Strategies, Concepts & Tools for Growth & Profit

5.Robert A Bungerman & Madisto A Maiidique; Strategic Management of Technology and Innovation; Irwin

6.7.8.

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References – contd.

6. Peter Drucker, Innovation and Entrepreneurship – Harper & Row, 1985, NY

7. Dr. K.V.Khurana, Management of Technology & Innovation , Ane Books India , 2007

8. Tarek M.Khalil, Management of Technology, Mc Graw Hill

9. Curtis R. Carlson & William W. Wilmot, Innovation, Crown Business, 2006

10. Wolfgang Grulke with Gus Silver, Lessons in Radical Innovation, Prentice Hall, 2001

11. Margret A White & Garry D.Bruton, The Management of Technology and Innovation, Cengage learning, 2007

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Objectives

• Understand the innovation process at the operational and strategic levels.

• Understand the integration of market, organizational and technological change to improve the competitiveness of companies.

• Understand the processes, tools & techniques for the successful commercialization of new product, process and service innovations

• To help connect the academic learning with industry practices.

•

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Key Concepts

• Invention and Discoveries are at the origin of the technological innovation process.

• Discover – something unknown but already existing- eg White light is made of 7 colours (VIBGYOR)

• Invent – something that did not exist before eg telescope to view the stars

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Basic Concepts – contd.

• Scientific Research: Investigation carried out for a certain purpose using scientific tools and based on scientific laws

• Basic Scientific Research: Activities involved in generating new knowledge about physical, biological and social phenomena.

• Applied Scientific Research: Activities geared towards solving particular technical problem.

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Technology

• the practical application of science to commerce or industry

• the discipline dealing with the art or science of applying scientific knowledge to practical problems

• Refers to the theoretical and practical knowledge, skills and artifacts that can be used to develop products, process and services as well as production and delivery systems

•

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Technology –contd.

• technology can be embodied in people, materials, cognitive and physical processes, plant, equipment and tools

• criteria for success of a technology is technical rather than commercial.

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Technology -contd

• Technologies are the outcome of development activities undertaken to put inventions and discoveries to practical use.

• The invention of the transistor(1947), I.C. (1959) and Microprocessor ( 1971) gave rise to successive generations of new technologies in the semiconductor industry that in turn led new applications in the telecom , computing and automation areas.

•

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Innovation

• Innovation is the successful exploitation of new ideas.

• The term comes from the latin – innovare meaning ‘to make something new’

• Innovation is the process of turning opportunity into new ideas and putting these to widely used practice. ( Ref 1)

• Innovation is the process whereby new and improved products , processes, materials and services are developed and transferred to a plant and /or market where they are appropriate – Rubenstein

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Components of an Innovation cycle

INVENTION

SCIENTIFIC DISCOVERY INNOVATION

MARKET

Has no instantaneous

commercialvalue

May never be developed into marketable products

Adoptinginnovation

Fountainhead ofinnovation

Buying or ignoring theinnovation

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Invention vs Innovation

INVENTION INNOVATIONIt is the creation of a new Product, Process or Service

It is the introduction of new product, process or service into the marketplace

May not be commercialized Results into commercializationActivities centred in R&D or in some lab or workplace

Activities and applications spread across the organizationMay have or may not have

economic motiveFor economic motive

May bring few changes in the workplace

Brings organizational change

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May or may not be patentedEssential to patent before commercializationPrecedes Innovation Succeeds Invention

Invention = Innovation – Commercial Exploitation

Innovation = Invention + Commercial ExploitationInvolves few people ( even

one person) – usually from one or few technical disciplines

Innovation involves a team, organization of multi discipline people.

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KAIZEN

• Kaizen is the Japanese concept of continuous improvement. The motto of Kaizen is

• “Today better than yesterday and tomorrow better than today”

• Deep, systematic and continuous involvement of people and using certain techniques, mainly people’s brains to cause an improvement.

• It is continuous because it is ongoing activity and never stops.

• Job rotation and cross training are employed to give workers a complete perspective

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Difference between Innovation and Kaizen

Criteria Kaizen InnovationEffect Long term and long

lastingUsually short term effect on org’s systems /technologies

Undramatic DramaticPace Small steps Big stepsTime frame Continuous Intermittent – project

orientedInvolvement Everybody from top to bottom

Select few –multi functional teams

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Difference between Innovation and Kaizen

Criteria Kaizen InnovationSpark Conventional know-

howTechnological breakthroughs

Effort orientation

People oriented Technology orientedInvestment Small BigHuman effortMajor LessSuitability Works well in slow

growthWorks well in fast growth economy

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Innovation Process

• It is the process which facilitates innovation and involves search and selection , exploration and synthesis, cycles of divergent thinking and convergence.

•

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What is Innovation? – contd.

• Innovation is a specific tool of entrepreneurs, the means by which they exploit change as an opportunity for a different business or service.

• It is capable of being presented as a discipline, capable of being learned, capable of being practiced.

- Peter Drucker (1985)

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What is Innovation? – contd

• An innovative business is one which lives and breathes “outside the box”.

• It is not just good ideas, it is a combination of - -good ideas,

-motivated staff -and an instinctive

understanding of what your customer wants

- Richard Branson (1998)

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• Innovation indices confuse innovation with invention. The innovation value chain–in a national context– encompasses the end-to-end cycle from R&D invention to its value realization in the society at large.

•• As such, invention is only a subset of

innovation that’s generally science-based research or focused on product design and results in patentable inventions.

•• National employment, power, wealth, and

well-being depend more on the deployment of innovations than on the invention itself.

•

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Invention and Innovation

• "Countries, like firms, can most easily reap the rewards of innovation through a global ecosystem in which firms, universities, NGOs, and governments collaborate. We call this an Innovation Network.

•• Within such a network, nations will fluidly weave

internally and externally available inventions and innovation services by taking on one of four innovation roles: Inventor, Transformer, Financier, or Broker."

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Management of Innovation

1.It requires the fostering of an environment where innovative thought and work are encouraged

2.It involves leading a firm from existing processes and products to something that is better and more valuable.

3.It is proactive and encourages creativity and risk taking.

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Characteristics of Firms that manage Innovation process

well1.Separate funds for INNOVATION2.Periodic reviews of informal proposals by a

group outside line management3.Clear definition on studies to be done and

follow –ups that are expected4.Extensive boundary- spanning activities to

learn from others and to gain an understanding of what others are doing.

5.Set of realistic expectations6.Supportive atmosphere for de-bugging and

exploring variations as well as appropriate resources for maintenance and service

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Management of Innovation - Definition

• A comprehensive approach to managerial problem solving and action based on an integrative problem-solving framework and an understanding of the linkages among innovative streams, organizational streams and organization evolution.

• It is about implementation- managing politics, control and individual resistance to change.

• The manager is an architect/engineer, politician/network builder and artist/scientist.

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Innovation catagories

C 1- New Solution to an old problem : Product new medication: - -Process Just in time

-C 2 No Innovation

C 3 New product that leads to new opportunities: Product PC in 1980: Process Bar codes for inventory control

C 4- Old product used in a new way: Product DVDs: Process Testing soils with satellite imagery

New Old

Old

New

Usag/e

Problem

/Product Process

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Invention and Innovation • For instance, "inventor nations" lead in research

and design. These countries (think India 20 years from now) have the academic institutions and scientists to file a lot of patents.

•• "Transformer nations" take those ideas and turn

them into businesses with investment. •• "Financiers" bankroll the innovation with venture

capital (think U.S.).•• "Broker nations" connect all of these pieces with

"multiculturalism, workforce diversity, cross-border scientific collaboration, Internet adoption, language proficiency, foreign student rates, patents created with foreign co-inventors, and international venture capital funding."

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Stages of Technological Innovation

1.Basic Research2.Applied Research3.Technology Development4.Technology implementation5.Production6.Marketing7.Proliferation8.Technology Enhancement

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Some minimalist definitions – Mills (1996)

• Science: How things are• Technology: How to do things• Management: How to get things done• Technology Management: Doing

things• Entrepreneurship: Doing things to

make money• Innovation: Doing Entrepreneurship

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The Innovation Chain Equation

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Process of Technological Innovation

Idea Generation

Concept Definition

Market Analysis

Technical Analysis

Business Plan

.Approved by Top Mgmt

Development Test Marketing & Full Production C Commercialization

Disposal

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Process of Technological Innovation – 1. Idea Generation

• Recognition of need• Study Alternatives• Select best solution• Make proposal for

implementation•

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Process of Technological Innovation – 2. Concept

Definition• Conceptual Definition of

Product/Service• Setting technical goals and priorities• Setting expected performance

standards

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Process of Technological Innovation – 3. Market Analysis• Defining Markets• Analysis of current and future needs• Know the customers• Know the competitors• Window of Opportunity

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Process of Technological Innovation-

4. Technical Analysis• Resources required• Resources available• Time frame for development5. SWOT analysis• Economic analysis• Capital • Strategic outlook ( Identify NICHE

area)

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• 7. Development• R&D• Prototype• Testing• Start-up needs

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8. Test Marketing• Strategy for market introduction• Marketing Innovations• Testing• Measuring response

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Process of Technological Innovation 9.

9. Full Production and Commercialization

• Production• Testing• Operational Control• Supply organization• Logistics

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Innovation Process

• Search for new Ideas• Feasible Idea are selected and

pursued• Search , select, implement (acquire,

execute, launch, sustain) all to LEARN (time)

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Gate 1 Gate 2 Gate 3 Gate 4

Project Charter Business Plan & Launch Proposal Sanity Check

IdeaGeneratio

n Concept

feasibility

CapabilityDevelopment

-Ramp up Launch

- Innovation process at Enterprise level ( Traditional phase gate model Linear Model

)of Innovation

& Financial Technical

Feasibility

PrototypeDevelopment

TestMarketing

Feedback& CorrectionsCommercializat

ion

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Innovation Process – Flexible Model

Concept Development Implementation

ProjectStart

ConceptFrozen Market

Introduction

Concept Development

Implementation

TRADITIONAL MODEL

FLEXIBLEMODEL

Concurrent Engineering

(Implementation)

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Industrial Innovation

• Industrial Innovation includes the technical, design, manufacturing, management and commercial activities involved in the marketing of a new (or improved) process or equipment - Chris Freeman (1982)

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Drivers of Innovation

1.Need to improve quality2.Create new markets3.Extend product range4.Reduce labour cost5.Improve production process6.Reduce materials/ material cost7.Reduce environmental damage8.Replace products/Services9.Reduce energy consumption10.Conform to regulations

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Innovation mode

–Supply Pushed ( Technology Pushed)

Or–Market Pulled

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Technology Push Model

• It is the first generation linear model• Technology is regarded as the key

driver of innovation.• When a new/improved technology

emerges, it leads to innovations to new products/services or processes

• Sequential steps that follows are: R&D, Design, Engineering, Manufacturing, Marketing and Sales.

• E.g. Menu Operated Computer Software, instant messaging, Original Blacberry (wireless email)

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Market Pull Model

• This is the second generation linear model. It includes and integrates consumer needs in the innovation process.

• Assessment of consumer needs/market requirements, concept/idea generation, refining of idea to meet consumer need, design, engineering, manufacturing, test marketing and sales.

e.g. Phones, UPS, Investors , lakme lip duo, 3G services on the phone

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Model for technological Innovation in Bio-medical

Devices case Generation of Ideas

Testing the feasibility of the ideas

& FDA approval Patenting

Production

Marketing

Customer

, Product Design Prototype development and testing Design the manufacturing process

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- Bio medical Industry & University Research Labs

Intrapreneurs & R D Departments Researchers Entrepreneurs

Technology Push

Generation of Ideas

Health care Sector - Bio medical Industry

Physician Patients Health care professionals Bio medical Rngineers & Marketing Sales

Market Pull

- - GENERATION OF IDEAS BIO MEDICAL DEVICESCASE

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Feasibility of Ideas – Bio-medical devices case

1.Market Potential2.Capital2.1 Venture Capital2.2 Funding agencies3. Manufacturing requirements4. Professional advice4.1 Industrial alliances4.2 Govt. programs4.3 Universities & Research Labs

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Product deign, development & testing – Bio-medical devices

case1.Technology2.Cost3.Cost-Function relationship4.Simplicity and ease of use5.Expandability6.Quality7.Safety and environmental factors w.r.t.

use in hospitals, operation theatres, human beings etc. and Use & Disposal of hazardous consumables.

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Conclusion of Bio- medical devices -case study

• Unique characteristics of healthcare industry & rigorous FDA approval requirements needs to be taken into account.

• Market pull is an important factor in selecting the right idea for implementation

• Low success potential and high costs of development necessitates an elaborate mechanism for choosing the right idea.

• Timely introduction in market and shortening of the innovation process from concept to market are also crucial for success.

• Strong IPR regime also needs to be factored in.

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Sources for Innovation

• Users/Customers• Manufacturers• Competitors• Suppliers/Vendors/Contractors/Sub-

contractors• Others like R&D Institutions,

Universities• Employees•

•

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TYPES OF INNOVATIONS

1)PRODUCT – PROCESS – SERVICE – INNOVATIONS

2)INCREMENTAL – RADICAL INNOVATIONS

3)MODULAR – ARCHITECTURAL INNOVATIONS

4)GENERIC - EPOCHIAL INNOVATIONS5)TECHNOVATION – GENERIC

INNOVATIONS6)VISION – INNOVISION7)CREATIVE – DISRUPTIVE

INNOVATIONS

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Dimensions of Innovation

, , New versions of motor car aeroplane TV . . & New generations e g MP3 and download vs CD cassette music , , Steam Power ICT revolution-Bio Technology

Improvements to components New components for existing systems Advanced materials to improve component performance

Incremental Radical

System Level

Component level

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The 4 Ps of Innovation

• Product Innovation - Changes in the things (products/services) which an organization offers

• Process Innovation: Changes in the way in which they are created and delivered.

• Position Innovation: Changes in the context in which the products/services are introduced.

• Paradigm Innovation: Changes in the underlying mental models which frame what the organization does

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Product Innovation

Example: A new car, a new insurance package

for accident prone babies, a new home entertainment system.

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Process Innovation

• Example: • Changes in the manufacturing

methods• Equipment used to produce the car

or the home entertainment system• Change of office procedure and

sequencing of an insurance package.

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Positioning innovation

• Example: An old, established product “Lucozade” which is presently selling as a children’s tonic or for convalescing patients was re-launched as a health drink aimed at the “fitness” segment.

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Paradigm Innovation

• Examples: Shift to ‘low cost airlines’• Re- position Coffee as premium

designer product.• Energy saving as a “Carbon credit”

business opportunity.

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Incremental - Radical Innovation

• Another dimension is the degree of novelty involved.

• Incremental: doing what we do better• Radical: doing something new to the

world• Example: Car with revamped styling

vs New Concept car with electric engine.

• New welding machine with auto – gap control vs New laser welding machine.

•

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Incremental Innovation through Platform/Robust design

• Create a strong basic platform or family which can e stretched to extend the range and life of the product.

• E.g. Boeing aircraft, Intel Chipsets, Proctor & Gamble’s Cyclodextrin

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Incremental Innovation through combining different knowledge

sets• Innovation is about combining a bundle

of knowledge sets. • The process of weaving these different

knowledge stets together into a successful innovation involves several unknown and uncertain conditions. The development of these knowledge bases requires commitment of resources to reduce the uncertainties involved.

• As resources are increasingly committed, the uncertainty reduces.

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sets

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sets• Successful innovation management

requires not only the development and use of the knowledge of the components but also about how those can be put together. This is called the architecture of the innovation.

• Technology Fusion is the convergance of different technology streams such that products which had discrete identity begin to merge into new architectures. E.g. Home automation industry

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Triggers/Sources of discontinuity

1.New market emerges2.New technology emerges3.New political rules emerge4.Running out of ‘road’5.Sea-change in market sentiment or

behavior.6.De-regulation/shifts in regulatory

regime7.Fractures along ‘fault lines’8.Unthinkable events9.Business model innovation

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DIFFUSION OF INNOVATION – S -Curve

• It is said that only one in every 3000 inventions manage to get implemented.

• The extent of adoption of an innovation depends on

1)How the characteristics of an innovation affect adoption

2)How the process of commercialization affects adoption

3)What techniques are available for forecasting future patterns of adoption

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Effect of Innovations on Market & Technology Linkages

DISRUPTIVE INNOVATION( )Disrupting the market

RADICAL INNOVATION

EVOLUTIONARY INNOVATION DISRUPTIVE ( )INNOVATION Disrupting the technology base

Technology Linkages/ Enhances Destroys

Mark et

LinkagesEnha

/ ncesDestroys

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How the characteristics of an innovation affects diffusion?

• Relative advantage• Compatibility• Complexity• Triability• Observability

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S - Curve

• Innovations usually follow a certain pattern . Initially there is a slow growth in the performance, market and cost competiveness.

• This is followed by a stage of steep exponential growth

• Finally there is a tapering off stage when further progress is prohibitively expensive or too time consuming; hence not worthwhile.

• The course of innovation is typically depicted through an S - Curve

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Typical Diffusion curve of a new product – S - Curve

1968 1972 1976 1980

20

40

60

80Mark

etPenetratio n

(%)

Year of Adoption

Innovators

earl y

adopters

latemajority

laggards

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Process of Diffusion -S Curve

• Process of diffusion/adoption of innovation is affected as follows:

1)Initially the rate of adoption is low and confined to so-called “innovators”

2)Next to adopt are the “early adopters”

3)This is followed by the “late majority”. The market growth is exponential at this stage.

4)Finally the curve tails off as only the “laggards” remain.

5)

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Product or Service Life Cycle

curveS - Curve

Valu e Rs

- millions

- Time yearsAA

B

CC

New Product orService

NewConcept

Maturity

Investment

Profits

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S – Curve – an established technology and a new rival.

20

40

60

80Performanc e

(%)

/Time Investment

New Rival

EstablishedTechnology

T1 T2

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Failure of Innovation

• 90% of all innovations have no impact on the organizational goals.

• As per one survey, only one in 3000 new ideas become successful.

Causes of failure:• Internal• External

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Failure of Innovation – Internal Causes

Cultural:• Poor Leadership; Organization;

Communication ; Empowerment; Knowledge Management

ProcessPoor definition of goalsPoor alignment of actions with GoalsPoor participation in teamsPoor monitoring of resultsPoor access to information

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Failure of Innovation – Internal Causes

• R&D efforts are not guided by market research or customer requirements

• R&D efforts not in synch with manufacturing/Skill capabilities

• When there is no corresponding changes in organizational processes

• When new product launch is not accompanied by change in marketing strategies

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Failure of Innovation – External Causes

• Mismatch between price charged and value benefit perceived by customer

• Not enough value addition perceived by customer

• Competitor brings in Disruptive technology /innovation

• Government regulations undergo change adversely affecting innovation

• Market not as yet ready to accept the change.

•

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Roadmaps for success

Innovation process can be depicted as a 3 stage model:

1.Search 2.Select3.Implement3.1 Acquire3.2 Execute3.3 Launch3.4 Sustain

innovation

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