Introduction

Edyta Kostanek
UCL, University of London
Edyta Kostanek
e.kostanek@ucl.ac.uk
Schedule
§ 9 December 2019 § 7 January 2019
§ Introduction § Social Innovation
§ Creativity and Teams § Sustainability
§ What is innovation and why does it matter?
§ 8 January 2019
§ Innovation as a process
§ Project Work
§ Sources of innovation
§ Xerox Case Analysis
§ Selecting innovation projects
§ 9 January 2019
§ 10 December 2019
§ Group presentations
§ Developing New Products
§ Final remarks
§ Commercialization and Diffusion of innovations
§ Users as Innovators
§ Open Innovation
§ 11 December 2019
§ Finance and Innovation
§ Intellectual Property
Assessment
§ Individual essay based on Xerox Case
Study
§ Deadline: December 31st, 23:59:00
§ Form of submission:
§ Max. 5 pages, all inclusive
§ Send an email with your essay to
Edyta Kostanek
(e.kostanek@ucl.ac.uk)
§ Subject line should be
“IFE Innovations – Essay submission”
§ 20-min group presentation
about your proposed innovative
solution to address the UN
Sustainable developmental goal
(SDG).
§ Groups of 4
§ Presentations in class on
9 January 2019 (Wednesday)
Creative Teams and Mindsets

Edyta Kostanek
UCL, University of London
 Come up with
15 uses for a paper clip
How would
you define
creativity?
Creativity

§ ‘Creativity is the generation of new

ideas’ (Stokes 2010:31)

§ A series of actions which create new

ideas, thoughts and physical objects.

§ The making of bi-sociations which

expand patterns and areas of belief.

What isn’t
creativity?
5 Dimensions of creativity (Lucas, 2016)

Inquisitive

Imaginative

Persistent

Collaborative

Disciplined
Inquisitive

Clearly creative individuals are good at uncovering and

pursing interesting and worthwhile questions in their
creative domain.
§ Wondering and questioning - beyond simply being curious about things,
questioning individuals pose concrete questions about things to help them think
things through and develop new ideas.
§ Exploring and investigating - questioning things alone does not lead to creativity.
Creative individuals act out their curiosity through exploration and follow up on their
questions by actively going out, seeking, and finding out more.
§ Challenging assumptions - a degree of appropriate scepticism is important; not
taking things at face value without critical examination.
Imaginative

At the heart of a wide range of analyses of the creative

personality is the ability to come up with imaginative solutions
and possibilities.
§ Playing with possibilities - developing an idea involves manipulating it, trying it

out, and improving it.

§ Making connections - the synthesizing process brings together a new amalgam of

disparate things.

§ Using intuition - the use of intuition allows individuals to make new connections

tacitly that would not necessarily materialize given analytical thinking alone
Persistent

Creative individuals do not give up easily.

§ Sticking with difficulty - persistence in the form of tenacity is

important, enabling an individual to get beyond familiar ideas and

come up with new ones.

§ Daring to be different - creativity demands a certain level of self-confidence as a

prerequisite for sensible risk-taking.

§ Tolerating uncertainty - being able to tolerate uncertainty is important when

actions or even goals are not fully set out.

Collaborative

Creative individuals recognize the social dimension

of the creative process.
§ Sharing the product - creative outputs matter, whether they are ideas or things
and create impact beyond their creator.

§ Giving and receiving feedback - this is the propensity of wanting to contribute to

the ideas of others, and to hear how one’s own ideas might be improved.
§ Cooperating appropriately - the creative individual co-operates appropriately
Disciplined
As a counterbalance to the more intuitive side of creativity, there is
a need for knowledge and craft in shaping the creative product and
in developing expertise.

§ Developing techniques - skills may be established or novel but the

creative individual will practice in order to improve.

§ Reflecting critically - once ideas have been generated, evaluation is important.

Such “converging” requires decision-making skills.

§ Crafting and improving - taking pride in work, attending to details, correcting

errors indicate people whose creative skill is of the highest order.
Teams
What is a team?
Team

§ ”A team is a small number of people with complimentary skills who

are committed to a common purpose, performance goals, and
approach for which they hold themselves mutually accountable”
(Katzenback and Smith, 1993)

§ Two or more individuals who have some interdependence or

relationship and who have an influence on each other through their
interactions (Paulus, 1989; Forsythe, 1999).
§ Teams or group sessions are often promoted as an important
vehicle for the development of creative ideas (Sutton and Hargadon, 1996)
Why are teams more creative? (Paulus, 2000)

§ Diverse & novel views

§ Varied skillset/expertise

§ Volume of ideas
Limitations of teams (Paulus, 2000)
Threats to Team Creativity

§ Social loafing: Free-riding

• Likely when people not individually accountable
§ Conformity
• Inhibitions, anxiety, self-presentational concerns...
• Rituals of social interaction, designed to make people feel at ease, hinder
idea generation (e.g., positive feedback, repeating ideas, telling stories)
• Conformity of ideas (clichéd and conventional)
• Conformity in rate of idea generation
Threats to Team Creativity

§ Production blocking
• Taking turns slows the process down
• Cognitively difficult to maintain stream of thought
• Forget to rehears own ideas when listening to others
• Negativity bias may take over
§ Downward norm setting
• Benchmark performance level set too low
• Low performers more influential...
• Group bias; faulty group esteem
Creative Team Identities and Processes
(Lumsdaine & Lumsdaine, 1995)

§ Problem definition: Detective

and Explorer
§ Idea generation (many ideas):
Artist
§ Idea synthesis (better ideas):
Engineer
§ Idea evaluation (best idea):
Judge
§ Solution implementation:
Producer
(based on Belbin, 2012)
Group Activity
Draw an apple
What is
innovation
and why does
it matter?

Edyta Kostanek
UCL, University of London
 What
is innovation?
 Draw
an image of
innovation
Innovation

§ The word ‘innovation’ comes from the Latin, innovare, and is all about

change

§ ‘the process of creating value from ideas’

§ Innovation = Invention + exploitation

§ A new way of doing things, which is commercialized. The process of

innovation cannot be separated from a firm’s strategic and competetive

context

§ Adoption of ideas that are new to the adopting organization

Innovation

§ Involves the capacity to adapt quickly by adopting new innovations

(products, processes, strategies, organization, etc)

§ Traditionally the focus has been on new products or processes, but

recently new business models have come into focus, i.e. the way a firm
delivers value and secures profits.
What is innovation?

§ Schumpeter argued that innovation comes about through new

combinations made by an entrepreneur, resulting in
§ a new product,
§ a new process,
§ opening of new market,
§ new way of organizing the business
§ new sources of supply
Examples of innovations
Examples of innovations
Typology of innovations (Oslo Manual)
§ Product innovation
§ A good or service that is new or significantly improved. This includes significant improvements in technical specifications,
components and materials, software in the product, user friendliness or other functional characteristics.

§ Process innovation
§ A new or significantly improved production or delivery method. This includes significant changes in techniques, equipment
and/or software.

§ Marketing innovation
§ A new marketing method involving significant changes in product design or packaging, product placement, product
promotion or pricing.

§ Organisational innovation
§ A new organisational method in business practices, workplace organisation or external relations.

§ Technological innovations – based on specific technology, invention, discovery,

§ Social innovations – in critical historic periods more important than technological ones (mail, educational systém, social systém,
health care…)

https://www.oecd.org/site/innovationstrategy/defininginnovation.htm
Examples of innovations
Degree (of novelty) of innovations (Goffin and Mitchell, 2017)
Types of Innovation (Tidd and Bessant, 2014: 6)
Why and for whom does
innovation matter?

https://www.youtube.com/watch?v=hQJqSGtGb4U
Who do innovation matters to?

§ Entrepreneurs starting up a venture

§ Established enterprises trying to grow

§ Governments (local and national)

§ Trade and sector bodies

§ Supply chain ‘owners’

Innovations matter…

§ Innovation is about growth – about recognising opportunities for doing

something new and implementing those ideas to create some kind of

value

§ Innovation…
§ contributes to competitive success
§ helping to get the organization where it is trying to go
§ delivering shareholder value for private sector firms,
§ enabling the start-up and growth of new enterprises.
Activity: Creating value through innovation

§ List all the different ways in

which innovation might

create some kind of value?

§ Can you find any ‘real world’

examples of such
innovations.
Creating and capturing
value

https://www.youtube.com/watch?v=n9txlwMjcCI
Paper planes

§ For innovation to happen it needs a

product, a process, a market, a

business model.

§ It also needs to involve strategy,

collaboration, technology, marketing,
communication, etc.
Why innovate?

§ Financial pressures to reduce costs, increase efficiency, do

more with less, etc
§ Increased competition
§ Shorter product life cycles
§ Value migration
§ Stricter regulation
§ Industry and community needs for sustainable development
§ Increased demend for accountability
§ Demographic, social and maket changes
§ Rising customer expectations regarding service and quality
§ Changing economy
§ Greater availability of potentially useful technologies coupled
with a need to exceed the competition in these technologies

(Tidd and Bessant, 2014)

Innovation isn’t easy…

§ Barriers to innovation include:

• Seeing innovation as ideas, not
managing the whole journey;
• Not recognizing the need for
change;
• Mindset and complacency – core
competence becomes core
rigidity;
• Closed information network,
insulated from new ideas.

(Tidd and Bessant, 2014)

Can we manage innovations?

• Innovation as a series of experiments;

• Building ‘routines’ – behaviour patterns which become
embedded;
• Structures, policies, procedures for making innovation
happen;
• Culture – ‘the way we do things around here’
Challenges on the innovation horizon

§ Acceleration of knowledge production

§ Global distribution of knowledge production

§ Market expansion

§ Market fragmentation

§ Market virtualization

§ Rise of active users

§ Growing concerns with sustainability issues

§ Development of social and technological infrastructure

(Tidd and Bessant, 2014)
Challenges on the innovation horizon (Tidd and Bessant, 2014: 14)
Context Change Indicative Examples
Acceleration of OECD estimates that around $1500bn is spent each year (public and private
knowledge production sector) in creating new knowledge – and hence extending the frontier along which
‘breakthrough’ technological developments may happen

Global distribution of Knowledge production is increasingly involving new players especially in emerging
knowledge production market fields like the BRIC (Brazil, Russia, India, China) nations – so the need to
search for innovation opportunities across a much wider space. One
consequence of this is that ‘knowledge workers’ are now much more widely
distributed and concentrated in new locations – for example, Microsoft’s 3rd largest
R&D Centre employing thousands of scientists and engineers is now in Shanghai.

Market expansion Traditionally much of the world of business has focused on the needs of around 1
billion people since they represent wealthy enough consumers. But the world’s
population has just passed the 7bn mark and population – and by extension
market – growth is increasingly concentrated in non-traditional areas like rural
Asia, Latin America and Africa. Understanding the needs and constraints of this
‘new’ population represents a significant challenge in terms of market knowledge.
Challenges on the innovation horizon (Tidd and Bessant, 2014: 14-15)
Context Change Indicative Examples
Market fragmentation Globalization has massively increased the range of markets and segments so that
these are now widely dispersed and locally varied – putting pressure on innovation
search activity to cover much more territory, often far from ‘traditional’ experiences –
such as the ‘bottom of the pyramid’ conditions in many emerging markets.[6]or along
the so-called long tail – the large number of individuals or small target markets with
highly differentiated needs and expectations.
Market virtualization The emergence of large-scale social networks in cyberspace pose challenges in
market research approaches – for example, Facebook with 1billion members is
technically the 3rd largest country in the world by population. Further challenges arise
in the emergence of parallel world communities – for example, Second Life now has
over 6 million ‘residents’, whilst World of Warcraft has over 10 million players.

Rise of active users Although users have long been recognized as a source of innovation there has been
an acceleration in the ways in which this is now taking place – for example, the
growth of Linux has been a user-led open community development. In sectors like
media the line between consumers and creators is increasingly blurred - for example,
You Tube has around 100 million videos viewed each day but also has over 70,000
new videos uploaded every day from its user base.
Challenges on the innovation horizon (Tidd and Bessant, 2014: 15)

Context Change Indicative Examples

Growing concern Major shifts in resource and energy availability prompting search for new
with sustainability alternatives and reduced consumption. Increasing awareness of impact of
issues pollution and other negative consequences of high and unsustainable growth.
Concern over climate change. Major population growth and worries over
ability to sustain living standards and manage expectations. Increasing
regulation on areas like emissions, carbon footprint.

Development of Increasing linkages enabled by information and communications

technological and technologies around the internet and broadband have enabled and reinforced
social infrastructure alternative social networking possibilities. At the same time the increasing
availability of simulation and prototyping tools have reduced the separation
between users and producers
 Innovation as a process

Edyta Kostanek
UCL, University of London
Managing innovation (Tidd and Bessant, 2014: 83)

https://www.youtube.com/watch?v=qxmookUeLJc
Key stages in the innovation process

• Searching for trigger ideas.

• Selecting from the possibilities the one we are going to follow through.

• Acquiring the resources to make it happen.

• Developing the idea from initial ‘gleam in the eye’ to a fully-developed

reality.

• Managing its diffusion and take up in our chosen market.

• Capturing value from the process.

Developing an innovation process

hUps://www.youtube.com/watch?v=l9sNGnxMEXE
Activity

Watch the video Melissa Clark-Reynolds Try

and map the innovation process involved in
this.

http://www.innovation-
portal.info/resources/minimonos-melissa-clark-
reynolds-2/
Different versions of the core process model

§ For a start-up entrepreneur

§ the ‘search’ stage is often called ‘opportunity recognition’ – but once they have spotted something they think
they can exploit the challenge is of making it happen. They have to acquire resources making various pitches
to get backing and buy-in.
§ Then they have to develop the venture and finally launch it into their chosen marketplace and capture the
rewards and also the learning to allow them to do it again.

§ For a public service team in a hospital

§ the search may be for more efficient ways of delivering the service under resource constraints.
§ Once again an individual or team has to convince others and secure resources and the permission to explore,
they have to develop it and then diffuse it as a new method to an internal market of people in the service who
will adopt the new way. And once again they capture value, in terms of efficiency improvement but also in
learning.
Different versions of the core process model

§ For a new product development team in a company it is about searching for ideas
(maybe in the R&D lab, maybe via customer survey, maybe some combination of both).
§ Then they have to secure internal resources – pitching for backing against other competing projects form
different teams.
§ Then they manage the development process, bringing the product through various stages of prototyping and
simultaneously developing the market and launch plans.
§ Finally launch and, hopefully, widespread adoption – and capturing the gains in commercial terms but also in
terms of what has been learned for next time.

§ For the social entrepreneur it is about finding a trigger need, then developing and
sharing a vision around how to meet that need better.
§ Securing support and buy in is followed by development, implementation and hopefully widespread adoption –
and the value is captured in social improvements as well as learning.
Influences on the process (Tidd and Bessant, 2014: 87)

§ Innovation needs:
§ Strategy;
§ Innovative
organization;
§ Proactive linkages;
§ Learning and
improvement loop.
Key questions about how we manage innovation

§ Do we search as well as we could?

§ How well do we manage the selection and resource acquisition process?

§ How well do we implement?

§ Do we capture value? Improve our technical and market knowledge for next time?
Generate and protect the gains so they are sustainable?

§ Do we learn from experience? How do we capture this learning and feed it back

into the next time?

The difficulties in managing what is an uncertain and
risky process (Tidd and Bessant, 2014: 88)
Firm’s size (Tidd and Bessant, 2014: 89)
The problem of partial models (Tidd and Bessant, 2014: 92)
The problem of partial models (Tidd and Bessant, 2014: 92)
Summary

§ Innovation doesn’t happen simply because we hope it will – it’s a complex process which
carries risks and needs careful and systematic management.

§ This core process doesn’t take place in a vacuum – we know it is strongly influenced by
many factors. In particular innovation needs:
§ Clear strategic leadership and direction, plus the commitment of resources to make this happen.
§ An innovative organisation in which the structure and climate enables people to deploy their creativity and share
their knowledge to bring about change.
§ Pro-active links across boundaries inside the organisation and to the many external agencies who can play a part in
the innovation process – suppliers, customers, sources of finance, skilled resources and of knowledge, etc.

§ Any organisation can get lucky once but the real skill in innovation management is being
able to repeat the trick.
Sources of innovation

Edyta Kostanek
UCL, University of London
Generic innovation process

§ Searching

§ Selecting

§ Implementing
§ Acquiring the knowledge resources to enable the innovation
§ Executing the project under conditions of uncertainty which require
extensive problem-solving
§ Launching the innovation and managing the process of initial adoption
§ Sustaining adoption and use in the long-term – or revisiting the original
idea and modifying it – reinnovation.

§ Learning
Activity

§ Pick a sector – e.g. food retailing,

airlines, chemicals, public
administration
§ Draw a map of their particular version
of innovation process.

§ How does it work out in practice?

§ Where are they likely to need or to
place most emphasis?
Where do innovations
come from?

List as many possible

sources as you can,
providing examples.
Where do innovations come from? (Tidd and Bessant, 2014: 98)
Sources of innovations

§ Sources of innovation can be resolved into two broad classes – knowledge push

and need pull – although they almost always act in tandem. Innovation arises form
the interplay between them.

§ E.g. ‘need pull’ can include social needs, market needs, latent needs ‘squeaking
wheels’, crisis needs, etc.

§ Regulation is also an important element in shaping and directing innovative activity

– by restricting what can and can’t be done for legal reasons new trajectories for
change are established which entrepreneurs can take advantage of.
Activity

§ Think about a smart phone

§ Now try and work backwards

§ Draw out the ‘family tree’ of triggers which brought

that innovation into being.

§ What were the enabling ‘pushes’ - for example

where did the technology come from - and what
were the ‘need pulls’?
 Push and pull
- which is more important?
Accidents will happen..
Selecting innovation projects

Edyta Kostanek
UCL, University of London
Why is selection important?

• Plenty of things we could do but we have limited resources.

• Random choice is gambling.

• Innovation involves uncertainty and risk so we need ways of

choosing projects to balance risk and reward.

• Building a balanced portfolio.

Uncertainty and innovation (Tidd and Bessant, 2014: 161)
The innovation funnel (Tidd and Bessant, 2014: 161)
Uncertainty in project planning (Tidd and Bessant, 2014: 162)
Approaches to
project selection
(Tidd and Bessant, 2014: 163)
 Simple checklist

§ A list of factors which are considered

important in making a decision in a specific
case. Criteria include technical and
commercial details, legal and financial
factors, company targets and company
strategy. The technique can be
strengthened by:
§ including some quantitative factors among the whole
list of factors;
§ assigning different weights to different factors;
§ developing a systematic way of arriving at an overall
opinion on the project, such as a score or index.
Simple checklist (continued)
Business Case

§ Business case – the story behind a proposed project should contain:

• details of the product or service;
• assessment of the market opportunity;
• identification of target customers;
• barriers to entry and competitor analysis;
• experience, expertise and commitment of the management team;
• strategy for pricing, distribution and sales;
• identification and planning for key risks;
• cash-flow calculation, including breakeven points and sensitivity;
• financial and other resource requirements of the business.
http://www.innovation-portal.info/wp-
content/uploads/activity-developing-the-business-case.pdf
Business model canvas

§ Business models provide a powerful way of representing how an innovation will

create and deliver value.

hUp://www.innovaZon-
portal.info/wp-
content/uploads/Business
-model-canvas.pdf
The problem of multiple projects

§ The problem of multiple projects:

• Business case OK for single project.

• How to assess competing projects?
• Need to balance risk and reward.
• Need for portfolio management.
Problems due to lack of portfolio management
Boston Box

§ This matrix offers a simple

technique for assessing a firm’s

position relative to others in terms
of its product
Bubble Chart
Bubble Chart (Tidd and Bessant, 2014: 169)
The A D Little matrix

§ A D Little matrix groups technological

knowledge into four key groups: base,
incremental, next generation, radical

§ Making this distinction helps: identify a strategy

for acquisition based on the degree of potential
impact; the importance to the enterprise; the
protectability of the knowledge.

§ Models of this can be refined, for example, by

adding to the matrix information about different
markets and their rate of growth or decline

§ For more detail on this approach see

http://www.adlittle.com/.
Managing risk over time – the Stage Gate approach
(Tidd and Bessant, 2014: 171)

http://www.innovation-
portal.info/wp-
content/uploads/Stage-
Gate-Models.pdf
Innovation Voodoo. Why Stage-Gate is killing
Innovations!
Dealing with radical innovation

§ Problem is such high uncertainty that it becomes hard to evaluate.

§ Risk is that organization rejects these options.

§ Need some way of handling and evaluating these projects.

A map of innovation space selection (Tidd and Bessant, 2014: 173)
Selection challenges mapped on to the model
Selection challenges mapped on to the model
Typical reactions to ‘wild ideas’ (1)
Typical reactions to ‘wild ideas’ (2)
Case: Gunfire at sea

§ This is a famous case study which highlights the challenges of introducing radical

ideas into established organizations.

https://de.coursera.org/l
ecture/unethical-
decision-making/4-4-
gunfire-at-sea-when-
habits-are-stronger-than-
reason-YM1f4
References
§ Belbin, R.M. (2012). Team roles at work. Routledge.

§ Forsythe, D.R. (1999). Group Dynamics. Belmont, CA: Brooks/Cole.

§ Goffin, K. and Mitchell, R. (2017). Innovation Management: Effective Strategy and Implementation.

§ Katzenback, J.R. and and Smith, D.K. (1993). The wisdom of teams. New York: McKinsey & Company

§ Lucas, B (2016). A Five-Dimensional Model of Creativity & its Assessment in Schools. Applied Measurement in
Education, 29(4), 278–290.
§ Lumsdaine, E., and Lumsdaine, M. (1995). Creative problem solving. IEEE Potentials, Dec 94-Jan 95.

§ Paulus, B (2000). Groups, Teams and Creativity. Applied Psychology: An International Review, 49(2), 237-262.

§ Paulus, P. B. (1989). An overview and evaluation of group influence. In P. B. Paulus (Ed.), Psychology of group
influence (2nd ed.) (pp. 1–12). Hillsdale, NJ: Erlbaum.
§ Stokes, D. and Wilson, N. (2010). Small Business Management and Entrepreneurship. Cengage Learning EMEA.

§ Sutton, R.I and Hargadon, A. (1996). Brainstorming groups in context: Effectiveness in a product design firm.
Administrative Science Quarterly, 41, 685-718.
§ Tidd, J. and Bessant, J. (2014). Strategic innovation management. John Wiley & Sons.
Recommended reading

§ Stollberger, J., West, M.A., and Sacramento, C. (Forthcoming) Innovation in work

teams, in: Paulus, P.B. and Nijstad B.A. (Ed.)The Oxford Handbook of Group
Creativity and Innovation. New York: Oxford University Press