Professional Documents
Culture Documents
Innovation Management
Innovation Management
A
PROJECT REPORT
Submitted by
Bharat A. Lalwani (09054)
&
Rajkumar D. Patel (09078)
Batch 2009 to 2011
Guided by
Dr. Tejash Pujara
To
Director (PGDM)
EXECUTIVE SUMMARY
This project has been divided into 8 sub parts. First part (CH-1) is an introductory
part, which gives definition of innovation, need of innovation, kinds of innovation. It
also explains how innovation process spread across globe to reduce a lead time of
product to reach market. It also consists of data of spending of multinational
companies on innovation which shows importance of innovation. End with barriers of
innovation.
Third part (CH-5) consists of process innovation, in which 5 various level of process
innovation has been discussed in detail. Then focus on TQM in context to process
innovation, and concluded that TQM is a hurdle for process innovation, followed by
case study.
Fifth part (CH-7) consist of HR, it is important than other because to attract and retain
innovative workforce is not easy task, requires great effort. We take E-HRM as
innovation in HR.
Eighth part (CH-10) we derived business platform variables and Technical platform
variables with help of 2 case studies.
Ninth part (CH-11) as our project is totally based on secondary data as time was short
we have mentioned some limitation of the project and further scope of the study on
same project title.
In the tenth part (CH-12) we conclude the whole project and mentioned the
importance of the Knowledge management and foster innovation by management for
continuous innovation.
TABLE OF CONTENT
LIST OF TABLES
LIST OF FIGURES
ABBREVIATIONS
PREFACE
Project work is an essential part of the syllabus of PGDM program. In project work
student has to use his or her various skills like analytical skill, communication skill,
writing skill, etc. This is why included in PGDM program.
The proverb ―Practical makes man perfect‖ means a lot to the manager. Success does
not come easily, one has to work hard for it and achieve it at each and every stage of
life.
Conceptual studies are always observed during the project study. It gives us the
complete understanding of the real life situation and happenings in the real world.
From the practical point of view a project plays an important role for the student.
Before We present this project, We would like to say that it is mirror image of a
reflection to whatever We have observed and have come through during our project
work.
DECLARATION
Signature:
Signature:
Place: Adipur
ACKNOWLEDGEMENT
CHAPTER:- 1
INTRODUCTION
1.3 INNOVATION
First perspective, opportunities or changes to exploit are those where most of the
parameters are well defined and understood. It is something like improving an
ongoing process, reducing cycle time, increasing throughout or reducing cost. So
these are basically incremental improvements.
On the other hand, opportunities/changes to explore are those areas, where we have
newly started and have little information about it. Here we have ideas and solutions
which are applied in new ways to solve new problems. It creates the environment for
transformational innovation.
Meanwhile, today‗s innovators such as Wal-Mart (chain of retail shops), eBay (online
auctions) are themselves relative newcomers. Such high turnover at the top suggests
that the real problem is not with the lack of innovation, but it is sustained Innovation.
Companies may seize upon a good idea that gives them an advantage for a while, but
sooner or later, they cede this advantage to a competitor who has found an even better
idea.
wants to stay on top of their competitors and win the innovation game. Innovation is
very important criterion for success in the future.
Radical
Major Major innovation
Effect of innovation
innovation on Incremental Strategic
Minor
consumer habits innovation innovation
and behaviors Enhances Destroys
Effect of innovation on organization established firms
Table no. 1: Types of Innovation
(Source: Costas Markides, Paul A. Geroski racing to be 2nd: conquering the industries
of future, Business strategy review, vol 15, issue 4, Winter 2004, p25 to 31, Blackwell
publishing Ltd.)
Literally, these organizations don‗t work against their competitors, instead build
innovation groups among their own different kind of products and be an active
competitor for their products.
For example, the Hewlett-Packard Company produces both laser and ink jet printers.
These products equally compete in the market. They came up with a plan, to divide
the markets of both the ink jet and laser divisions. As a result, HP has become the
leader in both laser and ink jet printers.
As a result the existing competence of the organization might get turmoil and become
obsolete. For example, Intel, one among the largest PC processor manufacturers,
appreciates radical innovation. It initially developed single core processors, however
as soon as it released its dual core processors, the former became obsolete and the
later gained its market. This process is endless, as Intel recently released its multi core
processor, which might cease the interest of dual core processors in future.
Literally, Intel cannibalizes its own business by constantly bringing out better
processors to replace the ones that are once market leaders.
Innovations have acquired a key-role in the growth and competition strategies of firms
today. They are regarded as an essential tool to stimulate growth and enable firms to
master the competition brought about by the forces of globalization. In developed
countries they are thought to provide a vital buffer against challenges from low-cost
producers from emerging countries.
At the same time, innovations in today‘s ―globalized‖ world are hardly feasible in
isolation. World-wide economic reforms and far-reaching technological
advancements have brought to fore new economic powerhouses, such as China and
India, which possess strong scientific capabilities. Products are marketed
internationally which often necessitates adaptation to specific needs of targeted
markets. All these developments are leading to the ―globalization of innovation‖.
There are various factors which lead to innovation to globalization.
Following the same logic, even a single step of a project may be worked upon round
the clock in changing shifts the world-over whereby the data is transmitted
electronically from one center to next. Such a step could be of crucial importance for
The starting salary of a software developer working for the German software firm
SAP in India was reported at 8,000 euros per annum in 2004, while the salary for a
similarly qualified person at the headquarters in Germany was reported 5-times higher
at 40,000 euros (Müller, 2004).
Especially German firms seem to locate their R&D activities in close vicinity of their
production centers. Whereas many international studies found ―access to knowledge
resources‖ as the leading reason for many international offshore R&D activities,
The emerging markets of India and China have attracted substantial foreign direct
investment (FDI) in R&D sector. India as a R&D location has reportedly attracted
many Fortune 500 firms (Srinivasan, 2004). Over 100 of the Fortune 500 firms were
conducting a part of their R&D activities in India by 2003 (GOI, 2003The largest
investing country was the USA followed by Germany (TIFAC, 2006).
Domestic R&D expenditure in India and China increased substantially in recent years
as both countries are undertaking concerted efforts to build cutting edge scientific
capabilities. The EU counts India and China among ―major R&D performing
countries in the world‖ (INNO METRICS, 2006).
China‘s R&D expenditures surged from USD 17 billion in 1995 to USD 94 billion in
2004 in terms of purchasing power parity (PPP), registering an average growth of
nearly 20% per annum. China was projected to become the second largest R&D
investor worldwide by overtaking Japan in 2006 in PPP terms (Dyer, 2006; OECD,
2006).
According to figures available with UNCTAD (2005c), The trend of offshore R&D is
not limited to multinational concerns alone. Many small and medium-sized
enterprises (SMEs) too have started to recognize the opportunities that the
globalization enables not only in the production but also in R&D.
The fear of change makes many companies to stick in their standard mode of
operation. They work hard to bring up existing model work better and don‗t spend
time looking for a better model, or a better method of operation. Most companies are
built for continuous improvement, rather than for discontinuous innovation. They
know how to get better, but they don‗t know how to get different.
But successful companies deploy their managers to take responsibility for initiating
and directing change in addition to their objectives. Successful companies believe that
they need to do something that the world has not seen before. They change and
innovate so that they are first and unique in this wild and competitive market.
included financing issues, the problems in finding suitable and qualified personnel,
bureaucratic hurdles, and the trouble finding ―right‖ cooperation partners, the negative
impact of these barriers can be gauged from the fact that the financial constraints
alone were cited 22 times as having led to abandonment of one or more innovation
projects in the surveyed SMEs within past 3 years. Whereas 42% of the project
abortions took place in the ―early phases‖ of a project, the rest had to be aborted in an
advanced stage of implementation (42%) or even marketing (16%), thereby
suggesting a significant loss in the form of sunk costs and lost opportunities.
CHAPTER:- 2
OBJECTIVES
OBJECTIVES:
Product
Process
Inventory management& Logistic
Human resource
4. To study the business platform variables and Technical platform variables that
influences the innovation management.
CHAPTER:- 3
METHODOLOGY
In this project first we studied about the innovation and creativity then identified the
related factors that influence the innovation. After that we went for innovation in
product, process, inventory management and logistics and in Human resource
management so that we are able to understand the relationship between them.
We also viewed some Business variable platforms which influences the innovation
process and innovation management with help of the case studies.
CHAPTER:- 4
PRODUCT
INNOVATION
4.1 INTRODUCTION
We defined product innovation as development of new products, changes in
design of established products, or use of new materials or components in
manufacture of established products.
Product innovation means different things to different people. Indeed, since about
1970 there seems to have been a steady swing towards product improvement rather
than totally new products, throughout the industrial world1. We felt there was good
reason, therefore, to adopt a broad rather than a narrow view of product Innovation.
In other words, anything which is new to the business and its product range is counted
as innovation, even if similar products are available elsewhere or if the change is an
incremental one.
4.2.1 Strategy:
Top performing businesses put a product innovation and technology strategy in place,
driven by the leadership team and the strategic vision of the business. This product
innovation strategy guides the business‘s product innovation direction and helps to
steer resource allocation and project selection.
These are the main practices that separate the Best Performers from the rest. These
four themes make up the four points of performance of the Innovation Diamond. And
they are the keys to successful product innovation. While many investigations have
identified different sides of new product management as vital to success there is no
one key to success in product innovation. Thus management must step back from
looking just at a single driver or even individual new product projects, and consider
the broader picture. For example, having a great idea-to-launch process is not
sufficient – it‘s not a stand-alone driver of positive performance.
The Innovation Diamond highlights the main drivers and practices that are common to
the Best Performers in product innovation. This Diamond proves to be a valuable
model for helping senior managers focuses their efforts to improve their business‘s
new product development productivity and performance.
In 2005, the industry invested EUR 68 billion in R&D – that is 4.2 percent of sales, or
EUR 783 per vehicle. The continuous cost pressure in the automotive industry created
by legislation, competition, increasing risk and stagnating customer demands has a
strong impact on innovation management. Traditional cost-cutting programs are not
enough our forecast shows an additional EUR 1,500 of cost reduction (or 11 percent
of costs) must be implemented to make car production a profitable business in the
future. OEMs and suppliers will have to significantly improve efficiency in all R&D
processes to keep costs under control. Furthermore, the effectiveness of each
innovation must be investigated. Cost-improvement measures, such as offshoring of
engineering, complexity-reduction programs, standardization and modularization or
the development of low-cost cars will help the industry control some of the cost
increases produced by the growing number of functions.
additional R&D spending of EUR 20 billion in 2015 (in 2005: EUR 46 billion). The
concentration process in the supplier industry will improve innovative strength and
networking opportunities with other partners – another way of cutting costs while
increasing the quality of innovations.
Oliver Wyman has analyzed the innovation strategies of the industry‘s most
successful auto companies. The study ―Car Innovation 2015‖ identifies the levers that
car manufacturers and suppliers must pull to become state-of-the-art innovation
leaders. Depending on the business design of the supplier and OEM, four dimensions
must be brought into alignment: innovation proposition, competence focus and
collaboration, innovation business case, and innovation organization and structure.
The leading suppliers in innovation management generate a 16 percent higher EBIT
margin than their peers – all by employing a clear innovation strategy and balance
along those four dimensions. The Oliver Wyman study ―Car Innovation 2015‖
concludes with five recommendations for innovation management in the automotive
industry:
The worldwide megatrends in politics, societies, economies and technology define the
requirements that future cars will have to fulfill – and these will affect almost every
aspect of the automobile. ―Car Innovation 2015‖ has identified 27 megatrends that
will have a significant impact on the automotive industry. Innovation strategies must
reflect the respective trends in order to meet technological standards, economic
imperatives, customer needs and government regulations.
At first glance, many of these trends may seem all too familiar and fail to inspire any
creative thinking. But long-range consequences to innovation strategies are linked to
each of these megatrends. Take the aging society. It is likely to have a powerful effect
on fashion cycles, technology penetration and even societal ideals. In ten years, the
average customer will be significantly older than today and will have a very different
set of needs. In order to succeed, technologies must be both easy to use and easy to
understand by older consumers.
At the same time, raw materials prices will become increasingly volatile, making
flexible pricing a necessity. While the polarization in wealth distribution will not lead
to a collapse of the middle, it will support the success of low-cost cars as the vehicle
segment with the fastest growth worldwide. Toyota was the first to recognize the
chances of new low-cost designs as an enabler to new materials, methods of
production and design principles. Such ―cost innovations‖ will become a major R&D
focus driving the industry beyond 2015.
In the mid-1970s, though, Canon ran into severe difficulties as demand for existing
products declined precipitously and Canon was forced to retreat from the low-priced
calculator market. In 1975 Canon had to suspend its dividend payments—a radical
step of a Japanese firm. In the words ―Canon was experiencing a managerial crisis.
Top management lacked coherence and direction; the company's inflexible corporate
structure made it impossible to deal effectively with diversification, and insufficient
attention had been paid to the rationalization of production. Or, as the new President,
Ryusaburo Kaku has put it, ‗Canon was like a ship that constantly changes course and
goes nowhere‘.‖
Canon does not separate technical personnel into departments according to discipline
so there is much greater mixing of research personnel (for the importance of this
method of organizing the innovation process, see Florida and Kenney (1990). This
heightens the possibility of new concepts and ideas emerging serendipitously. For
further discussion of Japanese strength in hybrid technologies, see, for example,
Kodama accelerate information creation Canon has had a policy of hiring mid-career
personnel from other firms to create ―counter-cultures‖ or diversity within Canon to
increase the potential for new information creation.
In fall 1970 Canon began internal development of a plain paper copier (PPC)
technology. In the early days diversification into PPCs was opposed by many in the
A small copier (Mini Copier or MC) would require very different characteristics from
traditional PPCs. Obviously, the copier must produce clear copies, and be lightweight
and compact (less than 50 pounds). More problematic was that the MC might be used
only rarely and thus the cost of regular servicing would be exorbitant on a per copy
basis. Because of this, the MC must require either extremely simple maintenance or
none at all. Moreover, the initial price must be no more than 200,000 yen
(approximately $1,000 at that time). These constraints imposed a heavy burden on the
design team. Initially, a feasibility study team was formed to examine what would be
necessary to actualize an MC.
This team would form the core of the entire project and had an average age of 28. The
14-member team consisted of eight people from R&D, three from production, two
from marketing, and one from product design. The fundamental contradiction the
team faced was managing the inverse relationship between reliability and cost. That
is, when reliability was improved the costs of production increased, but when costs
were reduced service requirements increased. Managing Director Mitarai named this
objective ―Cost-Reliability Improvement‖. To resolve this contradiction the
development staff would have to create a new concept of how a copier operated. This
objective was so challenging that internally it was referred to as aiming a ―Canon
Revolution‖. To achieve this objective, joint efforts by Design and Production
Engineering were indispensable.
The crux of the problem was clearly outlined by research on the causes of copy
machine troubles. The researchers discovered that 90 percent of the problems
occurred around the drum. The conventional method of addressing this problem was
to seek methods of improving the durability of the drums and cleaners. As long as this
was the goal, however, it was impossible to escape the contradiction between major
cost savings and reliability improvement. Thus, what was necessary was a major
concept change, that is, a synthesis of the contradiction through the creation of a new
concept.
To solve the problem the members of the feasibility team engaged in heated
arguments at several spontaneously organized "camp" sessions. Camp sessions are
gatherings of project teams outside the workplace to brainstorm new solutions. They
are frequently used by Japanese corporations during product development efforts. In
this case the camp session provided an opportunity for the feasibility team to invite
people from other parts of Canon to discuss how to overcome the contradiction.
The new concept that emerged from the camp session was that the entire drum should
be a module that could be discarded after making a certain number of copies. With
this the copier would be essentially maintenance-free. Whereas in conventional
copiers the drum was a component with open-ended operating life which would
certainly fail and then need to be repaired, the team created an entirely new way of
thinking about the drum. It was
When many task force members said it was impossible to produce the drum
inexpensively, the feasibility team leader, Hiroshi Tanaka, had some disposable cans
of beer purchased and told them to drink the beer. Then he engaged the members in
an argument about how much the beer can cost and what made it so inexpensive. The
disposable beer can resembled the copier drum because it would be disposable. The
conceptual linking of the drum and beer can provided the taskforce members many
insights into methods of manufacturing the drum at a lower cost. This opening up of
―The idea of packaging the drum and surrounding components as a cartridge revealed
to us a great number of things. First of all, as everything is brought together, the
structure can be simplified and only a very small number of essential parts are needed.
So, high precision design becomes possible by combination in design. The product
becomes less messy. Also, the key module becomes quite compact as the release
mechanisms between units are no longer needed. So, low cost as well as high
reliability will be achieved at the same time.
Moreover, with a cartridge, the toner seal is opened only after reaching the customer.
This meant the plant is required to develop a production process without imaging
inspection. This led to better efficiency.‖ The big breakthrough on the cartridge then
led to a cascade of other improve73 meets in the chain reaction-style well described
by Usher (1954). After this the design conception and a feasibility model was
advanced by another early stage design team. When these were completed the
corporation decided to develop the MC.
It was clear from the beginning that the development of the MC would require all of
the talents in the firm, so a task force was formed to actualize the MC. At Canon task
forces are independent organizations whose team members are appointed by the
company president. With the exception of the tremendously successful AE-1 camera
task force, this task force would be the second largest horizontal development
organization Canon had ever formed (approximately 300 persons). It was also the first
such massive effort by the Reprographic Products Group. Tanaka, director of
Reprographic Products Development Center, was appointed as the chief of the task
force. Its advisor was Keizo Yamaji, Managing Director of Reprographic Products
Division.
A system also was organized for constant communication with the leaders of related
internal organizations such as Hajime Mitarai, managing director for Research and
Development; Teruo Yamanouchi, director of Corporate Technical Planning and
From the planning stage the task force included Quality Assessment and Cost
Assessment groups. Because of the projected usage pattern for the MC, the Quality
Assessment group decided the repair frequency of television sets was the relevant
goal and proceeded to collect exhaustive information related to television sets. With
this information as a target, the group began the task of setting all quality standards
for charging, exposure, development, cleaning and fusing. Similarly, the Cost
Assessment group was working on cost and quality allocation for achieving a sales
price of 200,000 yen.
This was the first time in Canon‘s history that a task force had ever gone so far in the
planning process. A Market Task group was also created, consisting of copier sales
representatives from around the world to study marketing ideas. Finally, the Soft Task
group was to examine the ―software‖ aspects such as color copying and other possible
uses.
―In any company good products are created when production engineering and design
become fused for their development. I believe there were tangible and intangible cost
reductions. By becoming one with Production Engineering, one can propose uniform
parts design or assembly in one direction, how something should be assembled and in
what sequence, or that one should do this or that if possible, when attempting to
automate production, for example. If we (in product design) are by ourselves, it is
easy to prepare drawings, and do what we like without thinking that far ahead. So, our
discussions with Production Engineering people and working to accommodate their
various requests in our own ways resulted in both tangible and intangible cost
reductions.‖ Of course, such fusions are not simple, and Design and Production
Engineering often participated in outspoken arguments. These led to major synergistic
effects, however, reducing costs and speeding product development.
The new technologies that were developed for the cartridge then became a part of the
corporation's knowledge base and later would be applied to other products, such as
laser printers and facsimile machines. In this sense the MC innovation process
became continuous and spread throughout Canon. The knowledge generated in the
development of the MC became part of the Canon's competitive strength.
CHAPTER:- 5
PROCESS
INNOVATION
5.1 INTRODUCTION
We do not wish to underestimate the importance of process innovation. By investing
in new plant and equipment, firms can gain in terms of productivity, material
utilization, quality or reliability. They can even gain the capacity to manufacture new
products which would otherwise have lain outside their reach.
It has often been pointed out that process innovation may be particularly helpful or
suitable for small firms, since by this means they can share in advanced technology
developed by larger firms. The adoption of a proven process technology may also
have the advantages of low risk and short-term payback.
For the purposes of our study, a particular interest is how investment in process
technology relates to product innovation. Some advocates of investment in process
innovation have seen it as an alternative to product innovation, especially if it permits
existing products to be made at lower cost. The reverse is also possible: if products
can be given a new lease of life through modifications made at low cost, this may be
preferred to investment in sophisticated and costly equipment. Finally, it could be that
investment in new production equipment goes hand-in-hand with product
development.
This might take place simply because innovative firms are likely to innovate in
numerous ways. Or, similar technical expertise may be needed both to introduce new
equipment and to develop new products: this could be particularly true where the
same technology, such as that of microelectronics, was involved in both. Or again,
firms diversifying their product ranges may need new equipment to be able to make
the different types of products. We are also, of course, particularly interested in how
the regions differ in their use of new process technology.
(Source: Process innovation, By John Jeston & John Nelis, consultants, touch point,
Business process services, Sydney, Australia.)
real time information provides not just the current status, but also the predicted future
status. For example, the industry can assess what SLA penalties will be levied without
any pro-active correction action and what is the optimal action to ensure that the SLA
penalty will either be removed or reduced to a minimum, e.g., through re-routing of
the route. Furthermore, these options provide the customer with the ability to track or
trace their products real-time, at the same time reducing workload for the call center,
which previously would have had to answer calls from customers seeking this
information.
to whether the order is complete and correct and that the required resources are
available. Our research has shown that up to 40% of orders contain errors where
forms are incomplete (not all fields filled), inconsistent (fields contradicting each
other or where a proposed configuration is impossible) or incorrect information (e.g.,
wrong address).
Many organizations fail in obtaining the benefits of their initiatives. The main cause is
that true business process innovation requires a variety of skills – business
knowledge, process thinking, IT literacy, people change management capability,
project management skills, and, last but not least, excellent stakeholder management.
Many organizations embark on this journey without a clear approach (way forward)
and get lost on the way.
All these three challenges relate to management. Thus, management must be
both more open to process innovation and they must actively encourage
innovation to ―show the way‖ forward.
But TQM, as a management model and practice, is still a suitable resource for
competing in the future. The underlying reason is a premise suggesting that managing
innovation is fundamentally different from managing quality.
In this regard, Prajogo and Sohal (2001) have discussed the two competing
perspectives concerning the relationship between TQM and innovation.
A group of scholars has underscored the value of maintaining TQM in the future as
well as its positive link with innovation. Zairi (1994), for example, argues that the
arrival of TQM as a philosophy of modern competitiveness has to some extent
brought improvement in the areas of innovation practices. He further maintains that
TQM has also given organizations the impetus and commitment required for
establishing a climate of never-ending innovation. Similarly, Flynn (1994) argues that
TQM and product innovation share a common ground in terms of organizational
infrastructure, including product development process, cross-functional teamwork,
and supplier relationship, and therefore should be compatible to each other.
On the other hand, a number of scholars and researchers have articulated the
incompatibility of TQM with innovation, particularly in relation to the continuous
improvement and customer focus principles. Harari (1993), for example, strongly
argues that by emphasizing incremental improvement, companies could lead people to
work on unambitious goals and produce solutions which are not novel.
Supporting this argument, Samaha (1996) also holds that by emphasizing incremental
change, the concept of continuous improvement could lead people to focus on
maintaining the existing process. In this way, the companies would not only ignore
the potential of adopting breakthrough innovation, but also they would be led to work
continually on processes that are fundamentally flawed. In conjunction with this,
TQM also promotes standardization with the purpose being to achieve a high level of
The Bank of India has always been in the forefront of innovation whilst maintaining
traditional values and ethics in service and trust. It was among the first nationalized
banks to establish a fully computerized branch and ATM facility at its Mahalaxmi
branch in Mumbai back in 1989. It was also a founding member of SWIFT1, to foster
India‗s participation in the international financial community, and a pioneer in the
introduction of the Health Code System in 1982 for evaluating and rating credit risk.
When India opened its financial markets to outside competitors in 1991, the Bank of
India focused on fine-tuning its internal systems and introducing technology. In 2002,
when the government started focusing on technology as a platform and enabler, the
Bank of India realized it needed a game-changing strategy and technology
infrastructure upgrade—especially to win and retain younger customers who were
willing to pay for anywhere, anytime banking capabilities.
The Bank of India decided to leapfrog the competition with a next-generation core
banking solution, tied together with a new centralized data center and information
management warehouse. The Bank of India believed this comprehensive solution
would provide its growing branch network with the multi-channel, intra-branch
connectivity backed by the integrated, consolidated view of customers it required for
more effective up-selling, cross-selling and customer service.
Following a long and methodical planning process, the Bank of India issued a detailed
Request for Proposal (RFP). After careful evaluation of more than 20 proposals from
major IT solutions providers, the Bank of India selected HP as its business
transformation partner. Bank of India‗s three pronged strategy required HP to play
multiple roles—hardware and software supplier, consulting and implementation
partner and finally business process outsourcer (BPO), with HP chosen to run the
bank‗s data center and help desk.
HP was selected for the strength and quality of its RFP response along with the low
investment and total operating costs. HP was also able to distinguish itself with its
deep banking expertise, financial strength and stability, recognized leadership in
technology and partnerships with industry leaders like Oracle, Cisco and Infosys. HP
provided a solid team with demonstrated experience in integrating and managing
large-scale projects, a truly collaborative approach and a single point of accountability
for the whole project.
Today, the Bank of India has a flexible and scalable architecture designed to meet the
needs of changing market dynamics and differentiate the Bank of India from
competition, while enabling it to aggressively compete with new private sector banks
and providing state-of-the-art capabilities, channels and products.
With HP’s help, the Bank of India is realizing phenomenal success—234% ROI
over five years. Combining core banking, business continuity and information
management, the Bank of India has doubled its revenue, and tripled its profits
with 12% fewer employees, all made possible by efficiencies from the HP
partnership where IT is now driving the bank’s strategy.
CHAPTER:- 6
INNOVATION IN
INVENTORY
MANAGEMENT AND
LOGISTICS
The scope of inventory management also concerns the fine lines between
replenishment lead time, carrying costs of inventory, asset management, inventory
forecasting, inventory valuation, inventory visibility, future inventory price
forecasting, physical inventory, available physical space for inventory, quality
management, replenishment, returns and defective goods and demand forecasting.
Also may include ABC analysis, lot tracking, cycle counting support etc.
Management of the inventories, with the primary objective of determining/controlling
stock levels within the physical distribution function to balance the need for product
availability against the need for minimizing stock holding and handling costs.
Most manufacturing organizations usually divide their "goods for sale" inventory into
6.1.1 Raw materials: Materials and components scheduled for use in making a
product.
6.1.2 Work in process WIP: Materials and components that have begun their
transformation to finished goods.
6.2.1 Purpose
Companies often use inventory management software to reduce their carrying costs.
The software is used to track products and parts as they are transported from a vendor
to a warehouse, between warehouses, and finally to a retail location or directly to a
customer.
6.2.2 Components
When a product is in a warehouse or store, it can be tracked via its barcode and/or
other tracking criteria, such as serial number, lot number or revision number.
6.2.2.2 Bar-coding
Barcodes are the means whereby data on products and orders is inputted into
inventory management software. A barcode reader is required to read barcodes and
look up information on the products they represent.
Once products reach a certain low level, a company‘s inventory management system
can be programmed to tell managers to reorder that product. This helps companies
avoid running out of products or tying up too much capital in inventory.
Companies that are primarily service-oriented rather than product-oriented can use
inventory management software to track the cost of the materials they use to provide
services, such as cleaning supplies. This way, they can attach prices to their services
that reflect the total cost of performing them.
6.2.3 Advantages
In many cases, a company‘s inventory represents one of its largest investments, along
with its workforce and locations. Inventory management software helps companies
cut expenses by minimizing the amount of unnecessary parts and products in storage.
It also helps companies keep lost sales to a minimum by having enough stock on hand
to meet demand.
With the aid of restricted user rights, company managers can allow many employees
to assist in inventory management. They can grant employees enough information
access to receive products, make orders, transfer products and do other tasks without
compromising company security. This can speed up the inventory-management
process and save managers‘ time.
6.2.4 Disadvantages
The main disadvantages of inventory management software are its cost and
complexity.
6.2.4.1 Expense
6.2.4.2 Complexity
Increased automation and item tracking capabilities help you improve inventory
accuracy and better match the goods you have on hand with customer demand.
6.3.1 Benefits
• Help reduce purchasing and inventory costs. Connect inventory control,
purchasing, and sales order processing with demand planning and help reduce
costs, improve cash flow, and help ensure that you have the right stock
available when you need it.
• Gain visibility into inventory processes. Effectively balance availability with
demand and track items and their possible expiration dates throughout the
supply chain to help minimize on-hand inventory, optimize replenishment, and
increase warehouse efficiency.
6.3.2 Features
system replenishment.
14 Cycle counting Determine the counting frequency per item or stock keeping
unit to help increase inventory accuracy and meet shipping
deadlines.
15 Business Generate e-mail messages to alert your people, suppliers, or
notifications partners to changes in critical inventory levels, order status,
or replenishment needs.
Table no. 2: Features of Inventory management software- Microsoft NAV
(Source: www.microsoftdynamicnav.com)
Logistics is the process of anticipating customer needs and wants; acquiring the
capital, materials, people, technologies and information necessary to meet those needs
and wants; optimizing the good-or service-producing network to fulfil customer
request; utilising the network to fulfil the customer request in the timely manner.
Essentially, third party Logistics firm may be defined as external supplier that
performs all part of company‘s logistics services.
The process of moving or transporting goods from their final destination for the
purpose of capturing value or for proper disposal.
Designed and managed to explicitly consider both forward and reverse flows
activities in a supply chain.
Now days Reverse logistics is one of the major problems for the any company.
However DCL is the great e.g. of providing the reverse and closed loop supply chain
services to companies and helps to save the big money for companies. Case describes
about the Innovation in logistics through use of IT and tracking the accurate
information of goods and place where it should be delivered.
Innovation in logistics can be best defined by Reverse logistics. Now days big
companies like Coca-Cola is saving good amount of money through efficient logistic
system.
Receiving, inspecting and doing something profitable with all of these returns is no
easy routine. Returns are a fact of life, and should be given the same management
priority as marketing, manufacturing, distribution and customer service. A good
reverse logistics system not only improves corporate bottom line, but it can also
improve customer trust and confidence – critical in today‘s tough business climate.
large multinationals spread over 36 countries. As part of a strategy to offer the same
level of service as their existing software products, Symantec incorporated DCL and
its Supply Chain Management Services as a key part of their integration strategy for
all Axent products.
Symantec recognized long ago that it wanted to sit above the supply chain, composing
and monitoring its daily performance, rather than sitting in the middle handling
physical goods. The company warranted that its supply chain partner, DCL, not only
provide operations but also provide visibility across the entire supply chain for all
activities, giving them full access to information about their customers, issues and
product dispositions.
This allowed Symantec to focus on its core competencies product development and
marketing not supply chain management. With the original emphasis on software
distribution, reverse logistics did not play a critical role in supply chain logistics, but
the addition of the Axent hardware line warranted a fresh look at the entire process.
Symantec realized that they needed to keep a tight limit on returned goods and their
disposition if they were to be competitive in the marketplace.
Internet Security is a very competitive marketplace where end users demand reliable
equipment but also with no down time. There is enormous pressure for a rapid
response time and for a quick turnaround of all customer requests including a
provision to provide replacement hardware under certain contractual conditions.
Furthermore, the cost of the hardware warrants that proper disposition is made of the
incoming hardware whether it is fixed and put back in the inventory or, disassembled
for spare parts. Either way, speed, accuracy, and communications are key elements
that have to be addressed during the entire process.
DCL recognized that with an improved process and a unique IT infrastructure reverse
logistics can be looked in a new light – not just a reality of doing business, but a
powerful tool to improve customer trust and confidence while managing the corporate
bottom line.
Customer call
centre
Customer
Email to
DCL
Complete Receiving
visibility of Original product
inventory status
Inspection
Warranty check &
legality check
Disposition
Rules by customer
redefined
CHAPTER:- 7
INNOVATION IN
HUMAN RESOURCES
MANAGEMENT
position.
02 Performance Performance Formulate competent
appraisal / appraisal performance appraisal system.
Compensation 100% timely completion of
appraisal.
Ensure transparent evaluation.
Compensation Introduce new compensation
scheme for high performance.
Maintain salaries as per
industry norms.
Reduce overtime payments.
03 Skills enhancement Training Identify training need &
arrange training program.
Reduce training cost.
04 Work place Work Create friendly work
management environment environment
(Source: Human capital trends and innovations, August 2009, PEW centre on the
states, sponsored by PEW charitable trust.)
7.4.1 E-HRM:
E-HRM is a way of implementing HR strategies, policies, and practices in
organizations through a conscious and directed support of and/or with the full use of
web-technology-based channels. The word ‗implementing‘ in this context has a broad
meaning, such as making something work, putting something into practice, or having
something realized. E-HRM, therefore, is a concept - a way of ‗doing‘ HRM.
which ensures that the whole is greater than the sum of the parts. In the CLAN model,
action takes place in the businesses whilst networking between them is driven from
the centre.
CLAN's attraction is that it provides a powerful and more stable, yet still flexible,
alternative to centralized or de-centralized management of key business functions.
Traditionally, a company structure is likened to a pyramid. Solid this may be, but one
side of the business cannot see across to the other, and the stones at the bottom cannot
see where the top is pointing. We prefer the imagery of the light, transparent
connected structure.
But CLANs are not always the right solution. There are occasions when autocratic
top-down leadership is essential, for example in a time of corporate crisis. Likewise it
is unlikely to be the right choice in a company that is so intent upon task that it
ignores the 'processes' whereby people work together.
These outcomes, in turn, may change the state of HRM in an organization, or through
individuals and/or groups within an organization actually result in a new HRM state.
This closes the circle. With the addition of the E-HRM outcomes, the building blocks
have been identified that are needed to finalize our E-HRM model (see Figure):
E-HRM will assume an active role for line management and employees in
implementing HRM strategies, policies, and practices. In terms of the more
operational and information processing work, such as administration, registration and
information distribution, there will be less demand for HR people. This seems most
logical for organizations with an operational e-HRM approach. However, also with a
relational e-HRM approach dominating, a smaller HR staff will be necessary if line
management and employees pick up and use the HRM instruments provided by the
HR intranet. There will still be HR experience necessary for the renewal of
instruments and to prepare them for easy intranet-based use. Finally, with a more
transformational e-HRM approach, strategic HRM expertise will be necessary in
order to formulate adequate strategic HRM plans. The scarce empirical studies on this
topic suggest that an investment in e-HRM seems to result in companies reducing the
number of HRM employees. Based on the earlier arguments, it is likely that this
concerns primarily the operational/administrative HRM workers.
At the tactical and strategic levels, HRM staff will remain necessary, but will see a
shift in their expertise from face-to-face skills towards intranet and internet activities.
In other words, the web-dimension will be added to the toolkit of HRM professionals.
7.4.8 Conclusion:
Based upon the research of (HuubRuël – Utrecht School of Governance, Tanya
Bondarouk – University of Twente, Jan KeesLooise – University of Twente) draw
conclusions regarding the followingthree topics: (1) e-HRM goals in the companies,
(2) types of e-HRM, and (3) e-HRMoutcomes.
Turning to the employees, the introduction of e-HRM brings changes in the way they
experience HRM in their company and in the HR tools and instruments they get
offered. They acquire the opportunity to get updated in terms of organizational
dynamics, take part in online discussions, and choose their career path. However, not
all employees are willing to accept full responsibility for their personal career
development through the available web-based HR tools. Some (and the case studies
suggest a specific group) require their managers to come up with career development
initiatives.
When implementing e-HRM on a global scale it is not easy to make e-HRM appear
advantageous on a local scale. That makes it hard to get local HRM professionals
enthusiastic. Guaranteeing the security and confidentiality of input data is an
important issue for employees in order that they should feel ‗safe‘ when using web-
based HR tools.
Our final observation is that employees and line managers‘ mindsets need to be
changed: they have to realize and accept the usefulness of web-based HR tools. They
generally feel that they lack the time and space needed to work quietly and
thoughtfully with web-based HR tools and so, if there is no real need, they will not do
it.
CHAPTER:- 8
HOW MANAGEMENT
CAN FOSTER
CONTINEOUS
INNOVATION
No distance is too far and no dream is too large because the cycle of life keeps
changing. Certainly, changes bring improved lifestyle and technological progress,
consecutively to keep the momentum of improvements one has to really appreciate
innovation.
But where does the innovation come from? An apple in Newton‗s head sparked to
deliver an Idea, which plays a vital role in everyone‗s life till today. Innovation can be
considered to be as creativity, i.e., to create new ideas and knowledge creation.
However it goes beyond idea generation to putting those ideas into action. So it is
important to evaluate the ideas in order to yield good innovation. An idea that is
developed and put into action creates innovation.
Idea
generation
Idea
conversion
Idea
diffusion
Idea
assesment
For the idea generation phase, the financial, practical, physical limitation and other
business parameters are not considered, this is to ease seamless flow of ideas and to
encourage out of box thinking.
Refined ideas are the ones identified to be financially successful and technically
viable. It doesn‗t mean that ideas are simply put away, but it is in this phase ideas are
turned into revenue generating products, services and processes.
Typical methodology that could be used in this phase is brainstorming, to analyze the
feasibility and problems. The possible problems might vary from one company to the
other. It has to be noted the tight budgets, conventional thinking and strict funding
criteria caused many novel ideas to shut down.
The generation of high number of ideas depends on the tools & techniques that an
organization adapts. Consequently, this helps to avoid strangling the innovation
process for lack of ideas.
8.3.2.2 Benchmarking
Benchmarking is an important tool for competition analysis. Benchmarking is an
ongoing process of measuring and improving business practices against the
companies that can be identified as the best worldwide. It emphasizes the importance
of improving, rather than maintaining the status quo.
8.3.2.4 Co-operation
Co-operation with institutions like universities and industrial associations help the
organization to have new ideas through co-operation settlements/agreements. Where
organization gets and provides inputs. Member organizations participate and form an
ideal source for development of innovative ideas.
8.3.2.5 Brainstorming
Brainstorming is a widely used technique, in which a group of people were put
together and discuss their ideas that they can think of, even if apparently foolish. The
important thumb rule of this technique is not to criticize ideas presented until the
discussion ends. An advantage of this method is the fact that the association of several
ideas can trigger new ones.
This phase is particularly important for the large companies who have their divisions
in many geographical locations. So the biggest question that, what is the impact of
diffusing of ideas within the organization? One possible negative upshot could be
leaking of your idea to the competitors.
The company P&G first launched Pampers diapers in Germany, and then it developed
ideas to establish the product in France. However it has taken long time to do so, P&G
can able to launch its product only after five years. Meanwhile, Colgate Palmolive
sensed that idea and launched its line of diapers in France two years before to P&G‗s
launch.
In the technical point of view, the feasibility study is carried out to check if it is
possible to implement the idea at an acceptable cost. This involves questions such as
whether the technology needed for the system exists, how difficult it will be to build,
and whether the organization has prior experience using that technology in the
business perspective.
The feasibility study is conducted to check the factors affecting the commercial
viability of the business. Also to ensure the cost-effectiveness of the proposed system
i.e. if the benefits of the new idea do not outweigh the costs, then it is not worth going
ahead.
From the comparison between the idea‗s profitability and the risk associated to the
same, a decision can be made about the idea. With a raising number of ideas analyzed
and processed there is a better understanding of the risk level of several types of ideas
and the costs each one brings. The study of this technique is strongly supported by a
wide bibliography related to the economical and financial areas.
By using metrics we can find the deviation i.e., what is planned against what is
achieved? Idea Assessment is very important to any organizations to monitor the
trends in the actual effort spent on Idea generation process. This helps to understand
where does company stand and find areas of improvements. It also helps to re-plan or
alter the ideas so that it is more technically viable.
Over time they get replicated and they lose their distinctiveness and, therefore,
their power to produce above-average returns.
Strategies also get exhausted as markets become saturated.
Customers get bored, or optimization programs reach the point of diminishing
returns.
Finally, strategies get eviscerated. Customers or suppliers become so powerful
that they can dictate much lower prices than before.
CHAPTER:- 9
ROLE OF
KNOWLEDGE
MANAGEMENT IN
INNOVATION
MANAGEMENT
It refers to the set of business processes develop in the organization to create, store,
transfer and apply Knowledge. Knowledge is an important part for the Innovation
Management. Knowledge residing in the minds of the employees that has not been
documented called tacit knowledge. Knowledge has been documented is called
explicit knowledge.
Through knowledge accessibility and knowledge flow, staff members are able to
increase their skills levels and knowledge both formally and informally. An increase
in skills can improve the quality of innovation. The flow of knowledge across
functional boundaries ensures that a wider base of knowledge is available to
employees than only the knowledge they use in their day-to-day activities. Employees
therefore have a wider frame of reference of the context in which they work and will
therefore be able to innovate more efficiently. Knowledge management also provides
a culture of knowledge sharing and accessibility of knowledge, creating an
environment conducive to skills and competency building, which aids innovation.
Recently, a new understanding has begun to take shape. Instead of nurtured only in-
house, innovation-related knowledge can also be in-sourced from the outside and
combine with internal skills and expertise. The spread and subsequent ubiquity of the
internet has breathed new life into the use of technology as a device to capture market
information and knowledge. Companies have made use of it to facilitate interactions
between them and their customers. They have, over a period of time upgraded their
technological interface with their customers, such as setting u web-based
communities, to gain an insight into customers‘ behavior computer-mediated
environments Invaluable though this form of knowledge may be, it is still limited to
technology-mediated forms – data, information, numbers and figures – all of which
Today, information technology media are often used for capturing and diffusing
explicit knowledge and information. However face-to-face interactions and the
sharing of context and perspectives is still the preferred way to capture tacit
knowledge. The increased reliance on technology as an interface with customers has
led companies to realize that their knowledge of the customers is not on par with
customers‘ changing and fluid needs and wants.
companies. However, there is more to this than just financial incentives. Scientists
engage in these challenges for intellectual reasons as well. Innovation intermediaries
fulfill two main functions. From the ―seeker‖ companies‘ perspective, they are a cost-
effective, convenient and speedy way of tapping scientific knowledge – knowledge
that transcends the boundaries of organizations and nations.
They allow a company to expand its R&D capacity without increasing its size and
incurring supplementary costs, since all payment is contingent upon satisfactory
solutions. Furthermore, as scientists participating in the challenge may be versed in
different fields of expertise and may not come from one nation or one continent, the
synergy of different approaches and perspectives may be a creative way to solve
problems that would otherwise prove hard to solve.
The increase in the various forms of innovation intermediaries can be accounted for in
terms of the increase in the mobility of knowledge as the result of the mobility of
workers, who spill out ideas from companies‘ R&D departments. Combined with the
growing availability of private venture capitalists – which have helped finance new
players to commercialize ideas spilled outside the silos of corporate research labs,
innovation tends to migrate towards the open model. Furthermore, tight connections
and intensive communications between the company and its external sources of
innovative ideas through new information technologies reduce the cost of transaction
and interaction.
It seems easier and less costly to push innovation to where tacit knowledge resides,
rather than to attempt to extract it, bring it to the firm and use it as an input in
innovation processes. Involving the customer in the innovation process would reduce
the risk of failure and speed up product cycles. For example, customers of computer
and electronic equipment (C&EE) are increasingly putting pressures on their suppliers
to design more and more complex and sophisticated solutions to their business
problems. Given that customers are not in a position to thoroughly spell out to their
suppliers in explicit forms what they are seeking, they enter into various forms of
partnerships, in which they work together with the aim of uncovering or defining
―problems for which solutions are required‖.
This view suggests that neither a ―push‖ nor a ―pull‖ approach is called for. Instead,
what is needed is an interactive and relational approach between customers and
suppliers. The role of C&EE suppliers is changing from product providers to
―solutions‖ providers. Solution-based businesses may either develop the solutions
internally or in-source them from outside partners. The solution components should
be ―architecturally compliant, i.e. easily integrated using industry standard
technology‖ in order for them to be streamlined and integrated with the rest of a
system‘s components with minimum friction. It is a challenge for solutions providers
to build the required competencies and organizational adjustments to meet the needs
of customers and to establish an effective environment based on a close relationship
with them – an environment that locks both sides into a mutually advantageous long-
term commitment.
(Source: www.emeraldinsight.com/0263-5577.htm).
Complex knowledge is slow to transfer and thus more difficult to apply and convert.
Complexity of knowledge increases an understanding of the form that knowledge
takes and the ways by which knowledge that enhances rather than destroys exciting
knowledge. In other words, modularity decomposes knowledge into specific retinues
that helps employees implement operation activities and then promotes the companies
KM capability. Similarly, the more tacit the company‘s knowledge, the less employee
company‘s knowledge, the less employees can communicate with their peers.
Firms have always had some process to synthesize their experience and integrate it
with knowledge. Knowledge integration helps the firm create condition under which
multiple employees can integrate their knowledge through system and
communication. However, integration has been viewed as depended upon the
characteristics or the knowledge or technology manipulated. The four mechanisms are
rules and directives, sequencing, routines and group problem solving and decision
making for knowledge integration related to characteristics of knowledge.
Tacitness is the nature of knowledge, which derives from an inability to articulate the
principles that influence the performance. Propose that modularity represents the
standard interface specification which allows the separation of the production
processes. Furthermore, most papers claim that explicitness, complexity and
The operative learning of the organization reinforces existing knowledge and the
sharing of it throughout the organization. Learning organization in a dynamic
environment will enhance the quality and quantity of information transfer and
knowledge accumulation. Firm‘s learning capability will enhance knowledge
application and creation. Thus, it seems to suggest that a firm‘s organizational
learning will influence its KM capability.
Continuous orientation toward organizational learning will improve the efficiency and
effectiveness of a firm‘s innovative activities. Organizational design needs to access,
and integrate transfer knowledge among members of an organization. Knowledge
integration helps firms to combine internal and external knowledge through
communication and systems integration. Knowledge as integrated within the
organization in order to create KM capability. He proposes that most organizational
capabilities require the integration of knowledge from a number of individuals. Firm‘s
competitiveness depends on its capacity to integrate knowledge in an effective
manner. Without effective knowledge integration, the firm needs to spend more time
and resources administering and guarding information, thus impeding innovation. The
wider the scope of knowledge that is integrated, the greater the diversity of the
individuals involved.
Organizational learning is the process by which firms can detect problems and
provide solutions. Knowledge from internal and external learning activities has
become a strategic process that facilitates the acquisition and deployment of an
organization‘s stock and flow of knowledge. Different knowledge bases and different
strategies in developing and deploying knowledge result in performance differences
between firms. However, while the importance of creating, managing and transferring
knowledge have been recognized by firms, most have not been able to transform this
into an effective KM strategy. Thus, it is a big challenge for firms to establish a
suitable knowledge strategy that improves organizational learning and further creates
superior KM capability. Firms with human oriented KM strategy will have a better
attitude toward learning and innovation, because the sense of care gives rise to trust
and empathy, which can encourage organization members to communicate and
cooperate better. It is argued that, within a culture of care, individuals may have more
favorable perceptions of KM activities.
This mix can be important, but first it is necessary to find out how the markets
perceive the presence of value. These considerations can be taken as a guideline for
KM.
There are perhaps an unlimited number of factors that can define management
attitudes regarding the role of intellectual capital into organizations' life. Some
managers evaluate significantly this capital as a very important resource that should
be used to obtain adequate profits. Therefore this capital should be constantly
improved.
The most common factors that affect initially the personal characteristics of a
knowledge worker are education level, attitudes and values, innovativeness and
creativity. Innovativeness is an important factor for supporting innovative efforts and
it contributes also to define the personality. However, it is not enough to desire new
products or new processes. In fact, an innovation that an enterprise presents into the
market may be also due to the creativity of its knowledge workers.
Nowadays, managers have to decide whether they want to obtain better results from
their knowledge workers or they prefer to lose the creative power that they possess in
their minds and their professional experience. Managers' attention must be focused on
personal development. To obtain an effective knowledge level, investment in
knowledge development is needed. Managers should improve their ability to motivate
knowledge workers to attain higher knowledge levels, because the arousal of this set
of intellectual needs may be caused by external stimuli. Motivations should be
Managers can obtain impressive results in what concerns the companies' abilities to
innovate if they are able to develop the stimulation of innovative proposals through
motivational methods and adequate rewards. The same can be said in what concerns
key success factors: managers should practice frequently the stimulation of
competitive efforts, provided through utilization of both existing and new
technologies. This conceptual model intends to interpret the relationship between KM,
innovation, and competitiveness. It may contribute to an integrated understanding of
the knowledge development process and its influences into the domains where
management efforts should be focused.
In the networking process, the common phases and the additional phase of
internalization interact with each other and communicate with the knowledge bases
through KM process. The common phases can keep the compatibility with existing
best practices of innovation, while the internalization phase parallel to the common
phases provides a powerful conduit for integrating the KM process into innovation.
Then the functioning of internalization phase is discussed.
Despite that knowledge is a key component for continuous innovation, the deliberate
KM in order to support innovation has still not found its ways into all companies.
That is partially because of the absence of a way to integrate KM process into
innovation. Since there are increasing requirements to integrate the KM process into
business process, including the process of innovation, the phase of internalization can
provide a platform for carrying out the activities of KM. This platform will facilitate
the interactions and iterations in innovation and KM. In previous research, this phase
has been performed in an implicit way such as market research, capitalization of
experience, community of practice and so on.
Owing to the changing customer needs, extensive competition and rapid technological
change, innovation is extremely dependent on the availability of internal and external
knowledge. Through the additional phase of internalization, innovation process can
exchange rapidly knowledge and information with internal and external knowledge
bases. The feedbacks from customers, the responses from competitors, best practices,
errors and lessons learned about the innovation project will be capitalized so as to be
transferred to and assimilated by the stakeholders. By this way, the capabilities of the
continuous innovation can be improved.
The internalization phase makes the networking process of innovation more flat and
concurrent. The iterations and feedbacks can be rapidly transmitted to the right place
and the right person. Organizational learning in double loop can emerge and a
learning network can be built on this platform. The requirements of the latter phases
in innovation can be better considered in its early phases. This phase will increase the
shared common understanding during the innovation process and improve the
knowledge level in the knowledge bases. Furthermore, the sparks and impulses of
new ideas are conceived and matured for continuous innovation. With the phase of
internalization continuously providing seeds for more innovation, the continuous
innovation can become a propeller of companies.
CHAPTER:- 10
THE BUSINESS
PLATFORM
VARIABLES THAT
INFLUENCE THE
INNOVATION
MANAGEMENT.
Technology platform variables and Business platform variables helps in managing the
innovation and measures the whole organisation performance related to the
profitability and technological Innovation.
The attempt to compete for potential platform creation began when Xerox and Apple
launched Xerox Star and Apple Lisa. By tying the operating system to their own
hardware, Xerox and Apple expected to command a high price and establish
proprietary business platforms. However, the price they set was regarded by the
customers as too expensive (Xerox Star $16,595 and Apple Lisa $10,000 comparing
to a standalone PC $2,000). Moreover, as Xerox Star and Apple Lisa ran as a closed
system, this prevented software development firms from writing application
programmes.
Thus, the machines of Xerox and Apple were not seen as valuable for the customers
to purchase. The result was that both Xerox and Apple failed to establish a business
platform even though they were early movers in the PC Windows operating system
market and might have established their technologies as standard. Apple in its launch
The strategy of not licensing also showed that Apple overlooked the importance of
speed in using other PC manufacturers‘ distribution capability to bring the innovation
to market. As a result, the MacOS failed to take off as quickly as Microsoft Windows.
The strategy of not licensing constrained the growth in the installed base of Apple
machines, lowered Apple‘s capability to compete and limited the potential to create a
business platform. Among the competitors launching the innovation of Windows
operating system for PC (Microsoft, IBM, Apple, Xerox), only Microsoft could create
technology platform and business platform. The development of Microsoft‘s
Windows created a technology platform in terms of generating further related
software products including scalable operating systems for intelligent devices, PCs
and servers, software development tools and internet and intranet software and
technologies.
Microsoft also created its business platform by pursuing a low-cost licensing strategy
to license its Windows via OEM arrangements with the PC manufacturers. Microsoft
business platform was reinforced by a product bundling strategy to include software
applications running on its operating system in the OEM deal which further increased
the value of Microsoft Windows to PC users, increased the demand for its products
and reduced the scope for competing suppliers. The distribution strength of global PC
manufacturers and the value of application programmes running on Microsoft
Windows enabled Microsoft Windows to reach wide adoption and become a de facto
standard. The wide adoption and the de facto standard of Microsoft Windows
operating system then served as a strong business platform that helped Microsoft to
successfully launch subsequent Windows products such as Windows 95, 97, 98, 2000,
Windows NT, Windows CE, Windows ME, and Windows Media and enter the new
businesses such as the Internet browser, Web TV business, and computer game.
Although IBM had a great presence in the mainframe computer business and
operating systems since the 1960s, IBM lost the opportunity to extend its competitive
position into operating system for PCs. The launch of IBM OS/2, although technically
superior to Windows 3.1 and Windows 95, could not compete with Microsoft
Windows. This is because IBM OS/2 was a closed system, not offered with other PCs
and was seen as too complicated and unwieldy for the customers. Thus IBM failed to
establish its OS/2 as standard operating system although IBM had a strong
distribution capability. IBM‘s aim of developing an operating system business
platform creation was unsuccessful. From the study, it can be seen that the way that
innovators launched successive Windows products to match their competitors within a
few years suggests that technology can quickly be caught up.
Taking into account the competitive position among innovators, it is worth noting that
Microsoft enjoyed platform advantage through ownership of over 90 per cent of PC
customers.
Microsoft developed platform advantage from its control over the technology
platform, business platform and de facto standard for operating systems. However,
Microsoft‘s business platform is vulnerable to erosion by state regulation rather than
from competitors reacting to Microsoft‘s anticompetitive software bundling and
predatory pricing of software. Microsoft‘s declining share price was a result of legal
action by the US authorities against Microsoft‘s anti competitive behaviour in the
market for PC operating systems and software.
The process of platform creation in the plain paper copier market began in the early
years of the Xerox copier. The development of Xerox copier created a technology
platform of xerography/ electro photography in that the underlying technology was
capable of driving a variety of imaging applications including printer, copier, fax and
scanner which could be created using common parts and technologies.
The launch of the model 914 enabled Xerox to create a business platform. The model
914 which was easier to use than the existing copying machines using different
technologies created a strong demand for Xerox‘s copier. The demand for Xerox‘s
copier can be seen from the 15 per cent annual growth in terms of copying volume in
the 1960s. The combination of capabilities in terms of the product feature, the
strength of Xerox‘s brand and sales force served as a strong business platform that
helped Xerox enjoy a competitive advantage in terms of uninterrupted sales growth
and profits through the 1960s. In the year 1965, Xerox‘s sales growth was 10 times
higher than the first year sales (962 per cent increase).
In 1969, Xerox‘s profit increased by 600 per cent from$23 million in 1963 to $161
million. Further, Xerox‘s business platform enabled it to enter the new businesses
such as PC, Office of the future (office automation), plug-and-play products, internet
business, insurance and financial services. In the late 1970s, the technology platform
of Xerox began to erode when most of its patents expired. Japanese competitors
entered the fray to compete with the price which was 25 per cent below the cost of
Xerox copier. As a result of Xerox‘s technology platform of xerography/ electro
photography being matched by the liquid toner technology of the Japanese firms, the
market share of Xerox was reduced from over 94 per cent in 1970 to 41 per cent in the
early 1980s.
The way that Xerox‘s technology platform was destroyed thus demonstrates that
technology could not be permanently monopolised and could provide only temporary
competitive advantage (Xerox copier was launched in 1960 and matched in the late
1970s). The business platform of Xerox was also undermined as a result of strong
competition from the Japanese copiers (stated above). The falling market share during
the 1970s-1980s indicated that Xerox‘s business platform was eroded. Although
Xerox had brand strength and the capabilities of PARC [3] that enabled it to enter
new businesses (stated above), Xerox was slow to bring the new products to
commercialisation.
Thus Xerox could not fully exploit its business platform capabilities to subsequent
advantage. The competition in the plain paper copier market increased in the 1990s as
non-traditional competitors in the printer business like Hewlett- Packard took printed
pages away from the copier business. The Japanese copiers, e.g. Canon, Ricoh, and
Konica also continued to take the share in the copier business. The situation became
worse when Xerox‘s attempt to reorganise its sales force backfired. Xerox kept losing
market share and was in a state of near collapse. The falling business platform is
reflected in Xerox‘s stock price plunge. Xerox‘s market value was 8 times lower than
that of Hewlett-Packard and not much larger than the Japanese competitors‘.
The market to book value and operating profit of Xerox were dwarfed by the major
rivals like Hewlett-Packard and Canon. The market share of only 25.8 per cent in the
late 1990s comparing to the share of 90 per cent-100 per cent in the 1970s indicates
that Xerox is much less competitive than before and charts the erosion of its business
platform. From the study, Xerox built a technology platform as well as business
platform but could not maintain them to enjoy continued platform advantage. As the
market is now moving towards the digital copier and networked solutions, there are
many competitors who are ready to compete in the light of this new opportunity.
Canon, a rival of Xerox, is a pioneer in digital and colour copiers.
Hewlett-Packard also competes in the digital market with its high-speed digital
electronic copier and printer. These are indications of increased competition in the
copier market. Xerox strategy to rival Canon or Hewlett-Packard and rebuild its
platform with its strategy of ―document processing‖ has attracted little confidence in
the market. Figure gives an overview of the progress of plain paper copier innovation
as a result of innovators ‗using strategies in managing innovation. The circle
represents the total revenue pool of innovation in the plain paper copier market. Xerox
had the dominant market share during the 1960s-1970s because its superior copier
protected by the strong patent and the aggressive direct selling enabled Xerox to
develop a new market.
In other words, Xerox could get rid of competing copiers (alternative copiers with
different technologies) with the launch of its superior one-touch copier (copier model
914). Also, Xerox initiated the concept of leasing which not only allowed it to remove
technology risk for customers but also gave it an extremely strong position in the
marketplace. In the early 1970s, Xerox controlled the plain paper copier market with
100 per cent market share. The largest market share could best be adjudged as the
internal benefits. Xerox was satisfied with its internal benefits and therefore did not
see collaboration as important.
Figure No: 11: The innovation process of plan paper machine of Xerox
CHAPTER:- 11
LIMITATION AND
FURTHER SCOPE OF
RESEARCH
In this project we have used only secondary data. Our project is lack of primary data.
Today in the era of cut through competition, most of the organizations want to reduce
lead time for their new or innovative product. So it leads to ‗Globalization of
innovation process‘ in which innovation process is divided in several steps and work
on each single step done at the same time in different parts of the world. It also
enhances local adaption of product, because it enables customization. So interested
candidates will go for the more depth of ‗Globalization of innovation process‘
There are mainly 2 types of innovation; Incremental & Radical innovation. Both
innovations require different types of resources, technology support, and
management. So in future He/ She may identify and study different resources,
technology support, and management which will be required for both type of
innovation separately.
By practising TQM, 5R, 5S, Lean manufacturing system, JIT system, 6-sigma, almost
production excellence has been achieved. If we talk about India, because of poor
infrastructure, logistic will remain darker side of management. So lot of work has
been required to improve logistic system.
Some companies like Apple, Microsoft, GE are excellent to attract and retain
innovative workforce, while on another side some innovative project failed with only
the reason of ‗stability of innovative workforce‘. So various HR tactics which can
identify, motivate, retain innovative people. It may be an interesting topic for
researcher.
Up to now, idea diffusion phase has been proved to be more risky for organizations.
So interested candidates may find reason for that and also find our precaution which
has been required at idea diffusion phase.
At last from case studies, we have identified 9 ‗various business platforms‘ which will
be useful during innovation for obtaining excellence performance. These 9 variables
may increase over the time as business became more complex.
CHAPTER: - 12
CONCLUSION
Foster of
Knowledge
continuous
management
innovation by
management
Business
platform
variables and
Technical
platform
variables
Innovation
management
As per our objective and figure13 we started with different innovation in product,
process, inventory management & logistics and human resource management. We
studied the different types of innovation and innovation management techniques and
tools. We also went through for some case studies in the same and conclude that
continuous innovation in the activities of the organization is necessary as well as
management of the same is necessary for that knowledge management of the
organization had to play a crucial role.
Continuous innovation is measured on two variables. These variables are also the
mechanism of continuous and successful innovation management. In that part we
included two cases and measures companies innovation on that variables. A company
have to introduce incremental as well as radical innovation in any part of the business
activities according to mechanism of the given variables.
CHAPTER: - 13
BIBLIOGRAPHY
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Transitioning from TQM to total innovation management, By- Danniel I
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