INNOVATION IN SUPPLY Chapter 3: Innovation as a

CHAIN AND LOGISTICS Management Process

MANAGEMENT
COURSE LEARNING OUTCOMES
At the end of the lesson, students should be able to :
1. Explain the importance of innovation in the organizations.
2. Identify the skills to manage innovation at the operational and strategic levels.
3. Describe organizations can be used innovation to improve their processes or to
differentiate their products and services.
4. Integrate the management of market, technological and organizational change to
improve the competitiveness of firms and effectiveness of the organizations.
 TOPIC LEARNING OUTCOMES
At the end of the lesson, students should be able to :
1. Identify innovation as a core business process.
2. Integrate the evolving models of the process.
3. Describe the consequences of partial understanding of the innovation process.
4. Explain how we can we manage innovation?
5. Identify successful innovation and successful innovators.
6. Describe what do we know about successful innovation management?
 INNOVATION AS A CORE BUSINESS
PROCESS
• Thomas Alva Edison, the most successful innovator realized that innovation is more than simply coming up
with good ideas, it is the process of growing them into practical use.
• If we only understand PART of the innovation process, most likely we behave towards managing it will be
PARTIALLY helpful.
• The underlying process as common to all firms and at its heart the process is as below
INNOVATION AS A CORE BUSINESS PROCESS
PROCESS DESCRIPTION
Searching Scanning the environment (internal & external), processing relevant signals,
threats and opportunities
Selecting Deciding (based on the strategic view of how the enterprise can best develop)
which of these signal to respond to
Implementing Translating the potential in the trigger idea into something new and launching it
in an internal or external market. This process require multiple attention:
1. Acquiring the knowledge resources to enable the innovation (creating
something new through R & D, market research, new knowledge through
technology transfer, strategic alliance).
2. Executing the project under conditions of uncertainty which require
extensive problem solving
3. Launching the innovation and manage the process of initial adoption.
4. Sustaining adoption and use in the long term or revisiting the original idea
and modifying it – re-innovation.
Learning Learn from progressing through this cycle so that knowledge base can be built,
and the ways of the process is being managed can be improved
  Variations on a Theme
INNOVATIONS  Size matters
AS A CORE  National, Regional, Local Context
BUSINESS
 Network & Systems
PROCESS –
THE ENABLERS  Project-based Organizations
 Do Better/Do Different
 VARIATIONS ON A THEME
 Innovations vary widely in scale, nature, degree of novelty and so-on – and so do innovating
organizations.
 Developing new consumer products involve picking up signals about potential needs and new
technological possibilities, develop strategic concepts, come up with options and work those
products into launching to the new market.
 Same goes to installing new technology of process. It involves the same patterns as
developing new consumer products.
 Services – may different since it is less tangible – however the same model applies as above
 Smaller organizations posses a range of advantages – agility, rapid decision-making – but
equally limitations E.g. resource constraints.
 It means that developing effective innovation management will depend on creating
structures and behaviors.
 To be clear, small organizations differ widely – small firms account for 95% or more of the
total world business, e.g hairdressing, high-tech start-up.
 Often, small/medium sized enterprise (SME) failed to feature in surveys of R&D and other
formal indicator of innovation activity – but, they tend to engage in other innovation activity
such as process improvement or customer service.

SIZE MATTERS
 NATIONAL, REGIONAL,

LOCAL CONTEXT
The emergence of ‘innovation system’ due to wider context
within which innovation takes place.
 These include government, financial, educational, labour
market, science and technology infrastructure etc –
represents the context which organizations operate their
innovation process.
 It can be local, regional or national – which how they
evolved and operate are varied.
It is increasingly a multiplayer game in which organizations of different shapes
and sizes work together in networks
It may be regional clusters or supply chains or product development or
strategic alliances which bring competitors and customers into a temporary
collaboration
One of the key implications of this multiplayer – the need to shift our way of
thinking from a single enterprise to more systems view
Such a system view needs to include other player – customers and suppliers,
competing firms, collaborators

NETWORKS AND
SYSTEMS
 PROJECT-BASED
ORGANIZATIONS
For many enterprise – a real challenge is moving to project-based
organizations – specific project (build airport or hospital) or
managing the design and build around complex product systems
(flight simulators or jet engine)
This kind of organizations involve a systems which bring multiple
players from different elements into one single ‘cell’.
Usually involving different firms, long timescales and high level
technological risks.
The first term coined is ‘doing what we do but better’ – a ‘steady state’ in which
innovation happened, but within a defined envelope around.
It contrast with ‘do different’ in which the game rule of innovation have shifted –
due to major technological, market or political shifts for example – managing it is
more a process of exploration and co-evolution under conditions of high
uncertainty.
The generic model remain the same. They need to search for trigger signal, make a
strategic choices, implementing it and monitor it.
The only difference is that the ‘do better’ has much more flexibility.

DO BETTER/DO
DIFFERENT
WIDE RANGE OF INFLUENCES -
ORGANIZATION NEED TO CONFIGURE THEIR VERSION OF
INNOVATION PROCESS
CONTEXT MODIFIERS TO THE BASIC PROCESS
Sector Different sectors have different priorities and characteristics (scale-intensive,
science-intensive)
Size Small firms differ in terms of access to resources
National systems of Different countries have more or less supportive – institutions, policies
innovation
Life cycle (of tech, Different stages in life-cycle emphasize different aspect of innovation – new
industry) technology industries vs mature established firms
Degree of novelty ‘More of the same’ improvement innovation requires different approaches to
continuous vs organizations and management to more radical forms.
discontinuous
innovation
Role played by external Some sectors (utilities, telecommunications and some public services) are
agencies such as heavily influenced by external regimes in which shape the rate and direction of
regulators innovative activity.
EVOLVING MODELS OF THE
PROCESS
 It is a great importance for us to view innovation as a process as we try to understanding shapes
the way in which we try and manage it.
 Early models of innovation saw it as a linear sequence of functional activities.

 There may be ‘push’ (technology push as new opportunities arise as it found its way into market)
and ‘pull’ (when the market signalled something new is needed which drew the problem into the
market)
 A successful innovation require interaction between both. To put into simple analogy, a pair of
scissors, without both blade, it would be difficult to cut.
 Most innovation is messy – false starts, recycling between stages, dead ends, jumps out of
sequence.
 Andrew Van de Ven and colleagues explored the limitations of simple models of the process and
derived some important modifiers
EVOLVING MODELS OF THE
PROCESS
 Andrew Van de Ven modifiers

 Shocks trigger innovations – change happens when people or organizations reach a threshold of
opportunity or dissatisfaction.
 Ideas proliferate – after starting out in a single direction, the process proliferates into multiple,
divergent progressions
 Setbacks frequently arise, plans are over-optimistic, commitments escalate, mistakes accumulate
and vicious cycle developed.
 Restructuring of the innovating unit often occurs through external intervention, personnel changes or
other unexpected events.
 Top management plays a key role in sponsoring – but also in criticizing and shaping – innovation.

 Success criteria shift over time, differ between groups and make innovation a political process

 Innovation involves learning, but many of its outcome are due to other events which occur as the
innovation develops – making learning often ‘superstitious’ in nature.
EVOLVING MODELS OF
THE PROCESS
 Roy Rothwell suggested that our appreciation of the nature of the innovation
process has been evolved, from simple linear to complex interactive models.
 His ‘fifth-generation innovation’ sees innovation as a multi-actor process –
requires high level of integrations

GENERATION KEY FEATURES

First / Second Simple linear models – need pull, technology push
Third Coupling model, recognizing interaction between different elements and
feedback loops between them
Fourth Parallel model, integration within the company, upstream with key suppliers
and downstream with demanding and active customers, emphasis on
linkages and alliance
Fifth Systems integration and extensive networking, flexible and customized
response, continuous innovation
CONSEQUENCES OF PARTIAL UNDERSTANDING OF
THE INNOVATION PROCESS
Example of partial thinking:
1. Seeing innovation as a linear ‘technology push’ process.
2. Seeing innovation simply in terms of major ‘breakthrough’ – ignoring the
significant potential of incremental innovation.
3. Seeing innovation as a single isolated change rather than as part of a wider
system
4. Seeing innovation as a product or process only, without recognizing the
interrelationship between the two.

Hence, it will create problems…….

PROBLEMS OF PARTIAL VIEWS OF
INNOVATION
If innovation is only seen as…. ….the result can be
Strong R&D capability
The province of specialists
Understanding and meeting
customers needs
Advances along the
technology frontier
The province of large firms
Only about ‘breakthrough’
changes
Technology which fails to meet user needs and may not be
accepted
Lack of involvement of others, and lack of in the R&D laboratory
key knowledge and experience input from other perspectives
Lack of technical progression, leading to inability to gain
competitive edge
Producing products or services which market doesn’t want or
designing processes which do not meet the needs of the user
Weak small firms with too high a dependence on large customers.
Disruptive innovation as apparently insignificant small players
seize new technical or market opportunities
Neglect of the potential of incremental innovation. Also an inability
to secure and reinforce the gains from radical change because the
incremental performance ratchet is not working well.
PROBLEMS OF PARTIAL VIEWS OF
INNOVATION
If innovation is only seen as…
Only about strategically
targeted projects
Only associated with key
individuals
Only internally generated
Only externally generated
Only concerning single firms
…the result can be
May miss out on lucky ‘accidents’ which open up new possibilities
Failure to utilize the creativity of the remainder of employees, and
to secure their inputs and perspectives to improve innovation
The ‘not invented here’ effect, where good ideas from outside are
resisted or rejected
Innovation becomes simply a matter of filling a shopping list of
needs from outside and there is little internal learning or
development of technological competence
Excludes the possibility of various forms of interorganizational
networking to create new products, streamline shared processes
  Certainly no easy recipe on how we
manage the innovation – despite
uncertain and random nature of
innovation process – it is possible to find
success
CAN WE
 Routines are what makes one
MANAGE organization different from another – but
INNOVATION? simply copying other routines will not do.
 Core abilities in managing innovation is
needed
 BASIC CONTRIBUTING ROUTINES
ABILITY
Recognizing Searching the environment for technical and
economic issue clues to trigger the change process
Aligning Ensuring a good fit between the overall business
strategy and the proposed change
Acquiring Recognizing the limitations of the company’s own
technology base and being able to connect to external CORE
sources.
Transferring technology from various sources ABILITIES
Generating Having the ability to create some aspects of
technology in-house (R&D, engineering) IN
Choosing Explore and select the most suitable response to the
environmental triggers MANAGING
Executing Managing development projects for new products or
processes from initial idea to final launch
INNOVATIO
Implementing Managing the introduction of change (technical and
otherwise) – in the organization to ensure acceptance
N
and effective use of innovation
Learning Having the ability to evaluate and reflect upon the
innovation process and identify lessons for
improvement in the management routines
Developing Embedding effective routines in place – in structures,
the processes, underlying behaviors. etc.
organization
SUCCESSFUL
INNOVATION
 The components of sustainable innovations:
1. Vision and strategy for innovation
2. Culture and supporting innovation
3. Processes, practices, and systems supporting innovation
4. Top management team leading innovation
5. Cross-functional teams mapping innovation road
6. Empowered employees driving innovation
SUCCESS  What do successful innovator have?
1. Sensing opportunity

FUL 2. Proper training and education

3. Proactivity and persistence

INNOVAT
4. Prudence (cautiousness)
5. Emotional intelligence

OR (Pere Rosales, Innovative Talent 2018)

WHAT DO WE KNOW ABOUT
SUCCESSFUL INNOVATION
MANAGEMENT?
 2 key points
 Innovation is a process, not a single event, needs to be managed as such
 The influences on the process can be manipulated to affect the outcome – thus can be
managed
 Research highlights the concept of success routines – learned over time and
experience
 Critical point – innovation needs managing in an integrated way – not just manage in
some areas
CROSS FUNCTIONAL TEAMS
LEADING INNOVATION

Culture Methodologies Infrastructure Work Practice

WHAT DO WE KNOW ABOUT
SUCCESSFUL INNOVATION
MANAGEMENT?
 2 fundamentals views on what it takes to manage innovation
1. Innovation in accordance with the corporate venture strategy can be nurtured in special and
highly creative environments; these environments are most easily created in small
companies and corporate spin-outs
2. Any company, however big or cumbersome, can itself become more innovative by changing
its management structures, systems and practices.