Product Innovation Management & Processes

Prof R K Gupta
BE Mech Hons MBA PhD FIE
Professor of Management & Director Sobhagya
Consultancy & Marketing Services-Delhi, India

Invention is a flower. Innovation is a weed-Bob Metcalfe

ABSTRACT

Technology is a systematic way of doing something. Innovation

comes from inner vision (Tata). Hence innovation is confluence
of technology, materials and systems available to any
organization. But most important is the hot spots if these exist in
the organizations (Lynda Grattan). These hot spots release self-
propelling immense energy in the work teams. New technologies
are considered radical or breakthrough only when these are 10
times better than the existing one, which these aim to replace.
Then only consumer notices it to be significantly different and
having ‘wow’ effect. For technology innovation some driving
forces are required.
I give some examples from my own industry experience of 3
decades in some of leading companies. First example is use of
200 series of stainless steels for sheets and utensils in place of
300 series that was developed indigenously in Rathi Alloys,
Alwar. The driving force was to eliminate Nickel in the metal as it
was expensive and imported constituent. The stainless steel was
also competing cheaper substitute Aluminum sheet. The process
of development of technology to produce low nickel steel was
daunting & long winding. Another example is under development
non-invasive Laser cardio-surgery to eliminate open heart and
telescopic intervention for opening of clogged arteries. The
driving force here is high cost and risk to human life and low
capacity of handling the rising cases of angina by conventional
technology. Third example is development of technology for joint-
less tubes for tires so as to minimize pollution in the factory (soap
stone), protect workers and to speed up production capacity in a
highly manual process. In these examples technology
management has seen adopting of radically different approaches
and materials and exploiting available technologies in various
fields.

Is then the technological innovation management a process or a

project management or combination of both? Is technology
management based on human creativity in the organization or is
it more systematic and scientific management of all these
ingredients- human resource, creation of hot spots, social and
industry networking and continuous scanning of technological
environment to pick up relevant inventions both in manufacturing
processes and in materials. The paper is based on empirical
experience of the author in Indian industry and the cases of
recent advances in digital and electronic technology products
under both collaborative and competitive mode by organizations.
It attempts to unveil the current systems of product innovation
management.

Drivers for innovation processes:

We first develop premise for invention vs. innovation. Invention

refers to new concepts or products that derive from individual’s
ideas or scientific research the latter refers to commercialization
of the invention itself. Dr Crawford put it this way: Innovation
happens when you figures out how to make money from
invention. Inventions mostly relate to laboratory level
achievements. Modern Innovation is essentially a tem/project
work not internally but even linked globally.

The major driving forces for the innovation in an organization are:

-The spirit of creativity and innovation culture in the organization
-The commercial need for survival in competitive market
-Changing consumer demand or habits, which in turn are driven
by various factors including awareness, substitute products,
lifestyle changes and prices.
-New technologies; which can be alternative technologies or
breakthrough technologies (Disruptive changes)
-The R&D infrastructure in an organization and its role within the
organization.
-The threat from substitutes
-Technology cycles eroding the product life cycles

While innovations are a continuous process, breakthroughs

come occasionally that take people by surprise and make
significant difference in the way the existing needs are met or the
unknown needs are discovered.
Unless the breakthroughs occur the needs may also not be
known. The example is hetero-laser invention that found its way
to compact disc writer-reader of modern day. The invention of
this laser was never meant for this application. It is a good
example of product innovation.

Innovations cannot occur by themselves, which may be isolated

occasional events. This requires focus on strategic management
of technology in the organization and networking with outside
institutional framework in global context and scanning of various
technologies, materials and basic scientific research happening
in other laboratories or companies. Collaborative technology
management is essential today for short time new product
development processes and at economical cost with lower risk.
Many companies like Sony have created new and innovative
product in cooperative research with other organizations.

Another issue is the risk and return question of technological

innovations. Soon after a technology is commercialized and
brought to market, the competition follows or even competitive
entry may lead the commercial launch thus depriving the
innovating organization from profits and recovery of expenditure.
Many companies therefore prefer acquisitions and outsourcing
technologies for expansion and growth.
The product life cycles are modified by start of new cycles based
on newer technologies. Before the product decay starts in cycle a
new product life cycle starts, based on new technology or an
innovation. Hence there is built in danger not to initiate and
manage innovation in products and services for successful
organizations.
The examples of the drivers for innovations in Industry are
explained hereunder:

The utensils in India have traditionally been made of Brass,

Aluminum and stainless steels besides less used other alloys
and metals.
India does not have deposits of Nickel, which is imported, and
costly alloying element used in steels and heating elements
besides several other applications. The standard AISI Grade SS
contains 8-9 % nickel. On account of this addition stainless steel
sheets were getting out competed by Aluminum sheets for
making Utensils that appealed to large middle class and lower
middle class markets in India. There were huge problems in
importing Nickel due to License requirements and delivery
schedules. Hence some enterprises like Rathi Alloys, Jindal
Steel and others started looking for low cost steel that would
resemble property of AISI 304 steel. The grade of 200 series was
available but not applied in this usage. It had several problems
due to replacement of Nickel by Manganese. The material was
brittle in processing and reduced ductility and draw-ability and
also was inflicted with problem of seasoning cracks after some
duration. Intense efforts by industry players to optimize the
production and processing of this composition of steel saw huge
expansion of utensil grade stainless in India and it virtually drove
out Aluminum since the price of Aluminum went up while that of
200 series SS came down due to very small Nickel required
under 0.8 to 1.2 % in place of 8-9%.

We can easily identify the driving forces here:

-Competitive substitute product
-Poor availability and high cost of a main component Nickel
-Market opportunity for expanding utensil market in India (30
million households)
-Entrepreneurship

The next example is of Laser based Cardio vascular treatment

for removing clogs from arteries leading to heart. Here the main
driving forces are three:
-Availability of laser technology
-High risk in bypass surgery and reaction to it by many people
and age factor
-High cost of traditional surgery and time taken thus limiting
capacity of hospitals to treat ever-growing number of heart
patients globally.
Although laser has been successfully used in operations of eye
including detached retina and radial keratotomy, the heart
surgery is still in research stage as it has problems in controlling
the effect of laser on blood vessels. Laser-mediated vaporization
of athero-sclerotic plaque in the coronary arteries and peripheral
circulation may offer a percutaneous approach to the treatment
of arterial occlusive disease. Cardiovascular uses of lasers are
purely investigational at the current time but it has potential. We
can see clearly huge risk and investment in research required but
outcomes are promising for mankind. In this case a break
through is needed.

Another example in small sector of innovation is the BB cups

used in cycle axles to hold balls. Traditionally it was
manufactured from a steel rod piece turning out the material from
inside of the rod to give it a hollow cup shape. Not only it was
cumbersome, time consuming and wastage of material and
energy but also it increased the cost. Some enterprising
businessmen from India visited Germany and saw how it is made
there. Steel makers for this application developed the deep
drawing quality steel. The sheets were rolled from it and then BB
axle cups were simply drawn out in one simple stroke of Press
machine thus reducing energy consumption and cost of
production while several times increasing productivity.

Here the driving forces can be easily identified as:

- Cumbersome and slow turning process for cycle component
-Low productivity
-Availability of better steel stock in India

We can easily observe that innovations are on account of several

driving factors and occur not only in an organized sector
environment but at grass root level in society and in small sector
also.
Strong driving forces, available basic technology or
materials and entrepreneurship spirit can be easily detected
as three main sources of Innovation.
Of course the most important generator of innovation is
identification of consumer need through a systematic and
ongoing market research to discover unsatisfied consumer
needs or solutions to existing or even unknown problems of
consumers.

Constructive Destruction

We can thus see that management of technology and

management of creative environment are two hand-in-hand
challenges for organization to remain in advantageous position.
The challenge to innovative companies themselves has to be
managed by understanding the concept of constructive
destruction.
We are quite familiar with technology adoption curves called S-
curves. After sometime the replacement technology takes over.

Companies that once revolutionized and dominated new

industries – for example, Xerox in copiers or Polaroid in instant
photography – have seen their profits fall and their dominance
vanish as rivals launched improved designs or cut manufacturing
costs. Wal-Mart is a recent example of a company that has
achieved a strong position in many markets, through its use of
new inventory-management, marketing, and personnel-
management techniques, using its resulting lower prices to
compete with older or smaller companies in the offering of retail
consumer products. Just as older behemoths perceived to be
juggernauts by their contemporaries (e.g., Montgomery Ward,
Kmart, Sears) were eventually undone by nimbler and more
innovative competitors, Wal-Mart faces the same threat. Just as
the cassette tape replaced the 8-track, only to be replaced in turn
by the compact disc, itself being undercut by MP3 players, the
seemingly dominant Wal-Mart may well find itself an antiquated
company of the past. This is the process of creative destruction.

In fact, successful innovation is normally a source of temporary

market power, eroding the profits and position of old firms, yet
ultimately succumbing to the pressure of new inventions
commercialised by competing entrants. Creative destruction is a
powerful economic concept because it can explain many of the
dynamics of industrial change: the transition from a competitive
to a monopolistic market, and back again.It has been the
inspiration of endogenous growth theory and also of evolutionary
economics.

There are numerous types of innovation-generating creative

destruction in an industry:

 New markets or products

 New equipment
 New sources of labor and raw materials
 New methods of organization or management
 New methods of inventory management
 New methods of transportation
 New methods of communication (e.g., the Internet)
 New methods of advertising and marketing
 New financial instruments
 New ways to lobby politicians or new legal strategies
(though many economists would argue that this last is not a
genuine example of creative destruction, so much as an
example of using force of government to prevent more
innovative or lower cost competitors from selling to one's
customers)

Process of inovation management

There is big span to bridge while taking laboratory level invention

or innovation to the useful application.It requires whole lot of
management skill and resources to achive that. It should be very
clear that while basic knowledge normally develops in University
laboratories, these are harnessed into useful product or
application in corporate R&D laboratories, an example is Lucent
lab in USA.There is huge risk in doing that. Japnese have beaten
US firms in adopting technology for new product launch in their
own country.The investor also asks as to where he would get
more returns on a dollar invested in technology and
innovations.Many firms therefore may not find attractive to even
attempt innovation from scratch but may go for collaborations,
outsourcing technology and A&M for expansion and remaining
market leaders.

The processes for taking the laboratory innovation to

commercialization need whole lot of resources and
circumstances:

-Availability of materials
-Availability of tooling and equipment
-Availability of right production technology that can economically
produce
-Creating favorable environment of innovation in organization
-Aligning R & D goals and positioning consistent with strategies
and other corporate goals
-Market trials
-Risk taking consumers or early adapters
-Financial commitments or investment
-Demand potential

These are not easy to manage. Many times innovations or

inventions take decades to get into market. Take example of
several drugs that could not be administered unless ‘controlled
release’ drug technology came into being. A product idea may
not be feasible to be manufactured due to lack of technology or
equipment available. It might also be unattractive for price-
substitute combination available to potential users. Innovation by
itself is not useful unless converted into useful commercially
viable proposition. It is long chain full of activities and risks. It
frequently happens that research project of a company is made
redundant by announcement of a same or similar work by other
company or rival. In countries like India, ‘me-too’ and imitators
pose a big threat to innovation efforts, as risk is enhanced. Third
world countries often take route of buying second hand
technology or copying rather than original investment in research
efforts.

Conclusions:
 Risk Complexity

R&D New Product

Development
Commercialization
Process Operations &
Production

Technological Collaboration
Technology strategy

Learning Creativity

Knowledge

Adopted from: ‘Management of technological innovation: general issues’ by Mark

Dodgson

The above diagram explains in gist the factors required for

managing Product innovation and management.

The product innovation is a project management as well as

processes management within the organization while scanning
the external and internal environment for available ideas, basic
scientific knowledge and its potential for application. The role of
managing human resource and talent within the organization and
external networking cannot be overlooked for successful
management of product innovation

References:

1. Hot Spots; by Lynda Gratton

2. Technology Management by C S V Murthy
3. Art of Technology Management by CEO Speak Publisher:
Vision Books
4. Market-oriented Technology Management by Phillips Fred
5. Breakthrough Technology Project Management by Lientz
Bennet P
6. Innovation Management by Shlomo Maital, D V R Seshadri
7. The Management Of Innovation by Tom Burns
8. Handbook of technology management by Robert
Szakonyi,Editor
9. Breakthrough by Mark Stefik et.al
10. The Management of technological innovation by Mark
Dodgson
11. The Power of Management capital by Figenbaum &
Fignebvaum
12.Cardiovascular applications of laser technology; Dr.
Lawrence I. Deckelbaum, MD 19th October 2005