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JTH 3033 Chapter 2
• • • • • • Introduction Definition of innovation Process of innovation Innovation factors Classification of innovation Technological innovation process modeling
JTH 3033 Chapter 2
innovation may not be appropriate. • If the processes. Has significant effect in today’s fast-changing business environment. products and structure of the organization are fairly stable and the environment is mature.Introduction • The management of innovation requires technology but the management of technology does not necessarily require innovation. • A process that converts knowledge into useful products and services that have socioeconomic impact. JTH 3033 Chapter 2 3 .
• A complex set of activities that transforms ideas and scientific knowledge into physical reality & real-world applications. JTH 3033 Chapter 2 4 . • Innovation is any system of organized activities that transforms a technology from idea to commercialization. processes. where they are appropriate. materials and services are developed and transferred to a plant and/or market.Definition of innovation • The process whereby new and improved products.
(White & Bruton.managing politics. and organization evolution. organizational teams. and an understanding of the linkages among innovation streams. and individual resistance to change. 2007) JTH 3033 Chapter 2 5 . control. • It is about implementation.Innovation management • A comprehensive approach to managerial problem solving and action based on an integrative problemsolving framework.
Process of managing innovation Pixar Animation Studios: • Pioneered the development of new computerized animation technologies – RenderMan – Marionette – Ringmaster • Has creative individuals heading the firm (Steve Jobs. JTH 3033 Chapter 2 6 . founder of Apple Computer) and others through out the firm.
• The company seek to further encourage creativity by limiting its bureaucracy.The case of Pixar: • Illustrated the way to build a supportive environment for innovation. which allows individuals in the firm to study for 3 months on a variety of topics related to Pixar’s work. the firm started Pixar University. JTH 3033 Chapter 2 7 . • To ensure that individuals in the firm have the range of skills necessary.
Individual characteristics that enhance innovation initiative • Asking questions to identify problems and opportunities • Learning new skills • Taking risks and being proactive • Aligning strong personal beliefs and values with the organization’s values and goals If an organization manages the work environment in such a way as to encourage these behaviours. then innovation is more likely. JTH 3033 Chapter 2 8 .
Factors that promote innovation • Greater control of the process and the outcomes • Greater understanding of the technology produced and how to apply it • Greater ability to potentially develop the next generation of technology • Greater profit potential as a first mover JTH 3033 Chapter 2 9 .
• There is greater risk of failure to develop the right product at the right time. There is always the danger that another firm will enter the market first.Factors that disrupt innovation • Longer time is needed to develop internal innovation strategy compared to purchased from outside the firm. • Keeping a pipeline of new products and/or processes is difficult at best. JTH 3033 Chapter 2 10 .
However.Disruptive innovation? Prior to the development of hydraulic shovels. JTH 3033 Chapter 2 11 . they needed an efficient machine that was compact and flexible. established manufacturers were focused on developing larger mechanical earth-moving equipment designed to move greater and greater amount of earth. many customers were not interested in moving larger amounts of earth.
JCB introduced the first hydraulic shovel or backhoe. • Their innovation failed to generate the right product at the right time for their market.The case of hydraulic shovels • A relatively small firm. JTH 3033 Chapter 2 12 . • In this case. • The established firm had focused only on large mechanical equipment. and the development of their own version of the backhoe took time. the hydraulic shovel can be considered as a disruptive innovation to the established firm.
• Both concepts are related and there is rarely one without some effect on the other.Classification of innovation • Innovations can be classified in a number of ways. • Product innovation: – Basic research. however one of the most common is from the perspective of product and process innovations. applied research and systems integration • Process innovation: – Restructuring and reengineering JTH 3033 Chapter 2 13 .
product innovations are the center of their research and development efforts.Product innovation • For most organizations. JTH 3033 Chapter 2 14 . • The types of innovation efforts found in the R&D process include: – Basic: pure research and development – Applied: new product development – Development (systems integration): product improvement or market expansion • A firm may have any or all of these different types going on at any given time.
Process innovation • To increase the efficiencies or the effectiveness of an organization. • There are 3 types of process innovations: – Restructuring – Reengineering – Value destruction JTH 3033 Chapter 2 15 . • Offer the organization and its personnel opportunities to improve the value of the organization and to continue the organization’s viability.
organizations need to undertake a major review of what it does and why. • Common activities in restructuring are downsizing JTH 3033 Chapter 2 16 . – Opportunities and threats being missed by the organization.Restructuring • Refers to a major reorganization of a firm. • Periodically. • Mainly caused by: – Slow decision making due to information delay. – Disruption in the environment that caused extreme stress to the organization.
• However. • This will effect in expected financial benefits of the restructuring are often not met. the planning and goals of downsizing should be extensive and clear. • Survivors of the downsizing often feel overworked and are uncertain if they might be laid off next. Therefore. many firms that downsize have experienced negative results. JTH 3033 Chapter 2 17 .Downsizing • Occurs when a firm either sells some of its units or lays off employees.
JTH 3033 Chapter 2 18 .Reengineering • Requires fundamental rethinking and radical redesign of work processes. • Has 5 specific goals: – – – – – Increasing productivity Optimizing value to shareholders Achieving quantum results Consolidating functions Eliminating unnecessary levels and work • The main idea is to identify processes within the organization that create no value for the firm.
Value destruction • Obsolescence. or being leapfrogged may require the firm to destroy value in one area to gain resources to undertake value creation and/or appropriation in another. • Eg: in 1990. • Important so that firms could focus their attention and resources in a given area that offers the greatest opportunity. IBM had to undergo radical changes that involved restructuring units and laying off employees for the first time in its history. The actions were necessary so that IBM could promote new products that would allow it to prosper in the future. JTH 3033 Chapter 2 19 .
• There is no universal model to describe the process.Technological innovation process modeling • There are many models that have been developed to help describe the complexity of the process. There are 4 general types of models: – Stage models – Conversion models – Integrative models – Decision models JTH 3033 Chapter 2 20 .
JTH 3033 Chapter 2 21 . • The unit of analysis within each stage is generally activity or functional responsibility.Stage models • Innovation is viewed as a series of discrete stages.
Conversion models (technology push/market pull models) • Inputs being converted into product or processes through a number of steps. • Addresses the needs of the marketplace and the opportunities presented by new technologies. JTH 3033 Chapter 2 22 .
Integrative models • These models attempt to integrate process and product innovation in respect to technology life cycle. JTH 3033 Chapter 2 23 . • The dynamic nature of the innovation process was stressed & the process was represented as changing over time as the industry evolved and matured.
Decision models • Approach the innovation process in terms of these decision points. JTH 3033 Chapter 2 24 . • Offers management a practical approach to the process. • Points to the evolutionary nature of decision-making process.
Thomson South-Western.. Managing Technological Innovation: Competitive Advantage from Change.. Singapore. Harrison. G. M. Narayanan.. JTH 3033 Chapter 2 25 .K. McGraw-Hill Irwin. US. V. Managing Technology and Innovation for Competitive Advantage. F. White. US. Betz. Technology Management: Text and International Cases. and Samson. US. 2nd edition. US. 2000.A. John-Wiley & Sons. 2001.References Tarek Khalil. N. & Bruton. McGraw-Hill International Edition. Management of Technology: The key to competitiveness and wealth creation.2002. (2007). 2003. Prentice Hall.D. The management of technology and innovation: A strategic approach. D.