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Chapter 3 Processing Innovation

Chapter 3 Processing Innovation. © David O’Sullivan. Reflections. Explain the relationship between change and innovation. In his change management method, Kotter talks about creating a sense of urgency. Explain what this means. List a number of traits of excellent organizations.

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Chapter 3 Processing Innovation

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  1. Chapter 3Processing Innovation © David O’Sullivan

  2. Reflections • Explain the relationship between change and innovation. • In his change management method, Kotter talks about creating a sense of urgency. Explain what this means. • List a number of traits of excellent organizations. • Explain some of the main traits of innovation culture. • List a number of barriers to innovation. • What is the fifth-generation innovation model? • Explain the dangers of having too much routine.

  3. Activities [Discussion of selected student ‘Activities’ from previous chapter]

  4. Learning Targets • Show the main reasons why organizations invest in innovation • Understand some of the reasons why innovation fails • Discuss the key stages in the innovation process • Understand the importance of opportunity recognition in the innovation process • Explain the innovation funnel • Apply an innovation method to building an innovation plan

  5. Innovation Investment • Organizations invest an average of 4% of turnover on Innovation • Budget typically spent across various functions e.g. • Computer Services • Product Design • Process Improvements • Training etc.

  6. Innovation Investment Innovation Expenditure as % Turnover in Western Europe • Manufacturing 3.7% • Services 2.8%

  7. Goals of Innovation 1. Improved quality 2. Creation of new markets 3. Extension of the product range 4. Reduced labor costs 5. Improved production processes 6. Reduced materials 7. Reduced environmental damage 8. Replacement of products or services 9. Reduced energy consumption 10. Conformance to regulations

  8. Goals of Innovation Improve Quality 65% of organisations surveyed Create New Markets 50% Extend Product Range 46% Reduce Labour Costs 40% Improve Production 35% Reduce Materials 25% Reduce Environ. Damage 23% Replace Products/Services 21% Reduce Energy Consumption 18% Conform to Regulations 18%

  9. Problem • Between 50-70% of all Innovation fails to impact on organisational goals • Implications … • Wasted resources – time, people and money • Loss of morale • Higher resistance • *Various. See: Paul Strebel in Harvard Business Review on Change 139-157 • (Harvard Business Review, Boston, 1999)

  10. Failure of Innovation • Various reasons • Common reasons across all organizations: • Poor goal definition • Poor alignment of actions to goals • Poor participation in teams • Poor monitoring of results • Poor communication and sense of community

  11. 75% of Ideas Fail • Three possible outcomes for you ideas: • You continue with idea (25% chance of success) • You stop idea but start a new idea (Increase chances of success!) • You stop the idea and so save time and money

  12. Failures • Survey of 13,000 new products • 14% made it to market • 65% of these succeeded • i.e. 91% new products failed representing almost 50% of investment • Success factors • Fit with market needs • Fit with company strengths • Technical superiority Booz Allen and Hamilton 1981

  13. Failure • Survey of 200 Failed Products • Better ‘mousetraps’ 28% • ‘Me too’ products 24% • Technical ‘dogs’ 15% • Competitive pricing 13% • Too expensive 13% • Ignorance 7% Calantone and Cooper 1979

  14. Idea Attrition

  15. Metric System • Metric available since 17th Century • Customers reluctant to adopt • Mars Climate Orbiter Disaster (1998) • NASA reveals some calculations were ‘Imperial’! • Yes, these were ‘rocket scientists’ • U.S. Aerospace Industry prefers ‘Imperial’ • Where else has ‘Imperial’ remained?

  16. Scurvy • Fatal disease on voyages • Half of all sailors died on long voyages! • Simple and cheap cure found in 1601: Citrus Fruits • In 1795 Navy finally adopted cure • Not adopted in merchant fleet for another 70 years

  17. Sanitation • Greatest innovation in history • Saves millions of lives! • 40% of current world population lack sanitation! • Half Million children die in Asia each year (2008) • MRSA in Irish Hospitals

  18. Primary Causes • Poor definition of goals • Poor alignment of actions to goals • Poor participation by employees in teams • Poor monitoring of results • Poor communication and participation in communities

  19. Process of Innovation

  20. Applying Innovation • Better definition of goals • Better alignment of actions to goals • Greater participation of individuals in teams • Better monitoring of results • Greater communications and building of communities

  21. Goals • “Objective of an Effort” • Examples: • Vision Statements, Stakeholder Requirements, Conformance Standards, Development Strategies, and Indicators of Performance

  22. Actions • “Expenditure of Effort” • Examples: • Solving Problems, Generating Ideas, Developing Proposals, Managing Projects

  23. Teams • “Resources of Effort” • Examples: • Leaders, teams, pay reviews, …

  24. Results • “Outcome of an effort” • Examples: • Status of Goals, Actions andTeams • Relationships between • goals and actions • goals and teams, etc… • Exceptions, Reports

  25. Communities • communities refers to all people who share a common purpose of supporting innovation in the organization • organization and leadership, • communications, and • knowledge management.

  26. Leaders in Industry • Tom McCabe, M.D., Boston Scientific • Setting Goals • Michael Welch, M.D. Fidelity Investments • Managing Portfolios • Lionel Alexander, M.D. Hewlett Packard • People and Teams • Frank O’Connor, M.D., Ingersoll-Rand • Monitoring Results (Scorecard)

  27. GOALS ACTIONS RESULTS TEAMS Innovation Funnel Recognise Opportunity Create Idea Develop Idea Realise Potential COMMUNITIES

  28. Innovation Funnel

  29. Innovation Knowledge

  30. Innovation Team

  31. Summary • Show the main reasons why organizations invest in innovation • Understand some of the reasons why innovation fails • Discuss the key stages in the innovation process • Understand the importance of opportunity recognition in the innovation process • Explain the innovation funnel • Apply an innovation method to building an innovation plan

  32. Activities

  33. Search Online • http://www.youtube.com • Henry Chesbrough on Open Innovation • Michael Porter on Strategy • Innovation at Google • Tom Peters: Innovation is Actually Easy! • Sun's 25 years of innovation

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