Readings DiscussionMBA 651Group 1 Presented by: Kevin Crouch Kedar Revankar Ann-Marie Vincoli
Management Criteria For Effective Innovation George R. White
Purpose of the Article • To “identify management criteria which effectively discriminate between profitable and unprofitable new technologies, and to prove that these criteria have utility in appraising technological innovation in a wide variety of cases.”
Inventive Concept • What fundamental technical constraints limiting the prior innovation are lifted? • What new technical constraints are inherent in the new innovation? • How favorable is the relief of the former against the stringencies of the latter?
Embodiment Merit • Is the end product enhanced by additional technology? • Is the inventive concept itself diluted or enhanced by the embodiment required? • Does the additional embodiment offer opportunity for further enhancement?
Operational Practice • What previously emplaced business operations are displaced by the new innovation? • What new business operations are needed to support the new innovation? • How favorable is the cessation of the former practices weighed against the provision of the latter?
Market Dynamics • Does the product incorporating the new technology provide enhanced effectiveness in the marketplace serving the final user? • Does the operation reduce the cost of delivering product or service?
Conclusion: Forecasting future innovation • The viability and probable outcome of an innovation can be predicted by evaluating the criteria outlined in the reading. • This can be useful in indicating the likely future course of other prospective innovations.
Patterns of Industrial Innovation Abernathy and Utterback
Purpose of the Article • To present the basic characteristics of a model “relating patterns of innovation within an organization to its competitive strategy, production capabilities, and organizational characteristics.”
Spectrum of innovation • Small, entrepreneurial organizations • Creating new products • Radical changes • Larger, high-volume organizations • Refining process aimed at minimizing cost • Change is costly and incremental in nature
Patterns of innovation • New product or system is introduced • Major system innovation is followed by • Many minor product improvements • Repeated system improvements • Significant economic gain comes from small, incremental improvements • Development of mass markets • Improvements in economies of scale and quality of production
Major product introductions • Very fluid process; entrepreneurial act • Performance criteria may be vague • Cost is less of an issue for initial adopters • Closely tied to specific user needs • Often occurs in new companies rather than established companies
Transitional phase As product volume increases: • The product becomes more standardized • Process innovation becomes more important • Semiconductors: • 3 new entrants were responsible for half of major product innovations, but only 1 of nine process improvements • 3 established units made one-fourth of product innovations, but 3 of nine process innovations
High tech markets • In markets where change is rapid (i.e., semiconductors and computers), process innovation is often not as great a source of competitive advantage as product innovation. • Caveat: Sometimes process innovation can lead to product innovation • Modern semiconductor product innovations are driven by process, i.e., die size and fabrication process size,
Specific phase • The product is in mainstream/late mainstream part of life-cycle; becomes more commodity-like • Focus becomes minimizing cost through process improvements • Very minor improvements in product performance, quality
Management issues • Managerial targets shift from vague concepts to specific goals as product moves through phases. • Different phases require different managerial skills
Fluid phase • Management must be flexible and adaptable • Goals are often changing; set by users • High ambiguity • Often many projects; fewer successes • Often general purpose equipment
Transitional phase • Managerial focus changes from product innovation to competitive environment • Management goals and targets become more formalized • Decreased ambiguity • Product success is established, organizational success less so. • Increase in specialized equipment
Specialized phase • Management focus become bureaucratic, focused on efficiency and productivity • Low ambiguity • Organizational success; often oligopoly • Highly specialized equipment
Conclusion • Identify the phase • Recognize different skill sets required for each phase • Recognize what phase industry is in • How can your company adjust focus to maximize advantage for the phase the industry is in?