Management of Innovation

Digital Media Report

Semester 2, 2012

Sohaib Hasan 7e0b7908/15114394

Tutor: Mr. Adriel Sim

Total file word count: 3229 Less direct quotes: 100 Less table of content: 56 Less references lists: 431 Less headings: 48 Total net word count: 2594
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Table of Contents

1. Executive Summary 2. Company Profile/Background 3. IP Strategies 4. Managing Organizational Knowledge 5. Collaboration Strategies 6. Questions from CEO 7. Managing operations and managing innovation 8. New Product Development 9. Questions from CEO 10. Conclusions/Suggestions 11. Reference List 12. Exhibit

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Executive Summary T-Line Safety mechanism was invented by Mr. Leigh Dowie founder of the Meridian Safety in 2002. The T-line safety system is a unique mechanism that provides working safety in almost all dimensions of application be it horizontal or vertical with the desired freedom of movement required by the users. This report will hold discussion about the Intellectual Property strategies of Meridian Safety and the various property protection methods that Meridian has utilized to protect and patent the T-Line safety system. Also, this report will briefly discuss about the accumulation of organizational knowledge of Meridian Safety. To explain further this report will un-earth any potential trace of an absorptive capacity in relation to the T-Line safety mechanism. Moreover, the collaboration strategies adopted by Meridian will be discussed in detail and its practical implications. Following on in this report, the concepts of operation management and managing innovation will be analyzed especially with regard with Meridian Safety. Before the suggestion section comes in there is some light shed on the new product development phase of assembling knowledge, creating business opportunities, development and testing of new product etc. Finally the conclusion/suggestion part will lay down possible step that Meridian can undertake towards achieving organizational success.

Company profile & background Surprised and intrigued by the lack of technological resources available in fall arrest devices, Mr Leigh Dowie a structural engineer was inspired to do things differently. Hence, the inception of Meridian Safety Pty Ltd took place, which holds pride in developing an all-around fall prevention device known as T-Line safety mechanism (The New Inventors 2011). The T-line safety system is a unique mechanism that provides working safety in almost all dimensions of application be it horizontal or vertical with the desired freedom of movement required by the users (T-line Safety System 2012). The birth of the idea took place back in 2002, which was followed by the initial research carried out by Mr. Leigh on how to register & patent the invention. In 2004 Mr. Leigh came up with the provisions of the intellectual property protection rights. In the years 2005-2006 preliminary licensing work was started followed by detailed prototyping. In the year 2007 the design was finalized under a firm in U.S and testing began. The trial and error, validation process and validation testing took a couple of years. By 2010 advertisements began to air on television & radio. In the year 2011 some sales were made and the clientele started to grow form there onwards. Also in the same year Leigh won the innovator of the year award from Western Australia (Western Australia: Innovator of the Year 2012). In the current year the product is mainly distributed by one of the biggest safety devices distributers. The idea is to eliminate the middleman in the supply chain and supply the products directly to mainstream distributors. This was a brief typology of the Mr. Leighs path from the inception of the idea to the mainstream commercialization of the product.

Establishing an environment for innovation (Intellectual Property Strategies)

First off Leigh has utilized a simple core patent that states that two spools operate on a single shaft while having a locking mechanism between them (T-line Safety System 2012). It has proved to be a very strong patent for the firm as many companies have tried to develop a similar product with the same advantages but have failed due to the core patent protection of the T-Line mechanism. This success is due to Leighs pondering over the fact that if he was to infringe the patent how would he go about it? The product has a clear differentiation advantage, as there is not a single product in the related market, which equals its overall design. Patents for the T-Line safety system has been granted in the New Zealand, Canada and Australia while the patents are still on hold in United States and Europe. In United States T-Line safety system has acquired Trademark Registration, which is beneficial as no one else can use the T-Line name when developing a similar mechanism (Jameson 2011, 211; Somaya, Teece and Wakeman 2011, 50). All is good considering the core patent of the T-line system but Leigh lacks strong investment that is hindering more related patents to be acquired. According to (Gredel, Kramer and Bend 2012, 540) Leigh should try to attract more investors to increase the level of funding so that he can consider associated technologies for transportation. Managing organizational knowledge

Core competencies (imitability & profitability) How does Leigh build org. knowledge & knowledge base of his company Does Leigh have any identifiable absorptive capacity? Check for Leighs background & company profile

Organizational knowledge refers to the concept of the internal and external sources of knowledge, which accumulates into a knowledge base pool from people inside and outside the organization (Rai 2011, 780). Leighs organizational knowledge is very experiential based. From (Emadzade, Mashayekhi and Abdar 2012, 785)s perspective the whole process of developing and patenting the product has helped Leigh in building a knowledge web related to his product. For example the Leigh wrote his own patents and documented them himself which equipped him with knowledge regarding writing and registering patent for a product. This is an example of acquired skill, which adds to the knowledge pool of the organization (Ramirez, Morales and Rojas 2011, 315). As Leigh is a structural engineer he learned a lot of the mechanical aspects of a product throughout the phase of developing the product. Leigh also acquired relevant standards and certifications know-how, which plays a vital role in the overall designing of the product. With all that knowledge base, Leigh knows completely of the required processes and supplies needed for product development phase. The external skills acquired by Leigh, add to the organizational knowledge, which include hiring a patent counselor, mechanical engineer, lawyer, accountant, certified testing groups (especially for US and Europe) and small functional teams. In addition to the aforementioned knowledge contributors, investors are very important to the firm. The firm handpicks investors, who align their visions with the firms visions (Peirone 2007, 865) Leigh certainly does have an absorptive capacity according to (Wei-li and Yi Chih 2012, 945-950). It is evident from the fact that after when he came up with the idea of the T-line safety system he referred to a mechanical engineer to perfect the mechanics of his product. Also he got acquainted with a mechanical engineer so that he can validate and evaluate the overall T-line design. Expanding the horizons of the concept of absorptive capacity it states that the process is cumulative, meaning a prior knowledge base expands by increasing knowledge in other areas (Mursitama 2011, 55). For example after when the T-line mechanism was positively validated the other

aspects like patenting, documenting, registering and supplying added to the advantage of the firm in reaping profits and building a clientele. Collaboration strategies Collaboration is process where companies work in alliance while sharing their organizational resources to reap profits and also bear losses at the same time. The profit and loss sharing is legalized under a contractual agreement (Irvine 2011, 314315). The collaboration pathways that Leigh took are simple but effective. The intention of the firm is not to go global instead act local. First off, the firm has strong relations with its functional distributors that provide them help with the local market knowledge. Secondly, the firm wants to hold some level of stock and technical proficiency to support their distributors. Also, the firm avoids issuing license where the notion of exclusivity exists. This is because the track records of issuing licenses (exclusively) mislead the product and caused misunderstanding between the licensee and the firm. According to the current direction of Leigh, Meridian has no plans of internationalization. That is where there is potential scope for international collaborations of Meridian with other firms. The firm is doing well by tapping the local market effectively but (Li, Zhou and Zajac 2009, 875) point out that it should also foresee some level of international partnerships to compete effectively in the international market.

Question from the CEO: o Should Meridian proceed with patenting improvements to the T-Line and the other related technologies ahead of the business activities related to increasing market share etc? Yes, Meridian should carry on to acquire improvement patents to the T-Line and other related technologies. The reason behind acquiring improvement patents to the T-line mechanism is that, improvement patents are only granted if they are eligible to be patentable over basic patents. That means first the basic patents are analyzed in order to grant improvement patents. This is an advantage to Meridian as the

original/basic patent belongs to them and getting an improvement patent will not be an issue. Also there are two types of improvement patents: addition and substitution (Collins 2011, 1217). Addition reflects the idea of adding a feature to the existing product for example Gillette mac III razor blade was an addition to the previous Gillette mac II razor. Substitution on the other hand refers to a particular process or feature being substituted by another process or feature (Collins 2011, 1217). Theres also a downside towards acquiring improvement patents which is it kills innovation of the particular product. Acquiring improvement patents and encompassing a larger market share would also make the product less valuable and there would be no extended effort towards its innovation.

Managing innovation and operations management Meridian safety is currently managing its operations well by doing three things: 1. Keeping strong rapport with distributors which helps Meridian to gain insight of the local market and other upcoming technologies 2. Focusing to infiltrate the market by delivering applications engineering solutions to consumers 3. Foreseeing collaborations with distributors in important markets complimented by addition/supporting product line-up Operation management relates to the concept of creating a design; carry out business processes by utilizing firms resources to spawn quality products and innovation (Foster, Wallin and Ogden 2011, 2285). Moreover, Meridian safety is also planning to acquire or merge with other entities to increase its overall operational efficiency and company profile. In addition to it, Meridian safety is considering to develop totally new products from their existing product range. One drawback to operational efficiency is that Meridian safety is lacking funds, which will help them to expand and give out an effective response to market needs. This absence of finance is hindering Meridian to formalize a research & development department. Currently the only development is carried out by feedbacks received by the distributors that help to reduce cost or improve functionality of the existing product. Also some of the future

developments schemes cannot be initiated because of the same problem: insufficient funds while the only thing that can be done with the available resources is to concentrate on core products. Moreover, Meridian has moderate involvement of experts of design for example assembly optimization that is good for the firm from an innovative stand point. This current level of innovation is satisfactory but to achieve innovative greatness Meridian needs to pull some strings differently. This brings us to second part of this section: Organizational Innovation. Innovation in an organization can be categorized into three basic phases: innovation impetus, innovation aptitude and innovation enactment (de Sousa, Pellissier and Monteiro 2012, 50). In case of Meridian safety innovation impetus is strong as Leigh has a great sense of leadership, people skills, knowledge base and creativity potential. The innovation aptitude however is a little weak for Meridian. There are some traces of technology management but with the absence of a formal research and development department the audacity to innovate is far less. Innovation enactment that involves innovation of two kinds: product & process also has some traces in the firm. For example the feedback given by the distributors help to reduce cost or improve the overall functionality of the product. This is a kind of process innovation that takes place at Meridian but there is room for much more.

New product development According to (Floren and Frishammar 2012, 25) new product development procedure refers to the process of creating products, which support the business goals by utilizing the firms resources in a sustainable manner to reap maximum profits. The process of new product development for Meridian can be beneficial in many ways especially in terms of growth of the firm. First off Meridian aim is to increase its market share by posing different models depending upon the how the market is segmented. For example currently the products at Meridian cover the mid range prices while low and high range price products are something that Meridian needs to work on in order to encompass a larger market. Moreover, Meridian needs to introduce products and services according to the specialized applications, which meet a certain criteria. Furthermore, Meridian should tap with other players in the industry to spawn opportunities like trucking or transport. 9

Question from the CEO: o Which of the future development pipelines should be prioritised? (Question relates to new product development)

Meridian should go for increasing their market share by developing different models for different market fragments like low, medium and high price range products. According to (Dora, Smith and Viguerei 2011, 15) an increased market share will give Meridian a good presence among the distributors and consumers, which will contribute to the business growth. T-line safety mechanism and other Meridian products are rather ubiquitous which need to be known in all market segments. Also an increase in the market share by developing variant products will attract more investors. (Yu and Ting 2012, 140) point out that getting more investors is important for Meridian in order to pursue their future goals especially in research and development. Conclusion and recommendations Meridian Safety has just the right kind of patents at the moment documented by the founder Mr Leigh. Meridian can go for improvement patents as mentioned earlier, which could result in the products enhancement and possibly reap profits for the firm. Also if Meridian wants to gain full benefit of the T-line safety mechanism it needs to get those patents that are still due in America and Europe. There are three suggestions to Meridian Safety Pty Ltd, which can help them achieve organizational success: 1. Eliminating the lack of funds issue. Meridian needs to make itself a fundable company so that more and more investors pour in. In the aforementioned sections it is repeatedly being discussed that lack of finance is hindering future development projects. Also lack of money from the firms perspective will pause new product development and will not allow Meridian to develop specific applications model for the higher price range because it requires loads

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of money. To curb the issue of lack of funds Meridian should develop a sound business plan for them. If they want to get the big sharks they need to get their business plan writing and demographic analysis done before presenting their ideas and future goals. 2. Meridian has a good mechanistic organizational structure, which brings operational efficiency and reliability. The problem lies that there is very less room for variance which affects innovation. Lack of small teams free of obligations and rules results in low creativity throughout the whole organization. Meridian needs to adopt some organic organizational culture which allows free flow interaction and communication of knowledge which would lead to organizational innovation

3. Meridian also needs to keep in mind that new product development will not only occur and be successful if only finance and product development is there. This sense of direction is one-dimensional and is taken in isolation. In order to develop new products Meridian needs to involve marketing & sales, finance, research, engineering & manufacturing processes, customer feedback and supplier feedback to carry out a successful new product development phase. For example Meridian can utilize lead users as a good resource of customer feedback in the new product development process.

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Reference List Collins, Kevin Emerson. 2011. Patent Protection for improvements. Berkeley Technology Law Journal. 26(2): 1217-1313 http://web.ebscohost.com.dbgw.lis.curtin.edu.au De Sousa, Fernando Cardoso, and, Rene, Pellissier. 2012. Creativity, Innovation and Collaborative Organizations. International Journal of Organizational Innovation. 5(1): 26-64 http://web.ebscohost.com.dbgw.lis.curtin.edu.au Dora, Sumit, Smit, Sven, and, Patrick, Viguerie. 2011. Drawing a road map for growth. McKinsey Quarterly. 1(2): 12-16 http://web.ebscohost.com.dbgw.lis.curtin.edu.au Emadzade, Mohamad Kazem, Behnaz, Mashayekhi, and, Elham, Adbar. 2012. Knowledge management capabilities and organizational performance. Interdisciplinary Journal of Contemporary Research in Business. 3(11): 781-790. http://web.ebscohost.com.dbgw.lis.curtin.edu.au Foster, S. Thomas, Cynthia, Wallin, and, Jeffrey, Ogden. 2011. Towards a better understanding of supply chain quality management. International Journal of Production Research. 49(8): 2285-2300 doi: 10.1080/00207541003733791 Gredel, Daniel, Matthias, Kramer, and Boris, Bend. 2012. Patent-based investment funds as innovation intermediaries for SMEs. Technovation. 32(9): 536-549. 10.1016/j.technovation.2011.09.008 Henrik, Floren, and, Johan, Frishammar. 2012. Managing the front end of new product development. California Management Review. 54(4): 20-43 doi: 10.1525/cmr.2012.54.4.20 Irvine, Kate. 2011. Collaboration as a strategy to accelerate change. Journal of Organizational Transformation and Social Change. 8(3): 313-326. doi: 10.1386/jots.8.3.313_1 Jameson, Daphne A. 2011. Intellectual Property Rights as a Business. Business Communication Quarterly. 74(2): 210-215. Doi: 10.1177/1080569911404696 Kotabe, Masaaki, Michael, Mol, Janet, Murray, and Ronaldo Parente. 2012. Outsourcing and its implication for market success. Journal of Academy of Marketing Science. 40(2): 329-346 doi: 10.1007/s11747-011-0276-z

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Li, Jing, Changhui, Zhou, and Edward J, Zajac. 2009. Control, collaboration and productivity in international joint ventures: theory and evidence. Strategic Management Journal. 30(8): 865-884. http://web.ebscohost.com.dbgw.lis.curtin.edu.au Mursitama, Tirta Nugraha. 2011. Searching for Potential and Realized Absorptive Capacity of the firm. Journal of Knowledge Management. 9(4): 53-75 http://web.ebscohost.com.dbgw.lis.curtin.edu.au Pugh, Katrina, and, Nancy M, Dixon. 2008. Dont Just Capture Knowledge- Put it to work. Harvard Business Review. May. Rai, Rajnish Kumar. 2011. Knowledge management and organizational culture: a theoretical framework. Journal of Knowledge Management. 15(5): 779-801 Doi: http://dx.doi.org.dbgw.lis.curtin.edu.au/10.1108/13673271111174320 Samli, A. Coskun. 2012. Creating a culture of innovation: The necessary ingredient for economic progress. Marketing Review. 12(2): 125-140. http://web.ebscohost.com.dbgw.lis.curtin.edu.au Somaya, Deepak, David, Teece, and, Simon, Wakeman. 2011. Mapping Solutions to Logical and Intellectual Property Complexity. California Management Review. 53(4): 47-79. http://web.ebscohost.com.dbgw.lis.curtin.edu.au Tice, Carol. 2012. How Partnerships Can Help You Extend Your Small Marketing Budget. Entrepreneur. April 16. T-Line Safety System 2012. Meridian Safety. Accessed 3 October 2012. http://www.meridiansafety.com/products/t-line-safety-system Wei-li, Wu, and, Lee, Yi-Chih. 2012. Absorptive Capacity and MNC Knowledge Transfer. International Business and Economics Research Journal. 11(8): 943-950. http://web.ebscohost.com.dbgw.lis.curtin.edu.au Western Australia: Innovator of the year 2012. Department of Commerce. Accessed 3 October 2012. http://www.commerce.wa.gov.au/scienceinnovation/Innovator/winners_2011.html. Yu, Vincent, and, Hsiu-I, Ting. 2012. Financial development, investor protection, and corporate commitment to sustainability Evidence from the FTSE Global 500. Management Decision. 50(1): 130-146 doi: 10.1108/00251741211194912

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Appendix Exhibit 1- Improvement Patents This exhibit relates to the discussion laid down under the topic of improvement patents. Most inventions are improvements upon other inventions or solutions. Usually components from other products combine together to form something new (never before done) and non-obvious. This is exactly the case with the T-Line safety system, which was invented by Mr. Leigh of Meridian Safety.

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