Applied Innovation - David O'Sullivan

APPLIED
INNOVATION
APPLICATION DE L'INNOVATION
ANWENDEN DER INNOVATION
APPLICAZIONE DELL'INNOVAZIONE
APLICACIN DE LA INNOVACIN
APLICANDO A INOVAO
Applied Innovation
Written by: David OSullivan
Foreword by: Jos lvaro Gomes da Silva
Copyright 2007 David OSullivan
Produced by:
Constructing an Inter-regional Innovation Network.

An Interreg IIIb Atlantic Area project.
For more information see: http://techlink.idit.up.pt/
Managed by: NET, SA BIC Porto

NET Novas Empresas e Tecnologias,
SA. Business & Innovation Centre
Rua de Salazares,
842 4100-442 PORTO
PORTUGAL
Acknowledgements
The producers wish to thank members of the project
consortium for their contributions and in particular the
European Commission for supporting this work. The producers
also thank the author and the National University of Ireland,
Galway for their kind permission in using some figures and
text in this booklet.
Creative Commons
You are free to copy and distribute this work under the
following conditions: (i) Attribution. You must give the
original author credit. (ii) Non-commercial. You may not use
this work for commercial purposes. (iii) No Derivatives. You
may not alter, transform or build on this work
Techlink Partnership:
NET BIC Porto ADI Agncia de Inovao, SA WestBic BIC GIPUZKOA BERRILAN
Portugal Portugal Ireland Spain
www.net-sa.pt/ www.adi.pt www.westbic.ie www.bicberrilan.com
IDIT Technopole TEKNIKER

Portugal France Spain
www.idit.up.pt www.tech-quimper.fr www.tekniker.es
Co-financed by:
Avec la participation
de l'Union Europenne
Programme co-financ
par le FEDER
Interreg IIIb Atlantic Area European Commission

www.interreg-atlantique.org www.europa.eu
2
Foreword
Few topics have exercised our minds so much, as the term
innovation, and yet it continues to remain a mystery for most of us.
For many of us the application of innovation remains difficult to
understand and stubbornly difficult to apply. Despite the many
books and articles published on innovation, managers continue to
face the same persistent question: How can innovation be applied
in my organisation?
There is a new urgency around why companies need to innovate. In Key Question
How can innovation be
a global economy there are great opportunities, if companies can applied in any organisation?
anticipate the needs of customers and introduce new products,
processes and services that meet these needs. On the other hand,
if companies do not innovate, then there are many competitors
around the world, who will.
The aim of this booklet is to give you some important insights into
how innovation management can be put to work in your Aims & Objectives
To give managers important
organisation. It contains a systematic approach to managing insights into how innovation
innovation. The author has brought together a number of practical can be put to work in any
organisation.
tools and techniques that can be used to improve the innovation
process. He includes a range of ideas that are easy to implement
and have worked very successfully in leading companies throughout
the world.
I invite you now to explore the ideas presented in this booklet. I am

confident that you will find some ideas that will improve the way
you currently manage innovation. You will also find guidelines for
exploring the topic of innovation in more detail. I hope that
through this publication some of the mystery surrounding
innovation can be solved.
Jos lvaro Gomes da Silva

Techlink Project
December 2006
3
Contents
Introduction ....................................................................................................................................... 5
Defining Innovation........................................................................................................................ 6
Managing Innovation .................................................................................................................. 14
Defining Innovation Goals ....................................................................................................... 22
Managing Innovation Actions.................................................................................................. 30
Empowering Innovation Teams ............................................................................................. 43
Monitoring Innovation Results ............................................................................................... 56
Building Innovation Communities ........................................................................................ 66
Conclusions ..................................................................................................................................... 79
Bibliography.................................................................................................................................... 81
Click on page number above to hyperlink to that page
4
Introduction
Innovation is an important force in creating and sustaining business
growth. Effective innovation can mean the difference between
leading with a particular product, process or service and simply
following the pack with the risk of stagnation and decline.
Innovation transforms mediocre companies into world leaders, and
ordinary businesses into stimulating environments for employees.
Innovation is an imperative for all organisations profit and non

profit. It is as relevant for a hospital as it is for a bank or a
manufacturing company. Innovation occurs at various levels within
an organisation, from management teams and departments to
project teams and even individuals. Innovation is often viewed as
producing a new product or service. In fact it is about making all
kinds of changes, both radical and incremental, throughout an
organisation.
Innovation is defined as the process of making changes to Web Link

More detailed information
something established by introducing something new. These on the ideas covered in
changes can be both radical and incremental, and can happen to this booklet can be found
at: www.owl.ie
products, processes or services. Innovation management is about
putting tools, techniques and methods in place that can encourage
individuals to work together in defining innovation goals, managing
ideas and projects, and monitoring results. Innovation management
is about building a community within an organisation whose
common purpose is to change products, processes or services so
that they can add value to customers and exceed their demands.
This booklet contains a systematic approach to developing high- High Impact

impact innovation in any organization. High-impact innovation This booklet contains a
systematic approach to
requires close attention to the five key areas goals, actions, developing high-impact
teams, results and communities, and perhaps of equal importance, innovation in any
organization.
to the relationships between them.
Learning Targets
When you have completed this booklet you will be able to:
Explain the theory and process of innovation

Describe how to manage innovation
Learning Target
Use explicit skills for defining goals, generating ideas, Develop a simple
empowering teams and monitoring the results of innovation knowledge management
Apply what you have learned to managing innovation in any system for innovation
management
organisation
5
Defining Innovation
Defining Innovation
Introduction
All organisations need to change in order to sustain their current

activities and develop growth. Some changes are positive and lead
to increased efficiency and revenue, while others are negative and
risk stagnation and decline for the organisation. The principal
mechanism for change in any organisation is innovation. Innovation
occurs to products, processes and services. This part of the booklet
defines the main concepts behind innovation. Innovation is the
process of making changes to something established by introducing
something new. Innovation is classified according to its impact on
products, processes or services. The difference between radical
and incremental innovation is discussed, with a particular focus on
disruptive technologies.
Learning Targets
When you have completed this section you will be able to:
Define innovation and explain the difference between

innovation and invention
Explain the difference between product, process and service
innovation
Explain radical and incremental innovation
Give examples of disruptive technologies
Definition of Innovation
Innovation is defined as Making changes to something established

by introducing something new1. This definition does not suggest
that innovation needs to be radical or that it needs to happen
exclusively to products. Innovation is often mundane and
incremental and can happen to products, processes and services at Invention
every level within an organisation. Creating something new
that has never existed
before.
The term innovation is often confused with the term invention.
Invention is defined in the dictionary, as Creating something new
that has never existed before. Invention is often about creating
something that has yet to be desired by a customer.
1
The New Oxford Dictionary of English. 1998: Oxford University Press.
6
Defining Innovation
Sample: The old tube television was an invention. Before it

existed people had no desire for it. It did not make changes to
something already established. When it was created, it established
something new that had never existed before. The new flat-screen
television, on the other hand, was an innovation. It met a desire
from customers to have flatter, more high-definition television
sets. It made changes to the already-established tube television.
When Philips introduced the Interactive TV in the 1980s, some
analysts viewed it as another innovation by a company renowned
for its innovation processes. They argued that it could destroy the
traditional tube television market. However, customers found the
new interactive TV too expensive and too cumbersome to use. The
Interactive TV itself was ultimately destroyed by the innovation
process and replaced by more successful ideas.
In innovation, destroying poor ideas is often as important as

nurturing good ones. To express positive innovation, we need to
add an important addendum to our definition: Innovation is the Innovation
Making changes to
process of making changes to something established by introducing something established by
something new that adds value to customers. This addendum is introducing something new
that adds value to
important. By classifying an innovation as adding value to customers.
customers we assume that customers who experience the added
value will continue to purchase or use the product or service. This
is turn will lead to greater revenue and growth for the organisation.
Todays innovation will become obsolete in the future. For

organisations to sustain innovation, they must learn how to
continuously replace existing products, processes and services with
more effective ones. This learning element adds a further
extension to our definition: Innovation is the process of making
changes to something established by introducing something new
Innovation Management
that adds value to customers and then learns from that process Innovation management is
so that innovation can be repeated continuously. the process of managing
information, people and
changes associated with
Innovation management is the process of managing innovation innovation so that value can
be added to customers.
within an organisation i.e. managing ideas, goals, projects and
initiatives, improving communications, managing innovation teams,
and so on. Innovation management is the process of managing
information, people and changes associated with innovation so that
value can be added to customers.
Alternative Definition
There are numerous alternative definitions to innovation. One

popular alternative is to present innovation as an invention that has
been exploited commercially. In this alternative definition, the
term innovation means exploiting the invention and making it
7
Defining Innovation
commercially successful. We can denote this alternative definition
of innovation with the following expression:
Innovation = Invention + Exploitation
Innovation management therefore, is a systematic approach to Web Link

creating an environment based on discovery, invention and Visit www.wikipedia.org
commercial exploitation of ideas that meet unmet needs. This for a number of alternative
definitions from experts in
definition fits very well with many of the high- profile examples of the field.
innovation that we are familiar with, such as the invention of the
transistor used in computers, or radio frequency identity tags used
on credit cards. However, it also hides the millions of innovations
that are often much smaller in scale or not necessarily exploited in
the same commercial sense. This alternative definition also has a
strong technology focus. This booklet focuses on the tools and
techniques necessary for radical and incremental innovation as
described earlier. The issues surrounding the definition in this
section such as invention and exploitation are beyond the cope of
this booklet but the reader is referred to a number of excellent
books on this subject in the Bibliography at the back of this
booklet.
Product, Process and Service Innovation
The term innovation is often associated with products. When we

think about innovation we think about a physical product e.g. a
television. However, changes can also be made to processes that Product Innovation
make products, and to services that deliver products. There are Product innovation is about
making changes to physical
also many examples of innovation applied to restructuring the products.
organisation. We can say that innovation makes changes to:
Products
Processes
Services
Product innovation is about making changes to physical products.

For example (i) introducing a new screen size in television sets, (ii)
changing from the old tube television to flat screen televisions or
(iii) adding functionality such as internet access to televisions.
Process innovation is about making changes to the processes that

produce products or services. For example (i) building new
machines that assemble televisions, (ii) redesigning the assembly Process Innovation
line so that televisions can be manufactured more cheaply and (iii) Process innovation is about
outsourcing the production of the plastic covers on televisions so making changes to the
processes that produce
that those costs can be reduced, and quality improved. products and services.
Service innovation is about making changes to services that

customers use. For example (i) changing the way dealers sell new
8
Defining Innovation
televisions in order to keep costs low, (ii) changing the way
customers get rid of their old televisions by introducing a take
back policy and (iii) changing the way customers purchase
televisions over the internet. Clearly, services do not necessarily
involve products. Services can also be developed around needs for
government information, health services and so on.
Sample: Low cost airlines Ryanair and EasyJet grew dramatically Service Innovation
Service innovation is about
in the 1990s because of innovations they adopted in their online making changes to services
purchasing and no frills approach to air transportation. Giant that customers use.
rivals such as British Airways were quickly overtaken in terms of
company value on the stock exchange, so much so, that they had
little choice but to adopt the same no frills innovations in order to
compete. Customers no longer expected meals. They were
attracted by the low cost and high efficiency that came with buying
their own tickets online.
Radical and Incremental Innovation
The definition of innovation does not refer to the size and scope of
the change to the product, process or service. For example
introducing a new flat-screen television is clearly a major or radical
change to the older established television market. On the other
hand, a change such as changing the colour or the size of the
screen is relatively small or incremental. Innovation can be:
Radical
Incremental
Radical innovation is about making major changes in something

established. The term radical often refers to the degree of Incremental
Innovation
change in the efficiency or revenue of the product. For example by Making small changes that
introducing the flat-screen television, manufacturers radically have short-term impact on
growth.
increased the demand for such televisions. We can visualise radical
innovation as a step change in some measure of performance such
as revenue or efficiency, see Figure 1. Most organisations engage in
some radical innovations during the lifetime of their innovation or
development plans.
9
Defining Innovation
Incremental
Revenue/ Innovation
Radical Innovation
Efficiency Making changes that
Radical have large step changes
Innovation in growth.
Time
Figure 1: Radical and Incremental Innovation2
Incremental innovation is about making small continuous changes to

a product, process or service. These changes are often more
numerous and less risky than radical changes but they also often
have lower impact on growth. Some organisations such as
manufacturing and more established service organisations rely
totally on incremental innovation and deploy techniques such as
Total Quality Management, Continuous Improvement and Lean
Manufacturing to make many small changes to the organisation.
Organisations engage in many incremental innovations during the
lifetime of their innovation or development plans. Innovative
organisations will typically have many incremental changes and a
small number of radical changes occurring in the same planning
period.
Sample: Philips invested significant resources time and money

into the development of its Interactive TV. Customers did not
purchase the interactive TV in sufficient quantities to allow Philips
to reach their revenue targets i.e. the innovation failed. Not only
did Philips lose money, but they lost time in coming up with a
better innovation. If interactive TV had succeeded, then certainly
Philips would have had an enormous head-start over their
competitors and would almost certainly have created a step-change
in their revenues.
Disruptive Innovation
Every now and then a radical innovation is introduced that disrupts

business practice. In other words, business practice changes Disruptive Innovation
radically. These disruptive innovations often occur mainly through Innovations, typically
new sciences and technologies. For example, many years ago the technical, that change
business practice across an
television depended on a technology called the vacuum tube for entire sector of business.
its operation. Owners of these televisions waited for up to a minute
for the tubes to heat up and produce an image on the screen. In
the 1970s, research into electronics produced the transistor which
2
Adapted from Managing Creativity and Innovation. Harvard Business Essentials.
2002, Boston: Harvard Business School Press.
10
Defining Innovation
offered much lower production costs, lower energy consumption,
higher reliability and the screen on the television lit up in
seconds. The transistor dramatically changed or disrupted business
practice around the design and manufacture of televisions. Early
adopters of transistors made significant increases in market share.
Slow adopters went out of business.
There are many examples of disruptive technologies introduced in

recent years including:
Digital Photography
Radio Frequency Tags
Digital Media (Music and Video)
Internet and World Wide Web
Arguably the largest disruptive technology to emerge has been the

internet and World Wide Web. The web has radically disrupted
huge ranges of products, processes and services across many Disruptive Technology
business sectors. Products such as televisions can now be web Often developed in
laboratories of large
enabled, allowing customers a host of new services such as video organisations, but it can
download and internet browsing. Processes such as the also be the result of
collaboration between
manufacturing of televisions regularly use the web to source many small organisations.
materials and receive orders from customers. Services such as film
rental now use the web to offer customers the latest films that are
then downloaded directly to their television on demand.
Sample: Radio Frequency Identity Detection (RFID) tags are now

being used as a replacement for bar codes on products in
supermarkets. The current process of purchasing goods in a
supermarket is well known to most of us. We wait in line at the
supermarket checkout and scan the bar code of each individual
item before paying. Waiting times to pay for goods can be long.
RFID tags can be detected remotely by receivers. If all of the items
in our basket have RFID tags, then all we need to do is push the
shopping basket under a radio frequency receiver. It will remotely Search
detect every item in the basket. The value for customers is shorter Search the internet using a
popular search engine using
times at the check out or the replacement of check outs the following key words:
altogether. Suppliers and supermarkets who adopt RFID tags will
Invention
clearly add value to customers, and hence attract new customers Innovation
over their slower rivals. Innovation Management
Disruptive Innovation
Radical Innovation
Incremental Innovation
Summary Disruptive Technology
Innovation is the process of making changes to something established

by introducing something new. Innovation is not to be confused with
invention. It can be radical or incremental and it can apply to
products, processes and services. Disruptive innovation is radical
innovations that disrupt forever the way business is normally
11
Defining Innovation
conducted. All changes, large or small, to an organisation are
classified as innovation.
For more information on innovation in your own language why not

try: www.wikipedia.org
Case
Clearview Pharmaceuticals is a small manufacturing company. The

innovation team is responsible for mainly process innovations and
includes key personnel from all of the main functions in the
organisation all managers and some specialists. They meet bi-
monthly to discuss the progress of their goals and review the status
of various projects both radical and incremental projects. They
also review any ideas that have been generated by employees that
match organisation goals. The innovation team has representatives
from a number of departments (see Figure 2).
Figure 2: Innovation Team at Clearview Pharmaceuticals
Activity
Throughout this booklet you will be asked to complete a number of

simple activities. All of these activities combine to create a simple
innovation plan for your organisation. This plan can later be
expanded.
12
Defining Innovation
For this activity, create a list of the individuals in your innovation
team. You can select your entire management team plus some
specialists or perhaps key players from your department or perhaps
your project team. Think about your innovation team as the
maximum number of individuals you can comfortably sit around a
table to discuss and make decisions about your innovation plan.
Individuals can be members of more than one innovation team. For
example, a department manager will be a member of the
department innovation team. He or she will also be a member of a
higher-level management team that looks at innovation across the
entire organisation. The same individual can also be a member of a
number of large project teams. Each of these organisations can
have its own innovation plan.
Copy the worksheet below into a spreadsheet application. More

worksheets can be added later for other aspects of your innovation
plan.
Individuals
Title Role
Title = Name of the individual

Role = Role or position of the individual in the organisation
Reflections
Explain the difference between innovation and invention

Give one example of each of the following types of
innovation:
(i) product, (ii) process and (iii) service
Give one example each of a radical innovation and an
incremental innovation
What is a disruptive technology?
13
Managing Innovation
Managing Innovation
Introduction
Every organisation invests to a larger or lesser extent in innovation

making changes to something established. Organisations invest a
proportion of turnover to make changes to its products, processes
and services. There are particular reasons or goals that should be
achieved because of this investment. However, research has shown
that a very large percentage of innovations fail to meet these
goals. The reasons behind failure give us clues on how avoid failure
in the future. This section looks at investments that organisations
make in innovation and the goals they most frequently want to
achieve. It then looks at the reasons why many innovations fail to
achieve their goals.
Learning Targets
Give reasons why organizations invest in innovation

Measure the amount of investment that organizations make
Learn why organizations make these investments i.e. their
goals
Give reasons why most innovation fails.
Investment in Innovation
Each year, organisations spend a significant amount of turnover on

innovation i.e. making changes to their established products,
processes and services. The amount of investment can vary from as Innovation Investment
The average investment
little as a half a percent of turnover to anything over twenty across all types of
percent of turnover for organisations. The average investment organizations is four
percent.
across all types of organizations is four percent 3. For an
organisation with a turnover of, say, one billion euros, this
represents an investment of forty million euros annually. This
budget will typically be spread across various departments
including marketing, product design, information systems,
manufacturing systems, quality assurance and so on.
The principal goals to be achieved in return for this investment vary

across organisations. The following have been found from a
European survey3. They are ranked in order of popularity:
3
http://cordis.europa.eu/itt/itt-en/99-7/innov3.htm (14th December 2006)
14
Managing Innovation
Improved quality
Creation of new markets
Extension of the product
range Reduced labour costs
Improved production processes
Reduced materials
Reduced environmental damage
Replacement of products/services
Reduced energy consumption and
Conformance to regulations.
These goals include improvements to products, processes and

services and dispel a popular myth that innovation deals mainly
with new product development. Most of the goals could apply to
any organisation, be it a manufacturing facility, a marketing firm, a
hospital or a local government organisation. None of the goals
suggest any particular solution or technology e.g. computer
technology. Technology, for example, may be a means to a goal,
but is not the goal in itself.
Failure of Innovation
Most innovation fails to meet organisational goals. Figures vary

considerably depending on the research. Some research quotes
failure rates of fifty percent while other research quotes figures as
high as ninety percent4. From another perspective, one survey
regarding product innovation states that out of three thousand Innovation Failure
ideas only one will become a success in the marketplace5 . Failure Failure can also lead to
loss of morale among
is an inevitable part of the innovation process, and most successful employees and an increase
in cynicism and even
organisations factor this into the change process. The impact of higher resistance to change
failure goes beyond the simple loss of investment. Failure can also in the future.
lead to loss of morale among employees and an increase in cynicism
and higher resistance to change in the future.
The causes of failure have been widely researched. They can vary
considerably between organisations. Some causes will be external
to the organisation and outside its influence of control. Others will
be internal and ultimately within the control of the organisation.
Internal causes of failure can be divided into causes associated with
the cultural infrastructure and causes associated with the
innovation process. Failure in the cultural infrastructure varies
from one organisation to another, but the following are common
across all organisations at some stage:
4 Strebel, P., Why Innovation Fails, in Harvard Business Review on Change.

1999, Harvard Business Press: Boston. p. 139-157.
5 Strategic Management of Technological Innovation by Melissa Schilling, McGraw-
Hill, 2005.
15
Managing Innovation
(1) Poor Leadership
(2) Poor Organisation
(3) Poor Communication
(4) Poor Empowerment
(5) Poor Knowledge Management
Common causes of failure within the innovation process can be

distilled into five types:
(1) Poor goal definition

(2) Poor alignment of actions to goals
(3) Poor participation in teams
(4) Poor monitoring of results
(5) Poor communication and sense of community
Tackling poor goal definition requires that organisations state

explicitly what their goals are in terms understandable to everyone
involved in the innovation process. This often involves
communicating goals in a number of ways. Poor alignment of
actions to goals requires linking explicit actions such as ideas and
projects to specific goals. It also calls for effective management of
action portfolios or groups of projects. Poor participation in teams
refers to the behaviour of individuals and teams and the explicit
allocation of responsibility to individuals. It also refers to the
payment and rewards systems that link individuals to goals. Finally,
improving poor monitoring of results requires simple and effective
monitoring of all goals, actions and teams involved in the
innovation process.
High Impact Innovation
Every organisation would like to achieve a return on their

investment. The causes of failure outlined above give us an
indication of what areas most organisations need to improve to
increase the impact of innovation. The five main areas are:
1. Better definition of Goals

2. More effective alignment between Actions and goals
3. Greater participation of individuals in Teams
4. Better monitoring of Results
5. Great communications and building of Communities
Goals: A goal is the defined as the objective of an effort. There

are a number of ways of defining goals. These include:
(i) Statements such as the mission and vision statement

(ii) Requirements of stakeholders such as customers and
shareholders
(iii) Objectives such as strategic plans and
16
Managing Innovation
(iv) Indicators of performance such as output and profits
Defining these goals is a key factor in creating high impact

innovation. We will deal with Goals in more detail in the section
on: Defining Innovation Goals.
Actions: An action is defined as the expenditure of effort. Actions

include such activities as:
Definition: Goals
The objective of an effort
(i) Problem identification and solution
(ii) Idea generation Definition: Actions
The expenditure of effort
(iii) Managing initiatives and projects
(iv) Balancing project portfolios Definition: Teams
Resources for an effort
A key issue is that actions are in some way aligned with the goals of Definition: Results
the organisation e.g. ideas have goals. We will deal with Actions in The outcome of an effort
more detail in the section on: Managing Innovation Actions. Definition:
Communities
Teams: A team is the defined as resources for an effort. Teams Individuals with a common
are made up of individuals and there are a number of issues related

to greater participation by individuals in teams. These include:
(i) Assigning responsibility

(ii) Building structure in teams
(iii) Improving participation by individuals
(iv) Appraising performance of individuals
We will deal with Teams in more detail in the section on:

Empowering Innovation Teams.
Results: The term result is defined as the outcome of an effort.

The principal results that an organisation needs to concern itself
with are the results of:
(i) Goals, such as objectives and indicators

(ii) Actions, such as ideas and projects and
(iii) Teams, such as their contribution
There are clearly many things going on at once and organisations

must learn to use techniques such as the traffic lights system that
allows them focus on critical activities. Organisations also need to
learn about meeting management. We will deal with Results in
more detail in the section on: Monitoring Innovation Results.
Communities: The dictionary defines community as individuals

with a common purpose. That common purpose is the goals of the
organisation but may also reflect the personal goals of the
individuals in it. Building community is a time-consuming process
and involves key issues such as:
17
Managing Innovation
(i) Organisation and Leadership
(ii) Benchmarking
(iii) Communications
(iv) Knowledge Management
We will deal with Community in more detail in the section on:

Building Innovation Community.
Innovation Funnel
The innovation funnel provides a solution for explicitly defining the

information requirements for managing goals, actions, teams and
results used in the innovation process. The funnel illustrates how
goals, actions, teams and results interact with each other to create
change in any organisation see Figure 3.
The innovation funnel can be visualised as containing four arrows

flowing around a funnel. Each arrow represents the flow of goals, Innovation Goals
actions, teams and results. Actions enter the wide mouth of the funnel Tightly defined goals can
be visualised as closing
and represent, among other things, alternative ideas for change. the neck of the innovation
These actions flow towards to the neck of the funnel where many will funnel allowing fewer
ideas flowing through.
be eliminated. The neck of the funnel is constrained by two arrows
goals and teams. These constraints loosen or tighten depending on the
availability of teams and definition of the goals. Tightly-defined goals
can be visualised as closing the neck of the funnel, allowing fewer
ideas to flow through. The availability of more teams or other
resources such as funding, on the other hand, can be visualised as
opening the neck of the funnel, and allowing more ideas to be worked
on. The final arrow, results, flows from the narrow end of the funnel
and represents information concerning the results of execution of
goals, actions and teams. This arrow flows back towards goals,
representing the impact of results on the process of defining and
redefining goals.
GOALS
ACTIONS
RESULTS
COMMUNITIES
TEAMS
Figure 3: Innovation Funnel
An important aspect of the innovation funnel is the relationships

created between actions and goals. Ideas, for example, that cannot
18
Managing Innovation
be associated with goals will find it difficult to proceed into the
funnel. This has two effects. Firstly, the individuals or teams
generating the ideas will study the goals more closely in order to
generate an idea that matches better. Secondly, good ideas that
are not easily associated with goals will begin to impact on the Ideas
definition of the goals. This will ultimately lead to a redefinition of When goals change there is
a knock-on effect in the
goals in order to allow the good ideas through. This is a natural generation of ideas that
learning process within an innovation community. When goals meet these goals.
change, there is a knock-on effect in the generation of ideas that

meet these goals, because the innovation community in now tuned
to having new ideas meet organisational goals. The process offers
the innovation community the ability to change the innovation
process in response to changing demands of stakeholders.
Best Practice
In the 1980s, the airline industry was characterised by high ticket

costs and high operating costs. The aviation industry then
experienced a downturn because of the worldwide recession and
the Gulf War. Capacity overload became a common problem in
most companies. Many airlines started focusing on cutting costs,
reducing capacity growth, and increasing load factors. New airline
companies emerged (e.g. Southwest, Ryanair, EasyJet) to radically
change the basis of competition from high cost to low cost.
Goals: To maximise seating utilisation, to increase passenger

numbers, to dramatically reduce operating costs, to make air travel
like a flying bus, to streamline ticket purchase, to increase
destinations, to simplify baggage handling.
Actions: Removal of travel agents, electronic booking of tickets,

point-to-point, dramatic reduction of seat prices, baggage fees,
online seat allocation.
Results: Major increase in passengers, very high turnover, very low

operating costs, word of mouth marketing, growth in ancillary
products such as car hire and hotel bookings.
Summary
Search
Search the internet using a
Organisations spend on average just under 4% of turnover on popular search engine using
innovation, trying to achieve goals such as better quality, lower the following key words:
lead times, more product variety and increased market share. Most Innovation Failure
innovation fails to achieve these goals and some analysts argue that Innovation Funnel
Knowledge Management
failure could be as high as 90%. The causes of failure are varied,
but some causes are common across most organisations. These
causes can be divided into cultural and process failures. Cultural
19
Managing Innovation
failures, such as poor leadership and organisation, are clearly
important but take time to improve. Process failures such as
definition of goals and aligning actions with goals are also
important but can be remedied in the shorter term through better
information and knowledge management. The innovation funnel
offers organisations a structured approach to managing innovation
that reduces the effects of the main cause of failure, while
simultaneously achieving goal attainment. The rewards for adopting
such a simple yet effective system can be significant, not only in
terms of more cost-benefits but more importantly in terms of the
morale and skills developed by participants in the innovation
process. Reducing failure by just fifty percent provides potential
savings of twenty million euros annually for a one billion euro
turnover company. The benefits from goal attainment mirror the
common goals mentioned earlier improved quality, better
productivity, better product ranges and so on.
Case Study
SwitchIt Ltd. Is a self-owned design and manufacturing company of

electrical switch gear. All managers form a team that reviews their
innovation plan weekly. The management team has identified six
stakeholders for the company including Employees and the local
Community. Their existing customer requirements are for greater
product variety, increased product availability and reduced order
lead times. As part of the creation of their plan they initially
created statements around their strengths, weaknesses, threats
and opportunities. They have also created statements for mission,
vision, quality, safety and core competencies. Core competencies
that the company would like to maintain include their design
process, and the injection moulding process. Their statements are
published on an internal web site for all employees to review on
demand. Statements are updated annually following a detailed
review of results for the organisation.
Activity
Conduct an analysis on your organisation to determine the

strengths, weaknesses, threats and opportunities. You can do this
with your innovation team or with the help of outside facilitators.
Copy the table below into a new worksheet in the spreadsheet file
you started for the previous activity.
20
Managing Innovation
Statements > SWOT

Statement Question Statements
Strengths What are your organisations advantages?
What are your core competencies?
Where are you making the most contribution?
What are you doing well?
Weaknesses What areas are you avoiding?
Where do you lack resources?
What are you doing poorly?
Where are you lacking contribution?
What needs improvement?
Opportunities Any trends in similar organisations?
New technologies?
New needs of customers (internal or external)?
Threats Obstacles to overcome?

Competiting organisations?
Negative economic conditions?
Government regulation?
Changing business climate?
Reflections
List some of the main reasons why organisations invest in

innovation
What are main causes of failure in achieving innovation?
What are main issues that every organisation addresses
regularly to achieve better impact from innovation?
What are the key stages in the innovation process?
21
Defining Innovation Goals

Introduction
Defining innovation goals is the first and perhaps the most

important activity in creating an innovative organization. Well-
defined goals inspire ideas and guide activities towards the
achievement of performance targets. A number of goals need to be
defined. These include statements, stakeholder requirements,
strategic objectives and performance indicators. This section looks
at a number of ways for defining goals. A road map for defining
goals is presented. The roadmap outlines a number of steps that
need to be taken for developing a comprehensive set of goals. The
first step looks at defining various types of statements. Some of
these statements i.e. SWOT have been presented in the previous
section. The next step looks at defining stakeholder requirements
that are used to inform the strategic planning process. Strategic
planning involves a number of key elements including the
identification of strategic thrusts and defining strategic objectives.
The final step looks at defining key performance indicators.
Together, these various types of goals form a comprehensive
definition of the innovation goals of any organization.
Learning Targets
Explain the drivers of innovation goals

Outline a process for defining goals
Explain the various types of goals that can be created
Outline the process of creating performance indicators
Create a simple chart for monitoring indicators
Defining Goals
Goal planning is now a common technique for most organisations. Defining Goals
This was not always the case. In the past, goals resided only in the The goals of the
organisation inform the
minds of owners and senior managers who communicated them to imaginations of individuals
subordinates through verbal instructions. Todays complex business and set indicators of
performance that projects
and service environments require employees to understand and and initiatives need to
share common goals in order to engage in idea generation and achieve.
change. Few owners and managers now have the ability to set goals
for an organisation, and simultaneously generate and manage the
actions required for innovation. The principal approach in modern
management is to define high-level goals for change and innovation
within the organisation. These goals then guide individuals and
22
teams in generating actions such as ideas and projects. The goals of
the organisation inform the imaginations of individuals and set
indicators of performance that projects and other actions need to
achieve.
The main drivers of innovation goals are emerging new

technologies, the more innovative activities of competitors, best
practice by similar organisations, new ideas from customers and
employees, stakeholder requirements and exceptional performance
(negative or positive) from within the organisation. Added to these
drivers are general changes within the organisations environment.
All of these drivers help to create a sense of urgency around the
need to create new innovation goals. A number of types of goals
can be created. Figure 4 illustrates five primary types of goals for
any organisation. As stated earlier many organisations will only
require a subset of these goals to be defined in the short term (e.g.
indicators).
GOALS
Statements
Requirements
Objectives
Standards
Indicators
ACTIONS
RESULTS
COMMUNITIES
TEAMS
Figure 4: Innovation Goals
Statements: Typical statements include mission and vision

statements. Statements are high-level goals that inform individuals
in the organisation and their customers about what the organisation
is doing or aims to do in the future. Mission statements are
informed by the philosophy, history, core values and core
competencies of the organisation. Statements in turn inform the
process of generating strategic objectives. Other types of
statements include Strengths, Weaknesses, Threats, Opportunities,
Health and Safety, Quality, Core Values and so on.
Requirements: There are requirements of the various stakeholders

for an organisation. Stakeholders can be seen as the customers in
the broadest sense of the term. Typical stakeholders include
customers, shareholders, employees, suppliers and so on. A list of
requirements from stakeholders is a powerful form of goal setting
activity. These can be worked on as goals directly or they can be
translated into strategic objectives or performance indicators.
23
Objectives: Strategic objectives are a more detailed list of goals

typically divided into groups called strategic thrusts. The
development of strategic objectives is informed by stakeholder
requirements. It is also informed by the drivers of innovation
mentioned earlier. Strategic Objectives are a list of typically
between 10 and 30 very specific statements for where change and
innovation needs to take place in the future over a planning period.
Standards: Standards are sometimes used in place of strategic

objectives. Many standards used for developing an organisation Web Link
Visit www.efqm.org for an
contain statements that must be met by an organisation. For explanation of the EFQM
example the ISO9000 standard is a set of objectives that must be objectives.
met by an organisation. EFQM is a variation of a standard that
presents organisations with a standard set of objectives. There are
other standards around issues such as products, health and safety,
environment and so on.
Indicators: Performance indicators are measurable targets of

performance. They are linked with the strategic objectives in that
each strategic objective should be measurable directly or indirectly
by a performance indicator. Selecting performance indicators is
informed by such activities as benchmarking and environment
analysis. Indicators in turn, inform the actions that need to be
generated, managed and executed to make changes physically
happen to the organisation.
Goals need to be kept general. They should be used to guide

change for between one and five years into the future rather than Goals vs. Ideas
Goals need to kept general
suggest explicit and specific types of changes to be performed. and leave room for
They need to leave room for individuals to make their own individuals to make their
own decisions regarding
decisions regarding specific ideas or projects. It is typical to see a specific ideas for change.
planning period appended to the title of innovation plans e.g. ABC
Corp Strategic Goals 2007-2009. Various terms are interchangeable
with the term goals, for example strategic plan, development
plan, innovation plan or team objectives. For the remainder of
this section we focus on one of the more popular types of goals
performance indicators.
Performance Indicators
Performance indicators are a measurable way of defining goals.

Performance indicators include a number of measurable elements.
They include targets for the future, current progress towards those
future goals and they provide a historical perspective on performance
in the past. Indicators can be financial and non-financial. Financial
indicators such as measures of revenues and cost have been popular in
the past. An organisations worth is often measured by financial
measures such as turnover and profits. This is
24
no longer the case, with almost every organization worth
significantly more or less than its current financial figures suggest.
This is because organisations are now increasingly measured in
terms of their potential. A knowledge-based organization, for
example can innovate change its products, processes and services
in response to changing market demands. Because of this, its
value is often far greater than its present financial value. Most
innovation indicators are non-financial.
Indicators show progress towards defined performance targets, and

motivate people towards achieving goals. Key questions for a
performance indicator process are: What has happened? Why has it
happened? Is it going to continue? What are we going to do about
it? Understanding indicators promotes problem solving, idea
generation and other forms of corrective action.
Indicators have the following attributes:
Directly related to strategic objectives

Repeatable over time, allowing comparisons Seven Indicators
Define no more than seven
Foster improvement rather than monitoring indicators for your
Measurements are reliable and verifiable organisation. These seven
may be children or
Primarily non-financial parents of other
Maximum number of measures (<7) measures in the wider
organisation but your focus
Change over time as conditions change is only on your seven.
Simple and easy to use
Provide fast feedback
Leading rather than lagging
Sample: One of the first steps in choosing indicators is to look at Web Link
macro indicators. All indicators stem from one of three macro Visit www.owl.ie for more
information on
indicators: cost, time and accuracy. In recent years, other macro performance
indicators have been added to this list. They include flexibility, measurement.
culture and environment. Below are a number of samples of

indicators that are popular in some organisations.
1. Process e.g. Productivity (hours/unit); Throughput (units per

day); Utilisation (output/capacity)
2. Marketing e.g. Sales per region (units/region); Sales per
model (units/model); Marketing costs (/year)
3. People e.g. Attrition (individuals/year); Overtime
(hrs/month); Absenteeism (days/month)
4. Design e.g. R&D Expenditure (/year); Warranty Costs
(/month); Revenue Created by New Products in last five
years; Value Analysis Savings (/unit)
5. Environment e.g. Emissions (CO2/month); Scrap and Wastage
(tonnes/month); Accidents (lost days/month); Litigation
(/year)
25
Every indicator must have a unit of measure e.g. /year. Each
indicator consists of three major measurements its origin or
what it measured at some point in the past, its current
measurement and its target performance, or what it should
measure at some point in the future. Many Organisations like to add
the fourth measurement stretch target. The stretch target is a
target performance beyond some point in the future. It allows
individuals to consider stretching beyond the current target and
achieve breakthrough performance for the current period.
Performance Charts
Performance indicators are measurable and therefore can be

represented graphically using a performance chart. The key
attributes of the performance chart are illustrated in Figure 5. Each
indicator has an origin with an origin date and an origin value. This Charts
Charts should be kept two-
is typically the beginning of a particular year. Each indicator also dimensional and simple.
has a target with a target date and target value. Performance
charts may also have stretch values and stretch dates. Another
characteristic of a performance chart are the record of values over
the planning horizon. These are illustrated as small stars in Figure
5. Finally, the performance charts may also have upper and lower
control limits. Values that fall outside these limits may be treated
differently, i.e. if the value is out of control it may be coloured
red, and draw attention to this indicator for remedial action.
Charts should be kept simple.
Stretch
Value
Target
Value
Origin Lower
Control
Value
Limit
Origin Date Target Date
Figure 5: Performance Chart
Best Practice Web Link

Visit http://icmr.icfai.org
for best practice cases
used in this booklet and
The US based Motorola Inc. lost business to its Japanese many more.
competitors in 1981 principally due to poor relative quality.

Japanese firms had become known for high quality products and
processes. To address the problem of falling quality, Motorola
introduced a system called Six-Sigma.
26
Goals: To achieve a ten-fold improvement in the quality of its

products and services.
Actions: An ambitious and innovative quality drive. Six-Sigma, was

launched in 1981.
Teams: Bill Smith (Smith), a Motorola engineer, was responsible for

linking the term of Six-Sigma with the companys quality initiatives.
Results: Motorolas Six-Sigma quality target achieved not more

than 3.4 defects per million products. It also achieved customer
satisfaction by providing the best quality products and services, and
significantly increased in companys sales. Motorola acquired the
reputation of being the quality leader, not just in manufacturing
but in every process including customer relations. Between 1986 Web Link
and 1988 alone, Motorola received 50 quality awards, and became Visit www.quality.nist.gov
for more information on
the only company in the world to have received the Malcom Malcom Baldridge award.
Baldridge National Quality Award twice.
Summary
Search
Performance indicators are a measurable goal for an organization. popular search engine using
They provide a tangible incentive for employees to generate ideas, the following key words:
evaluate progress and take remedial action as required. Key Performance Indicators
Performance indicators are primarily non-financial. They foster Strategic Objectives
Balanced Scorecard
improvement and innovation rather than simply present historical Innovation Measures
financial data. Indicators can either lead or lag innovation Metrics of Innovation
expectations and typically only seven are necessary for any team
within an organization. These seven can be linked hierarchically to
other indicators within the organization so that any one group is
focused on no more than seven. Performance indicators are
typically illustrated using performance charts and tables.
Case Study
LCIT Solutions is an IT service organisation. The organisations goal

is to provide high quality IT services and products that satisfy
customer needs. Its innovation team consists of personnel from
various functional departments including the managing director, all
managers, and some experts from the technical group, human
resources and finance. The team meet monthly to discuss the
execution of its innovation plan and in particular the performance
of its indicators. In addition, various groups in the organisation
meet weekly to review lower-level indicators and agree actions for
keeping them on track. Figure 6 shows the status of its current
performance indicators.
27
Figure 6: Performance Indicators at LCIT Solutions
The team has chosen eight performance indicators. For example,

the Defects per Installation measures the errors in each IT
installation. A record of errors is kept to stop them happening in
the future. All these indicators are performing well except one that
need attention training. On closer examination the training
target of ten hours per quarter for each employee is not being met.
Activity
Define a list of no more than seven performance indicators for your

innovation plan. Keep the details of the indicators to a minimum
but make sure you capture all of the critical information. Try to use
an active verb in the title of the indicator e.g. Increase, Decrease,
Maintain, etc. Copy the table below into your spreadsheet
application and share the information with your innovation team.
Indicators
Title Unit Origin Target Stretch
Title = The title of the indicator

Unit = Unit of Measurement e.g. defects/unit or %
Origin = Original Value at start of period e.g. beginning of year
Target = Target Value at end of period e.g. end of year
Stretch = Stretch Value e.g. Target + 20%
28
Reflections
List five ways of defining a set of innovation goals

List five key attributes of a good performance indicator
Explain why seven indicators are better than thirty
Indicate the key data points in a simple performance chart
29
Managing Innovation Actions

Introduction
Actions are the activities that an organization carries out to make

change physically happen to products, processes and services.
Actions are usually carried out in response to a stimulus such as a Actions
problem or a goal. There are a number of different types of actions Actions are unique non-
including solving problems, generating ideas, managing projects permanent activities that
often require resources
and balancing project portfolios. The terms project and initiative time, money and labour.
are interchangeable. They are unique non-permanent activities
that require resources time, money and labour. Problems and
ideas can be either proactive or reactive. They can react to an
existing problem or they can be proactive in responding to a
potential problem or goal in the future. Ideas that dont require
significant resources can be implemented as quick wins. Ideas
that require significant resources can become initiatives or
projects. A typical organization will have many ideas and projects
active at once and at various stages of implementation. These ideas
and initiatives should have a strong relationship with the goals of
the organization. The entire portfolio of projects needs to be
balanced to maximize short-term and long-term benefits while
simultaneously optimising scarce resources.
Learning Targets
Describe the problem solving process and a number of tools

for solving problems systematically
Explain idea generation and use tools for generating new
ideas
Identify broader aspects of project management appropriate
to the innovation process
Explain the procedure for project portfolio management
where a group of projects are chosen to meet short- and
long-term goals
Managing Actions
Stimuli
Ideas can be stimulated by
There are four common types of actions illustrated in Figure 7 problems or goals. They can
also be stimulated by more
problems, ideas, projects and initiatives. The terms initiatives knowledge e.g. attending
and projects are interchangeable. Innovation management conferences, networking,
training, benchmarking,
typically involves many of each type of action. For example, etc.
organisations will have a number of projects ongoing at once. Some
of these may be radical while most may be incremental. Some
30
projects will deal with changes to processes, while others will deal
with products. Project management of an individual project is one
issue that needs to be addressed in organisations. Of equal
importance is balancing the portfolio of projects. Problems are
often regarded as the seed of innovation e.g. a problem exists with
a particular product when compared with a competitor. On the
other hand ideas or goals are viewed as stimulating innovation. We
begin this section by looking a problem solving. Later we explore
idea generation and project portfolio management.
GOALS
ACTIONS
Idea s
RESULTS
Problems
Projects
Initiatives
COMMUNITIES
TEAMS
Figure 7: Innovation Actions
Solving Problems
From time to time, problems occur with products, processes and

services. Problems are identified by employees, customers and
other stakeholders. Customers are an excellent source of problem
identification. Not only do they experience problems but they can Problems
Problems can be reactive
often predict problems in the future. They use products, processes or proactive.
and services to add value to their own activities and have a strong
focus on any problems they encounter. The solution to a problem
can be either reactive or proactive. Reactive problem solving
occurs after a problem has been identified. Proactive problem
solving occurs before a potential problem has occurred. The terms
problem solving and corrective action are interchangeable.
A large number of tools can be used for documenting, analysing,

ranking and illustrating problems and later identifying solutions for
solving them. Table 1 below illustrates a number of problem solving
and idea generation tools.
Table 1: Problem Solving Tools/Techniques

Activity Network, Affinity Diagram, Bar Charts, Brainstorming,
Cause-Effect Diagram, Checklist, Control Chart, Decision Tree,
Design of Experiments, Fault Tree Analysis, Failure Mode Effects
Analysis, Flowchart, Flow Process Chart, Force-Field Diagram,
Gantt Chart, Histogram, IDEFo, Line Chart, Matrix Diagram, Matrix
Data Analysis Chart, Nominal Group Technique, Pareto Diagram,
31
Prioritisation Matrix, Process Capability Diagram, Process Decision
Program Chart, Relationship Diagram, Scatter Diagram, String
Diagram, Surveys, Triz, Tables, Tree Diagram, Value Analysis,
Voting
It is not possible to discuss each of these tools and techniques Search

individually. You are encouraged to visit the internet and search for Search the internet using a
information on any tools or techniques that catch your interest. popular search engine using
the key words in Table 1
What follows is a discussion on some popular tools: (i) Cause-Effect,
(ii) Brainstorming (iii) Affinitising and (iv) FMEA.
Cause-Effect: This graphical technique identifies the effect or

effects of a problem. It then looks for possible causes of the effect.
Causes can be grouped into key areas. One popular grouping
technique is to use (i) man, (ii) machine, (iii) method or (iv)
material. The possible cause can be the person, the equipment or
machine that they use, the method in which they use the
equipment or any materials in the process.
Brainstorming: Brainstorming is a technique that relies heavily on

group creativity. It is particularly effective in looking in the broad
direction of a problem and in developing solutions to problems that
cannot be logically deduced. Brainstorming encourages the use of
divergent thinking. Two basic rules apply to creative thinking,
these are: (i) suspended judgement during the creation of ideas
and (ii) all ideas put forward are considered.
Affinitising: Once ideas have been generated, the next step is to

rank them. A simple technique for ranking or affinitising is to rank
them according to risk and impact. Each individual can be asked to
place a number from one to five for both risk and impact on each
idea. Alternatively, an open discussion between groups of
individuals can attempt to reach a consensus on the ranking. Once
the ideas have been ranked, perhaps the top three or five can be
discussed further in detail. Pareto Analysis indicates that 20% of the
problems cause 80% of the effects (the 80/20 rule).
FMEA: Failure Mode Effects Analysis is a technique for predicting

future problems or failures and them allocating a score to each
problem. The technique then identifies actions that can be carried
out to prevent the failure occurring. The technique is popular in
product design and in processes. The technique is highly successful
in assuring high quality and greater reliability of products that in
turn give organisations a competitive advantage over their
competitors.
Sample: Customers and employees at a computer chip

manufacturing company complained of long delays in releasing new
chips. A group of employees including managers, designers, and
32
lead customers developed a solution using cause-effect,
brainstorming and affinitising. Figure 8 illustrates the cause-effect
diagram that indicates the most likely causes of the long delays.
This was followed by brainstorming which identified ideas for
addressing the key causes and affinitising which ranked the ideas in
terms of their risk versus impact.
Figure 8: Cause-Effect Diagram
Generating Ideas
Ideas occur during the problem solving process, or when goals are
defined that motivate individuals. Some ideas occur because of
serendipity i.e. an idea suddenly arises without any prompting.
Most ideas are planned. They occur because of a planned set of
activities. Good ideas go on to become initiatives and projects that
require resources time, labour and money and need to be Serendipity
Some ideas occur because
scheduled. Some ideas can be implemented immediately with very of serendipity i.e. an idea
few resources. These are sometimes called quick wins. Creativity suddenly arises without
any prompting. Most ideas
is one of the first steps in the idea generation process. Creativity are planned.
begins by identifying a problem or a goal. Individuals or teams with
the right expertise, motivation and creative thinking skills work on
the problem or goal, generate ideas, test the ideas and ultimately
implement the ideas as quick wins, corrective actions, incremental
improvements or projects. The vast majority of ideas will be
scrapped, recycled, merged with other ideas, or postponed.
Perhaps one idea in one hundred will progress to become a
solution. There are a number of ways of encouraging the idea-
creation process in any organization. Some of the more popular
ways are listed below:
1. Providing a diverse information service

2. Employing staff with diverse interests
3. Having a supportive management style
4. Allowing failures to be willingly tolerated
5. Allowing individuals room to pursue their own ideas
6. Rewarding success
7. Providing idea suggestion programs
33
8. Providing good strategic direction
9. Benchmarking and access to external stimuli
10. Providing a challenging environment
Individuals will become creative if they are motivated, competent

and possess problem solving and idea generation skills in an
environment that provides well-defined goals and supports for the
innovation process.
Sample: A number of tools can be used in the idea creation

process. Some of these were listed in Table 1: Problem Solving
Tools/Techniques. Mind mapping has become a popular tool in
recent years for a wide variety of problem-solving and idea
generation tasks. Mind mapping which takes its ideas from the
original spider diagram can be used to create concepts or
thoughts, associations between concepts, and hierarchies of
concepts. These are also called tree diagrams and topic maps. Mind
maps can be used for a number of problem solving techniques
mentioned earlier including cause-effect diagrams and
brainstorming. Figure 9 illustrates a mind map for the concept of an
Innovation Team. The diagram suggests that to understand an
innovation team the reader needs to understand an number of
associated concepts such as creativity, problem solving and so
on.
Figure 9: Mind Map
Sources of Ideas
There are many sources of ideas. Sources of ideas can be divided

into six areas6: (i) new knowledge, (ii) ideas of customers, (iii) lead
6
Managing Creativity and Innovation, Harvard Business Essentials, Harvard
Business School Press, 2003
34
users, (iv) empathetic design, (v) invention factories and, (vi) open
market innovation.
New Knowledge: These are ideas from employees, suppliers,

distributors and individuals in the organisation. Ideas are typically
generated from new knowledge and insights gained from books,
magazines, competitive benchmarking, collaborative
benchmarking, practice and experience. Many sources of new
knowledge can be used to generate new ideas.
Ideas of Customers: Customers are a main source of new ideas for Customer Ideas
products, processes and services. Customers are useful for One weakness of using
identifying problems and weaknesses. Market research of large customers solely for
generating ideas is that
customer bases can also identify future trends in customer buying customers often defend
behaviour. One weakness of using customers solely is that the products they
purchase.
customers often defend the products they purchase and hence
usually have poor ideas regarding future products, processes or
services.
Lead Users: Some customers are particularly interested in engaging

in the innovation process and push the barrier of usage for
particular products, processes and services. These are called lead
users. Lead users are important for collaborative benchmarking, co-
design, and testing and validation of new ideas.
Empathetic Design: This design process involves observing users of

the products, processes and services. Users are observed often by
camera over a prolonged period. Their usage pattern often shows
up pleasure, frustration, and so on that can guide designers
regarding peoples potential likes and dislikes of a particular
product or service.
Invention Factories: Invention factories are special laboratories

within organisations, and those shared between organisations and
universities. Laboratories such as Bell Labs hire experts from
diverse backgrounds to work on ideas for the future. These ideas
are principally scientific in nature with solutions often only possible
in the long term.
Open Market Innovation: This approach to generating ideas

involves purchasing and taking over other organisations that have
already generated complementary innovations. The combination of
skills and ideas from both organisations is blended and mixed to
generate new opportunities for the expanded organization.
Evaluation of Ideas
The most direct way of evaluating an idea is judging its merits with
respect to its impact on meeting the goals of the organization
35
versus any risk of not achieving its impact. Score each idea on a
scale from one to five on its impact, and then score each idea on
a scale from five to one on its risk. Multiply both scores and you
get an overall score for the idea. Other factors that need to be
considered are the technical and business competencies available
in the organization. There is little point in choosing a good idea if
the competencies to implement and exploit the idea are not
available in the organization. Cost benefit analysis is another direct
way of evaluating an idea, although it is often difficult to
determine benefit from an idea that has not been tested in the
marketplace.
7
Another approach to evaluating ideas is the buyer-utility map . The Utility Levers
buyer-utility map is a two-dimensional matrix with six utility levers on Productivity
Simplicity
the y-axis and six stages of buyer experience on the x-axis, see Figure Convenience
10. The approach suggests that every customer measures the utility of Risk
Fun and image
a product, process or service according to the criteria on the map. The Environmental friendliness
six utility levers are productivity, simplicity, convenience, risk, fun
and image, and environmental friendliness. If a comparison of
Buyer Life Cycle
product, process or service shows that your idea is better than Purchase
competitors, then the idea is a good one. All six of these utility levers Delivery
Use
can then be applied for each stage in the buyer experience life cycle Supplements
from purchase, delivery and use to supplements, maintenance and Maintenance
Disposal
disposal. Again, if the comparison with competitors shows your idea is
better, then the idea is a good one. An alternative approach to using
the buyer-utility map is to use it to compare customer requirements
with the idea.
ts ce
Purchase D Use Supplemen M Dispos al
n
el ery ainten
iv
Collective Productivity
Simplicity
Convenience
Risk
Fun and Image
Environmental Friendliness
Figure 10: Buyer-Utility Map (Kim and Mauborgne, 2000)
Sample: A low cost airline recently completed a buyer-utility map for its
innovative service to airline passengers. They later contrasted this map with
the map developed following an analysis of requirements by airline passengers.
The map is illustrated in
Figure 11.
7
Kim and Mauborgne, Knowing a winning business idea when you see one.
Harvard Business Review, 2000. September-October: p. 129-136.
36
h lements o
ce a
e an
l
as s
P r c
Delivery U e Sup Ma D
s
p
u sp
i
Collective Productivity
Simplicity
Convenience
Risk
Fun and Image
Environmental Friendliness
Figure 11: Buyer-Utility Map for Low Cost Airline
During the purchasing stage, the Internet contributes towards lower

cost (i.e. collective productivity), convenience, lower risk (since
the customer interacts directly with the airline), and fun and image
(since customers often boast about the price of their tickets with
friends). Simplicity is not seen, as an advantage since interacting
with a web site is less simple than perhaps interacting with a travel
agent. During the delivery of tickets stage the use of the Internet
as a delivery mechanism provides numerous advantages. During the
use of the service customers viewed the no frills model as
advantageous in almost all utility levers. Finally, in the
supplements phase activities such as changing dates and repurchase
due to missed flights again lead to a more productive service since
new tickets purchased on the spot are also not expensive. The
maintenance and disposal stages were not relevant for this service.
Project Portfolios
Most ideas transform into projects that demand scarce resources Project Portfolio
that need to be managed so that the organisation can optimise its Most organisations have a
group of projects that they
return on investment. A group of projects is called a portfolio. Most are working on as part of
organisations have a group of projects that they are working on as their innovation program.
part of their innovation program. These projects will have various
start dates, durations, due dates and so on. A portfolio of projects
is sometimes called a program or a plan. One of the key issues in
managing a portfolio is scoring and ranking of projects. As
investment budgets increase or decrease, the position of the
project in the overall ranking determines whether it would be
implemented or not. There are four key approaches for portfolio
management:
Maximising Value of Portfolio

Creating the Right Mix of
Projects Maximising Alignment
with Goals Optimising Resources
Maximising Value of Portfolio: This approach involves placing a

value on each of the projects in the portfolio. Payback is a simple
37
yet effective way to place value on a project. This approach
suggests reviewing projects simply in terms of their cost versus
revenue potential. An alternative approach is to include both
financial and non-financial criteria. Projects can be scored on a
number of criteria, for example: Strategic alignment, Product
advantage, Market attractiveness, Ability to leverage core
competencies, Technical feasibility, Reward vs. risk, Payback and
so on. The total scores for each project in the portfolio are then
compared.
Creating the Right Mix of Projects: The previous approach Project Mix
Develop a mix of high-
maximizing value often leads to only low-risk projects in the risk and low-risk projects.
project portfolio. Low risk projects have predictable but often Risky projects can fail but
they may also provide
medium benefits. A complementary approach is to develop a mix of significant benefits.
high-risk and low-risk projects. Risky projects can fail but they may
also provide significant benefits. The bubble chart is a simple tool
for visualizing a mix of projects and providing decision support for
managing a project portfolio (see Figure 12).
Risk
Low
Pearls Bread and Butter
High Low
Reward
Oysters White Elephants
High
Figure 12: Bubble Diagram
This bubble diagram maps projects according to their impact on

either reward or risk. The size of the bubble in this instance
represents the capital cost of the project. The position of the
bubble indicates whether the project has a high or low reward, or a
high or low risk. This presents the user with a visual decision
support tool that allows them to rank projects in the portfolio.
Each of the quadrants has been given a name representing their
relative meaning.
Maximising Alignment with Goals: Maximising Alignment is an

objective that selects projects that are aligned with particular
goals. A powerful but simple technique used here is the matrix
diagram (see
Figure 18). The matrix diagram places the portfolio of initiatives or
projects on the y-axis and a list of the other variables on the x-axis.
38
A mark is then placed on the intersection between two variables if
a relationship exists between them.
Optimising Resources: This is the process of balancing funds,

people and skills required by the portfolio of projects. There is
often a finite amount of money available for investment. In
addition, the funding available can change. For example if revenues
are particularly low for the organisation, then overall expenditure
on innovation can be suddenly reduced. This can mean shelving
particular low-ranked initiatives. The total number of person-hours
and skills available for executing initiatives is also finite, and can
vary significantly as people move within and between
organisations. A major cause of variation is the amount of time
individuals have for spending on innovation activities versus their
day-to-day operations activities.
All four approaches discussed above can be used together to

generate knowledge that can be used to decide which projects to
pursue. Once a portfolio has been chosen there are two approaches
for reviewing a portfolio while it is in the process of being Portfolio Dominates
The portfolio as a whole
executed: (i) the Gates Dominate approach and the (ii) Portfolio and the organizational
Dominates approach. goals as a whole are
reviewed regularly rather
than detailed evaluations
Gates Dominate: This review approach focuses on reviewing each of individuals projects.
stage gate within the individual projects in the portfolio. At each
stage gate, a decision is taken regarding future actions for the
individual project. A regular portfolio view is sacrificed in favour of
in-depth review of individual projects. The approach is suitable
where portfolios are relatively static and unchanging and is
typically found in large mature businesses.
Portfolio Dominates: This review approach favours a portfolio view

over an in-depth review of individual projects. The portfolio as a
whole, and the organizational goals as a whole, is reviewed
regularly. The approach is particularly suitable in fast, dynamic
organisations where projects are changing regularly and where the
business environment is regarded as a fluid i.e. goals and projects
are changing regularly.
Best Practice
When Boeing announced the development of a new airplane model

Boeing 777 in the late 1980s, many aviation experts wondered
about the rationale behind the decision. They questioned the need
for a new model since Boeings highly successful 747 models had
been flying successfully for over 30 years.
39
Goals: To make the 777 model technically superior as compared to
other competing models during the time of its launch.
Actions: The 777 was designed and developed in close collaboration

and involvement of Boeings customers, fellow aircraft
manufacturers, airline users, engineers, finance experts,
technicians and computer experts. Various computer based
technologies like CAD, CAM and CATIA were used in designing the
777.
Teams: Boeing and Boeings customers, fellow aircraft

manufacturers, airline users, engineers, finance experts,
technicians and computer experts
Results: The 777 has the distinction of the first paperless designed
aircraft in the aeronautical history. The Boeing 777 family came to
be known as the builders of the most technologically advanced
aeroplanes. The 777 design, innovative features and approach to
manufacturing established a benchmark for development of aircraft
in future.
Case Study
Sheet Metal Industries is a manufacturing company that produces

metal panels for the automobile industry. Its mission is
Manufacturing Excellence through Teamwork and it has produced
a five-year Manufacturing Development Plan that outlines a set of
strategic objectives and expected performance targets. One of its
primary goals is cost reduction. Figure 13 illustrates its current
portfolio of projects.
Figure 13: Project Portfolio for Manufacturing Firm
40
The full portfolio of projects currently has a capital expenditure of
over 1 million euros (1.118m). The most expensive project is a
high tech upgrade of its sheet metal machinery (400k). This
particular project will also have additional recurrent costs of 100k
annually. However, the saving in terms of quality improvement,
additional capacity and improved productivity will be 300k
annually. The project has a payback of two years. All of the
projects except one in the portfolio pay for themselves within two
years. The recycling process development project has a poor
payback of over five years but it is ranked high in the portfolio
because of its significance in meeting the companys goal of
environmental conformance.
Summary
Problems occur to products, processes and services regularly now Search

and in the future. When these problems are identified either by Search the internet using a
employees, customers or other stakeholders, they need to be popular search engine using
the following key words:
recorded and managed. Not all problems are important. Typically
20% of problems cause 80% of the negative effects. Ranking FMEA
Creativity
problems helps. Ideas evolve from problems and well-defined goals. Idea Generation
Various stimuli can initiate the creativity process including new Project Portfolio
Buyer-Utility Map
knowledge, ideas from customers and research laboratories. Most Bubble Diagram
ideas are planned and many ideas are merged, postponed or
rejected. The principal way to measure the potential success of an
idea is to compare it with the goals of the organization.
Organisations typically implement ideas through a portfolio of
projects. The primary objective of portfolio management is to
create a balance around issues such as cost-benefit, risk versus
reward, and goal attainment. In dynamic organisations, where goals
are changing, portfolio management is often more important than
managing individual projects.
Activity
Create a list of ideas or projects for your innovation plan. You can
generate a list of ideas using techniques such as brainstorming.
Record only the critical information about the projects in a simple
spreadsheet application. The form below contains all of the critical
information necessary for managing a simple portfolio of innovation
projects.
41
Projects
Title Start Date Due Date Risk Impact Cost Payback
Impact = Impact on Indicators (with 1 for very low and 5 for very high)
Risk = Level of Risk (with 5 for very low and 1 for very high)
Cost = Capital Costs in currency units

Payback = Cost / Annual Savings or Revenue
Reflections
List three tools for problem solving or idea generation

What are the six principal sources of ideas for any
organization?
Name the six utility levers that can be used by customers
in evaluating the value of a product, process or service
What are the four key overlapping strategies used in
selecting projects in portfolio management?
42
Empowering Innovation Teams

Introduction
In previous sections we looked at the first two of five key areas

surrounding the innovation funnel goals, actions, teams, results
and community. Goals set the objectives for the generation of
actions by various individuals in the organisation. In this section we
will look at the role that teams play in the innovation process. The
first part looks at building teams how to create team structure
and foster team behaviour that leads to more effective innovation.
Next we look at some of the concepts of leadership and the process
of creating an innovation culture. We then explore some ideas
around motivation and reward, and in particular we look at ways to
tie an individuals goal into the overall goals of the organisation.
The final part of this section looks at organisational learning, where
organisations can learn from mistakes and continue to improve the
innovation process itself.
Learning Targets
Define innovation teams structure and behaviour and explain

how to build a team culture within the organisation
Explain the importance of leadership in innovation
Explore various ways of increasing motivation through
intrinsic and extrinsic rewards
Explain the need to create a learning organisation for
sustainable innovation
Empowering Teams
There are two major resources used in the innovation process. The
first is funding, which was described very generally in the previous
section. The second are individuals, and in particular teams.
Individuals are necessary for setting goals, generating ideas,
relating ideas to goals and executing projects. Individuals have Innovation Resources
There are two major
many different skills and perspectives to bring to the innovation resources used in the
process. They also have differing levels of engagement and innovation process: funding
and individuals or teams.
motivation. There are a number of key techniques for increasing
the engagement and motivation of individuals in the innovation
process. Some of them involve managing the information and
structure surrounding teams. The most important techniques
address the behaviour and motivation of teams. In terms of
information and structure, we can visualise the innovation funnel as
43
comprising a number of knowledge elements as illustrated in Figure
14. These are Individuals, Responsibilities, Teams, Workgroups and
Appraisals. Other knowledge elements can be easily added in Figure
14 and include the Skills of various individuals and training
Courses available for individuals to complete. This section looks
at each of these knowledge elements in four separate but
interrelated discussions on leadership, teams, motivation and
learning.
GOALS
ACTIONS
RESULTS
COMMUNITIES
TEAMS
Individuals
Responsibilities
Teams
Workgroups
Appraisals
Figure 14: Innovation Teams
Leading Innovation
Leadership is the ability to influence a team towards the

achievement of well-defined, communicated and accepted goals.
Many actions occur from the bottom up, i.e. ideas are generated by
engineers, specialists and users of a particular product, process or
service. What stimulates this activity is a combination of leadership
skills that include creating a culture of innovation, keeping the
focus of the strategic goals of the organisation, empowering others
to act on the goals and resolving conflicts as soon as they arise.
These skills are not easy to attain and often require many years of
training and experience. Over the years, leaders will develop a
specific style that can foster and promote innovation.
Leadership is clearly important for good innovation. What is not so Leadership

clear is what attributes a good leader needs to have. The following Leadership is the ability to
influence a team towards
is a list of attributes identified as being important for successful the achievement of well
leadership8: defined, communicated and
accepted goals
Ambition and energy

The desire to lead
Honesty and integrity
8
Robbins, S., Organisational Behaviour: Concepts, Controversies, Applications.
8th ed. 1998, New Jersey: Prentice Hall.
44
Self-confidence and intelligence
Job-relevant knowledge
Highly self-motivated
It is generally agreed that good leadership requires skills in three

areas: tasks, relationships and organisation. Leadership depends on
the ability to manage tasks, manage relationships within the team
and with other stakeholders and equally importantly it depends on
the organization. A good leader in one organization may not be a
good leader in another. It is this latter issue organization and in
particular how an organization changes that suggests that good
leadership requires dynamism and the ability to change.
Table 2 illustrates two main styles of leadership transactional

and transformational. Transactional leadership is typically used in
established organisations. The style emphasises attention to short-
term goal attainment, the need for formal structures, problem
solving, and maintaining the status quo that has served the
company over many years. Transformational leadership on the
other hand emphasises attention to long-term visions,
empowerment and trust and a continuous focus on the need to
change products, processes and services and the innovation process
itself.
Table 2: Leadership Styles9

Transactional Leadership Transformational Leadership
Clarify goals & objectives to obtain Establish long-term vision
immediate results
Create structure & processes for Create a climate of trust
control
Solve problems Empower people to control
themselves, manage problem
solving
Maintain & improve the current Change the current situation
situation
Plan, organise & control Coach & develop people
Guard & defend the culture Challenge & change the culture
Transactional leaders are often regarded as conservative

bureaucrats who abide by the rules of the organisation. A
transformational leader is viewed as a maverick that challenges
established authority, attempts to seize every opportunity,
question every rule and motivates and controls individuals through
personal loyalty.
9
Jones, P., et al., Delivering Exceptional Performance. 1996, London: Pitman
Publishing.
45
Leadership Culture
Setting goals and generating ideas are two elements of a complex

environment for innovation. New ideas will only succeed if the
organizational culture is right to allow them to grow and prosper.
There are many factors necessary for developing an effective
innovation culture in any organization, including the following:
Risk taking is encouraged and

accepted New ideas are welcomed
Information exchange is open and shared
Extensive and uncontrolled access to new
knowledge Good ideas are supported
Innovations are rewarded and recognised
Risk Taking: Taking risks is a necessary part of creating new ideas. Risk Taking
Taking risks is a necessary
Many ideas will fail but a few will succeed that will more than part of creating new ideas.
justify the entire effort. The risk-benefit relationship needs to be
integral part of the skill-set of every innovation leader.
Welcome New Ideas: Welcoming new ideas is consistent with the

transformation management approach where any ideas that will
lead to positive change are welcomed. This is not to be confused
with welcoming any ideas. Poor ideas, or ideas which have an
unacceptable level of risk, will need to be terminated swiftly.
Information Exchange: Information and knowledge within an

organisation is the life-blood of innovation. Who is responsible for
what goal? Who is working on a particular idea? Who has skills in a
particular area? Who recently visited a particular conference?
Access to New Knowledge: The internet has recently created an Knowledge Access
explosion in new knowledge sources. In the past, organisations The internet has recently
created an explosion in
relied on expensive libraries, subscription to a few magazines and new knowledge sources.
trips to conferences and trade shows. New knowledge is the raw
material for creative thought. Access to new knowledge needs to
take place within an environment where goals are well defined and
understood.
Support for Ideas: Ideas and the individuals who create them are
like young seedlings if they do not receive support and
encouragement, they can wither and die. Innovation leaders need
to learn how to support ideas and protect the often delicate egos
and sensitivities of the individuals who create them.
Reward
Creative energy is easily
Reward and Recognition: Innovation and creativity demand dissipated. Reward and
appropriate reward and recognition for the individual or team that recognition replenishes
this energy in the minds
creates an idea. Creative energy is easily dissipated. Reward and of individuals.
recognition replenish this energy in the minds of individuals.
46
Rewards can be either intrinsic (e.g. self actualisation) or extrinsic
(e.g. a bonus) or both.
Empowerment and Responsibility
Empowerment is about giving individuals the necessary power to

make appropriate decisions. Empowerment is similar to delegation
in that it increases autonomy and discretion in individuals and leads
not only to more effective innovation, but also better job
satisfaction. Autonomy and discretion together are one of six
psychological job criteria identified that empower individuals and
lead to better job satisfaction. The full list of criteria is10:
Autonomy and discretion

Sense of meaningful contribution
Opportunity to learn and continue learning on the
job Optimal variety
Opportunity to exchange help and
respect Prospect of a meaningful future
Empowered individuals not only want an appropriate increase in

Empowerment
autonomy and discretion, they also need to feel that their Empowered individuals
contribution is meaningful and valued. They want the option of want not only an
appropriate increase in
continuing learning on the job i.e. increase their enablement and autonomy and discretion,
knowledge that in turn can lead to more empowerment. but they also need to feel
that their contribution is
Empowered individuals want optimal variety in their job tasks and meaningful.
they would like the opportunity to exchange help and respect with
colleagues. Finally, empowered individuals need to know that they
have the prospect of a meaningful future with the organisation.
Empowerment or the discretion to take decisions needs to be
appropriately balanced with enablement i.e. the ability and skills
to take decisions. If that enablement is not present in the
individual, then it needs to be supported through more training and
experience.
One of the first steps in empowering individuals is to assign them

responsibility for something i.e. put their name on a particular task
or goal and ask them to take ownership. The level of ownership can
vary considerably. Putting their name of a particular goal may
mean that if the goal is not met then they are held personally
responsible. On the other hand, they may simply be responsible for
reporting to the organization the status of the goal. They may have
responsibility for communicating the goal to other individuals and
collecting information on how the goal is progressing. The level of
responsibility needs to be worked out in advance.
10
Pava, C., Managing new office technology: An organisational strategy. 1983,
New York.: The Free Press.
47
Building Teams
Most organisations now operate a type of matrix organizational Teams

structure where individuals report on a permanent basis to There are two types
of teams:
functional departments but also report on a temporary basis to
project organisations. Functional departments are examples of Permanent (e.g.
department)
permanent teams. Once they are formed and structured, they can
last for many years. Project organisations, on the other hand, are Non-Permanent (e.g.
project teams)
non-permanent teams. Project organisations only last for the
duration of the project. The Innovation process requires both types
of teams. The terms team and organisation are interchangeable.
A team is a group of people with a common purpose. This common

purpose is typically expressed by a set of goals. There are two
types of teams permanent and non-permanent. Management
teams, departments, committees and work groups are examples of
permanent teams. Permanent teams do not change significantly
over a long period. A project team, on the other hand, is an
example of a non-permanent team. The project team has a start
date and an end date, both defined by the project to be executed.
Each time a non-permanent team forms to execute a particular
initiative, it has an entirely new set of goals. As we learned earlier
each new project is unique, i.e. it has never been done before.
Therefore each non-permanent project team needs to define and
understand a new set of goals each time a project is started.
Innovation is often seen as an individual act where one person

creates an idea and perhaps another validates and implements the
idea. Most innovations, however, are the result of group or team
behaviour. Teams can create greater innovation because they bring
together different competencies, insights and perspectives. Team
composition means a diversity of thinking styles and skills. This
diversity has a number of advantages:
Diversity creates creative friction between individuals that

can spark new ideas
Diversity is a safeguard against groupthink where a group of
individuals has a tendency over time to allow their thinking
to converge
Diversity creates an environment where different
perspectives are developed and where good ideas can be
identified and supported
Innovative organisations have high employee involvement in teams.

The attributes of such organisations include:
Involvement
Innovative organisations
employee involvement policy have high employee
involvement in teams.
clear organisational strategy towards
involvement formal measures of involvement
internal consulting staff
48
team champions
large training activity
external consultants
Innovative organisations have a formal policy for engaging

employees in teams and regularly create strategic objectives whose
aims are to enhance involvement. They have formal measures of
team involvement such as how many ideas are being generated and
how much time is being spent on project activities by individuals.
Innovative organisations often have internal consulting staff that
can consult and train various teams in an effort to increase
effectiveness and participation. Team champions or mentors are
assigned to teams. These mentors are often senior members in the
organisation and can act in the interests of the team at senior
board meetings. Innovative organisations have a large training
activity and use external consultants for training and facilitation on
various team-building activities.
Motivating Performance
One of the most practical ways to tying individuals into the Motivation
innovation process is to link their personal performance with the One of the most practical
ways to tying individuals
performance of the organisation. The performance of the into the innovation process
organisation is articulated through such goals as strategic is to link their personal
performance with the
objectives and performance indicators. If the individual is made performance of the
responsible for achieving these goals, then it can act both as a organisation.
motivator and later on as a reward. There are many intrinsic and
extrinsic means of motivating individual performance. Intrinsic
techniques, such as giving the individual autonomy and discretion
are generally deemed the most productive. Extrinsic techniques,
such as linking performance to pay and other rewards, are also
necessary incentives for the individual and help them to take more
risks for the organisation.
Extrinsic Motivation : Intrinsic motivation, such as job satisfaction

is clearly important however, a number of forces act against it.
These forces include:
Individuals are risk adverse, loss averse, and tend to remain

content rather than stretch their efforts.
Individuals need to see a clear link between their effort and
the resulting performance.
Individuals already receiving a guaranteed reward in return
for reasonable performance are unlikely to stretch further.
To counteract these forces, extrinsic motivation remains present in

most innovative organisations. There are three principal techniques
used for providing extrinsic motivation and linking reward with
performance:
49
(i) Gain Sharing,

(ii) Profit Sharing and
(iii) Performance Appraisal.
The ideal scenario for many organisations is to maximise the factors

that provide intrinsic motivation and optimise extrinsic-based
systems.
Performance Appraisal
Performance appraisal is a very common way to reward individuals Appraisal

through annual salary increases. It is a structured interaction In many organisations
between an individual and their superior to formally appraise the but not all appraisal
results are used, either
individuals progress on a number of goals, both organisational and directly or indirectly, to
personal. In many organisations but not all appraisal results are help determine reward
outcomes.
used, either directly or indirectly, to help determine reward
outcomes. Similarly, appraisal results are used to identify the
poorer performers who may require some form of counselling, or in
extreme cases, demotion, dismissal or decreases in pay.
Researchers and managers disagree on the need to link appraisal

with reward. Advocates argue that it can lead to significant
increases in innovation and productivity. Critics argue that
increases in productivity do not require a link with rewards and
that linking both can ultimately be damaging for team morale. One
compromise argues for a performance appraisal system for
individuals with no reward, coupled with a group-based reward
system (similar to gain sharing) when a reward is shared equally
across a team.
The performance appraisal system is typically constructed around a

range of organisational and personal development topics. In the
context of the approach adopted in this booklet, individuals can
find themselves motivated to contribute to specific goals within the
following areas:
Contribution to specific Objectives

Contribution to specific Indicators
Development of specific Technical/Management
skills Development of specific Interpersonal Skills
Development of specific Personal Skills
Specific Objectives: The individual is given a number of objectives

that they take responsibility for achieving either individually or as a
team. These are typically the same objectives or a subset of the
main objectives for the organisational as a whole. Individuals are
usually measured on up to three of the most important objectives.
50
Specific Indicators: The individual is given up to three performance
indicators that they take responsibility for achieving either
individually or as a team. These are typically the same indicators or
a subset of the main indicators for the organisational as a whole.
Individuals are usually measured on up to three of the most
important indicators.
Technical/Management Skills: The individual agrees to develop

specific technical and management skills over the course of the
appraisal period e.g. computer programming skills, project
management skills and so on. These skills may be achieved simply
through the completion of particular training programmes.
Interpersonal Skills: The individual is assigned a number of

interpersonal skills to develop either independently or through
attendance at particular courses of study. The list of potential skills
include: Articulating Ideas; Coaching; Customer Orientation;
Delegation; Developing Others; Giving Recognition; Good Listener;
Handling Pressure; Initiative and Risk Taking; Mentoring; Monitoring
Performance; Motivating; Open and Ethical Communication;
Organisation; Personal Integrity; Problem Solving; Responding to
Feedback; Self-confidence and Teamwork.
Personal Skills: The individual is assigned a number of personal

skills to develop either independently or through attendance at
particular courses of study. The list of potential skills include:
Commitment; Communication Skills; Emotional Resilience;
Encouraging Motivation; Future Scanning; Listening to Others;
Managing Conflict; Networking; Positive Self-regard; Responsibility;
Self-Awareness; Self-development; Support; Training; Personal
Integrity; Problem Solving; Responding to Feedback; Self-
confidence and Teamwork.
The performance appraisal system also typically involves an

opportunity for the individual to add other achievements outside of
the objectives agreed. The whole process is formally recorded and
entered into the individuals employment record.
Learning Organisation
A Learning Organisation is an organisation skilled at creating, Learning Organisation

A Learning Organisation is
acquiring, and transferring knowledge, and at modifying its behaviour an organisation skilled at
to reflect new knowledge and insights. A learning organisation creating, acquiring, and
transferring knowledge,
facilitates the learning of all of its individual members, and and at modifying its
continually transforms itself through better knowledge and behaviour to reflect new
knowledge and insights.
understanding. Consider it in the context of the innovation funnel
presented earlier organisational learning is the process by which the
organisation carries out some actions in response to given goals; after
some time it reflects on the results of the actions towards
51
achieving those goals, and if necessary alters its behaviour towards
creating new goals and new actions. The cycle continues
indefinitely.
Learning organisations are skilled at five main activities: systematic

problem solving, experimentation with new approaches, learning
from their experiences and the best practices of others, and
transferring knowledge quickly and efficiently throughout the
organisation. Five conditions have been given for the development
of a learning organisation11:
A perception of learning as an important and cyclical
process
An acceptance of the different roles of innovation
A free flow of information
The ability to value people as the key asset
The ability to reframe information to the strategic and
innovation perspective
A learning organisation is one that values learning, and this includes Operations
The learning organisation
learning from mistakes. The organisation allows risk taking, differentiates between
experimentation, benchmarking and so on. The learning the roles of operations and
innovation. A learning
organisation differentiates between the roles of operations and organisation helps its
innovation. Operations are the process of selling, manufacturing members to understand
this difference
and delivering products and services. Innovation is the process of
changing products, process and services to meet the new demands
of customers.
Best Practice
Federal National Mortgage Association (known popularly as Fannie

Mae), achieved recognition not only for its financial performance
but also for its progressive human resource (HR) policies.
Goals: To recognise and retain talent, irrespective of

class/gender/nationality.
Actions: New HR policies were developed and implemented to offer

a wide variety of financial, health and career benefits. Some of
these policies were: healthy living day off; paid child adoption
leave; elder care and childcare programs; flexible work options;
Assistance for Collegiate Education (ACE) Program; Corporate
Mentor Program, mandatory diversity training; 10 hours of paid
time off each month for volunteer activities; and Employer-Assisted
11
Garvin, D., Building a Learning Organisation. Harvard Business Review, 1993.
July-August.
52
Housing (EAH). The Office of Diversity was created in 1992 to
promote diversity at the organisation.
Results: The organisation earned the reputation of being one of the

best companies to work for. The company had been included in
Fortunes Best Companies for Minorities list every year since 1998.
Summary
Innovation leaders are driven by vision, ambition and energy. They Search
are transformational, prepared to takes risks and constantly change popular search engine using
the status quo. Innovation leaders foster a culture of innovation the following key words:
within the organisation that encourages appropriate risk taking, Learning Organisation
welcomes new ideas, shares information openly and recognises the Performance Appraisal
Tiger Teams
contributions of individuals. Each organization consists of Leadership
permanent and non-permanent teams. Individuals can be members
of more than one team. Teams have a number of attributes, but in
particular they are a group of individuals with a common purpose.
Extrinsic reward involves developing a system where the
individuals performance can be linked to the performance of the
organisation. The ability to learn faster than your competitors may
ultimately be the only sustainable competitive advantage.
Sustainable competitive advantage requires continuous innovation
by organisations where individuals change regularly and innovations
are planned regularly. Organisations need to create a learning
culture that allows individuals take risks, conduct experiments,
implement actions and most importantly reflect on the lessons
learned. Organisations need to become more learning centred.
Case Study
ADO Pharmaceuticals is a US company with a subsidiary in Ireland.

The Irish company currently manufactures drug products mainly for
the European market. There are currently 200 employees at the
Irish manufacturing facility. Over the last 15 years the company has
built up a state-of-the-art research and development department
concentrating on Biotechnology products. The company has created
a plan for development of its R&D department and defined a set of
performance measures and projects. Individuals are reviewed
annually for their contribution to the performance indicators of the
organisation. They are also reviewed on personal development
around technical skills, interpersonal skills and leadership skills.
Figure 15 illustrates the appraisal form for each individual in the
organisation.
53
Figure 15: Appraisal Form for ADO Pharmaceuticals
Activity
Create a simple relationship diagram to compare two lists of data

against each other. Copy the table below into a new worksheet in
your spreadsheet file. Create a relationship matrix for (i) Indicators
vs. Responsibilities and (ii) Projects vs. Responsibilities. Project
managers should have a strong relationship (+) with the project.
Team members should have a weak (-) relationship with a project.
54
Relationships
<List 1> vs. <List 2>
Lists Results Row and Column

List 1 = Objectives or Indicators, etc. Progressing Well
): (: |:
List 2 = Individuals or Initiatives, etc. Progressing Poorly

Neutral
Matrix
Place a + character in the cell to indicate a strong relationship
Place a - character in the cell to indicate a weak relationship
Reflections
Why is transformation leadership more desirable for

effective innovation?
What are the two basic types of team?
Name three techniques for rewarding individuals with
money.
What is a learning organisation?
55
Monitoring Innovation Results

Introduction
One of the primary causes of failure in the innovation process is

poor monitoring of results. Results are defined in the dictionary
as the outcome of an effort. Earlier sections discussed three types
of efforts the definition of goals, the management of actions and
the empowerment of teams. This section continues from these
three discussions but now focuses on closing the loop in the
innovation funnel i.e. monitoring the results of goals, actions and
teams and equally importantly the relationships between them.
The first part of this section looks at some simple techniques for
reporting results. The traffic lights system is now a simple and
popular technique for indicating the status of goals, actions or
teams. Then we look at ways to map the relationships between
different sets of information. The matrix diagram is a powerful yet
simple decision support tool for assuring alignment between goals
and actions. Finally, we look at various issues around managing
innovation meetings.
Learning Targets
Illustrate a number of ways that results of goals, actions and

teams can be highlighted
Map the relationships between different sets of innovation
information
Use techniques for managing innovation meetings
Monitoring Results
The innovation funnel describes the innovation process as

Results
comprising four flows of structured information goals, actions, Results represent the
teams and results. Results represent the outcome of goals, actions outcome of goals, actions
and teams activities.
and teams activities. When monitoring the progress of goals,
actions and teams, three key types of information become
important exceptions, relationships and reports (see Figure 16).
56
GOALS
ACTIONS
RESULTS
Exceptions
Relationships
Reports
TEAMS COMMUNITIES
Figure 16: Innovation Results

Relationships: All of the activities described in earlier sections
(e.g. individuals, indicators, ideas, projects, etc.) can be related to
each other. For example indicators can be paired with projects
illustrating which indicators are linked to which projects, and visa
versa. The relationship diagram or matrix can also indicate which
projects have no indicators and which indicators have no projects.
Building relationship matrices is a powerful way to indicate the
results of the innovation activity and to decide what activities need
to be executed. Relationship matrices will be discussed in detail
later in this section.
Reports: An innovation report is a report on the Goals, Actions, Ideal Report

Teams and Results from an innovation funnel. By keeping a focus on An ideal report is a full
knowledge management
elements around the funnel, the report is a snapshot of the plans system that users can
for the future, the actions currently being executed and a history explore online.
of what happened in the past. A simple report consists on a set of
tables similar to the Activities presented in this booklet. An ideal
report is a full knowledge management system that users can
explore online.
Exceptions: All of the activities described in earlier sections (e.g.

indicators, ideas, projects, etc.) can be monitored for status and
progress as they are being executed. There are various ways to tag
status on an activity. A popular technique is to indicate the status
of an activity in terms of red, amber or green signals. Positive
exceptions are those activities that have a green signal only.
Negative exceptions have a red signal only. The ways in which
exceptions can be indicated and interpreted can be agreed by the
innovation team. Meetings can be managed in such as way that
focus is always kept on positive or negative exceptions.
Results Signals
There is a wide variety of techniques to signal the status of an

activity and consequently exceptions to normal behaviour. Two
57
simple and easy-to-deploy techniques are status fields and traffic
lights.
Status Fields: Status fields indicate various aspects of the status of

an activity. The table below lists a number of common approaches.
The % Complete field is an indication of how complete an activity
is. O% indicates that the activity has not started and 100%
represents full completion. The Progress field is a visual signal for
indicating various states of progress e.g. In Progress and
Waiting.
Table 3: Status Fields

Data Field Value
% Complete 0-100%
Priority High, Normal, Low
Progress Not Started, In Progress, Completed, Waiting,
Deferred, Abandoned
Status (See Traffic Lights example below)
Traffic Lights
Indicates the status of an
activity using visual
Traffic Lights: The traffic lights system of signalling the status of signals such as red, amber
and green.
an activity has become very popular in organisations for its
simplicity and visual impact. The meaning of each traffic light state
(i.e. green, amber or red) varies between organisations. Table 4
illustrates the three states and their possible meaning.
Table 4: Traffic Lights

Image Interpretation Alternative Alternative
Interpretation Image
Green Activity Activity progressing Green smiley
progressing well well face
inside control
limits
Amber Activity entering or Discussion required Amber neutral
leaving out of if time available face
control area
Red Activity out of Discussion required Red unhappy
control face
Watchdog
The individual labelled as
responsible for an activity
Some organisations have a control perspective on the meaning of takes on the role of
each state. If the light is red, then the activity is seen as out of watchdog and brings the
activity to the attention of
control and the individual responsible needs to report on the the team when necessary.
causes and remedies. This interpretation can lead some individuals
to hide the true status, since they equate a red signal with their
own personal failure even if the activity is a group event. A softer
interpretation is to equate each signal with the need to discuss the
58
activity. If the light is red, then the individual responsible is
signalling a need to discuss the activity within the team and not
that the activity is performing poorly. The culture within the team
in this case is one where the team takes ultimate responsibility for
the activity being in or out of control. The individual labelled as
responsible takes on the role of watchdog and brings the activity
to the attention of the team when necessary. A criticism of the
traffic light system is how to address the issue of individuals with
colour blindness. A simple way of overcoming this is to provide an
additional graphic element e.g. the traditional red circle becomes
a red circular unhappy face or smiley (see
Figure 18: Matrix Diagram).
Relationships
There are a number of ways of showing the relationship between

two or more sets of information. Table 5 shows various types of
relationships than can exist between sets of data.
Table 5: Types of Relationships

Relationship Explanation
One to one Where one data element is related to another data
element e.g. Initiative3A is being led by Individual4B
One to many Where one data element is related to a number of other
data elements e.g. Initiative3A has team members
Individual4B, Individual5C and Individual2E
Many to one Where many data elements are related to one data
element e.g. Initiative3A and Initiative4D are managed by
Individual4B
Many to many Where many data elements are related to many other
data elements. This is the same as One to Many and Many
to One but represented together in a matrix
Parent-Child Where one data element is the parent of another data
element. There is a hierarchical relationship between the
data elements e.g. Indicator2A is a subset or child of
Indicator3S.
The first three types are easy to implement in a knowledge

management system. The representation of many to many
relationships can be achieved with a simple matrix diagram. The
diagram illustrates where relationships exist and where they do not
exist. Matrix diagrams are used to identify the relationships
between pairs of lists. Representation of parent-child relationships
can be achieved using a tree diagram. Both of these diagrams are
good at illustrating the many to many relationships that exist
when comparing two lists. They can also be used to describe the
strength of relationships between pairs of data. Both diagrams are
illustrated schematically in Figure 17 below.
59
Figure 17: Matrix Diagram and Tree Diagram
Matrix Diagram
The matrix diagram is a decision support tool that facilitates Matrix

The matrix consists of cells
systematic analysis of the relationships between two or more sets that can contain symbols
of data. It typically consists of a table whose first column and top that denote the strength of
a relationship between a
row contain the data sets. The cells that form the matrix between pair of data elements.
the data sets can contain symbols or numbers that denote the
strengths of relationship between the data sets.
Figure 18 illustrates a simple matrix diagram for two data sets
goals and actions. It also illustrates an additional row and column
for indicating the results of each element in the data sets. The
matrix consists of cells that can contain symbols that donate the
strength of a relationship between a pair of data elements. This
provides a strong visual signal that is easy to interpret quickly. The
symbols can be simple dots or they can be assigned values that can
be summed up to give a numeric indication of the strength of a
relationship. The data list on the left-hand column can be
interpreted as representing the what of a problem, the data list
on the horizontal row then represents the solution or how to the
problem. The basic questions that the analyst can ask of the matrix
are:
Key Questions
1. What is the relationship between any two data elements? Why do some goals have
2. Why particular row elements are not related to particular no actions? Why do some
column elements? actions have no goals?
3. Why particular column elements are not related to particular

row elements?
60
Figure 18: Matrix Diagram
Types of Diagram: There are a number of types of matrix diagram

depending on the lists selected. Table 6 illustrates most of the
possible matrices that can be created among all of the knowledge
elements illustrated in the innovation funnel.
Table 6: Types of Matrix

Goals versus Goals Goals versus Actions
Objectives versus Indicators Objectives versus Initiatives
Indicators versus Requirements Objectives versus Ideas
Objectives versus Requirements Indicators versus Initiatives
Etc. Indicators versus Ideas
Etc.
Goals versus Teams Actions versus Teams
Objectives versus Responsible Initiatives versus Responsible
Indicators versus Responsible Initiatives versus Team
Etc. Initiatives versus Creator
Etc.
Teams versus Teams Actions versus Actions
Individuals versus Skills Ideas versus Ranking Criteria
Individuals versus Courses Problems versus Risk
Leader versus Teams Projects versus Schedules
Etc. Etc.
Relationships between Matrices: Matrices can also be related to

each other in a parent child relationship. Focusing on the matrix in
Figure 18, the row or top list of the matrix can be transposed into
the first column of a new matrix. A new list can then be related to
these data elements. For example, customer requirements can be
related to, say, design features in the first matrix. Design features
can then be related to, say, performance indicators in a second
matrix. Performance indicators can them be related to project
initiatives in a third matrix and so on.
61
Meeting Management
Meetings can be an expensive waste of time and potential source of

conflict. On the other hand, they can be a powerful way to
communicate goals, solve problems and motivate participants. To
achieve positive results, meetings need to have a focus that
appeals to participants and who feel they can make a meaningful
contribution. Participation and engagement of each individual is
one of the keys to success in a meeting. Other issues include (i) the
roles that certain individuals play at meetings, (ii) meeting agenda,
(iii) opening and closing a meeting and (iv) time management.
Roles: There are a number of potential roles at each meeting.

Meetings will typically have a chairperson, a reporter and
sometimes a facilitator. The purpose of the chairperson is to lead
the meeting and make sure that the agenda is implemented and
adjusted accordingly. The chairperson is ultimately responsibly for
conducting the meeting in a timely fashion. It is good practice for
each person at a meeting to talk through the chair initially rather
than address other individuals at the meeting.
Agenda: There can be fixed agenda, suggested agenda, hybrid, or Meeting Agenda
exceptions only. Typical fixed agenda for an innovation team 1. Previous Minutes; 2.
Matters Arising; 3. Goals;
include: (i) Previous Minutes, (ii) Matters Arising, (iii) Goals, (iv) 4. Actions; 5. Any Other
Actions, (v) Any Other Business. Matters arising refers to the Business
status of actions agreed in the minutes that will not otherwise arise
under the normal agenda. Since many actions will arise under the
normal agenda it is important that this item be managed sensibly.
Opening and Closing a Meeting: Always start a meeting on time.

This respects those who showed up on time and reminds latecomers
that punctuality is important. Meetings should begin by reviewing
the agenda and giving participants a chance to understand all the
major items to be discussed.
Chairperson
Time Management: This need not be a major challenge. Consider Ground rules need to be
the time requirements in advance of a meeting and once a time articulated through the
deeds and actions of
slot is decided, communicate this in advance of the meeting with the chairperson.
the agenda. Each item then needs to be allocated time within this
time slot. A good chairperson will judge where allocated times can
be shortened or lengthened during the meeting. Largely, meetings
should be kept formal regarding timekeeping and always finish on
time except in exceptional circumstances.
Best Practice
The rapidly improving business environment in China and its entry

into the World Trade Organisation in 2001 attracted many multi-
62
nationals to the country. DHL was among those who recognised the
potential for growth in the country's express logistics industry.
Goals: To become an integrated one-stop supply chain solutions

provider, offering services in express, air & ocean freight and
overland transport.
Actions: A massive expansion program was initiated called China

Domestic. An international express service was launched, as a part
of the DHLs strategy to respond to the fast-changing customer
requirements. A door-to-door delivery service particularly for
parcels and freight items was offered. Track-and-Trace
technology was implemented.
Results: DHL was able to offer shorter delivery and pick-up times,
besides better customer service and shipment visibility. DHL soon
emerged as the worlds leading logistics company.
Summary
Tracking information on the results of activities is a critical part of

effective innovation management. Status signals allow individuals Search
to draw attention to poorly performing activities and encourage popular search engine using
views on discussing corrective actions. Matrices are a simple yet the following key words:
powerful decision support tool for understanding relationships Traffic Lights

between two or more lists of data e.g. Goals vs. Actions. In its Balanced Scorecard
Meeting Management
simplest form, the matrix is a visual representation of where DHL Case Study
relationships exist, where they dont exist and perhaps where they
should exist. Proper meeting management is a basic yet
fundamental technique for communicating goals, actions and
results. Face-to-face meetings are a rich form of communication,
motivation and understanding. Conducting effective meetings
requires attention to creating the agenda, selecting the right
people to attend, effective time management, and creating
meeting minutes. It is important to follow up on actions agreed at a
meeting.
Case Study
Moneypits Banking monitors and discusses the status of its

performance indicators each month. It uses two data fields to signal
status %Complete and Status. Any indicators with a red light are
automatically discussed as its monthly meeting. Amber (yellow) lights
can also be discussed if they are in transition from green to red. It is
up to the individual responsible to indicate the status of the indicator.
He or she voluntarily switches a signal based on their own perceived
status of the indicator. Turning a signal red is an
63
indication of concern and an indication that the individual
responsible wants the activity discussed in the meeting. Figure 19
illustrates the status of their strategic objectives at a moment in
time.
Figure 19: Status of Objectives at Moneypits Banking
Activity
Create a simple relationship table to compare two lists of data

against each other. Copy the table below into a new worksheet in
your spreadsheet file. Create a relationship matrix for (i) Indicators
vs. Projects. You can create many other relationship diagrams, for
example ideas vs. indicators and problems vs. indicators, and so on.
Relationships
<List 1> vs. <List 2>
Lists Results Row and Column

List 1 = Objectives or Indicators, etc. Progressing Well
): (: |:
List 2 = Individuals or Initiatives, etc. Progressing Poorly

Neutral
Matrix
Place a + character in the cell to indicate a strong relationship
Place a - character in the cell to indicate a weak relationship
64
Reflections
1. Why do you feel it is important to have fewer status signals?

2. Name all of the possible matrix diagrams that can be
constructed for a list of indicators, a list of projects and a
list of individuals.
3. Review documentation available on the internet for
managing meetings more effectively.
65
Building Innovation Communities

Introduction
In previous sections, we explored the meaning of innovation

management for a single community who share common goals,
actions, teams and results. In many large organisations there are a
number of such communities. Each community deals with various
aspects of innovation to products, processes and services. There
are even communities for large single projects. Every individual can
also have their own independent innovation funnel for how they
will manage personal and professional change in their own lives.
Within manufacturing alone there may be separate communities
(funnels) for manufacturing, computer services, health and safety,
environment, quality, maintenance and so on.
We can visualise each of these communities as a unique funnel with

its own goals, actions, teams and results. Many of these funnels will
be directly related to a particular department, for example product
design, operations or materials. Other funnels will be related to
senior management teams that together manage a number of
departments. Other funnels still will be built around large project
teams. Finally, there will be funnels for various strategic partners
of the organisation such as suppliers and distributors. In this section
we will look at some general knowledge around how innovation
knowledge can be managed. We will look at how funnels can utilise
knowledge management systems to allow individuals manage and
share critical information.
Learning Targets
Describe how organisations can contain a number of

innovation communities with unique but interrelated
innovation funnels
Discuss how to design and implement a knowledge
management system for the management of innovation-
related information
Describe the technologies used to create virtual teams
Innovation Communities
Communities
Communities are groups
The fifth common cause of failure in the innovation process of individuals who share a
presented earlier was poor communication and sense of common purpose.
community. Communities are groups of individuals who share a
66
common purpose. This common purpose can is attention to
organisation goals but it can also be much broader and include such
issues as social interaction, policies and culture, support for the
local community, family, sports and leisure. In any one organisation
many such communities will exist within projects, departments,
management groups, suppliers, sports and social clubs and so on. In
this section we look at some issues around building more effective
communities within an organisation. We also look at how to
develop a simple knowledge management system for storing and
sharing community -based innovation information. Figure 20
illustrates some knowledge elements associated with communities.
These knowledge elements range from notice boards (Notices) and
online libraries (Libraries) to tools for increasing communication
such as Blogs and Wikis. Before looking at knowledge management
we will first look at some issues around innovation culture within
large organisations.
GOALS
ACTIONS
RESULTS
COMMUNITIES
TEAMS Policies
Forums
Blogs
Wikis
Notices
Clubs
Libraries
Figure 20: Innovation Communities
Understanding Culture
In striving to become innovative, organisations need to look within

themselves and assess what takes the organisation forward and
what holds it back. Four key factors are found to either stimulate
or depress the innovation community:
People
Culture
Structure
People: Individuals and teams are a key resource in idea generation

and implementation and ultimately in making sure that customers
requirements are met and exceeded. Leaders are responsible for
leading the task of identifying requirements, settings goals for the
organisation and ultimately taking decisions that ensure that good
67
ideas are executed efficiently. The structure of teams can vary, but
more important is the behaviour of individuals in the team.
Effective teams have effective leaders, autonomy and discretion,
appropriate mix of skills sets and a commonly understood set of
objectives.
Culture: Organisational cultures change continuously. However, at

various points in time particular cultures can be identified that
promote effective innovation. Organisations can also contain sub-
cultures within departments, particular management groups and
project teams that can sometimes conflict with the overall culture.
There are four types of culture: (i) Role, (ii) Power, (iii) Task and
(iv) People cultures 12.
(i) Role culture is a classical bureaucratic model dominated by

formal rules, regulations and procedures to ensure that
everyone knows who is responsible for what. Individuals rarely
think outside of their responsibilities or interfere with the
responsibilities of others.
(ii) Power cultures are generally found in organisations that

have developed around one individual, and typically in small-
to medium-sized enterprises. Unlike the role culture, decisions
may be made on an ad-hoc basis by one or two strong
individuals.
(iii) Task cultures are generally associated with matrix Task Cultures
structures in large organisations. Individuals report to Task cultures are
generally associated with
different managers depending on the task being executed. matrix structures in large
Task or Matrix cultures are flexible and adaptable with high organisations.
value placed on individual and/or group performance.
(iv) People cultures appear in organisations comprising a

number of highly skilled individuals. Such organisations are
often highly de-centralised and contain informal structures.
Examples include Architects and General Practitioners. People
cultures can generate a high level of innovation for the
individuals involved.
Structure: Organisational structures can be mechanistic or organic. Organic Structures

Organic structures have
Mechanistic structures have deep and narrow hierarchies between flat and group-based
management and staff. Responsibilities are well defined and rigid hierarchies, communicate
through hierarchies and
and communication is principally through the formal hierarchies. laterally across
Power and authority are typically based on seniority. Organic hierarchies, have flexible
job descriptions and base
structures, on the other hand, have flat and group-based power and authority on
hierarchies. They communicate both through hierarchies and ability.
laterally across hierarchies. They have flexible job descriptions.
12
Handy, C., Understanding Organisations. 1985, Harmondsworth: Penguin.
68
Power and authority Is based on ability. Large innovative
organisations have a tendency towards the organic structure.
Creating Structure
Organisational structure is a system for dividing people and their

roles and responsibilities into more manageable parts. The most
common form of structure is to divide an organisation into
departments, as illustrated in Figure 21. Departments allow teams
of individuals to specialise and manage one particular aspect of an
organisations activity. Specialisation allows organisations to
develop experience and share knowledge among individuals in
manageable numbers. Individuals are typically assigned to one
department that also contains its own overall manager. Structure
leads to a functional hierarchy where each department understands
its role in meeting the overall objectives of the organisation. The
structuring of departments and sub-departments varies
considerably between organisations and even within the same
organisation.
Corporate
Corporate
Board
Board
Division I Divisional II
Division I Divisional II
Boar
Board d
Board Board
Design Marketing Finance Personnel

Design Operations Marketing Finance Personnel
Department Operations Department Department Department
Department Department Department Department
Plant A Plant B
Plant A Plant B
Board Board
Board Board
Materials Engineering Assembly Machining

Materials Engineering Assembly Machining
Dept Dept Dept Dept

Dept Dept Dept Dept
CellCellAA Cell B
Cell B
Team Team
Team Team
Figure 21: Departmentation
In addition to individual departments or sub-departments, there

will be other types of innovation teams present in the organisation.
The most important of these are management teams. Other types
of teams will include project teams, cross functional teams and
strategic partners in the extended organisation.
Management Teams: These functional managers and specialists

meet regularly to discuss goals and actions for the functions they
represent. In this context, functional managers are members of at
least two teams or innovation funnels. They are members of their
own functional team and the higher-level management team. Each
manager will attend two types of meeting and discuss two sets of
goals, actions, teams and results. However, there will be
69
hierarchical relationships between the two innovation funnels. For
example some of the objectives of the management team will
become the stakeholder requirements of the functional team. On
the other hand, many of the objectives and projects of the
functional team will be represented at the management team as
actions.
Virtual Teams
Virtual teams are groups of individuals who work together on

common objectives, but mainly use mobile and online
communications services to collaborate and share information.
Virtual Teams
These types of organisation are becoming more commonplace Virtual teams are groups of
because of the increasing globalisation of organisations, highs rates individuals who work
together on common
of organisational change and the availability of technologies that objectives but mainly use
facilitate communications. Mobile and online communications mean mobile and online
communications services to
that individuals can work together from anywhere in the world and collaborate and share
even at different times of the day. Traditional teams are usually information.
co-located in the same building for the same working hours and
share the same language and culture. Virtual teams dissolve these
boundaries out of necessity, by utilising such technologies as online
collaborative workspaces, mobile phones and mobile computing and
video-conferencing.
While many advantages can come from the adoption of virtual

teams, new challenges also arise for the organisation. The main one
involves satisfying the need for sharing, collaborating and
exchanging information. There are some key requirements that
have to be fulfilled so that the successful implementation of the
virtual team can be realised. These requirements include:
Greater collaboration: The ability for co-authoring,

document version control, group editing, report annotation,
etc.
More communication: emails, virtual notice boards, phone,
faxing, teleconferences meeting and online white boards,
WIKIs and Blogs.
Improved co-ordination: online project management,
corporate calendar, group meeting schedule.
More training: training in better interpersonal
communications, cultural diversity, and virtual teamwork
tools and so on.
Innovation teams can be virtual or at least can adopt many of the Knowledge
Knowledge is defined as
technologies that support virtual teams such as (i) collaborative information plus
workspaces including content management systems, information judgement that leads to
informed decisions.
portals, Wikis, Blogs, and so on, (ii) teleconferencing and video
conferencing and (iii) mobile technologies including the voice and
text messaging. A number of the more popular of these
70
technologies will be discussed in the section on managing
knowledge.
Managing Knowledge
Knowledge is defined as information plus judgement that leads to

informed decisions. Organisations utilise less than twenty percent
of their knowledge. Most knowledge remains trapped inside the
minds of individuals and increasingly in the various data stores that
an organisation uses, such as databases, email systems, files in
personal computers, filing cabinets, libraries and archives. Many
organisations now realise that to succeed in innovation they need
to harvest and utilise their innovation related knowledge more
effectively. They need to develop processes that increase
knowledge sharing among individuals.
It is clear that knowledge requires both information and individuals

or people. The expression knowledge management refers to
processes that facilitate individuals in managing and sharing
information that may later be translated into knowledge. In this
context the term knowledge management is in effect about
information management but only that information specifically
aimed at facilitating individuals in making decisions. This is Knowledge
There are two types
different to information management that allows machines to share of knowledge:
information. There are two types of knowledge: tacit and explicit. Tacit (e.g. skills and
expertise)
Tacit knowledge is knowledge typically within the minds of
Explicit (e.g. forms and
individuals that has not been shared or written down in any manuals)
way. Tacit knowledge can also exist within organisations as a
whole.
Explicit knowledge on the other hand is explicitly known

because it is perhaps written down or commonly expressed
through advice or training programmes.
One of the key objectives of an organisation is to translate tacit

knowledge into explicit knowledge e.g. translate useful information
in the minds of individuals into easily accessible information that
can be used by anyone.
Codification and Personalisation
There are two broad approaches to translating tacit knowledge into

explicit knowledge and then sharing this knowledge among
individuals in the organisation. These are personalisation and
codification.
71
Personalisation of knowledge: This approach involves the personal
exchange of knowledge and experience between individuals
through face-to-face meetings both formal and ad hoc, Knowledge
presentations, lectures and other information exchange forums. Management
There are two strategies
The emphasis in this approach is on human contact with one for managing and sharing
another. Many organisations create physical environments where knowledge:
individuals will meet each other regularly and can get together to Codification (e.g. forms)
have formal and ad-hoc meetings. Personalisation (e.g.
meetings)
Codification of knowledge: The second approach involves codifying
knowledge using forms and databases. Each individual is expected
to complete specific tables and data fields about their information.
This information is then stored and retrieved from the
organisations computer and filing systems. Organisations use
systems such as content management systems and case based
reasoning to store as much information as possible that may be
reused in the future.
Codification Minimum Critical

Codification
& Team Based
Personalization
Personalization
Figure 22: Codification and Personalisation of Knowledge
Figure 22 illustrates the relationship between personalisation and

codification of knowledge. Two paths can be followed. The first is a
major increase in the codification of knowledge. This means
codifying every available piece of information in the organisation.
This can lead to significant effort and inevitable complaints from
individuals about keying in information that they already know.
The second path is to dramatically increase the personalisation of
knowledge allowing more time for meetings both formal and
informal more presentations and so on. This also has its
disadvantages, in that it not only uses up a considerable amount of
time, but can also bore and demoralise individuals who would
rather complete a task than talk about it.
A compromise clearly exists where organisations agree to only

codify information that is critically necessary for the organisation
as a whole to share. More detailed information can be found if
necessary from the individuals involved. Personalisation can also be
limited to specific team-based activities, thereby reducing informal
and ad hoc meetings. These complementary approaches are called
minimum critical codification and team based personalisation.
72
Collaboration
Four types of collaboration can be classified, based on the space

and time of the collaboration taking place13. These are illustrated
in Figure 23 and are: (i) Face-to-Face Collaboration, (ii)
Asynchronous Collaboration, (iii) Distributed Synchronous
Collaboration and (iv) Distributed Asynchronous Collaboration.
Different
Same Time
Times
Collaboration
There are four types of
collaboration:
Same Time Same Place

Same
(e.g. meetings)
Place Face-to-Face Asynchronous
Collaboration Collaboration Same Time Different
Place (e.g. phone)
Different Time Same

Different Place
Places (e.g. notice boards)
Distributed Distributed
Synchronous Asynchronous
Collaboration Collaboration
Different Time Different
Place (e.g. email, KM
system)
Figure 23: Four Types of Collaboration
Face-to-face collaboration involves exchanging information at the

same time and in the same place. Meetings in a common venue
such as a meeting room, office, caf or even corridor are examples
of face-to-face meetings.
Asynchronous collaboration involves exchanging information in the

same place but at different times. This can be done using
communication media such as physical notice boards.
Distributed synchronous collaboration involves exchanging

information in different places but at the same time. This involves
real-time exchange of information between individuals who are
located in different geographical areas. There are various
techniques available such as telephones, video-conferencing, and
voice over IP (VOIP).
Distributed asynchronous collaboration involves exchanging

information at different times and in different places. This involves
exchange of information where individuals are located in different
geographical locations and where they can access the same
information at different times. This mode of communication
involves communication via the post, fax machines, voice mail,
pagers, email and increasingly, collaborative workspaces.
13
Anuba, C., et al., A Multi-Agent System for Distributed Collaborative Design.
Logistics Information Management, 2001. 14(5/6).
73
An organisation by its very nature, involves many types of
collaboration. As teams become virtual and individuals become
more flexible and mobile in completing their tasks, there needs to
be a marked increase in collaboration that is both distributed and
asynchronous. Email, collaborative workspaces and mobile phones
are now normal modes of exchanging information in addition to
traditional face-to-face meetings.
Collaborative Workspaces
Collaborative workspaces are computer-based systems used to

generate, represent, store, access and retrieve information by an
organisation. Collaboration systems typically contain forms, reports
and other structured information that the organisation shares. They
can also contain discussion forums, bulletin boards and links to a
variety of other resources. They are sometimes referred to as
portals or gateways, since they potentially provide organisations
with a portal to vast amounts of information.
There are two major types of portal. Horizontal portals serve large
communities with a wide variety of information. Examples include
Google, AOL and MSN. Vertical portals serve specific communities
and provide specific types of information. For example there are
portals for finding suppliers involved in the car industry and
internal enterprise information portals (EIPs) for topics such as
innovation management. Our interest in this booklet is in the use
and development of collaborative workspaces or enterprise
information portals that support the innovation management
process.
The major functions of portals include the following:
Creating portlets or information

containers Search and navigation
Document management
Personalization of
interfaces Automatic alerts
Task management and workflow
Integration of applications
These functions allow individuals to share information by uploading

and editing their own information through the portal, and then
accessing everyone elses information as required. Many vendors
provide collaborative workspaces that allow teams to easily
configure a portal site for innovation management.
Sample: SharePoint Team Services is a product from the

Microsoft Corporation bundled with its main server product.
SharePoint provides a team website that allows teams to set up an
74
easily configurable portal or content management system for
storing and sharing information. The tool allows the user to create
a full-featured website with built-in functionalities such as
announcements, meetings, discussion management, email
notification, address books, surveys and tasks. Each user is
allocated a username and password. The basic components of the
system are web parts which can be positioned dynamically on the
main portal page. Figure 24 illustrates a screen shot from the main
page that allows users to define and configure a particular web
part.
Figure 24: Sample of Web Parts
This sample of the web parts available allows users to create

document, form and picture libraries that can be used for files.
Also illustrated are web parts for creating a list of links,
announcements and contacts. Not illustrated in this figure are web
parts for creating so called lists for records such as statements,
objectives and projects.
Sample: Outlook is a primarily a mail client product from the

Microsoft Corporation but also contains a module for helping
individuals and teams shared information relating to various kinds
of tasks. The Tasks module can be easily configured to manage
various types of innovation and project related information in
predefined formats. Most of the activities in this booklet for
example can be carried out in the Tasks module. The Matrix
activity however cannot be carried out since this functionality is
not present in Outlook. Outlook can be a cheap and attractive
alternative to more expensive Portal servers. It can also be
synchronised with hand held devices such as personal digital
assistants and cell phones.
75
Best Practice
The retail sector, especially in the United States, was not known
for being employee-friendly. Many large retailers paid low salaries
and offered negligible benefits while expecting employees to work
long hours. Consequently, it suffered from high human resource
(HR) costs, as companies had to recruit and train replacements at
frequent intervals. In this context, IKEA stood out for its employee-
friendly policies and generous benefits, which made it the
preferred employer in the retail sector.
Goals: To promote life balance and diversity in the company.
Actions: Several human resource management practices were

adopted, including flexible work design, comprehensive benefits,
quality of work life, and employee training and development. The
company also created unique work culture that supported co-
workers and encouraged creativity and diversity.
Results: IKEAs committed workforce has become one of the

sources of the companys innovative concepts. IKEA North America
(IKEA) was in the annual list of the Fortune 100 Best Companies to
Work For.
Case Study
ABC Health Care is a hospital that provides various health care

services to public and private patients. It has developed an
innovation management system to manage its innovation
information. The various information modules are divided into
Goals, Actions, Teams, Results and Community. For example the
Requirements module lists the various requirements of its key
stakeholders patients, staff, regulation bodies and so on. The
Problems module records current corrective actions, their status,
and who is responsible for fixing them. The Suppliers module lists
the main supplier details for the organisation. Their innovation
management system is available online to all employees in the
organisation who can add, update, edit and share innovation
information. Figure 25: ABC HealthCare illustrates the information
portal used to manage all of the innovation data used by the
hospital.
76
Figure 25: ABC HealthCare
Summary
In any organisation there can be a number of innovation teams each

Search
with its own innovation funnel. A large organisation will have many Search the internet using a
such teams responsible for various aspects of product, process and popular search engine using
the following key words:
service innovation. The common approach to organisational design
is to divide the organisation into functions or departments. Each Sharepoint
Plumtree
department can have its own innovation funnel. Virtual teams allow 37signals
individuals from different locations and time zones to collaborate Content management
Collaborative Workspace
on common objectives. Many technologies support virtual Innovation channel
collaboration, the most common of which are internet-based
technologies and the mobile phone. Knowledge is information plus
judgement that can lead to informed decisions. Most knowledge
remains trapped inside the minds of individuals or on their personal
computer. This can be released for use by others through two
strategies codification and personalisation. Collaboration is a
process that allows individuals to share knowledge and make
decisions together that achieve common objectives. There are a
number of technologies that support collaboration. Web portals are
content management systems for a wide variety of information that
can be stored in different types of knowledge management system.
Activity
Go on the internet and find a number of links that may be useful

for sharing with your innovation team. Find three types of links: (1)
similar organisations to your own; (ii) competitor organisations to
your own; (iii) useful tools for creating a simple knowledge
management system for your innovation plan i.e. can you find a
tool that can replace the use of simple spreadsheets? Place the
name of the links and their URL address in the table below.
77
Links
Title Hyperlink
Title = Title of the link

Hyperlink = The URL or http:// address
Reflections
What is an innovation team?

List a number of easily-available technologies that allow
teams to practice virtual collaboration
Explain the difference between tacit and explicit
knowledge What is codification of knowledge?
78
Conclusions
Conclusions
Innovation is the process of making changes to something
established by introducing something new. Innovation applies to
every organisation profit and non-profit. Many innovation teams
can exist within an organisation, from management teams and
departments to project teams and even individuals. Innovation can
occur to products, processes and services. The degree of change
can be incremental, radical or disruptive.
Innovation management is about putting a process in place for

managing innovation. Every organisation, large and small,
department or project team, will develop its own process. Common
features of every process will include elements for defining goals,
managing actions, empowering teams, monitoring results and
building communities. Defining innovation goals can be seen as the
starting point for innovation that informs individuals about the
direction of change the organisation is willing to take. It leads to
goal-centred ideas and projects.
Innovation actions such as ideas or projects are about discovering

ideas for innovation that meet goals continuously. Problem solving
that includes both small and large changes to existing products and
processes are an important part of this process. Idea generation
can come from a number of sources including lead users and
employees. Project portfolio management is a process of balancing
the portfolio of projects between potential risk and potential
benefit. Individuals staff the innovation effort in organisations both
at a leadership and operational level. Managers increasingly depend
on other staff to generate and realise ideas. A key mechanism for
engaging and motivating staff is linking the goals of the individual
with the innovation goals of the organisation.
Monitoring innovation results is a critical part of effective

innovation management. Status signals allow individuals to draw
attention to poorly performing activities and encourage views on
discussing corrective actions. Matrices are a simple yet powerful
decision support tool for understanding relationships between two
or more lists of data e.g. Goals vs. Actions. Face-to-face meetings
are a rich form of communication, motivation and understanding.
In any organisation, there can be a number of innovation funnels

for product, process or service innovation. Each department can
have its own innovation funnel. Many technologies support
collaboration. The internet provides access to many of these
collaborative technologies. Knowledge management systems allow
individuals to share knowledge and make decisions together online.
79
Conclusions
A simple knowledge management system can be created for
managing innovation, using the spreadsheets presented in this
booklet for creating, editing and sharing innovation information.
A combination of effective innovation management tools and Web Link

techniques, a good knowledge management system and adopting More detailed information
on the ideas covered in
best practice in innovation management offers any organisation an this booklet can be found
effective way to create sustainable growth. at: www.owl.ie
80
Bibliography
Applying
Innovation
by David
OSullivan and
Lawrence Dooley,
Sage Publishing, Due for Publication Managing Innovation, by Joe Tidd

in Summer 2007. and John Bessant, Wiley, 2006.
Innovation Management by Keith Goffin Building the Innovative Organisation

and Rick Mitchell, Palgrave, 2005. by James Christiansen, MacMillan,
2000.
Strategic Management of Technological Mastering the Dynamics of Innovation

Innovation by Melissa Schilling, by James Utterback, HBS Press, 1996.
McGraw-Hill, 2005.
Managing Innovation, Design and Managing Creativity and Innovation,

Creativity by Bettina Von Stamm, Harvard Business Essentials,
Wiley, 2003. Harvard Business School Press, 2003.
Innovation Management and New Innovation and Entrepreneurship

Product Development by Paul Trott, by Peter Drucker, Butterworth-
FT Prentice Hall, 1998. Heinemann, 2005.
81
82
TechLink
USER
PWD
NEW USER?
February 2007
01 02 03
04 05 06 07 08 09 10
11 12 13 14 15 16 17 Project description
18 19 20 21 22 23 24
25 26 27 28
TechLink - Constructing an Inter-regional
Innovation Network
SEARCH TechLink is an Interreg IIIb project of trans-national cooperation
involving four regions of the Atlantic Area, North of Portugal, Basque
News Country, Bretagne in France and West of Ireland.
More news... Interreg III

Project
Project description Interreg III is one of the four programmes of Community initiative
Project established by the European Commission intended to support a
results Links harmonious, balanced and durable development of the European
Partners territory over the period 2000-2006.
NET The general objectives of Interreg III are
IDIT - to contribute to a harmonious territorial integration of all
AdI
the community,
- to encourage trans-national, trans-border and inter-regional co-
BIC Berrilan
http://techlink.idit.up.pt/ (1 of 2)16-02-2007 10:07:38

TechLink
TEKNIKER operation,
Technopole - to create a real involvement of European organisations by supporting
WESTBIC
collective projects involving partners from several countries.
Actions
TechLink
Action 1
Action 2 The mission of TechLink is to contribute to the social and economical

Action 3 development of the regions involved by promoting a culture of
Action 4 innovation and exchange of developments among them, strengthening
Action 5 the competitiveness of the area and increasing transfer of technological
Action 6 innovation.
Innovation database Traditionally industrialised, the regions taking part in this project are
Support agencies currently faced with new competition from countries with low production
costs.
English
In order to stay competitive and avoid the risks of delocalisation, these
Portugus
regions must build new competitive forces based on knowledge and
innovation, while developing trans-national co-operation between
public and private organisations in the sector of technological
innovation (universities, SMEs, technological centres).
On the basis of the study of the current situation, the project consists
of creating a network of trans-national co-operation which will develop
methodologies and tools making it possible to control and guide the
evolution of innovation in a continuous manner.
Comment
http://techlink.idit.up.pt/ (2 of 2)16-02-2007 10:07:38

ITT: October 1999: Special Edition: Mapping innovation in Europe
Innovation and Technology Transfer Logo
The Newsletter of the Innovation Programme
Home
October 1999
Latest Issue
Special Edition
MAPPING INNOVATION
Innovation
http://cordis.europa.eu/itt/itt-en/99-7/innov3.htm16-02-2007 10:08:45
Case Studies in Business, Management and Business Reports - Icfai Center for Management Research
ICFAI Center for Management

Research
Asia's Largest Online Collection of Management Case Studies
Home Business Reports Case Studies Case Exchange Books Services Free Resources
Micro Case Studies

ICFAI Center for Site Search
Aditya Birla's Acquisition
of Trinethra Management
Pharma Firms to Stop Research is a Go!

Gifts to Doctors: Is Self research center of
www ICMR
Regulation the Answer? the ICFAI
Body Shop Launched in University, and is

Use the box above to search for cases. You
India involved in
can search using specific keywords, or for
eBay Changes its business research, cases on specific companies or industries.
Strategy in China management

Can India Become A consulting, and the We are recruiting
Global Automobile development of
Manufacturing Hub? case studies and
Pfizer: The Impact of courseware in Skype us for any assistance or
queries - Click on the 'Call me' icon
Torceptrapib's Failure management. ICMR below
MySpace Sued for also provides
Copyright Infringement knowledge process
The Bharti - Wal-Mart outsourcing
Retail Joint Venture services to Working Hours/Holidays List
Talent Shortage in India's international
IT Sector Note: You need to have Skype installed
clients.
Turbulent Times for on your PC to use this facility.
Airlines in India
Over 6.5 million ICMR News
More >>
copies of ICMR
case studies have ICMR case study "The Betapharm
Business Updates been printed in Acquisition: DRL's Inorganic Growth
The Reliance Group's international and Strategy in Europe" written by Rajiv
Retail Venture Indian textbooks, Fernando and Debapratim Purkayastha,
Lifebuoy's "Swasthya
workbooks and wins the first runner up prize in the John
Chetna" Initiative
case study
Molson Case Writing Competition 2006,
Bausch & Lomb - The
volumes. More than
'ReNu Moistureloc' organized by the John Molson School of
110,000
Controversy
individual copies Business, Concordia University, Montreal,
Lipitor's Legal and
of our case studies
http://icmr.icfai.org/ (1 of 3)16-02-2007 10:09:43

Canada.
Marketing Challenges have been
Foreign Direct Investment
purchased by many ICMR case study "Carrefour's
in the Indian Retail Sector
of the leading Strategies in China" written by Vivek
Microsoft's Troubles with
business schools Gupta and Indu P., wins the second
the EU Commission
and universities
The 'LALU' Brand in Rural runner up prize in the John Molson Case
around the world.
Bihar Writing Competition 2006, organized by
More >> Our case studies have won prizes in the John Molson School of Business,
several global case writing competitions,
Concordia University, Montreal, Canada.
Mini Case Studies and also appear in many international
Business Strategy management textbooks. More than 1000 ICMR case study 'Wal-Mart's Strategies in
Consumer Behavior case studies, mini case studies, micro
China' written by Ruchi Chaturvedi and
International Business case studies and business reports are
Sanjib Dutta, wins the second runner up
Environment available for immediate download from
International Marketing this site. The material is available for prize in the John Molson MBA Case Writing
Marketing download as pdf files, with a 'Do Not Competition 2005, organized by the John
Communications Copy' watermark.
Molson School of Business, Concordia
Marketing Management
Sales & Distribution Case Studies Mini Case Studies Micro University, Montreal, Canada.
Management Case Studies Other Categories

'Allied Irish Banks: The Currency
Services Marketing
Derivatives Fiasco' written by Gautam and
Supply chain Management
Vivek Gupta wins the first prize in the
Industrial Marketing
Managing Risk category in the EFMD Case
Free Email Alerts
Use our free email alerts Writing Competition, 2005.
service to receive email
notifications on new business More ICMR News
updates and Micro Casestudies
Enter Email ID
Submit
Contact us:
ICFAI Center for
Management Research.
#49, Nagarjuna Hills,
Punjagutta, Hyderabad -
500082.
INDIA
Ph: (+91) 40
Business Reports :
23430462/63/64
These are reports of varying length, on
Fax: (+91) 40 23430467
countries, sectors or industries.
E-mail: icmr@icfai.org

Route Map to ICMR Free Resources:
Case Studies, Book Reviews, Interviews,
Articles, Glossary, Online Quiz
Industry Case Packs :
Each Case Pack is a collection of industry-

specific case studies, on a CD-ROM.
Aviation, Electricals and Electronics,
Telecom, Banking and Financial Services,
Media and Entertainment, Retailing
Knowledge Partnership Services
Business Research :
ICMR offers business research services
to corporate, government and social
sector clients.
Management Consulting :
As part of its initiatives to strengthen

and institutionalize the relationships
between academia and industry, ICMR
provides management consulting
services in different functional areas.
Copyright 2006 ICFAI . All

rights reserved.
Terms Of Use | Privacy Policy
To make payments against

specific invoices, please click here
ICFAI University IBS Careers About Us Contact Us Sitemap FAQ

Applied Innovation - David O&#39;Sullivan

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Applied Innovation - David O&#39;Sullivan

Uploaded by

Copyright:

Available Formats

APPLIED

Copyright 2007 David OSullivan

Constructing an Inter-regional Innovation Network.

Managed by: NET, SA BIC Porto

IDIT Technopole TEKNIKER

Interreg IIIb Atlantic Area European Commission

I invite you now to explore the ideas presented in this booklet. I am

Jos lvaro Gomes da Silva

Managing Innovation .................................................................................................................. 14

Defining Innovation Goals ....................................................................................................... 22

Managing Innovation Actions.................................................................................................. 30

Empowering Innovation Teams ............................................................................................. 43

Monitoring Innovation Results ............................................................................................... 56

Building Innovation Communities ........................................................................................ 66

Click on page number above to hyperlink to that page

Innovation is an imperative for all organisations profit and non

Innovation is defined as the process of making changes to Web Link

This booklet contains a systematic approach to developing high- High Impact

Explain the theory and process of innovation

All organisations need to change in order to sustain their current

Define innovation and explain the difference between

Innovation is defined as Making changes to something established

Sample: The old tube television was an invention. Before it

In innovation, destroying poor ideas is often as important as

Todays innovation will become obsolete in the future. For

There are numerous alternative definitions to innovation. One

Innovation = Invention + Exploitation

Innovation management therefore, is a systematic approach to Web Link

Product, Process and Service Innovation

The term innovation is often associated with products. When we

Product innovation is about making changes to physical products.

Process innovation is about making changes to the processes that

Service innovation is about making changes to services that

Radical and Incremental Innovation

Radical innovation is about making major changes in something

Figure 1: Radical and Incremental Innovation2

Incremental innovation is about making small continuous changes to

Sample: Philips invested significant resources time and money

Every now and then a radical innovation is introduced that disrupts

There are many examples of disruptive technologies introduced in

Arguably the largest disruptive technology to emerge has been the

Sample: Radio Frequency Identity Detection (RFID) tags are now

Innovation is the process of making changes to something established

For more information on innovation in your own language why not

Clearview Pharmaceuticals is a small manufacturing company. The

Figure 2: Innovation Team at Clearview Pharmaceuticals

Throughout this booklet you will be asked to complete a number of

Copy the worksheet below into a spreadsheet application. More

Title = Name of the individual

Explain the difference between innovation and invention

Every organisation invests to a larger or lesser extent in innovation

Give reasons why organizations invest in innovation

Each year, organisations spend a significant amount of turnover on

The principal goals to be achieved in return for this investment vary

These goals include improvements to products, processes and

Most innovation fails to meet organisational goals. Figures vary

4 Strebel, P., Why Innovation Fails, in Harvard Business Review on Change.

Common causes of failure within the innovation process can be

(1) Poor goal definition

Tackling poor goal definition requires that organisations state

High Impact Innovation

Every organisation would like to achieve a return on their

1. Better definition of Goals

Goals: A goal is the defined as the objective of an effort. There

Applied Innovation - David O'Sullivan

Applied Innovation - David O'Sullivan