MTIC

Innovation Management
By
Prof. (Dr.) Vijay Kr Khurana

Topics in Syllabus

Innovation Strategies
Innovation Management

Questions in Univ Exams

Why do innovations fail? Why successful

management of innovation is important?
Challenges for innovation management.
What do you understand by innovative strategy of
firm. Explain various types of innovation
strategies giving examples
Key steps for becoming an innovative organization
Internal capabilities for innovative environment
Cooperation & competition for value creation
Patents vs Copyrights

Why do innovations fail?

Innovations have high failure rate.
There are many causes of failure of innovations.
Some causes are external to the organisation and
outside its influence of control. Others are
internal and ultimately within the control of the
organisation.

Deloittes Survey: Barriers to Innovation

Why do innovations fail?

Internal causes of failure can be divided into causes
associated with the cultural infrastructure and causes
associated with the innovation process itself.
O'Sullivan, (2002): Failure in the cultural infrastructure
varies between organisations but the following are
common across all organisations at some stage in their
life cycle
Poor Leadership
Poor Organisation
Poor Communication Systems
Poor Empowerment
Poor Knowledge Management

Why do innovations fail?

Common causes of failure within the innovation
process in most organisations are as under:
Poor goal definition
Poor alignment of actions to goals
Poor participation in teams
Poor monitoring of results
Poor communication and access to information

Why do innovations fail?

Innovation can fail if seen as an organisational process
whose success stems from a mechanistic approach i.e.
'pull lever obtain result'.
Some examples of internal causes are:
R&D efforts not guided by marketing research or
customer requirements & preferences
R&D efforts not guided by manufacturing capabilities
& skills and no change / improvement in mfg
capabilities/skills
No corresponding change in organizational processes
New product launch not accompanied by change in
marketing strategies.

Why do innovations fail?

External causes are beyond the control of the
organization. Some examples of external causes
are:
Mismatch between price charged & value benefits
perceived by customer
Mere imitation /copy without any increase in
value/utility to customer
Competitor brings in disruptive technology /
innovation
Govt regulations undergo change adversly
affecting innovation.

Why management of innovation is important?

Economics of Innovation

Economics call for study of cost vs benefits

involved in the innovation for making a rational
decision about the viability of innovation.
Total costs of innovation including invisible costs,
need to be studied for making a rational decision
about the viability of innovation.
Organisations spend a significant amount of their
turnover on innovation. The average investment is
estimated to be around four percent.

Economics of Innovation
Why management of innovation is important?
Innovations have high rate of failure. Thus there are
chances of huge losses [due to high investment].
The impact of failure goes beyond the simple loss of
investment. Failure can also lead to loss of morale
among employees, an increase in cynicism and even
higher resistance to change in the future.
Sometimes innovations lead to displacement of existing
products or services.
Sometimes, innovation may lead to price war.
Competitor may introduce better product at lower
price. Thus benefits of innovation may not be fully
realized.
Such losses also need to be accounted for.

Economics of Innovation
Why management of innovation is important?

Innovation should drive growth and, consequently,

improve shareholder value.
Business measures like balanced scorecards related to
finances, processes, employees and customers should be
used to find out benefits of innovation (e.g. new product
revenue, time to market, customer and employee
perception & satisfaction).
Organizational capabilities can be evaluated through
various evaluation frameworks e.g. EFQM (European
Foundation for Quality Management).
Innovations are pursued when their estimated benefits
outweigh total estimated costs.

Innovation Strategies

Innovation strategies of an organization depend upon

following factors:
Government support and policies for technology and
innovation
Risk taking abilities of the organization
Risk taking attitude of Top Management
Organizational goals & policies
Degree of technological changes
Degre of competition
Availabilty of funds / budgetory support for innovation
process
Age of organiztion viz new vs old organization

Innovation Strategies
Types of Innovation Strategies:
Innovation Leader- Under this strategy, a firm seeks to
be the first to introduce innovations and aims at tapping
first mover advantages like increased reputation, preempting competition, early profits, new sales etc. Such
stratgies focus on radical , open, non-linear, flexible
innovation process.
Innovation Follower A conscious & active strategy, by
which a firm chooses not to be first on innovations and
aims at learning from the experiences of innovation
leader, by low cost imitation, by bringing better products
or services through improvement. etc. Such stratgies
focus on incremental , closed, linear innovation process.

Innovation Strategies
Types of Innovation Strategies:
Competition vs Collaboration Strategies
Whether to go for competitive development of
innovation or to go for collaborative
development of innovation?

Innovation Strategies
Change in Innovation Strategies
It is very likely that a firm may like to change its
innovation strategies at some point of time. A firm
pursuing incremental innovation can shift to / transform
to radical innovation by using some of following tools:
Strategic Framing
Scouting R&D
High Impact Research
Target Selection
Rapid Product Development
Rapid Commercialization

Innovation Strategies
Change in Innovation Strategies . Contd ..
Similarly a firm pusuing pursuing radical
innovation can shift to / transform to
incremental innovation by taking some of
following steps:
Installing more gatekeepers at various stages
Spreading budgetory support over longer
periods
Carrying out rigorous progress reviews
Using more controls etc.

Innovative Organization
Innovative Organization can be defined as an
organization in which ideas spread and breed like
viruses. Prominent examples are Apple, Microsoft,
3M etc.
Sometimes innovative organization is also referred as
organizational innovation i.e. new ways through which
work can be organized, and accomplished within an
organization to encourage and promote competitive
advantage.
An innovative organization is one which facilitates
creative chaos within a flexible guiding structure
These are also called adhocracy organizations.

Innovative Organization
Innovation requires a structure that is capable of
coalescing /motivating individual technological
performers & non-technological performers into an
effectively functioning team.
According to Mintzberg - An Innovative organization
cannot rely on any form of standardized coordination. The enterprise must avoid : bureaucratic
structures including structures that result into sharp
division of labour, extensive unit differentiation,
highly formalized behaviour.

Power of Innovative Organization to Attract

Talented Employees

In the Deloitte Millennium

Innovation Survey 2013,
66% respondents opined
that innovative
organizations are better
positioned to attract
talented employees, as
shown in figure below.

 Fig . Power of Innovative Organization to

Attract Talented Employees

Impact of Innovation on Retention

Innovative organizations
are better positioned to
retain them for longer
period, as emphasized in
the Technology Innovation
Survey 2013 conducted by
Mortimer Spinks.

Impact of Innovation on Retention

Traits of Innovative Organization

The enterprises should emphasize on :
Top managements commitment and support
Capability / need to manage in the light of corporate
restructuring & transient senior management
Planning & control systems with high degree of
flexibility
Effective communication system
Absolute integrity between various sub-systems /
parts of an organization - Tight coupling of
complimentary skill sets
Use of multifunctional teams - Higher order teaming

Traits of Innovative Organization

Supporting organiztional culture & environment
like
Appropriate reward / incentive system
Respect for individual inititaive & personal
growth
Tolerance for honest mistakes
Allowing room for failure
Enthusiasm for knowledge
Drive to stay ahead in knowledge
Willingness for alteration to activities

Innovative Organization

A. Modes of Enterprise Innovation based on approach

towards technology & innovation
Science Based Product Innovation Mode Enterprises - These
enterprises spend big amounts on R&D and are
Technological leaders & Pace setters. Viz Microsoft
The Enterpreneurial Fast Track Experimentation Innovation
Mode Enterprises - are characterized by high degree of
experimentation to develop a continuous flow of products &
services. Viz. 3M
Global Cost Leadership Innovation Mode Enterprises - are
process innovaters, with strength driven from development
or acquisition of new processes. These are high quality &
low cost driven. E.g. Japanese firms

Innovation Organization
A. Modes of Enterprise Innovation Contd
Reliance on Information Technology & Process Adoption
Mode Enterprises - are innovators who incorporate new
ideas stemming from information technology or other
engineering enterprises e.g. ATM in Banks
Social Innovation Mode Enterprises combine busniess
methods and social value creation. They plug the gap
between the roles that governmental and philonthropic
efforts play, often solving societal problems, not in
opposition to or even at the charity of the organizations,
but rather in collaboration and mutual benefit to the
private sector.

Innovation Organization
B. Modes of Enterprise Innovation Another
way of classification on the basis of underlying
business philosophy and structures
Ambidextrous organization which explores as
well as exploits. e.g. IBM, Microsoft etc
Collaborative organization which uses
collaboration as a base of all of their activities.
e.g. P&G, IBM etc

Innovation Organization
Self organization which pursues distributed
structures and shows emergent behaviour. Selforganization is a process where some form of
order or coordination arises out of the
interactions between the components of a system.
Emergent behavior is unanticipated behavior
shown by a system. e.g. Wikipedia, Skype,
Google etc
Learning organization which pursues learning
based approach to all activities. e.g. Toyota,
Motorola etc.

Management of Innovation
Innovation management is the process of
managing innovations in organisations.
According to National Research Council (NRC),
Management of Innovation means linking of
engineering, science & management disciplines
to plan, develop and implement technological
capabilities to shape & accomplish the strategic
and operational objectives of an organization.
Management of Innovation deals with meeting
and managing eight primary needs of an
organization.

Management of Innovation

These eight primary needs are as under : How to integrate technology into overall strategic objectives of
an organization?
How to get into & out of technologies faster & more efficiently?
How to assess or evaluate technology more efficiently?
How to accomplish technology transfer?
How to reduce new product development time?
How to manage, large, complex & interdisciplinary or interorganisational projects & systems?
How to manage organizations internal use of technology?
How to leverage the effectiveness of the technical
professionals?

Factors which affect Innovation

Management in Organization
Top Managements philosophy
Organizational culture
Degree of formalization, formal structures,
systems & procedures
Degree of Centralization
Openness to external information
Degree of informal communication
Resources available

Challenges in Management of
Innovation
Challenges for small organization are as under : Lack of risk taking abilities
Non availability of adequate resources viz
finance, technical manpower etc
Difficulty in product testing
Low linkage with external environment
Difficulty in conducting market survey
Difficulty in test marketing
Difficulty in commercialization

Challenges in Management of
Innovation

Challenges for big organization are as under : Degree of formalization, formal structures, systems &
procedures
Degree of centralization
Degree of formal communication
Corporate Restructuring & Transient senior
management
Integration of many complex projects being executed
simultaneously
Bigger teams & their management
Duplication of efforts
Ensuring right direction

Management of Innovation
For proper management of Innovation, following should be
ensured:
Likely Failures should be identified and screened out as
early in the process as possible.
Exceptional productivity is concentrated among a few
people. There is need to employ, develop and retain
exceptionally talented inventors.
Seeking maximum participation of all the concerened
individuals. Individuals are the 'atoms' of the organisation
close to the minutiae of daily activities.
Strong integration & orchestration of cross functional
activities
Top managements commitment and support

Management of Innovation
Contd
Capability / need to manage in the light of corporate
restructuring & transient senior management
The enterprises should emphasis on
Planning & control systems with high degree of
flexibility
Respect for individual initiative & personal
growth
Tolerance for honest mistakes; allowing room for
failure

Management of Innovation
Contd
Innovation management education should be
aimed at upper level managers & middle level
managers comprising both non-technical
managers as well as technological managers, for
creating a common ground across the organization
Building a unified and committed multifunctional
team
Supportive organizational culture & environment

Management of Innovation
Contd
The incharge / manager of technology must be well
trained & sensitive to patterns of technology changes,
market needs, vision to see business opportunities &
have commitment for protection of firms technology .
Supportive management structures, rationales &
actions.
Avoiding bureaucratic structures including structures
that result into sharp division of labour, extensive
unit differentiation, highly formalized behaviour
Effective communication in the organization

Cooperation & Competition for

value creation
Cooperation for value creation discuss about
collaboration , external collaboration, R& D
Alliances, Marketing Alliances, Outsourcing
agreements etc AND internal collaboration ---multifunctional team, people lever in
organization viz kaizen, ringi, quality circles
Competition for value creation discuss about
technology / innovation leadership strategy, first
mover advantages, patenting, benchmarking,
business process re-engineering, reverse
engineering, disruptive innovations etc

Patents vs Copyrights
Invention & Patent
Patent gives the inventor exclusive use of that
invention & the right to assign that use.
Invention need to be registered with specified
government bodies who in turn grant patent.
Trade Secret
A Trade Secret is any commercial formula,
device, pattern, process or information that
provides an enterprise an competitive edge over
others who do not know it.

Patents vs Copyrights
Know How
Knowhow is a factual accumulation of knowledgeusually as a result of trial & error. It cannot be
protected or licensed until it is recorded in tangible
medium.
Copy Right
A Copy Right is an exclusive right granted to
authors, composers, artists or their assignees usually
for large number of years. These rights are granted
to individuals when some new work is done / created
by them.

Patents vs Copyrights
Trade Mark
A Trade Mark is a word, name, symbol, device,
letter, numeral, picture or any combination of these
in any form or arrangement that is used to identify
the origin of goods or services. Like copy-rights,
trade marks can also be registered.