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

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Chapter 3 Processing Innovation

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Chapter 3Processing Innovation

© David O’Sullivan


Reflections

  • Explain the relationship between change and innovation.

  • In his change management method, Kotter talks about creating a sense of urgency. Explain what this means.

  • List a number of traits of excellent organizations.

  • Explain some of the main traits of innovation culture.

  • List a number of barriers to innovation.

  • What is the fifth-generation innovation model?

  • Explain the dangers of having too much routine.


Activities

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


Learning Targets

  • Show the main reasons why organizations invest in innovation

  • Understand some of the reasons why innovation fails

  • Discuss the key stages in the innovation process

  • Understand the importance of opportunity recognition in the innovation process

  • Explain the innovation funnel

  • Apply an innovation method to building an innovation plan


Innovation Investment

  • Organizations invest an average of 4% of turnover on Innovation

  • Budget typically spent across various functions e.g.

    • Computer Services

    • Product Design

    • Process Improvements

    • Training etc.


Innovation Investment

Innovation Expenditure as % Turnover in Western Europe

  • Manufacturing 3.7%

  • Services 2.8%


Goals of Innovation

1. Improved quality

2. Creation of new markets

3. Extension of the product range

4. Reduced labor costs

5. Improved production processes

6. Reduced materials

7. Reduced environmental damage

8. Replacement of products or services

9. Reduced energy consumption

10. Conformance to regulations


Goals of Innovation

Improve Quality 65% of organisations surveyed

Create New Markets50%

Extend Product Range 46%

Reduce Labour Costs40%

Improve Production35%

Reduce Materials25%

Reduce Environ. Damage23%

Replace Products/Services21%

Reduce Energy Consumption18%

Conform to Regulations18%


Problem

  • Between 50-70% of all Innovation fails to impact on organisational goals

  • Implications …

    • Wasted resources – time, people and money

    • Loss of morale

    • Higher resistance

    • *Various. See: Paul Strebel in Harvard Business Review on Change 139-157

      • (Harvard Business Review, Boston, 1999)


Failure of Innovation

  • Various reasons

  • Common reasons across all organizations:

    • Poor goal definition

    • Poor alignment of actions to goals

    • Poor participation in teams

    • Poor monitoring of results

    • Poor communication and sense of community


75% of Ideas Fail

  • Three possible outcomes for you ideas:

    • You continue with idea (25% chance of success)

    • You stop idea but start a new idea (Increase chances of success!)

    • You stop the idea and so save time and money


Failures

  • Survey of 13,000 new products

    • 14% made it to market

    • 65% of these succeeded

    • i.e. 91% new products failed representing almost 50% of investment

    • Success factors

      • Fit with market needs

      • Fit with company strengths

      • Technical superiority

Booz Allen and Hamilton 1981


Failure

  • Survey of 200 Failed Products

    • Better ‘mousetraps’ 28%

    • ‘Me too’ products24%

    • Technical ‘dogs’15%

    • Competitive pricing13%

    • Too expensive13%

    • Ignorance7%

Calantone and Cooper 1979


Idea Attrition


Metric System

  • Metric available since 17th Century

  • Customers reluctant to adopt

  • Mars Climate Orbiter Disaster (1998)

  • NASA reveals some calculations were ‘Imperial’!

  • Yes, these were ‘rocket scientists’

  • U.S. Aerospace Industry prefers ‘Imperial’

  • Where else has ‘Imperial’ remained?


Scurvy

  • Fatal disease on voyages

  • Half of all sailors died on long voyages!

  • Simple and cheap cure found in 1601: Citrus Fruits

  • In 1795 Navy finally adopted cure

  • Not adopted in merchant fleet for another 70 years


Sanitation

  • Greatest innovation in history

  • Saves millions of lives!

  • 40% of current world population lack sanitation!

  • Half Million children die in Asia each year (2008)

  • MRSA in Irish Hospitals


Primary Causes

  • Poor definition of goals

  • Poor alignment of actions to goals

  • Poor participation by employees in teams

  • Poor monitoring of results

  • Poor communication and participation in communities


Process of Innovation


Applying Innovation

  • Better definition of goals

  • Better alignment of actions to goals

  • Greater participation of individuals in teams

  • Better monitoring of results

  • Greater communications and building of communities


Goals

  • “Objective of an Effort”

  • Examples:

    • Vision Statements, Stakeholder Requirements, Conformance Standards, Development Strategies, and Indicators of Performance


Actions

  • “Expenditure of Effort”

  • Examples:

    • Solving Problems, Generating Ideas, Developing Proposals, Managing Projects


Teams

  • “Resources of Effort”

  • Examples:

    • Leaders, teams, pay reviews, …


Results

  • “Outcome of an effort”

  • Examples:

    • Status of Goals, Actions andTeams

    • Relationships between

      • goals and actions

      • goals and teams, etc…

    • Exceptions, Reports


Communities

  • communities refers to all people who share a common purpose of supporting innovation in the organization

    • organization and leadership,

    • communications, and

    • knowledge management.


Leaders in Industry

  • Tom McCabe, M.D., Boston Scientific

    • Setting Goals

  • Michael Welch, M.D. Fidelity Investments

    • Managing Portfolios

  • Lionel Alexander, M.D. Hewlett Packard

    • People and Teams

  • Frank O’Connor, M.D., Ingersoll-Rand

    • Monitoring Results (Scorecard)


GOALS

ACTIONS

RESULTS

TEAMS

Innovation Funnel

Recognise

Opportunity

Create

Idea

Develop

Idea

Realise

Potential

COMMUNITIES


Innovation Funnel


Innovation Knowledge


Innovation Team


Summary

  • Show the main reasons why organizations invest in innovation

  • Understand some of the reasons why innovation fails

  • Discuss the key stages in the innovation process

  • Understand the importance of opportunity recognition in the innovation process

  • Explain the innovation funnel

  • Apply an innovation method to building an innovation plan


Activities


Search Online

  • http://www.youtube.com

    • Henry Chesbrough on Open Innovation

    • Michael Porter on Strategy

    • Innovation at Google

    • Tom Peters: Innovation is Actually Easy!

    • Sun's 25 years of innovation


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