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Tools for Innovation Management. Prasada Reddy Lund University, Sweden. Tools for Scanning Internal Environment . Audits What is an audit? - inventory of resources, assets, systems and procedures of an organization; What is the purpose? - identify what a firm has

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tools for innovation management

Tools for Innovation Management

Prasada Reddy

Lund University, Sweden

tools for scanning internal environment
Tools for Scanning Internal Environment
  • Audits
  • What is an audit?
  • - inventory of resources, assets, systems and procedures of an organization;
  • What is the purpose?
  • - identify what a firm has
  • - identify how firm utilizes them
  • - improve/learn - basis for betterment
  • - provide background for identification of core competences.
audits
Audits
  • How to use an audit?
  • - Audit collects data and is based on questionnaires designed mostly ad hoc.
  • - Audits need to be related to the objectives of the firm.
  • - Audits can be performed for the entire organization or just for parts of it (departments).
types of audits
Types of Audits
  • Skills/Organizational Capabilities Audit
  • Technology/Innovation audit
organizational capabilities 1
Organizational Capabilities 1
  • Source: Ulrich, D. & Smallwood, N. (2004)
  • What people respect is not how they are structured or their specific approaches to management, but their capabilities - an ability to innovate or to respond to changing customer needs.
  • Such ‘organizational capabilities’ are key intangible assets (one cannot see or touch them). But they make all the difference in the world when it comes to market value.
organizational capabilities 2
Organizational Capabilities 2
  • Organizational capabilities - the collective skills, abilities, and expertise of an organization - are the outcome of investments in staffing, training, compensation, communication and other human resource areas.
  • They form the identity and personality of the organization by defining what it is good at doing and what it is.
  • They are stable over time and difficult for competitors to imitate.
  • They are not easy to measure.
organizational capabilities 3
Organizational Capabilities 3
  • 1. Represents a person’s functional competence, such as technical expertise in marketing, finance or manufacturing.
  • 2. Refers to a person’s leadership ability - to set direction, to communicate a vision or to motivate people.
  • 3. Comprises a firm’s core technical competencies, e.g. Financial firm’s risk management knowledge.
  • 4. Represents an organization’s underlying DNA, culture and personality and may include such capabilities as innovation and speed.
organizational capabilities 4
Organizational Capabilities 4
  • A firm typically excel in as many as three of the following 11 capabilities, while maintaining industry parity in others.
  • Talent (attracting, motivating and retaining); Speed (in making changes); Shared Mind-Set and Coherent Brand Identity (employees and customers have positive images); Accountability (high performance); Collaboration (working across boundaries); Learning (generating ideas); Leadership; Customer Connectivity; Strategic Unity; Innovation (new in content and process); Efficiency (managing costs)
organizational capabilities audit process 1
Organizational Capabilities - Audit Process 1
  • 1. Determine which part of the business to audit - division, region or the entire company.
  • 2. Create the content of the audit - adapt the 11 generic capabilities listed to the organization’s requirement.
organizational capabilities audit process 2
Organizational Capabilities - Audit Process 2
  • 3. Gather data from multiple groups on current and desired capabilities.
  • - For a 90-degree assessment, collect data only from the leadership team of the unit under audit. Quick, but deceptive as leaders’ self-reports may be biased.
  • - For a 360-degree assessment, collect data from multiple groups within the firm. Different groups may tell different stories, but can provide insights that might otherwise be missed.
  • For 720-degree assessment, collect data from internal and external groups such as investors, customers and suppliers.
organizational capabilities audit process 3
Organizational Capabilities - Audit Process 3
  • 4. Synthesize the data to identify the most critical capabilities requiring managerial attention - Look for patterns in the data and focus on not more than three capabilities required to deliver on strategy goals. Identify those with most impact and the easiest to improve.
  • 5. Put together an action plan with clear steps to take and measures to monitor, and assign a team to the job of delivering on the critical capabilities.
  • - Actions - coordinating education or training events, setting performance standards, creating task forces, investing in technology, etc.
organizational capabilities audit process 4
Organizational Capabilities - Audit Process 4
  • 4. Synthesize the data to identify the most critical capabilities requiring managerial attention - Look for patterns in the data and focus on not more than three capabilities required to deliver on strategy goals. Identify those with most impact and the easiest to improve.
  • 5. Put together an action plan with clear steps to take and measures to monitor, and assign a team to the job of delivering on the critical capabilities.
  • - Actions - coordinating education or training events, setting performance standards, creating task forces, investing in technology, etc.
organizational capabilities audit process 5
Organizational Capabilities - Audit Process 5
  • Lessons Learned:
  • Get focused; Recognize the interdependence of capabilities; Learn from the best; Create a virtuous cycle of assessment and investment; Compare capability perceptions; Match capability with delivery; Avoid underinvestment in organization intangibles; Don’t confuse capabilities with activities.
technical innovation audit 1 source chiesa et al 1996
Technical Innovation Audit 1Source: Chiesa et al. (1996)
  • Core Processes:
  • Concept generation - identification of new product concepts
  • Product development - taking the innovation from concept, through development and transfer to manufacturing and use
  • Process innovation - the development of innovations in manufacturing processes
  • Technology acquisition - the development and management of technology per se.
technical innovation audit 2 source chiesa et al 1996
Technical Innovation Audit 2Source: Chiesa et al. (1996)
  • Enabling Processes:
  • Resources - the deployment of human and financial resources
  • Systems and tools - the effective use of appropriate systems and tools
  • Leadership - providing the top management leadership and direction.
technical innovation audit 3 source chiesa et al 1996
Technical Innovation Audit 3Source: Chiesa et al. (1996)
  • Detailed Audit
  • Assessing the current innovation practice and performance;
  • Identifying the gaps between current and targeted practice and performance and the reasons for gaps;
  • Defining the action plans needed to close these gaps.
technical innovation audit 4 source chiesa et al 1996
Technical Innovation Audit 4Source: Chiesa et al. (1996)
  • Audit - Two Dimensions:
  • 1. Process audit:
  • - the degree to which there are appropriate business processes in place;
  • - the deployment of good practice - the breadth of use in the company;
  • The degree to which each practice meets known best in class or world class standards.
technical innovation audit 5 source chiesa et al 1996
Technical Innovation Audit 5Source: Chiesa et al. (1996)
  • Audit - Two Dimensions:
  • 2. Performance audit -
  • Focus on the outcomes: i) of each individual core and enabling process; ii) of the overall process of technological innovation; and iii) the impact of this on competitiveness.
  • Produced quantitative results that facilitate comparison between and within organizations and monitors trends.
  • Weaknesses - insufficient as basis for learning. It does not specify extent of gaps or how to cover gaps.
technical innovation audit 5 source chiesa et al 19961
Technical Innovation Audit 5Source: Chiesa et al. (1996)
  • Innovation Scorecards: Process Audits
  • Provide a rapid overall assessment of the practices adopted with respect to the known best practice and whether or not the required managerial processes are in place.
  • The basis of the score card is a description, for each process of innovation, of the characteristics of good practice and poor practice.
  • This description can be translated into scales against which companies can review themselves.
technical innovation audit 6 source chiesa et al 1996
Technical Innovation Audit 6Source: Chiesa et al. (1996)
  • Performance Audit
  • 1. The performance of each core and enabling process that is relevant for firm;
  • 2. The global result of the innovation process, that is how it impacts on the competitive ability of the firm.
  • - the performance of innovation in financial terms;
  • - the impact of the innovation on the competitive performance of the product portfolio to which the innovation belongs;
  • - the contribution to firm’s process of learning.
technical innovation audit 6 source chiesa et al 19961
Technical Innovation Audit 6Source: Chiesa et al. (1996)
  • Testing the Audit Tool:
  • Functionality - i) test the basic functionality of the tool and the functionality of the support process; and ii) to test the degree to which the tool was generic and thus appropriate for firms from different sectors, sizes and technologies.
  • Usability - i) the degree to which users are able to use the tool properly without support from experts; and ii) clarity of language and terminology.
  • Usefulness - Short term, whether companies found it useful? Did it lead to effective action plans? Long term - measuring the effectiveness of the programs that resulted from the assessment.
group exercise
Group Exercise
  • Conduct 1 Audit in a Firm
  • Make Analysis of the results - Graph
  • Prepare presentation
  • Include advantages and inconveniences of a) the technique; and b) the exercise.
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