Innovation Management: an overview

innovation
Dr Paul Trott, Reader in Innovation Management,
University of Portsmouth.

Professor of Innovation & Entrepreneurship,

TU Delft, The Netherlands.

P Trott January 2009 Slide 1

 PAUL TROTT

innovation
INNOVATION MANAGEMENT
AND
NEW PRODUCT DEVELOPMENT
4th Edition

P Trott January 2009 Slide 2

Management of Innovation: an overview

1. Introduction
2. Can we manage innovation?
3.
4.
5.
6.
innovation
Models of understanding of innovation management
Factors that influence the innovation process
A framework for innovation management
Conclusions

P Trott January 2009 Slide 3

Popular view of innovation:

innovation
. . . the lone inventor/mad professor.

P Trott January 2009 Slide 4

Table 1: World’s most innovative companies

Margin Growth Stock Returns

Company
2006 Rank 1995-2005 % 1995-2005 %
1 Apple 7.1 24.6
2 Google NA** NA**
3 3M 3.4 11.2
4 Toyota 10.7 11.8
5

6
innovation Microsoft
General
Electric
2.0

5.7
18.5

13.4

Procter &
7 4.4 12.6
Gamble
8 Nokia 0.0 34.6
9 Starbucks 2.2 27.6
10 IBM -0.7 14.4

P Trott January 2009 Slide 5

Source: Business Week April 24, (2006)
 Overview of the innovation process

Scientific & Firms

technological
developments
inevitably
lead to knowledge
{ Creative
individuals
operating
functions &
activities Firm’s develop
knowledge,
inputs.

innovation Firms architecture

& external
linkages
processes &
products.

{
Societal changes &
market needs lead to
demands &
opportunities.
P Trott January 2009 Slide 6
 2. What is innovation ?

Invention & innovation

Innovation = conception + invention + exploitation

innovation Source: Henry & Walker (1991)

Innovation is not a single action but a total process of interrelated

sub processes. It is not just the conception of a new idea, nor
the invention of a new device, nor the development of a new market.
The process is all these things acting in an integrated fashion . . .'
Myers and Marquis (1969).
P Trott January 2009 Slide 7
 3. Types of innovation
Dimensions of
discontinuous Innovation space

New manufacturing
technique
Perceived

innovation
extent of change
radical

New improved
Launch of
ebay

detergent
incremental
product service process

What is changed?

P Trott January 2009 Slide 8

New services that also create new business models/value

Industry sector New service/new business model/value

Company
Ebay On-line auction A new way of buying and selling through a
community of individual users
Ryanair Airline A new way of consuming air-travel with no frills
service and emphasis on economy.

innovation
Amazon Retailer New way to buy goods- on-line retailer
Napster; iTunes Music retailer New way to buy and download music.
Google Internet search A fast way to search for information on the
engine internet
Partygaming On-line gambling Gambling and gaming from the comfort of your
own home
Myspace/ Social networking A community of users on-line who can chat and
Facebook share music, images, news from their own home.
You-Tube On-line video and A community of users sharing home made video
film archive clips plus recorded favourite clips from movies.

* The world’s largest internet poker company (Moules, 2007).

P Trott January 2009 Slide 9

Disruptive innovations

•Research by Utterback (1994) & Christensen (2000)

suggests many firms find it difficult to manage
disruptive innovations;

innovation
• e.g. IBM, Hoover, UK Banks, etc.

•Incumbents in an industry do not respond well to

dramatic shifts in behaviour

•How do firms manage both continuous change

and discontinuous change?

P Trott January 2009 Slide 10

5 studies of innovation management

Studies of Innovation management

1. Carter & Williams 1957 Industry & technical progress

2. Project Hindsight- TRACES 1968 Historical reviews of US gvt funded
(Isensen) defence industry
3. Wealth from knowledge (Langrish et al.) 1972 Queens Awards for tech innov

innovation
4. Project Sappho 1974 Success & failure factors in chemical
industry
5. Minnesota Studies (van de van) 1989 14 case studies of innovations
6. Rothwell 1992 25 yr review of studies
7. Sources of innovation
(Wheelwright & Clark) 1992 Different levels of user involvement
8. MIT studies (Utterback) 1994 5 major industry-level cases
9. Project NEWPROD (Cooper) 1994 Longditudinal survey of success &
failure in new products
10. Radical innovation (Leifer) 2000 Review of mature businesses

P Trott January 2009 Slide 11

 Factors that affect innovation

Firm related factors:

Organisational heritage Product related factors:
Experience Relative price
R&D team Relative quality
Strategy towards Uniqueness
Innovation Technologically advanced
Organisational structure

innovation
R&D intensity Technological
viability
Successful
marketable
product
Commercial
viability

Project related factors: Market related factors:

Complementarity Concentration of
Management style Target market
Top management Timing of market entry
support Competitive pressure
Marketing

P Trott January 2009 Slide 12

Linear models of innovation management

technology push

Research &
Manufacturing Marketing user
development

innovation market pull

Research &
Marketing Manufacturing user
development

P Trott January 2009 Slide 13

 Interactive model of innovation

TECHNOLOGY
PUSH

latest science and technology

advances in society

innovation
idea R&D Manufacturing Marketing
commercia
l
product

needs of society
and the market place
MARKET
PULL
Source: Rothwell & Zegweld (1985)

P Trott January 2009 Slide 14

 Open Innovation

Basic Research New Product

Development

innovation
Internal
research
projects

Technology Technology
Current market
And business model

In-licensing acquisition

Venture investing
External research
project (Chesbrough, 2003)

P Trott January 2009 Slide 15

Open innovation . . .
Procter & Gamble’s web of links for
innovation and new product development

innovation
Source: HBR (2006)

P Trott January 2009 Slide 16

 Cyclic Innovation Model

Technological
research
integrated
hard sciences engineering cycle
cycle

innovation
Scientific
exploration
Entrepreneurship
Product
creation

Marketing
soft sciences cycle
cycle
Market
transitions

Source: G Berkhout (2007), TU Delft. P Trott January 2009 Slide 17

 The end
innovation
Thank you
For listening

P Trott January 2009 Slide 18