Innovation management in multinationals - IB
Lecture 1: innovation
Definition innovation
“Innovation is the process by which an idea or invention is translated into a good or
service for which customers are willing to pay, or the result from this process”
Innovation = invention +
commercialization Invention of the
telephone
In 1876, Alexander Graham Bell filed a patent of the invention of the telephone
Two hours later, Elisha Gray arrived at the same patent office and filed an application for
the same telephone
Antionio Meucci experimented with the key ingredient of the telephone receiver in 1857
and filed a patent in 1871… but he never developed his idea or defended his patent. This left
him poor and bankrupt. Meucci was an inventor, not an innovator.
Innovation is not about creativity, it is about discipline you manage.
Importance of innovation
Innovation improves a firm’s competitive position
• Respond to market opportunities by creating new products or new markets
• New products help to differentiate from the competition
• Contributes to growth
• Product lifecycles get shorter; innovation is needed to remain attractive to customers
• Without constant innovation you will be overtaken by the competition
Innovation improves society
• Innovations improve health, safety and comfort of customers
• Cloud computing, artificial intelligence, internet of things, eHealth, online shopping
Changing technologies, customer needs and global economies create many opportunities
for innovation
Studies show that there4 is no direct relationship between money spend on R&D and firm
innovation performance
Degree of newness
Newness to the market vs newness to the company.
Incremental innovation
• Minor product change
• High success rate
• Low returns
Radical innovation
, • Large product change
• Low success rate
• High potential returns
Lecture 2: innovation process
stages of the innovation process
Old approach to innovation:
1. Each department works on the product until they have completed their task
2. Then, the project is handed over to the next department
This results in a very suboptimal process
• Many communication problems, even when there are feedback loops
• Many delays, resulting in a slow process
• Less successful output (the new product)
Sources of ideas
There are many sources of ideas for innovations
• Customers, R&D department, salesforce, competitors, patents, universities,
other industries, technological developments, existing products
,Successful innovators use a wide range of sources to generate ideas
• Beware of ingrained patterns, like always talking to the same customers
• Successful firms stimulate serendipity
The nature of the idea depends on the source
• Customers are more likely to suggest incremental innovations of wild ideas
• Employees and experts are more likely to suggest practical, easily
implementable ideas
• Universities are more likely to suggest radical innovations
Many ideas for breakthrough innovations come from outsiders
Outsiders often look at problems in new ways
• They are not trapped by traditional paradigms and assumptions
• They do not have investments in traditional methods
Traditional method to see into patient’s intestines: endoscope (flexible rod with a camera)
Innovation is mostly incremental improvements of the rod, camara and imaging software
From idea to concept
A concept is a more detailed representation of the new product
• Blueprints, drawings , specifications, computer model, images, video, scale
models, physical mockups
• Makes the idea more specific; facilitates communication (within the team and
with the customers
Test your new product concept with
customers Popular method: crowdfunding
• Kickstarter, IndieGoGo, RocketHub
• Cheap way to quickly test customer’s interest
From concept to prototype
A prototype is a first, preliminary version of the product
Alpha test:
• Technical test by the manufacturer
• Manufacturers copy users situations in great detail
• Does the product perform according to specifications?
Beta test:
• Product test by customers in their own real-life user environment
• Does the product fuction in real-life situations?
• Often used for promotion during launch (“tested by
X”) Virtual prototyping
• Simulated test
• Testing more prototypes, cheaper, faster: more information
, • E.g. new medicines are tested on “organs-on-a-chip”
Test market
• Selling the new product on a limited scale in a controlled environment
o In a specific country (because they are more open to innovation)
o In a specific region or city (such as Apeldoorn or Breda)
o In a specific channel (such as gas stations)
• Objective is to test the viability of the new product, i.e., the complete marketing mix
o Product
o Channels
o Communication messages/media
o Pricing
o Promotional activities
• To test market or not?
o Cost vs profits
o Required investments
o Danger of competitors copying
Launching the new product
By segment or geographical location or full scale (national or global)
• Test customers may be used as launch customers
o Used as reference
o Demonstrate product to potential customers
o Promote the product on social media
• In some markets influencers may be relevant
• Strategic launch decisions (taken early in the process)
o Objective (why?)
o Newness (what?)
o Timing (when?)
o Target market (where?)
• Tactical launch decisions (taken later in the process)
o Product (branding, depth of product range, packaging)
o Distribution (channel selection, distribution intensity, delivery conditions)
o Price (skimming or penetrations pricing, discounts)
o Communication (budget, instruments, push or pull)
New product announcements
Every communication that makes it clear that a new product will be launched
Objectives of new product announcements
• Create excitement with customers
• Persuade potential buyers to wait for the new product
• Allow customers to get ready for the purchase (e.g. by saving money or
making required investments)
• Encourage suppliers to develop new components
Lecture 1: innovation
Definition innovation
“Innovation is the process by which an idea or invention is translated into a good or
service for which customers are willing to pay, or the result from this process”
Innovation = invention +
commercialization Invention of the
telephone
In 1876, Alexander Graham Bell filed a patent of the invention of the telephone
Two hours later, Elisha Gray arrived at the same patent office and filed an application for
the same telephone
Antionio Meucci experimented with the key ingredient of the telephone receiver in 1857
and filed a patent in 1871… but he never developed his idea or defended his patent. This left
him poor and bankrupt. Meucci was an inventor, not an innovator.
Innovation is not about creativity, it is about discipline you manage.
Importance of innovation
Innovation improves a firm’s competitive position
• Respond to market opportunities by creating new products or new markets
• New products help to differentiate from the competition
• Contributes to growth
• Product lifecycles get shorter; innovation is needed to remain attractive to customers
• Without constant innovation you will be overtaken by the competition
Innovation improves society
• Innovations improve health, safety and comfort of customers
• Cloud computing, artificial intelligence, internet of things, eHealth, online shopping
Changing technologies, customer needs and global economies create many opportunities
for innovation
Studies show that there4 is no direct relationship between money spend on R&D and firm
innovation performance
Degree of newness
Newness to the market vs newness to the company.
Incremental innovation
• Minor product change
• High success rate
• Low returns
Radical innovation
, • Large product change
• Low success rate
• High potential returns
Lecture 2: innovation process
stages of the innovation process
Old approach to innovation:
1. Each department works on the product until they have completed their task
2. Then, the project is handed over to the next department
This results in a very suboptimal process
• Many communication problems, even when there are feedback loops
• Many delays, resulting in a slow process
• Less successful output (the new product)
Sources of ideas
There are many sources of ideas for innovations
• Customers, R&D department, salesforce, competitors, patents, universities,
other industries, technological developments, existing products
,Successful innovators use a wide range of sources to generate ideas
• Beware of ingrained patterns, like always talking to the same customers
• Successful firms stimulate serendipity
The nature of the idea depends on the source
• Customers are more likely to suggest incremental innovations of wild ideas
• Employees and experts are more likely to suggest practical, easily
implementable ideas
• Universities are more likely to suggest radical innovations
Many ideas for breakthrough innovations come from outsiders
Outsiders often look at problems in new ways
• They are not trapped by traditional paradigms and assumptions
• They do not have investments in traditional methods
Traditional method to see into patient’s intestines: endoscope (flexible rod with a camera)
Innovation is mostly incremental improvements of the rod, camara and imaging software
From idea to concept
A concept is a more detailed representation of the new product
• Blueprints, drawings , specifications, computer model, images, video, scale
models, physical mockups
• Makes the idea more specific; facilitates communication (within the team and
with the customers
Test your new product concept with
customers Popular method: crowdfunding
• Kickstarter, IndieGoGo, RocketHub
• Cheap way to quickly test customer’s interest
From concept to prototype
A prototype is a first, preliminary version of the product
Alpha test:
• Technical test by the manufacturer
• Manufacturers copy users situations in great detail
• Does the product perform according to specifications?
Beta test:
• Product test by customers in their own real-life user environment
• Does the product fuction in real-life situations?
• Often used for promotion during launch (“tested by
X”) Virtual prototyping
• Simulated test
• Testing more prototypes, cheaper, faster: more information
, • E.g. new medicines are tested on “organs-on-a-chip”
Test market
• Selling the new product on a limited scale in a controlled environment
o In a specific country (because they are more open to innovation)
o In a specific region or city (such as Apeldoorn or Breda)
o In a specific channel (such as gas stations)
• Objective is to test the viability of the new product, i.e., the complete marketing mix
o Product
o Channels
o Communication messages/media
o Pricing
o Promotional activities
• To test market or not?
o Cost vs profits
o Required investments
o Danger of competitors copying
Launching the new product
By segment or geographical location or full scale (national or global)
• Test customers may be used as launch customers
o Used as reference
o Demonstrate product to potential customers
o Promote the product on social media
• In some markets influencers may be relevant
• Strategic launch decisions (taken early in the process)
o Objective (why?)
o Newness (what?)
o Timing (when?)
o Target market (where?)
• Tactical launch decisions (taken later in the process)
o Product (branding, depth of product range, packaging)
o Distribution (channel selection, distribution intensity, delivery conditions)
o Price (skimming or penetrations pricing, discounts)
o Communication (budget, instruments, push or pull)
New product announcements
Every communication that makes it clear that a new product will be launched
Objectives of new product announcements
• Create excitement with customers
• Persuade potential buyers to wait for the new product
• Allow customers to get ready for the purchase (e.g. by saving money or
making required investments)
• Encourage suppliers to develop new components
