Management of product Innovation
Chapter 1 Introduction
Technological innovation = The act of introducing a new device, method, or material for application
to commercial or practical objectives
- It is now the most important driver of competitive success
- The increasingly importance of innovation is due in part to the globalization of markets
Foreign competition has put pressure on firms to continuously innovate in order to
produce differentiated products and services.
Advances in information technology also have plays a role in speeding the pace of innovation
- Computer-aided design and computer-aided manufacturing have made it easier and faster for
firms to design and produce new products, while flexible manufacturing technologies have made
short production runs economics.
- It helps firms develop and produce more product variants that closely meet the needs of
customer groups and thus achieving differentiation from competitors.
The impact of technological innovation on society
The raising innovation has a clearly positive effect on society:
- Innovation enables a wider range of goods and services to be delivered to people worldwide
(globalization)
- It made the production of food more efficient
- Produce medical treatments that improve health conditions
- It enables people to travel to and communicate with almost every part of the world
Gross domestic product (GDP) = The total annual output of an economy as measured by its final
purchase price
- The impact of technological innovation can be observed by looking at the GDP
- Technological innovation increased the amount of output achievable from a given quantity of
labor and capital.
- While GDP has its shortcomings as a measure of standard of living, it does relate very directly to
the amount of goods consumers can purchase
- Thus, to the extent that goods improve quality of life, we can ascribe some beneficial impact of
technological innovation.
Sometimes technological innovation results in negative externalities = Costs (or benefits) that are
borne by individuals other than those responsible for creating them.
- Production technologies may create pollution that is harmful to the surrounding communities
- Agri-cultural and fishing technologies can result in erosion
- Medical technologies can result in unanticipated consequences such antibiotic-resistant strains
of bacteria
Technology is knowledge, knowledge to solve our problems and pursue our goals
- Technological innovation is thus the creation of new knowledge
- Sometimes this knowledge is applied to problems without full consideration of the
consequences, but overall it will probably serve us better to have more knowledge than less
Innovation by industry: the importance of strategy
While innovation is popularly depicted as a freewheeling process that in unconstrained by rules and
,plans, study after study has revealed that successful innovator has clearly defined innovation
strategies and management processes.
Most innovative ideas do not become successful new products. Many studies suggest that only one
out of several thousand ideas result in a successful new product; many fait to earn a commercial
return.
- The innovation process is thus often imagined as a funnel; with many potential new product
ideas going in the wide end, but very few making it through the development process.
The new product development Funnel in Pharmaceuticals:
Improving a firm’s innovating success requires a well strategy
- The innovation projects should align with its resources and objectives, leveraging its core
competencies and helping it achieve its strategic intent.
- A firm’s new product development process should maximize the likelihood of projects being both
technically and commercially successful. To achieve these things, a firms need
(a) an in-depth understanding of the dynamics of innovation
(b) a well-crafted innovation strategy
(c) a well-designed processes for impemening the innovation strategy
A: Industry Dynamics of Technological Innovation
B: Formulating Technolgoical Innovation Strategy
,C: Implementing Technolgoical Innovation Strategy
Chapter 2 Sources of Innovation
Innovation =The practical implementation of an idea into a new device or process
Sources of Innovation as a System
One primary engine of innovation is firms:
- They are well suited to innovation activities because they are typically having greater resources
than individuals and they have a management system
- They have also strong incentives to develop differentiating new products and services, which may
give them an advantage
Creativity
Innovation begins with the generation of new ideas = Something imagines or pictures in the mind.
The ability to generate new and useful ideas is termed creativity = The ability to produce novel
(nieuw) and useful work
- Novel work must be different from work that has been previously produces
- A product could be noel to the person who made it, but known to most everyone else. Then we
call it reinvention
- The most creative works are novel at the individual producer level, the local audience level, and
the broader societal level.
Individual’s creative ability = A function of his or her intellectual abilities, knowledge, personality,
motivation, and environment.
1. Intellectual abilities
The most important intellectual abilities for creative thinking include intelligence, memory, the ability
to analyse which ideas are worth pursuing and which not, the ability to look at problems in
, unconventional ways, and the ability to articulate those ideas to other and convince others that the
ideas are worthwhile.
- Another important intellectual ability: primary process thinking = a person’s ability to let their
mind engage in visual mental activity.
2. Knowledge
The impact of knowledge on creativity is somewhat double-edged.
- On the one hand: If an individual has too little knowledge of a field, he or she is unlikely to
understand it well enough to contribute meaningfully to it
- On the other hand: If an individual knows a field too well, that person can become trapped in the
existing logic and paradigm, preventing him/her form coming up with solutions that require an
alternative perspective.
- Thus, an individual with only a moderate degree of knowledge of a field might be able to produce
more creative solutions and breakthrough innovations are often developed by outsiders to a
field.
3. Personality
The personality trait most often associated with creativity is ‘openness to experience’.
- This trait reflects an individual’s use of active imagination, aesthetic sensitive, attentiveness to
emotion, a preference for variety, and intellectual curiosity.
4. Motivation
Intrinsic motivation has been shown to be very important for creativity. That is, individuals are more
likely to be creative if they work on things they are interested in and enjoy.
5. Environment
To stimulate creativity, it required a supportive environment with time for the individual to explore
their ideas independently, a structure that is not rigid or hierarchical, and decision norms that do not
require consensus.
The creativity of the organization is a function of creativity of the individuals within the organization
and a variety of social processes and contextual factors that shape the way those individuals interact
and behave
- It is thus not only the creativity of the individuals, but also the organization’s structure, routines
and incentives are important.
- The most familiar method of company tapping the creativity of its individual employees is the
suggestion box. They are easy and cheap to implement, but are only a first step in supporting
employee creativity
- Google utilized an idea management system whereby employees e-mail their ideas for new
products and processes to a company-wide-database where every employee can view the idea,
comment on it, and rate it.
- Employees access the company’s idea is easier through the company’s intranet = A private
network, accessible only to authorized individuals. It is like the Internet but operation only within
the organization.
Their they can submit their idea and actively interact and collaborate with the ideas of
each ideas
Translating creativity into innovation
Innovation is more that the generation of creative ideas; it is the implementation of those ideas into
some new device or process.
- Innovation required combining a creative idea with resources and expertise that make it possible
to transfer the creative idea in a useful form.
