Dr Larry Stapleton Millikin University
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Invention:
 Creating something that does not currently exist
Innovation:
 the process of bring an invention to market or
introducing a radical step change
Continuous Improvement:
 making incremental changes to a product, service or
process
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A new way of doing something
◦ Method
Process
Technology
◦ Product
Service
◦ Level of Innovation
 New Product
 Significant Improvement to a product or process
 New Application of current product/service
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External Forces
◦ Technology Changes
◦ Globalized Markets
◦ Fragmented Markets
◦ Government Regulation / Deregulation
◦ Social Change
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Efficient time to take a new product to market
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How to apply resources to increase a product portfolio
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There is a need to promote and succeed in an area that
you are not familiar.
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Adapting a culture that understands that individual
failure is probable but overall success is the goal to
achieve.
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Discontinuous Innovation
◦ Breakthrough : High Risk; Misreading the market
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Dynamically Continuous
◦ dramatic improvement over an existing state-of-the- art solution
◦ lower risk as market demands are better understood
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Continuous Innovation
◦ Incremental change; step at a time
◦ Low risk as focus is on slight changes to product or process
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Imitation
◦ Copying/adapting from another firm
◦ May not be necessarily the same
◦ Level of risk depends on the speed of the market demand
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CEO involvement in innovation
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Defining innovation as critical for long term success
Emphasis on concept of managing change
Innovation and Creativity in Mission statement
Demonstrated openness to outside ideas
Formal programs for idea generation and problem solving
Strong emphasis on cross- function communications\
Encourage employee communications with customers
Increased level of R&D, strong product development focus
Providing rewards for individual creativity and innovation
Creating budgets exclusively to innovation
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Synectics study (1993)
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Can you Manage Innovation?
Idea Generation
Concept Testing
Technical Feasibility Assessment
Product Testing
Financial Assessment
Test Marketing
Launch
Life Cycle Management
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Depends on the level of Innovation
Dedicated Team, ad hoc or hybrid
Keys factors to consider
• Level of Communication
• Expertise required: Specialist or Generalist
• Control: Centralized vs Decentralized
• Autonomous or Integrated
• Full or Part time team members
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Recognition that the success and failure of a single project is not as
important as the success of the whole.
◦ May drive a different way of managing and rewarding employees
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Develop Portfolio of projects that coincide with company’s current
lifecycle.
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Promote a product maturity and market diversified portfolio
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Recognize that a flexible and adaptive structure is key to Innovation
◦ General structure is necessary to guide the process
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Portfolio should contact High, Medium and Low risk projects
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Companies are guided to innovate based upon a new technology,
new market or a change in the market.
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Technology Pull: Likely a break through product or process
◦ does the market desires the new product.
◦ moving the product from the design stage to product launch
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Market Pull: based on perceived market changes
◦ Assumes customer knows what they want
◦ May not know until they see product
◦ Many focus on continuous improvement
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Aspects of a good Portfolio:
◦ Portfolio must be company wide with Management involvement
◦ Focus on current products or new diversified markets
◦ What type of technology will be of focus.
◦ Type of market including maturity
◦ Planned level of resource commitment. % of revenue
◦ Is innovation thru internal or external sources
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Goals are necessary to see if we got where we wanted
to go.
Financial Metrics alone do not work
◦ they focus on short term gains while innovation is strategic
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Innovation metrics we prefer:
◦ % of revenues gained from new products in 3-5 years
◦ Holding a team and individual accountable
 difficult to schedule innovation
 Look at Idea generation, development of portfolio, understanding
of lifecycle.
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Products in development at any one point (11)
◦ New Products (4)
◦ Product Revisions (4)
◦ Product Support (3)
New Product Launches per year (4)
Average Development Cycle
◦ New products and Product Revisions (18 & 6 months)
Average Development Costs
◦ New products and Product Revisions ($2M, $1.1M)
Company revenue, by %, innovations over last 3 years (35%)
Managers time spent on innovation activity (10%)
Average ROI on new product development (30%)
Morris & Kuratko, 2002
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◦ What do we need to allow Innovation to occur?
 Requires gathering the right people, money, materials, machines,
processes, methods and procedures
 Requires a group action and is managed
 Create a culture that fosters individuals that are willing to take a
risk and are success driven.
How do we create a culture of change?
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Represented by a set of key values, beliefs, understanding and norms
shared by members of an organization.
• Typically generated from Top Management
• Successful if communicated by a strong focused leader.
Means of Communication
• Symbols
• Stories
• Heroes
• Slogans
• Ceremonies
Focus on customers and internal people and processes that bring
about useful change towards attainment of organizational goals.
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Organizational Change
Def: The adoption of a new idea or behavior by an organization.
• Change is common aspect of current business environment
• Adaptation to change is central point of learning organization
• For success, adaptation to change must exist in current workforce
• Change includes redefining of roles, processes, values and removal of barriers
Model for Planned Change
1. Both internal and external forces contribute to change
2. Organizations must monitor the forces of change and determine when
there is a need for change.
3. Initiate search for response to the change
4. Implement the response to the change
Forces of Change
Environmental (External) Forces
• Customers
• Competitors
• Technology
• Economic
• International arena
What are examples of these forces?
Internal Forces
• Goals
• Employees
• Labor Unions
• Production efficiencies
• Company performance
What are examples of these forces?
Need For Change
Management’s responsibility is to:
a. Monitor threats and opportunities in the external environment
b. Identify strengths and weaknesses in the organization.
How does a manager determine a need for change?
• Disparity between existing and desired performance levels
( Performance Gap).
Is this gap due solely to non-performance?
How does the sense of urgency enter into the
identification of the need for change?
Initiating Change
Def: To search for or create ideas that solve perceived needs are developed.
Search: process of learning about current developments inside or outside the
organization that can meet the perceived need.
Creativity: Generating novel ideas with the potential of meeting the perceived
need or opportunity.
Characteristics of a Creative individual
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Conceptual Fluency
Originality
Open mindedness
Less authority, Independence
Playfulness, Curiosity, Undisciplined exploration
Persistence, commitment, focused approach
Idea Champion: Passionate , committed to the idea despite rejection by others.
Inventor: Develops the idea but does not have the ability or interest to promote.
Sponsor: High-level manager who approves, protects and removes major barriers.
Critic: Challenges the concept and provides reality checks.
Development of a Creative Organization
1. Open channels of communication
2. Contact with outside sources
3. Brainstorming, suggestion systems
4. Eccentricity allowed
5. Use of teams
6. Decentralization, loosely defined positions
7. Acceptance of mistakes, risk taking
8. Freedom to pursue and choose problems
9. Playful culture
10. Freedom to discuss ideas, long time horizon
11. Resources allocated to creative personnel and
projects without immediate payoff
12. Reward system that encourages innovation
Implementing Change
Why do we resist change?
• Self Interest: Perceived loss of power, prestige, pay, or benefits.
• Lack of Understanding and Trust: purpose unknown.
• Uncertainty: Lack of information.
• Different Assessments of goals: Goals conflict, differ in perceived
outcome.
Force Field Analysis
To implement a change requires an analysis of the driving
forces and the restraining forces. Removal of restraining
forces allows driving forces to implement change.
What is meant by this statement?
Implementation Tactics
Communication and Education
• Change is technical
• Users need accurate information and analysis to understand change.
Participation
• Users need to feel involved
• Design requires information from others
• Users have power to resist
Negotiation
• Group has power over implementation
• Group will lose out in the change
Examples?
Coercion
• A crisis exists
• Initiators clearly have power
• Other implementation techniques have failed
Top Management support
• Change involves multiple departments or reallocation of resources
• Users doubt legitimacy of change
Types of Planned Change
Technology changes
Related to the organization’s production process. (efficiency)
Technology change is from the bottom up.
Lower level techs act as idea champions.
Why
What type of Implementation tactic would you use and Why?
Structural Changes
Involves the hierarchy of authority, goals, structural characteristics,
administrative procedures and management systems.
Accomplished thru a Top - Down approach.
Why?
Champions are Top level and Middle management
Why would the Preferred Implementation Tactics be
Education, Negotiation & Participation?
New Product Changes
• Change in the organization’s product or service output
• Primary way that organizations adapt to changes in markets,
technologies and competition.
• Implemented more along a Horizontal line
• Horizontal Linkage Model shows that a new product must be
developed simultaneously by marketing, research & manufacturing.
What roles do these depts play in a successful development of new product?
(Marketing, Technical specialists, research, manufacturing)
How does time play into the new product strategy?
(Time Based Competition)
Cultural / People Changes
A change in values, norms, attitudes, beliefs and behaviors of employees.
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Way people think, Mindset rather than technology, structure or products
Training is the most frequently used tool.
Organizational Development: promotes improvement of internal relationships
and increased problem solving capabilities to improve an organization’s
effectiveness.
• Team building Survey feedback activities
Large group intervention
OD Steps:
1. Unfreezing: participants become aware of problems and then increase
willingness to change (Change Agent)
2. Changing: Experiment with new behavior and learn new skills.
3. Refreezing: New behaviors are evaluated and reinforced by individuals who
have newly acquired attitudes or values and are rewarded by the organization.