innovation - Vodafone Chair Mobile Communications Systems

mns.ifn.et.tu.dresden.de

innovation - Vodafone Chair Mobile Communications Systems

Vodafone Chair Mobile Communications Systems, Prof. Dr.-Ing. G. Fettweis

Management of Technology Innovation (MTI)

Sommersemester 2011

Chapter 2: Innovation Strategy, Open Innovation

Dr. Alejandro Zalnieriunas


Lecture Content

> Introduction

> Innovation Strategy, Open Innovation

> Innovation Process and Tools

– Ideation and Creativity

– Concept and Feasibility

– Implementation

– Life Cycle

> Innovation Measurement and Economics

> People and Innovation Culture

> Management of Knowledge and Skills

> Intellectual Property Rights (IPR)

> Selected Topics

TU Dresden Alejandro Zalnieriunas Slide 2


Innovation / Development Funnel

Problem statements, development requests

New ideas

Ideas

Ideation Concept Feasibility

G c

STAGE GATE PROCESS

Concepts

Project portfolio management Life Cycle Management


Feasibility projects Implementation

projects

Imple-

mentation

G F G I G L

Decision Gates

Products,

Services,

Processes,

Business Models,


Life

Cycle

TU Dresden Alejandro Zalnieriunas Slide 3


Innovation Elements I

Innovation Process

Ideation Concept Feasibility

Innovation Tools

External Ideation

Enterprise Strategy

Strategy Alignment

Innovation Strategy

People and Innovation Culture

Enterprise Culture

Culture Alignment

External R&D, Suppliers, Partners

Imple-

mentation

Enterprise

Life

Cycle

Products,

Services,

Processes,

Business Models,


Open Innovation

TU Dresden Alejandro Zalnieriunas Slide 4


Innovation Elements II

Enterprise Strategy

Innovation Strategy

People and Innovation Culture

Enterprise Culture

Enterprise

Innovation Process

Innovation Tools*

*) Innovation Tools: Idea Management, Innovation Portfolio Management,

Project Management, Knowledge and Skills Management

External:

- R&D

- Suppliers

- Partners

Open Innovation

TU Dresden Alejandro Zalnieriunas Slide 5


Business Strategy and Innovation Strategy

Business Strategy

• Defines How to meet the business

goals.

• Through improvement of

• competitive edge,

• market share,

• revenue and margin growth.

• Business goals include the

fulfilment of expectations of

business stakeholders:

• Customers

• Investors

• Employees

• State / Government

• Environment (Sustainability)

• Determines when and where

innovation is required to fulfil the

business strategy.

Innovation Strategy

• Is a part of the overall business

strategy and aligned with it.

• Guides the selection of innovation

target areas.

• Guides decisions on resource

allocation for innovation activities.

• Improves chances of complex and

risky activities related to R&D and

new product development (NPD).

• Creates innovations as a key

source of competitive advantage

TU Dresden Alejandro Zalnieriunas Slide 6


Innovation Strategy – Oversight

TU Dresden Alejandro Zalnieriunas Slide 7


Innovation Leadership

Innovation Leadership

Experience shows that innovation is the most effective

instrument to achieve leadership in all dimensions (e.g.

quality, costs, time to market) and guarantee growth over

long periods of time through a sustained offer of new

products and services

TU Dresden Alejandro Zalnieriunas Slide 8


Innovation Strategy – The Need for Innovation

Now

Prediction

Innovate!

Future

Aims

met?

> Identify where innovation is most needed

> Decide which leadership area(s) is(are) to be addressed: Product, service,

process, business model

> Decide which type of innovation is needed: Incremental, radical, disruptive,

blue ocean / value innovation, open innovation

> Create defence mechanisms for innovations against competitors

TU Dresden Alejandro Zalnieriunas Slide 9

No

Yes


Diffusion of Innovations

performance

time

Note 1 Note 1

Customer demand

Current technology

New technology

Customer Migration

time

Examples for Technology

Replacement

• Propeller-aircraft Jet

• Vinyl disks CDs

• Video tapes DVDs

Note 1) Source: Innovation Management and New Product Development,

4th Edition. P. Trott

TU Dresden Alejandro Zalnieriunas Slide 10


Technology ‘S‘ Curve

performance

Emerging

Pacing

Key

Total investment

Organisation focus along ‘S’ curves

• Emerging: R&D masters technology

• Pacing: Technology competence and ability to supply

• Key: Feature improvement and market share growth

• Base: Focus moves from features and performance to other aspects like

service and pricing

TU Dresden Alejandro Zalnieriunas Slide 11

Base


Types of Innovation I

Product change

Low High

Radical

Incremental

Technology change

Disruptive

TU Dresden Alejandro Zalnieriunas Slide 12

High Low


performance

Types of Innovation II – Disruptive Innovation

performance

High

Low

Sustaining Technology

Disruptive Technology

Pace of demanding technology

High-end

customer demand

Customer Migration

Low-end

customer demand

time

Pace of simpler,

cheaper technology

acceptable performance

time

Characteristics

• Current technology / features

exceed demand of a

considerable amount of

customers

• Disruptive technologies offer

products with poor, but

acceptable, performance in

some features but advantage in

others, typically price

• Features of disruptive

technologies are improved with

time

Examples

• HP’s inkjet printers

• IBM’s PCs

• Philips LEDs for consumer

electronics Illumination

TU Dresden Alejandro Zalnieriunas Slide 13


What Incremental Innovators Do

N.F.E.

> Seeking cost advantages over competition

> Increasing production efficiency changing processes and organisation

> Making minor modifications to designs

> Adding features to existing products

> Re-innovating – make changes to newly launched products

> Developing a reputation for product quality – branding

> Learning from users and customers

TU Dresden Alejandro Zalnieriunas Slide 14


What Radical and Disruptive Innovators Do

N.F.E.

> Being open to new ideas from outside firm and sector

> Building networks and alliances outside core business

> Continuously scanning technological and marketing environment

> Taking option by investing in a technology portfolio

> Creating new links with innovation systems

> Engaging some parts of the organisation in exploratory work

> Bringing new capabilities by acquisition or hiring

> Being aware of new patterns of customer behaviour

> Changing the „way of doing things“ when required – process innovation

TU Dresden Alejandro Zalnieriunas Slide 15


Pace of Innovation Strategies

Required range and depth

of resources

Reactive

(follower)

Passive

Proactive

(Leader)

Active

(fast follower)

Required process complexity

TU Dresden Alejandro Zalnieriunas Slide 16


Innovation Strategy – Resources

TU Dresden Alejandro Zalnieriunas Slide 17


Business Strategy – BCG Matrix

Market growth

Low High

Question Marks Stars

Invest

selectively

Leave

market

Poor Dogs Cash Cows

Market share

Invest

Get

profit

TU Dresden Alejandro Zalnieriunas Slide 18

High Low


Technology Strategy – Technology Matrix

Technology attractiveness

Low Medium High

Strength of Resources

TU Dresden Alejandro Zalnieriunas Slide 19

High Medium Low


Innovation Strategy – Project Matrix

Chance*

Invest

Select

Low High

Risk*

Avoid

*) Could be defined through probabilities of appropriate events

Select

carefully

TU Dresden Alejandro Zalnieriunas Slide 20

High Low


Innovation Strategy – SWOT Example

Analysis of as-is situation for the introduction of innovation improving

measures in a global enterprise

Strengths

• CEO and top management is committed

to innovation

• Solid technology knowhow and skills are

available

• Distributed R&D facilities allow to access

many local resources

• Creation of good ideas and value capture

has been demonstrated frequently, but

non-systematically

Weaknesses

Opportunities Threats

• Improve of systematic collaboration

between local R&D facilities

• Install tools that rise the efficiency of the

collaboration across regions and divisions

• Transparency of ideas will lead to

increased implementation of innovations

• Lack of appropriate innovation tools

• Lack of an appropriate innovation culture

• Peoples’ roles don’t leave time for

innovating

• Resistance of people to the introduction of

an innovation culture

• Lack of short-term success could lead to

employee demotivation

• Innovation doesn‘t get the right priority

TU Dresden Alejandro Zalnieriunas Slide 21


Open Innovation – Definition

AN INNOVATION IS THE IMPLEMENTATION

OF SOMETHING NEW

WHICH DELIVERS BENEFIT

INVENTION Implementation Success INNOVATION

OPEN INNOVATION IS THE PROCESS OF CREATING INNOVATIONS

IN COOPERATION WITH EXTERNAL RESOURCES

“Open Innovation combines internal and external ideas

into architectures and systems whose requirements

are defined by a business model.”

Source: Open Innovation: The New Imperative for Creating and Profiting from Technology, Henry Chesbrough.

TU Dresden Alejandro Zalnieriunas Slide 22


Closed and Open Innovation I

Closed Innovation

• Technology leadership is based

on own R&D.

• Ideas and IP are generated and

exploited within the company.

• R&D costs and IP are high

barriers for market entrants.

• Companies often have vertical

business models. They produce

goods and services along the

whole value chain, from materials

to after sales services.

Open Innovation

Mobile employees and Venture

Capital industry enable

founding of start-ups.

• Ideas and IP are exploited at the

most appropriated place.

• Ideas and IP can move out of and

into the company.

• IP can be acquired, sold and

licensed in or out.

• Teams can leave the company as

spin-offs and start-ups can be

acquired.

New

Market

Current

Market

TU Dresden Alejandro Zalnieriunas Slide 23


Closed and Open Innovation II

Closed Innovation Open Innovation

The smart people in our field work for us. Not all the smart people work for us. We need

to work with smart people inside and outside our

company.

To profit from R&D, we must discover it,

develop it, and ship it ourselves.

If we discover it ourselves, we will get it to

market first.

The company that gets an innovation to

market first will win.

If we create the most and the best ideas in the

industry, we will win.

We should control our IP, so that our

competitors don’t profit from our ideas.

Source: Open Innovation: The New Imperative for Creating and Profiting from Technology, Henry Chesbrough.

External R&D can create significant value;

internal R&D is needed to claim some portion of

that value.

We don’t have to originate the research to

profit from it.

Building a better business model is better than

getting to market first.

If we make the best use of internal and external

ideas, we will win.

We should profit from others’ use of our IP,

and we should buy others’ IP whenever it

advances our own business model.

TU Dresden Alejandro Zalnieriunas Slide 24


Open Innovation – Business Model

I D E A S

25

Sell IP License-out

Spin-out

NEW

MARKET

CURRENT

MARKET

TU Dresden Alejandro Zalnieriunas Slide 25


Open Innovation – Crowd Sourcing

“Crowdsourcing is the act of taking tasks traditionally

performed by employees or contractors, and outsourcing them

to a large group of people (a crowd) or community, through an "open call"

asking for contributions.

(Adapted from: Wikipedia)

What the Crowd can do for you - Crowdsourcing and Wisdom of Crowds. From

programs like IdeaStorm to IBM's Idea Jam, many organizations are discovering

the wealth of ideas and insights available from their customers and

business partners. Crowdsourcing uses your customers/users/business partners

as allies to help fuel your company's idea engine ultimately producing new

products and services.

(Source: Product Development and Management Association, PDMA)

TU Dresden Alejandro Zalnieriunas Slide 26


Open Innovation – Advantages

• Innovation is most an iterative solution process:

– Create

– Trial and succeed, trial and error

– Recombine knowledge

• External knowledge and trial capability is by far larger

• Solution may be known externally – in the same or in a related domain

• Large amount of involved people with different backgrounds leads to larger solution

space

• Solution generation can be dramatically faster

• Recombination of external knowledge can lead to new products or solutions

TU Dresden Alejandro Zalnieriunas Slide 27


Open Innovation – Co-operations and Networks

• Co-operations:

– Specialised partners work together with a clear short term purpose.

– Each partner is usually responsible for a part of the value chain.

– Partners share risks and costs.

• Networks:

– Loose co-operation on broad areas, usually for long term optimisation.

– Offer fast and cost effective way to get access to resources.

– Can be used to mature ideas externally.

– Can be used to get access to markets.

TU Dresden Alejandro Zalnieriunas Slide 28

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