Improvement of Innovation Management through the Enlargement of Idea Sources

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1 Improvement of Innovation Management through the Enlargement of Idea Sources 6. EU Certificates (EUCert) Days Martin Neumann, Kolbenschmidt Pierburg AG, Germany Andreas Riel, Grenoble Institute of Technology, France Timisoara (Romania), September 22nd, 2011

2 Introduction Objective Target Innovation management has to guarantee a sustainable idea generation to support the product development with the continuous flow and collection of new successful ideas. Case Study The following presentation is based on the case study of the international automotive supplier Kolbenschmidt Pierburg (KSPG), headquartered in Germany, which is running a strategic project to improve its existing innovation management. The goal of this presentation is to propose an approach for innovation management to leverage idea generation and capitalization. The case study which links these theoretical principles with industry experiences shows that the enlargement of idea sources can boost innovation power. Kolbenschmidt Pierburg

3 Kolbenschmidt Pierburg AG Company Overview Kolbenschmidt Pierburg AG Sales 2010: 1,982 million, Employees: 10,816 Sales: 605 m Sales: 160 m Sales: 515 m Sales: 376 m Sales: 221 m Sales: 186 m Employees: 4,758 Employees: 682 Employees: 2,206 Employees: 1,305 Employees: 524 Employees: 977 Products: - Passenger car pistons - Commercial vehicle pistons - Piston modules - Large-bore pistons - MIR Products: - High-end aluminum engine blocks - Final machining - Cylinder heads - Cast aluminum components Products: - Air Management - Emission Control - Actuators - Solenoid Vales - Commercial Diesel Systems Products: - Oil pumps - Vacuum pumps - Electrical and mechanical coolant pumps - Water circulation pumps Products: - Independent aftermarket - OES + SOE Products: - Plain bearings - Bushings - Thrust washers - Dry bearings (Permaglide ) - Non-ferrous continuous castings Financial year 2010 Kolbenschmidt Pierburg

4 Innovation Management Trends and Requirements in the Automotive Industry Automotive R&D value creation , in bn. Engineering service providers 67.6 bn. 8.1% (5.5) 90 bn. 11% (10) In 2015, the global automotive suppliers and engineering firms will invest approximately 65 billions in R&D; this sum is far more than twice as much as the OEMs budgets. Suppliers OEMs 60.5% (40.9) 31.4% (21.2) 61% (55) 28% (25) R&D value creation Because of the automotive suppliers high involvement and responsibility during the development activities of the OEMs, most of the vehicle parts are engineered and manufactured by the suppliers. Innovations become more and more a supplier task. Source: Dannenberg J., Burgard J. (2007). Car Innovation 2015 A comprehensive study on innovation in the automotive industry. Published by Oliver Wyman Automotive, Munich, Germany (2007), Kolbenschmidt Pierburg

5 Initial Situation It seems we need ideas, and we need lots of them! Why? Source: Dandy, G., Walker, D., Trevor, D., Warner, R.: Planning and Design of Engineering Systems. 2nd edition, Taylor & Francis, Abingdon, Oxon / New York, NY (2008), p. 99 Kolbenschmidt Pierburg

6 Number of Ideas Kolbenschmidt 6. EUCert Days: Pierburg Improvement Group of Innovation Management through the Enlargement of Idea Sources Universal Industrial Success Curve Raw Ideas (Unwritten) Stage 2. Stage 3. Stage 4. Stage 5. Stage 6. Stage 7. Stage Idea Generation 300 Ideas Submitted 125 Small Projects Idea Screening Preliminary Analysis 9 Early Stage Devel. Business Analysis 4 Major Devel. Development 1.7 Launches Commercial launch 1 Success Commercial success Stages of New Product Development Process Source: Stevens, G. A., Burley, J.: 3,000 raw ideas = 1 commercial success! In: Research Technology Management, 40 (3), pp (1997) Kolbenschmidt Pierburg

7 Two Major Aims of Innovation Management 1. Increase Quantity of Ideas 2. Improve Quality of Ideas Kolbenschmidt Pierburg

8 Idea Generation A Major Task within Innovation Management Within the innovation management, idea management can be defined as a sub-process responsible for the generation of internal and external ideas, the structured evaluation of ideas and finally the selection of the most promising ideas for future business success. Because idea generation is critical to the development of new products, innovation management has to look systematically for new idea sources to enlarge the pool of ideas and guarantee long-term market success. Kolbenschmidt Pierburg

9 Integration of Stakeholders for Sustainable Innovation Management The basic idea is that not only one group of stakeholders should be responsible for innovations, but also other stakeholders of the corporate environment should be actively involved in the innovation process. A large number of diverse internal and external stakeholders of a company should take active parts in the whole innovation management process as the main key to sustainability. Innovation becomes a team-based effort that involves alliances with all internal and external partners. At different stages of the innovation process, the mode and degree of effects from stakeholder involvement are different. The analysis of the stakeholder concerning their interests and participations in the innovation process is necessary for innovation projects to gain more validation and significance. Kolbenschmidt Pierburg

10 Innovation Management System based on the Stakeholder Concept Executive Customers Government Mangement Learning Internal Stakeholders Employees of all departments Sales Representatives Realisation Innovation Management Selection Science Society External Stakeholders Think Tank Competitors External Employees Suppliers Kolbenschmidt Pierburg

11 Innovation Management at Kolbenschmidt Pierburg AG A critical analysis of the existing innovation management system at KSPG reveals that idea generation is currently limited to a core group of employees who act as idea contributors. By using only ideas and information from well-known sources within the company there could be the threat of stagnation. To capture new ideas from different sources, it is essential to identify potential sources inside and outside the organisation. The adopted solution approach is to enhance idea generation to all stakeholders in the product-service-system life cycle. This approach of integrating more stakeholders in the idea generation process has started with an as-is analysis of KSPG s current innovation management with special regard to the idea sources up to now and how these ideas have been evaluated so far. Kolbenschmidt Pierburg

12 Overview of Internal Idea Sources Stakeholder Idea Source Direct way to get ideas Indirect ways to get ideas Idea generation activities and processes Executive Executive in the company Idea/Innovation Database General overview of external Idea management or corporate stakeholders improvement suggestion system interests Continuous improvement process Inventions Management professional in the Management Same as first source Same as first source company Departments Departments includes R&D, includes sales, Employees Especially sales sales and customer and service purchasing, R&D, customer sales, service, should capture customer ideas of Employees all Same as first source quality control, production, Purchasing customer should service collect should supplier departments purchasing, customer controlling etc. ideas of all Same as first source service, quality control, departments production, controlling Sales Representatives Think Tank External employees Sales representatives promote and sell products directly to customer etc. in the field; may have their office at the customer s site A group dedicated to coming up with new ideas, research and knowledge Collective term for loosely affiliated employees, like project-based employees, temporary employees, freelancers or students Contractual agreements Direct solicitation Outcome based innovations Inventor circles Same as first source capture customer ideas Organisation of workshops or Purchasing should collect seminars at the customer s site, for example supplier R&D ideas can present and discuss new product solutions direct with the customer on-site This group can have members from all departments and so different aspects can be considered Stimulus from outside Possible solution to avoid to be professionally blinkered Kolbenschmidt Pierburg

13 Improvement of the KSPG s Innovation Database Old Version KSPG Intranet New Version Kolbenschmidt Pierburg

14 Overview of External Idea Sources Stakeholder Idea Source Direct way to get ideas Indirect ways to get ideas Customers Customers Competitors Science Society Government Suppliers Core customer groups Core customer groups Direct competitors Universities Groups of interests like Industry Associations Media sources Governmental departments 1. Suppliers of physical goods, for example Tier 2 suppliers, etc. 2. Suppliers of information, like consultants and research firms Customer submitted Customer submitted ideas Interviews Customer ideas contracts negotiations Interviews Customer contracts Competitive Intelligence Direct talks during international fairs negotiations and summits Sponsoring of university chairs Master thesis projects Networking Working groups Contact with editors Visiting respective website Scanning new technology regulations Supplier submitted ideas Meetings Contract negotiations Direct talks Visiting presentations Networking Customer analysis Customer analysis Satisfaction surveys Customer Satisfaction database surveys Internal customer-related teams Customer database Internal customer-related Market research firms teams Scanning new technology releases, like PhD thesis or other publications Publications from associations Scanning media, especially internet research or patent research Attend in national and international fund programs for innovation projects Scanning commentaries concerning new laws Supplier analysis Research for news from suppliers Working with database of consultants Use of provided automotive information services Kolbenschmidt Pierburg

15 Concept of KSPG Customer Teams KSPG Customer Teams Customer-related information Team Room in KSPG Intranet Team No. 1 Team No. 2 Team No. 3 Team No. 4 Team No. 5 Team No. 6 Team No. 7 Team No. 8 Team No. 9 Team No. 10 Corporate database available via KSPG s intranet Feedback to KSPG Customer Teams Kolbenschmidt Pierburg

16 Conclusion Idea generation has to be understood as part of the whole innovation process. Ideas generation has to be defined as a systematic sub-process of innovation management on a regular basis. Idea generation activities may not only be based on well-known internal sources but has to be expanded to external sources. Many more ideas are generated by others outside the company which could be turned into new innovative products and services. Knowledge plays an important role in this context. It is essential to build up a fundamental understanding in the company for the utilisation of these new idea sources and the accompanying advantages of this new concept of innovation management. In conclusion, the move towards stakeholder-integration based innovation management processes and organisations has become a must also for automotive suppliers. Kolbenschmidt Pierburg

17 Thank you for your attention! Kolbenschmidt Pierburg

18 Copyright Weitergabe sowie Vervielfältigung dieses Dokuments, Verwertung und Mitteilung seines Inhalts sind verboten, soweit nicht ausdrücklich gestattet. Zuwiderhandlungen verpflichten zu Schadenersatz. Alle Rechte für den Fall der Patent-, Gebrauchsmuster- oder Geschmacksmustereintragung vorbehalten. The reproduction, distribution and utilization of this document as well as the communication of its contents to others without explicit authorization is prohibited. Offenders will be held liable for the payment of damages. All rights reserved in the event of the grant of a patent, utility model or design. Kolbenschmidt Pierburg

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