INNOVATION MANAGEMENT

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1 INNOVATION MANAGEMENT Strategy and Implementation using the Pentathlon Framework SECOND EDITION KEITH GOFFIN & RICK MITCHELL Includes 77 innovation case studies - from the service and manufacturing sectors and from around the globe macmillan

2 Table of Contents List of Case Studies xi Acknowledgements xvii Preface xix About the Authors xxi Copyright Material xxiii 1 KEY ASPECTS OF INNOVATION MANAGEMENT. 1 Introduction 1 Innovation Drivers 2 Technological Advances; Changing Customers and Needs; Intensified Competition; Changing Business Environment; Responding to the Environment Strategic Intent Characteristics Of Innovation 6 Definitions of Innovation; Dimensions of Innovation; Dimensions of Innovation in Services; Degrees of Innovation; Evaluating Dimensions and Degrees; Innovation and Continuous Improvement; Phases of Innovation; Innovation throughout the Organization Key Research On Innovation 20 Macro-Level Investigations; Micro-Level Investigations; Project-Level Investigations; Service Innovation Research Managing Innovation - The Challenge, 26 Need for a Framework; The Innovation Pentathlon Framework The Structure Of This Book 32 Format of the Chapters Summary 34 2 INNOVATION AND ECONOMICS 41 Introduction 41 Economic Measures Of Innovation 42 Factors Mediating Innovation 44 Company Size and Innovation; Market Sectors and Innovation; Education Levels, National Culture and Innovation; Government Policies and Innovation Impacts Of Innovation 51 Innovation and Business Cycles; Innovation and Employment; Innovation and Company Performance; Product Innovation and Growth Diffusion Of Innovations 56 VII

3 VIII TABLE OF CONTENTS The Influence of Product Features; The Adoption Life Cycle Summary^ CONTRASTING SERVICES WITH MANUFACTURING 65 Introduction 65 The Importance Of Services 66 Service and the Economy; R&D.in Services; Manufacturers Need Services Characteristics Of Services 70 Terminology of Services and Manufacturing; Service Delivery; The Servicescape; Service Characteristics and Innovation; Managing Quality in Services Innovation In Services 80 The Need.for Innovation; Managing Service Innovation; New Service Development Processes Services And Innovation Management 85 Summary 86 4 DEVELOPING AN INNOVATION STRATEGY 93 Introduction 93 Innovation Strategy And Stakeholder Satisfaction 97 Kano's Feature Analysis < Technology: The Capability Ceiling 101 The Technology C S' Curve; An Alternative Perspective: Dominant Design; Evolution of Strategy as Technology Matures Customer Satisfaction: Feature Fatigue 109 Disruptive Innovation; Responses to a Disruptive Threat Competition 115 Value Innovation: Blue Ocean Strategies; Protecting the Value Open Innovation 119 Strategic Issues Linking The Components Of Strategy 123 Roadmapping; Scenario Planning The Success Trap 131 Summary GENERATING CREATIVE CUSTOMER-FOCUSED^ IDEAS 139 Introduction ' 139 Creativity 140 Types of Business Creativity; Individual Creativity; Team Creativity and Culture; Creativity Techniques for Innovation Triz 149 Managing Knowledge 150 Nature of Knowledge; Capturing Tacit Knowledge; Promoting Knowledge Transfer. ' Ideas And Innovation 154

4 TABLE OF CONTENTS IX Identifying Customer Needs - Traditional Approaches; Hidden Needs Analysis; Empathic Design; Lead Users; Experimentation; Virtual Communities; Identifying Priorities - Conjoint Analysis; Choosing the Correct Approach to Market Research Protecting Ideas 175 Copyright; Design Right; Trademarks; Patents Summary SELECTING AND MANAGING AN INNOVATION PORTFOLIO 187 Introduction 187 Principles Of Portfolio Management 188 The Need for a Process; Elements of a Good Portfolio Valuing Individual Projects 191 Types of Project; Financial Valuation Methods; Single-Stage Projects; Estimating Probabilities in Projects; Multistage and Network Projects; Comparing the Values of Risky Projects; Valuing Large and Small Portfolios of Projects; Non-financial Methods; Choosing a Valuation Method Choosing And Managing A Portfolio 210 Ranking Projects for Selection; Balance The Management Process ' 216 People Issues; Selecting the Tools Summary IMPLEMENTING INNOVATIONS 227 Introduction 227 Project Management Techniques 229 Setting Project Aims and Tradeoffs; Work Breakdown Structure; The Project Schedule; The Resource; Plan; Agile Project Management Managing Project Risks 236 Collecting Risk Information; Appraising the Risks: The FMEA Process Linking Customer Needs To Product Design 239 Embedding the Features: Quality Function Deployment; Defining and Delivering Service Products Managing Stakeholders 248 Managing An Innovation Department 250 Phase Gates; Managing Simultaneous Projects; Managing Collaborations Summary CREATING AN INNOVATIVE CULTURE 265 Introduction 265 Organizational Culture And Innovation 266

5 TABLE OF CONTENTS Understanding and Assessing Culture; Applying the Cultural Web; Studies of Innovation Culture Managing Innovation Teams 282 Team Structures; Making Project Teams Work Managing People For Innovation 297 Recruiting and Job Assignment; Managing Performance; Development of Employees Summary 306 BOOSTING INNOVATION PERFORMANCE 311 Introduction 311 Performance Improvement '» 312 Assessing Current Performance 313 Performance Measures; The Innovation Audit Priorities And Linkages 323 Priority Areas; Considering Linkages Actions To Boost Performance 329 Change Management and Innovation; Making a Breakthrough; The Role of an Innovation Manager Summary THE FUTURE OF INNOVATION MANAGEMENT Introduction: The Innovation Environment Customers Technology Competition The Business Environment Open Innovation; The Dangers of Open Innovation; Conclusion Summary Appendix References and Notes Index

TABLE OF CONTENTS CHAPTER TITLE PAGE

TABLE OF CONTENTS CHAPTER TITLE PAGE viii TABLE OF CONTENTS CHAPTER TITLE PAGE TITLE PAGE DECLARATION DEDICATION ACKNOWLEDGEMENT ABSTRACT ABSTRAK TABLE OF CONTENTS LIST OF TABLES LIST OF FIGURES LIST OF APPENDICES I II III IV VI VII VIII

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