Sven Schimpf. Industry Innovation: Why, What and How
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1 Sven Schimpf Industry Innovation: Why, What and How Seite 1 Overview Fraunhofer Institute for Industrial Engineering IAO Importance of Industry Innovation. Industrial Cases on Innovation Management. Trends in Innovation Management. Seite 2
2 Profile of IAO and IAT Founded: IAO 1981 IAT 1991 Director: Spath Prof. Dr.-Ing. Dr.-Ing. E.h. Dieter Budget: 28 Mio, of which 38% from industry contracts* Staff: 400 employees * Figures for 2009, including IAT University of Stuttgart Technology & Innovation Management Organization Design Human Factors Personal Management Information Technology Seite 3 Laboratories, Demonstration and Consulting Centres Virtual reality lab,»picasso«and Powerwall Visual enterprise management (Visum) Model factory E-Business innovation centre Office Innovation Centre (OIC) Vehicle interaction lab Lab Innovation Centre (LIC) Seite 4
3 Business Unit IAO Strategic Innovation, R&D and Technology Management: R&D Strategies and Program Management, Technology Intelligence and Planning, Innovation Management R&D Processes and Organization: R&D Assessments, R&D Organization and R&D performance Innovative IT-Systems in R&D and Engineering: CAx, DMU, PLM, Digital Factory, ERP, Project Management and Collaboration Corporate Development: Innovation Assessment, Processes, Method & Tools 10 Researcher / Consultants 15 Student Research Assistants ~2 Mio Euro Budget Seite 5 Overview Fraunhofer Institute for Industrial Engineering IAO Importance of Industry Innovation. Industrial Cases on Innovation Management. Trends in Innovation Management. Seite 6
4 Kondratieff-Waves: Key Innovations initiate new industrial and social stages of development Innovation Cycles Steamengine, Textile industry Steel, Railway, Transport Automobile Petrochemistry Electr. Eng. Chemistry Microchip Internet, Automation Mobile Communic. Life Sciences Renewable Energy Future World? Early Industrialization Late Industrialization Servicesociety Knowledgesociety Health Age Source: cf. in Nefiodow in Capital 1/ Seite 7 Comparison of Labour Costs and the Implication for R&D Example of Siemens Siemens-labour costs / hour for a software engineer 2001 Germany USA Austria Great Britain Hungary Singapore Israel Argentina Brazil Slovakia Romania India 56,50 Euro 52,10 Euro 41,90 Euro 30,40 Euro Pro s and Con s... 28,90 Euro 26,90 Euro Outsourcing of R&D destroys 24,80 Euro qualified jobs in Germany 21,70 Euro combined costing allows 15,50 Euro competitive prices 13,00 Euro Local Content forces to local 9,20 Euro customization 6,80 Euro... Source: - Siemens, ein Konzern auf der Flucht, Januar 2004 Seite 8
5 Progress through innovation is the only way to secure prosperity and employment in Germany. Hans-Jörg Bullinger, President of the Fraunhofer Society Seite 9 Success Factor Innovation Management Systematic planning, management and control of innovation processes. 1. Effectiveness invest in the best innovation projects - Evaluate ideas and select the best ones - Optimize the Innovation Portfolio - Start (and cancel) innovation projects 2. Efficiency create the best framework for innovation - Define processes, structures and methods to support innovation projects - Bring forward and update competencies for innovation - Support innovation on the highest company level Seite 10
6 Innovation Management 9 Areas of Influence of Innovation Management Innovation Culture (leadership, management, motivation, trust, communication) Strategy (objectives, realisation, achievement, framework) Competence & Knowledge (data, documentation, information, interdisciplinarity) Technology (production process, resources, components) Products & Services (productcharacteristics, competitive advantages, hybrid solutions) Processes (activities, results, methods, transparency, flexibility) Strukture & Network (team, partner, supplier, cooperation) Market (customers, market access) Project Management (planning, control, methods, organisation) Seite 11 Overview Fraunhofer Institute for Industrial Engineering IAO Importance of Industry Innovation. Industrial Cases on Innovation Management. Trends in Innovation Management. Seite 12
7 Innovation Management Selected Industrial Cases Area of Influence Market Strategy Technology- Strategy Key success Factor Industry- Innovation Example Customer integration Application of the Lead-User Approach Development of a Technology Strategy Seite 13 Case Study: Hilti The Hilti Group is a world leader in developing, manufacturing and marketing products for professional customers in the construction industry and in building maintenance. The Hilti-Portfolio: Drilling Diamond Coring and Cutting Direct Fastening Anchoring Systems Screw Fastening Systems Installation Systems Positioning Systems Firestop and Foam Systems Short Company Profile Name: Hilti Corporation Branch Professional Electric Tools Employees: 14,390 Revenue: 3,1 bn CHF Innovation Rate: 28% Source: Survey of the Fraunhofer IAO Integriertes Innovationsmanagement Image source: Seite 14
8 Hilti Integration of Customers into the Innovation Process Gate 1 Definition Phase Gate 2 Gate 3 Gate 4 Gate 5 Gate 6 Concept Phase Design Phase Launch- & Preparation Phase Market Launch Phase Customer Integration Analysis of problems in cooperation with customers and definition of relevant criteria regarding customer satisfaction Concept-test jointly with customers for the assortment of best solutions out of multiple alternatives Test of customer satisfaction for assessing to which extent customer requirements are met Preproduction test in order to verify functionality as well as product quality under practical conditions Customer feedback for improvement arrangements Source: Survey of the Fraunhofer IAO Integriertes Innovationsmanagement Seite 15 Hilti Procedure Chart of Assembling Cable Trays Technologically simple, little competitive pressure Room for improvement: 20% Measuring and marking 28% Drilling 17% Plugging 10% Assembly of linings 10% Assembly of brackets 14% Cable tray assembling 21% Technologically sophisticating, high competitive pressure Room for improvement: 4 % Source: Survey of the Fraunhofer IAO Integriertes Innovationsmanagement Seite 16
9 Hilti Setting up the Business Segment Positioning The Results: Laser measurement has been identified as attractive solution for the building industry regarding surveying and mapping. The decision to set up this business and to establish the business segment positioning was made. The concept was implemented shortly through developing competences by cooperation and technology purchase. Today Hilti provides a wide range of laser measurement tools for construction building site applications. Source: Survey of the Fraunhofer IAO Integriertes Innovationsmanagement Seite 17 Case study: Embraco Embraco belongs to Whirlpool Cor. which is the world s leading manufacturer and marketer of household appliances. Since 1911, Whirlpool Corp. grew to be a global enterprise with nearly 50 production and technology research centres. The Embraco portfolio: short company profile name: industry: employees: 68,125 revenue: Whirlpool Corp. electronic household appliances 13,220 Mill. US$ standard VCC NEK condensing units sealed units heat exchangers Embraco Aerotruck Source: Seite 18
10 Embraco: New Products for New Markets New Programme Extension Diversification Product / Technology Old Market Penetration Market Extensions Old Market / Customers New Seite 19 Embraco: New Products for New Markets 1) Initial assessment of new application areas 2) Expert interviews (universities, suppliers, OEMs, end customers), attendance of conferences and trade shows New New Business Business Concept Concept development development Opportunity Opportunity scouting scouting Idea Idea generation generation 3) Opportunity formulation and evaluation 4) Idea development for selected opportunities 5) Elaboration of single ideas into product ideas Seite 20
11 R&D and Innovation planning at Embraco technology/marketwatch, creation of scenarios strategic planning, product/market/technology roadmaps development of new technologies and products Feedback interview with Embraco* We had no systematic approach for identifying, selecting and better understanding technologies. A methodology for setting the right priorities in research and development has been missing. *Spath (2006) Technologiemanagement in der Praxis, S.41 Seite 21 Overview Fraunhofer Institute for Industrial Engineering IAO Importance of Industry Innovation. Industrial Cases on Innovation Management. Trends in Innovation Management. Seite 22
12 Trend #1: From Closed to Open Innovation Boundary Company of the boarder Firm Innovation/ Research Technologies Projects New markets Market Aktueller Current market Market Markt Change the way of thinking: From: We will be successful, if we have the best and most ideas in our industry! to: We will be successful, if we use internal and external ideas for us! Fuzzy Research Front End Source: cf. Chesbrough, 2003 Development/ Development Implementation The better business model as success factor Seite 23 Trend #2: Innovation through Cooperation Options of cooperation Cooperation or Consortium Purchasing of R&D services Joint Ventures Process of cooperation Initiation Implement Maintenance Types of cooperation: Horizontal (economies of scale) Vertical (knowhow, extended benefits & R&D alliance) Diagonal (inter-sectoral, new products, services) Image sources: Seite 24
13 Trend #3: From Products to Solutions Maximum value prod./ service bundle Minimum value prod./ service bundle Product Product and service Integrated solution? Bundle integration Products and services need to complement each other seamlessly Source: Process integration Products and services have to be aligned with customers processes and interfaces Individualization Willingness to pay increases with the extent to which offerings can be customized to individual needs Seite 25 Trend #4: Low Cost Innovation Rethink Product, Production Processes and Business Models First popular low-cost solution: southwest airlines, founded 1971 Worldwide emergence of similar concepts (Ryanair, Easyjet, German Wings, Virgin Blue ) Great popularity and attention caused by low-cost car Tata Nano Image sources: Southwest Airlines, Tata, OLPC, Chotukool, Oorja, BSH. Seite 26
14 Innovativeness Number of features Quelle: Kathy Sierra, Seite 27 Thank You! Sven Schimpf +49 (0) Seite 28
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