Introduction to Innovation and Project Management Course TU-E5000

Introduction to Innovation and Project Management Course TU-E5000 14.1.2016 19.1.2016, coming later 21.1.2016, coming later Dr. Pekka Berg Innovation Management Institute Aalto University

Contents for next three lectures 1. Intro 2. Offering 3. Innovation Process 4. Enablers 5. Conclusions + Your first homework (21.1.2016) 18/01/2016 2

Innovation Research Program 2011-2016 FINVA Wallac Oy/ Perkin Elmer Ruukki Rolls Royce Metsä Fibre RAPI 2012-14 Rapid Innovation Practices Tekes Rapid Development Small Strategic Entry Konecranes BACI 2014-16 Back Stage Interaction for Effective Collaboration and Innovation Tekes Liideri Program YLE Fake Graphics Codelma Rocla Ruukki Ruukki UXI 2011-15 User experience in Innovation UXUS-Program FIMECC MAIN 2012-14 Management of Intangibles Tekes Intangible Assets Program RINE 2011-15 Requirements for Innovative Environments FutIS-Program FIMECC Outotec OP-Pohjola YLE Ruukki Fortum Metso The Federation of Finnish Technology Innovation Management IndustriesInstitute Innopark Ltd UPM YLE FIT Biotech 3 Ahlstrom

Why do we have the course like this? 1. What is innovation? 2. What is management? 3. What is project? 4

Nature of the Management of the Design/ Innovation Project Methods well defined No Type 2: Product Development Type 4: Research & Organizational Change Yes Type 1: Engineering Type 3: Systems Development Yes No Goals well defined 5 Source: Turner & Cochrane 1993, Turner 1999

Offering + Process + Enablers ENABLERS PHASE: Invention Planning Offering Development Strategy Commercialization Customer Interaction Business Intelligence, Foresight Crossfunctional teams Competence Roadmaps Portfolio Development Business Process LAUNCH Goods Service New Business Concept Innovation FOCUS ON: Creativity Decision Making PROCESS Speed Costs OFFERING 18/01/2016 6

Innovative Enablers What practices create and support the characteristics of social, physical and virtual environments identified as beneficial for innovativeness? Innovation process Social environment: Trust and safety Risk taking Freedom Clear vision Collaboration Concrete support What practices support and inhibit innovativeness? (in relation to the recognised enablers of the three environments) Offering Physical environment: Workplace Artefacts Organisation structures Process descriptions Instructions Virtual environment: Text Audio Picture & Video 3-D 18/01/2016 7

Why do we have the course like this? 1. What is innovation? 2. What is management? 3. What is project? 8

Innovation Language Principles? 1. Innovation? 2. Idea? 3. Invention? 4. Concept? 5. Prototype? 6. Innovation process? 7. Innovativeness? 8. Product? 9. Offering? 9

Innovation Language Principles? Innovation= 1. Commercialisation of new materials 2. Commercialisation of new processes 3. Commercialisation of new markets 4. Introduction of new organisational forms (Joseph Schumpeter 1930) 10

Innovation Language Principles? Innovation= Transforming technological inventions into commercially successes (Cantwell 1999; Sundbo, 1998; Van de Ven et al. 1999). 11

Innovation Language Principles? Innovation= Innovation is an iterative process initiated by the perception of a new market and\or new service opportunity for a technology-based invention which leads to development, production, and marketing tasks striving for the commercial success of the invention. (OECD 1991) 12

Contents 1. Intro 2. Offering 3. Innovation Process 4. Enablers 18/01/2016 13

Process vs. Offering There is need to start from a offering/context! 18/01/2016 14

Outcome/ Offering/ Product Customer Interaction (High End Service) New Business Concept Innovation Goods Service 18/01/2016 15

Offering / Goods market-pull products (sporting goods, ) technology push products (Gore-Tex rainwear, ) platform products (consumer electronics, ) process-intensive products (snack foods, chemicals, ) customized products (motors, batteries, ) high-risk products (pharmaceuticals, space systems, ) quick-build products (software, ) complex systems (airplanes, ) Ulrich and Eppinger (2003) 18/01/2016 16

Outcome/ Offering/ Product Customer Interaction (High End Service) New Business Concept Innovation Goods Service 18/01/2016 17

Service Innovation 1. CUSTOMER OUTCOME 2. CUSTOMER PROCESS SERVICE MODEL 3. PREREQUISITES Service concept what needs, how satisfied? core service and support service utility, benefits and value of service Service system staff and organisation control customer culture physical and soc. resources Service process chain of parallel, sequential, overlapping activities, which are necessary to implement the service Lähde: Bo Edwardsson

PALVELUN JÄSENTÄMINEN OSATEKIJÖIHIN (innovaatiot voivat tapahtua missä tahansa näistä osatekijöistä) PALVELUN ARVOLUPAUS PALVELUN RAKENNE JA MARKKINAT - palvelun rakenne (osapalvelut ja niiden status: ydinpalvelut vs. täydentävät palvelut - palvelun kytkeytyminen yrityksen muihin palveluihin - hinnoittelu - markkinat (asiakasryhmät) PALVELUPROSESSI - prosessin vaiheet - palvelun tarjoajan ja käyttäjän roolit: mitä kumpikin tekee - asiakasrajapinnan luonne (henkilökohtainen vs. ICT:tä hyödyntävä) - palvelusuhteen syvyys (massapalvelut vs. avainasiakkaat) RESURSSIT JA INFRASTRUKTUURI - teknologia - muut mallit ja ohjeet - organisaatio - palvelun tarjoajan ja käyttäjän kompetenssit - alihankkijat - fyysinen ympäristö 18/01/2016 19 TUOTETTU HYÖTY Lähde: Bo Edvardsson

Blurring boundaries between goods and services Pure material products Material products and accompanying services Hybrids Services and accompanying material products Pure services Manufacturing Traditional hybrids (like retail) and the new solutions business Services Modified from Kotler 2003

Product development according to Hamel 18/01/2016 21 Lähde: Gary Hamel, Leading The Revolution, 2000

Product development according to Hamel Radical Nonlinear innovation Business concept innovation Incremental Continuous improvement Business process improvement Component 18/01/2016 22 System Lähde: Gary Hamel, Leading The Revolution, 2000

Technology Discontinuous? New Radical Current Incremental Current New Market 18/01/2016 23

Offering / Incremental vs. Radical Oct 19, 2010 24 Source: Loch 2000

Outcome/ Offering/ Product Customer Interaction (High End Service) New Business Concept Innovation Goods Service 18/01/2016 25

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Maturing industry sectors focus on experiences Toiminnallisuus (Utility) Käytettävyys (Usability) Kokemuksellisuus (Experience) Pine, J. & Gilmore, J. H. (1999). The Experience Economy: Working is Theatre & Every Business a Stage. Seidel, M., Loch, C., Chahil, S. (2005). Quo Vadis, Automotiven Industry? A Vision of Possible Industry Transformations. European Management Journal, Vol. 23, No. 4, pp. 439 449, 2005 Nokia Corporation (2005). Inspired Human Technology. White paper.

UXUS partner companies slogans Company Brand slogan Value supported Customer -centric Lifting businesses Customer success People flow Customer performance 8760 hours Customer performance

Experience-driven design What does good UX mean in our case? (e.g. Values, Brand promise) UX targets/goals Concept idea

A small example of experience design Rolls-Royce Marine: Trusted to deliver excellence But does it show in all touchpoints? By Carolina Rebelo, Tae Yong Kim from Aalto ARTS

Design Thinking (by SUGAR network) What it is?

We need to know what they are Thinking Doing Feeling In order to build Empathy Insight Opportunities New business ideas Prototype

Outcome/ Offering/ Product Customer Interaction (High End Service) New Business Concept Innovation Goods Service 18/01/2016 33

Souce: Yrjö Neuvo, TEKES Seminar 8.3.2006 18/01/2016 34

Components of Business Model (Osterwalder) Infrastructure management Product Customer interface Partner Network Customer Relationship Core Capabilities Value Configuration Value Proposition Distribution Channel Customer Segment Cost Structure Success/ Failure Revenue Streams Financial aspects 18/01/2016 35

Individual work - Group work 1 Offering as Point of View 1. Take your IDBM-company as the context 2. Concider the structure of offering in your company How do you see the elements as follows: Goods Services Customer/User interaction Business model(s) Component vs. System Incremental vs. Radical 3. Also think about the possible change of these elements of offering in next, 1 4 8 years 18/01/2016 36

Thank You! pekka.berg@aalto.fi www.imi.aalto.fi