BM050-3-3 Innovation Management and New
Product Development (IMNPD)
An introduction to New Product
Development (NPD)
New products: Managing Innovation
within firms
New Product DevelopmentManaging Innovation within firms
Learning Objectives
 Identify the factors organizations have to
manage to achieve success in innovation
 Explain the dilemma facing all
organizations concerning the need for
creativity and stability
 Recognize the difficulties of managing
uncertainty
Module Code and Module Title
Title of Slides
New Product DevelopmentManaging Innovation within firms
Learning Objectives
 Identify the factors organizations have to
manage to achieve success in innovation
 Explain the dilemma facing all
organizations concerning the need for
creativity and stability
 Recognize the difficulties of managing
uncertainty
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Dilemma of Innovation Management
 Fundamental tension between opposing
needs: stability vs creativity.
 Companies require high levels of productivity
and control to compete in today’s world.
Reduce costs and inefficiencies.
 On the other hand also need to develop new
ideas and new products to be competitive in
future. Need environment to test new ideas.
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Pearson’s Uncertainty Map
High
3. Applications
engineering
1. Exploratory
research
4. Combining
market
opportunities
2. Development
engineering
Uncertainty
about output
(what)
Low
High
Uncertainty about process (how)
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Managing UncertaintyPearson’s Uncertainty Map
 Provides a framework for analyzing and
understanding uncertainty and the
innovation process
 Divides uncertainty into two separate
dimensions:
 Uncertainty about ends / output (what is
eventual target of the activity or project)
 Uncertainty about means / process (how to
achieve this target)
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Pearson’s Uncertainty Map
Quadrant 1 Exploratory Research
 High degree of uncertainty about means and ends
 Ultimate target is not clearly defined and how to
achieve is not clear
 “Exploratory research”, activities often involve
working with technology not fully understood
 E.g. University research laboratory
 Large organizations that have the necessary
resources to fund such exploratory studies.
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Pearson’s Uncertainty Map
Quadrant 2 Development Engineering
 The end or target is clear
 E.g. Commercial opportunity may have been
identified but the means of fulfilling this has not be
established
 Different technologies or different approaches to try
to achieve the desired product
 Additional approaches may be uncovered along the
way. Considerable uncertainty about precisely how
company will achieve its target.
 looking at production processes, efficiencies,
reducing costs.
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Pearson’s Uncertainty Map
Quadrant 3 Applications Engineering
 Uncertainty regarding ends /destination / target
 Attempts to discover how technology can be most
effectively used
 Application engineering
 New materials used in manufacturing fall into this
area. Eg Velcro - hook-and-loop fasteners
 Many may be ineffective due to costs or
performance, some new and improved products
will emerge from this effort.
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Pearson’s Uncertainty Map
Quadrant 4 Combining market opportunities
 Area of the most certainty in innovative activities
 Situation dominated by improving existing products
or creating new products through the combination
of a market opportunity and technical capability
 Speed of development is often the key to success
 Minimal new technology with focus on the
appearance or performance of an existing product
 E.g. Iphone with new designs rapidly into market
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Organization characteristics that
facilitate the innovation process
1. Growth Orientation

A commitment to long term growth rather than short term
profit
2. Organizational heritage and innovation experience
•
Widespread recognition of the value of innovation,
cooperation among groups , departments.
3. Vigilance and external links

Continual external scanning, keep up with latest
development, competitor analysis, open flow of info
4. Commitment to technology and R&D intensity

The willingness to invest in long term development of
technology
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Organization characteristics that
facilitate the innovation process
5. Acceptance of risks
• The willingness to include risky opportunities in
a balanced portfolio
6. Cross functional cooperation and coordination
within organization structure
•
Mutual respect among individuals and a willingness to
work together across functions
7. Receptivity

The ability to be aware of, identify and take effective
advantage of externally developed technology
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Organization characteristics that
facilitate the innovation process
8. Space for creativity

An Ability to manage the innovation dilemma and
provide room for creativity
9. Strategy towards innovation

Strategic planning and selection of technologies and
markets
10.Diverse range of skills

Developing a marketable product requires
combining a wide range of specialized knowledge
Module Code and Module Title
Title of Slides
New Product DevelopmentManaging Innovation within firms
Learning Objectives
 Explain the dilemma facing all organizations
concerning the need for creativity and stability
 Recognize the difficulties of managing
uncertainty
 Identify the factors organizations have to
manage to achieve success in innovation
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Title of Slides
Organizational structures and
innovation
1. Formalization



Inverse relationship between formalization and innovation
Formalization of procedures will result in a decrease in
innovative activity
Argument: Organization planning and routines are necessary
for achieving efficiencies
2. Complexity of organization



Complexities refers to the number of professional groups or
diversity of specialists
e.g. Hospital – Doctors, Nurses, Wide range of Specialist
Good supply: Complex distribution all over country but not
wide range of highly qualified professional groups
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Organizational structures and
innovation
3. Centralization



Refers to the decision making activity and location of
power
Fewer levels of hierarchy are required
Lead to more responsive decision closer to the action
4. Organization size


Economic and organization resources e.g. Employees
and scale of operation
20 employees differs significantly in terms of resources
from and organization of 200 or 2000 employees
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Establishing an innovative environment
and propagating this virtuous circle
Attraction of creative
people
The organization’s
reputation for
innovation
Organizational
encouragement of
creativity and innovation
High morale and
retention of creative
people
Motivates people within
the organization and
reduces frustration
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Development of
innovative products
A willingness within the
organization to accept new
ideas
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Establishing an innovative environment
and propagating this virtuous circle
1. Reputation of the organization



Reputation takes years to develop
Strongly linked to overall performance
Factors: 1) recent product launches, 2) Success of the
programs 3) High level of expenditure on R&D
2. Attraction of creative people


Creative organization attract creative people
Top scientist will seek employment with those
companies which have a reputation for innovation and
scientific excellence
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Establishing an innovative environment
and propagating this virtuous circle
3.
Organization encourages creativity



Creativity has to be supported with actions and resources
rather than just lip services
Build an environment that tolerates errors and mistakes
Successful new ideas need to be rewarded in terms of
publicity involved
4. Development of innovative products


Genuine improvements compared with products currently
available
Success in current market place that leads to further
success
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Establishing an innovative environment
and propagating this virtuous circle
5. A willingness to accept new ideas


Many organization suffer from inability to implement
changes and new ideas
It is important that it is carried through to completion
6. Increased motivation and reduced frustration


Individual contribution to the overall performance of the
business
Good ideas that are constantly overlooked will lead to
increased frustration
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Establishing an innovative environment
and propagating this virtuous circle
7.
High Moral and retention of creative people



All preceding activities will help contribute to increased
moral
A rewarding and enjoyable working environment will
help retain creative people
Reinforce the company’s innovative capabilities
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Tutorial
1. Discuss the main organizational characteristics
that facilitate the innovation process?
2. Explain the key individual roles within the
innovation process and the activities they
perform.
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