Fifth Edition
Gareth R. Jones
Copyright 2007 Prentice Hall
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Learning Objectives
1. Describe how innovation and technological change affect each other
2. Discuss the relationship among innovation, intrapreneurship, and creativity
3. Understand the many steps involved in creating an organizational setting that fosters innovation and creativity
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Learning Objectives (cont.)
4. Identify the ways in which information technology can be used to foster creativity, and speed innovation and new product development
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Innovation and Technological
Change
 Innovation: process by which new goods and services or new production and operating systems are developed
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Enables better response to customer needs
 Quantum technological change: a rare, fundamental shift in technology that revolutionizes products or the way they are produced
Quantum innovation: new products or operating systems that incorporate quantum technological improvement
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Innovation and Technological
Change (cont.)
 Incremental technological
change: technological change that represents a refinement of some base technology
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Incremental innovations: products or operating systems that incorporate refinements of some base technology
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Innovation and Technological
Change (cont.)
 Technology cycle
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Quantum innovations occur rarely
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Technological discontinuity
Dominant design emerges
Era of incremental change and innovation during which competition is based on technology
Technological discontinuity may occur again and the process starts all over
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Figure 13-1: The Technology
Cycle
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Innovation and Technological
Change (cont.)
 Product life cycle: the changes in demand for a product that occur over time
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Demand for most successful products passes through four stages:
The embryonic stage
The growth stage
The maturity stage
The decline stage
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Innovation and Technological
Change (cont.)
 Product life cycle (cont.)
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Embryonic stage: a product has yet to gain widespread acceptance
Minimal demand
Growth stage: a product has been
 accepted by customers
Demand increases
Mature stage: market demand peaks because most customers have already bought the product
Decline stage: occurs if and when demand for a product falls
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Innovation and Technological
Change (cont.)
 Determinants of the length of the product life cycle
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Rate of technological change
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Faster the rate of change, the shorter the product life cycle
Role of fads and fashion
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Determine the attractiveness of products to customers
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“Creative destruction”: new companies use new global and technological opportunities to make better products that drive old, inefficient companies out of business
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Figure 13-2: Technological
Change and Product Life Cycle
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 Intrapreneurs: leaders of innovation and new product development in established organizations
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Notice opportunities
Manage product development
May leave organization if their ideas are not supported
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Become entrepreneurs
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 Creativity: ideas going beyond the current boundaries, whether those boundaries are based on technology, knowledge, social norms, or beliefs
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Most people are creative at some time
May involve combining and synthesizing new things
 Knowledge-creating organization: an organization where innovation is going on at all levels and in all areas
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Managing The Innovation
Process
 Project management: the process of leading and controlling a project so that it results in the effective creation of new or improved products
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Project: a subunit whose goal centers on developing the products or service on time, within budget, and in conformance with predetermined performance specifications
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Managing The Innovation
Process (cont.)
 Project management (cont.)
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Effective product management often begins with a clearly articulated plan
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Takes a product through the concept, initial test, modification, and manufacturing phases
Project manager’s tasks are different from regular managers
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Manage high proportion of highly skilled and educated professionals
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Plan to deal with top corporate executives
Must keep project on track
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Often quantitative modeling is used
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Managing The Innovation
Process (cont.)
 Quantitative modeling (cont.)
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Examples include PERT/CAM network of
Gantt Chart
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Flowcharts of a project that can be built with many proprietary software packages
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These software packages focus on:
Modeling the sequence of actions necessary to reach a project’s goal
Relating these actions to cost and time criteria
Sorting out and defining the optimal path for reaching the goal
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Managing The Innovation
Process (cont.)
 Quantitative modeling (cont.)
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Critical path method
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Goal is to determine:
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Which particular tasks or activities of the many that have to be performed are critical in their effect on project time and cost
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How to sequence or schedule critical tasks so that a project can meet a target date at a minimum cost
Optimal sequencing of tasks is often worked out by a team
Analysis is an important learning tool
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Figure 13-3: CPM Project
Design
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Managing The Innovation
Process (cont.)
 Stage-gate development funnel
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A structured and coherent innovation process that improves control over the product development effort
Forces managers to make choices among competing new product development projects so that resources are not spread thinly over too many projects
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 Stage-gate development funnel (cont.)
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Stage 1: Funnel has a wide mouth to encourage as many new product ideas as possible from both new and established project managers
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Stage 2: Specify all of the information required to make a decision about whether to go ahead with a full-blown product development effort
Plans are either accepted, revised, or rejected
Stage 3: Proceed to development phase
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Figure 13-4: A Stage-Gate
Development Funnel
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Managing The Innovation
Process (cont.)
 Cross-functional teams
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Coordinating R&D function with other functions is critical but often difficult
 New product development teams
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Marketing, engineering, and manufacturing need to be core members of product teams
Core members: refers to a nucleus of three to six people who bear primary responsibility for the product development effort
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Figure 13-5: Innovation as a
Cross-Functional Activity
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 Team leadership
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Having cross-functional teams is not sufficient for innovation – they have to be managed properly
Lightweight team leader: a mid-level functional manager who has lower status than the head of a functional department
Heavyweight team leader: a true project manager who has higher status within the organization
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Managing The Innovation
Process (cont.)
 Skunk works: a temporary task force that is created to expedite new product design and to promote innovation by coordinating the activities of functional groups
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An island of innovation located away from the organization
Dissolved when the product is brought to market
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Managing The Innovation
Process (cont.)
 New venture divisions: a new division that is allocated a complete set of value-creating functions to manage a project from beginning to end
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Assumes full responsibility for the commercialization of the product
Normally an independent division
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Balance of control between the division and the corporate center is problematic
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Managing The Innovation
Process (cont.)
 Joint venture: a strategic alliance among two or more organizations that agree to jointly establish and share the ownership of a new business
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Allows organizations to combine their skills and technologies and pool their resources to embark on risky projects
Partners may disagree over future development plans
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Managing The Innovation
Process (cont.)
 Creating a culture for innovation
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Organizational structure
 Creating the right setting is important to fostering innovation
 Increasing organization size, age, and complexity may slow innovation
 Organic structures tend to promote innovation
People - organizations need to guard against too much similarity
Property rights – create career paths to show that success is closely linked with future promotion and rewards
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Innovation and Information
Technology
 Information efficiencies: the cost and time savings that occur when IT allows employees to perform current tasks at a higher level
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Enables employees to assume additional tasks
Enables employees to expand their roles in the organization due to advances in the ability to gather and analyze data also allows information efficiencies
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Innovation and Information
Technology (cont.)
 Information synergies: the knowledge-building created when individuals or subunits pool their resources and collaborate across boundaries
 Boundary-spanning activity: the interactions of people/groups across the organizational boundary to obtain valuable information and knowledge from the environment
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IT and Organizational
Structure and Culture
 IT affects the innovation process through its many effects on organizational structure
 IT gives lower level employees more detailed and current knowledge of consumer and market trends and opportunities
 IT can produce information synergies
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Facilitates increased communication and coordination between decentralized decision makers and top managers
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IT and Organizational
Structure and Culture (cont.)
 IT means that fewer levels of managers are needed to handle problem solving and decision making
 IT provides lower level employees with more freedom to coordinate their actions
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Information synergies may emerge as employees experiment and find better ways of performing their tasks
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IT and Organizational
Structure and Culture (cont.)
 IT facilitates the sharing of beliefs, values, and norms
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Allows for the quick transmission of rich and detailed information between people and subunits
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