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Innovation and creativity 07 managing innovation

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Course name: innovation and creativity
Chapter 07: managing innovation

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Innovation and creativity 07 managing innovation

  1. 1. Introduction to: Innovation and Creativity BY KAMAL M. AL MASRI Course code: ::::.BEAD4312..:::: Israa University Gaza Faculty of Managerial and Financial Sciences Departmentof Management Chapter 07: Managing Innovation
  2. 2. Innovation and Creativity By Kamal AL MASRI 2 ILO’s  List main topics of managing innovation.  Discuss the importance of innovation strategies.  Explain how innovation strategies are made.  Explain the role or senior management in innovation strategies.  List and explain some types of innovation strategies.  List the methods of financing innovation.  Explain and contrast methods of financing innovation.  Contrast the methods of financing innovation.
  3. 3. Innovation and Creativity By Kamal AL MASRI 3 Introduction  Organizations invest a proportion of turnover to innovate.  Particular goals should be achieved.  A very large percentage of innovations fail to meet these goals.  Organizations need to work at the main ingredients for success at managing innovation and apply themselves to the five hallmarks listed (last chapter).
  4. 4. Innovation and Creativity By Kamal AL MASRI 4 Concretely, managing innovation means:  Dealing with the external factors,  Establishing strategies,  Detecting opportunities,  …  Enhancing the internal environment:  Funding processes,  Leading people,  Organizing work activities,  Planning and setting goals,  …
  5. 5. Innovation and Creativity By Kamal AL MASRI 5 The best way to manage innovation? While there is general agreement on the imperatives for organizations to adapt to turbulent environments there is considerable disagreement on how best to understand and manage these processes. We need an effective management ...
  6. 6. Innovation and Creativity By Kamal AL MASRI 6 Abundance of models and frameworks… In reality, there is no clear solutions to complex problems, to the ambiguities and inconsistencies in theories and practice, but we may also find certain approaches that resonate more than others in shedding insight and offering explanation. There is an abundance of models and frameworks that purport to provide answers…
  7. 7. Innovation and Creativity By Kamal AL MASRI 7 Three pillars/categories of innovation management: 1. Strategy & Management 2. People & Culture 3. Processes, Tools & Metrics  https://www.bearingpoint.com/ecomaXL/files/Innovation_High_Res.pdf page 27
  8. 8. Innovation and Creativity By Kamal AL MASRI 8 1- Strategy & Management  Vision: Vision for Innovation needs to be defined, communicated and reacted/realized.  Strategic Planning: Broadly defining scope of impact of Innovation in line with business strategy.  Funding & Resource: Allocation Broader funding and appropriate allocation of resources based on prioritisation.  Portfolio Management: Visualizing Innovation activities within the life-cycle for decision making.
  9. 9. Innovation and Creativity By Kamal AL MASRI 9 2- People & Culture  Management Leadership: Visibility of the direction how to drive Innovation and the support from leadership.  Acceptance of Risk Taking: Level of attitude towards taking creative risks.  Collaboration: Level and the scope of collaboration at the employee level.  Capability Development: Skill development and performance management of individual employees.  Roles & Responsibilities: Penetration of Innovation activities as everyday work at the employee level.  Rewards & Recognition: Scheme of rewarding people based on contribution to Innovation.
  10. 10. Innovation and Creativity By Kamal AL MASRI 10 3- Processes, Tools & Metrics  Innovation Processes: Integration of the processes within the whole life-cycle of Innovation.  Innovation Frameworks: Sharing and leveraging methodologies and tools for Innovation.  Measurement of Impact: Measurement of impact from Innovation.  Communication of Value: Communication of impact from Innovation.
  11. 11. Innovation and Creativity By Kamal AL MASRI 11 Vision and Strategy  Despite massive investments of management time and money, innovation remains a frustrating pursuit in many companies (cf. the cases last chapter).  Innovation initiatives frequently fail, and successful innovators have a hard time sustaining their performance (Polaroid, Nokia, Sun Microsystems, Yahoo…).  Why is it so hard to build and maintain the capacity to innovate?  The reasons go much deeper than the commonly cited cause: a failure to execute.  https://hbr.org/2015/06/you-need-an-innovation-strategy We need an effective management ...
  12. 12. Innovation and Creativity By Kamal AL MASRI 12 Why strategy is important?  Without an innovation strategy, the impact of innovation best practices and efforts (decentralized autonomous teams, corporate venture-capital arms, external alliances, open innovation, crowdsourcing, collaborating with customers, and implementing rapid prototyping, …) can easily be wiped:  The capacity for innovation stems from an innovation system:  “a coherent set of interdependent processes and structures that dictates how the organization searches for novel problems and solutions, synthesizes ideas into a business concept and product designs, and selects which projects get funded.”
  13. 13. Innovation and Creativity By Kamal AL MASRI 13 Why strategy is important? (cont.) Individual best practices involve trade-offs. Adopting a specific practice generally requires a host of complementary changes to the rest of the organization’s innovation system.
  14. 14. Innovation and Creativity By Kamal AL MASRI 14 Why strategy is important? (cont.) A company without an innovation strategy won’t be able to make trade-off decisions and choose all the elements of the innovation system. Strategy tells about the way an organization perceives innovation, the focus, the resources, the place of value, …
  15. 15. Innovation and Creativity By Kamal AL MASRI 15 Concretely, innovation strategy determines: The level of innovation (type), the focus, the resources, the method, the place in the market …
  16. 16. Innovation and Creativity By Kamal AL MASRI 16 Specificity of innovation strategies Innovation strategies are different from many business strategies. Because of the difficulty of predicting the steps, time and impact of the innovation.
  17. 17. Innovation and Creativity By Kamal AL MASRI 17 It’s an explicit roadmap for desired future… Innovation strategy isn’t about innovation tactics, such as setting up an idea challenge, but more about mapping organization’s mission, vision and value proposition for defined customer markets. It sets boundaries to innovation performance expectations by simplifying and structuring innovation work to achieve the best possible outcome. Innovation strategy can be described as an explicit roadmap for desired future.
  18. 18. Innovation and Creativity By Kamal AL MASRI 18 Recall: benefits of innovation strategy…  It guides decisions on how resources are to be used to meet a business's objectives for innovation, deliver value and build competitive advantage:  Consistent action,  Managing Trade-Offs,  How much to invest?  How to begin?  When to stop?  How will innovation create value for potential customers?  How will the company capture a share of the value its innovations generate?  What types of innovations will allow the company to create and capture value, and what resources should each type receive?
  19. 19. Innovation and Creativity By Kamal AL MASRI 19 Developing an innovation strategy An innovation strategy doesn't come from zero … Strategies should include:  an analysis of a business's competitive and technological environment,  its external challenges and opportunities,  its distinctive advantages.  This guide describes how to approach the development of your innovation strategy (HERE).
  20. 20. Innovation and Creativity By Kamal AL MASRI 20 Developing an innovation strategy (cont.) There are many different types of innovation, and the type of innovation will be determined by the innovation strategy. The strategy will be influenced by:  the stage the company has reached,  where it is heading, and  the desired outcome of the innovation.
  21. 21. Innovation and Creativity By Kamal AL MASRI 21 5 Steps for Developing Your Innovation Strategy (https://www.viima.com/blog/innovation-strategy)  1. Determine objectives and strategic approach to innovation.  2. Know Your Market: Customers and Competitors.  3. Define Your Value Proposition.  The blue ocean strategy (see later)  https://youtu.be/2N3XqyuOwIM  4. Assess and Develop Your Core Capabilities.  5. Establish Your Innovation Techniques and Systems.
  22. 22. Innovation and Creativity By Kamal AL MASRI 22 Determine your desired outcome  Your innovation strategy should reflect what you want to achieve from the innovation process, for example:  Develop a new product - you may see an opportunity for a radical change in the type of products offered on the market.  Protect market share - in a dynamic global environment, continuous innovation is required in many instances just to maintain market share.  Expand market share - for example, offering existing products in a different market.  Sell or licence to another organisation - you may be looking at an exit strategy, once the innovation is developed you can sell or licence the innovation.
  23. 23. Innovation and Creativity By Kamal AL MASRI 23 Determine your desired outcome (cont.) Retain more staff - a commitment to innovation can motivate and retain skilled staff by providing a challenging and creative environment. Improve operational efficiency - you may wish to reduce costs through streamlining your operations. Increased recognition in the marketplace - you may wish to increase your profile in the marketplace through an innovative marketing strategy.
  24. 24. Innovation and Creativity By Kamal AL MASRI 24 Determine your desired outcome (cont.) The type of innovation and the level of risk you attribute to that innovation will vary depending on whether you are seeking to expand your business or maintain your current revenue or profit. Your company may pursue multiple outcomes and therefore will require multiple strategies. Once you have determined your intended outcome and how this fits within your company, think about the type of innovation strategy that will best achieve your outcome.
  25. 25. Innovation and Creativity By Kamal AL MASRI 25 Types of innovation strategies Many classifications. For examples, innovation strategies can be classed according to:  1- Timing of reaction: Proactive, active, reactive and passive (Dodgson et al. 2008).  2- Type of competition: Blue ocean vs. Red Ocean,  3- Focus on technological innovation: Disruptive, routine, architectural, radical … (HBR, here)  …
  26. 26. Innovation and Creativity By Kamal AL MASRI 26 Proactive Innovation strategies:  Tendance to have strong research orientation and first-mover advantage, and be a technology market leader.  Access knowledge from a broad range of sources and take big bets/high risks.  Examples include: Dupont, Apple and Singapore Airlines.  The types of technological innovation used in a proactive innovation strategy are:  radical - breakthroughs that change the nature of products and services  incremental - the constant technological or process changes that lead to improved performance of products and services.
  27. 27. Innovation and Creativity By Kamal AL MASRI 27 Active innovation strategies  Defending existing technologies and markets while being prepared to respond quickly once markets and technologies are proven.  A broad sources of knowledge and medium-to-low risk exposure; they tend to hedge their bets (careful).  Examples include Microsoft, Dell and British Airways.  These companies use mainly incremental innovation with in-house applied research and development.
  28. 28. Innovation and Creativity By Kamal AL MASRI 28 Reactive innovation strategies Used by companies which are followers. They:  have a focus on operations,  take a wait-and-see approach look for low-risk opportunities,  copy proven innovation and use entirely incremental innovators. An example is Ryanair, a budget airline which has successfully copied the no-frills service model of Southwest Airlines.
  29. 29. Innovation and Creativity By Kamal AL MASRI 29 Passive innovation strategies Wait until their customers demand a change in their products or services. Examples include automotive supply companies as they wait for their customers to demand changes to specification before implementing these. (not necessarily true for Valeo and Bosch for example).
  30. 30. Innovation and Creativity By Kamal AL MASRI 30 Comparison … Passive innovation strategy Reactive strategy Active innovation strategy Proactive innovation strategy Criteria/aspect ????/10Position in the market Levels of risk Sources of knowledge Main type of innovation Resources needed
  31. 31. Innovation and Creativity By Kamal AL MASRI 31 Blue vs. Red Ocean Strategy (see here)  Blue ocean strategy: the simultaneous pursuit of differentiation and low cost to open up a new market space and create new demand.  Red oceans concerns the industries in existence today – the known market space.  industry boundaries are defined and accepted,  and the competitive rules of the game are known,  profits and growth are reduced.  products become commodities, leading to cutthroat or ‘bloody’ competition (red oceans).
  32. 32. Innovation and Creativity By Kamal AL MASRI 32 Blue vs. Red Ocean Strategy (see here)
  33. 33. Innovation and Creativity By Kamal AL MASRI 33 The innovation landscape map This matrix considers how a potential innovation fits with a company’s existing business model and technical capabilities. It can help to select a suitable innovation strategy …
  34. 34. Innovation and Creativity By Kamal AL MASRI 34 The Leadership Challenge (link here)  Creating a capacity to innovate starts with strategy.  The question then arises, Whose job is it to set this strategy?  The answer is simple: the most senior leaders of the organization.  Innovation cuts across just about every function.  Only senior leaders can orchestrate such a complex system.  They must take prime responsibility for the processes, structures, talent, and behaviors that shape how an organization searches for innovation opportunities, synthesizes ideas into concepts and product designs, and selects what to do.
  35. 35. Innovation and Creativity By Kamal AL MASRI 35 Four essential tasks in creating and implementing an innovation strategy:  1- to answer the question “How are we expecting innovation to create value for customers and for our company?” and then explain that to the organization.  2- to create a high-level plan for allocating resources to the different kinds of innovation.  3- to manage trade-offs (what is best for the best for the whole organization).  4- to recognize that innovation strategies must evolve.
  36. 36. Innovation and Creativity By Kamal AL MASRI 36 The Leadership Challenge (cont.) Any strategy represents a hypothesis that is tested against the unfolding realities of markets, technologies, regulations, and competitors. Just as product designs must evolve to stay competitive, so too must innovation strategies. Like the process of innovation itself, an innovation strategy involves continual experimentation, learning, and adaptation.
  37. 37. Innovation and Creativity By Kamal AL MASRI 37 A quotation … Managing innovation is a ‘challenge to management... especially top management and a touchstone of its competence’ Peter Drucker
  38. 38. Innovation and Creativity By Kamal AL MASRI 38 Pedagogy Innovation needs a lot of pedagogy, We have many tools:  Lean Launch Pad,  I-Corps,  Case-studies,  Mentors,  …
  39. 39. Innovation and Creativity By Kamal AL MASRI 39 Lean Launch Pad  Lean LaunchPad is an entrepreneurship methodology created by Steve Blank to test and develop business models based on querying and learning from customers.  It is based on the scientific method and combines experiential learning with the three building blocks of a successful lean startup: Alexander Osterwalder's "Business Model Canvas", Steve Blank's "Customer Development Model, and Agile Engineering.  Students of Lean LaunchPad propose and immediately test business hypotheses.  They get out of the building to talk with prospective customers and partners, using this customer feedback acquired in these interviews to refine their product or service; ensure their product or service meets a customer need or solves a customer problem; and validate that they have created a repeatable, scalable business model. just for reading
  40. 40. Innovation and Creativity By Kamal AL MASRI 40 Financing innovation Innovation activities (either for existing or for new enterprises) need to be financed. Some traditional ways are not able to respond to needs. Innovation activities are characterized by a high level of risk. We can be innovative in funding our business !!!
  41. 41. Innovation and Creativity By Kamal AL MASRI 41 How to finance innovation? Traditional ways of funding (own savings or bank loans) can be useful, but not always! Organizations need to find more innovative ways to finance new businesses. There are many different ways of funding. Organizations may use one or many of them.
  42. 42. Innovation and Creativity By Kamal AL MASRI 42 Many sources of finance:  Personal financing (own savings, family loans, etc.).  Traditional bank loans (interest, Riba).  Microloans (or micro-financing).  Venture capitalists (VC, Corporate VC.)  Angel investors.  Crowd funding.  Mergers & Acquisitions.  Grants and Development funds.  Business Incubators (see Chapter 07a).  … Each type of funding has its advantages and disadvantages: for both sides of the operation (of funding).
  43. 43. Innovation and Creativity By Kamal AL MASRI 43 For example, from the point of view of innovators:  Personal loans cannot cover serious projects.  Traditional loans are risky.  Microloans are very expensive.  Angel seed funds are not easy to get.  Grants and development funds are not sustainable.  For detailed landscape of funding tools, see Nesta (here), page 6 and more.
  44. 44. Innovation and Creativity By Kamal AL MASRI 44 What Is a Venture Capitalist (VC)? (investopedia)  A private equity investor that provides capital to companies exhibiting high growth potential in exchange for an equity stake.  This could be funding startup ventures or supporting small companies that wish to expand but do not have access to equities markets.  Venture capitalists are willing to risk investing in such companies because they can earn a massive return on their investments if these companies are a success.  VCs experience high rates of failure due to the uncertainty that is involved with new and unproven companies.
  45. 45. Innovation and Creativity By Kamal AL MASRI 45 What is an Angel Investor? (Investopedia)  An angel investor (also known as a private investor, seed investor or angel funder) is a high net worth individual who provides financial backing for small startups or entrepreneurs, typically in exchange for ownership equity in the company.  Often, angel investors are found among an entrepreneur's family and friends.  The funds that angel investors provide may be a one-time investment to help the business get off the ground or an ongoing injection to support and carry the company through its difficult early stages.
  46. 46. Innovation and Creativity By Kamal AL MASRI 46 What is Crowdfunding? (investopedia)  The use of small amounts of capital from a large number of individuals to finance a new business venture.  Crowdfunding makes use of the easy accessibility of vast networks of people through social media and crowdfunding websites to bring investors and entrepreneurs together, with the potential to increase entrepreneurship by expanding the pool of investors beyond the traditional circle of owners, relatives and venture capitalists.  See (8 Crowdfunding Sites here)
  47. 47. Innovation and Creativity By Kamal AL MASRI 47 Other innovative funding methods … Merchant cash advances and Equipment loans, see link (here). Specific innovation funds, see “the GIF” (here) Research article (here).
  48. 48. Innovation and Creativity By Kamal AL MASRI 48 Compare, avaluate and choose! OthersCrowd fundingAngel Investor Venture Capitalist Traditional Bank Loans Family and private loans Criteria/ aspect …??? /10Cost Levels of risk Availability/a cessibility Sustainability Volume … All depends on the context…
  49. 49. Innovation and Creativity By Kamal AL MASRI 49 13 methods for innovation…  There are many ways to help bring good ideas to life (NESTA).  Have a look (here).  These techniques, tools and processes are collectively known as innovation methods. (NESTA) 8. Innovation mapping 9. People Powered Results: the 100 day challenge 10. Prototyping 11. Public and social innovation labs 12. Scaling grants for social innovations 13. Standards of Evidence 1. Accelerator programmes 2. Anticipatory regulation 3. Challenge prizes 4. Crowdfunding 5. Experimentation 6. Futures 7. Impact investment Will be discussed separately
  50. 50. Innovation and Creativity By Kamal AL MASRI 50 Topics for further reading (Dawson, & Andriopoulos, 2017: 292)  Change Management Practice: Choices, Lessons Learned and Key Considerations Introduction  Reasons for change: context, drivers and choices  The role of government in driving change: electricity in New Zealand and the politics of privatization  Environmental determinism and strategic choice  Scale and type of organizational change  The practice of managing change: guidelines, lessons and perspectives  Reflective exercise: how leaders spark and sustain change  The practice of managing innovation and change: success and failure
  51. 51. Innovation and Creativity By Kamal AL MASRI 51 References  Essentials of the Management of Creativity and Innovation in Education, Business, and Engineering, Christian H. Werner and Min Tang, 2017. in Handbook of the management of creativity and innovation: Theory and practice, World Scientific Press, 2017.  Dodgson, Mark, Gann, David and Salter, Ammon. 2008. The Management of Technological Innovation: Strategy and Practice. Completely rev. and updated. Oxford: Oxford University Press.  Patrick Dawson, Constantine Andriopoulos, 2017, Managing Change, Creativity & Innovation, Sage, 2017, London.  HBR, here.

Editor's Notes

  • Creating a capacity to innovate starts with strategy.
    The question then arises, Whose job is it to set this strategy?
    The answer is simple: the most senior leaders of the organization.
    Innovation cuts across just about every function. Only senior leaders can orchestrate such a complex system. They must take prime responsibility for the processes, structures, talent, and behaviors that shape how an organization searches for innovation opportunities, synthesizes ideas into concepts and product designs, and selects what to do.
    There are four essential tasks in creating and implementing an innovation strategy. The first is to answer the question “How are we expecting innovation to create value for customers and for our company?” and then explain that to the organization. The second is to create a high-level plan for allocating resources to the different kinds of innovation. Ultimately, where you spend your money, time, and effort is your strategy, regardless of what you say. The third is to manage trade-offs. Because every function will naturally want to serve its own interests, only senior leaders can make the choices that are best for the whole company.
    (link here)
  • ×