Innovation Management Notes 1-11 (2) PDF

Innovation management LEC 1 Define Innovation: The practical implementation of an idea into a new device or process. Different types of innovation: - product vs process innovation: Product innovation: the development of a new or improved pr...

Innovation management LEC 1 Define Innovation: The practical implementation of an idea into a new device or process. Different types of innovation: - product vs process innovation: Product innovation: the development of a new or improved product. OR embodied in the output of an organization’s goods or services. Process innovation: innovation in the way an organization conducts its business. - radical vs incremental innovation: radical innovation: an innovation that is very new and different from prior solutions. incremental innovation: an innovation that makes a relatively minor change from (or adjustment to) existing practices. - competence-enhancing vs competence destroying innovation: A competence-enhancing innovation builds on existing knowledge and skills whereas a competence-destroying innovation renders (offer) existing knowledge and skills obsolete(old). Whether an innovation is competence enhancing or competence destroying depends on whose perspective is being taken. An innovation can be competence enhancing to one firm, while competence destroying for another. The innovation process: - It is the way a firm manages its resources over time and develops capabilities that influences its innovation performance. - To achieve that innovation performance each firm needs its own unique organizational architeture  Innovation and Invention: Invention: The process of converting intellectual thoughts into a tangible new artefact (usually a product or process). Invention is the conception of the idea, whereas Innovation is the subsequent translation of the invention into the economy. Innovation = theoretical conception + technical invention + commercial exploitation For example: Introduction of electric board is Invention, Mobile phone and Tablet are innovation. Models of innovation: -Conceptual framework of innovation -Linear models of innovation:  § Interactive model of innovation: Innovative capabilities:  LEC2: o Apple Case Study: Apple's return on investment (ROI) has fallen due to: 1. iPod Decline: iPod sales dropped as smartphones replaced them, reducing profits. 2. Competition: Intense competition from brands like Samsung and Google has increased costs and squeezed profit margins. 3. Investments in Huge Data Centers for Cloud Support: Apple’s significant spending on data centers for iCloud support has increased costs, impacting short-term returns. These factors collectively lower Apple’s ROI by increasing costs and reducing profits. o Innovation in India: The Chotukool Project. - Product: Chotukool is a 43-liter solid-state cooler. - Energy Source: It runs on 12V DC and can use battery, inverter, or solar power. - Weight: It weighs 7.8 kg, making it portable. - Cooling Range: Keeps food fresh and cool between 5°C and 15°C in typical home conditions. - Price: Market price ranges from Rs 3,250 to Rs 3,500. o Types of Innovation: § Product innovations vs Process Innovations: Product innovations: are embodied in the outputs of an organization—its goods or services, even if those products are services. Example: snapchat filters Process innovations: are innovations in the way an organization conducts its business, such as in the techniques of producing or marketing goods or services. Example: Elon Musk's use of automation for most of the production process for the Model 3 with giant robots. § Radical vs Incremental Innovations: Radical innovation: is an innovation that is very new and different from prior solutions. Thus, radicalness might be conceived as the combination of newness and the degree of differentness. Example: The development of third generation (3G) telephony. Incremental innovation: an innovation that makes a relatively minor change from (or adjustment to) existing practices. Example: Changing the screen of a cell phone to make it more crack resistant An Innovation that was once considered radical may eventually be considered incremental as the knowledge base underlying the innovation becomes more common. § Competence-enhancing vs Competence-destroying Innovations: Competence enhancing innovation: builds on existing knowledge and skills i.e., innovations that leverage on the company’s existing competencies, making them more valuable. Example: each generation of Apple's iPhone (e.g., iPhone 12, iPhone SE, and iPhone X) builds on the technology underlying the previous generation. Competence destroying innovation: is from the perspective of a particular firm if the technology does not build on the firm’s existing competencies or renders them obsolete. Example: Store locations and the retail footprint were critical competencies for Block Buster. Blockbuster's retail competence was undermined by Netflix's online model. As a result, it was a competence destroying innovation. Whether an innovation is competence enhancing or competence destroying depends on whose perspective is being taken. An innovation can be competence enhancing to one firm, while competence destroying for another. § A component vs Architectural Innovations: Component innovation: entails changes to one or more components but does not significantly affect the overall configuration of the system. Example: the difference between iphone 12 and iphone 13 is some component.  § Architectural innovation: entails changing the overall design of the system or the way that components interact with each other. Example: when SpaceX set out to make space travel significantly less expensive, they developed a number of component and architectural innovations. o Technology S-Curves: A firm's innovation performance is influenced by how it manages its resources and develops its capabilities over time. To achieve this, each firm needs a unique organizational structure. Technology S-curves represent the relationship between technology improvement and its adoption. The learning curve leads to price reductions, which in turn accelerate the diffusion of technology. Factors affecting this process include: The firm's ability to absorb knowledge or experience. The value of complementary resources and technologies. Changes in market conditions. The development of component technologies. The level of acceptance and consumption of the technology. The S-curves of diffusion are shaped by the S-curves of technology improvement. o Diffusion of Innovation and Adopter Categories:  Lecture 3 Outline Topic 4: Culture and Climate for Innovation 1. Differences between organisational Culture and organisational Climate: Culture for Innovation: - It represents the core values and beliefs shared by people in an organization. - It is reflected in the organization's key traits and behaviors. - It refers to fundamental assumptions proven successful in the past, now widely accepted within the organization. Climate for Innovation o It reflects how the business operates daily. o It is seen in the organization's practices, procedures, and reward systems. o It shows the organization's priorities and values. o The practices and priorities influence and are influenced by the people in the organization, shaping its climate. 2. Organisational Culture: § Models to describe the organisational Culture in organisations: Martins (1987) has developed a model to describe organisational culture based on the typical ideal organisation and the importance of leadership in creating a distinctive organisational culture. § The dimensions of the Culture encompass the following: 1. Strategic vision and mission: Determines how well personnel understand the organization’s vision, mission, and values, and how these are translated into measurable individual and team goals. 2. Customer focus (external environment): determine the focus on external and internal customers and employees’ perception of the organization’s community involvement. 3. Means to achieve objectives: determine how the organizational structure and support systems contribute to its effectiveness.  4. Image of the organisation: focuses on how the organization is perceived externally and whether it is considered a desirable employer. 5. Management processes: Looks at decision-making, goal setting, innovation, control, and communication processes within the organization. 6. Employee needs and objectives: Focuses on how employees’ needs and objectives align with those of the organization, as perceived by the employees. 7. Interpersonal relationships: focuses on relationships between managers and employees, including how conflicts are managed. 8. Leadership: Focuses on areas that enhance leadership, as perceived by employees. 3. Relationship of creativity and innovation with organisational Culture: organisational culture influence creativity and innovation through: 1. Socialisation: Employees learn acceptable behaviours and norms, shaping their understanding of whether creativity is valued in the organisation. 2. values, assumptions and beliefs: core values and beliefs are reflected in structures, policies, and practices that support creativity, such as resource allocation for new ideas. How can organisational culture support creativity and innovation? (Ways/factors): 1. External Environment: Economic and competitive pressures encourage changes in products and services. 2. Reaction to Critical Incidents: Responses to internal and external events shape organisational strategy. 3. Managers’ values and beliefs: Support for open communication, change, and diversity of beliefs. 4. The structure of the organization: Flexible, decentralized structures with shared decision-making enhance innovation. 5. Technology: Access to tools and knowledge resources supports creative processes. 4. Determinants of organisational Culture that support creativity and innovation: 1. Strategy: a) Vision and Mission: Innovation stems from a clear, future-focused vision and mission. Employees must understand these and the gap from the current state to act creatively. b) Purposefulness: goals reflect values and can either foster or hinder innovation. 2. Structure: a) Flexibility: Promotes creativity by allowing adaptability, job rotation, and less rigid job descriptions. b) Freedom: Encourages innovation through autonomy, empowerment, and decision-making freedom within guidelines. c) Cooperative Teams & group interactions: diversity, trust, respect, and effective communication within teams enhance creativity and innovation. Cross- functional teams improve collaboration between developers and implementers. 3. Support mechanisms: a) Rewards and Recognition: Rewarding creativity and risk-taking encourages innovative behavior. Both individual and team efforts should be recognized, with rewards tailored to inspire employees effectively. b) Availability of Resources: o Time: Allowing employees time to think creatively and experiment. o Information Technology: Utilizing tools like the Internet and intranet to foster idea exchange. o Creative People: Hiring diverse individuals to stimulate innovation and fresh ideas. 4. Behavior that encourages innovation: a. Mistake handling b. Idea generating c. Continuous learning culture d. Risk taking e. Competitiveness f. Support for change g. Conflict handling 5. Communication: A culture of open, transparent communication built on trust enhances creativity and innovation. Encouraging disagreement as a tool for growth fosters openness, while emotional safety and mutual trust empower employees to act creatively. An open-door policy and communication across teams and departments are vital for gaining fresh perspectives and driving innovation.  Lecture 4 Outline Managing Intellectual Property (a lot of examples in tut) 1. Examine the different forms of protection available for a firm’s intellectual property: I. Patents: are a contract between an individual or organization and the state, granting a temporary monopoly to encourage innovation. In return, the patent holder must disclose enough details of the invention. The state does not prevent others from using the invention; this responsibility lies with the patent holder. Defending a patent can be costly. II. Copyright gives legal rights to creators of certain types of work, allowing them to control how their work is used. It applies to original literary, dramatic, musical, and artistic works, sound recordings, films, broadcasts, cable programs, and the layout of published editions. Its protection is automatic, without the need for registration. Copyright lasts for 70 years after the author's death for most works, and for 50 years after publication for other works. The copyright symbol © signifies protection. Ideas are not copyrighted, only the way they are expressed. III. Trademarks are important for differentiating products, especially in industries with limited use of patents. They are closely linked to a company's image, goodwill, and reputation. Trademarks help consumers identify quality, value, and origin of goods. A trademark is defined as any sign capable of distinguishing goods or services, and it can include names, logos, and slogans. Trademarks must be distinctive, not misleading, and not cause confusion with existing trademarks. IV. Trade secrets refer to business activities and processes that are not patented, copyrighted, or trademarked. These can include special ways of working, pricing costings, or business strategies. A famous example is the recipe for Coca-Cola, which is not patented to prevent its competitors from discovering it. However, the law regarding trade secrets is unclear, and there is no satisfactory legal definition of the term.  V. Registered designs protect the outward appearance of an article, including its shape, configuration, pattern, or ornament, but not the underlying idea. The system is intended for designs with aesthetic appeal, such as electrical appliances, toys, and packaging. A registered design lasts for a maximum of 15 years, It must also present a materially different appeal compared to existing designs. 2. Identify the limitations of the patent system: I. Expensive legal journey: Securing and maintaining a patent involves significant legal and filing expenses, which can be unaffordable for smaller firms. II. Costs of patent enforcement: Defending patents in court can cost millions, making it difficult for smaller companies to protect their intellectual property. III. Limited access for small firms: Only 10% of UK patents are granted to small firms, despite them representing 99% of businesses. IV. High costs of filing and maintaining patents: The process of filing a UK patent and maintaining it can be expensive, with fees totalling £1,000–£1,500 for a UK patent, and up to £10,000 for protection in multiple countries. V. Weak protection for certain industries: Industries like services and information technology are weakly protected, limiting innovation. VI. Limited protection duration: The current system may not provide enough coverage for new ideas, especially for smaller companies. who could benefit from shorter, broader protection. 3. Explain why other firms’ patents a valuable resource can be. It can be a valuable resource because they provide access to detailed technical knowledge and innovations that have already been developed. Patents often include comprehensive information about processes, technologies, and designs, allowing firms to gain insights into emerging trends and advancements in their industry. By analyzing these patents, companies can identify opportunities to improve their own products, explore new areas of innovation, and develop solutions that complement or build upon existing technologies. Additionally, understanding competitors' patents helps firms avoid infringement risks and identify gaps in the market where they can focus their research and development efforts. 4. Identify the link between brand name and trademark: The link between the brand name and the trademark is becoming closer and stronger. While the literature separates the two, with brands remaining in the sphere of marketing and trademarks within the sphere of law, Both serve to facilitate identity and origin. That origin, in turn, indicates a certain level of quality, as reflected in the goods. It is also noted that many brands have been registered as trademarks. 5. Identify when and where the areas of copyright and registered design may be useful. Registered Design: a. Useful when protecting the outward appearance of an article, such as its shape, configuration, pattern, or ornament. b. It is applicable to designs with aesthetic appeal (e.g., electrical appliances, toys, forms of packaging). c. Prevents competitors from copying designs that are new and create a materially different appeal to the eye.  Copyright: a. Useful for protecting creative material in a tangible form (e.g., written, drawn, or recorded). b. Covers literary, dramatic, musical, and artistic works, as well as sound recordings, films, broadcasts, cable programmes, and typographical arrangements. c. Especially significant for industries like computer software and the music industry, which face illegal copying issues. d. Protects the specific presentation of ideas but not the ideas themselves. 6- Explain how the patent system is supposed to balance the interests of the individual and society. by: I. Ensuring that the details of patents are made public, allowing others to challenge the granting of a monopoly and promoting transparency. II. Providing a formal registering and indexing system to make patents easily accessible to the public, which helps in balancing the interests of inventors and society. III. Requiring patents to disclose enough information to allow others to replicate the invention, promoting the sharing of knowledge and fostering innovation. IV. Allowing broad claims to protect inventors but ensuring these claims don't block competition unfairly. V. The patent system aims to benefit both the inventor (through the protection and monetization of their work) and society (through the sharing of knowledge, innovation, and the possibility of wider access to the inventions once patents expire).  Lecture 5 Chapter 6: Defining the Organisation’s Strategic Direction 1. Competitive advantage: Competitive Advantage: A product or service that an organization’s customers place a greater value on than similar offerings from a competitor. An advantage over competitors gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and better servicing facilities that could justify higher prices. First-mover advantage – Occurs when an organization can significantly impact its market share by being first to market with a competitive advantage. Competitive Intelligence – The Process of gathering information about the competitive environment including competitors’ plans, activities, and products to improve a company’s ability to succeed. Example: Amazon created the first online bookstore, which was immensely successful. By the time other retailers established an online bookstore presence, Amazon had achieved significant brand recognition and doubled-up its first-mover advantage into marketing a range of additional, unrelated products. 2. Assessing firms internal & external environment: I. External analysis tools: include Porter's Five-Force Model: Stakeholder analysis II. Internal analysis: Porter’s Value Chain Model Porter's Five-Force Model: analyzes an industry's attractiveness and a firm's opportunities and threats by examining five forces and the role of complements. Complements: Products or services that enhance the usefulness or desirability of another product. For example, software is important complement for computer. 1- The degree Rivalry among existing competitors – High when competition is fierce in a of existing market and low when competitors are more satisfied. rivalry: - depends on the number and size of competitors, with more similar-sized firms leading to more competition. In oligopolistic industries, competition can be intense or minimal. - Differentiation – Occurs when a company develops unique differences in its products or services with the intent to influence demand. - Increased demand lowers rivalry, while declining demand heightens competition. - High exit barriers in declining industries also increase rivalry. 2- Threat of Threat of new entrants – High when it is easy for new competitors to enter a potential market and low when there are significant entry barriers. entrants - Entry barrier – A feature of a product or service that customers have come to expect and entering competitors must offer the same for survival, like high start-up costs, brand loyalty, and competition. 3- Bargaining Supplier power – The suppliers’ ability to influence the prices they charge for power of supplies. suppliers Supply chain – Consists of all parties involved in the procurement of a product or raw material. o depends on their number, differentiation, and the firm's reliance on them. Fewer suppliers or high reliance gives them more power. High switching costs and vertical integration also increase supplier power.  4- Bargaining Buyer power – The ability of buyers to affect the price of an item. power of Switching cost – Manipulating costs that make customers reluctant to switch to buyers. another product. Loyalty program – Rewards customers based on the amount of business they do with a particular organization. o depends on how much the firm relies on a few customers, how different the product is, and switching costs. If the product is similar, buyers have more power. If there are high switching costs, buyer power decreases. If buyers can make their own products, they have more power. 5- Threat of High when there are many alternatives (products that serve a similar purpose) substitutes to a product or service and low when there are few alternatives. like buses substituting for air travel on short routes due to lower costs Stakeholder analysis: Stakeholder analysis is used for strategic and normative purposes. A strategic analysis focuses on how stakeholders impact financial performance, while a normative addresses ethical or moral issues. First, the firm lists all stakeholders and their interests, contributions, and claims. Key stakeholders include shareholders, employees, customers, suppliers, lenders, the local community, government, and competitors.  Porter’s The value chain: Internal analysis begins by identifying a firm's strengths and weaknesses, often using the value chain model. Activities are divided into primary and support. a. primary activities: Have a direct relationship with the organization's customers, include: - inbound logistics (receiving and storing inputs) - operations (transforming inputs into outputs) - outbound logistics (distributing outputs) - marketing and sales (promoting and selling) - service (after-sales support). b. Support activities: provide the inputs and infrastructure that allows the primary activities to be performed, include: - procurement (acquiring inputs) - human resource management (recruiting, training, and compensating) - technology development (managing equipment and knowledge) - infrastructure (functions like finance, legal, and general management). o a model that describes a series of value-adding activities connecting a company’s supply side (raw materials, inbound logistics, and production process) with its demand side (outbound logistics, marketing, and sales). o To understand how firms developed a competitive position, we need to understand the concept of “Value Chain”. o Porter States that every firm is a collection of activities that are performed to design, produce, market, deliver and support its products and services. o Michael Porter uses the value chain as a systematic means of displaying and categorizing business activities. 3- Managing Big Data: Advancements in digitalization, social media, and mobile devices have led to "big data," enabling firms to analyse patterns and improve products. While firms like Amazon and Ford succeeded in leveraging big data, challenges include high costs, security risks, misuse, and biases, which can mislead firms. Professor Foster Provost advises focusing on key business problems before collecting data. Key tips from his book include: Treat data as assets: Structure and clean data to maximize value. Build a skilled data science team: Expertise is crucial for success. Align data with business goals: Ensure analytics solve key challenges. Assess data quality: Account for biases and errors in data. 1. Identifying Core Competencies: Core competencies set a company apart by combining market, infrastructure, and technology skills, making them hard to copy. The three tests for identifying core competencies are: a) Competitive differentiation: Does it uniquely add value for customers? (e.g., Sony's miniaturization improves portable products). b) Transcendence: Does it apply across multiple businesses? (e.g., Honda's engine expertise spans various industries). c) Imitability: Is it difficult for competitors to replicate, involving harmonized technologies and years of development?  Lecture 6 Chapter 10 Open innovation and technology transfer 1- Open Innovation VS Closed Innovation: o Open innovation is a collaborative approach that involves engaging with external stakeholders to drive innovation and create value. o Stakeholders play a crucial role in the open innovation process, contributing their expertise, resources, and knowledge to cocreate innovative solutions. o The difference between open and closed innovation is that closed innovation involves keeping innovation internal to the firm, while open innovation involves external collaborations and knowledge sharing across the supply chain. 2- Practices of open innovation: – Example 1 Co-creation with partners at Bosch o Bosch, one of the largest German engineering and technology companies, has launched the Bosch Open Innovation Partnerships platform. o This platform allows them to easily access and coordinate idea submissions for defined search fields and co-create with startups, universities, and other experts. o It serves as a gateway for Bosch to gain outside-in perspectives. o The platform also facilitates better-informed decision-making through market insights, coming from different integrated external data sources. o candidates, ideas, and partners are funnelled through a defined process, ultimately leading to the conversion of these opportunities into “innovation projects”. – Example 2 Driving sustainability in the supply chain with collaborations at Körber Supply Chain o In our Innovation Rockstars Podcast, Dr. Kerstin Höfle, Vice President R&D and Product Management at Körber Supply Chain, shared insights on how they address the hot topic of sustainability in the supply chain. o She highlighted those collaborations with partners and suppliers are the way forward to successfully drive innovation and sustainability. Because they cannot have all the expertise and capabilities in-house, they scan the market for new players, identify the most promising ones and partner up. 3- Technology Transfer: Technology transfer: is the process of applying existing technology to new uses or users, focusing on utilizing current scientific and technological knowledge in new areas rather than expanding it through further research. Technology transfer: is the process of sharing ideas, knowledge, and innovations from advanced companies, research organizations, and academia to broader and practical use in industry and business. For example: In 1979, Steve Jobs visited Xerox PARC, where he saw the Graphic User Interface and Mouse in action. During the visit, Apple employees were shown Xerox's technology in exchange for Xerox getting the option to buy stock in Apple. 4- NIH Syndrome: Limitations and barriers to technology transfer: The NIH (Not-Invented-Here) syndrome is a barrier to technology transfer, where project groups believe they have superior knowledge in their field and reject outside ideas, which can harm performance. This attitude is common among R&D teams that have worked together for a long time. Example: Groups of scientists and engineers who have worked together for many years will begin to believe that no one else can know and understand the area in which they are working better than they do. 5- Explicit and Tacit Knowledge: Explicit knowledge: is formal, objective, and easily documented. It includes information found in books, reports, databases, and other written sources. Tacit knowledge, on the other hand, is personal and subjective. It is derived from individual experiences, intuition, and insights, making it difficult to articulate or formalize. 6- Conceptual framework of Technology Transfer: - Accessibility: refers to the availability of technology knowledge and the related information. - Mobility: is the ease with which this technology knowledge can be obtained, through channels such as intermediaries, people movements, networks, and partnerships. - Receptivity: is an organization’s overall ability to recognize, identify with, and effectively leverage technology. This concept has also been referred to as 'absorptive capacity.' - These three elements—accessibility, mobility, and receptivity—form a framework for viewing technology transfer as a process, focusing on the company’s perspective. - Receptivity was later expanded to include stages such as awareness, association, assimilation, and application. - This framework illustrates that technology transfer is better understood as a series of interconnected sub-processes, rather than a simple one-time transaction or decision. Successful innovative companies must excel in all four stages of the receptivity process. 7- Models of technology Transfer Licensing: involves the Science Park model: An industrial area technology owner receiving a near a university or center of excellence, licence fee in return where science-based companies use it for access to the technology. as a place to develop and test new ideas. Intermediary agency model: Technology Directory model: Directory/Database centre or transfer managers – act as the that includes patent applications and intermediary between companies seeking grants Collaboration model between and companies offering technology. universities. Knowledge Transfer Partnership model: Hiring skilled employees: For Collaboration model between universities example: hiring telecom engineers and small companies through an MSc. study in the Telecom organisations in program followed by application (2 / 3 days). Egypt. Research clubs: Brining companies Consultancy: Technology consultants, with common interests altogether to often ex-researchers, provide expertise conduct collaborative research – to R&D groups and support early exchange information/knowledge. project stages. Limitations of models o They fail to the organization’s specific needs. o They focus only on technical features. o They underestimate the need for interaction. o They assume organizations can clearly explain their problems in technical terms.  Lecture 7 Chapter 13: New Product Development (NPD) 1- Product Development as a Series of Decisions Product development can be viewed as a sequence of critical decisions. According to literature reviewed on the topic, these decisions can be divided into four key categories within a product development project: 1. Concept Design 2. Supply Chain Design 3. Product Design 4. Production Ramp-up and Launch Key Findings by Krishnan and Uldrich (2001): 1. Concept Design Decisions: o What are the target values for product attributes? o What will the product concept be? o What variants of the product will be offered? o What is the product architecture? o What will the overall physical form and industrial design of the product be? 2. Supply Chain Design Questions: o Which components will be designed specifically? o Who will design and produce the product? o What is the configuration of the physical supply chain?  o What type of process will be used to assemble the product? o Who will develop and supply the process equipment? 2- Considerations for Developing a New Product Development (NPD) Strategy: Establishing a clear direction for the business and selecting strategies to achieve goals is an ongoing process that often evolves and changes. This is known as "Opportunity Identification." I. Ongoing corporate planning: In large organizations, corporate planning is formal and led by senior managers. In smaller businesses, it's often informal, handled by the owner. Example: decisions like a sports footwear company focusing on basketball instead of tennis can significantly impact its future. II. Ongoing market planning: Market planners' decisions can be impactful. For instance, realizing a competitor's improved tennis shoe may lead to five development projects: two on new sole materials, one on new designs, one on alternative fastenings, and one on reducing production costs. III. Ongoing technology management: In tech-driven industries like pharmaceuticals and software, technology management is crucial. Monitoring internal R&D and external patents, such as a competitor's application, can prompt new projects to stay ahead of developments. IV. Opportunity analysis/serendipity: often includes unplanned inputs or serendipity. As 3M’s vice-president stated, “Chaos is a necessary part of an innovative culture,” highlighting the unpredictability of their innovations. 3- What is a new product? - A notable example of a new product is long-life milk (aseptic milk), sold without refrigeration. While this product has been consumed in Europe for many years, it is a relatively new concept for most U.S. consumers. People used to refrigerate milk might hesitate initially to try non-refrigerated options. - Although this product is not entirely new, from a product manager's perspective, adopting a relativistic view is more practical. - The Multi-Dimensional Nature of Products A product is a multi-dimensional concept, with both tangible and intangible features. For instance, different packaging alone may not define a new product, but when combined with marketing efforts, it can reposition the product in the market. Example of Product Repositioning: Lucozade by GlaxoSmithKline was originally sold in distinctive bottles wrapped in cellophane and marketed as a drink for sick children. With rebranding and new marketing strategies, it is now recognized as a sports drink. This transformation highlights the complexity of defining what constitutes a "new product." - Classifications of New Products Only 10% of all new products are truly innovative, as these involve significant risks and are new to both the company and the marketplace. Common categories of new product developments include: a. New-to-the-world products – (Entirely original innovations) create new markets with major technological innovations or new uses of existing technology. Examples: Apple's iPhone, introduced in 2007, was a groundbreaking new-to- the-world product that combined a phone, iPod, and internet device, revolutionizing the smartphone market despite high risks. b. New product lines – (new to the firm) are not new to the market but are new to the company, allowing it to enter an established market. Example: Nike entered wearable tech with products like the Nike+ FuelBand, marking a significant shift from its core athletic footwear business. c. Additions to existing lines – (line additions) are products that are significantly different from the company’s current offerings but not different enough to be considered a new product line. Example: Starbucks expanded its product line with a breakfast menu of sandwiches and pastries, complementing their coffee offerings and attracting more customers throughout the day. d. Improvements and revisions – (Enhancements or updates to existing products) are updates to existing products in a company’s line, enhancing performance, reliability, and often reducing manufacturing costs.  Example: Phone 7 Camera Upgrade – The iPhone 7 featured camera improvements like optical image stabilization and a wider aperture, making it more competitive and appealing to consumers. e. Cost reductions: focus on lowering production costs without offering new consumer benefits, but they can lead to significant financial rewards for the firm through improved processes and cheaper materials. Example: Toyota uses lean manufacturing to reduce production costs, improving profitability while maintaining quality. f. Repositioning: involves finding new uses for existing products, often through changes in consumer perception and branding rather than technical innovation. Example: Aspirin was repositioned from a pain reliever to a treatment for blood clots and prevention of strokes and heart attacks. 4- Overview of NPD Theories New product development (NPD) starts with idea generation, screening, concept development, and testing, focusing on refining the idea before it becomes physical. Once the concept advances, costs rise as decisions on manufacturing, materials, and market evaluation are made. NPD models vary by industry, with the linear eight-stage model often used in textbooks but not fully capturing industry-specific processes. Pharmaceutical companies focus on scientific advancements, while food industries prioritize consumer research. 5- Network models: New ideas for NPD products can come from a wide variety of resources like marketing and manufacturing. The "interactive model of innovation" considers all these different sources. However, traditional "linear activity-based models" don’t take these diverse sources into account. 6- 3D printing: 3D printing, or stereolithography (SL), creates objects by building them layer by layer with a laser that hardens liquid plastic. If you have a computer design (CAD model), you can make almost any 3D shape you can think of. How it works: 1. Create a 3D model using a CAD program. 2. A software divides the CAD model into thin layers, typically 5-10 layers per millimetre. 3. The 3D printer's laser hardens one layer of liquid plastic at a time. 4. The platform lowers slightly, and the laser paints the next layer. 5. This process repeats, building the object layer by layer until complete. Key Benefits: Enables mass customization and small production runs. Reduces the need for large inventories. 3D printers are now affordable, making it easier to obtain them for businesses. Printers, scanners, and related applications are widely available in supply chains. Common Uses: Cell phone covers Jewellery Toys Bicycles Prototypes for manufacturing tests Lecture 8: guest speaker  Lecture 9 Chapter 5 Operations and process innovation 1- operations Management: - Most organizations offer a combination of both product and service elements. - For example, restaurants provide food (product) and service (food delivery to the table). - The term "operations management" was created to combine skills and techniques from both manufacturing and service sectors, encouraging the transfer of best practices. - In today's global market, the service aspect often gives a company its competitive edge. - Therefore, innovation in operations is key to achieving strategic goals. Operations management involves controlling the conversion process from inputs to outputs. 2- Manufacturing Process Innovation: Manufacturing process innovation focuses on how products are produced within an organization (internal focus). How is it achieved? It involves introducing new elements to the production process, such as: Input materials Work and information flow mechanisms Equipment used in production Why is it important? Reduces production costs Improves product quality Enhances efficiency 3- The dominant focus on product innovation: There has been less attention on process innovation in both industry and academia Why is that? Process innovations are primarily related to production and delivery, whereas product innovations are more visible and are perceived to generate higher revenues Consequences: Radical process innovations are rare, often occurring only once every 30 years in some industries. 4- Quality of Design: the quality of design and operations management plays a crucial role in innovation management. By keeping things simple and focusing on how customers experience your products and services, you can make continuous improvements.  Companies like Dell stay ahead by constantly redesigning their products and services, listening to customers, watching competitors, and keeping up with new technologies. This can be challenging but is important for ongoing innovation. 5- Lean Innovation: Lean innovation focuses on creating new products or processes efficiently, emphasizing value creation and removing waste in the new product development (NPD) process. It follows the Pareto principle, where 20% of a product's features typically provide 80% of the value to customers. This philosophy aims to add value for customers while removing inefficiencies and unimportant activities that do not contribute to the final product. It maximizes the use of available resources, ensures timely delivery, and maintains product quality at the lowest cost. Lean Manufacturing Targets: Achieving zero waste Reducing supply time and improving customer response Increasing productivity, quality, and revenue Gaining a competitive advantage 6- Waste and tools for Waste management: Wastes refer to any activities that do not add value to the customer or the product. types of waste: 1. Overproduction Producing more than needed or producing too early leads to higher labor, storage, and transportation costs. Overproduction is considered the most critical type of waste as it often causes other forms of waste. 2. Excess Inventory Holding too much inventory, whether raw materials, work-in-progress, or finished goods, increases the risk of expiry and adds storage costs. 3. Waiting Delays in production due to waiting for the next task, materials, information, or machinery result in lost time and money. Workers standing idle on production lines also contribute to this waste. 4. Transportation Moving products unnecessarily or transporting them far from their destination wastes time, money, and effort without adding value. 5. Overprocessing Taking unnecessary or overly complex steps during production, or having inefficient product designs, leads to wasted time and resources. 6. Motion Excessive or unnecessary movements by workers can lead to physical strain, product defects, or workplace accidents, reducing efficiency. 7. Defects Producing defective items or spending time and resources fixing defects wastes time, effort, and materials. 8. Unused Employee Creativity Failing to involve employees in sharing their ideas, skills, or knowledge results in missed opportunities for improvement and innovation. v The 6s explanation: The goal is to create a workspace that is efficient, safe, and free from waste, promoting higher productivity and employee satisfaction. It’s widely used in lean manufacturing and operational management systems. v Value Stream Mapping - Value Stream Mapping is a tool used in business operations to ensure the efficiency of the business process. - The map demonstrates the route that the product/service takes before reaching the destination. - It shows the factors that can affect the quality, and helps the provider assess if the process needs to be improved. - This type of map provides many benefits, like being able to identify wastes, which greatly affects the quality of products and services. v Poka Yoke - Poka Yoke, a Japanese term meaning "mistake-proofing" or "foolproofing," focuses on preventing errors in processes and products. - By anticipating potential mistakes or defects in manufacturing and product use, engineers implement preventive measures to eliminate them altogether. - This approach ensures higher quality and reduces the likelihood of errors at the source. v Andon Andon is a visual alert system used in production lines to indicate the status of operations. It triggers alarms or notifications when issues or malfunctions occur, allowing immediate attention to resolve problems and maintain workflow efficiency. v Jidoka (Automation) - Jidoka, a Japanese term for "automation," refers to the practice of stopping a process immediately when something goes wrong. - This approach ensures quality is built into every step of the process, preventing defects from progressing further. - By incorporating Jidoka, operators don’t need to constantly monitor machines or operations, as the system automatically detects and responds to issues. - Jidoka, progresses through three stages: I. Manual feeding of the production line. II. Automated feeding of the line, with a worker monitoring the output. III. Full automation, including automatic feeding, ejection, and real-time monitoring through Andon systems to detect and alert for issues. - Jidoka focuses on achieving seamless, efficient production with minimal manual intervention. v Kaizen - Kaizen, meaning "continuous improvement," emphasizes small, incremental changes that collectively lead to significant progress. - It is a philosophy of engaging employees at all levels to identify and implement daily improvements, creating a culture of continuous development. - Key principles of Kaizen: Focus on small, low-cost improvements over time rather than large, expensive changes. Applicable to any type of organization, not just manufacturing. v SMED (Single Minute Exchange of Dies) - SMED is a method to reduce idle time that results from changing operations from product to another product. - It measures the total time from completing the last unit of one product to starting the first unit of the next. - By minimizing this changeover time, SMED helps improve operational efficiency and flexibility. v Kanban System - A Kanban system is a workflow management tool designed to reduce idle time and improve productivity. - It optimizes the work process by identifying inefficiencies and bottlenecks within workflows, ensuring smoother operations. - By visualizing tasks and workloads, teams can trace idle time back to specific process issues and make adjustments to maximize efficiency. v TPM (Total Productive Maintenance) 7- Triggers for innovation in the management of the operations process I. Gap analysis is a technique used to identify differences between customer expectations and the producer's delivery. Understanding customer expectations is challenging as they vary and evolve over time. For instance, student expectations have shifted from basic overhead projectors to multimedia presentations like PowerPoint and videos. II. Total Quality TQM is a system that integrates efforts for quality Management development, maintenance, and improvement to achieve (TQM) customer satisfaction at economical levels. The TQM philosophy emphasizes: o Meeting customer needs and expectations o Involving all parts of the organization o Including everyone in quality efforts o Analyzing all quality-related costs o Designing in quality o Developing systems for quality improvement o Continuous improvement processes  III. The ISO 9000 In 1994, countries combined their quality standards to create approach ISO 9000, a set of documentation standards for quality programs. Companies are certified by an external examiner, and once certified, they are listed in a directory accessible to potential customers. ISO 9000:2000 added four key principles: o Quality management should focus on the customer. o Quality performance should be measured. o Quality management should drive improvement. o Top management must commit to maintaining and improving systems. Despite these revisions, the ISO approach is not universally seen as beneficial. 8- Characteristics of the Fourth Industrial Revolution: a) Digital Megatrends: Internet of Things (IoT) b) Servitisation of Manufacturing c) Smart Technologies 9- Process design and innovation: Process Industries are characterized by: High production speed and short throughput time (the time taken from raw materials to finished goods). Rigid process control. High capital investment. Fixed capacity with a single routing for all products and limited volume flexibility. Low product complexity. Low added value. A small number of production steps.  Lecture 11 Chapter 7 Managing organisational knowledge 1- Core Competencies A company's core competencies are its competitive advantages—the unique skills and resources that provide an edge in the marketplace. Identifying and leveraging these distinctive competencies is key to business success. - A competence becomes a core competency when it is central to the company’s strategy, competitiveness, and profitability. - Core competencies often result from collaboration across various departments within the organization. - Typically, core competencies are found in a company’s people rather than its physical assets. - A core competence offers a valuable potential competitive advantage. Examples of Core Competencies: Buying Power: Some companies use their impressive buying power as a key core competency, using their large influence on outbuy competitors and increase their market share. Company Culture: building a strong company culture by offering good pay, benefits, and effective HR practices to attract job seekers and create a positive reputation. Customer Service: Providing friendly and honest customer service depends on employees with great communication and people skills. Partnerships: Strategic partnerships, especially within the supply chain, can enhance operational efficiency and product delivery.  Quality Control: Focusing on quality instead of quantity can set a company apart by offering well-made products in markets that prioritize mass production. 2- Technology trajectories: Companies invest over time to build knowledge competence. - Samsung has years of experience in developing smartphones. - It has gained competence in many areas. - Samsung is a global leader in certain fields. o This is due to years of investment in R&D. o To succeed in technology, a company must stay on the "technology escalator." o Over time, a company becomes so skilled that it becomes difficult to shift away from its expertise. 3- Competitive advantage, resources and distinctive capabilities 4- How firms develop Core competencies? - Firms need to use its assets to perform value-creating activities - The new theory views both external and internal environments as constantly changing. o The external environment changes as different players adjust their strategies. o The internal environment is also evolving within the company. - Managing internal change and understanding external changes helps explain the challenges faced by senior management. 5- The Knowledge base of an organisation: