Lecture 7 PDF: Innovation Process

Thought of the Day Good friends help you find important things when you have lost them... Things like your smile, your hope and your courage  1  Teaching Plan* Week Dates...

Thought of the Day Good friends help you find important things when you have lost them... Things like your smile, your hope and your courage  1  Teaching Plan* Week Dates Topics 09 July MGMT 307: Introduction: Course Organization, Assessment, Expectations 1 Experiencing Entrepreneurship 16 July Problem Discovery 2 Who is your Customer ? (Step 1-5) 23 July What can you do for your customer ? (Step 6-11) 3 Guest Session 30 July How do you make money off your product (Step 12-19) 4 (Atom and Vic Uni Student Entrepreneurs) 06 August Designing and Building the product (Step 20-24) 5 Group Project Tutorial 6 13 August Mid-term test Lecture session Mid-Term Break 03 Innovation Process 7 September Rebel Business School (Guest Speaker) 10 Lecture Session 8 September Core Schedule (Guest Speaker) 17 Think Place (Guest Speaker) 9 September Group Project Tutorial 24 Airplane Contest (Pitch Warmup) 10 September Litmaps (Guest Speaker) 01 October * The plan is indicative and could change. 11 Presentations/Pitching 2 08 October 12 Recap and Final Assessment Preparation Agenda Session 1 Generic Model of the Innovation Process Evolution of Innovation Models 3  Process of Innovation 4  A Generic model of the Innovation process Idealized Model – only highlighting activities, real life rarely packaged like this. Steps not so clearly differentiated, may even be absent, some 5 may not come at all.  Development  Central to development is construction of models and prototypes.  “Models” convey the form, style and feel (Appearance) of an object.  Computer generated 3D models are particularly helpful with complex products where issues like compatibility and lack of space can be spotted early before building the real object. 6  Functions of Prototypes  Prototypes are more to do with function and little with form. Hence also known as “functional prototypes”.  Prepared using general purpose equipment rather than specialist purpose built.  Often made of different material than the final product.  Form the basis of testing that forms the core of development.  Usually a slow and laborious process  Other Purposes  Integration of components & systems (especially complex products).  Facilitate Learning (cumulative nature of innovation; also applies on user-test prototypes to learn about users and user behaviour).  Risk Reduction (tests can help identify potential risks (particularly technological)). 7  Models and prototypes 8  Design Designers are required to determine the attributes and features of the final product that will go on sale. This is likely to cover:  The precise shape of the product  The tolerances to which it has to be manufactured  The materials to be used in manufacture  The process by which the product will be manufactured In short, designs have to be aesthetically pleasing, functional and manufacturable. 9  Market Evaluation  At market evaluation decisions about the business model (involves value capture and creation) take place. Value Creation involves articulation of value proposition, thereby, determining the actual value that the new product provides, specifying who the customer is and the particular markets/segments to be targeted.  Also complementary assets (product support, training etc), if any, need to be recognized and arranged. 10  Production Engineering Production Engineering is likely to involve consideration of the following in order to keep costs down:  Reducing the parts count  Using standardised components  Using self-aligning parts  Using assembly operations that require a single, linear motion Note: As the volume of production increases so the most appropriate method of manufacture also changes. 11  Market/Pilot Testing Further testing to ensure successful marketplace entry. Involves two types of testing  Market Testing – launching the product on trial in a limited geographical area to gauge mechanical/distribution systems and gathering commercial data to construct sales forecasts/budgets and evaluate competitor reaction.  Physical Testing – testing for safety of the product in consumer’s hands. Involves a large degree of consumer interaction. May be a statutory/certification requirement. 12  Full Scale Manufacture and Launch  Begin manufacturing, which is also initiated not on full scale (20-30 % capacity).  This is done to take advantage of the learning curve effect (less time taken to ramp up capacity).  Products produced in ramp-up can be evaluated to spot potential flaws.  Supplied to preferential customers who can provide valuable marketing data on the product.  Ramping up slowly can also help in stock building. 13  Full Scale Manufacture and Launch  After full scale production starts, Market-Launch takes place, which highlights several marketing related activities such as  Ensuring that retail outlets have appropriate stocks.  Booking advertising space.  Designing and producing advertisements.  Booking exhibition space  Ensuring that literature about the product has been designed, written and printed.  Informing the press and ensuring that they have had the time to familiarize themselves with the product. 14 MODELS OF INNOVATION Linear Models (Technology Push & Demand Pull) Coupling Model Integrated Model Network Model Open Innovation 15  LINEAR MODELS Technology Push Model (1950s --- Mid 1960s) Market Pull Model (Mid 1960s --- Early 1970s) 16 QUESTION  In which industries do you think that: a. The push model is applicable, and b. The pull model is applicable?  Which model is likely to generate more sales? Why? 17  Coupling Model Early 1970s --- Mid 1980s Overcomes the problems of working in isolation created by the linear, sequential and ‘over the wall’ nature of earlier models Presence of feedback loops; two-way line of communication. More interaction and interdependence. Marketplace and state of technology are linked to each phase. Furthermore, the point of commencement for innovation is not known in advance. 18  Integrated model (Early 1980s --- Early 1990s) 1. Concurrent or parallel product development. 2. Ended strictly linear and sequential processes. 3. Relies on project teams that integrate various functions. 4. Brings all functions from the start of NPD and joint meetings ensure that manufacturing issues are discussed much earlier in the process. 19  Network model 20  Integrated model Internally organize resources as well as draw on external one’s to develop subsystems or undertake specific innovation phases. Achieved through alliances, agreements and contracts with third party organizations. Trend towards systems integrators, where companies manage the integration of development activities and thus the innovation process. For e.g iPod. Rising consumer expectations and increased emphasis on choice have enhanced emphasis on innovation and NPD. To cater for this need, companies have increasingly started to look outside for ideas/technologies and tap greater range of capabilities. 21  Open Innovation “ Open innovation is a paradigm that assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as the firms look to enhance their technology” Chesbrough (2006) 22  Features of Open Innovation  Explicitly recognises that no one firm can hire all the best brains, hence the importance of accessing external knowledge /expertise.  Networking in various forms can provide the means of linking to external knowledge/expertise.  Recognises that there are innovation strategies other than a first mover strategy.  Management of intellectual property. 23  Erosion factors favouring Open Innovation 1. Growing mobility of highly experienced and skilled people (i.e. can’t keep knowledge inside). 2. Increased time people spend in university training (i.e. knowledge spills over to lots of firms). 3. Increased availability of private Venture Capital (i.e. easier for researchers to launch own start-up firm). Note: old style Closed innovation relied on large firms with own research labs (e.g. Xerox, Bell Labs) 24  Which innovation model is most applicable to your business idea and why ? 25  Key Learnings  Distinguish the steps in the innovation process;  Differentiate and distinguish the different activities associated with the process of innovation;  Evaluate the techniques available to facilitate the process of innovation;  Compare and contrast the open and closed forms of innovation. 26